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 February 29,
2000.
....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
THE HERITAGE ORGANIZATION, INC.
(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
Buffalo Capital III, Ltd.
(former name of small business)
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 February 29,
2000, 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 February 29, 2000, 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.
THE HERITAGE ORGANIZATION, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
Quarter Ended February 29, 2000
THE HERITAGE ORGANIZATION, INC.
(A Development Stage Company)
Index to Financial Statements [C]
Balance Sheet 5
Statement of Loss and Accumulated Deficit 6
Statements of Cash Flow 10
Notes to Financial Statements 12
THE HERITAGE ORGANIZATION, INC.
(A Development Stage Company)
BALANCE SHEET
February 29, 2000
(unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 2,417
OTHER ASSETS:
Organizational costs (net
of amortization) 90
TOTAL ASSETS 2,507
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 0
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 80,708
Deficit accumulated during the
development stage (88,623)
Net Income (3,078)
Total stockholders' equity (2,493)
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY 2,507
</TABLE>
The accompanying notes are an integral part of these financial statements.
THE HERITAGE ORGANIZATION, INC.
(A Development Stage Company)
STATEMENT OF LOSS AND ACCUMULATED DEFICIT FOR THE
THREE AND NINE MONTHS ENDED FEBRUARY 29, 2000 AND
FEBRUARY 28, 1999, AND FOR THE PERIOD FROM AUGUST 28, 1996
THROUGH FEBRUARY 29, 2000
(unaudited) Page 1 of 2
<TABLE>
<CAPTION>
Period from Three Three
Inception months months
(8/28/96) ended ended
to 2/29/00 2/29/00 2/28/99
<S> <C> <C> <C>
REVENUE - - -
EXPENSES
Legal &
professional 23,875 598 5,033
Amortization 210 15 15
Bank charges 103 - 18
Rent 2,100 150 150
Licenses & Permits 175 95 -
Consulting Fees 62,800 - -
Director Fees 200 - -
Office expense 2,238 145 -
TOTAL EXPENSES 91,702 1,003 5,216
NET LOSS (91,702) (1,003) (5,216)
Accumulated deficit
Balance,
beginning of period - (90,698) (80,756)
Balance,
end of period (91,702) (91,702) (85,972)
NET LOSS
PER SHARE (.0065) (.0065) NIL
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 9,353,151 9,353,151 1,260,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
THE HERITAGE ORGANIZATION, INC.
(A Development Stage Company)
STATEMENT OF LOSS AND ACCUMULATED DEFICIT FOR THE
THREE AND NINE MONTHS ENDED FEBRUARY 29, 2000 AND
FEBRUARY 28, 1999, AND FOR THE PERIOD FROM AUGUST 28, 1996
THROUGH FEBRUARY 29, 2000
(unaudited) Page 2 of 2
<TABLE>
<CAPTION>
Nine Nine
months months
ended ended
2/29/00 2/28/99
<S> <C> <C>
REVENUE - -
EXPENSES
Legal &
professional 2,206 9,264
Amortization 45 45
Bank charges - 53
Rent 450 450
Filing Fees 95 25
Consulting Fees - -
Director Fees - -
Office expense 282 24
TOTAL EXPENSES 3,078 9,861
NET LOSS (3,078) (9,861)
Accumulated deficit
Balance,
beginning of period (88,624) (76,111)
Balance,
end of period (91,702) (85,972)
NET LOSS
PER SHARE (.0065) NIL
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 9,353,151 1,260,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
THE HERITAGE ORGANIZATION, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOW FOR THE NINE MONTHS ENDED
FEBRUARY 29, 2000 AND FEBRUARY 28, 1999, AND FOR THE
PERIOD FROM AUGUST 28, 1996 THROUGH
FEBRUARY 29, 2000
(unaudited)
<TABLE>
<CAPTION>
Period from Nine Nine
Inception months months
(8/28/96) ended ended
to 2/29/00 2/29/00 2/28/99
<S> <C> <C> <C>
OPERATING ACTIVITIES:
NET LOSS (91,702) (3,078) (9,861)
Adjustments to reconcile net loss to
net cash used by operating activities:
Amortization 210 45 45
Rent Expense 2,100 450 450
Expenses paid
by shareholders 15,609 0 5,291
Stock issued for
directors fees 59,960 0 0
Stock issued for
consulting fees 3,040 0 0
Decrease in accounts
Payable-related party 0 0 4,000
Net cash provided
by operating
activities (10,783) (2,583) (75)
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) 2,417 2,417 (75)
NET CASH
Beginning of Period 0 0 103
NET CASH
End of Period 2,417 2,417 28
</TABLE>
The accompanying notes are an integral part of these financial statements.
THE HERITAGE ORGANIZATION, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
February 29, 2000
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
THE HERITAGE ORGANIZATION, INC. (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 a 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 affect 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 February 29, 2000, 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 $2,100 since
inception in rent expense which has been designated as paid-in capital.
Similarly, the Company recorded amortization of the organization
costs of $210.
NOTE 5. INCOME TAXES
The Company has Federal net operating loss carryforwards of
approximately $90,700 expiring in the years 2012, 2013 and 2019.
The tax benefit of these net operating losses, which totals
approximately $18,000, 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 three month periods ended February 29, 2000 and
February 28, 1999, the Company recorded amortization of the
organizational costs of $15 and $15.
Similarly, the Company recorded rent expense for the three month
periods ended February 29, 2000 and February 28, 1999 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 February 29, 2000, reflects a total
asset value of $2,507.
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 February
29, 2000, 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 $91,702.
As of the end of its third quarter ending February 29, 2000, 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 $1,003 for the third quarter,
compared with a loss of $5,216 for the same quarter of the previous
fiscal year. The loss during the third 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 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) The Company filed Restated and Amended Articles of
Incorporation on January 3, 2000. These Restated Articles provide
for a new class of stock, Class B Common Stock, which shall have
the same rights, preferences and limitations as the current Common
Stock, except that each share of Class B Common Stock shall have
10,000 votes per share. The holders of Class B Common Stock also
have the pre-emptive right to purchase, at their par value, additional
shares of Class B Common Stock in order to maintain the same
relative voting power in the Company upon the issuance of any
additional shares of Common Stock of the Company to any other
stockholder or upon the issuance of any shares of Common Stock of
the Company to any new stockholder.
(b) The authorization of the Class B Voting Stock will have an effect
on the holders of Common Stock and Preferred Stock, in that the
voting power of the holders of Common Stock and Preferred Stock
will be diluted because Preferred Stock and Common Stock is only
entitled to one vote per share. In addition, the Restated Articles of
Amendment provide that no pre-emptive rights shall exist for the
stockholders except that the stockholders of Class B Common Stock
shall have the pre-emptive right to purchase, at their par value,
additional shares of Class B Common Stock in order to maintain the
same relative voting power in the Company upon the issuance of any
additional shares of Common Stock of the Company to any other
stockholder or upon the issuance of any shares of Common Stock of
the Company to any new stockholder.
ITEM 5. OTHER INFORMATION
The Restated and Amended Articles of Incorporation filed on January
3, 2000 changed the name of the Company to The Heritage
Organization, Inc., and on March 1, 2000, the Company began
trading under the symbol THOI.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 3.1 - Restated and Amended Articles of
Incorporation by reference from Report on Form 10QSB for quarter
ended November 30, 1999, filed with the Securities and Exchange
Commission on January 13, 2000.
(b) There were no reports on Form 8-K filed during the
quarter ended February 29, 2000.
Exhibit 27 - Financial Data Schedule
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.
THE HERITAGE ORGANIZATION, INC.
(Registrant)
Date: April 7, 2000
By: /s/___________________________
Gary M. Kornman
Chairman of the Board
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-END> FEB-29-2000
<CASH> 2,417
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,417
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,507
<CURRENT-LIABILITIES> 5,000
<BONDS> 0
0
0
<COMMON> 8,500
<OTHER-SE> 80,708
<TOTAL-LIABILITY-AND-EQUITY> 2,507
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,078
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,078)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,078)
<EPS-BASIC> (0065)
<EPS-DILUTED> (0065)
</TABLE>
