Tiger Oil & Energy, Inc. - Quarter Report: 2010 March (Form 10-Q)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-Q
(Mark One)
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2010
o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 333-141875
UTEC, INC.
(Exact name of Registrant as specified in its charter)
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NEVADA
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20-5936198
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(State or other jurisdiction of incorporation or
organization) |
(IRS Employer Identification No.)
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7230 Indian Creek Ln., Ste 210
Las Vegas, NV 89149
(Address of principal executive offices)
(702) 335-0356
(Registrant’s telephone number, including area code)
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (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 o
Indicate by checkmark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
o Yes x No (Not Required)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in rule 12b-2 of the Exchange Act.
Large accelerated filer o Accelerated Filer o
Non-accelerated filer o (Do not check if a smaller reporting company) Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes x No o
APPLICABLE ONLY TO CORPORATE ISSUERS
As of April 30, 2010, the Company had 33,560,172 issued and outstanding shares of its common stock.
PART I — FINANCIAL INFORMATION
The accompanying interim unaudited financial statements of UTEC, Inc. (a Nevada corporation) are condensed and, therefore, do not include all disclosures normally required by accounting principles generally accepted in the United States of America. These statements should be read in conjunction with the Company’s most recent annual financial statements for the year ended December 31, 2009 included in a 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on April 14, 2010. In the opinion of management, all adjustments necessary for a fair presentation have been included in the accompanying interim financial statements and consist of only normal recurring adjustments. The results of operations presented in the accompanying interim financial statements for the three months ended March 31, 2010 are not necessarily indicative of the operating results that may be expected for the full year ending December 31, 2010.
UTEC, INC.
Consolidated Financial Statements
March 31, 2010 and December 31, 2009
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Contents
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2
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3
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5
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8
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10
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10
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10
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10
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10
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11
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March 31,
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December 31,
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2010
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2009
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(Unaudited)
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| ASSETS | ||||||||
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CURRENT ASSETS
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Cash and cash equivalents
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$ | 4,295 | $ | 9,453 | ||||
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Total Current Assets
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4,295 | 9,453 | ||||||
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PROPERTY, PLANT AND EQUIPMENT, NET
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328,115 | 328,427 | ||||||
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TOTAL ASSETS
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$ | 332,410 | $ | 337,880 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
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CURRENT LIABILITIES
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Accounts payable
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$ | 355,635 | $ | 350,716 | ||||
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Accrued salary
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250,000 | 200,000 | ||||||
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Accounts payable to related parties
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80,300 | 80,535 | ||||||
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Loan payable
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240 | 240 | ||||||
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Total Current Liabilities
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686,175 | 631,491 | ||||||
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TOTAL LIABILITIES
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686,175 | 631,491 | ||||||
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STOCKHOLDERS’ EQUITY (DEFICIT)
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Preferred stock - 1,000,000 authorized, $0.001 par value;
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42,013 and 42,013 issued and outstanding, respectively
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42 | 42 | ||||||
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Common stock - 74,000,000 authorized, $0.001 par value;
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34,118,159 and 34,118,159 issued and outstanding, respectively
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34,118 | 34,118 | ||||||
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Additional paid-in capital
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2,639,115 | 2,639,115 | ||||||
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Deficit accumulated during the development stage
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(3,027,040 | ) | (2,966,886 | ) | ||||
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Total Stockholders’ Equity (Deficit)
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(353,765 | ) | (293,611 | ) | ||||
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TOTAL LIABILITIES AND STOCKHOLDERS’
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EQUITY (DEFICIT)
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$ | 332,410 | $ | 337,880 | ||||
The accompanying notes are an integral part of these financial statements.
2
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From
Inception |
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on April 30
2009 |
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For the Three Months Ended
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through
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March 31,
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March 31,
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2010
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2009
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2010
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REVENUES
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$ | - | $ | - | $ | - | ||||||
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COST OF SALES
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- | - | - | |||||||||
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GROSS MARGIN
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- | - | - | |||||||||
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OPERATING EXPENSES
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Amortization of deferred tax benefit
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- | - | 170,800 | |||||||||
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Impairment of intangible assets
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- | - | 121,242 | |||||||||
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General and administrative
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60,045 | 95,233 | 789,595 | |||||||||
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Total Operating Expenses
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60,045 | 95,233 | 1,081,637 | |||||||||
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LOSS FROM OPERATIONS
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(60,045 | ) | (95,233 | ) | (1,081,637 | ) | ||||||
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OTHER EXPENSE
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Interest expense
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(109 | ) | - | (109 | ) | |||||||
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LOSS BEFORE TAXES
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(60,154 | ) | (95,233 | ) | (1,081,746 | ) | ||||||
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Provision for income taxes
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- | - | - | |||||||||
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NET LOSS FROM CONTINUING OPERATIONS
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(60,154 | ) | (95,233 | ) | (1,081,746 | ) | ||||||
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Net income (loss) from discontinued operations
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- | (376,402 | ) | 309,650 | ||||||||
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Loss on disposal of discontinued operations
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- | (1,730,742 | ) | |||||||||
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Loss from discontinued operations, net of income taxes
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- | (376,402 | ) | (1,421,092 | ) | |||||||
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NET LOSS
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$ | (60,154 | ) | $ | (471,635 | ) | $ | (2,502,838 | ) | |||
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BASIC LOSS PER SHARE FROM CONTINUING OPERATIONS
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$ | (0.00 | ) | $ | (0.00 | ) | ||||||
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BASIC LOSS PER SHARE FROM DISCONTINUED OPERATIONS
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- | (0.01 | ) | |||||||||
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TOTAL BASIC LOSS PER SHARE
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$ | (0.00 | ) | $ | (0.01 | ) | ||||||
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WEIGHTED AVERAGE NUMBER
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OF SHARES OUTSTANDING
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34,118,159 | 52,538,590 | ||||||||||
The accompanying notes are an integral part of these financial statements.
3
UTEC, INC.
(A Development Stage Company)
Consolidated Statements of Stockholders’ Equity (Deficit)
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Deficit
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Accumulated
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Additional
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During the
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Preferred Stock
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Common Stock
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Paid-In
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Development | |||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Capital | Stage | Total | ||||||||||||||||||||||
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Balance, December 31, 2006
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22,013 | $ | 22 | 25,917,159 | $ | 25,917 | $ | - | $ | (33,951 | ) | $ | (8,012 | ) | ||||||||||||||
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Common stock issued for acquisition at $0.08 per
share
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- | - | 22,500,000 | 22,500 | 1,879,439 | - | 1,901,939 | |||||||||||||||||||||
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Common shares issued for finders fee at $0.001 per share
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- | - | 2,525,000 | 2,525 | - | - | 2,525 | |||||||||||||||||||||
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Preferred shares issued for acquisition at $0.001 per share
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20,000 | 20 | - | - | - | - | 20 | |||||||||||||||||||||
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Common stock issued pursuant to employment stock grants at $0.06 per share
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- | - | 1,914,000 | 1,914 | 105,487 | - | 107,401 | |||||||||||||||||||||
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Common shares issued for intangible assets at $0.08 per share
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- | - | 850,000 | 850 | 70,750 | - | 71,600 | |||||||||||||||||||||
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Common shares issued for services at $0.45 per
share
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- | - | 50,000 | 50 | 22,450 | - | 22,500 | |||||||||||||||||||||
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Capital contribution by shareholder
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- | - | - | - | 38,250 | - | 38,250 | |||||||||||||||||||||
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Net loss for the year ended December 31, 2007
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- | - | - | - | - | (285,341 | ) | (285,341 | ) | |||||||||||||||||||
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Balance, December 31, 2007
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42,013 | $ | 42 | 53,756,159 | $ | 53,756 | $ | 2,116,376 | $ | (319,292 | ) | $ | 1,850,882 | |||||||||||||||
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Cancelled share issued pursuant to employee stock grants
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- | - | (1,898,000 | ) | (1,898 | ) | (105,485 | ) | - | (107,383 | ) | |||||||||||||||||
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Common stock issued for cash at $0.38 per share
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- | - | 110,000 | 110 | 41,874 | - | 41,984 | |||||||||||||||||||||
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Option expense pursuant to employee option plan
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- | - | - | - | 96,750 | - | 96,750 | |||||||||||||||||||||
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Net loss for the year ended December 31, 2008
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- | - | - | - | - | (204,910 | ) | (204,910 | ) | |||||||||||||||||||
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Balance, December 31, 2008
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42,013 | 42 | 51,968,159 | 51,968 | 2,149,515 | (524,202 | ) | 1,677,323 | ||||||||||||||||||||
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Option expense pursuant to employee option plan
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- | - | - | - | 401,250 | - | 401,250 | |||||||||||||||||||||
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Operational segment sold in exchange for common stock
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- | - | (22,500,000 | ) | (22,500 | ) | 22,500 | - | - | |||||||||||||||||||
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Common stock issued for purchase of subsidiary at $0.01 per share
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- | - | 4,050,000 | 4,050 | 36,450 | - | 40,500 | |||||||||||||||||||||
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Common stock issued for cash at $0.05 per share
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- | - | 600,000 | 600 | 29,400 | - | 30,000 | |||||||||||||||||||||
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Net loss for the year ended December 31, 2009
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- | - | - | - | - | (2,442,684 | ) | (2,442,684 | ) | |||||||||||||||||||
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Balance, December 31, 2009
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42,013 | 42 | 34,118,159 | 34,118 | 2,639,115 | (2,966,886 | ) | (293,611 | ) | |||||||||||||||||||
| Net loss for the three months ended March 31, 2010 (unaudited) |
- | - | - | - | - | (60,154 | ) | (60,154 | ) | |||||||||||||||||||
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Balance, March 31, 2010 (unaudited)
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42,013 | $ | 42 | 34,118,159 | $ | 34,118 | $ | 2,639,115 | $ | (3,027,040 | ) | $ | (353,765 | ) | ||||||||||||||
The accompanying notes are an integral part of these financial statements.
4
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From Inception
on April 30 2009 |
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For the Three Months Ended
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through
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March 31,
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March 31,
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2010
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2009
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2010
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OPERATING ACTIVITIES
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Net loss
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$ | (60,154 | ) | $ | (471,635 | ) | $ | (2,502,838 | ) | |||
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Adjustments to Reconcile Net Loss to Net
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Cash Used by Operating Activities:
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Depreciation
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312 | - | 624 | |||||||||
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Amortization of intangibles
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- | 698 | 2,803 | |||||||||
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Employee option grants issued
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- | 32,250 | 46,500 | |||||||||
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Cancellation of employee stock option shares
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- | - | 354,750 | |||||||||
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Impairment of intangible assets
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- | - | 121,242 | |||||||||
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Deferred tax asset
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- | - | 170,800 | |||||||||
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Changes in operating assets and liabilities:
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Accounts payable to related parties
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(235 | ) | - | 280,300 | ||||||||
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Accounts payable and accrued liabilities
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54,919 | (194,739 | ) | 38,554 | ||||||||
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Net Cash Used in Continuing Operating Activities
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(5,158 | ) | (633,426 | ) | (1,487,265 | ) | ||||||
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Net Cash Used in Discontinued Operating Activities
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- | 633,326 | 1,678,016 | |||||||||
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Net Cash Used in Operating Activities
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(5,158 | ) | (100 | ) | 190,751 | |||||||
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INVESTING ACTIVITIES
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Purchase of property and equipment
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- | - | (216,556 | ) | ||||||||
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Net Cash Used in Continuing Investing Activities
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- | - | (216,556 | ) | ||||||||
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Net Cash Used in Discontinued Investing Activities
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- | - | - | |||||||||
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Net Cash Used in Investing Activities
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- | - | (216,556 | ) | ||||||||
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FINANCING ACTIVITIES
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Proceeds from common stock
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- | - | 30,000 | |||||||||
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Net Cash Provided by Continuing Financing Activities
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- | - | 30,000 | |||||||||
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Net Cash Used in Discontinued Financing Activities
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- | - | - | |||||||||
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Net Cash Used in Financing Activities
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- | - | 30,000 | |||||||||
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NET DECREASE IN CASH
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(5,158 | ) | (100 | ) | 4,195 | |||||||
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CASH AT BEGINNING OF PERIOD
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9,453 | 100 | 100 | |||||||||
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CASH AT END OF PERIOD
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$ | 4,295 | $ | - | $ | 4,295 | ||||||
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SUPPLEMENTAL DISCLOSURES OF
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CASH FLOW INFORMATION
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CASH PAID FOR:
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Income taxes paid
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$ | - | $ | - | $ | - | ||||||
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Interest paid
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- | - | - | |||||||||
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NON CASH FINANCING ACTIVITIES:
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Common stock issued for purchase of subsidiary
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$ | - | $ | - | $ | 40,500 | ||||||
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Common stock cancelled
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- | - | 20,500 | |||||||||
5
UTEC, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
March 31, 2010 and December 31, 2009
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at March 31, 2010, and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 2009 audited financial statements. The results of operations for the period ended March 31, 2010 is not necessarily indicative of the operating results for the full year.
NOTE 2 - GOING CONCERN
The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
6
UTEC, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
March 31, 2010 and December 31, 2009
March 31, 2010 and December 31, 2009
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements
In January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the scope of current US GAAP. It clarifies the decrease in ownership provisions of Subtopic 810-10 and removes the potential conflict between guidance in that Subtopic and asset de-recognition and gain or loss recognition guidance that may exist in other US GAAP. An entity will be required to follow the amended guidance beginning in the period that it first adopts FAS 160 (now included in Subtopic 810-10). For those entities that have already adopted FAS 160, the amendments are effective at the beginning of the first interim or annual reporting period ending on or after December 15, 2009. The amendments should be applied retrospectively to the first period that an entity adopted FAS 160. The Company does not expect the provisions of ASU 2010-02 to have a material effect on the financial position, results of operations or cash flows of the Company.
In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to Topic 505 clarifies the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a limit on the amount of cash that will be distributed is not a stock dividend for purposes of applying Topics 505 and 260. Effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis. The Company does not expect the provisions of ASU 2010-01 to have a material effect on the financial position, results of operations or cash flows of the Company.
NOTE 4 – RELATED PARTY TRANSACTIONS
Through March 31, 2010, the Company has borrowed $80,300 from a related party to fund continuing operations. This note bears no interest, is due on demand and in uncollateralized.
On June 1, 2009 the Company entered into an employment agreement with its CEO. Under the agreement, the Company has agreed to pay $200,000 per year and a bonus of up to 50% of the annual pretax earnings before depreciation and amortization, subject to a maximum of $100,000. As of March 31, 2010 and December 31, 2009, the Company has accrued $250,000, and $200,000 of salary in conjunction with this agreement. Unpaid salary does not accrue interest.
NOTE 5 - SUBSEQUENT EVENTS
In accordance with ASC 855-10, Company management reviewed all material events through the date of this report and there are no material subsequent events to report.
7
2007 was the first year of operation for the Company, after it acquired the UTEC Corporation from Energetic Systems Inc, LLC. In 2007, the Company was organized into three marketing units, Energetic Materials, Specialty Chemicals and Raw Materials and Hazardous Chemicals and Biological Waste Destruction. The Company’s historical legacy business was primarily constituted by the first two marketing units and almost exclusively within the commercial explosives market. Revenue comparisons are included from these two activities.
The new marketing unit, Hazardous Chemicals and Biological Waste Destruction was in a development stage through June of 2009, and had no commercial revenues. Focus has been on licensing and validation of the Cold Plasma Oxidizer technology, and on the development of the Company’s Waste Destruction System, identification of potential markets, and preparation of its business plan. This business unit was structured in order to pursue commercialization of Cold Plasma Oxidizer waste destruction systems during 2009.
During the latter part of 2008, the Directors and Management conducted a review of the Company’s business prospects and concluded that the legacy activities of UTEC Corporation were not sufficient to fund development and commercialization of the waste destruction business. Consequently, the Directors and Management began exploring various means to continue the growth of the business and fund the final development and commercialization of the waste destruction technology licensed from Ceramatec. A decision was made to sell the legacy business to Energetic Systems, Inc., LLC., and retain within the UTEC consolidated group the Ceramatec license and waste destruction assets developed over the past two years. The effect of this will be to simplify and focus the activities of the Company on the waste destruction business, eliminate the need to inject additional cash required to fund the legacy business, and thereby make the Company more attractive to potential lenders and investors.
The sale was completed on April 26, 2009, with effect from April 1, 2009. UTEC, Inc. and its wholly owned subsidiary UTEC Corporation will continue as public companies, retaining the assets of the waste destruction business.
On September 2, 2009 the Company received a termination notice from Ceramatec that this agreement was cancelled for non-performance. The Company had issued 850,000 of its $.001 par value common shares to Ceramatec that Ceramatec could sell starting two years from the date of the agreement. These unregistered shares were issued under section 4(2) of the Securities Act of 1933 as they were transactions by an issuer not involving any public offering. The Company has received assurances that the 765,000 shares still held by Ceramatec issued under this agreement will be returned to treasury.
8
On October 1, 2009 the Company purchased 100% of the outstanding shares of C2R Energy Commodities Inc for the issuance of 4,050,000 of the Company’s $0.001 par value common shares. These unregistered shares were issued under section 4(2) of the Securities Act of 1933 as they were transactions by an issuer not involving any public offering
Revenues
Revenues from continuing operations for the year ended December 31, 2009 were $-0. The Company divested all assets that generated revenue in the period ended June 30, 2009 as part of the sale of the legacy business.
Expenses
Expenses from continuing operations for the three month period ended March 31, 2010 and 2009 were $60,154 and $95,233. The majority of the remaining expenses are composed of $50,000 and $59,363 in compensation to officers of the Company for the three months ended March 31, 2010 and 2009, respectively.
Discontinued Operations
In April 2009, the Company sold its commercial explosives development, analysis, testing and manufacturing business (“Legacy Business”) in a non-cash transaction to a related party in exchange for stock in the Company totaling 22,500,000 shares. The stock was cancelled in July of 2009.
A breakdown of the loss associated with the discontinued is presented in the table below.
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Three
Months Ended March 31, 2010 |
Three
Months Ended March 31, 2009 |
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Income
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- | 1,039,595 | ||||||
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Cost of Goods Sold
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- | 353,544 | ||||||
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Operating expenses
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- | 376,402 | ||||||
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Net Operating Income (Loss)
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- | 309,649 | ||||||
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Loss on disposal of assets
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- | - | ||||||
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Tax benefit at 34%
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- | - | ||||||
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Net income (loss)
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- | 309,649 | ||||||
Liquidity and Capital Resources
As of March 31, 2010, the company had $4,295 cash on hand. During 2008 and 2009, cash flows from the legacy business, supplemented with short-term borrowings from related parties, was used to support the waste destruction business development program. Following a general business review at the end of 2008, management has determined that the legacy business cannot support both its ongoing operations as well as the development of the waste destruction business on its operations alone. Consequently, the board of directors, in consultation with management and major shareholders, took the following step. In April 2009, the Company sold its commercial explosives development, analysis, testing and manufacturing business (“Legacy Business”) in a non-cash transaction to a related party in exchange for stock in the Company totaling 22,500,000 shares. The stock was cancelled in July of 2009.
9
Not Applicable.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we evaluated the effectiveness of our disclosure controls and procedures in ensuring that the information required to be disclosed in our filings under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, including ensuring that such information is accumulated and communicated to UTEC management as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, management concluded that the Company’s internal control over financial reporting was not effective as of March 31, 2010, due to a lack of segregation of duties.
Changes in internal controls over financial reporting
There was no change in our internal controls over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
On October 1, 2009 the Company purchased 100% of the outstanding shares of C2R Energy Commodities Inc for the issuance of 4,050,000 of the Company’s $0.001 par value common shares. These unregistered shares were issued under section 4(2) of the Securities Act of 1933 as they were transactions by an issuer not involving any public offering.
On October 1, 2009, the Board of Directors asked Suresh Subramanian to step down as President and J. Curt Stafford to step down as CFO of the Company pursuant to a condition of the Company’s agreement with CR2 Energy Commodities Corp. Effective October 1, 2009, the Board of Directors appointed Fortunato Villamagna President and CEO; Kenneth B. Liebscher as Secretary and Howard Bouch as CFO.
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Exhibits:
|
Exhibit No.
|
Document
|
Location
|
|
31
|
Rule 13a-41(a)/15d-14(a) Certificates
|
Included
|
|
32
|
Section 1350 Certifications
|
Included
|
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.
UTEC, INC.
| May 15, 2010 | /s/ Fortunato Villamagna | |
| Fortunato Villamagna, Director & CEO, | ||
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