UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________
Commission File No. 33-55254-42
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QUANTITATIVE METHODS CORPORATION
(Exact name of Small Business Issuer as specified in its charter)
NEVADA 87-0485310
- ---------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
203-6200 Taschereau Blvd. East
Brossard (Quebec) Canada J4W 3J8
- ---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (888) 713-2222
--------------
Indicate by check mark whether the Issuer (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 Issuer
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.
Class Outstanding as of March 31, 1999
- ------------------------------------ --------------------------------
$.001 PAR VALUE CLASS A COMMON STOCK 9,300,000 SHARES
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ITEM 1. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
THE FOLLOWING DISCUSSION MAY INCLUDE FORWARD-LOOKING STATEMENTS WITH
RESPECT TO THE COMPANY'S FUTURE PERFORMANCE. ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE CURRENTLY ANTICIPATED AND FROM HISTORICAL RESULTS
DEPENDING UPON A VARIETY OF FACTORS, INCLUDING THOSE DESCRIBED BELOW UNDER THE
SUB-HEADING, "BUSINESS RISKS." SEE ALSO THE COMPANY'S ANNUAL REPORT ON FORM 10K
FOR THE YEAR ENDED DECEMBER 31, 1998.
HISTORY AND PURPOSE
Quantitative Methods Corporation (the "Company" or "QTTM"), was
incorporated under the laws of Nevada on July 26, 1990. Quantitative Methods
Corporation shares are currently traded under the symbol QTTM on the NASD
Electronic Bulletin Board System.
In January 1999, the Company completed a transaction with Softguard
Enterprises, Inc. ("Softguard") a private Canadian corporation, formed in June
1995. As part of this Agreement, the Company issued and delivered 7,650,000
shares of its Common Stock bearing a restrictive legend, in exchange for which
issuance QTTM acquired all of the outstanding shares of Softguard. Following the
transaction the former shareholders of Softguard owned 82% of the outstanding
shares of the Company. With this acquisition, the Company received scientific
research and experimental development tax grants, computer equipment and
software, patents and other intangible assets related to the business of
Softguard.
No material relationship exists between the former management and
directors of Quantitative Methods Corporation and the current management and
directors.
At the present time, the Company's mission is to invest in and ensure
sustainable growth of a diversified portfolio of emerging e-business and
Internet software companies. In the opinion of management these potential
business ventures should provide a source of eventual profit to the Company.
BUSINESS ACTIVITIES
Since its inception, Softguard Enterprises Inc. has dedicated itself to
the research and development of technologies for use in the field of information
systems management and security. To ensure that customer security, performance
and robustness requirements will be met at all times, Softguard has engineered a
unique Internet client/server system technology based on a series of Master,
Sub-Station and Proxy servers.
Softguard is a development stage enterprise and has had no revenues to
date. Softguard's resources have been committed to the implementation of
state-of-the-art Internet protocols to create leading-edge software security
solutions in the development of a discreet, non-intrusive, intelligent and
universal architecture. The system was developed in a Unix environment, based on
Linux. The free POSIX operating system architecture is robust, efficient and
stable.
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Reaching the final development stages of the system and core
architecture, this work has primarily consisted of the creation of two products
that fall under the following categories: A) Software License Notification
Service ("SLNS"), and B) Quorum Document Authentication Program.
The working prototype of SLNS was designed to provide customers with a
secure, private and efficient means of verifying the origin, legality or
integrity of software within their computing environment. It also provides
timely access to product upgrade and security information.
Quorum provides technology for document validation, version control,
and distributed annotation and approval for all organizations that need to
verify that a given file is an authentic replica of an original.
Management expects to be able to expand the core technology and the
majority of the existing code to support other applications in the secure
circulation of digital information, including sound and image files, online
copyright control, document security and confidentiality audit, as well as virus
protection; in short, supporting the intellectual property protection of every
kind of computerized data.
To meet the objectives of its business plan and reach an economy of
scale in the short-term, the Company has initiated several acquisitions.
During 1999, the Company entered into a verbal agreement to acquire a
100% interest in SolarPro Reg'd (Gestion Danpe Inc.) ("SolarPro"), a
Canadian-based solar technology equipment manufacturer and distributor located
in Asbestos (Quebec) Canada. With this acquisition, the Company will receive
manufacturing equipment, prototypes, inventory, accounts receivable and an
established market presence in Canada and the United States. Gestion Danpe, Inc.
was incorporated in March 1991 and has operated under the registered name of
SolarPro since August 1996.
The Company hopes to finalize this acquisition in the second quarter of
2000, pending the approval and markings from the Canadian Standards Association
(CSA) for the National Recognized Testing Laboratories (NRTL) certification for
the solar units. Solarpro is the top-line and unique manufacturer using anodized
extruded aluminum in the construction of high-end solar units that have minimal
assembly requirements. The primary advantage of these units is the durable, high
quality finish that extends the useful life of the product line for commercial
use.
Based on funding from QTTM, SolarPro will develop a significant
business-to-business e-model and relocate their manufacturing facilities in
order to expand operations that will benefit and focus resources on product
development, sales and distribution.
The Company has also initiated discussions, which are nearing the
contract stage, with SysDem, Inc. ("SysDem"), a Canadian corporation based in
Longueuil (Quebec) Canada. SysDem is an Internet marketing service bureau
incorporating proprietary server technology that offers a better, faster,
cheaper and simpler way of marketing with personalized email. The integration of
the best database marketing practices into high volume mail merge functionality
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allows the massive delivery of highly personalized messages to
permission-granted customers. Since the product launch in April 1999, this
system has delivered double digit response rates for clients.
QTTM's management believes that the combination of Softguard's
technology with SysDem's personalized email delivery system would be a major
development for on-line marketing.
The Company hopes to acquire SysDem during the second quarter of 2000
and in order to reduce overhead costs, Softguard and SysDem would combine
facilities at that time.
RESULTS OF OPERATIONS
During the three months ending March 31, 1999 the Company lost
$124,932.
Any comparison to the same periods of the prior year would be
meaningless because the Company conducted no significant business operations
prior to 1999 and, consequently, such comparison has been omitted.
All of the losses incurred by the Company during 1999 were the result
of the on-going efforts of the Company's subsidiary Softguard to advance the
development of its software security and document authentication programs
discussed above. Currently 10 individuals are engaged in various capacities
relating to the development of Softguard's products.
There can be no assurance that the Company will have the capital
resources necessary to complete the introduction of the Softguard products in a
timely manner in accordance with the Company's business plan. The Company is
currently pursuing various funding prospects for these projects.
The majority of the Company's research and development was conducted at
the principal office situated in Brossard (Quebec) Canada, a suburb of Montreal.
Softguard incurred substantial research and development costs for the core
architecture and the SLNS product prior to January 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company is currently seeking additional working capital to meet its
short-term growth needs, including the acquisition of potentially favorable
business opportunities.
Management believes, although there can be no assurance, that the
Company will have sufficient cash for its immediate needs over the next 12
months regardless of its success in attracting additional capital investment.
However, management also believes that a lack of additional working capital
during the year 2000 would substantially curtail the rollout of the current
Softguard products.
NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has adopted several notices
with regard to the treatment of interim financial statements. These issues are
presented in the Company's interim
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financial statements. As discussed in the notes to the interim financial
statements, the implementation of these new pronouncements is not expected to
have a material effect on the financial statements.
BUSINESS RISKS
Management believes, but there can be no assurance, that the Company is
sufficiently capitalized to continue operations for the remainder of the year
2000, however, management is currently seeking additional capital investment to
fulfill research and development requirements. A lack of working capital could
have a material impact on short-term growth objectives.
This report contains a number of forward-looking statements which
reflect the Company's current views with respect to future events and
performance. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical results or those anticipated. In this report, the words
"anticipates", "believes", "expects", "intends", "future" and similar
expressions identify forward-looking statements. The Company undertakes no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances that may arise after the date hereof.
ITEM 2. LEGAL PROCEEDINGS (Not applicable)
Legal proceedings relating to the previous officers and directors of
Quantitative Methods Corporation are outlined in detail in the Company's 10K
filing for the year ending December 31, 1997.
Management does not feel that the legal problems of the former officers
and directors of QTTM will have any adverse effect on the Company. Current
management has no past or present legal problems and intends to comply with all
applicable laws.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Financial statements as of : March 31, 1999
(b) Reports on Form 8-K
An 8-K was filed on January 22, 1999 to announce the
Softguard acquisition.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
QUANTITATIVE METHODS CORPORATION
Dated: March 13, 2000 By: s\Robert L. Seaman
------------------
Robert L. Seaman, President and Director
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<PAGE>
QUANTITATIVE METHODS CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------------ -----------------
ASSETS (Unaudited) (Audited)
CURRENT ASSETS
<S> <C> <C>
Accounts receivable $ 28,211 $ 0
Income tax recoverable 355,005 0
Prepaid expense 4,690 0
------------------ -----------------
TOTAL CURRENT ASSETS 387,906 0
PLANT & EQUIPMENT 61,732 0
OTHER ASSETS
Patents and trademarks 34,795 0
Deferred tax benefit 24,025 0
------------------ -----------------
58,820 0
------------------ -----------------
TOTAL ASSETS $ 508,458 $ 0
================== =================
LIABILITIES & EQUITY
CURRENT LIABILITIES
Cash overdraft $ 71,491 $ 0
Bank loan 26,000 0
Accounts payable and accrued expenses 150,155 0
Current portion of long-term debt 25,000 0
------------------ -----------------
TOTAL CURRENT LIABILITIES 272,646 0
LONG-TERM DEBT 216,006 0
------------------ -----------------
488,652 0
------------------ -----------------
STOCKHOLDERS' EQUITY
Common Stock $.001 par value:
Authorized - 25,000,000 shares
Issued and outstanding 9,300,000 shares
(1,150,000 in 1998) 9,300 1,150
Additional paid-in capital 1,533,560 74,850
Retained earnings (Deficit) (1,523,054) (76,000)
------------------ -----------------
TOTAL STOCKHOLDERS' EQUITY 19,806 0
------------------ -----------------
$ 508,458 $ 0
================== =================
</TABLE>
F - 1
<PAGE>
QUANTITATIVE METHODS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended
March 31,
1999
------------------
<S> <C>
SALES $ 0
==================
General and administrative expenses
Professional fees 5,994
Consulting 61,194
Salaries and fringe benefits 13,053
Rent 5,430
Office expenses 1,453
Research and development 25,006
Telephone and communication 2,292
Insurance, taxes and licenses 477
Interest and bank charges 1,639
Interest on bank loan 1,407
Depreciation of fixed assets 4,527
Depreciation of deferred expenses 2,460
------------------
Total general and administrative expenses 124,932
NET INCOME (LOSS)
BEFORE INCOME TAXES (124,932)
NET INCOME (LOSS) (124,932)
TOTAL COMPREHENSIVE
INCOME (LOSS) $ (124,932)
==================
Net income (loss) per weighted average share $ (.01)
==================
Weighted average number of common shares used to
compute net income (loss) per weighted average share 9,300,000
==================
</TABLE>
F - 2
<PAGE>
QUANTITATIVE METHODS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended
March 31,
1999
------------------
OPERATING ACTIVITIES
<S> <C>
Net earnings (loss) $ (124,932)
Items not requiring cash outlays:
Depreciation and amortization 6,987
------------------
(117,945)
------------------
Changes in assets and liabilities 14,598
------------------
NET CASH USED
BY OPERATING ACTIVITIES (103,347)
INVESTING ACTIVITIES
Acquisition of fixed assets and deferred expenses (155)
------------------
NET CASH (USED)
BY INVESTING ACTIVITIES (155)
FINANCING ACTIVITIES
Variation of advances from a shareholder 82,400
Issuance of common stock 500
Repayment of long-term debt (8,333)
------------------
NET CASH (USED)
BY FINANCING ACTIVITIES 74,567
------------------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (28,935)
Cash and cash equivalents at beginning of year (42,556)
------------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ (71,491)
==================
Cash paid for interest $ 3,046
==================
</TABLE>
F - 3
<PAGE>
QUANTITATIVE METHODS CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1999
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
Accounting Methods
The Company recognizes income and expenses based on the accrual method
of accounting.
Principals of Consolidation
The financial statements contain the accounts of the Company and its
wholly owned subsidiary, Softguard Enterprises, Inc. ("Softguard").
Softguard is currently the main line of business for the Company. All
significant inter-company transactions have been eliminated on
consolidation.
Dividend Policy
The Company has not yet adopted any policy regarding payment of
dividends.
Fixed Assets
The Company amortized its fixed assets according to the following
methods and annual rates:
Computer equipment Declining 30%
Computer software Declining 30%
Furniture and fixtures Declining 20%
Office equipment Declining 20%
Leasehold Improvements Straight-line 33%
The Company amortized its deferred expenses according to the
straight-line method at an annual return of 20%.
Revenue Recognition
The Company has not recognized any revenue to date.
Earnings (loss) per share
Earnings or loss per common and common equivalent share is computed by
dividing net earnings (loss) by the weighted average common shares
outstanding during each period.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets,
liabilities, revenues, and expenses during the reporting period.
Estimates also affect the disclosure of contingent assets and
liabilities at the date of the financial statements. Actual results
could differ from these estimates. Such estimates of significant
accounting sensitivity are allowance for doubtful accounts.
Income Taxes
The Company records the income tax effect of transactions in the same
year that the transactions enter into the determination of income,
regardless of when the transactions are recognized for tax purposes.
Tax credits are recorded in the year realized.
At December 31, 1998 a deferred tax asset has not been recorded due to
the Company's change in control and lack of operations to provide
income to use the net operating loss carryover of $1,000 which will
expire December 31, 2005 and the loss of $75,000 which expires December
31, 2018.
F - 4
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Quantitative Methods Corporation March 31, 1999 financial statements
and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0000894561
<NAME> Quantitative Methods Corporation
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1.00
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 383,216
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 387,906
<PP&E> 97,078
<DEPRECIATION> 35,346
<TOTAL-ASSETS> 508,458
<CURRENT-LIABILITIES> 272,646
<BONDS> 0
0
0
<COMMON> 9,300
<OTHER-SE> 10,506
<TOTAL-LIABILITY-AND-EQUITY> 508,458
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 124,932
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,046
<INCOME-PRETAX> (124,932)
<INCOME-TAX> 0
<INCOME-CONTINUING> (124,932)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (124,932)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
