UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[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: _____________
MVD, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 94-3357128
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
660 Dover Street, Suite A16, Boca Raton, Florida, 33487
(Address of principal executive offices)
(561) 443-4654
(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. As of November 13, 2000, there were
2,500,000 shares of the issuer's $.001 par value common stock issued and
outstanding.
1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MVD, INC.
(A Development Stage Company)
REVIEW REPORT AND FINANCIAL STATEMENTS
FOR THE PERIOD MARCH 14, 2000 (INCEPTION) THROUGH
SEPTEMBER 30, 2000
<PAGE>
MVD, INC.
(a development stage company)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, 2000 June 30, 2000
(Unaudited) (Audited)
----------------- ---------------
<S> <C> <C> <C>
Cash and cash equivalents (Note 1) $ 880 $ 920
Prepaid Expenses 5,000 --
-------- --------
Total assets $ 5,880 $ 920
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES
Accrued expenses $ 2,100 $ 1,265
Advance from stockholder (Note 2) 10,000 10,000
-------- --------
12,100 11,265
-------- --------
COMMITMENTS AND CONTINGENCIES (Note 3)
STOCKHOLDERS' DEFICIT(Note 4)
Preferred stock
$0.001 par value
5,000,000 shares authorized
No shares issued and outstanding -- --
Common stock
$0.001 par value
50,000,000 shares authorized
2,500,000 shares issued and outstanding 2,500 2,500
Additional paid-in capital 13,794 770
Deficit accumulated during development stage (22,514) (13,615)
-------- --------
Total stockholders' deficit (6,220) (10,345)
-------- --------
Total liabilities and stockholders' deficit $ 5,880 $ 920
======== ========
</TABLE>
See Accountants' Review Report and the
accompanying notes to these financial statements
2
<PAGE>
MVD, INC.
(a development stage company)
STATEMENTS OF OPERATIONS
March 14, 2000 March 14, 2000
(inception) (inception)
through through
September 30, 2000 June 30, 2000
(Unaudited) (Audited)
------------------ -------------
REVENUES $ 0 $ 0
-------- --------
EXPENSES
Legal and organization costs (Note 1) 18,429 10,494
Consulting fees (Note 5) 1,500 1,500
Rent (Notes 3 and 5) 1,694 770
Licenses and registrations 689 689
Office expense 202 162
-------- --------
Total expenses 22,514 13,615
-------- --------
LOSS BEFORE INCOME TAXES (22,514) (13,615)
PROVISION FOR INCOME TAXES (Note 6) 0 0
-------- --------
NET LOSS $(22,514) $(13,615)
======== ========
BASIC LOSS PER SHARE $ (.00) $ (.00)
======== ========
DILUTIVE LOSS PER SHARE $ (.00) $ (.00)
======== ========
See Accountants' Review Report and the
accompanying notes to these financial statements
3
<PAGE>
MVD, INC.
(a development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Deficit
Common Stock Preferred Stock Accumulated
------------------------ ----------------------- Additional During Total
Paid-in Development Stockholders'
Shares Amount Shares Amount Capital Stage Deficit
---------- ---------- ---------- ---------- ---------- ---------- ----------
(Audited)
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, March 14, 2000 (inception) 0 $ 0 0 $ 0 $ $ 0 $ 0
ISSUANCE OF COMMON
STOCK FOR CASH 1,000,000 1,000 1,000
ISSUANCE OF COMMON STOCK FOR
SERVICES 1,500,000 1,500 1,500
ADDITIONAL PAID-IN CAPITAL (rent
provided by a stockholder)
770 770
NET LOSS (13,615) (13,615)
---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCE, June 30, 2000 2,500,000 2,500 0 0 770 (13,615) (10,345)
</TABLE>
See Accountants' Review Report and the
accompanying notes to these financial statements
4
<PAGE>
MVD, INC.
(a development stage company)
STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT (CONTINUED)
<TABLE>
<CAPTION>
Deficit
Common Stock Preferred Stock Accumulated
------------------------ ----------------------- Additional During Total
Paid-in Development Stockholders
Shares Amount Shares Amount Capital Stage Deficit
---------- ---------- ---------- ---------- ---------- ---------- ----------
(Unaudited)
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
ADDITIONAL PAID-IN CAPITAL (rent
provided by stockholder)
924 924
ADDITIONAL PAID-IN CAPITAL (services
paid for by stockholder) 12,100 12,100
NET LOSS (8,899) (8,899)
---------- ---------- ---------- ---------- ---------- ---------- ----------
BALANCE, September 30, 2000 2,500,000 $ 2,500 0 $ 0 $ 13,794 $ (22,514) $ (6,220)
========== ========== ========== ========== ========== ========== ==========
</TABLE>
See Accountants' Review Report and the
accompanying notes to these financial statements
5
<PAGE>
MVD, INC.
(a development stage company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
March 14, 2000 March 14, 2000
(inception) (inception)
through through
September 30, 2000 June 30, 2000
(Unaudited) (Audited)
------------------ ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(22,514) $(13,615)
-------- --------
Adjustments to reconcile net loss to net cash used in operating
activities
Services provided in exchange for issuance of common stock
1,500 1,500
Rent provided by a stockholder as additional paid-in capital
1,694 770
Expenses paid by stockholder as additional paid-in capital
12,100 --
Changes in operating assets and liabilities
Increase in accrued expenses 2,100 1,265
-------- --------
Total adjustments 17,394 3,535
-------- --------
Net cash used in operating activities (5,120) (10,080)
-------- --------
CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from the issuance of common stock 1,000 1,000
Advance from stockholder 10,000 10,000
-------- --------
Net cash provided by financing activities 11,000 11,000
-------- --------
NET INCREASE IN CASH AND CASH EQUIVALENTS 5,880 920
CASH AND CASH EQUIVALENTS, beginning of period (inception)
0 0
-------- --------
CASH AND CASH EQUIVALENTS, end of period $ 5,880 $ 920
======== ========
</TABLE>
See Accountants' Review Report and the
accompanying notes to these financial statements
6
<PAGE>
MVD, INC.
(a development stage company)
STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>
March 14, 2000 March 14, 2000
(inception) (inception)
through through
September 30, June 30,
2000 2000
(Unaudited) (Audited)
----------- ---------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period for interest $ --- $ --
Cash paid during the period for income taxes $ --- $ --
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
During the period ended June 30, 2000, the Company issued stock in exchange
for services provided valued at $1,500.
During the periods ended September 30, 2000 and June 30, 2000 the Company
recorded rent expense of $1,694 and $770, respectively, and additional
paid-in capital of $1,694 and $770, respectively, for rent provided by a
stockholder.
During the period ended September 30, 2000 the Company recorded additional
paid-in capital of $12,100 for expenses paid by a stockholder
</TABLE>
See Accountants' Review Report and the
accompanying notes to these financial statements
7
<PAGE>
MVD, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Nature of Business - MVD, Inc. (the "Company") doing
business in Florida as MVDIGITAL, Inc. provides digital entertainment products
and services with an elected December 31st fiscal year end. The Company's
primary focus is the distribution and sale of digital entertainment products
developed and manufactured by third parties and the development of digital
related services.
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 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 may differ from those estimates.
Cash and Cash Equivalents - For purposes of the balance sheets and
statements of cash flows, the Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to be cash
equivalents.
Income Taxes - The Company accounts for income taxes in accordance with the
provisions of Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes", which requires the recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
included in the financial statements or tax returns. Under this method, deferred
tax assets and liabilities are determined based on the difference between the
financial statement and the tax basis of assets and liabilities using enacted
rates in effect for the periods in which the differences are expected to
reverse. Valuation allowances are established when necessary to reduce deferred
tax assets to the amount expected to be realized.
Start-up Activities - The Company has adopted the provisions of Statement
of Position 98-5, "reporting Costs of Start-up Activities" ("SOP 98-5"). SOP
98-5 requires that the costs of start-up activities including organization costs
be expensed as incurred.
On March 14, 2000, the principal stockholder and officer of the Company
advanced the Company $10,000 which was used for initial legal and start-up
expenses of the Company. This advance is non-interest bearing, due on demand,
and is to be repaid as cash becomes available.
8
<PAGE>
NOTE 2 - ADVANCE FROM STOCKHOLDER
On March 14, 2000, the principal stockholder and officer of the Company
advanced the Company $10,000 which was used for initial legal and start-up
expenses of the Company. This advance is non-interest bearing, due on demand,
and is to be repaid as cash becomes available.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
The Company is currently utilizing office space provided by the Company's
President (a stockholder). The Company has recorded rent expense of $308 per
month which represents the Company's pro rata share of the office space being
provided by the Company's President. The President has waived reimbursement of
the allocated rent and has considered it as additional paid-in capital.
NOTE 4 - COMPANY SECURITIES
Description of Capital Stock - The authorized capital stock of the Company
consists of 50,000,000 shares of $.001 par value common stock of which 2,500,000
are issued and outstanding as of September 30, 2000 and 5,000,000 shares of
$.001 par value preferred stock of which no such shares are issued and
outstanding as of September 30, 2000. Holders of shares of the Company's common
stock are entitled to receive dividends when and as declared by the Board of
Directors of the Company. All the shares of common stock have equal voting
rights and are nonassessable. Each share of common stock is entitled to share
ratably in any assets available for distribution to holders of the Company's
equity securities upon liquidation of the Company.
Dividend Policy - Any payment of dividends will be at the sole and absolute
discretion of the Company's Board of Directors and will depend upon earnings,
financial condition, capital requirements, amount of indebtedness, contractual
restrictions with respect to payment of dividends, and other factors. Any such
dividends may be paid in cash, property or shares of the Company's capital
stock. The Company has not paid any dividends since its formation, and it is not
probable that any dividends on the Company's common stock will be declared at
any time in the foreseeable future. There can be no assurance that any dividends
on the Company's common stock will be paid in the future.
Dilution - The following table sets forth the number of shares of $.001 par
value common stock purchased from the Company, the total consideration paid and
the price per share.
<TABLE>
<CAPTION>
Shares Issued Total Consideration
--------------------------- ---------------------------
Price Per
Number Percent Amount Percent Share
------ ------- ------ ------- -----
<S> <C> <C> <C> <C> <C>
Founding stockholders 1,500,000 60% $ 1,500 60% $.001
Purchasers of offered shares 1,000,000 40% 1,000 40% .001
--------- --- --------- ---
Total 2,500,000 100% $ 2,500 100%
========= === ========= ===
</TABLE>
9
<PAGE>
NOTE 5 - RELATED PARTY TRANSACTIONS
During the period from inception through June 30, 2000, the Company entered
into consulting agreements for advisory services relating to the initial
start-up of the Company with fees totaling $1,500. The President, acting as a
consultant, and each of the others received a percentage of ownership in the
form of common stock. The services were valued using hourly rates at estimated
fair market value of similar services. No additional consulting fees were
subsequently incurred through the period September 30, 2000. As mentioned in
Note 3, the Company has recorded rent expense for office space being provided by
the President.
In addition, during the period ended September 30, 2000, one of the
stockholders paid for legal and accounting services relating to the Company's
operations. These expenses have been included in the results of operations for
the corresponding period and recorded as additional paid-in capital.
NOTE 6 - INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109 ("SFAS 109"). This statement mandates the liability
method of accounting for deferred income taxes and permits the recognition of
deferred tax assets subject to an ongoing assessment of realizability.
The components of the Company's income tax provision consist of:
March 14, 2000 March 14, 2000
-------------- --------------
(inception) (inception)
through through
September 30, June 30,
2000 2000
-------------- --------------
Federal taxes (deferred) net operating
loss benefit $ 3,400 $(2,000)
Change in valuation account (3,400) 2,000
------- -------
$ -- $ --
======= =======
10
<PAGE>
NOTE 6 - INCOME TAXES (CONTINUED)
Deferred income taxes are provided for timing differences in the
recognition of certain income and expense items for tax and financial statement
purposes. The tax effect of the temporary differences giving rise to the
Company's deferred tax assets and liabilities are as follows:
September 30, June 30,
2000 2000
------------- --------
Deferred income taxes
Net operating loss benefit $ 3,400 $ 2,000
Valuation allowance (3,400) (2,000)
------- -------
$ -- $ --
======= =======
The Company's tax reporting year end is December 31, 2000. If the Company
has a net operating loss carryforward from operations at that time, it will
expire in 2020.
NOTE 7 - LIQUIDITY
Due to the Company being in the development stage, various risks must be
considered carefully. These risks include, but are not necessarily limited to,
(i) there can be no assurance that the Company's current products and services
will achieve a significant degree of market acceptance, and that acceptance, if
achieved, will be sustained for any period sufficient to permit the Company to
recover associated costs; (ii) there can be no assurance that the Company will
be able to adequately protect its trade secrets and proprietary information;
(iii) the Company's officers and directors may be subject to various conflicts
of interest; (iv) the Company's results of operations may vary from period to
period as a result of a variety of factors; (v) the market for the Company's
products and services is characterized by continuous development, production and
introduction of new products and services; and, (vi) the Company's business is
significantly competitive.
11
<PAGE>
Item 2. Plan of Operation
This following information specifies certain forward-looking statements of
management of the company. Forward-looking statements are statements that
estimate the happening of future events and are not based on historical fact.
Forward-looking statements may be identified by the use of forward-looking
terminology, such as "may", "shall", "will", "could", "expect", "estimate",
"anticipate", "predict", "probable", "possible", "should", "continue", or
similar terms, variations of those terms or the negative of those terms. The
forward-looking statements specified in the following information have been
compiled by our management on the basis of assumptions made by management and
considered by management to be reasonable. Our future operating results,
however, are impossible to predict and no representation, guaranty, or warranty
is to be inferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject
to uncertainty as to possible changes in economic, legislative, industry, and
other circumstances. As a result, the identification and interpretation of data
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the
extent that the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking statements. No assurance can be
given that any of the assumptions relating to the forward-looking statements
specified in the following information are accurate, and we assume no obligation
to update any such forward-looking statements.
Our Business. We are a developmental stage company. We intend to provide digital
entertainment products and services. Our principal business activities include
the distribution and sale of digital cameras and digital music players developed
and manufactured by third parties, and the development of digital-related
services. The products that we currently sell and distribute include a digital
camera and a digital music player, which are manufactured by Joinford (H.K.)
Ltd. We have not yet generated any revenues from the sale of those digital
cameras or music players. We have not yet received any orders for digital
cameras or music players.
Liquidity and Capital Resources. We have cash of $880 as of September 30, 2000.
We were incorporated on March 14, 2000 and our only material expenses has been
legal and accounting fees of approximately $18,429. Our President, director and
principal shareholder, Christopher A. Cota, has paid our expenses since our
inception. Although, we do not have a written agreement or formal arrangement
with Mr. Cota, in which he has agreed to pay our expenses, we anticipate that
Mr. Cota will continue to pay our expenses in the event that we do not generate
revenues or obtain additional working capital. Our belief that Mr. Cota will pay
our expenses is based on the fact that Mr. Cota has a significant equity
interest in us. We believe that Mr. Cota will continue to pay our expenses as
long as he maintains a significant equity interest in us. However, in the event
that that Mr. Cota sells some or all of his shares, he may not have a continued
incentive to fund our operations and pay our expenses. We cannot assure you that
Mr. Cota will not sell some or all of his shares.
Results of Operations. We have not yet realized any revenue from operations. Our
expenses of approximately $22,514 consist primarily of start-up costs from
formation through September 30, 2000.
Our Plan of Operation for the Next Twelve Months. Our plan of operation is
materially dependent on our ability to generate revenues. If we are able to
generate significant revenues, we anticipate that those revenues will be used to
market digital cameras and music players, provide us with working capital and
pay our legal and accounting fees for the next twelve months. If we generate
those revenues, then we expect that our expenses for the next twelve months will
be
2
<PAGE>
approximately $100,000. If we are unable to generate revenues, then we
anticipate that our expenses for the next twelve months will be limited to the
day-to-day expenditures necessary to conduct business such as administrative
expenses which includes costs to maintain our telephone and website. Although it
is difficult to quantify the day-to-day expenses, we believe that such expenses
will no more that $200 per month. Our President, director and principal
shareholder, Christopher A. Cota, has paid our expenses since our inception. Our
belief that Mr. Cota will pay our expenses is based on the fact that Mr. Cota
has a significant equity interest in us. We believe that Mr. Cota will continue
to pay our expenses as long as he maintains a significant equity interest in us.
In the opinion of management, available funds will satisfy our working capital
requirements through November 2000. We have begun marketing the digital cameras
and music players to potential customers. Based on our meeting with a potential
customer who is a manufacturer of computer flash memory, Joinford (H.K.) Ltd.
has assured us that they can add the logo of that manufacturer to digital
cameras and music players to comply with the potential customers' request.
However, we have not entered into any formal discussions with this potential
customer because Joinford (H.K.) Ltd. has not assured us that it can add a
liquid crystal display to the music player. Therefore, based on discussions with
potential customers, we believe the earliest that we will begin to generate
revenues is approximately January 2001. Our belief is based on the fact that
Joinford (H.K.) Ltd. has forecast January 2001 as the earliest time that it can
add a liquid crystal display to the music player.
Our arrangement with Joinford (H.K.) Ltd. provides that we will sell their
products subject to our customers' specifications. Therefore, our profits will
be determined on a case-by-case basis. For example, if we are selling digital
cameras to manufacturers of computer hardware to be sold with their current
products as a promotional item, then we will negotiate prices for the digital
cameras with Joinford (H.K.) Ltd. and increase the prices to our customers.
Our forecast for the period for which our financial resources will be adequate
to support our operations involves risks and uncertainties and actual results
that could fail as a result of a number of factors. We anticipate that we may
need to raise additional capital to develop, promote and conduct our operations.
Such additional capital may be raised through public or private financing as
well as borrowings and other sources. There can be no assurance that additional
funding will be available on favorable terms, if at all. If adequate funds are
not available, we believe that our officers and directors will contribute funds
to pay for our expenses. Therefore, we have not contemplated any plan of
liquidation in the event that we do not generate revenues.
We are not currently conducting any research and development activities. We do
not anticipate conducting any such activities in the next twelve months. We do
not anticipate that we will purchase or sell any significant equipment in the
next six to twelve months unless we generate significant revenues.
We do not anticipate that we will hire any employees in the next six to twelve
months, unless we generate significant revenues. We believe our future success
depends in large part upon the continued service of our key personnel.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities
None
3
<PAGE>
Item 4. Submission of Matters to Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
27 Financial Data Schedule
4
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MVD, Inc.,
a Delaware corporation
November 13, 2000 By: /s/ Christopher A. Cota
----------------------------------
Christopher A. Cota
Its: President, Treasurer
November 13, 2000 By: /s/ Ryan A. Neely
----------------------------------
Ryan A. Neely
Its: President, Secretary
5
