UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarter Ended January 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) FOR THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the Transition Period From ________ to _______.
Commission File Number: 0-13628
---------------------------------
TRIDON ENTERPRISES INCORPORATED
(Exact name of registrant as specified in its charter)
Colorado 13-3183646
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
136 South Palm Drive #105
Beverly Hills, CA 90212
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:
(310) 858-7123
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Shares, par value $.001 per share
Indicate by a check mark whether the Registrant (1) has filed all reports
required to be filed by section 12 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]. As of January 31, 1999,
there were 62,794,734 shares outstanding of the Registrant's common stock,
$.001 par value.
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TRIDON ENTERPRISES INCORPORATED
(A Company In The Development Stage)
Balance Sheets
October 31, 1998 And April 30, 1998
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January 31, 1999 April 30, 1998
(Unaudited) (Audited)
Assets
Current Assets:
Cash $ 3,332 $ 682
Advances to Officers/Stockholders 30,000 30,000
Notes Receivable 275,000 275,000
Less Allowance for Bad Debt (275,000) (275,000)
Interest Receivable 36,000 29,253
Inventory 5,325 5,325
------- -------
Total Current Assets 74,657 65,260
Furniture and Equipment - at Cost 17,993 17,993
Accumulated Depreciation (8,517) (6,305)
------- -------
Net Furniture and Equipment 9,476 11,688
------- -------
Marketable Equity Securities 0 107,451
------- -------
Total Assets $ 84,133 $ 184,399
------- -------
Liabilities And Stockholders' Equity
Current Liabilities:
Accounts Payable and Accrued Expenses $ 85,225 $ 129,297
Advances from Stockholder 1,536 5,000
Advances from Officer 53,837 48,845
------- -------
Total Current Liabilities 140,598 183,142
Commitments And Contingencies - -
------- -------
Total Liabilities 140,598 183,142
Stockholders' Equity:
Common Stock, $.001 Par Value, 100,000,000
Shares Authorized, 62,794,734 and
42,275,734 Shares Issued And
Outstanding, Respectively 62,795 42,276
Preferred Stock, 7% Cumulative Convertible,
Par Value $.001, 20,000,000 Shares
Authorized, 83,300 Shares Issued
And Outstanding 83 83
Additional Paid-In Capital 9,612,134 9,270,566
Common Stock Subscribed (220,500) (225,000)
Common Stock Subscribed -
Unearned Compensation (279,000) (279,000)
Deficit Accumulated During
Development Stage (9,231,977) (8,807,668)
--------- ---------
Total Stockholders' Equity (56,465) 1,257
--------- ---------
Total Liabilities And
Stockholders' Equity $ 84,133 $ 184,399
--------- ---------
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TRIDON ENTERPRISES INCORPORATED
(A Company In The Development Stage)
Statements Of Operations
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Nine Nine
Inception Months Months
To Ended Ended
January 31, January 31, January 31,
1999 1999 1998
Revenue:
Net Sales $ 151,729 $ 0 $ 0
Cost of Sales 182,581 0 0
---------- --------- ---------
Gross Loss (30,852) 0 0
---------- --------- ---------
Operating Expenses:
General and Administrative 4,560,099 446,884 768,563
Research and Development 132,697 0 0
Computer Software Development Costs 630,066 0 0
Interest 869,166 0 0
---------- --------- ---------
Total Operating Expenses 6,192,028 446,884 768,563
---------- --------- ---------
Net Loss from Operations (6,222,880) (446,884) (768,563)
---------- --------- ---------
Other Income (Expense)
Consulting Fees Related to
Common Stock Issued (838,000) (28,000) 0
Officer's Salary Related to
Common Stock Issued (409,023) 0 0
Interest 94,099 0 8,333
Casualty Loss - Boat (3,000,000) 0 0
Gain on Settlement 411,495 0 0
Forgiveness of Interest 8,901 0 0
Forgiveness of Debt 123,994 0 0
Gain on Disposition of
Marketable Securities 2,720 51,375 3,677
Loss on Permanent Impairment
of Securities (1,120,050) 0 0
Miscellaneous 3,420 0 0
Bad Debt Expense (351,422) 0 0
---------- --------- ---------
Total Other Income (Loss) (5,073,866) 23,375 12,010
---------- --------- ---------
(Loss) from Continuing Operations
Before Income Tax Benefit (Expense) (11,296,746) (423,509) (756,553)
Income Tax Benefit (Expense) 81,805 (800) (800)
---------- --------- ---------
(Loss) from Continuing Operations (11,214,941) (424,309) (757,353)
Gain on Disposal of Segment 3,836,964 0 0
(Loss) on Discontinued Operations (1,854,000) 0 0
---------- --------- ---------
Net Income (Loss) $ (9,231,977) $ (424,309) $ (757,353)
---------- --------- ---------
Loss Per Share $ (.01) $ (.02)
---------- --------- ---------
Weighted Average Number of Shares Outstanding 49,490,934 32,967,734
---------- --------- ---------
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TRIDON ENTERPRISES INCORPORATED
(A Company In The Development Stage)
Statements Of Cash Flows
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Nine Nine
Inception Months Months
To Ended Ended
January 31, January 31, January 31,
1999 1999 1998
Cash Flows From Operating Activities:
Net Income (Loss) $(9,231,977) $ (424,309) $(757,353)
Adjustments to Reconcile Net (Loss)
to Net Cash Used by Operations:
(Loss) on Disposal of Segment (3,836,964) 0 0
Loss on Permanent Impairment
of Marketable Securities 1,120,050 0 0
(Gain) Loss on Sale of Marketable
Securities (7,467) (51,375) 0
Write-Down of Investment 25,000 0 0
Depreciation 8,682 2,212 1,200
Increase in Allowance for
Bad Debts 370,638 0 0
Professional Fees 66,885 54,000 0
Outside Services Paid by
Issuance of Common Stock 467,202 150,000 51,000
Officers' Salaries Related
to Common Stock Issued 949,023 0 540,000
Operating Expenses Paid
by Officer 110,699 11,694 74,148
Loan Fees Related to
Common Stock Issued 810,000 0 0
Write-Down of Screenplays 49,860 0 0
Loss on Fixed Asset Disposal 1,253 0 0
Research and Development 88,000 0 0
Interest Expense 349,745 0 0
Forgiveness of Interest (8,901) 0 0
Maritime Loss 3,462,825 0 0
Forgiveness of Debt (123,994) 0 0
(Increase) Decrease in:
Inventory (5,325) 0 (5,325)
Prepaid Expenses (26,000) (6,747) 0
Notes Receivable (3,000) 0 0
Interest Receivable (25,000) 0 (8,333)
Increase (Decrease) in:
Accounts Payable and Accrued
Expenses 332,602 83,583 64,827
Income Tax Payable 0 0 800
Preferred Stock Subscription 10,000 0 0
Estimated Future Cost of
Discontinued Operations 3,125 0 0
Accounts Payable -
Vintage Group, Inc. 45,574 0 0
---------- --------- ---------
Net Cash (Used) by Operating
Activities (4,997,465) (180,942) (31,503)
---------- --------- ---------
Cash Flows From Investing Activities:
Loans Made (340,757) 0 0
Investments in Marketable Equity Securities (238,550) 0 0
Proceeds from Sale of Securities 440,743 107,451 0
Sale of Common Stock 13,550 0 0
Investment in Screenplays (40,000) 0 0
Purchase of Furniture and Equipment (19,412) 0 0
Advances to Officers (91,627) 0 (12,606)
Investment in Production (1,925) 0 (22,353)
Repayment of Notes Receivable 6,000 0 0
---------- --------- ---------
Net Cash (Used) by Investing
Activities (271,978) 107,451 (34,959)
---------- --------- ---------
Cash Flows From Financing Activities:
Proceeds from Issuance of Common Stock 4,860,326 74,623 65,399
Proceeds from Issuance of Convertible
Preferred Stock 135,003 0 0
Increase in Paid-In Capital 99,866 0 0
Proceeds from Issuance of Convertible
Notes Payable 59,025 0 0
Advances from Officer 160,735 2,000 2,087
Repayments of Advances from Officer (42,184) (482) 0
---------- --------- ---------
Net Cash Provided By Financing
Activities 5,272,771 76,141 67,486
---------- --------- ---------
Net Increase (Decrease) in Cash 3,328 2,650 1,024
Cash at Beginning of Period 4 682 18,936
---------- --------- ---------
Cash at End of Period $ 3,332 $ 3,332 $ 19,960
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Tridon Enterprises Incorporated
(A Company in the Development Stage)
UNAUDITED
Notes to Consolidated Financial Statements
In the opinion of management, the accompanying unaudited financial statements
contain all the normal recurring adjustments necessary to present fairly the
financial position of the Company as of January 31, 1999, the results of its
operations for the three month periods ended January 31, 1999, and its cash
flows for the three month periods ended January 31,1999. Operating results
for the three month period ended January 31, 1999, are not necessarily
indicative of the results that may be expected for the year ended April 30,
1999.
1. Organization and Summary of Significant Accounting Policies:
Organization
Tridon Enterprises Incorporated (the Company) was incorporated in the state of
Colorado on October 7, 1983 as Turco Computer Systems, Inc. The Company
changed its name to Hammer Computer systems, Inc. on September 27, 1984. On
October 10, 1989 the shareholders voted to merge with Tridon Development
Company, HCSI being the surviving Corporation. The Articles of Incorporation
were amended to change the Company name, new directors were elected and the
Plan of Merger was approved by shareholders voting in person or by proxy. As a
result of the merger effective October 10, 1989 Hammer Computer Systems, Inc.
exchanged 600 shares of common stock in HCSI for each of the 30,000 shares of
outstanding common stock of Tridon Development Corporation. This increased the
outstanding shares of common stock in Tridon Enterprises Corporation from
17,270,433 to 35,270,433. Authorized shares of common stock remain at
100,000,000.
On October 10, 1989, Paul Ebeling was elected by the Board of Directors;
President, Chief Executive Officer & Chairman of the Board of the Corporation.
Kevin Welch was elected Secretary/Treasurer of the Corporation on February 23,
1996.
All of the assets of the Company have been presented at the lower of their cost
or estimated realizable value.
Common Shares and Earnings per Share
The computation of income per share is based on the weighted average number of
shares outstanding during each fiscal period. To calculate earnings per share,
a base of 62,794,734 shares was used for January 31, 1999 and a base of
42,275,734 was used for April 30, 1998.
2. Related Party Transactions
Vintage Group Inc., as a condition set forth in the Agreement and Plan of
Merger, canceled and forgave all debts and obligations owed Vintage by HCSI.
The Company advanced $5,000 to Vintage Group, Inc. during the quarter ending
October 31, 1994.
Beginning in September of 1991, CEO and Director, Paul Ebeling, began advancing
the Corporation funds to purchase equipment and pay for minimal office expenses
including rent for office space. In April 1995 Paul Ebeling converted $150,000
of his loan to the Company to Series A 7% cumulative convertible preferred
stock at the full offering price of $10.00 per share.
The son of Paul Ebeling, Nicholas Ebeling, purchased $2,500 of convertible
notes payable. He has converted his note into the Series A 7% cumulative
preferred stock.
The directors of the Company on September 21, 1998 authorized the conversion of
$10,845.00 of Paul Ebeling's outstanding loan to restricted (Rule 144) common
stock at par according to the terms of the loan agreement. At the same meeting
the directors authorized the conversion of the entire outstanding loan of The
Antebi Children's Insurance Trust of 1995, $3,464.00 at par according to the
terms of the loan agreement.
On December 9, 1998 the directors of the Company voted to convert $51,375.00 of
Mr. Paul Ebeling's outstanding $104,202.00 loan to the Company for 205,500
shares of North American Exploration Corporation at $.25/share. Mr. Ebeling
elected to convert that portion of his loan and took possession of 205,500
shares representing all of the shares held by the Company in North American
Exploration Corporation
3. Income Taxes
On April 30, 1987, HCSI and its subsidiary, Certified Software, had a net
operating loss carry forward, which may or may not be utilized for tax
purposes, for financial reporting purposes of approximately $4,024,000. Due to
timing differences in recording financial reporting and taxable income, HCSI
and Certified had net operating loss carry forwards available to reduce future
federal taxable income of approximately $3,914,000, expiring as follows:
Year of Expiration HCSI Certified Total
1999 625,000 293,000 918,000
2000 118,000 357,000 475,000
2001 1,241,000 160,000 1,401,000
2002 608,000 393,000 1,001,000
Subsequent to the merger of HCSI and Tridon. Development Corporation, the
Company accumulated a loss carry forward of approximately $524,000 for federal
income tax purposes an a $259,000 tax loss carry forward for California tax
purposes. Federal net operating losses (NOL's) are carried forward fifteen
years and expire between 2004 and 2009. State NOL's are carried forward for
five years and expire between 1997 and 2000. All loss carry forward amounts
are subject to review by tax authorities.
4. Notes Receivable
Madera International Negotiable Promissory Note declared in default on June 29,
1998 and collection proceeding have been initiated for $349,997.00, including
principal, interest, late charges and interest on late charges.
5. Furniture and Equipment
Furniture and equipment is recorded at purchase cost and depreciation is
calculated over 5 years using the straight line method. For the quarter ended
January 31, 1999 there were purchases of furniture and equipment by the
Corporation.
Item 2. Management's Discussion and Analysis.
The Board Of Directors on February 10, 1992, authorized the issuance of
convertible promissory notes to develop a suitable reliable marketable product,
and for operating capital. Notes totaling $48,000 in principle have been
issued as of December 31, 1994. Interest accrued on these notes on a monthly
basis. At January 31 1996, all notes were converted to preferred stock.
The Company is developing a process for manufacturing a hair prosthesis,
Vertex(R) and if applicable will apply for patents of its own.
The Company announced on September 21, 1993, the appointment of Harold A.
Lancer, M.D. as Medical Director. Dr. Lancer is the attending staff
dermatologist at Cedars-Sinai Medical Center in Los Angeles, the Assistant
Clinical Professor of Dermatology at U.C.L.A. Medical Center, Los Angeles, and
a fellow of the American Academy of Dermatology. A native of Montreal, Quebec,
Canada, he was educated at Brandies University, University of California at San
Diego Medical School, Harvard University Medical School, Tel Hashomen Hospital,
Israel and St. Johns Hospital for Diseases of the Skin, London, England. Dr.
Lancer has international experience in the specialities of dermatology and
cosmetic surgery. Dr. Lancer presented a paper on the Vertex to the Pacific
Dermatological Society In Monterey, California on September 10, 1994. Dr.
Lancer heads the medical and scientific team developing the Vertex and its
attendant products.
The Company contracted with California Cybernetics Corporation for the
implementation of its design, engineering, manufacturing and software
applications for its computer aided flexible manufacturing process. All
patentable aspects, including software and programming, of California
Cybernetics' work for the Company's Vertex products are the sole property of
Tridon Enterprises Incorporated. As of July 31, 1995 the Company has deposited
$98,000 with California Cybernetics Corporation for research and development.
Vertex has no base as used in normal hairpieces, but the hair appears to be
growing directly from the scalp and there is no feeling of an object on one's
head. Vertex has 100% adhesion and can remain on for approximately one month
with no special maintenance, after which it is replaced by a new one. Through
Vertex's unique locking system, human hair fibers are attached directly to
transparent and breathable synthetic skin. The material is transparent.
Substrate is also moisture vapor permeable, which means the moisture, gases and
heat (including perspiration) can exit while a one-way screen prevents bacteria
from entering. It also may reduce the effect of the sun's damaging ultraviolet
rays. Using advancements in computer robotics, the Vertex(R) can be made
consistently and less expensively than competitive products. With programmed
information about a person's skin, natural hair, age and body chemistry,
robotics manufacturing will allow an individual to obtain the Vertex(R) on
short notice, from anywhere in the world.
Management believes that it can successfully develop the non surgical Vertex
hair replacement system. The company began an 18 month comprehensive testing
program in February 1997.
On January 20, 1994, the stockholders of the Company in a special meeting
approved the issuance of 7% cumulative convertible preferred stock. On June 7,
1994, the Company issued a private placement memorandum for the offering.
Through July 31, 1995 the Company has received $188,000 for the purchase of
the preferred stock including $48,000 notes converted into preferred stock.
The proceeds of this offering was used to further develop the manufacturing
process for Vertex(R). As of January 31, 1996 the Company raised $188,000 from
this offering. The offering is closed.
In the quarter ended July 31,1994 the Company expended $31,081 on research and
development. These expenditures were used to complete the development of the
process of attaching the Vertex(R) to the scalp and documentation. This work
was done by Dr. Lancer. Total research and development costs are estimated to
be approximately $60,000 and was for the most part completed in December 1996.
An eighteen Month testing program began in February 1997 and has been completed
successfully.
On September 20, 1994, the Company engaged Robert Miles Runyan and Associates,
Marina Del Rey, CA. Runyan & Associates specializes in the field of strategic
planning and point of sale advertising, providing the Company advise and
planning on all media matters for the development and marketing of Tridon's
Vertex(R) products. This work is completed.
There have been no material changes in the operations. Tridon Enterprises
Incorporated does not have operating activity and therefore has no revenue.
For the Company to continue as a going concern it will seek an acquisition or
merger partner, place its Vertex(R) technology in a wholly-owned subsidiary and
raise the additional capital to successfully market Vertex(R).
Subsequent Events
Company management has been exploring opportunities to act as a facilities
based provider of voice and data long distance services between North America,
Asia and other territories. Management elected to form Tridon Communications
Corporation, a Nevada corporation, and signed a definitive agreement to become
a resale common carrier under the Communications Act of 1934 as amended by the
Telecommunications Act of 1996 which provides for certain specified
international termination services to be provided to five prominent domestic
carriers. The business will begin immediately. The agreement provides for a
minimum of $150,000,000 in annual gross revenue to Tridon Communications.
Concurrently with the formation of the subsidiary the Company applied to the
FCC for the relevant license.
With regard to management's plan to reorganize, change it's name to SLC
Corporation and acquire the assets of Satellite Link Communications, Inc., the
Company has determined that it was in the best interest of its shareholders to
allow the agreement to expire after a one week extension to Satellite Link
Communications management to supply due diligence material not timely
delivered. Tridon management is continuing talks with Satellite Link
Communications management to acquire its assets but under more favorable terms
to the Company. Further, several opportunities in the telecommunications
industry are being explored by the Company that offer attractive profit ratios.
Except for the historical information contained herein, certain matters
discussed are forward looking statements as defined in Section 21E of the
Securities Exchange Act of 1934, as amended.
On March 23, 1999 the Company obtained an injunction preventing the transfer
and sale of Vanity A.V.V. (Aruba) Investment Bankers' 1,000,000 share
certificate and is proceeding to cancel the certificate and return the shares
to the Company treasury.
PART II-OTHER INFORMATION
Items 1 through 3. No response required.
Item 4. Submission of Matters to a Vote of Security Holders.
On October 10, 1989, a special meeting of the shareholders of Hammer Computer
Systems, Inc. (HCSI), a Colorado Corporation incorporated in 1983, was held to
approve the Agreement and Plan of Merger, signed on February, 1989, to merge
HCSI with Tridon Development Corporation, a Missouri Corporation organized in
1988. In connection with the proposed merger, all the then existing officers
and directors of HCSI tendered their resignations. The shareholders, voting in
person or by proxy, (a) approved the merger of Tridon Development Corporation
into Hammer computer Systems, Inc. (b) elected three new Directors, Paul
Ebeling, Harold Antoine, and Frances Schmoker, to the Board of Directors, and
(c)approved an amendment to the articles of incorporation to change the name of
the Company from Hammer Computer Systems, Inc. to Tridon Corporation.
On January 20, 1994, the stockholders of the Company in a special meeting
approved a $1,000,000 offering of 7% cumulative convertible preferred stock.
On June 7, 1994, the Company issued a private placement memorandum for the
offering. To January 31, 1996, the Company has received $140,000 for the sale
of preferred stock and an additional $48,000 of notes payable have been
converted into preferred stock. Paul Ebeling, Company CEO, has converted
$150,000 of his loan to the company to 15,000 shares of convertible preferred
stock at $10.00 per share, the offering price.
On February 22, 1996, the stockholders of the Company approved an amendment to
the Company's Articles of Incorporation: that the officers and directors of the
Company liability be limited to the full extent as provided for in Colorado
Corporations Code, Section 7, Article 9, as amended. The stockholders voted to
amend the Articles of Incorporation to change the name of the Corporation to
Tridon Enterprises Incorporated and to split the shares of the company one for
ten. The stockholders voted to form a wholly-owned subsidiary for the
continuing development of Vertex(R). Vertex Corporation, a Nevada corporation,
was incorporated on February 25, 1997 as a subsidiary. On March 9, 1999 the
Company incorporated Tridon Communications Corporation, a Nevada corporation,
as a subsidiary.
Item 5. Exhibits and Reports of Form 8-K.
Form 8-K dated October 17, 1989, Items 1,5, and 6 to report merger.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRIDON ENTERPRISES INCORPORATED
Registrant
Date: March 24, 1999 /s/ Paul Ebeling
Paul Ebeling, CEO and Director
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