10QSB/A 1 cbsi10qa602.txt Securities and Exchange Commission Washington, D.C. 20549 Form 10-QSB/A [X] Quarterly report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly period ended June 30, 2002 [ ] 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) 403-296-0280 -------------- 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 ISSUER'S State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: June 30, 2002 CLASS Outstanding at June 30, 2002 ---------------------------- ---------------------------- Common Stock $.001 Par Value 187,341,296 Preferred Stock no Par Value 500,000 Class A
CORMAX BUSINESS SOLUTIONS INC. INDEX TO FORM 10-QSB FILING FOR THE QUARTER ENDED JUNE 30, 2002 PART 1 - FINANCIAL INFORMATION PAGE ITEM 1. Financial Statements Consolidated Balance Sheet as of June 30, 2002 (Unaudited) and December 31, 2001 F-1 Consolidated Statement of Operations for the Three and Six month period Ended June 30, 2002 and 2001 (Unaudited) F-2 Consolidated Statement of Cash Flows for the Six month period ended June 30, 2002 and 2001 (Unaudited) F-3 Statements of Changes in Stockholders Equity (Deficit) F-4 Notes to Consolidated Financial Statements (Unaudited) as of June 30, 2002 F-5 Management Discussion and Analysis ITEM 2. Management's Discussion and Analysis or Plan of Operation. PART II - OTHER INFORMATION ITEM 1. Legal Proceedings ITEM 6. Exhibits and Reports on Form 8-K
PART I - FINANCIAL INFORMATION ITEM 1. Financial Statements MICHAEL JOHNSON & CO., LLC. 9175 Kenyon Ave., #100 Denver CO 80237 Phone: 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 consolidated balance sheet of Cormax Business Solutions, Inc. as of June 30, 2002 and the related consolidated statements of operations for the three month and six month ended June 30, 2002 and 2001 and the related consolidated cash flows for the six month ended June 30, 2002 and 2001, included in the accompanying Securities and Exchange Commission Form 10-QSB for the period ended June 30, 2002. 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 auditing standards generally accepted in the United States, 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 accounting principles generally accepted in the United States. We have previously audited, in accordance with auditing standards generally accepted in the United States, the consolidated balance sheet as of December 31, 2001, and the related consolidated statements of operations, stockholders' equity and cash flows for the year then ended (not presented herein). In our report dated April 12, 2002, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying balance sheet as of June 30, 2002 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 August 14, 2002 F-1 Cormax Business Solutions Inc. Consolidated Balance Sheet (unaudited) (audited) June 30,'02 Dec. 31.'01 ----------- ----------- ASSETS Current Assets Cash $ 76,323 $ 38,551 Accounts Receivable-trade 55,063 125,550 Work in Progress 4,648 Prepaid Expenses 7,629 11,032 Inventory 11,218 7,037 ----------- ----------- Total Current Assets 154,882 182,170 ----------- ----------- Investments 100,099 3,456 ----------- ----------- Fixed Assets Computer Equipment 123,003 115,515 Computer Software 4,275 5,177 Furniture & Fixtures 35,372 31,026 ----------- ----------- 162,651 151,718 Less Accumulated Depreciation (66,522) (46,473) ----------- ----------- Net Fixed Assets 96,129 105,245 ----------- ----------- Other Assets Goodwill Less Accumulated Amortization ----------- ----------- Total Other Assets ----------- ----------- TOTAL ASSETS $ 351,110 $ 290,871 =========== =========== LIABILITIES & EQUITY Liabilities Current Liabilities Line of Credit 66,390 - Accounts Payable-trade 164,910 273,580 Accrued Expenses 13,333 23,438 Accrued Interest Payable 96,466 96,466 Due to Stockholders 75,692 119,944 Notes Payable-Current Portion 270,814 274,955 ----------- ----------- Total Current Liabilities 687,606 788,383 ----------- ----------- TOTAL LIABILITIES 687,606 1,237,431 Shareholders' Equity (Deficit): Preferred Stock, no par Value, 10,000,000 Shares authorized, 500,000 shares issued and 16,667 - Outstanding Common Stock, Par Value $.001 500,000,000 shares authorized, 187,341,296 and 36,640,160issued and outstanding at June 30, 2002 and December 31, 2001 respectively 187,341 36,640 Additional Paid-In Capital 5,435,982 4,920,613 Subscription Receivable (130,439) - Retained Deficit (5,917,907) (5,454,765) Other comprehensive Income (Loss) (28,139) - ----------- ----------- Total Stockholders Equity (336,495) (497,512) ----------- ----------- TOTAL LIABILITIES & STOCKHOLDERS EQUITY $ 351,110 $ 290,871 =========== ===========
The accompanying notes are an integral part of these financial statements F-2
Cormax Business Solutions Inc. Consolidated Statement of Operations (Unaudited) Three Months Ended Six Months Ended June 30, 2002 June 30, 2001 June 30,2002 June 30, 2001 --------------- --------------- --------------- --------------- REVENUES: $ 122,656 $ 334,368 $ 409,237 $ 445,338 COST OF GOODS SOLD: 78,501 213,199 324,111 213,199 --------------- --------------- --------------- --------------- GROSS PROFIT 44,155 121,169 85,126 232,139 --------------- --------------- --------------- --------------- OPERATING EXPENSES: Selling and Marketing 4,832 54,739 46,611 54,739 General and Administrative 193,954 506,669 392,822 640,665 --------------- --------------- --------------- --------------- Total Expenses 198,786 561,408 439,433 695,404 --------------- --------------- --------------- --------------- OTHER REVENUES & EXPENSES: Interest Expense (540) (1,172) (877) (1,172) Interest Income - 2,386 - 2,386 Other Income - 3 - 42,698 Other Expenses (5,079) (79) (7,958) (55,060) Loss on Sale of Assets - (40,104) - (40,104) --------------- --------------- --------------- ---------------- Total Other Revenues & Expenses (5,620) (38,966) (8,835) (51,252) --------------- --------------- --------------- ---------------- Extraordinary Item -Cancellation of Debt - - - 119,720 NET INCOME (LOSS) $ (160,250) $ (479,205) $ (363,142) $ (394,797) ================ ================ ================ ================ Per Share information: Weighted Average Number Of Common Shares Outstanding 122,164,845 19,192,421 93,656,616 16,812,254 ---------------- ---------------- ---------------- ---------------- Net (loss) Per Common Share $ (0.00) $ (0.02) $ (0.00) $ (0.02) ================ ================ ================ =================
The accompanying notes are an integral part of this financial statement F-3
Cormax Business Solutions Inc. Consolidated Statement of Cash Flows (Unaudited) (unaudited) (unaudited) Six Months Ended Six Months Ended June 30, 2002 June 30, 2001 ---------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES NET LOSS FOR THE PERIOD $ (363,142) $ (394,797) Adjustments to reconcile net income to net cash Used in operating activities: Depreciation and Amortization 20,049 21,809 Stock Issued for Services 122,558 400,574 Dtock Issued in Lieu of Debt 28,522 - Debt Forgiveness - (119,720) Changes in Assets and liabilities: (Increase) In Accounts Receivable 70,487 (340,025) (Decrease) in Prepaid Expenses (592) (11,267) (Increase) In Inventory & contract in Progress (4,835) (50,602) (Decrease) in Accounts Payables (137,192) (326,491) (Decrease) in Accrued Expenses (10,105) - --------------- --------------- Net Cash used in Operating Activities (274,250) (820,520) --------------- --------------- CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of Expanded Systems - 481,649 Purchase of Investments (96,643) (4,655) Proceeds From Sale of Fixed Assets - 7,674 Capital Expenditures (10,933) (3,112) --------------- --------------- Net Cash Used in Investing Activities (107,576) 481,556 --------------- --------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from Sale of Stock 281,657 153,549 Bank Overdraft - 47,511 Line of Credit 66,390 - Due to Stockholders 75,692 106,977 Proceeds/Payments from Notes Payable-Net (4,141) 27,790 --------------- --------------- Cash Flows Provided by Financing Activities 419,598 335,827 --------------- --------------- Net (decrease) Increase in Cash and Cash Equivalents 37,772 (3,137) Cash And Cash Equivalents at Beginning of the Period 38,551 3,471 --------------- --------------- Cash and Cash Equivalents at the End of the Period $ 76,323 $ 334 =============== =============== Supplemental Information: Cash Paid for interest $ (540) $ - =============== =============== Cash Paid For Income Taxes $ (13,267) $ - =============== ===============
The accompanying notes are an integral part of this financial statement F-4
Cormax Business Solutions Inc. Statement of Changes in Stockholders' Equity Additional Other Total Preferred Stock Common Stock Paid-In Subscriptions Retained ComprehensiveStockholders' ---------------------- --------------------- Shares Amount Shares Amount Capital Receivable Deficit Income (Loss) Equity ---------------------------------------------------------------------------------------------------------- Balance -December 31, 1997 1,503,024 $1,503 $ 1,003,029 $ (2,056,003) $ (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) ---------------------------------------------------------------------------------------------------------- Nel loss - - - - (46,198) - (46,198) ---------------------------------------------------------------------------------------------------------- Balance - December 31, 1999 - - 1,503,024 1,503 1,003,029 - (2,959,097) - (1,954,565) ---------------------------------------------------------------------------------------------------------- Net loss - - - - (1,570,017) - - (1,570,017) ---------------------------------------------------------------------------------------------------------- Balance - December 31, 2000 - - 12,051,921 12,052 3,483,855 - (4,529,114) - (1,033,207) ---------------------------------------------------------------------------------------------------------- Net loss - - - - - - (925,651) - (925,651) ---------------------------------------------------------------------------------------------------------- Balance - December 31, 2001 - - 36,640,160 36,640 4,920,613 - (5,454,765) - (497,512) ---------------------------------------------------------------------------------------------------------- Issuance of Preferred Shares 500,000 16,667 - - - - - - 16,667 Stock issued for cash - - 9,896,200 9,896 255,094 - - - 264,990 Stock issued for services - - 107,282,903 107,283 15,275 - - - 122,558 Warrants Issued - - 5,000,000 5,000 245,000 (130,439) - - 119,561 Stock issued for cancellation of debt - - 28,522,033 28,522 - - - - 28,522 Other Comprehensive Income (Loss) - - - - - - - (28,139) (28,139) Net Loss - - - - - - (363,142) - (363,142) ---------------------------------------------------------------------------------------------------------- Balance - March 31, 2002 500,000 16,667 187,341,296 187,341 5,435,982 (130,439) (5,817,907) (28,139) (336,495) ==========================================================================================================
F-5 Cormax Business Solutions Inc. Notes to Consolidated Financial Statements (Unaudited) as of June 30, 2002 1. Presentation of Interim Information In the opinion of the management of Cormax Business Solutions, Inc., the accompanying unaudited consolidated financial statements include all normal adjustments considered necessary to present fairly the financial position as of June 30, 2002, and the results of operations for the three months and six months ended June 30, 2002 and 2001, and cash flows for the six months ended June 30, 2002 and 2001. 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 consolidated financial statements and notes for the fiscal year ended December 31, 2001. 2. Capital Stock Transactions On December 26, 2001, an 8K was filed by the company for the issuance of Class A preferred shares. The Board of Directors agreed to sell Todd Violette 1,000,000 shares of Class A preferred for $50,000 CDN and completion of his current employment contract. On April 6, 2002, the Board of Directors agreed to the conversion of 500,000 shares of Class A preferred shares to common shares. The conversion rate for this transaction was for every 1 share of preferred, 200 shares of common were issued. The transaction totaled 100 million newly issued common shares. F-6 ITEM 2. Management's Discussion and Analysis and Results of Operations 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. Result of Operations During the three-month periods ended June 30, 2002, we had revenues of $122,656 compared to $334,368 in the same period in 2001. We incurred general and administrative expenses of $392,822 for the six-month period ended June 30, 2002 and $640,665 for the six-month period ended June 30, 2001. Net loss in the three-month periods ended June 30, 2002 was ($160,250) or ($.00) per share compared to net loss of ($479,205) or ($.02) per share in the same period 2001. We recognize revenues as they are earned, not necessarily as they are collected. Direct costs such as hosting expense, design cost and server expense 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 three month period ended June 30, 2002 as compared to the three month period ended June 30, 2001 is primarily attributable to the decrease in payroll expenses and consulting fees. Liquidity and Capital Resources. The auditor's report accompanying our audited financial statements for the year ended December 31, 2001 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 June 30, 2002, we were able to generate positive cash flow. No assurance can be given that we will be able to achieve our cash flow or obtain our additional financing. 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 June 30, 2002 we had a retained deficit of ($5,817,907) compared to retained deficits of ($4,923,911) and ($5,454,765) at June 30, 2001 and December 31, 2001, respectively. As of June 30, 2002, we had total current assets of $154,882 and total current liabilities of $686,606 or negative working capital of ($532,724). At December 31, 2001, we had total current assets of $182,170 and total current liabilities of $788,383 or negative working capital of ($606,213). At June 30, 2001 we had total current assets of $465,027 and total current liabilities of $977,273 or negative working capital of ($512,246). 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 6. Exhibits and Reports on Form 8-K Form 8-K filed June 27, 2002 announcing a stock dividend to shareholders. 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 19th day of August 2002