SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the
Securities Act of 1934
For the quarterly period ended September 30, 1997 or
/ / Transition report pursuant to Section 13 or 15(d) of the
Securities Act of 1934
For the transition period from to
Commission file number 33-18521-NY
DAVIN ENTERPRISES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 11-2854355
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
240 Clarkson Ave. Brooklyn, NY 11226
(Address of Principal Executive Office) (Zip Code)
(718)469-3132
(Registrant's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year,
If Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities and Exchange Act of 1934 during the preceding twelve
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 ninety days.
Yes / X / No / /
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes / / No / /
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date. 1,937,354
10Q-1
DAVIN ENTERPRISES, INC.
FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
I N D E X
Page
ACCOUNTANTS' REVIEW REPORT 1
BALANCE SHEETS 2
STATEMENTS OF STOCKHOLDERS' EQUITY 3-4
STATEMENTS OF OPERATIONS 5-6
STATEMENTS OF CASH FLOWS 7
NOTES TO THE FINANCIAL STATEMENTS 8-10
ACCOUNTANTS' REVIEW REPORT
To the Board of Directors and Shareholders
DAVIN ENTERPRISES, INC.
Brooklyn, New York 11226
We have reviewed the balance sheet of DAVIN ENTERPRISES, INC. (A
Development Stage Enterprise) as of September 30, 1997 and the
related statements of operations, stockholders' equity and cash
flows for the six month periods ended September 30, 1997 and 1996,
in accordance with standards established by the American Institute
of Certified Public Accountants.
A review of interim financial information consists principally of
obtaining an understanding of the system for the preparation of
interim financial information, applying analytical review
procedures to financial data, and making inquiries of persons
responsible for financial and accounting matters. It is
substantially less in scope than an examination in accordance with
generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements
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 financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the balance sheet as of March 31, 1997, and the
related statements of operations, stockholders' equity and cash
flows for the year then ended (not presented herein); and in our
report dated June 17, 1997, we expressed an unqualified opinion on
those financial statements. In our opinion, the information set
forth in the accompanying balance sheet as of March 31, 1997 is
fairly stated in all material respects in relation to the balance
sheet from which it has been derived.
GREENBERG & COMPANY, LLC
Springfield, New Jersey
October 30, 1997
Page 1 of 10
DAVIN ENTERPRISES, INC.
(A Development Stage Enterprise)
BALANCE SHEETS
Sept. 30, 1997
(Unaudited) March 31, 1997
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 36,800 $ 45,717
Total Current Assets 36,800 45,717
OTHER ASSETS
Organization Costs 1,300 1,300
Investment - Target Vision, Inc.
- Common Stock, At Fair Value
(Note 3) 400,000 685,078
Total Other Assets 401,300 686,378
TOTAL ASSETS $ 438,100 $ 732,095
L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y
CURRENT LIABILITIES
Accrued Taxes and Expenses $ 1,483 $ 2,283
Total Current Liabilities 1,483 2,283
Committments and
Contingencies (Note 4)
STOCKHOLDERS' EQUITY
Common Stock (Par Value $.0001)
50,000,000 Shares Authorized
1,937,354 Shares Issued and
Outstanding 194 194
Paid-In Capital In Excess Of
Par Value 1,072,526 1,072,526
(Deficit) Accumulated During
Development Stage (636,103) (342,908)
Total Stockholders' Equity 436,617 729,812
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 438,100 $ 732,095
Subject to the comments contained in the Accountants' Review Report.
Page 2 of 10
DAVIN ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
For The Period April 8, 1987 (Inception) to September 30, 1997
# of $.0001 Paid In Deficit Total
Shares Par Value Capital Accumulated Stock-
During holders'
Development Equity
Stage
Initial Investment
in Capital
Stock 1,600,000 $160 $ 426,220 $426,380
Warrants
Exercised 222,550 22 475,078 475,100
Offering Costs (68,705) (68,705)
Net (Loss) for the
Period April 8, 1987
(Inception) to
March 31, 1988 $ (13,113) (13,113)
BALANCES -
APRIL 1, 1988 1,822,550 182 832,593 (13,113) 819,662
Warrants
Exercised 114,804 12 239,933 239,945
Net (Loss) for
the Year Ended
March 31, 1989 (60,555) (60,555)
BALANCES -
MARCH 31, 1989 1,937,354 194 1,072,526 (73,668) 999,052
Net (Loss) for
the Year Ended
March 31, 1990 (73,354) (73,354)
BALANCES -
MARCH 31, 1990 1,937,354 194 1,072,526 (147,022) 925,698
Net (Loss) for
the Year Ended
March 31, 1991 (35,500) (35,500)
BALANCES -
MARCH 31, 1991 1,937,354 194 1,072,526 (182,522) 890,198
Net (Loss) for
the Year Ended
March 31, 1992 (31,935) (31,935)
BALANCES -
MARCH 31, 1992 1,937,354 194 1,072,526 (214,457) 858,263
Subject to the comments contained in the Accountants' Review Report.
Page 3 of 10
DAVIN ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY
For The Period April 8, 1987 (Inception) to September 30, 1997
(Continued)
# of $.0001 Paid In Deficit Total
Shares Par Value Capital Accumulated Stock-
During holders'
Development Equity
Stage
BALANCES -
MARCH 31, 1992 1,937,354 $194 $1,072,526 $(214,457) $858,263
Net (Loss) for
the Year Ended
March 31, 1993 (29,060) (29,060)
BALANCES -
MARCH 31, 1993 1,937,354 194 1,072,526 (243,517) 829,203
Net (Loss) for
the Year Ended
March 31, 1994 (21,616) (21,616)
BALANCES -
MARCH 31, 1994 1,937,354 194 1,072,526 (265,133) 807,587
Net (Loss) for
the Year Ended
March 31, 1995 (16,623) (16,623)
BALANCES -
MARCH 31, 1995 1,937,354 194 1,072,526 (281,756) 790,964
Net (Loss) for
the Year Ended
March 31, 1996 (254,657) (254,657)
BALANCES-
MARCH 31, 1996 1,937,354 194 1,072,526 (536,413) 536,307
Net Income
for the Year Ended
March 31, 1997 193,505 193,505
BALANCES -
MARCH 31, 1997
(audited) 1,937,354 $194 $1,072,526 $(342,908) $729,812
Net (Loss) for the
Six months ended
Sept.30, 1997 (293,195) (293,195)
BALANCES AT
SEPTEMBER 30, 1997
(unaudited) 1,937,354 $194 $1,072,526 $(636,103) $436,617
Subject to the comments contained in the Accountants' Review Report.
Page 4 of 10
DAVIN ENTERPRISES, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
(Unaudited)
For The Three Months Ended
September 30,
1997 1996
Income $ -0- $ -0-
General and Administrative Expenses
Management Fees 1,600 2,400
Professional Fees 1,750 7,313
Miscellaneous Expenses 370 3,868
Total Expenses 3,720 13,581
(3,720) (13,581)
Other Income
Interest Income 411 647
(Loss) Before Franchise Taxes (3,309) (12,934)
Franchise Tax Expense (Benefit) 733 -0-
(Loss) Before Extraordinary Item (4,042) (12,934)
Extraordinary Item
Write Down of Investment (Note 3) (285,078) -0-
Net (Loss) $(289,120) $ (12,934)
Net (Loss) Per Share $ (0.15) $ (0.01)
Weighted Average Number
of Shares 1,937,354 1,937,354
Subject to the comments contained in the Accountants' Review Report.
Page 5 of 10
DAVIN ENTERPRISES, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
(Unaudited)
For The Six Months Ended
September 30,
1997 1996
Income $ -0- $ -0-
General and Administrative Expenses
Management Fees 4,000 4,800
Professional Fees 3,500 14,263
Miscellaneous Expenses 554 6,262
Total Expenses 8,054 25,325
(8,054) (25,325)
Other Income-Interest Income 793 1,411
(Loss) Before Franchise Taxes (7,261) (23,914)
Franchise Tax Expense (Benefit) (856) (432)
(Loss) Before Extraordinary Item (8,117) (23,482)
Extraordinary Item
Write Down of Investment (Note 3) (285,078) -0-
Net (Loss) $(293,195) $ (23,482)
Net (Loss) Per Share $ (0.15) $ (.01)
Weighted Average Number
of Shares 1,937,354 1,937,354
Cumulative Amounts From Inception
Income $ -0-
Expenses 417,579
(417,579)
Interest Income 92,825
(Loss) Before Franchise Taxes
and Extraordinary Item (324,754)
Franchise Taxes (26,271)
(Loss) Before Extraordinary Item (351,025)
Extraordinary Item (285,078)
Net (Loss) $ (636,103)
Subject to the comments contained in the Accountants' Review Report.
Page 6 of 10
DAVIN ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
For The Six Months Ended
September 30,
1997 1996
Cash Flows From Operating Activities:
Net (Loss) $(293,195) $(23,482)
Changes in Asset & Liability Accounts:
Increase (Decrease) in Accrued Expenses (800) -0-
Net Cash Provided By (Used In)
Operating Activities (293,995) (23,482)
Cash Flows from Financing Activities
Write Down of Investment 285,078 -0-
Net Cash Provided By Financing Activities 285,078 -0-
Net Increase (Decrease) In Cash (8,917) (23,482)
Cash and Cash Equivalents -
Beginning of Period 45,717 80,757
CASH AND CASH EQUIVALENTS -
END OF PERIOD $ 36,800 $ 57,275
Supplemental disclosure of cash flow:
Cash paid during the period for:
Interest $ -0- $ -0-
Income tax $ 856 $ 432
Subject to the comments contained in the Accountants' Review Report.
Page 7 of 10
DAVIN ENTERPRISES, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997
(Unaudited)
NOTE 1: ORGANIZATION AND NATURE OF OPERATIONS
Davin Enterprises, Inc. (Davin) was organized under the laws
of Delaware on April 8, 1987 to function initially as an
inactive publicly held corporation pursuing a combination with
a privately held business engaged in any area of business.
Davin is located in New York. Davin is considered a
Development Stage Enterprise as it has not begun any
commercial operation. Davin's principal assets are cash and
an investment in a private company.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL INFORMATION
Costs associated with the Company's initial public offering
have been charged directly to paid in capital in excess of par
value.
CASH
Cash equivalents consist of highly liquid, short-term
investments with maturities of 90 days or less.
INCOME TAXES
During 1993, the Company adopted Statement of Financial
Accounting Standards No. 109(SFAS 109), Accounting for Income
Taxes. SFAS 109 requires an asset and liability approach to
measuring deferred income taxes. Previous standards required
an income statement approach. The cumulative effect of this
change in the method of accounting for income taxes was not
material.
PREPARATION OF FINANCIAL STATEMENTS
Preparation of the Company's financial statements in
conformity with generally accepted accounting principles
requires the use of management's estimates, primarily related
to the fair values of investments. Accordingly, actual
results could differ from those estimates.
NOTE 3: INVESTMENT - TARGET VISION, INC., AT LOWER OF COST OR FAIR
VALUE:
On April 21, 1988, the Company concluded an agreement with
Target Vision, Inc. ("TVI") for their merger, which agreement
was subsequently terminated.
Page 8 of 10
DAVIN ENTERPRISES, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997
(Unaudited)
(Continued)
As part of the merger agreement, the Company had agreed to
lend TVI up to $800,000 from the proceeds of Class "A" and
Class "B" warrants exercised. The Company advanced $685,078
to TVI. Subsequently, litigation ensued relating to the note
with TVI, which was settled on June 28, 1991.
Pursuant to the Company's receipt of 2,883,333 shares of TVI
common stock the action was discontinued. The implementation
of the settlement agreement took place on July 31, 1991.
Therefore, the loan receivable was reclassified to an
investment in common stock. The cost of this investment is
$685,078.
Extraordinary Item
In the quarter ended June 30, 1996 a sale of TVI stock
occurred. The sale was by an unrelated shareholder and
resulted in a complete liquidation of that stockholders
interest. The current financial statements reflect a $285,078
extraordinary write down of the Company's investment to
reflect the fair value, as there currently is no market for
TVI stock. The fair value was estimated based primarily on
the financial condition and operating results of TVI and not
the single liquidation of a minority shareholder's interest.
Audited financial information of TVI for the year ended
September 30, 1996 follows:
Total Assets $4,684,632
Stockholders' Equity 1,176,821
Revenues 8,616,999
Net Income 797,050
NOTE 4: RELATED PARTY TRANSACTIONS
The Company has entered into an oral agreement with Modern
Technology Corp., a principal shareholder, to provide services
and the partial use of its office to the Company for the sum
of $800 per month since July 1, 1991 and $400 per month from
September 1, 1997. Arthur Seidenfeld, president of the
Company, is also president of Modern Technology Corp.
NOTE 5: FRANCHISE TAX
Franchise taxes represent payment of New York State and New
York City taxes. No federal income tax was due as the Company
has generated a loss since inception. The Company has
available approximately $320,000 of Net Operating Loss (NOL)
carryforwards which can be used to offset future income.
Page 9 of 10
DAVIN ENTERPRISES, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997
(Unaudited)
(Continued)
These NOL's expire between the years 2003 and 2010. The
income tax benefit relating to these NOL's has been fully
reserved in the valuation allowance account since the Company
has never had taxable income and the realization of these
benefits is highly uncertain.
NOTE 6: POSTRETIREMENT EMPLOYEE BENEFITS
The company does not have a policy to cover employees for any
health care or other welfare benefits that are incurred after
employment (postretirement). Therefore, no provision is
required under FAS'S 106 or 112.
NOTE 7: COMMON STOCK
On May 29, 1996 the Company effected a one (1) for one hundred
(100) reverse stock split. The number of authorized shares
was changed from 250,000,000 to 50,000,000. All share and per
share amounts presented in these financial statements have
been adjusted to reflect this reverse stock split on a
retroactive basis.
NOTE 8: INTERIM FINANCIAL REPORTING
The unaudited financial statements of the Company for the
period April 1, 1997 to September 30, 1997 have been prepared
by management from the books and records of the Company, and
reflect, in the opinion of management, all adjustments
necessary for a fair presentation of the financial position
and operations of the Company as of the period indicated
herein, and are of a normal recurring nature.
Page 10 of 10
Part 1. Financial Information.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Davin Enterprises, Inc. ("The Registrant") is a development
stage company, which was incorporated on April 8, 1987. The Registrant
has no predecessors and has no history prior to its date of
organization. During the quarter ended September 30, 1987, the
Registrant completed its proposed public offering.
The proposed business of the Company was to provide a
mechanism to take advantage of business opportunities which management
believes arise from time to time. It was believed that the Company's
ability to take advantage of some business opportunities is enhanced by
its status as a small, publicly held entity with liquid assets which
could be deployed quickly to investigate, acquire an interest in and
devote to business operations, product development, asset acquisition of
other opportunities.
On April 21, 1988, the Registrant concluded an agreement with
Target Vision, Inc. ("TVI") for the merger of TVI with the Registrant.
In conjunction with the merger agreement, the Company loaned TVI
$685,078.08. Subsequently, litigation ensued relating to the note,
which was settled on June 28, 1991. Pursuant to the agreement, on
August 21, 1991, the Registrant converted $685,000 of debt into
2,883,333 shares of TVI common stock, representing approximately 9.6% of
the outstanding shares of TVI, with a potential dilution to 8.7% if
additional shares are issued.
For the year ended September 30, 1996, TVI generated net
revenues of $8,616,999, and net income of $797,050. At September 30,
1996, TVI had total assets of $4,684,632, and stockholders' equity of
$1,176,821. The figures already mentioned for the year ended September
30, 1996 and the balance sheet figures at September 30, 1996 were
audited and provided by TVI. TVI's primary product is computer based
business television that is used in a variety of environments as a
communication vehicle. Its dominant application is in industry, where
communicators use the product as an employee communication tool. Its
system combines television with the technology of computers to allow for
immediate updating and dissemination of information. With the
termination of the proposed merger, the Registrant began seeking out
appropriate business opportunities. It should be noted that the
Registrant's efforts in seeking out business opportunities had been
hampered by the outstanding lawsuit and while management is in
discussions with several firms interested in a potential merger, no
assurances can be given that the Company will be successful in
completing a merger or acquisition in the near future.
In the quarter ended June 30, 1996, a sale of Target Vision,
Inc. stock occurred. The sale was by an unrelated shareholder and
resulted in a complete liquidation of that stockholder's interest. The
current financial statements reflect a $285,078 extraordinary write down
of the investment to reflect a more realistic fair value. For the six
months ended Sept. 30, 1997, the Registrant generated a net loss of
$293,195. The loss for the six months ended Sept. 30, 1997 reflects an
extraordinary item- write down of investment in Target Vision Inc.
amounting to $285,078, interest income of $793; general and
administrative expenses amounted to $8,054 of which professional fees
(accounting and legal) amounted to $3,500, managerial fees, paid to a
company in which the officers and directors of the Registrant are
majority shareholders, amounted to $4,000 and miscellaneous expenses
amounting to $554 and a franchise tax expense of $856. For the six
months ended Sept. 30, 1996 the net loss amounted to $23,482. This loss
reflects interest income of $1,411. General and administrative expenses
for the six months ended Sept. 30, 1996 amounted to $25,325 of which
professional fees (accounting and legal) amounted to $14,263 and
managerial fees, paid to a company which the officers and directors of
the Registrant are majority shareholders, amounted to $4,800 and
miscellaneous expenses amounted to $6,262.
No salaries have been paid to the officers and directors of
the Registrant since inception. Services to the Registrant such as
administrative, bookkeeping and clerical are provided for through the
management fee compensation arrangement. The Registrant's management
has determined that considerable monetary savings can be achieved
through such an arrangement, as compared to hiring the additional
personnel needed to perform the comparable administrative, clerical and
bookkeeping services. The management fee for services has been $800 a
month since July 1, 1991. On September 1, 1997, the management fee for
services has been reduced to $400 per month.
Subsequent to the close of the fiscal quarter and at the
request of the officers and directors involved in a class action, the
Registrant passed resolutions, agreed to by those officers and
directors, wherein advances for expenses to be reimbursed pursuant to
indemnification would in the future be waived, and thus the Registrant
no longer has any contingent liabilities relating to this case. The
class action was commenced in 1989 and subsequent to the officers
denying liability in an answer the action has remained dormant against
the officers and directors of the Registrant.
On May 29, 1996, the Registrant effected a one for one hundred
reverse split of its Common Stock, and reduced the number of authorized
shares from 250,000,000 to 50,000,000. As a result, the number of
shares of Common Stock outstanding at June 30, 1996 was 1,937,354.
During the week of August 2, 1996, the Registrant's common stock was
relisted on the OTC bulletin board with the symbol DAVN.
PART II. OTHER INFORMATION;
Item 1. Legal Proceedings. None
Item 2. Changes in Securities. None
Item 3. Defaults upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Materially Important Events. None.
Item 6. Exhibits and Reports on Form 8-K. None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
DAVIN ENTERPRISES, INC.
BY Arthur Seidenfeld
President
Dated: November 12, 1997
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