10QSB 1 g0364.txt QUARTERLY REPORT FOR THE QTR ENDED 7/31/03 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-QSB -------------------------------------------------------------------------------- (Mark one) [X] Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 For the quarterly period ended July 31, 2003 [ ] Transition Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 For the transition period from ______________ to _____________ -------------------------------------------------------------------------------- Commission File Number: 000-30071 KIK Technology International, Inc. (Exact name of small business issuer as specified in its charter) California 91-2021602 (State of incorporation) (IRS Employer ID Number) 590 Airport Road, Oceanside CA 92054 (Address of principal executive offices) (760) 967-2777 (Issuer's telephone number) -------------------------------------------------------------------------------- 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 [ ] State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date: September 11, 2003: 25,021,865 Transitional Small Business Disclosure Format (check one): YES [ ] NO [X] KIK TECHNOLOGY INTERNATIONAL, INC. Form 10-QSB for the Quarter ended July 31, 2003 Table of Contents Page ---- PART I - FINANCIAL INFORMATION Item 1 Financial Statements 3 Item 2 Management's Discussion and Analysis or Plan of Operation 19 Item 3 Controls and Procedures 22 PART II - OTHER INFORMATION Item 1 Legal Proceedings 22 Item 2 Changes in Securities 22 Item 3 Defaults Upon Senior Securities 22 Item 4 Submission of Matters to a Vote of Security Holders 22 Item 5 Other Information 22 Item 6 Exhibits and Reports on Form 8-K 23 SIGNATURES 23 2 PART I ITEM 1 - FINANCIAL STATEMENTS KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS July 31, 2003 and 2002 (UNAUDITED)
July 31, July 31, 2003 2002 ---------- ---------- ASSETS CURRENT ASSETS Cash on hand and in bank $ 58,908 $ 38,575 Accounts receivable Trade, net of allowance for doubtful accounts of approximately $13,300 and $50,000, respectively 517,178 348,622 Other 6,475 -- Inventories 339,574 402,609 ---------- ---------- TOTAL CURRENT ASSETS 922,135 789,806 ---------- ---------- PROPERTY AND EQUIPMENT - AT COST, NET OF ACCUMULATED DEPRECIATION 158,094 139,386 ---------- ---------- OTHER ASSETS Note receivable from officer 53,400 53,400 Refundable deposits 4,800 6,469 Deferred debt issuance costs, net of accumulated amortization of approximately $18,200 and $7,280, respectively 3,640 14,560 ---------- ---------- TOTAL OTHER ASSETS 61,840 74,429 ---------- ---------- TOTAL ASSETS $1,142,069 $1,003,621 ========== ==========
The accompanying notes are an integral part of these consolidated financial statements. 3 KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS - CONTINUED July 31, 2003 and 2002 (UNAUDITED)
July 31, July 31, 2003 2002 ----------- ----------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable to investors, net of accompanying warrant discount of approximately $1,827 and $7,723, respectively $ 73,173 $ 67,277 Current maturity of capital lease payable 3,738 3,578 Accounts payable - trade 400,869 301,512 Other accrued expenses 29,303 39,620 Management fee payable to majority shareholder 60,000 -- Advances from majority shareholder 16,000 16,000 ----------- ----------- TOTAL CURRENT LIABILITIES 583,083 427,987 ----------- ----------- LONG-TERM DEBT Capital lease payable 12,622 16,377 ----------- ----------- TOTAL LIABILITIES 595,705 444,364 ----------- ----------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common stock - $0.001 par value 100,000,000 shares authorized 25,021,865 and 24,014,212 shares issued and outstanding 25,022 24,014 Additional paid-in capital 5,146,573 5,062,882 Accumulated deficit (4,625,231) (4,527,639) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 546,364 559,257 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,142,069 $ 1,003,621 =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 4 KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS Six and Three months ended July 31, 2003 and 2002 (UNAUDITED)
Six months Six months Three months Three months ended ended ended ended July 31, July 31, July 31, July 31, 2003 2002 2003 2002 ----------- ----------- ----------- ----------- REVENUES - net of returns and allowances $ 1,721,727 $ 1,628,761 $ 929,571 $ 779,391 COST OF SALES (1,461,695) (1,339,171) (791,754) (619,885) ----------- ----------- ----------- ----------- GROSS PROFIT 260,032 289,590 137,817 159,506 ----------- ----------- ----------- ----------- OPERATING EXPENSES Selling, general and administrative expenses 355,944 306,842 177,897 152,330 Compensation expense related to common stock issuances at less than "fair value" 945 -- -- -- ----------- ----------- ----------- ----------- TOTAL OPERATING EXPENSES 356,889 306,842 177,897 152,330 ----------- ----------- ----------- ----------- LOSS FROM OPERATIONS (96,857) (17,252) (40,080) 7,176 OTHER INCOME Interest and other income (expense) - net (3,009) 2,289 21 1,640 ----------- ----------- ----------- ----------- LOSS BEFORE PROVISION FOR INCOME TAXES (99,866) (14,963) (40,059) 8,816 PROVISION FOR INCOME TAXES -- -- -- -- ----------- ----------- ----------- ----------- NET LOSS (99,866) (14,963) (40,059) 8,816 OTHER COMPREHENSIVE INCOME -- -- -- -- ----------- ----------- ----------- ----------- COMPREHENSIVE LOSS $ (99,866) $ (14,963) $ (40,059) $ 8,816 =========== =========== =========== =========== Net loss per weighted-average share of common stock outstanding, calculated on Net Loss - basic and fully diluted nil nil nil nil =========== =========== =========== =========== Weighted-average number of shares of common stock outstanding 24,656,881 23,991,778 24,990,579 23,998,336 =========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial statements. 5 KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS Six months ended July 31, 2003 and 2002 (UNAUDITED)
Six months Six months ended ended July 31, July 31, 2003 2002 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES NET CASH PROVIDED BY OPERATING ACTIVITIES $ 72,064 $ 109,264 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (38,005) (1,261) --------- --------- NET CASH USED IN INVESTING ACTIVITIES (38,005) (1,261) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Net borrowings (payments) on bank line of credit -- (99,981) Payments on long-term capital lease (1,843) (1,126) Cash advanced by majority shareholder -- 16,000 --------- --------- NET CASH USED IN FINANCING ACTIVITIES (1,843) (85,107) --------- --------- INCREASE (DECREASE) IN CASH 32,216 22,896 Cash at beginning of period 26,692 15,679 --------- --------- CASH AT END OF PERIOD $ 58,908 $ 38,575 ========= ========= SUPPLEMENTAL DISCLOSURE OF INTEREST AND INCOME TAXES PAID Interest paid for the period $ 641 $ 1,172 ========= ========= Income taxes paid for the period $ -- $ -- ========= ========= SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES Acquisition of equipment on a long-term capital lease $ -- $ 21,080 ========= ========= Trade accounts payable settled with issuance of common stock $ 73,401 $ -- ========= =========
The accompanying notes are an integral part of these consolidated financial statements. 6 KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS KIK Technology International, Inc. (KTII) was incorporated on February 1, 2000 under the laws of the State of California as Russian-Imports.com. Russian-Imports.com was initially founded to develop an e-commerce internet website which would sell handmade lacquer boxes, Matroshka dolls and crystal imported from Russia. This venture was unsuccessful. On September 4, 2001, KTII (formerly Russian-Imports.com) issued 16,700,000 shares of restricted, unregistered common stock to KIK Tire Technologies, Inc. (a publicly-owned Canadian corporation) (KTTI) for 100.0% of the issued and outstanding stock of KIK Technology, Inc. (a wholly-owned subsidiary of KTTI). By virtue of this transaction, KIK Technology, Inc. became a wholly-owned subsidiary of KTII and KTTI became an approximate 73.6% shareholder in KTII. Concurrent with this transaction, Russian-Imports.com changed it's corporate name to KIK Technologies International, Inc. At the transaction date, KTII was a "shell company" as the Company had no assets or liabilities, had generated no revenues since inception and had incurred total expenses of approximately $940,000 since its inception on February 1, 2000 through the September 4, 2001 transaction. KIK Technology, Inc. (KIK) was incorporated in June 1988 under the laws of the State of California. KIK manufactures and markets an extensive and high quality line of off-highway micro-cellular polyurethane tires for the healthcare, light industrial, lawn and garden and recreational industries. KIK operates from a sole manufacturing plant and marketing offices located in Oceanside, CA. The Company's principal raw materials are purchased from a sole supplier who is also a major customer for the Company's products. In the event of any disruption in the availability of raw materials or a market for the Company's products purchased by this key supplier, the Company may experience a negative economic impact. The Company believes that suppliers of raw materials are available at comparable prices and management is seeking other avenues of distribution of the Company's products to consumers. Management is of the opinion that no interruption of either raw materials or product demand will occur. NOTE B - PREPARATION OF FINANCIAL STATEMENTS The acquisition of KIK Technology, Inc. (KTI), on September 4, 2001, by KTII effected a change in control of KTII and was accounted for as a "reverse acquisition" whereby KTI is the accounting acquiror for financial statement purposes. Accordingly, the historical consolidated financial statements of the Company are those of KTI from it's inception and those of the consolidated entity subsequent to the September 4, 2001 transaction date. The Company follows the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America and has adopted a year-end of January 31. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure 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 differ from those estimates. 7 KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE B - PREPARATION OF FINANCIAL STATEMENTS - CONTINUED Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company's system of internal accounting control is designed to assure, among other items, that 1) recorded transactions are valid; 2) valid transactions are recorded; and 3) transactions are recorded in the proper period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the Company for the respective periods being presented During interim periods, the Company follows the accounting policies set forth in its annual audited financial statements filed with the U. S. Securities and Exchange Commission on its Annual Report on Form 10-KSB/A for the year ended January 31, 2003. The information presented within these interim financial statements may not include all disclosures required by generally accepted accounting principles and the users of financial information provided for interim periods should refer to the annual financial information and footnotes when reviewing the interim financial results presented herein. In the opinion of management, the accompanying interim financial statements, prepared in accordance with the U. S. Securities and Exchange Commission's instructions for Form 10-QSB, are unaudited and contain all material adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial condition, results of operations and cash flows of the Company for the respective interim periods presented. The current period results of operations are not necessarily indicative of results which ultimately will be reported for the full fiscal year ending January 31, 2004. For segment reporting purposes, the Company operated in only one industry segment during the periods represented in the accompanying financial statements and makes all operating decisions and allocates resources based on the best benefit to the Company as a whole. These financial statements reflect the books and records of KIK Technology International, Inc. (formerly Russian-Imports.com) (KTII) and KIK Technology, Inc. (KTI) as of and for the six and three months ended July 31, 2003 and 2002, respectively. All significant intercompany transactions have been eliminated in consolidation. The consolidated entities are referred to as Company. NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. CASH AND CASH EQUIVALENTS For Statement of Cash Flows purposes, the Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. Cash overdraft positions may occur from time to time due to the timing of making bank deposits and releasing checks, in accordance with the Company's cash management policies. 8 KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 2. ACCOUNTS RECEIVABLE AND REVENUE RECOGNITION In the normal course of business, the Company extends unsecured credit to virtually all of its customers which are located throughout the United States and are principally concentrated in the midwest region of the country. Depending upon management's assessment of creditworthiness and order size, certain shipments are made on "COD" terms using common carriers. Because of the credit risk involved, management has provided an allowance for doubtful accounts which reflects its opinion of amounts which will eventually become uncollectible. In the event of complete non-performance, the maximum exposure to the Company is the recorded amount of trade accounts receivable shown on the balance sheet at the date of non-performance. The Company recognizes revenue from the sale of tires and accessories upon shipment to, or receipt by customers, depending upon contractual terms and when there is no significant uncertainty regarding the consideration to be received and the associated costs to be incurred. Additionally, the Company recognizes reductions of recorded revenue for product returns from unsatisfied customers and other billing adjustments or corrections, at the point that the returned products are received by the Company or upon the completion of negotiations between the Company and it's customer. 3. INVENTORY Inventory consists of raw materials, principally chemical feedstocks, and finished goods, principally tires and accessories manufactured by the Company and other minor miscellaneous items purchased from third vendors for resale as a component of the Company's products. Inventory is valued at the lower of cost or market value, using principally the average cost method. 4. PROPERTY AND EQUIPMENT Property and equipment are recorded at historical cost. These costs are depreciated over the estimated useful lives, generally two (2) to seven (7) years, of the individual assets using the straight-line method. Gains and losses from the disposition of property and equipment are included in operations as incurred. In accordance with Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the Company follows the policy of evaluating all property and equipment as of the end of each reporting quarter. For each of the quarters ended July 31, 2003 and 2002, no charges to operations were made for impairments in the future benefit of property and equipment. 5. DEFERRED DEBT ISSUE COSTS Deferred debt issue costs represent monies paid investment bankers and legal counsel in connection with the $75,000 in convertible notes payable. These costs are amortized as a component of operations over the life of the underlying debt instrument using the straight line method. 9 KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 6. INCOME TAXES The Company uses the asset and liability method of accounting for income taxes. At July 31, 2003 and 2002, the deferred tax asset and deferred tax liability accounts, as recorded when material to the financial statements, are entirely the result of temporary differences. Temporary differences represent differences in the recognition of assets and liabilities for tax and financial reporting purposes, primarily accumulated depreciation and amortization, allowance for doubtful accounts and vacation accruals. As of July 31, 2003 and 2002, the deferred tax asset related to the Company's net operating loss carryforward is fully reserved. 7. ADVERTISING COSTS The Company does not conduct any direct response advertising activities. For non-direct response advertising, the Company charges the costs of these efforts to operations at the first time the related advertising is published. 8. EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is computed by dividing the net income (loss) by the weighted-average number of shares of common stock and common stock equivalents (primarily outstanding options and warrants). Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method. The calculation of fully diluted earnings (loss) per share assumes the dilutive effect of the exercise of outstanding options and warrants at either the beginning of the respective period presented or the date of issuance, whichever is later. As of July 31, 2003 and 2002, the Company's issued and outstanding, warrants, options and convertible debt are considered antidilutive due to the Company's net operating loss position. 9. EMPLOYEE STOCK OPTIONS For periods prior to November 1, 2002, the Company has chosen to account for employee stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25 (APB No. 25), Accounting for Stock Issued to Employees, and related interpretations. Accordingly, employee compensation cost for stock options and warrants is measured as the excess, if any, of the market price of the Company's stock at the date of the grant over the amount an employee must pay to acquire the stock. This treatment was allowed under Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation" (SFAS 123). In December 2002, FASB issued Statement of Financial Accounting Standards No. 148 "Accounting for Stock-Based Compensation - Transition and Disclosure" (SFAS 148). This statement amends SFAS 123 and provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. This statement also amends the disclosure requirements of SFAS 123 to require more prominent and frequent disclosures in financial statements about the effects of stock compensation. The transition guidance and annual disclosure provisions of SFAS 148 are effective for financial statements issued for fiscal years ending after December 15, 2002. Effective November 1, 2003, the first day of the reporting quarter including the effective date of SFAS 148, the Company's Board of Directors, in conjunction with public opinion and SFAS 148, elected to expense the imputed compensation cost related to any stock options granted during Fiscal 2003 and for future periods. 10 KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 9. EMPLOYEE STOCK OPTIONS The Company did not issue any stock options during Fiscal 2003, nor subsequent thereto, and the adoption of SFAS 148 did not have a material impact on our results of operations or financial condition. 10. NEW AND PENDING ACCOUNTING PRONOUNCEMENTS In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards (" SFAS") No. 141 "Business Combinations" and SFAS No. 142 "Goodwill and Other Intangible Assets". SFAS No. 141, among other things, eliminates the pooling of interests method of accounting for business acquisitions entered into after June 30, 2001. SFAS No. 142 requires companies to use a fair- approach to determine whether there is impairment of existing and future goodwill. In August 2001, FASB issued SFAS No. 144 "Accounting for Impairment of Long-Lived Assets". SFAS No. 144 supersedes SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and APB No. 30 "Reporting the Effects of Disposal of a Segment of a Business and Extraordinary, Unusual and Infrequently Occurring Events and Transactions" and combines the two accounting models into a single model based on the framework established in SFAS No. 121. We were required to implement these pronouncements for the fiscal year beginning June 1, 2002. The implementation of these pronouncements did not have a material impact on our results of operations or financial condition. In June 2001, FASB also issued SFAS No. 143 "Accounting for Asset Retirement Obligations" that addresses asset retirement obligations that result from the acquisition, construction or normal operation of long-lived assets. It requires companies to recognize asset retirement obligations as a liability when the liability is incurred at its fair value. There was no impact on our results of operations or financial condition as a result of the adoption of the standard. In April 2002, FASB issued SFAS No. 145 "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections". SFAS No. 13 is amended to eliminate any inconsistency between the required accounting for sale leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to leaseback transactions. This statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. We will be required to adopt this standard in our fiscal year beginning June 1, 2003. We do not believe that there will be a material impact on our results of operations or financial condition as a result of the adoption of this standard. In June 2002, FASB issued SFAS No. 146 "Accounting for Costs Associated with Exit or Disposal Activities". This statement requires recording costs associated with exit or disposal activities at their fair value when a liability has been incurred. Under previous guidance, certain exit costs were accrued upon management's commitment to an exit plan, which is generally before an actual liability has been incurred. The provisions of this statement are effective for exit or disposal activities that are initiated after December 31, 2002. This standard will not have a material impact on our results of operations or financial condition. 11 KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 10. NEW AND PENDING ACCOUNTING PRONOUNCEMENTS - CONTINUED In November 2002, the FASB issued Interpretation No. 45 ("FIN45") "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others". This interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that is has issued. It also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The disclosure requirements and initial measurement requirements of FIN45 are effective prospectively for guarantees issued or modified after December 31, 2002. We are not a party to any agreement in which we are a guarantor of indebtedness of others. Accordingly, the pronouncement is currently not applicable to us. NOTE D - FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying amount of cash, accounts receivable, accounts payable and notes payable, as applicable, approximates fair value due to the short term nature of these items and/or the current interest rates payable in relation to current market conditions. Interest rate risk is the risk that the Company's earnings are subject to fluctuations in interest rates on either investments or on debt and is fully dependent upon the volatility of these rates. The Company does not use derivative instruments to moderate its exposure to interest rate risk, if any. Financial risk is the risk that the Company's earnings are subject to fluctuations in interest rates or foreign exchange rates and are fully dependent upon the volatility of these rates. The company does not use derivative instruments to moderate its exposure to financial risk, if any. NOTE E - CONCENTRATIONS OF CREDIT RISK The Company and its KIK subsidiary maintain their respective cash accounts in financial institutions subject to insurance coverage issued by the Federal Deposit Insurance Corporation (FDIC). Under FDIC rules, the Company and its subsidiaries are entitled to aggregate coverage of $100,000 per account type per separate legal entity per financial institution. During the six months ended July 31, 2003 and 2002 and for each of the years ended January 31, 2003 and 2002, respectively, the various operating companies had deposits in a financial institution with credit risk exposures in excess of statutory FDIC coverage. The Company has incurred no losses as a result of any of these unsecured situations. NOTE F - INVENTORIES Inventories consist of the following at July 31, 2003 and 2002: July 31, July 31, 2003 2002 -------- -------- Raw materials $114,012 $127,834 Finished goods 225,562 274,775 -------- -------- Total $339,574 $402,609 ======== ======== 12 KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE G - NOTE RECEIVABLE FROM OFFICER In May 2001, the Company advanced $53,400 to its President to hold in trust as a contingency fund for the sole use of the Company in the event of a unanticipated cash shortfall. The advance bears interest at 4.0% annually and is unsecured. The original documentation required repayment of the advance and accrued, but unpaid, interest in May 2003. As of July 31, 2003, the Company's President continues to maintain these funds as trustee on behalf of the Company. NOTE H - NOTES PAYABLE TO INVESTORS Pursuant to the terms of a private placement agreement, the Company attempted to raise up to $600,000 through the placement of two-year senior notes bearing interest at 10% payable quarterly. This Private Placement Memorandum was terminated by the Company during the fiscal quarter ended October 31, 2002. In November 2001, the Company entered into an agreement with an investment banker whereby the investment banker would act as exclusive dealer-manager in this private placement of securities to be issued by the Company pursuant to Regulation D of the Securities Act of 1933, as amended. As compensation, the investment banker was paid $15,000 for professional fees and will receive a commission equal to 10% of the gross proceeds, an expense allowance equal to 4% of the gross proceeds and, for every $500,000 raised, 150,000 shares of the Company's restricted, unregistered common stock. Such shares will be issued upon completion of the private placement. In addition, the investment banker will have the option to nominate one person to the Company's Board of Directors if at least $2,000,000 is raised. As of the termination of this Private Placement Memorandum, only $75,000 had been successfully raised and the Company issued 22,500 shares of restricted, unregistered common stock in payment of commissions. Note holders can elect, with the consent of the Company, to accept Company common stock in lieu of cash interest payments. Such payments in stock would be calculated at 50% of the daily average of the market price of the common stock for the 30-calendar days preceding the interest due date. After six months from the date of issue of the notes, the Company can convert the notes to common stock if the daily average market price of the Company's common stock for any 30-calendar days after the initial six-month period equals or exceeds $1.00. The conversion of the notes to common stock would also be calculated at 50% of the daily average market price for the 30 days prior to the Company giving notice of its plan to convert. In conjunction with the offering of the notes, each note holder was given one warrant for each $1.00 invested. Each warrant allows the holder to purchase one share of the Company's common stock at an initial exercise price of $0.60 per share, and is exercisable for two years. In March 2002, the Company repriced the outstanding warrants to an exercise price of $0.40 per share. Pursuant to the private placement, the Company sold a $50,000 convertible note on November 12, 2001 and a $25,000 convertible note on December 26, 2001 to two unrelated investors. Warrants to purchase a combined total of 75,000 shares of the Company's common stock at $0.60 per share were also issued to the investors. The warrants were valued at $11,789 using the Black-Scholes option-pricing model, and therefore $11,789 of the total debt proceeds of $75,000 was allocated to the warrants, resulting in a discount on the notes, which will be amortized to interest expense over the term of the underlying debt. During the years ended January 31, 2003 and 2002, approximately $5,900 and $1,100 of the discount was amortized to interest expense. The weighted average assumptions utilized to value the warrants using the Black-Scholes option-pricing model were as follows: 13 KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE H - NOTES PAYABLE TO INVESTORS - CONTINUED Expected life of the option: The initial life of the corresponding option, generally two (2) years Expected volatility in the Company's stock price: 150.0%, which was based on fluctuations of the Company's stock price over the past Fiscal year. Expected dividends: Zero (0.00) based on past performance Anticipated risk free Interest rate: Estimated to be 2.80%. The convertible notes contained a beneficial conversion feature valued at a combined total of approximately $63,000. However, because the conversion features are fully contingent upon the occurrence of certain future events, the Company did not record a discount resulting from the beneficial conversion feature. The aggregate maturities of the notes are as follows: Year ending January 31, 2004 $ 75,000 Less unamortized discount (1,827) -------- Balance at July 31, 2003 $ 73,173 ======== NOTE I - CAPITAL LEASE PAYABLE Capital lease payable is as follows: July 31, July 31, 2003 2002 -------- -------- $21,080 capital lease payable to a finance corporation Interest at 8.60%. Payable in monthly installments of approximately $432, including accrued interest Final maturity due in April 2007. Collateralized by equipment $ 16,360 $ 19,955 Less current maturities (3,738) (3,578) -------- -------- Long-term portion $ 12,622 $ 16,377 ======== ======== Future maturities of long-term capital leases payable, as of the Company's last year-end, January 31, 2003, are as follows: Year ending January 31, Amount ----------- ------ 2004 $ 3,738 2005 4,092 2006 4,468 2007 4,872 2008 125 ------- Total $17,295 ======= 14 KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE J - INCOME TAXES The components of income tax (benefit) expense for the six months ended July 31, 2003 and 2002, respectively, are as follows: July 31, July 31, 2003 2002 ------- ------- Federal: Current $ -- $ -- Deferred -- -- ------- ------- -- -- ------- ------- State: Current -- -- Deferred -- -- ------- ------- -- -- ------- ------- Total $ -- $ -- ======= ======= The Company has a net operating loss carryforward of approximately $4,200,000 to offset future taxable income. Subject to current regulations, this carryforward will begin to expire in 2005. The amount and availability of the net operating loss carryforwards may be subject to limitations set forth by the Internal Revenue Code. Factors such as the number of shares ultimately issued within a three year look-back period; whether there is a deemed more than 50 percent change in control; the applicable long-term tax exempt bond rate; continuity of historical business; and subsequent income of the Company all enter into the annual computation of allowable annual utilization of the carryforwards. The Company's income tax expense for the six months ended July 31, 2003 and 2002, respectively, are as follows: July 31, July 31, 2003 2002 -------- -------- Statutory rate applied to loss before income taxes $(34,000) $ (5,100) Increase (decrease) in income taxes resulting from: State income taxes -- -- Other, including reserve for deferred tax asset 34,000 5,100 -------- -------- Income tax expense $ -- $ -- ======== ======== Temporary differences, consisting primarily of net operating loss carryforwards, statutory deferrals of expenses for organizational costs and accrued, but unpaid, accruals for officer compensation and statutory differences in the depreciable lives for property and equipment, between the financial statement carrying amounts and tax bases of assets and liabilities give rise to deferred tax assets and liabilities as of January 31, 2003 and 2002, respectively: January 31, January 31, 2003 2002 ----------- ----------- Deferred tax assets Net operating loss carryforwards $ 1,700,000 $ 1,700,000 Less valuation allowance (1,700,000) (1,700,000) ----------- ----------- Net Deferred Tax Asset $ -- $ -- =========== =========== 15 KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE K - COMMON STOCK TRANSACTIONS In October 2001, the Company issued 1,200,000 shares of its restricted common stock to consultants for services provided, which were valued at $84,000, or $0.07 per share, which represents management's estimate of the fair value of the common stock at the date of issuance. This amount is included as general and administrative expense in the accompanying statement of operations for the year ended January 31, 2002. In January 2002, the Company sold 85,000 shares of its restricted common stock to a private investor for $8,500, or $0.10 per share. Effective at the end of each Fiscal quarter during the year ended January 31, 2003, the Company and the holders of the two convertible notes agreed for the payment of accrued interest in restricted, unregistered common stock. The Company issued an aggregate 101,964 shares of restricted, unregistered common stock in payment of accrued interest. These transactions were valued at an aggregate approximately $6,978. The convertible note terms allow for the payment of accrued interest with restricted, unregistered common stock using an average value of 50% of the daily average of the market price of the common stock for the 30 calendar days preceding the interest due date. In two instances, the closing stock price, as discounted was at or in excess of the closing price on the settlement date. In two instances, the closing stock price on the settlement date was in excess of the prescribed calculation. The differential between the discounted "fair value" and the settlement price resulted in a charge to operations of approximately $906 for compensation expense related to common stock issuances at less than "fair value". Effective on February 1, 2003, the Company issued an aggregate 114,771 shares of restricted, unregistered common stock as payment for accrued interest as of January 31, 2003 on convertible notes payable. In February 2003, the Company issued 150,000 restricted, unregistered shares of common stock in payment of a contract for marketing services. This transaction was valued at approximately $3,000. In April 2003, the Company issued 22,500 restricted, unregistered shares of common stock in settlement of a January 31, 2003 trade account payable in the amount of approximately $552. Effective on May 1, 2003, the Company issued an aggregate 92,216 shares of restricted, unregistered common stock as payment for accrued interest as of April 30, 2003 on convertible notes payable. In May 2003, the Company issued 575,664 restricted, unregistered shares of common stock in payment of trade accounts payable to the Company's primary legal counsel in the amount of approximately $72,849. NOTE L - STOCK WARRANTS At July 31, 2003, all 75,000 warrants sold in conjunction with the convertible notes private placement were outstanding. 50,000 warrants expire in November 2003, and 25,000 warrants expire in December 2003. In March 2002, the Company reduced the exercise price on the warrants being offered in the private placement from $0.60 to $0.40 per share. This new exercise price was retroactively applied to the note holders who invested $75,000 during the year ended January 31, 2002. The Company has determined that there is no material change in the value of the warrants after recalculating the value by using the Black-Scholes option-pricing model with the new exercise price of $0.40 per share. In conjunction with the reverse acquisition, which was concluded in September 2001, The Company granted 2,300,000 warrants to certain shareholders of KTTI. These warrants have an exercise price of approximately $0.05 per share and expire in April 2004. 16 KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE L - STOCK WARRANTS - CONTINUED The following table lists the issued and outstanding stock warrants as of July 31, 2003 and 2002, respectively:
Warrants Warrants outstanding at originally July 31, issued 2003 Exercise price --------- --------- -------------- Balance at February 1, 2002 2,375,000 2,375,000 $0.05 - $0.40 Granted -- -- Exercised -- -- Forfeited/Expired -- - --------- --------- Balance at July 31, 2002 2,375,000 2,375,000 $0.05 - $0.40 ========= ========= Balance at February 1, 2003 2,375,000 2,375,000 $0.05 - $0.40 Granted -- -- Exercised -- -- Forfeited/Expired -- - --------- --------- Balance at July 31, 2003 2,375,000 2,375,000 $0.05 - $0.40 ========= ========= Warrants exercisable at July 31, 2003 2,375,000 ========= Weighted-average exercise price per warrant $ 0.06 =========
NOTE M - RELATED PARTY TRANSACTIONS During the year ended January 31, 2002, the Company paid $14,000 to KTTI, its majority shareholder, for administrative and accounting services rendered. During the six months ended July 31, 2003, the Company accrued $60,000 in management fees payable to KTTI, its majority shareholder for administrative and accounting services rendered. (Remainder of this page left blank intentionally) 17 KIK TECHNOLOGY INTERNATIONAL, INC. AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED NOTE N - COMMITMENTS AND CONTINGENCIES LEASED FACILITIES The Company leases its facilities under a non-cancellable operating lease, which expires in May 2005. The lease requires monthly payments as follows: $8,307 for the first 12 months; $8,639 for the next 12 months and $8,984 for the next 12 months. Rent expense incurred under this lease was approximately $97,800 and $93,000 for the years ended January 31, 2003 and 2002, respectively. Future amounts due under this agreement are as follows: Year ending January 31, Amount ----------- ------ 2004 $102,340 2005 106,428 2006 35,936 -------- Total $244,704 ======== EMPLOYMENT CONTRACT In May 2000, KIK entered into an employment agreement with William M. Knooihuizen, the Company's current President and Director. The term of the agreement is for a period of five (5) years. For such services, KIK agreed to pay Mr. Knooihuizen an annual salary in the amount of $143,000, to be paid in weekly installments. NOTE O - SIGNIFICANT CUSTOMERS During the year ended January 31, 2003, the Company had two separate customers responsible for an aggregate of approximately 80.3% (68.2% and 12.1%, respectively) of total sales. The largest customer is also a significant vendor of raw materials. The largest key customer was responsible for approximately 57.2% of accounts receivable and 0.0% of accounts payable at January 31, 2003. The second key customer was responsible for approximately 9.02% of accounts receivable and 0.0% of accounts payable at January 31, 2003. There were no other customers responsible for more than 10.0% of total net sales during Fiscal 2003. During the year ended January 31, 2002, the Company had a single customer, which is also a significant vendor of raw materials, who was responsible for an aggregate of approximately 63% of total sales and approximately 58% of accounts receivable and 55% of accounts payable at January 31, 2002. There were no other customers responsible for more than 10.0% of total net sales during Fiscal 2002. These trends continued through the quarters ended July 31, 2003 and 2002, respectively. 18 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (1) CAUTION REGARDING FORWARD-LOOKING INFORMATION Certain statements contained in this quarterly filing, including, without limitation, statements containing the words "believes", "anticipates", "expects" and words of similar import, constitute forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: international, national and local general economic and market conditions: demographic changes; the ability of the Company to sustain, manage or forecast its growth; the ability of the Company to successfully make and integrate acquisitions; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other factors referenced in this and previous filings. Given these uncertainties, readers of this Form 10-QSB and investors are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements contained herein to reflect future events or developments. (2) RESULTS OF OPERATIONS, LIQUIDITY AND CAPITAL RESOURCES OR PLAN OF OPERATION OVERVIEW During the six and three months ended July 31, 2003, respectively, the Company achieved revenues of approximately $1,722,000 and $930,000 as compared to approximately $1,629,000 and $779,000 for the first six and three months of Fiscal 2002, respectively. These revenues were derived primarily from the sale of tire products. Net loss for the six and three months ended July 31, 2003 was approximately $(100,000) and $(40,000), respectively as compared to a net income (loss) of approximately $(15,000) and $8,800 for the six and three months ended July 31, 2002. The net loss per share of common stock for each of the six and three month periods ended July 31, 2003 and 2002, respectively, was approximately $0.00. RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes. SIX MONTHS ENDED JULY 31, 2003 AS COMPARED TO THE SIX MONTHS ENDED JULY 31, 2002 The Company posted net sales of approximately $1,722,000 for the six months ended July 31, 2003 as compared to net sales of approximately $1,629,000 for the six months ended July 31, 2002. The Company experienced an increase in volume during the three month period from May 1, 2003 through July 31, 2003 as compared to the same period in the previous year. The Company continues to experience some seasonality in product demand and overall economic and competitive pressures from competitors with similar product lines. The Company's cost of sales increased by approximately $123,000 to approximately $1,462,000 for the six months ended July 31, 2003 as compared to approximately $1,339,000 for the six months ended July 31, 2002 as a result of increased sales volume. Virtually all of the increase was directly attributable to raw material purchases as the Company maintains a position of excess manufacturing capacity and relatively stable other costs associated with production. The Company experienced a gross profit margin of approximately 15.10% (approximately 19 $260,000) for the first six months of Fiscal 2004 as compared to approximately 17.78% (approximately $290,000) for the first six months of Fiscal 2003. General and administrative expenses increased by approximately $50,000 to approximately $357,000 for the six months ended July 31, 2003 from approximately $307,000 for the six months ended July 31, 2002. The largest contributor to this increase is a $5,000 per month administrative fee charge which is payable back to the Company's majority shareholder, KIK Tire Technologies, Inc. (a publicly-owned Canadian corporation). Through July 31, 2003, $60,000 has been accrued as a payable to the Company's majority shareholder to be paid at a future date when cash flows will permit. LIQUIDITY AND CAPITAL RESOURCES The Company had cash and cash equivalents of approximately $59,000, $27,000 and $39,000 at July 31, 2003, January 31, 2003 and July 31, 2002, respectively. The Company maintained business liquidity and capital resources during the year adequate to fund all capital and operating expense requirements. Operations have historically been funded from internally generated funds, line of credit borrowings, and capital raised via a private placement of securities in previous years. For the six months ended July 31, 2003 and 2002, net cash provided by (used in) operating activities was approximately $72,000 and $109,000, respectively. Net cash provided by operating activities consists of cash received from sales of products to customers, less purchases of raw materials, payment of payroll and payment of other general operating expenses, including interest. Cash used in investing activities was approximately $(38,000) and $(1,300) for each of the six months ended July 31, 2003 and 2002, respectively. The Fiscal 2004 and 2003 cash utilization was due solely to the acquisition of equipment. The Company experienced cash used in financing activities of approximately $(1,800) in the first six months of Fiscal 2004 compared to $(85,000) for the first six months of Fiscal 2003. Of the cash used during the six months ended July 31, 2002, approximately $(100,000) was used in the repayment and cancellation of the Company's bank line of credit and was offset by approximately $16,000 advanced from the Company's majority shareholder. The Company believes that sufficient cash will be generated internally to fund its operations for the next twelve months. CRITICAL ACCOUNTING POLICIES Financial Reporting Release No. 60, which was recently released by the Securities and Exchange Commission, requires all companies to include a discussion of critical accounting policies or methods used in the preparation of financial statements. Note 2 to the Consolidated Financial Statements includes a summary of the significant accounting policies and methods used in the preparation of the Company's Consolidated Financial Statements. The following is a brief discussion of the more significant accounting policies and methods used by the Company. REVENUE RECOGNITION Our revenue recognition policy is significant because our revenue is a key component of our results of operations. The Company recognizes revenue from the sale of tires and accessories. Revenue is recognized upon shipment to, or receipt by customers, depending upon contractual terms and when there is no significant uncertainty regarding the consideration to be received and the associated costs to be incurred. Additionally, we provide a reduction of recorded revenue for billing adjustments and billing corrections. 20 ACCOUNTS RECEIVABLE The Company continuously monitors collections and payments from its customers and maintains an allowance for estimated uncollectible accounts based upon historical experience and specific customer collections issues that have been identified. Depending upon management's assessment of a customer's creditworthiness and order size, certain shipments are made on "COD" terms using common carriers. Since accounts receivable are concentrated in a relatively few customers, a significant change in the liquidity or financial position of any one of these customers could have a material adverse impact on the collectibility of the Company's accounts receivable and future operating results. In the event of complete non-performance by any customer or customers, the maximum exposure to the Company would be the recorded amount of trade accounts receivable shown on the balance sheet at the date of non-performance. INVENTORIES Inventories are valued at the lower of cost or market. Cost is determined principally on the average cost method. The Company regularly reviews inventory quantities on hand and records, when necessary, a provision for excess and obsolete inventory based primarily on the Company's estimated forecast of product demand and production requirements for the next twelve months. Demand for the Company's products can fluctuate significantly. A significant increase in the demand for the Company's products could result in a short-term increase in the cost of inventory purchases while a significant decrease in demand could result in an increase in the amount of excess inventory quantities on hand. In addition, the Company's industry is characterized by rapid technological change, frequent new product development and rapid product obsolescence that could result in an increase in the amount of obsolete inventory quantities on hand. Additionally, the Company's estimate of future product demand may prove to be inaccurate, in which case the Company may have understated or overstated the provision required for excess and obsolete inventory. Therefore, although the Company makes every effort to ensure the accuracy of its forecasts of future product demand, any significant unanticipated changes in demand or technological developments could have a significant impact on the Company's inventory value and reported operating results. STOCK-BASED COMPENSATION Statement of Financial Accounting Standards No. 123, Accounting for Stock Based Compensation, defines a fair-value based method of accounting for stock-based employee compensation plans and transactions in which an entity issues its equity instruments to acquire goods and services from non-employees, and encourages but does not require companies to record compensation cost for stock-based employee compensation plans at fair value. For periods prior to November 1, 2002, the Company has chosen to account for employee stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25 (APB No. 25), Accounting for Stock Issued to Employees, and related interpretations. Accordingly, employee compensation cost for stock options and warrants is measured as the excess, if any, of the market price of the Company's stock at the date of the grant over the amount an employee must pay to acquire the stock. This treatment was allowed under Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation" (SFAS 123). In December 2002, FASB issued Statement of Financial Accounting Standards No. 148 "Accounting for Stock-Based Compensation - Transition and Disclosure" (SFAS 148). This statement amends SFAS 123 and provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. This statement also amends the disclosure requirements of SFAS 123 to require more prominent and frequent disclosures in financial statements about the effects of stock compensation. The transition guidance and annual disclosure provisions of SFAS 148 are effective for financial statements issued for fiscal years ending after December 15, 2002. Effective November 1, 2003, the first day of the reporting quarter including the effective date of SFAS 148, the Company's 21 Board of Directors, in conjunction with public opinion and SFAS 148, elected to expense the imputed compensation cost related to any stock options granted during Fiscal 2003 and for future periods. The Company did not issue any stock options during Fiscal 2003 and the adoption of SFAS 148 did not have a material impact on our results of operations or financial condition. ITEM 3 - CONTROLS AND PROCEDURES As required by Rule 13a-15 under the Exchange Act, within the 90 days prior to the filing date of this report, the Company carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of the Company's management, including the Company's President and Chief Executive Officer along with the Company's Chief Financial Officer. Based upon that evaluation, the Company's President and Chief Executive Officer along with the Company's Chief Financial Officer concluded that the Company's disclosure controls and procedures are effective. There have been no significant changes in the Company's internal controls or in other factors, which could significantly affect internal controls subsequent to the date the Company carried out its evaluation. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in Company reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in Company reports filed under the Exchange Act is accumulated and communicated to management, including the Company's Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure. PART II - OTHER INFORMATION ITEM 1 - LEGAL PROCEEDINGS None ITEM 2 - CHANGES IN SECURITIES Effective on May 1, 2003, the Company issued an aggregate 92,216 shares of restricted, unregistered common stock as payment for accrued interest as of April 30, 2003 on convertible notes payable. In May 2003, the Company issued 575,664 restricted, unregistered shares of common stock to Mintmire & Associates, the Company's primary legal counsel, in payment of trade accounts payable in the amount of approximately $72,849. ITEM 3 - DEFAULTS ON SENIOR SECURITIES None ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company has held no regularly scheduled, called or special meetings of shareholders during the reporting period. ITEM 5 - OTHER INFORMATION None 22 ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K Exhibits 31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief Executive Officer 31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 - Chief Financial Officer 32.1 Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Reports on Form 8-K None -------------------------------------------------------------------------------- SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. KIK TECHNOLOGY INTERNATIONAL, INC. Dated: September 12, 2003 /s/ Kuldip C. Baid ------------------ ---------------------------------- Kuldip C. Baid Chief Financial Officer and Director 23