UNITED STATES 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 September 30, 2000.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ______ to ______.
Commission File Number: 000-28409
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EASTPORT RED'S INCORPORATED
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(Name of Small Business Issuer in its charter)
Nevada 84-1416078
--------------------------------- --------------------------
(State or Other Jurisdiction of (IRS Employer ID Number)
Incorporation or Organization)
3434 East 7800 South, #237, Salt Lake City, Utah 84121
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(Address of Principal Executive Offices and Zip Code)
Issuer's telephone number: (801) 274-6415
----------------
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 PRECEDING FIVE YEARS:
Check whether the registrant has filed all documents and reports required to
be filed by Sections 12, 13, or 15(d) of the Exchange Act subsequent to 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:
As of November 8, 2000, there were 11,000,000 shares of common stock
issued and outstanding.
Total of Sequentially Numbered Pages: 15
Index to Exhibits on Page: 15
<PAGE>
FORM 10-QSB
EASTPORT RED'S INCORPORATED
TABLE OF CONTENTS
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PAGE
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PART I
ITEM 1. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION . . .12
PART II
ITEM 1. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . .13
ITEM 2. CHANGES IN SECURITIES . . . . . . . . . . . . . . . . . . . . .13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . . . . . .14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . .14
ITEM 5. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . .14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . . . . .14
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
2
<PAGE>
PART I
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ITEM 1. FINANCIAL STATEMENTS
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In the opinion of management, the accompanying unaudited financial
statements included in this Form 10-QSB reflect all adjustments (consisting
only of normal recurring accruals) necessary for a fair presentation of the
results of operations for the periods presented. The results of operations
for the periods presented are not necessarily indicative of the results to be
expected for the full year.
[THIS SPACE INTENTIONALLY LEFT BLANK]
3
<PAGE>
EASTPORT RED'S INCORPORATED
[A Development Stage Company]
UNAUDITED CONDENSED FINANCIAL STATEMENTS
September 30, 2000
4
<PAGE>
EASTPORT RED'S INCORPORATED
[A Development Stage Company]
CONTENTS
----------
PAGE
------
Unaudited Condensed Balance Sheets, September 30,
2000 and December 31, 1999 2
Unaudited Condensed Statements of Operations,
for the three and nine months ended September 30, 2000
and 1999 and for the period from inception on
July 18, 1997 through September 30, 2000 3
Unaudited Condensed Statements of Cash Flows,
for the nine months ended September 30, 2000
and 1999 and for the period from inception on
July 18, 1997 through September 30, 2000 4
Notes to Unaudited Condensed Financial Statements 5 - 7
5
<PAGE>
EASTPORT RED'S INCORPORATED
[A Development Stage Company]
CONDENSED BALANCE SHEETS
[Unaudited]
ASSETS
--------
September 30, December 31,
2000 1999
------------- -------------
CURRENT ASSETS
Cash in bank $ 4,368 $ 7,793
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Total Current Assets 4,368 7,793
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$ 4,368 $ 7,793
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------
CURRENT LIABILITIES
Note payable - related party $ 750 $ 750
Accrued interest payable - related party 225 169
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Total Current Liabilities $ 975 $ 919
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STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value,
5,000,000 shares authorized,
0 shares issued and outstanding -- --
Common stock, $.001 par value,
20,000,000 shares authorized,
11,000,000 shares issued and
outstanding 11,000 11,000
Capital in excess of par value -- --
Deficit accumulated during the
development stage (7,607) (4,126)
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Total Stockholders' Equity 3,393 6,874
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$ 4,368 $ 7,793
============= =============
Note: The Balance Sheet of December 31, 1999, was taken from the audited
financial statements at that date and condensed.
The accompanying notes are an integral part of these unaudited condensed
financial statements.
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6
<PAGE>
EASTPORT RED'S INCORPORATED
[A Development Stage Company]
CONDENSED STATEMENTS OF OPERATIONS
[Unaudited]
<TABLE>
<CAPTION>
For the Three For the Nine From Inception
Months Ended Months Ended on July 18,
September 30, September 30, 1997 Through
------------------------ ------------------------ September 30,
2000 1999 2000 1999 2000
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
REVENUE: $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- ----------------
EXPENSES:
General and Administrative 522 2,170 3,425 2,195 7,382
----------- ----------- ----------- ----------- ----------------
LOSS BEFORE OTHER EXPENSES (522) (2,170) (3,425) (2,195) (7,382)
OTHER EXPENSES:
Interest expense (19) (19) (56) (56) (225)
----------- ----------- ----------- ----------- ----------------
LOSS BEFORE INCOME TAXES (541) (2,189) (3,481) (2,251) (7,607)
CURRENT TAX EXPENSE -- -- -- -- --
DEFERRED TAX EXPENSE -- -- -- -- --
----------- ----------- ----------- ----------- ----------------
NET LOSS $ (541) $ (2,189) $ (3,481) $ (2,251) $ (7,607)
----------- ----------- ----------- ----------- ----------------
LOSS PER COMMON SHARE $ (.00) $ (.00) $ (.00) $ (.00) $ (.00)
----------- ----------- ----------- ----------- ----------------
</TABLE>
The accompanying notes are an integral part of these unaudited condensed
financial statements
-3-
7
<PAGE>
EASTPORT RED'S INCORPORATED
[A Development Stage Company]
CONDENSED STATEMENTS OF CASH FLOWS
[Unaudited - See Accountants' Review Report]
<TABLE>
<CAPTION>
From
For the Nine Inception on
Months Ended July 18,
September 30, 1997 Through
---------------------- September 30,
2000 1999 2000
---------- ---------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,481) $ (2,251) $ (7,607)
Adjustments to reconcile net loss to
net cash used by operating activities:
Stock issued for services - - 1,000
Changes is assets and liabilities:
Increase in accrued interest -
related party 56 56 225
---------- ---------- --------------
Net Cash Provided (Used) by
Operating Activities (3,425) (2,195) (6,382)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Net Cash Provided by Investing
Activities - - -
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock - 10,000 10,000
Increase in notes payable - related party - - 750
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Net Cash Provided by Financing
Activities - 10,000 10,750
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NET INCREASE (DECREASE) IN CASH (3,425) 7,805 4,368
CASH AT BEGINNING OF PERIOD 7,793 10 -
---------- ---------- --------------
CASH AT END OF PERIOD $ 4,368 $ 7,815 $ 4,368
---------- ---------- --------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
For the nine months ended September 30, 2000
None
For the nine months ended September 30, 1999
None
The accompanying notes are an integral part of these financial statements.
-4-
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<PAGE>
EASTPORT RED'S INCORPORATED
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Eastport Red's Incorporated (the Company) was organized under
the laws of the State of Nevada on July 18, 1997. The Company has not
commenced planned principal operations and is considered a development stage
company as defined in Statement of Financial Accounting Standards (SFAS) No.
7. The Company is seeking potential business ventures. The Company has, at
the present time, not paid any dividends and any dividends that may be paid in
the future will depend upon the financial requirements of the Company and
other relevant factors.
Condensed Financial Statements - The accompanying financial statements have
been prepared by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows at
September 30, 2000 and 1999 and for the periods then ended have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's December 31, 1999
audited financial statements. The results of operations for the periods ended
September 30, 2000 are not necessarily indicative of the operating results for
the full year.
Organization Costs - Organization costs, which reflect amounts expended to
organize the Company, amounted to $1,000 and were expensed during the period
ended December 31, 1997.
Loss Per Share - The computation of loss per share is based on the weighted
average number of shares outstanding during the period presented in accordance
with Statement of Financial Accounting Standards No. 128, "Earnings Per
Share". [See Note 6]
Cash and Cash Equivalents - For purposes of the financial statements, the
Company considers all highly liquid debt investments purchased with a maturity
of three months or less to be cash equivalents.
Accounting 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, the disclosures of contingent assets and liabilities at the date
of the financial statements, and the reported amount of revenues and expenses
during the reported period. Actual results could differ from those estimated.
Recently Enacted Accounting Standards - Statement of Financial Accounting
Standards (SFAS) No. 136, "Transfers of Assets to a not for profit
organization or charitable trust that raises or holds contributions for
others", SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities - deferral of the effective date of FASB Statement No. 133 (an
amendment of FASB Statement No. 133.),", SFAS No. 138 "Accounting for Certain
Derivative Instruments and Certain Hedging Activities - and Amendment of SFAS
No. 133", SFAS No. 139, "Recission of SFAS No. 53 and Amendment to SFAS No 63,
89 and 21", and SFAS No. 140, "Accounting to Transfer and Servicing of
Financial Assets and Extinguishment of Liabilities", were recently issued SFAS
No. 136, 137, 138, 139 and 140 have no current applicability to the Company or
their effect on the financial statements would not have been significant.
-5-
9
<PAGE>
EASTPORT RED'S INCORPORATED
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 2 - CAPITAL STOCK
Common Stock - During July 1997, in connection with its organization, the
Company issued 1,000,000 shares of its previously authorized, but unissued
common stock. The shares were issued for services rendered at $1,000 (or
$.001 per share).
During May 1999, the Company issued 10,000,000 shares of its previously
authorized, but unissued common stock for cash of $10,000 (or $.001 per
share).
NOTE 3 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". SFAS
No. 109 requires the Company to provide a net deferred tax asset/liability
equal to the expected future tax benefit/expense of temporary reporting
differences between book and tax accounting methods and any available
operating loss or tax credit carryforwards.
The Company has available at September 30, 2000, unused operating loss
carryforwards of approximately $7,000 which may be applied against future
taxable income and which expire in various years from 2019 through 2020. The
amount of and ultimate realization of the benefits from the operating loss
carryforwards for income tax purposes is dependent, in part, upon the tax laws
in effect, the future earnings of the Company, and other future events, the
effects of which cannot be determined. Because of the uncertainty surrounding
the realization of the loss carryforwards the Company has established a
valuation allowance equal to the amount of the loss carryforwards and,
therefore, no deferred tax asset has been recognized for the loss
carryforwards. The net deferred tax assets are approximately $2,400 and
$1,300 as of September 30, 2000 and December 31, 1999, respectively, with an
offsetting valuation allowance at each year end of the same amount resulting
in a change in the valuation allowance of approximately $1,100 during the nine
months ended September 30, 2000.
NOTE 4 - RELATED PARTY TRANSACTIONS
Management Compensation - As of September 30, 2000, the Company has not paid
any compensation to an officer/director of the Company.
Office Space - The Company has not had a need to rent office space. An
officer/shareholder of the Company is allowing the Company to use his/her home
as a mailing address, as needed, at no expense to the Company.
Notes Payable - During October 1997, an officer/shareholder of the Company
advanced $750 to the Company. The note is payable upon demand and accrues
interest at 10% per annum. Accrued interest amounted to $225 and $169 at
September 30, 2000 and December 31, 1999, respectively.
-6-
10
<PAGE>
EASTPORT RED'S INCORPORATED
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 5 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. However, the Company has incurred losses
since its inception and has not yet been successful in establishing profitable
operations. These factors raise substantial doubt about the ability of the
Company to continue as a going concern. In this regard, management is
proposing to raise any necessary additional funds not provided by operations
through loans or through additional sales of its common stock. There is no
assurance that the Company will be successful in raising this additional
capital or achieving profitable operations. The financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per share for
the periods presented:
</TABLE>
<TABLE>
<CAPTION>
For the Three For the Nine From Inception
Months Ended Months Ended on July 18,
September 30, September 30, 1997 Through
------------------------ ------------------------ September 30,
2000 1999 2000 1999 2000
----------- ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C> <C>
Loss from continuing operations
available to common shareholders
(numerator) $ (541) $ (2,189) $ (3,481) $ (2,251) $ (7,607)
----------- ----------- ----------- ----------- ----------------
Weighted average number of
common shares outstanding used
in loss per share for the period
(denominator) 11,000,000 11,000,000 11,000,000 6,494,505 5,409,402
----------- ----------- ----------- ----------- ----------------
</TABLE>
-7-
11
<PAGE>
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
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Results of Operations
----------------------
****************************************************************
Nine Month Periods Ended September 30, 2000 and 1999,
Three Month Periods Ended September 30, 2000 and 1999
and from Inception on July 18, 1997 through September 30, 2000
****************************************************************
The Company had no revenue from continuing operations for the nine month
periods ended September 30, 2000 and 1999, for the three month periods ended
June 30, 2000 and 1999 or from inception on July 18, 1997 through September
30, 2000.
General and administrative expenses for all periods ended consisted of
general corporate administration, legal and professional expenses, and
accounting and auditing costs. These expenses were $3,425 for the nine month
period ended September 30, 2000, $2,195 for the nine month period ended
September 30, 1999, $522 for the three month period ended September 30, 2000,
$2,170 for the three month period ended September 30, 1999 and $7,382 from
inception on July 18, 1997 through September 30, 2000.
Interest expense for the nine month periods ended September 30, 2000 and
1999, the three month periods ended September 30, 2000 and 1999 and from
inception on July 18, 1997 through September 30, 2000 was $56, $56, $19, $19
and $225 respectively. Interest was accrued on a note payable to a third
party in the principal amount of $750. This note is payable upon demand and
accrues interest at 10% per annum.
As a result of the foregoing factors, the Company realized a net loss of
$3,481 for the nine month period ended September 30, 2000, $2,251 for the nine
month period ended September 30, 1999, $541 for the three month period ended
September 30, 2000, $2,189 for the three month period ended September 30, 1999
and $7,607 from inception on July 18, 1997 through September 30, 2000.
Liquidity and Capital Resources
--------------------------------
The Company remains in the development stage and, since inception, has
had no revenues. At September 30, 2000, the Company had working capital of
$3,393. The Company had cash in the amount of $4,368. All cash raised by
the Company to date, has come from the sale of 10,000,000 shares of the
Company's common stock to First Avenue, Ltd. for $10,000, as well as a $750
loan to the Company by its previous President, Marlon Hill. Ken W. Kurtz, the
Company's President, Secretary, Treasurer and Director is a general and
limited partner of First Avenue, Ltd. The shares were sold to First Avenue,
Ltd. to obtain capital to pay the costs of becoming a reporting company under
the Securities Exchange Act of 1934, as amended, and also to pay the costs of
general administrative expenses.
12
<PAGE>
Management believes that the Company has sufficient cash to meet its
anticipated needs through at least the first calendar quarter of 2001.
However, there can be no assurances to that effect, as the Company has no
revenues through the date of this report and its need for capital may change
dramatically if it acquires an interest in a business opportunity during that
period. In the event the Company requires additional funds, the Company will
have to seek loans or equity placements to cover such cash needs. There is no
assurance additional capital will be available to the Company on acceptable
terms.
Plan of Operations
-------------------
The Company's plan of operations centers around its search for potential
businesses, products, technologies and companies for acquisition or
reorganization.
The Company has no property. The Company president is allowing the
Company to use his office as a mailing address, as needed, at no expense to
the Company. The Company will continue to maintain operations at this
location until management believes that the Company's revenues and financial
resources justify a move to an alternative location. If such a move is
required, the Company believes that there is an inadequate supply of
office/warehouse/retail space in Salt Lake County, Utah meeting the Company's
anticipated needs for the foreseeable future. Initially, the Company expects
that it will lease rather then purchase such property in order to allocate its
resources specifically to its operations.
The Company may attempt to employ additional personnel if it is able to
generate revenues or obtain additional financing. However, there is no
assurance that the services of such persons will be available or that they can
be obtained upon terms favorable to the Company.
No commitments to provide additional funds have been made by management
or other stockholders. Accordingly, there can be no assurance that any
additional funds will be available to the Company to allow it to cover its
expenses as they may be incurred.
Irrespective of whether the Company's cash assets prove to be adequate to
meet the Company's operational needs, the Company might seek to compensate
providers of services by issuances of stock in lieu of cash.
PART II
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ITEM 1. LEGAL PROCEEDINGS
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Not Applicable.
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ITEM 2. CHANGES IN SECURITIES
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Not Applicable.
13
<PAGE>
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
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Not Applicable.
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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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Not Applicable.
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ITEM 5. OTHER INFORMATION
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Not Applicable.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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(a) Exhibits: Exhibits required to be attached by Item 601 of Regulation
S-B are listed in the Index to Exhibits of this Form 10-QSB, which is
incorporated herein by reference.
(b) Reports on Form 8-K: No reports on Form 8-K have been filed during the
last quarter of the period covered by this report.
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SIGNATURES
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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.
EASTPORT RED'S INCORPORATED
/s/ Ken Kurtz
-----------------------------------
Date: November 9, 2000 By: Ken Kurtz, President, Secretary
Treasurer & Director
14
<PAGE>
INDEX TO EXHIBITS
---------------------
SEC Ref Page
No. No. Description
------- ---- -----------
Ex-3(i) ** Articles of Incorporation of the Company, filed with
the State of Nevada on July 18, 1997.
Ex-3(ii) ** Bylaws of the Company.
Ex-10(a) ** Promissory Note made by the Company to the order of
Marlon Hill, dated October 1, 1997.
Ex-27 * Financial Data Schedule for the nine month period ended
September 30, 2000.
** The listed exhibits are incorporated herein by this reference to the
Registration Statement on Form 10-SB, filed by the Company with the
Securities and Exchange Commission on December 8, 1999.
* The Financial Data Schedule is presented only in the electronic filing
with the Securities and Exchange Commission.
15
