UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934. For the quarterly period ended September 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 000-49649
Donar Enterprises, Inc.
(Exact name of registrant as specified in its charter)
Delaware 23-3083371
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
2000 Hamilton Street, #520
Philadelphia, Pennsylvania 19130-3883
(Address of principal executive offices) (Zip Code)
(215) 893-3662
(Registrant's telephone number, including area code)
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 Exchange Act of
1934 during the preceding 12 months (or for a 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 September 30, 2002, there were 5,268,000 shares of Common Stock, $.001
par value, outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [x]
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited financial statements
included in this Form 10-QSB reflect all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of the results of
operations for the periods presented. The results of operations for the
periods presented are not necessarily indicative of the results to be expected
for the full year.
DONAR ENTERPRISES, INC.
(A Development Stage Company)
BALANCE SHEETS
ASSETS
September 30,
2002 December
(Unaudited) 31, 2001
----------- -----------
Current assets:
Cash in bank $ 26,728 $ --
Accounts receivable 837 --
----------- -----------
Total current assets $ 27,565 $ --
Other assets:
Deferred offering costs 5,573 3,480
----------- -----------
TOTAL ASSETS $ 33,138 $ 3,480
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Due to stockholder $ 5,231 $ 4,004
Accounts payable 1,350 --
----------- -----------
Total current liabilities 6,581 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,
5,268,000 and 4,750,000 issued and
outstanding in 2002 and 2001,
respectively 5,268 4,750
Additional paid-in capital 258,132 232,750
Deferred officer's compensation -- (222,500)
Accumulated amortization, officer's
compensation -- 129,792
(Deficit) accumulated during the
development stage (236,843) (145,316)
----------- -----------
Total stockholders' equity (deficit) 26,557 (524)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 33,138 $ 3,480
=========== ===========
DONAR ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
From
Inception on
Three Months Nine Months May 25, 2001
Ended Ended Through
September 30, September 30, September 30,
2002 2002 2002
------------ ------------ ------------
Revenue:
Sales, net of discounts and allowances $ 1,480 $ 1,648 $ 1,648
Interest income 17 17 17
------------ ------------ ------------
1,497 1,665 1,665
Expenses:
General and administrative expenses 380 93,192 238,508
------------ ------------ ------------
Net income (loss) from operations $ 1,117 $ (91,527) $ (236,843)
============ ============ ============
DONAR ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
From
Inception on
Three Months Nine Months May 25, 2001
Ended Ended Through
September 30, September 30, September 30,
2002 2002 2002
------------ ------------ ------------
Cash flows from operating activities:
Net (loss) $ 1,117 $ (91,527) $ (236,843)
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 -- (2,093) (5,573)
Increase in deferred officer's compensation -- -- (222,500)
Amortization of deferred officer's compensation -- 92,708 222,500
Increase in accounts payable -- 1,350 1,350
Increase in accounts receivable (669) (837) (837)
------------ ------------ ------------
Net cash (used in) operating activities 448 (399) (4,403)
------------ ------------ ------------
Cash flows from investing activities: -- -- --
------------ ------------ ------------
Net cash provided by investing activities -- -- --
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock 25,900 25,900 25,900
Advances from stockholder 380 1,227 5,231
------------ ------------ ------------
Net cash provided by financing activities 26,280 27,127 31,131
------------ ------------ ------------
Net Increase in Cash 26,728 26,728 26,728
Beginning Cash -- -- --
------------ ------------ ------------
Ending Cash $ 26,728 $ 26,728 $ 26,728
============ ============ ============
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 $ -- $ -- $ --
============ ============ ============
DONAR ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2002
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and Description of Business
Donar Enterprises, Inc. (the "Company") was organized under the laws of the
State of Delaware on May 25, 2001. The primary plan of operations of the
Company is providing electronic filing services with the Securities and
Exchange Commission ("SEC") through the SEC's electronic system - "Electronic
Data Gathering Analysis and Retrieval" or "EDGAR". The Company has not
generated significant revenues from its planned principal operations and is
considered a development stage company as defined in Statement of Financial
Accounting Standards No. 7. The Company has, at the present time, not paid any
dividends and any dividends that may be paid in the future will depend upon the
financial requirements of the Company and other relevant factors.
Preparation of Financial Statements
The accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America for
interim financial information and with the instructions incorporated in
Regulation S-B, Item 310(b) of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnote
disclosures required by accounting principles generally accepted in the United
States of America for complete financial statements. The statements are
unaudited but, in the opinion of management, all adjustments (consisting of
normal recurring adjustments and accruals) considered necessary for a fair
presentation have been included.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year. The accompanying
financial statements should be read in conjunction with the Company's financial
statements for the period ended December 31, 2001.
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.
Revenue Recognition
Revenues from document formatting and electronic filing services are recognized
at the time the services are provided to the customer.
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
DONAR ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2002
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.
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.
NOTE 2. 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, which exempts from registration "transactions by an issuer not
involving any public offering," 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 September 30, 2002, the Company
owed the sole director an outstanding balance of $5,231.
NOTE 3. GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America, which
contemplate continuation of the Company as a going concern. However, the
Company has recently commenced operations and has incurred losses since its
inception, raising substantial doubt about the ability of the Company to
continue as a going concern. In this regard, management is proposing to raise
any necessary additional funds not provided by operations through loans or
through additional sales of its common stock. 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. There is no assurance that the Company will be
successful in raising this additional capital or achieving profitable
operations. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
NOTE 4. COMMON STOCK OFFERING
The Company has filed a registration statement with the Securities and Exchange
Commission on Form SB-2 under the Securities Act of 1933, which became
effective February 27, 2002, for the sale of up to 2,000,000 shares of its
common stock to the public for $0.05 per share. The offering is on a best
DONAR ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 2002
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 OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The financial information set forth in the following discussion should be read
in conjunction with, and qualified in its entirety by, the Financial Statements
included in this report.
Plan of Operation
Donar Enterprises, Inc. (the "Company") is a service company, which provides
electronic filing services for clients that need to electronically file
reports, prospectuses, registration statements, and other documents with the
Securities and Exchange Commission ("SEC") through the SEC's electronic system
- - Electronic Data Gathering Analysis and Retrieval ("EDGAR").
The Company has recently established relationships with a limited number of
clients. The Company plans on increasing its client base through advertising
campaigns on the Internet.
The Company may attempt to employ additional personnel if it is able to
generate sufficient revenues. However, there is no assurance that the services
of such persons will be available or that they can be obtained upon terms
favorable to the Company. If and when the Company is successful in achieving a
positive cash flow, it is likely that it will consider expanding, which will
also increase costs.
Management expects that the Company will continue generating small amounts of
revenue from the Company's current clients during the remaining calendar
quarter of 2002. As the Company attracts more clientele, revenues are expected
to increase.
Results of Operations
The Company's operations during the quarterly period ended September 30, 2002,
resulted in $1,480 in revenues and incurred expenses of $380, stemming from
costs related to general and administrative expenses.
Liquidity and Capital Resources
At September 30, 2002, the Company had total current assets of $27,565 and
total liabilities of $6,581. Based upon the Company's current level of
revenues, expected growth and estimated expenses, management believes that its
cash on hand of $26,728 will be sufficient to allow it to maintain its current
operations for the next twelve months.
Readers are referred to the cautionary statement below, which addresses
forward-looking statements.
Cautionary Statement Regarding Forward-Looking Information
This report and other reports, as well as other written and oral statements
made or released by the Company, may contain forward looking statements.
Forward-looking statements are statements that describe, or that are based on,
the Company's current expectations, estimates, projections and beliefs.
Forward-looking statements are based on assumptions made by the Company, and on
information currently available to the Company. Forward-looking statements
describe the Company's expectations today of what it believes is most likely to
occur or may be reasonably achievable in the future, but such statements do not
predict or assure any future occurrence and may turn out to be wrong. You can
identify forward-looking statements by the fact that they do not relate
strictly to historical or current facts. The words "believe," "anticipate,"
"intend," "expect," "estimate," "project", "predict", "hope", "should", "may",
and "will", other words and expressions that have similar meanings, and
variations of such words and expressions, among others, usually are intended to
help identify forward looking statements.
Forward-looking statements are subject to both known and unknown risks and
uncertainties and can be affected by inaccurate assumptions we might make.
Risks, uncertainties and inaccurate assumptions could cause actual results to
differ materially from historical results or those currently anticipated.
Consequently, no forward-looking statement can be guaranteed. The potential
risks and uncertainties that could affect forward looking statements include,
but are not limited to increased competition, extent of the market demand for
and supply of goods and services of the types provided by the Company,
governmental regulation, performance of information systems, and the ability of
the Company to hire, train and retain qualified employees. In addition, other
risks, uncertainties, assumptions, and factors that could affect the Company's
results and prospects have been and may further be described in the Company's
prior and future filings with the Securities and Exchange Commission and other
written and oral statements made or released by the Company.
The Company cautions you not to place undue reliance on any forward-looking
statements, which speak only as of the date of this document. The information
contained in this report is current only as of its date, and the Company
assumes no obligation to update 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 SECURITIES 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:
Exhibit No. Description
----------- ------------------------------------------------------------
99.1 CEO/CFO Certification Pursuant to 18 USC, Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
(b) Reports on 8-K:
No reports on Form 8-K have been filed during the last quarter of the period
covered by this report.
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, Chief Executive
Officer, Treasurer and Director
(principal financial officer,
principal accounting officer,
director)
Date: November 4, 2002
