-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Dpw9WHFKv38j7lgW/uVoPuPFneBWJjon0i9398oxMrOuX/PBXhkQI4g6NLf/nk7t Lh9E/w9O/u7WBju9z+lj3A== 0001072588-01-500389.txt : 20020411 0001072588-01-500389.hdr.sgml : 20020411 ACCESSION NUMBER: 0001072588-01-500389 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011120 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CORMAX BUSINESS SOLUTIONS INC CENTRAL INDEX KEY: 0000736314 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 840959153 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-11424 FILM NUMBER: 1796996 BUSINESS ADDRESS: STREET 1: #250708 11TH AVENUE SW STREET 2: CALGARY ALBERTA CITY: CANADA T2R 0E4 STATE: C1 ZIP: 00000 BUSINESS PHONE: 888 261 2887 MAIL ADDRESS: STREET 1: #250708 11TH AVENUE SW STREET 2: CALGARY ALBERTA CITY: CANADA T2R 0E4 STATE: C1 ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: WATCHOUT INC DATE OF NAME CHANGE: 19991110 FORMER COMPANY: FORMER CONFORMED NAME: WHITE CLOUD EXPLORATION INC DATE OF NAME CHANGE: 19920703 10QSB 1 cbsi10q901.txt Securities and Exchange Commission Washington, D.C. 20549 Form 10-QSB [X] Quarterly report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly period ended September 30, 2001 [ ] Transition report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition period from _______________ to _______________ 000-11424 ----------------------- (Commission File Number) CORMAX BUSINESS SOLUTIONS INC. ------------------------------- (Exact Name of Small Business Issuer as Specified in its Charter) UTAH 84-0959153 - ------------------------------- ---------------------------- (State of other Jurisdiction of (IRS Employer Identification Incorporation or Organization) Number) #250, 708 11th Avenue S.W., Calgary, Alberta, Canada, T2R 0E4 ------------------------------------------------------------- (Address of Principal Executive Offices) 877-322-8822 -------------- 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. (X) Yes ( ) No APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: September 30, 2001 CLASS Outstanding at September 30, 2001 - ---------------------------- --------------------------------- Common Stock $.001 Par Value 22,500,160 CORMAX BUSINESS SOLUTIONS INC. INDEX TO FORM 10-QSB FILING FOR THE QUARTER ENDED SEPTEMBER 30, 2001 PART 1 - FINANCIAL INFORMATION PAGE ITEM 1. Financial Statements Consolidated Balance Sheet as of September 30, 2001 (Unaudited) and December 31, 2000 F-1 Consolidated Statement of Operations for the Three and Nine month period Ended September 30, 2001 and 2000 (Unaudited) F-2 Consolidated Statement of Cash Flows for the Nine month period ended September 30, 2001 and 2000 (Unaudited) F-3 Statements of Changes in Stockholders' Equity (Deficit) F-4 Notes to Consolidated Financial Statements (Unaudited) as of September 30, 2001 F-5 Management Discussion and Analysis ITEM 2. Management's Discussion and Analysis or Plan of Operation. 7 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 11 ITEM 2. CHANGES IN SECURITIES 11 ITEM 3. DEFAULT UPON SENIOR SECURITIES 11 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 11 ITEM 5. OTHER INFORMATION 11 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11 Michael Johnson & Co., LLC 9175 E. Kenyon Ave., #100 Denver, CO 80237 (303) 796-0099 FAX: (303) 796-0137 REPORT ON REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT To the Board of Directors Cormax Business Solutions, Inc. Calgary, Canada We have reviewed the accompanying balance sheet of Cormax Business Solutions, Inc.. as of September 30, 2001 and the related statements of operations for the three month and nine month periods ended September 30, 2001 and 2000, and the cash flows for the nine months ended September 30, 2001 and 2000 included in the accompanying Securities and Exchange Commission Form 10-QSB for the period ended September 30, 2001. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the balance sheet as of December 31, 2000, and the related statements of operations, stockholders' equity and cash flows for the year then ended (not presented herein). In our report dated March 28, 2001, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of September 30, 2001 is fairly stated in all material respects in relation to the balance sheet from which it has been derived. /s/ Michael Johnson & Co., LLC. Michael Johnson & Co., LLC. Denver, Colorado November 15, 2001 F-1 PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements Cormax Business Solutions Inc. Consolidated Balance Sheet As of September 30, 2001 and December 31, 2000 (unaudited) (audited) Sept. 30, 2001 Dec. 31, 2000 ----------- ----------- ASSETS Current Assets Cash $ 54,074 $ 3,471 Accounts Receivable-trade 56,805 62,799 Work in Progress 101,061 Inventory 30,630 Prepaid Expenses 10,900 ----------- ----------- Total Current Assets 253,470 66,270 ----------- ----------- Investments 12,485 8,280 ----------- ----------- Fixed Assets Computer Equipment 108,509 111,523 Computer Software 4,955 6,921 Furniture & Fixtures 29,690 26,151 ----------- ----------- 143,154 144,595 Less Accumulated Depreciation (40,053) (14,921) ----------- ----------- Net Fixed Assets 103,101 129,674 ----------- ----------- Other Assets Other Assets 12,497 Goodwill 166,050 Less Accumulated Amortization (6,000) ----------- ----------- Total Other Assets 172,547 ----------- ----------- TOTAL ASSETS $ 541,603 $ 204,224 =========== =========== LIABILITIES & EQUITY Liabilities Current Liabilities Accounts Payable-trade 279,456 783,282 Accrued Expenses 118,915 105,682 Accrued Interest Payable 95,900 98,467 Notes Payable-Current Portion 270,225 250,000 ----------- ----------- Total Current Liabilities 764,496 1,237,431 ----------- ----------- Long-Term Debt Notes Payable 6,793 - Due to Stockholders 98,763 - ----------- ----------- Total Long-Term Debt 105,556 TOTAL LIABILITIES 870,052 1,237,431 Shareholders' Equity (Deficit): Preferred Stock, no par Value, 10,000,000 Shares authorized, no shares issued and Outstanding Common Stock, Par Value $.001 500,000,000 shares authorized, 22,500,160 and 12,051,921 issued and outstanding at September 30, 2001 and December 31, 2000 respectively. 22,500 12,052 Additional Paid-In Capital 4,561,660 3,483,855 Deficit (4,912,609) (4,529,114) ----------- ----------- Total Shareholders' Equity (328,449) (1,033,207) ----------- ----------- TOTAL LIABILITIES & EQUITY $ 541,603 $ 204,224 =========== =========== The accompanying notes are an integral part of these financial statements F-2
Cormax Business Solutions Inc. Consolidated Statement of Operations For the Three and Nine month periods Ended September 30, 2001 and 2000 (Unaudited) Three Months Ended Nine Months Ended Sept. 30, 2001 Sept. 30, 2000 Sept. 30,2001 Sept. 30, 2000 --------------- --------------- --------------- --------------- REVENUES: $ 257,914 $ 84,148 $ 703,252 $ 84,148 COST OF GOODS SOLD: 64,065 - 277,264 - --------------- --------------- --------------- --------------- GROSS PROFIT 193,848 84,148 425,988 84,148 --------------- --------------- --------------- --------------- OPERATING EXPENSES: Selling and Marketing 29,661 269,585 84,400 3,228,185 General and Administrative 149,993 308,648 798,388 1,326,339 --------------- --------------- --------------- --------------- Total Expenses 179,654 578,233 882,788 4,554,524 --------------- --------------- --------------- --------------- OPERATING PROFIT (LOSS) 14,194 (494,085) (456,801) (4,470,376) OTHER REVENUES & EXPENSES: Interest Expense (1,094) - (2,266) (34,066) Interest Income - - 2,386 - Other Income 5,373 - 48,071 - Other Expenses (361) (349,220) (51,692) - Income Taxes (2,809) - (2,809) - Loss on Sale of Assets - - (40,104) - --------------- --------------- --------------- ---------------- Total Other Revenues & Expenses 1,108 (349,220) (46,414) (34,066) --------------- --------------- --------------- ---------------- Extraordinary Item -Cancellation of Debt - - 119,720 959,460 NET INCOME (LOSS) $ 15,302 $ (843,305) $ (383,495) $ (3,544,982) ================ ================ ================ ================ Per Share information: Weighted Average Number Of Common Shares Outstanding 22,202,541 4,955,563 19,761,667 3,928,134 ---------------- ---------------- ---------------- ---------------- Net (loss) Per Common Share $ 0.00 $ (0.17) $ (0.02) $ (0.90) ================ ================ ================ =================
The accompanying notes are an integral part of this financial statement F-3
Cormax Business Solutions Inc. Consolidated Statement of Cash Flows For the Nine months ended September 30, 2001 And September 30, 2000 (Unaudited) (unaudited) (unaudited) Six Months Ended Six Months Ended Sept. 30, 2001 Sept. 30, 2000 ---------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES NET LOSS FOR THE PERIOD $ (383,495) $ (843,305) Adjustments to reconcile net income to net cash Used in operating activities: Depreciation and Amortization 31,132 22,877 Stock Issued for Services 446,006 - Loss on Sale of Assets 40,104 - Debt Forgiveness (119,720) - Changes in Assets and liabilities: (Increase) In Accounts Receivable 5,994 (48,624) (Increase) In Inventory (131,692) - (Decrease) in Prepaid Expenses (10,900) (23,325) (Decrease) in Accounts Payable & Accrued Expenses (493,160) 841,231 --------------- --------------- Net Cash used in Operating Activities (615,713) (51,146) --------------- --------------- CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of Expanded Systems 418,678 - Purchase of Investments (4,205) (981,363) Development Costs - (56,545) Proceeds From Sale of Fixed Assets 7,674 - Capital Expenditures 1,441 (157,625) --------------- --------------- Net Cash Used in Investing Activities 423,589 (1,195,533) --------------- --------------- CASH FLOWS FROM FINANCING ACTIVITIES Stock Issued for Cash 129,461 49,560 Increase in Notes Payable 20,225 285,000 Advances From Stockholders 98,763 - Advances From Parent - 939,741 Proceeds From Notes Payable 6,793 - --------------- --------------- Cash Flows Provided by Financing Activities 255,242 1,274,301 --------------- --------------- Effect Of Foreign Exchange Rate on Cash and Cash Equivelents (12,497) - Net (decrease) Increase in Cash and Cash Equivalents 50,603 27,622 Cash And Cash Equivalents at Beginning of the Period 3,471 - --------------- --------------- Cash and Cash Equivalents at the End of the Period $ 54,074 $ 27,622 =============== =============== Supplemental Information: Interest Paid $ 2,266 $ - =============== =============== Income Taxes Paid $ 2,809 $ - =============== ===============
The accompanying notes are an integral part of this financial statement F-4
Cormax Business Solutions Inc. Statement of Changes in Stockholders' Equity Common Stock Additional Retained Total ------------ Paid-in Earnings Stockholders' Shares Amounts Capital (Deficit) Equity --------- ---------- ---------- ------------ ------------ Balance-December 31,1997 $1,503,024 $ 1,503 $1,003,029 $(1,051,471) $(1,051,471 Net Loss - - - (856,896) (856,896) --------- ---------- ---------- ------------ ------------ Balance December 31,1998 1,503,024 1,503 1,003,029 2,912,899 (1,908,367) --------- ---------- ---------- ------------ ------------ Net Loss - - - (46,198) (46,198) --------- ---------- ---------- ------------ ------------ Balance December 31, 1999 1,503,024 1,503 1,003,029 (2,959,097) (1,954,565) --------- ---------- ---------- ------------ ------------ Stock Issued for Cancellation 35,000 35 35,000 - 35,035 Stock Issued for Services 8,003,897 8,004 2,445,826 - 2,453,830 Stock Issued for Subsidiary 2,510,000 2,510 - - 2,510 Net loss for Year Ended - - - (1,570,017) (1,570,017) --------- ----------- ---------- ------------ ------------ Balance-December 31,2000 12,051,921 12,052 3,483,855 (4,529,114) (1,033,207) --------- ----------- ---------- ------------ ------------ Stock Issued for Expanded Systems 400,000 400 232,605 - 233,005 Stock Issued for Cancellation Of Debt 1,075,000 1,075 278,706 - 279,781 Stock Issued for Services 4,553,293 4,553 441,453 - 446,006 Stock Issued for Cash 4,420,000 4,420 125,041 - 129,461 Net income for Period - - - (383,495) (383,495) --------- ----------- ----------- ------------- ------------ Balance-September 30, 2001 22,500,160 22,500 4,561,660 (4,912,609) (328,449) --------- ----------- ----------- ------------- ------------
The accompanying notes are an integral part of this financial statement F-5 Cormax Business Solutions Inc. Notes to Consolidated Financial Statements (Unaudited) as of September 30, 2001 1. Presentation of Interim Information In the opinion of the management of Cormax Business Solutions, Inc. the accompanying unaudited financial statements include all normal adjustments considered necessary to present fairly the financial position as of September 30, 2001, and the results of operations for the nine months ended September 30, 2001 and 2000, and cash flows for the nine months ending September 30, 2001 and 2000. Interim results are not necessarily indicative of results for a full year. The financial statements and notes are presented as permitted by form 10-QSB, and do not contain certain information included in the Company's audited financial statements and notes for the fiscal year ended December 31, 2000. 2. Acquisition of Expanded Systems Solutions On March 13, 2001 the Company entered into an agreement to purchase all the issued and outstanding common shares of Expanded Systems Solutions, Inc. (Expanded). Expanded is a private company engaged in the business of installing wireless facilities and is a reseller of wireless equipment. The purchase became effective on March 20, 2001. The purchase price of the common shares was $200,000 U.S. dollars, and was paid by the issuance of 400,000 shares of the Company's common stock. The Company's shares are held by an escrow agent and are to be liquidated in satisfaction of the purchase price over a period of nine months. Should the escrow agent realize less than $200,000 from the shares, the Company is required to pay the shortfall in cash within seven days following the end of the of the liquidation period. In the event there are shares remaining in the escrow account after realizing the $200,000, the escrow agent is to return the excess shares to the treasury of the Company. The Company has accounted for the acquisition of the shares of Expanded as a purchase and the excess of the purchase price over the underlying net asset value of expanded is shown as goodwill in the amount of $239,960.82 CDN on the balance sheet at March 31, 2001. Other costs associated with the acquisition of Expanded Systems amounted to $320,000.This amount included accounting and legal fees and the value of the stock issued was to retain the employees of Expanded Systems. 3. Cormax sold computer equipment and furniture on April 10, 2001. The sale resulted in a loss of $40,104. 4. Due to an accounting error, the issued and outstanding common stock of the Company has been adjusted. Adjustments have been made to the appropriate statements ending September 30, 2001, to reflect this error. F-6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THE FOLLOWING DISCUSSION OF THE RESULTS OF OUR OPERATIONS AND FINANCIAL CONDITION SHOULD BE READ IN CONJUNCTION WITH OUR FINANCIAL STATEMENTS AND THE NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT. EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE DISCUSSION CONTAINED IN THIS REPORT CONTAINS "FORWARD-LOOKING STATEMENTS" THAT INVOLVE RISK AND UNCERTAINTIES. THESE STATEMENTS MAY BE IDENTIFIED BY THE USE OF FORWARD-LOOKING TERMINOLOGY SUCH AS "BELIEVES," "EXPECTS," "MAY," "WILL," "SHOULD" OR "ANTICIPATES" OR THE NEGATIVE THEREOF OR SIMILAR EXPRESSIONS OR BY DISCUSSIONS OF STRATEGY. THE CAUTIONARY STATEMENTS MADE IN THIS REPORT SHOULD BE READ AS BEING APPLICABLE TO ALL RELATED FORWARD-LOOKING STATEMENTS WHEREVER THEY APPEAR IN THIS REPORT. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN THIS REPORT. RESULTS OF OPERATIONS FOR QUARTER ENDED SEPTEMBER 30, 2001 During the three-month period ended September 30, 2001, we had revenues of $257,914 compared to $84,148 in the same period in 2000. We had incurred general and administrative expenses of $179,654 for the three-month period ended September 30, 2001 and $578,283 for the three month period ended September 30, 2000. The Company had an operating profit in the quarter of $14,194 in 2001 compared to an operating loss of ($494,085) in the period in 2000. Net income in the three-month period ended September 30, 2001 was $15,302 or ($.00) per share compared to net loss of ($843,305) or ($.17) per share in the same period in 2000. We recognize revenues as they are earned, not necessarily as they are collected. Direct costs such as hardware and software purchases for resale and subcontracting fees are classified as cost of goods sold. General and administrative expenses include salaries, accounting, advertising, contract labor, bank charges, entertainment, equipment rental, insurance, legal, labor, supplies, payroll taxes, postage, professional fees, telephone and travel. The decrease in general and administrative expenses during the three-month period ended September 30, 2001 as compared to the three-month period ended September 30, 2000 is primarily attributable to the decrease in marketing, payroll expenses, and consulting fees. In the period in 2000 the Company had a non-recurring expense of $349,220, which substantially increased its net loss. Result of Operations During the nine-month period ended September 30, 2001, we had revenues of $703,252 compared to $84,148 in the same period in 2000. We incurred general and administrative expenses of $882,788 for the nine-month period ended September 30, 2001 and $4,554,524 for the same period ended September 30, 2000. The Company had an operating loss of ($456,801) and ($4,470,376) in the periods in 2001 and 2000, respectively. Net loss in the nine-month period ended September 30, 2001 was ($383,495) or ($.02) per share compared to net loss of ($3,544,982) after an extraordinary gain of $959,460 on cancellation of debt or ($.90) per share in the same period 2000. We recognize revenues as they are earned, not necessarily as they are collected. Direct costs such as hardware and software purchases for resale and subcontracting fees are classified as cost of goods sold. General and administrative expenses include salaries, accounting, advertising, contract labor, bank charges, entertainment, equipment rental, insurance, legal, supplies, pay roll taxes, postage, professional fees, telephone and travel. The decrease in general and administrative expenses during the nine month period ended September 30, 2001 as compared to the nine-month period ended September 30, 2000 is primarily attributable to the decrease in marketing, payroll expenses, and consulting fees. Liquidity and Capital Resources. The auditor's report accompanying our audited financial statements for the year ended December 31, 2000 indicated that there is substantial doubt respecting our ability to continue as a going concern. The qualification was due to our need to generate positive cash flow from operations or obtain additional financing. During the quarter ended September 30, 2001, we were able to generate positive cash flow. No assurance can be given that we will continue to achieve positive cash flows or obtain additional financing for operations. We have incurred losses since the inception of our business. We expect to continue to incur losses until we increase our revenues while reducing costs of good sold and general and administrative expenses. We have been dependent on additional funding from lenders and investors to conduct operations. At September 30, 2001 we had a retained deficit of ($4,912,609) compared to retained deficits of ($3,544,982) and ($4,529,114) at September 30, 2000 and December 31, 2000, respectively. As of September 30, 2001, we had total current assets of $253,470 and total current liabilities of $764,496 or negative working capital of ($511,026). At December 31, 2000, we had total current assets of $66,270 and total current liabilities of $1,237,431 or negative working capital of ($1,171,161). At September 30, 2000 we had total current assets of $99,571, and total current liabilities of $1,126,231 or negative working capital of ($1,026,660). We currently have no material commitments for capital expenditures. We will continue to evaluate possible acquisitions or investments in businesses, products and technologies that are complimentary to ours. These may require the use of cash which would require us to seek financing. We believe that existing cash, investments and loans available under our present credit facilities will only be sufficient for the next 1 to 2 months. However, we may sell additional equity or debt securities or seek additional credit facilities to fund acquisition-related or other business costs. Sales of additional equity or convertible debt securities would result in additional dilution to our stockholders. We may also need to raise additional funds in order to support more rapid expansion, develop new or enhanced services or products, respond to competitive pressures, or take advantage of unanticipated opportunities. Our future liquidity and capital requirements will depend upon numerous factors, including the success of our service offerings and competing technological and market developments. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULT 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 A. Exhibits: None B. There have been no reports on Form 8-K filed during the third quarter 2001. 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. Cormax Business Solutions Inc. BY: /s/ Todd Violette - ---------------------------- Todd Violette, President Dated: This 16th day of November 2001 -----END PRIVACY-ENHANCED MESSAGE-----