SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended: June 30, 2000
Commission file number 33-5203
THE ENTITY, INC.
-------------------
(Exact name of small business issuer as specified in its charter)
Colorado 84-0953839
-------- ----------
(State or other jurisdiction of (I.R.S. Employer incorporation
or organization) Identification No.)
10200 W. 44th Avenue, Suite 400, Wheat Ridge, CO 80033
---------------------------------------------------
Address of principal executive offices)
(303) 422-8127
---------------
(Issuer's telephone number)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 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 X No
As of June 30, 2000, 81,400,000 shares of common stock were outstanding.
Transitional Small Business Disclosure Format: Yes No X
<PAGE>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements.
For financial information, please see the financial statements and the
notes thereto, attached hereto and incorporated herein by this reference.
The financial statements have been prepared by The Entity, Inc.
without audit pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted as allowed by such rules
and regulations, and management believes that the disclosures are adequate to
make the information presented not misleading. These financial statements
include all of the adjustments which, in the opinion of management, are
necessary to a fair presentation of financial position and results of
operations. All such adjustments are of a normal and recurring nature. These
financial statements should be read in conjunction with the audited financial
statements at September 30, 1999, included in the Company's Form 10-KSB.
<PAGE>
<TABLE>
<CAPTION>
THE ENTITY, INC.
(A Development Stage Company)
BALANCE SHEET
(unaudited)
June 30, September 30,
2000 1999
---- ----
<S> <C> <C>
Current Assets:
Cash and cash equivalents $0 $0
TOTAL ASSETS $ 0 $ 0
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, related parties $9,624 $9,624
Retained Earnings (deficit) (71,374) (71,374)
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $(0) $(0)
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-1
<PAGE>
<TABLE>
<CAPTION>
THE ENTITY, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(unaudited)
Three Months Ending June Three Months Ending June 30,
30, 2000 1999
<S> <C> <C>
Revenue & interest $0 $0
Rent & Office $0 $0
Travel $0 $0
Weighted average number of 81,400,000 81,400,000
common shares
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
THE ENTITY, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(unaudited)
Nine Months Ending June Nine Months Ending June 30,
30, 2000 1999
<S> <C> <C>
Revenue & interest $0 $0
Rent & Office $0 $0
Travel $0 $0
Weighted average number of 81,400,000 81,400,000
common shares
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
THE ENTITY, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(unaudited)
Nine Months Ending Nine Months Ending
June 30, 2000 June 30, 1999
<S> <C> <C>
Cash flows from operating activities:
Cash provided (used) by operating $0 $0
activities
Cash at beginning of period $0 $0
Cash at end of period $0 $0
The accompanying notes are an integral part of the financial statements.
F-4
</TABLE>
<PAGE>
THE ENTITY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTER ENDED JUNE 30, 2000 AND 1999
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of The Entity, Inc. (Company)
significant accounting policies:
Organizations
The Company was incorporated July 7, 1983 under the laws of
Colorado under the name of Moonstone, Inc. for the primary
purpose of seeking acquisitions of business or properties,
without limitation as to geographic location or type of business.
Moonstone, Inc., a publicly traded entity, merged with The
Entity, Inc. Moonstone, Inc., the surviving entity after the
merger, changed its name to The Entity, Inc.
On December 23, 1997, an application for Reinstatement and
Corporate Report was approved and submitted after a special
stockholders' meeting. Many of the corporate records have been
lost or destroyed. Since the completion of the initial offering,
the Company has not engaged in any operations nor has it
generated any revenue. The Company has been engaged in the
identification and evaluation of target business entities or
assets for possible acquisition.
Cash and Cash Equivalents
For purpose of the statement of cash flows, cash and cash
equivalents include cash in banks and money market accounts. The
Company has no cash accounts at the present time.
Deferred Organization Expenses
Cost incurred in connection with the organization were charged to
expenses using the straight-line method over 60 months.
Income Taxes
The Financial Accounting Standards Board (FASB) has issued
Statement of Financial Accounting Standards Number 109 ("SFAS
109"), "Accounting for Income Taxes," which requires a change
from the deferred method to the assets and liability method,
deferred income taxes are recognized for the tax consequences of
"temporary differences" by applying enacted statutory tax rates
applicable to future years to differences between the financial
statement carrying amounts and the tax basis of existing assets
and liabilities.
At September 30, 1999, the Company had net operating loss
carryforwards of approximately $71,370 for federal income tax
purposes. These carryforwards, if not utilized to offset taxable
income, will expire at the end of 2002. There is no provision or
benefit for income taxes in fiscal 1999.
F-5
<PAGE>
THE ENTITY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE QUARTER ENDED JUNE 30, 2000
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amount of
assets and liabilities and disclosures 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.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which
contemplates continuation of the Company as a going concern.
However, the Company has sustained an operation loss this year.
As shown in the financial statements, the Company incurred net
losses in the prior years. At June 30, 2000, current liabilities
exceed current assets by $9,624. These factors indicate that the
Company has substantial doubt about its ability to continue as a
going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of
recorded assets, or the amounts and classification of liabilities
that might be necessary in the event the Company cannot continue
in existence.
In view of these matters, realization of a major portion of the
assets in the accompanying balance sheet is dependent upon
continued operations of the Company, which in turn is dependent
upon the Company's ability to meet its financial requirements,
and the success of its future operations.
F-6
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
- ------------------------------------------------------------------
Results of Operations for the Quarter Ended June 30, 2000
- ----------------------------------------------------------
The Company had no revenue or operations for the period. The Company
incurred no general and administrative expenses in the period in 2000 or 1999.
The Company had no profit or loss on operations for the period in 2000 or 1999.
There was no net profit or loss for the period.
Results of Operations for the Nine Month Period Ended June 30, 2000
- -------------------------------------------------------------------
The Company had no revenue or operations for the nine month period ended
June 30, 2000. The Company incurred no general and administrative expenses for
the nine month period ended June 30, 2000 or 1999. The Company incurred no
operating profit or loss for the nine month period ended June 30 in 2000 or
1999.
The trend of operating losses can be expected to continue until and unless
the company acquires or merges with a profitable business.
(b) Liquidity and Capital Resources. At June 30, 2000, the Company had no
cash or other assets with which to conduct operations. There can be no assurance
that the Company will be able to complete its business plan and to exploit fully
any business opportunity that management may be able to locate on behalf of the
Company. Due to the lack of a specified business opportunity, the Company is
unable to predict the period for which it can conduct operations. Accordingly,
the Company will need to seek additional financing through loans, the sale and
issuance of additional debt and/or equity securities, or other financing
<PAGE>
arrangements. Management of the Company and its counsel have advised that they
will pay certain costs and expenses of the Company from their personal funds as
interest free loans in order to facilitate development of the Company's business
plan. Management believes that the Company has inadequate working capital to
pursue any operations at this time; however, loans to the Company from
management and its counsel may facilitate development of the business plan. For
the foreseeable future, the Company through its management and counsel intend to
pursue acquisitions as a means to develop the Company. The Company does not
intend to pay dividends in the foreseeable future. As of the end of the
reporting period, the Company had no material cash or cash equivalents. There
was no significant change in working capital during this quarter.
(c) Year 2000 issues "Year 2000 problems" result primarily from the
inability of some computer software to properly store, recall or use data after
December 31, 1999. The Company is engaged primarily in organizational and fund
raising activities and accordingly, does not rely on information technology
("IT") systems. Accordingly the Company does not believe that it will be
materially affected by Year 2000 problems. The Company relies on non-IT systems
that may suffer from Year 2000 problems including telephone systems, facsimile
and other office machines. Moreover, the Company relies on third-parties that
may suffer from Year 2000 problems that could affect the Company's operations
including banks and utilities. In light of the Company's minimal operations, the
Company does not believe that such non-IT systems or third-party Year 2000
problems will affect the Company in a manner that is different or more
substantial than such problems affect other similarly situated companies.
Consequently, the Company does not currently intend to conduct a readiness
assessment of Year 2000 problems or develop a detained contingency plan with
respect to Year 2000 problems that may affect the Company or third-parties.
The foregoing is a "Year 2000 Readiness Disclosure" within the meaning
of the Year 2000 Information and Readiness Disclosure Act of 1998.
<PAGE>
PART II--OTHER INFORMATION
Item 1. Legal Proceedings.
- --------------------------
There are no pending legal proceedings, and the Company is not aware of any
threatened legal proceedings, to which the Company is a party or to which its
property is subject.
Item 2. Changes in Securities.
- ------------------------------
(a) There have been no material modifications in any of the instruments
defining the rights of the holders of any of the Company's registered
securities.
(b) None of the rights evidenced by any class of the Company's
registered securities have been materially limited or qualified by the issuance
or modification of any other class of the Company's securities.
Item 3. Defaults Upon Senior Securities.
- ----------------------------------------
(Not applicable)
Item 4. Submission of Matters to a Vote of Security Holders.
- ------------------------------------------------------------
(Not applicable)
Item 5. Other Information.
- --------------------------
(Not applicable)
Item 6. Exhibits and Reports on Form 8-K.
- -----------------------------------------
(a) Exhibits
No exhibits as set forth in Regulation SB, are considered necessary for
this filing.
(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 Securities Exchange Act of
1934, as amended, the registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
THE ENTITY, INC.
Date: August 25, 2000
/s/Larry Carr
------------------
Larry Carr, President
