UNITED STATES
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 quarter endedFebruary 28, 2003
¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File No.000-50103
24 HOUR AUCTION INC.
(Name of Small Business Issuer in its Charter)
| Delaware | 71-911780705 |
| (State or other jurisdiction of | (I.R.S. Employer Identification No.) |
| incorporation or organization) | |
| 2009 CRON ST | |
| BELLINGHAM WA | 98225 |
| (Address of principal executive office) | (Zip Code) |
(360) 647-3170
(Issuer's telephone number)
None
(Former Name or Former Address, 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 Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days
¨ Yes ¨ No
State the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
11,980,000 shares of common stock outstanding as of February 28, 2003
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
2
24 HOUR AUCTION, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
FEBRUARY 28, 2003
(Unaudited)
(Stated in U.S. Dollars)
F-1
24 HOUR AUCTION, INC.
(A Development Stage Company)
BALANCE SHEET
(Unaudited)
(Stated in U.S. Dollars)
| FEBRUARY 28 | AUGUST 31 | |||||
| 2003 | 2002 | |||||
| (Unaudited) | (Audited) | |||||
| ASSETS | ||||||
| Capital Assets, net | $ | 599 | $ | 1,030 | ||
| LIABILITIES | ||||||
| Current | ||||||
| Accounts payable | $ | 3,990 | $ | 2,490 | ||
| Related party payable | 18,274 | 18,274 | ||||
| 22,264 | 20,764 | |||||
| SHAREHOLDERS' DEFICIENCY | ||||||
| Share Capital | ||||||
| Authorized: | ||||||
| 80,000,000 common shares, par value $0.0001 per share | ||||||
| 20,000,000 preferred shares, par value $0.0001 per share | ||||||
| Issued and outstanding: | ||||||
| 11,292,000 common shares | 1,129 | 1,129 | ||||
| Additional paid-in capital | 70,371 | 70,371 | ||||
| Deficit Accumulated During The Development Stage | (93,165 | ) | (91,234 | ) | ||
| (21,665 | ) | (19,734 | ) | |||
| $ | 599 | $ | 1,030 |
F-2
24 HOUR AUCTION, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(Unaudited)
(Stated in U.S. Dollars)
| INCEPTION | |||||||||||||||
| SEPTEMBER 21 | |||||||||||||||
| THREE MONTHS ENDED | SIX MONTHS ENDED | 1999 TO | |||||||||||||
| FEBRUARY 28 | FEBRUARY 28 | FEBRUARY 28 | |||||||||||||
| 2003 | 2002 | 2003 | 2002 | 2003 | |||||||||||
| Expenses | |||||||||||||||
| Lease expense | $ | - | $ | - | $ | - | $ | - | $ | 3,000 | |||||
| Filing and transfer | |||||||||||||||
| agent fees | - | 1,458 | - | 1,701 | 6,761 | ||||||||||
| Professional | |||||||||||||||
| expenses | - | 15,000 | 1,500 | 30,000 | 71,150 | ||||||||||
| Organization | |||||||||||||||
| expense | - | - | - | - | 2,000 | ||||||||||
| Website | |||||||||||||||
| maintenance | - | - | - | - | 132 | ||||||||||
| Depreciation | 105 | 326 | 431 | 652 | 3,908 | ||||||||||
| General and | |||||||||||||||
| administrative | - | 495 | - | 4,478 | 6,135 | ||||||||||
| Office supplies | - | - | - | - | 79 | ||||||||||
| Net Loss For The | |||||||||||||||
| Period | $ | 105 | $ | 17,279 | $ | 1,931 | $ | 36,831 | $ | 93,165 | |||||
| Net Loss Per Share | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.01 | ) | |||
| Weighed Average | |||||||||||||||
| Number Of Common | |||||||||||||||
| Shares Outstanding | 11,272,000 | 11,272,000 | 11,272,000 | 11,272,000 | |||||||||||
F-3
24 HOUR AUCTION, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
(Unaudited)
(Stated in U.S. Dollars)
| SIX MONTHS ENDED | ||||||
| FEBRUARY 28 | ||||||
| 2003 | 2002 | |||||
| Cash Flows From Operating Activities | ||||||
| Net loss for the period | $ | (1,931 | ) | $ | (36,831 | ) |
| Adjustments To Reconcile Net Loss To Net Cash By Operating | ||||||
| Activities | ||||||
| Depreciation | 431 | 652 | ||||
| Accounts payable | 1,500 | - | ||||
| Increase (Decrease) In Cash | - | (36,179 | ) | |||
| Cash, Beginning Of Period | - | 39,582 | ||||
| Cash, End Of Period | $ | - | $ | 3,403 | ||
F-4
24 HOUR AUCTION, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDER'S EQUITY
FEBRUARY 28, 2003
(Unaudited)
(Stated in U.S. Dollars)
| DEFICIT | ||||||||||||||
| COMMON STOCK | ACCUMULATED | |||||||||||||
| NUMBER | ADDITIONAL | DURING THE | ||||||||||||
| OF | PAID-IN | DEVELOPMENT | ||||||||||||
| SHARES | AMOUNT | CAPITAL | STAGE | TOTAL | ||||||||||
| Issuance of common shares September 29, 1999 | 10,980,000 | $ | 1,098 | $ | 18,402 | $ | - | $ | 19,500 | |||||
| Loss for the period | - | - | - | (15,483 | ) | (15,483 | ) | |||||||
| Balance, August 31, 2000 | 10,980,000 | 1,098 | 18,402 | (15,483 | ) | 4,017 | ||||||||
| Common share subscriptions received | 312,000 | 31 | 51,969 | - | 52,000 | |||||||||
| Loss for the year | - | - | - | (14,593 | ) | (14,593 | ) | |||||||
| Balance, August 31, 2001 | 11,292,000 | 1,129 | 70,371 | (30,076 | ) | 41,424 | ||||||||
| Loss for the year | - | - | - | (61,158 | ) | (61,158 | ) | |||||||
| Balance, August 31, 2001 | 11,292,000 | 1,129 | 70,371 | (91,234 | ) | (19,734 | ) | |||||||
| Loss for the period | - | - | - | (1,931 | ) | (1,931 | ) | |||||||
| Balance, February 28, 2003 | 11,292,000 | $ | 1,129 | $ | 70,371 | $ | (93,165 | ) | $ | (21,665 | ) | |||
F-5
24 HOUR AUCTION, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2003
(Unaudited)
(Stated in U.S. Dollars)
| 1. | ORGANIZATION AND DESCRIPTION OF BUSINESS | |
| 24 Hour Auction, Inc. (herein after "the Company") was incorporated in September 1999, under the laws of the State of Delaware, primarily for the purpose of auctioning goods and services via the internet. | ||
| In November 1999, the Company established its website, Bidmonkey.com, which is expected to auction goods and services that are geographically targeted. 24 Hour Auction, Inc. is in the development stage and, at February 28, 2003, has not realized any revenues from planned operations. | ||
| 2. | SIGNIFICANT ACCOUNTING POLICIES | |
| This summary of significant accounting policies is presented to assist in understanding the Company's financial statements. The financial statements and notes are representations of the Company's management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the financial statements. | ||
| a) | Accounting Method | |
| The Company's financial statements are prepared using the accrual method of accounting. | ||
| b) | Interim Financial Statements | |
| The interim financial statements as of, and for the period ended, February 28, 2003, included herein, have been prepared for the Company without audit. They reflect all adjustments which are, in the opinion of management, necessary to present fairly the results of operations for these periods. All such adjustments are normal recurring adjustments. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full fiscal year. | ||
F-6
24 HOUR AUCTION, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2003
(Unaudited)
(Stated in U.S. Dollars)
| 2. | SIGNIFICANT ACCOUNTING POLICIES(Continued) | |
| c) | Use of Estimates | |
| The process of preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts. | ||
| d) | Development Stage Activities | |
| The Company has been in the development stage since its formation on September 21, 1999. It is primarily engaged in auctioning goods and services via the internet. | ||
| e) | Cash and Cash Equivalents | |
| For purposes of the statement of cash flows, the Company considers investments purchased with an original maturity of three months or less to be cash equivalents. | ||
| f) | Fair Value of Financial Instruments | |
| The carrying amounts for cash and payables approximate their fair value. | ||
| g) | Concentration of Risk | |
| The Company maintains its cash accounts in one commercial bank in Vancouver, British Columbia, Canada. The Company's cash account is a business chequing account maintained in U.S. dollars, which totalled $0 as of February 28, 2003. This account is not insured. | ||
| h) | Derivative Instruments | |
| In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 133 – "Accounting for Derivative Instruments and Hedging Activities". This standard establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the consolidated balance sheet, and measure those instruments at fair value. | ||
F-7
24 HOUR AUCTION, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2003
(Unaudited)
(Stated in U.S. Dollars)
| 2. | SIGNIFICANT ACCOUNTING POLICIES(Continued) | |
| h) | Derivative Instruments (Continued) | |
| At February 28, 2003, the Company has not engaged in any transactions that would be considered derivative instruments or hedging activities. | ||
| i) | Impaired Asset Policy | |
| In March 1995, the Financial Accounting Standards Board issued Statement SFAS No. 121 – "Accounting for Impairment of Long-Lived Assets". In complying with this standard, the Company reviews its long-lived assets quarterly to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable. The Company determines impairment by comparing the undiscounted future cash flows estimated to be generated by its assets to their respective carrying amounts. | ||
| The Company does not believe any adjustments are needed to the carrying value of its assets at February 28, 2003. | ||
| j) | Revenue Recognition | |
| Revenues and cost of revenues will be recognized when services and products are furnished or delivered. At February 28, 2003, no revenues were realized or recognized by the Company. | ||
| k) | Income Taxes | |
| At February 28, 2003, the Company had an accumulated net operating loss of $93,165 since its inception in September 1999. No provision for taxes or tax benefit has been reported in the financial statements, as there is not a measurable means of assessing future profits or losses. | ||
| l) | Basic and Diluted Loss Per Share | |
| Net loss per share was computed by dividing the net loss by the weighted average number of shares outstanding during the period. The weighted average number of shares was calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Basic and diluted loss per share were the same as there were no common stock equivalents outstanding at February 28, 2003. | ||
F-8
24 HOUR AUCTION, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2003
(Unaudited)
(Stated in U.S. Dollars)
| 2. | SIGNIFICANT ACCOUNTING POLICIES(Continued) | |
| m) | Going Concern | |
| The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. | ||
| As shown in the accompanying financial statements, the Company has generated no revenues since inception. The Company recorded a loss and an accumulated deficit of $93,165 for the period from September 21, 1999 (inception) to February 28, 2003. The Company, being a development stage enterprise, is currently putting technology in place that will, if successful, mitigate these factors which raise substantial doubt about the Company's 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. | ||
| Management has established plans designed to create sales of the Company's products and services. Management intends to seek new capital from new equity securities issuances that will provide funds needed to increase liquidity, fund internal growth and fully implement its business plan. | ||
| 3. | PROPERTY AND EQUIPMENT | |
| The Company has capitalized the costs to build its website and is depreciating those costs over three years using the straight-line method. In addition, the Company purchased computer equipment which will be depreciated over five years using the straight-line method. In the future, the Company will review those assets for impairment on a quarterly basis by comparing the estimated undiscounted future cash flows to their respective carrying amounts. | ||
| Depreciation expense for the six months ended February 28, 2003 was $431. | ||
| 4. | RELATED PARTY TRANSACTION | |
| The Company is the lessor of office space and computers under an operating lease for $250 per month. The space and computers are leased from a related party. This lease expired in September 2000. | ||
F-9
24 HOUR AUCTION, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 2003
(Unaudited)
(Stated in U.S. Dollars)
| 5. | SHARE CAPITAL |
| On April 22, 2002, the Company effected a three for one stock split of its common stock. All common share as per common share information in the accompanying financial statements and related notes have been restated to reflect the stock split. | |
F-10
Item 2. Management's Discussion and Analysis or Plan of Operation
OnFebruary 28, 2003, The Company had an accumulated deficit of $ 93,165
The Company continues to develop a word of mouth referral system along with other conventional marketing strategies.
Item 3. Controls and Procedures
Disclosure Controls and Procedures. The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act.
Internal Control Over Financial Reporting. There have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are not involved in any lawsuits and are not aware of any pending litigation.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 6. Exhibits
The following exhibits are provided with this Quarterly Report:
| 31.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1 |
3
SIGNATURES
In accordance with the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| 24 Hour Auction Inc. | ||
| Dated:September 17, 2004 | By: | /s/ Robin Lee |
| Robin Lee | ||
| President | ||
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