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, 1998
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, 1998: 1,103,500
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
See attached.
DURWOOD, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
MARCH 31, 1998 AND DECEMBER 31, 1997
<PAGE>
C O N T E N T S
Independent Auditors' Report . . . . . . . . . . . . . . . . 3
Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . 4
Statements of Operations . . . . . . . . . . . . . . . . . . 5
Statements of Stockholders' Equity . . . . . . . . . . . . . 6
Statements of Cash Flows . . . . . . . . . . . . . . . . . . 7
Notes to the Financial Statements . . . . . . . . . . . . . 8
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Durwood, Inc.
(A Development Stage Company)
Salt Lake City, Utah
The accompanying balance sheet as of March 31, 1998, and the related
statements of operations, stockholders' equity, and cash flows for the periods
ended March 31, 1998 and 1997 and from inception on July 12, 1996 through
March 31, 1998 were not audited by us and, accordingly, we do not express an
opinion on them.
The accompanying balance sheet as of December 31, 1997 was audited by us and
we expressed an unqualified opinion on it in our report dated March 20, 1998
Jones, Jensen & Company
May 5, 1998
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
March 31, December 31,
1998 1997
_______ ________
(Unaudited)
CURRENT ASSETS
Cash $ 16,949 $ 18,068
_______ ________
Total Current Assets 16,949 18,068
_______ ________
OTHER ASSETS
Inventory 1,000 1,000
Property and equipment 4,714 4,986
_______ ________
Total Other Assets 5,714 5,986
_______ ________
TOTAL ASSETS $ 22,663 $ 24,054
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,225 $ -
_______ ________
Total Current Liabilities 1,225 -
_______ ________
TOTAL LIABILITIES 1,225 -
_______ ________
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 shares
issued and outstanding 1,104 1,104
Additional paid-in capital 48,534 48,534
Deficit accumulated during the development
stage (28,200) (25,584)
_______ ________
Total Stockholders' Equity 21,438 24,054
_______ ________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 22,663 $ 24,054
======= ========
The accompanying notes are an integral part of these financial statements
<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,
1998 1997 1998
________ ________ ________
REVENUES $ - $ - $ -
EXPENSES 2,616 1,364 28,200
________ ________ ________
NET INCOME (LOSS) $ (2,616) $ (1,364) $ (28,200)
======== ======== ========
NET EARNINGS (LOSS) PER SHARE
OF COMMON STOCK $ (0.00) $ (0.00)
======== ========
The accompanying notes are an integral part of these financial statements
<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 year ended
December 31, 1997 - - - (18,583)
_________ _____ _______ _______
Balance, December 31, 1997 1,103,500 1,104 48,534 (25,584)
Net loss for the three months
ended March 31, 1998 - - - (2,616)
_________ _____ _______ _______
Balance, March 31, 1998 1,103,500 $1,104 $ 48,534 $(28,200)
========= ===== ======= =======
The accompanying notes are an integral part of these financial statements
<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,
1998 1997 1998
________ ________ ________
CASH FLOWS FROM OPERATING ACTIVITIES
Income (loss) from operations $ (2,616) $ (1,364) $(28,200)
Adjustments to reconcile net income to net
cash provided by operating activities:
Increase in accounts payable 272 - 725
Increase in tax payable - 619 -
Increase in inventory - - (1,000)
________ ________ ________
Net Cash Used by Operating Activities (1,119) (865) (27,250)
________ ________ ________
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) in equipment - - (5,439)
________ ________ ________
Net Cash Provided by Investing Activities - - (5,439)
________ ________ ________
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of deferred stock offering costs - (750) (12,112)
Common stock issued for cash - - 61,750
________ ________ ________
Net Cash Provided by Financing Activities - (750) 49,638
________ ________ ________
NET INCREASE IN CASH AND CASH EQUIVALENTS (1,119) (1,615) 16,949
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 18,068 3,250 -
________ ________ ________
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 16,949 $ 1,635 $ 16,949
======== ======== ========
Cash Paid For:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
The accompanying notes are an integral part of these financial statements
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 1998 and December 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, 1998, the Company has a loss
carryover of $28,000 which expires in 2013. 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.
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 1998 and December 31, 1997
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 - PROPERTY AND EQUIPMENT
Property and equipment at March 31, 1998 and December 31, 1997 is
summarized as follows:
March 31, December 31,
1998 1997
Equipment $ 5,439 $ 5,439
Less accumulated depreciation (725) 453
Total Property and Equipment $ 4,714 $ 4,986
Depreciation expense for the three months ended March 31, 1998 and for
the year ended December 31, 1997 was $272 and $453, respectively; and
is computed using the straight-line method over a 5 year life.
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. It is the intent of the Company's management to expand sales
and marketing of its pool cues.
NOTE 4 - 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. The
Company incurred costs of $12,112 which were offset against the proceeds
of the 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 and preparation and filing
of a registration statement to register a public offering of its
securities, pursuant to which the Company 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 assets acquired with offering proceeds and the
proceeds remaining from the offering.
Management's plan of operation for the next twelve months is
to continue using the net proceeds to purchase various items of
equipment needed to turn out and finish the custom pool cues, and
supplies of wood and other raw materials from which to make the
cues. The remaining portion of the proceeds is also being used
to pay rent and other operating expenses of the Company and
otherwise provide working capital for the operation of the
Company's business. The net proceeds from the 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.
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
or discontinue operations. In the event the 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.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
(a) None.
(b) None.
(c) See Part I, Item 1 (financial statements) and Item 2
(management's discussion) for financial information and
a narrative discussion regarding use of proceeds.
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 18, 1998 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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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
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0
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<OTHER-SE> 20,334
<TOTAL-LIABILITY-AND-EQUITY> 22,663
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</TABLE>
