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: March 31, 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 March
31, 1997: 1,000,000
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DURWOOD, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
March 31, 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
March 31, December 31,
1997 1996
(Unaudited)
CURRENT ASSETS
Cash $ 1,635 $ 3,250
Total Current Assets 1,635 3,250
OTHER ASSETS
Deferred stock offering costs 750 -
Total Other Assets 750 -
TOTAL ASSETS $ 2,385 $ 3,250
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 750 $ 131
Tax payable - 120
Total Current Liabilities 750 251
TOTAL LIABILITIES 750 251
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, 1,000,000 shares issued and outstanding 1,000 1,000
Additional paid-in capital 9,000 9,000
Deficit accumulated during the development stage (8,365) (7,001)
Total Stockholders' Equity 1,635 2,999
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,385 $ 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 July 12,
Three Months Ended 1996 Through
March 31, March 31,
1997 1996 1997
REVENUES $ - $ - $ -
EXPENSES 1,364 - 8,365
NET INCOME (LOSS) $ (1,364) $ - $ (8,365)
NET EARNINGS (LOSS) PER SHARE
OF COMMON STOCK $ (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)
Net loss for the three months
ended March 31, 1997 - - - (1,364)
Balance, March 31, 1997 1,000,000 $ 1,000 $ 9,000 $ (8,365)
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 July 12,
Three Months Ended 1996 Through
March 31, March 31,
1997 1996 1997
CASH FLOWS FROM OPERATING ACTIVITIES
Income (loss) from operations $ (1,364) $ - $ (8,365)
Adjustments to reconcile
Net income to net cash provided by
operating activities:
Increase in accounts payable (120) - 750
Increase in tax payable 619 - -
Net Cash Used by Operating Activities (865) - (7,615)
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of deferred stock offering costs (750) - (750)
Common stock issued for cash - - 10,000
Net Cash Provided by Financing Activities (750) - 9,250
NET INCREASE IN CASH AND CASH
EQUIVALENTS (1,615) - 1,635
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 3,250 - -
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 1,635 $ - $ 1,635
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
March 31, 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 March 31, 1997, the Company has a loss
carryover of $8,365 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.
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.
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 1997
NOTE 2 - PUBLIC OFFERING
The Company is offering, 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 will terminate 120 days from the effective date thereof (or 150
days if extended by the Company) unless a minimum of $50,000 of subscriptions
have been received.
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.
NOTE 4 - SUBSEQUENT EVENT
On April 21, 1997, the Company received $51,750 from the proceeds of
the public offering.
<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, the preparation and
filing of the 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 not completed until after the end of the quarter for
which this report is filed, 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
first to raise funds from this offering and then commence
operations. The Company intends 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 commence its intended 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, the
Company has not produced or sold any products yet, and there is
absolutely no assurance that the proposed business will succeed
and that the Company will be able, with the proceeds of this
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
successfully 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.
Management intends to commence operations as soon as
possible after the offering is completed and the proceeds
therefrom received by the Company. At this time, no assurances
can be given with respect to the exact timing of commencement of
operations or 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.
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: May 19, 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>
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<PERIOD-END> MAR-31-1997
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0
0
<COMMON> 1,000
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<TOTAL-LIABILITY-AND-EQUITY> 2,385
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</TABLE>
