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 June 30, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File No. 2-76219-NY
-----------------------------------------
VICTORY CAPITAL HOLDINGS CORPORATION
------------------------------------
------------------------------------------
(Name of Small Business Issuer in its Charter)
NEVADA 87-0564472
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
7860 Mission Center Court, Suite 100
San Diego, California 92108
-----------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (866) 570-6992
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.
(1) Yes [X] No [ ] (2) Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Not applicable.
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:
September 7, 2004
61,866,925 (40,666,667 is held in Treasury)
21,200,258
----------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
VICTORY CAPITAL HOLDINGS CORPORATION AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2004 AND DECEMBER 31, 2003
VICTORY CAPITAL HOLDINGS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
June 30, December 31,
2004 2003
------------ ------------
(Unaudited)
CURRENT ASSETS
Cash $ -- $ --
------------ ------------
Total Current Assets -- --
------------ ------------
FIXED ASSETS, NET 2,153 520
------------ ------------
TOTAL ASSETS $ 2,153 $ 520
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 32,283 $ 28,472
Accounts payable - related party 73,158 42,604
Accrued payroll and payroll taxes 137,792 111,956
------------ ------------
Total Liabilities 243,233 183,032
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock authorized 100,000,000 shares at
$0.001 par value; 21,200,258 and 16,120,258 shares
issued and outstanding, respectively 21,200 16,120
Additional paid-in capital 1,765,363 617,493
Deficit accumulated during the development stage (2,027,643) (816,125)
------------ ------------
Total Stockholders' Equity (Deficit) (241,080) (182,512)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 2,153 $ 520
============ ============
The accompanying notes are an integral part of these consolidated financial statements
2
VICTORY CAPITAL HOLDINGS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
From
Inception on
For the For the January 7,
Three Months Ended For the Six Months Ended 1982
June 30, June 30, Through
----------------------------- ----------------------------- June 30,
2004 2003 2004 2003 2004
------------- ------------- ------------- ------------- -------------
REVENUES $ -- $ -- $ -- $ -- $ --
------------- ------------- ------------- ------------- -------------
EXPENSES
Consulting expense -- 327,332 965,450 327,332 1,358,482
Salaries and wages -- 20,000 144,000 20,000 248,000
General and administrative 41,517 32,599 53,705 38,374 366,898
------------- ------------- ------------- ------------- -------------
Total Expenses 41,517 379,931 1,163,155 385,706 1,973,380
------------- ------------- ------------- ------------- -------------
LOSS FROM OPERATIONS (41,517) (379,931) (1,163,155) (385,706) (1,973,380)
OTHER INCOME (EXPENSE)
Loss on extinguishment
of debt -- -- (48,363) -- (48,363)
Interest expense -- -- -- (1,900) (5,900)
------------- ------------- ------------- ------------- -------------
Total Other Income -- -- (48,363) -- (54,263)
------------- ------------- ------------- ------------- -------------
NET LOSS $ (41,517) $ (379,931) $ (1,211,518) $ (387,606) $ (2,027,643)
============= ============= ============= ============= =============
BASIC LOSS PER SHARE
OF COMMON STOCK $ (0.00) $ (0.03) $ (0.06) $ (0.05)
============= ============= ============= =============
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 21,200,258 11,890,279 19,387,291 7,280,910
============= ============= ============= =============
The accompanying notes are an integral part of these consolidated financial statements
3
VICTORY CAPITAL HOLDINGS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
Deficit
Accumulated
Common Stock Additional During the
------------------------- Paid-in Development
Shares Amount Capital Stage
----------- ----------- ----------- -----------
Balance, January 7, 1982 -- $ -- $ -- $ --
Common stock issued for cash
at $7.50 per share 6,000 6 45,000 --
Common stock issued for cash
at $0.39 per share 168,503 169 65,819 --
Net loss from inception on
January 7, 1982 through
December 31, 1982 -- -- -- (39,597)
----------- ----------- ----------- -----------
Balance, December 31, 1982 174,503 175 110,819 (39,597)
Net loss for the year ended
December 31, 1983 -- -- -- (71,397)
----------- ----------- ----------- -----------
Balance, December 31, 1983 174,503 175 110,819 (110,994)
Common stock issued for cash
at $25.00 per share 57 -- 1,425 --
Common stock issued for cash
at $25.00 per share 3 -- 75 --
Common stock issued for cash
at $0.25 per share 1,580,000 1,580 38,373 --
Net loss for the year ended
December 31, 1984 -- -- -- --
----------- ----------- ----------- -----------
Balance, December 31, 1984 1,754,563 1,755 150,692 (110,994)
Retired common stock, (1,296,132) (1,297) -- --
Net loss for the year ended
December 31, 1985 -- -- -- --
----------- ----------- ----------- -----------
Balance, December 31, 1985 458,431 458 150,692 (110,994)
Net loss for the year ended
December 31, 1986 -- -- -- --
----------- ----------- ----------- -----------
Balance, December 31, 1986 458,431 458 150,692 (110,994)
Net loss for the year ended
December 31, 1987 -- -- -- --
----------- ----------- ----------- -----------
Balance, December 31, 1987 458,431 $ 458 $ 150,692 $ (110,994)
----------- ----------- ----------- -----------
The accompanying notes are an integral part of these consolidated financial statements
4
VICTORY CAPITAL HOLDINGS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Deficit
Accumulated
Common Stock Additional During the
------------------------- Paid-in Development
Shares Amount Capital Stage
----------- ----------- ----------- -----------
Balance, December 31, 1987 458,431 $ 458 $ 150,692 $ (110,994)
Net loss for the year ended
December 31, 1988 -- -- -- --
----------- ----------- ----------- -----------
Balance, December 31, 1988 458,431 458 150,692 (110,994)
Net loss for the year ended
December 31, 1989 -- -- -- --
----------- ----------- ----------- -----------
Balance, December 31, 1989 458,431 458 150,692 (110,994)
Net loss for the year ended
December 31, 1990 -- -- -- --
----------- ----------- ----------- -----------
Balance, December 31, 1990 458,431 458 150,692 (110,994)
Net loss for the year ended
December 31, 1991 -- -- -- --
----------- ----------- ----------- -----------
Balance, December 31, 1991 458,431 458 150,692 (110,994)
Net loss for the year ended
December 31, 1992 -- -- -- --
----------- ----------- ----------- -----------
Balance, December 31, 1992 458,431 458 150,692 (110,994)
Net loss for the year ended
December 31, 1993 -- -- -- --
----------- ----------- ----------- -----------
Balance, December 31, 1993 458,431 458 150,692 (110,994)
Canceled common stock (316,000) (316) -- --
Net loss for the year ended
December 31, 1994 -- -- -- (6,656)
----------- ----------- ----------- -----------
Balance, December 31, 1994 142,431 142 150,692 (117,650)
Common stock issued for
services at $0.001 per share 2,357,895 2,358 -- --
Net loss for the year ended
December 31, 1995 -- -- -- (49,097)
----------- ----------- ----------- -----------
Balance, December 31, 1995 2,500,326 $ 2,500 $ 150,692 $ (166,747)
----------- ----------- ----------- -----------
The accompanying notes are an integral part of these consolidated financial statements
5
VICTORY CAPITAL HOLDINGS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Deficit
Accumulated
Common Stock Additional During the
------------------------- Paid-in Development
Shares Amount Capital Stage
----------- ----------- ----------- -----------
Balance, December 31, 1995 2,500,326 $ 2,500 $ 150,692 $ (166,747)
Common stock issued for
services at $0.001 per share 120,000 120 -- --
Net loss for the year ended
December 31, 1996 -- -- -- (1,681)
----------- ----------- ----------- -----------
Balance, December 31, 1996 2,620,326 2,620 150,692 (168,428)
Net loss for the year ended
December 31, 1997 -- -- -- (3,517)
----------- ----------- ----------- -----------
Balance, December 31, 1997 2,620,326 2,620 150,692 (171,945)
Net loss for the year ended
December 31, 1998 -- -- -- (2,479)
----------- ----------- ----------- -----------
Balance, December 31, 1998 2,620,326 2,620 150,692 (174,424)
Net loss for the year ended
December 31, 1999 -- -- -- (6,307)
----------- ----------- ----------- -----------
Balance, December 31, 1999 2,620,326 2,620 150,692 (180,731)
Net loss for the year ended
December 31, 2000 -- -- -- (9,011)
----------- ----------- ----------- -----------
Balance, December 31, 2000 2,620,326 2,620 150,692 (189,742)
Net loss for the year ended
December 31, 2001 -- -- -- (19,461)
----------- ----------- ----------- -----------
Balance, December 31, 2001 2,620,326 2,620 150,692 (209,203)
Contributed capital for rent and
officer compensation -- -- 1,950 --
Net loss for the year ended
December 31, 2002 -- -- -- (13,960)
----------- ----------- ----------- -----------
Balance, December 31, 2002 2,620,326 2,620 152,642 (223,163)
Contributed capital for rent and
officer compensation -- -- 488 --
Capital contributed by shareholders
through forgiveness of
accounts payable and interest -- -- 77,415 --
----------- ----------- ----------- -----------
Balance forward 2,620,326 $ 2,620 $ 230,545 $ (223,163)
----------- ----------- ----------- -----------
The accompanying notes are an integral part of these consolidated financial statements
6
VICTORY CAPITAL HOLDINGS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit) (Continued)
Deficit
Accumulated
Common Stock Additional During the
------------------------- Paid-in Development
Shares Amount Capital Stage
----------- ----------- ----------- -----------
Balance forward 2,620,326 $ 2,620 $ 230,545 $ (223,163)
Common stock issued for services
at $0.025 per share 13,389,932 13,390 321,358 --
Common stock issued for
services at $0.61 per share 100,000 100 60,900 --
Common stock issued for
services at $0.47 per share 10,000 10 4,690 --
Net loss for the year ended
December 31, 2003 -- -- -- (592,962)
----------- ----------- ----------- -----------
Balance, December 31, 2003 16,120,258 16,120 617,493 (816,125)
Common stock issued for
services at $0.16 per share
(unaudited) 1,000,000 1,000 159,000 --
Common stock issued for
services at $0.17 per share
(unaudited) 1,800,000 1,800 304,200 --
Common stock issue for services
at $0.165 per share (unaudited) 800,000 800 131,200 --
Common stock issued for
services at $0.215 per share
(unaudited) 30,000 30 6,420 --
Common stock issued for debt
at $0.45 per share (unaudited) 150,000 150 67,350 --
Common stock issued for services
at $0.40 per share (unaudited) 300,000 300 119,700 --
Common stock issued for services
at $0.34 per share (unaudited) 700,000 700 237,300 --
Common stock issued for services
at $0.41 per share (unaudited) 300,000 300 122,700 --
Net loss for the three months
ended June 30, 2004 (unaudited) -- -- -- (1,211,518)
----------- ----------- ----------- -----------
Balance, June 30, 2004
(unaudited) 21,200,258 $ 21,200 $ 1,765,363 $(2,027,643)
=========== =========== =========== ============
The accompanying notes are an integral part of these consolidated financial statements
7
VICTORY CAPITAL HOLDINGS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Unaudited)
From
For the Inception on
Six Months Ended January 7,
June 30, 1982 Through
--------------------------- June 30,
2004 2003 2004
------------ ------------ ------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $(1,211,518) $ (387,606) $(2,027,643)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation 60 30 140
Loss on extinguishment of debt 48,363 -- 48,363
Stock issued for services 1,085,450 327,332 1,488,436
Contributed capital for rent and officer
compensation -- 488 2,438
Increase in accounts payable
and accounts payable - related party 53,502 42,756 205,994
Increase to accrued liabilities 25,836 17,600 133,792
------------ ------------ ------------
Net Cash Used by Operating Activities 1,693 600 (148,480)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (1,693) (600) (2,293)
------------ ------------ ------------
Net Cash Used by Investing Activities (1,693) (600) (2,293)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock for cash -- -- 150,773
------------ ------------ ------------
Net Cash Provided by Financing Activities -- -- 150,773
------------ ------------ ------------
NET DECREASE IN CASH -- -- --
CASH AT BEGINNING OF PERIOD -- -- --
------------ ------------ ------------
CASH AT END OF PERIOD $ -- $ -- $ --
============ ============ ============
CASH PAID FOR:
Interest $ -- $ -- $ --
Income taxes $ -- $ -- $ --
SCHEDULE OF NON CASH
FINANCING ACTIVITIES
Stock issued for services $ 1,085,450 $ 334,748 $ 1,488,436
Contributed capital for rent and officer
compensation $ -- $ 488 $ 2,438
Contributed capital by shareholders $ -- $ -- $ 77,415
The accompanying notes are an integral part of these consolidated financial statements
8
VICTORY CAPITAL HOLDINGS CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2004 and December 31, 2003
NOTE 1 - CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared
by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary
to present fairly the financial position, results of operations and
cash flows at June 30, 2004 and 2003 and for all periods presented have
been made.
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. It is suggested that these consolidated financial
statements be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's December 31,
2003 audited consolidated financial statements. The results of
operations for the period ended June 30, 2004 is not necessarily
indicative of the operating results for the full year.
NOTE 2 - GOING CONCERN
The Company's consolidated financial statements are prepared using
accounting principles generally accepted in the United States of
America applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal
course of business. The Company has not yet established an ongoing
source of revenues sufficient to cover its operating costs and allow it
to continue as a going concern. The ability of the Company to continue
as a going concern is dependent on the Company obtaining adequate
capital to fund operating losses until it becomes profitable. If the
Company is unable to obtain adequate capital, it could be forced to
cease operations.
In order to continue as a going concern, develop a reliable source of
revenues, and achieve a profitable level of operations the Company will
need, among other things, additional capital resources. Management's
plans to continue as a going concern include seeking opportunities to
merge with an existing operating company. In the interim, the
shareholders of the Company will cover all operating expenses.
Management cannot provide any assurances that the Company will be
successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent
upon its ability to successfully accomplish the plans described in the
preceding paragraph and eventually secure other sources of financing
and attain profitable operations. The accompanying consolidated
financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.
Item 2. Management's Discussion and Analysis or Plan of Operation.
------------------------------------------------------------------
Plan of Operation.
------------------
Our Company has launched 3 unique service products and is now managing several
marketing programs designed to increase our existing subscriber base for our
OnDemand and Global Card products. During our 2nd Quarter, OnDemand enrolled 3
nationally recognized corporate accounts, which represent a 3rd quarter rollout
of over 75,000 customers in North America. Our average Monthly Subscription
Revenue (MSR) represents $13.97 yet we anticipate increasing our MSR with the
launch of our VoIP (Voice over Internet Protocol) UnityVoice product, set to
launch 3rd Quarter. It is our goal to complete the roll-out of these corporate
customers by December 31, 2004.
Our Company's plan of operation for the next quarter is to continue executing
the business plans of our subsidiary Companies in the following sectors: (a)
Technology, (On Demand Communications Corp.)(b) Finance, (Global Card, Inc.)and
Media. Victory's business objective is to increase net operating income and net
asset value by focusing its efforts and assets in companies and industries with
high potential for growth, equity appreciation and overall return. The Company
is principally engaged in the formation of subsidiary companies to operate in
emerging markets, and incubating them from their initial stages to maturity and
independence.
Item 3. Controls and Procedures.
--------------------------------
(a) Evaluation of Disclosure Controls and Procedures
Victory Capital Holdings Corporation's President and
Secretary/Treasurer have evaluated the company's disclosure controls and
procedures as of September 07, 2004, and they concluded that these controls and
procedures are effective.
(b) Changes in Internal Controls
There are no significant changes in internal controls or in other
factors that could significantly affect these controls subsequent to September
07, 2004.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
--------------------------
The Company was a named defendant in an unlawful detainer action filed
in Los Angeles County, California. During the 2nd Quarter the Company's legal
representation entered final settlement and the matter has been dismissed with
prejudice.
Item 2. Changes in Securities.
------------------------------
None; not applicable.
Item 3. Defaults Upon Senior Securities.
----------------------------------------
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
------------------------------------------------------------
None; not applicable.
Item 5. Other Information.
--------------------------
On November 17, 2003 the Company relieved Jersey Transfer and Trust
Company of the duties as the Company's Transfer Agent and engaged Mellon
Investor Services to fill these duties and responsibilities.
Harold Gregg, the Company's Chairman and Interim CEO, owns 0% of the
Company's common stock, is eligible under the Performance Agreement dated
January 1, 2004, which is valid through December 31, 2004, to be issued 10% of
the Company's common stock at a .10 share price. These shares will be issued in
the event that the business plan referenced above in item 2. is either met or
exceeded.
Mr. Gregg, also serves as General Counsel for Ascot Investments, Inc.,
which holds 4.0% of the Company's common stock. In addition, Mr. Gregg serves as
General Counsel of Ascot Aviations, Inc. and CTSO, Inc., which both hold 4.0% of
the Company's common stock. Mr. Gregg currently holds a seat on the Board of
Directors of Ascot Investments, Inc. Both Ascot Aviations, Inc. and CTSO, Inc.
are portfolio holdings of Ascot Investments, Inc.
Item 6. Exhibits and Reports on Form 8-K.
-----------------------------------------
(a) Exhibits.
None.
(b) Reports on Form 8-K.
None.
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.
Victory Capital Holdings Corporation
fka New Environmental Technologies Corporation
Date: 09/10/04 By: /s/Harold Gregg
-------------- ------------------------------------
Harold Gregg
Director and CEO
Secretary and Treasurer
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Harold Gregg, President of Victory Capital Holdings Corporation, (the
"Registrant"), certify that:
1. I have reviewed this Annual Report on Form 10-QSB ("the Annual
Report") of the Registrant;
2. Based on my knowledge, this Annual 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 Annual Report;
3. Based on my knowledge, the financial statements, and other financial
information included in this Annual Report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the Registrant as of, and for, the periods presented in
this Annual Report;
4. The Registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the Registrant
and we 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
Annual 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 Annual Report (the "Evaluation Date"); and
c) presented in this Annual 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 officer 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 function);
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 officer and I have indicated in this
Annual 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.
Dated: September 10, 2004 Signature: /s/ Harold Gregg
------------------------
Harold Gregg
President
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Harold Gregg, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Victory Capital
Holdings Corporation fka New Environmental Technologies Corporation.
The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
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 respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report. Date: September 10, 2004
/s/ Harold Gregg
-------------------------------------
Harold Gregg
Chairman of the Board and Treasurer
(principal executive officer)
(principal financial officer