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 0-27733
CERRITOS HOLDINGS INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 77-0497976
------------------------------- -------------------------------------
(State or other jurisdiction of (I.R. S. Employer Identification No.)
Incorporation or organization)
302-1040 Hamilton Street, Vancouver, B.C., V6B 2R9
(Address of principal executive offices)
(604) 603-2542
(Issuer's telephone number)
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 practical date: July 21, 2000 12,000,000
Transitional Small Business Disclosure Format (check one). Yes No x
--- ---
<PAGE>
CERRITOS HOLDINGS INC.
(A Development Stage Company)
BALANCE SHEET
-------------
September 30, December 31,
2,000 1999
-------- --------
ASSETS
Intangible and Other Assets
Motion Picture and Television Rights $ 13,717 $ 13,717
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 4,881 $ 181
Accounts Expenses 2,717 2,717
-------- --------
Total Liabilities 7,598 2,898
-------- --------
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 100,000,000 shares
Issued 12,000,000 Shares
at September 30, 2,000
and December 31, 1999 12,000 12,000
Paid-In Capital 1,485 1,485
Currency Translation Adjustments -- --
Retained Deficit (1,200) (1,200)
Deficit Accumulated During the
Development Stage (6,166) (1,466)
-------- --------
Total Stockholders' Equity 6,199 10,819
-------- --------
Total Liabilities and Stockholders' Equity $ 13,717 $ 13,717
======== ========
See accompanying notes and accountants' report
F-1
<PAGE>
<TABLE>
<CAPTION>
CERRITOS HOLDINGS INC.
(A Development Stage Company)
STATEMTNS OF OPERATIONS
Cumulative
Since July 9,
For the Three Months For the Nine Months 1999
Ended Ended Inception of
September 30, September 30, Development
2000 1999 2000 1999 Stage
---------- ----- ------- ----- -------
<S> <C> <C> <C> <C> <C>
Revenues $ -- $-- $ -- $-- $ --
---------- ----- ------- ----- -------
General &
Administrative 2,200 -- 4,700 -- 6,160
---------- ----- ------- ----- -------
Operating Loss -- -- -- -- --
Other income (expense):
Interest expense -- -- -- -- --
Reorganization items:
Administrative fee -- -- -- -- --
----------------------- ---------- ----- ------- ----- -------
Loss before taxes
Income taxes -- -- -- -- --
---------- ----- ------- ----- -------
Net Loss $(2,200) $-- $(4,700) $-- $(6,160)
========== ===== ======= ===== =======
</TABLE>
See accompanying notes and accountants' report.
F-2
<PAGE>
CERRITOS HOLDINGS INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Cumulative
Since July 9,
For the Nine Months 1999
Ended Inception of
September 30, Development
2000 1999 Stage
-------- ------ --------
CASH FLOW FROM
OPERATING ACTIVITIES:
Net Loss $ (4,700) $ -- $ (6,160)
Increase (Decrease) in Accounts
Payable 4,700 -- 4,683
Increase (Decrease) in Accrued
Liabilities -- -- 2,710
-------- ------ --------
Net Cash Used in Operating
Activities -- -- 1,232
-------- ------ --------
CASH FLOWS FROM
INVESTING ACTIVITIES:
Investment in Motion Picture and
Television rights -- -- (13,710)
-------- ------ --------
Net cash provided by investing
Activities -- -- (13,710)
-------- ------ --------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Capital contributed by shareholder -- -- 12,485
-------- ------ --------
Net Cash Provided by
Financing Activities -- -- 12,485
-------- ------ --------
Net (Decrease) Increase in
Cash and Cash Equivalents -- -- --
Cash and Cash Equivalents at
Beginning of Period -- -- --
-------- ------ --------
Cash and Cash Equivalents at
End of Period $ -- $ -- $ --
======== ====== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid during the year for:
Interest $ -- $ -- $ --
Franchise and income taxes $ -- $ -- $ 250
SUPPLEMENTAL DISCLOSURE
OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
None
F-3
<PAGE>
CERRITOS HOLDINGS INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Cerritos Holdings Inc. is presented to
assist in understanding the Company's financial statements. The accounting
policies conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
The unaudited financial statements as of September 30, 2000 and for the nine
months then ended reflect, in the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to fairly state the
financial position and results of operations for the three months. Operating
results for interim periods are not necessarily indicative of the results, which
can be expected for full years.
Organization and Basis of Presentation
The Company was incorporated under the laws of the State of Nevada on October 9,
1996. The Company ceased all operating activities during the period from October
29, 1996 to July 9, 1999 and was considered dormant. On July 9, 1999, the
Company obtained a Certificate of renewal from the State of Nevada. Since July
9, 1999, the Company is in the development stage, and has not commenced planned
principal operations.
Nature of Business
The Company intends to position itself to evolve into a vertically integrated,
diversified global media entertainment company. The Company intends to acquire a
number of diversified entertainment companies that will allow for the pursuit of
opportunities currently available in the global marketplace.
The Company anticipates generating revenues from several sources, including,
production of new and existing feature films, as well as expanding into other
areas of the entertainment industry.
Foreign Currency Translation
The functional currency of the Company is Canadian dollars. Balance sheet
accounts are translated to U.S. dollars at the current exchange rate as of the
balance sheet date. Income statement items are translated at average exchange
rates during the period. The resulting translation adjustment is recorded as a
separate component of stockholders' equity.
F-4
<PAGE>
CERRITOS HOLDINGS INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTS POLICIES (continued)
Loss per Share
The reconciliation of the numerators and denominators of the basic loss per
share computations are as follows:
<TABLE>
<CAPTION>
Income Shares Per-Share
(Numerator) (Denominator) Amount
----------- ------------- ------
For the three months ended September 30, 2000
<S> <C> <C> <C>
Basic Loss per Share
Loss to common shareholders $ (2,200) 12,000,000 $ --
========== ========== ========
For the Nine months ended September 30, 2000
Basic Loss per Share
Loss to common shareholders $ (4,700) 12,000,000 $ --
========== ========== ========
For the three months ended September 30, 2000
Basic Loss per Share
Loss to common shareholders $12,000,000 $ -- $ --
========== ========== ========
For the nine months ended September 30, 2000
Basic Loss per Share
Loss to common shareholders $ -- 12,000,000 $ --
========== ========== =======
</TABLE>
The effect of outstanding common stock equivalents is anti-dilutive for
September 30, 2000 and 1999 and is thus not considered.
Intangible Assets
Intangible assets are valued at cost and will be amortized on the income
forecast method. The initial valuation of the motion picture option agreements,
were derived from what Management believes to be arms length negotiation.
There have been no production costs as of December 31, 1999. It is anticipated
that when production costs are incurred the income forecast method will be used
to amortize the cost of production for films, manuscripts, recordings and
similar property.
F-5
<PAGE>
CERRITOS HOLDINGS INC.
(A Development Stage Company)
FOR THE NINE MONTHS ENDED SEPTEMBBER 30, 2000
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Intangible Assets (Continued)
The Company identifies and records impairment losses on intangible assets when
events and circumstances indicate that such assets might be impaired. The
Company considers factors such as significant changes in the regulatory or
business climate and projected future cash flows from the respective asset.
Impairment losses are measures as the amount by which the carrying amount of
intangible asset exceeds its fair value.
Reclassification
Certain reclassifications have been made in the 2000 and 1999 financial
statements to conform with the September 30, 2000 presentation.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all highly
liquid debt instruments purchased with a maturity of three months or less to be
cash equivalents to the extent the funds are not being held for investment
purposes.
Pervasiveness of Estimates
The Preparation of financial statements in conformity with generally accepted
accounting principles required 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.
NOTE 2 - INCOME TAXES
As of September 30, 2000, the Company had a net operating loss carry-forward for
income tax reporting purposes of approximately $3,000 that may be offset against
future taxable income through 2011. Current tax laws limit the amount of loss
available to be offset against future taxable income when a substantial change
in ownership occurs. Therefore, the amount available to offset future taxable
income may be limited. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or greater chance the
carry-forwards will expire unused. Accordingly, the potential tax benefits of
the loss carry-forwards are offset by a valuation allowance of the same amount.
F-6
<PAGE>
CERRITOS HOLDINGS INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(Continued)
NOTE 3 - DEVELOPMENT STAGE COMPANY
The Company has not begun principal operations and as is common with a
development stage company, the Company has had recurring losses during its
development stage.
NOTE 4 - COMMITMENTS
As of September 30, 2000, all activities of the Company have been conducted by
corporate officers from either their homes or business offices. Currently, there
are no outstanding debts owed by the Company for the use of these facilities and
there are not commitments for future use of the facilities.
NOTE 5 - STOCK SPLIT
On May 6, 1999, the Board of Directo4rs authorized 1,000 to 1 stock split,
changed the authorized number of shares to 100,000,000 shares and the par value
to $.001 for the Company's common stock. As a result of the split, 999,000
shares were issued.
On December 2, 1999, the Board of Directors authorized a 30 to 1 stock split. As
a result of this split the Company issued 11,6000,000 shares of common stock.
All references in the accompanying financial statements to the number of common
shares and per-share amounts for 2000 and 1999 have been restated to reflect the
stock split.
Item 2. Management's Discussion and Analysis or Plan of Operation.
The Company intends to position itself to evolve into a vertically integrated,
diversified global media entertainment companies that will allow for the pursuit
of opportunities currently available in the global marketplace.
The Company anticipates generating revenues from several sources, including,
production of new and existing feature films, as well as expanding into other
areas of the entertainment industry.
The Company was not in full operations during 1999 and 1998 and thus, the
revenues generated are not representative of those that will be generated once
the Company becomes fully operational. Revenues are not yet sufficient to
support the Company's operating expenses and are not expected to reach such
levels until the first or second quarter of 2001. Since the Company's formation,
it has funded its operations and capital expenditures primarily through private
placements of debt and equity securities. See "Recent Sales of Unregistered
Securities." The Company expects that it will be required to seek additional
financing in the future. There can be no assurance that such financing will be
available at all or available on terms acceptable to the Company.
F-7
<PAGE>
CERRITOS HOLDINGS INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(Continued)
Plan of Operation
The Company was organized for the purpose of creating a corporate vehicle to
seek, investigate and, if such investigation warrants, acquire an interest in
one or more business opportunities presented to it by persons or firms who or
which desire to seek perceived advantages of a publicly held corporation.
The Company may incur significant post-merger or acquisition registration costs
in the event management wishes to register a portion of their shares for
subsequent sale. The Company will also incur significant legal and accounting
costs in connection with the acquisition including the costs of preparing
post-effective amendments, Forms 8-K, agreements and related reports and
documents.
The Company will not have sufficient funds (unless it is able to raise funds in
a private placement) to undertake any significant development, marketing and
manufacturing of the products acquired. Accordingly, following the acquisition,
the Company will, in all likelihood, be required to either seek debt or equity
financing or obtain funding from third parties, in exchange for which the
Company may be required to give up a substantial portion of its interest in the
acquired product. There is no assurance that the Company will be able either to
obtain additional financing or interest third parties in providing funding for
the further development, marketing and manufacturing of any products acquired.
Results of Operations
From April 7, 1997 to July 9, 1999, the Company was an inactive corporation.
From July 9, 1999, the Company was a development stage company and had not begun
principal operations. Accordingly, comparisons with prior periods are not
meaningful.
Liquidity and Capital Resources
The Company has met its capital requirements through the sale of its Common
Stock. Since the Company's re-activation in July 9, 1999, the Company's
principal capital requirements have been the funding of the development of the
Company.
After the completion of its expansion plans, the Company expects future
development and expansion will be financed through cash flor from operations and
other forms of financing such as the sale of additional equity and debt
securities, capital leases and other credit facilities. There are no assurances
that such financing will be available on terms acceptable or favorable to the
Company.
Government Regulations
The Company is subject to all pertinent Federal, State, and Local laws governing
its business. The Company is subject to licensing and regulation by a number of
authorities in its Province (State) or municipality. These may include health,
safety, and fire regulations. The Company's operations are also subject to
Federal and Sate minimum wage laws governing such matters as working conditions
and overtime.
F-8
<PAGE>
Competition
The Company faces competition from a wide variety of entertainment distributors,
many of which have substantially greater financial, marketing and technological
resources than the Company.
Employees
As of October 23, 2000, the Company had no employees.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not engaged in any legal proceedings other than the ordinary
routine litigation incidental to its business operations, which the Company does
not believe, in the aggregate, will have a material adverse effect on the
Company, or its operations.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
The following exhibits are included as part of this report:
Exhibit
Number Exhibit
3.1 Articles of Incorporation (1)
3.2 Amended Articles of Incorporation (1)
3.3 Bylaws (1)
Financial Data Schedule
(1) Incorporated by reference to the Registrant's registration statement on
Form 10K-SB filed on May 8, 2000.
(b) The Company filed a report on Form 8-K on January 24, 2000, to report a
change in control of the company and resignation of officer.
F-9
<PAGE>
SIGNATURES
----------
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereto duly
authorized.
CETTITOS HOLDINGS INC.
(Registrant)
Date: October 23, 2000 By: /S/Joseph L. Searles, III
-------------------------
Joseph L. Searles, III
(Principal Executive Officer)
Date: October 23, 2000 By: /S/Joseph L. Searles, III
-------------------------
Joseph L. Searles, III
(Principal Financial and
Accounting Officer)
F-10
