UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 10-QSB /A
(Mark One)
[ x ]
Quarterly report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended December 31, 2006
[ ]
Transition report under Section 13 or 15(d) of the
Exchange Act
Commission file number:
000-32479
TRIMAX
CORPORATION
(Exact name of small business issuer as
specified in its charter)
Nevada
|
76-0616468
|
(State of incorporation)
|
(I.R.S. Employer Identification No.)
|
|
|
2 Lombard St, Suite 204
|
Toronto, Ontario, M5C-1M1
|
(Address of principal executive offices)
|
|
|
(416)
832-9315
|
|
(Issuers telephone number)
|
(Issuers website)
|
Check whether the issuer (1) filed all reports required to be
filed by Section 13 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 [ ]
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ x ]
State the number of shares outstanding of each of the issuers
classes of common equity, as of the latest practicable date:
56,709,937 shares
of common stock, as of February 11, 2007.
Transitional Small Business Disclosure Format (check one): Yes
[ ] No [ x ]
2
Table of Contents
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited consolidated financial statements of the quarterly
shareholders report for the quarter ended December 31, 2006, are incorporated
herein by reference.
The consolidated financial statements incorporated by reference
from the quarterly shareholders report have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB /A
and item 310 under subpart A of Regulation S-B. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three
month ended December 31, 2006 and for the period August 25, 2000 (inception)
to December 31, 2006 are not necessarily indicative of the results that may
be expected for the year ended September 30, 2007. For further information,
refer to the consolidated financial statements and footnotes thereto included
in the Companys annual report on Form 10-KSB for the year ended September
30, 2006.
3
Table of Contents
TRIMAX CORPORATION
|
(A Development Stage Company)
|
|
CONSOLIDATED BALANCE SHEETS
|
|
|
December
|
|
|
September
|
|
|
|
31,
|
|
|
30,
|
|
|
|
2006
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
Cash
|
$
|
437
|
|
$
|
764
|
|
Prepaid expenses and deposits
|
|
117,443
|
|
|
107,027
|
|
Inventory
|
|
24,221
|
|
|
-
|
|
|
|
|
|
|
|
|
Total
Current Assets
|
|
142,101
|
|
|
107,791
|
|
|
|
|
|
|
|
|
INTANGIBLE ASSETS, net of depreciation
|
|
1,385,092
|
|
|
1,463,483
|
|
EQUIPMENT, net of depreciation
|
|
16,673
|
|
|
17,654
|
|
Total Long Term Assets
|
|
1,401,765
|
|
|
1,481,137
|
|
|
$
|
1,543,866
|
|
$
|
1,588,928
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
Bank indebtedness
|
$
|
20,020
|
|
$
|
20,622
|
|
Accounts payable
|
|
654,711
|
|
|
364,967
|
|
Long term
debt - current portion
|
|
56,122
|
|
|
54,528
|
|
Advances from related parties
|
|
545,984
|
|
|
413,603
|
|
|
|
|
|
|
|
|
Total Current Liabilities
|
|
1,276,837
|
|
|
853,720
|
|
|
|
|
|
|
|
|
LONG TERM LIABILITIES
|
|
|
|
|
|
|
Long term
debt
|
|
94,455
|
|
|
98,496
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
|
1,371,292
|
|
|
952,216
|
|
STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
Common
stock
|
|
35,041
|
|
|
32,291
|
|
Additional paid-in
capital
|
|
11,560,121
|
|
|
11,311,180
|
|
Accumulated other comprehensive loss
|
|
(620
|
)
|
|
(23,288
|
)
|
Deficit accumulated
during the development stage
|
|
(11,421,968
|
)
|
|
(10,683,471
|
)
|
|
|
|
|
|
|
|
|
|
172,574
|
|
|
636,712
|
|
|
|
|
|
|
|
|
|
$
|
1,543,866
|
|
$
|
1,588,928
|
|
See accompanying notes to consolidated financial statements.
4
Table of Contents
TRIMAX CORPORATION
|
(A Development Stage Company)
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
Period
|
|
|
|
Three Months Ended
|
|
|
August 25,
|
|
|
|
December 31,
|
|
|
2000
|
|
|
|
|
|
|
|
|
|
( Date of
|
|
|
|
|
|
|
|
|
|
Inception)
|
|
|
|
|
|
|
|
|
|
to
|
|
|
|
|
|
|
|
|
|
December
|
|
|
|
2006
|
|
|
2005
|
|
|
31, 2006
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES
|
|
|
|
|
|
|
|
|
|
License fees
|
$
|
-
|
|
|
21,484
|
|
$
|
64,953
|
|
Financial
|
|
4,613
|
|
|
164
|
|
|
100,005
|
|
Depreciation on tangible
assets
|
|
1,345
|
|
|
1,590
|
|
|
33,446
|
|
Depreciation
of intangible assets
|
|
78,391
|
|
|
-
|
|
|
182,917
|
|
Consultants and subcontractors
|
|
524,317
|
|
|
21,587
|
|
|
7,003,631
|
|
General and
administrative
|
|
129,831
|
|
|
74,075
|
|
|
3,937,348
|
|
|
|
|
|
|
|
|
|
|
|
NET LOSS
|
|
738,497
|
|
|
118,900
|
|
|
11,322,300
|
|
FOREIGN CURRENCY TRANSLATION ADJUSTMENT
|
|
22,668
|
|
|
7,725
|
|
|
45,956
|
|
COMPREHENSIVE LOSS
|
|
761,165
|
|
|
126,625
|
|
|
11,368,256
|
|
NET LOSS PER COMMON SHARE - (Basic and diluted)
|
$
|
(0.02
|
)
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE COMMON SHARES
|
|
|
|
|
|
|
|
|
|
OUTSTANDING
|
|
33,913,616
|
|
|
25,389,600
|
|
|
|
|
See accompanying notes to consolidated financial statements.
5
Table of Contents
TRIMAX CORPORATION
|
(A Development Stage Company)
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
Period
|
|
|
|
Three Months Ended
|
|
|
August 25,
|
|
|
|
December 31
|
|
|
2000
|
|
|
|
|
|
|
|
|
|
(Date of
|
|
|
|
|
|
|
|
|
|
Inception)
|
|
|
|
|
|
|
|
|
|
to December
|
|
|
|
2006
|
|
|
2005
|
|
|
31, 2006
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(738,497
|
)
|
$
|
(118,900
|
)
|
$
|
(11,322,300
|
)
|
Adjustments to reconcile net loss to net cash provided by
|
|
|
|
|
|
|
|
|
|
operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
79,736
|
|
|
1,590
|
|
|
216,363
|
|
Cancellation
of common stock
|
|
-
|
|
|
-
|
|
|
(16,000
|
)
|
Common stock issued for debt
|
|
-
|
|
|
-
|
|
|
113,799
|
|
Common stock
issued in settlement of legal claim
|
|
-
|
|
|
-
|
|
|
59,408
|
|
Accounts payable forgiven
|
|
-
|
|
|
(10,171
|
)
|
|
(10,171
|
)
|
Issuance
of common stock for services
|
|
100,000
|
|
|
6,500
|
|
|
6,569,576
|
|
Common stock issued for salaries
|
|
-
|
|
|
-
|
|
|
986,500
|
|
Write-off
of salaries payable
|
|
-
|
|
|
-
|
|
|
(111,355
|
)
|
Write-off of directors
compensation
|
|
-
|
|
|
-
|
|
|
(200,000
|
)
|
|
|
|
|
|
|
|
|
|
|
Changes in operating assets
and liabilities:
|
|
-
|
|
|
-
|
|
|
-
|
|
Stock subscriptions
receivable
|
|
-
|
|
|
(21,900
|
)
|
|
-
|
|
Prepaid expenses
|
|
(10,416
|
)
|
|
(319
|
)
|
|
(107,245
|
)
|
Inventory
|
|
(24,221
|
)
|
|
|
|
|
(24,221
|
)
|
Prepaid license fees
|
|
-
|
|
|
18,234
|
|
|
-
|
|
Accounts
payable and accrued liabilities
|
|
292,094
|
|
|
(9,828
|
)
|
|
1,755,381
|
|
Net Cash Used in Operating Activities
|
|
(301,304
|
)
|
|
(102,723
|
)
|
|
(2,090,265
|
)
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Acquisition of Multi-Source Inc.
|
|
-
|
|
|
-
|
|
|
14,016
|
|
Purchases of property and equipment
|
|
(1,010
|
)
|
|
(22,670
|
)
|
|
(54,382
|
)
|
Net Cash Used in Investing Activities
|
|
(1,010
|
)
|
|
(22,670
|
)
|
|
(40,366
|
)
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Advances from related parties
|
|
132,381
|
|
|
(22,124
|
)
|
|
402,261
|
|
Loans payable
|
|
-
|
|
|
-
|
|
|
626,123
|
|
(Repayment) Proceeds from bank indebtedness
|
|
(602
|
)
|
|
|
|
|
706
|
|
(Repayment) Proceeds from long-term debt
|
|
(2,447
|
)
|
|
|
|
|
(370
|
)
|
Common stock to be issued
|
|
-
|
|
|
94,960
|
|
|
173,555
|
|
Proceeds from issuance of stock
|
|
152,750
|
|
|
36,071
|
|
|
883,398
|
|
Net Cash Provided by Financing
Activities
|
|
282,082
|
|
|
108,907
|
|
|
2,085,673
|
|
EFFECT OF FOREIGN CURRENCY TRANSLATION
|
|
19,905
|
|
|
2,366
|
|
|
45,722
|
|
NET (DECREASE) INCREASE IN CASH
|
|
327
|
|
|
(14,120
|
)
|
|
764
|
|
CASH BEGINNING OF PERIOD
|
|
437
|
|
|
19,855
|
|
|
-
|
|
CASH END OF PERIOD
|
$
|
764
|
|
$
|
5,735
|
|
$
|
764
|
|
See accompanying notes to consolidated financial statements.
6
Table of Contents
TRIMAX CORPORATION
|
(A Development Stage Company)
|
|
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
|
|
|
|
|
|
|
|
|
Period
|
|
|
|
Three Months Ended
|
|
|
August 25,
|
|
|
|
December 31,
|
|
|
2000
|
|
|
|
|
|
|
|
|
|
(Date of
|
|
|
|
|
|
|
|
|
|
Inception)
|
|
|
|
|
|
|
|
|
|
to December
|
|
|
|
2006
|
|
|
2005
|
|
|
31, 2006
|
|
|
|
(Unaudited)
|
|
|
|
|
|
(Unaudited)
|
|
Supplemental Disclosure of Cash Flows Information:
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
$
|
4,613
|
|
$
|
|
|
$
|
42,483
|
|
Shares
issued (cancelled) to settle debt and accounts payable
|
|
100,000
|
|
|
(617,985
|
)
|
|
(404,186
|
)
|
Issuance
of common stock to acquire Multi-Source
|
$
|
-
|
|
$
|
-
|
|
$
|
1,147,500
|
|
See accompanying notes to consolidated financial statements.
7
Table of Contents
TRIMAX CORPORATION
(A Development Stage
Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,
2006
Summary of Significant Accounting Policies
Nature of Operations
Urbanesq.com Inc. (Urbanesq) was incorporated August 25, 2000
under the laws of the Province of Canada.
Effective October 18, 2001, Urbanesq completed a merger with
Koala International Wireless Inc. (Koala), a public company incorporated in
the State of Nevada on August 18, 1999. This merger constituted a reverse
takeover of Urbanesq by Koala resulting in the period of operations being
reported from the commencement of operations of Urbanesq.
The Company changed its name to KIWI Network Solutions Inc.
(The Company) on December 23, 2003.
On November 4, 2004 the Company announced a reverse stock split
of one of the Corporations common stock for each one hundred shares outstanding
in the name of such shareholder; and authorized any fractional shares to be
rounded to one share.
On February 11, 2005, the Company approved its Amended and
Restated Articles of Incorporation, changed the name of the Company to Trimax
Corporation (Trimax), and increased the number of its authorized stock by
95,000,000 shares of common stock and 19,000,000 shares of preferred stock, both
with a par value of $0.01 per share.
On August 17, 2005, pursuant to a reorganization agreement by
and among PLC Network Solutions Inc. (PLC), a private company incorporated in
the Province of Ontario under the Ontario Business Corporations Act and Trimax,
Trimax acquired all of the outstanding common stock of PLC.
On July 29, 2005, the Company entered into an Exclusive Supply
agreement with a technology partner (the "Partner"), a privately-held
corporation based in Toronto, Ontario. This agreement provided the Company with
the exclusive right to sell Switzerland based Ascom broadband over power line
communication access products ("Products") in Canada and non-exclusive rights
world wide, which the Partner represented that it had secured itself from
Ascom. In accordance with the agreement, the Partner agreed not to sell or
supply Products to any other person or legal entity in Canada with the exception
of any hydro organizations. In consideration for these rights the Company agreed
to pay the Partner an annual license fee of $100,000 in Canadian dollars for
five years commencing on August 1, 2005.
Subsequent to the signing and the advancement of funds for the
Exclusive Supply Agreement the company was made aware that the product
supplier had no right to grant a sub-license from Ascom. Furthermore, the supplier
was previously in default and was never in any position to grant any sub-license
on its own license. Due to these events, Trimax has secured product from other
vendors for BPL products, which it considers to be more cost effective and possessing
similar performance characteristics. As well no annual license fees are required
to be paid by Trimax. The company is also in the process of negotiating an equity
position as well as being classified as a first tier client with exclusive rights
in certain areas of the world for BPL products with a company that possesses
its own proprietary BPL products.
On March 22, 2006 Trimax filed an action in The Superior Court
Of Ontario against Electrolinks Corporation alleging damages of $1,250,000.
Subsequently, Trimax received a settlement offer for $107,000 plus applicable
taxes and legal fees, which it has accepted. Subsequent to the quarter ended
December 31, 2006 the company received $25,000 from Electrolinks Corporation.
On June 1, 2006, pursuant to a reorganization agreement by and
among Multi-Source Inc. (MSI), a private company incorporated in
the Province of Ontario under the Ontario Business Corporations Act and Trimax,
Trimax acquired all of the outstanding common stock of MSI.
8
Table of Contents
TRIMAX CORPORATION
(A Development Stage
Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,
2006
Going Concern
The Company's 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 losses
from operations since inception that raise substantial doubt as to its ability
to continue as a going concern.
The Company's ability to continue as a going concern is
contingent upon its ability to obtain the financing and strategic alliances
necessary to attain profitable operations.
The financial statements do not include any adjustments to
reflect the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries, PLC and MSI, and have
been prepared in accordance with accounting principles generally accepted in the
United States of America ("GAAP"). All significant inter-company accounts and
transactions are eliminated.
The Company has not earned any revenues from limited principal
operations and accordingly, the Company's activities have been accounted for as
those of a "Development Stage Enterprise" as set forth in SFAS No. 7, Accounting
and Reporting by Development Stage Enterprises. Among the disclosures required
by SFAS No. 7 are that the Company's financial statements be identified as those
of a development stage company, and that the statements of operation,
stockholders' deficiency and cash flows disclose activity since the date of the
Company's inception.
Deferred Financing Costs
The costs of financing are capitalized and amortized by the straight-line
method over the term of the related debt. If any or all of the related debt
is repaid prior to its maturity date, a pro-rata share of the related deferred
financing costs are written off and recorded as amortization expense in the
period of the repayment in the consolidated statement of operations.
Intangible Assets
Intangible assets of acquired businesses, is stated at cost.
The intangibles have limited lives which the Company has determined to be five
years. Other intangible assets include deferred financing fees. The Company
evaluates intangible assets at least annually to determine whether events and
circumstances continue to support a definite useful life.
9
Long-Term Debt
|
|
December
|
|
|
December
|
|
|
|
31,
|
|
|
31,
|
|
|
|
2006
|
|
|
2005
|
|
Long-term debt consists of the following:
|
|
|
|
|
|
|
Bank loan, bearing interest at Business Development Bank of
Canada
|
|
|
|
|
|
|
floating rate plus a variance of 2% repayable
in monthly payment of $835
|
|
|
|
|
|
|
plus interest with the final payment due on
July 23, 2009. The loan is
|
|
|
|
|
|
|
personally guaranteed by a
shareholder of the Company.
|
$
|
30,400
|
|
$
|
-
|
|
Bank loan bearing interest at Bank of Montreal prime rate
plus 3%,
|
|
|
|
|
|
|
repayable in monthly principle
payments of $1,778 plus interest, with the
|
|
|
|
|
|
|
final payment due on July 31, 2012
|
|
120,177
|
|
|
-
|
|
|
|
150,577
|
|
|
-
|
|
Less current portion
|
|
56,122
|
|
|
-
|
|
Long-term debt
|
$
|
94,455
|
|
$
|
-
|
|
|
|
|
|
|
|
|
Approximate principal repayments
required by the long term debt are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
Year
|
|
|
|
|
|
|
2007
|
|
|
|
|
37,548
|
|
2008
|
|
|
|
|
27,998
|
|
2009
|
|
|
|
|
27,998
|
|
2010
|
|
|
|
|
19,769
|
|
2011 and thereafter
|
|
|
|
|
37,264
|
|
|
|
|
|
$
|
150,577
|
|
10
Table of Contents
TRIMAX CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
Acquisition
Multi-Source Inc.
On June 1, 2006 Trimax entered into a Reorganization Agreement
with the shareholders of MSI, a company incorporated in the Province of Ontario,
Canada. Under the terms of the Reorganization Agreement, the shareholders of MSI
conveyed all of the issued and outstanding shares of MSI to Trimax in exchange
for up to 5,000,000 shares of Trimaxs common stock. The acquisition was
accounted for under the purchase method of accounting. Accordingly, the
financial position and results of operations of MSI have been consolidated
subsequent to the acquisition date. Trimax allocated the purchase price to the
acquired tangible net assets and liabilities. In addition the company allocated
$1,557,327 to the acquired intangible assets. The intangible assets have been
amortized over a five year period on a straight-line basis. At closing on June
1, 2006, 3,000,000 shares of common stock of Trimax were issued. Of the
3,000,000 shares issued on closing, 750,000 were issued to a third party
subscriber for transaction costs. Up to an additional 2,000,000 shares may be
issued to the principal shareholder of MSI, subsequent to the acquisition, upon
the achievement of certain milestones by the MSI business within 18 months of
the closing.
The purchase price was allocated as follows:
|
|
|
|
|
|
|
|
|
|
|
At June 1,
|
|
|
|
|
|
|
|
|
|
|
|
|
2006
|
|
Consideration exchanged:
|
|
|
|
|
|
|
|
|
|
|
3,000,000 shares of
common stock valued at the average price two days before and after the
measurement date
|
|
$
|
1,530,000
|
|
Transaction costs -
750,000 shares of common stock valued at the average price two days before
and after the measurement date
|
|
|
(382,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase price
|
|
|
|
|
|
|
|
$
|
1,147,500
|
|
Liabilities assumed
|
|
|
|
|
|
|
|
|
(442,540
|
)
|
Estimated fair value of tangible
assets acquired
|
|
|
|
|
|
|
|
|
32,713
|
|
Estimated fair value of identifiable intangible
assets acquired completed technology
|
|
|
1,557,327
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill
|
|
|
|
|
|
|
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible assets, net, consisted
of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
Useful Life and Amortization Basis
|
|
|
Gross
Intangible
Asset
|
|
|
Accumulated
Amortization
|
|
|
Net
Intangible
Asset
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Completed
|
|
|
|
|
|
|
|
|
|
|
Technology
|
|
|
|
|
|
|
|
|
|
|
|
|
5 years using straight-line
basis
|
|
$
|
1,557,327
|
|
$
|
181,683
|
|
$
|
1,375,644
|
|
11
Table of Contents
TRIMAX CORPORATION
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2006
Deposits toward Acquisition
3One Networks Inc.
Trimax is purchasing the High Speed Internet Access (HSIA)
service business, including a portfolio of 50 Hotels consisting of approximately
4,600 rooms and all existing service contracts and related assets for providing
HSIA services to these hotels, motels and resorts. The purchase price was
$220,230 CDN. Trimax has paid initial deposits and payments totaling $94,600
USD. The company has halted further payments while in negotiations with 3One for
possible mutually beneficial changes in its relationship on a going forward
basis. Therefore, remaining, payments pertaining to the purchase and sale
agreement have yet to be fulfilled and the rights to these assets do not
transfer to the company until fully paid, the deposits and payments paid as of
September 30, 2006 have been reflected in the balance sheet under prepaid
expenses and deposits. No additional deposits and payments have been paid
subsequent to year end. The agreement also provides for 3One to deliver certain
BPL equipment based on normal distribution pricing. The agreement called for the
acquisition of the service book for 50 Hotels, which represents recurring
revenue stream from 4,600 rooms in total. The acquisition allows for the
potential to upgrade the services, technology, IP applications and broadband
provisioning to these hotel sites.
Recent Accounting Pronouncements
In March 2005, the FASB issued FIN No. 47,
Accounting for
Conditional Assets Retirement ObligationsAn Interpretation of FASB Statement
No. 143
. FIN 47 requires an entity to recognize a liability for the fair
value of a conditional asset retirement obligation when incurred if the
liability's fair value can be reasonably estimated. The adoption of FIN No. 47
did not have a material impact on the financial position or results of
operations of the Company.
In June 2005, the FASB issued SFAS No. 154,
Accounting
Changes and Error Corrections, which changes the requirements for the accounting
for and reporting of voluntary changes in accounting principle
. SFAS 154
requires retrospective application to prior periods financial statements of
changes in accounting principles, unless impracticable. SFAS 154 supersedes
Accounting Principles Board Opinion No. 20, Accounting Change (APB 20), which
previously required that most voluntary changes in accounting principle be
recognized by including in the current periods net income the cumulative effect
of changing to the new accounting principle. SFAS 154 also makes a distinction
between retrospective application of an accounting principle and the restatement
of financial statements to reflect correction of an error. SFAS 154 carries
forward without changing the guidance contained in APB 20 for reporting the
correction of an error in previously issued financial statements and a change in
accounting estimate. SFAS 154 applies to voluntary changes in accounting
principle that are made in fiscal years beginning after 15 December 2005.
Management does not expect that the adoption of SFAS 154 will have a significant
impact on the financial condition or results of operations.
In February 2006, the FASB issued SFAS No. 155,
Accounting
for Certain Hybrid Financial Instruments
, which amends SFAS No. 133,
Accounting
for Derivative Instruments and Hedging Activities
and SFAS No. 140,
Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities
.
SFAS 155 simplifies the accounting for certain derivatives embedded in other
financial instruments by allowing them to be accounted for as a whole if the
holder elects to account for the whole instrument on a fair value basis. The
statement also clarifies and amends certain other provisions of SFAS No. 133
and SFAS No. 140. SFAS 155 is effective for all financial instruments acquired,
issued, or subject to a remeasurement event occurring in fiscal years beginning
after 15 September 2006. Management does not expect that the adoption of SFAS
155 will have a significant impact on the financial condition or results of
operations.
In March 2006, the FASB issued SFAS No. 156,
Accounting for
Servicing of Financial Assets-an amendment to FASB Statement No. 140
. SFAS
156 requires that all separately recognized servicing rights be initially measured
at fair value, if practicable. In addition, this statement permits an entity
to choose between two measurement methods (amortization method or fair value
measurement method) for each class of separately recognized servicing assets
and liabilities. This new accounting standard is effective 1 January, 2007.
Management does not expect that the adoption of SFAS 156 will have a significant
impact on the financial condition or results of operations.
In September 2006, the FASB issued SFAS No. 157,
Fair Value
Measurements
, which defines fair value, establishes a framework for measuring
fair value in generally accepted accounting principles, and expands disclosures
about fair value measurements. SFAS 157 is effective in fiscal years beginning
after 15 November 2007. Management is currently evaluating the impact that the
adoption of this statement may have on the Companys consolidated financial
position and results of operations.
12
Table of Contents
TRIMAX CORPORATION
Formerly Kiwi Network Solutions
Inc.
(A Development Stage Company)
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER 31, 2006
Convertible Debenture
On May 15, 2006 Trimax secured financing from a private
accredited group of investors. The commitment of $1,500,000 is available to be
drawn down in $300,000 tranches at Trimax's option. The loans mature on May 14,
2009 at bear an annual interest rate of 12%. At the investor's option, the loan
is convertible to common shares at the prior 20 day average price. Each common
share has one purchase warrant attached, with each warrant is exercisable for
one common share at $1.25 until May 14, 2009. In October of 2006 the company
signed an amendment to the convertible financing agreement which encompasses
pricing changes and more flexible terms to Trimax. On 10 October 2006 the
Company drew down $150,000 of the available loan under the terms of the
supplementary and amending agreement to the convertible debenture. This draw
down was simultaneously used as proceeds for the issuance of 750,000 restricted
common shares and warrants for an additional 750,000 common shares exercisable
at $0.20.
Capital Stock
On 19 October 2006 the Company's Board of Directors approved
the issuance of 750,000 restricted common shares in exchange for a draw down
payment of $150,000 from the convertible debenture described above. These shares
were issued as a result of an amending agreement in October 2006 to the
convertible debenture agreement which outlined the simultaneous issuance of
750,000 restricted common shares and warrants for an additional 750,000 common
shares exercisable at $0.20 upon making the first draw down payment from the
convertible debenture to the Company.
On November 16, 2006 the Company's Board of Directors approved
the issuance of 2,000,000 private placement restricted common shares in exchange
for $100,000 of services provided to the Company or $0.05 per share.
Subsequent Events
On January 22, 2007 the Company issued 1,369,286 common shares
in exchange for consulting services rendered under consulting agreements, pursuant
to the Director and Officer Stock Performance Plan. These shares were issued
pursuant to a Form S-8 registration statement.
On January 24, 2007 the Company issued 10,000,000 restricted
common shares to the officers of the company for accrued wages totalling $200,000
or $0.02 per share.
On January 27, 2007 the Company issued 8,300,000 restricted common
shares in settlement of accounts payable of $148,400 or $0.02 per share.
13
Table of Contents
Item 2. Managements Discussion and Analysis
The following discussion should be read in conjunction with the
information contained in our consolidated financial statements and the notes
thereto appearing elsewhere in this quarterly report, and in conjunction with
the Management's Discussion and Analysis set forth in (1) our annual report on
Form 10-KSB for the year ended September 30, 2006.
Preliminary Note Regarding Forward-Looking
Statements
This quarterly report and the documents incorporated herein by
reference contain forward-looking statements within the meaning of the federal
securities laws, which generally include the plans and objectives of management
for future operations, including plans and objectives relating to our future
economic performance and our current beliefs regarding revenues we might earn if
we are successful in implementing our business strategies. The forward-looking
statements and associated risks may include, relate to or be qualified by other
important factors. You can identify forward-looking statements generally by the
use of forward-looking terminology such as believes, expects, may, will,
intends, plans, should, could, seeks, pro forma, anticipates,
estimates, continues, or other variations of those terms, including their
use in the negative, or by discussions of strategies, opportunities, plans or
intentions. You may find these forward-looking statements in this Item 2.
Managements Discussion and Analysis of Financial Condition and Results of
Operations, as well as throughout this quarterly report. A number of factors
could cause results to differ materially from those anticipated by
forward-looking statements.
These forward-looking statements necessarily depend upon
assumptions and estimates that may prove to be incorrect. Although we believe
that the assumptions and estimates reflected in the forward-looking statements
are reasonable, we cannot guarantee that we will achieve our plans, intentions
or expectations. The forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause actual results to differ in
significant ways from any future results expressed or implied by the
forward-looking statements.
Any of the factors described in this quarterly report,
including in this Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations, could cause our financial results,
including our net income (loss) or growth in net income (loss) to differ
materially from prior results, which in turn could, among other things, cause
the price of our common stock to fluctuate substantially. We base the
forward-looking statements on information currently available to us, and we
assume no obligation to update them.
In addition, readers are also advised to refer to the information
contained in our filings with the Commission, especially on Forms 10-KSB, 10-QSB
and 8-K, in which we discuss in more detail various important factors that could
cause actual results to differ from expected or historic results. It is not
possible to foresee or identify all such factors. As such, investors should
not consider any list of such factors to be an exhaustive statement of all risks
and uncertainties or potentially inaccurate assumptions.
14
Table of Contents
Plan of Operations
Trimax and its wholly owned subsidiaries Multi-Source Inc. and
PLC Network Solutions Inc. are providers of BPL communication technologies.
Trimax specializes in the development, distribution, implementation, and
servicing technologies that use the power grid to deliver 128-bit encrypted
high-speed symmetrical broadband for data, voice and video transmission. BPL is
a communications technology that turns the existing ubiquitous power line
infrastructure and common electrical wiring in commercial and residential
buildings into a high-bandwidth network. Broadband is delivered simultaneously
on a single platform, to every electrical outlet throughout the home or
business. To connect, users simply plug a modem into any electrical outlet, and
plug their computer, phone or IP device into the modem at a speed substantially
faster than conventional DSL or cable. Since the building's electrical wiring
becomes the backbone for a secure local area network, there is no need to
install any new wiring in the walls. The company's technologies use the existing
electrical wiring as a "smart" network to deliver broadband access to computers,
video on demand (VOD), VOIP phones, surveillance cameras, elevator
applications, IPTVs, AMR, etc. as well as connect printers, faxes, entertainment
systems, etc. on the hotel, office or home network. Installation is usually
implemented in a matter of hours or days instead of weeks or months and avoids
the expense and disruption to the business of burying cables or opening walls
and ceilings to run new cables, which is necessary for other broadband access
technologies. This technology has been successfully deployed around the globe,
in hotels, homes, apartments, office towers, schools, hospitals, museums and
government buildings.
The Company and its BPL devices are presently Federal
Communications Commission (FCC) certified. No further research and development
is needed in order for the Company to be able to sell and market its products.
In 2006, the Company has completed pilot projects, deployed test equipment begun
negotiations of contracts worldwide including North and South America, Africa,
India, Pakistan, and Saudi Arabia, and anticipates an increase in interest for
deployment of its devices and bundled services in the 2007 calendar year. The
Company anticipates securing some noteworthy contracts in fiscal 2007 for its
devices and bundled services in emerging markets through its subsidiaries MSI
and PLC. The Company anticipates and foresees a significant trend towards the
adoption of BPL technology worldwide.
For the three month period ended December 31, 2006, the Company
incurred a loss in the amount of $738,797. Most of the expenses incurred during
this period were for basic monthly Company expenses including marketing and
technological expenses. These expenditures were principally due to research and
development costs related to the development of marketing strategies, costs
associated with deploying test pilots for potential customers and clients within
various markets around the around. Also included are salary and travel costs
related to increased sales and marketing functions. Operation costs over the
next year will depend on a number of factors, including the costs attributed to
the various products acquired from third party suppliers, as well as the cost of
marketing research and executing its marketing campaign. Fifty percent of the
budgeted expenditures over the next year are budgeted for the finalization and
deployment of its South American contracts. The remaining fifty percent are
budgeted toward the procurement and deployment of the residential and commercial
clients based in North America and various other parts of the world. These
expenditures are expected to be financed mainly through its convertible
debenture agreement and various private placements.
Liquidity and Capital Resources
Since the consummation of the merger between Trimax and PLC Network
Solutions Inc. the Company has raised funds through its convertible debenture,
and private placement funds through various investors. The Company continues
to raise funds through its convertible debenture and various small individual
investors to keep its business operational until it can be self sufficient.
The Company foresees a trend towards the adoption of BPL devices and the technology
in general, which will assist the Company in the prospects of being able to
attract and procure revenue generating clients and contracts. Although the Company
anticipates to raise the finances necessary to allow it to fulfill its needs
until revenues are received and the company is self sufficient, there can be
no assurance that any additional funds will be available on terms acceptable
to the Company at all.
15
The forecast of the period of time through which the Company's
financial resources will be adequate to support operations is a forward-looking
statement that involves risks and uncertainties. The actual funding requirements
may differ materially from this as a result of a number of factors including
plans to rapidly expand its new operations. There can be no guarantee that
financing adequate to carry out the Company's business plan will be available on
terms acceptable to the Company, or at all. No material commitments for capital
expenditures were made during the three month period ended December 31, 2006.
The forecasted expenses of implementing the Company's business
plan will exceed the Company's current resources. The Company therefore will
need to secure additional funding through an offering of its securities or
through capital contributions from its stockholders. No commitments to provide
additional funds have been made by management; however the company feels that it
can draw down on funds through a previously executed convertible debenture
agreement executed on May 15, 2006. This commitment is non binding; therefore,
there can be no assurances that any additional funds will be available on terms
acceptable to the Company at all. The agreement is with a private accredited
group of investors. The total commitment including warrants of $3,000,000 is
available to be drawn down up to tranches of $300,000 at Trimax's option. The
loans mature on May 14, 2009 and bear an annual interest rate of 12%. At the
investor's option, the loan is convertible to common shares at the prior 20 day
average price. Each common share has one purchase warrant attached, with each
warrant exercisable for one common share at $1.25 until May 14, 2009. In October
2006 the Company and the investors agreed to allow the Company to draw down
$150,000 of the available funds in two increments. The Company drew on the
$150,000 and expects to draw on further funds in the second quarter of 2007.
The Company does not require any further research and
development at this time in order to be able to market and sell its products,
although the Company requires financing and/or joint ventures with strategic
partners to allow for the fulfillment of any orders that have been secured. To
date the Company has raised funds to keep its business operational and to allow
it to market its products and procure contracts. The availability of future
financings will depend on market conditions.
16
Table of Contents
Item 3. Controls and Procedures
We maintain disclosure controls and procedures that are designed
to be effective in providing reasonable assurance that information required
to be disclosed in our reports under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time periods specified
in the rules and forms of the SEC, and that such information is accumulated
and communicated to our management to allow timely decisions regarding required
disclosure.
In designing and evaluating disclosure controls and procedures,
management recognizes that any controls and procedures, no matter how well
designed and operated, can provide only reasonable, not absolute assurance of
achieving the desired objectives. Also, the design of a control system must
reflect the fact that there are resource constraints and the benefits of
controls must be considered relative to their costs. Because of the inherent
limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, have
been detected. These inherent limitations include the realities that judgments
in decision-making can be faulty and that breakdowns can occur because of simple
error or mistake. The design of any system of controls is based, in part, upon
certain assumptions about the likelihood of future events and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions.
17
As of the end of the period covered by this report, we carried
out an evaluation, under the supervision and with the participation of management,
including our chief executive officer and principal financial officer, of the
effectiveness of the design and operation of our disclosure controls and procedures
as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based upon
that evaluation, management concluded that our disclosure controls and procedures
are effective to cause the information required to be disclosed by us in reports
that we file or submit under the Exchange Act is recorded, processed, summarized
and reported within the time periods prescribed by SEC, and that such information
is accumulated and communicated to management, including our chief executive
officer and principal financial officer, as appropriate, to allow timely decisions
regarding required disclosure.
Four weaknesses
in our internal controls were identified during the completion of our year end
September 30, 2006 and detailed in our form 10KSB disclosure for the year ended
September 30, 2006. The four weaknesses were resolved by the implementations
and changes disclosed in the 10KSB.
There was no change in our internal controls over financial
reporting identified in connection with the requisite evaluation that occurred
during our last fiscal quarter that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
On March 22, 2006 Trimax filed an action in The Superior Court
of Ontario against Electrolinks Corporation for fraud and fraudulent
misrepresentation alleging damages of $1,250,000. Subsequently, Trimax received
a court ordered judgment, and is awaiting payment of $107,000 plus applicable
legal fees and interest. Subsequent to year end the company received $25,000
from Electrolinks Corporation. Although the remaining balance is a legal
receivable, the company has taken an allowance against this balance as at
December 31, 2006.
On May 22, 2006 Trimax was notified of an action out of the
district court of Clark County Nevada whereby 16 plaintiffs registered an action
exceeding $50,000. The Company has been in negotiations and both parties have
agreed to settle the matter for $120,000 USD in total to be paid out over an
eight month period. The first payment is expected to be remitted commencing
March of 2007. The Company has accrued this amount in these financial
statements.
18
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
On 19 October 2006 the Company's Board of Directors approved
the issuance of 750,000 restricted common shares in exchange for a draw down
payment of $150,000 from the convertible debenture described above. These shares
were issued as a result of an amending agreement in October 2006 to the
convertible debenture agreement which outlined the simultaneous issuance of
750,000 restricted common shares and warrants for an additional 750,000 common
shares exercisable at $0.20 upon making the first draw down payment from the
convertible debenture to the Company.
On November 16, 2006 the Company's Board of Directors approved
the issuance of 2,000,000 private placement restricted common shares in exchange
for $100,000 of services provided to the Company or $0.05 per share.
On January 24, 2007 the Company issued 10,000,000 restricted
common shares to the officers of the company for accrued wages totalling
$200,000 or $0.02 per share.
On January 27, 2007 the Company issued 8,300,000 restricted
common shares in settlement of accounts payable of $148,400 or $0.02 per
share.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
19
Table of Contents
Item 6. Exhibits
The following exhibits are being filed as part of this quarterly
report:
20
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
TRIMAX CORPORATION
|
|
|
|
|
|
|
|
By:
|
/s/ Robert Vivacqua
|
|
|
Name: Robert Vivacqua
|
|
|
Title: President,
Principal Executive Officer, Principal Financial Officer)
and Director
|
|
|
|
|
Date: May
22, 2008
|
21
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