UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
_____________________________________________________________________________
(Mark one)
[XX] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934
For the transition period from _______ to ________
______________________________________________________________________________
Commission File Number: 0-26059
COMET TECHNOLOGIES, INC.
________________________________________________________________
(Exact Name of small business issuer as specified in its charter)
Nevada 87-0430322
________________________________________________________________
(State of Incorporation) (IRS Employer ID Number)
10 West 100 South, Suite 610, Salt Lake City, Utah 84101
________________________________________________________________
(Address of principal executive offices)
(801) 532-7851
________________________________________________________________
(Issuer's telephone number)
Not Applicable.
_______________________________________________________________
(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 Three Months ended March 31, 2004
Table of Contents
Part I - Financial Information Page
Item 1. Financial Statements 4
Item 2. Management's Discussion and Analysis or
Plan of Operation 10
Item 3. Controls and Procedures 12
Part II - Other Information
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
2
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
March 31, 2004 and December 31, 2003
3
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
March 31, December 31,
2004 2003
------------- -------------
(Unaudited)
CURRENT ASSETS
Cash $ 132,858 $ 151,597
------------- -------------
Total Current Assets 132,858 151,597
------------- -------------
TOTAL ASSETS $ 132,858 $ 151,597
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - related parties $ 44,295 $ 30,000
------------- -------------
Total Current Liabilities 44,295 30,000
------------- -------------
TOTAL LIABILITIES 44,295 30,000
------------- -------------
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 (153,596) (120,562)
------------- -------------
Total Stockholders' Equity 88,563 121,597
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 132,858 $ 151,597
============= =============
The accompanying notes are an integral part of these financial statements.
4
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
From
Inception on
For the Three Months Ended February 7,
March 31, 1986 through
--------------------------- March 31,
2004 2003 2004
------------- ------------- --------------
REVENUES $ - $ - $ -
EXPENSES
General and administrative 33,169 8,304 300,035
------------- ------------- --------------
Total Expenses 33,169 8,304 300,035
------------- ------------- --------------
LOSS FROM OPERATIONS (33,169) (8,304) (300,035)
------------- ------------- --------------
OTHER INCOME (EXPENSE)
Dividend income - - 5,493
Interest income 135 421 147,596
Unrealized loss from
marketable securities - - (6,650)
------------- ------------- --------------
Total Other Income (Expense) 135 421 146,439
------------- ------------- --------------
NET LOSS $ (33,034) $ (7,883) $ (153,596)
============= ============= ==============
BASIC LOSS PER SHARE $ (0.01) $ (0.00)
============= =============
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 3,598,000 3,598,000
============= =============
The accompanying notes are an integral part of these financial statements.
5
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
From Inception on February 7, 1986 through March 31, 2004
Deficit
Accumulated
Common Stock Additional During
------------------------- Paid-In Development
Shares Amount Capital 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 March 31, 2004
Deficit
Accumulated
Common Stock Additional During
------------------------- Paid-In Development
Shares Amount Capital 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 three
months ended March 31,
2004 (unaudited) - - - (33,034)
------------- ----------- ----------- -------------
Balance, March 31, 2004
(unaudited) 3,598,000 $ 3,598 $ 238,561 $ (153,596)
============= =========== =========== =============
The accompanying notes are an integral part of these financial statements.
7
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
From
Inception on
For the Three Months Ended February 7,
March 31, 1986 through
--------------------------- March 31,
2004 2003 2004
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss from operations $ (33,034) $ (7,883) $ (153,596)
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 14,295 (9,600) 43,994
------------- ------------- -------------
Net Cash used by Operating Activities (18,739) (17,483) (109,001)
------------- ------------- -------------
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
------------- ------------- -------------
INCREASE (DECREASE) IN CASH (18,739) (11,292) 132,858
CASH AT BEGINNING OF PERIOD 151,597 176,686 -
------------- ------------- -------------
CASH AT END OF PERIOD $ 132,858 $ 159,203 $ 132,858
============= ============= =============
CASH PAID FOR:
Taxes $ - $ - $ -
Interest $ - $ - $ -
The accompanying notes are an integral part of these financial statements.
8
COMET TECHNOLOGIES, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2004 and December 31, 2003
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 at March 31, 2004 and 2003 and
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, 2003 audited financial statements. The results of operations for
the periods ended March 31, 2004 and 2003 are not necessarily indicative of
the operating results for the full years.
NOTE 2 - RELATED PARTY TRANSACTION
As of March 31, 2004, the Company owed $44,295 to related parties for unpaid
services rendered to the Company.
NOTE 3 - 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
will resign and be replaced by officers and directors of Town House.
9
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. These risks and uncertainties,
many of which are beyond our control, include (i) the sufficiency of existing
capital resources and the Company's ability to raise additional capital to
fund cash requirements for future operations; (ii) volatility of the stock
market; and (iii) general economic conditions. Although the Company believes
the expectations reflected in these forward-looking statements are reasonable,
such expectations may prove to be incorrect.
(2) Plan of Operation
The Company has been not been engaged in business operations, and has
had no revenue from operations during the quarter ended March 31, 2004.
The Company has entered into an Exchange Agreement with Town House Land
Limited ("Town House"), a company organized in the Hong Kong Special
Administrative Region in The People's Republic of China ("PRC") and the
shareholders of Town House. The Company expects this transaction to close in
June, 2004. This proposed transaction, and the business of Town House are
described in detail in the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 2003. If the Exchange Agreement is
consummated, the business of the Registrant will be conducted through its then
subsidiary, Town House, which will, in turn, conduct its business through
Wuhan Pacific Real Estate Industry Development Company Limited ("Wuhan
Pacific"), a foreign enterprise organized in Hubei Province in The People's
Republic of China ("PRC"). According to documentation provided by Town House,
Wuhan Pacific is one of the first privately owned property developers in Wuhan
City and is one of the largest property developers in Wuhan City, based on a
list of top 100 property development enterprises in Wuhan City in terms of
Gross Floor Area ("GFA") sold in 2002 published by the Wuhan Statistics
Bureau. It engages principally in the development and sale of high quality
private residential properties catering to the mass residential property
market in Wuhan City. Wuhan Pacific also engages in other ancillary property
related services such as property sales planning and underwriting,
construction supervisory and real estate agency services.
Wuhan Pacific's portfolio of properties under development are currently
all located in Wuhan City and target different segments within the mass
residential property market, including young white collar employees, middle to
senior managers in enterprises, entrepreneurs and families with young
children. These upwardly mobile people represent the emerging middle class in
Wuhan City and are a growing source of demand in the mass residential property
market.
10
Wuhan Pacific aims to further solidify its position in Wuhan City, and
plans to also expand its focus on property business in Shanghai. Wuhan
Pacific also indicates that it will pursue quality business opportunities in
other fast growing cities in China such as Yi Chang, if market conditions are
appropriate. There is no assurance that the operations of the Company will
be successful.
(3) Results of Operations
The Company had essentially no operations during the quarter ended March
31, 2004. As of March 31, 2004, the Company had cash of $132,858, liabilities
of $44,295, and no other liquid assets or resources. It is expected that all
of the Company's cash assets will be expended in connection with the Town
House Acquisition described above.
The Company has not experienced any material changes in results of
operation, except for additional expenses incurred in connection with the
transaction with Town House, described above. The Company had no revenue from
continuing operations and incurred expenses during the quarter ended March 31,
2004, of $33,169, in accounting, legal, consulting and other general and
administrative expenses, as compared to $8,304 in expenses for the quarter
ended March 31, 2003. These expenses were incurred in connection with the
Company's continuing efforts to file necessary periodic reports and to
continue its efforts in consummating the Town House transaction.
The Company has realized a net loss for the three months ended March 31,
2004 and 2003, of $33,034 and $7,883 respectively, and a net loss since
inception of $153,596.
(4) Liquidity and Capital Resources
The Company has not experienced a material change in financial condition
over the past year. At March 31, 2004, the Company had working capital of
approximately $88,563, as compared to $121,597, at December 31, 2003. This
reduction in working capital is due to costs of maintaining the Company as a
public company, and payments to officers and professionals for efforts in
reviewing business opportunities and in connection with the proposed
transaction with Town House, described above. Working capital as of both
dates consists of short-term investments, and cash and cash equivalents, less
current liabilities. Management believes that the Company has sufficient cash
and short-term investments 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.
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.
11
Item 3 - Controls and Procedures
As of the end of the period covered by this report, based on an
evaluation of the Company's disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934)
each of the chief executive officer and the chief financial officer of the
Company has concluded that the Company's disclosure controls and procedures
are effective to ensure that information required to be disclosed by the
Company in its Exchange Act reports is recorded, processed, summarized and
reported within the applicable time periods specified by the SEC's rules and
forms.
There were no significant changes in the Company's internal controls or
in any other factors which could significantly affect those controls
subsequent to the date of the most recent evaluation of the Company's internal
controls by the Company, including any corrective actions with regard to any
significant deficiencies or material weaknesses.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
None.
Item 2 - Changes in Securities
None.
Item 3 - Defaults on Senior Securities
None.
Item 4 - Submission of Matters to a Vote of Security Holders
During the quarter ended March 31, 2004, 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.
Item 5 - Other Information
None.
Item 6 - Exhibits and Reports on Form 8-K
Exhibit Description
________ _____________________________________________________________________
31.1 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002*
31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002*
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.
12
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: May 13, 2004 By: /s/ Richard B. Stuart
________________________________________
Richard B. Stuart, President and CEO
Date: May 13, 200 By: /s/ Jack M. Gertino
_______________________________________
Jack M. Gertino, Secretary and CFO
13