SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended 0-28315
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September 30, 2004 Commission File No.
AZONIC CORPORATION
----------------------------------------------------
(Exact name of Registrant as specified in its charter)
NEVADA 84-1517404
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(State or other jurisdiction of (I.R.S. Empl. Ident. No.)
incorporation or organization)
7 Dey Street, Suite 900, New York, New York 10007
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(Address of Principal Executive Offices) (Zip Code)
(212) 962-4400
--------------
(Registrant's Telephone Number, including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
at least the past 90 days.
Yes X No
---- -----
The number of shares outstanding of each of the Registrant's classes of common
equity, as of September 30, 2004 are as follows:
Class of Securities Shares Outstanding
------------------------------ ------------------
Common Stock, $.001 par value 24,000,000
INDEX
Page of
Report
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PART I. FINANCIAL STATEMENTS
Item 1. Financial Statements.
Balance Sheets:
As of September 30, 2004 (Unaudited) and March 31, 2004 ....... F-1
Statements of Operations (Unaudited):
For the three and six months ended September 30, 2004, and year
ended March 31, 2004 and Cumulative from inception (May 1, 1996)
through September 30, 2004..................................... F-2-F3
Statements of Cash Flows (Unaudited):
For the six months ended September 30, 2004, year ended
March 31, 2004 and Cumulative from inception (May 1, 1996)
through September 30, 2004..................................... F-4
Statement of Changes in Stockholders' Equity (Unaudited):
From inception (May 1, 1996) through September 30, 2004........ F-5
Notes to Financial Statements (Unaudited) ..................... F-6
Item 2. Management's Discussion and Analysis or Plan of Operation...... 5
Item 3. Controls and Procedures........................................ 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.............................................. 8
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.... 7
Item 3. Defaults Upon Senior Securities................................ 7
Item 4. Submission of Matters to a Vote of Security Holders............ 7
Item 5. Other Information.............................................. 8
Item 6. Exhibits ...................................................... 8
Signatures..................................................... 9
2
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
AZONIC CORPORATION
(A Development Stage Company)
BALANCE SHEETS
ASSETS
(Unaudited) (Audited)
September 30 Mar. 31
2004 2004
--------- --------
Current Assets:
Cash $ -0- $7,500
Plant, Property and Equipment: -0- -0-
Other Assets -0- -0-
------ ------
TOTAL ASSETS $ -0- $7,500
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $25,253 $ 1,284
Notes payable - related party 39,639 25,102
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64,892 26,386
Stockholders' Equity:
Preferred Stock: 5,000,000 shares
Authorized; $.001 par value; -0- -0-
none issued and outstanding
Common Stock: 50,000,000 shares
Authorized; $.001 par value;
24,000,000 shares outstanding 24,000 24,000
Paid in Capital (deficit) 6,800 (23,700)
Deficit accumulated during
The development stage (95,692) (19,186)
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Total Stockholders' Equity (64,892) (18,886)
------ ------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ -0- $7,500
====== ======
The accompanying notes are an integral part of the financial statements.
F-1
AZONIC CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Periods as Noted
(Unaudited) (Unaudited)
3 Months 3 Months
Ended Ended
9-30-04 9-30-03
----------- -----------
Revenues: $ -0- $ -0-
----------- -----------
Costs and Expenses:
Amortization -0- -0-
General and Administrative 57,752 1,500
----------- ------------
Net (Loss) from Operations (57,752) (1,500)
Other Income (Expense) -0- -0-
----------- ------------
Net (Loss) for the Period $(57,752) $ (1,500)
=========== ============
(Loss) per common share $ (.002) $ *
=========== ============
Weighted Average
Shares Outstanding 24,000,000 24,000,000
=========== =============
* Less than ($.01) per share.
The accompanying notes are an integral part of the financial statements.
F-2
AZONIC CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the Periods as Noted
(Unaudited) (Unaudited)
6 Months 6 Months May 1, 1996
Ended Ended (Inception) to
9-30-04 9-30-03 September 30, 2004
----------- ----------- --------------
Revenues: $ -0- $ -0- $ -0-
----------- ----------- --------------
Costs and Expenses:
Amortization -0- -0- 50
General and Administrative 76,506 1,500 95,642
----------- ------------ --------------
Net (Loss) from Operations (76,506) (1,500) (95,692)
Other Income (Expense) -0- -0- -0-
----------- ------------ --------------
Net (Loss) for the Period $(76,506) $ (1,500) $(95,692)
=========== ============ ==============
(Loss) per common share $ (.003) $ * $ (.004)
=========== ============ ==============
Weighted Average
Shares Outstanding 24,000,000 24,000,000 16,000,000
=========== ============= =============
* Less than ($.01) per share.
The accompanying notes are an integral part of the financial statements.
F-3
AZONIC CORPORATION
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the Periods as Noted
(Unaudited) (Unaudited)
6 Months 6 Months May 1, 1996
Ended Ended (Inception) to
9-30-04 9-30-03 September 30,
2004
----------- ----------- --------------
Cash Flows from Operating Activities
Net loss $(76,506) $(1,500) $(95,692)
Adjustments to reconcile net loss
To net cash provided by operating activities
Amortization -0- -0- 50
Noncash services -0- -0- 250
Increase in
accounts payable 23,969 25,253
----------- ----------- --------------
Net cash used by operating
Activities (52,537) (1,500) (70,139)
Cash Flows from
Investing Activities -0- -0- -0-
Cash Flows from
Financing Activities
Shareholder contribution -0- 1,500 -0-
Increase in notes payable 45,637 70,139
----------- ----------- --------------
Net cash provided by
Financing activities 45,637 -0- 57,654
Net Increase (Decrease) (7,500) -0- -0-
Beginning Cash Balance 7,500 -0- -0-
----------- ----------- --------------
Cash Balance - End of Period $ -0- $ -0- $ -0-
=========== =========== ==============
Supplemental disclosure of noncash investing and financing activities:
Note payable contributed
To capital $30,500 $ -0- $30,500
=========== =========== ==============
Common Stock issued
for Organizational
costs & Services $ -0- $ -0- $ 300
=========== =========== ==============
The accompanying notes are an integral part of the financial statements.
F-4
AZONIC CORPORATION
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY For the
Period May 1, 1996 (Inception)
to September 30, 2004
Common Stock Deficit
---------------------------------- Accumulated
Paid-in from
Shares Amount (Deficit) Inception
----------- -------- --------- -----------
Balances May 1, 1996 -0- $ -0- $ -0- $ -0-
Common stock issued
For services & costs 4,000,000 4,000 (3,950)
Net Loss 3-31-97 -0- -0- -0- (9)
---------- -------- --------- ---------
Balance 3-31-97 4,000,000 4,000 (3,950) (9)
Net loss 3-31-98 -0- -0- -0- (10)
---------- -------- --------- ---------
Balance 3-31-98 4,000,000 4,000 (3,950) (19)
Net loss 3-31-99 -0- -0- -0- (31)
---------- -------- --------- ---------
Balance 3-31-99 4,000,000 4,000 (3,950) (50)
Common stock issued
For services 8-10-99 20,000,000 20,000 (19,750) -0-
Net loss 3-31-00 -0- -0- -0- (250)
---------- -------- --------- ----------
Balance 3-31-00 24,000,000 24,000 (23,700) (300)
Net Income 3-31-01 -0- -0- -0- -0-
---------- -------- --------- ----------
Balance 3-31-01 24,000,000 24,000 (23,700) (300)
Net Income 3-31-02 -0- -0- -0- -0-
---------- -------- --------- ----------
Balance 3-31-02 24,000,000 24,000 (23,700) (300)
Net Income 3-31-03 -0- -0- -0- -0-
---------- -------- --------- ----------
Balance 3-31-03 24,000,000 24,000 (23,700) (300)
Net Income 3-31-04 -0- -0- -0- (18,886)
---------- -------- --------- ----------
Balance 3-31-04 24,000,000 24,000 (23,700) (19,186)
Note payable contributed
To capital 30,500
Net income 9-30-04 -0- -0- -0- (76,506)
---------- -------- --------- ----------
Balance 9-30-04 24,000,000 $24,000 $6,800 (95,692)
========== ======== ========= ==========
The accompanying notes are an integral part of the financial statements.
F-5
AZONIC CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS (Unaudited)
September 30, 2004
NOTE 1: THE COMPANY
-------------------
Organization and Nature of Operations- The financial statements presented are
those of Azonic Corporation. The Company is a development stage company with no
operations. The Company is developing a business plan pursuing opportunities in
the telecommunications area. Its principal executive offices are located at 7
Dey Street, New York, New York 10005. Azonic was initially incorporated in the
state of Colorado on May 1, 1996 as Grand Canyon Ventures Two, Incorporated. The
Company changed its name to Azonic Engineering Corporation on September 23,
1998. On November 12, 1999, it was redomiciled to the State of Nevada by merging
into its wholly-owned subsidiary, Azonic Corporation, which now is the name of
the Company. As a result of the merger, the Company has changed the par value of
its common stock to $.001. The accompanying financial statements have been
restated to reflect this change.
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES
----------------------------------------
Condensed Financial Statements - The financial statements dated 9-30-04 included
herein have been prepared by Azonic Corporation (the "Company") without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
the financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted as allowed by such rules
and regulations. The Company believes that the disclosures are adequate to make
the information presented not misleading. While management believes the
procedures followed in preparing these financial statements are reasonable, the
accuracy of the amounts are, in some respects, dependent upon the facts that
will exist, and procedures that will be accomplished by the Company in the
future.
Use of Estimates - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual amounts could differ from those estimates.
F-6
NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (Continued)
---------------------------------------------------
Income Taxes - The Company provides for income taxes using the asset and
liability method as prescribed by Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes. Under the asset and liability method,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amount of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date.
Income Taxes - As of September 30, 2004 the Company had a net operating loss
carryforward of $69,000, which expires in varying amounts from 2012 to 2015.
Generally, these operating losses are available to offset future federal and
state taxable income.
Loss per Common Share - Loss per common share is computed using the weighted
average number of common shares outstanding during each period.
Statement of Cash Flows - For purposes of the statement of cash flows, the
Company considers all highly liquid instruments with an original maturity of
three months or less to be cash equivalents.
Comprehensive Income - The Company adopted Statement of Financial Accounting
Standards (SFAS) No. 130 Reporting Comprehensive Income, effective April 1,
1998. SFAS No. 130 establishes standards for reporting comprehensive income and
its components (revenues, expenses, gains and losses). Components of
comprehensive income are net income and all other non-owner changes in equity.
SFAS No. 130 requires an enterprise to (a) classify items of other comprehensive
income by their nature in a financial statement, and (b) display the accumulated
balance of other comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of a statement of financial
position. The Company has no items of comprehensive income at September 30,
2004.
NOTE 3: RELATED PARTY TRANSACTIONS
----------------------------------
The Company's corporate offices are located in the offices of is principal
stockholder, Infinity Capital Group, Inc. (hereinafter "Infinity") and that of
its former President, CEO and Chairman of the Board, Greg Laborde, on a rent-
ree basis. Furthermore, all legal and accounting costs with the exception of the
work prepared by the independent auditors were paid by Infinity and legal
services are provided by McCormick, P.C. of New York, New York, a corporate
entity which provides such services to Infinity Capital Group, Inc.
F-7
NOTE 4: STOCKHOLDERS' EQUITY
----------------------------
Capital Structure - The Company was originally incorporated under Colorado law
on May 1, 1996, under the name of Grand Canyon Ventures Two, Incorporated. On
September 23, 1998, the Company amended its Articles of Incorporation and
changed its name to Azonic Engineering, Incorporated. On September 17, 1999,
Azonic Corporation was formed in Nevada. On November 12, 1999 Azonic
Engineering, Incorporated was merged into Azonic Corporation. The surviving
capital structure now consists of 55 million shares of $.001 par value stock, of
which 50 million shares are designated as common stock and 5 million shares are
designated as preferred stock. Stockholders' equity has been restated from
inception to conform to the current capital structure.
Preferred Stock - No shares of the Company's preferred stock have been issued as
of September 30, 2004. Dividends, voting rights and other terms, rights and
preferences have not been designated. The Company's board of directors may
establish these provisions from time to time.
Common Stock - 1,000,000 shares of common stock have been issued at $0.00005 in
exchange for services performed and costs advanced to organize the Company in
May 1996.
On August 10, 1999, the board of directors authorized the issuance of 5,000,000
shares of common stock at $0.00005 per share to the Company's president in
exchange for services valued at $250.
F-8
RECENT DEVELOPMENTS
Strategic Partnership with Wireless Age Communications, Inc.
On August 30, 2004 the Company announced that Wireless Age Communications, Inc.
had entered into strategic partnership with Azonic Corporation to develop and
market a disposable cellular phone.
Under the terms of this agreement, Wireless Age agreed to acquire 4,460,000
Azonic Corporation common shares from Infinity Capital Group, Inc., for an
undisclosed amount. In addition, Azonic Corporation entered into a 2 year
management services contracts for the services of certain officers of Wireless
Age to provide management services to Azonic Corporation. Assets Acquired from
Filippo Guani Revocable Trust On October 13, 2004 the Company announced that it
had purchased certain assets owned by the Filippo Guani Revocable Trust (the
"Trust"). In connection with the closing, the Company issued 3,000,000 shares of
its common stock to the Trust. In addition, if, on or before June 1, 2005,
Azonic receives the assets that it did not receive at the closing, free and
clear of any encumbrances, it will issue an additional 1,500,000 shares of its
common stock to the Trust. The Trust will also be entitled to receive an earn
out payment of up to $3 million based on Azonic's future operating profits.
The Company plans to utilize certain intellectual property and other assets it
acquired to introduce the "Cyclone Phone," as its solution for a "phone for the
phoneless." The Company plans to market two low-cost, analog phones. One is
designed to be located in glove boxes, first aid kits and emergency supply
packages and used for emergency purposes. The second is a prepaid wireless phone
designed to be used in the low cost and short-term usage markets. Potential
applications include the traditional prepaid market, kiddy phone and throw away
markets for business people and tourists in immediate need of a cell phone but
who do not wish to enter into multi year expensive contracts or purchase
expensive handsets. These low-cost disposable phones will bring wireless
communication to millions who cannot afford the cost of current offerings, want
to avoid monthly charges, or simply need an inexpensive wireless phone while
traveling or for emergency calls only. This new product offering will make and
receive calls, be "ready to go" out of the box using "AA" batteries, will be
refreshable, and will incorporate proprietary patented design.
New Officers and Directors
John G. Simmonds: Chief Executive Officer and Director
Mr. Simmonds, 54, has 35 years of experience in the communications
sector. He has extensive experience in building teams, operating systems, and
distribution networks. Mr. Simmonds has particular experience with developing
distribution networks for Midland(TM) LMR products worldwide, an asset now owned
by Wireless Age Communications, Inc. (OTCBB:WLSA), through its wholly owned
subsidiary, Prime Wireless Corporation. Mr. Simmonds was integral in developing
the Midland(TM) brand worldwide following an initial product launch in Canada
during the late 1970's through his family business A.C Simmonds & Sons Ltd. and
later followed by the successful acquisition of Midland International
Corporation from Western Auto, a subsidiary of Sears in 1993.
Mr. Simmonds has, since March 2003, been the Chief Executive Officer
and a Director of Wireless Age Communications, Inc. In addition, since 1998,
Mr. Simmonds has served as the CEO and a Director of TrackPower (OTCBB:TPWR), a
development company involved in horse race track ownership opportunities. Mr.
Simmonds has also been CEO and or director of several other companies. Mr.
Simmonds will replace Gregory H. Laborde as Azonic's CEO. Mr. Laborde, who has
served as Azonic's CEO since September of 2003, voluntarily resigned as CEO as
of October 12, 2004.
3
Gary Hokkanen: Chief Financial Officer
Mr. Hokkanen, 48, is an executive level financial manager with over 6
years experience in public company financial management. Mr. Hokkanen has, since
May 2003, been the Chief Financial Officer of Wireless Age Communications, Inc.
From January 2001 to April 2003 Mr. Hokkanen was CFO of IRMG Inc., a Toronto
based financial management consulting firm. Mr. Hokkanen served as CFO of
Simmonds Capital Limited from July 1998 to January 2001 and served as CFO of
Trackpower Inc. from February 1998 to June 2001. For the period April 1996 to
July 1998, Mr. Hokkanen served as Treasurer of Simmonds Capital Limited. Mr.
Hokkanen holds a Bachelor of Arts degree from the University of Toronto and is a
CMA (Certified Management Accountant) and a member of the Society of Management
Accountants, Ontario.
Jim Hardy: Chief Operating Officer
Mr. Hardy, 49, has more than 25 years of experience in both technical
and business development. He has served since May 2004 as Chief Operating
Officer of Wireless Age Communications, Inc. From 1999-2000, he served as the
President and COO of Iceberg Media Inc. (TSX Venture Exchange symbol: YIC),
where he implemented a fully integrated internet broadcast facility. In 1991,
Mr. Hardy founded HTI Inc., which is a professional services consulting firm
involved in the high tech industry. In 1987, he joined Oracle Corporation Canada
Inc. as Corporate Consultant and later became Vice-President responsible for
Oracle Canada's Consulting Division until 1991. In 1984, he co-founded Nexus
Computer Consultants, a systems consulting firm, and served as President and
CEO.
David MacKinnon: Chief Technology Officer.
Mr. MacKinnon, 54, has more than 30 years of experience in wireless
communications systems, business development and management. Mr. MacKinnon has,
since May of 2004, been the Chief Technology Officer of Wireless Age Communica-
tions, Inc. From 1995 until May of 2004, Mr. MacKinnon was employed as the
Chairman of Selmah House, Ltd., a private company involved in the business of
technology consulting, financial services and investments. From 1980 until 1995,
Mr. MacKinnon was employed with SNC-Lavalin (TSX:SNC), an engineering consulting
company, where he last held the position of Senior Vice President. At
SNC-Lavalin, Mr. MacKinnon was involved in remote sensing in particular the real
-time collection of oceanographic, metrological and sea ice information ice in
both the Beaufort Sea and the North Atlantic. Mr. MacKinnon is a 1971 graduate
of St. Mary's University in Halifax, Nova Scotia. He also attended Dalhousie
University in Halifax, Nova Scotia, for two years.
Carrie Weiler: Corporate Secretary
Ms. Weiler, 45, provides Corporate Secretarial services to the Simmonds
group of companies, which she joined in 1979. She has, since 1994, also served
as Vice President of Corporate Development for Simmonds group of companies. In
addition, since May 2003, Ms. Weiler has served as the Corporate Secretary of
Wireless Age Communications, Inc.
David Smardon (Chairman of the Board)
Dave Smardon, 50, is a seasoned executive with a background in
establishing, growing, and financing technology-based companies. Mr. Smardon is
currently CEO and Managing Partner of Nibiru Capital Management Limited.
Since 1991, Mr. Smardon has been involved in several turnarounds and
re-financings of Canadian technology companies where he has raised additional
capital and assisted in operational restructuring. In 1997, he was chosen to
spearhead the establishment of a government sponsored Internet portal called
Innovator's Alliance. As interim CEO, Mr. Smardon attracted over $2 million in
corporate sponsors for the non-profit organization and helped recruit a
membership base of 125 CEOs before turning the reigns over to a full-time
Managing Director.
4
Through the 1990s, Mr. Smardon established and expanded the Nibiru
group of companies including Nibiru Tactical Corporation, Nibiru Investments and
Nibiru Capital Management Limited. These entities provide investment capital and
hands-on operational management to high growth technology companies. In addition
they provide advisory, due diligence and investment syndication services to the
institutional investment communities.
Ralph V. (Terry) Hadley, III, Esq.: Director
Mr. Hadley, 62, is currently and has been the Managing Partner of Swan
& Hadley, P.A., a law firm based in Winter Park, Florida, since prior to 1994.
Mr. Hadley is the nominee of the Filippo Guani Revocable Trust, which is
entitled to nominate one member of Azonic Corp.'s Board of Directors pursuant to
an Asset Sale Agreement with Azonic Corp. dated August 26, 2004. The Trust
currently owns 3.000,000 shares of the Azonic's common stock and is eligible to
receive up to an additional 1,500,000 shares of Azonic Corp.'s common stock and
an earn out payment of up to $3,000,000. Mr. Hadley received his Bachelor of
Science degree from the University of Florida in 1965 and his law degree from
the University of Florida College of Law in 1968.
Messrs. Simmonds, Smardon and Hadley join Mr. Laborde on Azonic's Board
of Directors. Mr. Karl Nelson, who served as a Director of Azonic since
September of 2003, voluntarily resigned in August of 2004.
FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements and information
relating to Azonic that are based on the beliefs of its management as well as
assumptions made by and information currently available to its management. When
used in this report, the words "anticipate," "believe," "estimate," "expect,"
"intend," "plan" and similar expressions, as they relate to Azonic or its
management, are intended to identify forward-looking statements. These
statements reflect management's current view of Azonic concerning future events
and are subject to certain risks, uncertainties and assumptions, including among
many others: a general economic downturn; a downturn in the securities markets;
a general lack of interest for any reason in going public by means of
transactions involving public blank check companies; federal or state laws or
regulations having an adverse effect on blank check companies, Securities and
Exchange Commission regulations which affect trading in the securities of "penny
stocks," and other risks and uncertainties. Should any of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described in this report as
anticipated, estimated or expected. Readers should realize that Azonic is in the
development stage, with virtually no assets, and that for Azonic to succeed
requires that it either originate a successful business (for which it lacks the
funds) or acquire a successful business. Azonic's realization of its business
aims as stated herein will depend in the near future principally on the
successful completion of its acquisition of a business, as discussed below.
Item 2. Management's Discussion and Analysis or Plan of Operation.
BACKGROUND. Azonic was incorporated in the State of Colorado on May 1, 1996
as Grand Canyon Ventures Two, Incorporated. The Company changed its name to
Azonic Engineering Corporation on June 23, 1998. On November 12, 1999, it was
redomiciled to the State of Nevada by merging into its wholly owned subsidiary
Azonic Corporation ("Company"), a Nevada corporation, which now is the name of
the Company.
The Company is in the development stage in accordance with Financial
Accounting Standards Board Standard No. 7. The Company has not been operational,
other than described below, nor had revenues other than interest income since
its inception.
5
RESULTS OF OPERATIONS FOR QUARTER ENDED JUNE 30, 2004 COMPARED TO SAME QUARTER
IN 2003
The Company had no revenues during the first fiscal quarter in 2004 and
2003. During the fiscal quarter ended September 30, 2004, Azonic incurred a net
loss of $57,752, due to expenses to pursue its business development, compared to
$1,500 in the fiscal quarter ended September 30, 2003. The Company paid no rent
or salaries and had no operations during the quarter. The net loss per share was
nominal in the period in 2004 and 2003.
SIX MONTHS ENDED SEPTEMBER 30, 2004 COMPARED WITH SIX MONTHS ENDED
SEPTEMBER 30, 2003
During the six months ended September 30, 2004 and 2003, the Company had no
revenues.
Interest and expenses for the six months ended September 30, 2004 was
$76,506 compared to $1,500 for the six months ended September 30, 2003. The
Company had a net loss on operations of ($76,506) in the six month period in
2004 compared to a ($1,500) net loss in 2003 in the period. The net loss per
share was nominal in the period in 2004 and 2003.
Unless the Company achieves a cash positive business combination, it
expects the trend of losses to continue.
FINANCIAL POSITION
The Company's working capital deficit was $64,892 at September 30, 2004.
The decrease in working capital during the six months ended September 30, 2004,
was primarily due to use of capital to seek acquisitions. The Company had no
cash for working capital.
LIQUIDITY and CAPITAL RESOURCES
Azonic had minimal cash on hand at the end of the quarter and had no other
assets to meet ongoing expenses or debts that may accumulate. Since inception,
Azonic has accumulated a deficit (net loss) of $(95,692).
Management plans to aggressively pursue the new business plan (see Recent
Developments). Azonic's ability to fund the planned growth is connected to its
ability to raise external financing. Additional funding will be required for
acquisitions, additional working capital and pre-maturity operating losses.
Management plans to raise the necessary capital in an appropriate mixture of
long term debt, subordinated debt and equity private placements. Current common
stock shareholders are expected to experience substantial dilution as Azonic
grows in size.
There can be no assurance that Azonic will be able to raise this funding as and
when needed.
Such a lack of funds could result in severe consequences to Azonic, including
among others:
(1) failure to make timely filings with the SEC as required by the Exchange Act,
which also probably would result in suspension of trading or quotation in
Azonic's stock and could result in fines and penalties to Azonic under the
Exchange Act;
6
or (2) inability to complete its business plan due to lack of funds to pay legal
and accounting fees and business-related expenses.
Item 3. Controls and Procedures
a. Evaluation of Disclosure Controls and Procedures:
Disclosure controls and procedures are designed to ensure that information
required to be disclosed in the reports filed or submitted under the Exchange
Act is recorded, processed, summarized and reported, within the time period
specified in the SEC's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed in the reports filed under the Exchange Act
is accumulated and communicated to management, including the Chief Executive
Officer and Chief Financial Officer, as appropriate, to allow timely decisions
regarding required disclosure. As of the end of the period covered by this
report, the Company carried out an evaluation, under the supervision and with
the participation of the Company's management, including the Company's Chief
Executive Officer and Chief Financial Officer, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
upon and as of the date of that evaluation, the Chief Executive Officer and
Chief Financial Officer concluded that the Company's disclosure controls and
procedures are effective to ensure that information required to be disclosed in
the reports the Company files and submits under the Exchange Act is recorded,
processed, summarized and reported as and when required.
b. Changes in Internal Control over Financial Reporting:
There were no changes in the Company's internal control over financial reporting
identified in connection with the Company evaluation of these controls as of the
end of the period covered by this report that could have significantly affected
those controls subsequent to the date of the evaluation referred to in the
previous paragraph, including any correction action with regard to significant
deficiencies and material weakness.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
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Item 5. Other Information
None
Item 6. Exhibits
Exhibits - Exhibits 31 and 32 (Sarbanes-Oxley)
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report on Form 10-QSB to be signed on its behalf by the undersigned,
thereunto duly authorized.
DATED: November , 2004
AZONIC CORPORATION
By: /s/ John Simmonds
----------------------------------
John Simmonds, CEO
By: /s/ Gary Hokkanen
----------------------------------
Gary Hokkanen, CFO
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