SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES ACT OF 1934
For the quarterly period ended March 31, 2006.
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 000-51386
EAST WEST DISTRIBUTORS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
| NEVADA | 20-2012723 | ||
|---|---|---|---|
| (State or other jurisdiction of | (I.R.S. Employer | ||
| Incorporation or organization) | Identification No.) | ||
PMB 382
10105 East Via Linda, #103
Scottsdale, AZ 85258
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(480) 614-2874
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK, $ .001 PAR VALUE
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 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.
YES X NO
ON March 31, 2006, THERE WERE 2,456,855 SHARES OF THE ISSUER’S COMMON STOCK OUTSTANDING.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE): YES X NO
DOCUMENTS INCORPORATED BY REFERENCE
NONE.
INDEX
| Part I – Financial Information | PAGE NO. | ||||||
|---|---|---|---|---|---|---|---|
Item 1. | Financial Statements | ||||||
| Balance Sheets at March 31, 2006 (Unaudited) | F-1 | ||||||
| Statements of Operations for the three months and nine months ended March 31, 2006 and From July 1, 2005 to March 31, 2006 (Unaudited | |||||||
| F-2 | |||||||
| Statement of Changes in Shareholders’ Equity (Unaudited) | F-3 | ||||||
| Consolidated Statements of Cash Flows for the nine months ended March 31, 2006 And from July 1, 2005 to March 31, 2006 (Unaudited) | |||||||
| F-4 | |||||||
| Item 2. | Management’s Discussion and Analysis or Plan of Operation | 8 | |||||
| Item 3. | Controls and Procedures | 9 | |||||
| Part II – Other Information | 9 | ||||||
| Item 1. | Legal Proceedings | 9 | |||||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 9 | |||||
| Item 3. | Defaults Upon Senior Securities | 9 | |||||
| Item 4. | Submission of Matters to a Vote of Security Holders | 9 | |||||
| Item 5. | Other Information | 10 | |||||
| Item 6. | Exhibits and Reports on Form 8-K | 10 | |||||
This amended 10QSB for the quarter ended March 31, 2006 includes revised footnotes and revised Statements of Operations and Cash Flows. None of the changes are deemed to be material.
2
EAST WEST DISTRIBUTORS, INC.
(A Development Stage Company)
Balance Sheet
March 31, 2006
(Unaudited)
| Assets | |||
| Cash in Bank | $ 2,865 | ||
| Total Assets | $ 2,865 | ||
| Liabilities and Shareholders' Deficit | |||
| Current Liabilities | |||
| Accrued expenses and payables to directors and officers | $ 15,804 | ||
| Due to related party | 42,760 | ||
| Total Current Liabilities | 58,564 | ||
| Total Liabilities | 58,564 | ||
| Shareholders' Deficit | |||
| Preferred stock, $0.001 par value; 25,000,000 shares | |||
| and no shares issued and outstanding | — | ||
| Common stock. $0.001 par value; 400,000,000 shares | |||
| authorized, 2,456,855 shares issued and outstanding | 2,457 | ||
| Deficit accumulated during development stage | (58,156 | ) | |
| Total Shareholders' Deficit | (55,699 | ) | |
| Total Liabilites and Shareholders' Deficit | $ 2,865 | ||
F-1
EAST WEST DISTRIBUTORS, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
| Three months ended March 31, 2006 | Nine months ended March 31,2006 | From Inception (December 13,2004) To March 31,2006 | |||||
|---|---|---|---|---|---|---|---|
Professional Services | 5,814 | 63,632 | 63,632 | ||||
| Administrative Expenses | 301 | 2,550 | 2,550 | ||||
| Total Operating Expenses | 6,115 | 66,182 | 66,182 | ||||
| Other Income: | |||||||
| Sale of Biotech | — | 10,183 | 10,183 | ||||
| Total Other Income | — | 10,183 | 10,183 | ||||
| Net Income (Loss) | 6,115 | 55,999 | 55,999 | ||||
| Basic and Diluted Loss Per Share | — | — | — | ||||
| Weighted Average shares outstanding | 2,156,855 | 2,156,855 | 2,156,855 | ||||
F-2
EAST WEST DISTRIBUTORS, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT
| Number of Common Shares | Common Stock at $.001 Par Value | Deficit Accumulated during development stage | Total Shareholders' Deficit | ||||||
|---|---|---|---|---|---|---|---|---|---|
Inception December 13, 2004 | 0 | $ — | $ — | $ — | |||||
| Distribution of shares in spin-off | 2,156,855 | 2,157 | (2,157 | ) | |||||
| Shares used for compensation | 300,000 | 300 | 300 | ||||||
| Net Loss | (52,967 | ) | (52,967 | ) | |||||
| Balance 9/30/05 | 2,456,855 | 2,457 | (55,124 | ) | (52,667 | ) | |||
| Net Income | 3,083 | 3,083 | |||||||
| Balance 12/31/05 | 2,456,855 | 2,457 | (52,041 | ) | (49,584 | ) | |||
| Net Loss | (6,115 | ) | (6,115 | ) | |||||
| Balance 3/31/06 | 2,456,855 | $ 2,457 | $ (58,156 | ) | $ (55,699 | ) | |||
F-3
EAST WEST DISTRIBUTORS, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOW
| Nine Months ended March 31,2006 | From Inception (December 13,2004) To March 31, 2006 | ||||
|---|---|---|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | |||||
| Net Loss | $ (55,999 | ) | $ (55,999 | ) | |
| Adjustments to reconcile net loss to | |||||
| net cash used in operations | |||||
| Shares used for compensation | 300 | 300 | |||
| Change in Operating Liabilities | |||||
| Due to related party | 42,760 | 42,760 | |||
| Accrued Expenses and other liabilities | 15,804 | 15,804 | |||
| Net Cash Used in Operations | 2,865 | 2,865 | |||
| CASH | |||||
| Begnning of period | — | — | |||
| End of period | $ 2,865 | $ 2,865 | |||
F-4
EAST WEST DISTRIBUTORS, INC.
(Development Stage Companies)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2006
(Unaudited)
NOTE A — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business activity (Company and Subsidiaries)
EAST WEST Distributors, Inc. (“EAST WEST”) is a drug development company, which is focused in the areas of research, development, and marketing in the biomedical industry, with an emphasis on anti-infective drugs. EAST WEST was incorporated in Nevada on December 13, 2004. Since then, it has been engaged in attempting to fund operations with the objective of bringing its future products to market.
Development Stage Enterprise
The Company was formed in December 2004 as a wholly owned subsidiary of Meditech Pharmaceuticals, Inc, which spun off 2,156,855 shares to its shareholders as of August 29, 2005.
The Company is a development stage company as defined in Statement of Financial Accounting Standards (“SFAS”) No. 7, “Accounting and Reporting by Development Stage Enterprises.” The Company is devoting substantially all of its present efforts to establish a new business, and its planned principal operations have not yet commenced.
The Company has not generated significant revenues from operations and has no assurance of any future revenues. All losses accumulated since inception have been considered as part of the Company’s development stage activities. The Company will require substantial additional funding for commercialization of its products. There is no assurance that the Company will be able to obtain sufficient additional funds when needed, or that such funds will be obtainable on terms satisfactory to the Company. The Company’s products, to the extent that they may be deemed medical devices or biologics, are governed by the Federal Food, Drug and Cosmetics Act and by the regulations of state agencies and various foreign government agencies. There can be no assurance that the Company will maintain or obtain the regulatory approvals required to market its products.
Basis of Presentation
The accompanying financial statements have been prepared by EAST WEST pursuant to the rules and regulations of the Securities and Exchange Commission. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of managements, necessary to fairly represent the operating results for the respective periods. Certain information and footnote disclosures normally present in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. The results of the nine months ended March 31, 2006 are not necessarily indicative of the results to be expected for the full year ending June 30, 2006.
Estimates
The preparation of 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 disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
3
EAST WEST DISTRIBUTORS, INC.
(Development Stage Companies)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2006
(Unaudited)
Revenue
Revenue represents license fees that are recognized when earned over the period of the applicable license agreement.
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the assets to future net cash flows expected to be generated by the assets. If the assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair value of the assets. Based on its analysis, the Company believes that no impairment of the carrying value on its long-lived assets exists at March 31, 2006. There can be no assurance, however, that market conditions will not change which could result in impairment of long-lived assets in the future.
Stock-Based Compensation
The Company accounts for non-employee stock-based compensation under Statement of Financial Accounting Standards No. 123 (“SFAS 123”), “Accounting for Stock-Based Compensation.” SFAS 123 defines a fair value based method of accounting for stock-based compensation. However, SFAS 123 allows an entity to continue to measure compensation cost related to stock and stock options issued to employees using the intrinsic method of accounting prescribed by Accounting Principles Board Opinion No. 25 (“APB 25”), “Accounting for Stock Issued to Employees.” Under APB 25, compensation cost, if any, is recognized over the respective vesting period based on the difference, on the date of grant, between the fair value of the Company’s common stock and the grant price. Entities electing to remain with the accounting method of APB 25 must make pro forma disclosures of net income (loss) and earnings per share, as if the fair value method of accounting defined in SFAS 123 had been applied. The Company has elected to account for its stock-based compensation to employees under APB 25.
For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the option vesting period. Adjustments are made for options forfeited prior to vesting.
Income Taxes
The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax.
4
EAST WEST DISTRIBUTORS, INC.
(Development Stage Companies)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2006
(Unaudited)
rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is provided for significant deferred tax assets when it is more likely than not those assets will not be recovered.
Loss Per Share
Basic loss per share is computed by dividing loss available to common stockholders by the weighted-average number of common shares outstanding. Diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. For the nine months ended March 31, 2006, the Company incurred net losses; therefore, potential common shares are ignored as their effect would be anti-dilutive.
Comprehensive Income
Comprehensive income is not presented in the Company’s consolidated financial statements since the Company did not have any items of comprehensive income in any period presented.
Segments of an Enterprise and Related Information
As the Company operates in one segment, the Company has not made segment disclosures in the accompanying consolidated financial statements.
5
EAST WEST DISTRIBUTORS, INC.
(Development Stage Companies)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2006
(Unaudited)
NOTE B — COMMITMENTS AND CONTINGENCIES
Leases
Currently, the Company uses its operating facilities provided by its Chief Executive Officer, without a lease agreement. There is no guarantee the officer will be willing to provide these facilities in the future.
Employment Agreements
There are no employment agreements in effect as of March 31, 2006.
Litigation
The Company may become involved in various legal proceedings and claims which arise in the ordinary course of its business. Management does not believe that these matters will have a material adverse effect on the Company’s financial position or results of operations.
6
EAST WEST DISTRIBUTORS, INC.
(Development Stage Companies)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2006
(Unaudited)
NOTE C — STOCKHOLDERS’ DEFICIT
NOTE D — RELATED PARTY TRANSACTIONS
The Company maintains its primary place of business in facilities owned by the Chief Executive Officer, for which it is NOT charged rent expense (see Note B).
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Item 2. Management's Discussion and Analysis of Financial Condition or Plan of Operation
You should read the following discussion of our financial condition and operations in conjunction with the condensed consolidated financial statements and the related notes included elsewhere in this filing. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors.
Overview
We are a drug development company, founded in 2004, focused in the areas of research, development, and marketing in the biomedical industry, with an emphasis on anti-infective drugs. The Company has been granted the rights to the drugs Viraplex (R) and MTCH-24(TM).
Our development activities since inception (December 14, 2004) have included efforts to secure financing and create a management and business structure. These activities have produced very little in operating revenues.
Going Concern
Our financial statements for the nine months ended March 31, 2006, were prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These factors, among others, raise substantial doubt about our ability to continue as a going concern.
We must raise additional capital in order to continue and complete our research and development and testing. Our future success is dependent upon raising additional money to provide for the necessary operations of the Company. If we are unable to obtain such additional financing, there would be a material adverse effect on our business, financial position, and results of operations. Our continuation as a going concern is dependent on our ability to generate sufficient capital to meet our obligations on a timely basis, and to resume research and development and testing efforts. However, no assurance can be given that additional capital, if needed, will be available when required or upon terms acceptable to the Company.
8
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 2006.
The major activity during the first nine months of 2005 – 2006 was the sale of the Company’s 50% interest in BioDtech for $10,183.00. Other than that, preparations were made to begin operations.
Operating Expenses
Total operating expenses consisted of legal and administrative costs in preparation for commencement of operations in the amount of $66,182.00..
Net Income/Loss
The net loss for the nine months, of$55,999.00 was the result of$66,182.00 in legal and administrative costs offset slightly by the sale of the Company’s 50% interest in BioDtech.
LIQUIDITY AND CAPITAL RESOURCES
Our cash and cash equivalents were$ 2,865.00 at March 31, 2006.
Item 3. Controls and Procedures
As of the end of the period covered by this Form 10-QSB, the Company carried out an evaluation, under the supervision and with the participation of its chief executive officer and chief financial officer, of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13-a-15-e or 15-d-15-e under the Securities Exchange Act of 1934).
Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded that as of the evaluation date, such disclosure controls and procedures were reasonably designed to ensure that information required to be disclosed by the Company in reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.
Part II Other Information
Item 1. Legal Proceedings
Not applicable.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
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Item 5. Other Information
Not applicable.
Item 6. Exhibits
The following exhibits are included herein:
| 31.1 | Certification of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2 | Certification of CFO Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1 | Certification of CEO Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 32.2 | Certification of CFO Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
EAST WEST Distributors, Inc.
By: /s/ Gerald N. Kern |
Gerald N. Kern, Director |
Dated: 5/1/06 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and/or the class indicated.
/s/ Gerald N. Kern Dated: 5/1/06 |
Gerald N. Kern, Director |
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