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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

   

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 ( d ) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2014

 

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 ( d ) OF THE EXCHANGE ACT

 

For the transition period from ____________ to____________

 

Commission File No. 000-54152  

 

RadTek, Inc.

(Exact name of Registrant as specified in its charter)

 

Nevada

 

27-2039490

(State or Other Jurisdiction of

 

(I.R.S. Employer Identification No.)

incorporation or organization)

 

 

 

 

9900 Corporate Campus Drive, Ste 3000, c/o PEG

 

 

Louisville, Kentucky  40223

 

 

(Address of Principal Executive Offices)

 


 

(502) 657-6005

 

 

(Registrant’s telephone number, including area code)

 


Indicate by check mark whether the Registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 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 [  ]

 

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405) of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]

 

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “non-accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 



1




Large accelerated filer          [  ]

 

Non-accelerated filer             [  ]

Accelerated filer                   [  ]

 

Smaller reporting company   [x]


Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

 

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date: August 19, 2014 – 121,336,800 shares of common stock.




2




RADTEK, INC.

FORM 10-Q

TABLE OF CONTENTS

 

PART 1 – FINANCIAL INFORMATION

 

 

 

 

 

Page

Item 1.  Consolidated Financial Statements (Unaudited)

 

4

Item 2.  Management's Discussion and Analysis of

  Financial Condition and Results of Operations

 

12

Item 3.  Quantitative and Qualitative Disclosure

  About Market Risk

 

14

Item 4.  Controls and Procedures

 

14


PART II – OTHER INFORMATION



 

 

 

Item 1.  Legal Proceedings

 

15

Item 1A.  Risk Factors

 

15

Item 2.  Unregistered Sales of Equity Securities and

  Use of Proceeds

 

15

Item 3.  Defaults upon Senior Securities

 

15

Item 4.  Mine Safety Disclosures

 

15

Item 5.  Other Information

 

15

Item 6.  Exhibits

 

15

 

 

 

SIGNATURES

 

16





PART I

 

Item 1. Financial Statements

 

The Financial Statements of the Registrant required to be filed with this 10-Q Quarterly Report were prepared by management and commence below, together with related notes. In the opinion of management, the Financial Statements fairly present the financial condition of the Registrant.

 



3



RADTEK, INC.

Consolidated Balance Sheets

As of June 30, 2014 and December 31, 2013

 

June 30, 2014

December 31, 2013

Assets

 

(Unaudited)

 

(Audited)

Current assets:

 

 

 

 

Cash and cash equivalents

$

780,406

$

106,908

Accounts receivable, net

 

101,401

 

52,748

Prepaid expenses and other assets

 

1,348,235

 

560,462

Total Current assets

 

2,230,042

 

720,118

 

 

 

 

.

Investment

 

5,199

 

4,998

Property and equipment

 

-

 

-

Intangible assets

 

98,987

 

98,303

Security deposits

 

29,574

 

28,428

 

 

133,760

 

131,729

 

 

 

 

 

Total assets

$

2,363,802

$

851,847

 

 

 

 

 

Liabilities and equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts and other payables

$

283,881

$

157,556

Short-term borrowings

 

147,870

 

145,648

Advances from related party

 

310,733

 

249,298

Advance receipts on contracts

 

1,613,890

 

263,561

Loan from related party

 

65,000

 

-

Other current liabilities

 

106,236

 

93,032

 

 

2,527,610

 

909,095

Non-current liabilities:

 

 

 

 

Accrued severance benefits

 

28,159

 

25,165

 

 

28,159

 

25,165

 

 

 

 

 

Total liabilities

 

2,555,769

 

934,260

 

 

 

 

 

Equity:

 

 

 

 

Preferred Stock;

 

 

 

 

Authorized: 10,000,000 shares, $0.001 par value

 

 

 

 

Issued and outstanding shares: 0

 

 

 

 

Common stock

 

 

 

 

Authorized: 1,990,000,000 shares, $0.001 par value

 

 

 

 

Issued: 176,711,800 and 156,711,800 shares

 

 

 

 

Outstanding: 121,336,800 and 101,336,800 shares

 

 

 

 

as of June 30, 2014 and December 31, 2013, respectively

 

176,712

 

156,712

Additional Paid-in capital

 

1,638,514

 

778,511

Treasury Stock (55,375,000 shares)

 

(375,053)

 

(375,053)

Accumulated other comprehensive loss

 

(90,525)

 

(50,977)

Accumulated deficits

 

(1,541,615)

 

(591,606)

 

 

 

 

 

Total equity

$

(191,967)

$

(82,413)

 

 

 

 

 

Total liabilities and equity

$

2,363,802

$

851,847


The accompanying notes are an integral part of these financial statements.




4



 RADTEK, INC

Consolidated Statement of Operations

For the Three and Six Months Ended June 30, 2014 and 2013


 

Three Months Ended

 

Six Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2014

 

June 30, 2013

 

June 30, 2014

 

June 30, 2013

Net revenues

$

54,534

 

$

580,879

 

$

241,366

 

$

717,799

 

 

 

 

 

 

 

 

 

 

 

 

Cost of sales

 

41,389

 

 

333,857

 

 

166,017

 

 

323,060

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

13,145

 

 

247,022

 

 

75,349

 

 

394,739

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses :

 

 

 

 

 

 

 

 

 

 

 

Depreciation and Amortization

 

1,615

 

 

2,033

 

 

3,171

 

 

4,066

Consulting fees

 

0

 

 

 

 

 

435,736

 

 

 

Selling and administrative expenses

 

77,992

 

 

172,544

 

 

594,291

 

 

237,881

 

 

 

 

 

 

 

 

 

 

 

 

Total Operating expenses

 

79,607

 

 

174,577

 

 

1,033,198

 

 

241,947

 

 

 

 

 

 

 

 

 

 

 

 

Gain(Loss) from operations

 

(66,462)

 

 

72,445

 

 

(957,849)

 

 

152,792

 

 

 

 

 

 

 

 

 

 

 

 

Other income(expenses) :

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

(1,384)

 

 

(1,888)

 

 

(3,341)

 

 

(3,981)

Foreign exchange transaction gain (loss)

24,601

 

 

(507)

 

 

15,575

 

 

249

other income, net

 

(2,603)

 

 

1,815

 

 

(4,394)

 

 

2,724

 

 

20,614

 

 

(580)

 

 

7,840

 

 

(1,008)

Income for the year before tax

 

(45,848)

 

 

71,865

 

 

(950,009)

 

 

151,784

Provision for income tax

 

-

 

 

 

 

 

-

 

 

-

Net income

 

(45,848)

 

 

71,865

 

 

(950,009)

 

 

151,784

 

 

 

 

 

 

 

 

 

 

 

 

Other Comprehensive income (loss)

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustments

(39,307)

 

 

99,218

 

 

(39,548)

 

 

127,582

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income (loss)

$

(85,155)

 

$

171,083

 

$

(989,557)

 

$

279,366

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

$

(0.00)

 

$

0.00

 

$

(0.01)

 

$

0.00

 

 

176,711,800

 

 

65,000,000

 

 

147,740,805

 

 

65,000,000


  The accompanying notes are an integral part of these financial statements.




5



RADTEK, INC

Consolidated Statement of Cash Flows (Unaudited)

For the Six Months Ended June 30, 2014 and 2013


 

June 30, 2014

 

June 30, 2013

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

Net Gain(loss)

$

(950,009)

 

$

151,784

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 - Depreciation and amortization

 

3,171

 

 

4,066

 - Severance benefits

 

2,994

 

 

21,710

 - Stock based compensation

 

871,472

 

 

-

Change in assets and liabilities, net of the effect of acquisitions:

 

 

 

 

 

 - Accounts receivable

 

(48,653)

 

 

(101,799)

 - Inventory

 

0

 

 

(13,073)

 - Prepaid expenses and other assets

 

(787,773)

 

 

7,409

 - Accounts payable and other payable

 

126,325

 

 

52,320

 - Advance receipts on contracts

 

1,350,329

 

 

(391,411)

 - Accrued liabilities and other liabilities

 

13,204

 

 

(11,343)

Net cash provided by (used in) operating activities

 

581,060

 

 

(280,337)

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

Goodwill

 

0

 

 

  15,000

Net cash used in financing activities

 

0

 

 

(15,000)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 - Proceeds from short-term borrowings

 

0

 

 

(54,538)

 - Loan from related party

 

65,000

 

 

 

 - Advances from related parties

 

61,435

 

 

260,550

Net cash provided by financing activities

 

126,435

 

 

206,012

 

 

 

 

 

 

Net decrease in cash and cash equivalent

 

707,495

 

 

(89,325)

Effect of exchange rate changes

 

(33,997)

 

 

132,840

Cash and cash equivalent at beginning of year

 

106,908

 

 

8,339

 

 

 

 

 

 

Cash and cash equivalent at end of year

$

780,406

 

$

51,854

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

 

 

Cash paid for interest

 

3,341

 

 

3,981


The accompanying notes are an integral part of these financial statements.

 



6



RadTek, Inc.

Consolidated Notes to the Financial Statements

June 30, 2014 (Unaudited)


Note 1 – Nature of Business


(a) Description of Business


RadTek, Inc. (the “Company”) was incorporated in Nevada on December 18, 2009, under the laws of the State of Nevada, for the purpose of providing management consulting services to the small or median sized private companies in the Taiwan that want to look for business partners, or agencies, or financing resources, or to become public through IPO or reverse merger in the United States, or Canada.

 

The Company was a subsidiary of USChina Channel Inc., and spun off on March 15, 2010. As of March 18, 2013 the company filed with the Nevada Secretary of State and subsequently with the SEC and FINRA for a name change to RadTek, Inc., change to the Articles of Incorporation. With this the ticker of the company also changed to RDTK and created a class of preferred stock with 10,000,000 shares issuable. No preferred shares have been issued to date.


On November 26, 2013, the Company acquired RadTek, Co. Ltd. RadTek, Co., Ltd. was incorporated under the laws of Republic of Korea in May 2001, and is engaged in developing and marketing radiation-imaging system and equipment that employ digital radiography technology. The systems offered are primarily in the line of radiation scanning and related engineering services for users in various fields such as biotechnology, medical, product quality control, and security system. The specific product line includes food inspection systems, X-ray diagnosis related systems, baggage and container inspection systems, and radiation safety engineering. As the market in this field is dominated by high-priced systems for large users, the Company aims to focus on the niche market of small users by offering low-cost models.


On December 31, 2012, RadTek, Co., Ltd. entered into an agreement to acquire a company (a Nevada corporation) listed on “Over-the-Counter” Market of the United States. This transaction was completed in February 2013, and has resulted in the acquisition of 89.6% of the outstanding voting shares of the listed company at the consideration of $367,000 including transaction expenses. All amounts recorded as treasury stock in consolidated balance sheet as of December 31, 2013.


On November 26, 2013, the Company entered into a definitive agreement with RadTek, Co. Ltd.’s shareholders.   Pursuant to the agreement, the Company purchased all of the outstanding securities of the RadTek, Co. Ltd. (1,900,000) in exchange for 95,000,000 common shares (post stock split) of the Company.  RadTek Co. Ltd. shall be a wholly owned subsidiary of the Company. RadTek, Co. Ltd. is treated as the “accounting acquirer” in the accompanying financial statements. In the transaction, the Company issued 95,000,000 common shares to the shareholders of RadTek, Co. Ltd.; such shares represented, immediately following the transaction, 94% of the outstanding shares of the Company(excluding treasury stock of 55,375,000 shares).  The transaction was accounted for as a “reverse merger” and a reverse recapitalization and the issuances of common stock were recorded as a reclassification between paid-in-capital and par value of Common Stock.


On January 15, 2014, the Board of Directors approved to increase authorized common shares from 60,000,000 common shares, par value $0.001 to 1,990,000,000 common shares, par value $0.001 per common shares and to effectuate a forward split of RadTek’s common stock at an exchange ratio of 50 for 1 so that each outstanding common share before the forward split shall represent 50 common shares after the forward split.

 



7



(b) Basis of Presentation and Going Concern Considerations


The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included.  Operating results for the three months ended June 30, 2014 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2014.


For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.


The accompanying financial statements have been presented on the basis that it is a going concern which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs.  The Company’s ability to continue as a going concern is highly dependent upon management’s ability to increase near-term operating cash flows and obtain additional working capital through the issuance of debt and or equity.  If the Company is unable to obtain adequate capital, it could be forced to cease operations.


These consolidated financial statements present the financial condition, and results of operations and cash flows of the operating companies.


The Company’s financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.  The Company has experienced recurring losses over the past years which have resulted in stockholders’ accumulated deficits of approximately $192 thousand and a working capital deficits of approximately $298 thousand at June 30, 2014.  These conditions raise uncertainty about the Company’s ability to continue as a going concern.

 

The Company’s ability to continue as a going concern is contingent upon its ability to secure additional financing, increase sales of its products and attain profitable operations. It is the intent of management to continue to raise additional capital to sustain operations and to pursue acquisitions of operating companies in order to generate future profits for the Company. However, there can be no assurance that the Company will be able to secure such additional funds or obtain such on terms satisfactory to the Company, if at all.

 

The accompanying financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.

 

Note 2 – Investment


The Company invested W30,000,000 (about US$28,000) in KTEX Ltd. in 2012. The Company has ownership of 3% of KTEX. The Company recognized loss on investment of $22,580 in 2013.




8



Note 3 – Intangibles


The Company’s intangible assets are composed of the following as of June 30, 2014 and December 31, 2013:


 

June 30, 2014

December 31, 2013

Patents

$  14,110

$  13,564

Technical rights

118,160

113,581

 

132,270

127,145

Accumulated amortization

(33,283)

(28,842)

Intangible assets, net

$  98,987

$  98,303


Direct costs incurred in obtaining patents and technical rights are capitalized. These patents and rights are subject to amortization as their lives are statutorily limited in South Korea, typically over the period of twenty years. Accordingly, they are being amortized over the statutory lives. Management considered recoverability of the balances of these assets and determined that no adjustment was necessary as of June 30, 2014.


Amortization expenses for the six months and year ended June 30, 2014 and December 31, 2013 were $3,171 and $6,075, respectively.


Note 4 – Short-term Borrowings


Short term borrowings consist of the following as of June 30, 2014 and December 31, 2013:


 

June 30, 2014

December 31, 2013

Note payable to a bank at interest rate of 4.95%.  The line matures in November 2014.

$147,870

$145,648

Total short-term borrowings

$147,870

$145,648


Note 5– Advances from Related Party


The Company, on an as need basis, borrows funds from a shareholder. The borrowings are unsecured and payments are made at the Company’s discretion. The borrowings are non-interest rate.  Total borrowing as of June 30, 2014 and December 31, 2013 were $310,733 and $249,298 respectively.


Note 6 – Loan agreement


On April 1, and May1, 2014, the Company entered loan agreement of $50,000 and $50,000 with related party, respectively. The interest is 2% per annum. As of June 30, 2014, the Company borrowed $65,000 from related party.




9



Note 7 – Common stock


On November 26, 2013, the Company entered into a definitive agreement with RadTek, Co. Ltd.’s shareholders.   Pursuant to the agreement, the Company purchased all of the outstanding securities of the RadTek, Co. Ltd. (1,900,000) in exchange for 95,000,000 common shares of the Company.  


As of December 31, 2013, the Company holds 55,375,000 common shares ($375,053) as treasury stocks recorded as capital adjustment.


On January 15, 2014, the Board of Directors approved to increase authorized common shares from 60,000,000 common shares, par value $0.001 to 1,990,000,000 common shares, par value $0.001 per common shares and to effectuate a forward split of RadTek’s common stock at an exchange ratio of 50 for 1 so that each outstanding common share before the forward split shall represent 50 common shares after the forward split.


On January 14, 2014, the Company issued 20,000,000 common shares to two employees and three consultants valued at the market close and recorded as $435,736 in selling and administrative expenses and $435,736 in consulting fees, respectively, for an aggregate expense of $871,472.


Note 8 – Significant contracts


On October 11, 2013, the Company entered into a supply contract with Joongsun ITC Co. Ltd. The Company is working in order to supply security solution and security server, which is worth W882 million won (US$ 870 thousand). As of June 30, the company received $858,000 as advance from Joongsun ITC and paid $781,000 as advance to several vendors.


On November 28, 2013, the Company entered into a supply contract with Korea Transport Network Express Co. Ltd. The Company is working in order to supply X-ray inspection equipment and total solutions for radiation detection, which are worth W700 million won (US$ 690 thousand). Contract term is 6 month.


On February 13, 2014, the Company had a contract with Korea Procurement Service that is delivering a X-ray Linear Accelerator of Cargo Inspection System (CIS) to Korea Research Institute of Ships and Ocean (KRISO) which runs under authority of Korea Institute of Ocean Science of Technology (KIOST) and funded by Korea Ministry of Maritime Affairs. The total amount of the contract is 945,000 USD. Under the payment term, 80% before shipment and 20% after the delivery, the Company has received 756,000 USD, the 80%, from KIOST on May 23, 2014. The last 20% will be received after the delivery due date which is September 5, 2014.




10



Note 9 – Investment Agreement and Marketing Agreement


On April 22, 2014, the Company entered into an investment agreement and a corresponding registration rights agreement with Dutchess Opportunity Fund, II, LP, a Delaware Limited Partnership.  Under the terms of the investment agreement, Dutchess will invest up to $20,000,000 to purchase the Company’s common shares.  From time to time, the Company may deliver a put notice to Dutchess which states the dollar amount of shares they wish to sell.  This amount shall be equal to up to either 1) 300% of the average daily US market value of the common stock for three trading days prior to the date of the put notice, or 2) $300,000.  


Once a put notice has been delivered to Dutchess, Dutchess will purchase the shares at a price equal to 95% of the lowest daily volume weighted average price of the common stock for the five consecutive trading days following delivery of the put notice.  The closing date for the put notice is at the end of that five day period.  If the Company has not issued the shares at the end of that period, they agree to pay a cumulative late fee for each trading day beyond the closing date.


Dutchess cannot purchase more than 4.99% of the total common shares outstanding as of the closing date.


Dutchess is not obligated to purchase any shares unless 1) a registration statement has been declared effective and remains effective and available for the resale of all registerable securities at all times until the closing of each subject put notice; 2) the common stock is listed on a principal trading market and is not suspended from trading; 3) the Company has not breached the terms of the investment agreement or the registration agreement; 4) no injunction has been issued prohibiting the purchase or issuance of the securities; and 5) the issuance of shares will not violate any shareholder approval requirements of the principal trading markets.


The investment agreement terminates when Dutchess has purchased an aggregate of $20,000,000 of the Company’s common stock pursuant to the agreement, upon written notice of the registrant to Dutchess, or on April 22, 2017.


Under the terms of the registration rights agreement, the Company shall register up to 40,000,000 common shares for resale.  No other securities shall be registered under this agreement without the written approval of Dutchess.


Note 10 – Subsequent Event


The Company follows the guidance in ASC Topic 855 “Subsequent Events” for the disclosure of subsequent events. The Company evaluated subsequent events through the date of the financial statements were issued.


On July 2, 2014, the Company entered loan agreement of $60,000 with related party.




11



Item 2.  Management’s Discussions and Analysis of Financial Condition and Results of Operations.

 

Forward-looking Statements

 

Statements made in this Quarterly Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and our business, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words “may,” “would,” “could,” “should,” “expects,” “projects,” “anticipates,” “believes,” “estimates,” “plans,” “intends,” “targets” or similar expressions.

 

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters.

 

Accordingly, results actually achieved may differ materially from expected results in these statements. Forward-looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements.

 

Plan of Operation

 

Our plan of operation for the next 12 months is to: (i) Expand our customer base in industries in which we may have an interest, to include X-Ray technology and construction consultation services related to x-ray technology facilities; (ii) Continue reconfiguring our business plans for engaging in the business of our selected industry; and (iii) to expand our contract capacity while completing our expansion of operations through funding and/or our announced acquisition of a going concern engaged in the industry selected.

 

Other than standard operations associated with business operations mentioned in subsequent events, during the next 12 months, one of our only foreseeable cash requirements, which may be advanced by our management or principal stockholders as loans to us, will relate to maintaining our good standing or the payment of expenses associated with legal, accounting and other fees related to our compliance with the Exchange Act requirements of being a reporting issuer and reviewing or investigating any potential acquisition or business combination candidate. With our business and industry in which our operations have commenced, and other potential acquisitions have not been identified and any prospective acquisition or business combination candidate as of the date of this Quarterly Report, it is impossible to predict the amount of any such costs or required advances. Any such loan will be on terms no less favorable to us than would have been made available to us from a commercial lender in an arm's length transaction.

 

Results of Operations

 

For the three months ended June 30, 2014, we earned net revenues of $54,534.  Our cost of sales was $41,389, resulting in a gross profit of $13,145.  We had depreciation and amortization expenses of $1,615 and selling and administrative expenses of $77,992.  We had interest expense of $1,384, a gain on foreign exchange transactions of $24,601, and other loss of $2,603.  As a result, we had net loss of $45,848 for the three months ended June 30, 2014.




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Comparatively, for the three months ended June 30, 2013, we earned net revenues of $580,879.  Our cost of sales was $333,857, resulting in a gross profit of $247,022.  We had depreciation and amortization expenses of $2,033 and selling and administrative expenses of $172,544.  We paid interest expenses of $1,888.  We had a loss on foreign exchange transactions of $507.  We have other income of $1,815.  As a result, we had net income of $71,865 for the three months ended June 30, 2013.


The increase in net loss of $117,713 between the three months ended June 30, 2014 compared to the same period ended June 30, 2013 was the result of decreased operations.  We were unable to attract a lot of new customers, and as a result our gross profit decreased by 233,877, or 94.7%.  We were able to reduce our selling and administrative expenses during this time, but no amount of cost cutting will make up for the 94.7% reduction in gross profit for the three months ended June 30, 2014.


For the six months ended June 30, 2014, we earned net revenues of $241,366.  Our cost of sales was $166,017, resulting in gross profit of $75,349.  We paid depreciation and amortization expenses of $3,171, consulting fees of $435,736, and selling and administrative expenses of $594,291.  We paid interest expense of $3,341.  We had a gain on foreign exchange transactions of $15,575 and other loss of $4,394.  As a result, we had net loss of $950,009 for the six months ended June 30, 2014.


Comparatively, for the six months ended June 30, 2013, we earned net revenues of $717,799.  Our cost of sales was $323,060, resulting in gross profit of $394,739.  We paid depreciation and amortization expenses of $4,066 and selling and administrative expenses of $237,881.  We paid interest expense of $3,981.  We had a gain on foreign exchange transaction of $249 and other income of $2,724.  As a result, we had net income of $151,784 for the six months ended June 30, 2013.


The increase in net loss of $1,101,793 between the six months ended June 30, 2014 compared to the same period ended June 30, 2013 was the result of decreased operations.  We were unable to attract many new customers, and as a result our gross profit decreased by $319,390, or 80.9%.  We had increased our total operating expenses by $791,251 due to the additional costs incurred in meeting all of our reporting requirements and to pursue our registration statement.


Liquidity and Capital Resources


For the six months ended June 30, 2014, we had net loss of $950,009.  We had the following adjustments to reconcile net loss to net cash used in the operating activities: $3,171 for depreciation and amortization, $2,994 for severance benefits, and $871,472 for stock based compensation.  We had the following changes in assets and liabilities: increases of $48,653 in accounts receivable, $787,773 in the prepaid expenses and other assets, $126,325 in the accounts payable and other payables, $1,350,329 in the advance receipts on contracts, and $13,204 in the accrued liabilities and other liabilities.  As a result, we had net cash provided by operating activities of $581,060 for the six months ended June 30, 2014.


For the six months ended June 30, 2013, we had net income of $151,784.  We had the following changes to reconcile net income to net cash used in the operating activities: $4,066 for depreciation and amortization and $21,710 for severance benefits.  We had the following changes in assets and liabilities: increases of $101,799 in the accounts receivable, $13,073 in the inventory, and $52,320 in the accounts payable and other payable and decreases in the $391,411 in the advance receipts on contracts, $11,343 in the accrued liabilities and other liabilities and  $7,409 in the prepaid expenses and other assets. As a result, we had net cash used in operating activities of $280,337 for the six months ended June 30, 2013.


For the six months ended June 30, 2014, we did not pursue any investing activities.


For the six months ended June 30, 2013, we spent $15,000 on goodwill activities.  As a result, we had net cash used in investing activities of $15,000 for the six months ended June 30, 2013.



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For the six months ended June 30, 2014, we received $65,000 from a loan from a related party and $61,435 from advances from related parties.  As a result, we had net cash provided by financing activities of $126,435 for the six months ended June 30, 2014.


For the six months ended June 30, 2013, we repaid $54,538 for short-term borrowings.  We received $260,550 from advances from related parties.  As a result, we had net cash provided by financing activities of $206,012 for the six months ended June 30, 2013.


We had cash or cash equivalents of $780,406 and $106,908 on hand at June 30, 2014 and at December 31, 2013, respectively. If additional funds are required in connection with our present planned business operations or for Exchange Act filings or other expenses, such funds may be advanced by management or principal stockholders.


Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Not applicable for a smaller reporting company.

 

Item 4. Controls and Procedures.


During the three months ended June 30, 2014, there were no changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of June 30, 2014.  Based on this evaluation, our chief executive officer and principal financial officers were not able to conclude that the Company’s disclosure controls and procedures are effective to ensure that information required to be included in the Company’s periodic Securities and Exchange Commission filings is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms.  Therefore, under Section 404 of the Sarbannes-Oxley Act of 2002, the Company must conclude that these controls and procedures are not effective.


Off-Balance Sheet Arrangements; Commitments and Contractual Obligations


As of June 30, 2014, we did not have any off-balance sheet arrangements and did not have any commitments or contractual obligations.




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PART II - OTHER INFORMATION


Item 1.   Legal Proceedings

None


Item 1A.  Risk Factors  

Not applicable for smaller reporting companies


Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

None


Item 3.   Defaults Upon Senior Securities.

None


Item 4.   Mine Safety Disclosures

Not Applicable


Item 5.   Other Information

None


Item 6.   Exhibits


Exhibit 31* - Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Exhibit 32* - Certifications pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS**   XBRL Instance Document

101.SCH**   XBRL Taxonomy Extension Schema Document

101.CAL**   XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**.  XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**   XBRL Taxonomy Extension Label Linkbase Document

101.PRE**   XBRL Taxonomy Extension Presentation Linkbase Document

*  Filed herewith

**XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.




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SIGNATURES

 

RADTEK, INC.

 

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 thereunto duly authorized

 

 Date: August 19, 2014

RadTek, Inc.

 

By

/s/ KwangHyun Kim

 

 

Name: KwangHyun Kim
Title: President, Chief Executive Officer

 

 Date: August 19, 2014

RadTek, Inc.

 

By

/s/ JaeChan Kim

 

 

Name: JaeChan Kim
Title: Treasurer (Chief Financial Officer)




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