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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter Ended March 31, 2000 Commission File No. 0-28073
GALLAGHER RESEARCH CORPORATION
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(Exact name of Registrant as specified in its charter)
NEVADA 84-0920934
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(State or other jurisdiction of (I.R.S. Empl. Ident. No.)
incorporation or organization)
12373 E. Cornell Avenue
Aurora, Colorado 80014
- --------------------------------------- --------
(Address of Principal Executive Offices) (Zip Code)
(303) 337-3384
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(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 such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
at least the past 90 days.
Yes X No
----- -----
The number of shares outstanding of each of the Registrant's classes of common
equity, as of March 31, 2000 are as follows:
Class of Securities Shares Outstanding
- ----------------------------- ------------------
Common Stock, $.001 par value 4,768,000
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<PAGE>
TABLE OF CONTENTS
Page of
Report
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheets:
As of March 31, 2000 (Unaudited) and December 31, 2000 ..... 3
Statements of Operations (Unaudited):
For the three months ended March 31, 2000 and 1999.......... 4
Statements of Cash Flows (Unaudited):
For the three months ended March 31, 2000 and 1999.......... 5
Notes to Financial Statements (Unaudited) .................. 6
Item 2. Management's Discussion and Analysis or Plan of Operation .. 7
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ........................... 11
Signatures.................................................. 11
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GALLAGHER RESEARCH CORPORATION
Balance Sheets
ASSETS
March 31, December 31,
2000 1999
--------- ------------
(Unaudited)
Total Assets $ -- $ --
========= =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 1,345 $ --
Due to officers/stockholders 4,910 4,910
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6,255 4,910
--------- ---------
Stockholders' deficit:
Preferred stock; $.001 par value; authorized -
5,000,000 shares; issued - none -- --
Common stock; $.001 par value; authorized -
50,000,000 shares; issued and outstanding -
4,768,000 shares 477 477
Additional paid-in capital 835 835
Retained earnings (deficit) (7,567) (6,222)
--------- ---------
Total stockholders' deficit (6,255) (4,910)
--------- ---------
$ -- $ --
========= =========
The accompanying notes are an integral part of
the financial statements.
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GALLAGHER RESEARCH CORPORATION
Statements of Operations (Unaudited)
Three Months Ended
March 31,
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2000 1999
----------- -----------
Costs and expenses:
General and administrative, related party $ 1,345 $ 245
----------- -----------
Net loss $ (1,345) $ (245)
=========== ===========
Loss per common share $ (.000) $ (.000)
=========== ===========
Weighted average shares outstanding 4,768,000 4,768,000
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The accompanying notes are an integral part of
the financial statements.
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GALLAGHER RESEARCH CORPORATION
Statements of Cash Flows (Unaudited)
Three Months Ended
March 31,
--------------------
2000 1999
-------- -------
Cash flows from operating activities:
Net loss $(1,345) $ (245)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Changes in assets and liabilities:
Increase (decrease) in accounts payable 1,345 --
Increase (decrease) in amounts due
to officers/stockholders -- --
------- -------
Net cash used in operating activities -- (245)
------- -------
Cash flows from investing activities:
Organization costs -- --
------- -------
Net cash used in investing activities -- --
------- -------
Cash flows from financing activities:
Proceeds from sale of common stock -- --
------- -------
Net cash provided by financing activities -- --
------- -------
Net increase (decrease) in cash -- (245)
Cash at beginning of year -- 245
------- -------
Cash at end of period $ -- $ --
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The accompanying ntoes are an integral part
of the financial statements.
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GALLAGHER RESEARCH CORPORATION
Notes to Financial Statements (Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB and do not include all of the information
and disclosures required by generally accepted accounting principles for
complete financial statements. All adjustments which are, in the opinion of
management, necessary for a fair presentation of the results of operations for
the interim periods have been made and are of recurring nature unless otherwise
disclosed herein. The results of operations for such interim periods are not
necessarily indicative of operations for a full year.
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FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements and information
relating to Gallagher Research Corporation ("GRC" or "Company") that are based
on the beliefs of its management as well as assumptions made by and information
currently available to its management. When used in this report, the words
"anticipate", "believe", "estimate", "expect", "intend", "plan" and similar
expressions, as they relate to GRC or its management, are intended to identify
forward-looking statements. These statements reflect management's current view
of GRC concerning future events and are subject to certain risks, uncertainties
and assumptions, including among many others: a general economic downturn; a
downturn in the securities markets; a general lack of interest for any reason in
going public by means of transactions involving public blank check companies;
federal or state laws or regulations having an adverse effect on blank check
companies, Securities and Exchange Commission regulations which affect trading
in the securities of "penny stocks," and other risks and uncertainties. Should
any of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described in this report as anticipated, estimated or expected. Readers should
realize that GRC has only very limited assets, and that for GRC to succeed
requires that it either originate a successful business (for which it lacks the
funds) or acquire a successful business. GRC's realization of its business aims
as stated herein will depend in the near future principally on the successful
completion of its acquisition of a business, as discussed below.
Item 2. Management's Discussion and Analysis or Plan of Operation.
BACKGROUND. GRC was incorporated on April 2, 1999, for the purpose of
entering into a merger with and reincorporating its predecessor, Gallagher
Research and Development Company ("Gallagher Colorado"), a Colorado corporation
organized on July 27, 1983 under the name Gallagher Research and Development
Company, Inc. On December 10, 1997, Gallagher Colorado changed its name to
Gallagher Research and Development Company, dropping the "Inc." from the name.
Effective April 6, 1999 Gallagher Colorado was merged with and into GRC in a
statutory merger (the "Reincorporation Merger"). At the effective time of the
Reincorporation Merger, each share of Gallagher Colorado's common stock issued
and outstanding immediately prior to the Merger was as result of the Merger
changed into one (1) share of GRC's common stock. Because the Reincorporation
Merger was consummated for the sole purpose of changing Gallagher Colorado's
domicile from Colorado to Nevada, management believes that it did not constitute
a "sale" within the meaning of Section 5 of the Securities Act of 1933, as
amended. The Reincorporation Merger was effected due to management's belief that
Nevada law is more advantageous to a corporation than Colorado law. There was no
change of control or ownership or control in relation to the Reincorporation
Merger.
On January 21, 1998, MNS Eagle Equity Group V, Inc. ("MNS"), a Nevada
corporation, was merged with and into Gallagher Colorado (the "1998 Merger"),
and the 682,500 issued and outstanding common shares of MNS were on the
effective date of the 1998 Merger converted into 273,000 fully paid and
nonassessable shares of Gallagher Colorado's $.0001 par value common stock.
On June 8, 1998, Gallagher Colorado transferred its assets to GRDC, Inc., a
Colorado corporation wholly owned by Gallagher Colorado, pursuant to an
Assignment and Indemnity Agreement of the same date. Under that agreement, GRDC
assumed all liabilities of Gallagher Colorado and also agreed to indemnify
Gallagher Colorado from and against all such liabilities. Pursuant to an October
9, 1998 Stock Exchange Agreement among Gallagher Colorado, GRDC, Inc. and
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certain shareholders of Gallagher Colorado (the "Shareholders"), the
Shareholders transferred to Gallagher Colorado a total of 1,175,000 of the
1,200,000 shares of Gallagher Colorado owned by them in exchange for all the
issued and outstanding shares of GRDC. On October 28, 1998 Gallagher Colorado's
shareholders approved the consummation of the Stock Exchange Agreement at a
special shareholders' meeting.
Gallagher Colorado prior to the October 1998 Stock Exchange Agreement, was
an independent oil and gas service firm that provided geological, geophysical
and geochemical consulting services. Gallagher Colorado has performed consulting
projects in every major producing area within the United States and most of
Canada. Gallagher Colorado has also completed projects in Australia and
Pakistan. The principal reason Gallagher Colorado entered into a merger with MNS
was to allow Gallagher Colorado to become publicly held and thus have the
ability to raise capital and create liquidity in its common stock. Due to the
volatility of the stock markets, Gallagher Colorado was not able to raise
capital as a public company. Because of its long operating history prior to the
Reincorporation Merger, GRC is out of the development stage.
On October 30, 1998, Gallagher Colorado determined upon a new business plan
to either acquire a small to medium-size business (or its assets) actively
engaged in a business generating revenues or having immediate prospects of
generating revenues, or to originate a business.
GRC owns no real estate and has had no full time employees since October
30, 1998. GRC has not had any operations since October 30, 1998 and will not
have any operations of its own unless and until it engages in one or more of the
activities described below. GRC is a "blank check" company which intends to
enter into a business combination with one or more as yet unidentified privately
held businesses.
Effective April 16, 1999, GRC forward-split its common stock outstanding
sixteen to one (16:1). There are now 4,768,000 common shares of GRC outstanding.
PLAN of OPERATION
GRC is a blank check company whose plan of operation over the next twelve
months is to seek and, if possible, acquire an operating business or valuable
assets by entering into a business combination. GRC will not be restricted in
its search for business combination candidates to any particular geographical
area, industry or industry segment, and may enter into a combination with a
private business engaged in any line of business, including service, finance,
mining, manufacturing, real estate, oil and gas, distribution, transportation,
medical, communications, high technology, biotechnology or any other.
Management's discretion is, as a practical matter, unlimited in the selection of
a combination candidate. Management of GRC will seek combination candidates in
the United States and other countries, as available time and resources permit,
through existing associations and by word of mouth. This plan of operation has
been adopted in order to attempt to create value for GRC's shareholders. For
further information on GRC's plan of operation and business, please consult
GRC's 10KSB available on the EDGAR system of the U.S. Securities and Exchange
Commission.
GRC does not intend to do any product research or development. GRC does not
expect to buy or sell any real estate, plant or equipment except as such a
purchase might occur by way of a business combination that is structured as an
asset purchase, and no such asset purchase currently is anticipated. Similarly,
GRC does not expect to add additional employees or any full-time employees
except as a result of completing a business combination, and any such employees
likely will be persons already then employed by the company acquired.
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COMPETITION. GRC will be in direct competition with many entities in its
efforts to locate suitable business opportunities. Included in the competition
will be business development companies, venture capital partnerships and
corporations, small business investment companies, venture capital affiliates of
industrial and financial companies, broker-dealers and investment bankers,
management and management consultant firms and private individual investors.
Most of these entities will possess greater financial resources and will be able
to assume greater risks than those which GRC, with its limited capital, could
consider. Many of these competing entities will also possess significantly
greater experience and contacts than GRC's Management. Moreover, GRC also will
be competing with numerous other blank check companies for such opportunities.
EMPLOYEES. GRC has no full-time employees, and its only employees currently
are its officers. It is not expected that GRC will have additional full-time or
other employees except as a result of completing a combination.
RESULTS OF OPERATIONS
FIRST QUARTER 2000 - During the first fiscal quarter ended March 31, 2000,
GRC incurred a net loss of $1,345. Expenses in the quarter related primarily to
miscellaneous filing fees and accounting costs. The Company paid no rent or
salaries and had no operations.
FIRST QUARTER 1999 - During the first fiscal quarter ended March 31, 1999,
GRC incurred a net loss of $245. Expenses in the quarter related primarily to
miscellaneous filing fees. The Company paid no rent or salaries and had no
operations during the quarter.
LIQUIDITY and CAPITAL RESOURCES
GRC had $-0- cash on hand at the end of the quarter and had no other assets
to meet ongoing expenses or debts that may accumulate. Since inception, GRC has
accumulated a deficit (net loss) of $7,567.
GRC has no commitment for any capital expenditure and foresees none.
However, GRC will incur routine fees and expenses incident to its reporting
duties as a public company, and it will incur expenses in finding and
investigating possible acquisitions and other fees and expenses in the event it
makes an acquisition or attempts but is unable to complete an acquisition. GRC's
cash requirements for the next twelve months are relatively modest, principally
accounting expenses and other expenses relating to making filings required under
the Securities Exchange Act of 1934 (the "Exchange Act"), which should not
exceed $5,000 in the fiscal year ending December 31, 2000. Any travel, lodging
or other expenses which may arise related to finding, investigating and
attempting to complete a combination with one or more potential acquisitions
could also amount to thousands of dollars.
GRC's current management and its counsel have informally agreed to continue
rendering services to GRC and to not demand payment of sums owed unless and
until GRC completes an acquisition. The terms of any such payment will have to
be negotiated with the principals of any business acquired. The existence and
amounts of GRC debt may make it more difficult to complete, or prevent
completion of, a desirable acquisition. In addition, offices are provided to GRC
without charge.
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GRC will only be able to pay its future debts and meet operating
expenses by raising additional funds, acquiring a profitable company or
otherwise generating positive cash flow. As a practical matter, GRC is unlikely
to generate positive cash flow by any means other than acquiring a company with
such cash flow. GRC believes that management members or shareholders will loan
funds to GRC as needed for operations prior to completion of an acquisition.
Management and the shareholders are not obligated to provide funds to GRC,
however, and it is not certain they will always want or be financially able to
do so. GRC shareholders and management members who advance money to GRC to cover
operating expenses will expect to be reimbursed, either by GRC or by the company
acquired, prior to or at the time of completing a combination. GRC has no
intention of borrowing money to reimburse or pay salaries to any GRC officer,
director or shareholder or their affiliates. There currently are no plans to
sell additional securities of GRC to raise capital, although sales of securities
may be necessary to obtain needed funds. GRC's current management and its
counsel have agreed to continue their services to GRC and to accrue sums owed
them for services and expenses and expect payment reimbursement only.
Should existing management or shareholders refuse to advance needed funds,
however, GRC would be forced to turn to outside parties to either loan money to
GRC or buy GRC securities. There is no assurance whatever that GRC will be able
at need to raise necessary funds from outside sources. Such a lack of funds
could result in severe consequences to GRC, including among others:
(1) failure to make timely filings with the SEC as required by the
Exchange Act, which also probably would result in suspension of
trading or quotation in GRC's stock and could result in fines and
penalties to GRC under the Exchange Act;
(2) curtailing or eliminating GRC's ability to locate and perform suitable
investigations of potential acquisitions; or
(3) inability to complete a desirable acquisition due to lack of funds to
pay legal and accounting fees and acquisition-related expenses.
GRC hopes to require potential candidate companies to deposit funds with
GRC that it can use to defray professional fees and travel, lodging and other
due diligence expenses incurred by GRC's management related to finding and
investigating a candidate company and negotiating and consummating a business
combination. There is no assurance that any potential candidate will agree to
make such a deposit.
YEAR 2000 ISSUES
GRC has not suffered any Y2K related problems and does not anticipate that
it will suffer any losses as a result of Y2K problems. However, if general
economic problems resulting from Y2K issues were to be severe and prolonged,
demand for blank check companies such as GRC could be reduced or eliminated for
an unknown period of time. Because GRC regularly backs up its records and
documents maintained on computer, any computer failure should not directly cause
GRC more than a modest inconvenience at worst.
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Item 6. Exhibits and Reports on Form 8-K.
(a) EXHIBITS. Exhibit 27 - Financial Data Schedule.
(b) REPORTS ON FORM 8-K. None
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report on Form 10-QSB to be signed on its behalf by the undersigned,
thereunto duly authorized.
DATED: May 8, 2000
GALLAGHER RESEARCH CORPORATION
/s/ Stephen M. Siedow
By..........................................
Stephen M. Siedow, Chief Executive
Officer and Chief Financial Officer
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<FISCAL-YEAR-END> DEC-31-2000 DEC-31-1999
<PERIOD-END> MAR-31-2000 MAR-31-1999
<CASH> 0 0
<SECURITIES> 0 0
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<BONDS> 0 0
0 0
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<COMMON> 477 30
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<SALES> 0 0
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<TOTAL-COSTS> 1,345 245
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<INCOME-PRETAX> (1,345) (245)
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<INCOME-CONTINUING> (1,345) (245)
<DISCONTINUED> 0 0
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