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, 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 June
30, 1998: 1,103,500
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
DURWOOD, INC.
(A Development Stage Company)
Balance Sheets
ASSETS
June 30, December 31,
1998 1997
-------- --------
(Unaudited)
CURRENT ASSETS
Cash $ 8,084 $ 18,068
-------- --------
Total Current Assets 8,084 18,068
-------- --------
OTHER ASSETS
Inventory 1,000 1,000
Property and equipment (net) (Note 2) 4,442 4,986
-------- --------
Total Other Assets 5,442 5,986
-------- --------
TOTAL ASSETS $ 13,526 $ 24,054
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 4,077 $ -
-------- --------
Total Current Liabilities 4,077 -
-------- --------
TOTAL LIABILITIES 4,077 -
-------- --------
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 (40,189) (25,584)
-------- --------
Total Stockholders' Equity 9,449 24,054
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 13,526 $ 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,
Three Months Ended Six Months Ended 1996 Through
June 30, June 30, June 30
1998 1997 1998 1997 1998
---------------------------------------------------
REVENUES $ 2,480 $ - $ 2,480 $- $ 2,480
EXPENSES 14,469 7,140 17,085 8,504 42,669
-------- ------- -------- ------- ---------
NET LOSS $(11,989) $(7,140) $(14,605) $(8,504) $ (40,189)
======== ======= ======== ======= =========
NET LOSS PER SHARE OF
COMMON STOCK $ (0.00) $ (0.00) $ (0.00) $ (0.00)
======== ======= ======== =======
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
(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 six months
ended June 30, 1998 - - - (14,605)
--------- -------- ------- --------
Balance, June 30, 1998 1,103,500 $ 1,104 $48,534 $ (40,189)
========= ======== ======= ========
The accompanying notes are an integral part of these financial statements
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
For the For the July 12,
Three Months Ended Six Months Ended 1996 Through
June 30, June 30, June 30
1998 1997 1998 1997 1998
-------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Income (loss) from operations $(11,989) $ (7,140) $(14,605) $ (8,504) $(40,189)
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation 272 - 544 - 997
Increase in accounts payable 2,852 4,861 4,077 4,741 4,077
Increase in tax payable - - - 619 -
Increase in inventory - - - - (1,000)
-------- -------- -------- -------- --------
Net Cash Used by
Operating Activities (8,865) (2,279) (9,984) (3,144) (36,115)
-------- -------- -------- -------- --------
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 - (11,362) - (12,112) (12,112)
Common stock issued for cash - 51,750 - 51,750 61,750
-------- -------- -------- -------- --------
Net Cash Provided by
Financing Activities - 40,388 - 39,638 49,638
-------- -------- -------- -------- --------
NET INCREASE IN CASH AND
CASH EQUIVALENTS (8,865) 38,109 (9,984) 36,494 8,084
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 16,949 1,635 18,068 3,250 -
-------- -------- -------- -------- --------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 8,084 $ 39,744 $ 8,084 $ 39,744 $ 8,084
======== ======== ======== ======== ========
Cash Paid For:
Interest $ - $ - $- $- $ -
Income taxes $ - $ - $- $- $ -
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Notes to the Financial Statements
June 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. Loss Per Share
The computations of 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 June 30, 1998, the Company has a
loss carryover of $40,000 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
June 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 June 30, 1998 and December 31, 1997 is
summarized as follows:
June 30, December 31,
1998 1997
---------- ----------
Equipment $ 5,439 $ 5,439
Less accumulated depreciation (997) (453)
---------- ----------
Total Property and Equipment $ 4,442 $ 4,986
========== ==========
Depreciation expense for the six months ended June 30, 1998 and for
the year ended December 31, 1997 was $544 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: August 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>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 8,084
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 1,000
<CURRENT-ASSETS> 8,084
<PP&E> 4,442
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,526
<CURRENT-LIABILITIES> 4,077
<BONDS> 0
0
0
<COMMON> 1,104
<OTHER-SE> 8,345
<TOTAL-LIABILITY-AND-EQUITY> 13,526
<SALES> 2,480
<TOTAL-REVENUES> 2,480
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 17,085
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (14,605)
<INCOME-TAX> 0
<INCOME-CONTINUING> (14,605)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,605)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
