10QSB 1 f10qsb92001_precom.txt FORM 10-QSB FOR 9/30/01 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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 September 30, 2001 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from to Commission File No. 0-31507 PRECOM TECHNOLOGY, INC. (Name of Small Business Issuer in Its Charter) Florida (State or Other Jurisdiction of Incorporation or Organization) 06-1588136 (I.R.S. Employer Identification No.) 2001 West Main Street, Suite 208, Stamford, CT 06902 (Address of Principal Executive Offices) (Zip Code) (203) 961-0306 (Issuer's Telephone Number, Including Area Code) 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: As of November 14, 2001, the Company had 2,120,852 shares of Common Stock outstanding, $0.001 par value. Part I - FINANCIAL INFORMATION
TABLE OF CONTENTS Page No. INDEPENDENT ACCOUNTANTS' REVIEW REPORT ............................. 1 FINANCIAL STATEMENTS Balance Sheets............................................... 2 Statements of Operations..................................... 3 Statement of Stockholders' (Deficit)......................... 4 Statements of Cash Flows..................................... 5 - 6 Notes to Financial Statements................................ 7 - 10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11-12 PART II - OTHER INFORMATION 13 Item 1. Legal Proceedings 13 Item 2. Changes in Securities 13 Item 3. Defaults Upon Senior Securities 14 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 5. Other Information 14 Signatures 14
PART I - FINANCIAL INFORMATION Item 1. Financial Statements: BASIS OF PRESENTATION The accompanying unaudited financial statements are presented in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-QSB and item 310 under subpart A of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The accompanying statements should be read in conjunction with the audited financial statements for the year ended December 31, 2000. In the opinion of management, all adjustments (consisting only of normal occurring accruals) considered necessary in order to make the financial statements not misleading, have been included. Operating results for the nine months ended September 30, 2001 are not necessarily indicative of results that may be expected for the year ending December 31, 2001. The financial statements are presented on the accrual basis. PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) FINANCIAL STATEMENTS SEPTEMBER 30, 2001 (UNAUDITED) TABLE OF CONTENTS Page No. INDEPENDENT ACCOUNTANTS' REVIEW REPORT ............................. 1 FINANCIAL STATEMENTS Balance Sheets............................................... 2 Statements of Operations..................................... 3 Statement of Stockholders' (Deficit)......................... 4 Statements of Cash Flows..................................... 5 - 6 Notes to Financial Statements................................ 7 - 10 INDEPENDENT ACCOUNTANTS' REVIEW REPORT To the Board of Directors and Stockholders Precom Technology, Inc. We have reviewed the accompanying balance sheet of Precom Technology, Inc. as of September 30, 2001 and the related statements of operations, stockholders' (deficit), and cash flows for the three and nine months ended September 30, 2001 and 2000, and for the period from September 1, 1996 (date of inception) to September 30, 2001, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of Precom Technology, Inc. A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 6 to the financial statements, the Company has sustained losses of $466,191, has deficit stockholders' equity, and needs additional capital to finance its operations. These conditions raise doubt about its ability to continue as a going concern. Managements' plans regarding these matters also are described in Note 6. The financial statements do not include any adjustments that might result from the outcome of these uncertainties. We have audited, in accordance with auditing standards generally accepted in the United States of America, the balance sheet of Precom Technology, Inc. as of December 31, 2000, and the related statements of operations, stockholders' (deficit) and cash flows for the year then ended (not presented herein); and in our report dated January 30, 2001 we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of December 31, 2000, is fairly stated in all material respects in relation to the balance sheet from which it has been derived. Moffitt & Company, P.C. Scottsdale, Arizona October 17, 2001 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEETS SEPTEMBER 30, 2001 AND DECEMBER 31, 2000 ASSETS
September 30, December 31, 2001 2000 (Unaudited) (Audited) ----------- --------- TOTAL ASSETS $ 0 $ 0 ==================== ==================== LIABILITIES AND STOCKHOLDERS' (DEFICIT) CURRENT LIABILITIES Accounts payable Stock Transfer Agent $ 17,293 $ 17,293 Greenwich Financial Group 59,188 40,200 Legal and Accounting Fees 24,347 9,278 -------------------- -------------------- TOTAL CURRENT LIABILITIES 100,828 66,771 -------------------- -------------------- STOCKHOLDERS' (DEFICIT) Preferred stock, par value $ 0.001 per share Authorized 10,000,000 shares Issued and outstanding - 0 - shares 0 0 Common stock, par value $ 0.001 per share Authorized 50,000,000 shares Issued and outstanding - 2,120,852 shares 2,121 2,121 Paid in capital in excess of par value of stock 363,242 363,242 Deficit accumulated during the development stage ( 466,191) ( 432,134) -------------------- -------------------- TOTAL STOCKHOLDERS' (DEFICIT) ( 100,828) ( 66,771) -------------------- -------------------- TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 0 $ 0 ==================== ====================
See Accompanying Notes and Independent Accountants' Review Report. 2 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 AND FOR THE PERIOD FROM SEPTEMBER 1, 1996 (DATE OF INCEPTION) TO SEPTEMBER 30, 2001 (UNAUDITED)
Three Months Ended September 30, ------------------- 2001 2000 ---- ---- REVENUE $ 6,766 $ 0 ---------- ---------- EXPENSES Development costs 0 28,970 General and administrative 4,791 0 ---------- ---------- TOTAL EXPENSES 4,791 28,970 ---------- ---------- NET INCOME (LOSS) $ 1,975 $ (28,970) ========== ========== NET INCOME (LOSS) PER COMMON SHARE Basic and diluted$ .00 $ (.01) ========== ========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 2,120,852 2,120,852 ========== ==========
See Accompanying Notes and Independent Accountants' Review Report.
For the period from September 1, 1996 (Date Nine Months of Inception) to Ended September 30, September 30, 2001 2000 2001 REVENUE $ 6,766 $ 0 $ 6,766 ------------------ ----------------- -------------------- Development costs 0 46,170 373,393 General and administrative 40,823 0 99,564 ------------------ ----------------- -------------------- 40,823 46,170 472,957 ------------------ ----------------- -------------------- TOTAL EXPENSES $ ( 34,057) $ ( 46,170) $ ( 466,191) ================== ================= ==================== NET INCOME (LOSS) NET INCOME (LOSS) PER COMMON SHARE Basic and diluted$ $ ( .02) $ ( .02) ================== ================= WEIGHTED AVERAGE NUMBER OF 2,120,852 2,120,852 COMMON SHARES OUTSTANDING ================== =================
See Accompanying Notes and Independent Accountants' Review Report. 3 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) FOR THE PERIOD FROM SEPTEMBER 1, 1996 (DATE OF INCEPTION) TO SEPTEMBER 30, 2001 (UNAUDITED)
Preferred Stock Common Stock --------------- ------------ Shares Amount Shares Amounts ------ ------ ------ ------- September 1, 1996 (Date if inception) 0 $ 0 0 $ 0 September, 1996 - Shares issued for services 0 0 100,000 100 October, 1996 - Shares issued for cash 0 0 100,000 100 Net (loss) for the period from September 1, 1996 to December 31, 1996 0 0 0 0 ---------- --------------- ----------------- ---------------- BALANCE, DECEMBER 31, 1996 0 0 200,000 200 March 1997 - Shares issued for cash 0 0 400,000 400 March 1997 - Shares issued for settlement of failed mergers 0 0 720,852 721 Net (loss) for the year ended December 31, 1997 0 0 0 0 ---------- --------------- ----------------- ---------------- BALANCE, DECEMBER 31, 1997 0 0 1,320,852 1,321 August 1998 - Shares issued for services 0 0 600,000 600 Net (loss) for the year ended December 31, 1998 0 0 0 0 ---------- --------------- ----------------- ---------------- BALANCE, DECEMBER 31, 1998 0 0 1,920,852 1,921 Net (loss) for the year ended December 31, 1999 0 0 0 0 ---------- --------------- ----------------- ---------------- BALANCE, DECEMBER 31, 1999 0 0 1,920,852 1,921 August 2000 - issuance of common stock for Provence Capital Corporation, Inc. 0 0 200,000 200 Net (loss) for the year ended December 31, 2000 0 0 0 0 ---------- --------------- ----------------- ---------------- BALANCE, DECEMBER 31, 2000 0 0 2,120,852 2,121 Net (loss) for the nine months ended September 30, 2001 0 0 0 0 ---------- --------------- ----------------- ---------------- BALANCE, SEPTEMBER 30, 2001 0 $ 0 $ 2,120,852 $ 2,121 ========== =============== ================= ================
See Accompanying Notes and Independent Accountants' Review Report.
Paid in Deficit Capital in Accumulated Excess of During the Par Value Development of Stock Stage Total -------- ----- ----- $ 0 $ 0 $ 0 900 0 1,000 50,084 0 50,184 0 ( 16,703) ( 16,703) ---------------------- ---------------------- ---------------------- 50,984 ( 16,703) 34,481 199,600 0 200,000 6,488 0 7,209 0 ( 178,200) ( 178,200) ---------------------- ---------------------- ---------------------- 257,072 ( 194,903) 63,490 99,400 0 100,000 0 ( 171,241) ( 171,241) ---------------------- ---------------------- ---------------------- 356,472 ( 366,144) ( 7,751) 0 ( 7,249) ( 7,249) ---------------------- ---------------------- ---------------------- 356,472 ( 373,393) ( 15,000) 6,770 0 6,970 0 ( 58,741) ( 58,741) ---------------------- ---------------------- ---------------------- 363,242 ( 432,134) ( 66,771) 0 ( 34,057) ( 34,057) ---------------------- ---------------------- ---------------------- $ 363,242 $ ( 466,191) $ ( 100,828) ====================== ============== ======= ============== =======
See Accompanying Notes and Independent Accountants' Review Report. 4 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 AND FOR THE PERIOD FROM SEPTEMBER 1, 1996 (DATE OF INCEPTION) TO SEPTEMBER 30, 2001 (UNAUDITED)
For the period From September 1, 1996 (Date of Nine Months Inception) to Ended September 30, September 30, 2001 2000 2001 ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss)$ ( 34,057) $ ( 46,170) $ (466,191) Adjustments to reconcile net (loss) to net cash (used) by operating activities: Stock issued for failed merger 0 0 7,209 Stock issued for services 0 0 101,000 Stock issued for merger expenses 0 6,970 6,970 Changes in operating assets and liabilities: Accounts payable 34,057 39,200 100,828 ---------------- ---------- ----------------- NET CASH (USED) BY OPERATING ACTIVITIES 0 0 (250,184) ---------------- ---------- ----------------- CASH FLOWS FROM INVESTING ACTIVITIES 0 0 0 ---------------- ---------- ----------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock 0 0 250,184 ---------------- ---------- ----------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 0 0 250,184 ---------------- ---------- ----------------- NET INCREASE IN CASH AND CASH EQUIVALENTS 0 0 0 CASH AND CASH EQUIVALENT AT BEGINNING OF PERIOD $ 0 $ 0 $ 0 ================ ========== ================= CASH AND CASH EQUIVALENT AT END OF PERIOD $ 0 $ 0 $ 0 ================ ========== ================= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 0 $ 0 $ 0 ================ ============ ================= Taxes $ 0 $ 0 $ 0 ================ ============ =================
See Accompanying Notes and Independent Accountants' Review Report. 5 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF CASH FLOWS (CONTINUED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000 AND FOR THE PERIOD FROM SEPTEMBER 1, 1996 (DATE OF INCEPTION) TO SEPTEMBER 30, 2001 (UNAUDITED)
For the period from September 1, 1996 (Date of Nine Months Inception) to Ended September 30, September 30, 2001 2000 2001 ---- ---- ---- SCHEDULE OF NON CASH FINANCING ACTIVITIES: Issuance of common stock for failed mergers $ 0 $ 0 $ 7,209 Issuance of common stock for services $ 0 $ 0 $ 101,000
See Accompanying Notes and Independent Accountants' Review Report. 6 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2001 (UNAUDITED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business Precom Technology, Inc. was organized on September 1, 1996, under the laws of the State of Florida. The Company is in the development stage and is seeking a merger candidate. Accounting Estimates Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States of America. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were used. Income Taxes Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax basis of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in FASB Statement No. 109, Accounting for Income Taxes. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Net (Loss) Per Share The Company adopted Statement of Financial Accounting Standards No. 128 that requires the reporting of both basic and diluted earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with FASB 128, any anti-dilutive effects on net (loss) per share are excluded. NOTE 2 RESTATEMENT OF COMMON STOCK AND PAID IN CAPITAL IN EXCESS OF PAR VALUE OF STOCK On February 5, 2001, the Company effected a 1 for 100 reverse stock split on 19,208,522 shares of stock. On March 19, 2001, the Company then had a 10-1 forward stock split on 192,008 shares. See Accompanying Notes and Independent Accountants' Review Report. 7 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2001 (UNAUDITED) NOTE 2 RESTATEMENT OF COMMON STOCK AND PAID IN CAPITAL IN EXCESS OF PAR VALUE OF STOCK (CONTINUED) The stock splits have been retroactively recorded in the financial statements as if they occurred at the date of inception. NOTE 3 INCOME TAXES Significant components of the Company's deferred tax assets and liabilities are as follows as of September 30, 2001 and 2000:
2001 2000 ------------------ ------------------ Deferred tax assets Net operating losses carryforward $ 63,000 $ 56,009 Less valuation allowance 63,000 56,009 ------------------ ------------------ Net deferred tax assets $ 0 $ 0 ================== ================== Deferred tax liabilities $ 0 $ 0 ================== ================== A reconciliation of the valuation allowance is as follows: 2001 2000 ------------------ ------------------ Balance at beginning of period $ 57,959 $ 56,009 Addition for period 5,041 0 ------------------ ------------------ Balance at end of period $ 63,000 $ 56,009 ================== ==================
NOTE 4 NET OPERATING LOSS CARRYFORWARDS The Company has the following net operating loss carryforwards at September 30, 2001:
Tax Year Amount Expiration date -------- ------ --------------- December 31, 1996 $ 16,703 2016 December 31, 1997 178,200 2017 December 31, 1998 171,241 2018 December 31, 1999 7,249 2019 December 31, 2000 12,396 2020 September 30, 2001 36,032 2021 --------------------- $ 421,821 =====================
Future changes in ownership may limit the ability of the Company to utilize its net operating loss carryforwards. See Accompanying Notes and Independent Accountants' Review Report. 8 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2001 (UNAUDITED) NOTE 5 PREFERRED STOCK No rights or preferences have been assigned to the preferred stock. NOTE 6 GOING CONCERN These financial statements are presented on the basis that the Company is a going concern. Going concern contemplates the realization of assets and the satisfaction of liabilities in the normal course of business over a reasonable length of time. The Company has sustained net losses of $466,191, has deficit stockholders' equity and needs additional capital to finance its operations. These factors raise doubt as to the Company's ability to continue as a going concern. Management's plans to eliminate the going concern situation include but are not limited to seeking a merger candidate. NOTE 7 BUSINESS COMBINATION In August 2000, the company merged with Provence Capital Corporation, Inc. and accounted for the transaction as a pooling of interest. The Company recorded the merger as follows: Increase in common stock $ 200 Increase in paid in capital in excess of par value of stock 6,770 The following unaudited information presents certain income statement data of the separate companies for the period preceding the merger: 2000 ---- Net sales Precom Technology, Inc. $ 0 Provence Capital Corporation, Inc. 0 Net (loss) Precom Technology, Inc. ( 42,170) Provence Capital Corporation, Inc. ( 6,970) There were no material transactions between Precom Technology, Inc. and Provence Capital Corporation, Inc. prior to the merger. The effects of conforming Provence Capital Corporation, Inc.'s accounting policies to those of Precom Technology, Inc. were not material. See Accompanying Notes and Independent Accountants' Review Report. 9 PRECOM TECHNOLOGY, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2001 (UNAUDITED) NOTE 8 UNAUDITED FINANCIAL INFORMATION The accompanying financial information as of September 30, 2001 is unaudited. In management's opinion, such information includes all normal recurring entries necessary to make the financial information not misleading. See Accompanying Notes and Independent Accountants' Review Report. 10 Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations Forward-Looking Statements -------------------------- Forward-looking statements, based on management's current views and assumptions, are made throughout the Management's Discussion and Analysis and elsewhere in this report to stockholders. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results and those presently anticipated or projected. Among the factors that may affect operating results are the following: success of the Company's change in focus; competitive environment; and general economic conditions. Results of Operations --------------------- The Company had no operations in the third quarter of 2001 other than general and administrative expenses of $4,791. Future Outlook -------------- Due to extenuating circumstances that arose with Group Now, the agreement set forth between us and Group Now was terminated. We will continue to seek a candidate to merge with under the same set of goals set forth by us. PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 2. Changes in Securities. None Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None Item 5. Other information. None. Item 6. Exhibits and reports on Form 8-K. None SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this 10-QSB report to be signed on its behalf by the undersigned thereunto duly authorized. Precom Technology, Inc., a Florida corporation By: /s/ Nicholas M. Calapa ------------------------- Nicholas M. Calapa President DATED: November 14, 2001