UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the fiscal year ended December 31, 2004
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________________ to ________________________.
Commission File Number: 33-22175
SAFETEK INTERNATIONAL, INC.
----------------------------------------------------
(Exact name of company as specified in its charter)
Delaware 75-2226896
------------------------------ ----------------
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
5509 11th Avenue
Brooklyn, NY 11219
(Address of principal executive offices)
(718) 436-8246
(Company's telephone number, including
area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to section 12(g) of the Act: Common Stock,
$0.0001 par value
Indicate by check mark whether the company (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act during the past
12 months (or for such shorter period that the company 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 if there disclosure of delinquent filers in response
to Item 405 of Regulation S-K is not contained in this form, and no disclosure
will be contained, to the best of company's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
Indicate by check mark whether the company is an accelerated filer (as
defined in Rule 12b-2 of the Act) [ ] Yes [ ] No
The Company's revenues for its most recent fiscal year were $0.
Based on the closing sales price of the Common Stock on March 15, 2005, the
aggregate market value of the voting stock of the company held by non-affiliates
was $54,000.
The company has 52,617,951 shares of common stock outstanding as of March
31, 2005.
Documents Incorporated By Reference: None
Transitional Small Business Issuer Disclosure Format (check one):
Yes [ ] No [ X ].
ITEM 7. FINANCIAL STATEMENTS.
(1) Stock price reflects a 1 for 1000 reverse stock split.
SAFETEK INTERNATIONAL, INC.
AND SUBSIDIARIES
Table of Contents
Report of Independent Registered Public Accounting Firm F-1
Independent Auditors' Report F-2
Financial Statements:
Consolidated Balance Sheet F-3
Consolidated Statements of Operations F-4
Consolidated Statements of Stockholders' Deficit F-5
Consolidated Statements of Cash Flows F-6
Notes to Financial Statements F-7
Report of Independent Registered Public Accounting Firm
The Board of Directors
Safetek International, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheet of Safetek
International, Inc. and Subsidiaries as of December 31, 2004 and the related
consolidated statements of operations, stockholders' deficit, and cash flows for
the year ended December 31, 2004. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with the of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statements presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above, present
fairly, in all material respects, the financial position of Safetek
International, Inc. and Subsidiaries as of December 31, 2004, and the results of
their operations and their cash flows for each of the year ended December 31,
2004 in conformity with accounting principles generally accepted in the United
States of America.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has experienced recurring net
operating losses. At December 31, 2004, the Company continues to experience a
working capital deficit and also has a stockholder deficit of $694,820. These
matters raise substantial doubt about the Company's ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 2. The accompanying consolidated 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 should
the Company be unable to continue as a going concern.
/s/ Sherb & Co., LLP
New York, New York
April 5, 2005
F-1
TSCHOPP, WHITCOMB & ORR, P.A.
2600 Maitland Center Parkway, Suite 330
Maitland, Florida 32751
Independent Auditors' Report
The Board of Directors
Safetek International, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Safetek
International, Inc. and Subsidiaries as of December 31, 2003 and 2002 and the
related consolidated statements of operations, stockholders' deficit, and cash
flows for each of the years in the three year period ended December 31, 2003.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above, present
fairly, in all material respects, the financial position of Safetek
International, Inc. and Subsidiaries as of December 31, 2003 and 2002, and the
results of their operations and their cash flows for each of the years in the
three year period ended December 31, 2003 in conformity with accounting
principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in note 2 to the
consolidated financial statements, the Company has experienced net operating
losses of $37,626, $455,961, and $651,345 for the three years ended December 31,
2003, 2002 and 2001, respectively. Sales declined significantly in 1999 and,
thereafter, substantially all operating activities were suspended in 2000. At
December 31, 2003, the Company continues to experience a working capital deficit
and also has a stockholder deficit of $710,393. These matters raise substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are described in note 2. The accompanying
consolidated 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 should the Company be unable to
continue as a going concern.
/s/ Tschopp, Whitcomb & Orr, P.A.
July 21, 2004
F-2
SAFETEK
INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
December 31, 2004
Assets
Curent assets
Cash $ -
-----------
Total assets $ -
===========
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable and accrued expenses $ 243,014
Loans payable 84,379
-----------
Total current liabilities 327,393
Subordinated convertible redeemable debentures 135,027
-----------
Total liabilities 462,420
-----------
Redeemable convertible preferred shares
(4,648 shares, par value $ .0001, redeemable
prior to February 21, 2002 at $50 per share,
50,000,000 shares authorized) 232,400
-----------
Stockholders' deficit:
Common stock, $.0001 par value authorized
500,000,000 shares, issued and outstanding
739,541 at December 31, 2004 74
Additional paid-in capital 3,199,602
Accumulated deficit (3,894,496)
-----------
Total stockholders' deficit (694,820)
-----------
Total liabilities and stockholders' deficit $ -
==========
See accompanying notes to consolidated financial statements.
F-3
SAFETEK INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
Years Ended December 31, 2004 and 2003
2004 2003
-------- -------
Net sales $ - $ -
Cost of sales - -
--------- --------
Gross profit - -
--------- --------
Expenses:
General and administrative 37,400 37,626
--------- --------
Total expenses 37,400 37,626
--------- --------
Operating loss (37,400) (37,626)
Other income (expense):
Interest expense (87,428) -
--------- --------
Net loss $(124,828) $(37,626)
========= ========
Basic and diluted loss per share $ (0.24) $ (0.20)
========= ========
See accompanying notes to consolidated financial statements.
F-4
SAFETEK INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Deficit
For The Years Ended December 31, 2004 and 2003
Common Stock
---------------------- Additional
Number of Paid-in Accumulated Stockholders'
Shares Par Value Capital Deficit Deficit
--------- --------- ---------- ----------- -----------
Balance at December 31, 2002 101,972 $ 10 $ 2,924,215 $ (3,732,042) $ (807,817)
Net loss for the year (37,626) (37,626)
Shares converted from
subordinated convertible
redeemable debentures 238,000 24 130,777 130,801
Shars issued for services 42,500 4 4,246 4,250
------- --------- ---------- ----------- -----------
Balance at December 31, 2003 382,472 38 3,059,238 (3,769,668) (710,392)
Shares issued for services 17,000 2 20,398 20,400
Shares issued for repayment
of loan due to stockholder 100,000 10 119,990 120,000
Shares issued on reverse
stock split 240,069 24 (24)
Net loss for the year (124,828) (124,828)
------- --------- ---------- ----------- -----------
Balance at December 31, 2004 739,541 $ 74 $ 3,199,602 $ (3,894,496) $ ( 694,820)
======= ========= ========== =========== ===========
See accompanying notes to consolidated financial statements.
F-5
SAFETEK INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended December 31, 2004 and 2003
2004 2003
-------- -------
Cash flows from operating activities:
Net loss $(124,828) $ (37,626)
Adjustments to reconcile net loss to
net cash used in operating activities:
Non-cash interest expense 87,428
Issuance of common stock for services 20,400 4,250
Cash provided by (used for) changes in:
Accounts payable 10,000 (44,003)
--------- ---------
Net cash used in operating activities (7,000) (77,379)
--------- ---------
Cash flows from financing activities:
Proceeds from loans payable 7 ,000 77,379
--------- ---------
Net cash provided from financing
activities 7,000 77,379
--------- ---------
Net increase (decrease) in cash - -
Cash-beginning of year - -
--------- ---------
Cash-end of year $ - $ -
========= =========
Supplemental disclosures:
Cash paid during the year for:
Interest $ - $ -
========= =========
Income taxes $ - $ -
========= =========
See accompanying notes to consolidated financial statements.
F-6
SAFETEK INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2004 and 2003
(1) Summary of Significant Accounting Policies
(a) Principles of Consolidation
The consolidated financial statements include the financial statements of
Safetek International, Inc. ("Safetek" or the "Company") and its wholly owned
subsidiaries, Safety Technologies, Inc. ("STI") and Sentex, Inc. ("Sentex"). All
significant intercompany balances and transactions have been eliminated in
consolidation.
(b) Corporate Organization
Safetek International, Inc. (formerly known as Theoretics, Inc.) was
incorporated in April 1988. STI was in the development stage since its
incorporation in December 1986 through December 31, 1990. Sentex has had no
significant operations since its incorporation in December 1988. The Company,
through 2000, was engaged primarily in the development and marketing of safety
products for the health care, medical, industrial, commercial, hotel, home
building, boating and recreational markets.
In July 2000, the Company terminated its office and warehouse lease in Las Vegas
and suspended all operating activities. Since this date, management has been
actively pursuing settlement of claims and obligations of the Company and has
disposed of substantially all remaining assets. Presently, management has no
intention to re-enter the safety products industry and is currently reviewing a
number of business opportunities.
Safetek was reorganized in May 2001 for the purpose of providing embryonic
companies with commercially viable patented ideas and products primarily
developed by inventors with working prototypes and to assist in successfully
bringing these products to market.
(c) Depreciation
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets as follows:
Furniture and fixtures 5-7 years
Computer equipment 5 years
Manufacturing equipment 5 years
(Continued)
F-7
SAFETEK INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies (Continued)
(d) Inventories
Cost is determined using the first-in first-out method and includes all direct
and indirect costs.
(e) Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statements carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. 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. Changes in tax rates are recognized in the
period that includes the enactment date.
(f) Revenue Recognition
Revenue has been recognized as the Company's products are provided or upon sale
and/or installation. The Company operated in the safety products industry in the
United States through 2000. Since that date the Company has generated minimal
revenues through December 31, 2004.
(g) Advertising Costs
Advertising expenditures related to product presentation material and marketing
efforts are expensed as incurred.
(h) Cash Flows
For purposes of reporting cash flows, the Company considers all highly liquid
investment instruments with original maturities of three months or less to be
cash equivalents.
(i) Stock-Based Compensation
In October 1995, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123) which sets forth accounting and disclosure requirements
for stock-based compensation arrangements. The new statement encourages but does
F-8
SAFETEK INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies (Continued)
(i) Stock-Based Compensation (Continued)
not require, companies to measure stock-based compensation using a fair value
method, rather than the intrinsic value method prescribed by Accounting
Principles Board Opinion No. 25 ("APB No.25".) The Company has adopted
disclosure requirements of SFAS 123 and has elected to continue to record
stock-based compensation expense using the intrinsic value approach prescribed
by APB No. 25. Accordingly, the Company computes compensation cost for each
employee stock option granted as the amount by which the quoted market price of
the Company's common stock on the date of grant exceeds the amount the employee
must pay to acquire the stock. The amount of compensation cost, if any, will be
charged to operations over the vesting period. SFAS 123 requires companies
electing to continue using the intrinsic value method to make certain pro forma
disclosures.
(2) Going Concern and Recent Developments
The Company's consolidated financial statements have been presented on a going
concern basis which contemplate the realization of assets and the satisfaction
of liabilities in the normal course of business. As more fully described below,
the liquidity of the Company has been adversely affected by significant losses
from operations through 1999 and suspension of substantially all operating
activities in 2000. The Company reported an operating loss of $106,726 for the
year ended December 31, 2004 and cumulative operating losses for the past three
years of $624,968. In addition, as of December 31, 2004, stockholders' deficit
amounted to $676,719.
These conditions raise substantial doubt about the entity's ability to continue
as a going concern without additional capital contributions and/or achieving
profitable operations. There can be no assurance that the Company will be
successful in obtaining additional funding or in attaining profitable
operations.
(3) Lease Obligation
Through July 2000, the Company leased its office and warehouse space under an
operating lease agreement that expired in 2003.
F-9
SAFETEK INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(4) Notes and Debentures Payable
Debentures payable consist of the following
at December 31:
2004 2003
----------- ------------
8% subordinated convertible redeemable
debentures, due May 2004 The debentures
are convertible at 70% of the lowest closing
bid on day of conversion.
$ 135,027 $ 135,027
============= ============
The subordinated convertible redeemable debenture is currently in default. The
holders of this instrument have agreed to extend the due date until June 30,
2005.
(5) Related Party Transactions
Amounts due to stockholders represent non-interest bearing advances made to the
Company which are due on demand and unsecured. As of December 31, 2004, the
balance that was due to stockholder's was -0-.
(6) Income Taxes
Income tax expense (benefit) attributable to income from continuing operations
differed from the amount computed by applying the U.S. federal income tax rate
of 34% to income (loss) from continuing operations before income taxes primarily
as a result of utilization of a net operating loss carryforward, and changes in
the valuation allowance. Accordingly, no income tax provision has been
recognized in the accompanying financial statements.
At December 31, 2004, the Company had net operating loss carryforwards of
approximately $3,800,000 for financial statement and income tax purposes which
will expire in varying amounts commencing in 2004 through 2022. A valuation
allowance equal to the tax benefit of the net operating losses has been
established since it is uncertain that future taxable income will be realized
during the carryforward period.
Realization of deferred tax assets is dependent upon generating sufficient
taxable income prior to their expiration. Management believes that there is a
risk that certain of these deferred tax assets may expire unused and,
accordingly, has established a valuation allowance against them.
F-10
SAFETEK INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(7) Earnings(loss) per Share of Common Stock
Basic and diluted earnings per share of common stock in 2004, 2003 and 2002 were
based on the weighted average number of shares outstanding of 512,457, 190,736
and 71,316 respectively.
(8) Redeemable Convertible Preferred Stock
The redeemable convertible preferred stock (preferred) may be converted to
common shares at a rate of one-half common share for each preferred share.
During the years 2004, 2003 and 2002, preferred stock has been converted
resulting in an additional 10,365 shares of common stock being issued. In
addition, the Company is required to redeem the preferred shares at $50 per
share on February 21, 2002. Accordingly, at December 31, 2004, the Company has
adjusted the balance of this account to reflect an obligation amounting to
$232,400 associated with the redemption feature.
The preferred stock issuance is not considered a part of stockholders' equity in
the accompanying balance sheets because of the redeemable feature associated
with the stock. As the preferred stock is converted, the resulting issuance
common stock and additional paid-in capital is recorded. Redemption of preferred
shares result in a reduction in the balance of the preferred stock account at
the redemption price.
(9) Reverse Stock Splits
In January, 2001, the Board of Directors of the Company approved a 1 for 500 and
1 for 50 reverse split of the Company's issued and outstanding common and
preferred stock, respectively. All share and per-share amounts in the
accompanying financial statements have been restated to give effect to the stock
splits described herein.
On May 13, 2004 by written consent from the Board of Directors and certain
principal stockholders of the Company holding approximately 50.2% of the total
issued and outstanding shares of Common Stock, adopting a resolution to amend
the Company's Articles of Incorporation t0 (!) authorize up to 50,000,000 shares
of a new class of undesignated Preferred Stock ("Preferred Stock") which would
allow the Board of Directors of the Company to issue, without further
shareholder action, one or more series of Preferred Stock and
(!!) authorize a one-for-thousand reverse stock split of the issued and
outstanding shares of our Common Stock by changing each one-thousand shares into
one share. No fractional share certificates or scrip were issued evidencing
shares of Common Stock in connection with the reverse stock split. The Company
issued 100 shares to stockholders who would otherwise be entitled to less than
100 shares as a result of the split. The reverse stock split was effective on
September 7, 2004. All share and per share amounts in the accompanying financial
statements have been restated to give effect to the stock split.
F-11
SAFETEK INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(10) Stock Option Plan
In May, 2001, the Company adopted the 2001 Stock Option Plan of Safetek
International, Inc. Under the plan, the exercise price shall not be less than
the fair market value of the common stock on the date of grant. The maximum
number of options granted may not cause the total number of shares outstanding
to exceed 300,000,000 shares.
On May 11, 2001, 120,000 options were granted to one individual. In the second
and third quarters of 2001, 5,000 options each were exercised. In the fourth
quarter of 2001, 11,663 options were exercised. At December 31, 2002, 98,337
options remain outstanding.
The Company determined that the fair market value of the stock at date of grant
approximated the par value of the shares at that date. The par value of the
stock is $.0001.
The Company continues to account for stock-based compensation using the
intrinsic value method prescribed by Accounting Principles Board Opinion No. 25
under which no compensation cost for stock options is recognized for stock
option awards granted at or above fair market value.
Had compensation expense been determined based upon fair values at the grant
date for the award of options as described herein in accordance with SFAS No.
123, "Accounting for Stock-Based Compensation", the Company's net earnings and
earnings per share would not be materially changed from the amounts as reported
in the accompanying financial statements.
Accordingly, management has not presented the pro forma effects of the
application of SFAS No. 123 herein with respect to net earnings and earnings per
share for the year ended December 31, 2004.
(11) Research and Development Activities
During 2004 and 2003, the Company did not have any research and development
costs.
F-12
SAFETEK INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(12) Selected Financial Data (Unaudited)
The following is a summary of the quarterly results of operations for the years
ended December 31, 2004 and 2003, respectively:
Quarter ended Quarter ended Quarter ended Quarter ended Year ended
March 31, June 30, September 30, December 31, December 31,
------------- ------------- ------------- ------------- -------------
2004
Revenues $ -- -- -- -- --
Gross profit -- -- -- -- --
Net loss
from operations (5,177) (1,507) -- (30,942) (37,626)
Basic loss per share (0.000) (0.000) (0.000) (0.000) (.000)
Weighted-average
number of shares
issued and outstanding 116,972,707 217,972,707 242,222,707 242,222,707 190,736,354
2003
Net revenues $ 376 -- 140 1,600 2,116
Gross profit 376 -- 110 1,255 1,741
Net income (loss)
from operations 14,093 (53,359) (25,808) (598,189) (663,263)
Basic earnings (loss)
per share 0.15 (0.04) (0.003) (0.140) (0.033)
Weighted-average
number of shares
issued and outstanding 93,548 1,201,185 6,991,657 4,272,778 20,376,434
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
SAFETEK INTERNATIONAL, INC.
Dated: May 16, 2005 By: /s/ Shmuel Shneibalg
-----------------------------
Name: Shmuel Shneibalg
Title: Chairman, Chief Executive
Officer, Secretary, and
Director