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 October 31, 2000
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)
11601 Wilshire Blvd., Ste. 2040
Los Angeles, CA 90025
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:
(310) 726-3559
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 October 31, 2000, there
were 79,794,734 shares outstanding of the Registrant's common stock, $.001 par
value.
<PAGE>
TRIDON ENTERPRISES INCORPORATED
10-Q
INDEX
Part I. Financial Information
Item 1. Financial Statements (unaudited)
Balance Sheets......................................... 3
Statement of Operations ............................... 4
Statements of Cash Flows .............................. 5-6
Notes to Consolidated Financial Statements ............ 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operation............................................... 10
Part II. Other Information
Item 4. Results of Votes of Security Holders ................... 11
Item 6. Exhibits and Reports on Form 8-K ....................... 12
Signatures ......................................................... 12
2
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Part I. Financial Information
Item 1. Financial Statements
<TABLE>
<CAPTION>
TRIDON ENTERPRISES INCORPORATED
(A Company In The Development Stage)
Balance Sheets
October 31, 2000 and April 30, 2000
Assets
October 31, 2000 April 30, 2000
---------------- --------------
(Unaudited) (Audited)
<S> <C> <C>
Current Assets:
Cash $ 460 $ 1,250
Notes Receivable and Interest Receivable 277,310 277,310
Less Allowance for Bad Debt (277,310) (277,310)
Loans Receivable and Related Interest 37,567 37,567
------------ ----------
Total Current Assets 38,027 38,817
Furniture and Equipment - at Cost 25,462 25,462
Accumulated Depreciation (13,403) (12,180)
------------ ----------
Net Furniture and Equipment 12,059 13,282
------------ ----------
Total Assets $ 50,086 $ 52,099
============ ==========
Liabilities And Stockholders' Equity (Deficit)
Current Liabilities:
Accounts Payable and Accrued Expenses $ 260,038 $ 232,671
Advances from Stockholder 119,613 119,613
Advances from Officers 16,600 13,600
Advances from Vertex Marketing 39,400 39,400
------------ ----------
Total Current Liabilities 435,651 405,284
Commitments And Contingencies - -
------------ ----------
Total Liabilities 435,651 405,284
------------ ----------
Stockholders' Equity (Deficit):
Common Stock, $.001 Par Value, 100,000,000
Shares Authorized, 79,794,734 and 79,594,734
Shares Issued And Outstanding Respectively 79,795 79,595
Preferred Stock, 7% Cumulative Convertible,
Par Value $.001, 20,000,000 Shares Authorized,
53,300 Shares Issued And Outstanding 53 53
Additional Paid-In Capital 12,568,585 12,563,784
Deficit Accumulated During Development Stage (13,033,998) (12,996,617)
------------ ----------
Total Stockholders' Equity (Deficit) (385,565) (353,185)
------------ ----------
Total Liabilities And Stockholders'
Equity (Deficit) $ 50,086 $ 52,099
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
TRIDON ENTERPRISES INCORPORATED
(A Company In The Development Stage)
Statements Of Operations
(Unaudited)
Inception To Six Months Ended Six Months Ended
October 31, 2000 October 31, 2000 October 31, 1999
---------------- ---------------- -----------------
<S> <C> <C> <C>
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 6,215,748 31,581 808,329
Consulting Fees 752,250 0 0
Research and Development 132,697 0 0
Computer Software Development Costs 630,066 0 0
Interest 874,175 5,000 9
---------------- ---------------- -----------------
Total Operating Expenses 8,604,936 36,581 808,338
---------------- ---------------- -----------------
Net Loss from Operations (8,635,788) (36,581) (808,338)
---------------- ---------------- -----------------
Other Income (Expense)
Consulting Fees Related to Common Stock Issued (1,049,016) 0 0
Officer's Salary Related to Common Stock Issued (1,157,328) 0 0
Interest 94,099 0 0
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
Realized Gain on Disposition of Marketable Securities 2,720 0 0
Loss on Permanent Impairment of Securities (1,120,050) 0 0
Miscellaneous 7,516 0 0
Bad Debt Expense (353,732) 0 0
Litigation Settlement (429,978) 0 (139,500)
---------------- ---------------- -----------------
Total Other Loss (6,461,379) 0 (139,500)
---------------- ---------------- -----------------
Loss from Continuing Operations Before Income Tax
Benefit (Expense) (15,097,167) (36,581) (947,838)
Income Tax Benefit (Expense ) 80,205 (800) (800)
---------------- ---------------- -----------------
Loss from Continuing Operations (15,016,962) (37,381) (948,638)
Gain on Disposal of Segment 3,836,964 0 0
Loss on Discontinued Operations (1,854,000) 0 0
---------------- ---------------- -----------------
Net Loss $(13,033,998) $ (37,381) $ (948,638)
================ ================ =================
Loss Per Share $ (.00) $ (.01)
================ =================
Weighted Average Number of Shares Outstanding 79,709,020 66,951,877
================ =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
TRIDON ENTERPRISES INCORPORATED
(A Company In The Development Stage)
Statements Of Cash Flows
(Unaudited)
Inception To Six Months Ended Six Months Ended
October 31, 2000 October 31, 2000 October 31, 1999
---------------- ---------------- -----------------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net Loss $ (13,033,998) $ (37,381) $ (948,638)
Adjustments to Reconcile Net Loss to Net
Cash Provided (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 on Sale of Marketable Securities (7,467) 0 0
Write-Down of Investment 25,000 0 0
Depreciation 13,570 1,224 1,463
Increase in Allowance for Bad Debts 372,948 0 0
Professional Fees 12,885 0 0
Outside Services Paid by Issuance of Common Stock 1,580,923 0 30,000
Officers' Salaries Related to Common Stock Issued 1,697,328 0 0
Operating Expenses Paid by Officer 110,699 0 0
Loan Fees Related to Common Stock Issued 1,049,016 0 0
Write-Down of Screenplays 49,800 0 0
Loss on Fixed Asset Disposal 1,253 0 0
Research and Development 88,000 0 0
Interest Expense 354,745 5,000 0
Reclassification of Common Stock Subscribed 225,000 0 0
Forgiveness of Interest (8,901) 0 0
Maritime Loss 3,462,825 0 0
Forgiveness of Debt (123,994) 0 0
Stock Issued in Litigation Settlement 429,978 0 139,500
(Increase) Decrease in:
Prepaid Expenses 759,940 0 752,250
Notes Receivable (5,567) 0 0
Interest Receivable (25,000) 0 0
Increase (Decrease) in:
Accounts Payable and Accrued Expenses 424,127 30,367 24,847
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 (5,205,105) (790) (578)
--------------- ----------- ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
TRIDON ENTERPRISES INCORPORATED
(A Company In The Development Stage)
Statements Of Cash Flows
(Continued)
Inception To Six Months Ended Six Months Ended
October 31, 2000 October 31, 2000 October 31, 1999
---------------- ---------------- ----------------
<S> <C> <C> <C>
Cash Flows From Investing Activities:
Loans Made (375,757) 0 (35,000)
Investments in Marketable Equity Securities (238,550) 0 0
Proceeds from Sale of Securities 440,743 0 0
Sale of Common Stock 13,550 0 0
Investment in Screenplays (40,000) 0 0
Purchase of Furniture and Equipment (26,881) 0 0
Advances to Officers (91,627) 0 0
Investment in Production (1,925) 0 0
Repayments of Notes Receivable 6,000 0 0
---------------- ---------------- ----------------
Net Cash Used by Investing Activities (314,447) 0 (35,000)
---------------- ---------------- ----------------
Cash Flows From Financing Activities:
Proceeds from Issuance of Common Stock 4,906,325 0 35,000
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 325,174 0 1,000
Repayments of Advances from Officer (44,785) 0 0
Advances from Vertex Marketing 39,400 0 0
---------------- ---------------- ----------------
Net Cash Provided By Financing Activities 5,520,008 0 36,000
---------------- ---------------- ----------------
Net Increase (Decrease) in Cash 456 (790) 422
Cash at Beginning of Period 4 1,250 1,031
---------------- ---------------- ----------------
Cash at End of Period $ 460 $ 460 $ 1,453
================ =============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
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 October 31, 2000, the results of its
operations for the three month periods ended October 31, 2000, and its cash
flows for the three month periods ended October 31,2000. Operating results for
the three month period ended October 31, 2000, are not necessarily indicative of
the results that may be expected for the year ended April 30, 2001.
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
All of the assets of the Company have been presented at their cost or estimated
fair 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 79,644,734 shares was used for October 31, 2000.
7
<PAGE>
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
On April 21, 1999, Mr. Paul Ebeling, the Chief Executive Officer and Chairman of
the Board of Directors of the Company tendered his resignation from all
positions with the Company. The resignations were accepted by the remaining
Board of Directors when tendered and the resignations became effective
immediately. Kevin Welch was nominated as interim Chief Executive Officer and
Chairman of the Board pending the election of directors at the next annual
meeting of shareholders. The resignation of Mr. Ebeling stems from personal
matters involving Mr. Ebeling that are unrelated to the Company. However, in
light of the nature of the personal issues confronting Mr. Ebeling, the
remaining Board of Directors believed it to be in the best interests of the
Company that Mr. Ebeling forthwith resign. As of April 21, 1999, Mr. Ebeling
will have no further involvement with the Company.
On June 23, 1999, Mr. Ebeling entered into a definitive written agreement with
an unrelated third party to sell all right, title and interest in and to the
Series A Preferred Stock and Shares of Common Stock of the Company. The sale and
purchase agreement will close on July 1, 1999 at which time Mr. Ebeling will own
no further shares of stock in the Company. On March 15, 2000, Nick Wieder, a
director of the Company, was issued one million shares of common stock of the
Company as director's fees for the fiscal years ending April 30, 1999 and April
30, 2000.
8
<PAGE>
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.
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 $2,877,000, expiring as follows:
Year of Expiration HCSI Certified Total
------------------ ---- --------- -----
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 proceedings are contemplated 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
October 31, 2000 there were no purchases of furniture and equipment by the
Corporation.
9
<PAGE>
Item 2. Management's Discussion and Analysis.
On August 2, 1999, Tridon Enterprises, Inc. (the "Company") entered into an
agreement of reorganization with Satellite Link Communications, Inc., a
California Corporation. On May 30, 2000, prior to the effective date of the
agreement, management of Satellite Link Communications, Inc. requested a release
from the agreement due internal management disputes interfering with the
Satellite Link Communications' ability to execute its business plan. On June 1,
2000, the Board of Directors of Tridon Enterprises, Inc. accepted Satellite Link
Communications, Inc. request and granted a release from the agreement of
reorganization dated August 2, 1999.
On June 6, 2000, Tridon Enterprises, Inc. (the "Company") entered into an
agreement of reorganization with BzAds, Inc. ("BzAds"), a Delaware Corporation.
To accomplish the acquisition, the Company intends to issue shares of its voting
common stock to the shareholders of BzAds in exchange of all of the issued and
outstanding shares of common stock of BzAds. BzAds shall receive that number of
shares of common stock of the Company following the merger that will result in
BzAds owning ninety five percent (95%) of the issued and outstanding shares of
the Company following the acquisition.
As of the date of this filing, the authorized capitalization of the Company
consists of 100,000,000 shares of Common Stock, with a par value of $.001 per
share and there are 79,644,734 shares issued and outstanding. The Company also
has 20,000,000 shares of Convertible Preferred Stock, with a par value of $.001
per share, of which 53,300 shares are issued and outstanding as of this date of
this filing.
The Reorganization Agreement requires that the Company cause a 1 for 40
reverse stock split to occur prior to the Closing and that the Shareholders
approve the same at the next annual meeting . To that end, the company is
presently preparing a proxy statement for delivery to shareholders of record
following receipt of approval of the same from the Commission. Following the
acquisition, the Company shall have approximately forty million shares of common
stock outstanding of which approximately two million shall be owned by
shareholders of record as of the date of the receipt of shareholder approval of
the proposed acquisition.
Following the completion of the acquisition, BzAds shall become a
wholly-owned subsidiary the Company and BzAds shall continue to operate as a
separate legal entity. BzAds shall take such steps, in cooperation with the
Company, as may be reasonably required to effectuate the acquisition, including
the filing of all required documents. Following the consummation of the
acquisition, the Officers and the Directors of the Company shall be
reconstituted and those individuals not remaining shall resign and shall tender
their written resignations to the Company. Following the receipt of shareholder
approval of the acquisition, the shareholders of the Company shall elect a new
board of directors. This is scheduled for the next shareholder meeting and shall
be included in the proxy materials the Company will file shortly with the
Commission.
10
<PAGE>
The proposed acquisition is subject to certain condition precedents and the
completion of certain items of due diligence as between the Company and BzAds.
To accomplish, the Company and BzAds will permit their authorized
representatives to have full access to the premises and books, files and records
of each other at any reasonable time and in any reasonable manner, and will
furnish each other at such time such financial and operating data and other
information with respect to its business and properties as each shall reasonably
request so that the due diligence and pre-acquisition contingencies can be
completed.
The Company anticipates the completion of the proxy materials with BzAds to
be completed and filed with the commission on or before December 15, 2000.
However, both the Company and BzAds have agreed that this date may be extended
by mutual consent of parties.
LIQUIDITY AND CAPITAL RESOURCES
The Company's auditors has expressed uncertainty to continue as a going
concern. The Company and its subsidiaries, have suffered substantial losses
since inception. In order to continue as a going concern, the Company is
dependent upon management's ability to raise capital from various sources,
including loans from shareholders, advances from officers and the development of
an ongoing source of revenue.
In efforts to develop an ongoing source of revenue, the Company executed a
reorganization agreement with BzAds on June 6, 2000. Should the reorganization
with BzAds.com, Inc. fail to finalize, the Company's future is uncertain as to
the ability to meet the financial commitments required to maintain current SEC
filings and to meet working capital requirements.
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.
11
<PAGE>
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.
As of the date of this report, the Company has not submitted a proxy to the
Securities and Exchange Commission regarding the reorganization with BzAds.com
and other matters that require shareholder approval. It is anticipated that the
submission of a proxy to the Securities and Exchange Commission will occur on or
before December 15, 2000.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
None for the quarter ending October 31, 2000
12
<PAGE>
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: December 13, 2000 /s/ Kevin Welch
--------------------------------
Kevin Welch, CEO and Director
13
