U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
X...Quarterly report under section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended August 31,
1999.
....Transition report under section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required] for the transition period
from _________ to _________.
Commission File No: 0-21951
BUFFALO CAPITAL III, LTD.
(Name of small business in its charter)
Colorado 84-1356383
(State or other (IRS Employer Id. No.)
jurisdiction of Incorporation)
5001 Spring Valley Road, Suite 800, East Tower
Dallas, Texas 75244
(Address of Principal Office) Zip Code
Issuer's telephone number: (972) 991-0001
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 12
months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes ..X.. No ....
Applicable only to issuers involved in bankruptcy proceedings during
the past five years.
Check whether the issuer has filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes .....
No .....
Applicable only to corporate issuers
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. At September 1,
1999, the following shares of common were outstanding: Common
Stock, no par value, 14,000,000 shares.
Transitional Small Business Disclosure Format (Check one):
Yes ..... No ..X..
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS
(a) The unaudited financial statements of registrant for the three
months ended August 31, 1999, follow. The financial statements
reflect all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the interim period
presented.
BUFFALO CAPITAL III, LTD.
(A Development Stage Company)
FINANCIAL STATEMENTS
Quarter Ended August 31, 1999
Buffalo Capital III, Ltd.
(A Development Stage Company)
Index to Financial Statements
Balance Sheet
Statement of Loss and Accumulated Deficit
Statements of Cash Flows
Notes to Financial Statements
Buffalo Capital III, Ltd.
(A Development Stage Company)
BALANCE SHEET
August 31, 1999
(unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 3,467
OTHER ASSETS:
Organizational costs (net
of amortization) 120
TOTAL ASSETS 3,587
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 0
Proceeds from Note Payable
from Stockholder 5,000
TOTAL CURRENT LIABILITIES 5,000
STOCKHOLDERS' EQUITY
Common stock, no par value;
100,000,000 shares authorized;
14,000,000 shares issued and
outstanding 8,500
Preferred stock, no par value
10,000,000 shares authorized;
no shares issued and outstanding 0
Additional paid-in capital 80,408
Deficit accumulated during the
development stage (90,321)
Total stockholders' equity 3,587
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 3,587
</TABLE>
The accompanying notes are an integral part of these financial statements.
Buffalo Capital III, Ltd.
(A Development Stage Company)
STATEMENT OF LOSS AND ACCUMULATED DEFICIT FOR THE
THREE MONTHS ENDED August 31, 1999 AND 1998, AND
FOR THE PERIOD FROM AUGUST 28, 1996 THROUGH AUGUST 31, 1999
(unaudited)
<TABLE>
<CAPTION>
Period from Three Three
Inception months months
(8/28/96) ended ended
8/31/99 8/31/98 8/31/99
<S> <C> <C> <C>
REVENUE - - -
EXPENSES
Legal and
professional 23,065 1,396 1936
Amortization 180 15 15
Bank charges 103 - 17
Rent 1,800 150 150
Licenses and
Permits 80 - 25
Consulting
Fees 62,800 - -
Director fees 200 - -
Office expense 2,093 136 22
TOTAL EXPENSES 90,321 1,697 2,165
NET LOSS (90,321) (1,697) (2,165)
Accumulated deficit
Balance,
beginning of period - (88,624) (76,111)
Balance,
end of period (90,321) (90,321) (78,276)
NET LOSS
PER SHARE (0.017) (0.017) (.06)
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 5,448,493 5,448,493 1,260,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
Buffalo Capital III, Ltd.
(A Development Stage Company)
STATEMENTS OF CASH FLOW FOR THE THREE MONTHS ENDED
AUGUST 31, 1999 AND 1998, AND FOR THE PERIOD FROM AUGUST 28,
1996 THROUGH February 28, 1999
(unaudited)
<TABLE>
<CAPTION>
Period from Three Three
Inception months months
(8/28/96) ended ended
to 8/31/99 8/31/99 8/31/98
<S> <C> <C> <C>
OPERATING ACTIVITIES:
NET LOSS (90,322) (1,698) (2,165)
Adjustments to reconcile net loss to
net cash used by operating activities:
Amortization 180 15 15
Rent Expense 1,800 150 150
Expenses paid
by shareholders 15,609 0 2,284
Stock issued for
directors fees 59,960 0 0
Stock issued for
consulting fees 3,040 0 0
Changes in Current
liabilities 0 0 (323)
Net cash provided
by operating
activities (9,733) (1,533) (39)
INVESTING ACTIVITIES:
Organization costs (300) 0 0
Net cash provided
by investing
activities (300) 0 0
FINANCING ACTIVITIES:
Issuance of
common stock 8,500 0 0
Proceeds from Note
Payable from
Stockholder 5,000 5,000 0
Net cash provided
by financing
activities 13,500 5,000 0
Net cash increase
(decrease) 3,467 3,467 (39)
NET CASH
Beginning of Period 0 0 103
NET CASH
End of Period 3,467 3,467 64
</TABLE>
The accompanying notes are an integral part of these financial statements.
Buffalo Capital III, Ltd.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 1999
NOTE 1. Basis of Presentation
The information included in the financial statements is unaudited, but
includes all adjustments (consisting of normal recurring items) which
are, in the opinion of management, necessary for a fair representation of
the interim period presented.
Development Stage Company
Buffalo Capital III, Ltd. (the "Company") was incorporated under the
laws of the State of Colorado on August 28, 1996. Its office is located
at the office of its President at 5001 Spring Valley Road, Suite 800, East
Tower, Dallas, Texas 75244.
The Company is a new enterprise in the development stage as defined by
Statement No. 7 of the Financial Accounting Standards Board and has
not engaged in any business other than organizational efforts. It has no
full-time employees and owns no real property. The Company intends
to operate as a capital market access corporation by registering with the
U.S. Securities and Exchange Commission under the Securities
Exchange Act of 1934. After this, the Company intends to seek to
acquire one or more existing businesses which have existing
management, through merger or acquisition. Management of the
Company will have virtually unlimited discretion in determining the
business activities in which the Company might engage.
Accounting Method
The Company records income and expenses on the accrual method.
Fiscal Year
The Company maintains a May 31 fiscal year end for financial statement
reporting purposes, and an August 31 fiscal year end for tax reporting
purposes.
Organization Costs
Costs to incorporate the Company have been capitalized and will be
amortized over a sixty month period.
Loss Per Share
Loss per share was computed using the weighted average number of
shares outstanding during the period.
Statement of Cash Flows
For purposes of the statements of cash flow, the Company considers all
highly liquid debt instruments purchased with an original maturity date
of three months or less to be cash equivalents.
Use of Estimates
The preparation of the Company's financial statements in conformity
with generally accepted accounting principals requires the Company's
management to make estimates and assumptions that effect the amounts
reported in these financial statements and accompanying notes. Actual
results could differ from those estimates.
Stock Basis
Shares of common stock issued for other than cash have been assigned
amounts equivalent to the fair value of the service or assets received in
exchange.
Changes in Classification
Classification changes in 1998 financial statement data were made in
order to conform to the current year presentation.
NOTE 2. STOCKHOLDERS EQUITY
Common Stock
As of August 31, 1999, 14,000,000 shares of the Company's no par
value common stock were issued and outstanding. Of these shares,
11,083,800 were purchased for $870 cash on May 4, 1999 by Steadfast
Investments, L.P.. Another 1,656,200 shares was purchased for $130
cash on May 4, 1999 by GMK Family Holdings, L.L.C.
Preferred Stock
The Company's Certificate of Incorporation authorizes the issuance of
10,000,000 shares of preferred stock, no par value per share. The
Board of Directors of the Company is authorized to issue preferred stock
from time to time in series and is further authorized to establish such
series, to fix and determine the variations in the relative rights and
preferences as between the series and to allow for the conversion of
preferred stock into common stock. No preferred stock has been issued
by the Company.
NOTE 3. RELATED PARTY TRANSACTIONS
Rent is being provided to the Company at no charge. For purposes of
financial statements, the Company is accruing $50 per month as
additional paid-in capital for this use.
The Company was loaned $5000 from Steadfast Investments, L.P., a
principal shareholder, to cover expenses. This is shown as Proceeds
from Note Payable from Stockholder.
NOTE 4. SUPPLEMENTAL DISCLOSURE OF NON-CASH
FINANCING ACTIVITIES
As mentioned in Note 3, the Company has incurred $1,800 since
inception in rent expense which has been designated as paid-in capital.
Similarly, the Company recorded amortization of the organization costs
of $180.
NOTE 5. INCOME TAXES
The Company has Federal net operating loss carryforwards of
approximately $90,300 expiring in the years 2012, 2013 and 2019. The
tax benefit of these net operating losses, which totals approximately
$17,500, has been offset by a full allowance for realization. This
carryforward may be limited under IRC Section 381, upon the
consummation of a business combination.
NOTE 6. SUPPLEMENTAL DISCLOSURE OF NON-CASH
FINANCING ACTIVITIES
During the periods ended August 31, 1999 and 1998, the Company
recorded amortization of the organization costs of $15 and $15.
Similarly, the Company recorded rent expense for the periods ended
August 31, 1999 and 1998 of $50 per month for a total of $150 and
$150.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION
Liquidity and Capital Resources.
The Company remains in the development stage, and since inception, has
experienced no significant change in liquidity or capital resources or
stockholders' equity other than the receipt of net proceeds in the amount
of $8,500 from its inside capitalization funds, and $5,000 as a loan from
a principal shareholder. Consequently, the Company's balance sheet for
the quarter ended August 31, 1999, reflects a total asset value of $3587.
The Company does not have sufficient assets or capital resources
to pay its on-going expenses while it is seeking out business
opportunities, and it has no current plans to raise additional capital
through sale of securities, or otherwise. As a result, although the
Company has no agreement in place with its shareholders or other
persons to pay expenses on its behalf, it is currently anticipated that the
Company will rely on loans from shareholders or third parties to pay
expenses at least until it is able to consummate a business combination.
Results of Operations.
During the period from August 28, 1996 (inception) through
August 31, 1999, the Company has engaged in no significant operations
other than organizational activities, acquisition of capital and registering
its securities under the Securities and Exchange Act of 1934, as
amended. No revenues were received during this period, and the
Company experienced a cumulative net loss of $90,321.
As of the end of its first quarter ending August 31, 1999, the Company
is pursuing, but has not yet reached any agreement or definitive
understanding with any person concerning the business combination
transaction between the Company and The Heritage Organization,
L.L.C., or between the Company and Steadfast Investments, L.P., the
principal owner of The Heritage Organization, L.L.C. or any other
entity. The Company's immediate business plan is to pursue this
possible business combination transaction. The predicted time frame and
methodology of this possible business combination transaction, as of the
date of this filing, has not been determined. The business combination
transaction is considered possible but not probable. Should this
transaction not occur, the Company shall continue with its previous
business plan to seek, investigate and possibly acquire one or more
properties or businesses. Such an acquisition may be made by purchase,
merger, exchange of stock, or otherwise and may encompass assets or
a business entity, such as a corporation, joint venture, or partnership.
The Company has very limited capital, and it is unlikely that the
Company will be able to take advantage of more than one such business
opportunity. The Company intends to seek opportunities demonstrating
the potential of long-term growth as opposed to short-term earnings
The Company experienced a net loss of $1,697 for the first
quarter, compared with a loss of $39 for the same quarter of the
previous fiscal year. The loss during the first quarter is primarily the
result of legal and accounting costs related to compliance with reporting
requirements of the securities laws. The Company does not expect to
generate any revenue until it completes a business combination, but it
will continue to incur legal and accounting fees and other costs
associated with compliance with its reporting obligations. As a result,
the Company expects that it will continue to incur losses each quarter at
least until it has completed a business combination. Depending upon the
performance of any acquired business, the Company may continue to
operate at a loss even following completion of a business combination.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
INFORMATION
This report contains various forward-looking statements that are
based on the Company's beliefs as well as assumptions made by and
information currently available to the Company. When used in this
report, the words "believe," "expect," "anticipate," "estimate" and
similar expressions are intended to identify forward-looking statements.
Such statements may include statements regarding seeking business
opportunities, payment of operating expenses, and the like, and are
subject to certain risks, uncertainties and assumptions which could cause
actual results to differ materially from projections or estimates contained
herein. Factors which could cause actual results to differ materially
include, among others, unanticipated delays or difficulties in location of
a suitable business acquisition candidate, unanticipated or unexpected
costs and expenses, competition and changes in market conditions, lack
of adequate management personnel and the like. Should one or more of
these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially form those
anticipated, estimated or projected. The Company cautions again placing
undue reliance on forward-looking statements all of which speak only as
of the date made.
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBIT 27 - FINANCIAL DATA SCHEDULE
(b) There were no reports on Form 8-K filed during the
quarter ended August 31, 1999.
Signatures
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BUFFALO CAPITAL III, LTD.
(Registrant)
Date: October 15, 1999
By: /s/___________________________
Gary M. Kornman
Chairman of the Board
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-END> AUG-31-1999
<CASH> 3,467
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,467
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,587
<CURRENT-LIABILITIES> 5,000
<BONDS> 0
0
0
<COMMON> 8,500
<OTHER-SE> (9,913)
<TOTAL-LIABILITY-AND-EQUITY> 3,587
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,697
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (90,322)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (90,322)
<EPS-BASIC> .017
<EPS-DILUTED> 0
</TABLE>
