U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________ to _______________.
COMMISSION FILE NUMBER: 000-49688
SKTF ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 33-0961488
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1059 E. SKYLER DRIVE
DRAPER, UTAH 84020
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (801) 361-7644
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 .
---- ----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. 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. As of May 13, 2003, there
were 6,044,750 shares of common stock, par value $0.001, issued and outstanding.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT
(check one):
Yes _____ No X .
------
SKTF ENTERPRISES, INC.
TABLE OF CONTENTS
-----------------
PART I
Item 1 Financial Statements
Item 2 Management's Discussion and Analysis or Plan of Operations
Item 3 Controls and Procedures
PART II
Item 1 Legal Proceedings
Item 2 Changes in Securities and Use of Proceeds
Item 3 Defaults Upon Senior Securities
Item 4 Submission of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6 Exhibits and Reports on Form 8-K
2
PART I
This Quarterly Report includes forward-looking statements within the meaning of
the Securities Exchange Act of 1934 (the "Exchange Act"). These statements are
based on management's beliefs and assumptions, and on information currently
available to management. Forward-looking statements include the information
concerning possible or assumed future results of operations of the Company set
forth under the heading "Management's Discussion and Analysis of Financial
Condition or Plan of Operation." Forward-looking statements also include
statements in which words such as "expect," "anticipate," "intend," "plan,"
"believe," "estimate," "consider" or similar expressions are used.
Forward-looking statements are not guarantees of future performance. They
involve risks, uncertainties and assumptions. The Company's future results and
shareholder values may differ materially from those expressed in these
forward-looking statements. Readers are cautioned not to put undue reliance on
any forward-looking statements.
ITEM 1 FINANCIAL STATEMENTS
3
SKTF ENTERPRISES, INC.
(A FLORIDA DEVELOPMENT STAGE CORPORATION)
BALANCE SHEET
MARCH 31, DECEMBER 31,
2003 2002
------------ --------------
ASSETS (UNAUDITED)
Cash $ - $ 2,104
----------- --------------
Total Assets $ - $ 2,104
=========== ==============
LIABILITIES AND EQUITY
Accounts payable and accrued liabilities $ 31,450 $ 20,260
Commitments and contingencies - -
Shareholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized; - -
No shares issued or outstanding
Common stock, $0.001 par value; 100,000,000 shares authorized; 6,045 6,045
6,044,750 shares issued and outstanding at March 31, 2003
Additional paid in capital 41,804 41,804
Deficit accumulated during development (79,299) (66,005)
------------ --------------
(31,450) (18,156)
------------ --------------
Total liabilities and shareholders' equity $ - $ 2,104
============ ==============
The accompanying condensed notes to financial statements
are an integral part of these statements.
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SKTF ENTERPRISES, INC.
(A FLORIDA DEVELOPMENT STAGE CORPORATION)
STATEMENT OF OPERATIONS
DEFICIT
ACCUMULATED FROM
INCEPTION
THREE MONTHS THREE MONTHS (MARCH 27, 2001)
ENDED ENDED THROUGH
MARCH 31, 2003 MARCH 31, 2002 MARCH 31, 2003
--------------- ----------------------------------
Revenue $ - $ - $ -
General and administrative expenses 13,294 7,194 79,299
----------------- ---------------- -----------------
Net loss $ (13,294) $ (7,194) $ (79,299)
================== ================ =================
Net loss per share available to common stockholders
Basic and diluted $ (0.00) $ (0.00)
Weighted average number of common shares outstanding 6,044,750 6,013,000
The accompanying condensed notes to financial statements
are an integral part of these statements.
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SKTF ENTERPRISES, INC.
(A FLORIDA DEVELOPMENT STAGE CORPORATION)
STATEMENT OF CASH FLOWS
CUMULATIVE
FROM
INCEPTION THREE MONTHS
(MARCH 27, 2001) ENDED
THROUGH MARCH 31,
-------------------------
MARCH 31, 2003 2003 2002
----------------- ------------ ----------
Cash flows from operating activities -
Net loss $ (79,299) $ (13,294) $(7,194)
Adjustments to reconcile net loss to cash
used in operating activities - - - -
Contributed capital for services rendered 14,199 - 2,569
Changes in assets and liabilities -
Increase (decrease) in accounts payable
and accrued liabilities 31,450 11,190 4,625
---------------- -------------- ----------
Cash used in operating activities (33,650) (2,104) -
Cash flows from financing activities -
Proceeds from issuance of common stock 33,650 - -
----------------- -------------- ----------
Cash provided by financing activities 33,650 - -
Net decrease in cash - (2,104) -
Cash, beginning of the period - 2,104 -
----------------- -------------- ----------
Cash, end of the period $ - $ - $ -
================= ============== ==========
Supplemental information -
No amounts were paid for interest or income taxes during the period.
The accompanying condensed notes to financial statements
are an integral part of these statements.
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SKTF ENTERPRISES, INC.
(A FLORIDA DEVELOPMENT STAGE CORPORATION)
CONDENSED NOTES TO FINANCIAL STATEMENTS
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES
-------------------------------------------------
Nature of Operations. The Company incorporated in Florida on March 27, 2001.
The fiscal year end of the Company is December 31. Planned principal operations
of the Company have not yet commenced; activities to date have been limited to
forming the Company, developing its business plan, and obtaining initial
capitalization. The Company's business plan is to develop, market and
distribute branded and licensed hats and clothing at major events such as
sporting events, concerts and conventions. The Company plans to focus on
high-end events such as, the World Series, the Super Bowl, the Indianapolis 500,
the Republican and Democratic National Conventions.
Principles of Accounting. The accompanying financial statements have been
prepared in conformity with generally accepted accounting principles.
Accounting Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates.
Shares Issued in Exchange for Services. The fair value of shares issued in
exchange for services rendered to the Company is determined by the Company's
officers and directors, as there is currently no market for the Company's stock.
As of March 31, 2003, no shares have been issued for services provided to the
Company.
Cash and Cash Equivalents. The Company includes cash on deposit and short-term
investments with original maturities less than ninety days as cash and cash
equivalents in the accompanying financial statements.
General and Administrative Expenses. The Company's general and administrative
expenses consisted primarily of legal and accounting fees for the three months
ended March 31, 2003 and 2002.
Research and Development. Research and development costs are expensed as
incurred as required by Statement of Financial Accounting Standards No. 2,
"Accounting for Research and Development Costs." As of March 31, 2003, no
research and development costs had been incurred.
Stock-Based Compensation. Statement of Financial Accounting Standards No. 123,
Accounting for Stock Based Compensation, encourages, but does not require,
companies to record compensation cost for stock-based employee compensation
plans at fair value. The Company has chosen to account for stock-based
compensation using the intrinsic value method prescribed in previously issued
standards. Accordingly, compensation cost for stock options issued to employees
is measured as the excess, if any, of the fair market value of the Company's
stock at the date of grant over the amount an employee must pay to acquire the
stock Compensation is charged to expense over the shorter of the service or
vesting period. Stock options issued to non-employees are recorded at the fair
value of the services received or the fair value of the options issued,
whichever is more reliably measurable, and charged to expense over the service
period.
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SKTF ENTERPRISES, INC.
(A FLORIDA DEVELOPMENT STAGE CORPORATION)
CONDENSED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. NATURE OF OPERATIONS AND ACCOUNTING POLICIES - Continued
---------------------------------------------------------------
Income Taxes. The Company has made no provision for income taxes because of
financial statement and tax losses since its inception. A valuation allowance
has been used to offset the recognition of any deferred tax assets due to the
uncertainty of future realization. The use of any tax loss carry-forward
benefits may also be limited as a result of changes in Company ownership.
Fair Value of Financial Instruments. The Company considers all liquid
interest-earning investments with a maturity of three months or less at the date
of purchase to be cash equivalents. Short-term investments generally mature
between three months and six months from the purchase date. All cash and
short-term investments are classified as available for sale and are recorded at
market using the specific identification method; unrealized gains and losses are
reflected in other comprehensive income. Cost approximates market for all
classifications of cash and short-term investments; realized and unrealized
gains and losses were not material.
Net Loss per Common Share. Net loss per share is calculated in accordance with
Statement of Financial Accounting Standards No. 128, Earnings Per Share. Basic
net loss per share is based upon the weighted average number of common shares
outstanding. Diluted net loss per share is based on the assumption that options
are included in the calculation of diluted earnings per share, except when their
effect would be anti-dilutive. Dilution is computed by applying the treasury
stock method. Under this method, options and warrants are assumed to be
exercised at the beginning of the period (or at the time of issuance, if later),
and as if funds obtained thereby were used to purchase common stock at the
average market price during the period.
2. GOING CONCERN
--------------
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company has no established source of revenue, and as of March 31, 2003, the
Company has no assets and negative working capital of $31,450. In addition, the
Company has been in the development stage since its inception on March 27, 2001
and is dependent on outside financing to fund its operations. These factors,
among others, raise substantial doubt about the Company's ability to continue as
a going concern.
Management's plans in regard to these matters are to continue to raise
additional capital from selling the Company's stock. However, there is no
assurance that the Company will be able to obtain such financing. Management
believes actions currently being taken provide the opportunity for the Company
to continue as a going concern. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
3. STOCKHOLDERS' EQUITY
---------------------
Founders' Stock. The Company issued 6,000,000 shares of common stock on April
20, 2001 for cash totaling $600.
Stock-Based Compensation. The Company did not issue nor did it recognize
stock-based compensation from inception (March 27, 2001) through March 31, 2003.
8
SKTF ENTERPRISES, INC.
(A FLORIDA DEVELOPMENT STAGE CORPORATION)
CONDENSED NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. STOCKHOLDERS' EQUITY - Continued
-----------------------------------
Private Placement Memorandum. On June 1, 2001, the Company began an offering to
sell up to 100,000 shares of common stock at $0.10 per share pursuant to a
Private Placement Memorandum. In August 2001, the Company sold 13,000 shares of
its common stock at $0.10 under this private placement. All proceeds from the
offering are to be used for pre-incorporation expenditures, consulting fees and
working capital.
Registered Stock Offering. During the quarter ended September 30, 2002, the
Company sold 31,750 shares of its common stock at $1.00 per share for total
proceeds of $31,750. The stock offering was pursuant to the Company's effective
Form SB-2/A registration statement dated December 12, 2001. The Company used the
proceeds to repay advances and general and administrative expenses. The
Company's registered offering expired on September 30, 2002.
Stock Option Plan. The Company's Board and shareholders approved a Stock Option
Plan, effective June 1, 2001. The plan limits the aggregate number of shares
available to 600,000. Each award under the plan will be evidenced by a Stock
Purchase Agreement; each agreement will establish the vesting requirements and
the maximum term of the options granted. As of March 31, 2003, no options had
been granted.
4. RELATED PARTY TRANSACTIONS
----------------------------
Legal and Administrative Services. The Company has engaged a shareholder as its
corporate counsel. For the three months ended March 31, 2003 and 2002, total
legal services and out of pocket costs were $9,690 and $2,494, respectively. As
of March 31, 2003, and December 31, 2002, the Company had amounts due to its
corporate counsel of $24,826 and $15,136, respectively, which are recorded in
accounts payable and accrued liabilities in the accompanying financial
statements.
The Company's president elected to forego a salary during the early
developmental stages. The Company's president also provides office space for
the Company. The Company estimates the value of these services to be $1,500 and
zero for the three months ended March 31, 2003 and 2002, respectively. As of
March 31, 2003, and December 31, 2002, the Company had amounts due to its
president of $6,625 and $5,125, respectively, which are recorded in accounts
payable and accrued liabilities in the accompanying financial statements.
Stockholders Loans and Advances. From time to time, certain Company
stockholders loan or advance monies to the Company. Loans bear interest at
rates established at the time of the loan; advances bear no interest. While
these loans and advances have no maturity dates, they are expected to be repaid
as early as practicable.
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ITEM 2 MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
We recently closed a public offering of up to $1,000,000 pursuant to a Form
SB-2 originally filed with the Securities and Exchange Commission on August 30,
2001 and declared effective on December 12, 2001. A total of 31,750 shares of
our common stock were sold under the offering, which closed on September 30,
2002. For at least through the quarter ending June 30, 2003, management
anticipates that SKTF will engage in very little business activity, will not
hire any employees, and will not enter into any material contracts. As a
result, our cash requirements will be minimal, related only to the cost of
maintaining the Company in good standing. Our two primary shareholders, Mr.
Berg and Mr. Lebrecht, have verbally agreed to advance funds to us to fund these
minimal cash requirements that cannot otherwise be covered by the proceeds from
the offering.
Although we had hoped to offer products focused on the 2002 Winter
Olympics, we did not take any steps to obtain the necessary licenses or
manufacture the products to do so, and did not successfully market any products
at that event. Recently, the Board of Directors of the Company has undertaken
an analysis of whether or not the historical business plan is economically
viable, and whether or not it should continue to be pursued. If the historical
business plan is not pursued, the Board of Directors will decide whether or not
to pursue other lines of business, either from start up or through acquisitions.
No decisions have been reached by the Board of Directors.
On December 19, 2002, the National Association of Securities Dealers
notified our market maker that its request to submit a quote for our common
stock on the Over the Counter Bulletin Board had been cleared. The trading
symbol for our common stock is SKTE. As of the date of this filing, to the best
of our knowledge, no transactions in our common stock have taken place. Trading
in our common stock, if any, is anticipated to be very sporadic and should not
be deemed to constitute an established public trading market. There is no
assurance that there will be liquidity in the common stock.
It is not anticipated that current management will be paid a salary during
the next twelve months.
Management does not anticipate that we will engage in any material product
research and development because we will negotiate for the acquisition of
licenses to manufacture and sell products that are already in existence.
Management does not anticipate that we will purchase a plant or significant
equipment because we will enter into agreements with existing hat and clothing
manufacturers to manufacture the products.
Management anticipates that, if the historical business is pursued, over
the next twelve months we will hire up to five full-time employees to oversee a
temporary sales force at each location where we will sell our products. The
temporary sales people will either be paid a commission based on sales, or will
be paid an hourly wage plus a commission based on sales, depending on applicable
laws at that location. The temporary sales people will not be offered benefits.
Our financial statements have been prepared assuming we will continue as a
going concern. Because we have not generated any revenues to date and have
minimal capital resources, our Certified Public Accountants included an
explanatory paragraph in their report raising substantial doubt about our
ability to continue as a going concern. We have not identified any critical
accounting issues.
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ITEM 3 CONTROLS AND PROCEDURES
The Company's Chief Executive Officer and Chief Financial Officer (or those
persons performing similar functions), after evaluating the effectiveness of the
Company's disclosure controls and procedures (as defined in Rules 13a-14(c) and
15d-14(c) under the Securities Exchange Act of 1934, as amended) as of a date
within 90 days of the filing of this quarterly report (the "Evaluation Date"),
have concluded that, as of the Evaluation Date, the Company's disclosure
controls and procedures were effective to ensure the timely collection,
evaluation and disclosure of information relating to the Company that would
potentially be subject to disclosure under the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder. There were no
significant changes in the Company's internal controls or in other factors that
could significantly affect the internal controls subsequent to the Evaluation
Date.
11
PART II
ITEM 1 LEGAL PROCEEDINGS
We are not a party to or otherwise involved in any legal proceedings.
ITEM 2 CHANGES IN SECURITIES AND USE OF PROCEEDS
There have been no events that are required to be reported under this Item.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
There have been no events that are required to be reported under this Item.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the security holders during the
quarter.
ITEM 5 OTHER INFORMATION
None.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
99.1 Certification of Carl M. Berg, Chief Executive Officer and Chief
Financial Officer of the Company
(b) Reports on Form 8-K
None.
12
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.
SKTF ENTERPRISES, INC.
Dated: May 12, 2003 /s/ Carl M. Berg
-------------------------------
Carl M. Berg
President, Director,
Chief Executive Officer,
Chief Financial Officer
13
CERTIFICATION OF CHIEF EXECUTIVE
AND
CHIEF FINANCIAL OFFICER
I, Carl M. Berg, Chief Executive Officer and Chief Financial Officer of the
registrant, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of SKTF Enterprises,
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. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rule 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us 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 as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons fulfilling the equivalent
functions):
(i) all significant deficiencies in the design or operation of
internal controls 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; and
(ii) any fraud, whether or not material, that involves management or
other employees who have a significant role in the issuer's
internal controls; and
14
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Dated: May 12, 2003 /s/ Carl M. Berg
________________________________
Carl M. Berg
Chief Executive and
Chief Financial Officer
15