SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from __________ to __________
Commission File No. 33-33939
LINDSEYTECHNOLOGIES.COM, INC.
-----------------------------
(Exact name of small business issuer as specified in its charter)
COLORADO 84-1121635
-------- ------------------
(State or other jurisdiction of (I.R.S.
Incorporation or organization) Employer Identification No.)
2851 SOUTH PARKER ROAD, SUITE 720
AURORA, COLORADO 80014
---------------------------------
(Address of principal executive offices, including zip code)
Issuer's Telephone Number: (303) 306 - 1967
________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
--- ---
As of December 31, 1999, 19,046,460 shares of common stock were outstanding.
Transitional Small Business Disclosure Format: Yes No x
--- ---
<PAGE>
TABLE OF CONTENTS
FORM 10-QSB
2ND QUARTER ENDED DECEMBER 31, 1999
LINDSEYTECHNOLOGIES.COM, INC.
<TABLE>
<CAPTION>
PART I: FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
Item 1.
<S> <C> <C>
Balance Sheet 2
Statement Of Operations 3
Statement Of Cash Flows 4
Notes To Financial Statements 5
Item 2.
Management's Discussion And Analysis Or Plan Of Operation 8
PART II: OTHER INFORMATION. . . . . . . . . . . . . . . . . 12
- --------------------------------------------------------------------------------
SIGNATURES 13
</TABLE>
- i -
<PAGE>
PART I. FINANCIAL INFORMATION
1
<PAGE>
- ------
ITEM 1.
- ---------
LindseyTechnologies.com, Inc. and Subsidiaries
(Formerly Lindsey Technologies, Inc.)
Consolidated Balance Sheet
December 31, 1999
(UNAUDITED)
Assets
<TABLE>
<CAPTION>
<S> <C> <C>
Current assets
Cash in bank $ 26,170
Accounts receivables 7,828
-----------
Total current assets 33,998
Property and equipment
Computer equipment, less accumulated depreciation of $7,034 6,237
Costs in excess of acquired net assets
less accumulated depreciation of $6,874. 54,986
-----------
$ 92,275
===========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 885,400
Accounts payable-related parties 28,176
Accrued expenses 7,209
Notes payable-shareholders 145,564
-----------
Total current liabilities 1,066,349
-----------
Stockholders' equity
Preferred stock, no par value,
20,000,000 shares authorized
5,000 Series A shares authorized
4,200 issued and outstanding 304,257
Common stock, no par value,
100,000,000 shares authorized,
19,146,460 issued and outstanding 14,422,772
Underwriter's warrants 20,000 issued and outstanding. 120
Accumulated other comprehensive income. (2,666)
Accumulated deficit (15,698,557)
------------
(974,074)
------------
$ 92,275
============
</TABLE>
See Notes to Financial Statements.
2
<PAGE>
LindseyTechnologies.com, Inc. and Subsidiaries
(Formerly Lindsey Technologies, Inc.)
Consolidated Statements of Operations and Other Comprehensive Income
Three Months and Six Months Ended December 31, 1999 and 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six months ended
December 31 December 31
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues. . . . . . . . . . . . . . . $ 39,124 $ 14,652 $ 52,391 $ 24,958
----------- ----------- ----------- ----------
General & Administrative expenses . . 28,261 16,989 56,462 26,899
Research and development. . . . . . . 6,078 3,617,923 15,093 3,679,245
----------- ----------- ----------- ----------
34,339 3,634,912 71,555 3,706,144
----------- ----------- ----------- ----------
Net income (loss) from operations . . 4,785 (3,620,260) (19,164) (3,681,186)
Other income (expense):
Amortization. . . . . . . . . . . . . (3,040) (5,996)
Gain on sale of securities. . . . . . (76) 409 156 533
----------- ----------- ----------- ----------
(3,116) 409 (5,840) 533
----------- ----------- ----------- ----------
Net income (loss) . . . . . . . . . . 1,669 (3,619,851) (25,004) (3,680,653)
Other comprehensive income (loss)
Unrealized gain (loss) on securities. 697 (855) 2,536 (855)
Foreign currency translation. . . . . 12,338 262 (6,799) 8,157
----------- ----------- ----------- ----------
Other comprehensive income (loss) . . 13,035 (593) (4,263) 7,302
----------- ----------- ----------- ----------
Total comprehensive income (loss) . . $ 14,704 $ (3,620,444) $ (29,267) $(3,673,351)
=========== =========== =========== ==========
Net income (loss) per share . . . . . $ (*) $ (.20) $ (*) $ (.20)
Total comprehensive income (loss)
per share . . . . . . . . . . . . . . $ (*) $ (.20) $ (*) $ (.20)
=========== =========== =========== ==========
Weighted average number of
Common shares and equivalent units
outstanding . . . . . . . . . . . . . !9,146,000 18,181,460 19,146,460 18,181,460
=========== =========== =========== ==========
<FN>
* Less than $.01 per share
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
LindseyTechnologies.com, Inc. and Subsidiaries
(Formerly Lindsey Technologies, Inc.)
Consolidated Statements of Cash Flows
Six Months Ended December 31, 1999 and 1998
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C>
1999 1998
Cash flows from operating activities:
Net income (loss) . . . . . . . . . . . . . . . . . . $ (25,004) $ (3,673,351)
Adjustments to reconcile net income to net cash
used in operations:
Share of loss of Heldol Corporation 11,045
Unrealized loss on securities 855
Depreciation and amortization. . . . . . . . . 8,310 16,363
Foreign currency translation adjustment. . . . 6,158 (8,157)
Compensatory stock issuance 3,565,000
(Increase) decrease in:
Accounts receivable. . . . . . . . . . . . . . 3,543 1,388
Other assets . . . . . . . . . . . . . . . . . 514
Increase (decrease) in:
Accounts payable . . . . . . . . . . . . . . . (20,032) 40,524
Accrued expenses . . . . . . . . . . . . . . . 7,209
-------- ---------
Net cash used in operating activities . . . . . . . . (19,302) (46,333)
-------- ---------
Cash flows from investing activities:
Investment in Heldol Corporation (37,272)
Sale of purchase of securities . . . . . . . . 7,166 (8,155)
-------- ---------
Net cash provided by ( used) in investing activities. 7,166 (45,427)
-------- ---------
Cash flows from financing activities:
Due to shareholder . . . . . . . . . . . . . . . (3,163)
Increase in notes payable 82,171
Sale of common stock 40,518
-------- ---------
Net cash flow provided by financing activities. . . . (3,163) 122,689
-------- ---------
Net increase (decrease) in cash equivalents . . . . . (15,299) 30,929
Cash at beginning of period. . . . . . . . . . . . . 41,469 17,820
-------- ---------
Cash at end of period . . . . . . . . . . . . . . . . $ 26,170 $ 48,749
======== =========
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
LindseyTechnologies.com, Inc. and Subsidiaries
(Formerly Lindsey Technologies, Inc.)
Notes to Financial Statements
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB and do not include all of the information
and disclosures required by generally accepted accounting principles for
complete financial statements. All adjustments which are, in the opinion of
management, necessary for a fair presentation of the results of operations for
the interim periods have been made and are of recurring nature unless otherwise
disclosed herein. The results of operations for such interim periods are not
necessarily indicative of operations for a full year.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
FOREIGN CURRENCY TRANSLATIONS.
The Company has quarterly foreign currency translations adjustments due to its
day to day operational Research &Development activities in France conducted in
French Francs.
For these operations with the local currency as the functional currency, assets
and liabilities are translated at year-end exchange rates, and statements of
operations are translated at the average exchange rates during the year. Gains
or losses resulting from foreign currency translation are accumulated as a
separate component of shareholders' equity.
NOTE 3: BUSINESS COMBINATIONS
On November 5th. 1998, the Company acquired Distributed Quality Corp. ("DQC"), a
Colorado based company involved in marketing Networking and CORBA framework
software platform for distributing quality related knowledge throughout
organizations using Internet technology, for $2,700,000 consisting of 540,000
restricted common stock of the Company valued at $2,700,000 and the assumption
of $300,000 in liabilities. DQC was acquired in a merger transaction pursuant to
the terms of a merger agreement, dated November 5th 1998.
These acquisitions were accounted for under the purchase method, and the global
purchase price was allocated to acquired in-process technology. Prior to
completing these acquisitions, the Company conducted reviews in order to
determine the fair market value of the organizations and technologies to be
acquired. These reviews consisted of an evaluation of existing products,
Research & Development in process (projects that had not reached technological
feasibility and had no alternative future use), customers, financial position
and other matters. The acquired in process Research & Development represents
unique and emerging technologies.
5
<PAGE>
On August 31st 1998, DQC signed an agreement with Stellarx SA, a French software
start-up company that provides software infrastructure for developing Internet
based application software solutions. This agreement stipulates that DQC buys
the Stellarx Framework Development Toolkit (tm) license for a price of $300,000.
This software environment includes an XML document manager and repository, a
workflow engine and an application designer. It also includes a Versant (tm)
ODBMS development license. (Versant is a trademark of Versant Corp., Stellarx is
a trademark of Stellarx S.A.)
Under the terms of this agreement, DQC also has a right to integrate Stellarx
and Versant ODBMS runtime software pieces in its own application software and
distribute the whole as a package to its clients. This right is worldwide,
unlimited in time and exclusive for application software related to Quality,
regardless of the business sector. DQC is required to pay 10% of its application
license revenues and 5% of its license maintenance revenues to Stellarx as
compensation for this right.
The deal gives the Company to have access to DQC's technology and distribution
agreements.
Prior to the transaction, the Company has evaluated the establishment of
technological feasibility of acquired in-process technology. Due to the early
stage of completion at the date of the acquisition, the Company has concluded
that it cannot determine, with any reasonable degree of accuracy, technological
feasibility until the acquired in-process technology was delivered and tested.
The purchased software was not fully delivered to DQC at the date of the merger
transaction.
In conformity with SFAS No. 86: "Accounting for the Costs of Computer Software
to be Sold, Leased or Otherwise Marketed", the total purchase price of DQC has
been allocated to Research & Development expenses.
The purchase price and costs directly attributable to the completion of the
acquisition were not significant. No significant adjustments were required to
conform the accounting policies of the acquired companies.
The Company may continue to incur charges for acquired in-process technology in
connection with future acquisitions, which will increase operating and net loss
for the periods in which the acquisitions are consummated.
6
<PAGE>
NOTE 4. RESEARCH & DEVELOPMENT EXPENSES
The Company conforms to the requirements of SFAS No. 86, "Accounting for the
Costs of Computer Software to be Sold, Leased or Otherwise Marketed", which
requires capitalization of costs incurred in developing new software once
technological feasibility, as defined, has been reached. Costs of developing
software and Research & Development are expensed as incurred. The Company did
not capitalize any software development costs during the years ended June 30,
1998, 1997, and 1996.
AICPA SOP 98-1, "Accounting for Costs of Computer Software Developed or Obtained
for Internal Use", issued on March 4,1998, is effective for the Company in
fiscal year 1999. There has not been a significant impact upon adoption.
Except for expenses related to the merger transaction with DQC, Research &
Development expenses for all periods presented consisted primarily of
compensation and consulting fees to support Research & Development for
conception, modeling and development of our application software: Key-Qual (tm),
a Net-based tool for certification and organization of all existing production
processes covering Industry, Services, Administration and Medical sectors.
These expenses may vary from one period to the other because expenses are
recorded when cooperation contracts has been signed and stock issuance has been
authorized by a board meeting, which does not occur every day.
Such wide variation of expenses may occur in the future.
The Company believes it has budgeted adequate Research & Development resources
to complete the contemplated projects over time periods ranging from six to
eighteen months from the dates of acquisition in order to finalize development
of finished application software.
NOTE 5. STOCK ISSUANCE
During the quarter ended December 31, 1999, the Company has not issued any
shares.
Thereby the total common shares outstanding remains 19,046,460.
Compensations for Research & Development performed for the Company are usually
paid with the issuance of common shares for services.
7
<PAGE>
LINDSEYTECHNOLOGIES.COM, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- -------
FORWARD-LOOKING STATEMENTS
IN ADDITION TO HISTORICAL INFORMATION, THIS FORM 10-Q CONTAINS FORWARD- LOOKING
STATEMENTS. IN THIS FORM 10-Q, THE WORDS "EXPECTS," "ANTICIPATES," "BELIEVES,"
"INTENDS," "WILL" AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS,
WHICH ARE BASED UPON INFORMATION CURRENTLY AVAILABLE TO THE COMPANY, SPEAK ONLY
AS OF THE DATE HEREOF AND ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES. THE
COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENTS. THE
COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THE RESULTS DISCUSSED IN
SUCH FORWARD-LOOKING STATEMENTS. FACTORS THAT MAY CAUSE SUCH A DIFFERENCE
INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THIS SECTION ENTITLED
"MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION --FACTORS THAT MAY
AFFECT FUTURE RESULTS." READERS SHOULD CAREFULLY REVIEW THE RISK FACTORS
DESCRIBED IN OTHER DOCUMENTS THAT THE COMPANY FILES FROM TIME TO TIME WITH THE
SECURITIES AND EXCHANGE COMMISSION (THE "COMMISSION"), INCLUDING THE 1999 ANNUAL
REPORT ON FORM 10-K AND THE QUARTERLY REPORTS ON FORM 10-Q TO BE FILED BY THE
COMPANY IN FISCAL 2000. ALL PERIOD REFERENCES ARE TO THE COMPANY'S FISCAL YEARS
ENDED JUNE 30, 2000, 1999 AND 1998, UNLESS OTHERWISE INDICATED.
THE COMPANY PROJECT
For the last two years, the Company has undertaken the development of its own
software solution implementing business to business E-commerce as an application
software provider with its own set of tools, notably Key-Qual (tm).
Key-Qual is a net-based tool for the organization and certification of all
existing production processes. It covers Industry, Services, Administration and
Medical sectors.
The system enables to fully describe all the desired functions of production
processes taking into account all the particularities of any connected end user.
Through normalization every professional individuals will be able to communicate
and interact in the most effective way.
By connecting and running Key-Qual quality system application, a company will
have all of its production and know-how online. Thus lies a great enhancement of
productivity and added value of the whole organization.
Any user will be able to ask or be asked relevant information regarding
production.
The system will help perform all relevant analyses and cross-reference them with
clients' procedures, production cycle and accompanying knowledge database.
8
<PAGE>
WHO MAY BE INTERESTED
All small and large organizations concerned in raising customer satisfaction by
improving quality throughout its processes.
Industrial and corporate environment,
- ----------------------------------------
The Company is currently working on a generic industrial Key-Qual application.
Key-Qual has the ambition to cover all non-computerized personnel in any given
company regardless of its business activity.
In the industry sector, actually only 15-20% employees of a company use a
desktop system with access to Information system mainly for administrative
tasking. We presume the same model prevails in any other sectors at large:
health care, services, administration. The 80-85% remaining employees are
affected to production within the company.
Professionals and individuals and specific fields of expertise
- ---------------------------------------------------------------------
The company's business model is to release a packaged Key-Qual title for any
professional and business activity that can generate over 3 years a minimum of
ten thousand basic $380/month contracts and set up the portal for delivery and
servicing worldwide through Internet Providers and Portal companies.
These titles can be marketed through the setup of subsidiaries with partners and
investors.
The Company is currently working on
- - a Key-Qual application for the certification of software editors and
independent developers,
- - a Key-Qual application for dentists and orthodontists and
The Company is planning to work on
- - a Key-Qual application for managing and normalizing on the Web the information
stored in databases and ERP systems i.e. SAP (r), BAAN (r), JD Edwards (r), etc.
ADVANTAGES
The resulting interaction between the system and its users will eliminate most
of the cost associated with the back and forth running between all different
activities running in the company.
The likely outcome of using Key-Qual is huge productivity gains, turbo charged
Research & Development and management of internal know-how for corporations and
greater quality service and knowledge for individuals.
Most processes and transactions in industry, health-care and services are
duplicative and paper based, clobbering the value added process of all
participants. Normalization in these activities is particularly well suited for
Internet use.
The growing number of users on the Internet is becoming more and more important
for business to business as well as business to consumer interaction.
9
<PAGE>
HOW IT WORKS
Key-Qual is a mission critical application that can be deployed on the Internet,
Extranet and Intranet platform.
It uses the most up to date technological standards such as a modular tiered
Corba based architecture so any connected user can interact without the need for
expensive hardware.
It runs on any desktop system with a browser, is self-deploying and requires
zero client maintenance. Thanks to Java technology, it will work on most server
platforms available on the market for large application software.
It carries services like scalability, interoperability, fault tolerance and
security and can handle high volumes of transactions.
Key-Qual allows the integration of diverse applications.
CURRENT SITUATION
The conception phases started about two years ago. All Research & Development
expenses recorded until December 98 have been geared towards conception only.
This means engineering, industry and quality management specialists, and
services, paid for coming up with a satisfactory solution for encapsulating
know-how. Then this will be translated into a workable system software
application.
The modeling phase is currently under way. It consists in creating a model that
will be used for the development of the application software. The model must
show all the layers of what the application software will be.
The company has started working on the patent writing of some parts of its
software application tool set. The company believes the patent application
should be filed in the first semester 2000.
The company is also working with experts in specific fields in order to create
models for specific applications.
The development of the final prototype product will take into consideration the
architecture of the application, its functions, ergonomics and GUI. The
specifications for basic engines for the application are being currently
written. The company expects to have a commercially viable prototype in the
first semester 2000.
By merging with DQC, the Company will have access to Stellarx's and Versant's
technologies, which shall have substantial beneficial effects on the development
time and costs of its application software.
Moreover, the company believes that the limited amount of fees to be paid to
Stellarx for runtime distribution will considerably reduce future costs of
revenues when installing application software and Database Management Systems
runtimes on the Company's customers computers.
IMPACT OF YEAR 2000
The Company has determined that the purchased software applications it uses and
software applications developed internally are Year 2000 compliant. However,
there is no guarantee that other systems of other companies on which the
Company's systems rely will be timely converted and would not have an adverse
effect on the Company's systems.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Working capital needed to finance the Company's overheads in the past has been
provided by cash on hand, Share subscriptions and loans from related parties.
The Company expects to continue to incur substantial expenses related to further
Research & Development of its technologies and products, increased staffing
levels, acquisition and support of patent rights, additional capital equipment
for Research & Development activities, starting commercial activities. The
Company may incur additional losses in the near term.
The Company estimates that Research & Development expenses required for
completing the development of the Key-Qual application software will be covered
with issuance of stock as compensation for such services.
If the Company's currently available funds and internally generated cash flow
are not sufficient to satisfy its financing needs, the Company would be required
to seek additional funding through other arrangements with collaborative
partners, through bank borrowings and through public or private sales of its
securities, including equity securities through a Private Placement. There can
be no assurance that additional funds, if required, will be available to the
Company on favorable terms, if at all.
POTENTIAL FLUCTUATIONS IN OPERATING RESULTS
The Company's operating results have varied significantly in the past and may do
so in the future. Factors affecting the Company's operating results include, but
are not limited to: important Research & Development expenses to finish
development of software product, delays in commercializing the software, the
degree of acceptance of the Company's products; by the markets and industries
served by the Company;
The Company expects that fluctuations in its operating results will continue for
the foreseeable future. Consequently, the Company believes that period-to-period
comparisons of its financial results should not be relied upon as an indication
of future performance.
The Company intends to continue making significant expenditures on Research &
Development to finish development of current product and develop new products.
While the Company believes that these current Research & Development
expenditures will be beneficial in the long term development of its business,
there can be no assurances that the development of products will be successful
or will not be rendered obsolete by future technology acquisitions or
developments. Research & Development expenditures are incurred substantially in
advance of related revenue and in some cases may not result in the generation of
revenue.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings - None
ITEM 2. Changes in Securities - None
ITEM 3. Defaults Upon Senior Securities - None
ITEM 4. Submission of Matters To A Vote of Securities Holders - None
ITEM 5. Other Information - None
ITEM 6. Exhibits and Reports on Form 8-K :
-- 01/06/2000 Change in Registrant's Certifying Accountant
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has
duly caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
LINDSEYTECHNOLOGIES.COM, INC.
By: /s/Lionel Mauclaire
--------------------
Lionel Mauclaire, President
Date: March 25, 2000 and Director
------------------
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AT 12/31/99 (UNAUDITED) AND STATEMENT OF OPERATIONS FOR THE THREE MONTHS
ENDED 12/31/99(UNAUDITED). IT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CAPTION>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 26170
<SECURITIES> 0
<RECEIVABLES> 7828
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 33998
<PP&E> 13271
<DEPRECIATION> 7034
<TOTAL-ASSETS> 92275
<CURRENT-LIABILITIES> 1066349
<BONDS> 0
0
304257
<COMMON> 14422772
<OTHER-SE> (15701103)
<TOTAL-LIABILITY-AND-EQUITY> 92275
<SALES> 39124
<TOTAL-REVENUES> 39124
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 34339
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1669
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14704)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
