<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ............. to ..............
Commission File Number 000-27223
CETEK TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 84-0925366
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
19 Commerce Street
Poughkeepsie, NY 12603
(Address and telephone number, including area code, of
registrant's principal executive office)
(914) 452-3510
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
At March 31, 2000, there were 47,538,842 shares of Common Stock, no par
value, outstanding.
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PURCHASE POINT MEDIA CORPORATION
INDEX
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Page
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Part I. Financial Information 1
Item 1. Financial Statements
Balance Sheets as of March 31, 2000
(unaudited) and December 31, 1999 2
Statements of Operations and for the
Three Months Ended March 31, 2000
and 1999 (unaudited) 3
Statements of Cash Flows for the Three
Months Ended March 31, 2000 and
1999 (unaudited) 4 - 5
Notes to Financial Statements (unaudited) 6 - 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
or Plan of Operations 8 - 9
Part II. Other Information
Item 1. Legal Proceedings 10
Item 6. Exhibits and Report on Form 8-K 10
Signatures 11
<PAGE>
PART I. Financial Information
Item 1. Financial Statements
Certain information and footnote disclosures required under
generally accepted accounting principles have been condensed or omitted from the
following financial statements pursuant to the rules and regulations of the
Securities and Exchange Commission. It is suggested that the following
consolidated financial statements be read in conjunction with the year-end
financial statements and notes thereto included in the Company's Report on Form
10-SB dated September 2, 1999.
The results of operations for the three months ended March 31,
2000, are not necessarily indicative of the results to be expected for the
entire fiscal year or for any other period.
1
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CETEK TECHNOLOGIES, INC. AND SUBSIDIARY
BALANCE SHEETS
ASSETS
------
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- -------------
(Unaudited)
<S> <C> <C>
Current Assets:
Cash $ 218,313 $ 377,673
Accounts receivable 49,736 30,693
Inventory 35,514 32,296
Prepaid expenses - 102,236
---------- ----------
Total Current Assets 303,563 542,898
Property and equipment - net 463,110 474,200
Other assets 3,936 4,575
---------- ----------
TOTAL ASSETS $ 770,609 $1,021,673
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIENCY)
Current Liabilities:
Short-term debt $ 80,000 $ 138,000
Current portion of long-term debt 73,297 69,284
Current maturities of capitalized
lease obligations 149,123 145,804
Accounts payable 54,707 46,975
Accrued expenses 226,831 222,696
---------- ----------
Total Current Liabilities 583,958 622,759
Long term capital lease obligations 32,029 36,680
Long-term debt 49,322 59,066
Note payable to officer 237,801 237,801
---------- ----------
Total Liabilities 903,110 956,306
---------- ----------
Stockholders' Deficiency:
Preferred stock; par value $.001
per share - authorized 1,000,000
shares; none issued - -
Common stock, par value $.001 per
share - authorized, 50,000,000
shares; outstanding 47,538,842
and 46,977,516 shares 47,539 46,978
Paid in capital 2,014,721 2,021,515
(Deficit) (2,194,761) (2,003,126)
---------- ----------
Total Stockholders' Equity
(Deficiency) (132,501) 65,367
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
(DEFICIENCY) $ 770,609 $1,021,673
========== ==========
</TABLE>
2
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CETEK TECHNOLOGIES, INC AND SUBSIDIARY
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------------
2000 1999
---------- ----------
(Unaudited)
<S> <C> <C>
Sales-net $ 71,279 $ 66,263
---------- ----------
Costs and Expenses:
Cost of sales 129,165 127,272
Selling, general and
administrative expenses 56,584 53,432
Research and development 41,747 1,522
Interest expense 38,433 135,842
Dividend income 3,015 -
---------- ----------
262,914 318,068
---------- ----------
Net loss $ 191,635 $ 251,805
========== ==========
(Loss) per common share -
basic and diluted $ - $ .01
========== ==========
Weighted average number of
common shares outstanding -
basic and diluted 47,486,554 30,621,527
========== ==========
</TABLE>
3
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CETEK TECHNOLOGIES, INC. AND SUBSIDIARY
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
2000 1999
-------- --------
(Unaudited)
Cash flows from operating activities:
<S> <C> <C>
Net (loss) $ (191,635) $ (251,805)
Adjustments to reconcile
net (loss) to net cash
provided by operating
activities:
Depreciation 31,789 22,000
Non cash rent expense 12,500 12,500
Non cash compensation 12,500 12,500
Non cash interest expense 10,767 116,000
Issuance of stock for services
Loss on sale of marketable
securities
Changes in operating assets 8,481 (20,298)
-------- --------
Net Cash (Used in )
Operating Activities (115,598) (109,103)
-------- --------
Cash flows from investing activities:
Purchase of equipment (20,699) -
-------- --------
Cash flows from financing activities:
Proceeds from sale of
common stock - 170,423
Proceeds from sale of convertible
debentures - 600,000
Repayment of borrowings (23,063) (13,278)
-------- --------
Net Cash Provided by
Financing Activities (23,063) 757,145
-------- --------
</TABLE>
4
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CETEK TECHNOLOGIES, INC. AND SUBSIDIARY
STATEMENT OF CASH FLOWS (continued)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
Net increase (decrease)
in Cash (159,360) 648,042
Cash - beginning of period 377,673 17,350
--------- --------
Cash - end of period $ 218,313 $665,392
========= ========
Changes in operating assets and liabilities consist of:
(Increase) decrease in accounts
receivable (19,043) 30,352
(Increase) decrease in inventory (3,218) 4,759
(Increase) decrease in prepaid
expenses 18,236 (45,935)
Decrease in other assets 639 639
Increase (decrease) in accounts
payable 7,732 (19,868)
Increase in accrued expenses 4,135 9,755
--------- --------
$ 8,481 $(20,298)
========= ========
Supplementary Information:
Cash paid during the year for:
Interest $ 3,682 $
========= ========
Income taxes $ 680 $ 600
========= ========
Non-cash financing activities:
Conversion of debt to common
stock $ 42,000 $200,000
========= ========
Fair value of rent contributed
by officer $ 12,500 $ 12,500
========= ========
Issuance of warrants in
connection with loan financing $ - $ 7,422
========= ========
Forgiveness of officers salary $ 12,500 $ 12,500
========= ========
</TABLE>
5
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CETEK TECHNOLOGIES, INC AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated balance sheet as of March 31, 2000, and the
consolidated statements of operations and comprehensive income and cash flows
for the periods presented herein have been prepared by the Company and are
unaudited. In the opinion of management, all adjustments (consisting solely of
normal recurring adjustments) necessary to present fairly the financial
position, results of operations and comprehensive income and cash flows for all
periods presented have been made. The information for December 31, 1999 was
derived from audited financial statements.
2. Nature of Business and Liquidity
The Company's financial statements for the three months ended March
31, 2000 have been prepared on a going concern basis which contemplates the
realization of assets and the settlement of liabilities and commitments in the
normal course of business.
The Company was in default at March 31, 2000 on its loan agreements
and its capitalization lease obligations. Additionally, the Company has incurred
net losses of $191,635 for the three months ended March 31, 2000 and $854,000
for the year ended December 31, 1999. The Company has a stockholders' deficiency
of $132,500 and a working capital deficiency of $280,000 as of March 31, 2000.
Management recognizes that the Company's continued existence is dependant upon
its ability to obtain needed working capital through additional equity and/or
debt financing and increase its sales sufficiently to cover its costs and
expenses. In an effort to increase its sales and profitability, management is
aggressively seeking new business. Management's plans include possible strategic
alliances and mergers or acquisitions with other companies that may be
compatible with the Company.
However, there is no assurance that additional capital will be
obtained or mergers and acquisitions will take place. These uncertainties raise
substantial doubt about the ability of the Company to continue as a going
concern.
The financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts or the amounts
and classifications of liabilities that might be necessary should the Company be
unable to continue as a going concern.
3. Earnings Per Share
Basic earnings per common share are computed using the weighted average
number of common shares outstanding during the period. Diluted earnings per
common share are computed using the weighted average number of common shares and
potential common shares outstanding during the period.
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4. Sale of common stock and common stock warrants
In March 1999, the Company completed a private placement of its
securities by issuing 2% Series A Senior Subordinated Convertible Debentures in
the amount of $600,000. As of March 31, 2000 all the debentures were converted
to common stock. The Company issued 16,678,745 shares of common stock with a
conversion price for the debentures at 75% of the closing bid price upon
conversion. The Company recorded $200,000 of additional interest to reflect the
conversion of the debentures below fair market value of the Company's common
stock at the date of the conversion of which $14,000 and $116,000 is included in
the statement of operations for the three months ended March 31, 2000 and 1999,
respectively.
-7-
<PAGE>
Item 2. Management's Discussion and Analysis of Plans of Operations
The Company's quarterly and annual operating results are affected by a
wide variety of factors that could materially and adversely affect revenues
and profitability, (a) the risk that it may be unable to respond adequately
to rapidly changing technological developments in its industry, (b) the
highly competitive nature of the Company's industry and the impact that
competitors' new products and pricing may have upon the Company, (c) the
likelihood that revenues may vary significantly from one accounting period
to another accounting period due to a variety of factors, including
customers' buying decisions, the Company's product mix and general market
and economic conditions, (d) the Company's reliance on certain substantial
customers, and (e) risks associated with the Company's ability to
manufacture and deliver products in a manner that is responsive to its
customers' needs. As a result of these and other factors, the Company may
experience material fluctuations in future operating results on a quarterly
or annual basis, which could materially and adversely affect its business,
financial condition, operating results, and stock prices. Furthermore, this
document and other documents filed by the Company with the Securities and
Exchange Commission (the "SEC") contain certain forward-looking statements
under the Private Securities Litigation Reform Act of 1995 with respect to
the business of the Company. These forward-looking statements are subject to
certain risks and uncertainties, including those mentioned above, and those
detailed in Item 1 of the Company's Form 10-SB dated September 2, 1999,
which could cause actual results to differ materially from these
forward-looking statements. The Company undertakes no obligation to publicly
release the results of any revisions to these forward-looking statements
which may be necessary to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events. An investment
in the Company involves various risks, including those mentioned above and
those which are detailed from time to time in the Company's SEC filings.
-8-
<PAGE>
Three Months ended March 31, 2000 vs.
Three Months ended March 31, 1999
Net Sales
Net sales increased from $66,263 during the first three months of
1999 to $71,279 during the first three months of 2000. The Company considers the
increase to be immaterial.
Cost of Sales
Cost of sales increased from $127,272 during the first three months
of 1999 to $129,165 during the first three months of 2000. The Company considers
the increase to be immaterial.
General and Administrative Expenses
General and administrative expenses increased from $53,432 during the first
three months of 1999 to $56,544 during the first three months of 2000. The
Company considers the increase to be immaterial.
Interest Expense
Interest expense decreased from $135,842 for the three months ended March 31,
1999 to $38,433 for the three months ended March 31, 2000. The Company
attributes the decrease primarily to the valuation of common stock warrants in
connection with the sale of the Company's common stock during the three months
ended March 31, 1999.
Research and Development
Research and Development increased from $1,522 for the three months ended March
31, 1999 to $41,747 for the three months ended March 31, 2000. The Company
attributes the increase primarily to increase in research for a new product
line.
Liquidity
The Company had a negative working capital of approximately $280,000 as of March
31, 2000 compared to a negative working capital of approximately $(80,000) as of
March 31, 1999. The increase is primarily attributable to the continued losses.
The Company however does not have sufficient working capital to sustain its
current levels of operations nor to commence operations in the ceramic industry.
During 2000 and 1999 the Company has been unable to pay its indebtedness on a
timely basis. It has defaulted on several obligations including a loan from
Dutchess County Economic Development Corp. and amounts due on equipment leases.
In addition it has been unable to pay its lease payments for its facility or pay
its chief executive officer salary an aggregate amount of $25,000 for the months
ended March 31, 2000 and 1999, respectively. These payments have been waived and
the amount thereof has been added to capital as a capital contribution.
In March 1999, the Company completed a private placement of its securities by
issuing 2% Series A Senior Subordinated Convertible Debentures. Through such
placement, the Company raised $600,000.
Prior to May 2000, the Company has not introduced its process or has it
manufactured product on a commercial basis. It has produced samples of its
product, had such sample tested by independent laboratories at the Company's
expenses has provided samples to potential customers and has acquired and
converted equipment for use for its process. The Company has estimated it needs
additional funds to commence commercial operations in order, among other things
to purchase additional equipment estimated to cost approximately $450,000. It
has received small orders for the commercial orders but these orders are for
teaching of the products.
-9-
<PAGE>
PART II. Other Information
Item 1. Legal Proceedings
Management of the Company is not aware of any legal
proceedings, threatened legal proceedings to which the
Company is a party or to which the property of the Company
is subject as a defendant.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27.1 Financial Data Schedule
(b) There were no Current Reports on Form 8-K filed by the
registrant during the quarter ended March 31, 2000.
-10-
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: August 21, 2000
CETEK TECHNOLOGIES, INC
By: /s/ Fayiz Hilal
--------------------------------------
Fayiz Hilal
President and Chief Executive Officer
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