SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period ended June 30, 2003
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 33-18099-NY and 33-23169-NY
QUEST PRODUCTS CORPORATION
(Exact Name of small business issuer as specified in its charter)
DELAWARE 11-2873662
State or other jurisdiction of (IRS Employer I.D. No.)
Incorporation or organization)
6900 Jericho Turnpike, Syosset, New York 11791
(Address of principal executive offices)
Issuer's telephone number, including area code: (516) 364 - 3500
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) 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 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 the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the last practicable date.
Class Outstanding at June 30, 2003
----------------------- ----------------------------
Common Stock, par value 233,038,334
$.00003 per share
QUEST PRODUCTS CORPORATION AND SUBSIDIARIES
INDEX
PART 1 - FINANCIAL INFORMATION
Page
----
Item 1 Consolidated Financial Statements
Report of Independent Accountants 3
Consolidated Balance Sheet (unaudited) 4 - 5
Consolidated Statements of Operations (unaudited) 6 - 7
Consolidated Statements of Cash Flows (unaudited) 8
Notes to Consolidated Financial Statements 9 - 12
Item 2 Management's Discussion and Analysis 13 - 15
Item 3 Controls and Procedures 15
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 15
Item 2 Changes in Securities 16
Item 3 Defaults upon Senior Securities 16
Item 4 Submission of Matters to a Vote of Security Holders 16
Item 5 Other Information 16
Item 6 Exhibits and Reports on Form 8-K 17
Signatures 17
2
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders
Quest Products Corporation and Subsidiaries
We have reviewed the accompanying consolidated balance sheet of Quest Products
Corporation and Subsidiaries as of June 30, 2003 and the related consolidated
statements of operations for each of the three and six month periods ended June
30, 2003 and 2002 and consolidated cash flows for the six months ended June 30,
2003 and 2002 as set forth in the accompanying unaudited consolidated financial
statements. These consolidated financial statements are the responsibility of
the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States of
America, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our review, we are not aware of any material modifications that should
be made in the accompanying consolidated financial statements for them to be in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
financial statements, the Company has had recurring net operating losses since
its inception, has relied upon debt and equity financing to provide funds for
operations and, as of June 30, 2003, current liabilities exceed current assets
by $1,999,574. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
RAICH ENDE MALTER & CO. LLP
East Meadow, New York
August 8, 2003
3
QUEST PRODUCTS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
June 30, 2003
(Unaudited)
Assets
Current Assets
Cash $ 13,866
Inventory 843
Prepaid expenses 383
----------
15,092
----------
Investment in Unconsolidated Subsidiary 1,513
Furniture and Equipment - at cost - net of accumulated
depreciation of $65,787 6,186
License - at estimated fair value 1,000
Patents - at cost - net of accumulated amortization
of $2,500 7,500
----------
16,199
----------
$ 31,291
==========
See accompanying notes and accountants' report.
4
QUEST PRODUCTS CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheet
June 30, 2003
(Unaudited)
Liabilities and Shareholders' (Deficit)
Current Liabilities
1992 convertible debentures - including accrued interest
of $11,400 $ 21,400
Accounts payable 291,219
Due to officers and directors 1,343,826
Loans from shareholders - including accrued interest
of $33,439 259,929
Accrued expenses and other current liabilities 98,292
-----------
2,014,666
-----------
Deferred rent payable 6,676
Commitments and Contingencies
Shareholders' (Deficit)
Convertible Preferred Stock - par value $.00003 -
authorized 10,000,000 shares - no shares issued and
outstanding --
Common Stock - par value $.00003 - authorized
390,000,000 shares - 233,038,334 shares issued and
outstanding 6,991
Capital in excess of par 6,073,233
Accumulated (deficit) (8,070,275)
-----------
(1,990,051)
-----------
$ 31,291
===========
See accompanying notes and accountants' report.
5
QUEST PRODUCTS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
For the Six Months Ended
June 30,
--------------------------------
2003 2002
--------------------------------
Sales - net $ 7,862 $ 4,282
Cost of Sales 968 279
------------- -------------
6,894 4,003
------------- -------------
Research and Development Expenses 78,928 78,550
Selling Expenses 12,573 17,569
General and Administrative Expenses 238,680 259,189
------------- -------------
330,181 355,308
------------- -------------
(Loss) Before Other Income (Expenses) (323,287) (351,305)
------------- -------------
Other Income (Expenses)
Write-off of discount on debt -- (34,000)
Interest (expense) (10,375) (7,095)
Loss on investment in unconsolidated subsidiary (82) (82)
------------- -------------
(10,457) (41,177)
------------- -------------
Net (Loss) $ (333,744) $ (392,482)
============= =============
Basic and Diluted Net (Loss) Per Share $ NIL $ NIL
============= =============
Weighted Average Number of Shares
Outstanding (to nearest 1,000,000) 233,000,000 232,000,000
============= =============
See accompanying notes and accountants' report.
6
QUEST PRODUCTS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
For the Quarter Ended
June 30,
--------------------------------
2003 2002
--------------------------------
Sales - net $ 2,670 $ 1,784
Cost of Sales 242 118
------------- -------------
2,428 1,666
------------- -------------
Research and Development Expenses 38,295 36,575
Selling Expenses 4,888 8,278
General and Administrative Expenses 124,972 118,372
------------- -------------
168,155 163,225
------------- -------------
(Loss) Before Other Income (Expenses) (165,727) (161,559)
------------- -------------
Other Income (Expenses)
Write-off of discount on debt -- --
Interest (expense) (5,520) (3,950)
Loss on investment in unconsolidated subsidiary (41) (41)
------------- -------------
(5,561) (3,991)
Net (Loss) $ (171,288) $ (165,550)
============= =============
Basic and Diluted Net (Loss) Per Share $ NIL $ NIL
============= =============
Weighted Average Number of Shares
Outstanding (to nearest 1,000,000) 233,000,000 228,000,000
============= =============
See accompanying notes and accountants' report.
7
QUEST PRODUCTS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
For the Six Months Ended
June 30,
------------------------
2003 2002
------------------------
Cash Flows from Operating Activities
Net (loss) $(333,744) $(392,482)
Adjustments to reconcile net (loss) to net cash
(used for) operating activities:
Depreciation 2,122 3,788
Amortization 2,500 3,953
Warrants issued for compensation 73,150 73,150
Write-off of discount on debt -- 34,000
Write-off of security deposit 405 --
Equity in net loss of unconsolidated subsidiary 82 82
(Increase) decrease in:
Inventories 781 278
Prepaid expenses 91 573
Deferred rent payable 1,331 --
Increase (decrease) in:
Accounts payable 21,052 19,024
Accrued interest 10,375 7,095
Accrued officer compensation 167,246 171,230
Accrued expenses and other current liabilities 20,838 (3,846)
--------- ---------
(33,771) (83,155)
--------- ---------
Cash Flows from Financing Activities
Proceeds from issuance of common stock -- 1,333
Proceeds of loans from shareholders 46,490 48,000
--------- ---------
46,490 49,333
--------- ---------
Net Increase (Decrease) in Cash 12,719 (33,882)
Cash - beginning 1,147 35,644
--------- ---------
Cash - end $ 13,866 $ 1,822
========= =========
See accompanying notes and accountants' report.
8
QUEST PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, 2003
1. BACKGROUND AND STATUS OF THE COMPANY
Quest Products Corporation (the "Company") was organized as a Delaware
Corporation on July 17, 1987 and operated as a development stage company
through 1993. The Company has one wholly-owned subsidiary, The
ProductIncubator.Com, Inc. ; and a majority-owned subsidiary, Wynn
Technologies, Inc., through which it intends to identify and bring to the
marketplace unique proprietary consumer products. The Company also
continues to distribute its patented "Phase-Out" system smoking cessation
device (the "PhaseOut device") both domestically and internationally.
During 1999, the Company entered into a License Agreement with the holders
of a patent for the exclusive worldwide license to make, use and sell
inventions related to an adjustable lens product such as sunglasses, ski
goggles or diving masks. In June 2000, the Company entered into a
comprehensive agreement with Opsales and its President and Vice President,
Sidney and Dean Friedman, to manufacture and distribute the Company's
rotatable variable polarized lenses to be used in the Company's new
sunglass product. In January 2001, the Company made its final selection of
frame designs for its Rainbow Shades(TM) sunglasses. The initial line of
Rainbow Shades(TM) sunglasses consists of three separate frames created
and designed in Italy. The Rainbow Shades(TM) sunglasses feature Quest's
patented and revolutionary new lens system which allows the wearer to
select up to three different lens colors by simply moving a slider on the
frame. The slider causes the lens to rotate which, in turn, changes the
lens color. With the Rainbow Shades(TM) sunglasses, there is no need to
remove or replace the lens.
On November 11, 2002 the Board of Directors decided that, until the
Company begins to generate revenue from other sources, not to put
additional marketing effort into both the PhaseOut and the sunglass
projects. As such, the Company determined that the value of the PhaseOut
patent, the deferred royalties and the License related to the sunglass
project were impaired and were written down to their fair values based on
the future cash flows expected from the PhaseOut device and the estimated
fair value of the License.
During 2000, the Company acquired the rights to and developed a
multi-account card system which will allow a subscribing card holder to
access all of their Credit card, Debit card, frequent flyer, telephone
calling card and other membership accounts by using one plastic "smart"
credit card which will be commercialized and marketed under the name
"BIG1CARD"(TM). On March 1, 2001, the Company signed a five-year
Consulting Agreement with Alex W. Hart to serve as a Special Consultant to
the Company on the development and commercialization of the Company's
patented BIG1CARD(TM) technology. Quest, through its subsidiary, Wynn
Technologies, Inc., owns all rights to the BIG1CARD(TM) patent, U. S.
Patent No. 5,859,419. Mr. Hart's duties will be to use his best efforts to
locate and approach appropriate organizations to participate in the
Company's BIG1CARD(TM) SmartCard project. This will include introducing
the Company and assisting in completing agreements with all such
organizations.
9
QUEST PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, 2003
As part of the BIG1CARD(TM), a new corporation was formed by the Company,
named Wynn Technologies Inc. ("Wynn Tech"), which acquired all right,
title and interest to the Wynn patent. Therefore, Wynn Technologies Inc.
has the exclusive rights in the United States to make, use, offer and sell
this new multi-account card system. Wynn Tech is owned 65% by Quest
Products Corporation and 35% by Mr. Wynn. The Company's 65% interest is
subject to the resolution of certain contingencies. Accordingly, the
Company is not currently consolidating this subsidiary.
On June 10, 2003, the United States Patent Office issued U.S. Patent No.
RE 38,137 on Quest's multiple account smart card system. The new Patent
which contains 35 separate claims replaces the Company's original U.S.
Patent No. 5,859,419 which had 7 claims. In January 2001, the Company had
filed a Reissue Application with the United States Patent Office to add
these additional patent claims to the Company's patent for a multiple
account smart card system. The new claims were allowed in their entirety.
On March 1, 2001, the Company signed a five-year Consulting Agreement with
Alex W. Hart to serve as a Special Consultant to the Company on the
development and commercialization of Wynn Technologies, Inc.'s patented
BIG1CARD(TM) technology. The five-year Consulting Agreement called for Mr.
Hart to receive options to purchase 5 million shares of the Company's
stock, which can be exercised at any time during the five-year Agreement,
either on a cash or cashless basis. Two million options have been issued
at $.10; 1 million options issued at $.15; 1 million options at $.20; and
1 million options at $.30. The fair value of these options is being
amortized over the life of the consulting agreement. Quest, through its
unconsolidated subsidiary, Wynn Technologies, Inc., owns all rights to the
BIG1CARD(TM) patent, U. S. Patent No. 5,859,419. Mr. Hart's duties are to
use his best efforts to locate and approach appropriate organizations to
participate in the Company's BIG1CARD(TM) project. This will include
introducing the Company and assisting in completing agreements with all
such organizations.
The consolidated financial statements have been prepared on a
going-concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business over a
reasonable length of time. The Company has had recurring net operating
losses since its inception and has made use of privately-placed debt and
equity financing to provide funds for operations. As of June 30, 2003,
current liabilities exceed current assets by $1,999,574. Those factors, as
well as the Company's inability thus far to establish a marketable
product, create an uncertainty about the Company's ability to continue as
a going concern. The Company has intentions of expanding and refining its
marketing efforts to include other products. In addition, the Company is
continuing its efforts to obtain long-term financing through the issuance
of long-term debt and equity securities. The consolidated financial
statements do not include any adjustments that might be necessary should
the above or other factors affect the Company's ability to continue as a
going concern.
10
QUEST PRODUCTS CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
June 30, 2003
2. UNAUDITED INTERIM STATEMENTS
The accompanying unaudited consolidated financial statements of the
Company have been prepared in accordance with the instructions to Form
10-QSB and do not include all of the information and footnotes required by
accounting principles generally accepted in the United States of America
for complete financial statements. In the opinion of management, all
adjustments (which consist only of normal recurring adjustments) necessary
for a fair presentation have been included.
Operating results for the three and six months ended June 30, 2003 are not
necessarily indicative of the results to be expected for the year ending
December 31, 2003. These consolidated financial statements and notes
should be read in conjunction with the financial statements and notes
thereto included in the Company's annual report on Form 10-KSB for the
year ended December 31, 2002.
Certain amounts from prior years have been restated to conform to the
current year's presentation. Those reclassifications have no effect on the
previously reported loss.
3. STOCK-BASED COMPENSATION
Employees - When stock based compensation is issued to employees and
directors in connection with their services as directors, Statement of
Financial Accounting Standards ("SFAS") No. 123 Accounting for Stock-Based
Compensation, as amended by SFAS No. 148 Accounting for Stock - Based
Compensation -Transition and Disclosure, encourages, but does not require
companies to record compensation cost for stock-based employee
compensation plans at fair value. The Company has chosen to continue to
account for stock-based compensation using the intrinsic value method
prescribed in Accounting Principles Board Opinion ("APB") No. 25,
Accounting for Stock Issued to Employees. APB No. 25 requires no
recognition of compensation expense for the stock-based compensation
arrangements provided by the Company where the exercise price is equal to
or greater than the market price at the date of the grants.
Non-Employees - When stock based compensation is issued to non-employees,
the Company records these transactions at the fair market value of the
equity instruments issued or the goods or services received, whichever is
more reliably measurable.
11
The following table illustrates the effect on net income and earnings per share
if the Company had applied the fair value recognition provisions of SFAS No. 123
Accounting for Stock - Based Compensation, to stock - based employee
compensation:
For the six months ended
June 30,
2003 2002
---- ----
Net loss, as reported $(333,744) $(392,482)
Deduct: total stock - based employee
compensation expense determined
under fair value based method for
all awards, net of related tax effects (51,463) (156,126)
--------- ---------
$(385,207) $(548,608)
--------- ---------
Earnings per share (basic and diluted:
As reported -0- -0-
Pro forma -0- -0-
4. BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed by dividing net income (loss)
by the weighted average numbers of shares of common stock outstanding
during the period. Diluted earnings (loss) per share is computed giving
effect to all dilutive potential common shares that were outstanding
during the period. Dilutive potential common shares consist of the
incremental common shares issuable upon the exercise of warrants. For the
six months ended June 30, 2003 and 2002, potentially dilutive securities
of approximately 1,951,000 and 9,000,000 shares that related to shares
issuable upon the exercise of warrants and options granted by the Company
were excluded, as their effect was antidilutive.
5. RELATED PARTY TRANSACTIONS AND ISSUANCES OF EQUITY SECURITIES
The Company received loans from Shareholders in the amount of $46,490
during the six months ended June 30, 2003. The loans are payable on demand
plus accrued interest at 10% per annum.
12
QUEST PRODUCTS CORPORATION AND SUBSIDIARIES
Item 2 - Management's Discussion and Analysis
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. All statements other than statements of historical
fact in this report are forward-looking statements. Such forward-looking
statements are based on the current beliefs of management and involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Quest Products Corporation to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, the following: Quest's history of losses; the need to obtain
additional financing and the ability to obtain such financing; and uncertainties
relating to business and economic conditions in markets in which Quest operates.
The words, believe, expect, anticipate, intend and plan and similar expressions
identify forward-looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
the statement was made.
The Company intends, through its newly incorporated subsidiaries, to identify
and bring to the marketplace, unique proprietary consumer products.
Results of Operations
Six Months Ended June 30, 2003 Compared
to Six Months Ended June 30, 2002
The Company incurred a net loss of $333,744 for the six months ended June 30,
2003 as compared to a loss of $392,482 for the six months ended June 30, 2002.
Sales increased by $3,580 from $4,282 in 2002 to $7,862 in 2003 as a result of a
increase in international sales. The Company`s sales continue to be primarily
generated via e-commerce.
The Company sold 485 PhaseOut units in 2003 at an average price of approximately
$16 per unit and 173 PhaseOut units in 2002 at an average price of approximately
$20 per unit. The average cost per unit sold in 2003 and 2002 remained $1.61
plus shipping and handling.
The Company's research and development expenses were approximately $79,000 in
both 2003 and 2002.
The Company's selling expenses decreased by $4,996 from $17,569 in 2002 to
$12,573 in 2003. This decrease is primarily due to a decrease in travel -related
expenses.
The Company's general and administrative expenses decreased by $20,509 from
$259,189 in 2002 to $238,680 in 2003. This decrease is attributable to a
decrease in salaries, insurance and rent, net of sublease income.
Interest expense increased by $3,280 from $7,095 in 2002 to $10,375 in 2003 due
to interest on additional loans from shareholders received during the fourth
quarter of 2002 and the first and second quarter of 2003.
13
QUEST PRODUCTS CORPORATION AND SUBSIDIARIES
Management's Discussion and Analysis
Liquidity and Capital Resources
The Company has a working capital deficit at June 30, 2003 of $1,999,574 as
compared to a working capital deficit at December 31, 2002 of $1,745,420. During
the six months ended June 30, 2003, the Company used $33,812 in operating
activities and generated $46,490 from financing activities from loans from
officers. The Company currently has $13,866 in cash.
The Company's working capital deficiency increased primarily due to accrued
officers compensation and loans from shareholders. Working capital and current
ratios were:
June 30, December 31,
2003 2002
---- ----
Working capital
(deficiency) $(1,999,574) $(1,745,420)
Current ratios 0.002:1 0.02:1
In order to meet short-term marketing goals, in July 1997 certain officers and
directors agreed to acquire an aggregate of 10,000,000 shares of the Company's
common stock (representing 8% of total shares outstanding) for an aggregate
purchase price of $100,000. Through December 31, 2002, the Company received
$1,158,700 of financing under the same terms offered to the Directors and
Officers. There is no assurance that the Company will be able to obtain
additional financing.
In October 1999, the Company successfully completed development of adjustable
polarized sunglasses which allow the wearer to change the color of the sunglass
lenses to a variety of colors without changing the lenses or altering the frame.
Cash paid for further research and development expenditures related to the
sunglass project is not expected to exceed $50,000 during 2003.
During 2000, the Company acquired the rights to and developed a multi-account
card system which will allow a subscribing card holder to access all of their
Credit card, Debit card, frequent flyer, telephone calling card and other
membership accounts by using one plastic "smart" credit card which will be
commercialized and marketed under the name "BIG1CARD"(TM). On March 1, 2001, the
Company signed a five-year Consulting Agreement with Alex W. Hart to serve as a
Special Consultant to the Company on the development and commercialization of
the Company's patented BIG1CARD(TM) technology. Quest, through its
unconsolidated subsidiary, Wynn Technologies, Inc., subject to the resolution of
certain contingencies, owns all rights to the BIG1CARD(TM) patent, U. S. Patent
No. 5,859,419. Mr. Hart's duties will be to use his best efforts to locate and
approach appropriate organizations to participate in the Company's BIG1CARD(TM)
SmartCard project. This will include introducing the Company and assisting in
completing agreements with all such organizations.
The Company believes the issuance of the enhanced patent on the Big1Card will
give it the ability to raise additional funds through revenue, debt or equity
financing, which, in turn will enable it to expand and refine its marketing
efforts to improve the efficiency of these efforts and to increase revenues for
its other products.
14
On June 10, 2003, the United States Patent Office issued U.S. Patent No. RE
38,137 on Quest's multiple account smart card system. The new Patent which
contains 35 separate claims replaces the Company's original U.S. Patent No.
5,859,419 which had 7 claims. In January 2001, the Company filed a Reissue
Application with the United States Patent Office to add these additional patent
claims to the Company's patent for a multiple account smart card system. The new
claims were allowed in their entirety. The Company's management believes the
Patent Office action allowing these additional 28 claims significantly broadens
and strengthens the Company's patent and materially increases its value in the
marketplace. The new claims allowed by the Patent Office, when combined with the
original claims, make it extremely unlikely that a competitor will be able to
design around or otherwise circumvent the Company's patent in launching a smart
card multi-account credit card system and best insures that no one else in the
United States will be able to commercialize a multi-account credit card system
without obtaining license rights from the Company. The Company's patent which
has a 1995 priority date is, to their knowledge, the only U.S. patent which
covers a multi-account credit card system employing a processing chip and
on-board memory. In addition, Quest Products Corporation is in the process of
contacting corporations in order to apply the Company's patented multi-account
credit card system to the myriad of security issues facing Government and
industry. Cash paid for further research and development expenditures related to
the BIG1CARD(TM) smart card project in 2003 is not expected to exceed $25,000.
ITEM 3. CONTROLS AND PROCEDURES
The Company, under the supervision of the chief executive and chief financial
officers, has conducted an evaluation of the effectiveness of the design and
operation of the Company's disclosure controls and procedures within 90 days of
the filing date of this quarterly report. Based upon the results of this
evaluation, the chief executive and chief financial officers believe that the
Company maintains proper procedures for gathering, analyzing and disclosing all
information in a timely fashion that is required to be disclosed in its Exchange
Act reports. There have been no significant changes in the Company's controls
subsequent to the evaluation date.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
15
Item 2. Changes in Securities
Recent Sales of Unregistered Securities
During the six months ended June 30, 2003, we made the following sales of
unregistered securities:
Consideration Received and If Option, Warrant
Description of Underwriting or Convertible
or Other Discounts to Exemption from Security, Terms of
Date of Type of Number Market Price Afforded to Registration Exercise or
Sale Security Sold Purchasers Claimed Conversion
---- -------- ---- ---------- ------- ----------
2/15/03 Warrant 2,250,000 Warrants issued to Directors in 4(2) Exercisable through
connection with Board February 15, 2006 at
services. No cash consideration an exercise price of
received until exercise. $.015 per share.
5/29/03 Warrant 3,500,000 Warrants issued to Directors in 4(2) Exercisable through
connection with Board May 29, 2008 at an
services. No cash consideration exercise price of
received until exercise. $.015 per share.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
16
Item 6. Exhibits and Reports on Form 8-K
A) Exhibits
31.1 - Certification of CEO pursuant to Section 302 of
Sarbanes-Oxley Act of 2002
31.2 - Certification of CFO pursuant to Section 302 of
Sarbanes-Oxley Act of 2002
32.1 - Certification of CEO pursuant to Section 906 of
Sarbanes-Oxley Act of 2002
32.2 - Certification of CFO pursuant to Section 906 of
Sarbanes-Oxley Act of 2002
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.
QUEST PRODUCTS CORPORATION
Dated: August 12, 2003
/s/ Herbert M. Reichlin
------------------------------------
Herbert M. Reichlin, President
17