UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 2002
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 333-61714
ASSURE ENERGY, INC.
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(Exact name of registrant as specified in its charter)
Delaware 13-4125563
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6786 Willowood Drive, Suite G1006, Boca Raton, FL 33434
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(Address of principal executive offices) (Zip Code)
(561) 482-6952
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(Registrant's telephone number, including area code)
July 31
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(Former fiscal year if changed since last report)
Check 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, and (2) has been subject to such filing requirements for
the past 90 days. Yes |X| No | |
As of May 15, 2002, there were 20,884,00 shares of the Registrant's
common stock issued and outstanding.
ASSURE ENERGY, INC.
MARCH 31, 2002 QUARTERLY REPORT ON FORM 10-QSB
TABLE OF CONTENTS
Page Number
Special Note Regarding Forward Looking Statements ....... 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements .................................... 4
Item 2. Plan of Operation ....................................... 11
PART II - OTHER INFORMATION
Item 4. Submission of Matters to be a Vote of Security Holders .. 12
Item 5. Other Information ....................................... 12
Item 6. Exhibits and Reports on Form 8-K ........................ 13
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
To the extent that the information presented in this Quarterly Report
on Form 10-QSB for the quarter ended March 31, 2002, discusses financial
projections, information or expectations about our products or markets, or
otherwise makes statements about future events, such statements are
forward-looking. We are making these forward-looking statements in reliance on
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Although we believe that the expectations reflected in these
forward-looking statements are based on reasonable assumptions, there are a
number of risks and uncertainties that could cause actual results to differ
materially from such forward-looking statements. These risks and uncertainties
are described, among other places in this Quarterly Report, in "Plan of
Operation".
In addition, we disclaim any obligations to update any forward-looking
statements to reflect events or circumstances after the date of this Quarterly
Report. When considering such forward-looking statements, you should keep in
mind the risks referenced above and the other cautionary statements in this
Quarterly Report.
3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet as of March 31, 2002 .................. 5
Consolidated Statements of Operations
for the three months ended March 31, 2002 and 2001 .......... 6
Consolidated Statements of Cash Flows
for the three months ended March 31, 2002 and 2001 .......... 7
Notes to Consolidated Financial Statements ....................... 8
4
Assure Energy, Inc. and Subsidiary
F/K/A Inventoy.com, Inc.
(A Development Stage Company)
Consolidated Balance Sheets
March 31,
2002
----
(Unaudited)
-----------
Assets
Current assets:
Cash $ 31,167
---------
Total current assets 31,167
---------
Other assets:
Purchased toy designs 3,000
---------
Total assets $ 34,167
=========
Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable $ 25,522
Note payable 100,000
---------
Total liabilities 125,522
---------
Shareholders' deficit:
Common stock,100,000,000 shares
authorized; 20,844,000 shares
issued and outstanding; par
value $.001 20,844
Preferred stock, 5,000,000 shares
authorized; -0- shares issued
and outstanding; par value $.0001 --
Additional paid in capital 62,890
Subscriptions receivable (600)
Retained earnings (deficit) (174,489)
---------
Total shareholders' deficit (91,355)
---------
Total liabilities and
shareholders' deficit $ 34,167
=========
See accompanying Notes to Financial Statements.
5
Assure Energy, Inc. and Subsidiary
F/K/A Inventoy.com, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
Period from
Three months Three months August 11, 1999
ended ended (inception)
March 31, March 31, to March 31,
2002 2001 2002
------------ ------------ ------------
Revenues:
Net sales $ -- $ -- $ --
------------ ------------ ------------
Expenses:
General and administrative 105,509 5,010 175,737
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Total Expenses 105,509 5,010 175,737
Other Income
Interest 86 488 1,323
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Net loss before income taxes (105,423) (4,522) (174,414)
Income taxes 75 -- 75
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Net loss $ (105,498) $ ( 4,522) $ (174,489)
============ ============ ============
Net loss per share:
Basic $ (0.01) $ 0.00
============ ============
Weighted average common shares used
in calculation of net loss
per share 20,844,000 5,089,283
============ ============
See accompanying Notes to Financial Statements.
6
Assure Energy, Inc. and Subsidiary
F/K/A Inventoy.com, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
Period from
August 11,1999
Three Months Ended (inception)
March 31, to March 31,
2002 2001 2002
--------- --------- ---------
Cash flows from operating activities:
Net loss $(105,498) $ (4,522) $(174,489)
Adjustments to reconcile net loss
to cash provided (used) for operating activities:
Common stock issued for services -- -- 50,000
--------- --------- ---------
(105,498) (4,522) (124,489)
Increase (decrease) in operating accounts payable 19,376 (7,123) 25,522
--------- --------- ---------
Cash (used) for operating activities (86,122) (11,645) (98,967)
--------- --------- ---------
Cash flows from financing activities:
Proceeds from notes payable 100,000 -- 100,000
Proceeds of private placement offering net of
$3,325, $13,993 and $80,966 direct costs -- 68,507 30,134
--------- --------- ---------
Cash provided by financing activities 100,000 68,507 130,134
--------- --------- ---------
Increase in cash 13,878 56,862 31,167
Cash, beginning of period 17,289 21,090 --
--------- --------- ---------
Cash, end of period $ 31,167 $ 77,952 $ 31,167
========= ========= =========
Supplemental Disclosure of non-cash investing
and financing activities:
Receivable from shareholders in
connection with subscription
from common stock $ -- $ -- $ 600
Issuance of common stock for
deferred design costs $ -- $ -- $ 3,000
See accompanying Notes to Financial Statements.
7
Assure Energy, Inc. and Subsidiary
F/K/A Inventoy.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
1. Consolidated Financial Statements
The accompanying financial statements include the accounts of Assure Energy,
Inc. and Subsidiary (f/k/a Inventoy.com, Inc.) and its wholly owned subsidiary
Inventoy.com International, Inc. (The "Company"). All significant intercompany
balances and transactions have been eliminated in consolidation.
The accompanying unaudited condensed consolidated financial statements of Assure
Energy, Inc. have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
normal and recurring adjustments and accruals considered necessary for a fair
presentation have been included. Operating results for the three-month period
ended March 31, 2002 are not necessarily indicative of the results that may be
expected for the year ended December 31, 2002. For further information, refer to
the financial statements and footnotes thereto included in the Company's annual
shareholders' report incorporated by reference in the Form 10-KSB for the year
ended July 31, 2001.
2. Promissory Notes Payable
On March 19, 2002 the Company borrowed $100,000 and executed a 5% unsecured
promissory note due March 19, 2003. Interest begins to accrue on March 19, 2002
in accordance with the terms of the note.
3. Shareholders' Equity
On February 15, 2002 the Board of Directors of Assure Energy, Inc. (f/k/a
Inventoy.com, Inc.) approved a plan, and filed an amended certificate of
incorporation, to increase the Company's authorized common stock. The new
capitalization plan calls for an increase in the Company's authorized common
stock from 20,000,000 shares to 100,000,000 shares. There was no change in the
number of authorized preferred stock that remained at 5,000,000 shares.
The Company's Board of Directors, voted to forward split the outstanding common
stock of the Company, in the ratio of four (4) to one (1). The record date of
the stock split was February 25, 2002 (the Record Date). As a result,
shareholders of record as of the close of business on the Record Date were
eligible to receive an additional three shares for every one share they held in
the Company.
As a result of the stock split the Company's 5,211,000 shares of common stock
issued and outstanding, were increased to 20,884,000 shares of common stock
issued and outstanding.
8
Assure Energy, Inc. and Subsidiary
F/K/A Inventoy.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
4. Investment in Subsidiaries
On March 14, 2002 the Company signed an asset purchase agreement with
Inventoy.com International, Inc., through which Assure Energy, Inc. (f/k/a
Inventoy.com, Inc.) assigned all of its rights, titles and exclusive interests
in and to all patents, trademarks, trade names, technical processes, know-how
and other intellectual property that was associated with the business of the
Company at the time (toy designs), including the twenty seven (27) toy designs
the Company acquired from Kaplan Design Group upon its formation, in exchange
for all of the outstanding shares of Inventoy.com International, Inc., (100
shares, par value $.001).
5. Subsequent Events
(a) On April 23, 2002 the Company entered into an acquisition agreement with
Assure Oil and Gas Corp. ("Assure") an Ontario, Canada corporation. According to
the agreement Assure Energy, Inc. (f/k/a Inventoy.com, Inc.) acquired all of
Assure's issued and outstanding capital stock, making Assure a wholly owned
subsidiary, in exchange for 2,400,000 units, each unit consisting of one share
of the Company's common stock, one class A Warrant and one class B Warrant. Each
class A Warrant entitles the holder to purchase one share of the Company's
common stock at a price of $.50 per share for a period of five years from
issuance. Each class B Warrant entitles the holder to purchase one share of the
Company's common stock at a price of $1 per share for a period of five years
from issuance.
(b) On April 23, 2002 Ed Kaplan one of the Company's three directors, resigned
and was replaced by James I. Golla, a designee of Assure Oil and Gas Corp.
(c) On April 23, 2002 the Company signed a $1,250,000 six-month promissory note
with a foreign company. The note bears interest at the rate of 1% above the
prime rate as charged by Citicorp. All interest and principal due on the note
are payable on or before October 23, 2002.
(d) On May 1, 2002 Inventoy.com, Inc amended its Certificate of Incorporation to
change its name to Assure Energy, Inc.
(e) On May 8, 2002 the Company completed a $1,750,000 equity financing with
three accredited persons pursuant to the exemption from the registration
provisions of the Securities Act of 1933, as amended, provided by Rule 506 of
Regulation D. According to the agreement the Company issued 1,400,000 units at a
purchase price of $1.25 per unit. Each unit consists of one share of the
Company's common stock and one common stock purchase warrant. Each warrant
entitles the holder to purchase one share of the Company's common stock at a
price of $1.50 per share for a period of four years commencing one year from the
date of issuance.
9
Assure Energy, Inc. and Subsidiary
F/K/A Inventoy.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
6. Acquisitions
On April 23, 2002 the Company acquired Assure Oil and Gas Corp. an Ontario,
Canada corporation. The acquisition was accounted for under the purchase method
of accounting, and accordingly, the assets and liabilities of the acquired
businesses were recorded at their estimated fair values at the date of
acquisition. The results of operations of the acquired business will be included
in the consolidated results of Assure Energy, Inc. starting from the acquisition
date.
The following are the unaudited condensed financial statements of Assure Oil &
Gas, Corp. for the quarters ended March 31, 2002 and 2001:
Condensed Balance Sheets (Unaudited)
March 31, March 31,
2002 2001
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Assets
Total current assets 369,028 4,343
Oil and Gas properties net of
accumulated depletion 894,953 132,246
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Total assets $ 1,263,981 $ 136,589
=========== ===========
Liabilities and Shareholders' Equity
Total current liabilities 148,042 89,304
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Shareholders' equity:
Common stock, unlimited shares authorized;
1000 and 383 shares issued and outstanding 1,238,121 48,490
Retained deficit (122,175) (1,223)
Accumulated other comprehensive income (loss) (7) 18
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Total shareholders' equity 1,115,939 47,285
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Total liabilities and shareholders' equity $ 1,263,981 $ 136,589
=========== ===========
Condensed Statements of Operations (Unaudited)
Three months ended
March 31,
2002 2001
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Revenues:
Net oil and gas sales $75,499 $ 4,383
Operating costs 30,921 2,415
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Gross profit 44,578 1,968
Total administrative and other expenses 29,515 2,556
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Net income (loss) $15,063 $ (588)
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10
ITEM 2. PLAN OF OPERATION.
The following discussion of our plan of operation for the next twelve
months should be read together with, and is qualified in its entirety by the
more detailed information, including the financial statements, appearing
elsewhere in this document.
We were incorporated August 11, 1999 in the state of Delaware with the
objective to license toy designs to toy manufacturers and to act as a toy
inventor's agent in licensing toy designs developed by others. We expected to
market such toy designs by both direct meetings with toy manufacturers'
representatives and through a web site that could give manufacturers the
opportunity to review pictures and descriptions of new inventions at a single
source to decide whether a face-to-face meeting would be useful. We believe that
the foregoing business model is still valid; however, given the effect of an
overcrowded .com business environment, no operations in this area have commenced
to date. Accordingly we have looked at other ventures of merit for corporate
participation as a means of enhancing shareholder value. This strategy resulted
in our April 23, 2002 Acquisition Agreement with Assure Oil & Gas Corp. ("Assure
O&G").
Assure O&G is actively engaged in the exploration, development,
acquisition and production of petroleum and natural gas (P&NG) properties
primarily located in Western Canada. In October 2000 Assure O&G commenced its
oil and gas operations as part of an initiative to create cash flow by
participating in a Farmout Agreement to drill a prospective Elkton zone natural
gas well. To date, Assure O&G has acquired varying interests, through farmout
participations, asset purchases and crown land sales in approximately 6,500
gross acres (3,500 net acres) of both producing and prospective P&NG properties
in the Western Sedimentary Basin of Western Canada.
Assure O&G plans to continue to explore, develop or acquire P&NG
properties over the next twelve months to increase cash flow, and to build P&NG
reserves. Assure O&G anticipates an exploration program that could include
infill drilling of current proved and producing properties, seismic
interpretation of prospective properties and exploratory drilling. Acquisitions
could include lands, licenses and leases, producing well bores or corporate
acquisitions. Assure O&G also may from time to time acquire, or enter into
strategic alliances with, complementary businesses to achieve these objectives.
On March 29th, 2002 Assure O&G signed a Letter of Intent to acquire all
of the issued and outstanding shares of Westerra 2000 Inc., an Alberta Canada
privately held company engaged in oil and gas exploration and production, which
as of this date has not resulted in the execution of a definitive acquisition
agreement.
We plan to fund Assure O&G's current exploration program from oil
and gas cash flow and from working capital.
11
PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On February 15, 2002 the holders of a majority of our outstanding
shares of common stock executed a written consent authorizing an amendment to
our Certificate of Incorporation to increase the number of authorized shares
from 25,000,000 shares, comprising 20,000,000 shares of common stock, par value
$.001 per share and 5,000,000 shares of blank check preferred stock, par value
$.001 per share to 105,000,000 shares, comprising 100,000,000 shares of common
stock, par value $.001 per share and 5,000,000 shares of blank check preferred
stock, par value $.0001 per share.
On March 14, 2002, the holders of a majority of our outstanding shares
of common stock executed a written consent authorizing an agreement to sell all
of our property and assets, including goodwill, to Inventoy.com International,
Inc., a Delaware corporation, in exchange for all of the issued and outstanding
capital stock of Inventoy.com International, Inc.
ITEM 5. OTHER INFORMATION
On February 15, 2002, we filed a Certificate of Amendment to our
Certificate of Incorporation to increase our authorized common stock from
20,000,000 shares to 100,000,000 shares. There was no change in the number of
authorized shares of preferred stock which remained at 5,000,000 shares.
On February 15, 2002, our Board of Directors voted to forward split our
outstanding common stock, in the ratio of four (4) to one (1). The record date
of the stock split was February 25, 2002 (the "Record Date"). As a result,
shareholders of record as of the close of business on the Record Date received
an additional three shares of common stock for every share of common stock that
they held. Pursuant to the stock split, our 5, 211,000 shares of common stock
issued and outstanding on the Record Date were increased to 20,884,000 shares of
common stock issued and outstanding.
Effective February 22, 2002 we changed our fiscal year to December 31
from July 31.
On March 14, 2002 we entered into an Asset Purchase Agreement with
Inventoy.com International, Inc., through which we assigned all of our rights,
titles and exclusive interests in and to all patents, trademarks, trade names,
technical processes, know-how and other intellectual property associated with
our business, including the twenty seven (27) toy designs which we acquired from
Kaplan Design Group upon our formation, in exchange for all of the outstanding
shares of Inventoy.com International, Inc., (100 shares, par value $.001).
12
Subsequent to the period covered by this Report, on April 23, 2002 we
entered into an "Acquisition Agreement" (the "Acquisition Agreement") with
Assure Oil and Gas Corp, an Ontario, Canada corporation ("Assure"); and the
shareholders of Assure (the "Assure Shareholders"). The Acquisition Agreement
principally involved our acquisition of all of Assure's issued and outstanding
capital stock, making Assure a wholly owned subsidiary of ours, in exchange for
2,400,000 units (the "Units"), each Unit consisting of one share of our common
stock, one class A Warrant and one class B Warrant. As at the date hereof, we
have yet to issue the Units to the Assure Shareholders for administrative
reasons relating to the printing of new stock certificates, but expect to do so
shortly. Pursuant to a related Registration Rights Agreement, dated as of April
23, 2002, between us and the Assure Shareholders (the "Registration Rights
Agreement"), we have agreed to register the common stock forming part of the
Units (the "Units Shares") and the common stock underlying the class A Warrants
(the "Class A Warrant Shares") and class B Warrants (the "Class B Warrant
Shares"). We have agreed to register 50% of the Unit Shares and all of the Class
A Warrant Shares on a registration statement on Form SB-2, or such other form as
shall be available, (the "Initial Registration Statement"), as soon as
practicable, and to register the remaining 50% of the Unit Shares and all of the
Class B Warrant Shares within 18 months of the effective date of the Initial
Registration Statement. In connection with the Acquisition Agreement, Ed Kaplan,
one of our three directors, resigned and was replaced by James I. Golla, a
designee of Assure. Further, on May 1, 2002 we amended our Certificate of
Incorporation to change our name to Assure Energy, Inc.
Subsequent to the period covered by this Report, on April 23, 2002 we
completed a $1,250,000 debt financing with Private Investment Company, Ltd., a
Turks and Caicos Company. The debt is evidenced by our demand promissory note
(the "Note") dated April 23, 2002 and bears interest at the rate of 1% above the
prime rate changed by Citicorp. All interest and principal due on the Note are
payable on or before October 23, 2002.
Subsequent to the period covered by this Report, on May 8, 2002 we
completed a $1,750,000 equity financing with three accredited persons pursuant
to the exemption from the registration provisions of the Securities Act of 1933,
as amended, provided by Rule 506 of Regulation D. In connection therewith, we
will issue an aggregate of 1,400,000 units at a purchase price of $1.25 per
unit. Each unit consists of one share of our common stock and one common stock
purchase warrant. Each warrant entitles the holder to purchase one share of our
common stock at a price of $1.50 per share for a period of four years commencing
one year from the date of issuance.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
None.
13
(b) Reports on Form 8-K.
During the period covered by this Report, we filed a Current
Report on Form 8-K dated February 22, 2002. Item 8 of the Form 8-K titled
"Change in Fiscal Year" contained disclosure respecting the change in our fiscal
year from July 31 to December 31.
14
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ASSURE ENERGY, INC.
Dated: May 20, 2002 By: /s/Douglas Kaplan
-------------------------------
Douglas Kaplan
President, Chief Executive
and Financial Officer
15