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EXCEL - IDEA: XBRL DOCUMENT - RadTek, Inc | Financial_Report.xls |
EX-32 - EXHIBIT 32 - RadTek, Inc | radtek10q3q14ex32.htm |
EX-31 - EXHIBIT 31 - RadTek, Inc | radtek10q3q14ex31.htm |
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 September 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) |
|
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| 9900 Corporate Campus Drive, Ste 3000, c/o PEG |
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| Louisville, Kentucky 40223 |
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| (Address of Principal Executive Offices) |
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| (502) 657-6005 |
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| (Registrants 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 Registrants classes of common stock, as of the latest practicable date: December 5, 2014 121,336,800 shares of common stock.
2
RADTEK, INC.
FORM 10-Q
TABLE OF CONTENTS
PART 1 FINANCIAL INFORMATION
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| 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
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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 |
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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 CO., LTD.
Condensed Consolidated Balance Sheets
As of September 30, 2014 and December 31, 2013
|
| September 30, 2014 |
| December 31, 2013 |
Assets |
| (Unaudited) |
| (Audited) |
Current assets: |
|
|
|
|
Cash and cash equivalents | $ | 34,281 | $ | 106,908 |
Accounts receivable, net |
| 95,054 |
| 52,748 |
Prepaid expenses and other assets |
| 909,580 |
| 560,462 |
Total Current assets |
| 1,038,915 |
| 720,118 |
|
|
|
| . |
Investment |
| 5,020 |
| 4,998 |
Property and equipment |
| - |
| - |
Intangible assets |
| 93,994 |
| 98,303 |
Security deposits |
| 28,555 |
| 28,428 |
|
| 127,569 |
| 131,729 |
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|
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Total assets | $ | 1,166,484 | $ | 851,847 |
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Liabilities and equity |
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Current liabilities: |
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Accounts and other payables | $ | 304,193 | $ | 157,556 |
Short-term borrowings |
| 140,577 |
| 145,648 |
Advances from related party |
| 434,105 |
| 249,298 |
Advance payments on contracts |
| 776,722 |
| 263,561 |
Loan from related party |
| 160,000 |
| - |
Other current liabilities |
| 3,717 |
| 93,032 |
|
| 1,819,314 |
| 909,095 |
Non-current liabilities: |
|
|
|
|
Accrued severance benefits |
| 31,169 |
| 25,165 |
|
| 31,169 |
| 25,165 |
Total liabilities |
| 1,850,483 |
| 934,260 |
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Equity: |
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Preferred Stock; |
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Authorized: 10,000,000 shares, $0.001 par value |
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Issued and outstanding shares: 0 |
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Common stock |
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Authorized: 1,990,000,000 shares, $0.001 par value |
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Issued: 176,711,800 and 156,711,800 shares |
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Outstanding: 121,336,800 and 101,336,800 shares |
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as of September 30, 2014 and December 31, 2013, respectively | 176,712 |
| 156,712 | |
Additional Paid-in capital |
| 1,638,511 |
| 778,511 |
Treasury Stock (55,375,000 shares) |
| (375,053) |
| (375,053) |
Accumulated other comprehensive loss |
| (36,971) |
| (50,977) |
Accumulated deficits |
| (2,087,198) |
| (591,606) |
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Total equity | $ | (683,999) | $ | (82,413) |
Total liabilities and equity | $ | 1,166,484 | $ | 851,847 |
The accompanying notes are an integral part of these financial statements.
4
RADTEK CO., LTD.
Condensed Consolidated Statement of Operations
For the Three and Nine Months Ended September 30, 2014 and 2013
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| Three Months Ended | Nine Months Ended | ||||||
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| September 30, 2014 |
| September 30, 2013 |
| September 30, 2014 |
| September 30, 2013 |
Net revenues | $ | 866,373 | $ | 1,287,770 | $ | 1,107,739 | $ | 2,013,300 | |
|
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Cost of sales |
| 762,037 |
| 945,559 |
| 928,054 |
| 1,273,576 | |
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Gross profit | 104,336 |
| 342,211 |
| 179,685 |
| 739,724 | ||
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Operating expenses : |
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Depreciation and Amortization | 1,618 |
| 2,021 |
| 4,789 |
| 6,088 | ||
Consulting fees | - |
| - |
| 435,736 |
|
| ||
Selling and administrative expenses | 125,889 |
| 85,303 |
| 720,180 |
| 325,002 | ||
Bad debt |
| 524,226 |
| - |
| 524,226 |
| - | |
Total Operating expenses |
| 651,733 |
| 87,324 |
| 1,684,931 |
| 331,090 | |
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Gain(Loss) from operations |
| (547,397) |
| 254,887 |
| (1,505,246) |
| 408,634 | |
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Other income(expenses) : |
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| ||||
Interest expense, net | (1,592) |
| (2,017) |
| (4,933) |
| (5,995) | ||
Foreign exchange transaction gain (loss) | (989) |
| (23,055) |
| 14,586 |
| 1,282 | ||
Other income, net |
| 4,395 |
| 3,067 |
| 1 |
| 5,807 | |
|
|
| 1,814 |
| (22,005) |
| 9,654 |
| 1,094 |
Income for the year before tax | (545,583) |
| 232,882 |
| (1,495,592) |
| 409,728 | ||
Provision for income tax | - |
| - |
| - |
| - | ||
Net income |
| (545,583) |
| 232,882 |
| (1,495,592) |
| 409,728 | |
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Other Comprehensive income (loss) |
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Foreign currency translation adjustments | 53,554 |
| (6,351) |
| 14,006 |
| 96,169 | ||
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Comprehensive income (loss) | $ | (492,029) | $ | 226,531 | $ | (1,481,586) | $ | 505,897 | |
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Earnings per share: |
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- | Basic and diluted earnings per share | $ | (0.00) | $ | 0.00 | $ | (0.01) | $ | 0.01 |
- | Weighted Average Outstanding Shares |
| 176,711,800 |
| 65,000,000 |
| 156,929,093 |
| 65,000,000 |
The accompanying notes are an integral part of these financial statements.
5
RADTEK CO., LTD.
Condensed Statement of Cash Flows (Unaudited)
For the Nine Months Ended September 30, 2014 and 2013
| September 30, 2014 | September 30, 2014 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net Gain(loss) | $ | (1,495,592) | $ | 409,728 |
Adjustments to reconcile net loss to net cash used in operating activities: |
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- Depreciation and amortization |
| 4,789 |
| 6,088 |
- Severance benefits |
| 6,004 |
| 23,933 |
- Stock based compensation |
| 871,472 |
| - |
- Bad debt |
| 524,226 |
| - |
Change in assets and liabilities, net of the effect of acquisitions: |
|
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|
- Accounts receivable |
| (42,306) |
| (36,107) |
- Inventory |
| - |
| (14,881) |
- Prepaid expenses and other assets |
| (873,344) |
| (22,639) |
- Accounts payable and other payable |
| 146,637 |
| 61,982 |
- Advance payments on contracts |
| 513,161 |
| (385,933) |
- Accrued liabilities and other liabilities |
| (89,315) |
| 32,485 |
Net cash provided by (used in) operating activities |
| (434,268) |
| 74,656 |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Goodwill |
| - |
| (15,000) |
Investment in affiliate |
| - |
| (28,009) |
Net cash used in financing activities |
| - |
| (43,009) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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- Proceeds from short-term borrowings |
| - |
| (44,961) |
- Loan from related party |
| 160,000 |
| - |
- Advances from related parties |
| 184,807 |
| 232,223 |
Net cash provided by financing activities |
| 344,807 |
| 187,262 |
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Net decrease in cash and cash equivalent |
| (89,461) |
| 218,909 |
Effect of exchange rate changes |
| 16,834 |
| 94,427 |
Cash and cash equivalent at beginning of year |
| 106,908 |
| 8,339 |
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Cash and cash equivalent at end of year | $ | 34,281 | $ | 321,675 |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
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Cash paid for interest | $ | 4,933 | $ | 3,981 |
Cash paid income tax | $ | - | $ | - |
The accompanying notes are an integral part of these financial statements.
6
RadTek, Inc.
Consolidated Notes to the Financial Statements
September 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 1,900,000 common shares 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 1,900,000 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 1,107,500 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.
7
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 RadTeks 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.
(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 September 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 Companys 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 Companys ability to continue as a going concern is highly dependent upon managements 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 Companys 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 $2,087 thousand and a working capital deficit of approximately $780 thousand at September 30, 2014. These conditions raise uncertainty about the Companys ability to continue as a going concern.
The Companys ability to continue as a going concern is contingent upon its ability to secure additional financing and increase sales of its products. It is the intent of management to continue to raise additional capital to sustain operations and to increase sales 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 increase sales, 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.
8
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.
Note 3 Intangibles
The Companys intangible assets are composed of the following as of September 30, 2014 and December 31, 2013:
| September 30, 2014 | December 31, 2013 |
Patents | $ 13,625 | $ 13,564 |
Technical rights | 114,088 | 113,581 |
| 127,713 | 127,145 |
Accumulated amortization | (33,719) | (28,842) |
Intangible assets, net | $ 93,994 | $ 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 March 31, 2014.
Amortization expenses for the nine months and year ended September 30, 2014 and December 31, 2013 were $4,309 and $6,075, respectively.
Note 4 Short-term Borrowings
Short term borrowings consist of the following as of September 30, 2014 and December 31, 2013:
| September 30, 2014 | December 31, 2013 |
Note payable to a bank at interest rate of 4.95%. The line matures in November 2014. | $140,577 | $145,648 |
Total short-term borrowings | $140,577 | $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 Companys discretion. The borrowings are non-interest rate. Total borrowing as of September 30, 2014 and December 31, 2013 were $434,105 and $249,298 respectively.
9
Note 6 Loan agreement
On April 1, May1, and July 2, 2014, the Company entered loan agreement of $50,000, $50,000 and $60,000 with related party, respectively. The interest is 2% per annum and repayment date is March 24, 2015. As of September 30, 2014, the Company borrowed $160,000 from related party.
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 1,900,000 common shares of the Company.
As of December 31, 2013, the Company holds 1,107,500 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 RadTeks 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 $871,472.
Note 8 Significant contracts
On October 11, 2013, the Company entered into a supply contract with Joongsun ITC Co. Ltd. The Company is working in order to supply security solution and security server, which is worth W882 million won (US$ 840 thousand). The delivery of Joongsun ITC contract was completed as of July 30, 2014.
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$ 656 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. The delivery due date was postponed as request from KRISO. It was delivered, and the final 20% of the whole payment was billed to KRISO as of November 10, 2014. Final 20% was received by RadTek Inc. on 17th of November, 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 Companys 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 Companys 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.
11
Item 2. Managements 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 September 30, 2014, we earned net revenues of $866,373. Our cost of sales was $762,037, resulting in a gross profit of $104,336. We had depreciation and amortization expenses of $1,618, selling and administrative expenses of $125,889, and bad debt expenses of $524,226. We had net interest expense of $1,592, a loss on foreign exchange transactions of $989, and other income of $4,395. As a result, we had net loss of $545,583 for the three months ended September 30, 2014. We had a foreign currency translation adjustment of $53,554, and as a result had a comprehensive loss of $492,029.
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Comparatively, for the three months ended September 30, 2013, we earned net revenues of $1,287,770. Our cost of sales was $945,559, resulting in a gross profit of $342,211. We had depreciation and amortization expenses of $2,021 and selling and administrative expenses of $85,303. We paid interest expenses of $2,017. We had a loss on foreign exchange transactions of $23,055. We have other income of $3,067. As a result, we had net income of $232,882 for the three months ended September 30, 2013. We had a decrease of $6,351 as a result of the foreign currency translation adjustment, resulting in comprehensive income of $226,531.
The increase in net loss of $778,465 between the three months ended September 30, 2014 compared to the same period ended September 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 237,875, or 69.5%. We experienced a bad debt expense of $524,226, and as a result, there was a $802,284 difference between the loss from operations for the three months ended September 30, 2014 compared to the three months ended September 30, 2013.
For the nine months ended September 30, 2014, we earned net revenues of $1,107,739. Our cost of sales was $928,054, resulting in gross profit of $179,685. We paid depreciation and amortization expenses of $4,789, consulting fees of $435,736, selling and administrative expenses of $720,180, and bad debt expense of $524,226. We paid interest expense of $4,933. We had a gain on foreign exchange transactions of $14,586 and other income of $1. As a result, we had net loss of $1,495,592 for the nine months ended September 30, 2014. We had an increase of $14,006 as a result of foreign currency translation adjustments, resulting in a comprehensive loss of $1,481,586.
Comparatively, for the nine months ended September 30, 2013, we earned net revenues of $2,013,300. Our cost of sales was $1,273,576, resulting in gross profit of $739,724. We paid depreciation and amortization expenses of $6,088 and selling and administrative expenses of $325,002. We paid interest expense of $5,995. We had a gain on foreign exchange transaction of $1,282 and other income of $5,807. As a result, we had net income of $409,728 for the nine months ended September 30, 2013. We had an increase of $96,169 due to foreign currency translation adjustments, resulting in a comprehensive income of $505,897.
The increase in net loss of $1,905,320 between the nine months ended September 30, 2014 compared to the same period ended September 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 $560,039, or 75.7%. We had increased our total operating expenses by $1,353,841 due to the bad debt of $524,226 and the additional costs incurred in meeting all of our reporting requirements and to pursue our registration statement.
Liquidity and Capital Resources
For the nine months ended September 30, 2014, we had net loss of $1,495,592. We had the following adjustments to reconcile net loss to net cash used in the operating activities: $4,789 for depreciation and amortization, $6,004 for severance benefits, $871,472 for stock based compensation, and bad debt of $524,226. We had the following changes in assets and liabilities: increases of $42,306 in accounts receivable, $873,344 in the prepaid expenses and other assets, $146,637 in accounts payable and other payables and $513,161 in the advance receipts on contracts. We had increases of $89,315 in accrued liabilities and other liabilities. As a result, we had net cash used in operating activities of $434,268 for the nine months ended September 30, 2014.
For the nine months ended September 30, 2013, we had net income of $409,728. We had the following changes to reconcile net income to net cash used in the operating activities: $6,088 for depreciation and amortization and $23,933 for severance benefits. We had the following changes in assets and liabilities: increases of $36,107 in accounts receivable, $14,881 in inventory, $22,639 in prepaid expenses and other assets, accounts payable and other payable and $32,485 in accrued liabilities and other liabilities and increases in $385,933 in advance payments on contracts. As a result, we had net cash used in operating activities of $74,656 for the nine months ended September 30, 2013.
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For the nine months ended September 30, 2014, we did not pursue any investing activities.
For the nine months ended September 30, 2013, we spent $15,000 on goodwill activities and $28,009 on an investment in an affiliate. As a result, we had net cash used in investing activities of $43,009 for the nine months ended September 30, 2013.
For the nine months ended September 30, 2014, we received $160,000 from a loan from a related party and $184,807 from advances from related parties. As a result, we had net cash provided by financing activities of $344,807 for the nine months ended September 30, 2014.
For the nine months ended September 30, 2013, we repaid $44,961 for short-term borrowings. We received $232,223 from advances from related parties. As a result, we had net cash provided by financing activities of $187,262 for the nine months ended September 30, 2013.
We had cash or cash equivalents of $34,281 and $106,908 on hand at September 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 September 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 September 30, 2014. Based on this evaluation, our chief executive officer and principal financial officers were not able to conclude that the Companys disclosure controls and procedures are effective to ensure that information required to be included in the Companys 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 September 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: December 5, 2014 | RadTek, Inc. | |
| By | /s/ KwangHyun Kim |
|
| Name: KwangHyun Kim |
Date: December 5, 2014 | RadTek, Inc. | |
| By | /s/ JaeChan Kim |
|
| Name: JaeChan Kim |
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