U. S. 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 June 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to____________
Commission File No. 033-02441-D
Draco Holding Corporation
----------------------------------
(Name of Small Business Issuer in its Charter)
NEVADA 87-0638750
------------ ---------------
(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
4843 Wallace Lane
Salt Lake City, Utah 84117
---------------------------------
(Address of Principal Executive offices)
Issuer's Telephone Number: (801) 209-0545
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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.
(1) Yes [ X ] No [ ] (2) Yes [ X ] No [ ]
<PAGE>
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of the latest practicable date:
August 10, 2000
2,034,751
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The unaudited consolidated balance sheet of Draco Holding Corporation, a
Nevada corporation, as of June 30, 2000 and the related audited consolidated
balance sheet as of December 31, 2000, the unaudited related consolidated
statements of operations and cash flows for the three and six month periods
ended June 30, 2000 and June 30, 1999, the unaudited related statements of
stockholders' equity for the period from inception through June 30, 2000, and
the notes to the financial statements are attached hereto as Appendix "A" and
incorporated herein by reference.
The accompanying financial statements reflect all adjustments which are,
in the opinion of management, necessary to present fairly the financial
position of Draco consolidated with Jump'n Jax, Inc., its wholly owned
subsidiary. The names "Draco", "we", "our" and "us" used in this report refer
to Draco Holding Corporation.
Item 2. Management's Discussion and Analysis or Plan of Operation.
(a) Plan of Operation.
Not applicable.
(b) Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Results of Operations. During the three months ended June 30, 2000,
Draco experienced a net loss of $20,152, which is $20,152 more than the $0 net
loss incurred for the three months ended June 30, 1999. For the six months
ended June 30, 2000, Draco incurred a net loss of $24,564 which is $24,564
more than the $0 net loss incurred during the six months ended June
<PAGE>
30, 1999. For the three months ended June 30, 2000, Draco reported revenues
of $3,962, comprised entirely of income from the Jump'n Jax, Inc. subsidiary
business of equipment rental and leasing of inflatable bounce houses for
parties and entertainment. Draco had no revenues during the three month
period ended June 30, 1999 since it was engaged in no business operations
during that time. Revenues for the six month period ended June 30, 2000 were
$4,167. Revenues for the six month period ended June 30, 1999 were $0. The
increase in revenues is attributed to the fact that during the three and six
month periods ended June 30, 1999, the Company was engaged in no active
business operations. Draco has been engaged in active business operations
through its wholly owned subsidiary, Jump'n Jax, Inc., since approximately
March 2000.
Expenses for the three months ended June 30, 2000 were $24,114, or
$24,114 more than the expenses of $0 incurred during the three month period
ended June 30, 1999. Expenses for the six months ended June 30, 2000 were
$28,731 or $28,731 more than the expenses of $0 incurred during the six month
period ended June 30, 1999. Approximately one-half of the expenses incurred
during the three and six month periods ended June 30, 2000, were primarily
associated with non recurring legal and accounting expenses. The remaining
expenses were primarily related to expenses of a recurring nature such as
salaries, advertising, and general and administrative expenses.
Balance Sheet Information
-------------------------
Assets
As of June 30, 2000, Draco reported total assets of $25,280, down $17,064
from the $42,344 reported as of December 31, 1999. Current assets of June 30,
2000 were $17,877, down $24,467 from the $42,344 reported as of December 31,
1999. The change in total assets and current assets reflects primarily the
net loss generated by Draco during the six months ended June 30, 2000
partially offset by a loan of $7,500 made to Draco by Draco's
Secretary/Treasurer. Current assets were also reduced during the same period
by the expenditure of approximately $7,403 of cash to purchase equipment.
Liabilities
Draco's only liability as of June 30, 2000 is for $7,500 on a note
payable to Draco's Secretary/Treasurer. In May 2000, Draco's
Secretary/Treasurer loaned Draco $7,500. The loan accrues interest at 10% per
annum and is due upon demand. The loan is unsecured.
Total liabilities of Draco increased $7,250 from $250 as of December 31,
1999, to $7,500 as of June 30, 2000. The increase in total liabilities
reflects the $7,500 loan made by Draco's Secretary/Treasurer to the Company in
May, 2000, partially offset by the payment of $250 of accounts payable which
were owed as of December 31, 1999.
<PAGE>
Liquidity and Capital Resources - June 30, 2000
-----------------------------------------------
Draco believes that its liquid resources are adequate to maintain
operations through internally generated cash flows for a period of
approximately 12 months. In the event that Draco's business continues to grow
and expand during this early phase, Draco may need to purchase additional
equipment which will require expanded resources. If that occurs, Draco
proposes to seek such additional capital either through loans from its
officers and directors, or through possible equity or debt financing. No
assurance can be given that Draco's resources will be adequate to take
advantage of opportunities to expand the business as they arise, or that any
such expansion opportunities will materialize.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None; not applicable.
Item 2. Changes in Securities.
None; not applicable.
Item 3. Defaults Upon Senior Securities.
None; not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
None; not applicable.
Item 5. Other Information.
None; not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Financial Data Schedule.
(b) Reports on Form 8-K.
No Current Reports on Form 8-K were filed by Draco during the
quarter ended June 30, 2000.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned thereunto duly authorized.
DRACO HOLDING
CORPORATION
Date: August 11, 2000 By: /s/ Lane Clissold
------------------------
Lane Clissold
Director and President
Date: August 11, 2000 By: /s/ Steven D. Moulton
----------------------------
Steven D. Moulton
Director and
Secretary/Treasurer
<PAGE>
APPENDIX "A"
FINANCIAL STATEMENTS
DRACO HOLDING CORPORATION
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2000 and December 31, 1999
<PAGE>
DRACO HOLDING CORPORATION
(A Development Stage Company)
Consolidated Balance Sheets
ASSETS
June 30, December 31,
2000 1999
------------- -------------
(Unaudited)
CURRENT ASSETS
Cash $ 17,877 $ 42,344
------------- -------------
Total Current Assets 17,877 42,344
------------- -------------
EQUIPMENT
Equipment 7,403 -
------------- -------------
Total Equipment 7,403 -
------------- -------------
TOTAL ASSETS $ 25,280 $ 42,344
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ - $ 250
Note payable - related party (Note 4) 7,500 -
------------- -------------
Total Liabilities 7,500 250
------------- -------------
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value; 500,000,000
shares authorized; 2,034,750 shares issued
and outstanding 2,035 2,035
Additional paid-in capital 133,795 133,795
Deficit accumulated during the development
stage (118,050) (93,486)
------------- -------------
Total Stockholders' Equity 17,780 42,344
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 25,280 $ 42,344
============= =============
<PAGE>
DRACO HOLDING CORPORATION
(A Development Stage Company)
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From
Inception on
For the For the December 17,
Six Months Ended Three Months Ended 1985 Through
June 30, June 30, June 30,
2000 1999 2000 1999 2000
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
REVENUES $ 4,167 $ - $ 3,962 $ - $ 4,167
EXPENSES 28,731 - 24,114 - 122,217
------------- ------------ ------------- ------------ ------------
NET LOSS $ (24,564) $ - $ (20,152) $ - $ (118,050)
============= ============ ============= ============ ============
BASIC LOSS PER SHARE $ (0.01) $ (0.00) $ (0.01) $ (0.00)
============= ============ ============= ============
BASIC WEIGHTED AVERAGE
NUMBER OF SHARES OUTSTANDING 2,034,750 934,750 2,034,750 934,750
============= ============ ============= ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DRACO HOLDING CORPORATION
(A Development Stage Company)
Consolidated Statements of Stockholders' Equity (Deficit)
From Inception on December 17, 1985 through June 30, 2000
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Amount Capital Stage
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at inception on December 17, 1985 - $ - $ - $ -
Common stock issued for cash at $0.02 400,000 400 7,600 -
Common stock issued for cash at $0.20 per share 534,750 535 106,415 -
Stock offering costs - - (34,220) -
Net loss from inception on December 17, 1985
through December 31, 1996 - - - (80,830)
---------- ---------- ---------- ----------
Balance, December 31, 1996 934,750 935 79,795 (80,830)
Contributed capital for expenses - - 100 -
Net loss for the year ended December 31, 1997 - - - (100)
---------- ---------- ---------- ----------
Balance, December 31, 1997 934,750 935 79,895 (80,930)
Net loss for the year ended December 31, 1998 - - - (150)
---------- ---------- ---------- ----------
Balance, December 31, 1998 934,750 935 79,895 (81,080)
Common stock issued for cash at $0.05 per share 1,000,000 1,000 49,000 -
Common stock issued for services at $0.05
per share 100,000 100 4,900 -
Net loss for the year ended December 31, 1999 - - - (12,406)
---------- ---------- ---------- ----------
Balance, December 31, 1999 2,034,750 2,035 133,795 (93,486)
Net loss for the six months ended June 30, 2000
(unaudited) - - - (24,564)
---------- ---------- ---------- ----------
Balance, June 20, 2000 (unaudited) 2,034,750 $ 2,035 $ 133,795 $(118,050)
========== ========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
DRACO HOLDING CORPORATION
(A Development Stage Company)
Consolidated Statements of Cash Flows(Unaudited)
From
Inception on
For the For the December 17,
Six Months Ended Three Months Ended 1985 Through
June 30, June 30, June 30,
2000 1999 2000 1999 2000
------------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (24,564) $ - $ (20,152) $ - $ (118,050)
Adjustments to reconcile net loss
to net cash used by operating
activities:
Contributed capital for expenses - - - - 100
Common stock issued for services - - - - 5,000
Changes in operating assets and
liabilities:
Increase (decrease) in accounts
payable - related 7,500 - 4,744 - 7,500
------------- ------------ ------------- ------------ ------------
Net Cash Used by Operating
Activities (17,064) - (15,408) - (105,450)
------------- ------------ ------------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (7,403) - (7,403) - (7,403)
------------- ------------ ------------- ------------ ------------
Net Cash Used by Investing
Activities (7,403) - (7,403) - (7,403)
------------- ------------ ------------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock offering costs - - - - (34,220)
Issuance of common stock for cash - - - - 164,950
------------- ------------ ------------- ------------ ------------
Net Cash Provided by
Financing Activities - - - - 130,730
------------- ------------ ------------- ------------ ------------
NET INCREASE (DECREASE) IN CASH (24,467) - (22,811) - 17,877
CASH AT BEGINNING OF PERIOD 42,344 - 40,688 - -
------------- ------------ ------------- ------------ ------------
CASH AT END OF PERIOD $ 17,877 $ - $ 17,877 $ - $ 17,877
============= ============ ============= ============ ============
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
Cash paid for:
Interest $ - $ - $ - $ - $ -
Income taxes $ - $ - $ - $ - $ -
</TABLE>
<PAGE>
DRACO CORP.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2000 and December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Organization
Draco Holding Corporation (the Company) was organized August 20, 1999 under
the laws of the State of Nevada for the purpose of engaging in any lawful
activity. On September 13, 1999, Draco Holding Corporation filed articles of
merger whereby Draco Corporation (a Utah corporation formed on December 17,
1985) (Draco-Utah) merged into Draco Holding Corporation (the Company). The
Company became the surviving corporation, assuming all the assets and
obligations of Draco-Utah. At the time of merger, each outstanding share of
common stock of Draco-Utah was converted into one share of common stock of the
Company, and all fractional shares were rounded to the nearest whole share.
The Company has had no significant operations since inception and is
considered a development stage company in accordance with Statement of
Financial Accounting Standards No. 7. The Company is the surviving entity for
legal purposes and the historical financial statements of Draco-Utah became
the Company's financial statements for accounting purposes.
The Company incorporated Jump'n Jax, Inc., a wholly-owned subsidiary. The
Subsidiary is in the business of equipment rental and the leasing of
inflatable bounce houses for parties and entertainment.
b. Provision for Taxes
At June 30, 2000, the Company had net operating loss carryforwards of
approximately $118,000 that may be offset against future taxable income
through 2020. No tax benefit has been reported in the financial statements,
because the Company believes there is a 50% or greater chance the
carryforwards will expire unused. Accordingly, the potential tax benefits of
the net operating loss carryforwards are offset by a valuation allowance of
the same amount.
c. Accounting Method
The financial statements are prepared using the accrual method of accounting.
The Company has elected a calendar year end.
d. 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 could differ from those estimates.
e. Cash and Cash Equivalents
The Company considers all highly liquid investment with a maturity of three
months or less when purchased to be cash equivalents.
<PAGE>
DRACO HOLDING CORPORATION
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2000 and December 31, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Revenue Recognition Policy
The Company currently has no significant source of revenues. Revenue
recognition policies will be determined when principal operations begin.
g. Basic Loss Per Share
For the Six Months
June 30, 2000
Loss Shares Per Share
(Numerator) (Denominator) Amount
------------ ------------ ------------
$ (24,564) 2,034,750 $ (0.01
============ ============ ============
For the Six Months
June 30, 1999
Loss Shares Per Share
(Numerator) (Denominator) Amount
------------ ------------ ------------
$ - 934,750 $ (0.00)
============ ============ ============
For the Three Months
June 30, 2000
Loss Shares Per Share
(Numerator) (Denominator) Amount
------------ ------------ ------------
$ (20,152) 2,034,750 $ (0.01)
============ ============ ============
For the Three Months
June 30, 1999
Loss Shares Per Share
(Numerator) (Denominator) Amount
------------ ------------ ------------
$ - 934,750 $ (0.00)
============ ============ ============
The computations of basic loss per share of common stock are based on the
weighted average number of shares of common stock outstanding during the
period of the financial statements.
<PAGE>
DRACO HOLDING CORPORATION
(A Development Stage Company)
Notes to the Consolidated Financial Statements
June 30, 2000 and December 31, 1999
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. The Company has not established revenues sufficient to cover its
operating costs and allow it to continue as a going concern. Management
intends to increase operations through its wholly-owned subsidiary; in the
interim, it has committed to meeting the Company's minimal operating expenses.
NOTE 3 - STOCK TRANSACTIONS
On August 18, 1999, the Company issued 1,000,000 unrestricted shares of common
voting stock for cash consideration of $50,000 and 100,000 shares of common
voting stock for services rendered valued at $5,000.
On September 13, 1999, the Company effected a reverse split of the issued and
outstanding common stock on the basis of one share for 10, while retaining the
authorized shares at 500,000,000 shares and retaining the par value of one
mill ($0.001) per share. The reverse stock split has been applied
retroactively to the financial statements.
NOTE 4 - RELATED PARTY TRANSACTIONS
In May 2000, a shareholder loaned the Company $7,500 to cover operating
expenses. The loan accrues interest at 10% and is due upon demand.
