WORLDTEQ GROUP INTERNATIONAL INC - 10-Q Filing Date: 12/31/02
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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 EXCHANGE ACT
For the transition period from to
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Commission File No. 0-27413
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WORLDTEQ GROUP INTERNATIONAL, INC.
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(Exact name of Small Business Issuer as specified in its Charter)
NEVADA 03-7392107
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(State or Other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
30 West Gude Drive, Suite 470,
Rockville, MD 20850
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(Address of Principal Executive Offices)
Issuer's Telephone Number: (240) 403-2000
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Not applicable.
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
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The Registrant has not been involved in any bankruptcy proceedings;
however, see Item 3, Part I, for information regarding a pending legal
proceeding pursuant to which additional documentation may be required to be
filed by the Registrant in connection with the distribution of securities of
the Registrant.
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date:
21,630,000
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Disclosure Page 1
ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
WORLDTEQ GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
(FORMERLY A1 INTERNET.COM, INC.)
CONSOLIDATED BALANCE SHEETS
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(UNAUDITED)
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March 31, December 31,
Assets 2003 2002
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(unaudited) (audited)
Current Assets:
Restricted Cash $ 55,000 $ 85,000
Accounts Receivable 68,646 78,974
Other Current Assets 18,134 12,574
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Total Current Assets 141,780 176,548
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Equipment 405,284 405,284
Accumulated Depreciation (340,554) (330,711)
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Net Fixed Assets 64,730 74,573
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Total Assets $ 206,510 $ 251,121
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Current Liabilities
Accounts Payable $ 674,192 $ 646,263
Accrued Expenses 31,728 15,717
Deferred Revenue 29,633 51,616
Current portion, note payable to shareholder 48,000 48,000
Note Payable 98,653 98,703
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Total Current Liabilities 882,206 860,299
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Note payable stockholder, net of current portion 176,223 96,208
Stockholders' Deficit
Convertible preferred stock, $.001 par value,
5,000,000 shares authorized, 1,055,553 shares
issued and outstanding 1,055 1,055
Common stock, $.001 par value, 100,000,000
shares authorized, 21,630,000 shares issued
and outstanding 21,630 21,630
Paid in capital 20,089,016 20,089,016
Retained Deficit (20,817,087) (20,817,087)
Net Income (Loss) (146,533)
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Total Stockholders' Deficit (851,919) (705,386)
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Total Liabilities and Stockholders' Deficit $ 206,510 $ 251,121
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ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
WORLDTEQ GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
(FORMERLY A1 INTERNET.COM, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
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(UNAUDITED)
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Three Months Ended
March 31,
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2003 2002
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Sales $ 382,444 $ 1,152,111
Cost of Sales 209,060 580,603
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Gross profit 173,384 571,508
Selling, general and administrative expenses 310,211 481,738
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Income (loss) from operations (136,827) 89,770
Interest Expense 9,706 10,438
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Net income (loss) $ (146,533) $ 79,332
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Basic and diluted income (loss) per share: $ (0.01) $ 0.00
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Weighted Average Shares Outstanding 17,830,000 17,830,000
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ITEM 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY INFORMATION
WORLDTEQ GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
(FORMERLY A1 INTERNET.COM, INC.)
CONSOLIDATED STATEMENTS CASH FLOWS
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(UNAUDITED)
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Three Months Ended
March 31,
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Cash Flows Used in Operating Activities 2003 2002
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Net Income (Loss) $ (146,533) $ 79,332
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization 9,843 19,617
Change in:
Accounts Receivable 10,328 (7,688)
Other Current Assets (5,560) (1,648)
Accounts Payable 27,929 8,448
Accrued Expenses 16,011 (18,554)
Deferred Revenue (21,983) (1,975)
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Net Cash Used In Operating Activities (109,965) 77,532
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Cash Flows Used In Investing Activities
Purchases of Equipment 0 (43,800)
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Cash Flows Provided By Financing Activities
Proceeds from shareholder note payable 80,015 (30,646)
Shareholder contributions to capital 0 171,667
Payments on note payable (50) (50,939)
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Net cash from financing activities 79,965 46,282
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Net Change in Cash (30,000) 123,814
Cash - beginning of year 85,000 103,045
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Cash - End of Quarter $ 55,000 $ 226,859
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WORLDTEQ GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
(Formerly A1 Internet.com, Inc.)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of WorldTeq Group
International, Inc. ("WorldTeq") have been prepared in accordance with
accounting principles generally accepted in the United States of America and the
rules of the Securities and Exchange Commission ("SEC"), and should be read in
conjunction with the audited financial statements and notes thereto contained in
WorldTeq's latest Annual Report filed with the SEC on Form 10-KSB. In the
opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the
results of operations for the interim periods presented have been reflected
herein. The results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year. Notes to the
financial statements which would substantially duplicate the disclosure
contained in the audited financial statements for the most recent fiscal year
2002, as reported in the 10-KSB, have been omitted.
WORLDTEQ GROUP INTERNATIONAL INC - 10-Q Filing Date: 12/31/02
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WORLDTEQ GROUP INTERNATIONAL, INC. AND SUBSIDIARIES
(Formerly A1 Internet.com, Inc.)
NOTES TO FINANCIAL STATEMENTS
ITEM 2 - MANAGEMENT'S DISCUSSION & ANALYSIS
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The following discussion and analysis of the financial condition and results of
operations should be read in conjunction with the financial statements, related
notes, and other detailed information included elsewhere in this Form 10-QSB.
Certain information contained below and elsewhere in this Form 10-QSB, including
information regarding our plans and strategy for our business, are
forward-looking statements. See "Note Regarding Forward-Looking Statements."
This Quarterly Report on Form 10-QSB contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking
statements are statements other than historical information or statements of
current condition. Some forward-looking statements may be identified by use of
terms such as "believes", "anticipates", "intends", or "expects". These
forward-looking statements relate to our plans, objectives and expectations for
future operations and growth. Other forward-looking statements in this Form
10-QSB include statements regarding synergies and growth expected as a result of
future acquisitions, expected growth in earnings, EBITDA, revenue and gross
margin, expected decreases in operating expenses, our expectation regarding our
ability to consummate future acquisitions. In light of the risks and
uncertainties inherent in all such projected operational matters, the inclusion
of forward-looking statements in this Form 10-QSB should not be regarded as a
representation by us or any other person that any of our objectives or plans
will be achieved or that any of our operating expectations will be realized. Our
revenues and results of operations are difficult to forecast and could differ
materially from those projected in the forward-looking statements contained in
this Form 10-QSB as a result of certain risks and uncertainties including, but
not limited to, our business reliance on third parties to provide us with
technology, infrastructure and content, our ability to integrate and manage
acquired technology, assets, companies and personnel, changes in market
conditions, the volatile and intensely competitive environment in the
telecommunications and Internet industries, the availability of transmission
facilities, dependence on call termination agreements, entry into new and
developing markets, risks associated with the international telecommunications
industry, customer concentration and attrition, dependence on a few significant
foreign and domestic customers and suppliers, international economic and
political instability, dependence on effective billing and information systems,
rapid technological change, the risk of litigation in connection with the
contents of our Web based systems, and our dependence on key employees in a
competitive market for skilled personnel. These factors should not be considered
complete; we undertake no obligation to release publicly the results of any
future revisions we may make to forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
RECENT DEVELOPMENTS
During the quarter we signed several new agent contracts, added enhancements to
our internal billing system that now allows us to offer traditional business
long distance, and singed new vendor relationships allowing us to expand our
offerings with prepaid cell phone service and unlimited long distance with local
service. Additionally, we researched and developed new products, including an
exclusive prepay toll-free service that brings the cost of inbound calls to less
then 3 cents per minute. We further enhanced our facilities to enable our
services integration capabilities with Private Debit Card programs and Master
Card platforms. We closed our office in Ohio and outsourced all resources to a
single solution provider allowing us to concentrate on marketing.
RESULTS OF OPERATIONS
Total net sales for the three months ended March 31, 2003 were $382,444, as
compared to $1,152,111 the same 3 months ended March 31, 2002. Net Income ended
March 31, 2003 decreased from $79,332 to a net loss of ($145,533) over the same
3 months ended March 31, 2003. This decrease was primarily attributable to
market competition, a change in focus for the company away from wholesale
customers, sales returns and allowances, and uncollectible debt.
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Disclosure Page 2
WORLDTEQ GROUP INTERNATIONAL INC - 10-Q Filing Date: 12/31/02
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Gross profit as a percentage of revenue has decreased slightly to 45.3% of sales
compared to 50% of sales during the same 3 month period in 2002 due primarily to
an increase in sales compensation during the quarter. Sales General and
administrative increased to 81% of sales from 41.8% of sales over the same 3
months ended March 31, 2002. Net profit margins decreased to a negative 38.3%
from 6.88% during the comparable 3 month period. We achieved a net loss of
($146,533) or ($.066) per share compared to a net gain of $79,332 or $.044 per
share during the same three months ended March 31, 2002. These results were
primarily due to market competition and uncollectible debt. Gross Margin
decreased per the periods covering January 1, 2003 and the same period ended
March 31, 2002 to 45.3% of sales in the period ended March 31, 2003.
General and administrative expenses decreased 35.60% to $310,211 from $481,738
for the three months ended March 31, 2003, respectively; this was primarily due
to the reduction of support staff. Our focus on cost containment and reducing
unneeded expenses aided us in limiting the increase of these expenses.
FINANCIAL CONDITION; LIQUIDITY AND FINANCIAL RESOURCES
During the quarter ending March 31, 2003 we eliminated non-productive assets and
pared down our workforce to reduce overhead.
Net cash provided by operating activities for 3 months ended March 31, 2003 was
($109,865). The negative cash provided by operating activities was primarily
attributable to the decrease in sales. Net financing activities provided
$80,015. Investing activities used $79,965 to finance resources to enhance our
overall infrastructure and ensure quality, uninterrupted service to our
customers.
Cash at end of March 2003 amounted to $55,000, a decrease of $171,589 compared
to same period last year ending March 31, 2002. Our current assets for March 31,
2003 are lower than our current liabilities by $675,696. Included in our current
liabilities is approximately $219,196 of disputed amounts that we feel confident
will be adjusted in our favor because we did not receive services we contracted
for and $98,750 in shareholder notes payable.
We believe our current cash position March 31, 2003 of $55,000 should be
sufficient along with anticipated operating cash flow to fund our operations for
the next 12 months.
We need an additional $3,000,000 to fund our planned expansion activities in the
next 12 months as follows:
We contemplate acquiring selected assets of smaller competitors around the
country and centralizing all of their operations, thereby increasing revenue and
profitability. The target acquisitions would include Long Distance resellers,
Voice Over Internet Protocol Providers, , and calling card providers. We
contemplate increasing our deployment of our Financial Services Products as we
believe this is the future of small business communications allowing them to
take advantage of the cost savings and integration of voice and data. The
balance of the funds would be earmarked to assist the company in its goal to
obtain NASDAQ small cap trading approval.
We currently have no source of this funding identified. We believe the balance
of 2003 will be a cash flow positive year, as our customer base has now reached
a greater than break-even point and we have reduced unneeded expenses. Our
customer base continues to grow each month, and we believe is diverse enough to
avoid sudden interruptions from cancellation by any single customer. Our
billing system takes advance credit card payments and ACH debits.
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Disclosure Page 3
WORLDTEQ GROUP INTERNATIONAL INC - 10-Q Filing Date: 12/31/02
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PART II.
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Item 5. Other information
During the Quarter our CEO, Bruce Bertman had resigned based on the outcome of
his trial in February of 2003. Upon Mr. Bertman's resignation, Jeffrey
Lieberman was named the new President and CEO.
Item 6. Exhibits and Reports on Form 8-K.
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(a) Exhibits.
None; not applicable.
(b) Reports on Form 8-K.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
WORLDTEQ GROUP INTERNATIONAL INCORPORATED
(Registrant)
Date: May 20, 2003
By:/S/ Jeffrey Lieberman
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(Signature)
Name: Jeffrey Lieberman
Title: President,
Chief Executive Officer
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Disclosure Page 4
WORLDTEQ GROUP INTERNATIONAL INC - 10-Q Filing Date: 12/31/02
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STATEMENT UNDER OATH OF PRINCIPAL FINANCIAL OFFICER REGARDING FACTS AND
CIRCUMSTANCES RELATING TO EXCHANGE ACT FILINGS.
I, Jeff Lieberman, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of WorldTeq Group
International;
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 Rules 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 performing the equivalent
functions):
a) 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
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether 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.
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.
Date: 5/20/03 By: /s/ Jeffrey M. Lieberman
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Jeffrey M. Lieberman
Chief Executive Officer, President and
Director
Date: 5/14/03 By: /s/ Amy Toms
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Principal Financial Officer
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Disclosure Page 5
WORLDTEQ GROUP INTERNATIONAL INC - 10-Q Filing Date: 12/31/02
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CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jeffrey M. Lieberman, Chief Executive Officer of WorldTeq Group
International
Inc. (the "Registrant"), certify that:
1. I have reviewed this Quarterly Report on Form 10-QSB of the
Registrant;
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 officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we
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 officer 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 performing the
equivalent function);
a) 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
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's
internal controls; and
6. The Registrant's other certifying officer 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 02, 2003 Signature: /s/Jeffrey M. Lieberman
Jeffrey M. Lieberman
Chief Executive Officer
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Disclosure Page 6
WORLDTEQ GROUP INTERNATIONAL INC - 10-Q Filing Date: 12/31/02
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CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Amy Toms, Principal Financial Officer of WorldTeq Group International
Inc. (the "Registrant"), certify that:
1. I have reviewed this Quarterly Report on Form 10-QSB of the
Registrant;
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 officer and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant and we
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 officer 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 performing the
equivalent function);
a) 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
b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Registrant's
internal controls; and
6. The Registrant's other certifying officer 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 20, 2003 Signature : /s/Amy Toms
Amy Toms
Principal Financial Officer
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Disclosure Page 7
WORLDTEQ GROUP INTERNATIONAL INC - 10-Q Filing Date: 12/31/02
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CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly report of WorldTeq Group International Inc.
(the
"Registrant") on Form 10-QSB for the period ending March 31, 2003, as filed with
the Securities and Exchange Commission on the date hereof (the "Quarterly
Report"), We, Jeffrey M. Lieberman, Chief Executive Officer and Amy Toms,
Principal Financial Officer of the Registrant, certify, pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that:
(1) The Quarterly Report fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Quarterly Report fairly presents,
in all material respects, the financial condition and result of operations of
the Registrant.
Date: 5/20/03 /s/Jeffrey M. Lieberman
Jeffrey M. Lieberman
Chief Executive Officer
Date: 5/20/03 /s/Amy Toms
Amy Toms
Principal Financial Officer
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Disclosure Page 8