UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2000
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( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File number 33-20344-LA
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THIN FILM BATTERY, INC.
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(Exact name of registrant as specified in charter)
Colorado 84-1077242
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14251 Chambers Road , Tustin, CA 92780
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(Address of principal executive offices) (Zip Code)
714-730-7900
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Registrant's telephone number, including area code
O. T. S. HOLDINGS, INC.
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(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), Yes [x ] No [ ] and (2) has been subject to such
filing requirements for the past 90 days. Yes [x ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date
Class Outstanding as of September 30, 2000
--------------------- ---------------------------------------
Common Stock, $0.001 51,851,384
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INDEX
Page
Number
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PART I.
ITEM 1. Financial Statements (unaudited).................................................3
Consolidated Balance Sheets......................................................4
September 30, 2000 and December 31, 1999
Consolidated Statements of Operations
For the three and nine months ended September
30, 2000 and 1999 5 and the period from
November 17, 1998 to September 30, 2000
Consolidated Statements of Cash Flows
For the nine months ended September 30, 2000 and 1999........................6
and the period from November 17, 1998 to Sepember 30, 2000
Notes to Financial Statements....................................................7
ITEM 2. Plan of Operations..............................................................10
PART II
.
Signatures......................................................................10
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PART I - FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
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The accompanying consolidated balance sheets of Thin Film Battery, Inc.and
subsidiary ( development stage company) at September 30, 2000 and December 31
1999, and the consolidated statements of operations for the three and nine
months ended September 30, 2000 and 1999 and the period from November 17, 1998
to September 30, 2000, the consolidated statement of cash flows for the nine
months ended September 30, 2000 and 1999, and the period from November 17, 1998
to September 30, 2000, have been prepared by the Company's management and they
do not include all information and notes to the financial statements necessary
for a complete presentation of the financial position, results of operations,
cash flows, and stockholders' equity in conformity with generally accepted
accounting principles. In the opinion of management, all adjustments considered
necessary for a fair presentation of the results of operations and financial
position have been included and all such adjustments are of a normal recurring
nature.
Operating results for the quarter ended September 30, 2000, are not necessarily
indicative of the results that can be expected for the year ending December 31,
2000.
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THIN FILM BATTERY, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
September 30, 2000 and December 31, 1999
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Sept 30, Dec 31,
2000 1999
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 85,737 $ --
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Total Current Assets 85,737 --
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EQUIPMENT - Net of accumulated depreciation 279,930 --
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OTHER ASSETS
License agreement - net of amortization - Note 3 63,583 --
Security deposits 8,823 --
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72,406 --
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$ 438,073 $ --
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable - license agreement - Note 3 $ 30,000 $ --
Note and accrued interest payable - related party 609,434 --
Accounts payable 153,166 950
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Total Current Liabilities 792,600 950
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STOCKHOLDERS' EQUITY
Preferred stock
10,000,000 shares authorized at $0.10 par value;
none issued and outstanding -- --
Common stock
100,000,000 shares authorized at $.001 par value;
51,851,384 issued and outstanding 51,851 51,851
Capital in excess of par value - Note 4 (32,801) (52,801)
Accumulated deficit - Note 4 (373,577) --
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Total Stockholders' Deficiency (354,527) (950)
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$ 438,073 $ --
========= =========
The accompanying notes are an integral part of
these financial statements.
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THIN FILM BATTERY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30,
2000 and 1999 and the Period November 17, 1998
(date of inception of development stage) to September 30, 2000
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Three Months Nine Months
---------------------------- ------------------------ Period
Sept 30, Sept 30, Sept 30, Sept 30, Nov 17, 1998
2000 1999 2000 1999 to Sept 30, 2000
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<S> <C> <C> <C> <C> <C>
REVENUES $ - $ - $ - $ - $ -
------------ ------------ ------------ --------- ------------
EXPENSES
Administrative 257,623 - 346,766 - 346,766
Interest 12,393 - 18,477 - 18,477
Depreciation and amortization 5,668 - 8,334 - 8,334
------------ ------------ ------------ --------- ------------
275,684 - 373,577 - 373,577
------------ ------------ ------------ --------- ------------
NET LOSS $ (275,684) $ - $ (373,577) $ - $ (373,577)
============ ============ ============ ========= ============
NET PROFIT (LOSS) PER COMMON
SHARE
Basic $ - $ -
------------ ------------
AVERAGE OUTSTANDING
SHARES
Basic 51,851,384 51,851,384
------------ ------------
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The accompanying notes are an integral part of these
financial statements.
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THIN FILM BATTERY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended September 30,
2000 and 1999 and the Period November
17, 1998 (date of inception ) to September 30, 2000
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Sept 30, Sept 30, Nov 17, 1998
2000 1999 to Sept 30, 2000
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<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net profit (loss) $(373,577) $ - $(373,577)
Adjustments to reconcile net loss to
net cash provided by operating
activities
Depreciation and amortization 18,477 - 18,477
Changes in accounts payable 160,550 - 160,550
Net Cash From (Used) in Operations (194,550) - (194,550)
--------- --------- ---------
CASH FLOWS FROM INVESTING
ACTIVITIES
Security deposits (8,823) - (8,823)
Purchase of equipment (291,990) - (291,990)
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(300,813) - (300,813)
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CASH FLOWS FROM FINANCING
ACTIVITIES
Payment on note payable - license (20,000) - (20,000)
Proceeds of note payable - related party 601,100 - 601,100
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581,100 - 581,100
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Net Increase in Cash 85,737 - 85,737
Cash at Beginning of Period - - -
--------- --------- ---------
Cash at End of Period $ 85,737 $ - $ 85,737
========== ========= =========
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The accompanying notes are an integral part of
these financial statements.
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THIN FILM BATTERY, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
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1. ORGANIZATION
The Company was incorporated on August 15, 1986 under the laws of the state of
Colorado, with the name "Vates Corp." with authorized common stock of 100,00,000
shares with no par value and authorized preferred stock of 10,000,000 shares
with a par value of $0.10. On March 6, 2000 the par value of the common capital
stock was changed to $.001. On January 4, 1988, the name was changed to
"Graystone Ventures, Inc.", and on December 18, 1989 to "American Jet Holdings,
Inc." On June 6, 1991, the name was changed to "O.T.S. Holdings , Inc" and on
April 14, 2000 the name was changed to "Thin Film Battery, Inc." in connection
with the acquisition of a company with the same name. See note 4
On March 6, 2000 the Company completed a reverse common stock split of 100
shares of outstanding stock for one share and on April 14, 2000 a forward common
stock split of three shares for one share of outstanding stock.
This report has been prepared showing after stock split shares with a par value
of $.001 from inception.
After 1995 the Company ceased all operations, lost its remaining assets, and
became inactive until the acquisition shown in note 4.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Accounting Methods
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The Company recognizes income and expenses based on the accrual method of
accounting.
Dividend Policy
---------------
The Company has not yet adopted a policy regarding payment of dividends.
Income Taxes
------------
On June 30, 2000, the Company had a net operating loss carry forward of
$5,722,527. The tax benefit from the loss carry forward has been fully offset by
a valuation reserve because the use any of the future tax benefit is doubtful
since the Company has no operations and there has been a substantial change in
its stockholders. The loss carryover expires in the years from 2001 through
2021.
On June 30, 2000 the subsidiary had a net operating loss carry forward of
$373,577. The tax benefit from the loss carry forward has been fully offset by a
valuation reserve because the use of the future tax benefit is doubtful since
the subsidiary has no operations. The loss carryover will expire in the year
2021.
Financial Instruments
---------------------
The carrying amounts of financial instruments, including cash, equipment, the
license agreement, and the accounts and notes payable, are considered by
management to be their estimated fair values.
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THIN FILM BATTERY, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS - continued
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Estimates and Assumptions
-------------------------
Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing the financial statements.
Basic and Diluted Net Income (Loss) Per Share
---------------------------------------------
Basic net income (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding. Diluted net income (loss) per
share amounts are computed using the weighted average number of common shares
and common equivalent shares outstanding as if shares had been issued on the
exercise of the preferred share rights unless the exercise becomes antidilutive
and then only the basic per share amounts are shown in the report.
Principals of Consolidation
---------------------------
The consolidated financial statements shown in this report excludes the
historical operating information of the parent, the former OTS Holdings Inc.,
prior to March 31, 2000 and includes the historical financial statements of the
subsidiary, Thin Film Battery, Inc. All intercompany transactions have been
eliminated
Comprehensive Income
--------------------
The Company adopted Statement of Financial Accounting Standards No. 130. The
adoption of this standard had no
impact on the total stockholder's equity.
Recent Accounting Pronouncements
--------------------------------
The Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial statements.
3. LICENSE AGREEMENT
On November 1, 1999 the subsidiary, Thin Film Battery, Inc., acquired the
license to manufacture and market a product known as thin film batteries. The
terms of the license purchase was $70,000 of which $20,000 was paid on
completion of the contract and $20,000 was paid on June 1, 2000. The balance of
$30,000 is due on December 1, 2000, without interest. Royalties will be payable
at the rate of 4% to 5% on sales.
The license is being amortized to expense over ten years.
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THIN FILM BATTERY, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS - continued
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On April 6, 2000 the Company completed an Agreement and Plan of Reorganization
between the Company and Thin Film Battery, Inc., which provided for a stock for
stock exchange, in which the former stockholders of Thin Film Battery Inc.
received 46,020,000 post split shares of the Company amounting to 99% of the
outstanding stock of the Company.
Following the acquisition the name of the parent "OTS Holdings Inc.", was
changed to "Thin Film Battery, Inc.". For reporting purposes, the acquisition
was treated as an acquisition of the Company by the subsidiary, Thin Film
Battery Inc. (a reverse acquisition) and a recapitalization of the subsidiary.
The historical operating statements prior to March 31, 2000 are those of the
subsidiary. Good will was not recognized from the acquisition.
These financial statements have been prepared as if the acquisition had been
completed on December 31, 1999 including the issuance of the common stock in
connection with the acquisition and therefore the December 31, 1999 financial
statements have been restated.
Thin Film Battery, Inc.(subsidiary) was organized in the state of Nevada on
November 17, 1998, for the purpose of manufacturing and marketing a thin film
battery under a license agreement outlined in note 3.
5. RELATED PARTY TRANSACTIONS
Related parties have acquired 99% of the common stock issued by the Company
after the acquisition shown in note 4.
6. CONTINGENT LIABILITIES
During June 2000 the Company canceled 128,326 shares of its preferred stock, and
its accrued interest payable, and returned the assets originally received
because of misrepresentation.
The Company wrote off $89,017 of its debt because management considers it to be
beyond the statute of limitations and legally uncollectible.
There could be claims against the Company resulting from the above actions by
the Company.
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ITEM 2. PLAN OF OPERATIONS
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Thin Film Battery, Inc.(subsidiary) was organized in the state of Nevada on
November 17, 1998, for the purpose of manufacturing and marketing a thin film
battery under a license agreement outlined in note 3 of the financial
statements. The parent company has no operations and therefore the following
comments outline the activity of the subsidiary.
Results of Operations
---------------------
During the second quarter ended September 30, 2000, the Company restructured to
meet the business and marketing requirements of its business plan objectives.
The Company focused on organizing, staffing, and equipping its research and
development center and establishing marketing and administrative support
functions. No revenue was generated during this period.
The Company established a research and development center in Atlanta Georgia and
the expenses paid for this quarter were primarily for salaries and recruiting
fees in connection with that activity.
Liquidity and Capital Resources
-------------------------------
The Company will need additional working capital to be successful in its planned
activity and plans to increase its cash resources through a future private
placement of stock. However, there can be no assurance that the Company will be
successful in this effort.
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SIGNATURES
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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 there unto duly authorized.
Thin Film Battery, Inc.
[Registrant]
/s/ Robert Pasquay
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November 13, 2000