UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-KSB/A
AMENDMENT NO. 1
x |
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGEACT OF 1934 FOR FISCAL YEAR ENDED DECEMBER 31,
2004 |
o |
TRANSITION
REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF
1934 |
Commission
file number 000- 27243
WORLDTEQ
GROUP INTERNATIONAL, INC.
(Exact
name of registrant as specified in its charter)
Nevada |
03-7392107 |
(State
or other jurisdiction
of |
(I.R.S.
Employer |
incorporation
or organization) |
Identification
No.) |
30
West Gude Drive, Rockville, Maryland 20850
(Address
of principal executive offices) (Zip Code)
(301) 728-8744
(Issuer's
telephone number, including area code)
Securities
registered under Section 12(b) of the Exchange Act: None
Securities
registered under Section 12(g) of the Exchange Act: COMMON
STOCK, $0.001 PAR VALUE
Check
whether the issuer (1) filed all reports required to be filed by Section13 or
15(d) of the Exchange Act during the past 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 [ ]
Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant'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. [X]
TRANSITIONAL
SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE) YES [ ] NO [X ]
The Index
of Exhibits filed with this Report begins on page 30
.
WorldTeq
Group International Inc.'s revenues for its most recent fiscal year ended
December 31, 2004 were $341,199.
On
December 31, 2004, the aggregate market value of the voting stock of WorldTeq
Group
International, Inc. (consisting of common stock, $0.001 par value) held
by
non-affiliates
of the Registrant (approximately 21,000,000 shares) was approximately
$2,310,000 based on the closing price for such common stock ($0.11)
on said date as reported by the OTC Bulletin Board.
As of
December 31, 2004, there were 1,290,706 outstanding common shares of
WorldTeq
Group International, Inc. common stock.
WORLDTEQ
GROUP INTERNATIONAL, INC. |
FORM
10-KSB/A |
|
|
|
|
|
|
Page |
PART
I |
|
|
|
|
3 |
|
|
|
12 |
|
|
|
12 |
|
|
PART
II |
|
|
|
|
12 |
|
|
|
14 |
|
|
|
16 |
|
|
|
16 |
|
|
|
16 |
|
|
PART
III |
|
|
|
|
16 |
|
|
|
19 |
|
|
|
20 |
|
|
|
21 |
|
|
Item
13. Exhibits and Reports |
22 |
|
|
|
25 |
FORWARD
LOOKING STATEMENTS
In
addition to historical information, this Report contains
forward-lookingstatements.
Such forward-looking statements are generally accompanied by words such as
"intends," "projects," "strategies," "believes," "anticipates," "plans,"
and
similar terms that convey the uncertainty of future events or outcomes. The
forward-looking
statements contained herein are subject to certain risks and uncertainties
that could cause actual results to differ materially from those reflected
in the forward-looking statements. Factors that might cause such a difference
include, but are not limited to, those discussed in ITEM 6 of this Report,
the section entitled "MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION."
Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis only as of the date
hereof and are in all cases subject to the Company's ability to cure its
current
liquidity problems. There is no assurance that the Company will be able
to
generate sufficient revenues from its current business activities to meet
day-to-day
operation liabilities or to pursue the business objectives discussed
herein.
The
forward-looking statements contained in this Report also may be impacted by
future
economic conditions. Any adverse effect on general economic conditions
and
consumer confidence may adversely affect the business of the Company.
WorldTeq
Group International, Inc. undertakes no obligation to publicly
revisethese
forward-looking statements to reflect events or circumstances that arise
after the
date hereof. Factors that could cause actual results or conditions to
differ
from those anticipated by these and other forward-looking statements
include
those more fully described in the "Risk Factors" section and elsewhere
in this
report. In addition, readers should carefully review the risk factors
described
in other documents the Company files from time to time with the Securities
and Exchange Commission.
CORPORATE
HISTORY
WorldTeq
Group International, Inc. was incorporated under the laws of Nevada on
October
13, 1997, and was originally named Halo Holdings of Nevada, Inc. On October
15, 2001, we amended our articles of incorporation to adopt our current
name,
which we believe more accurately reflects the business in which we are now
engaged.
From the
date of our incorporation in 1997 until early 1999 our company was engaged
in skydiving and related business ventures. Between February and April
1999 we
sold our skydiving business and acquired three companies which were providers
of Internet connectivity and related products and services. Specifically,
in February 1999 we acquired Virtual Information Express, Inc. a Maryland
corporation, which provided outsourced Internet services such as e-commerce
applications and collaborative technologies. In March 1999, we acquired
Computer Ease LLC, a Maryland limited liability company which provided
Web
design and development services to corporate clients and associations.
Computer
Ease was merged into our subsidiary A1 Internet Services, Inc., a Delaware
corporation. In April 1999 we acquired Networld Ohio, Inc., an Ohio corporation,
which is an Internet service provider ("ISP") based in Freemont, Ohio. In
March 1999 we wound down Virtual Information Express. In November of
2000 we
formed WorldTeq Corporation, a Delaware Corporation, to focus on adding
Long
Distance services to our product line. In May of 2003 Networld Ohio, Inc.,
a wholly
owned subsidiary of WorldTeq Group International, Inc., was sold to our
former
president, Bruce Bertman for $1. WorldTeq recorded the sale as a credit
to
additional paid in capital for the net liabilities totaling approximately
$435,000.
Early in 2003 the company began a
proactive approach to expand its business by searching for merger and
acquisition candidates that would be beneficial to the company and it’s
shareholders. In
September of 2003 WorldTeq added financial services to its product line in
the form of Payroll services through its stored-value debit card product,
MonEcard. While much time and money was invested in attempting to enter and
succeed in the payroll service market, WorldTeq found it difficult to build and
maintain a customer base. The product has not been entirely shelved and the
company is currently looking into the retail aspect of the market in offering
the cards direct to single end-users or through a newtwork of resellers and
multi-level marketing organizations. During most of 2004, the company developed
a new online service, MundoTeq.com and soft launched the product in mid-October.
MundoTeq.com was created to be one of the first all Spanish web portals.
The goal
was to make MundoTeq a place where all Spanish-speaking residents of the U.S.
can get news, entertainment, shopping and much more! Early in 2005 it was
decided to temporarily shelve the project for both lack
of major funding for marketing and to allow management to fully concentrate on
the company’s latest merger opportunity, to be discussed in a following section.
MundoTeq can either be re-launched in the future or can be sold as a complete
business.
OVERVIEW
Currently,
we are a switch-less and facilities-based provider of Internet protocol and
traditional
fiber-based communications services, including voice and data, along
with toll
free and related services. We market our services to groups specializing
in specific ethnic demographics, residential communities located in major
metropolitan areas, associations, network marketing organizations, and
multi-level-marketing
organizations (MLM's). Our goal is to become a leading provider
of communication services, including voice, data and Internet services to our
targeted markets, comprised of affinity communities. We provide our services
through a flexible network of owned, contracted facilities and resale
arrangements. We have an extensive network available
to us of IP gateways, international gateways, and domestic
switches.
Through
our subsidiary WorldTeq Corporation we provide agents, associations, and
businesses
with opportunities to generate revenues by supplying those associations,
individuals, and businesses with Internet technology and communications
solutions and services. Our products and services enable the agents
and affinity groups to offer their members, customers and others a variety
of revenue producing solutions and services without making large investments
in technology, infrastructure or staff. The principal products and services
which we offer are:
- - Long
Distance Service
- - Toll
Free Products
- -
Financial Services / Corporate Payroll Solutions
- -
Billing Services
- -
Online Spanish language portal
RECENT
DEVELOPMENTS
The
company recently announced in the form of an 8-K filed with the SEC that it has
signed a plan of exchange to acquire Harbin Yinhai Technology Development
Company Ltd.
On
January 21, 2005, the Registrant executed a Plan of Exchange (the "Agreement"),
between and among the Registrant, Harbin Yinhai Technology Development
Company Ltd., a corporation organized and existing under the laws of
the
Peoples' Republic of China ("Yinhai"), and Progressive Media Group, Inc.,
XCL
Partners, Inc., Aero Financial, Inc. and Triple S Parts, Inc. (collectively,
the
"Consultants").
Pursuant
to and at the closing of the Agreement, the shareholders of Yinhai (the "Yinhai
Shareholders") will exchange all of their shares of registered capital of Yinhai
for 12,211,857 shares of common stock of the Registrant, or approximately 90% of
the Registrant's then outstanding shares of common stock. Upon completion of the
exchange, the registered capital of Yinhai will be transferred to the
Registrant, and Yinhai will become a wholly-owned subsidiary of the Registrant.
An executed copy of the Initial Letter of Agreement is attached hereto as
Exhibit 1.1.
Yinhai is
a commercial printing company located in Harbin, Peoples' Republic of
China,
that, among other things, prints forms for use by banks in the Harbin
area, and
it has approximately 200 employees. It had unaudited revenue of approximately
US$8.6 million in fiscal 2003, and net income of approximately US$1.57
million.
The
company has filed a 14C and has obtained written consent from the majority of
the stockholders as of April 7, 2005, approving (i) a reverse split of the
Company’s common stock at a ratio of 1:30 (the "Reverse
Split"), and (ii) an amendment to the Company's Articles of Incorporation
changing the name of the Company to "China Printing Inc." (the "Name Change").
The Board of Directors of the Company unanimously approved the Name Change on
March 31, 2005 and the Reverse Split on April 1, 2005. Under Section 78.320 of
the corporate law of the State of Nevada, action by stockholders may be taken
without a meeting, without prior notice, by written consent of the holders of
outstanding stock having at least a majority of the voting power that would be
necessary to authorize the action at a meeting. No other vote or stockholder
action is required. You are hereby being provided with notice of the approval of
the Reverse Split and Name Change by less than unanimous written consent of the
stockholders of the Company.
As a
legal matter, the exchange transaction will become effective when Articles
of
Exchange are filed with the Secretary of State of the State of Nevada
pursuant
to the Nevada Revised Statutes Section 92A-200. The name change has taken effect
and the company is now registered as China Printing Inc. and trades under the
symbol CHPI on the OTC BB. A preliminary 14C was filed on May 16, 2005.
2004 KEY
POINTS
During
2004, WorldTeq has had a considerably negative year as far as its staple
business goes. Due to the concentration on developing MundoTeq and searching for
quality M&A candidates, WorldTeq witnessed its revenues cut to 50% and
because of capital investment in the development of MundoTeq the company
operated throughout the year at a loss. However, as the year ended , it appeared
that the company had found a good match in its search for M&A candidates and
discussions began in what has become the course we are on now of the merging of
Yinhai and WorldTeq.
EMPLOYEES
As of
December 31, 2004 we had 3 full time employees and 1 part time employee
categorized as follows:
- - 2
full time employees in administration staff; and
- - 1
full time and 1 part-time employee in product development and technical
operations
There are
no collective bargaining agreements in effect. We believe the relationships
with our employees are good.
INTELLECTUAL
PROPERTY
We have
no patented technology that would preclude or inhibit competitors from
entering
our market. We have entered into confidentiality and invention assignment
agreements with our employees to limit access to and disclosure of our
proprietary information. We intend to apply for copyrights as we develop new
products
and solutions. There can be no assurance that these measures will prove
sufficient
to prevent misappropriation of our intellectual property or to deter
independent
third-party development of similar products.
The FCC
has jurisdiction over all U.S. telecommunications common carriers to
the
extent they provide interstate or international communications services.
Wile
WorldTeq acts as a carrier reseller we still can be subject to the rules
and
regulations set, so that the FCC's current and future policies could have a
material
adverse effect on our business, operating results and financial condition.
In
accordance with the FCC's Detariffing Order, our rates, terms and conditions
for
interstate and international services are no longer set forth in tariffs
filed
with the FCC. Nonetheless, we remain subject to the FCC's general requirements
that rates must be just and reasonable, and not unreasonably discriminatory,
and are also subject to the FCC's jurisdiction over complaints regarding
our services. The detariffing of domestic interstate and international
services may pose additional risks for us because we will no longer
have the benefit of the "filed rate doctrine." This doctrine enabled us
to bind
our customers to the terms and conditions of the tariff without having
each
customer sign a written contract and enabled us to change rates and services
on one day's notice. Since the rates and terms of service are no longer
tariffed,
we may be subjected to increased risk of claims from customers involving
terms of service and rates that could impact our financial
operations.
RISK
FACTORS
You
should consider carefully the risks described below and other information in
this Form
10-KSB. If any of the events identified in the following risk factors
actually
occur, they could materially adversely affect our business, financial
condition
and results of operations.
WE HAVE A
HISTORY OF LOSSES AND CANNOT BE CERTAIN WE WILL ACHIEVE POSITIVE CASH
FLOW
Since
inception, we have incurred significant operating losses and negative cash
flow from
operations. Although we have made significant steps toward profitability,
we can give no assurances that we will not have continuing operating
losses in the future.
Even
thereafter, we cannot be certain that we will achieve or sustain positive
cash flow
or profitability from our operations. Our net losses and negative cash
flow from
operating activities are likely to continue even longer than we currently
anticipate if:
- - We
cannot establish and maintain a customer base that generates sufficient
revenue;
- -
Prices for our products or services decline faster than we have anticipated;
- - We
cannot remain competitive in the innovation and quality of our products;
and
- - We
cannot attract and retain qualified personnel.
OUR
ABILITY TO ACHIEVE OUR OBJECTIVES IS SUBJECT TO FINANCIAL, COMPETITIVE,
REGULATORY,
LEGAL, TECHNICAL AND OTHER FACTORS, MANY OF WHICH ARE BEYOND OUR CONTROL.
PURCHASES
AND SALES OF OUR STOCK ARE SUBJECT TO PENNY STOCK REGULATIONS
Our stock
has had a market price of less than $5.00 per share. The SEC has adopted
regulations which generally define "penny stock" to be any equity security
that has a market price (as defined) less than $5.00 per share or an
exercise
price less than $5.00 per share, subject to certain exceptions. During
periods
when our common stock does not qualify for inclusion on the NASDAQ Small
Cap
Market or is removed there from, the common stock may become subject to
rules
that impose additional sales practice requirements on broker-dealers who
sell such
securities to persons other than established customers and accredited
investors
(generally those with assets in excess of $1,000,000 or annual income
exceeding
$200,000, or $300,000 together with their spouse). For transactions covered
by these rules, the broker-dealer must make a special suitability determination
for the purchase of such securities and have received the purchaser's
written consent to the transaction prior to the purchase. Additionally,
for any transaction involving a penny stock, unless exempt, the rules
require the delivery, prior to the transaction, of a disclosure schedule
prepared
by the SEC relating to the penny stock market. The broker-dealer also
must
disclose the commissions payable to both the broker-dealer and the registered
representative, current quotations for the securities and, if the broker-dealer
is the sole market-maker, the broker-dealer must disclose this fact and
the broker-dealer's presumed control over the market. Finally, monthly
statements
must be sent disclosing recent price information for the penny stock
held in
the account and information on the limited market in penny stocks. Consequently,
the "penny stock" rules may restrict the ability of broker-dealers to sell
our common stock and may affect the ability of investors to sell our
common
stock in the public market.
OUR
LIMITED OPERATING HISTORY MAKES IT DIFFICULT TO ASSESS OUR PAST PERFORMANCE AND
FUTURE PROSPECTS
We have
limited historical operating and financial information, which may make
ur
performance and our prospects difficult to evaluate. We have acquired five
companies
since the beginning of 1999 and disposed of substantially all of the
businesses
in which we were engaged in prior years. This limits the comparability
of our operating and financial information from period to period.
Our
prospects need to be considered in light of the substantial risks, expenses,
uncertainties
and difficulties frequently encountered by companies in the new nd
rapidly evolving markets for Internet products and services. Such risks
include
the possibility that:
- - We
may be unable to increase and sustain levels of interest in our products
nd
services by Associations, membership marketing companies and ISPs;
- - We
may fail to sell our products successfully through our direct sales force;
- - Our
competitors may develop services or products similar or superior to our
own;
- -
Market prices for our products and services may fall as a result of competition
or other factors;
- - We
may be unable to identify, attract, motivate and retain qualified personnel;
and
- - We
may fail to fully integrate our existing operations the technology and
operations
with any of the businesses that we might acquire.
We cannot
be sure that we will be successful in addressing such risks, and the
failure
to do so could have a material adverse impact on our business,
financial
condition
and results of operation.
WE ARE
DEPENDENT ON GLOBAL CROSSING FOR LONG DISTANCE AND OTHER VOICE
SERVICES
Our
ability to offer end-user access to a tier one Voice network on an affordable
basis is dependent upon our relationship with Global Crossing. If this
relationship were to be terminated, or if the terms were to be substantially
amended, we might be required to enter into arrangements for services
with other providers on less favorable terms. There is no assurance that we
would be able to purchase voice services on comparable terms, and there
is no
assurance that we would be able to pass on additional costs to our customers.
Our inability to obtain minutes on comparable terms could materially
and
adversely affect our business, financial condition and results of operations.
WE RELY
ON OTHERS TO MARKET OUR PRODUCTS AND SERVICES TO END-USERS
We
believe that we may derive the majority of our recurring revenues from
subscription
fees and fees for value added services paid by end-users of our products
and services. The amount of these revenues is dependent upon the level
of
success achieved by resellers, membership marketing companies and multi-level
market
organizations (MLM's) in marketing our products and services to their
members
and customers. If sales to end-users do not meet our expectations, our
business
would be adversely affected and we would be required to develop alternate
marketing and sales strategies.
WE ARE
SUBJECT TO RISKS AS WE MAKE ACQUISITIONS AND ENGAGE IN STRATEGIC ALLIANCES
As part
of our business strategy, we may acquire, make investments in, or enter
into
strategic alliances with companies in complementary businesses, so as to
optimize
our market presence in the regions we presently serve and expand into
other
regions. In particular, we intend to acquire local and regional ISPs and
E-commerce
companies. Any such future acquisitions, investments or strategic alliances
would involve risks, such as:
- -
Incorrect assessment of the value, strengths and weaknesses of acquisition
and
investment opportunities;
- -
Underestimating the difficulty of integrating the operations and personnel
of newly
acquired companies;
- -
Potential disruption of our ongoing business, including possible diversions
of
resources and management time;
- -
Potential inability to maintain uniform standards, control, procedures and
policies;
and
- - The
threat of impairing relationships with employees and customers as a result of
changes in management or ownership.
We cannot
assure that we will be successful in overcoming these risks. Moreover,
we cannot
be certain that any desired acquisition, investment or strategic alliance
could be made in a timely manner or on terms and conditions acceptable
to us.
Neither can we assure that we will be successful in identifying attractive
acquisition candidates. We expect that competition for such acquisitions
may be significant. Competition for Internet companies is based on a number
of factors including price, terms and conditions, size, access to capital,
and ability to offer cash, stock or other forms of consideration. We
may
compete with others who have similar acquisition strategies, many of whom
may be
larger and have access to greater financial and other resources than
those
available to us at any given time.
An
additional risk associated with acquisitions is that many attractive
acquisition
candidates do not have audited financial statements and have varying
degrees
of internal controls. Although we may believe that the available financial
information for a particular business is reliable, we cannot guarantee
that a
subsequent audit would not reveal matters of significance, including but
not
limited to those in connection with liabilities, contingent or otherwise. We
expect
that, from time to time in the future, we will enter into acquisition
agreements,
the pro forma effect of which are not known and cannot be
predicted.
SALES OF
SHARES BY OUR SHAREHOLDERS COULD DEPRESS OUR STOCK PRICE
The
market price of our common stock could drop as a result of sales of a large
number of
our shares in the public market. The perception that such sales may occur
could have the same effect. As of January 31, 2004, our executive officers,
directors and affiliates owned, directly or indirectly, less then 1%
of our
common stock.
WE ARE
SUBJECT TO SECURITY AND FRAUD RISKS
Despite
our efforts to implement network security measures, such as limiting
physical
and network access to our computers, our Internet infrastructure is vulnerable
to computer viruses, break-ins and similar disruptive problems caused
by
customers, employees or other Internet users. Computer viruses, break-ins or
other
disruptive or security problems could lead to interruptions, delays or
cessation
in service to our Internet customers. Further, such inappropriate or
unauthorized
use of the Internet could also potentially jeopardize the security of
confidential information stored in the computer systems of our customers and
other
parties connected to the Internet, which may deter potential customers and
give rise
to liability to users whose security or privacy has been violated. The
security
and privacy concerns of existing and potential customers may inhibit
the
growth of the Internet service industry in general and our customer base and
revenues
in particular. A significant security breach could result in a loss of
customers,
damage to our reputation, direct damages, costs of repair and detection
and other expenses. In addition, our revenues for any given period may
be
adversely affected by fraud or debt collection problems that we experience.
The
occurrence of any of these events could have a material adverse effect our
business,
results of operations and financial condition.
WE MAY BE
HURT BY SYSTEM FAILURES
Our
success is largely dependent upon our ability to deliver high speed,
uninterrupted
access to the Internet. Any system failure that causes interruptions
in our operations could have a material adverse effect on us. We currently
rely upon our vendor's Internet Network. Failures in this or any other
telecommunications
network on which we rely would result in customers' receiving no or
diminished access to the Internet.
WE ARE
SUBJECT TO INTELLECTUAL PROPERTY RISKS
Legal
standards relating to the validity, enforceability and scope of protection
of
intellectual property rights in Internet-related industries are uncertain and
still
evolving and we cannot be certain as to the future viability or value of
any of
our intellectual property rights or those of other companies within the
IT
industry. We cannot assure that the steps we have taken to protect our
intellectual
property rights will be adequate or that third parties will not infringe
or misappropriate our proprietary rights. Any such infringement or misappropriation,
should it occur, could have a material adverse effect on our business,
results of operations and financial condition. Furthermore, we cannot
be
certain that our business activities will not infringe the proprietary rights
of others
or that such other parties will not assert infringement claims against
us. We
anticipate that we may be subject to claims in the ordinary course of our
business,
including claims of alleged infringement of the trademarks and other
intellectual
property rights of third parties due to the dissemination of our content
or the provision of access by our online services to content made available
by third parties. Such claims and any resultant litigation, should it
occur,
could subject us to significant liability for damages and could result in
invalidation
of our property rights and, even if not meritorious, could be time-consuming
and expensive to defend, and could result in the diversion of management
time and attention, any of which could have a material adverse effect
on our
business, results of operations and financial condition.
We regard
substantial elements of our products and services as proprietary, and
we
attempt to protect them by relying on trademark, service mark, trade dress,
copyright
and trade secret laws and restrictions on disclosure and transfer of
title. We
also enter into confidentiality agreements with our employees, suppliers,
distributors, consultants, vendors and customer and license agreements
with third parties and generally seek to control access to and distribution
of our technology, documentation and other proprietary information. We are
pursuing the registration of our service marks, but we currently have no
patents
or applications for patents pending for our products or services. Effective
service mark, copyright and trade secret protection may not be available.
WE DO NOT
EXPECT TO PAY DIVIDENDS
The
Company does not anticipate paying cash dividends in the foreseeable
future.
During
2004 WorldTeq Group International, Inc. nor any of its subsidiaries were
involved in any lawsuits or litigation.
No
matters were submitted during the fourth quarter of the fiscal year covered
by this
Report to a vote of security holders, through the solicitation of proxies
or otherwise. The annual shareholder meeting has been postponed to a
date in
the near future.
On
October 10, 1998 shares of our common stock, par value $.001, were initially
available
to the public on the OTC Bulletin Board under the symbol "HALO". On May 24,
1999 the board of directors and shareholders approved a name change to
A1
Internet.com Inc. and the symbol was changed to "AWON".
On
January 4, 1999, the SEC approved amendments to Rules of the National
Association
of Securities Dealers that limit quotations on the OTC Bulletin Board to
the stock of companies that are registered with the SEC under the Securities
Exchange Act of 1934. The letter "E" is affixed to ticker symbols of
those
companies that have not completed the registration process with the SEC as
of a
certain date and indicates that the affected company will be removed from
the OTC
Bulletin board within 30 days. On November 19, 1999, an "E" was affixed
to our
OTC Bulletin Board trading symbol and our common stock began trading
under the
symbol "AWONE." Our common stock was removed from the OTC Bulletin Board on
December 16, 1999, because we had not then completed the registration
process,
and began trading on the "Pink Sheets" of the National Quotation Bureau,
LLC. The closing price of our common stock on the OTC Bulletin Board
$4.125 as
of December 15, 1999.
In March
2000, we completed our registration under the Securities Exchange Act
of 1934,
as amended. On March 20, 2000, our common stock was once again listed
on the
OTC Bulletin Board and began trading under the symbol "AWON." In late
2000 an
"E" was affixed to our OTC Bulletin Board trading symbol and our
common
stock
began trading under the symbol "AWONE. The closing price of our common
stock on
the "Pink Sheets" of the National Quotation Bureau, LLC was $.26 as
of
December
31, 2001. On March 22, 2002 our common stock was again listed on the
OTC
Bulletin Board and began trading under the symbol "WTEQ" to reflect our name
change.
The closing price of our common stock on the OTC was $0.11 as of December
31, 2004. Starting in April of 2005 the company has changed it’s name as part of
the merger conditions to China Printing Inc. and began trading under the symbol
“CPHI”
The
following table sets forth, on a per share basis, the high and low sale
prices
for our common stock as reported by the OTC Bulletin Board Market, for
the
periods indicated. Such prices reflect inter-dealer prices, without retail
mark-up,
mark-down or commission, and do not necessarily represent actual
transactions.
|
HIGH |
LOW |
2003 |
|
|
1st
Quarter |
0.090
|
0.040 |
2nd
Quarter |
0.090
|
0.020 |
3rd
Quarter |
0.110
|
0.010 |
4th
Quarter |
0.130
|
0.050 |
|
|
|
2004 |
|
|
1st
Quarter |
0.280
|
0.100 |
2nd
Quarter |
0.360
|
0.130 |
3rd
Quarter |
0.200
|
0.080 |
4th
Quarter |
0.140
|
0.090 |
We have
not declared any cash dividends on the common stock. We intend to
retainfuture
earnings, if any, for use in our business and do not anticipate paying
regular
cash dividends on the common stock.
Approximately 431,396
shares of common stock issued to stockholders are available for resale under
Rule 144, subject to notice, volume and manner of sale restrictions under that
rule As of December 31, 2004, the Company had approximately 1,290,706
shares issued and outstanding of the common stock. As of December 31, 2004, we
had approximately 80 holders of our common stock. The number of record holders
was determined from the records of our transfer agent and does not include
beneficial owners of common stock whose shares are held in the names of various
security brokers, dealers, and registered clearing agencies. The transfer agent
for the Company is Corporate Stock Transfer, Inc. at 3200 Cherry Creek Drive
South, Suite 430, Denver, Colorado 80209.
RECENT
SALE OF UNREGISTERED SECURITIES:
There
were no sales made of unregistered common stock during the year ended
December
31, 2004
OPTIONS
AND WARRANTS:
In
February 2004, we registered 3,350,000 shares under our 2004 Employee Stock
Option
Plan on a Form S-8. We granted our CEO, Jeffrey Lieberman an option to
purchase
2,000,000 shares at an exercise price of $0.13 per share. We also granted
our VP of Sales, Brian Rosinski an option to purchase 350,000 shares at
an
exercise price of $0.13 per share. For both options, 16.667% of the Shares
subject
to the Option shall vest six months after February 25, 2004, and 1/36 of
the
Shares subject to the Option shall vest each month thereafter, subject to
the
Optionee continuing to be a Service Provider on such dates.
In
February of 2004 the company issued 2,000,000 stock purchase warrants at .05
cents per share to XCL Partners for $100,000. Agreement
for this can be found as Exhibit 5.1
On June
21, 2004 the company filed an SB-2 that allows the company to issue up to
8,000,000 shares of common stock, that are issuable upon exercise of common
stock purchase warrants. In December 2004, in exchange for services and cash, we
signed an agreement with XCL Partners and Chesapeake Group to issue 4,000,000
warrants for WorldTeq common stock under agreement as Exhibit 5.1 to XCL and 1
Million to Chesapeake at exhibit 5.2.
Both
organizations are Investor Relations firms, and are to provide WorldTeq with
business development and strategic consulting services, including formal
presentations to potential business partners for merger and acquisition
opportunities.
The
following discussion and analysis of the financial condition and results of
operations
should be read in conjunction with the financial statements, related
notes,
and other detailed information included elsewhere in this Form 10-KSB.
Certain
information contained below and elsewhere in this Form 10-KSB, including
information
regarding our plans and strategy for our business, are forward-looking
statements. See "Note Regarding Forward-Looking Statements."
LIQUIDITY
AND CAPITAL RESOURCES
During
2004, WorldTeq has had a considerably negative year as far as its staple
business goes. Due to the concentration on developing MundoTeq and searching for
quality M&A candidates, WorldTeq witnessed its revenues cut to 50% and
because of capital investment in the development of MundoTeq the company
operated throughout the year at a loss. However, as the year ended , it appeared
that the company had found a good match in its search for M&A candidates and
discussions began in what has become the course we are on now of the merging of
Yinhai and WorldTeq which could change its financial status for the
better.
RESULTS
OF OPERATIONS
Total
sales for the year ending 2004 decreased from 2003 by approximately 58% to
$341,199. This was
largely due to the continuing decrease in long distance business based on
competition. Additionally, the company chose to focus on new markets, such as
with MundoTeq.com. If MundoTeq.com had fully launched it still would have taken
a solid year of ramping to recover most of the sales losses we witnessed in the
past 5 years. Just as in 2003, the sale of Networld had a significant impact on
the reduction of total sales. Additionally, the 2nd half of
the year saw most of the company’s assets focusing finding M&A candidates.
As a result of these circumstances, our telecommunications revenue accounted for
almost 100% of our total revenuefor 2004.
Our net loss for the year ending 2004 was $1,836,773 or $1.65 per share,
compared
to $351,299 for 2003 or $0.45 per share.
Cost of
sales for 2004 decrease from 2003 by 40%. This is due to the sale of
Networld
and the removal of the unprofitable wholesale telecommunications business.
Selling,
General and Administrative expenses for the period ending December 31,
2004
increased by $1,142,660 or 164% compared to the same period ending 2003. The
increase was due primarily to the fair value of warrants issued to consultants
for services. Our bad debt expense for 2004 was $0 compared to $24,920 for 2003.
This is due to the fact that while we had one large customer last year who
defaulted, the improvements in our new billing system make sure non paying
customers are no longer running long distance traffic through us.
Interest
expense increased by 89% to $22,911 and depreciation expense totaled only
$12,690 for the period ending December 31, 2004 compared
to $37,091 for 2003
.
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders
WorldTeq
Group International, Inc.
Rockville,
Maryland
We have
audited the accompanying consolidated balance sheet of WorldTeq Group
International, Inc. and subsidiaries as of December 31, 2004, and the related
consolidated statements of operations, stockholders' deficit, and cash flows for
each of the two years then ended. These financial statements are the
responsibility of WorldTeq's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We
conducted our audits in accordance with standards 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 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 WorldTeq Group
International, Inc. as of December 31, 2004, and the results of its
operations and its cash flows for the two years then ended, in conformity with
accounting principles generally accepted in the United States.
The
accompanying financial statements have been prepared assuming that WorldTeq will
continue as a going concern. As discussed in Note 2 to the financial statements,
WorldTeq’s significant operating losses raise substantial doubt about its
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
MALONE
& BAILEY, PC
www.malone-bailey.com
Houston,
Texas
May 19,
2005
WORLDTEQ
GROUP INTERNATIONAL, INC. |
CONSOLIDATED
BALANCE SHEET |
DECEMBER
31, 2004 |
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
CURRENT
ASSETS: |
|
|
|
Trade
accounts receivable, net of allowance for |
|
$ |
35,914 |
|
doubtful
accounts of $0 |
|
|
|
|
Other
current assets |
|
|
848 |
|
Total
current assets |
|
|
36,762 |
|
|
|
|
|
|
Equipment,
net of $83,630 accumulated depreciation |
|
|
7,185 |
|
Customer
base, net of $11,458 amortization |
|
|
38,542 |
|
|
|
|
|
|
Total
assets |
|
$ |
82,489 |
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
Convertible
notes payable to stockholder |
|
$ |
187,432 |
|
Notes
payable |
|
|
3,000 |
|
Accounts
payable |
|
|
318,292 |
|
Accrued
expenses |
|
|
70,438 |
|
|
|
|
|
|
Total
current liabilities |
|
|
579,162 |
|
|
|
|
|
|
COMMITMENTS
AND CONTINGENCIES |
|
|
- |
|
|
|
|
|
|
STOCKHOLDERS'
DEFICIT: |
|
|
|
|
Series
A convertible preferred stock, $.001 par; |
|
|
|
|
$4,749,989
liquidation value 5,000,000 shares |
|
|
|
|
authorized;
911,553 shares issued and outstanding |
|
|
911 |
|
Common
stock, $.001 par; 100,000,000 shares authorized; |
|
|
|
|
1,290,206
shares issued and outstanding |
|
|
1,290 |
|
Additional
paid-in capital |
|
|
22,564,785 |
|
Accumulated
deficit |
|
|
(23,005,159 |
) |
Shareholder
receivable |
|
|
(58,500 |
) |
Total
stockholders' deficit |
|
|
(496,673 |
) |
Total
liabilities and stockholders' deficit |
|
$ |
82,489 |
|
See
accompanying summary of accounting policies and notes to
financial statements.
WORLDTEQ
GROUP INTERNATIONAL, INC. |
CONSOLIDATED
STATEMENTS OF OPERATIONS |
YEARS
ENDED DECEMBER 31, 2004 and 2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004 |
|
2003 |
|
|
|
|
|
|
|
Sales |
|
$ |
341,199 |
|
$ |
820,933 |
|
|
|
|
|
|
|
|
|
Cost
of sales |
|
|
292,138 |
|
|
483,519 |
|
Selling,
general and administrative |
|
|
1,839,824 |
|
|
697,164 |
|
Depreciation |
|
|
12,690 |
|
|
37,091 |
|
Amortization |
|
|
11,458 |
|
|
- |
|
Bad
debts |
|
|
- |
|
|
24,920 |
|
Total
operating expenses |
|
|
2,156,110 |
|
|
1,189,813 |
|
|
|
|
|
|
|
|
|
Loss
from operations |
|
|
(1,814,911 |
) |
|
(421,761 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME (EXPENSE) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Income |
|
|
1,049 |
|
|
1,481 |
|
Forgiveness
of debt |
|
|
- |
|
|
81,088 |
|
Interest
expense |
|
|
(22,911 |
) |
|
(12,107 |
) |
|
|
|
|
|
|
|
|
NET
INCOME (LOSS) |
|
$ |
(1,836,773 |
) |
$ |
(351,299 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and
Diluted loss per share: |
|
$ |
(1.65 |
) |
$ |
(0.45 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding |
|
|
1,115,605 |
|
|
787,098 |
|
See
accompanying summary of accounting policies and notes to
financial statements.
WORLDTEQ
GROUP INTERNATIONAL, INC. |
CONSOLIDATED
STATEMENT OF STOCKHOLDERS' DEFICIT |
YEARS
ENDED DECEMBER 31, 2004 and 2003 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
Stock |
|
Common
Stock |
|
|
|
|
|
|
|
|
|
Shares |
|
Amount |
|
Shares |
|
Amount |
|
|
|
|
|
|
|
|
|
|
|
Balances, |
|
|
|
|
|
|
|
|
|
December
31, 2002 |
|
|
1,055,553 |
|
$ |
1,055 |
|
|
721,000 |
|
$ |
721 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale
of Networld |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of options to consultants |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
issued for debt |
|
|
- |
|
|
- |
|
|
197,725 |
|
|
198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
of consultants options |
|
|
- |
|
|
- |
|
|
66,667 |
|
|
67 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, |
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2003 |
|
|
1,055,553 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
of consultants warrants |
|
|
- |
|
|
|
|
|
300,000 |
|
|
300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants
to consultants |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion
of preferred shares into common
shares |
|
|
|
|
|
(144,000 |
) |
|
144 |
|
|
4,815 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances, |
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2004 |
|
|
911,553 |
|
|
|
|
|
|
|
|
|
|
See
accompanying summary of accounting policies and notes to
financial statements.