U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended December 31, 1998
Commission File No. 333-9809
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to .
DURWOOD, INC.
(Name of small business issuer in its charter)
Delaware 87-0561426
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
4085 West 4715 South, Kearns, Utah 84118
(Address of principal executive offices) (zip code)
Issuer's telephone number, including area code: (801) 967-0777
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Act: None
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 Issuer was required
to file such reports) and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
Check if no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is contained in this form, and no disclosure will be contained,
to the best of the Issuer's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
The Issuer's revenues for its most recent fiscal year. $ 0.00
As of February 5, 1999, the aggregate market value of voting stock held by
non-affiliates was approximately $543,375.
The number of shares outstanding of the Issuer's common stock at December 31,
1998: 1,103,500
<PAGE>
PART I
ITEM 1. DESCRIPTION OF BUSINESS
(A) BUSINESS DEVELOPMENT.
Durwood, Inc. (the "Company") was incorporated under the laws of the
State of Delaware on July 12, 1996. In connection with the organization of
the Company, the founding shareholders of the Company contributed an aggregate
of $10,000 cash to capitalize the Company in exchange for 1,000,000 shares of
Common Stock.
The Company then registered a public offering of its securities to raise
funds with which to commence business operations. The Company filed with the
Securities and Exchange Commission a registration statement on Form SB-2,
Commission File No. 33-14477, which became effective December 12, 1996.
Pursuant thereto the Company offered on a "best efforts, minimum 100,000
shares - maximum 200,000 shares" basis, shares of its common stock to the
public at $.50 per share in an attempt to raise gross proceeds of between
$50,000 to $100,000. The offering was completed in April, 1997, with $51,750
in gross proceeds received, for which the Company issued 103,500 shares of
common stock.
The Company is considered a development stage company.
(B) BUSINESS OF COMPANY.
BUSINESS OF THE COMPANY
The original business and purpose of the Company's formation was to
engage in the business of manufacturing or otherwise acquiring and marketing
custom pool cues. The Company's business plan was to take advantage of what
management believed to be an escalating market in the cue-as-art industry, as
well as build quality custom pool cues for pool and billiards players. Upon
completion of the offering, the Company began to use the net proceeds from the
offering to provide the working capital necessary to commence business
operations. There was no assurance that the business of the Company would be
successful, and management decided at the end of 1998 to discontinue
operations with respect to this business venture. The Company had no
commitments or arrangements with respect to any other potential business
venture, but began to seek another business venture to become involved in.
In late January, 1999, the President of the Company, Darren Heiselt,
sent a Letter to Shareholders to announce that the Company has entered into a
Letter of Intent to acquire all of the issued and outstanding common stock of
SportsNuts.com, Inc., a privately-held Delaware corporation, with offices in
Orem, Utah and Tehachapi, California.
SportsNuts.com is an online sports community and sports "club" that uses
the internet, cable television media and direct sales to sell sports, outdoors
and fitness products and services to the members of its club worldwide. The
company acts primarily as an intermediary for the actual vendors of the
products and services without actually having to process, ship, or inventory
products. The company's Web Site is located at http://www.sportsnuts.com.
<PAGE>
The proposed acquisition of SportsNuts.com is subject to numerous
conditions including the Company raising $1,000,000 and other matters. The
proposed acquisition will involve recapitalization of the Company, change of
management, change of corporate name, a 2.3 to 1 forward split, change of
corporate headquarters and other significant matters, when and if the
acquisition is completed. Therefore, there is no assurance that the proposed
acquisition will be consummated, nor is management presently able to conclude
that it is probable. Additional information regarding this proposed
transaction and the business of SportsNuts.com will be provided to
shareholders as work on this proposed transaction proceeds.
EMPLOYEES
The Company presently has no employees, and does not presently
anticipate the need to hire employees (other than Mr. Heiselt).
ITEM 2. PROPERTIES
The Company presently has no active business operations and no longer
rents any office facilities but will continue for the time being, to use the
business address of the Company's President pending completion of the proposed
acquisition, which will involve a change of corporate headquarters.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any material pending legal proceedings
and, to the best of its knowledge, no action has been threatened by or against
the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matter was submitted to a vote of security holders through the
solicitation of proxies or otherwise during the fourth quarter of the fiscal
year covered by this report.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(A) MARKET INFORMATION.
The Company's public offering was not closed until April, 1997, and the
Common Stock of the Company did not begin trading in the over-the-counter
market until July of 1997. The stock is quoted on the NASD Electronic
Bulletin Board under the symbol "DWOD". The following table sets forth the
high and low bid price quotations for each calendar quarter since quotations
became available. Such prices represent interdealer quotations, without
retail markup, markdown or commission, and may not represent actual
transactions.
Quarter Ended High Bid Low Bid
September 30, 1997 $1.00 $1.00
December 31, 1997 $1.00 $1.00
<PAGE>
March 31, 1998 $1.00 $1.00
June 30, 1998 $1.00 $1.00
September 30, 1998 $1.00 $1.00
December 31, 1998 $1.00 $1.00
(B) HOLDERS.
As of February 5, 1999, there were approximately 43 record holders of
the Company's Common Stock.
(C) DIVIDENDS.
The Company has not previously paid any cash dividends on common stock
and does not anticipate or contemplate paying dividends on common stock in the
foreseeable future. It is the present intention of management to utilize all
available funds for the development of the Company's business. The only
restrictions that limit the ability to pay dividends on common equity or that
are likely to do so in the future, are those restrictions imposed by law.
Under Delaware corporate law, no dividends or other distributions may be made
which would render the Company insolvent or reduce assets to less than the sum
of its liabilities plus the amount needed to satisfy any outstanding
liquidation preferences.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The Company was incorporated on July 12, 1996. The Company has not yet
generated any significant revenues from operations and is considered a
development stage company. The Company presently has no active business
operations and no significant assets.
Management's plan of operation for the next twelve months is to complete
the proposed acquisition of SportsNuts.com which will involve the Company
raising $1,000,000 (of which there is no assurance) to finance ongoing
business operations. In the event the Company is unable to raise this capital
and complete the proposed acquisition, or if this business venture 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 business venture.
ITEM 7. FINANCIAL STATEMENTS.
See attached Financial Statements and Schedules.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
There are not and have not been any disagreements between the Company
and their accountants on any matter of accounting principles or practices or
financial statement disclosure.
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
(A) IDENTIFY DIRECTORS AND EXECUTIVE OFFICERS.
The following table sets forth the sole director and executive officer
of the Company, his age, and all offices and positions with the Company. A
director is elected for a period of one year and thereafter serves until his
successor is duly elected by the stockholders and qualifies. Officers and
other employees serve at the will of the Board of Directors.
<TABLE>
<S> <C> <C> <C>
Term Served As Positions
Name of Director Age Director/Officer With Company
Darren Heiselt 31 Since inception President &
Secretary/Treasurer
</TABLE>
This individual will serve as management of the Company. A brief
description of his background and business experience is as follows:
DARREN HEISELT serves as President, Secretary/Treasurer and Director of
the Company. Mr. Heiselt attended Kearns High School from which he graduated
in 1983. Following graduation, he worked for various contractors in the
construction industry becoming a supervising Foreman for Jacobsen Construction
Company, (a Salt Lake City based contractor), from 1985 to 1987. From 1988 to
1991 Mr. Heiselt worked for Gregory & Cook as a supervisory Foreman.
Beginning in 1991 to the present Mr. Heiselt has worked for Maxim Management
Corp. as Assistant Manager and now Manager for EO's Society Billiards and
Cafe, where he has assisted in putting on clinics and tournaments, and
arranging special events for the company, including booking top name players
to appear at EO's (former world champions Buddy Hall and Grady Matthews). In
1992 Mr. Heiselt created his own pro shop where he did cue repair and
manufacture of custom cues. Due to his involvement in the billiard industry,
Mr. Heiselt was exposed to numerous cuemakers where he learned the art of the
trade, and began to develop his own designs. Mr. Heiselt was one of the first
to offer these services in Salt Lake City. He has been invited to set up on a
temporary basis to do cue repair at regional tournaments, which has helped
establish his name and reputation in the intermountain area.
The director holds no directorships in any other company subject to the
reporting requirements of the Securities Exchange Act of 1934.
(B) IDENTIFY SIGNIFICANT EMPLOYEES.
None other than the person previously identified.
(C) FAMILY RELATIONSHIPS.
None
<PAGE>
(D) INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS.
Except as described hereinabove, no present officer or director of the
Company; 1) has had any petition filed, within the past five years, in Federal
Bankruptcy or state insolvency proceedings on such person's behalf or on
behalf of any entity of which such person was an officer or general partner
within two years of filing; or 2) has been convicted in a criminal proceeding
within the past five years or is currently a named subject of a pending
criminal proceeding; or 3) has been the subject, within the past five years,
of any order, judgment, decree or finding (not subsequently reversed,
suspended or vacated) of any court or regulatory authority involving violation
of securities or commodities laws, or barring, suspending, enjoining or
limiting any activity relating to securities, commodities or other business
practice.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The Issuer is not subject to the provisions of Section 16(a).
ITEM 10. EXECUTIVE COMPENSATION.
None
COMPENSATION OF DIRECTORS
None
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Company has not entered into any contracts or arrangements with any
named executive officer which would provide such individual with a form of
compensation resulting from such individual's resignation, retirement or any
other termination of such executive officer's employment with the Company or
its subsidiary, or from a change-in-control of the Company or a change in the
named executive officer's responsibilities following a change-in-control.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth certain information with respect to the
beneficial ownership of the Company's common stock with respect to each
director of the Company, each person known to the Company to be the beneficial
owner of more than five percent (5%) of said securities, and all directors and
executive officers of the Company as a group:
<PAGE>
<TABLE>
<S> <C> <C> <C>
Title of Amount and Nature of Percent
Name and Address Class Beneficial Ownership of Class
Darren Heiselt Common 200,000 shares 18%
4871 S. 4055 W.
Kearns, UT 84118
Cowbell, Inc. Common 400,000 shares 36%
1173 A 2nd Ave.
N.Y., N.Y. 10021
Elvena, Inc. Common 400,000 shares 36%
666 Fifth Ave. #159
N.Y., N.Y. 10103
All officers and Common 200,000 shares 18%
directors as a
group (1 person)
</TABLE>
Cowbell, Inc. and Elvena, Inc. are private investment corporations
solely owned by Eslie Barlow and Lynn Dixon, respectively, who may be deemed
to be promoters with respect to the Company. See "Certain Transactions."
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has entered into certain transactions with officers,
directors or affiliates of the Company which include the following:
In connection with the organization of the Company, its founding
shareholders paid an aggregate of $10,000 cash to purchase 1,000,000 shares of
Common Stock of the Company at a price of $.01 per share. See "Principal
Shareholders."
It is contemplated that the Company may enter into certain transactions
with officers, directors or affiliates of the Company which, even though they
may involve conflicts of interest in that they are not arms' length
transactions, are believed to be fair and equitable transactions in the best
interest of the Company. The Company's policy is that all transactions
between the Company and any affiliates be on terms no less favorable to the
Company than could be obtained from unaffiliated parties. These transactions
include the following:
The Company presently has no office facilities but will continue for the
time being, to use the business address of the Company's President pending
completion of the proposed acquisition, which will involve a change of
corporate headquarters. There is presently no formal written agreement for the
use of such facilities, and no assurance that such facilities will be
available to the Company on such a basis for any specific length of time.
In conjunction with the Company's decision to discontinue its existing
operations relating to the manufacture and marketing of custom pool cues,
<PAGE>
effective as of the fiscal year ended December 31, 1998, it transferred all
the remaining inventory of cuesticks and component materials, together with
all property and equipment used in such operations, to the President of the
Company, Darren Heiselt. He will continue to serve as President of the Company
until another business opportunity can be found and a suitable acquisition can
be consummated.
CONFLICTS OF INTEREST
Other than as described herein the Company is not expected to have
significant further dealings with affiliates. However, if there are such
dealings the parties will attempt to deal on terms competitive in the market
and on the same terms that either party would deal with an unrelated third
person. Presently no officer or director of the Company has any transactions
which they contemplate entering into with the Company, aside from the matters
described herein.
Management will attempt to resolve any conflicts of interest that may
arise in favor of the Company. Failure to do so could result in fiduciary
liability to management.
INDEMNIFICATION AND LIMITATION OF LIABILITY
The general corporation law of Delaware permits provisions in the
articles, by-laws or resolutions approved by shareholders which limit
liability of directors and officers for breach of fiduciary duty to certain
specified circumstances, namely, breaches of their duties of loyalty, acts or
omissions not in good faith or which involve intentional misconduct or knowing
violation of law, acts involving unlawful payment of dividends or unlawful
stock purchases or redemptions, or any transaction from which a director or
officer derives an improper personal benefit. The Company's by-laws indemnify
its officers and directors to the full extent permitted by Delaware law. The
by-laws with these exceptions eliminate any personal liability of an officer
or director to the Company or its shareholders for monetary damages for the
breach of fiduciary duty and therefore an officer or director cannot be held
liable for damages to the Company or its shareholders for gross negligence or
lack of due care in carrying out his or her fiduciary duties. The Company's
Articles provide for indemnification to the full extent permitted under law
which includes all liability, damages and costs or expenses arising from or in
connection with service for, employment by, or other affiliation with the
Company to the maximum extent and under all circumstances permitted by law.
Delaware law permits indemnification if a director or officer acts in good
faith in a manner reasonably believed to be in, or not opposed to, the best
interests of the corporation. A director or officer must be indemnified as to
any matter in which he or she successfully defends himself or herself.
Indemnification is prohibited as to any matter in which the director or
officer is adjudged liable to the corporation. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers, and controlling persons of the Company pursuant to the foregoing
provisions or otherwise, the Company has been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.
Except as disclosed in this item, in notes to the financial statements
or elsewhere in this report, the Company is not aware of any indebtedness or
other transaction in which the amount involved exceeds $60,000 between the
Company and any officer, director, nominee for director, or 5% or greater
beneficial owner of the Company or an immediate family member of such person;
nor is the Company aware of any relationship in which a director or nominee
<PAGE>
for director of the Company was also an officer, director, nominee for
director, greater than 10% equity owner, partner, or member of any firm or
other entity which received from or paid the Company, for property or
services, amounts exceeding 5% of the gross annual revenues or total assets of
the Company or such other firm or entity.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS to this report are all documents previously filed which
are incorporated herein as exhibits to this report by reference to
registration statements and other reports previously filed by the Company
pursuant to the Securities Act of 1933 and the Securities Exchange Act of
1934.
(B) REPORTS ON FORM 8-K have not been filed during the last quarter of
the fiscal year ended December 31, 1998.
SIGNATURES
In accordance with Section 12 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
DURWOOD, INC.
By: /s/ Darren Heiselt Date: February 5, 1999
Darren Heiselt, President, Treasurer and sole Director
Chief Executive Officer and
Chief Financial Officer
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and the
dates indicated.
By: /s/ Darren Heiselt Date: February 5, 1999
Darren Heiselt, President, Treasurer and sole Director
Chief Executive Officer and
Chief Financial Officer
<PAGE>
Supplemental Information to be Furnished With Reports Filed Pursuant to
Section 15(d) of the Exchange Act by Non Reporting Issuers
No annual report or proxy statement has been sent to security holders.
<PAGE>
DURWOOD, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
DECEMBER 31, 1998
<PAGE>
C O N T E N T S
Independent Auditors' Report . . . . . . . . . . . . . . . . . 3
Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . 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
To the Board of Directors
Durwood, Inc.
Salt Lake City, Utah
We have audited the accompanying balance sheet of Durwood, Inc.
(a development stage company) as of December 31, 1998 and the
related statements of operations, stockholders' equity and cash
flows for the years ended December 31, 1998 and 1997 and from
inception on July 12, 1996 through December 31, 1998. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Durwood, Inc. (a development stage company) as of December 31,
1998 and the results of its operations and its cash flows for the
years ended December 31, 1998 and 1997 and from inception on July
12, 1996 through December 31, 1998 in conformity with generally
accepted accounting principles
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed
in Note 2 to the financial statements, the Company is a
development stage company with no significant operating revenues
to date, which raises substantial doubt about its ability to
continue as a going concern. Management's plans in regard to
these matters are also described in Note 2. The financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.
Jones, Jensen & Company
Salt Lake City, Utah
January 26, 1999
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Balance Sheet
ASSETS
December 31,
1998
CURRENT ASSETS
Cash $ 520
Total Current Assets 520
TOTAL ASSETS $ 520
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ -
Total Current Liabilities -
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
Additional paid-in capital 48,534
Deficit accumulated during the development stage (49,118)
Total Stockholders' Equity 520
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 520
The accompanying notes are an integral part of these financial statements.
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Statements of Operations
From
Inception on
July 12,
For the Year Ended 1996 Through
December 31, December 31,
1998 1997 1998
REVENUES $ - $ - $ -
EXPENSES - - -
OPERATING LOSS - - -
LOSS FROM DISCONTINUED
OPERATIONS (23,534 ) (18,583) (49,118)
NET LOSS $ (23,534 ) $ (18,583) $ (49,118)
BASIC LOSS PER SHARE OF
COMMON STOCK $ (0.00 ) $ (0.00)
WEIGHTED NUMBER OF SHARES
OUTSTANDING 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 year ended
December 31, 1998 - - - (23,534)
Balance, December 31, 1998 1,103,500 $ 1,104 $48,534 $(49,118)
The accompanying notes are an integral part of these financial statements.
<PAGE>
DURWOOD, INC.
(A Development Stage Company)
Statements of Cash Flows
From
Inception on
July 12,
For the Year Ended 1996 Through
December 31, December 31,
1998 1997 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Income (loss) from operations $(23,534) $ (18,583) $ (49,118)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 4,986 453 5,439
Changes in operating assets and liabilities:
Increase (decrease) in accounts payable - (251) -
Increase in inventory 1,000 (1,000) -
Net Cash (Used) by Operating Activities (17,548) (19,381) (43,679)
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase)in equipment - (5,439) (5,439)
Net Cash Provided by Investing Activities - (5,439) (5,439)
CASH FLOWS FROM FINANCING ACTIVITIES
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 (17,548) 14,818 520
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 18,068 3,250 -
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 520 $ 18,068 $ 520
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
December 31, 1998
NOTE 1 - ORGANIZATION AND HISTORY
a. Organization
Durwood, Inc. (the "Company") was incorporated under the laws
of the State of Delaware on July 12, 1996. The Company has
commenced minimal business operations and is considered a
development stage company. The 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. In December 1998, the
Company determined to terminate its pool care business and to
seek new business opportunities.
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 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 December 31,
1998, the Company has a loss carryover of approximately
$49,000 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
December 31, 1998
NOTE 2 - 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 merge with an existing operating
company. In the interim, management has committed to meeting
its operating costs.
NOTE 3 - 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.
NOTE 4 - PROPOSED MERGER
The Company has proposed a merger with SportNuts.Com, Inc.
According to the terms of the merger, the Company would
acquire all of the outstanding stock of SportNuts.Com in
exchange for 22,761,709 shares of the common stock of the
Company. As of the date of this audit, the transaction has
not taken place.
NOTE 5 - DISCONTINUED OPERATIONS
The Company determined in December 1998 to discontinue its
pool care business and to seek other business opportunities.
Therefore, all revenues generated by the Company have been
netted against the expenses and are grouped into the
discontinued operations line on the statement of operations.
The loss on discontinued operations is summarized as follows:
From
Inception on
July 12,
1996 Through
December 31,
1998
Condensed Income $ 3,280
Condensed Expenses (52,398)
Condensed Net Loss $ (49,118)
<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> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 520
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 520
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 1,104
<OTHER-SE> (584)
<TOTAL-LIABILITY-AND-EQUITY> 520
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> (23,534)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (23,534)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
