UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended September 30,
2001.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the transition period from ______to ______.
Commission file number: 0-26717
SCORE ONE, INC.
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
NEVADA 88-0409164
------------------------------ -------------------------------
(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
Unit 2, 34/F
Cable TV Tower 9 Hoi Shing
TSUEN WAN, HONGKONG
--------------------------------------
(Address of principal executive offices)
011-852-2406-8978
----------------------------------------------
(Issuer's Telephone Number, Including Area Code)
------------------------------------------------------------------
(Former name, address and fiscal year, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant has filed all documents and reports required
to be filed by Sections 12, 13, or 15(d) of the Exchange Act subsequent to
the distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
-1-
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
As of September 30, 2001, there were 19,930,000 shares of common
stock issued and outstanding.
-2-
FORM 10-QSB
SCORE ONE, INC.
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
PART II
ITEM 1. LEGAL PROCEEDINGS
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
ITEM 3. DEFAULTS ON SENIOR SECURITIES
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
-3-
PART I
ITEM 1. FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited financial
statements included in this Form 10-QSB reflect all adjustments (consisting
only of normal recurring accruals) necessary for a fair presentation of the
results of operations for the periods presented. The results of
operations for the periods presented are not necessarily indicative of the
results to be expected for the full year.
SCORE ONE, INC.
FORM 10-QSB, QUARTER ENDED SEPTEMBER 30, 2001
ITEM 1 Financial Statements
SCORE ONE, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2001 AND DECEMBER 31, 2000
(Unaudited)
ASSETS 2001 2000
Current Assets
Cash and cash equivalents $ $
588,356 239,909
Accounts Receivable 6,248,086 1,792,096
Other receivables, Deposits, and Prepayments 772,363 3,383,593
Inventories 1,502,528 598,233
Deferred Income Taxes
0 20,984
Total Current Assets 9,111,333 6,034,815
Plant and Equipment, Net 4,963,206 3,227,815
Goodwill 10,404,850 0
Total Assets $ $
24,479,389 9,262,630
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ $
4,536,219 1,537,789
Bank Loans 1,440,890 0
Other Payables and Accrued Expenses 706,539 199,589
Income Taxes Payable 140,858 817,429
Total Current Liabilities 6,824,506 2,554,807
Long Term Liabilities
Deferred Income Taxes 2,224,231 242,265
Other Noncurrent Liabilities 1,282,051 0
Amount payable to stockholder 102,281
94,073
Total Long Term Liabilities 344,546
3,600,355
Total Liabilities 10,424,861 2,899,353
Minority Interest 956,113 0
Stockholders' Equity
Preferred Stock, par value $0.001 per share; 5,000,000
shares authorized, none issued
Common Stock, par value $0.001 per share; 41,250,000
shares authorized, 19,930,000 shares issued and 19,930 19,930
outstanding
Accumulated Other Comprehensive Income (Loss) (48,253) 0
Retained Earnings 13,126,738 6,343,347
Total Stockholders' Equity 13,098,415 6,363,277
Total Liabilities and Stockholders' Equity $ $
24,479,389 9,262,630
See condensed notes to the financial statements.
-4-
SCORE ONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(Unaudited)
For The Three For The Three For The Nine For The Nine
Months Ended Months Ended Months Ended MonthsEnded
9/30/01 9/30/00 9/30/00 9/30/01
Net Sales $ $ $ $
8,569,429 5,552,345 21,416,111 15,337,927
Costs of Sales (6,520,020) (3,981,217) (15,746,623) (10,982,067)
--------- --------- ---------- ----------
Gross Profit 2,049,409 1,571,128 5,669,488 4,355,860
Selling Expenses (62,479) (14,432) (116,801) (33,028)
Amortization (557,403) 0 (743,204) 0
General and (501,125) (458,728) (1,198,872) (902,244)
Administrative
Other Income (Expense), 9,704 0 29,458 1,895
Net
Interest (Financial Expense), (25,322) 0 (61,453) 0
Net --------- --------- ---------- ----------
Income Before Income
Taxes, Minority Interest 912,784 1,097,968 3,578,616 3,422,484
and Extraordinary Gain
Provision for Income Taxes (243,590) (93,327) (454,496) (298,051)
--------- --------- ---------- ----------
Income Before Minority
Interest and 669,194 1,004,641 3,124,120 3,124,432
Extraordinary Gain
Minority Interest (250,465) - (354,421) -
Income Before 418,729 1,004,641 2,769,699 3,124,432
Extraordinary Gain
Extraordinary Gain, net 0 0 4,013,692 -
--------- --------- ---------- ----------
Net Income Available for $ 418,729 $ 1,004,641 $ 6,783,391 $ 3,124,432
Common Stockholders ========= ========= ========== ==========
Net Income Per Common $ 0.02 $ 0.05 $ 0.14 $ 0.16
Share-Basic and Diluted: ======== ========= ========= ==========
Weighted average common
shares outstanding-basic 19,930,000 19,930,000 19,930,000 19,930,000
and diluted ========== ========== ========== ==========
See condensed notes to the financial statements.
-5-
SCORE ONE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(Unaudited)
Nine Months Nine Months
Ended Ended
9/30/01 9/30/00
Cash Flows From Operating Activities
Net Income $ $
6,783,391 3,124,432
Adjustments to Reconcile Net Income to Net Cash
Provided By Operating Activities
Depreciation and Amortization 1,500,988 737,002
Minority Interest 354,421 0
Gain on Disposal of Shares in Subsidiary (4,013,692) 0
Deferred Income Taxes 2,015,000 39,593
Changes in Assets and Liabilities
(Increase) Decrease in
Accounts Receivable (2,748,120) 353,148
Other Receivables, Deposits, and 3,037,982 424,562
Prepayments
Inventories (156,768) (106,478)
Accounts Payable 1,449,364 (748,624)
Other Payables and Accrued Expenses (854,914) (160,845)
Income Taxes Payable (887,652) 236,873
------- --------
Total Adjustments (303,391) 775,231
------- --------
Net Cash Provided By Operating Activities 6,480,000 3,899,663
Cash Flows From Investing Activities
Acquisition of Plant and Machinery (703,805) (1,563,814)
Related party Loans (5,961) (1,195,882)
Purchase of Subsidiary (10,037,214) 0
Disposal of Subsidiary 4,615,384 0
-------- --------
Net Cash Used In Investing Activities (6,131,596) (2,759,696)
Cash Flows From Financing Activities
Bank Overdraft 43 0
Dividends Paid 0 (959,172)
------- --------
Net Cash Provided By (Used In) Financing 43 (959,172)
------- --------
Activities
Increase in Cash and Cash Equivalents 348,447 180,795
Cash and Cash Equivalents, Beginning of Period 239,909 114,171
------- --------
Cash and Cash Equivalents, End of Period $588,356 $ 294,966
======= ========
The accompanying notes are an integral part of these financial statements.
-6-
SCORE ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001
BASIS OF PRESENTATION
The accompanying unaudited interim financial statements have been prepared
in accordance with Form 10QSB instructions and, in the opinion of
management, include all normal adjustments considered necessary to present
fairly the financial position as of September 30, 2001 and the results of
operations for the three and nine months ended September 30, 2001 and
2000. These results have been determined on the basis of generally
accepted accounting principles and practices and applied consistently with
those used in the preparation of the Company's audited financial statements
and notes for the seven months ended December 31, 2000. On January 23,
2001, the Company elected to change its fiscal year end from May 31 to
December 31.
Certain information and footnote disclosures normally included in the
financial statements presented in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that
the accompanying unaudited interim financial statements be read in
conjunction with the financial statements and notes thereto incorporated by
reference in the Company's 2000 Annual Report on Form 10KSB.
-7-
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
The following discussion should be read in conjunction with the
Company's financial statements and the notes thereto and the other
Financial information appearing elsewhere in this document. In
Addition to historical information, the following discussion and other
Parts of this document contain certain forward-looking information.
When used in this discussion, the words "believes," "anticipates,"
"expects," and similar expressions are intended to identify forward-
Looking statements. Such statements are subject to certain risks and
Uncertainties, which could cause actual results to differ materially
From those projected due to a number of factors beyond the company's
Control. The company does not undertake to publicly update or revise
Any of its forward-looking statements even if experience or future
Changes show that the indicated results or events will not be
Realized. Readers are cautioned not to place undue reliance on these
Forward-looking statements, which speak only as of the date hereof.
Readers are also urged to carefully review and consider the company's
Discussions regarding the various factors, which affect its business,
Included in this section and elsewhere in this report.
NATURE OF THE COMPANY'S PRESENT OPERATIONS
The success of the Company's proposed plan of operation will depend to
a great extent on the operations, financial condition, and management of
its subsidiary Advanced Technology International Holdings Limited ("ATIH").
The Company cannot ensure that it will be a commercially or economically
viable business operation. It will face all of the risks inherent in a new
business, the majority of which are beyond the control of the management of
both the Company and ATIH.
RESULTS OF OPERATIONS
The following table shows the selected consolidated income statement
data of the Company and its subsidiaries for the three-month period and
nine-month period ended September 30, 2001 and September 30, 2000. The
data should be read in conjunction with, and is qualified in its entirety
by reference to, the consolidated financial statements and the notes
thereto included as part of this quarterly report:
----------------------------------------------------------------------------------------
Three-month period ended Nine-month period ended
September 30 September 30
(US dollars in thousands) 2001 2000 2001 2000
------------------------------------------------------
Revenue 8,569 5,552 21,416 15,338
Cost of Sales (6,520) (3,981) (15,747) (10,982)
----- ----- ------ ------
Gross Profit 2,049 1,571 5,669 4,356
Gross Profit Margin 23.9% 28.3% 26.5% 28.4%
Other Income/(Expenses) 9 -- 29 2
Interest Income/(Expenses) (25) -- (61) --
Amortization of Goodwill (557) -- (743) --
Selling Expenses (62) (14) (117) (32)
General and Administrative Expenses (501) (459) (1,199) (902)
----- ----- ------ ------
Income before Income Taxes 913 1,098 3,578 3,422
Income Taxes (244) (93) (454) (298)
----- ----- ------ ------
Income after Income Taxes 669 1,005 3,124 3,124
Minority Interest (250) -- (354) --
----- ----- ------ ------
Net Income 418 1,005 2,770 3,124
Earning per shares (US$) 0.02 0.05 0.14 0.16
Extraordinary Gain on Disposal -- -- 4,014 --
----------------------------------------------------------------------------------------
-8-
REVENUE AND GROSS PROFIT MARGIN
Total revenue for the three-month period ended September 30, 2001
increased by US$3.0 million or 54.3% to US$8.6 million, compared to US$5.6
million for the corresponding period in year 2000. During the three-month
period ended September 30, 2001, the Company has provided discounts to
loyal customers in order to retain its market domination in Southern China,
as well as continue to expand its customer base. The Company also provides
value-added services to its clients, the circuit-on-board service, to
improve its gross profit margin in this highly competitive industry. Due
to these adjustments, the total revenue for the three-month period ended
September 30, 2001 increased accordingly, as compared to the same
corresponding period in 2000 when the Company concentrated mainly on the
traditional phenol based single and double-sided PCBs with relatively
inflexible pricing strategies.
Total revenue for the nine-month period ended September 30, 2001
increased by US$6.1 million or 39.6% to US$21.4 million, compared to
US$15.3 million for the corresponding period in 2000. The increase was
primarily the results of the implementation of a relatively flexible
pricing strategy, the shifting its focus on high margin products and on
providing value-added services.
The decrease in average gross profit margin from 28.3% for the three-
month period ended September 30, 2000 to 23.9% in year 2001 was the result
of providing discounts to loyal customers and increasing competition in the
PCB industry in this downturn economy, which was partially offset by the
entrance into higher profit margin PCBs market and providing additional
value-added services to the clients during last three quarters.
OTHER INCOME/(EXPENSES)
Other expenses during the three-month period ended September 30, 2001
Were US$9,000, compared to none for the same corresponding period in 2000.
During the nine-month period ended September 30, 2001, other income was
US$29,000, compared to other income of US$2,000 for the corresponding
period in year 2000. The majority of the other income was generated from
the sale of scraps resulted from the production processes.
INTEREST (FINANCIAL) EXPENSES
Interest expenses during the three-month period and nine-month period
ended September 30, 2001 were US$25,000 and $61,000, compared to none for
the same corresponding periods in year 2000. Interest expenses incurred
during the said period were the result of interests and bank charges spent
on maintaining the revolving over-draft banking facilities for the
provision of working capital flexibility. The Company maintained no
outside debt and did not have any interest expense on long-term debt
facilities.
SELLING EXPENSES
Selling expenses increased by approximately US$48,000 or 342.9% to
US$62,000 for the three-month period ended September 30, 2001 and increased
by approximately US$85,000 or 265.6% to US$117,000 for the nine-month
period ended September 30, 2000. The increase in laboratory testing,
custom declaration costs, and transportation related costs contributed to
the majority of the increase in selling expenses for the past three
quarters.
-9-
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses increase by approximately
US$42,000 or 9.2% to US$501,000 for the three-month period ended September
30, 2001 from US$459,000 for the same corresponding period in year 2000.
The following events occurred during the three-month period ended September
30, 2001 contributed to the majority of the overall increase in general and
administrative expenses:
(a) Provision of Business Tax - The provision of business tax in the
amount of US$122,000 was recorded during the three-month period
ended September 30, 2001, compared to none for the same
corresponding period in year 2000. This provision was made for a
wholly owned British Virgin Islands' subsidiary of the Company.
(b) Auditors' Fee - This fee increased by approximately US$51,000 for
the three-month period ended September 30, 2001 as compared to
none for the corresponding period in year 2000. This was the
result of additional fees spent on independent auditor's work for
the review of quarterly reports during the period. The Company
has changed its accounting policy to reflect such fees on a
quarterly basis in year 2001 rather than to show a year-end one-
time entry/adjustment as in year 2000.
(c) Staff Salaries and Allowances and Directors' Remuneration -
During the three-month period ended September 30, 2001, a total
of US$216,000 was recorded, an increase of US$63,000 over the
same corresponding period in year 2000. The Company has changed
its accounting policy to reflect directors' remuneration on a
quarterly basis in year 2001 rather than to show a year-end one-
time entry/adjustment as in year 2000.
General and administrative expenses increase by approximately
US$298,000 or 32.9% to US$1,199,000 for the nine-month period ended
September 30, 2000 from US$902,000 for the same corresponding period in
year 2000. The following events occurred during the nine-month period
ended September 30, 2001 contributed to the majority of the overall
increase in general and administrative expenses:
(a) Provision of Business Tax - The provision of business tax in the
amount of US$229,000 was recorded during the nine-month period
ended September 30, 2001, compared to none for the same
corresponding period in year 2000. This provision was made for a
wholly owned British Virgin Islands' subsidiary of the Company.
(b) Staff Salaries and Allowances and Directors' Remuneration -
During the nine-month period ended September 30, 2001, a total of
US$461,000 was recorded, an increase of US$136,000 over the same
corresponding period in year 2000. The Company has changed its
accounting policy to reflect directors' remuneration on a
quarterly basis in year 2001 rather than to show a year-end one-
time entry/adjustment as in year 2000.
(c) Auditors' Fee - This fee increased by approximately US$63,000 to
US$96,000 for the nine-month period ended September 30, 2001 as
compared to US$33,000 for the corresponding period in year 2000.
This was the result of additional fees spent on independent
auditor's work for the review of quarterly reports during the
period. The Company has changed its accounting policy to reflect
such fees on a quarterly basis in year 2001 rather than to show a
year-end one-time entry/adjustment as in year 2000.
(d) Loss on Exchange - During the nine-month period ended September
30, 2001, a total of US$39,000 was recorded as loss on exchange,
compared to none for the same corresponding period in year 2000.
This loss was the result of using a high exchange rate (US$/HK$)
of 7.8 rather than 7.75 to better reflect the current exchange
rate market situation in the region.
-10-
INCOME TAXES
The increase in income taxes was the result of the increase in income
before income taxes. Under the Hong Kong Tax Authority's Departmental
Interpretation and Practice Notes, a company based in Hong Kong, but with
substantially all of its manufacturing operations located in the PRC
conducted under a processing agreement with a PRC company, can enjoy profit
appointment under which 50% of its manufacturing profit is subject to Hong
Kong profit taxed. Therefore, the effective tax rate of the Company is
approximately 8% p.a. Such tax concession is granted based on an annual
application by the Company.
NET INCOME AND EARNING PER SHARES
For the three-month period ended September 30, 2001, net income
decreased by US$587,000 or 58.4% to US$418,000, compared to US$1,005,000
for the corresponding period in year 2000. For the nine-month period ended
September 30, 2001, net income decreased by US$356,000 or 11.4% to US$2.8
million, compared to US$3.1 million for the same period in year 2000. The
decrease was the result of providing discount to loyal customers that was
offset by the demand for higher margin PCBs of the consumer electronics and
telecommunication products and addition of value-added services.
Earning per shares for the three-month period ended September 30, 2001
decreased approximately by US$0.03 or 60% to US$0.02, as compared to
US$0.05 for the corresponding period in year 2000. For the nine-month
period ended September 30, 2001, earning per shares decreased approximately
by US$0.02 or 12.5% to US$0.14, as compared to US$0.16 for the same
corresponding period in year 2000.
EXTRAORDINARY GAIN ON DISPOSAL
An extraordinary gain on disposal in the amount of US$4 million was
the result from the proceeds of a placement of shares of a newly formed
indirect subsidiary of the Company. These proceeds were then used to pay
for the acquisition of, through an intermediate British Virgin Islands'
holding corporation, the ultimate assets of Jiang Yin Kaicheng Copper Clad
Laminated Co., Ltd., a wholly foreign owned enterprise established in the
PRC whose principal activities are the manufacture and sale of copper clad
laminated sheets.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents were US$588,000 as of September 30, 2001.
This represents an increase of US$348,000 as compared with the cash balance
as of December 31, 2000. The increase was primarily due to cash provided
by operating activities, which was partially offset by capital spending for
purchase of equipment, capital for acquisition of a subsidiary, and
repayment of short-term overdraft banking facilities.
Management believes that the level of financial resources is a
significant competitive factor in the PCB industry and accordingly may
choose at any time to raise additional capital through debt or equity
financing to strengthen its financial position, facilitate growth and
provide the Company with additional flexibility to take advantage of
business opportunities.
-11-
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
None
(b) Reports on Form 8-K:
None.
-12-
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.
SCORE ONE, INC.
Date: November 19, 2001 By: /S/ WING CHEONG HO
---------------------------
Name: Wing Cheong Ho
Title: President
-14-