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: September 30, 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
September 30, 1998: 1,103,500
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DURWOOD, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
September 30, December 31,
1998 1997
(Unaudited)
---------- ---------
CURRENT ASSETS
Cash $ 1,891 $ 18,068
---------- ---------
Total Current Assets 1,891 18,068
---------- ---------
OTHER ASSETS
Inventory 1,000 1,000
Property and equipment (net) (Note 2) 4,170 4,986
---------- ---------
Total Other Assets 5,170 5,986
---------- ---------
TOTAL ASSETS $ 7,061 $ 24,054
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 414 $ -
---------- ---------
Total Current Liabilities 414 -
---------- ---------
TOTAL LIABILITIES
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 (42,991) (25,584)
---------- ---------
Total Stockholders' Equity 6,647 24,054
---------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,061 $ 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 For the July 12,1996
Three Months Ended Nine Months Ended Through
September 30, September 30, September 30,
1998 1997 1998 1997 1998
------- ------- ------- ------- ---------
REVENUES $ 800 $ - $ 3,280 $ - $ 3,280
EXPENSES 3,602 14,227 20,687 22,731 46,271
------- ------- ------- ------- ---------
NET LOSS $ (2,802) $(14,227) $(17,407) $(22,731) $ (42,991)
======= ======= ======= ======= =========
BASIC NET LOSS PER SHARE
OF COMMON STOCK $ (0.00) $ (0.00) $ (0.00) $ (0.00)
======= ======= ======= =========
BASIC WEIGHTED AVERAGE
OF OUTSTANDING SHARES 1,103,500 1,103,500 1,103,500 1,103,500
========= ========= ========= =========
The accompanying notes are an integral part of these financial statements
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Statements of Stockholders' Equity
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 nine months
ended September 30,1998(unaudited) - - - (17,407)
--------- ------- ------- --------
Balance,September30,1998(unaudited) 1,103,500 $ 1,104 $ 48,534 $ (42,991)
========= ======= ======= --------
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 For the July 12,1996
Three Months Ended Nine Months Ended Through
September 30, September 30, September 30,
1998 1997 1998 1997 1998
------- ------- ------- ------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Income(loss) from operations $(2,802) $(14,227) $(17,407) $(22,731) $(42,991)
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 272 - 816 - 1,269
Increase in accounts payable (3,663) (3,375) 414 1,366 414
Increase in tax payable - - - 619 -
Increase in inventory - - - - (1,000)
------- ------- ------- ------- --------
Net Cash Used by
Operating Activities (6,193) (17,602) (16,177) (20,746) (42,308)
------- ------- ------- ------- --------
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 - - - (12,112) (12,112)
Common stock issued for cash - - - 51,750 61,750
------- ------- ------- ------- --------
Net Cash Provided by
Financing Activities - - - 39,638 49,638
------- ------- ------- ------- --------
NET INCREASE IN CASH AND
CASH EQUIVALENTS (6,193) (17,602) (16,177) 18,892 1,891
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 8,084 39,744 18,068 3,250 -
------- ------- ------- ------- --------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 1,891 $22,142 $ 1,891 $ 22,142 $ 1,891
======= ======= ======= ======= ========
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
September 30, 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. Basic Loss Per Share
The computations of basic loss per share of common stock are based on
the weighted average number of shares outstanding during the period
of the financial statements.
e. Income Taxes
The Company provides for income taxes based on income reported for
financial reporting purposes. At September 30, 1998, the Company has
a loss carryover of approximately $43,000 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
September 30, 1998 and December 31, 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 - PROPERTY AND EQUIPMENT
Property and equipment at September 30, 1998 and December 31, 1997 is
summarized as follows:
September 30, December 31,
1998 1997
Equipment $ 5,439 $ 5,439
Less accumulated depreciation (1,269) (453)
Total Property and Equipment $ 4,170 $ 4,986
Depreciation expense for the nine months ended September 30, 1998 and
for the year ended December 31, 1997 was $815 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. Upon
inception, the Company commenced 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 then began using the
net proceeds from the offering to provide working capital for the
commencement of operations. Proceeds were initially used 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 Company has not yet
generated significant revenues from operations and is considered
a development stage company.
Management's plan of operation for the next twelve months is
to continue using the net proceeds and any revenues generated
from operations to 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 revenues
generated from operations, and the Company is 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 at least 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: November 9, 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>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,891
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 1,000
<CURRENT-ASSETS> 1,891
<PP&E> 4,170
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,061
<CURRENT-LIABILITIES> 414
<BONDS> 0
0
0
<COMMON> 1,104
<OTHER-SE> 5,543
<TOTAL-LIABILITY-AND-EQUITY> 7,061
<SALES> 3,280
<TOTAL-REVENUES> 3,280
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 20,687
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (17,407)
<INCOME-TAX> 0
<INCOME-CONTINUING> (17,407)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,407)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
