10QSB: Optional form for quarterly and transition reports of small business issuers
Published on August 16, 2005
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Quarter Ended June 30, 2005
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 000-25809
SICLONE INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 87-0426999
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
378 North Main, #124; Layton, UT 84041
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(Address of principal executive offices)
Registrant's telephone number including area code: (801) 497-9075
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6269 Jamestown Court; Salt Lake City, UT 84121
Former Address, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or 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
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23,810,000
Number of shares the issuer had outstanding as of July 31, 2005.
PART I
ITEM 1 - FINANCIAL STATEMENTS
The condensed financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Company believes that the disclosures are
adequate to make the information presented not misleading.
In the opinion of the Company, all adjustments, consisting of only
normal recurring adjustments, necessary to present fairly the financial position
of the Company as of June 30, 2005 and the results of its operations and changes
in its financial position from December 31, 2004 through June 30, 2005 have been
made. The results of its operations for the interim period are not necessarily
indicative of the results to be expected for the entire year.
2
SICLONE INDUSTRIES, INC.
(A Development Stage Company)
Financial Statements
June 30, 2005 and December 31, 2004
3
SICLONE INDUSTRIES, INC.
(A Development Stage Company)
Balance Sheets
The accompanying notes are an integral part of these
financial statements.
4
SICLONE INDUSTRIES, INC.
(A Development State Company)
Statements of Operations
(Unaudited)
The accompanying notes are an integral part of these
financial statements.
5
SICLONE INDUSTRIES, INC.
(A Development State Company)
Statements of Cash Flows
Unaudited)
The accompanying notes are an integral part of these
financial statements.
6
Siclone Industries, Inc.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
June 30, 2005
(Unaudited)
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed financial statements have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted in
accordance with such rules and regulations. The information furnished in the
interim condensed financial statements include normal recurring adjustments and
reflects all adjustments, which, in the opinion of management, are necessary for
a fair presentation of such financial statements. Although management believes
the disclosures and information presented are adequate to make the information
not misleading, it is suggested that these interim condensed financial
statements be read in conjunction with the Company's most recent audited
financial statements and notes thereto included in its December 31, 2004 Annual
Report on Form 10-KSB of Siclone Industries, Inc. Operating results for the
three months ended June 30, 2005 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2005.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going concern
which contemplates the realization of assets and liquidation of liabilities in
the normal course of business. The Company has not yet established an ongoing
source of revenues sufficient to cover its operating costs and allow it to
continue as a going concern. The ability of the Company to continue as a going
concern is dependent on the Company obtaining adequate capital to fund operating
losses until it becomes profitable. If the Company is unable to obtain adequate
capital, it could be forced to cease operations.
In order to continue as a going concern, develop a reliable source of revenues,
and achieve a profitable level of operations the Company will need, among other
things, additional capital resources. Management's plans to continue as a going
concern include raising additional capital through sales of common stock and
continuing to develop and market its "bounce-house" business. However,
management cannot provide any assurances that the Company will be successful in
accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any adjustment
that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 - ASSIGNMENT OF DEBT
Due to the Company's inability to pay its debt holder, on May 20, 2005, Bradley
Shepherd, the former officer and director of the Company, who owns approximately
$40,550 in debt together with accrued interest assigned the debt to a
non-affiliate entity and has no further financial relationship with the Company.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Safe Harbor for Forwardlooking Statements
The discussion and analysis contained herein should be read in conjunction
with the preceding financial statements and the information contained in the
Company's Form 10-QSB and the Company's most recent Form 10-KSB. Except for the
historical information contained herein, the matters discussed in this Form 10-
QSB contain forward looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, and the Private Securities Litigation Reform Act of
1995, including, among others (I) expected changes in the Company's revenues and
profitability, (ii) the effects of cost-reduction measures, (iii) prospective
business opportunities and (iv) the Company's strategy for improving and funding
its business, that are based on management's beliefs and assumptions, current
expectations, estimates, and projections. Statements that are not historical
facts, including, without limitation, statements which are preceded by, followed
by, or include the words "believes," "anticipates," "plans," "expects," "may,"
"should" or similar expressions are forward-looking statements. Many of the
factors that will determine the Company's future results are beyond the ability
of the Company to control or predict. These statements are subject to risks and
uncertainties and, therefore, actual results may differ materially. All
subsequent written and oral forward-looking statements attributable to the
Company, or persons acting on its behalf, are expressly qualified in their
entirety by these cautionary statements. The Company disclaims any obligation to
update any forward-looking statements whether as a result of new information,
future events, or otherwise.
Description of Business
Siclone Industries, Inc. originally incorporated in Delaware on November 1,
1985 as McKinnely Investments, Inc. The Company changed its name to Accoline
Industries, Inc. on November 5, 1986 and again changed its name to Siclone
Industries, Inc. on May 24, 1988.
The Company has not had active business operations since its inception and
is considered a development stage company. In 1993, it entered into an agreement
with Bradley S. Shepherd in which Mr. Shepherd agreed to become an officer and
director of the Company and use his best efforts to organize and update its
books and records and to seek business opportunities for acquisition or
participation.
The Company intends to seek, investigate, and if warranted, acquire an
interest in a business opportunity. It will not restrict its search to any
particular industry or geographical area and may, therefore, engage in
essentially any business in any industry. Its management has unrestricted
discretion in seeking and participating in a business opportunity, subject to
the availability of such opportunities, economic conditions and other factors.
The selection of a business opportunity in which to participate is complex
and extremely risky and will be made by management in the exercise of its
business judgment. There is no assurance that it will be able to identify and
acquire any business opportunity which will ultimately prove to be beneficial to
the Company and its shareholders.
The Company's activities are subject to several significant risks which
arise primarily as a result of the fact that it has no specific business and may
acquire or participate in a business opportunity based on the decision of
management which will, in all probability, act without the consent, vote, or
approval of its shareholders.
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Plan of Operations
Management intends to actively seek business opportunities during the next
twelve months. If they identify a suitable business opportunity during the year,
the need for capital may change dramatically. Should the Company require
additional capital, it may seek additional advances from officers, sell common
stock or find other forms of debt financing. To date the Company has not pursued
any business opportunities and there can be no assurance that the management
will identify a business venture suitable for acquisition in the future. In
addition, it cannot assure that it will be successful in consummating any
acquisition on favorable terms or that it will be able to profitably manage any
business venture it acquires.
The current operating plan is to continue searching for potential
businesses, products, technologies and companies for acquisition and to handle
the administrative and reporting requirements of a public company.
Sources of Opportunities
The Company anticipates that business opportunities may arise from various
sources, including its officers and directors, professional advisers, securities
broker-dealers, venture capitalists, members of the financial community, and
others who may present unsolicited proposals.
The Company will seek potential business opportunities from all known
sources, but will rely principally on the personal contacts of its officers and
directors as well as indirect associations between them and other business and
professional people. Although management does not anticipate engaging
professional firms specializing in business acquisitions or reorganizations,
such firms may be retained if management deems it in the Company's best
interests. In some instances, the Company may publish notices or advertisements
seeking a potential business opportunity in financial or trade publications.
Criteria
The Company will not restrict its search to any particular business,
industry or geographical location. The Company may acquire or enter into a
business in any industry and in any stage of development. This may include a
business or opportunity involving a "start up" or new company. In seeking a
business venture, management's decision will not be controlled by an attempt to
take advantage of an anticipated or perceived appeal of a specific industry,
management group, or product or industry, but will be based upon the business
objective of seeking long-term capital appreciation in the real value of the
Company.
In analyzing prospective business opportunities, management will consider
such matters as the available technical, financial and managerial resources;
working capital and other financial requirements; the history of operations, if
any; prospects for the future; the nature of present and expected competition;
the quality and experience of management services which may be available and the
depth of the management; the potential for further research, development or
exploration; the potential for growth and expansion; the potential for profit;
the perceived public recognition or acceptance of products, services, trade or
service marks, name identification; and other relevant factors.
9
Generally, management will analyze all available factors in the
circumstances and make a determination based upon a composite of available
facts, without reliance upon any single factor as controlling.
Methods of Participation of Acquisition
Specific business opportunities will be reviewed and, on the basis of that
review, the legal structure or method of participation deemed by management to
be suitable will be selected. Such structures and methods may include, but are
not limited to, leases, purchase and sale agreements, licenses, joint ventures,
other contractual arrangements, and may involve a reorganization, merger or
consolidation transaction. The Company may act directly or indirectly through an
interest in a partnership, corporation, or other form of organization.
Procedures
As part of the ongoing investigation of business opportunities, officers
and directors may meet personally with management and key personnel of the firm
sponsoring the business opportunity, visit and inspect material facilities,
obtain independent analysis or verification of certain information provided,
check references of management and key personnel, and conduct other reasonable
measures.
Management will generally request that it be provided with written
materials regarding the business opportunity containing such items as a
description of product, service and company history; management resumes;
financial information; available projections with related assumptions upon which
they are based; an explanation of proprietary products and services; evidence of
existing patents, trademarks or service marks or rights thereto; present and
proposed forms of compensation to management; a description of transactions
between the prospective entity and its affiliates; relevant analysis of risks
and competitive conditions; a financial plan of operation and estimated capital
requirements; and other information deemed relevant.
Competition
The Company expects to encounter substantial competition in its efforts to
acquire a business opportunity. The primary competition is from other companies
organized and funded for similar purposes, small venture capital partnerships
and corporations, small business investment companies and wealthy individuals.
Employees
The Company does not currently have any employees. It relies upon the
efforts of its officers and directors to conduct its business.
Results of Operations for the Three Period Ended June 30, 2005 and 2004
The Company has not generated any revenues since its inception on November
1, 1985. Expenses for the three-month period ended June 30, 2005 were $2,713
compared to expenses of $4,856 during the same period in 2004. Expenses during
both periods consisted mainly of professional, legal and accounting costs
related to the Company's public filings.
10
As a result of the foregoing factors, the Company realized a net loss of
$2,713 for the three-month period ended June 30, 2005, compared to a net loss of
$4,856 for the three-month period ended June 30, 2004. Since inception on
November 1, 1985, the Company has realized a net loss of $654,856.
Liquidity and Capital Resources
At June 30, 2005 the Company's total assets consisted of $39 in cash. Total
liabilities at June 30, 2005 were $47,122 consisting of $1,634 in accounts
payable, $36,412 in notes payable to an unrelated third party and $9,076 in
accrued interest. At December 31, 2004, the Company had $124 in cash and
liabilities of $41,391 consisting of $840 in accounts payable, $33,212 in
accounts payable to Mr. Shepherd, a former office and director of the Company
and $7,339 in accrued interest on the accounts payable to Mr. Shepherd.
In recent years the Company has relied on advances from the former
president to cover its operating costs. The Company has little or no operations
and no funds with which to develop operations. The Company is currently in the
process of seeking short term capital while it investigates business
opportunities to merge with or acquire. The Company currently has no agreement
or arrangement of merger or acquisition.
There is no guarantee that the Company will be successful in developing any
business opportunities or acquiring any operational capital. Any investment in
the Company would be a highly speculative investment and should only be made by
those investors who are capable of bearing the risk of losing the entire value
of their investment.
ITEM 3 - CONTROLS AND PROCEDURES.
(a) Evaluation of disclosure controls and procedures. The Company maintains
disclosure controls and procedures designed to ensure that information required
to be disclosed in the reports that the Company files or submits under the
Securities Exchange Act of 1934, is recorded, processed, summarized and reported
within the time period specified in the rules and forms of the Securities and
Exchange Commission. The Company's management including its principal executive
officer and its principal financial officer, based on their evaluation of the
Company's disclosure controls over financial reporting and procedures (as
defined in Exchange Act Rules 13a-14c)) in connection with the Annual Report on
Form 10-KSB as of December 31, 2004, have concluded that the Company's
disclosure controls over financial reporting and procedures are adequate and
effective as of June 30, 2005 for the purposes set forth in the definition in
Exchange Act rules.
(b) Changes in internal controls over financial reporting. There were not
any significant changes in the Company's internal controls over financial
reporting or in other factors that could materially affect or is reasonably
likely to materially affect, or significantly affect the Company's internal
controls subsequent to the date of their evaluation.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.............................................None
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Item 2. Changes in Securities
On May 21, 2005, Bradley S. Shepherd, president and sole director of
Siclone Industries, Inc. ("Siclone") privately sold one million eight hundred
thousand (1,800,000) shares of common stock of Siclone to three non-affiliate
companies. The shares being sold were owned solely by Mr. Shepherd. This
transaction makes no changes in the total outstanding shares of common stock.
Item 3. Defaults Upon Senior Securities.............................. None
Item 4. Submission of Matters to a Vote of Security Holders...........None
Item 5. Other Information
Mr. Shepherd agreed to vote his remaining ten million two hundred thousand
(10,200,000) shares in favor of a reverse split of the Company's common stock
and for other corporate matters. Mr. Shepherd has provided a proxy to vote his
shares in favor of the proposed reverse split. It is anticipated the reverse
split will be up to 1 for 136 shares. The reverse has not yet been effectuated.
On May 21, 2005, Siclone's sole director, Bradley S. Shepherd, appointed
Paul Adams to the board of directors of Siclone. And then resigned as an officer
and director of the Company. From 1992 through 2003, Mr. Adams was involved in
the manufacturing and retail sales in the sports fishing industry as the owner
of his own business. Since 2000, Mr. Adams has also owned and operated
CocoMotive Candy Company which specialized in the corporate gift market.
Item 6. Exhibits and Reports on Form 8-K
1). The following exhibits are filed with this report:
31. Written statement of Chief Executive Officer and Chief Financial
Officer with respect to the compliance with Section 302 of the
Sarbanes-Oxley Act of 2002.
32. Written statement of Chief Executive Officer and Chief Financial
Officer with respect to the compliance with Section 13 (a) and
15(d) of the Securities Exchange Act of 1934 and pursuant to the
19 U.S.C. 1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002.
2). Form 8-K's filed during the period covered by this report:
a) May 24, 2005, Item 5.01 and 5.02, Changes in Control of
Registrant and Departure of Directors or Principle Officers;
Election of Directors; Appointment of Officers; respectively.;
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned authorized officer.
Date: August 15, 2005 Siclone Industries, Inc.
By /s/ Paul Adams
-------------------------------------------
Paul Adams, CEO and
Principal Accounting Officer
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Exhibit 31
SECTION 302 CERTIFICATION
I, Paul Adams, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Siclone
Industries, Inc..;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report.
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. I am responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules
12a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures or caused such
controls and procedures to be designed under my supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to me by others within those entities,
particularly during the period in which this quarterly report is being
prepared.
b) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report my conclusions about the
effectiveness of the disclosure controls and procedures as of the end of
the period covered by this quarterly report based on such evaluations; and
c) Disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter that has materially affected,
or is reasonably likely to materially affect, the registrant's internal
control over financial reporting.
5. I have disclosed, based on my most recent evaluation of internal control
over financial reporting, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent
functions):
a) All significant deficiencies and material weaknesses in the design
or operation of internal controls over financial reporting which could
adversely affect the registrant's ability to record, process, summarize and
report financial data and have identified for the registrant's auditors any
material weaknesses in internal controls over financial reporting.
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
controls over financial reporting.
Date: August 15, 2005 /s/ Paul Adams
-------------------------------------
Paul Adams
Chief Executive Officer
and Principal Accounting Officer
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Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT BY
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Siclone Industries, Inc., on
Form 10-QSB for the period ending June 30, 2005 as filed with the Securities and
Exchange Commission on the date hereof (the "Report"), the undersigned, Paul
Adams, Chief Executive Officer and Principal Accounting Officer of the Company,
certify, pursuant to 18 U.S.C. ss.1350, as adopted pursuant to ss. 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13 (a) or 15
(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
Date: August 15, 2005 /s/ Paul Adams
-------------------------------------------------
Paul Adams, Chief Executive Officer
And Principal Accounting Officer
14