FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 2000
Commission File Number 13-4051167
NAVARONE, INC.
(Exact name of registrant as specified in its charter)
Nevada 13-4051167
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
c/o Salem Krieger, 228 East 85th Street, New York, NY 10028
(Address of principal executive offices)
(Zip Code)
(212) 439-6268
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
X Yes ___ No
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding as of May 16, 2000
Common Stock 10,385,000
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
CONTENTS
PAGE
- Accountants' Review Report 3
- Unaudited Condensed Balance Sheets,
March 31, 2000 and December 31, 1999 4
- Unaudited Condensed Statements of Operations,
for the three months ended March 31, 2000
and 1999 and from inception on March 19, 1997
through March 31, 2000 5
- Unaudited Condensed Statements of Cash Flows,
for the three months ended March 31, 2000
and 1999 and from inception on March 19, 1997
through March 31, 2000 6
- Notes to Unaudited Condensed Financial Statements 7 - 10
2
<PAGE>
ACCOUNTANTS' REVIEW REPORT
Board of Directors
NAVARONE, INC.
New York, NY
We have reviewed the accompanying condensed balance sheet of Navarone, Inc. [a
development stage company] as of March 31, 2000 and the related condensed
statements of operations and cash flows for the three months ended March 31,
2000 and for the period from inception on March 19, 1997 through March 31,
2000. These financial statements are the responsibility of the Company's
management. All information included in these financial statements is the
representation of management of Navarone, Inc..
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review consists
principally of inquiries of Company personnel and analytical procedures
applied to financial data. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed financial statements reviewed by us, in order
for them to be in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
Navarone, Inc. will continue as a going concern. As discussed in Note 7 to
the financial statements, Navarone, Inc. has incurred losses since its
inception and has not yet been successful in establishing profitable
operations, raising substantial doubt about its ability to continue as a going
concern. Management's plans in regards to these matters are also described in
Note 7. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
/s/ Pritchett, Siler & Hardy
PRITCHETT, SILER & HARDY, P.C.
May 16, 2000
Salt Lake City, Utah
3
<PAGE>
NAVARONE, INC.
[A Development Stage Company]
CONDENSED BALANCE SHEETS
[Unaudited - See Accountants' Review Report]
ASSETS
March 31, December 31,
2000 1999
___________ ___________
CURRENT ASSETS:
Cash held by shareholder $ 2,535 $ 3,918
___________ ___________
Total Current Assets $ 2,535 $ 3,918
___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 60 $ 587
___________ ___________
Total Current Liabilities 60 587
___________ ___________
STOCKHOLDERS' EQUITY:
Common stock, $.001 par value,
25,000,000 shares authorized,
10,385,000 shares issued and
outstanding 10,385 10,385
Capital in excess of par value 24,980 24,980
Deficit accumulated during the
development stage (32,890) (32,034)
___________ ___________
Total Stockholders' Equity 2,475 3,331
___________ ___________
$ 2,535 $ 3,918
___________ ___________
Note: The balance sheet at 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 financial
statements.
4
<PAGE>
NAVARONE, INC.
[A Development Stage Company]
CONDENSED STATEMENTS OF OPERATIONS
[Unaudited - See Accountants' Review Report]
From
For the Three Inception on
Months Ended March 19, 1997,
March 31, Through
______________________ March 31,
2000 1999 2000
___________ __________ ___________
REVENUE $ - $ - $ -
___________ __________ ___________
EXPENSES:
General and administrative 856 3,590 24,890
Research and development - 3,000 7,000
___________ __________ ___________
Total Expenses 856 6,590 31,890
___________ __________ ___________
LOSS BEFORE INCOME TAXES (856) (6,590) (31,890)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
___________ __________ ___________
LOSS FROM CONTINUING
OPERATIONS BEFORE
CHANGE IN ACCOUNTING
PRINCIPLE - (6,590) (31,890)
CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
PRINCIPLE - - (1,000)
__________ __________ ___________
NET LOSS $ (856) $ (6,590) $ (32,890)
__________ __________ ___________
LOSS PER COMMON SHARE:
Continuing operations $ (.00) $ (.00) $ (.00)
Cumulative effect of change
in accounting principle - - (.00)
__________ __________ ___________
Net Loss Per Common
Share $ (.00) $ (.00) $ (.00)
__________ __________ ___________
The accompanying notes are an integral part of these unaudited financial
statements.
5
<PAGE>
NAVARONE, INC.
[A Development Stage Company]
CONDENSED STATEMENTS OF CASH FLOWS
[Unaudited - See Accountants' Review Report]
From
For the Three Inception on
Months Ended March 19, 1997,
March 31, Through
______________________ March 31,
2000 1999 2000
___________ __________ ___________
Cash Flows From Operating Activities:
Net loss $ (856) $ (6,590) $ (32,890)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Non-cash expense - - 2,500
Effect of change in accounting
principle - - 1,000
Change in assets and liabilities:
Increase (decrease) in accounts
payable (527) 5,068 60
___________ __________ ___________
Net Cash (Used) by Operating
Activities (1,383) (1,522) (29,330)
___________ __________ ___________
Cash Flows From Investing Activities - - -
___________ __________ ___________
Net Cash (Used) by Investing
Activities - - -
___________ __________ ___________
Cash Flows From Financing Activities:
Proceeds from common stock issuance - - 38,500
Payment of stock offering costs - - (6,635)
___________ __________ ___________
Net Cash Provided by Financing
Activities - - 31,865
___________ __________ ___________
Net Increase (Decrease) in Cash (1,383) (1,522) 2,535
Cash at Beginning of Period 3,918 13,925 -
___________ __________ ___________
Cash at End of Period $ 2,535 $ 12,403 $ 2,535
___________ __________ ___________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the periods for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
For the three months ended March 31, 2000:
None.
For the three months ended March 31, 1999:
None
The accompanying notes are an integral part of these unaudited financial
statements.
6
<PAGE>
NAVARONE, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Ezboy Imageworks, Inc. was organized under the laws of the
State of Nevada on March 19, 1997, but changed its name in 1998 to Navarone,
Inc (the Company). The Company intends to develop and pursue patent
protection for novelty items for the photographic industry. The Company
also intends to manufacture and market its inventions. 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. The Company has not generated significant
revenues and is considered a development stage company as defined in
Statement of Financial Accounting Standards (SFAS) No. 7.
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
March 31, 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
March 31, 2000 are not necessarily indicative of the operating results for the
full year.
Income Taxes - The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes." This statement requires an asset and liability approach for
income taxes.
Research and Development - The Company expenses research and development costs
as incurred. Expenditures for research and development were $0 and $3,000 for
the three months ended March 31, 2000 and 1999, respectively.
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 (SFAS) 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.
Restatement - The financial statements have been restated for all periods
presented to reflect a ten for one forward stock split effective January 5,
2000 [See Note 3].
7
<PAGE>
NAVARONE, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Recently Enacted Accounting Standards - Statement of Financial Accounting
Standards (SFAS) No. 132, "Employer's Disclosure about Pensions and Other
Postretirement Benefits", SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities", SFAS No. 134, "Accounting for Mortgage-Backed
Securities.", SFAS No. 135, "Rescission of FASB Statement No. 75 and Technical
Corrections", SFAS No. 136, "Transfers of Assets to a not for profit
organization or charitable trust that raises or holds contributions for
others", and 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.)," were recently issued. SFAS No. 132,
133, 134, 135, 136 and 137 have no current applicability to the Company or
their effect on the financial statements would not have been significant.
NOTE 2 - CASH
The Company's attorney, who is also a shareholder, currently holds cash
belonging to the Company in the amount of $2,535, in a non-interest bearing
and non-insured account.
NOTE 3 - CAPITAL STOCK
Common Stock - On March 19, 1997, the Company issued 10,000,000 shares of its
previously authorized, but unissued common stock to its attorney for
providing services valued at $1,000 related to organizing the Company.
In October 1998, the Company issued 385,000 shares of its previously
authorized, but unissued common stock. Total proceeds from the sale of stock
amounted to $38,500 (or $1.00 per share). Offering costs in the amount of
$6,635 have been charged to additional paid in capital.
In January 2000, the Company effected a ten for one forward stock split. The
financial statements for all periods presented have been restated to reflect
the stock split.
NOTE 4 - RELATED PARTY TRANSACTIONS
Professional Services - A shareholder of the Company provides professional,
legal and managerial services to the Company.
Cash - A shareholder holds cash in the amount of $2,535 belonging to the
Company in a non-interest bearing and non-insured account.
Rent - The Company currently does not have a need to rent office space but is
using the address of an officer as a mailing address, as needed, at no cost to
the Company. The President of the Company was paid a total of $3,000 in 1999
for the Company to use his studio for a short period in 1999 when the Company
was doing prototype development.
Prototype Development - During 1999, the President donated $2,500 of services
and unpaid expenses for prototype development that included utilization of
existing studio space, equipment and materials. The $2,500 was accounted
for as a contribution to capital.
8
<PAGE>
NAVARONE, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 5- 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. At March 31, 2000, the Company
has available unused operating loss carryforwards of approximately $32,500,
which may be applied against future taxable income and which expire in various
years through 2019.
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 tax effect of the loss carryforwards and,
therefore, no deferred tax asset has been recognized for the loss
carryforwards. The net deferred tax assets are approximately $11,000 and
$10,700 as of March 31, 2000 and December 31, 1999, respectively, with an
offsetting valuation allowance at each period end of the same amount resulting
in a change in the valuation allowance of approximately $300 for the three
months ended March 31, 2000.
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per share for the
periods ended March 31, 2000 and 1999:
From
For the Three Inception on
Months Ended March 19, 1997,
March 31, Through
______________________ March 31,
2000 1999 2000
___________ __________ ___________
Loss from continuing operations
available to common shareholders
(numerator) $ (856) $ (6,590) $ (31,890)
___________ __________ ___________
Cumulative effect of change in
accounting principle (numerator) $ - $ - $ (1,000)
___________ __________ ___________
Weighted average number of
common shares outstanding used
in loss per share for the period
(denominator) [Restated] 10,385,000 10,000,000 10,190,068
___________ __________ ___________
Dilutive loss per share was not presented, as the Company had no common
equivalent shares for all periods presented that would affect the computation
of diluted loss per share.
During 1999, the Company adopted Statement of Position 98-5 and accordingly
expensed its organization costs of $1,000. This has been reflected as a
cumulative effect of change in accounting principle.
9
<PAGE>
NAVARONE, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 7 - 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 and/or through additional sales of its common
stock. There is no assurance that the Company will be successful in raising
this additional capital or in achieving profitable operations. The financial
statements do not include any adjustments that might result from the outcome
of these uncertainties.
10
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
Company's results of operations and financial condition. The discussion should
be read in conjunction with the financial statements and notes thereto.
Plan of Operation
Navarone, Inc. is a new company in the development phase, engaged in the
development of novelty products related to the photographic industry. The
Company has completed production of prototypes for its first two products
and management has been pursuing the possibility of entering into royalty
agreements with companies interested in its Booger Bubble Gum Card Packages
or its Serenity Lamp, but to date, no such agreements have been executed.
Management is currently exploring other possiblilities for sale of its
products. The Company does not have the resources to market its products
directly at this time; as of the date of the Report, it had assets of only
$2,535, in the form of cash being held by its attorney on the Company's
behalf. The Company is also presently contemplating a second offering of
securities in order to raise additional funds, but no decision has yet been
made in this regard. In the meantime, the Company will rely upon loans
from its officers and principal shareholders in order to keep its expenses
paid until such time as it has achieved sufficient income, or until such
time as management should decide to abandon the Company's original business
plan and pursue merger or acquisition with an existing business.
Forward-Looking Statements
When used in this Form 10-Q or other filings by the Company with the
Securities and Exchange Commission, in the Company's press releases or other
public or shareholder communications, or in oral statements made with the
approval of an authorized officer of the Company's executive officers, the
words or phrases "would be", "will allow", "intends to", "will likely result",
"are expected to", "will continue", "is anticipated", "estimate", "project",
or similar expressions are intended to identify "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
The Company cautions readers not to place undue reliance on any forward-
looking statements, which speak only as of the date made, and advises readers
that forward-looking statements involve various risks and uncertainties. The
Company does not undertake, and specifically disclaims any obligation to
update any forward-looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statement.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to Vote of Securityholders.
None.
Item 5. Other Information.
During April, 2000, all 38,500 free-trading shares were purchased
from the investors by Tim Abato, a shareholder. Subsequently, during May,
2000 the shares were purchased by Maureen Abato, who is a principle
shareholder, a director, and secretary-treasurer of the Company. All
transactions were made pursuant to Stock Purchase Agreements, at a price
of $1.00 per share.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
None
(b) Reports on Form 8-K:
None.
NAVARONE, INC.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed by the undersigned
duly authorized.
NAVARONE, INC.
Date: May 16, 2000 By /s/ Salem Krieger
Salem Krieger, President
/s/ Salem Krieger
Salem Krieger President May 16, 2000
/s/ Maureen Abato
Maureen Abato Secretary-Treasurer May 16, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
financial statements for the three months ended March 31, 2000
and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,535
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,535
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,535
<CURRENT-LIABILITIES> 60
<BONDS> 0
0
0
<COMMON> 10,385
<OTHER-SE> (7,910)
<TOTAL-LIABILITY-AND-EQUITY> 2,535
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 856
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (856)
<INCOME-TAX> 0
<INCOME-CONTINUING> (856)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (856)
<EPS-BASIC> (.00)
<EPS-DILUTED> (.00)
</TABLE>
