10QSB 1 cv10qsep05.txt CREATIVE VENDING 10-QSB 9/30/05 U. S. Securities and Exchange Commission Washington, D. C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2005 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File No. 33-19411-C CREATIVE VENDING CORP. ---------------------------------------------- (Name of Small Business Issuer in its Charter) Florida 65-0008012 --------------------------------------------------------------------- (State or Other Jurisdiction of (I.R.S. Employer I.D. No.) incorporation or organization) P.O. Box 669, Palm Beach, FL 33480 ---------------------------------------- (Address of Principal Executive Offices) Issuer's Telephone Number: (561) 833-5092 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 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 [ ] No [X] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes [X] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest practicable date: February 24, 2006 Common Voting Stock: 2,009,350 Transitional Small Business Disclosure Format (check one): Yes [ ] No [X] PART I - FINANCIAL INFORMATION CREATIVE VENDING CORP. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEET AS OF SEPTEMBER 30, 2005 (UNAUDITED) ASSETS CURRENT ASSETS Cash and cash equivalents $ - ---------- TOTAL ASSETS $ - ========== LIABILITIES AND STOCKHOLDERS' DEFICIENCY CURRENT LIABILITIES Loan payable - stockholder 1,480 ---------- TOTAL LIABILITIES 1,480 STOCKHOLDERS' DEFICIENCY Preferred stock, $1,000 par value, 12% redeemable and convertible, 1,000,000 shares authorized, none issued and outstanding - Common stock, no par value, 50,000,000 Class A common shares and 150,000,000 Ordinary common shares authorized, no Class A common shares and 2,009,350 ordinary common shares issued and outstanding, respectively 123,545 Deficit accumulated during development stage (125,025) ---------- Total Stockholders' Deficiency (1,480) ---------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY $ - ========== See accompanying notes to financial statements. -1- CREATIVE VENDING CORP. (A DEVELOPMENT STAGE COMPANY) STATEMENTS OF OPERATIONS (UNAUDITED) For the Period From For The For The For The For The April 9, Three Three Nine Nine 1987 Months Months Months Months (Inception) Ended Sept Ended Sept Ended Sept Ended Sept to Sept 30, 2005 30, 2004 30, 2005 30, 2004 30, 2005 ------------------------------------------------------------------------------- REVENUES $ - $ - $ - $ - $ 73,715 COST OF REVENUES - - - - 80,359 -------- -------- -------- -------- --------- GROSS PROFIT - - - - (6,644) OPERATING EXPENSES General and administrative - - 150 150 118,381 -------- -------- -------- -------- --------- Total Operating Expenses - - 150 150 118,381 -------- -------- -------- -------- --------- LOSS FROM OPERATIONS - - (150) (150) (125,025) OTHER INCOME (EXPENSE) Interest expense - - - - - Interest income - - - - - -------- -------- -------- -------- --------- Total Other Income (Expense) - - - - - LOSS BEFORE PROVISION FOR INCOME TAXES - - (150) (150) (123,025) Provision for Income Taxes - - - - - -------- -------- -------- -------- -------- NET LOSS $ - $ - $ (150) $ (150) $(125,025) ======== ======== ======== ======== ======== NET LOSS PER SHARE - BASIC AND DILUTED $ - $ - $ - $ - $ (0.087) ======== ======== ======== ======== ======== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED 2,009,350 2,009,350 2,009,350 2,009,350 1,445,122 ========= ========= ========= ========= ========= See accompanying notes to financial statements. -2- For The For The For The Nine Nine Period From Months Months April 9, 1987 Ended Ended (Inception) Sept Sept to Sept 30, 2005 30, 2004 30, 2005 ------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (150) $ (150) $ (125,025) -------- -------- --------- Net Cash Used In Operating Activities (150) (150) (125,025) -------- -------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from loan payable - stockholder 150 150 1,480 Proceeds from issuance of common stock - - 123,545 -------- -------- --------- Net Cash Provided By Financing Activities 150 150 125,025 -------- -------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS - - - CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD - - - -------- -------- --------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ - $ - $ - ======== ======== ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the year for interest $ - $ - $ - ======== ======== ========= Cash paid during the year for income taxes $ - $ - $ - ======== ======== ========= See accompanying notes to financial statements. -3- CREATIVE VENDING CORP. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2005 (UNAUDITED) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ORGANIZATION (A) Basis of Presentation The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles and the rules and regulations of the Securities and Exchange Commission for the interim financial information. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position and results of operations. It is management's opinion, however, that all adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statements presentation. The results for the interim period are not necessarily indicative of the results to be expected for the year. For further information, refer to the financial statements and footnotes included in the Company's Form 10-KSB for the year ended December 31, 2004. (B) Organization Creative Vending Corp. (the "Company"), a development stage company, was organized under the laws of the State of Florida on April 9, 1987 as HWS MAI Corp. On February 17, 1989, the Company filed an amendment to its articles of incorporation changing its name to Creative Vending Corp. The Company, a "shell" entity, intends to effect a merger or acquire the assets or common stock of existing businesses. There can be no assurance of the Company's success in such endeavours. The Company only realized one revenue producing transaction in March 1989 sustaining a loss thereon and has not conducted any business operations. Activities during the development stage include development of a business plan, obtaining financing and effecting a merger or acquisition. (C) Use of Estimates In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported period. Actual results could differ from those estimates. -4- CREATIVE VENDING CORP. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2005 (UNAUDITED) (D) Cash and Cash Equivalents The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. The Company did not have any cash or cash equivalents as of the balance sheet dates presented in the financial statements. (E) Loss Per Share Basic and diluted net loss per common share is computed based upon the weighted average common shares outstanding as defined by Financial Accounting Standards No. 128, "Earnings Per Share." As of September 30, 2005 and 2004, there were no common share equivalents outstanding. (F) Income Taxes The Company accounts for income taxes in accordance with the Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes", which requires the recognition of deferred tax assets and liabilities at currently enacted tax rates for the expected future tax consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recognized to reduce the net deferred tax asset to an amount that is more likely than not to be realized. The income tax provision shown on the accompanying statement of operations is zero since the deferred tax asset generated from the net operating loss is offset in its entirety by valuation allowances. As of September 30, 2005, the Company had $1,500 of net operating loss carryforwards ("NOL") of which $150 expires in each of the years ending December 31, 2011, 2012, and 2018 through 2025, respectively. A deferred tax asset of $310 comprised of $230 for federal income taxes and $80 for state income taxes has been reserved by a valuation allowance to account for the potential benefit of the NOL. During the nine months ended September 30, 2005, the Company's valuation allowance increased $31, for the quarter ended September 30, 2005, there was no change in the valuation allowance. (G) Segment Information The Company operates in one segment and therefore segment information is not presented. -5- CREATIVE VENDING CORP. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2005 (UNAUDITED) (H) Stock-Based Compensation The Company applies Accounting Principles Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, and Related Interpretations, in accounting for stock warrants issued to employees. Under APB No. 25, employee compensation cost is recognized when estimated fair value of the underlying stock on date of grant exceeds exercise price of the stock option. For stock options and warrants issued to non-employees, the Company applies Statements of Financial Accounting Standards ("SFAS") No. 123, Accounting for Stock-Based Compensation, which requires the recognition of compensation cost based upon the fair value of stock warrants at the grant date using the Black-Scholes option pricing model. (I) Recent Accounting Pronouncements Statement of Financial Accounting Standards ("SFAS") No. 154, "Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3"; SFAS No. 151, "Inventory Costs - an amendment of ARB No. 43, Chapter 4"; SFAS No. 152, "Accounting for Real Estate Time-Sharing Transactions - an amendment of FASB Statements No. 66 and 67"; SFAS No. 153, "Exchanges of Non- monetary Assets - an amendment of APB Opinion No. 29"; and SFAS No. 123 (revised 2004), "Share-Based Payment" do not have applicability to the Company's operations nor any impact on the Company's financial statements. NOTE 2 LOANS FROM SHAREHOLDER The Company's founding shareholder loaned the Company $130 in 1996, $150 in each of the eight years ended December 31, 1997 through 2004 respectively, and $150 during the quarter ended March 31, 2005. As of September 30, 2005, the Company owes the shareholder $1,480. The loans are unsecured, payable on demand and non-interest bearing (See Note 4). NOTE 3 STOCKHOLDERS' EQUITY (A) Common Stock The common stock shares are divided into two classes, Class A common shares and ordinary common shares. The Company is authorized to issue 50,000,000 Class A common shares and 150,000,000 ordinary common shares. Class A common shares shall be converted automatically into ordinary common shares upon sale, death, or other transfer by the original holder other than to another Class A Common shareholder, or at any time at the written request of the original holder. No Class A common shares are issued and outstanding. -6- CREATIVE VENDING CORP. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2005 (UNAUDITED) The common shares carry no pre-emptive rights and are not redeemable. Cumulative voting is not permitted. All shareholders are entitled to participate equally in dividends and rank equally in the event of liquidation. Common stock issuances from April 9, 1987 (inception) to September 30, 2005 were as follows: i. On January 20, 1988, the Company issued 200,000 shares of common stock to its founders for cash of $5,000 ($0.025 per share). ii. On January 23, 1989, the Company issued 789,200 shares of common stock to its founders for cash of $114,425 ($0.145 per share). iii. During the months of May and June, 1989, the Company issued 3,600 shares of common stock for cash of $10,800 ($3.00 per share) pursuant to a Form S-18 registered offering. The Company incurred $6,700 of offering costs resulting in net proceeds to the Company of $4,100. iv. On December 22, 1995 the Company issued 1,016,550 shares of common stock to its founder for cash of $20 ($0.00002 per share). The financial statements reflect the retroactive application of the following stock split: i. On August 10, 1995, the Company authorized a reverse stock split of one ordinary common share for each 100 shares outstanding. (B) Preferred Stock The Company has authorized the issuance of 1,000,000 shares of Redeemable Convertible 12% Preferred Stock with a par value of $1,000 per share. These preferred shares are entitled to two votes per share, a 12% preferred dividend, have a preference upon liquidation or partial return of capital, and may be redeemed by the Company or converted to ordinary common shares. No preferred stock has been issued. NOTE 4 RELATED PARTY TRANSACTIONS See Notes 2 and 3. -7- CREATIVE VENDING CORP. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2005 (UNAUDITED) NOTE 5 GOING CONCERN The Company is in the development stage. The Company has no operations and has had recurring losses since inception and an accumulated deficit of $125,025. Accordingly, there is substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company's ability to raise additional capital and/or effect a merger or acquire the assets or common stock of an existing business. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. As more fully discussed in Note 6, on July 13, 2005, the Company entered into an agreement for the exchange of common stock with an unrelated party. Management believes that the successful consummation of said agreement can provide the Company with the opportunity to continue as a going concern. NOTE 6 SUBSEQUENT EVENTS On July 13, 2005, the Company entered into an agreement with TetriDyn Solutions, Inc., an unrelated party, (hereinafter referred to as "TSI") to acquire 100% of the common stock of TSI in exchange for 18,000,000 ordinary common shares of the Company. The consummation of the transaction is contingent upon the following conditions: i. The Company has been brought into full compliance with its reporting obligations under the Securities Exchange Act of 1934 and TSI obtaining shareholder approval of the agreement. ii. The "closing" of this agreement shall occur ten days after each of the two conditions referred to above have been satisfied. -8- ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS Results of Operations Creative Vending has not had any business operations since 1989. During the nine month periods ended September 30, 2005 and 2004, Creative Vending had no revenue. Its only expense during that period consisted of paying its franchise tax ($150 per year) with funds loaned to it by its President. Liquidity and Capital Resources At September 30, 2005 Creative Vending had no assets and only one liability: $1,480 owed to its President. It does not have sufficient resources to continue in business, and will rely on its President to loan it money in order to do so. Creative Vending's President has committed to pay the cost of continuing in business as a shell. Accordingly, we expect to have sufficient cash to continue our existence for the foreseeable future. Creative Vending will not be able to carry on any business activities unless it either (a) raises capital through the sale of equity or debt instruments or (b) acquires an operating business in exchange for equity. Any such acquisition will involve the issuance of shares that will represent most of the outstanding shares after the acquisition. Creative Vending is currently party to an Agreement for the Exchange of Common Stock with the shareholders of TetriDyn Solutions, Inc. The share exchange contemplated by that agreement will be completed if Creative Vending becomes current in its filing obligations under the Securities Exchange Act of 1934 and the regulations of the Securities and Exchange Commission, if the shareholders of TetriDyn Solutions approve the share exchange, and if certain other conditions are satisfied. Application of Critical Accounting Policies The preparation of our balance sheet as of September 30, 2005 did not involve the implementation of any critical accounting policies. Impact of Accounting Pronouncements There were no recent accounting pronouncements that have had or are likely to have a material effect on the Company's financial position or results of operations. Off-Balance Sheet Arrangements We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition or results of operations. -9- ITEM 3. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures. Dale B. Finfrock, Jr., our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of Creative Vending's disclosure controls and procedures as of September 30, 2005. Pursuant to Rule13a- 15(e) promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, "disclosure controls and procedures" means controls and other procedures that are designed to insure that information required to be disclosed by Creative Vending in the reports that it files with the Securities and Exchange Commission is recorded, processed, summarized and reported within the time limits specified in the Commission's rules. "Disclosure controls and procedures" include, without limitation, controls and procedures designed to insure that information Creative Vending is required to disclose in the reports it files with the Commission is accumulated and communicated to our Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure. Based on his evaluation, Mr. Finfrock concluded that Creative Vending's system of disclosure controls and procedures was effective as of September 30, 2005 for the purposes described in this paragraph. Changes in Internal Controls. There was no change in internal controls over financial reporting (as defined in Rule 13a-15(f) promulgated under the Securities Exchange Act or 1934) identified in connection with the evaluation described in the preceding paragraph that occurred during the third quarter of Creative Vending's 2005 fiscal year that has materially affected or is reasonably likely to materially affect Creative Vending's internal control over financial reporting. PART II - OTHER INFORMATION Item 6. Exhibits 31 Rule 13a-14(a) Certification 32 Rule 13a-14(b) Certification SIGNATURES 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. CREATIVE VENDING CORP. Date: February 27, 2006 By: /s/ Dale B. Finfrock, Jr. --------------------------------------- Dale B. Finfrock, Jr., Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer -10-