UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For quarterly period ended September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______________ to ______________
Commission File Number 00030997
Hercules Development Group, Inc.
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
COLORADO 841508866
------------------------------ -------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2121 30th Street, Boulder, Colorado 803011118
---------------------------------------------
(Address of principal executive offices)
(888) 4493434; (303) 4493434
----------------------------
(Issuer's telephone number)
(Former name, former address and former fiscal year, if changed since last
report.)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant 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 issuer's classes of common
equity, as of the latest practicable date:
Common stock, $.0001 par value 3,130,000
------------------------------- ----------------------------
Class Number of shares outstanding
at October 25, 2000
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ]
1
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FORM 10QSB
3RD QUARTER
INDEX
Page
----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements *
Condensed balance sheet, September 30, 2000 (Unaudited)............. 3
Condensed statements of operations, three and nine months
ended September 30, 2000 and 1999 (Unaudited), and June 30,
1999 (inception) through September 30, 2000 (Unaudited).......... 4
Condensed statements of cash flows, nine months ended
September 30, 2000 and 1999 (Unaudited), and June 30,
1999 (inception) through September 30, 2000 (Unaudited).......... 5
Notes to condensed financial statements (Unaudited)................. 6
Item 2. Plan of Operation.......................................... 8
PART II OTHER INFORMATION............................................... 9
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8K
Signatures.......................................................... 10
* The accompanying financial statements are not covered by an Independent
Certified Public Accountant's report.
2
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Part I. Item 1. Financial information
HERCULES DEVELOPMENT GROUP, INC.
--------------------------------
(A Development Stage Company)
Condensed Balance Sheet
(Unaudited)
September 30, 2000
Assets
Cash..............................................................$ 63,835
--------
$ 63,835
========
Liabilities and Shareholder's Equity
Liabilities:
Accounts payable and accrued liabilities......................$ 3,992
--------
Total liabilities 3,992
--------
Shareholders' equity:
Preferred stock............................................... --
Common stock.................................................. 313
Additional paidin capital..................................... 72,768
Deficit accumulated during development stage.................. (13,238)
--------
Total shareholders' equity 59,843
--------
$ 63,835
========
See accompanying notes to condensed financial statements
3
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<TABLE>
<CAPTION>
HERCULES DEVELOPMENT GROUP, INC.
--------------------------------
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
June 30,
1999
(Inception)
Three Months Ended Nine Months Ended through
September 30, September 30, Sept. 30,
------------------ ------------------ ----------
2000 1999 2000 1999 2000
---- ---- ---- ---- ----
Revenue:
Property management fees,
<S> <C> <C> <C> <C> <C>
related party (Note B) .............................. $ 1,350 $ 250 $ 3,500 $ 250 $ 4,600
Property management fees,
other ............................................... 1,493 150 3,888 150 4,688
----------- ----------- ----------- ----------- -----------
Total revenue ... 2,843 400 7,388 400 9,288
----------- ----------- ----------- ----------- -----------
Operating expenses:
Professional fees ..................................... 3,143 2,000 11,752 2,000 15,347
Rent, related party (Note B) .......................... 750 750 2,250 750 3,750
Other ................................................. 1,665 9 2,269 9 2,794
----------- ----------- ----------- ----------- -----------
Total operating expenses ...... 5,558 2,759 16,271 2,759 21,891
----------- ----------- ----------- ----------- -----------
Operating loss ...... (2,715) (2,359) (8,883) (2,359) (12,603)
Interest expense (Note B) ............................... -- -- (535) -- (635)
----------- ----------- ----------- ----------- -----------
Loss before income taxes ..... (2,715) (2,359) (9,418) 2,359) (13,238)
Income taxes (Note C) ................................... -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net loss ..... $ (2,715) $ (2,359) $ (9,418) $ (2,359) $ (13,238)
=========== =========== =========== =========== ===========
Basic and diluted loss
per common share ..................................... $ * $ * $ * $ *
=========== =========== =========== ===========
Basic and diluted weighted
average common shares
outstanding........................................... 3,130,000 2,490,870 2,837,500 2,490,870
=========== =========== =========== ===========
* Less than $.01 per common share
See accompanying notes to condensed financial statements
4
</TABLE>
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<TABLE>
<CAPTION>
HERCULES DEVELOPMENT GROUP, INC.
--------------------------------
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
Nine Months Ended (Inception)
September 30, through
------------------- Sept. 30,
2000 1999 2000
-------- -------- --------
<S> <C> <C> <C>
Net cash used in operating activities ................... $ (4,865) $ (109) $ --
-------- -------- --------
Cash flows from financing activities:
Proceeds from sale of common stock .................... 75,000 -- --
Proceeds from notes payable (Note B) .................. -- 10,000 --
Repayment of notes payable (Note B) ................... (10,000) -- --
Payments for offering costs ........................... (1,407) (4,500) --
-------- -------- --------
Net cash used in financing activities ................... 63,593 5,500 --
-------- -------- --------
Net change in cash 58,728 5,391 --
Cash, beginning of period ............................... 5,107 -- --
-------- -------- --------
Cash, end of period $ 63,835 $ 5,391 $ --
======== ======== ========
Supplemental disclosure of cash flow information:
Cash paid for interest .............................. $ 635 $ -- $ 635
======== ======== ========
Cash paid for income taxes .......................... $ -- $ -- $ --
======== ======== ========
Noncash financing transaction:
Cancellation of shares previously issued
for legal services ................................ $ 120 $ -- $ 120
======== ======== ========
See accompanying notes to condensed financial statements
5
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HERCULES DEVELOPMENT GROUP, INC.
--------------------------------
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2000
Note A: Basis of presentation
---------------------
The financial statements presented herein have been prepared by the Company in
accordance with the accounting policies in its Form 10SB dated March 31, 2000
and filed July 12, 2000, and should be read in conjunction with the notes
thereto.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to provide a fair presentation of
operating results for the interim period presented have been made. The results
of operations for the periods presented are not necessarily indicative of the
results to be expected for the year.
Interim financial data presented herein are unaudited.
Note B: Related party transactions
--------------------------
The Company's president provided office space to the Company at no charge for
the three and nine months ended September 30, 2000. The office space was valued
at $250 per month and is included in the accompanying financial statements as
rent expense with a corresponding credit to additional paidin capital.
At September 30, 2000, the Company had entered into nine property management
agreements for properties owned by the Company's president. The Company earned
$1,350 and $3,500 in management fees through those nine agreements for the three
and nine months ended September 30, 2000, respectively.
During 1999, two officers each loaned the Company $5,000 in exchange for
promissory notes. The notes carried an interest rate of eight percent. On April
25, 2000, the Company repaid the notes and related accrued interest totaling
$635. The Company recognized $535 of interest expense on the notes during the
nine months ended September 30, 2000.
Note C: Income taxes
------------
The Company records its income taxes in accordance with Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes". The Company incurred
net operating losses during the nine months ended September 30, 2000 resulting
in a deferred tax asset, which was fully allowed for; therefore, the net benefit
and expense resulted in $0 income taxes.
6
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<TABLE>
<CAPTION>
HERCULES DEVELOPMENT GROUP, INC.
--------------------------------
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
September 30, 2000
Note D: Shareholders' equity
--------------------
On February 14, 2000, the Company's attorney agreed to cancel the 120,000 shares
of common stock issued for legal services in exchange for $120.
During April 2000, the Company conducted a private placement offering whereby it
sold 750,000 shares of its $.0001 par value common stock for $.10 per share
pursuant to an exemption from registration provided under Rule 504 of Regulation
D of the Securities Act of 1933, as amended. The Company received net proceeds
of $69,093 after deducting offering costs totaling $5,907. Following is a
schedule of changes in shareholders' equity, which details all of the equity
transactions for the nine months ended September 30, 2000.
Schedule of Changes in Shareholders' Equity
-------------------------------------------
Deficit
Accumulated
Common Stock Additional During
---------------------- Paid-in Development
Shares Par Value Capital Stage Total
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance, January 1, 2000 ................................ 2,500,000 $ 250 $ (2,892) $ (3,820) $ (6,462)
February 14, 2000, cancellation
of shares previously issued in
exchange for legal services ......................... (120,000) (12) (108) -- (120)
April 24, 2000, offering costs
incurred ............................................ -- -- (1,407) -- (1,407)
April 24, 2000, sale of common
stock pursuant to private
placement ($.10 per share) .......................... 750,000 75 74,925 -- 75,000
Office space contributed by the
Company's president (Note B) ........................ -- -- 2,250 -- 2,250
Net loss for the nine months ended
September 30, 2000 .................................. -- -- -- (9,418) (9,418)
---------- ---------- ---------- ---------- ----------
Balance, September 30, 2000 3,130,000 $ 313 $ 72,768 $ (13,238) $ 59,843
========== ========== ========== ========== ==========
7
</TABLE>
<PAGE>
Part I. Item 2. Plan of operation
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HERCULES DEVELOPMENT GROUP, INC.
--------------------------------
(A DEVELOPMENT STAGE COMPANY)
Plan of Operation
-----------------
The plan of the Company's management, for the next twelve months, is to use the
net proceeds from its common stock offering and fees earned through existing
management agreements for marketing, advertising and promotion. Through
additional marketing, management intends to increase the Company's market share
for its residential property management services. The Company also plans to
expand its services to areas in Colorado outside the Denver, Boulder and
Longmont areas presently being served. In addition, management intends to
explore opportunities for the Company in commercial real estate management
throughout Colorado. While management views the ultimate market for the
Company's real estate management services as inclusive of the entire United
States, marketing efforts are necessarily confined to Colorado because of the
Company's limited cash and other resources.
The Company's management believes it must acquire 40 property management
contracts to breakeven on its property management services. At October 25, 2000,
the Company was servicing 18 property management contracts. Management expects
to achieve profitable operations by December 31, 2001. The Company currently has
no plans to raise additional funds.
The Company has no plans to incur research and development costs, acquire
significant property or equipment, or to change the number of employees.
Results of Operations
---------------------
From January 1, 2000 through September 30, 2000, the Company increased its
number of property management agreements from 12 to 18. The management fees
derived from these agreements have generated minimal revenues and a net loss for
the Company through September 30, 2000.
Revenues totaled $7,388 for the nine months ended September 30, 2000 as compared
to $400 for the nine months ended September 30, 1999. Revenues totaled $2,843
for the three months ended September 30, 2000 as compared to $400 for the three
months ended September 30, 1999. The increases in revenues were related to the
increase in the number of property management agreements. September of 1999 was
the first month in which the Company began conducting property management
services. Operating expenses totaled $16,271 for the nine months ended September
30, 2000 as compared to $2,759 for the nine months ended September 30, 1999.
Operating expenses totaled $5,558 for the three months ended September 30, 2000
as compared to $2,759 for the three months ended September 30, 1999. The
increase in operating expenses was largely a result of the legal and accounting
fees incurred related to filing the Company's Form 10SB registration statement.
In addition, comparable figures for the nine months ended September 30, 1999
consist of a short period [June 30, 1999 (inception) through September 30,
1999].
8
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Part I. Item 2. Plan of operation, continued
------- ----------------------------
HERCULES DEVELOPMENT GROUP, INC.
--------------------------------
(A DEVELOPMENT STAGE COMPANY)
Financial Condition
-------------------
Net proceeds from the offering discussed in Part I, Item I, Note D, increased
the Company's cash balance to $63,835 at September 30, 2000 from $5,107 at
December 31, 1999. The offering proceeds were used to reduce the Company's
liabilities from $11,569 at December 31, 1999 to $3,992 at September 30, 2000.
The offering proceeds were also a major factor in increasing shareholders'
equity from a deficit of ($6,462) at December 31, 1999 to $59,843 at September
30, 2000. There is no assurance the Company's financial condition will continue
to improve.
PART II OTHER INFORMATION
--------------------------
Items 1 through 5 - No response required.
Item 6 - Exhibits and reports on Form 8K.
(a) Exhibits 27 - Financial Data Schedule.
There were no reports on Form 8K.
9
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SIGNATURES
The financial information furnished herein has not been audited by an
independent accountant; however, in the opinion of management, all adjustments
(only consisting of normal recurring accruals) necessary for a fair presentation
of the results of operations for the three and nine months ended September 30,
2000 have been included.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HERCULES DEVELOPMENT GROUP, INC.
(Registrant)
DATE: October 25, 2000 BY: ________________________________
----------------
Peter Garthwaite
President
