Item 1. Business
Item 1A.
Item 1A. Risk Factors
Item 2.
ITEM 2. PROPERTIES
Rival’s principal administrative offices are located at 3155 East Patrick Lane, Suite 1, Las Vegas, Nevada. We pay approximately $1,000 per year on a month-to-month basis for secretarial, photocopying, and similar services.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
We are not a party to any proceedings or threatened proceedings as of the date of this filing.
ITEM 4.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
We have not submitted a matter to a vote of our shareholders during the fourth quarter of the 2007 fiscal year.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock was listed on the OTC Bulletin Board under the symbol “RVTI” from January 1, 2006 through June 2006. From June 2006 through the date of this filing our common stock is listed on the Pink Sheets, LLC. Our common stock also trades on the Berlin Stock Exchange and the Frankfurt Stock Exchange and our Regulation S common stock is traded on the Berlin Stock Exchange.
The following table lists the range for the high and low closing bid prices of our common stock for each quarter for the years ended December 31, 2007 and 2006, as reported by the OTC Bulletin Board and Pink Sheets, LLC. Over-the-counter market bid quotations reflect inter-dealer prices, without retail mark-up, mark-downs or commissions, and may not necessarily represent actual transactions.
Our shares are subject to Section 15(g) and Rule 15g-9 of the Securities and Exchange Act, commonly referred to as the “penny stock” rule. The rule defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions. The rule provides that any equity security is considered to be a penny stock unless that security is registered and traded on a national securities exchange meeting specified criteria set by the SEC or excluded from the definition on the basis of share price or the issuer’s net tangible assets.
These rules may restrict the ability of broker-dealers to trade or maintain a market in our common stock and may affect the ability of shareholders to sell their shares. Broker-dealers who sell penny stocks to persons other than established customers and accredited investors must make a special suitability determination for the purchase of the security. Accredited investors, in general, include individuals with assets in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 together with their spouse, and certain institutional investors. The rules require the broker-dealer to receive the purchaser’s written consent to the transaction prior to the purchase and require the broker-dealer to deliver a risk disclosure document relating to the penny stock prior to the first transaction. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the security. Finally, monthly statements must be sent to customers disclosing recent price information for the penny stocks.
Holders
As of March 24, 2008, we had 181 stockholders of record of our common stock, which does not include shareholders of our Regulation S common stock or shareholders who hold shares in “street accounts” of securities brokers.
Dividends
We have not paid any dividends on our common stock. We currently intend to retain any earnings for use in our business, and do not anticipate paying cash dividends in the foreseeable future.
Recent Sales of Unregistered Securities
On December 31, 2007, we issued 147,070 shares at $0.40 per share to a consultant in lieu of services. We relied on an exemption from registration for a private transaction not involving a public distribution provided by Section 4(2) of the Securities Act
.
Issuer Purchase of Securities
None.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data is based on the consolidated financial statements of Rival and CWI Technology and TRU Oiltech. The following chart summarizes our consolidated financial statements for the years ended December 31, 2007 and 2006 and should be read in conjunction with the financial statements, and notes thereto, included with this report at Part II, Item 8, below. The 2006 year has been restated to reflect corrections for errors made in that year’s financial reports (See Note 14 to the financial statements).
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
Plan of Operation
We have not received, nor recorded, consolidated revenue from ongoing operations for the past two years and have relied on equity transactions and loans to fund development of our business plan. Our auditors have expressed an opinion that these factors raise substantial doubt as to our ability to continue as a going concern. Management intends to raise funds through private placement offerings, targeting strategic partners in an effort to increase revenues and expanding revenues through strategic acquisitions.
During the past two years we have relied on debt financing, sales of our common stock for cash and we have issued common stock in consideration for services. During 2007 we received funding from Epsom Investment Services NV (“Epsom”) under a convertible promissory note in the amount of $500,000 (USD) bearing interest of 7% per annum. The promissory note is payable on or before July 30, 2008, but Epsom has the option to convert the principal and interest outstanding at the end of the term into Rival common stock. The conversion price will be the closing market value of the common stock on the last trading day prior to the date Epsom provides Rival with written notice of conversion.
To avoid using our cash we issued an aggregate of 522,070 shares of common stock in 2007 in consideration for services valued at $220,078. During 2006 we issued an aggregate of 27,500 shares of common stock in consideration for services valued at $18,550.
During 2006 we sold an aggregate of 3,075,336 shares in a Regulation S offering and realized gross proceeds of $482,694. Regulation S provides for the offers and sales of restricted securities outside of the United States. These securities are not registered under the Securities Act of 1933 and cannot be offered or sold in the United States unless registered under the Securities Act or an exemption from registration is available.
As a result of equity financing and loans our consolidated cash position at December 31, 2007 was $344,836, but we recorded a net loss of $783,498 for the year ended December 31, 2007. During the year ended December 31, 2007, we spent $78,983 on research and development compared to $189,589 for the year ended December 31, 2006. We anticipate that we will have research and development expense in future periods as our subsidiaries further develop their technologies. We do not anticipate hiring employees in the short term, but this action will be based upon the success of our subsidiaries’ development of their respective technologies.
Our challenge for the next twelve months will be to obtain financing to assist the development of our subsidiaries’ technologies to a commercially viable application and then market them to customers. However, our subsidiaries may be unable to develop each technology to a point where it satisfies the needs of the market. In that case, our subsidiaries may have to research and develop other applications or we may need to abandon our business plans.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
RIVAL TECHNOLOGIES, INC.
AND SUBSIDIARIES
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in Canadian Dollars)
December 31, 2007 and 2006
C O N T E N T S
Reports of Independent Registered Public Accounting Firms
Consolidated Balance Sheet
Consolidated Statements of Operations
Consolidated Statements of Other Comprehensive Loss
Consolidated Statements of Stockholders’ Equity (Deficiency in Assets)
Consolidated Statements of Cash Flows
Notes to the Consolidated Financial Statements
Chisholm
Bierwolf &
Nilson, LLC Certified Public Accountants
Todd D. Chisholm, Audit Partner
Nephi J. Bierwolf, Tax Partner
Troy F. Nilson, Audit Partner
533 West 2600 South, Suite 25 $ Bountiful, Utah 84010 $ Phone: (801) 292-8756 $ Fax: (801) 292-8809 $ www.cbncpa.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
of Rival Technologies, Inc.
Las Vegas, Nevada
We have audited the accompanying consolidated balance sheet of Rival Technologies, Inc. as of December 31, 2007, and the related consolidated statements of operations, stockholders= equity, and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company=s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the P.C.A.O.B. (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company=s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Rival Technologies, Inc. as of December 31, 2007, and the results of its operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has incurred substantial losses from operations, recurring negative cash flows from operations, and has limited sales of its products which raises substantial doubt about its ability to continue as a going concern. Management=s plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Chisholm, Bierwolf & Nilson
Chisholm, Bierwolf & Nilson
Bountiful, Utah
March 27, 2008
__________________________________________________________________
Member of AICPA, UACPA & Registered with PCAOB
Dohan and Company
Certified Public Accountants
a professional Association
[logo]
7700 North Kendall Drive, 200
Miami, Florida 33156-7578
Telephone (305)274-1366
Facsimile (305) 274-1368
E-mail info@uscpa.com
Internet www.uscpa.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Stockholders and Board of Directors
Rival Technologies, Inc and Subsidiaries (A Development Stage Company)
Las Vegas, Nevada
We have audited the consolidated balance sheet of Rival Technologies, Inc. and Subsidiaries (A Development Stage Company), (the ACompany@) as of December 31, 2006, and the related consolidated statements of operations and other comprehensive income (loss) and cash flows for the year then ended, and cumulative amounts from beginning of development stage (April 1, 2003) to December 31, 2006 and statements of stockholders= equity (deficiency in assets) for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company=s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company at December 31, 2006, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
[CPS logo] [agi logo]
The accompanying 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 experienced recurring losses from operations. In addition, the company has an accumulated deficit of approximately $14,907,764 as of December 31, 2006, which raises substantial doubt about its ability to continue as a going concern. Management=s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Dohan and Company, CPAs, P.A.
Miami, Florida
June 14, 2007
The accompanying notes are an integral part of these financial statements
The accompanying notes are an integral part of these financial statements
The accompanying notes are an integral part of these financial statements
The accompanying notes are an integral part of these financial statements
The accompanying notes are an integral part of these financial statements
The accompanying notes are an integral part of these financial statements
The accompanying notes are an integral part of these financial statements
The accompanying notes are an integral part of these financial statements
The accompanying notes are an integral part of these financial statements
The accompanying notes are an integral part of these financial statements
The accompanying notes are an integral part of these financial statements
RIVAL TECHNOLGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in Canadian Dollars)
December 31, 2007
NOTE 1 -
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Business
Rival Technologies, Inc. is incorporated under the laws of the State of Nevada as a result of its amalgamation and merger between Rival Technologies, Inc., a British Columbia Company (“Rival BC”), and Rival Technologies, Inc. (the “Company”), a Nevada Company. Tru Oiltech, Inc. was organized on September 20, 2005, under the laws of the State of Nevada. The Company currently has limited operations and, in accordance with Statement of Financial Accounting Standard (SFAS) No. 7, “Accounting and Reporting by Development Stage Enterprises,” is considered a Development Stage Enterprise.
The Company was the exclusive licensed manufacturer and distributor worldwide of a brand of fire extinguishants and fire retardant products. The license agreement was terminated December 1999. During the three years ended December 31, 2002, all sales were made to customers in North America. The Company does not expect any further sales of these products and has abandoned this business effective the three-month period beginning April 1, 2003.
During the period beginning April 1, 2003, the Company acquired a new technology for reducing diesel emissions and will now focus on developing and marketing this technology.
On October 31, 2005, the Company incorporated TRU Oiltech, Inc. a Nevada corporation (“TRU Oiltech”) for the purpose of acquiring, developing and marketing the TRU Oitech technology. On October 31, 2005, the Company received 6,000,000 shares of TRU Oiltech common stock and the owners of the technology received 4,000,000 shares of TRU Oiltech. As a result TRU Oiltech is a majority-owned subsidiary of the Company.
On October 31, 2005, the Company incorporated CWI Technology, Inc. a Nevada corporation, as a wholly-owned subsidiary for the purpose to develop and market the CWI Technology.
Significant Accounting Polices
These consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America. The significant accounting policies adopted by the Company are as follows:
RIVAL TECHNOLGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in Canadian Dollars)
December 31, 2007
NOTE 1 -
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Significant Accounting Polices (Continued)
a. Basis of Presentation
These consolidated financial statements are presented in Canadian dollars and there are no exchange restrictions. The Company’s functional currency is the Canadian dollar. In accordance with the Statement of Financial Accounting Standard (SFAS) No. 52, “Foreign Currency Translation,” which stipulates that if the US-incorporated registrant had little or no assets and operations in the U.S., substantially all the operations were conducted in a functional currency other that the U.S. dollar, and the reporting currency selected was the same as the functional currency, then reporting in the foreign currency would produce little or no foreign currency translation effects. The assets and liabilities denominated in foreign currency are translated into Canadian dollars at the current rate of exchange existing at period end and revenues and expenses are translated at daily exchange rates. Related translation adjustments are reported as a separate component of stockholders’ equity, whereas, gains or losses relating from foreign currency transactions are included in the results of operations.
These consolidated financial statements are also prepared in conformity with accounting principles generally accepted in the United States of America and include the accounts of the Company and its wholly-owned subsidiary, Rival Technologies (Delaware) Inc., its former subsidiary Tracker Capital Corp. which merged with Rival Technologies (Delaware) Inc. during 2002, its wholly-owned subsidiary, CWI Technology, (Nevada) Inc., and its 60% owned subsidiary, Tru Oiltech, (Nevada) Inc. All significant intercompany accounts and transactions have been eliminated.
b. Use of Estimates
The preparation of these consolidated financial statements in conformity with accounting principles generally accepted in the United State of America requires management to make estimates and assumptions that could affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those reported.
RIVAL TECHNOLGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in Canadian Dollars)
December 31, 2007
NOTE 1 -
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Significant Accounting Polices (Continued)
c. Foreign Currency Translation
Transaction amounts denominated in foreign currencies are translated at exchange rates prevailing at transaction dates. Carrying values of monetary assets and liabilities are adjusted at each balance sheet date to reflect the exchange rate at that date. Non-monetary assets and liabilities are translated at the exchange rate on the original transaction date. Gains and losses from restatement of foreign currency monetary assets and liabilities are included in the statement of operations. Revenues and expenses are translated at the rates of exchange prevailing on the dates such items are recognized in the statements of operations.
d. Cash and Cash Equivalents
The Company considers cash held at banks and all highly liquid investments with original maturities of three months or less to be cash and cash equivalents.
e. Concentrations
Financial instruments that potentially subject the Company to concentrations of credit risks consist of cash and cash equivalents. The Company places its cash and cash equivalents at well known quality financial institutions. At times, such cash and investments may be in excess of government insurance limits. Credit Suisse insures CHF 30,000 of funds for the bank accounts that the Company has with Credit Suisse. At December 31, 2007, the Company had funds totaling $258,350 in excess of the insured limit.
f. Property and Equipment
Property and equipment is recorded at cost. Major additions and improvement are capitalized. The cost and related accumulated depreciation of property and equipment retired or sold are removed from the accounts and any differences between the undepreciated amount and the proceeds from the sale are recorded as gain or loss on sale. Depreciation is computed using the straight-line method over the estimated useful life of the assets as follows:
Description
Estimated Useful Life
Furniture and equipment
5 years
Computer equipment
3 years
RIVAL TECHNOLGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in Canadian Dollars)
December 31, 2007
NOTE 1 -
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Significant Accounting Polices (Continued)
g. Intangible Property
Intangible property is recorded at cost.
The carrying value of intangible property is evaluated for potential permanent impairment on an ongoing basis at the reporting unit level. In order to determine whether permanent impairments exists, management considers the Company’s and its subsidiaries’ financial condition as well as expected pre-tax earnings, undiscounted cash flows or market related values. If the carrying value of intangible property of a reporting unit exceeds the fair value of the reporting unit, the carrying value of the intangible property must be written down to fair value in the year the impairment is recognized.
h. Research and Development
Research and development costs are expensed as incurred. Research and development costs charged to expenses were $78,983 and $189,589 for the years ended December 31, 2007 and 2006, respectively. There are no significant agreements relating to research and development expenditures.
i. Income Taxes
Income taxes are computed in accordance with Statement of Financial Accounting Standard (SFAS) No. 109 “Accounting for Income Taxes.” A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expenses (benefit) result from the net change during the period of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
RIVAL TECHNOLGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in Canadian Dollars)
December 31, 2007
NOTE 1 -
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Significant Accounting Polices (Continued)
j. Net Loss per Share
Basic net loss per share is computed by dividing net loss attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share takes into consideration shares of common stock outstanding (computed under basic loss per share) and potentially dilutive shares of common stock. In periods where losses are reported the weighted average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. For the years ended December 31, 2007 and 2006, there were no common stock equivalents.
k. Newly Adopted Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
l. Comparative Figures
Certain comparative figures have been reclassified in the prior year consolidated financial statements to conform with the presentation adopted in the current year.
m. Segment Information
The Company operates in one reportable segment for Rival Technologies, Tru Oiltech and CWI Technology, being the diesel technology industry, in Canada and the United States of America.
n. Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities approximate the carrying value based on their effective interest rates compared to current market prices.
RIVAL TECHNOLGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in Canadian Dollars)
December 31, 2007
NOTE 1 -
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Significant Accounting Polices (Continued)
o. Convertible Debt
The Company has adopted Emerging Issues Task Force (EITF) Issue No. 98-5, “Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios”, and EITF Issue No. 00-27, “Application of EITF Issue No. 98-5 to Certain Convertible Instruments.” The Company incurred debt whereby the convertible feature of the debt provides for a rate of conversion based upon the closing market value of the common stock on the last trading day prior to the date upon which the note holder provides written notice. Therefore, the Company has not recorded a beneficial conversion feature on this note pursuant to EITF Issue No. 98-5 and 00-27.
NOTE 2 -
GOING CONCERN
As shown in the accompanying consolidated financial statements, the Company incurred net losses of $783,498 and $612,188 during the years ended December 31, 2007 and 2006, respectively. The Company has historically incurred significant net losses which have resulted in an accumulated deficit of $15,771,254 at December 31, 2007. In addition, the Company’s current liabilities exceeded its current assets by $261,737 at December 31, 2007. These factors, as well as the uncertain conditions that the Company faces relative to capital raising activities, create substantial doubt as to the Company’s ability to continue as a going concern. The Company is seeking to raise additional capital through public and/or private placement offerings, targeting strategic partners in an effort to increase revenues, and expanding revenues through strategic acquisitions. The ability of the Company to continue as a going concern is dependent upon the success of capital offerings or alternative financing arrangements and expansion of its operations. The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. As of December 31, 2007, the Company had cash and cash equivalents of $344,836.
The Company will require additional funding during the next twelve months to finance the growth of its current operations and achieve its strategic objectives. Management is actively pursuing additional sources of financing sufficient to generate enough cash flow to fund its operations through 2008 and 2009. However, management cannot make any assurances that such financing will be secured.
RIVAL TECHNOLGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in Canadian Dollars)
December 31, 2007
NOTE 3 -
PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at December 31, 2007:
Furniture and equipment
$
16,311
Computer equipment
5,397
Accumulated depreciation
(8,832
)
Total property and equipment
$
12,876
Depreciation expense was $3,371 and $2,034 for the years ended December 31, 2007 and 2006, respectively.
NOTE 4 -
INTANGIBLE PROPERTY
On September 20, 2005, the Company executed an agreement with the now director and president of Tru Oiltech and two other businessmen (see Note 11). Under the terms of the agreement, the director and president along with the two other businessmen agreed to sell the TRU Technology to the Company in exchange for 4,000,000 shares of Tru Oiltech valued at 0.001 per share. Fair value of the shares was determined to be par value as no shares or assets exist prior to this date. Tru Oiltech issued 4,000,000 shares. Fair value of the TRU Technology was negotiated in an arms-length transaction by the parties to be $4,000. As of December 31, 2007, the Company determined that the intangible property was fully impaired, and recorded an impairment expense of $4,000 for the year ended December 31, 2007.
NOTE 5 -
RELATED PARTY PAYABLE
As of December 31, 2007, there was an outstanding amount of $4,500 that was owed to an officer of the Company. The amount is unsecured, non-interest bearing and payable on demand.
NOTE 6 -
CONVERTIBLE NOTE PAYABLE
During August 2007, the Company received $491,000 ($500,000 USD) from a company pursuant to a convertible note payable. The note bears interest at 7% per annum, and is due on July 30, 2008. As of December 31, 2007, accrued interest on the note totaled $14,333. Until July 30, 2008, the note holder has the right, at the holder’s option, to convert the principal and accrued interest on the note, in whole or in part, into shares of the Company’s common stock at the closing market value of the common stock on the last trading day prior to the date upon which the note holder provides written notice (see also Note 1).
RIVAL TECHNOLGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in Canadian Dollars)
December 31, 2007
NOTE 7 -
PROMISSORY NOTE PAYABLE
On April 17, 2003, the Company issued a promissory note of $5,575 to a former director of the Company. The note is unsecured, non-interest bearing and payable on demand. The Company intends to redeem the promissory note in the near future. Consequently, it is classified as a current liability in the balance sheet.
NOTE 8 -
COMMON STOCK
On September 9, 2005, the Company’s board of director’s resolved to issue and transfer 5,000,000 shares of common stock to a trustee for the sole purpose of selling the shares of common stock. The trustee will receive a trustee fee equal to 3% of the selling value of the shares of common stock. There is no time limit as to when the trustee has to sell the shares of common stock. Any shares of common stock not sold by the trustee will be returned to the Company at its request. Accordingly, those shares of common stock have not been recorded as issued and outstanding on the consolidated balance sheet at December 31, 2007. Effective August 1, 2005, the trustee fee was increased to 5% of the selling value of the shares of common stock.
In conjunction with the above, the Company entered into an agreement with a third party for investor relations services whereby the third party is entitled to receive a fee equal to 47% of the selling value of the shares of common stock. Additionally, the third party is entitled to receive, on a one-time basis only, 250,000 shares of common stock which was delivered upon execution of this agreement dated November 15, 2004. These shares were value at $1.24 per share for a total value of $308,945. The shares were issued on February 9, 2005. Further, during March and August of 2005, the third party received a total of 505,000 shares of common stock for investor relations services. 5,000 shares were value at $1.88 per share for a total value of $9,418, and 500,000 shares were valued at $1.33 per share for a total value of $665,000. All issues approximated the trading price when the shares were issued. This agreement was terminated at the end of July 2005.
Subsequently, the Company engaged a third party for investor relations services whereby the third party receives a fee equal to 43% of the selling value of the shares of common stock. Through December 31, 2007, 6,717,326 shares of common stock had been issued by the trustee for proceeds of $2,805,782 (net of issue costs), and for investor relations and other services rendered.
On July 6, 2005, the Company issued 45,000 shares of common stock to various directors and consultants at $1.25 per share for a total value of $56,250 which approximated the trading price when the shares were issued. These shares were issued pursuant to an equity incentive plan that the Company has in place.
RIVAL TECHNOLGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in Canadian Dollars)
December 31, 2007
NOTE 8 -
COMMON STOCK (Continued)
On October 24, 2005, the Company issued 20,000 shares of common stock to a director of Tru Oiltech in consideration of engineering services provided to the Company. The weighted average of the share price of the Company was $1.2592 for the 5 trading days prior to the issuance of the shares. Consulting expense of $25,184 was recognized as the fair market value of the shares. These shares were issued pursuant to an equity incentive plan that the Company has in place.
Only July 12, 2006, the Company issued 10,000 shares at $0.75 per share to a director in lieu of services. Shares are issued as per S-8 and Director and Form 4 Insider Filing was filed.
On August 3, 2006, the Company issued 12,500 shares at $0.56 per share to a consultant in lieu of services. Shares are issued as per S-8.
On October 26, 2006, the Company issued 5,000 shares at $0.81 per share to a consultant in lieu of services. Shares are issued as per S-8.
On April 6, 2007, the Company issued 26,862 shares at $0.57 per share to an individual in lieu of investor relations debt incurred during 2006, as described above.
On August 17, 2007, the Company issued 375,000 shares at $0.43 per share to various related parties for services rendered. These shares were issued pursuant to an equity incentive plan that the Company has in place.
On December 31, 2007, the Company issued 147,070 shares at $0.40 per share to a consultant in lieu of services
Reg S shareholders have the same voting and dividend rights as common shareholders, being one vote per share present at any shareholder meeting of the Company. The Company does not intend to issue dividends at this time.
As of December 31, 2007, there were no stock options outstanding.
NOTE 9 -
INCOME TAXES
Income taxes are computed in accordance with Statement of Financial Accounting Standard (SFAS) No. 109 (SFAS 109) “Accounting for Income Taxes”. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expenses (benefits) result from the net change during the period of deferred tax assets and liabilities.
RIVAL TECHNOLGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in Canadian Dollars)
December 31, 2007
NOTE 9 -
INCOME TAXES (Continued)
Deferred tax assets are reduced by a valuation allowance, when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
The Company has approximately $6,190,000 of operating loss carry-forwards, which expire in various periods through 2027. The availability of certain operating loss carry-forwards for income tax purposes is subject to certain restrictions due to Internal Revenue Code Section 382 because there was a change in control of the Company in 2001.
The Company has provided a valuation allowance against its deferred tax assets given that it is in the development stage and it is more likely than not that these benefits will not be realized.
The income tax benefit differs from the amount computed at federal statutory rates of approximately 48% as follows:
The deferred tax asset consisted of the following at December 31, 2007.
Deferred tax asset:
Income tax benefit of operating loss carry forwards
$ 2,970,000
Valuation allowance
(2,970,000)
Net deferred tax asset
$ -
RIVAL TECHNOLGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in Canadian Dollars)
December 31, 2007
NOTE 10 -
LOSS PER SHARE
Following is a reconciliation of the loss per share for the years ended December 31, 2007 and 2006
:
NOTE 11 - BUSINESS COMBINATION
On September 20, 2005, the Company executed an agreement with the now director and president of Tru Oiltech (See Note 4). The purpose of the business combination was to acquire a majority interest in the new technology for reducing diesel emissions (See Note 1). The agreement provides that the Company be issued 6,000,000 shares of Tru Oiltech common stock valued at $0.001 per share. Fair value of the shares was determined to be par value as no shares or assets exist prior to this date. Tru Oiltech accordingly issued 6,000,000 shares to the Company making it a 60% majority shareholder. The agreement also provides that the Company will provide additional financing of $150,000. As of December 31, 2007, the Company had advanced $268,577 toward that financing, which amount is eliminated in the consolidation.
NOTE 12 - AMALGAMATION AGREEMENT
The Company and Rival Technologies, Inc. (“Rival Nevada”) have agreed to amalgamate and merge pursuant to an agreement dated September 6, 2005. Rival Nevada was incorporated in the State of Nevada on September 2, 2005, and was inactive and a wholly-owned subsidiary of the Company at the time of the amalgamation and merger. The provisions of the agreement provide for the Company to have its jurisdiction in the State of Nevada. All issued and outstanding shares of the Company shall remain outstanding. The amalgamation agreement took effect on October 14, 2005.
RIVAL TECHNOLGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in Canadian Dollars)
December 31, 2007
NOTE 13 -
JOINT VENTURE AGREEMENT
On February 23, 2007, the Company and its subsidiary, TRU Oiltech, entered into a joint venture agreement that entitled the joint venture partner a 25% interest and exclusive right to exploit the TRU Oiltech technology in Venezuela until March 2008. The joint venture partner has the responsibility, out of its share of joint venture participation, to compensate others that may assist, either directly or indirectly, in facilitating the commercial exploitation of the Company’s technology in Venezuela. Additionally, the Company and the joint venture partner are to share in long-term savings obtained from the use of Rival’s technology in Venezuela on a ratio of a minimum of 25% of the savings for the account of the Company and joint venture partner. No significant transactions have occurred with this joint venture through the date of this report.
NOTE 14 -
CORRECTION OF AN ERROR
Subsequent to the year ended December 31, 2007, management of the Company discovered an error related to the consolidated financial statements for the years ended December 31, 2006 and 2005. During the years ended December 31, 2006 and 2005, the Company’s majority-owned subsidiary, TRU Oiltech, incurred net losses of $171,101 and $38,880, respectively. The Company erroneously recorded the proportionate share of the net losses, $68,440 and $15,552, as minority interest on the consolidated balance sheet, consolidated statements of operations and consolidated statements of other comprehensive loss, as of and for the years ended December 31, 2006 and 2005, respectively. Only $4,000 of the $15,552 net loss for the year ended December 31, 2005 should have been recorded as minority interest, reducing the minority shareholders basis to zero. No additional amount of the net loss should have been recorded to minority interest for the year ended December 31, 2006 since the minority shareholder’s initial investment had already been reduced to $-0- during the year ended December 31, 2005.
Accordingly, the Company has restated the consolidated financial statements to reflect this error. The effect to the financial statements is as follows:
RIVAL TECHNOLGIES, INC. AND SUBSIDIARIES
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(Expressed in Canadian Dollars)
December 31, 2007
NOTE 14 -
CORRECTION OF AN ERROR (Continued)
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
In our current report on Form 8-K, dated April 6, 2006 and filed April 12, 2006, we reported that our independent registered public accounting firm, Dohan and Company, CPA’s, P.A. declined to stand for re-election and we had engaged Kyle L. Tingle, CPA, LLC to serve as our independent registered public accounting firm on April 7, 2006. However, on June 15, 2006, we filed a current report on Form 8-K, dated June 9, 2006, that disclosed that we had dismissed Kyle L. Tingle, CPA, LLC and we again engaged Dohan and Company, CPA’s, P.A., as our independent registered public accounting firm.
In our current report on Form 8-K, dated August 29, 2007 and filed September 5, 2007, we reported that our board of directors had approved the dismissal of Dohan and Company, CPA’s, P.A. as our independent registered public accounting firm. In our current report on Form 8-K, dated September 13, 2007 and filed September 14, 2007, we reported that we had engaged Chisholm, Bierwolf & Nilson, LLC, Certified Public Accountants, as our independent registered public accounting firm.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC. This information is accumulated and communicated to our executive officers to allow timely decisions regarding required disclosure. Our Chief Executive Officer, who also is our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, he concluded that our disclosure controls and procedures were effective.
Management’s Annual Report on Internal Control over Financial Reporting
·
Our Chief Executive Officer, who is also our principal financial officer, is responsible to design or supervise a process to be effected by our board of directors that provides reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The policies and procedures include: maintenance of records in reasonable detail to accurately and fairly reflect the transactions and dispositions of assets,
·
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and directors, and
·
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on our financial statements.
For the year ended December 31, 2007, management has relied on the Committee of Sponsoring Organizations of the Treadway Commission (COSO), “Internal Control - Integrated Framework,” issued in 1992, to evaluate the effectiveness of our internal control over financial reporting and based upon that framework, management has determined that our internal control over financial reporting is effective.
Our management determined that there were no changes made in our internal controls over financial reporting during the fourth quarter of 2007 that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the our registered public accounting firm pursuant to temporary rules of the SEC that permit the company to provide only management’s report in this annual report.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Executive Officers
Biographical information about our executive officer and director is set forth below. Our bylaws require at least one director to serve until he is replaced by a qualified director. Our executive officers are chosen by our Board of Directors and serve at its discretion.
Name
Age
Position Held
Term of Directorship
Douglas B. Thomas
President, Chief Executive Officer
Secretary/Treasurer and Director
From August 2007 until next annual meeting
On August 29, 2007, our board of directors appointed Douglas B. Thomas to the positions of Director, President and CEO of Rival Technologies. Mr. Thomas serves as Managing Director of TRU Oiltech, our majority-owned subsidiary. Mr. Thomas has worked for the past twenty years as an independent marketing consultant. He brings extensive worldwide oilfield experience to the company and his experience will be useful as we move to commercialize our recently patented TRU™ process and TRULITE™ synthetic crude oil. He has worked on delivery of marketing initiatives of manufactured products and has introduced oilfield products to markets in North and South America, Russia, China and Australia.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires our directors, executive officers and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and our other equity securities. Officers, directors and greater than ten-percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) reports they file and provide written representation that no Form 5 is required. Based upon a review of these forms furnished to us during the fiscal year ended December 31, 2007, we believe Douglas B. Thomas filed late one Form 3, Robin J. Harvey filed late one Form 4 related to one transaction, and Rockridge Capital Corp filed late three Forms 4 related to four transactions.
Code of Ethics
Due to the fact that we have only one officer and director and minimal operations, we have not adopted a code of ethics for our principal executive and financial officers. Our board of directors will revisit this issue in the future to determine if adoption of a code of ethics is appropriate. In the meantime, our management intends to promote honest and ethical conduct, full and fair disclosure in our reports to the SEC, and compliance with applicable governmental laws and regulations.
Committees
We are a smaller reporting company with only one director and officer who has an active role in our operations. As a result, we do not have a standing nominating committee for directors, nor do we have an audit committee with an audit committee financial expert serving on that committee. Our director acts as our nominating and audit committee.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Executive Officer Compensation
The following table shows the compensation paid to our principal executive officer for the past two fiscal years ended December 31, 2007 and 2006.
(1) In Canadian dollars.
(2) Represents the fair value of 200,000 shares issued under the 2005 Equity Incentive Plan.
(3) Represents the fair value of 50,000 shares issued under the 2005 Equity Incentive Plan.
(4) Represents the fair value of 10,000 shares issued under the 2005 Equity Incentive Plan
We have not entered into an employment contract with our executive officer and as our sole director he
determines the amount of his compensation.
Outstanding Equity Awards
Our named executive officer does not hold any outstanding equity awards as of December 31, 2007.
Retirement or Change of Control Arrangements
We do not offer retirement benefit plans to our executive officer, nor have we entered into any contract, agreement, plan or arrangement, whether written or unwritten, that provides for payments to the named executive officer at or in connection with the resignation, retirement or other termination of the named executive officer, or a change in control of the company or a change in the named executive officer’s responsibilities following a change in control.
Compensation of Directors
We do not have any standard arrangement for compensation of our directors for any services provided as director, including services for committee participation or for special assignments.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
Securities Under Equity Compensation Plans
The following table lists the securities authorized for issuance under any equity compensation plans approved by our shareholders and any equity compensation plans not approved by our shareholders as of December 31, 2007.
2005 Equity Incentive Plan
On June 1, 2005, our board of directors adopted "The 2005 Equity Incentive Plan of Rival Technologies, Inc." (the "Plan"). The purpose of the Plan is to aid the company in maintaining and continuing its development of a quality management team, in attracting qualified employees, consultants, and advisors who can contribute to our future success, and in providing such individuals with an incentive to use their best efforts to promote our growth and profitability.
Pursuant to the Plan, the Board may authorize the issuance of stock or options to purchase stock up to an aggregate of five million (5,000,000) shares of our common stock over a maximum of a five year period, although the Board may shorten this period. Any options granted under the Plan are "non-qualified" stock options. The Board shall determine which employees are eligible to receive shares or options under the Plan. The term "Employee" includes any employee, director, officer, or consultant or advisor of the company or any of its subsidiaries, provided that bona fide services are rendered by consultants and advisors and such services are not rendered in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for our common stock.
On June 30, 2005, we filed a registration statement on Form S-8 (Registration No. 333-126241) which registered the 5,000,000 common shares to be issued under the Plan. As of December 31, 2007, our Board has granted 467,500 common shares to consultants and advisors pursuant to the Plan.
Beneficial Ownership
The following table sets forth the beneficial ownership of our outstanding common stock of each person or group known by us to own beneficially 5% or more of our outstanding common stock and ownership of our management. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Except as indicated by footnote, the persons named in the table below have sole voting power and investment power with respect to all shares of common stock shown as beneficially owned by them. The percentage of beneficial ownership is based on 47,157,560 shares of common stock outstanding as of March 24, 2008.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
Transactions with Related Parties
Since the beginning of our past fiscal year we have not engaged in, or propose to engage in, any transactions involving our executive officers, directors, 5% or more stockholders or immediate family members of such persons.
Director Independence
We do not have an independent director, as defined by NASD Rule 4200(a)(15), serving on our board.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Auditor Fees
The following table presents the aggregate fees billed for 2007 by our independent registered public accounting firm, Chisholm, Bierwolf & Nilson LLC, Certified Public Accountants, and for 2006 by our former independent registered public accounting firm, Dohan & Company, CPA’s PA, in connection with the audit of our financial statements and other professional services rendered by those accounting firms.
Audit fees
$ 28,092
$ 39,600
Audit-related fees
Tax fees
All other fees
$ 0
$ 0
Audit fees represent the professional services rendered for the audit of our annual financial statements and the accounting firm review of our financial statements included in quarterly reports, along with services normally provided by the firm in connection with statutory and regulatory filings or engagements. Audit-related fees represent professional services rendered for assurance and related services by the accounting firm that are reasonably related to the performance of the audit or review of our financial statements that are not reported under audit fees.
Tax fees represent professional services rendered by the accounting firm for tax compliance, tax advice, and tax planning. All other fees represent fees billed for products and services provided by the accounting firm, other than the services reported for the other categories.
Pre-approval Policies
We do not have a standing audit committee currently serving and as a result our board of directors performs the duties of an audit committee. Our board of directors will evaluate and approve in advance, the scope and cost of the engagement of an accounting firm before the accounting firm renders audit and non-audit services. We do not rely on pre-approval policies and procedures.
PART IV
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Exhibits
No. Description
3.1
Articles of Incorporation of Rival Technologies, Inc. (Incorporated by reference to exhibit 3.1 to Form 8-K, filed October 31, 2005)
3.2
Articles of Merger, dated September 6, 2005 (Incorporated by reference to exhibit 3.2 to Form 8-K, filed October 31, 2005)
3.3
Bylaws of Rival Technologies, Inc. (Incorporated by reference to exhibit 3.3 to Form 8-K, filed October 31,
2005)
4.1
The 2005 Stock Equity Incentive Plan of Rival Technologies Inc. (Incorporated by reference to exhibit 4.1 to Form S-8, filed June 30, 2005)
21.1
Subsidiaries of Rival Technologies (Incorporated by reference to exhibit 21.1 of Form 10-QSB, as amended,
filed May 1, 2007)
31.1
Chief Executive Officer Certification
31.2
Principal Financial Officer Certification
32.1 Section 1350 Certification
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized
RIVAL TECHNOLOGIES, INC.
By: /s/ Douglas B. Thomas
Douglas B. Thomas
President, CEO,
Secretary, Treasurer, and Director
Date: April 2, 2008