U.S. 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 PURSUANT TO SECTION 13 OR 15(d)OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
FROM _______________ TO _______________
Commission file number 000-29873
PROLOGUE
(Exact name of small business issuer as specified in charter)
UTAH
87-0412110
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3340 E. Del Verde Avenue,
Salt Lake City, Utah 84109
(Address of principal executive offices) (Zip Code)
(801) 484-0930
(Issuer's telephone number)
Not Applicable
(Former name, former address, and former fiscal year, if changed
since last report)
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 No
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 of the issuer's
classes of common equity, as of the latest practicable date
50,000,000 shares of Common Stock
Transitional Small Business Disclosure Format
(Check one):
Yes No
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FORWARD LOOKING STATEMENTS
This report contains forward-looking statements as defined
in the Private Securities Litigation Reform Act of 1995. Such
statements reflect the Company's views with respect to future
events based upon information available to it at this time.
These forward-looking statements are subject to certain
uncertainties and other factors that could cause actual results
to differ materially from such statements. These uncertainties
and other factors include, but are not limited to: the ability of
the Company to locate a business opportunity for acquisition or
participation by the Company; the terms of the Company's
acquisition of or participation in a business opportunity; and
the operating and financial performance of any business
opportunity following its acquisition or participation by the
Company. The words "anticipates," "believes," "estimates,"
"expects," "plans," "projects," "targets" and similar expressions
identify forward looking statements. Readers are cautioned not
to place undue reliance on these forward looking statements,
which speak only as of the date the statement was made. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new
information, changes in assumptions, future events or otherwise.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
PROLOGUE
[A Development Stage Company]
UNAUDITED CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
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PROLOGUE
[A Development Stage Company]
CONTENTS
PAGE
Unaudited Condensed Balance Sheets,
September 30, 2000 and December 31, 1999 2
Unaudited Condensed Statements of
Operations, for the three and nine months
ended September 30, 2000 and 1999 and from
the re-entering of the development stage on
May 1, 1991 through September 30, 2000 3
Unaudited Condensed Statements of Cash Flows,
for the nine months ended September 30, 2000
and 1999 and from the re-entering of the
development stage on May 1, 1991 through
September 30, 2000 4
Notes to Unaudited Condensed Financial
Statements 5 - 7
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PROLOGUE
[A Development Stage Company]
CONDENSED BALANCE SHEETS
[Unaudited]
ASSETS
September 30, December 31,
2000 1999
___________ ___________
CURRENT ASSETS:
Cash in bank $ - $ 20
___________ ___________
Total Current Assets - 20
___________ ___________
$ - $ 20
___________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 1,140 $ -
___________ ___________
Total Current Liabilities 1,140 -
___________ ___________
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $.001 par value,
50,000,000 shares authorized,
50,000,000 shares issued and
outstanding 50,000 50,000
Capital in excess of par value 4,514 1,689
Retained deficit (47,579) (47,579)
Deficit accumulated during the
development stage (8,075) (4,090)
___________ ___________
Total Stockholders' Equity
(Deficit) (1,140) (20)
___________ ___________
$ - $ 20
___________ ___________
Note: The Balance Sheet as of 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
condensed financial statements.
2
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PROLOGUE
[A Development Stage Company]
CONDENSED STATEMENTS OF OPERATIONS
[Unaudited]
From the
Re-entering of
For the Three For the Nine Development
Months Ended Months Ended Stage on May 1,
September 30, September 30, 1991, Through
______________ ______________ September 30,
2000 1999 2000 1999 2000
______ ______ ______ ______ __________
REVENUE $ - $ - $ - $ - $ -
COST OF SALES - - - - -
______ ______ ______ ______ __________
GROSS PROFIT - - - - -
EXPENSES:
General and
Administrative 1,140 - 3,985 - 8,075
______ ______ ______ ______ __________
LOSS FROM OPERATIONS
BEFORE INCOME
TAXES (1,140) - (3,985) - (8,075)
CURRENT TAX EXPENSE - - - - -
DEFERRED TAX EXPENSE - - - - -
______ ______ ______ ______ __________
NET LOSS $(1,140) $ - $(3,985) $ - $ (8,075)
______ ______ ______ ______ __________
LOSS PER COMMON
SHARE $ (.00) $ (.00) $ (.00) $ (.00) $ (.00)
______ ______ ______ ______ __________
The accompanying notes are an integral part of these unaudited
condensed financial statements.
3
<PAGE>
PROLOGUE
[A Development Stage Company]
CONDENSED STATEMENTS OF CASH FLOWS
[Unaudited]
From the
Re-entering of
For the Nine Development
Months Ended Stage on May 1,
September 30, 1991, Through
__________________ September 30,
2000 1999 2000
________ ________ __________
Cash Flows From Operating
Activities:
Net loss $(3,985) $ - $ (8,075)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Non-cash expenses 2,825 - 5,800
Changes is assets and
liabilities:
Increase in accounts payable 1,140 - 1,140
________ ________ __________
Net Cash Provided (Used) by
Operating Activities (20) - (1,135)
________ ________ __________
Cash Flows From Investing:
Purchase of Investment - - -
________ ________ __________
Net Cash Flows (Used) by
Investing Activities - - -
________ ________ __________
Cash Flows From Financing Activities:
Proceeds from common stock issuance - - 1,035
Contribution capital - - 100
________ ________ __________
Net Cash Provided by
Financing Activities - - 1,135
________ ________ __________
Net Increase (Decrease) in Cash (20) - -
Cash at Beginning of Period 20 - -
________ ________ __________
Cash at End of Period $ - $ - $ -
________ ________ __________
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing
Activities:
For the periods ended September 30, 2000
An officer/shareholder of the Company paid expenses totaling
$2,825 on behalf of the Company, which has been recorded as a
contribution to capital.
For the periods ended September 30, 1999
None.
The accompanying notes are an integral part of these financial
statements.
4
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PROLOGUE
[A Development Stage Company]
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - The Company was organized under the laws of the
State of Utah on October 14, 1982 and was previously engaged in
the sales and marketing business. The Company currently has no
ongoing operations and is considered a development stage company
as defined in SFAS No. 7. The company is currently seeking
business opportunities or potential business acquisitions.
Loss Per Share - The computation of loss per share of common
stock is based on the weighted average number of shares
outstanding during the periods presented, in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings
Per Share" [See Note 6].
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
September 30, 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
September 30, 2000 are not necessarily indicative of the
operating results for the full year.
Cash and Cash Equivalents - For purposes of the statement of cash
flows, the Company considers all highly liquid debt investments
purchased with a maturity of three months or less to be cash
equivalents.
Recently Enacted Accounting Standards - Statement of Financial
Accounting Standards (SFAS) No. 136, "Transfers of Assets to a
not for profit organization or charitable trust that raises or
holds contributions for others", 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.),", SFAS No. 138 "Accounting for Certain
Derivative Instruments and Certain Hedging Activities - and
Amendment of SFAS No. 133", SFAS No. 139, "Recission of SFAS No.
53 and Amendment to SFAS No 63, 89 and 21", and SFAS No. 140,
"Accounting to Transfer and Servicing of Financial Assets and
Extinguishment of Liabilities", were recently issued SFAS No.
136, 137, 138, 139 and 140 have no current applicability to the
Company or their effect on the financial statements would not
have been significant.
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.
5
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PROLOGUE
[A Development Stage Company]
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 2 -DISCONTINUED OPERATIONS
Discontinued Operations - The accompanying financial statements
reflect the Company re-entering into a new development stage on
May 1, 1991 as a result of management's decision to discontinue
the former operations of the Company.
NOTE 3 - CAPITAL STOCK
During 1983 Prologue filed a Registration Statement with the
Utah Securities Commission and completed a public sale of
5,000,000 shares of stock. In 1987 a wholly-owned subsidiary
named Bio-Clean was formed. On November 23, 1987 600,000
shares of Prologue stock was issued to Kapitol Klean-All of
Phoenix, AZ as partial consideration for some equipment and
solvent. Because of latent defects in the equipment all
activities were terminated and Bio-Clean was dissolved on May
1, 1991. On September 14, 1988, 1,500,000 shares of Prologue
stock was issued to an officer of Prologue in lieu of wages
for services rendered in behalf of the Company.
On December 19, 1994, 41,400,000 shares of stock were issued
to an individual in exchange for payment of the current and
back taxes due the state of Utah along with other
reinstatement fees. As a result of the stock issuance control
of the corporation changed hands and the individual became an
officer of the Company. This agreement also includes the
payment of all necessary accounting and attorney fees and the
production of an information package on Prologue to be used in
promoting the Company's future business activities.
NOTE 4 - INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes". FASB 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 September 30, 2000 the Company has
available unused operating loss carryforwards of approximately
$8,000, which may be applied against future taxable income and
which expire in various years through 2020.
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 $2,700 as of September 30, 2000 with an
offsetting valuation allowance of the same amount resulting in a
change in the valuation allowance of approximately $350 during
the nine months ended September 30, 2000.
6
<PAGE>
PROLOGUE
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 5 - RELATED PARTY TRANSACTIONS
Management Compensation - During the periods ended September 30,
2000 and 1999 the Company did not pay any compensation to any
officer/directors of the Company.
Office Space - The Company has not had a need to rent office
space. An officer/shareholder of the Company is allowing the
Company to use his home as a mailing address, as needed, at no
expense to the Company.
Expenses - An officer has paid $2,825 in expenses on behalf of
the corporation. These payments are shown as contributions to
capital in excess of par value.
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per
share and the effect on income and the weighted average number of
shares of dilutive potential common stock for the three and nine
months ended September 30, 2000 and from the re-entering of
development stage on May 1, 1991 through September 30, 2000:
From the
Re-entering of
For the Three For the Nine Development
Months Ended Months Ended Stage on May 1,
September 30, September 30, 1991, Through
____________________ ____________________ September 30,
2000 1999 2000 1999 2000
_________ __________ __________ _________ __________
Loss from
continuing
operations
available to
common stock
holders
(numerator) $ (1,140) $ - $ (3,985) $ - $ (8,075)
_________ __________ __________ _________ __________
Weighted average
number of common
shares outstanding
used in earnings
per share during
the period
(denominator) 50,000,000 50,000,000 50,000,000 50,000,000 34,017,674
_________ __________ __________ __________ __________
Dilutive earnings per share was not presented, as the Company had
no common equivalent shares for all periods presented that would
effect the computation of diluted earnings (loss) per share.
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,
has insufficient working capital, and has no on-going operations.
These factors raise substantial doubt about the ability of the
Company to continue as a going concern. In this regard,
management is seeking potential business opportunities and 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 additional capital or achieving profitable
operations. The financial statements do not include any
adjustments that might result from the outcome of these
uncertainties.
7
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
LIQUIDITY AND CAPITAL RESOURCES FOR THE NINE MONTH PERIOD
ENDED SEPTEMBER 30, 2000 (Unaudited)
The Company remains in the development stage and has no
revenues. Current expenses are being paid by the president,
Allen Avery, including the costs of becoming a reporting
company under the Securities Exchange Act of 1934.
Management is hopeful that becoming a reporting company will
increase the quality and number of prospective business
ventures that may be available to the Company. For the nine
month period ended September 30, 2000, general and administrative
expenses were $3,985, a significant increase over calendar
year 1999 general and administrative expenses of $115.00.
The increase was attributable to the SEC filing expenses.
Such losses will continue unless a business opportunity
with revenues and profits can be acquired by the Company.
There is no assurance that revenues or profitability
will ever be achieved by the Company.
The Company will carry out its plan of business as discussed
above. The Company cannot predict to what extent its lack
of liquidity and capital resources will impair the
consummation of a business combination or whether it will
incur further operating losses through any business entity
which the Company may eventually acquire.
RESULT OF OPERATIONS
For the nine months ended September 30, 2000 and 1999 (Unaudited).
Net losses for the periods ended September 30, 2000 and 1999
have been $0.00 per share each quarter. For the current fiscal
year, the President has agreed to pay the expenses associated
with the registration under the Securities Exchange Act of
1934 and if necessary pay for the 10-QSB and 10-KSB filings
for the calendar year 2000. The Company anticipates that
until a business combination is completed with an acquisition
candidate, it will not generate revenues and may continue
to operate at a loss after completing a business combination,
depending upon the performance of the acquired business.
NEED FOR ADDITIONAL FINANCING
Management believes that the Company has sufficient cash to
meet the anticipated needs of the Company's operations
through at least the first calendar quarter of 2001.
However, there can be no assurances to that effect, as the
Company has no revenues and the Company's need for capital
may change dramatically if it acquires an interest in a
business opportunity during that period. In the event the
Company requires additional funds, the Company will have to
seek loans or equity placements to cover such cash needs.
There is no assurance additional capital will be available
to the Company on acceptable terms. In the event the
Company is able to complete a business combination during
this period, lack of its existing capital may be a
sufficient impediment to prevent it from accomplishing the
goal of completing a business combination. There is no
assurance, however, that without funds it will ultimately
allow registrant to complete a business combination. Once a
business combination is completed, the Company's needs for
additional financing are likely to increase substantially.
Other than previously stated, no commitments to provide
additional funds have been made by management or other
stockholders. Accordingly, there can be no assurance that
any additional funds will be available to the Company to
allow it to cover its expenses as they may be incurred.
Irrespective of whether the Company's cash assets prove to
be adequate to meet the Company's operational needs, the
Company might seek to compensate providers of services by
issuance's of stock in lieu of cash.
PART II - OTHER INFORMATION
See Form 10-SB, as amended.
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
Not Applicable.
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
(a) Exhibits
EX 27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
for which this report is filed.
<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, thereunto duly authorized.
Prologue
Date: November 14, 2000 By /s/ Allen L. Avery
Allen L. Avery, President
11
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