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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 March 31, 2000.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from to
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Commission file number: 000-29569
MARKET INTEGRITY INC.
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(Exact name of small business issuer as specified in its charter)
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<CAPTION>
Nevada 86-0972808
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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5505 N. Indian Trail, Tucson, Arizona 85750
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(Address of principal executive office) (Zip Code)
(520) 577-1516
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(Issuer's telephone number)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the 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 XX No
---- ----
The number of outstanding shares of the issuer's common stock, $0.001
par value, as of May 1, 2000 was 1,000,000.
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TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS...................................................................................3
Condensed Balance Sheets as of December 31, 1999
and March 31, 2000............................................................................5
Condensed Statements of Operations
for the Three Month Periods Ended
March 31, 2000 and 1999.......................................................................6
Condensed Statements of Cash Flows
for the Three Month Periods Ended
March 31, 2000 and 1999.......................................................................7
Notes to Unaudited Condensed Financial Statements......................................................9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS..................................................................10
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS.......................................................................................12
ITEM 2 CHANGES IN SECURITIES...................................................................................12
ITEM 5 OTHER INFORMATION.......................................................................................12
INDEX TO EXHIBITS..............................................................................................13
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PART I
ITEM 1. FINANCIAL STATEMENTS
As used herein, the term "Company" refers to Market Integrity Inc., a
Nevada corporation, and its subsidiaries and predecessors unless otherwise
indicated. Unaudited, condensed interim financial statements including a balance
sheet for the Company as of the quarter ended March 31, 2000 and statements of
operations, statements of shareholders equity and statements of cash flows for
the interim period up to the date of such balance sheet and the comparable
period of the preceding year.
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INDEPENDENT ACCOUNTANTS' REPORT
Market Integrity Inc.
(A Development Stage Company)
We have reviewed the accompanying balance sheets of Market Integrity
Inc. (a development stage company) as of March 31, 2000, and the related
statements of operations, and cash flows for the three month period then ended.
These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statement 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 accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
Respectfully submitted
/s/ Robinson, Hill & Co.
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Certified Public Accountants
Salt Lake City, Utah
May 11, 2000
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MARKET INTEGRITY INC.
(A Development Stage Company)
BALANCE SHEETS
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<CAPTION>
March 31, December 31,
2000 1999
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ASSETS: $ - $ -
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LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ - $ -
============= ==============
Total Liabilities
Stockholders' Equity:
Common Stock, Par value $.001
Authorized 100,000,000 shares,
Issued 1,000,000 Shares at March 31, 2000
and December 31, 1999 1,000 1,000
Paid-In Capital 1,230 350
Retained Deficit (1,200) (1,200)
Deficit Accumulated During the
Development Stage (1,030) (150)
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Total Stockholders' Equity - -
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Total Liabilities and
Stockholders' Equity $ - $ -
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See accompanying notes and accountants' report.
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MARKET INTEGRITY INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
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Cumulative
since October
20, 1999
For the three months ended inception
March 31, of
---------------------------------- development
2000 1999 stage
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Revenues: $ - $ - $ -
Expenses: 880 - 1,030
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General & Administrative
================ ================ ================
Net Loss $ (880) $ - $ (1,030)
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Basic & Diluted loss per share $ - $ -
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See accompanying notes and accountants' report.
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MARKET INTEGRITY INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
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<CAPTION>
Cumulative
Since October
20, 1999
For the three months ended Inception
March 31, of
---------------------------------- Development
1999 1998 Stage
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CASH FLOWS FROM OPERATING
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ACTIVITIES:
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Net Loss $ (880) $ - $ (1,030)
Increase (Decrease) in Accounts Payable - - (200)
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Net Cash Used in operating activities (880) - (1,230)
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CASH FLOWS FROM INVESTING
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ACTIVITIES:
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Net cash provided by investing activities - - -
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CASH FLOWS FROM FINANCING
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ACTIVITIES:
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Capital contributed by shareholder 880 - 1,230
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Net Cash Provided by
Financing Activities 880 - 1,230
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Net (Decrease) Increase in
Cash and Cash Equivalents - - -
Cash and Cash Equivalents
at Beginning of Period - - -
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Cash and Cash Equivalents
at End of Period $ - $ - $ -
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
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Cash paid during the year for:
Interest $ - $ - $ -
Franchise and income taxes $ - $ - $ 300
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: None
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See accompanying notes and accountants' report.
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MARKET INTEGRITY INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Market Integrity 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 March 31, 2000 and for the
three 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
July 24, 1997. The Company ceased all operating activities during the period
from July 24, 1997 to October 20, 1999 and was considered dormant. Since October
20, 1999, the Company is in the development stage, and has not commenced planned
principal operations.
Nature of Business
The Company has no products or services as of March 31, 2000. The
Company was organized as a vehicle to seek merger or acquisition candidates. The
Company intends to acquire interests in various business opportunities, which in
the opinion of management will provide a profit to the Company.
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.
Loss per Share
The reconciliations of the numerators and denominators of the basic
loss per share computations are as follows:
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MARKET INTEGRITY INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Continued)
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Income Shares
------ ------ Per-Share
(Numerator) (Denominator) Amount
For the three months ended March 31, 2000 ---------
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BASIC LOSS PER SHARE
Loss to common shareholders $ (880) 1,000,000 $ -
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For the three months ended March 31, 1999
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BASIC LOSS PER SHARE
Loss to common shareholders $ - 1,000,000 $ -
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The effect of outstanding stock equivalents are anti-dilutive for March
31, 2000 and 1999 and are thus not considered.
Reclassification
Certain reclassifications have been made in the 2000 and 1999 financial
statements to conform with the March 31, 2000 presentation.
NOTE 2 - INCOME TAXES
As of March 31, 2000, the Company has a net operating loss carryforward
for income tax reporting purposes of approximately $2,000 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 change 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.
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 March 31, 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 no commitments for future use of the facilities.
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MARKET INTEGRITY INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Continued)
NOTE 5 - STOCK SPLIT
On October 20, 1999 the Board of Directors 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. All references in the accompanying financial statements to
the number of common shares and per-share amounts for 1999 and 1998 have been
restated to reflect the stock split.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This Quarterly Report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, which are intended to be
covered by the safe harbors created thereby. Investors are cautioned that all
forward-looking statements involve risks and uncertainty, including without
limitation, the ability of the Company to continue its expansion strategy,
changes in costs of raw materials, labor, and employee benefits, as well as
general market conditions, competition and pricing. Although the Company
believes that the assumptions underlying the forward-looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore, there can be no assurance that the forward-looking statements
included in this Quarterly Report will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements including
herein, the inclusion of such information should not be regarded as are
presentation by the Company or any other person that the objectives and plans of
the Company will be achieved.
As used herein the term "Company" refers to Market Integrity Inc., a Nevada
corporation and its predecessors, unless the context indicates otherwise. The
Company is currently a shell company whose purpose is to acquire operations
through an acquisition or merger or to begin its own start-up business.
The Company is in the process of attempting to identify and acquire a favorable
business opportunity. The Company has reviewed and evaluated a number of
business ventures for possible acquisition or participation by the Company. The
Company has not entered into any agreement, nor does it have any commitment or
understanding to enter into or become engaged in a transaction as of the date of
this filing. The Company continues to investigate, review, and evaluate business
opportunities as they become available and will seek to acquire or become
engaged in business opportunities at such time as specific opportunities
warrant.
RESULTS OF OPERATIONS
The Company had no sales or sales revenues for the three months ended March 31,
2000 or 1999 because it is a shell company that has not had any business
operations for the past three years.
The Company had no costs of sales revenues for the three months ended March 31,
2000 or 1999 because it is a shell company that has not had any business
operations for the past three years. The Company had no general and
administrative expenses for the three months period ended December 31, 2000 or
for the same period in 1999.
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The Company recorded net loss of $880 for the three months ended March 31, 2000
compared to $0 loss for the same period in 1999.
CAPITAL RESOURCES AND LIQUIDITY
At March 31, 2000, the Company had total current assets of $0 and total assets
of $0 as compared to $0 current assets and $0 total assets at December 31, 1999.
The Company had a net working capital deficit of $0 at March 31, 2000 and
December 31, 1999.
Net stockholders' deficit in the Company was $0 as of March 31, 2000 and
December 31, 1999.
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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/Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None/Not Applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
(a) Exhibits. Exhibits required to be attached by Item 601 of Regulation
S-B are listed in the Index to Exhibits on page 12 of this Form 10-QSB,
and are incorporated herein by reference.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
period covered by this Form 10-QSB.
SIGNATURES
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, this 11th day of May, 2000.
Market Integrity Inc.
/s/ Daniel L. Hodges
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Daniel L. Hodges May 11, 2000
President/CFO and Director
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EXHIBIT INDEX
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Exhibit No. Page No. Description
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27 12 Financial Data Schedule "CE"
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