UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB / AMENDMENT
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
June 30, 2002
[ ] 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 0-49649
DONAR ENTERPRISES, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 23-3083371
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2000 Hamilton Street, #520, Philadelphia, Pennsylvania 19130-3883
(Address of principal executive offices)
(215) 893-3662
(Issuer's telephone number, including area code)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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.
[X] Yes [ ] No
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Outstanding at June 30, 2002
Common Stock, par value $0.001 - 4,750,000
-------------------------------
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
DONAR ENTERPRISES, INC.
(A Development Stage Company)
BALANCE SHEETS
ASSETS
June 30,
2002 December
(Unaudited) 31, 2001
----------- -----------
Current assets:
Cash $ -- $ --
Accounts receivable 168 --
----------- -----------
Total current assets $ 168 $ --
=========== ===========
Other assets:
Deferred offering costs 5,573 3,480
----------- -----------
TOTAL ASSETS $ 5,741 $ 3,480
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Due to stockholder $ 4,851 $ 4,004
Accounts payable 1,350 --
----------- -----------
Total current liabilities 6,201 4,004
Stockholders' equity (deficit):
Preferred stock: $.001 par value,
20,000,000 shares authorized,
none issued or outstanding -- --
Common stock: $.001 par value,
100,000,000 shares authorized,
4,750,000 issued and outstanding 4,750 4,750
Additional paid-in capital 232,750 232,750
Deferred officer's compensation (222,500) (222,500)
Accumulated amortization, officer's
compensation 222,500 129,792
(Deficit) accumulated during the
development stage (237,960) (145,316)
----------- -----------
Total stockholders' equity (deficit) (460) (524)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,741 $ 3,480
=========== ===========
See Accompanying Notes to Financial Statements
DONAR ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
From
Inception on
3 Months 6 Months May 25, 2001
Ended Ended Through
June 30, June 30, June 30,
2002 2002 2002
------------ ------------ ------------
Revenue $ 168 $ 168 $ 168
------------ ------------ ------------
Costs and expenses:
General and administrative expenses 37,133 92,812 238,128
------------ ------------ ------------
Total costs and expenses 37,133 92,812 238,128
------------ ------------ ------------
Net income (loss) from operations $ (36,965) $ (92,644) $ (237,960)
============ ============ ============
Per share information: Basic and fully diluted
Weighted average number of common
shares outstanding 4,750,000 4,750,000 4,750,000
============ ============ ============
Net (loss) per common share $ (0.01) $ (0.02) $ (0.05)
============ ============ ============
See Accompanying Notes to Financial Statements
DONAR ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
From
Inception on
3 Months 6 Months May 25, 2001
Ended Ended Through
June 30, June 30, June 30,
2002 2002 2002
------------ ------------ ------------
Cash flows from operating activities:
Net (loss) $ (36,965) $ (92,644) $ (237,960)
Adjustments to reconcile net (loss) to
net cash (used in) operating activities:
Issuance of stock for services rendered -- -- 237,500
Increase in deferred offering costs (41) (2,093) (5,573)
Increase in deferred officer's compensation -- -- (222,500)
Amortization of deferred officer's compensation 37,083 92,708 222,500
Increase in accounts payable -- 1,350 1,350
Increase in accounts receivable (168) (168) (168)
------------ ------------ ------------
Net cash (used in) operating activities (91) (847) (4,851)
------------ ------------ ------------
Cash flows from investing activities: -- -- --
------------ ------------ ------------
Net cash provided by investing activities -- -- --
------------ ------------ ------------
Cash flows from financing activities:
Advances from stockholder 91 847 4,851
------------ ------------ ------------
Net cash provided by financing activities 91 847 4,851
------------ ------------ ------------
Net Increase in Cash -- -- --
Beginning Cash -- -- --
------------ ------------ ------------
Ending Cash $ -- $ -- $ --
============ ============ ============
NONCASH FINANCING AND INVESTING ACTIVITIES
Common stock issued to founder for organizational
costs and services $ 237,500 $ 237,500 $ 237,500
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid for: Income taxes $ -- $ -- $ --
============ ============ ============
Interest $ -- $ -- $ --
============ ============ ============
See Accompanying Notes to Financial Statements
DONAR ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Donar Enterprises, Inc. ("Donar" or "the Company") was incorporated under the
laws of the State of Delaware on May 25, 2001. The Company is organized to
engage in any lawful act or activity for which a corporation may be organized
under the General Corporation Law of the State of Delaware including, without
limitation, to provide document formatting and electronic filing services to
public corporations and individuals.
Donar has been in the development stage since its formation on May 25, 2001.
Planned principal operations have only recently commenced since then, but Donar
has not generated any significant revenue.
Revenue Recognition
Revenues from document formatting and electronic filing services are recognized
at the time the services are provided to the customer.
Use of Estimates
The preparation of the Company's financial statements in conformity with
accounting principles generally accepted in the United States of America
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 balance sheet date and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates.
Net Loss Per Share
The Company follows Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" ("SFAS No. 128"). Basic earnings (loss) per common share
("EPS") calculations are determined by dividing net income (loss) by the
weighted average number of shares of common stock outstanding during the year.
Diluted earnings (loss) per common share calculations are determined by
dividing net income (loss) by the weighted average number of common shares and
dilutive common share equivalents outstanding. Common stock equivalents were
not considered during the periods presented, as their effect would be anti-
dilutive.
Cash and Cash Equivalents
For purposes of balance sheet classification and the statements of cash flows,
the Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
DONAR ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Segment Information
The Company follows SFAS No. 131, "Disclosure about Segments of an Enterprise
and Related Information". Certain information is disclosed, per SFAS No. 131,
based on the way management organizes financial information for making
operating decisions and assessing performance. The Company currently operates
in one business segment and will evaluate additional segment disclosure
requirements as it expands operations.
Comprehensive Income
There have been no items of comprehensive income since the Company's inception
on May 25, 2001.
Impairment Of Long-Lived Assets
The Company periodically reviews the carrying amount of property, plant and
equipment and its identifiable intangible assets to determine whether current
events or circumstances warrant adjustments to such carrying amounts. If an
impairment adjustment is deemed necessary, such loss is measured by the amount
that the carrying value of such assets exceeds their fair value. Considerable
management judgement is necessary to estimate the fair value of assets,
accordingly, actual results could vary significantly from such estimates.
Assets to be disposed of are carried at the lower of their financial statement
carrying amount or fair value less costs to sell. As of June 30, 2002,
management does not believe there is any impairment of the carrying amounts of
assets.
Fair Value of Financial Instruments
Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of June 30, 2002. The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments include cash,
accounts payable and accrued expenses, and notes payable. Fair values were
assumed to approximate carrying values for these financial instruments because
they are short term in nature, their carrying amounts approximate fair values,
or they are receivable or payable on demand.
Deferred Offering Costs
The Company defers costs associated with the raising of capital until such time
as the offering is completed, at which time the costs are charged against the
capital raised. Should the offering be terminated, the costs are charged to
operations during the period when the offering is terminated.
DONAR ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Recent Pronouncements
In July, 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) 141, Business Combinations, and SFAS
142, Goodwill and Intangible Assets. SFAS 141 is effective for all business
combinations completed after June 30, 2001. SFAS 142 is effective for the year
beginning January 1, 2002; however certain provisions of that Statement apply
to goodwill and other intangible assets acquired between July 1, 2001, and the
effective date of SFAS 142. The Company does not believe the adoption of these
standards will have a material impact on the Company's financial statements.
In July 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 143, Accounting for Asset
Retirement Obligations. This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. This Statement applies to all
entities. It applies to legal obligations associated with the retirement of
long-lived assets that result from the acquisition, construction, development
and (or) the normal operation of a long-lived asset, except for certain
obligations of lessees. This Statement is effective for financial statements
issued for fiscal years beginning after June 15, 2002. The Company is
evaluating the impact of the adoption of this standard and has not yet
determined the effect of adoption on its financial position and results of
operations.
In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. This statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets and
supersedes FASB Statement No. 121, Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of. The provisions of the
statement are effective for financial statements issued for fiscal years
beginning after December 15, 2001. The Company is evaluating the impact of the
adoption of this standard and has not yet determined the effect of adoption on
its financial position and results of operations.
NOTE 2. GOING CONCERN
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplates continuation of the Company as a going concern. The Company has
generated losses since its inception on May 25, 2001, aggregating $237,960
through June 30, 2002. Additionally, the Company was recently formed, and has
not been able to establish operations since the date of inception. The Company
has been reliant on funding from stockholders.
DONAR ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
As discussed in Note 4, the Company plans on issuing up to 2,000,000 shares of
voting common stock in exchange for up to $100,000.
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.
NOTE 3. RELATED PARTY TRANSACTIONS
The Company issued 4,750,000 shares of unregistered common stock for $237,500,
based on the Company's expected offering price of $0.05 per share, to its
President in exchange for services as President, Secretary, and Treasurer.
These shares were issued under Section 4(2) of the Securities act of 1933, as
amended, and are subject to the resale provisions of Rule 144 and may not be
sold or transferred without registration except in accordance with Rule 144.
Certificates representing the securities bear such a legend.
On November 1, 2001, the sole director of the Company agreed to loan the
Company $25,000. The advance will bear an interest rate of 10% per annum, due
and payable on or before June 30, 2003. As of June 30, 2002, the Company owed
the sole director an outstanding balance of $4,851.
NOTE 4. COMMON STOCK OFFERING
The Company has filed a registration statement with the SEC on Form SB-2, which
became effective February 27, 2002, for the sale of up to 2,000,000 shares of
its common stock at $0.05 per share. The offering is on a best-efforts, no
minimum basis. As such, there will be no escrow of any of the proceeds of the
offering and the Company will have the immediate use of such funds to finance
its operations.
Item 2. Management's Discussion and Analysis or Plan of Operation.
The following discussion should be read in conjunction with the information
contained in the financial statements of the Company and the Notes thereto
appearing elsewhere herein.
History and Organization
The Company was organized on May 25, 2001 under the laws of the State of
Delaware, and has commenced operations, but it has not generated any
significant revenue and is still a development stage corporation. The Company
is in the business of providing document formatting and electronic filing
services for companies and individuals that desire to submit filings, such as
reports, prospectuses, registration statements, and other documents pursuant to
the federal securities laws, to the Securities and Exchange Commission's Edgar
(Electronic Data Gathering, Analysis and Retrieval) system.
In connection with organizing the Company, on May 25, 2001, William Tay, the
Company's founder, was issued 4,750,000 shares of the Company's restricted
common stock in exchange for services, his first year's salary, the business
plan of the Company, and the Company's web site and domain name, pursuant to
Section 4(2) of the Securities Act of 1933, to sophisticated persons (officers
and directors) having superior access to all corporate and financial
information. The amount of shares issued in exchange for organizational costs,
business plan, the website domain name and the first year's salary was valued
at $237,500.
The Company's common stock is not listed on any recognized exchange or quoted
on any quotation medium. There can be no assurance that the Company's common
stock will ever develop a market.
Plan of Operations
The Company's plan of operations is to provide high quality Edgar filing
services primarily to small public corporations traded on the over-the-counter
market and certain individuals by marketing its services to these groups
directly or through legal and accounting firms specializing in securities
practices. To do this, the Company intends to carry out an aggressive targeted
marketing campaign.
The Company presently does not have any cash to satisfy any future cash
requirements. The Company will need a minimum of $25,000 to be raised from its
public offering of its common stock (the "offering") filed with the Securities
and Exchange Commission ("Commission") on Form SB-2, which was declared
effective by the Commission on February 27, 2002, or from loans to satisfy its
cash requirements for the next 12 months. The offering proceeds, if any, or
loan proceeds will be used to pay off the offering expenses and for its planned
operations. The Company will not be able to operate fully if it does not obtain
equity financing through this offering, subsequent private offerings, loans or
contributions from Mr. William Tay, the Company's sole director. If only a
minimal number of shares are sold in the offering, the Company will continue to
satisfy its cash requirements by contributions or from loans from William Tay,
which the Company expects he will continue to contribute for the next twelve
months. This minimum amount of capital in the amount of $25,000, which includes
the offering expenses, must be raised in the offering or from loans from
William Tay, in order to minimally execute the Company's plan of operations,
and to pay off its offering expenses in the amount of $15,500.
If the Company does not raise at least $25,000 from the offering, then it will
seek additional funding by borrowing from William Tay who has committed to
loaning the Company the full amount of $25,000 even if the Company manages to
raise some proceeds from the offering, e.g. $10,000. Based on a loan agreement
executed on November 1, 2001, as amended, William Tay is bound under the terms
and conditions of the agreement to lend the Company money on a promissory note,
payable at 10% interest per annum, if the Company fails to raise $25,000 from
the offering needed to fund its plan of operations, and to pay off the offering
expenses. William Tay will make the loan to the Company after the offering
closes.
The Company has no current material commitments. The Company will depend upon
capital to be derived from future financing activities such as subsequent
offerings of its common stock. The Company may never be successful in raising
the capital it requires.
The Company's sole director, William Tay, believes that, if the offering is
successful in raising $100,000, it will be able to generate enough revenue and
become profitable from providing Edgar filing services and achieve liquidity
within the next twelve months.
The Company has no alternative plan of operations. In the event that the
Company does not receive additional financing from subsequent offerings of its
stock, or loans from its president is inadequate, the Company may have to
liquidate its business and undertake any or all of the following actions:
- Sell or dispose of the Company's assets, if any;
- Pay the Company's liabilities in order of priority, if it has available
cash to pay such liabilities;
- If any cash remains after the Company satisfies amounts due to its
creditors, distribute any remaining cash to its shareholders in an
amount equal to the net market value of its net assets;
- File a certificate of dissolution with the State of Delaware to dissolve
the corporation and close its business;
- Make the appropriate filings with the Commission so that the Company
will not be required to file periodic and other required reports with
the Commission, if, in fact, the Company is a reporting company at that
time; and
- Make the appropriate filings with the National Association of Securities
Dealers to affect a delisting of the Company's common stock, if, in
fact, its common stock is trading on the Over-the-Counter Bulletin Board
at that time.
Based upon the Company's current assets, however, the Company will not have the
ability to distribute any cash to its shareholders. If the Company has any
liabilities that it is unable to satisfy and it qualifies for protection under
the U.S. Bankruptcy Code, the Company may voluntarily file for reorganization
under Chapter 11 or liquidation under Chapter 7. The Company's creditors may
also file a Chapter 7 or Chapter 11 bankruptcy action against it. If the
Company's creditors or the Company files for Chapter 7 or Chapter 11
bankruptcy, the Company's creditors will take priority over its shareholders.
If the Company fails to file for bankruptcy under Chapter 7 or Chapter 11 and
the Company has creditors, such creditors may institute proceedings against the
Company seeking forfeiture of its assets, if any.
The Company does not know and cannot determine which, if any, of these actions
it will be forced to take. If any of these foregoing events occur, you could
lose your entire investment in the Company's shares.
The Company does not anticipate any further research and development of any
products, nor does it expect to incur any research and development costs. The
Company does not expect the purchase or sale of plant or any significant
equipment, and it does not anticipate any change in the number of its
employees. The Company has no current material commitments.
The Company is still considered to be a development stage company, with no
significant revenue, and is dependent upon the raising of capital through
placement of its common stock. There can be no assurance that the Company will
be successful in raising the capital it requires through the sale of its common
stock.
Readers are referred to the cautionary statement below, which addresses
forward-looking statements.
Cautionary Note Regarding Forward-Looking Statements
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"), the Company is hereby
providing cautionary statements identifying important factors that could cause
the Company's actual results to differ materially from those projected in
forward-looking statements (as such term is defined in the Reform Act) made by
or on behalf of the Company herein or orally, whether in presentations, in
response to questions or otherwise. Any statements that express, or involve
discussions as to expectations, beliefs, plans, objectives, assumptions or
future events or performance (often, but not always, through the use of words
or phrases such as "will result", "are expected to", "will continue", "is
anticipated", "estimated", "projection" and "outlook") are not historical facts
and may be forward-looking and, accordingly, such statements involve estimates,
assumptions, and uncertainties which could cause actual results to differ
materially from those expressed in the forward-looking statements. Such
uncertainties include, among other, the following: (i) the Company's ability to
obtain additional financing to implement its business strategy; (ii) the
financial condition of the Company's clients; (iii) imposition of new
regulatory requirements affecting the Company; (iv) a downturn in general
economic conditions (v) the delay or failure to properly manage growth and
successfully integrate acquired companies and operations; (vi) lack of
geographic diversification; and (vii) other factors which are described in
further detail in the Company's filings with the Securities and Exchange
Commission.
The Company cautions that actual results or outcomes could differ materially
from those expressed in any forward-looking statements made by or on behalf of
the Company. Any forward-looking statement speaks only as of the date on which
such statement is made, and the Company undertakes no obligation to update any
forward-looking statement or statements to reflect events or circumstances
after the date on which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it is not
possible for management to predict all of such factors. Further, management
cannot assess the impact of each such factor on the business or the extent to
which any factor, or combination of factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
There are no legal proceedings against the Company and the Company is unaware
of such proceedings contemplated against it.
Item 2. Changes in Securities.
There have been no changes or modifications in the Company's securities.
Item 3. Defaults upon Senior Securities.
There has been no default upon senior securities.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of the security holders during the
quarterly period covered by this report.
Item 5. Other Information.
There is no other information deemed material by management for disclosure
herein.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
1. Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer
and Chief Financial Officer).
(b) Reports on Form 8-K
1. A Form 8-K was filed by the Company dated May 9, 2002 and filed May 13,
2002; and
2. A Form 8-K was filed by the Company dated and filed June 7, 2002.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DONAR ENTERPRISES, INC.
(Registrant)
By: /S/ William Tay
William Tay, President and Director
Dated: August 13, 2002
