UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
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(Mark one)
[XX] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934
For the transition period from _______ to _______
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Commission File Number: 0-26059
COMET TECHNOLOGIES, INC.
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(Exact Name of small business issuer as specified in its charter)
Nevada 87-0430322
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(State of Incorporation) (IRS Employer ID Number)
10 West 100 South, Suite 610, Salt Lake City, Utah 84101
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(Address of principal executive offices)
(801) 532-7851
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(Issuer's telephone number)
Not Applicable.
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(Former name, address and fiscal year, if changed since last report)
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 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 [XX] 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 date of this
report, there were 3,598,000 shares of common stock outstanding.
Transitional Small Business Format: Yes [ ] No [ X ]
COMET TECHNOLOGIES, INC.
Form 10-QSB for the quarter ended June 30, 2005
Table of Contents
Part I - Financial Information Page
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis
or Plan of Operation 11
Item 3. Controls and Procedures 12
Part II - Other Information
Item 1. Legal Proceedings 12
Item 2. Unregistered Sales of Equity Securities
and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 13
2
PART I-FINANCIAL INFORMATION
Item 1-Financial Statements
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
June 30, 2005 and December 31, 2004
3
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
-------
June 30, December 31,
2005 2004
------------- --------------
(Unaudited)
CURRENT ASSETS
Cash $ 76,480 $ 90,864
------------- --------------
Total Current Assets 76,480 90,864
------------- --------------
TOTAL ASSETS $ 76,480 $ 90,864
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
-------------------------------------
CURRENT LIABILITIES
Accounts payable $ 63 $ 3,065
Payable - related parties 69,795 57,795
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Total Current Liabilities 69,858 60,860
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TOTAL LIABILITIES 69,858 60,860
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STOCKHOLDERS' EQUITY
Common stock: 20,000,000 shares authorized
of $0.001 par value, 3,598,000 shares issued
and outstanding 3,598 3,598
Additional paid-in capital 238,561 238,561
Deficit accumulated during the development stage (235,537) (212,155)
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Total Stockholders' Equity 6,622 30,004
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 76,480 $ 90,864
============= ==============
The accompanying notes are an integral part of these financial statements.
4
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
From
For the For the Inception on
Three Months Ended Six Months Ended February 7,
June 30, June 30, 1986 Through
--------------------------- -------------------------- June 30,
2005 2004 2005 2004 2005
------------- ------------- ------------- ------------- --------------
REVENUES $ - $ - $ - $ - $ -
EXPENSES
General and administrative 11,754 33,742 23,462 66,911 384,079
------------- ------------- ------------- ------------- --------------
Total Expenses 11,754 33,742 23,462 66,911 384,079
------------- ------------- ------------- ------------- --------------
LOSS FROM OPERATIONS (11,754) (33,742) (23,462) (66,911) (384,079)
------------- ------------- ------------- ------------- --------------
OTHER INCOME (LOSS)
Dividend income - - - - 5,493
Interest income 38 85 80 220 147,541
Reimbursement for Fees - 1,820 - 1,820 2,158
Unrealized loss from
marketable securities - - - - (6,650)
------------- ------------- ------------- ------------- --------------
Total Other Income
(Loss) 38 1,905 23,382 2,040 148,542
------------- ------------- ------------- ------------- --------------
NET LOSS $ (11,716) $ (31,837) $ (23,382) $ (64,871) $ (235,537)
============= ============= ============= ============= ==============
BASIC LOSS PER SHARE $ (0.00) $ (0.01) $ (0.01) $ (0.02)
============= ============= ============= =============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 3,598,000 3,598,000 3,598,000 3,598,000
============= ============= ============= =============
The accompanying notes are an integral part of these financial statements.
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COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
From Inception on February 7, 1986 through June 30, 2005
Deficit
Accumulated
Common Stock Capital in During
------------------------- Excess of Development
Shares Amount Par Value Stage
------------- ----------- ----------- -------------
Balance at Inception on
February 7, 1986 - $ - $ - $ -
Issuance of 1,098,000
shares of common stock
to officers, directors
and other individuals
for $0.023 per share on
February 7, 1986 1,098,000 1,098 23,902 -
Public offering of the
Company's common stock 2,500,000 2,500 247,500 -
Deferred offering costs
offset against capital
in excess of par value - - (32,841) -
Net loss from inception on
February 7, 1986 through
December 31, 1997 - - - (41,568)
------------- ----------- ----------- -------------
Balance, December 31, 1997 3,598,000 3,598 238,561 (41,568)
Net loss for the year
ended December 31, 1998 - - - (1,761)
------------- ----------- ----------- -------------
Balance, December 31, 1998 3,598,000 3,598 238,561 (43,329)
Net income for the year
ended December 31, 1999 - - - 145
------------- ----------- ----------- -------------
Balance, December 31, 1999 3,598,000 3,598 238,561 (43,184)
Net loss for the year
ended December 31, 2000 - - - (1,803)
------------- ----------- ----------- -------------
Balance, December 31, 2000 3,598,000 3,598 238,561 (44,987)
Net loss for the year
ended December 31, 2001 - - - (7,412)
------------- ----------- ----------- -------------
Balance, December 31, 2001 3,598,000 $ 3,598 $ 238,561 $ (52,399)
------------- ----------- ----------- -------------
The accompanying notes are an integral part of these financial statements.
6
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)(Continued)
From Inception on February 7, 1986 through June 30, 2005
Deficit
Accumulated
Common Stock Capital in During
------------------------- Excess of Development
Shares Amount Par Value Stage
------------- ----------- ----------- -------------
Balance, December 31, 2001 3,598,000 $ 3,598 $ 238,561 $ (52,399)
Net loss for the year
ended December 31, 2002 - - - (28,074)
------------- ----------- ----------- -------------
Balance, December 31, 2002 3,598,000 $ 3,598 238,561 (80,473)
Net loss for the year
ended December 31, 2003 - - - (40,089)
------------- ----------- ----------- -------------
Balance, December 31, 2003 3,598,000 3,598 238,561 (120,562)
Net loss for the year
ended December 31, 2004 - - - (91,593)
------------- ----------- ----------- -------------
Balance, December 31, 2004 3,598,000 3,598 238,561 (212,155)
Net loss for the six months
ended June 30, 2005
(unaudited) - - - (23,382)
------------- ----------- ----------- -------------
Balance, June 30, 2005
(unaudited) 3,598,000 $ 3,598 $ 238,561 $ (235,537)
============= =========== =========== =============
The accompanying notes are an integral part of these financial statements.
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COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
From
Inception on
February 7,
For the Six Months Ended 1986 through
June 30, June 30,
2005 2004 2005
------------- ------------ -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Loss from operations $ (23,382) $ (64,871) $ (235,537)
Adjustments to reconcile net loss to net
cash used by operating activities:
Amortization - - 301
Change in operating assets and liabilities:
Increase in taxes payable - - 300
Increase (decrease) in accounts payable
and accounts payable - related parties 8,998 18,939 69,557
------------- ------------ -------------
Net Cash used by Operating Activities (14,384) (45,932) (165,379)
------------- ------------ -------------
CASH FLOWS FROM INVESTING ACTIVITIES - - -
------------- ------------ -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Organizational costs - - (300)
Net stock offering proceeds - - 242,159
------------- ------------ -------------
Net Cash Provided by Financing Activities - - 241,859
------------- ------------ -------------
NET INCREASE (DECREASE) IN CASH (14,384) (45,932) 76,480
CASH AT BEGINNING OF PERIOD 90,864 151,597 -
------------- ------------ -------------
CASH AT END OF PERIOD $ 76,480 $ 105,665 $ 76,480
============= ============ =============
CASH PAID FOR:
Taxes $ - $ - $ -
Interest $ - $ - $ -
The accompanying notes are an integral part of these financial statements.
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COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 2005 and December 31, 2004
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows for all periods presented have
been made.
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. It
is suggested that these condensed financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's
December 31, 2004 audited financial statements. The results of operations for
the period ended June 30, 2005, are not necessarily indicative of the
operating results for the full year.
NOTE 2 - RELATED PARTY TRANSACTION
As of June 30, 2005, the Company owed $69,795 to related parties for unpaid
services rendered to the Company.
NOTE 3 - STOCK OPTIONS AND WARRANTS
On March 11, 1999, the Company granted to each of its three (3) directors,
options to purchase 200,000 shares of common stock at an exercise price of
$0.1875, which was the average of the bid and asked prices for the common
stock on that date. The options are vested and expire in March 2009. The
options were issued to compensate these persons for their services to the
Company over the past 13 years, for which they had received no other
compensation. The options of one of the directors, now deceased, have passed
on to his estate. There is an outstanding warrant to purchase 50,000 shares of
the Company's common stock held by an unrelated third party at an exercise
price of $0.1875, which expires in March 2009.
NOTE 4 - MATERIAL EVENTS
On January 19, 2004 the Company entered into a Stock Exchange Agreement with
Town House Land Limited (Town House), an entity organized in China. If
consummated, the Company would authorize a 1 for 3 reverse split of its
outstanding stock and then issue 18,390,000 post-split shares to acquire Town
House. Also, a majority of the current officers and directors of the Company
were to resign and be replaced by officers and directors of Town House.
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COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 2005 and December 31, 2004
NOTE 4 - MATERIAL EVENTS (CONTINUED)
On or about February 9, 2005, the Company sent notification to Town House of
its decision to terminate the Agreement between the Company, Town House and
the shareholders of Town House. As a result of this decision, the reverse
acquisition contemplated by the Agreement will not occur. Management will now
begin efforts to locate a suitable acquisition or merger candidate for the
Company.
The decision to terminate the Agreement, and the reverse acquisition and
related transactions contemplated by the Agreement, was a result of the
determination by the board of directors that Town House had recently
undertaken actions and business efforts which were a material deviation from
the business of Town House as described in the Company's preliminary
information statement under Schedule 14C filed with the U.S. Securities and
Exchange Commission. The board of directors concluded that this change would
require an amendment to the Company's 14C Information Statement and would
cause substantial additional delays and costs to the Company. Moreover, the
board of directors concluded that the change in the business of Town House was
contrary to the best interests of the Company and its shareholders.
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Item 2 - Management's Discussion and Analysis or Plan of Operation
(1) Caution Regarding Forward-Looking Information
When used in this report, the words "may," "will," "expect,"
"anticipate," "continue," "estimate," "project," "intend," and similar
expressions are intended to identify forward-looking statements within the
meaning of Section 27a of the Securities Act of 1933 and Section 21e of the
Securities Exchange Act of 1934 regarding events, conditions, and financial
trends that may affect the Company's future plans of operations, business
strategy, operating results, and financial position. Persons reviewing this
report are cautioned that any forward-looking statements are not guarantees of
future performance and are subject to risks and uncertainties and that actual
results may differ materially from those included within the forward-looking
statements as a result of various factors.
(2) Plan of Operation
Six Month Periods Ended June 30, 2005 and 2004
The officers have continued to evaluate potential mergers in an ongoing
effort to increase the value of the shareholders' investment in the Company.
During this period, however, the Company has not been engaged in business
operations, and has had no revenue from continuing operations for the
six-month periods ended June 30, 2005 and 2004.
General and administrative expenses for the six-month periods ended June
30, 2005 and 2004, consisted of general corporate administration, officer
compensation, legal and professional expenses, and accounting and auditing
costs. These expenses were $23,462 and $66,911 for the six-month periods ended
June 30, 2005 and 2004, respectively.
Interest income in the six-month periods ended June 30, 2005 and 2004,
was $80 and $220, respectively. As a result of the foregoing factors, the
Company realized a net loss of $23,382 for the six months ended June 30, 2005,
as compared to a net loss of $64,871 for the same period in 2004.
Liquidity and Capital Resources
At June 30, 2005, the Company had working capital of approximately
$6,622, as compared to $30,004 at December 31, 2004. Working capital as of
both dates consisted of cash and cash equivalents less current liabilities.
Management believes that the Company has sufficient cash to meet the
anticipated needs of the Company's operations through at least the next 12
months. However, there can be no assurances to that effect, as the Company has
no significant revenues and the Company's need for capital may change
dramatically if it acquires an interest in a business opportunity during that
period. The Company is dependent upon management and/or significant
shareholders to provide sufficient working capital to preserve the integrity
of the corporate entity during this phase. It is the intent of management and
significant shareholders to provide sufficient working capital necessary to
support and preserve the integrity of the corporate entity.
The Company's current operating plan is to (i) handle the administrative and
reporting requirements of a public company, and (ii) search for potential
businesses, products, technologies and companies for acquisition. At present,
the Company has no understandings, commitments or agreements with respect to
the acquisition of any business venture, and there can be no assurance that
the Company will identify a business venture suitable for acquisition
11
in the future. Further, there can be no assurance that the Company would be
successful in consummating any acquisition on favorable terms or that it will
be able to profitably manage any business venture it acquires.
Although the Company's assets consist of cash and cash equivalents, the
Company has no intent to become, or hold itself out to be, engaged primarily
in the business of investing, reinvesting, or trading in securities.
Accordingly, the Company does not anticipate being required to register
pursuant to the Investment Company Act of 1940, and expects to be limited in
its ability to invest in securities, other than cash equivalents and
government securities, in the aggregate amount of over 40% of its assets.
There can be no assurance that any investment made by the Company will not
result in losses.
Item 3 - Controls and Procedures
As of the end of the period covered by this report, an evaluation was
performed under the supervision and with the participation of the Company's
management, including the Chief Executive Officer and Chief Financial Officer
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures. Based on that evaluation, the Company's management,
including the Chief Executive Officer and Chief Financial Officer, concluded
that the Company's disclosure controls and procedures were effective. There
have been no significant changes in the Company's internal controls or in
other factors that could significantly affect internal controls subsequent to
the date of the evaluation.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
None.
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3 - Defaults on Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Security Holders
During the quarter ended June 30, 2005, the Company held no regularly
scheduled, called or special meetings of shareholders during the reporting
period, nor were any matters submitted to a vote of this Company's security
holders.
12
Item 5 - Other Information
None.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits.
Exhibit Description
31.1 Principal Executive Officer Certification*
31.2 Principal Financial Officer Certification*
32.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002**
* Included herein pursuant to Item 601(b) 31 of Regulation SB.
** Included herein pursuant to Item 601(b) 32 of Regulation SB.
(b) Reports on Form 8-K. None.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
COMET TECHNOLOGIES, INC.
Date: August 9, 2005 By: /s/ Richard B. Stuart
_______________________________________
Richard B. Stuart, President, CEO and
Principal Executive Officer
Date: August 9, 2005 By: /s/ Jack M. Gertino
_______________________________________
Jack M. Gertino, Secretary/Treasurer,
CFO and Principal Financial Officer
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