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 March 31, 2003
[ ] 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.
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(Exact name of registrant as specified in its charter)
Delaware 23-3083371
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(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
2000 Hamilton Street, #520
Philadelphia, Pennsylvania 19130-3883
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(Address of principal executive offices) (Zip Code)
(215) 893-3662
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(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 March 31, 2003, there were 5,706,000 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
March 31,
2003 December
(Unaudited) 31, 2002
----------- -----------
Current assets:
Cash in bank $ 44,029 $ 39,082
Accounts receivable 1,581 351
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Total current assets $ 45,610 $ 39,433
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TOTAL ASSETS $ 45,610 $ 39,433
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Due to stockholder $ 6,209 $ 6,109
Accounts payable - trade 1,441 1,350
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Total current liabilities 7,650 7,459
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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,
5,706,000 and 5,406,000 issued and
outstanding in 2003 and 2002,
respectively 5,706 5,406
Additional paid-in capital 279,594 264,894
Deferred officer's compensation -- (222,500)
Accumulated amortization, officer's
compensation -- 222,500
(Deficit) accumulated during the
development stage (247,340) (238,326)
----------- -----------
Total stockholders' equity (deficit) 37,960 31,974
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 45,610 $ 39,433
=========== ===========
The accompanying notes are an integral part of the financial statements.
DONAR ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
From
Inception on
Three Months Three Months May 25, 2001
Ended Ended Through
March 31, March 31, March 31,
2003 2002 2003
------------ ------------ ------------
Revenue:
Sales, net of discounts and allowances $ 2,590 $ -- $ 9,776
Interest income 77 -- 159
------------ ------------ ------------
2,667 -- 9,935
Expenses:
General and administrative expenses 11,681 55,679 257,275
------------ ------------ ------------
Net income (loss) from operations $ (9,014) $ (55,679) $ (247,340)
============ ============ ============
The accompanying notes are an integral part of the financial statements.
DONAR ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
From
Inception on
Three Months Three Months May 25, 2001
Ended Ended Through
March 31, March 31, March 31,
2003 2002 2003
------------ ------------ ------------
Cash flows from operating activities:
Net (loss) $ (9,014) $ (55,679) $ (247,340)
Adjustments to reconcile net (loss) to
net cash (used in) operating activities:
Issuance of stock for services rendered 10,000 -- 247,500
Increase in deferred offering costs -- (2,052) --
Increase in deferred officer's compensation -- -- --
Amortization of deferred officer's compensation -- 55,625 --
Increase in accounts payable 91 1,350 1,441
Increase in accounts receivable (1,230) -- (1,581)
------------ ------------ ------------
Net cash (used in) operating activities (153) (756) 20
------------ ------------ ------------
Cash flows from investing activities: -- -- --
------------ ------------ ------------
Net cash provided by investing activities -- -- --
------------ ------------ ------------
Cash flows from financing activities:
Proceeds from issuance of common stock 5,000 -- 37,800
Advances from stockholder 100 756 6,209
------------ ------------ ------------
Net cash provided by financing activities 5,100 756 44,009
------------ ------------ ------------
Net Increase in Cash 4,947 -- 44,029
Beginning Cash 39,082 -- --
------------ ------------ ------------
Ending Cash $ 44,029 $ -- $ 44,029
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid for: Income taxes $ -- $ -- $ --
============ ============ ============
Interest $ -- $ -- $ --
============ ============ ============
The accompanying notes are an integral part of the financial statements.
DONAR ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2003
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, 2002.
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)
MARCH 31, 2003
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 March 31, 2003, the Company
owed the sole officer and director an outstanding balance of $6,209.
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)
MARCH 31, 2003
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.
NOTE 5. COMMITMENT
In March 2003, the Company executed an employment agreement with its president
and majority stockholder. The agreement, which expires on January 1, 2006,
requires the Company to pay annual, base compensation of $85,000 and various
fringe benefits (as defined in the agreement).
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 second quarter of
2003. As the Company attracts more clientele, revenues are expected to
increase.
Results of Operations
The Company's operations during the quarterly period ended March 31, 2003,
resulted in $2,667 in revenues and incurred expenses of $11,681, stemming from
costs related to general and administrative expenses.
Liquidity and Capital Resources
At March 31, 2003, the Company had total current assets of $45,610 and
total liabilities of $7,650. Based upon the Company's current level of
revenues, expected growth and estimated expenses, management believes that its
cash on hand of $44,029 will be sufficient to allow it to maintain its current
operations for the next twelve months.
Material Agreement
On March 31, 2003, the Company entered into an employment agreement with
William Tay, who will be compensated at the rate of $85,000 per year and
various fringe benefits (as defined in the agreement). Under the terms of the
agreement, unpaid salary shall accrue without interest in the event the Company
is not in a position, due to its then- current financial situation, to make any
salary payment(s) to Mr. Tay. The employment contract also contains standard
non-compete, termination, confidentiality and other clauses. The employment
agreement expires on January 1, 2006.
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.
ITEM 3. CONTROLS AND PROCEDURES.
The Company maintains a system of controls and procedures designed to provide
reasonable assurance as to the reliability of the financial statements and
other disclosures included in this report, as well as to safeguard assets from
unauthorized use or disposition. Within 90 days prior to the filing of this
report, the Company's Chief Executive Officer and principal financial officer
have evaluated the effectiveness of the design and operation of the Company's
disclosure controls and procedures with the assistance and participation of
other members of management. Based upon that evaluation, the Company's Chief
Executive Officer and principal financial officer concluded that the Company's
disclosure controls and procedures are effective for gathering, analyzing and
disclosing the information the Company is required to disclose in the reports
it files under the Securities Exchange Act of 1934 within the time periods
specified in the SEC's rules and forms. There have been no significant changes
in the Company's internal controls or in other factors which could
significantly affect internal controls subsequent to the date the Company
carried out its evaluation.
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
On January 3, 2003, the Company issued an aggregate of 200,000 restricted
shares of common stock to U.S. Capital Partners, Inc., a financial services
company that provides investment banking and brokerage services, as
compensation for financial services to be provided by U.S. Capital Partners,
Inc. to the Company. The Company estimates the value of these services at
$10,000. The issuance of the shares to U.S. Capital Partners, Inc. was
accomplished in reliance upon Section 4(2) of the Securities Act of 1933, as
amended, and is 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 shares bear such a legend. The facts relied upon
for exemption are that U.S. Capital Partners, Inc. was an accredited investor,
a sophisticated purchaser and had full access to the information on the Company
necessary to make an informed investment decision by virtue of the due
diligence conducted by the purchaser or available to the purchaser prior to the
transaction.
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
The Company recently registered the domain names "www.edgarized.com" and
"www.fastedgar.com." EDGAR(R) is a federally registered trademark of the U.S.
Securities and Exchange Commission. The Company and its web sites are not
affiliated with or approved by the U.S. Securities and Exchange Commission.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit No. Description of Exhibit
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10.1 William Tay Employment Agreement
99.1 Certification by Management
(b) Reports on 8-K:
The Company filed a Form 8-K on February 6, 2003 to report that its common
stock has been cleared for trading on the Over-The-Counter Bulletin Board
service of the NASD under the symbol "DNRE".
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, Secretary, Treasurer
and Director
(principal financial officer,
principal accounting officer,
director)
Date: April 14, 2003
CERTIFICATION
I, William Tay, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Donar Enterprises,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: April 14, 2003 /s/ William Tay
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William Tay
Chief Executive Officer, President and
Principal Financial Officer
