UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
--------------------------------------------------------------------------------
(Mark one)
X Quarterly Report Under Section 13 or 15(d) of the Securities Exchange
------- Act of 1934
For the quarterly period ended July 31, 2002
Transition Report Under Section 13 or 15(d) of the Securities Exchange
------- Act of 1934
For the transition period from ______________ to _____________
--------------------------------------------------------------------------------
Commission File Number: 0-9483
Tomahawk Industries, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada 95-3502207
---------------------------- ----------------------------
(State of incorporation) (IRS Employer ID Number)
211 West Wall Street, Midland, TX 70701-4556
(Address of principal executive offices)
(915) 682-1761
--------------
(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. YES X NO
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: August 26, 2002: 56,637,228
---------------------------
Transitional Small Business Disclosure Format (check one): YES NO X
Tomahawk Industries, Inc.
Form 10-QSB for the Quarter ended July 31, 2002
Table of Contents
Page
----
Part I - Financial Information
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 9
Part II - Other Information
Item 4 Submission of Matters to a Vote of Security Holders 9
Item 6 Exhibits and Reports on Form 8-K 9
Signatures 10
2
Item 1 - Part 1 - Financial Statements
Tomahawk Industries, Inc.
Balance Sheets
July 31, 2002 and 2001
(Unaudited)
July 31, 2002 July 31, 2001
------------- -------------
Assets
------
Assets
Cash on hand and in bank $ 594 $ 2,427
------------- -------------
Total Assets $ 594 $ 2,427
============= =============
Liabilities and Shareholders' Equity
------------------------------------
Liabilities
Accounts payable - trade $ -- $ --
Advances from shareholder -- 25,000
------------- -------------
Total Liabilities -- 25,000
------------- -------------
Commitments and contingencies
Shareholders' Equity Common stock - $0.001 par value
200,000,000 shares authorized
56,637,228 and 16,637,228 shares
issued and outstanding, respectively 56,637 16,637
Additional paid-in capital 5,443,447 5,443,447
Accumulated deficit (5,499,490) (5,482,657)
------------- -------------
Total shareholders' equity 594 (22,573)
------------- -------------
Total Liabilities and Shareholders' Equity $ 594 $ 2,427
============= =============
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
3
Tomahawk Industries, Inc.
Statements of Operations and Comprehensive Income
Three months ended July 31, 2002 and 2001
(Unaudited)
Three months Three months
ended ended
July 31, 2002 July 31, 2001
------------- -------------
Revenues $ -- $ --
------------- -------------
Expenses
General and administrative expenses 250 --
------------- -------------
Income (Loss) from operations (250) --
Other Income (Expense)
Interest income -- 9
------------- -------------
Income (Loss) before provision for income taxes (250) 9
Provision for income taxes -- --
------------- -------------
Net Income (Loss) (250) 9
Other Comprehensive Income -- --
------------- -------------
Comprehensive Income (Loss) $ (250) $ 9
============= =============
Loss per weighted-average share
of common stock outstanding,
computed on Net Loss - basic
and fully diluted nil nil
============= =============
Weighted-average number of shares
of common stock outstanding 56,637,228 16,637,228
============= =============
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
4
Tomahawk Industries, Inc.
Statements of Cash Flows
Three months ended July 31, 2002 and 2001
(Unaudited)
Three months Three months
ended ended
July 31, 2002 July 31, 2001
------------- -------------
Cash Flows from Operating Activities
Net Income (Loss) $ (250) $ 9
Adjustments to reconcile net income to net cash
provided by operating activities
Increase (Decrease) in Accounts payable - trade -- --
------------- -------------
Net cash used in operating activities (250) 9
------------- -------------
Cash Flows from Investing Activities -- --
------------- -------------
Cash Flows from Financing Activities -- --
------------- -------------
Increase (Decrease) in Cash and Cash Equivalents (250) --
Cash and cash equivalents at beginning of period 844 2,418
------------- -------------
Cash and cash equivalents at end of period $ 594 $ 2,427
============= =============
Supplemental Disclosures of Interest and Income Taxes Paid
Interest paid during the period $ -- $ --
============= =============
Income taxes paid (refunded) $ -- $ --
============= =============
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
5
Tomahawk Industries, Inc.
Notes to Financial Statements
Note A - Organization and Description of Business
Tomahawk Industries, Inc. (Company) was incorporated under the laws of the State
of Nevada on May 13, 1980. From its inception through 1988, the Company was
engaged in oil and gas exploration. Beginning in 1984, the Company entered the
business of installing energy recovery and energy saving devices through a then
wholly- owned subsidiary.
In July 1987, the Company filed for protection under Chapter 11 of the U. S.
Bankruptcy Code and operated as a debtor-in-possession. Subsequent thereto, the
petition for bankruptcy protection was denied and the Company ceased all
business operations and abandoned all net assets remaining by April 30, 1988.
The Company has effectively had no operations, assets or liabilities since its
fiscal year ended April 30, 1998.
Note B - Preparation of Financial Statements
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure 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 could differ from those estimates.
The Company follows the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America and has
a year-end of April 30.
Management further acknowledges that it is solely responsible for adopting sound
accounting practices, establishing and maintaining a system of internal
accounting control and preventing and detecting fraud. The Company's system of
internal accounting control is designed to assure, among other items, that 1)
recorded transactions are valid; 2) valid transactions are recorded; and 3)
transactions are recorded in the proper period in a timely manner to produce
financial statements which present fairly the financial condition, results of
operations and cash flows of the Company for the respective periods being
presented
During interim periods, the Company follows the accounting policies set forth in
its annual audited financial statements filed with the U. S. Securities and
Exchange Commission on its Annual Report on Form 10-KSB/A for the year ended
April 30, 2002. The information presented within these interim financial
statements may not include all disclosures required by generally accepted
accounting principles and the users of financial information provided for
interim periods should refer to the annual financial information and footnotes
when reviewing the interim financial results presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the U. S. Securities and Exchange Commission's
instructions for Form 10-QSB, are unaudited and contain all material
adjustments, consisting only of normal recurring adjustments necessary to
present fairly the financial condition, results of operations and cash flows of
the Company for the respective interim periods presented. The current period
results of operations are not necessarily indicative of results which ultimately
will be reported for the full fiscal year ending March 31, 2003.
6
Tomahawk Industries, Inc.
Notes to Financial Statements - Continued
Note C - Going Concern Uncertainty
In July 1987, the Company filed for protection under Chapter 11 of the U. S.
Bankruptcy Code and operated as a debtor-in-possession. Subsequent thereto, the
petition for bankruptcy protection was denied and the Company ceased all
business operations and abandoned all net assets remaining by April 30, 1988.
The Company has effectively had no operations, assets or liabilities since its
fiscal year ended April 30, 1998.
The Company's continued existence is dependent upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
timely basis.
On August 2, 2002, the Company announced, in a Current Report on Form 8-K, that
it had entered into an Agreement and Plan of Reorganization, (Reorganization
Agreement) which sets forth the terms and conditions of a proposed reverse
merger business combination transaction between the Company and Cryotherm, Inc.
(a privately-owned Delaware corporation) (CRYO). Pursuant to the Reorganization
Agreement, CRYO's shareholders will exchange 100% of the outstanding shares of
CRYO for 25,000,000 newly issued, post reverse shares of Tomahawk. CRYO will, as
a result, become a wholly-owned subsidiary of Tomahawk.
Cryotherm, Inc. was formed in January 2002 as a Delaware corporation to finance,
develop, distribute and sell products using low-cost, pollution-free,
energy-extraction technologies that can convert low-temperature heat, cryogenic
cold, and kinetic energy resources into megawatts of electricity at costs
competitive to fossil fuel- generated power. Cryotherm holds an exclusive
license for the worldwide rights to make, use and sell energy- generating
products and services based upon this patented technology. Cryotherm is a
development stage enterprise and is principally focused at this time on raising
sufficient capital to begin production of commercially viable products utilizing
the patented technology.
Consummation of the Reorganization Agreement is subject to various conditions,
including the approval by the CRYO stockholders, the receipt of required
regulatory approvals, where appropriate and applicable, and the completion of
due diligence by all parties to the proposed transaction. There can be no
assurance that the Reorganization Agreement (or any of the transactions
contemplated thereby) will be consummated or, if consummated, as to the timing
thereof.
The Company anticipates offering future sales of equity securities. However,
there is no assurance that the Company will be able to obtain additional funding
through the sales of additional equity securities or, that such funding, if
available, will be obtained on terms favorable to or affordable by the Company.
If the Reorganization Agreement is not consummated and/or no additional
operating capital is received during the next twelve months, the Company will be
forced to rely on existing cash in the bank and upon additional funds loaned by
management and/or significant stockholders to preserve the integrity of the
corporate entity at this time. In the event, the Company is unable to acquire
advances from management and/or significant stockholders, the Company's ongoing
operations would be negatively impacted.
It is the intent of management and significant stockholders to provide
sufficient working capital necessary to support and preserve the integrity of
the corporate entity. However, no formal commitments or arrangements to advance
or loan funds to the Company or repay any such advances or loans exist. There is
no legal obligation for either management or significant stockholders to provide
additional future funding.
7
Tomahawk Industries, Inc.
Notes to Financial Statements - Continued
Note C- Going Concern Uncertainty - Continued
In such a restricted cash flow scenario, the Company would be unable to complete
our business plan steps, and would, instead, delay all cash intensive
activities. Without necessary cash flow, the Company may become dormant during
the next twelve months, or until such time as necessary funds could be raised in
the equity securities market.
The Company has a limited operating history, minimal cash on hand, no profit and
operates a business plan with inherent risk. Because of these factors, our
auditors have issued an audit opinion for the Company which includes a statement
describing our going concern status. This means, in our auditor's opinion,
substantial doubt about our ability to continue as a going concern exists at the
date of their opinion.
While the Company is of the opinion that good faith estimates of the Company's
ability to secure additional capital in the future to reach our goals have been
made, there is no guarantee that the Company will receive sufficient funding to
sustain operations or implement any future business plan steps.
Note D - Summary of Significant Accounting Policies
1. Cash and cash equivalents
-------------------------
For Statement of Cash Flows purposes, the Company considers all cash on
hand and in banks, including accounts in book overdraft positions,
certificates of deposit and other highly-liquid investments with maturities
of three months or less, when purchased, to be cash and cash equivalents.
2. Income Taxes
------------
The Company uses the asset and liability method of accounting for income
taxes. At July 30, 2002 and 2001, respectively, the deferred tax asset and
deferred tax liability accounts, as recorded when material to the financial
statements, are entirely the result of temporary differences. Temporary
differences represent differences in the recognition of assets and
liabilities for tax and financial reporting purposes, primarily accumulated
depreciation and amortization, allowance for doubtful accounts and vacation
accruals.
As of July 30, 2002 and 2001, the deferred tax asset related to the
Company's net operating loss carryforward is fully reserved. Due to the
provisions of Internal Revenue Code Section 338, the Company may have
limited net operating loss carryforwards available to offset financial
statement or tax return taxable income in future periods as a result of a
Fiscal 2000 change in control involving 50 percentage points or more of the
issued and outstanding securities of the Company.
3. Income (Loss) per share
-----------------------
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock
outstanding. The calculation of fully diluted earnings (loss) per share
assumes the dilutive effect of the exercise of outstanding options and
warrants, using the treasury stock method, at either the beginning of the
respective period presented or the date of issuance, whichever is later. As
of July 30, 2002 and 2001, respectively, the Company has no outstanding
stock warrants, options or convertible securities which could be considered
as dilutive for purposes of the loss per share calculation.
8
Tomahawk Industries, Inc.
Notes to Financial Statements - Continued
Note E - Fair Value of Financial Instruments
The carrying amount of cash, accounts receivable, accounts payable and notes
payable, as applicable, approximates fair value due to the short term nature of
these items and/or the current interest rates payable in relation to current
market conditions.
Note F - Advances from Controlling Shareholder
On January 2, 2001, the Company's controlling shareholder loaned the Company
$25,000 to support operations, settle outstanding trade accounts payable and
provide working capital. The advance was repayable upon demand and is
non-interest bearing. On September 25, 2001, the shareholder executed a private
placement letter converting this advance into 25,000,000 shares of restricted,
unregistered common stock.
Note G - Common Stock Transactions
During the August 24, 2001 Special Meeting of Shareholders, a one (1) for ten
(10) reverse stock split on the issued and outstanding shares of common stock
was approved. This action was subsequently enacted by the Company's Board of
Directors and caused the issued and outstanding shares to decrease from
166,373,094 to 16,637,228. The effect of this action is reflected in the
accompanying financial statements as of the first day of the first period
presented.
On September 25, 2001, the Company sold 15,000,000 shares of restricted,
unregistered common stock at $0.001 per share for gross proceeds of $15,000,
pursuant to a private placement memorandum to an entity owned by the Company's
President and Chief Executive Officer. These funds were used to support the
working capital needs of the Company. The Company relied upon Section 4(2) of
The Securities Act of 1933, as amended, for an exemption from registration on
these shares.
On September 25, 2001, the Company converted $25,000 in advances from the
Company's President and Chief Executive Officer into 25,000,000 shares of
restricted, unregistered common stock at $0.001 per share, pursuant to a private
placement memorandum. These funds were used to settle outstanding trade accounts
payable and provide working capital for the Company. The Company relied upon
Section 4(2) of The Securities Act of 1933, as amended, for an exemption from
registration on these shares.
(Remainder of this page left blank intentionally)
9
Part I - Item 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations
(1) Caution Regarding Forward-Looking Information
Certain statements contained in this quarterly filing, including, without
limitation, statements containing the words "believes", "anticipates", "expects"
and words of similar import, constitute forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.
Such factors include, among others, the following: international, national and
local general economic and market conditions: demographic changes; the ability
of the Company to sustain, manage or forecast its growth; the ability of the
Company to successfully make and integrate acquisitions; raw material costs and
availability; new product development and introduction; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; the loss of significant customers
or suppliers; fluctuations and difficulty in forecasting operating results;
changes in business strategy or development plans; business disruptions; the
ability to attract and retain qualified personnel; the ability to protect
technology; and other factors referenced in this and previous filings.
Given these uncertainties, readers of this Form 10-QSB and investors are
cautioned not to place undue reliance on such forward-looking statements. The
Company disclaims any obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward-looking statements
contained herein to reflect future events or developments.
(2) Results of Operations, Liquidity and Capital Resources
Tomahawk Industries, Inc. (Company) was incorporated under the laws of the State
of Nevada on May 13, 1980. From its inception through 1988, the Company was
engaged in oil and gas exploration. Beginning in 1984, the Company entered the
business of installing energy recovery and energy saving devices through a then
wholly- owned subsidiary.
In July 1987, the Company filed for protection under Chapter 11 of the U. S.
Bankruptcy Code and operated as a debtor-in-possession. Subsequent thereto, the
petition for bankruptcy protection was denied and the Company ceased all
business operations and abandoned all net assets remaining by April 30, 1988.
The Company has effectively had no operations, assets or liabilities since its
fiscal year ended April 30, 1998.
On August 2, 2002, the Company announced, in a Current Report on Form 8-K, that
it had entered into an Agreement and Plan of Reorganization, (Reorganization
Agreement) which sets forth the terms and conditions of a proposed reverse
merger business combination transaction between the Company and Cryotherm, Inc.
(a privately-owned Delaware corporation) (CRYO). Pursuant to the Reorganization
Agreement, CRYO's shareholders will exchange 100% of the outstanding shares of
CRYO for 25,000,000 newly issued, post reverse shares of Tomahawk. CRYO will, as
a result, become a wholly-owned subsidiary of Tomahawk.
Cryotherm, Inc. was formed in January 2002 as a Delaware corporation to finance,
develop, distribute and sell products using low-cost, pollution-free,
energy-extraction technologies that can convert low-temperature heat, cryogenic
cold, and kinetic energy resources into megawatts of electricity at costs
competitive to fossil fuel- generated power. Cryotherm holds an exclusive
license for the worldwide rights to make, use and sell energy- generating
products and services based upon this patented technology. Cryotherm is a
development stage enterprise and is principally focused at this time on raising
sufficient capital to begin production of commercially viable products utilizing
the patented technology.
10
Consummation of the Reorganization Agreement is subject to various conditions,
including the approval by the CRYO stockholders, the receipt of required
regulatory approvals, where appropriate and applicable, and the
completion of due diligence by all parties to the proposed transaction. There
can be no assurance that the Reorganization Agreement (or any of the
transactions contemplated thereby) will be consummated or, if consummated, as to
the timing thereof.
The Company had no revenue for the respective three month periods ended July 31,
2002 and 2001, respectively.
General and administrative expenses for the three months ended July 31, 2002 and
2001 were approximately $250 and $ -0-, respectively. Net income (loss) for the
three months ended July 31, 2002 and 2001, respectively, was approximately
$(2,600) and $(200). Earnings per share for the respective quarters ended July
30, 2002 and 2001 was $0.00 and $0.00 on the weighted-average post-reverse split
shares issued and outstanding.
The Company does not expect to generate any meaningful revenue or incur
operating expenses for purposes other than fulfilling the obligations of a
reporting company under The Securities Exchange Act of 1934 unless and until
such time that the Reorganization Agreement is consummated and Cryotherm begins
meaningful operations.
At July 31, 2002 and 2001, respectively, the Company had working capital of
approximately $600 and $(22,600).
The Company anticipates offering future sales of equity securities. However,
there is no assurance that the Company will be able to obtain additional funding
through the sales of additional equity securities or, that such funding, if
available, will be obtained on terms favorable to or affordable by the Company.
If the Reorganization Agreement is not consummated and/or no additional
operating capital is received during the next twelve months, the Company will be
forced to rely on existing cash in the bank and upon additional funds loaned by
management and/or significant stockholders to preserve the integrity of the
corporate entity at this time. In the event, the Company is unable to acquire
advances from management and/or significant stockholders, the Company's ongoing
operations would be negatively impacted.
It is the intent of management and significant stockholders to provide
sufficient working capital necessary to support and preserve the integrity of
the corporate entity. However, no formal commitments or arrangements to advance
or loan funds to the Company or repay any such advances or loans exist. There is
no legal obligation for either management or significant stockholders to provide
additional future funding.
In such a restricted cash flow scenario, the Company would be unable to complete
our business plan steps, and would, instead, delay all cash intensive
activities. Without necessary cash flow, the Company may become dormant during
the next twelve months, or until such time as necessary funds could be raised in
the equity securities market.
The Company has a limited operating history, minimal cash on hand, no profit and
operates a business plan with inherent risk. Because of these factors, our
auditors have issued an audit opinion for the Company which includes a statement
describing our going concern status. This means, in our auditor's opinion,
substantial doubt about our ability to continue as a going concern exists at the
date of their opinion.
While the Company is of the opinion that good faith estimates of the Company's
ability to secure additional capital in the future to reach our goals have been
made, there is no guarantee that the Company will receive sufficient funding to
sustain operations or implement any future business plan steps.
Part II - Other Information
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
None
11
Item 3 - Defaults on Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
On August 22, 2002, the Company filed a Preliminary Information Statement
Pursuant to Section 14(c) of the Securities Exchange Act of 1934. The
purpose of this filing is to notify the Company's non-controlling
shareholders that the Company intends to take the following action by
written consent of our stockholders: 1) to amend our Articles of
Incorporation to change the name of the corporation to "Cryotherm Energy,
Inc." and 2) to approve a 1-for-400 reverse stock split of the outstanding
shares of the Company's common stock and to amend our Articles of
Incorporation to reflect the reversal of the outstanding shares.
Holders of a majority of the Company's outstanding common stock, owning
approximately 70% of the outstanding shares of our Common Stock have
executed a written consent in favor of the actions described above. This
consent will satisfy the stockholder approval requirement for the proposed
action and allows the Company's Board of Directors to take the proposed
action on or after September 11,2002.
As of the date of this filing, the Company has received comments from the
staff of the U. S. Securities and Exchange Commission related to this
Preliminary Information Statement. Management is in the process of
addressing these comments and will file an amended document by September 1,
2002.
Item 5 - Other Information
On August 2, 2002, the Company announced, in a Current Report on Form 8-K,
that it had entered into an Agreement and Plan of Reorganization,
(Reorganization Agreement) which sets forth the terms and conditions of a
proposed reverse merger business combination transaction between the
Company and Cryotherm, Inc. (a privately-owned Delaware corporation)
(CRYO). Pursuant to the Reorganization Agreement, CRYO's shareholders will
exchange 100% of the outstanding shares of CRYO for 25,000,000 newly
issued, post reverse shares of Tomahawk. CRYO will, as a result, become a
wholly-owned subsidiary of Tomahawk.
Cryotherm, Inc. was formed in January 2002 as a Delaware corporation to
finance, develop, distribute and sell products using low-cost,
pollution-free, energy-extraction technologies that can convert
low-temperature heat, cryogenic cold, and kinetic energy resources into
megawatts of electricity at costs competitive to fossil fuel- generated
power. Cryotherm holds an exclusive license for the worldwide rights to
make, use and sell energy- generating products and services based upon this
patented technology. Cryotherm is a development stage enterprise and is
principally focused at this time on raising sufficient capital to begin
production of commercially viable products utilizing the patented
technology.
Consummation of the Reorganization Agreement is subject to various
conditions, including the approval by the CRYO stockholders, the receipt of
required regulatory approvals, where appropriate and applicable, and the
completion of due diligence by all parties to the proposed transaction.
There can be no assurance that the Reorganization Agreement (or any of the
transactions contemplated thereby) will be consummated or, if consummated,
as to the timing thereof.
Item 6 - Exhibits and Reports on Form 8-K
Exhibits
--------
99.1 CEO/CFO Certification Pursuant to 18 USC, Section
1330, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
Reports on Form 8-K
-------------------
August 1, 2002 Reporting an Agreement and Plan of Reorganization
which sets forth the terms and conditions of a
proposed reverse merger business combination
transaction between the Company and Cryotherm, Inc.
(a privately-owned Delaware corporation)
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.
Tomahawk Industries, Inc.
Dated: August 26, 2002 /s/ Glenn A. Little.
--------------- ------------------------------------
Glenn A. Little
President, Chief Executive Officer,
Chief Financial Officer and Director
13