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FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 2002
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[ ] TRANSITION REPORT UNDER 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 0-31683
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ROLLTECH, INC.
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(Name of small business issuer in its charter)
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NEVADA 98-0230423
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
35 - 148TH AVE SE, SUITE # 9, BELLEVUE, WA 98007
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number 206.353.8528
Securities registered under Section 12(b) of the Exchange Act:
Not applicable.
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK
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(Title of class)
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
[ ]
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB [ ].
State issuer's revenues for its most recent fiscal year.$Nil
State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as of
a specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.)
6,000 common shares @ $0.11(1) = $660 Bid $0.11; Ask $0.85
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(1) Average of bid and ask closing prices on March 11, 2003, the day of the
last trade.
<PAGE>
Note: If determining whether a person is an affiliate will involve an
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by non-affiliates on the basis of reasonable
assumptions, if the assumptions are stated.
(ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
5,868,500 common shares, par value of $0.001 per share outstanding as of March
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14, 2003
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Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS.
FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements as that term is defined
in the Private Securities Litigation Reform Act of 1995. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "may", "will",
"should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled "Risk Factors", that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.
As used in this annual report, the terms "we", "us", "our", and "Rolltech" mean
Rolltech, Inc., unless otherwise indicated.
All dollar amounts refer to US dollars unless otherwise indicated.
Business of the Company
We are currently seeking to either identify a suitable business opportunity or
enter into a suitable business combination. Until we secure a suitable business
opportunity or combination, we will operate as a "blank check" company. Rolltech
is a Nevada corporation with its business offices located at Suite 35 - 148th
Ave SE, Suite # 9, Bellevue, WA 98007. Our telephone number is 206.353.8528.
Corporate History
Rolltech was incorporated on January 25, 2000 under the laws of the State of
Nevada. Since inception, our focus has been on the identification and
acquisition of marketing licenses for high technology manufactured products.
Initially, we planned to develop a business-to-business manufacturing technology
interactive website to facilitate the marketing of any products that we
succeeded in licensing.
On February 7, 2000, as an initial marketing project, we entered into a
Marketing License Agreement with Terlaz USA, Inc., of New York, pursuant to
which we were granted an exclusive license to market a proprietary solid-state
graphite-based lubricant developed by Terlaz and sold under the brand name
"Cobra Solid Lubricant", as well as any future products that might be developed
by Terlaz during the term of the Agreement.
As a result of difficulties experienced in marketing Cobra Solid Lubricant,
high costs and poor market conditions, we have been unable to obtain adequate
financing to proceed with the execution of our plans, including the development
and launch of our business-to-business website. Effective February 1, 2001, we
terminated our Marketing License Agreement with Terlaz and refocused on efforts
in seeking new business opportunities.
On March 13, 2002, we acquired certain property and equipment and a license to
certain intellectual property to produce salmon caviar and salmon caviar-related
products. In contemplation of the acquisition, we incorporated a wholly-owned
subsidiary (Golden Caviar Corp.) on February 15, 2002 under the laws of the
State of Nevada to operate the caviar business. The processing and sale of
caviar and caviar-related products was the Company's primary business from late
March 2002 until June 2002. At this time the Company terminated its involvement
in the caviar business, returned remaining assets and settled liabilities of the
caviar business, became inactive and began the search for new business
opportunities. The operations of our caviar business are segregated in our
consolidated financial statements as discontinued operations.
<PAGE>
Our Current Business
Since we terminated our caviar business Agreement, we no longer have an active
operating business that we can pursue. Accordingly, we are seeking to either
identify a suitable business opportunity or enter into a suitable business
combination. Until we secure a suitable business opportunity or combination, we
will operate as a "blank check" company. Management of our company does not
believe that it will be able to generate revenues without finding and completing
the acquisition of a suitable business opportunity. In addition, if no suitable
business opportunity is identified, shareholders will not realize any further
return on their investment in our company, and there will be no market for our
common shares.
Once a business opportunity or business combination has been identified, we will
investigate and evaluate the business opportunity or business combination. In
selecting a suitable business opportunity or business combination, management
intends to focus on the potential for future profits and strength of current
operating management of the business opportunity or business combination. We
have not put industry or geographically specific limitations on the nature of
acquisitions or business opportunities to be evaluated. Management believes
that the greatest potential lies in technology and goods or products-related
industries, rather than principally service industries. Nevertheless, this
shall not preclude the investigation or evaluation of any other category of
business or industry. We will conduct our own investigation to identify an
appropriate business opportunity or business combination, and will seek a
potential business opportunity or business combination from all known sources,
relying principally upon personal contacts of our officers and directors, as
well as indirect associations between them and other business and professional
people.
Evaluation of Opportunities
The analysis of new business opportunities will be undertaken by, or under the
supervision of, our officers and directors. Management intends to concentrate
on identifying prospective business opportunities or business combinations which
may be brought to management's attention through present associations. In
analyzing prospective business opportunities or business combinations,
management will consider, among other factors, such matters as:
(a) the available technical, financial and managerial resources;
(b) working capital and other financial requirements;
(c) history of operations, if any;
(d) prospects for the future;
(e) present and expected competition;
(f) the quality and experience of management services which may be available
and the depth of that management;
(g) specific risk factors not now foreseeable but which may be anticipated as
having an impact on our proposed activities;
(h) the potential for growth or expansion;
(i) the potential for profit;
(j) the perceived public recognition or acceptance of products, services or
trades; and
(k) name identification.
Management will meet personally with management and key personnel of the firm
sponsoring the business opportunity or business combination as part of their
investigation. To the extent possible, we intend to utilize written reports and
personal investigation to evaluate the above factors. We will not acquire or
merge with any company for which audited financial statements cannot be
obtained.
<PAGE>
Opportunities in which we participate will present certain risks, many of which
cannot be identified adequately prior to selecting a specific opportunity. Our
shareholders must, therefore, depend on management to identify and evaluate such
risks. Promoters of some opportunities may have been unable to develop a going
concern or may present a business in its development stage (in that it has not
generated significant revenues from its principal business activities prior to
our participation). Even after our participation, there is a risk that the
combined enterprise may not become a going concern or advance beyond the
development stage. Other opportunities may involve new and untested products,
processes, or market strategies which may not succeed. Such risks will be
assumed by us and, therefore, our shareholders.
The investigation of specific business opportunities or business combinations
and the negotiation, drafting, and execution of relevant agreements, disclosure
documents, and other instruments will require substantial management time and
attention as well as substantial costs for accountants, attorneys and others.
If a decision is made not to participate in a specific business opportunity the
costs incurred in the related investigation would not be recoverable.
Furthermore, even if an agreement is reached for the participation in a specific
business opportunity, the failure to consummate that transaction may result in
the loss by of the related costs incurred. There is the additional risk that we
will not find a suitable target. Management does not believe that we will
generate revenue without finding and completing the acquisition of a suitable
business opportunity or a transaction with a suitable target company. If no such
business opportunity target is found, therefore, no return on an investment in
our company will be realized, and there will not, most likely, be a market for
our common shares.
Acquisition of Opportunities
In implementing a structure for a particular business acquisition, we may become
a party to a merger, consolidation, reorganization, joint venture, franchise or
licensing agreement with another corporation or entity. We may also purchase
stock or assets of an existing business. It is likely that any merger with an
existing company will be in the form of a reverse takeover, which may require
both shareholder approval and a disclosure document. Once a transaction is
complete, it is possible that our present management and shareholders will not
be in control of our company. In addition, a majority or all of our officers
and directors may, as part of the terms of the transaction, resign and be
replaced by new officers and directors without a vote of our shareholders.
It is anticipated that securities issued in any such reorganization would be
issued in reliance on exemptions from registration under applicable securities
laws. In some circumstances, however, as a negotiated element of the potential
transaction, we may agree to register such securities either at the time the
transaction is consummated, under certain conditions or at a specified time
thereafter. The issuance of substantial additional securities, and their
potential sale into any trading market in our common shares which may develop,
may have a depressive effect on the market for and the price of our common
shares.
As part of our investigation of a potential business combination or opportunity,
our officers and directors may:
(a) meet personally with management and key personnel;
(b) visit and inspect material facilities;
(c) obtain independent analysis or verification of certain information
provided;
(d) check references of management and key personnel; and
(e) take other reasonable investigative measures, as our limited financial
resources and management expertise allow.
The manner in which we participate in an opportunity with a target company or
acquire a business opportunity will depend on the nature of the opportunity, our
needs and desires, the needs and desires of the other party, management of the
opportunity, and our relative negotiating strength and such other management.
With respect to any mergers or acquisitions, negotiations with target company
management will be expected to focus on the percentage of our company which the
target company's shareholders would acquire in exchange for their shareholdings
in the target company. Depending upon, among other things, the target company's
assets and liabilities, our shareholders will, in all likelihood, hold a smaller
percentage ownership interest in our company following any merger or
acquisition. The percentage ownership may be subject to significant reduction
in the event we acquire a target company with substantial assets. Any merger or
acquisition effected by us can be expected to have a significant dilutive effect
on the percentage of shares held by our then shareholders.
<PAGE>
During the fiscal year ended December 31, 2002 subsequent to the termination of
the caviar venture, we reviewed in varying degrees a number of potential
business opportunities, all of which we determined were not suitable to pursue
having regard to a number of factors including, among other things, our
Company's limited resources. There can be no assurance that management will
ever be able to identify and secure a suitable business opportunity or that
management has the requisite experience to recognize and understand a business
operation that would benefit us. In the event that management is able to locate
what it considers to be a suitable business opportunity, there can be no
assurance that the acquisition of such business opportunity or the entering into
of a business combination will be successful. Selecting a business opportunity
will likely be complex and extremely risky. Because of general economic
conditions, rapid technological advances being made in some industries, and
shortages of available capital, management believes that there are numerous
firms seeking the benefits of a publicly-traded corporation. Such benefits of a
publicly traded corporation may include:
(a) facilitating or improving the terms on which additional equity financing
may be sought;
(b) providing liquidity for the principals of a business;
(c) creating a means for providing incentive stock options or similar benefits
to key employees; and/or
(d) providing liquidity (subject to restrictions of applicable statutes) for
all shareholders.
In contrast, negative aspects of becoming a publicly traded corporation
registered in the United States may include:
(a) complying with the requirements of the Securities Exchange Act of 1934;
(b) complying with the requirements of the Nevada corporations statute;
(c) exposure of our officers and directors to lawsuits and liabilities under
the Securities Act of 1933;
(d) distracting management's attention from our day to day operations;
(e) restricting publicity and other marketing activities to ensure compliance
with securities law requirements and minimizing the potential liability of
our management and our company; and/or
(f) increased legal, accounting and other expenses associated with operating a
public company.
Potentially available business opportunities and/or business combinations may
occur in many different industries and at various stages in the development of a
company, all of which will make the task of comparative investigation and
analysis of such business opportunities extremely difficult and complex.
RISK FACTORS
Much of the information included in this registration statement includes or is
based upon estimates, projections or other "forward looking statements". Such
forward looking statements include any projections or estimates made by us and
our management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgement regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions or other future performance
suggested herein.
Such estimates, projections or other "forward looking statements" involve
various risks and uncertainties as outlined below. We caution the reader that
important factors in some cases have affected and, in the future, could
materially affect actual results and cause actual results to differ materially
from the results expressed in any such estimates, projections or other "forward
looking statements".
<PAGE>
Our common shares are considered speculative during our search for a new
business opportunity. Prospective investors should consider carefully the risk
factors set out below.
Scarcity of and Competition for Business Opportunities and Combinations
We are, and will continue to be, an insignificant participant amongst numerous
other companies seeking a suitable business opportunity or business combination.
A large number of established and well-financed entities, including venture
capital firms, are actively seeking suitable business opportunities or business
combinations which may also be desirable target candidates for us. Virtually
all such entities have significantly greater financial resources, technical
expertise and managerial capabilities than we do. We are, consequently, at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. Moreover, we will also compete
with numerous other small public companies seeking suitable business
opportunities or business combinations.
Governmental Regulation
To the best of our knowledge, we are not currently subject to direct federal,
state or local regulation in the United States, other than regulations
applicable to businesses generally.
Key Personnel
Although none of our present officers or directors are key to our continuing
operations, we rely upon the continued service and performance of these officers
and directors, and our future success depends on the retention of these people,
whose knowledge of our business and whose technical expertise would be difficult
to replace. At this time, none of our officers or directors are bound by
employment agreements, and as a result, any of them could leave with little or
no prior notice.
If we are unable to hire and retain technical, sales and marketing and
operational personnel, any business we acquire could be materially adversely
affected. It is likely that we will have to hire a significant number of
additional personnel in the future if we identify and complete the acquisition
of a business opportunity, or if we enter into a business combination.
Competition for qualified individuals is likely to be intense, and we may not be
able to attract, assimilate, or retain additional highly qualified personnel in
the future. The failure to attract, integrate, motivate and retain these
employees could harm our business.
Need for Additional Financing
We anticipate that we may require additional financing from directors or
unrelated third parties in order to continue seeking a suitable business
opportunity or business combination in 2003. We do not currently have
sufficient capital to fund our existing operations. However, we may be required
to raise additional financing for a particular business combination or business
opportunity. We would likely seek to secure any additional financing necessary
through a private placement of our common shares.
There can be no assurance that, if required, any such financing will be
available upon terms and conditions acceptable to us, if at all. Our inability
to obtain additional financing in a sufficient amount when needed and upon terms
and conditions acceptable to us could have a materially adverse effect upon our
company. Although we believe that we have funds available to meet our immediate
needs, we may require further funds to finance the development of any business
opportunity that we acquire. There can be no assurance that such funds will be
available or available on terms satisfactory to us. If additional funds are
raised by issuing equity securities, further dilution to existing or future
shareholders is likely to result. If adequate funds are not available on
acceptable terms when needed, we may be required to delay, scale back or
eliminate the development of any business opportunity that we acquire.
Inadequate funding could also impair our ability to compete in the marketplace,
which may result in the dissolution of our company.
Limited Operating History
We have a limited operating history on which to base an evaluation of our
business and prospects. Our prospects must be considered in light of the risks,
uncertainties, expenses and difficulties frequently encountered by companies
<PAGE>
seeking to acquire or establish a new business opportunity. Some of these risks
and uncertainties relate to our ability to identify, secure and complete an
acquisition of a suitable business opportunity.
We cannot be sure that we will be successful in addressing these risks and
uncertainties and our failure to do so could have a materially adverse effect on
our financial condition. In addition, our operating results are dependent to a
large degree upon factors outside of our control. There are no assurances that
we will be successful in addressing these risks, and failure to do so may
adversely affect our business.
It is unlikely that we will generate any or significant revenues while we seek a
suitable business opportunity or business combination. Our short and long-term
prospects depend upon our ability to select and secure a suitable business
opportunity or business combination. In order for us to make a profit, we will
need to successfully acquire a new business opportunity in order to generate
revenues in an amount sufficient to cover any and all future costs and expenses
in connection with any such business opportunity. Even if we become profitable,
we may not sustain or increase our profits on a quarterly or annual basis in the
future.
We will, in all likelihood, sustain operating expenses without corresponding
revenues, at least until we complete a business combination or acquire a
business opportunity. This may result in our company incurring a net operating
loss which will increase continuously until we complete a business combination
or acquire a business opportunity that can generate revenues that result in a
net profit to us. There is no assurance that we will identify a suitable
business opportunity or complete a business combination.
Ability to Generate Revenues is Uncertain
For the year ended December 31, 2002, we incurred a net loss of $587,193. We do
not anticipate generating any significant revenues until we acquire a business
opportunity or complete a business combination. We also have an accumulated
deficit of $749,091 as at December 31, 2002. At this time, our ability to
generate any revenues is uncertain. Our independent auditors' report on our
December 31, 2002 consolidated financial statements contains an additional
explanatory paragraph which identifies issues that raise substantial doubt about
our ability to continue as a going concern. The financial statements do not
include any adjustment that might result from the outcome of this uncertainty.
Speculative Nature of Our Proposed Operations
The success of our proposed plan of operation will depend to a great extent on
the operations, financial condition and management of any identified business
opportunity. While management intends to seek business opportunities and/or
business combinations with entities which have established operating histories,
there is no assurance that we will successfully locate business opportunities
meeting such criteria. In the event that we complete a business combination or
otherwise acquire a business opportunity, the success of our operations may be
dependent upon management of the successor firm or venture partner firm,
together with a number of other factors beyond our control.
No Agreement for Business Combination or Other Transaction/No Standards for
Business Combination
We have no agreement with respect to acquiring a business opportunity or
engaging in a business combination with any private entity. There can be no
assurance that we will successfully identify and evaluate suitable business
opportunities or conclude a business combination. There is no assurance that we
will be able to negotiate the acquisition of a business opportunity or a
business combination on terms favorable to us. We have not established a
specific length of operating history or a specified level of earnings, assets,
net worth or other criteria which we will require a target business opportunity
to have achieved, and without which we would not consider a business combination
in any form with such business opportunity. Accordingly, we may enter into a
business combination with a business opportunity having no significant operating
history, losses, limited or no potential for earnings, limited assets, negative
net worth or other negative characteristics.
Continued Management Control/Limited Time Availability
We are dependent upon management's personal abilities to evaluate business
opportunities that may be presented in the future. While seeking to acquire a
business opportunity, management anticipates devoting up to 50% of their time to
our business. Management may or may not have prior experience in the technical
<PAGE>
aspects of the industry or the business within that industry that may be
acquired. Our officers have not entered into written employment agreements with
us with respect to our proposed plan of operation and are not expected to do so
in the foreseeable future. We have not obtained key man life insurance on our
officers or directors. Notwithstanding the combined limited experience and time
commitment of management, loss of the services of any of these individuals would
adversely affect development of our business and our likelihood of continuing
operations.
Lack of Market Research or Marketing Organization
We have not conducted or received results of market research indicating that
there is a demand for the acquisition of a business opportunity or business
combination as contemplated by our company. Even if there is demand for the
acquisition of a business opportunity or combination as contemplated, there is
no assurance we will successfully complete such an acquisition or combination.
Lack of Diversification
In all likelihood, our proposed operations, even if successful, may result in a
business combination with only one entity. Consequently, the resulting
activities will be limited to that entity's business. Our inability to
diversify our activities into a number of areas may subject us to economic
fluctuations within a particular business or industry, thereby increasing the
risks associated with our operations.
Regulation
Although we will be subject to regulation under the Securities Exchange Act of
1934, management believes that we will not be subject to regulation under the
Investment Company Act of 1940, insofar as we will not be engaged in the
business of investing or trading in securities. In the event that we engage in
business combinations which result in us holding passive investment interests in
a number of entities, we could be subject to regulation under the Investment
Company Act of 1940, meaning that we would be required to register as an
investment company and could be expected to incur significant registration and
compliance costs. We have obtained no formal determination from the Securities
and Exchange Commission as to the status of our company under the Investment
Company Act of 1940 and, consequently, any violation of such act would subject
us to material adverse consequences.
Probable Change in Control and Management
A business combination or acquisition of a business opportunity involving the
issuance of our common shares may result in new or incoming shareholders
obtaining a controlling interest in our company. Any such business combination
or acquisition of a business opportunity may require management of our company
to sell or transfer all or a portion of the common shares in the capital of our
company that they hold or resign as members of our board of directors. The
resulting change in our control could result in removal of one or more of our
present officers and directors, and a corresponding reduction in or elimination
of their participation in the future affairs of our company.
Reduction of Percentage Share Ownership Following Business Combination
Our primary plan of operation is based upon the acquisition of a business
opportunity or a business combination with a private concern, which, in all
likelihood, would result in us issuing common shares to shareholders of such
private company. Issuing previously authorized and unissued common shares in
our capital will reduce the percentage of common shares owned by present and
prospective shareholders and may result in a change in our control and/or
management.
Taxation
United States and, if applicable, international tax consequences will, in all
likelihood, be major considerations in any business acquisition or combination
we may undertake. Typically, these transactions may be structured to result in
tax-free treatment pursuant to various United States tax provisions. We intend
to structure any business combination so as to minimize the tax consequences to
our company, our management, our principal shareholders and the target entity.
Management cannot ensure that a business combination will meet the statutory
requirements for a tax-free reorganization, or that the parties will obtain the
intended tax-free treatment upon a transfer of common shares or assets. A
non-qualifying reorganization could result in the imposition of taxes, which may
have an adverse effect on both parties to the transaction.
<PAGE>
Requirement of Audited Financial Statements May Disqualify Business Opportunity
Management believes that any potential business opportunity or target company
should provide audited financial statements for review and for the protection of
all parties to the business acquisition or combination, although management may
waive this requirement in appropriate circumstances. One or more attractive
business opportunities may forego a business combination with us rather than
incur the expenses associated with preparing audited financial statements.
Uncertain Ability to Manage Growth
Our ability to achieve any planned growth upon the acquisition of a suitable
business opportunity or business combination will be dependent upon a number of
factors including, but not limited to, our ability to hire, train and assimilate
management and other employees and the adequacy of our financial resources. In
addition, there can be no assurance that we will be able to manage successfully
any business opportunity or business combination. Failure to manage anticipated
growth effectively and efficiently could have a materially adverse effect on our
business.
"Penny Stock" Rules May Restrict the Market for the Company's Shares
Our common shares are subject to rules promulgated by the Securities and
Exchange Commission relating to "penny stocks," which apply to companies whose
shares are not traded on a national stock exchange or on the NASDAQ system,
trade at less than $5.00 per share, or who do not meet certain other financial
requirements specified by the Securities and Exchange Commission. These rules
require brokers who sell "penny stocks" to persons other than established
customers and "accredited investors" to complete certain documentation, make
suitability inquiries of investors, and provide investors with certain
information concerning the risks of trading in the such penny stocks. These
rules may discourage or restrict the ability of brokers to sell our common
shares and may affect the secondary market for our common shares. These rules
could also hamper our ability to raise funds in the primary market for our
common shares.
Insider Control of Common Stock
Each of Dr. Michael Scheglov, our President, Chief Executive Officer and
Secretary, and Taly Keren, our Vice-President and Treasurer, owns 2,255,000
shares of our common stock, each representing 38.4% of our issued and
outstanding shares of common stock. Although these shareholders are not parties
to a voting trust or any other arrangement requiring them to vote their
respective shares in a particular way, each of these shareholders will be able
to influence all matters requiring shareholder approval, including the election
of directors and approval of significant corporate transactions. Such control
may have the effect of delaying or preventing a change in control.
Possible Volatility of Share Prices
Our common shares are currently publicly traded on the Over-the-Counter Bulletin
Board service of the National Association of Securities Dealers, Inc. The
trading price of our common shares has been subject to wide fluctuations.
Trading prices of our common shares may fluctuate in response to a number of
factors, many of which will be beyond our control. The stock market has
generally experienced extreme price and volume fluctuations that have often been
unrelated or disproportionate to the operating performance of companies with no
current business operation. There can be no assurance that trading prices and
price earnings ratios previously experienced by our common shares will be
matched or maintained. These broad market and industry factors may adversely
affect the market price of our common shares, regardless of our operating
performance.
In the past, following periods of volatility in the market price of a company's
securities, securities class-action litigation has often been instituted. Such
litigation, if instituted, could result in substantial costs for us and a
diversion of management's attention and resources.
Indemnification of Directors, Officers and Others
Our by-laws contain provisions with respect to the indemnification of our
officers and directors against all expenses (including, without limitation,
attorneys' fees, judgments, fines, settlements, and other amounts actually and
reasonably incurred in connection with any proceeding arising by reason of the
<PAGE>
fact that the person is one of our officers or directors) incurred by an officer
or director in defending any such proceeding to the maximum extent permitted by
Nevada law.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of our
company under Nevada law or otherwise, we have been advised the opinion of the
Securities and Exchange Commission is that such indemnification is against
public policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable.
Future Dilution
Our constating documents authorize the issuance of 75,000,000 common shares,
each with a par value of $0.001. In the event that we are required to issue any
additional shares or enter into private placements to raise financing through
the sale of equity securities, investors' interests in our company will be
diluted and investors may suffer dilution in their net book value per share
depending on the price at which such securities are sold. If we issue any such
additional shares, such issuances also will cause a reduction in the
proportionate ownership and voting power of all other shareholders. Further,
any such issuance may result in a change in our control.
Anti-Takeover Provisions
We do not currently have a shareholder rights plan or any anti-takeover
provisions in our By-laws. Without any anti-takeover provisions, there is no
deterrent for a take-over of our company, which may result in a change in our
management and directors.
ITEM 2. DESCRIPTION OF PROPERTY.
Our principal executive office is located at Suite 35 - 148th Ave SE, Suite # 9,
Bellevue, WA. We share a small section of the Bellevue premises with Dr Michael
Scheglov, President of the Company. Because we are presently inactive and do
not require office space beyond a place for record retention, Dr. Michael
Scheglov charges no compensation for use of his premises.
ITEM 3. LEGAL PROCEEDINGS.
We know of no material, active or pending legal proceedings against us, nor are
we involved as a plaintiff in any material proceedings or pending litigation.
There are no proceedings in which any of our directors, officers or affiliates,
or any registered or beneficial shareholders are an adverse party or have a
material interest adverse to us.
On or about May 24, 2002, the Law Office of Oleg Ordinartsev PLLC filed a
lawsuit in the King County Superior Court, Case No. 02-2-16398-0 SEA, against
Golden Caviar (the "Ordinartsev Action") alleging breach of a purported
agreement between Golden Caviar Corp. and the plaintiff Oleg Ordinartsev PLLC
and seeking specific performance. On or about June 10, 2002 Golden Caviar Corp.
filed its answer to the complaint in the Ordinartsev Action, in which it denied
the substantive allegations therein, raised several affirmative defences, and
filed a counterclaim against the plaintiff alleging interference with a business
expectancy, trespass and misrepresentation.
On June 27, 2002, Golden Caviar Corp. filed an amended answer, counterclaim and
third party complaint in the Ordinartsev Action naming Dr. Sova and Sea
Technology Enterprise, LLC as third party defendants. In addition to seeking
judgment to the effect that the plaintiff's claims against Golden Caviar Corp.
be dismissed with prejudice, Golden Caviar Corp. was seeking that judgment be
entered in its favor and against the plaintiff, Dr. Sova, Mr. Ordinartsev
personally and Sea Technology Enterprise, LLC for damages in an amount to be
proven at trial, for prejudgment interest, for attorney fees; and for such other
and further relief as the Court deems just, equitable and proper.
On June 27, 2002, we filed a report on Form 8-K announcing that on June 27,
2002, Golden Caviar Corp., our wholly-owned subsidiary, discontinued proposed
caviar business operations with Dr. Vyacheslav Sova, Sea Technology Enterprise,
LLC, a limited liability company formed under the laws of the State of
Washington and controlled by Dr. Sova. (Detailed report on Form 8-K filed on
June 27, 2002).
Effective June 27, 2002 we have begun to refocus on efforts in seeking new
business opportunities.
<PAGE>
On July 3, 2002, Rolltech and our wholly-owned subsidiary, Golden Caviar,
entered into Agreement with Dr. Sova and Sea Technology Enterprise, LLC to
release from any and all claims including, without limitation, any and all
claims being litigated in the King County Superior Court, Case No. 02-2-16398-0
SEA, or which could arise from any of the agreements or relationships by and
between Golden Caviar, Rolltech, Dr. Sova and Sea Technology Enterprise, LLC.
Concurrently, Rolltech and and its wholly-owned subsidiary, Golden Caviar Corp.
entered into to Agreement with Oleg Ordinartsev and the Law Office of Oleg
Ordinartsev PLLC forever discharge each other of any and all claims, demands,
and causes of action of whatsoever kind, nature or description, whether past,
present or future, which have arisen out of or could be alleged to have arisen
out of the claims by Golden Caviar Corp. contained in the King County Superior
Court, Case No. 02-2-16398-0 SEA.
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of our security holders during the year
ended December 31, 2002.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Our common stock is quoted on the OTC Bulletin Board under the symbol "RLTE".
Our common stock began quotation on the OTC Bulletin Board on January 12, 2001
and our CUSIP number is 77578R 100. The following quotations reflect the high
and low bids for our common stock based on inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions. The
high and low prices of our common stock (obtained from Canada Stockwatch) for
the periods indicated below are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
QUARTER ENDED HIGH LOW
------------------ ----- -----
December 31, 2002 $1.01 $0.11
------------------ ----- -----
September 30, 2002 $1.01 $0.10
------------------ ----- -----
June 30, 2002 $1.01 $0.51
------------------ ----- -----
March 31, 2002 $1.45 $0.10
------------------ ----- -----
</TABLE>
There was no trading activity for the quarterly periods ended September 30, 2002
and December 31, 2002.
Our common shares are issued in registered form. Pacific Stock Transfer, 5844
South Pecos Road, Suite D, Las Vegas, Nevada 89120 (Telephone: (702) 361-3033,
facsimile (702) 732-7890) is the registrar and transfer agent for our common
shares.
As of March 14, 2003, we had 5,868,500 shares of common stock outstanding and
approximately 64 stockholders of record. This number of stockholders does not
include stockholders who hold our securities in street name.
Dividend Policy
We have not declared or paid any cash dividends since inception. We intend to
retain future earnings, if any, for use in the operation and expansion of our
business and do not intend to pay any cash dividends in the foreseeable future.
Although there are no restrictions that limit our ability to pay dividends on
our common shares, we intend to retain future earnings for use in our operations
and the expansion of our business.
Equity Compensation Plan Information
On March 18, 2002, we granted 600,000 options to purchase our common stock at an
exercise price of $0.51 per share. 100,000 options granted to Dr. Sova were
<PAGE>
subsequently cancelled. Another 60,000 options granted to a consultant were
cancelled in November 2002. The remaining 440,000 options have fully vested at
December 31, 2002 and expire on March 18, 2007.
Recent Sales of Unregistered Securities
In exchange for the caviar licence (having no specified expiry), we issued (on
April 3, 2002) 1,000,000, fully-vested, non-forfeitable, restricted shares of
the Company to Dr. Sova. In June 2002, we decided to discontinue our caviar
business over an unresolvable dispute with Dr. Sova (the licensor). Such
termination and settlement of the agreement resulted in the return and
cancellation of the above-mentioned 1,000,000 issued common shares of the
Company (returned and cancelled in July 3 2002). The effect of the termination
has been recorded in our financial statements for the year ended December 31,
2002.
ITEM 6. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OR PLAN OF OPERATION.
The following discussion should be read in conjunction with our financial
statements and the related notes that appear elsewhere in this annual report.
The following discussion contains forward-looking statements that reflect our
plans, estimates and beliefs. Our actual results could differ materially from
those discussed in the forward looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
below and elsewhere in this annual report, particularly in the section entitled
"Risk Factors" found under "Item 1. Description of Business".
Our consolidated financial statements are stated in United States dollars and
are prepared in accordance with United States Generally Accepted Accounting
Principles.
GENERAL
Our company was incorporated on January 25, 2000 under the laws of the State of
Nevada. We were initially focused on the identification and acquisition of
marketing licenses for high technology manufactured products. We planned to
develop a business-to-business manufacturing technology interactive website to
facilitate the marketing of any products that we succeeded in licensing. In
February, 2000, as an initial marketing project, we entered into a marketing
license agreement pursuant to which we were granted an exclusive license to
market a proprietary solid-state graphite-based lubricant. As a result of
difficulties experienced in marketing the lubricant, high costs and poor market
conditions, we were unable to obtain adequate financing to proceed with the
execution of our plans, including the development and launch of our
business-to-business website. Effective February 1, 2001, we terminated our
marketing license agreement for the lubricant, and refocused on efforts in
seeking new business opportunities, operating as a "blank check" company.
On March 13, 2002, acting through our wholly-owned subsidiary, Golden Caviar
Corp., we entered into an arm's length agreement with Dr. Vyacheslav Sova and
Sea Technology Enterprise, LLC, a Washington limited liability company
controlled by Dr. Sova, pursuant to which Golden Caviar Corp. agreed to purchase
certain assets from Sea Technology Enterprise, LLC and to acquire an exclusive
license to certain intellectual property from Dr. Sova. The transactions
contemplated in this Agreement closed on March 13, 2002. The assets that Golden
Caviar Corp. purchased from Sea Technology consist of equipment that would have
together with the technology licensed by Dr. Sova, permitted Golden Caviar Corp.
to produce salmon caviar and salmon caviar products. The license that Dr. Sova
granted to Golden Caviar Corp. was a worldwide and exclusive license to use
certain intellectual property that was the subject of a number of Russian
patents, as well as other intellectual property (including certain proprietary
recipes) with respect to the production of salmon caviar and salmon caviar
products.
Since the closing of the transactions with Dr. Sova and Sea Technology
Enterprise, LLC, we were working towards establishing our infrastructure and
entering into key supply relationships with the view to commencing primary
processing of salmon caviar in June 2002. Shortly after the acquisition we
ceased our relationship with Dr. Sova and Sea Technology Enterprise, LLC over an
unresolved dispute and effected the reversal of the original acquisition
transaction.
On or about May 24, 2002, the Law Office of Oleg Ordinartsev PLLC filed a
lawsuit in the King County Superior Court, Case No. 02-2-16398-0 SEA, against
Golden Caviar (the "Ordinartsev Action") alleging breach of a purported
agreement between Golden Caviar Corp. and the plaintiff Oleg Ordinartsev PLLC
and seeking specific performance. On or about June 10, 2002 Golden Caviar Corp.
filed its answer to the complaint in the Ordinartsev Action, in which it denied
the substantive allegations therein, raised several affirmative defences, and
filed a counterclaim against the plaintiff alleging interference with a business
expectancy, trespass and misrepresentation. On June 27, 2002, Golden Caviar
<PAGE>
Corp. filed an amended answer, counterclaim and third party complaint in the
Ordinartsev Action naming Dr. Sova and Sea Technology Enterprise, LLC as third
party defendants. In addition to seeking judgment to the effect that the
plaintiff's claims against Golden Caviar Corp. be dismissed with prejudice,
Golden Caviar Corp. is seeking that judgment be entered in its favor and against
the plaintiff, Dr. Sova, Mr. Ordinartsev personally and Sea Technology
Enterprise, LLC for damages in an amount to be proven at trial, for prejudgment
interest, for attorney fees; and for such other and further relief as the Court
deems just, equitable and proper.
On June 27, 2002, we filed a report on Form 8-K announcing that on June 27,
2002, Golden Caviar Corp., our wholly-owned subsidiary, discontinued proposed
business operations with Dr. Vyacheslav Sova, Sea Technology Enterprise, LLC, a
limited liability company formed under the laws of the State of Washington and
controlled by Dr. Sova. (Detailed report on Form 8-K filed on June 27, 2002).
Effective June 27, 2002 we have begun to refocus on efforts in seeking new
business opportunities.
On July 3, 2002, Rolltech and our wholly-owned subsidiary, Golden Caviar,
entered into Agreement with Dr. Sova and Sea Technology to release from any and
all claims including, without limitation, any and all claims being litigated in
the King County Superior Court, Case No. 02-2-16398-0 SEA, or which could arise
from any of the agreements or relationships by and between Golden Caviar,
Rolltech, Sova and Sea Technology.
Concurrently, Rolltech and and its wholly-owned subsidiary, Golden Caviar
entered into to Agreement with Oleg Ordinartsev and the Law Office of Oleg
Ordinartsev PLLC to forever discharge each other of any and all claims, demands,
and causes of action of whatsoever kind, nature or description, whether past,
present or future, which have arisen out of or could be alleged to have arisen
out of the claims by Golden Caviar contained in the King County Superior Court,
Case No. 02-2-16398-0 SEA.
Plan of Operation
Since we discontinued our business relation with Dr. Sova and Sea Technology
Enterprises, LLC, we no longer have an active operating business that we can
pursue. Accordingly, we are seeking to either identify a suitable business
opportunity or enter into a suitable business combination. Until we secure a
suitable business opportunity or combination, we will operate as a "blank check"
company. Management of our company does not believe that it will be able to
generate revenues without finding and completing the acquisition of a suitable
business opportunity. In addition, if no suitable business opportunity is
identified, shareholders will not realize any further return on their investment
in our company, and there will be no market for our common shares.
Once a business opportunity or business combination has been identified, we will
investigate and evaluate the business opportunity or business combination. In
selecting a suitable business opportunity or business combination, management
intends to focus on the potential for future profits and strength of current
operating management of the business opportunity or business combination. We
have not put industry or geographically specific limitations on the nature of
acquisitions or business opportunities to be evaluated. Management believes that
the greatest potential lies in technology and goods or products-related
industries, rather than principally service industries. Nevertheless, this shall
not preclude the investigation or evaluation of any other category of business
or industry. We will conduct our own investigation to identify an appropriate
business opportunity or business combination, and will seek a potential business
opportunity or business combination from all known sources, relying principally
upon personal contacts of our officers and directors, as well as indirect
associations between them and other business and professional people.
Management believes that we currently lack sufficient cash flow to provide its
current cash requirements for the next twelve months without additional equity
financing or loans from directors. Until a business is acquired providing the
cash flow necessary to sustain our cash flow requirements, we will continue to
rely on certain of the directors to finance the deficiency of cash from
operations.
We do not presently have any agreements, arrangements or understandings for the
acquisition of new businesses. We are actively searching for potential
acquisitions, but there is no assurance that our search will locate good
investment targets or provide sufficient financing opportunities to allow us to
meet our liabilities and commitments as they come due.
We are a development stage company that, as of December 31, 2002, is operating
as a "blank check" company without an operating business. We are seeking to
identify a suitable business opportunity or enter into a suitable business
<PAGE>
combination. Our company will not be able to generate any revenues without
funding and completing the acquisition of a suitable business opportunity or the
completion of a suitable business combination. In addition, if we are unable to
identify and complete such an acquisition, then our shareholders will not
realize any further return on their investment in our company, and there will be
no market for our common shares.
There is substantial doubt about our ability to continue as a going concern as
we have suffered recurring losses from operations and have no established source
of revenue. Accordingly, our independent auditors included an explanatory
paragraph regarding concerns about our ability to continue as a going concern.
Our consolidated financial statements contain additional note disclosures
describing the circumstances that lead to this disclosure by our independent
auditors.
We are currently relying on our directors and creditors to fund our continuing
operating expenses and to fund the identification and evaluation of a suitable
business opportunity or business combination. As of December 31, 2002 our cash
balance was only $14 and directors have currently suspended payment of all
remuneration. We anticipate that we will require additional financing of at
least $50,000 from directors or unrelated third parties in order to continue
seeking a suitable business opportunity or business combination for the next
twelve months. However, we may be required to raise additional financing in
excess of $50,000 for a particular business combination or business opportunity.
We would likely seek to secure any additional financing necessary through a
private placement of our common shares.
Plan of Operation for the 12 Months ending December 31, 2003
We will continue to seek a new business opportunity or business combination over
the 12 month period ending December 31, 2003. Once a business opportunity or
business combination has been identified, we will investigate and evaluate the
business opportunity or business combination. Should our company wish to pursue
any specific business opportunity or business combination, we will have to
comply with all applicable corporate and securities laws in order to complete
the acquisition of or merger with any such business opportunity.
Cash Requirements
We anticipate that we may require additional financing from directors and
unrelated third parties in order to continue seeking a suitable business
opportunity or business combination beyond the end of the second quarter of the
fiscal year ending December 31, 2003. We anticipate that we will have
sufficient capital to fund our ongoing operations until that time. Once we
locate a suitable business opportunity or business combination, we will likely
have to seek to obtain equity and/or debt financing from third parties to
facilitate and complete the acquisition of such a business opportunity or a
suitable business combination. We may also issue shares of our common stock as
consideration for the acquisition of a suitable business opportunity or a
suitable business combination.
Product Research and Development
We do not anticipate that we will expend any significant monies on research and
development over the next twelve months. However, some research and development
is possible upon the identification of purchase of a targeted business, of which
none is currently identified.
Purchase of Significant Equipment
We do not intend to purchase any significant equipment through December 31,
2003, unless we identify a suitable business opportunity or business combination
that may require us to invest in such equipment.
Sales and Marketing
We do not anticipate that we will expend any significant monies on sales and
marketing over the next twelve months. However, some sales and marketing is
possible upon the identification of purchase of a targeted business, of which
none is currently identified
<PAGE>
Employees
Over the twelve months ending December 31, 2003, we anticipate an increase in
the number of employees we retain only if we identify and complete the
acquisition of a business opportunity or enter into a business combination.
Such an increase of the number of employees may significantly increase our
monthly burn rate and such increase in the monthly burn rate depends on the
number of employees we ultimately retain, if any.
New Accounting Pronouncements
Statement of Financial Accounting Standards No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" ("SFAS 146") provides guidance on
the recognition and measurement of liabilities for costs associated with exit or
disposal activities. The provisions of this Statement are effective for exit or
disposal activities that are initiated after December 31, 2002.
In November 2002, the FASB issued FASB Interpretation ("FIN") No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others", which addresses the accounting
for and disclosure of guarantees. FIN 45 requires a guarantor to recognize a
liability for the fair value of a guarantee at inception. The recognition of
the liability is required even if it is not probable that payments will be
required under the guarantee. The disclosure requirements are effective for
interim and annual financial statements ending after December 15, 2002. The
initial recognition and measurement provisions are effective for all guarantees
within the scope of FIN 45 issued or modified after December 31, 2002.
FIN 46, "Consolidation of Variable Interest Entities", clarifies the application
of Accounting Research Bulletin No. 51, "Consolidated Financial Statements", to
certain entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN 46 is applicable immediately for variable
interest entities created after January 31, 2003. For variable interest
entities created prior to January 31, 2003, the provisions of FIN 46 are
applicable no later than July 1, 2003.
The implementation of these new standards is not expected to have a material
effect on our financial statements.
Application of Critical Accounting Policies
Going Concern
These consolidated financial statements have been prepared on a going concern
basis which assumes that adequate sources of financing will be obtained as
required and that our assets will be realized and liabilities settled in the
ordinary course of business. Accordingly, these consolidated financial
statements do not include any adjustments related to the recoverability of
assets and classification of assets and liabilities that might be necessary
should we be unable to continue as a going concern.
In order for us to continue as a going concern, we require additional financing.
There can be no assurance that additional financing will be available to us when
needed or, if available, that it can be obtained on commercially reasonable
terms. If we are not able to continue as a going concern, we would likely be
unable to realize the carrying value of our assets reflected in the balances set
out in the preparation of consolidated financial statements.
<PAGE>
Use of Estimates
The preparation of financial statements in accordance with United States
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could materially differ from these estimates.
Stock-based Compensation
We apply Accounting Principles Board ("APB") Opinion No. 25, "Accounting for
Stock Issued to Employees", and related interpretations in accounting for stock
option grants to employees. Under APB 25, compensation cost is recognized for
stock options granted to employees at prices below the market price of the
underlying common stock on the date of grant.
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation", requires us to provide pro-forma information
regarding net income as if compensation cost for our stock options had been
determined in accordance with the fair value based method prescribed in SFAS No.
123. The value of stock options granted to consultants is recognized in our
consolidated financial statements as compensation expense using the
Black-Scholes option pricing model.
Compensation expense is remeasured on a quarterly basis until fully vested for
options not vested on the grant date.
We do not plan to adopt the fair value method of accounting for stock-based
compensation awarded to employees. Consequently, related pro-forma information
as required by SFAS No. 123 has been disclosed in the consolidated financial
statements in accordance with SFAS 148.
ITEM 7. FINANCIAL STATEMENTS.
Our consolidated financial statements are stated in United States dollars and
are prepared in accordance with United States generally accepted accounting
principles. The Report of Independent Accountants of BDO Dunwoody LLP for the
audited financial statements for the year ended December 31, 2002 and the Report
of Independent Accountants of Moore Stephens Ellis Foster Ltd. for the audited
financial statements for the year ended December 31, 2001 are included herein
immediately preceding the audited financial statements.
<PAGE>
ROLLTECH, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Consolidated Financial Statements
(Expressed in US Dollars)
December 31, 2002 and 2001
Index
-----
Report of Independent Accountants - BDO Dunwoody LLP
Report of Independent Accountants - Moore Stephens Ellis Foster Ltd.
Consolidated Balance Sheets
Consolidated Statement of Changes in Stockholders' Equity (Capital Deficit)
Consolidated Statements of Operations
Consolidated Statements of Cash Flows
Summary of Significant Accounting Policies
Notes to Consolidated Financial Statements
<PAGE>
================================================================================
REPORT OF INDEPENDENT ACCOUNTANTS
--------------------------------------------------------------------------------
TO THE DIRECTORS AND STOCKHOLDERS OF
ROLLTECH, INC.
(A DEVELOPMENT STAGE COMPANY)
We have audited the Consolidated Balance Sheet of Rolltech, Inc. (a development
stage company) as at December 31, 2002 and the Consolidated Statements of
Operations, Changes in Stockholders' Equity (Capital Deficit), Operations and
Cash Flows for the year then ended and for the period from January 25, 2000
(incorporation) to December 31, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit. We did not audit the
consolidated financial statements of Rolltech, Inc. for the period from January
25, 2000 (incorporation) to December 31, 2001. Such statements are included in
the cumulative inception to December 31, 2002 totals on the Statements of
Operations, Stockholders' Equity (Capital Deficit) and Cash Flows and reflect a
net loss of 14% of the related cumulative total. Those statements were audited
by other auditors whose report has been furnished to us and our opinion, insofar
as it relates to amounts for the period from January 25, 2000 (incorporation) to
December 31, 2001 included in the cumulative totals, is based solely upon the
report of the other auditors.
We conducted our audit in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform an audit
to obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit and the report of other auditors
provides a reasonable basis for our opinion.
In our opinion, based on our audit and the report of other auditors, these
financial statements present fairly, in all material respects, the consolidated
financial position of Rolltech, Inc. (a development stage company) as at
December 31, 2002 and the related Consolidated Statements of Operations and Cash
Flows for the year then ended and for the period from January 25, 2000
(incorporation) to December 31, 2002 in conformity with United States generally
accepted accounting principles.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements, the Company has suffered recurring losses
from operations and has no established source of revenue. This raises
substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are described in Note 1. These
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/S/ BDO DUNWOODY LLP
Chartered Accountants
Vancouver, Canada
March 20, 2003
<PAGE>
MOORE STEPHENS ELLIS FOSTER LTD.
CHARTERED ACCOUNTANTS
1650 West 1st Avenue
Vancouver, BC Canada V6J 1G1
Telephone: (604) 734-1112 Facsimile: (604) 714-5916
E-Mail: generaldelivery@ellisfoster.com
-------------------------------
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS
- ROLLTECH, INC.
(A development stage enterprise)
We have audited the balance sheet of ROLLTECH, INC. ("the Company") (a
development stage enterprise) as at December 31, 2001 and the related statements
of stockholders' equity, operations and cash flows for the cumulative period
from January 25, 2000 (inception) to December 31, 2001 and the year ended
December 31, 2001. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform an audit
to obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 2001 and the
results of its operations and its cash flows for the cumulative period from
January 25, 2000 (inception) to December 31, 2001 and the year ended December
31, 2001 in conformity with generally accepted accounting principles in the
United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates, among other
things, the realization of assets and the satisfaction of liabilities and
commitments in the normal course of business. As discussed in Note 1 to the
financial statements, the continued operations of the Company as a going concern
is dependent on its ability to search for a suitable business to merge with or
acquire. The Company has incurred recurring losses from operations. These
factors raise substantial doubt about its ability to continue as a going
concern. Management's plans concerning these matters are described in Note 1.
These financial statements do not include any adjustments that might result from
the outcome of this uncertainty.
Vancouver, Canada "MOORE STEPHENS ELLIS FOSTER LTD."
January 29, 2002 Chartered Accountants
MS An independently owned and operated member of Moore Stephens North America,
Inc. Members in principal cities throughout North America. Moore Stephens North
America, Inc. is a member of Moore Stephens International Limited, members in
principal cities throughout the world.
<PAGE>
<TABLE>
<CAPTION>
ROLLTECH, INC.
(A development stage enterprise)
Consolidated Balance Sheets
(EXPRESSED IN US DOLLARS)
====================================================================================
DECEMBER 31 2002 2001
------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT
Cash $ 14 $ 12,991
Prepaid expenses and deposits - 945
------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 14 13,936
PROPERTY AND EQUIPMENT (Note 3) 3,486 4,507
------------------------------------------------------------------------------------
TOTAL ASSETS $ 3,500 $ 18,443
====================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY (CAPITAL DEFICIT)
LIABILITIES
CURRENT
Accounts payable and accrued liabilities (Note 5) $ 104,885 $ 13,035
Due to directors (Note 5) 100,000 -
------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 204,885 13,035
------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY (CAPITAL DEFICIT)
SHARE CAPITAL (Note 2)
Authorized:
75,000,000 common shares with a par value
of $0.001 per share
Issued and outstanding
5,868,500 common shares 5,869 5,869
ADDITIONAL PAID-IN CAPITAL 541,837 161,437
DEFICIT ACCUMULATED DURING THE DEVELOPMENT STAGE (749,091) (161,898)
------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY (CAPITAL DEFICIT) (201,385) 5,408
------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (CAPITAL DEFICIT) $ 3,500 $ 18,443
====================================================================================
<FN>
THE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES ARE AN
INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ROLLTECH, INC.
(A development stage enterprise)
Consolidated Statement of Changes in Stockholders' Equity (Capital Deficit)
(EXPRESSED IN US DOLLARS)
=================================================================================================================================
Total
Deficit Stock-
accumulated holders'
Common stock Additional during the equity
-------------------------- paid-in development (Capital
Shares Amount capital stage Deficit)
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Shares issued for cash on inception 4,000,000 $ 4,000 $ 11,000 $ - $ 15,000
Shares issued for cash in July 2000, net of share
issuance cost of $36,500 1,527,500 1,528 114,722 - 116,250
Imputed interest on loan and amount due to related parties - - 1,218 - 1,218
Net loss and comprehensive loss for the period - - - (56,232) (56,232)
---------------------------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 2000 5,527,500 5,528 126,940 (56,232) 76,236
Shares issued for services at $0.001 per share in:
- April 2001 141,000 141 13,959 - 14,100
- November 2001 200,000 200 19,800 - 20,000
Imputed interest on amount due to related parties - - 738 - 738
Net loss and comprehensive loss for the year - - - (105,666) (105,666)
---------------------------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 2001 5,868,500 5,869 161,437 (161,898) 5,408
Shares issued for a license at $0.11 per share in
April 2002 (Note 2) 1,000,000 1,000 109,000 - 110,000
Shares cancelled in connection with termination and return of
license in July 2002 (Note 2) (1,000,000) (1,000) (109,000) - (110,000)
Stock option compensation (Note 7) - - 380,400 - 380,400
Net loss and comprehensive loss for the year - - - (587,193) (587,193)
---------------------------------------------------------------------------------------------------------------------------------
BALANCE, December 31, 2002 5,868,500 $ 5,869 $ 541,837 $ (749,091) $(201,385)
=================================================================================================================================
<FN>
The accompanying summary of significant accounting policies and notes are an integral part of these consolidated financial
statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ROLLTECH, INC.
(A development stage enterprise)
Consolidated Statements of Operations
(EXPRESSED IN U.S. DOLLARS)
================================================================================
CUMULATIVE
FROM
JANUARY 25
2000 YEAR Year
(INCORPORATION) ENDED Ended
TO DECEMBER 31 DECEMBER 31 December 31
2002 2002 2001
--------------------------------------------------------------------------------
<S> <C> <C> <C>
EXPENSES
Depreciation $ 2,061 $ 1,021 $ 880
Equipment rental - related parties 8,650 - 6,400
Compensation (Notes 4 and 7) 418,100 350,100 48,000
Office and miscellaneous 19,089 5,155 11,812
Professional fees 104,709 75,841 14,945
Rent 19,636 5,506 11,575
Transfer, filing and listing 9,129 2,024 5,095
Travel and promotion 24,073 1,569 7,800
--------------------------------------------------------------------------------
(605,447) (441,216) (106,507)
OTHER INCOME (EXPENSE)
Interest income 4,333 44 1,579
Interest expense and other (Note 5) (13,522) (11,566) (738)
Foreign exchange loss (167) (167) -
--------------------------------------------------------------------------------
NET LOSS FROM CONTINUING
OPERATIONS (614,803) (452,905) (105,666)
LOSS FROM DISCONTINUED OPERATIONS
(Note 2) (134,288) (134,288) -
--------------------------------------------------------------------------------
NET LOSS AND COMPREHENSIVE LOSS
FOR THE PERIOD $ (749,091) $ (587,193) $ (105,666)
================================================================================
LOSS PER SHARE
Basic and diluted
From continuing operations $ (0.13) $ (0.08) $ (0.02)
Discontinued operations (0.03) (0.02) -
--------------------------------------------------------------------------------
After discontinued operations $ (0.16) $ (0.10) $ (0.02)
================================================================================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic and diluted 4,573,162 6,117,815 5,646,746
================================================================================
<FN>
THE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES ARE AN
INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ROLLTECH, INC.
(A development stage enterprise)
Consolidated Statements of Cash Flows
(EXPRESSED IN US DOLLARS)
====================================================================================================
CUMULATIVE
FROM
JANUARY 25
2000
(INCORPORATION) YEAR Year Year
TO ENDED Ended Ended
DECEMBER 31 DECEMBER 31 December 31 December 31
2002 2002 2001
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH USED IN OPERATING ACTIVITIES
Net loss from continuing operations for the period $ (614,803) $ (452,905) $(105,666)
Adjustments to reconcile net loss from continuing
operations to net cash used in operating activities:
- depreciation 2,061 1,021 880
- interest expense 1,956 - 738
- shares issued for services 34,100 - 34,100
- stock option compensation 314,100 314,100 -
Changes in assets and liabilities:
- decrease (increase) in prepaid expenses and
deposits - 945 (271)
- increase (decrease) in accounts payable and
accrued liabilities 104,885 91,850 (16,667)
----------------------------------------------------------------------------------------------------
(157,701) (44,989) (86,886)
----------------------------------------------------------------------------------------------------
Loss from discontinued operations (134,288) (134,288) -
Adjustment for non-cash expenses
Stock option compensation - discontinued 66,300 66,300 -
----------------------------------------------------------------------------------------------------
(67,988) (67,988) -
----------------------------------------------------------------------------------------------------
(225,689) (112,977) (86,886)
----------------------------------------------------------------------------------------------------
CASH PROVIDED BY FINANCING ACTIVITIES
Shares issued for cash, net of issuance costs 131,250 - -
Loans from related parties 130,000 100,000 -
Repayment of loan from a related party (30,000) - -
----------------------------------------------------------------------------------------------------
231,250 100,000 -
----------------------------------------------------------------------------------------------------
CASH USED IN INVESTING ACTIVITIES
Purchase of property and equipment (5,547) - (3,948)
----------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH 14 (12,977) (90,834)
CASH, beginning of period - 12,991 103,825
----------------------------------------------------------------------------------------------------
CASH, end of period $ 14 $ 14 $ 12,991
====================================================================================================
SUPPLEMENTAL INFORMATION (Note 8)
<FN>
THE ACCOMPANYING SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND NOTES ARE AN INTEGRAL PART OF THESE
CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
ROLLTECH, INC.
(A development stage enterprise)
Summary of Significant Accounting Policies
December 31, 2002 and 2001
(EXPRESSED IN U.S. DOLLARS)
================================================================================
BASIS OF PRESENTATION These consolidated financial statements are
expressed in US dollars and have been prepared in
conformity with United States generally accepted
accounting principles. Included in the financial
statements are the accounts of the Company and its
wholly-owned subsidiary, Golden Caviar Corp.
Golden Caviar Corp. was incorporated in 2002 in
connection with the Company's acquisition of a
business. As a result of the subsequent
termination of the acquisition, the activities of
Golden Caviar Corp. are presented as discontinued
operations.
All significant intercompany transactions and
balances have been eliminated on consolidation.
USE OF ESTIMATES The preparation of financial statements in
accordance with United States generally accepted
accounting principles requires management to make
estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures
of contingent assets and liabilities at the date
of the financial statements and the reported
amounts of revenues and expenses during the
reporting period. Actual results could materially
differ from these estimates.
FINANCIAL INSTRUMENTS The Company's financial instruments consist of
cash, accounts payable and accrued liabilities and
amounts due to directors. Unless otherwise noted,
it is management's opinion that the Company is not
exposed to significant interest, currency or
credit risks arising from these financial
instruments. The fair value of financial
instruments approximate their carrying values due
to the immediate or short term maturity of these
financial instruments.
FOREIGN CURRENCY TRANSACTIONS Transactions undertaken in currencies other than
the US dollar are restated to US dollars using the
exchange rate in effect as of the transaction
date. Monetary assets and liabilities denominated
in foreign currencies are translated to US dollars
using the period end rate. Any exchange gains and
losses are included in the Statement of
Operations.
<PAGE>
ROLLTECH, INC.
(A development stage enterprise)
Summary of Significant Accounting Policies
December 31, 2002 and 2001
(EXPRESSED IN U.S. DOLLARS)
================================================================================
PROPERTY AND EQUIPMENT Property and equipment is recorded at cost.
Depreciation is provided on a declining-balance
basis over the estimated useful life of the assets
at the following annual rates:
Office equipment - 20%
Computer equipment - 30%
INCOME TAXES The Company follows the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 109,
"Accounting for Income Taxes", which requires the
Company to recognize tax liabilities and assets
for the expected future tax consequences of events
that have been recognized in the Company's
financial statements or tax returns using the
liability method. Under this method, tax
liabilities and assets are determined based on the
temporary differences between the financial
statement carrying amounts and tax bases of assets
and liabilities using enacted tax rates in effect
in the years in which the differences are expected
to reverse.
LOSS PER SHARE Loss per share is computed in accordance with SFAS
No. 128, "Earnings Per Share". Basic loss per
share is calculated by dividing the net loss
available to common stockholders by the weighted
average number of shares outstanding during the
year. Diluted earnings per share reflects the
potential dilution of securities that could share
in earnings of an entity. In a loss year, dilutive
common equivalent shares are excluded from the
loss per share calculation as the effect would be
anti-dilutive. Basic and diluted loss per share
are the same for the years presented.
For the years ended December 31, 2002 and 2001,
common equivalent shares (relating to options
outstanding at year end) totaling 440,000 (2001 -
Nil) were not included in the computation of loss
per share because their effect was anti-dilutive.
<PAGE>
ROLLTECH, INC.
(A development stage enterprise)
Summary of Significant Accounting Policies
December 31, 2002 and 2001
(EXPRESSED IN U.S. DOLLARS)
================================================================================
COMPREHENSIVE INCOME The Company has adopted SFAS No. 130, "Reporting
Comprehensive Income", which establishes standards
for reporting and display of comprehensive income,
its components and accumulated balances.
Comprehensive income is comprised of net income
(loss) and all changes to stockholders' equity
except those resulting from investments by owners
and distributions to owners. For the years ended
December 31, 2002 and 2001, comprehensive loss
equals the net loss.
STOCK BASED COMPENSATION The Company applies Accounting Principles Board
("APB") Opinion No. 25, "Accounting for Stock
Issued to Employees", and related interpretations
in accounting for stock option grants to
employees. Under APB 25, compensation cost is
recognized for stock options granted to employees
at prices below the market price of the underlying
common stock on the date of grant.
SFAS No. 123, "Accounting for Stock-Based
Compensation", requires the Company to provide
pro-forma information regarding net income as if
compensation cost for the Company's stock options
had been determined in accordance with the fair
value based method prescribed in SFAS No. 123. The
value of stock options granted to consultants is
recognized in these consolidated financial
statements as compensation expense using the
Black-Scholes option pricing model.
Compensation expense is remeasured on a quarterly
basis until fully vested for options not vested on
the grant date.
The Company does not plan to adopt the fair value
method of accounting for stock-based compensation
awarded to employees. Consequently, related
pro-forma information as required by SFAS No. 123
has been disclosed below in accordance with SFAS
148.
<PAGE>
<TABLE>
<CAPTION>
ROLLTECH, INC.
(A development stage enterprise)
Summary of Significant Accounting Policies
December 31, 2002 and 2001
(EXPRESSED IN U.S. DOLLARS)
================================================================================
STOCK BASED COMPENSATION For the year ended December 31 2002 2001
---------- ----------
<S> <C> <C> <C>
Net loss, as reported $(587,193) $(105,666)
Add: stock-based compensation
expense included in reported net
loss 380,400 -
Deduct: total stock-based
compensation expense
determined under fair-value based
method for all awards (393,600) -
$(600,393) $(105,666)
---------- ----------
Loss per share
- basic and diluted - as reported $ (0.10) $ (0.02)
---------- ----------
- basic and diluted - pro forma $ (0.10) $ (0.02)
</TABLE>
VALUATION OF LONG-LIVED The Company evaluates the future recoverability of
ASSETS its property and equipment in accordance with SFAS
No. 144, "Accounting for the Impairment or
Disposal of Long-lived Assets". SFAS No. 144
requires recognition of impairment of long-lived
assets in the event the net book value of such
assets exceeds the estimated undiscounted future
cash flows attributable to such assets. It
requires that those long-lived assets to be
disposed of by sale are to be measured at the
lower of carrying amount or fair value less cost
of sale whether reported in continuing operations
or in discontinued operations. No impairment was
required to be recognized during the periods
presented in these consolidated financial
statements.
NEW ACCOUNTING Statement of Financial Accounting Standards No.
PRONOUNCEMENTS 146, "Accounting for Costs Associated with Exit or
Disposal Activities" ("SFAS 146") provides
guidance on the recognition and measurement of
liabilities for costs associated with exit or
disposal activities. The provisions of this
Statement are effective for exit or disposal
activities that are initiated after December 31,
2002.
<PAGE>
ROLLTECH, INC.
(A development stage enterprise)
Summary of Significant Accounting Policies
December 31, 2002 and 2001
(EXPRESSED IN U.S. DOLLARS)
================================================================================
NEW ACCOUNTING In November 2002, the FASB issued FASB
PRONOUNCEMENTS (continued) Interpretation ("FIN") No. 45, "Guarantor's
Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of
Indebtedness of Others", which addresses the
accounting for and disclosure of guarantees. FIN
45 requires a guarantor to recognize a liability
for the fair value of a guarantee at inception.
The recognition of the liability is required even
if it is not probable that payments will be
required under the guarantee. The disclosure
requirements are effective for interim and annual
financial statements ending after December 15,
2002. The initial recognition and measurement
provisions are effective for all guarantees within
the scope of FIN 45 issued or modified after
December 31, 2002.
FIN 46, "Consolidation of Variable Interest
Entities", clarifies the application of Accounting
Research Bulletin No. 51, "Consolidated Financial
Statements", to certain entities in which equity
investors do not have the characteristics of a
controlling financial interest or do not have
sufficient equity at risk for the entity to
finance its activities without additional
subordinated financial support from other parties.
FIN 46 is applicable immediately for variable
interest entities created after January 31, 2003.
For variable interest entities created prior to
January 31, 2003, the provisions of FIN 46 are
applicable no later than July 1, 2003.
The implementation of these new standards is not
expected to have a material effect on the
Company's financial statements.
RECLASSIFICATION Certain 2001 amounts have been reclassified to
conform with the current year's presentation.
<PAGE>
ROLLTECH, INC.
(A development stage enterprise)
Notes to Consolidated Financial Statements
December 31, 2002 and 2001
(EXPRESSED IN US DOLLARS)
================================================================================
1. NATURE OF BUSINESS AND ABILITY TO CONTINUE OPERATIONS
Rolltech, Inc. was incorporated on January 25, 2000 under the laws of the
State of Nevada. The Company was initially involved in the identification
and acquisition of marketing licenses for high technology manufactured
products. In February 2001, the Company terminated its involvement in this
business and sought new business opportunities. On March 13, 2002, the
Company acquired certain property and equipment and a license to certain
intellectual property to produce salmon caviar and salmon caviar-related
products. In contemplation of the acquisition, the Company incorporated a
wholly-owned subsidiary (Golden Caviar Corp.) on February 15, 2002 under
the laws of the State of Nevada to operate the caviar business. The
processing and sale of caviar and caviar-related products was the Company's
primary business from late March 2002 until June 2002. The Company
terminated its involvement in the caviar business, returned remaining
assets and settled liabilities of the caviar business, became inactive and
is currently searching for new business opportunities. The results of
operations for the caviar business are presented in these financial
statements as discontinued operations. (Note 2)
These accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities and commitments in the normal course of
business. As at December 31, 2002, the Company has recognized no revenue
and has accumulated operating losses of approximately $750,000 since its
inception, has a working capital deficiency of $204,871 and returned to
inactive status in June 2002 upon disposal of its caviar business. The
continuation of the Company is dependent upon the continuing financial
support of creditors and stockholders, finding a new business for the
Company, obtaining long-term financing as well as achieving a profitable
level of operations. Management plans to raise equity capital to finance
the current cash requirements of the Company. Capital raised will be used
to develop a new business. While the Company is expending its best efforts
to achieve the above plans, there is no assurance that any such activity
will generate funds that will be available for operations.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. These financial statements do not include any
adjustments relating to the recoverability and classification of recorded
asset amounts or amounts and classification of liabilities that might arise
from this uncertainty.
<PAGE>
ROLLTECH, INC.
(A development stage enterprise)
Notes to Consolidated Financial Statements
December 31, 2002 and 2001
(EXPRESSED IN US DOLLARS)
================================================================================
2. ACQUISITION AND SUBSEQUENT DISPOSITION
On March 13, 2002, the Company (through its newly-incorporated wholly-owned
subsidiary, Golden Caviar Corp.) acquired certain property and equipment
and a license to certain intellectual property to produce salmon caviar and
salmon caviar products. The license was a world-wide and exclusive license
to use certain intellectual property that is subject to a number of Russian
patents as well as other intellectual property (including certain
proprietary recipes) with respect to the production of salmon caviar and
salmon caviar products.
The purchase price for the property and equipment was $249,000 in exchange
for an unsecured note payable. Interest on the note was to accrue at the
rate of 3% per annum, based on the unpaid balance.
In exchange for the licence (having no specified expiry), the Company
issued (on April 3, 2002) 1,000,000, fully-vested, non-forfeitable,
restricted shares of the Company to the Licensor. The value assigned to the
common stock and license of $110,000 was based upon the trading price of
the Company's common stock around the time the terms were agreed to.
Because the Company's caviar business was not yet functional and
operational, no amortization or depreciation was recognized on the acquired
property and equipment or license for the year ended December 31, 2002.
In connection with the acquisition, effective April 1, 2002, the Company's
wholly-owned subsidiary entered into an employment agreement with the
licensor for a three-year term whereby the licensor would become the
President of Golden Caviar Corp. and, in addition to a monthly salary,
would receive 500,000 shares of common stock of the Company on April 1,
2003 and stock options to purchase an additional 500,000 shares of common
stock of the Company. The shares were not issued. 100,000 stock options
were granted with an exercise price of $0.51 each. An additional 150,000
and 250,000 options were to be granted on December 31, 2002 and 2003,
respectively, with the exercise price to be determined by the Company's
Board of Directors. The options were scheduled to expire in March 2007.
<PAGE>
ROLLTECH, INC.
(A development stage enterprise)
Notes to Consolidated Financial Statements
December 31, 2002 and 2001
(EXPRESSED IN US DOLLARS)
================================================================================
2. ACQUISITION AND SUBSEQUENT DISPOSITION (continued)
In June 2002, the Company decided to discontinue its caviar business over
an unresolvable dispute with the licensor. In connection therewith, the
licensor filed a lawsuit in the State of Washington over the matter. The
Company counter claimed. On July 3, 2002, the Company signed a settlement
agreement with the licensor to terminate the above-noted acquisition and
release each party from claims filed. The termination of the agreement
resulted in the return or cancellation of the above-mentioned property and
equipment, license, unsecured note payable, the 1,000,000 issued common
shares of the Company (returned and cancelled in July 2002), employment
agreement with the licensor, the stock options issued to the licensor, and
all the commitments (Note 5). The effect of the termination has been
recorded in the financial statements for the year ended December 31, 2002.
There was no activity between the June measurement date and the July
disposal date.
The financial results of the caviar business have been segregated and
presented as discontinued operations in the Statements of Operations. There
were no net assets of the discontinued operation remaining at December 31,
2002. The loss from discontinued operations presented on the Statement of
Operations consists of expenses incurred in the caviar business from April
1, 2002 until June 30, 2002. No revenue was earned from the caviar
business. There was no gain or loss on disposal of the caviar business. The
trading value of the Company's common stock exceeded the value of the
returned assets of the date of cancellation.
3. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
----------------------------------------
2002 2001
----------------------------------------
<S> <C> <C>
Computer equipment $1,599 $1,599
Office equipment 3,948 3,948
--------------
5,547 5,547
Accumulated depreciation 2,061 1,040
========================================
Net book value $3,486 $4,507
========================================
</TABLE>
<PAGE>
ROLLTECH, INC.
(A development stage enterprise)
Notes to Consolidated Financial Statements
December 31, 2002 and 2001
(EXPRESSED IN US DOLLARS)
================================================================================
4. RELATED PARTY TRANSACTIONS
Related party transactions with the Company's directors and a company
controlled by the directors not disclosed elsewhere in these financial
statements are as follows:
<TABLE>
<CAPTION>
YEAR Year
ENDED ended
DECEMBER 31, December 31,
2002 2001
-----------------------------------------------------
<S> <C> <C>
Management compensation $ 36,000 $ 48,000
Equipment rental - 6,400
-----------------------------------------------------
$ 36,000 $ 54,400
=====================================================
</TABLE>
Related party transactions are recorded at the exchange amount, being the amount
established and agreed to by the related parties.
5. DUE TO DIRECTORS
a) During the year ended December 31, 2002, the Company obtained loans
from two directors totalling $100,000, bearing interest at 15% per
annum and repayable on demand. The loans, by way of promissory notes,
are collateralized by a security interest over all the Company's
present and after-acquired property. Interest accrued on these loans
for the year ended December 31, 2002 totalled $10,746 (2001 - $738).
b) Other amounts due to these directors in respect of expenses requiring
reimbursement and unpaid management fees are unsecured, non-interest
bearing and repayable on demand. The amounts owing in this regard were
$50,015 and included in accounts payable and accrued liabilities at
December 31, 2002 (December 31, 2001 - $7,300).
<PAGE>
ROLLTECH, INC.
(A development stage enterprise)
Notes to Consolidated Financial Statements
December 31, 2002 and 2001
(EXPRESSED IN US DOLLARS)
================================================================================
6. COMMITMENTS
Effective April 15, 2002, the Company's wholly-owned subsidiary entered
into an agreement to lease caviar production facilities in Redmond,
Washington. The term of the lease was for 36 months and required the
following payments (excluding operating costs):
<TABLE>
<CAPTION>
--------------------------------
Year ended December 31
--------------------------------
<S> <C>
2002 $ 53,976
2003 82,588
2004 85,064
2005 28,632
--------------------------------
Total $250,260
================================
</TABLE>
The Company was also scheduled to pay the lessor a management fee equal to
4.25% of its rent obligation.
The Company terminated its obligations under these agreements and is of the
understanding that no penalties will be levied in connection therewith. In
the event that penalties are levied, the expense will be recorded in the
period it becomes likely.
7. STOCK OPTIONS
During 2001, the Company established its 2001 Stock Option Plan, covering
1,000,000 shares of common stock. The Plan provides stock-based
compensation to consultants, directors and other advisors of the Company.
The term of the options granted under the Plan must not be more than ten
years from the date of grant. At December 31, 2001, no options had been
granted pursuant to the Plan.
<PAGE>
ROLLTECH, INC.
(A development stage enterprise)
Notes to Consolidated Financial Statements
December 31, 2002 and 2001
(EXPRESSED IN US DOLLARS)
================================================================================
7. STOCK OPTIONS (continued)
On March 18, 2002, in addition to the stock options referred to in Note 2,
the Company granted 500,000 stock options to various employees, directors
and consultants having an exercise price of $0.51 per option and expiring
in five years. Such options vest in accordance with the Company's 2001
Stock Option Plan, depending on the type of optionee. Pursuant to the
settlement agreement with licensor (Note 2), 100,000 options were cancelled
in July 2002. A further 60,000 options were cancelled in November 2002. At
December 31, 2002, 440,000 (2001 - Nil) stock options remained outstanding,
all of which are exercisable.
The value of stock options granted to non-employees is recognized in these
financial statements as compensation expense under SFAS No. 123 using the
Black-Scholes option pricing model. Using assumptions of no dividends, a
risk-free interest rate of 4.9%, volatility of the trading price of the
Company's common stock of 100% and the contractual term of the stock
options granted to non-employees of 60 months, the fair value of stock
options granted on March 18, 2002 was $0.39 per option.
Stock option compensation expense (remeasured quarterly for those stock
options vesting at different times in 2002) attributable to 560,000 stock
options granted to non-employees during the year ended December 31, 2002
and 2001 was as follows. Compensation expense related to stock options
granted in connection with the licensor is classified as discontinued
operations.
<TABLE>
<CAPTION>
-----------------------------------------------------
2002 2001
-----------------------------------------------------
<S> <C> <C>
Continuing operations - compensation
expense $314,100 $ -
Discontinued operations 66,300 -
-----------------------------------------------------
Total $380,400 $ -
=====================================================
</TABLE>
No compensation expense was recognized for 40,000 options granted to
directors (for director services) in 2002.
SFAS No. 123 requires the Company to provide pro-forma information
regarding net loss as if the compensation costs for the Company's stock
option grants had been determined in accordance with the fair value based
method prescribed in SFAS No. 123. To provide the required pro-forma
information, the Company estimates the fair value of each stock option
granted to employees at the grant date using the Black-Scholes
option-pricing model. The pro-forma results are set out in the Summary of
Significant Accounting Policies, based on the following assumptions: No
dividends, risk-free interest rate of 4.8%, volatility of the trading price
of the Company's common stock of 100% and an estimated holding period of 36
months. The fair value of stock options granted to employees was $0.33 per
option on the grant date.
<PAGE>
ROLLTECH, INC.
(A development stage enterprise)
Notes to Consolidated Financial Statements
December 31, 2002 and 2001
(EXPRESSED IN US DOLLARS)
================================================================================
8. SUPPLEMENTAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
CUMULATIVE
FROM
JANUARY 25
2000 YEAR Year
(INCEPTION) TO ENDED Ended
DECEMBER 31 DECEMBER 31 December 31
2002 2002 2001
----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Interest and taxes paid $ - $ - $ -
Non-cash operating investing and financing
activities
- shares issued in exchange for services $ 34,100 $ - $ 34,100
- purchase of property and equipment in
exchange for note payable (Note 2) $ 249,000 $ 249,000 $ -
- cancellation of note payable for purchase of
property and equipment (Note 2) $ (249,000) $ (249,000) $ -
- purchase of license in exchange for common
shares (Note 2) $ 110,000 $ 110,000 $ -
- cancellation of license and common shares
(Note 2) $ (110,000) $ (110,000) $ -
- stock option compensation (Note 7) $ 380,400 $ 380,400 $ -
</TABLE>
9. INCOME TAXES
The tax effects of temporary differences that give rise to the Company's
deferred tax asset are as follows:
<TABLE>
<CAPTION>
2002 2001
---------------------
<S> <C> <C>
Tax loss carryforward $ 123,000 $ 45,000
Valuation allowance (123,000) (45,000)
---------------------
$ - $
=====================
</TABLE>
The provision for income taxes differs from the amount estimated using the
federal US statutory income tax rate as follows:
<TABLE>
<CAPTION>
2002 2001
---------------------
<S> <C> <C>
Provision (benefit) at federal statutory rate $(200,000) $(35,700)
Stock option compensation 129,000 -
Other (7,000) -
Increase in valuation allowance 78,000 35,700
---------------------
$ - $ -
=====================
</TABLE>
<PAGE>
ROLLTECH, INC.
(A development stage enterprise)
Notes to Consolidated Financial Statements
December 31, 2002 and 2001
(EXPRESSED IN US DOLLARS)
================================================================================
9. INCOME TAXES (continued)
The Company evaluates its valuation allowance requirements based on
projected future operations. When circumstances change and this causes a
change in management's judgement about the recoverability of deferred tax
assets, the impact of the change on the valuation allowance is reflected in
current income.
At December 31, 2002, the Company had estimated losses carried forward of
approximately $363,000 available to reduce future US taxable income until
expiry in varying amounts between 2014 and 2022.
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Our Board of Directors approved the engagement of BDO Dunwoody, LLP, Chartered
Accountants, ("BDO Dunwoody") to replace Moore Stephens Ellis Foster Ltd.,
Chartered Accountants, ("Ellis Foster") as our independent accountants. We
therefore dismissed Ellis Foster effective April 17, 2002. We engaged BDO
Dunwoody to audit our financial statements for the year ending December 31, 2002
effective April 17, 2002.
Ellis Foster has represented us as our independent accountants since February
15, 2001. Prior to this, Michael Bonner, CPA, represented us as our independent
accountant and, in such capacity, provided a report on our financial statements
for the period commencing on January 25, 2000, the date of our inception, to
July 31, 2000. Except as described below, Ellis Foster's report on our financial
statements for the 2001 fiscal year and for the fiscal period from January 25,
2000 (inception) to December 31, 2000, as well as Michael Bonner's report on our
financial statements for the period from January 25, 2000 (inception) to July
31, 2000 for which Michael Bonner was our independent auditor, did not contain
an adverse opinion or disclaimer of opinion, and were not qualified or modified
as to uncertainty, audit scope, or accounting principles, except for an
explanatory paragraph in respect of going concern contingencies, discussed
below.
Ellis Foster's report dated January 29, 2002, on our financial statements for
the 2001 fiscal year and for the fiscal period from inception to December 31,
2000, contained an explanatory note commenting on the fact that such financial
statements do not contain any adjustments with respect to the substantial doubt
of our ability to continue as a going concern, as follows:
"The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates, among other
things, the realization of assets and the satisfaction of liabilities and
commitments in the normal course of business. As discussed in Note 1 to the
financial statements, the continued operations of the Company as a going concern
is dependent on its ability to search for a suitable business to merge with or
acquire. The Company has incurred recurring losses from operations. These
factors raise substantial doubt about its ability to continue as a going
concern. Management's plans concerning these matters are described in Note 1.
These financial statements do not include any adjustments that might result from
the outcome of this uncertainty."
During the 2001 fiscal year and the fiscal period from January 25, 2000
(inception) to December 31, 2000, as well as any subsequent interim periods
preceding the date of this report, there were no:
(a) disagreements between us and Ellis Foster on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope
or procedure which, if not resolved to the satisfaction of Ellis Foster,
would have caused them to make reference to the subject matter of the
disagreement or disagreements in their reports on the financial statements
for such years;
(b) reportable events involving Ellis Foster that would have required
disclosure under Item 304(a) (1) (v) of Regulation S-B; or.
(c) written or oral consultations between us and BDO Dunwoody regarding either
the specific application of accounting principles or the type of audit
opinion that might be rendered on our financial statements that was
considered an important factor by us in reaching a decision as to an
accounting, auditing or financial reporting issue, or any matter that was
the subject of a disagreement or a reportable event, that would have
required disclosure under Item 304 (a)(2) of Regulation S-B.
On March 13, 2002, we, acting through our wholly-owned subsidiary, Golden Caviar
Corp., purchased certain assets from Sea Technology Enterprise, LLC, a limited
liability company formed under the laws of the State of Washington, and acquired
an exclusive license to certain intellectual property from Dr. Vyacheslav Sova.
In connection with such transaction, which was reported in our current report on
Form 8-K filed March 15, 2002, we consulted BDO Dunwoody for the purpose of
understanding the pro forma requirements of the Form 8-K. There were no written
or oral consultations between us and BDO Dunwoody regarding either the specific
application of accounting principles or the type of audit opinion that might be
rendered on our financial statements. We did not consult Ellis Foster on any
such issues.
<PAGE>
We reported this change in accountants on Form 8-K filed with the Securities and
Exchange Commission on April 19, 2002 and amended on April 29, 2002.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
Directors and Executive Officers
All directors of our company hold office until the next annual meeting of the
shareholders or until their successors have been elected and qualified. The
officers of our company are appointed by our board of directors and hold office
until their death, resignation or removal from office.
As at March 14, 2003, our directors and executive officers, their ages,
positions held, and duration of such, are as follows:
<TABLE>
<CAPTION>
NAME POSITION HELD WITH OUR COMPANY AGE DATE FIRST
ELECTED OR APPOINTED
----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Dr. Michael Scheglov President, Chief Executive Officer, 56 February 4, 2000
Secretary and Director
----------------------------------------------------------------------------------------
Taly Keren Vice-President, Treasurer and 53 February 4, 2000
Director
----------------------------------------------------------------------------------------
Grigoriy Goldenshteyn Director 45 April 17, 2000
----------------------------------------------------------------------------------------
Dr. Alexander Karapetian Director 53 April 17, 2000
----------------------------------------------------------------------------------------
</TABLE>
Business Experience
The following is a brief account of the education and business experience during
at least the past five years of each director, executive officer and key
employee, indicating the principal occupation during that period, and the name
and principal business of the organization in which such occupation and
employment were carried out.
Dr. Michael Scheglov, President, Chief Executive Officer, Secretary and Director
Dr. Michael Scheglov, DMD was appointed as our Vice-President and a Director on
February 4, 2000. Effective September 1, 2001, Dr. Scheglov resigned his
position as Vice-President and was appointed President, Chief Executive Officer
and Secretary. Dr. Scheglov has over 20 years experience in business management,
operations and marketing. From 1986 to present, Dr. Scheglov was the founder,
president and CEO of Mountlake Medical Immediate Care Clinics in Washington
State. He successfully combined his marketing, professional and business
interests in the establishment of a medical facility with 12 doctors and medical
professionals. From 1996 to 1998, Dr. Scheglov has served as director of the
Odessa Petroleum Corporation. In 1981, Dr. Scheglov founded DentaShield(R),
which grew to include three dental care facilities in Washington and Oregon
states. In 1972, Mr. Scheglov graduated from the Moscow Medical-Dental School
with a Medical Doctor Degree as well as a Doctor of Dental Surgery. In 1975, he
received a PhD from the School of Medicine, Moscow, Russia. In 1979, he
graduated from the University of Washington, School of Dentistry as a Doctor of
Dental Surgery and a Doctor of Medical Dentistry.
<PAGE>
Taly Keren, Vice-President, Treasurer and Director
Taly Keren was appointed as our President, Chief Executive Officer and a
Director on February 4, 2000. Effective September 1, 2001, Mr. Keren resigned
his position as President and Chief Executive Officer and was appointed
Vice-President and Treasurer. Mr. Keren brings more than 20 years of
international management, investment, sales and marketing experience. His
management experience includes positions in private and public companies. From
1996 to 1998, he served as president and a director of Odessa Petroleum
Corporation, an international oil exploration company. In 1978, he founded
Anchor Security Systems Ltd. which he successfully managed for 10 years. As
founder and president of Anchor, Mr. Keren personally looked after the marketing
and sales of Anchor's security products. From 1986 to 1991, Mr. Keren held
board positions with Vikon International Inc. and Ossa Resources Ltd. In 1972,
Mr. Keren graduated with Honours from Kherson Marine Business College, Kherson,
Ukraine. In 1976, he graduated from Niagara College in St. Catherine's,
Ontario, Canada.
Grigoriy Goldenshteyn, Director
Mr. Goldenshteyn was appointed to our Board of Directors on April 17, 2000. Mr.
Goldenshteyn is a professional architectural and structural engineer with 20
years of experience in structural and architectural drafting and design of
industrial, residential, and commercial facilities. From 1996 to present, Mr.
Goldenshteyn held the position of Designer and CAD Operator at Lee Architectural
Group, Inc., in which he participates in the preparation of the designs and
drawings for public facilities, as well as commercial and residential projects.
From 1994 to 1996, Mr. Goldenshteyn was employed by International Housing, a
division of Habitech, Ltd. as the CAD Operator, with the responsibilities of
preparing structural, architectural and modulation drawings for various
commercial and residential projects in South East Asia. From 1982 to 1992,
prior to his immigration to the United States, Mr. Goldenshteyn was a design
engineer for a government consulting firm, during which he designed steel, wood
and concrete structures. He supervised and coordinated the constructions of
industrial and residential building projects at the State Construction Company
in Kolomiya, Ukraine, from 1979 to 1982. Mr. Goldenshteyn received an
Engineering Drafting and Design Certification from Lake Washington Technical
College in Kirkland, Washington, which he attended from 1993 to 1994. In 1979,
he received a Civil and Industrial Building Design Diploma from Rovno State
University in Rovno, Ukraine, which he attended from 1993 to 1994.
Dr. Alexander Karapetian
Dr. Karapetian joined our Board of Directors on April 17, 2000. Dr. Karapetian
is an entrepreneur with medical and dental professional background. From 1994
to present, Dr. Karapetian is the president and founder of the Garden of Health
Medical-Dental Clinics, a chain of dental clinics, located in New York and
Connecticut, of which he was responsible for the organization and the
development of the business since inception, as well as the management of ten
dentists and seventeen dental assistants along with eleven back office business
administrators. From 1986 to 1994, Dr. Karapetian held the position of director
at the International Trading Company in Moscow, Russia, during which he
developed, coordinated and supported global industry networks of banking,
trading, and consulting professionals through direct communication with
international partners of the firm. He was the founder and the president of a
dental clinic in Moscow, Russia, from 1983 to 1986, in which he managed twelve
dentists and twenty dental assistants. From 1980 to 1983, Dr. Karapetian held
the position of Chairman of the Department of Dentistry in the Clinic of
National Union, a central refresher school of dentistry in Moscow, Russia,
during which he managed 23 dentists, taught molar and periodontal surgery
courses, and developed new technologies in Molar Endo and Periodontal Dentistry.
He received a DDS Degree from New York University in 1992 and a DDS Degree from
Moscow Medical School in 1972. In addition, Dr. Karapetian has a PhD (1978)
Degree and an MD Degree (1974) from the Moscow Medical School in Russia.
Committees of the Board
We do not have an audit or compensation committee at this time.
Family Relationships
There are no family relationships between any of our directors or executive
officers.
<PAGE>
Involvement in Certain Legal Proceedings
Other than as discussed below, none of our directors, executive officers,
promoters or control persons have been involved in any of the following events
during the past five years:
1. any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;
2. any conviction in a criminal proceeding or being subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses);
3. being subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking activities; or
4. being found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not
been reversed, suspended, or vacated.
Section 16(a) Beneficial Ownership Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our
executive officers and directors and persons who own more than 10% of a
registered class of our equity securities to file with the Securities and
Exchange Commission initial statements of beneficial ownership, reports of
changes in ownership and annual reports concerning their ownership of our common
stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive
officers, directors and greater than 10% shareholders are required by the
Securities and Exchange Commission regulations to furnish our company with
copies of all Section 16(a) reports they file.
To the best of our knowledge, all executive officers, directors and greater than
10% shareholders filed the required reports in a timely manner, with the
exception of the following:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF TRANSACTIONS NOT FAILURE TO FILE
NAME LATE REPORTS REPORTED ON A TIMELY BASIS REQUESTED FORMS
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Taly Keren 2(1) 2(1) Nil
---------------------------------------------------------------------------------
Dr. Michael Scheglov 2(1) 2(1) Nil
---------------------------------------------------------------------------------
<FN>
(1) The named officer and director failed to file a Form 3 - Initial
Statement of Beneficial Ownership and a Form 4 Statement of Changes in Beneficial
Ownership.
</TABLE>
ITEM 10. EXECUTIVE COMPENSATION.
The following table summarizes the compensation of Dr. Michael Scheglov, our
President, Chief Executive Officer and Secretary and Taly Keren, our
Vice-President and Treasurer, during the period from incorporation (January 25,
2000) to December 31, 2000, 2001 and for the year ended December 31, 2002. No
other officers or directors received annual compensation in excess of $100,000
during the last three complete fiscal years.
<PAGE>
<TABLE>
<CAPTION>
LONG TERM PAY-
ANNUAL COMPENSATION COMPENSATION OUTS
------------------------------------------------ ------- ---------- ----- ------- ------------------------- ----
SECURITIES
OTHER UNDER RESTRICTED
ANNUAL OPTIONS/ SHARES OR LTIP
NAME AND PRINCIPAL COMPEN- SAR'S RESTRICTED PAY-
POSITION YEAR SALARY BONUS SATION GRANTED SHARE UNITS OUTS
------------------------------------------------ ------- ---------- ----- ------- ----------- ------------ ----
<S> <C> <C> <C> <C> <C> <C> <C>
Michael Scheglov 2002 $18,000(2) Nil Nil 200,000(3) Nil Nil
President, Chief Executive Officer and Secretary 2001 $12,000(2) Nil Nil Nil 170,500(2) Nil
2000(1) $10,000(2) Nil Nil Nil Nil Nil
Taly Keren 2002 $18,000(2) Nil Nil 200,000(3) Nil Nil
Vice-President and Treasurer 2001 $12,000(2) Nil Nil Nil 170,500(2) Nil
2000(1) $10,000(2) Nil Nil Nil Nil Nil
------- ---------- ----- ------- ----------- ------------ ----
<FN>
(1) Incorporated January 25, 2000
(2) Each of Messrs. Keren and Scheglov receive a salary pursuant to their
respective management agreements. The agreements provide for payment of
$2,000 per month in connection with their respective positions. For the
year ended December 31, 2001, each of Messrs. Keren and Scheglov received
cash compensation of $1,000 per month and were issued 341,000 common shares
at a deemed issue price of $0.10 per common share. Effective, October 1,
2002, at the mutual agreement of Messrs. Scheglov and Keren, the management
agreements were terminated.
(3) Each of Messrs. Keren and Scheglov were granted stock options to acquire
200,000 shares (including 10,000 options for services as a director) of our
common stock at an exercise price of $0.51 per option until expiry in March
2007
</TABLE>
Employment/Consulting Agreements
We have entered into oral management agreements with each of Dr. Scheglov, our
President, Chief Executive Officer, Secretary and a director, and Mr. Taly
Keren, our Vice-President, Treasurer and a director, pursuant to which they are
each were previously entitled to monthly compensation of $2,000, payable as to
$1,000 in cash and as to the balance in share of restricted stock. No amounts
were paid to Messrs Keren and Scheglov in respect of these amounts owing.
Effective, October 1, 2002, at the mutual agreement of Messrs. Scheglov and
Keren, the management agreements were terminated. Other than as set out in this
annual report, we have not entered into any employment or consulting agreements
with any of our current officers, directors or employees.
There are no arrangements or plans in which we provide pension, retirement or
similar benefits for directors or executive officers, except that our directors
and executive officers may receive stock options at the discretion of our board
of directors. Other than the management agreements discussed above, we do not
have any material bonus or profit sharing plans pursuant to which cash or
non-cash compensation is or may be paid to our directors or executive officers,
except that stock options may be granted at the discretion of our board of
directors.
Stock Options/SAR Grants
During the 2001 fiscal year we adopted a formal stock option plan to provide
stock-based incentive compensation to employees, consultants, directors and
other advisors. On March 18, 2002, we granted 600,000 options to purchase
common stock in our company at an exercise price of $0.51 per share expiring on
March 18, 2007. As part of the settlement agreement reached with Dr. Sova, he
<PAGE>
surrendered 100,000 stock options previously granted to him. A further 60,000
options were cancelled in November 2002. The remaining 440,000 options vested
in various amounts over the course of 2002 and are fully exercisable at December
31, 2002. No stock options were exercised in 2002. There were no stock options
outstanding on December 31, 2001.
<TABLE>
<CAPTION>
VALUE OF THE OPTIONS GRANTED AS AT DECEMBER 31, 2002
NAME SHARES VALUE NUMBER OF SHARES VALUE OF
ACQUIRED ON REALIZED OF COMMON STOCK UNEXERCISED
EXERCISE (#) ($) UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT
AT DECEMBER 31, 2002 DECEMBER 31, 2002 EXERCISABLE/ EXERCISABLE/
UNEXERCISABLE UNEXERCISABLE(1)
------------------- --------------------- ------------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Michael Scheglov(2) nil nil 200,000 / Nil $ 0 / nil
------------------- --------------------- ------------------ ---------------- ----------------
Taly Keren(3) nil nil 200,000 / Nil $ 0 / nil
------------------- --------------------- ------------------ ---------------- ----------------
<FN>
(1) The closing bid price on December 31, 2002 was $0.11 and accordingly the
unexercised options as at December 31, 2002 had no value.
(2) Michael Scheglov was granted stock options to purchase 200,000 shares of
our common stock (33% of options granted in 2002) which are exercisable at
$0.51 per share and expire on March 18, 2007.
(3) Taly Keren was granted stock options to purchase 200,000 shares of our
common stock (33% of options granted in 2002) which are exercisable at
$0.51 per share and expire on March 18, 2007.
</TABLE>
Director Compensation
We do not have a compensation committee. We reimburse our directors for
expenses incurred in connection with attending board meetings but did not pay
director's fees or other cash compensation for services rendered as a director
in the year ended December 31, 2002.
We have no formal plan for compensating our directors for their service in their
capacity as directors although such directors each received 10,000 options (for
Messrs Scheglov and Keren, this included in the compensation table above) to
purchase shares of common stock at an exercise price of $0.51 per share as
awarded by our board of directors. Directors are entitled to reimbursement for
reasonable travel and other out-of-pocket expenses incurred in connection with
attendance at meetings of our board of directors. The board of directors may
award special remuneration to any director undertaking any special services on
behalf of our company other than services ordinarily required of a director.
Other than indicated in this annual report, no director received and/or accrued
any compensation for his or her services as a director, including committee
participation and/or special assignments.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, as of March 14, 2003, certain information with
respect to the beneficial ownership of our common stock by each stockholder
known by us to be the beneficial owner of more than 5% of our common stock, as
well as by each of our current directors and executive officers. Each person
has sole voting and investment power with respect to the shares of common stock,
except as otherwise indicated. Beneficial ownership consists of a direct
interest in the shares of common stock, except as otherwise indicated.
<PAGE>
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER AMOUNT AND NATURE OF PERCENTAGE
BENEFICIAL OWNERSHIP(1) OF CLASS(1)
------------------------------------------------------------------------------------
<S> <C> <C>
Dr. Michael Scheglov(2) 2,455,000 40.45%
------------------------------------------------------------------------------------
Taly Keren(3) 2,455,000 40.45%
------------------------------------------------------------------------------------
Grigoriy Goldenshteyn(4) 10,000 1.7%
------------------------------------------------------------------------------------
Dr. Alexander Karapetian(5) 10,000 1.7%
------------------------------------------------------------------------------------
Directors and Executive Officers as a Group(6) 4,930,000 78.40%
------------------------------------------------------------------------------------
<FN>
(1) Based on 5,868,500 shares of common stock issued and outstanding as of
March 14, 2003. Except as otherwise indicated, we believe that the
beneficial owners of the common stock listed above, based on information
furnished by such owners, have sole investment and voting power with
respect to such shares, subject to community property laws where
applicable. Beneficial ownership is determined in accordance with the rules
of the SEC and generally includes voting or investment power with respect
to securities. Shares of common stock subject to options or warrants
currently exercisable, or exercisable within 60 days, are deemed
outstanding for purposes of computing the percentage ownership of the
person holding such option or warrants, but are not deemed outstanding for
purposes of computing the percentage ownership of any other person.
(2) Includes options to purchase 200,000 shares of our common stock at an
exercise price of $0.51 until expiry in March 2007.
(3) Includes options to purchase 200,000 shares of our common stock at an
exercise price of $0.51 until expiry in March 2007.
(4) Includes options to purchase 10,000 shares of our common stock at an
exercise price of $0.51 until expiry in March 2007.
(5) Includes options to purchase 10,000 shares of our common stock at an
exercise price of $0.51 until expiry in March 2007.
(6) Includes options to purchase 420,000 shares of our common stock at an
exercise price of $0.51 until expiry in March 2007.
</TABLE>
Change in Control
We are unaware of any contract or other arrangement, the operation of which may,
at a subsequent date, result in a change of control of our company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Except as discussed above and below, there have been no transactions, or
proposed transactions, which have materially affected or will materially affect
us in which any director, executive officer or beneficial holder of more than
10% of the outstanding common stock, or any of their respective relatives,
spouses, associates or affiliates, has had or will have any direct or material
indirect interest.
During the year ended December 31, 2002, we borrowed $50,000 each from Michael
Scheglov and Taly Keren (both executive officers and directors of our company).
The loans bear interest at a rate of 15% per annum and are repayable on demand.
The loans, by way of promissory notes, are collateralized by a security interest
over all of our present and after-acquired property. Interest accrued (and
unpaid) on these loans at December 31, 2002 was $10,746. Included in accounts
payable at December 31, 2002 is another $50,015 due to Messrs Scheglov and Keren
in respect of unpaid fees and reimbursements to that date. Such amounts are
unsecured, non-interest bearing and are repayable on demand.
<PAGE>
As at the date of this annual report, we do not have any policies in place with
respect to whether we will enter into agreements with related parties in the
future.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
Reports on Form 8-K
On March 15, 2002, we filed a current report on Form 8-K announcing that on
March 13, 2002, Golden Caviar Corp., our wholly-owned subsidiary, entered into
an arm's length agreement with Dr. Vyacheslav Sova and Sea Technology
Enterprise, LLC, a limited liability company formed under the laws of the State
of Washington and controlled by Dr. Sova, pursuant to which Golden Caviar Corp.
agreed to purchase certain assets from Sea Technology and to acquire an
exclusive license to certain intellectual property from Dr. Sova.
On April 19, 2002 and April 29, 2002, we filed current reports on Form 8-K and
Form 8-K/A announcing the resignation of Moore Stephens Ellis Foster Ltd. as our
independent auditor and the appointment of BDO Dunwoody LLP in their place. Our
Board of Directors approved the change of auditor to BDO Dunwoody LLP effective
April 17, 2002.
On June 27, 2002, we filed a report on Form 8-K announcing that on June 27,
2002, Golden Caviar Corp., our wholly-owned subsidiary, Discontinued Proposed
Business Operations and entered into a pending lawsuits with Dr. Vyacheslav
Sova, Oleg Ordinartsev and Sea Technology Enterprise, LLC, a limited liability
company formed under the laws of the State of Washington and controlled by Dr.
Sova.
On August 16, 2002, the Company filed a report on Form 8-K announcing that an
Agreement had been reached between Rolltech and its wholly-owned subsidiary,
Golden Caviar and Dr Sova and Sea Technology and Oleg Ordinartsev and the Law
Office of Oleg Ordinartsev PLLC to forever discharge each other of any and all
claims, demands, and causes of action of whatsoever kind, nature or description,
whether past, present or future. The termination of the agreement resulted to
the return or cancellation of the above-mentioned property and equipment,
license, unsecured note payable, the 1,000,000 fully-vested, non-forfeitable,
restricted shares of our company, employment agreement with the licensor, the
stock options issued, and all the commitments.
Financial Statements Filed as Part of the Annual Report:
The following Consolidated Financial Statements pertaining to Rolltech are filed
as part of this annual report:
Rolltech, Inc.
================================================================================
Independent Auditors' Report - BDO Dunwoody LLP, dated March 20, 2003
Independent Auditors' Report - Moore Stephens Ellis Foster Ltd., dated
January 29, 2002
Consolidated Balance Sheets as at December 31, 2002 and 2001
Consolidated Statement of Changes in Stockholders' Equity (Capital Deficit)
for the period from January 25, 2000 (incorporation)
to December 31, 2002
Statements of Operations for the period from January 25, 2000
(incorporation) to December 31, 2002 and for the years ended
December 31, 2002 and 2001
Statements of Cash Flows for the period from January 25, 2000
(incorporation) to December 31, 2002 and for the years ended
December 31, 2002 and 2001
Summary of Significant Accounting Policies
Notes to the Consolidated Financial Statements
<PAGE>
Exhibits Required by Item 601 of Regulation S-B
(3) ARTICLES OF INCORPORATION AND BY-LAWS
3.1 Articles of Incorporation and Corporate Charter (incorporated by reference
from our Registration Statement on Form 10-SB filed on October 4, 2000)
3.2 Bylaws (incorporated by reference from our Registration Statement on Form
10-SB filed on October 4, 2000)
(10) MATERIAL CONTRACTS
10.1 Agreement between Golden Caviar Corp., Sea Technology Enterprise, LLC and
Dr. Vyacheslav V. Sova, dated March 13, 2002 (incorporated by reference
from our Form 8-K filed on March 15, 2002)
10.2 Technology License Agreement between Dr. Vyacheslav Sova and Golden Caviar
Corp., dated March 13, 2002 (incorporated by reference from our Form 8-K
filed on March 15, 2002)
10.3 Employment Letter between Golden Caviar Corp. and Dr. Vyacheslav Sova,
dated March 13, 2002 (incorporated by reference from our Form 8-K filed on
March 15, 2002)
10.4 Industrial Lease entered into between Golden Caviar Corp. and Benaroya
Capital Company, LLC, dated April 15, 2002
10.5 Letter Agreement between Icicle Seafoods, Inc. and Golden Caviar Corp.,
dated April 18, 2002*
10.6 Supplier Agreement between Golden Caviar Corp. and NorQuest Seafoods Inc.,
entered into April 25, 2002*
10.7 Real Estate Lease Agreement between Golden Caviar Corp. and NorQuest
Seafoods Inc. dated May 1, 2002
10.8 Secured Grid Promissory Note dated February 28, 2002 for the principal
amount of $50,000 payable on demand by Rolltech, Inc. to Dr. Michael
Scheglov
10.9 Secured Promissory Note dated April 15, 2002 for the principal amount of
$50,000 payable on demand by Rolltech, Inc. to Taly Keren
* CERTAIN PARTS OF THIS DOCUMENT HAVE NOT BEEN DISCLOSED AND HAVE BEEN FILED
SEPARATELY WITH THE SECRETARY, SECURITIES AND EXCHANGE COMMISSION, AND IS
SUBJECT TO A CONFIDENTIAL TREATMENT REQUEST PURSUANT TO RULE 24B-2 OF THE
SECURITIES ACT OF 1934.
(21) Subsidiary
21.1 Golden Caviar Corp.
ITEM 14. CONTROLS AND PROCEDURES
The Company's Chief Executive Officer and Principal Financial Officer have
concluded, based on an evaluation conducted within 90 days prior to the filing
date of this annual report on Form 10-KSB, that the Company's disclosure
controls and procedures have functioned effectively so as to provide those
officers the information necessary whether:
(i) this annual report on Form 10-KSB contains any untrue statement of a
material fact or omits to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report on Form 10-KSB, and
(ii) the financial statements, and other financial information included in this
annual report on Form 10-KSB, fairly present in all material respects the
financial condition, results of operations and cash flows of the Company as
of, and for, the periods presented in this annual report on Form 10-KSB.
<PAGE>
There have been no significant changes in the Company's internal controls or in
other factors since the date of the Chief Executive Officer's and Principal
Financial Officer's evaluation that could significantly affect these internal
controls, including any corrective actions with regards to significant
deficiencies and material weaknesses.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ROLLTECH, INC.
/s/ Dr. Michael Scheglov
______________________________
By: Dr. Michael Scheglov, President
Date: March 28, 2003
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
SIGNATURES
/s/ Dr. Michael Scheglov
_____________________________________
Dr. Michael Scheglov, President,
Chief Executive Officer, Secretary
and Director
Date: March 28, 2003
/s/ Taly Keren
_____________________________________
Taly Keren, Vice-President, Treasurer and Director, Principal Accounting Officer
Date: March 28, 2003
/s/ Dr. Alexander Karapetian
_____________________________________
Dr. Alexander Karapetian, Director
Date: March 28, 2003
/s/ Grigoriy Goldenshteyn
______________________________________
Grigoriy Goldenshteyn, Director
Date: March 28, 2003
<PAGE>
I, Michael Scheglov, certify that:
1. I have reviewed this annual report on form 10-KSB of Rolltech, Inc.
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report.
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in exchange act rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "evaluation date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the evaluation date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls.
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 28, 2003
By: /s/ Michael Scheglov
Michael Scheglov, President & CEO
<PAGE>
I, Taly Keren, certify that:
1. I have reviewed this annual report on form 10-KSB of Rolltech, Inc.
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report.
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report.
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in exchange act rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this annual report (the "evaluation date"); and
c) presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the evaluation date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls.
6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: March 28, 2003
By: /s/ Taly Keren
Taly Keren, Principal Accounting Officer
<PAGE>
</TEXT>
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