Attached files
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EX-32.1 - EXHIBIT 32 - RadTek, Inc | radtekexhibit32_ex32z1.htm |
EX-31.2 - EXHIBIT31.2 - RadTek, Inc | radtekexhibit312_ex31z2.htm |
EX-31.1 - EXHIBIT31.1 - RadTek, Inc | radtekexhibit311_ex31z1.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 March 31, 2016
[ ] 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) |
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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: May 20, 2016 121,507,050 shares of common stock.
2
_________________________
EXPLANATORY NOTE
_________________________
This Amendment No. 1 (this "Amendment") to the Quarterly Report on Form 10-Q of RadTek, Inc. (the "Company") for the quarter ended March 31, 2016, originally filed with the U.S. Securities and Exchange Commission (the "SEC") on May 23, 2016, (the "Original Filing"), is being filed to update the Financial Statements and the Management Discussion and Analysis sections.
Except as described above, this Amendment does not modify or update the disclosures presented in, or exhibits to, the Original Filing in any way. This Amendment speaks as of the date of the Original Filing and does not reflect events occurring after the filing of the Original Filing. Accordingly, this Amendment should be read in conjunction with the Original Filing, as well as any other filings made by the Company with the SEC pursuant to Section 13(a) or 15(d) of Securities Exchange Act of 1934, as amended, subsequent to the filing of the Original Filing.
3
RadTek, Inc.
FORM 10-Q
TABLE OF CONTENTS
PART 1 FINANCIAL INFORMATION
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Item 1. Consolidated Financial Statements (Unaudited) |
| 4 |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations |
| 13 |
Item 3. Quantitative and Qualitative Disclosure About Market Risk |
| 14 |
Item 4. Controls and Procedures |
| 15 |
PART II OTHER INFORMATION
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Item 1. Legal Proceedings |
| 16 |
Item 1A. Risk Factors |
| 16 |
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds |
| 16 |
Item 3. Defaults upon Senior Securities |
| 16 |
Item 4. Mine Safety Disclosures |
| 16 |
Item 5. Other Information |
| 16 |
Item 6. Exhibits |
| 16 |
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SIGNATURES |
| 17 |
Special Note Regarding Forward-Looking Statements
Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended (Exchange Act). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of RadTek, Inc. (the Company), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words may, will, should, expect, anticipate, estimate, believe, intend, or project or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we,"RDTK, "our," "us, the "Company," refers to RadTek, Inc.
4
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.
RADTEK INC.
CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2016 (Unaudited)
CONTENTS
CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets
5
Condensed Statements of consolidated comprehensive income
6
Condensed Consolidated Statements of Cash Flows
7
Notes to Condensed Consolidated Financial Statements
8
5
RADTEK, INC. | |||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||
AS OF MARCH 31, 2016 AND DECEMBER 31, 2015 | |||||||||||
(US dollar in units) | |||||||||||
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| March 31, 2016 |
| December 31, 2015 | ||
Assets |
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| (Unaudited-Restated) |
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| (Audited-Restated) | |||||
Current assets: |
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Cash and cash equivalents |
| $ | 16,925 |
| $ | 78,301 | |||||
Accounts receivable, net |
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| 125,059 |
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| 128,341 | |||||
Prepaid expenses and other assets |
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| 1,135,365 |
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| 1,132,317 | |||||
Inventory |
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| 7,924 |
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| 2,850 | |||||
Total Current assets |
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| 1,285,273 |
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| 1,341,809 | |||||
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Investment |
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| - |
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| - | |||||
Property and equipment, net |
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| - |
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| - | |||||
Intangible assets |
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| 76,109 |
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| 77,163 | |||||
Security deposits |
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| 28,609 |
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| 28,157 | |||||
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| 104,718 |
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| 105,320 |
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Total assets |
| $ | 1,389,991 |
| $ | 1,447,129 | |||||
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Liabilities and equity |
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Current liabilities: |
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Trade and other payables |
| $ | 420,583 |
| $ | 403,258 | |||||
Short-term borrowings |
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| 320,764 |
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| 315,700 | |||||
Loan from related party |
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| 100,000 |
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| 100,000 | |||||
Advances from related party |
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| 887,028 |
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| 895,528 | |||||
Advance payments on contracts |
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| 1,304,228 |
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| 1,304,222 | |||||
Convertible Note |
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| - |
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| 5,000 | |||||
Derivative liability |
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| - |
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| 7,001 | |||||
Other current liabilities |
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| 6,031 |
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| 6,344 | |||||
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| 3,038,634 |
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| 3,037,053 |
Non-current liabilities: |
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Accrued severance benefits, net |
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| 46,315 |
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| 43,279 | |||||
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| 46,315 |
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| 43,279 |
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Total liabilities |
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| 3,084,949 |
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| 3,080,332 | |||||
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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: 176,882,050 shares |
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| Outstanding: 121,507,050 shares |
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| as of March 31, 2016 and December 31, 2015 |
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| 176,882 |
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| 176,882 | |||
Additional paid-in capital |
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| 1,651,700 |
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| 1,651,700 | |||||
Treasury Stock (55,375,000 shares) |
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| (375,053) |
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| (375,053) | |||||
Accumulated other comprehensive loss |
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| 73,745 |
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| 105,130 | |||||
Accumulated deficits |
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| (3,222,232) |
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| (3,191,862) | |||||
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Total equity |
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| (1,694,958) |
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| (1,633,203) | |||||
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Total liabilities and equity |
| $ | 1,389,991 |
| $ | 1,447,129 |
The accompanying notes are an integral part of these financial statements.
7
RADTEK INC. | ||||||||||
STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED) | ||||||||||
For the three months ended March 31, 2016 and 2015 | ||||||||||
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| (US dollar in units) |
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| March 31, 2016(Restated) |
| March 31, 2015 | ||
Net revenues | $ | 81,619 |
| $ | 245,775 | |||||
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Cost of sales |
| 43,568 |
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| 51,319 | |||||
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Gross profit |
| 38,051 |
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| 194,456 | |||||
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Operating expenses: |
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Depreciation and Amortization |
| 2,200 |
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| 1,511 | |||||
Selling and administrative expenses |
| 80,482 |
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| 91,019 | |||||
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Total Operating expenses |
| 82,682 |
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| 92,530 | |||||
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Gain(Loss) from operations |
| (44,631) |
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| 101,926 | |||||
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Other income(expenses): |
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Interest expense, net |
| (3,381) |
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| (1,707) | |||||
Foreign exchange transaction gain (loss) |
| 10,641 |
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| (2,118) | |||||
Gain on derivative liability |
| 7,001 |
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| 0 | |||||
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| 14,261 |
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| (3,825) |
Income for the year before tax |
| (30,370) |
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| 98,101 | |||||
Provision for income tax |
| - |
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| - | |||||
Net income |
| (30,370) |
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| 98,101 | |||||
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Other Comprehensive income (loss) |
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| Foreign currency translation adjustments |
| (31,385) |
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| 7,469 | ||||
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Comprehensive income (loss) | $ | (61,755) |
| $ | 105,570 | |||||
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Net income (loss) per common share-basic and diluted | $ | (0.00) |
| $ | 0.00 | |||||
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Weighted average number of common stock outstanding |
| 121,507.050 |
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| 121,336,800 |
The accompanying notes are an integral part of these financial statements.
8
RADTEK, INC. | |||||
CONSOLDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||
For the three months ended March 31, 2016 and 2015 | |||||
(US dollar in units) | |||||
| March 31, 2016 (Restated) |
| March 31, 2015 | ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net income (loss) | $ | (30,370) |
| $ | 98,101 |
Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation and amortization |
| 2,200 |
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| 1,511 |
Severance benefits |
| (3,036) |
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| 56 |
Change in assets and liabilities, net of the effect of acquisitions: |
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Accounts receivable |
| 3,282 |
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| (64,935) |
Inventory |
| (5,074) |
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| 1,513 |
Prepaid expenses and other assets |
| (3,048) |
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| 23,832 |
Accounts payable |
| 17,325 |
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| (50,753) |
Advance payments on contracts |
| 6 |
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| 113,777 |
Other current liabilities |
| (313) |
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| 9,485 |
Net cash provided by (used in) operating activities |
| (19,028) |
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| 132,587 |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
| - |
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| - |
Net cash used in investing activities |
| - |
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| - |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Common stock issuance |
| - |
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| - |
Repayment of short-term borrowings |
| - |
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| (160,000) |
Borrowing from related parties |
| (8,500) |
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| 15,554 |
Repayment of borrowing from related party |
| - |
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| - |
Net cash provided by financing activities |
| (8,500) |
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| (144,446) |
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Net decrease in cash and cash equivalent |
| (27,528) |
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| (11,859) |
Effect of exchange rate changes |
| (33,848) |
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| 7,287 |
Cash and cash equivalent at beginning of year |
| 78,301 |
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| 213,247 |
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Cash and cash equivalent at end of year | $ | 16,925 |
| $ | 208,675 |
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: |
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Cash paid for interest | $ | 2,010 |
| $ | 1,707 |
Cash paid for taxes | $ | - |
| $ | - |
The accompanying notes are an integral part of these financial statements.
10
RadTek, Inc.
Consolidated Notes to the Financial Statements
March 31, 2016 (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 March 31, 2016 and December 31, 2015.
On November 26, 2013, the Company entered into a definitive agreement with RadTek, Co. Ltd.s shareholders. Pursuant to the agreement, the Company purchased all of the outstanding securities of the RadTek, Co. Ltd. (1,900,000) in exchange for 95,000,000 common shares of the Company. RadTek Co. Ltd. shall be a wholly owned subsidiary of the Company. RadTek, Co. Ltd. is treated as the accounting acquirer in the accompanying financial statements. In the transaction, the Company issued 95,000,000 common shares to the shareholders of RadTek, Co. Ltd.; such shares represented, immediately following the transaction, 94% of the outstanding shares of the Company (excluding treasury stock of 55,375,000 shares). The transaction was accounted for as a reverse merger and a reverse recapitalization and the issuances of common stock were recorded as a reclassification between paid-in-capital and par value of Common Stock.
On January 15, 2014, the Board of Directors approved to increase authorized common shares from 60,000,000 common shares, par value $0.001 to 1,990,000,000 common shares, par value $0.001 per common shares and to effectuate a forward split of 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. All share amounts have been retroactively adjusted for all periods presented.
(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
11
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 March 31, 2016 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2016.
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, 2015.
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 $3,222 thousand and a working capital deficit of approximately $1,753 thousand at March 31, 2016. 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, increase sales of its products and attain profitable operations. It is the intent of management to continue to raise additional capital to sustain operations and to pursue acquisitions of operating companies in order to generate future profits for the Company. However, there can be no assurance that the Company will be able to secure such additional funds or obtain such on terms satisfactory to the Company, if at all.
The accompanying financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result from the outcome of this uncertainty.
Recent Accounting Pronouncements
Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying financial statements.
Note 2 Inventories
Inventories consist of the following as of March 31, 2016 and December 31, 2015:
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| March 31, 2016 | December 31, 2015 |
Raw materials | $ 7,924 | $ 2,850 | |
Finished goods | - | - | |
Total | $ 7,924 | $ 2,850 |
Note 3 Intangibles
The Companys intangible assets are composed of the following as of March 31, 2016 and December 31, 2015:
| March 31, 2016 | December 31, 2015 |
Patents | $ 12,409 | $ 12,213 |
Technical rights | 103,911 | 102,271 |
| 116,320 | 114,484 |
Accumulated amortization | (40,212) | (37,321) |
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Intangible assets, net | $ 76, 109 | $ 77,163 |
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, 2016.
Amortization expenses for the years ended March 31, 2016 and December 31, 2015 were $2,200 and $5,879, respectively.
Note 4 Short-term Borrowings
Short term borrowings consist of the following as of March 31, 2016 and December 31, 2015:
| March 31, 2016 | December 31, 2015 |
Note payable to a bank at interest rate of 4.39%. The line matures in November 2016. (KRW 150,000,000) | $ 130,040 | $ 127,987 |
Notes payable to individuals at interest rate of 0% to 7%. The maturity is August 10, 2016 (KRW220,000,000) | 190,724 | 187,713 |
Total short-term borrowings | $ 320,764 | $ 315,700 |
Note 5- Convertible Note
On July 27, 2015, the Company issued a $5,000 Convertible Note for services. The Convertible Not bears interest at 9% without a maturity date. The Noteholder shall have the right to convert any unpaid sums into common stock of the Company at the rate of 50% of the lowest trade reported in the 20 days prior to date of conversion. As at December 31, 2015, the Company has recorded interest of $198. The Company paid off convertible note of $5,000 and accrued interest of $233 on February 12, 2016
The embedded conversion option qualifies for derivative accounting and bifurcation under ASC 815-15 Derivatives and Hedging. The initial fair value of the conversion feature of $5,254 resulted in a discount to the note payable of $5,000 and the remaining $254 was recognized as derivative expense.
Note 6 Derivative Liabilities
The embedded conversion option of the Companys convertible debenture contains a conversion feature that qualifies for embedded derivative classification. The fair value of these liabilities will be re-measured at the end of every reporting period and the change in fair value will be reported in the statement of operations as a gain or loss on derivative liabilities.
The table below sets forth a summary of changes in the fair value of the Companys Level 3 financial liabilities:
For the three month ended
March 31, 2016
Balance at the beginning, December 31, 2015 | $ 7,001 |
Change in fair value of derivative | 7,001 |
Balance at end of period, March 31, 2016 | $ - |
Note 7 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 March 31, 2016 and December 31, 2015 were $887,028 and $895,528 respectively.
Note 8 Loan agreement
As of September 1, 2015, the Company borrowed $100,000 from ADQD Inc. The interest is 2.5% per annum and repayment date is September 2, 2016. As of March 31, 2016, accrued interest of $1,322 was recorded as other payable.
Note 9 Common stock
On November 26, 2013, the Company entered into a definitive agreement with RadTek, Co. Ltd.s shareholders. Pursuant to the agreement, the Company purchased all of the outstanding securities of the RadTek, Co. Ltd. (1,900,000) in exchange for 95,000,000 common shares of the Company.
As of December 31, 2013, the Company holds 55,375,000 common shares ($375,053) as treasury stocks recorded as capital adjustment.
On January 15, 2014, the Board of Directors approved to increase authorized common shares from 60,000,000 common shares, par value $0.001 to 1,990,000,000 common shares, par value $0.001 per common shares and to effectuate a forward split of 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. All share amounts have been retroactively adjusted for all periods presented.
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.
On July 7 and August 21, 2015, the Company issued 129,250 and 41,000 common shares at $0.1931 and $0.1805 respectively to Dutchess Opportunity Fund referred to the investment agreement made on April 22, 2014. The Company paid stock issuance cost of $17,000 and $2,000, respectively and deducted from additional paid in capital.
Note 10 Significant contracts
The Company has contracted with Korea Research Institute of Ships and Ocean Engineering (KRISO) for delivery of Cargo Inspection System (CIS) X-ray Accelerator which worth $945,447 on February 13, 2014. Under the payment term, 80% before shipment and 20% after the delivery, the Company has received 756,000 USD, the 80%, from KRISO on May 23, 2014. The delivery due date was postponed as request from KRISO. It was delivered but not installed, 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. The installation will be completed in May 2016. 1-year warranty starts after the installation.
The Company also got the delivery contract with KRISO for Temperature Control Unit of the X-ray Accelerator, which worth $25,500, on July 21, 2014. On January 21, 2015, KRISO and the Company contracted for CIS Array Detection System which worth $332,956. The installation schedule of all two items has been postponed until due of KRISOs construction, and it is expected in May, 2016.
The Company received $1,304 thousand and paid $1,132 thousand regarding KRISO project and recorded those amounts as other current asset and advance payments on contracts as of December 31, 2015.
14
The Company contracted with SKTelecom for maintenance service of Korea Customs Services Cargo Inspection Center II in Busan New Port. The contract ends on Dec 31, 2018 and the amount is 762,685,000 KRW ($672,000). The Company recognized revenue of KRW 32,500,000 ($27,000) for the three month ended March 31, 2016. Due to the contract condition with SKTelecom, the Company must have had a service contract with linear accelerators manufacturer, Varian Medical Systems. The service contract with Varian Medical Systems started from June 1, 2015 and it ends until May 31, 2019 or it expires if the Company decides not to continue managing the container inspection center. The Company agreed to make quarterly payment of $10,590 to Varian Medical Systems.
On April 28, 2015, the Company entered into an agreement with C&D Co. Ltd., a South Korean company, for the purposes of creating a new corporation. The new corporation will be an Internet Protocol television platform establishment and equipment delivery service. Under the agreement, the Company will raise $2 million for the purposes of establishing the new corporation and registering the shares with FINRA. The Company will then transfer all related resources to the new corporation after its establishment. C&D will provide use of its patents, licenses, trademarks and registered service marks to the Company, as well as its products, marketing support, and technical support. Once the new corporation has been established, all of the patents, licenses, trademarks, and registered service marks will be transferred to the new corporation.
Vietnam Multimedia Corporation (VTC), RadTek co., Ltd. and Giltz Capital Finance AG Group has made Memorandum of Agreement on May 27, 2015. The parties have agreed on supplying IPTV service and set-top boxes in Vietnam. In order to perform the business, the parties will establish a Joint Venture Company (JVC) in Vietnam and they will make 50 million USD investment in the business.
On April 6, 2015, RadTek Co., Ltd. has signed a Memorandum of Agreement (MOA) with C&D Corporation Co., Ltd. in purpose of a business which is supplying IPTV platform installation and devices to domestic and international customers. RadTeks duty in the contract is to promote investment for the fund problems of the business while C&D supplies required devices and service by providing IPTV related technical licenses and exclusivities. RadTek has loaned to Daeyoung Lim who is CEO of C&D and the loan is limited to use only for the company normalization.
Note 11 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.
15
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.
Under this investment agreement, the Company issued 129,250 and 41,000 common shares at $0.1931 and $0.1805, respectively, On July 7 and August 21, 2015
Note 12 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.
Note 13 Restatement
The accompanying unaudited consolidated financial statements as of March 31, 2016 have been restated as of August 22, 2016.
The journal entry for restatement is the following;
1.
Reflection of restatement of December 31, 2015
DR) Accumulated deficit | 12,355 |
| Cr) Prepaid expense | 8,825 |
|
|
| Other payable | 3,530 |
2.
Correction of understatement of expenses
DR) Selling and Administrative expenses | 5,295 |
| Cr) Other payable | 10,590 |
Prepaid expense | 5,295 |
|
|
|
Restatement of consolidated balance sheet:
|
|
|
|
|
|
|
|
| Adjustment |
|
| |
|
|
|
|
|
|
| March 31, 2016 | Dr) | Cr) | March 31, 2016 | ||
Assets |
|
| (Unaudited) |
|
| (Unaudited-Restated) |
| |||||
Current assets: |
|
|
|
|
|
|
| |||||
Cash and cash equivalents |
| $ | 16,925 |
|
| 16,925 |
| |||||
Accounts receivable, net |
|
| 125,059 |
|
| 125,059 |
| |||||
Prepaid expenses and other assets |
|
| 1,138,895 | 5,295 | 8,825 | 1,135,365 |
| |||||
Inventory |
|
| 7,924 |
|
| 7,924 |
| |||||
Total Current assets |
|
| 1,288,803 |
|
| 1,285,273 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment |
|
| - |
|
| - |
| |||||
Property and equipment, net |
|
| - |
|
| - |
| |||||
Intangible assets |
|
| 76,109 |
|
| 76,109 |
| |||||
Security deposits |
|
| 28,609 |
|
| 28,609 |
| |||||
|
|
|
|
|
|
|
| 104,718 |
|
| 104,718 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets |
| $ | 1,393,521 |
|
| 1,389,991 |
| |||||
|
|
|
|
|
|
|
|
|
|
| - |
|
Liabilities and equity |
|
|
|
|
|
|
| |||||
Current liabilities: |
|
|
|
|
|
|
| |||||
Trade and other payables |
| $ | 406,463 |
| 14,120 | 420,583 |
| |||||
Short-term borrowings |
|
| 320,764 |
|
| 320,764 |
| |||||
Loan from related party |
|
| 100,000 |
|
| 100,000 |
| |||||
Advances from related party |
|
| 887,028 |
|
| 887,028 |
| |||||
Advance payments on contracts |
|
| 1,304,228 |
|
| 1,304,228 |
| |||||
Convertible Note |
|
| - |
|
| - |
| |||||
Derivative liability |
|
| - |
|
| - |
| |||||
Other current liabilities |
|
| 6,031 |
|
| 6,031 |
| |||||
|
|
|
|
|
|
|
| 3,024,514 |
|
| 3,038,634 |
|
Non-current liabilities: |
|
|
|
|
|
|
| |||||
Accrued severance benefits, net |
|
| 46,315 |
|
| 46,315 |
| |||||
|
|
|
|
|
|
|
| 46,315 |
|
| 46,315 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
| 3,070,829 |
|
| 3,084,949 |
| |||||
|
|
|
|
|
|
|
|
|
|
| - |
|
Equity: |
|
|
|
|
| - |
| |||||
Preferred Stock: |
|
|
|
|
| - |
| |||||
| Authorized: 10,000,000 shares, $0.001 par value |
|
|
|
|
| - |
| ||||
|
| Issued and outstanding shares: 0 |
|
|
|
|
| - |
| |||
Common stock; |
|
|
|
|
| - |
| |||||
|
| Authorized: 1,990,000,000 shares, $0.001 par value |
|
|
|
|
| - |
| |||
|
| Issued : 176,882,050 shares |
|
|
|
|
| - |
| |||
|
| Outstanding: 121,507,050 shares |
|
|
|
|
| - |
| |||
|
| as of March 31, 2016 and December 31, 2015 |
|
| 176,882 |
|
| 176,882 |
| |||
Additional paid-in capital |
|
| 1,651,700 |
|
| 1,651,700 |
| |||||
Treasury Stock (55,375,000 shares) |
|
| (375,053) |
|
| (375,053) |
| |||||
Accumulated other comprehensive loss |
|
| 73,745 |
|
| 73,745 |
| |||||
Accumulated deficits |
|
| (3,204,582) | 17,650 |
| (3,222,232) |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity |
|
| (1,677,308) |
|
| (1,694,958) |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity |
| $ | 1,393,521 | 22,945 | 22,945 | 1,389,991 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Restatement of consolidated statement of operation:
|
|
|
|
|
|
|
| Adjustment |
|
| |
|
|
|
|
|
| March 31, 2016 (Original) | Dr) | Cr) | March 31, 2016 (Restated) | ||
Net revenues | $ | 81,619 |
|
| 81,619 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
| 43,568 |
|
| 43,568 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
| 38,051 |
|
| 38,051 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
| |||||
Depreciation and Amortization |
| 2,200 |
|
| 2,200 |
| |||||
Selling and administrative expenses |
| 75,187 | 5,295 |
| 80,482 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
Total Operating expenses |
| 77,387 |
|
| 82,682 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
Gain(Loss) from operations |
| (39,336) |
|
| (44,631) |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
Other income(expenses): |
|
|
|
|
|
| |||||
Interest expense, net |
| (3,381) |
|
| (3,381) |
| |||||
Foreign exchange transaction gain (loss) |
| 10,641 |
|
| 10,641 |
| |||||
Gain on derivative liability |
| 7,001 |
|
| 7,001 |
| |||||
|
|
|
|
|
|
| 14,261 |
|
| 14,261 |
|
Income for the year before tax |
| (25,075) |
|
| (30,370) |
| |||||
Provision for income tax |
| - |
|
| - |
| |||||
Net income |
| (25,075) |
|
| (30,370) |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive income (loss) |
|
|
|
|
|
| |||||
| Foreign currency translation adjustments |
| (31,385) |
|
| (31,385) |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) | $ | (56,460) |
|
| (61,755) |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share-basic and diluted | $ | (0.00) |
|
| (0.00) |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common stock outstanding |
| 121,336,800 |
|
| 121,507,050 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
|
18
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 March 31, 2016, we earned net revenues of $81,619. Our cost of sales was $43,568, resulting in a gross profit of $38,051. We incurred depreciation and amortization expenses of $2,200 and incurred selling and administrative expenses of $80,482. We recorded a loss in interest expense net of $3,381, incurred a gain due to foreign exchange transaction of $10,641 and incurred gain on derivative liability of 7,001. As a result, we recorded net loss of $30,370. We had foreign currency translation adjustments of $31,385 resulting in our comprehensive loss of $61,755 for the three months ended March 31, 2016.
Comparatively, for the three months ended March 31, 2015, we earned net revenues of $245,775. Our cost of sales was $51,319, resulting in a gross profit of $194,456. We incurred depreciation and amortization expenses of $1,511, incurred selling and administrative expenses of $91,019. We incurred an interest expenses net of $1,707 and recorded a foreign exchange transaction loss of $2,118. As a result, we recorded net other expenses of 3,825. As a
19
result, we recorded net gain of $98,101. We had a positive foreign currency translation adjustment of $7,469, resulting in a comprehensive gain of $105,570 for the three months ended March 31, 2015.
The increase in net loss of $128,471 between the three months ended March 31, 2016 compared to the same period ended March 31, 2015 was the result of decreased revenues for the three months ended March 31, 2016. Our net revenues decreased by $164,156, or 7%, and our cost of sales decreased by $7,751, or 15%. Our operating expenses decreased by $9,848 as a result of decreased selling and administrative expenses. We also had a foreign exchange transaction gain of $10,641 between the three months ended March 31, 2016 compared to a loss of $2,118 for the three months ended March 31, 2015. We also had a gain on derivative liability of $7,001 the three month ended March 31, 2016.
Liquidity and Capital Resources
For the three months ended March 31, 2016, we had net loss of $30,370. We had the following adjustments to reconcile net loss to net cash used in the operating activities: $2,200 for depreciation and amortization, and ($3,036) for severance benefits. We had the following changes in assets and liabilities: decreases of $3,282 in accounts receivable, increase of $5,074 in inventory, increase of $3,048 in the prepaid expenses and other assets, an increase of $17,325 in accounts payable and other payables and an increase of $6 in the advance receipts on contracts. We had decreases of $313 in accrued liabilities and other liabilities. As a result, we had net cash used in operating activities of $19,028 for the three months ended March 31, 2016.
For the three months ended March 31, 2015, we had net income of $98,101. We had the following adjustments to reconcile net loss to net cash used in operating activities: $1,511 for depreciation and amortization and $56 due to severance benefits. We had the following changes in assets and liabilities: a $64,935 increase in accounts receivable, a $1,513 decrease in inventory, a $23,832 decrease due to prepaid expenses and other assets, a $50,753 decrease due to accounts payable, a $113,777 increase due to advance payments on contracts, and a $9,485 decrease due to other current liabilities. As a result, we had net cash provided by operating activities of $132,587 for the three months ended March 31, 2015.
We did not pursue any investing activities during the three months ended March 31, 2016 or March 31, 2015.
For the three months ended March 31, 2016, we paid $8,500 as an advance from related parties. As a result, we had net cash used by financing activities of ($8,500) for the period.
For the three months ended March 31, 2015, we spent $160,000 on the repayment of short-term borrowings. We received $15,554 from borrowing from related parties. As a result, we had net cash used in financing activities of $144,446 for the three months ended March 31, 2015.
We had cash or cash equivalents of $16,925 and $78,301 on hand at March 31, 2016 and at December 31, 2015, 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 March 31, 2016, 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
20
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 March 31, 2016. 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 Sarbanes-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 March 31, 2016, we did not have any off-balance sheet arrangements and did not have any commitments or contractual obligations.
21
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 10.1* Loan Agreement by and between the Company and ADQD, Inc., dated August 12, 2015
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.
22
SIGNATURES
RadTek, Inc.
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized
Date: August 24, 2016 | RadTek, Inc. | |
| By | /s/ Dr. Kwanghyun Kim |
|
| Name: KwangHyun Kim |
Date: August 24, 2016 | RadTek, Inc. | |
| By | /s/ JaeChan Kim |
|
| Name: JaeChan Kim |
23