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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended
March 31, 2003 Commission File No. 33-63474
WEBTRONICS, INC.
(Exact name of Registrant as specified in its Charter)
Florida 62-1106840
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(State or jurisdiction of incorporation (IRS Employer
or organization) Identification No.)
420 Lexington Avenue, Suite 601, New York, NY 10710
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(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (212) 672-9190
Former name, former address and former fiscal year,
if changed since last report: N/A
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for a 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 [ ]
The number of shares issued and outstanding of the Registrant's Common Stock,
$.000005 par value, as of May 14, 2003 was 522,602,178
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INTRODUCTORY NOTE
This Report on Form 10-QSB may be deemed to contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. The Company intends that
such forward-looking statements be subject to the safe harbors created by such
statutes. The forward-looking statements included herein are based on current
expectations that involve a number of risks and uncertainties set forth under
"Risk Factors" in our Annual Report on Form 10-KSB and other period reports
filed with the SEC. Accordingly, to the extent that this Report contains
forward-looking statements regarding the acquisitions, financial condition,
operating results, business prospects or any other aspect of the Company, please
be advised that the Company's actual financial condition, operating results and
business performance may differ materially from that projected or estimated by
the Company in forward-looking statements.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
WEBTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
MARCH 31, 2003 AND DECEMBER 31, 2002
ASSETS
2003 2002
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(audited)
Current Assets:
Cash $ 190 $ 232
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Total Assets $ 190 $ 232
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Account payable $ - 0 - $ - 0 -
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Total Liabilities - 0 - - 0 -
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Stockholders' Equity:
Preferred Stock $ .0001 par value, 20,000,000 authorized
none issued and outstanding $ - 0 - $ - 0 -
Common Stock $.000005 par value, 550,000,000 authorized;
500,887,500 shares issued and outstanding $ 2,504 $ 2,504
Additional paid in capital 321 321
Accumulated Deficit during development stage (2,635) (2,593)
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Total Stockholders' Equity 190 232
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Total Liabilities and Stockholders' Equity $ 190 $ 232
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See accompanying notes to financial statements
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WEBTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
Three months ended Feb 2, 2001
------------------------- (Inception)
March 31, March 31, to March 31,
2003 2002 2003
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Revenue $ - 0 - $ - 0 - $ - 0 -
Expenses 42 2,048 2,635
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Net income (loss) before provision
for income taxes $ (42) $ (2,048) $ (2,635)
Provisions for income taxes - 0 - - 0 - - 0 -
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Net income (loss) $ (42) $ (2,048) (2,635)
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Net (Loss) per weighted average of shares $ (0.00) $ (0.00) $ (0.00)
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Weighted average of shares 500,887,500 500,887,500 500,887,500
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See accompanying notes to financial statements
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WEBTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
For the For the
three months three months Feb. 2, 2001
ended March 31, ended March 31, (Inception) to
2003 2002 March 31,2003
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Cash Flows from operations:
Net income (loss) $ (42) $(2,048) $(2,635)
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Net cash used for operations (42) (2,048) (2,635)
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Net (decrease) in cash (42) (2,048) (2,635)
Cash - beginning 232 2,385 2,825
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Cash - ending $ 190 $ 337 $ 190
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See accompanying notes to financial statements
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WEBTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2003
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Organization and Operations
The Company was incorporated under the laws of the State of Florida on
February 2, 2001.
The Company is in the development stage. The Company plans to develop a
website where individuals can obtain foreclosure of real estate and
related mortgage information. The Company currently has no operations.
On April 30, 2003, the Company acquired Callisto Research Labs LLC
(formerly Callisto Pharmaceuticals, Inc.) and Synergy Pharmaceuticals,
Inc. The Company has entered the pharmaceutical industry as a result of
this merger.
The Company will eventually change its name to Callisto
Pharmaceuticals, Inc and will re-domesticate the company's state of
incorporation from Florida to Delaware.
Basis of Accounting
The Company's policy is to prepare its financial statements using the
accrual basis of accounting in accordance with generally accepted
accounting principles. The Company has elected December 31 at its
annual year-end.
Interim Financial Information
The condensed unaudited interim financial statements included herein
have been prepared without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. The condensed financial
statements and notes are presented as permitted on Form 10-SB and do
not contain information included in the Company's annual statements and
notes. Certain information and footnote disclosures normally included
in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to such rules and regulation, although
the Company believes that the disclosures are adequate to make the
information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the December
31, 2002 audited financial statements and the accompanying notes
thereto. While management believes the procedures followed in preparing
these condensed financial statements are reasonable, the accuracy of
the amounts are in some respect dependent upon the facts that will
exist, and procedures that will be accomplished by the Company later in
the year.
These condensed unaudited financial statements reflect all adjustments,
including normal recurring adjustments which, in the opinion of
management, are necessary to present fairly the consolidated operations
and cash flows for the periods presented.
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WEBTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2003
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Cash and Equivalent
Cash and cash equivalents include cash and cash in banks. The Company
maintains cash and cash equivalent balances at a financial institution
that is insured by the Federal Deposit Insurance Corporation up to
$100,000.
Organization Costs
The Company has incurred various expenditures in the formation of its
corporate and organizational structure. In accordance with SOP98-5
these costs will be expenses as incurred.
Revenue Recognition
The Company will recognize revenue upon completion of its services to
be rendered or delivery of products to its customers. The Company has
not generated revenues since inception.
Development Stage
The Company is in its development stage. The Company since inception
has not commenced its operations, nor has generated sufficient working
capital to pursue its business objectives. The accumulated deficit
during its development stage is $2,655.
Net Earnings (Losses) Per Share
The Company reports its net earnings (losses) per share in accordance
with SFAS No. 128 "Earnings Per Share". Basic net earnings (losses) per
share is computed by dividing net income (loss) available to common
stockholders by the weighted averaged number of common shares
outstanding.
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WEBTRONICS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2003
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES (Continued)
Diluted earnings (losses) per share is computed similar to basic
earnings (losses) per share except that the denominator is increased to
include the number of additional common shares that would have been
outstanding. As of March 31, 2003, there are no outstanding stock
options or stock warrants that would have affected our computation.
NOTE 2 - INCOME TAX
In February 1992, the Financial Standards Board issued Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes."
Under SFAS No. 109, deferred assets and liabilities are recognized for
the estimated future tax consequences between the financial statement
carrying amounts of the existing assets and their respective basis.
Deferred assets and liabilities are measured using enacted tax rates in
effect for the year in which temporary differences are expected to be
recovered or settled. Under SFAS No. 109, the effect on deferred assets
and liabilities of a change in tax rates is recognized in the period
that includes the enactment date.
NOTE 3 - CAPITAL TRANSACTIONS
On March 15, 2003, certain shareholders entered into a Stock Purchase
Agreement with Callisto Pharmaceuticals, Inc. Under the agreement,
Callisto purchased approximately 99.7% of the Company's issued and
outstanding stock. A Form 8-K was filed on March 19, 2002 reporting the
change in control of the Company.
On March 14, the Company amended its Articles of Incorporation to
change its capital structure. As a result of this amendment, the
authorized common stock was increased from 50,000,000 to 550,000,000
and the par value changed from $ .0001 to $ .000005, respectively.
Pursuant to a merger agreement that was closed on April 30, 2003, the
Company issued 17,318,994 shares of common stock to holders of Callisto
and 4,395,684 shares of common stock to holders of Synergy
Pharmaceuticals.
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Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Background
On March 10, 2003, as amended on April 4, 2003, we entered into a
merger agreement with Callisto Research Labs, LLC (formerly known as Callisto
Pharmaceuticals, Inc.), or Callisto Research and Synergy Pharmaceuticals, Inc.,
or Synergy, an unaffiliated company under which Callisto Research and Synergy
agreed to merge in a stock for stock transaction and each become our
subsidiaries. On April 30, 2003 the merger closed. In addition it is anticipated
that we will change our name from Webtronics, Inc. to Callisto Pharmaceuticals,
Inc. and re-domesticate from Florida to Delaware by merging into a wholly-owned
subsidiary (the "Webtronics Merger").
Pursuant to the merger agreement we issued 17,318,994 shares of our
common stock to holders of Callisto Research common stock and 4,395,684 shares
to holders of Synergy common stock in exchange for outstanding Callisto Research
and Synergy common stock. As a result of the merger there is a total of
approximately 23,217,578 of our shares outstanding (not including 499,384,600 of
our shares owned by Callisto Research, which have been returned for cancellation
prior to the Webtronics merger).
Pursuant to the merger agreement, upon the closing of the Webtronics
Merger, it is expected that four of our directors will be nominated to our Board
by the former Callisto Research stockholders and three of our directors will be
nominated to our Board by the former Synergy stockholders. It is anticipated
that the Callisto Research directors will include Gabriel M. Cerrone and
Christoph Bruening. It is anticipated that the Synergy directors will be Donald
H. Picker, Ph.D., Edwin Snape and Albert J. Henry.
Pursuant to the merger agreement we assumed the obligations of Callisto
Research with respect to Callisto Research's outstanding 3,510,560 stock options
and the stock option plan under which Callisto Research had granted 2,563,055 of
these stock options. The remaining stock options are non-plan options.
Critical Accounting Policies
Our accounting policies are described in Note 1 of the consolidated
financial statements included in this report on Form 10-QSB. The financial
statements are prepared in accordance with accounting principles generally
accepted in the United States of America, which requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Since we are in the development stage and have had only limited
expenditures and no estimates we do not consider any accounting policy to be
critical to the understanding of our business.
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Results of Operations
Our financial statements, which are set forth in Item 1 of this report,
reflect our operating results from February 12, 2001 (inception) to March 31,
2003 and for the quarter ended March 31, 2003 and 2002. During the period from
inception to March 31, 2003, we had no revenue and our expenses totaled $2,635,
of which $440 was incurred in 2001, $2,353 in 2002 and $42 in 2003.
Substantially all of these expenses were for office and administrative
activities related to the early stages of developing plans for our foreclosure
and mortgage information business. We entered into an agreement for the hosting
of our website prior to our change in control in March, 2002 and thereafter
suspended that agreement to preserve cash pending our new management's
assessment of plans for financing the cost of indexing with search engines and
providing amortization calculators, mortgage analysis tools and 24 access.
Substantially all of these expenditures were made by management before March 15,
2002.
Callisto, who was our principal shareholder until the merger, pays for
expenses such as accounting and legal fees relating to our reporting
responsibility under the Securities Exchange Act of 1934, as well as provides us
with an office location without any expectation of repayment. We abandoned the
mortgage and foreclosure information business to facilitate the merger. Each of
Callisto and Synergy have plans to expand and develop their pharmaceutical
businesses and a full discussion of the results of operations of each company
and the plan for expenditures by the combined company as included in a Form 8-K
Report filed by us on May 15, 2003.
Liquidity and Capital Resources
Most of our operating expenses were borne by Callisto, our former
parent and, effective April 30, 2003, subsidiary, without any expectation of
reimbursement.
We will require substantial additional funds to conduct and sponsor
research and development activities, to conduct pre-clinical and clinical
testing, and to market Callisto's and Synergy's products. Our future capital
requirements will depend on many factors, including continued scientific
progress, progress with pre-clinical testing and clinical trials, the time and
costs involved in obtaining regulatory approvals, the costs involved in filing,
prosecuting and enforcing patent claims, competing technological and market
developments, the ability of Callisto and Synergy to establish collaborative
arrangements, effective commercialization activities and arrangements and the
purchase or development of additional equipment and facilities. There can be no
assurance, however, that changes in Callisto's or Synergy's research and
development plans or other events affecting operating expenses will not result
in the expenditure of such proceeds prior to that time. Neither we, Callisto nor
Synergy have other current sources of funding. As a result, we will need to
raise additional funds before any of its product candidates achieves regulatory
approvals, if at all. We intend to seek such additional funding through
collaborative arrangements and through public or private financings. There can
be no assurance that additional financing will be available, or, if available,
that such additional financing will be available on terms acceptable to us. If
additional funds are raised by issuing debt, we will incur fixed payment
obligations, which could delay the time, if any, when we may achieve
profitability. If adequate funds are not available, we may be required to delay,
scale back or eliminate one or more of its principal product candidates or
obtain funds through arrangements with collaborative partners or others that may
require us to relinquish rights to certain of its technologies, product
candidates or products that Callisto or Synergy would not otherwise relinquish.
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Item 3. Controls and Procedures
Under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, we have
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures within 90 days of the filing date of this quarterly
report, and, based on their evaluation, our principal executive officer and
principal financial officer have concluded that these controls and procedures
are effective. There were no significant changes in our internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation.
Disclosure controls and procedures are our controls and other procedures that
are designed to ensure that information required to be disclosed by us in the
reports we file or submit under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file under the
Exchange Act is accumulated and communicated to our management, including our
principal executive officer and principal financial officer, as appropriate to
allow timely decisions regarding required disclosure.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
(a) None
(b) None
(c) On April 30, 2003, we issued 17,318,994 shares of our
common stock to holders of Callisto Research common
stock and 4,395,684 shares to holders of Synergy
common stock in the merger in reliance on exemption
Rule 506 of Regulation D. Each holder has or will
represent that they are accredited investors and Form
D was filed May 15, 2003.
(d) Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
99.1 Certification pursuant to 18 U.S.C. Section 1350
(b) Reports on Form 8-K
A current report on Form 8-K was filed on March 19, 2003 to
report a 475-for-one forward split of our shares of common
stock.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: May 15, 2003
WEBTRONICS, INC.
By: /s/ Christoph Bruening
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Christoph Bruening, President
CERTIFICATION
I, Christoph Brueing, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Webtronics,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respect the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report.
4. The registrant's other certifying officers and I am responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the
period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to
the filing date of this quarterly report (the "Evaluation
Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based
on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and report
financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
May 15, 2003
/s/ Christoph Bruening
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Christoph Bruening
President and Sole Officer
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