U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 333-9809
DURWOOD, INC.
(Exact name of registrant as specified in its charter)
Delaware 87-0561426
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
4085 West 4715 South, Kearns, Utah 84118
(Address of principal executive offices)
(801) 967-0777
(Registrant's telephone number, including area code)
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such report(s), and (2)
has been subject to such filing requirements for the past 90
days.
YES [X] NO [ ]
The number of $.001 par value common shares outstanding at June
30, 1997: 1,103,500
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
See attached.
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
June 30, 1997 and December 31, 1996
<PAGE>
C O N T E N T S
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . 3
Statement of Operations . . . . . . . . . . . . . . . . . . 4
Statement of Stockholders' Equity . . . . . . . . . . . . . 5
Statement of Cash Flows . . . . . . . . . . . . . . . . . . 6
Notes to the Financial Statements . . . . . . . . . . . . . 7
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
June 30, December 31,
1997 1996
----------- ----------
(Unaudited)
CURRENT ASSETS
Cash $ 39,744 $ 3,250
Total Current Assets 39,744 3,250
----------- ----------
TOTAL ASSETS $ 39,774 $ 3,250
----------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 5,611 $ 131
Tax payable - 120
----------- ----------
Total Current Liabilities 5,611 251
----------- ----------
TOTAL LIABILITIES 5,611 251
----------- ----------
STOCKHOLDERS' EQUITY
Preferred stock: 500,000 shares authorized
of $0.001 par value but unissued - -
Common stock: 50,000,000 shares authorized
of $0.001 par value, 1,103,500 and
1,000,000 shares issued and outstanding 1,104 1,000
Additional paid-in capital 48,534 9,000
Deficit accumulated during the development
stage (15,505) (7,001)
----------- ----------
Total Stockholders' Equity 34,133 2,999
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 39,744 $ 3,250
----------- ----------
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
From
Inception on
For the For the July 12,
Six Months Ended Three Months Ended 1996 Through
June 30, June 30, June 30,
1997 1996 1997 1996 1997
------ ----- ------ ----- -------
REVENUES $ - $ - $ - $ - $ -
EXPENSES 8,504 - 7,140 - 15,505
------ ----- ------ ----- -------
NET INCOME (LOSS) $(8,504) $ - $(7,140) $ - $(15,505)
------ ----- ------ ----- -------
NET EARNINGS
(LOSS) PER SHARE
OF COMMON
STOCK $ (0.00) $ 0.00 $ (0.00) $ 0.00
------ ----- ------ -----
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Statements of Stockholders' Equity
(Unaudited)
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
--------- ------ ------- --------
Balance, July 12, 1996 - $ - $ - $ -
Common stock issued for cash at
$0.01 per share on July 15, 1996 1,000,000 1,000 9,000 -
Net loss for the five months
ended December 31, 1996 - - - (7,001)
--------- ------ ------- --------
Balance, December 31, 1996 1,000,000 1,000 9,000 (7,001)
Common stock issued for cash at
$0.50 per share on April 21, 1997 103,500 104 51,646 -
Stock issuance costs - - (12,112) -
Net loss for the six months
ended June 30, 1997 - - - (8,504)
--------- ------ ------- --------
Balance, June 30, 1997 1,103,500 $ 1,104 $ 48,534 $ (15,505)
--------- ------ ------- --------
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
From
Inception on
For the For the July 12,
Six Months Ended Three Months Ended 1996 Through
June 30, June 30, June 30,
1997 1996 1997 1996 1997
------- ----- ------- ----- -------
CASH FLOWS FROM
OPERATING ACTIVITIES
Income (loss) from
operations $ (8,504) $ - $ (7,140) $ - $(15,505)
Adjustments to reconcile
Net income to net cash
provided by operating
activities:
Increase in accounts
payable 4,741 - 4,861 - 5,611
Increase in tax payable 619 - - - -
------- ----- ------- ----- -------
Net Cash Used by
Operating Activities (3,144) - (2,279) - (9,894)
------- ----- ------- ----- -------
CASH FLOWS FROM
FINANCING ACTIVITIES
Payment of deferred
stock offering costs (12,112) - (11,362) - (12,112)
Common stock issued
for cash 51,750 - 51,750 - 61,750
------- ----- ------- ----- -------
Net Cash Provided by
Financing Activities 39,638 - 40,388 - 49,638
------- ----- ------- ----- -------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 36,494 - 38,109 - 39,744
CASH AND CASH
EQUIVALENTS AT
BEGINNING OF PERIOD 3,250 - 1,635 - -
------- ----- ------- ----- -------
CASH AND CASH
EQUIVALENTS AT
END OF PERIOD $ 39,744 $ - $ 39,744 $ - $ 39,744
------- ----- ------- ----- -------
Cash Paid For:
Interest $ - $ - $ - $ - $ -
Income taxes $ - $ - $ - $ - $ -
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 1997
NOTE 1 - ORGANIZATION AND HISTORY
a. Organization
Durwood, Inc. (the "Company") was recently incorporated under the laws
of the State of Delaware on July 12, 1996. The Company has not
commenced active business operations and is considered a development
stage company. The proposed business and purpose of the Company's
formation is to engage in the business of making and selling custom
pool cues as collectors items as well as for playing pool and
billiards; and to engage in and perform any and all acts and activities
customary in connection therewith, or incident thereto. The Company
intends to use the proceeds of its proposed public offering, if
successful, to purchase equipment for manufacturing custom pool cues
and also wood and other raw materials for manufacture into finished
goods inventory, and for initial working capital to begin active
business operations upon completion of this offering.
b. Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting. The Company has elected a December 31, year end.
c. Cash and Cash Equivalents
Cash equivalents include short-term, highly liquid investments with
maturities of three months or less at the time of acquisition.
d. Earnings (Loss) Per Share
The computations of earnings per share of common stock are based on the
weighted average number of shares outstanding at the date of the
financial statements.
e. Income Taxes
The Company provides for income taxes based on income reported for
financial reporting purposes. At June 30, 1997, the Company has a loss
carryover of $15,500 which expires in 2012. The potential benefit of
the tax loss carryover has been offset by a valuation allowance.
f. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
7
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Notes to the Financial Statements
June 30, 1997
NOTE 1 - ORGANIZATION AND HISTORY (Continued)
g. Unaudited Financial Statements
The accompanying unaudited financial statements include all of the
adjustments which in the opinion of management are necessary for a fair
presentation. All such adjustments are of a normal recurring nature.
NOTE 2 - PUBLIC OFFERING
The Company offered to the public, on a "best efforts, minimum - maximum"
basis up to 200,000 shares of its common stock to the public at $0.50 per
share. The offering was terminated on April 21, 1997 when the Company
received $51,750 and issued 103,500 shares of common stock.
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course
of business. The Company has not established revenues sufficient to cover
its operating costs and allow it to continue as a going concern. The
Company is seeking additional capital through its proposed public offering
(see Note 2). In the interim, management is committed to covering all
operating and other costs.
8
<PAGE>
Item 2: Management's Discussion & Analysis or Plan of Operations
The Company was incorporated on July 12, 1996. The Company
has not yet generated any revenues from operations and is
considered a development stage company. To date, activities have
been limited to organizational matters and preparation and filing
of a registration statement to register a public offering of its
securities, pursuant to which it sold 103,500 shares of common
stock and raised gross proceeds of $51,750. The offering was
completed in April, 1997. The Company has no significant assets
other than the net proceeds from the offering.
Management's plan of operation for the next twelve months is
to use the net proceeds to purchase various items of equipment
needed to turn out and finish the custom pool cues, as well as
initial supplies of wood and other raw materials from which to
make the cues. The remaining portion of the proceeds will be
used to pay rent and other operating expenses of the Company and
otherwise provide initial working capital for the operation of
the Company's proposed business. The net proceeds from this
offering are the sole anticipated source of funds other than any
revenues generated from operations, of which there is no
assurance, and the Company is totally dependent upon the offering
proceeds for the ability to conduct its business operations. The
Company was formed to engage in the business of manufacturing or
otherwise acquiring custom pool cues of collectible quality, as
well as quality custom pool cues for pool and billiards players.
The Company intends to market such pool cues to private
collectors and the general public. The Company has not engaged
in any operations nor conducted any research and development
activities to date, but will use the knowledge, skills and
experience of its President, who has been making custom pool cues
for the past several years, to attempt to produce high quality
custom pool cues and market them to pool and billiards players,
collectors and investors. Although the President has produced
and sold approximately twenty handmade, custom pool cues in the
past, there is absolutely no assurance that the proposed business
will succeed and that the Company will be able, with the proceeds
of the offering, to make and acquire custom pool cues of the type
that will be considered collectible or that pool and billiards
players desire to acquire. In the event the proposed business is
unsuccessful, there is no assurance the Company could become
involved in any other business venture. The Company presently
has no plans, commitments or arrangements with respect to any
other proposed business venture.
However, the Company's plan of operation for the next 12
months is to use approximately $5,000 of the net proceeds from
the offering to acquire various items of equipment necessary to
manufacture the pool cues, including inlay machines, cue smiths,
cutting bits, spindle bores and chucks, drill presses, belt
sander, scroll saw, work benches, etc. This is in addition to
the tools, supplies and machine equipment already owned by the
President, which will be made available to the Company. The
President believes, but there is no assurance, that acquisition
of the additional equipment which the Company intends to purchase
using proceeds of this offering, will enable him to significantly
increase the number of cues in process that he can work on at the
same time, and thus substantially increase the number of cues he
can produce within a given period of time, while at the same time
also improving the quality of the finished product. Also, the
President believes, but there is no assurance, that he would be
able to increase both the amount and intricacy of both the
woodwork and inlay work to produce custom cues in higher price
ranges, where profit margins would typically (but not
necessarily) be greater. It is presently anticipated that the
Company will begin producing custom cues that will sell for a few
hundred dollars, but as the knowledge, skills and experience of
the President increases over time, it is hoped that the Company
will be able to attract as buyers of its products persons
interested in spending several hundred or even more than a
thousand dollars for a high quality, custom cuestick. The
difference in price of cuesticks relates primarily to the amount
and intricacy of the inlay work and woodwork, as well as the
materials used and the quality of construction. The Company also
intends to use at least approximately $4,000 of net proceeds from
the offering, and more if more than the minimum offering amount
is raised, to purchase supplies of wood and other raw materials
inventory to use in the production of finished cues. In
addition, the Company has allocated between $10-15,000 of the
proceeds of the offering for marketing costs. It is presently
anticipated that this money will be expended for advertising in
such magazines as Billard News and Billiard Digest and for
traveling to shows, conventions and other gatherings of pool
players and pool cue makers and collectors where the Company's
cues can be displayed or advertised to become more well known.
The President's reputation as a cuemaker is not well known
outsided the patrons of the billiards establishment where he
works and the Company will be operating in a highly competitive
industry that is very specialized and limited. Many, if not most
of the Company's competitors have substantially greater financial
resources, technical expertise, management resources and
capabilities than the Company.
At this time, no assurances can be given with respect to the
length of time after commencement that it will be necessary to
fund operations from proceeds of this offering. Management
believes that the proceeds of this offering will be sufficient to
cover the operating expenses of the Company for six months to a
year after commencement of operations, during which time
managment is hopeful that the company will begin generating
sufficient revenues from sales and operations to thereafter cover
ongoing expenses. However, there is absolutely no assurance of
this, and if the Company is unable to generate sufficient
revenues from operations to cover expenses within such time
frame, it may have to seek additional debt or equity financing
for which it has no commitments. In the event such funding is
not available on acceptable terms, the Company may have to reduce
operations.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Change in Securities
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
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
Durwood, Inc.
Date: September 11, 1997 by: /s/Darren Heiselt
Darren Heiselt, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF DURWOOD, INC. AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 39,744
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 39,744
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 39,744
<CURRENT-LIABILITIES> 5,611
<BONDS> 0
0
0
<COMMON> 1,104
<OTHER-SE> 33,029
<TOTAL-LIABILITY-AND-EQUITY> 39,744
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8,504
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (8,504)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,504)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
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<NET-INCOME> (8,504)
<EPS-PRIMARY> (0.00)
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</TABLE>
