10-Q 1 fm10q0302.txt FORM 10Q UNITED STATES SECURITIES 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 March 31, 2002 ----------------------------------------------------------------- NEMCO, INC. ---------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 22-3656615 -------- ------------ (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 625 N. Michigan Avenue Chicago, Illinois 60611 ---------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number (312) 867-1052 -------------- As of March 31, 2002, the following shares of the registrant's common stock were issued and outstanding: 25,000,000 shares authorized, $0.001 par value 14,333,333 shares issued and outstanding INDEX PART I - FINANCIAL INFORMATION Item 1. Financial Statements . . . . . . . . . . . . . . . . .3 CONDENSED CONSOLIDATED BALANCE SHEET . . . . . . . . .4 CONDENSED CONSOLIDATED INCOME STATEMENT. . . . . . . .5 STATEMENT OF CASH FLOWS. . . . . . . . . . . . . . . .6 Note 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES. . . . . . . . . . . . .8 Note 2. USE OF OFFICE SPACE. . . . . . . . . . . . .8 Note 3. EARNINGS PER SHARE. . . . . . . . . . . . . 8 Note 4. LIQUIDITY . . . . . . . . . .. . . . . . . .9 Item 2. Management's Discussion And Analysis or Plan of Operations. . . . . . . . . . . . . . . . . . . . . .10 PART II - OTHER INFORMATION Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . 13 Item 2. Changes in Securities. . . . . . . . . . . . . . . . 13 Item 3. Defaults upon Senior Securities. . . . . . . . . . . 13 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . 13 Item 5. Other information. . . . . . . . . . . . . . . . . . 13 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . 13 PART I - FINANCIAL INFORMATION Item 1. Financial Statements To the Board of Directors of NEMCO INC. We have reviewed the accompanying balance sheet of Nemco Inc., (a development stage company) as of March 31, 2002 and the related statements of loss and accumulated deficit, and cash flows for the three months then ended, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of Nemco Inc. A review consists principally of inquiries of Company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, 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 to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles. Graf Repetti & Co., LLP Dated: New York, New York May 16, 2002 NEMCO INC. CONDENSED CONSOLIDATED BALANCE SHEET As Of As Of March 31, 2002 June 30, 2001 (Unaudited) (Audited) -------------------------------- ASSETS Current Assets Cash $0 $0 Other Current Assets 0 0 _________ ________ Total Current Assets 0 0 Other Assets 0 0 --------- -------- TOTAL ASSETS $0 $0 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accrued Expenses 46,338 39,300 Other Liabilities Loan Payable - Note 5 50,450 44,700 --------- --------- Total Liabilities 96,788 84,000 Stockholders' Equity Common Stock, $.001 par value, Authorized 25,000.000 Shares; Issued and Outstanding 14,333,333 Shares as of March 31, 2002; 14,333 14,333 Additional Paid in Capital 30,567 19,767 Deficit Accumulated During the Development Stage (141,688) (118,100) --------- -------- Total Stockholders' Equity (96,788) (84,000) TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $0 $0

NEMCO INC. CONDENSED CONSOLIDATED STATEMENT OF INCOME (LOSS) For the 3 Mos Ended For the 3 Mos Ended December 31 March 31 2001 2000 2002 2001 ---------------------------------------------- TOTAL REVENUES: $ 0 0 0 0 OPERATING EXPENSES: Accounting 1,750 4,000 1,750 1,750 Legal 2,500 2,500 2,500 2,500 Rent Expense-Note 2 3,600 3,600 3,600 3,600 Agent's fee 0 500 0 250 Other Start Up 0 0 0 0 Filing Fee 12 13 13 13 ________ _______ ________ ________ NET LOSS ( 7,862) (10,613) ( 7,863) (8,113) DEFICIT - Beginning of period (125,963) (83,012) (133,825) (93,625) ________ _______ ________ _______ DEFICIT - End of period (133,825) (93,625) (141,688) (101,738) NET LOSS PER SHARE (.00) (.00) (.00) (.00) Weighted Average Number of Shares Outstanding 14,333,333 4,615,385 14,333,333 14,333,333

NEMCO INC. STATEMENT OF CASH FLOWS (unaudited) For the three For the three Months Ended Months Ended to to March 31, 2002 March 31, 2001 ------------------ ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $( 7,863) $( 8,113) --------- ---------- Adjustments to Reconcile Net Loss to Net Cash Used in operating Activities: Changes in Assets and Liabilities: Decrease in Accrued Expenses ( 1,487) (4,463) --------- ---------- Total Adjustments ( 1,487) (4,463) --------- ---------- Net Cash Used in Operating Activities ( 9,350) ( 3,650) CASH FLOWS FROM FINANCING ACTIVITIES: Increase in loan payable - Channing Investments Ltd. 5,750 50 Paid in Capital contributed by shareholders for rent 3,600 3,600 --------- ---------- Net Cash Provided by Financing Activities 9,350 3,650 --------- ---------- Net Change in Cash 0 0 Cash at Beginning of Period 0 0 --------- ---------- Cash at End of Period $ 0 0 Supplemental Disclosure of Cash Flow Information Cash Paid During the Period for Interest Expense 0 0 Corporate Taxes $ 0 0

NEMCO INC. NOTES TO FINANCIAL STATEMENTS MARCH 31, 2002 NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES A. Description of Company NEMCO INC., ("the Company") is a for-profit corporation, incorporated under the laws of the State of Delaware on October 31, 1996 as Ecotech Solutions, Inc. On March 3, 1999, the Company changed its name to Bioincubation Corp. On December 20, 2000, the Company changed its name to Nemco Inc. The Company is a development stage company and is also considered a shell company at this time based upon the fact that the Company has no significant assets. The Company's principal business purpose is to locate and consummate a merger or alliance with a private entity. B. Basis of Presentation Financial statements are prepared on the accrual basis of accounting. Accordingly, revenue is recognized when earned and expenses when incurred. C. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts ind disclosures. Accordingly, actual results could differ from these estimates. Significant estimates in the financial statements include the assumption that the Company will continue as a going concern. See Note 5. NOTE 2 - USE OF OFFICE SPACE The Company uses office space for its executive offices at two locations. The fair market value of the 200 square foot office at The Studio, St. Nicholas Close, Elstree, Herts, United Kingdom is $600 per month. Use of this office space began January 1, 1999. The fair market value of the 300 square foot office at Suite 600, 625 N. Michigan Avenue, Chicago, Illinois is also $600 per month. Use of this office space began January 1, 1999. The amount for each office is reflected as an expense with a corresponding credit to accrued expenses, as the shareholders expect to be reimbursed in the future. NOTE 3 - EARNINGS PER SHARE FOR THE THREE MONTHS ENDED Net Loss Per Share $ (0.00) NOTE 4 - LIQUIDITY The Company's viability as a going concern is dependent upon raising additional capital, and ultimately, having net income. The Company's limited operating history, including its losses and no revenues, primarily reflect the operations of its early stage. As a result, the Company had from time of inception to March 31, 2002 no revenue and a net loss from operations of ($141,688). As of March 31, 2002, the Company had a net capital deficiency of ($96,788). The Company requires additional capital principally to meet its costs for the implementation of its business plan, for general and administrative expenses. It is not anticipated that the Company will be able to meet its financial obligations through internal net revenue in the foreseeable future. Bioincubation Corp., does not have a working capital line of credit with any financial institution. Therefore, future sources of liquidity will be limited to the Company's ability to obtain additional debt or equity funding. See Note 5. NOTE 5 - LOAN PAYABLE - CHANNING INVESTMENTS LTD. Channing Investments Ltd., a shareholder of the Company, will lend up to $50,000 to the Company upon request. The loan is not evidenced by a note. The informal agreement calls for no payment of interest. As of March 31, 2002, Channing Investments Ltd., had paid $50,450 of expenses on behalf of Nemco, Inc. The Company intends to repay the loan out of any fund raising that it may carry out or when the company achieves sustainable revenue. NOTE 6 - NON CASH FINANCIAL TRANSACTIONS Non-cash financing transactions consisting of the cost of contributed rent and the related additional paid in capital contributed by shareholders have been included in expenses and additional paid in capital, respectively, in the accompanying financing statements. These are valued at $3,600. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION RESULTS OF OPERATIONS The Company on December 11, 2000 acquired all the outstanding shares of common stock of Netmedia Developments Ltd.,(hereinafter "Netmedia") a company incorporated under the laws of the United Kingdom, whereunder the Company acquired all of the outstanding shares of common stock of Netmedia. Additionally, the company effectuated a 3 for 1 reverse split of its outstanding shares of common stock prior to the acquisition of Netmedia. The company thereafter issued 13,000,000 post reverse split shares of the Company in exchange for the outstanding shares of common stock of Netmedia. The transaction was approved by shareholders of both the company and Netmedia. As a result of the acquisition of Netmedia, control of the company passed to the shareholders of Netmedia. Pursuant to the terms of the Acquisition Agreement, the company changed its name to Nemco, Inc. A Form 8/K was filed on December 11, 2000 disclosing the transaction. Thereafter, Nemco was to file, within sixty (60) days of the transaction audited consolidated financial statements of Netmedia on a Form 8/K-A. Nemco however could not compile the financial statements of Netmedia and did not file the requisite Form 8/K-A. Additionally, Nemco was unable to further develop its business plan and effectively carry on operations due to market conditions. The Company was also unable to file interim financial reports on Form 10Q without incurring substantial hardship and expense. Based on the mutual agreement between the directors and shareholders of Bioincubation and Nemco, the parties agreed to terminate the original acquisition agreement entered into on December 11, 2000 and reverse the transaction. Control of the company has now reverted back to the original Bioincubation shareholders and the name of the company shall remain Nemco. Nemco shall now proceed as a blank check company whose principal business shall be to merge with or acquire another operating entity. Nemco shall proceed to update all its filings and become current with its reporting obligations with the Securities and Exchange Commission. Nemco is a blank check development stage company and its principal business purpose is to locate and consummate a merger or acquisition with a private entity. The SEC defines a blank check company as one which has no specific business or plan other than to consummate an acquisition of or merge into another business or entity. A number of states have enacted statutes, rules and regulations limiting the sale of securities of "blank check" companies in their respective jurisdictions. Additionally, some states prohibit the initial offer and sale as well as any subsequent resale of securities of shell companies to residents of their states. For this reason, management advises that any potential investor who has an interest in the Company should consult local Blue Sky counsel to determine whether the state within which that investor resides prohibits the purchase of shares of the Company in that jurisdiction. Once the Company has acquired or merged with another entity which possesses an active business plan, the Company will no longer be considered a "blank check" company. Additionally, shareholders of the Company have not entered into any "lock-up" letter agreement, which would prevent them from selling their respective shares of the Company's common stock until such time as the Company consummates a merger with or acquisition of another company. The selection of a business opportunity in which to participate is complex and risky. Additionally, as the Company has only limited resources, it may be difficult to find favorable opportunities. There can be no assurance that the Company will be able to identify and acquire any business opportunity which will ultimately prove to be beneficial to the Company and its shareholders. The Company will select any potential business opportunity based on management's business judgment. Nemco is a voluntarily reporting company in order to make information concerning itself more readily available to the public. Management believes that a reporting company under the Securities Exchange Act of 1934, as amended (the "Exchange Act") could provide a prospective merger or acquisition candidate with additional information concerning the Company. In addition, management believes that this might make the Company more attractive to an operating business opportunity as a potential business combination candidate. As a result of filing its registration statement, the Company is obligated to file with the Commission certain interim and periodic reports including an annual report containing audited financial statements. The Company intends to continue to voluntarily file these periodic reports under the Exchange Act even if its obligation to file such reports is suspended under applicable provisions of the Exchange Act. Any target acquisition or merger candidate of the Company will become subject to the same reporting requirements as the Company upon consummation of any such business combination. Thus, in the event that the Company successfully completes an acquisition or merger with another operating business, the resulting combined business must provide audited financial statements for at least the two most recent fiscal years or, in the event that the combined operating business has been in business less than two years, audited financial statements will be required from the period of inception of the target acquisition or merger candidate. The Company has no recent operating history and no representation is made, nor is any intended, that the Company will be able to carry on future business activities successfully. Further, there can be no assurance that the Company will have the ability to acquire or merge with an operating business, business opportunity or property that will be of material value to the Company. There is always a present potential that the Company may acquire or merge with a business or company in which the Company's promoters, management, affiliates or associates directly or indirectly have an ownership interest. There is no formal existing corporate policy regarding such transactions, however, in the event such a potential arises, the Company shall disclose any conflict of interest to its directors and shareholders for purposes of determining whether to acquire or merge with such a business. Management does not foresee or is aware of any circumstances under which this policy may be changed. The Company has held preliminary discussions with a number of entities for the purpose of consummating an acquisition or merger. These discussions have not developed into any serious negotiations, arrangement or understandings between the Company and such entities and are merely part of the Company's efforts to explore all available opportunities. The Company will consider the operations and business activity of any entity with which it wishes to consummate a transaction for the purpose of determining whether such entity will be able to sustain growth, profit and viable operations over the long term. At this time, the Company has not entered into any letters of intent, agreements or preliminary term sheets with any entity for the purpose of any transaction. The Company at this time does not have any preliminary agreements or understandings for the purpose of providing any consulting services. The Company will consider paying consultant or finders' fees to its principal shareholders on the same basis that it would pay any outside consultant or finder's fee. The Company at this time does not foresee generating any substantial income over the next twelve (12) months. The Company's main purpose and goal is to locate and consummate a merger or acquisition with a private entity. The Company's directors will be compensated with stock of any surviving Company subsequent to a merger or acquisition with a private entity. In the opinion of management, inflation has not and will not have a material effect on the operations of the Company until such time as the Company successfully completes an acquisition or merger. At that time, management will evaluate the possible effects of inflation on the Company as it relates to its business and operations following a successful acquisition or merger. PART II - OTHER INFORMATION Item 1. Legal Proceedings There are currently no pending legal proceedings against the company. Item 2. Changes in Securities There were no changes in securities for this period. Item 3. Defaults upon Senior Securities There has been no default in the payment of principal, interest, sinking or purchase fund installment. Item 4. Submission of Matters to a Vote of Security Holders There were no submission of matters to a vote of security holders during this period. Item 5. Other information There is no other information to report which is material to the company's financial condition not previously reported. Item 6. Exhibits and Reports on Form 8-K There are no exhibits attached and no reports on Form 8-K were filed during the quarter for which this report is filed. 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. NEMCO, INC. (Registrant) Date: May 29, 2002 /s/ Julian Andrews President

NEMCO INC 10-Q