U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the quarterly period ended June 30, 1998.
[ ] 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: 0-5367
D-LANZ DEVELOPMENT GROUP, INC.
(Exact name of registrant as specified in its charter
Delaware 11-1717709
(State of otherjurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
400 Grove Street Glen Rock, New Jersey 07452
Address of principal executive offices)
201- 445-8862
(Registrant's telephone number, including area code)
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark, whether the registrant:: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the 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 No
The Company had 10,100,000 shares of common stock outstanding
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
The condensed financial statements for the periods ended June 30, 1998
included herein have been prepared by D-Lanz Development Group, Inc., (the
"Company") without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (the "Commission"). In the opinion of
management, the statements include all adjustments necessary to present fairly
the financial position of the Company as of June 30, 1998, and the results of
operations and cash flows for the six month periods ended June 30, 1997 and
1998.
The Company's results of operations during the six months of the Company's
fiscal year are not necessarily indicative of the results to be expected for the
full fiscal year.
The financial statements included in this report should be read in
conjunction with the financial statements and notes thereto in the Company's
Annual Report on Form 10-K for the fiscal years ended December 31, 1996 and
1997.
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
BALANCESHEET
Assets
June 30,
December 31, 1998
1997 Unaudited
Current assets
Cash $934 $528
Other assets
License fees 252,500 252,500
Total other assets 252,500 252,500
Total assets $253,434 $253,028
Liabilities and Stockholders' Equity
Current liabilities
Officer loan payable $500
Capital stock
Preferred stock-authorized 50,000,000 shares
$.001 par value. At December 31, 1997 and June 30,
1998 the number of shares outstanding was -0-
Common stock-authorized 100,000,000 shares, par
value of $.001. At December 31, 1997 and June 30,
1998, there were 1,551,394 and 10,100,000 shares
outstanding.
$10,000 $10,100
Additional paid in capital 246,051 246,951
Deficit accumulated during development stage (2,617) (4,523)
Total stockholders' equity 253,434 252,528
Total liabilities and stockholders' equity $253,434 $253,028
See accompanying notes to financial statements.
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
For the period from
reorganization
For the year For the year For the six For the six (December 31, 1990)
ended December ended December months ended months ended to
31, 1996 31, 1997 June 30, June 30, June 30,
1997 1998 1998
Income $-0- $-0- $-0- $-0- $-0-
Less costs of goods sold -0- -0- -0- -0- -0-
Gross profit -0- -0- -0- -0- -0-
Operations:
General -0- 1,066 -0- 1,906 4,523
and
administrative
Amortization -0- -0- -0- -0- -0-
Total expense -0- 1,066 -0- 1,906 4,523
Profit (loss) from
operations and
before Corporate
income tax expense -0- -0- -0- (1,906) (4,523)
Corporate income tax -0- -0- -0- -0- -0-
Net profit or (Loss) $-0- $(1,066) $-0- $(1,906) $(4,523)
Net income per share $-0- $-0- $-0- $(-0-) $-0-
Total number of shares 10,100,000 10,100,000 10,100,000 10,100,000 10,100,000
outstanding
See accompanying notes to financial statements.
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the period from
reorganization
For the year For the year For the six For the six (December 31, 1990)
ended December ended December months ended months ended to
31, 1996 31, 1997 June 30, June 30, June 30,
1997 1998 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit (loss) $-0- $(1,066) $-0- $(1,006) $(4,523)
Non cash transaction 100 1,000
Depreciation and amortization -0- -0- -0- -0- -0-
TOTAL CASH FLOWS FROM OPERATING ACTIVITIES -0- (1,066) -0- (906) (3,523)
CASH FLOWS FROM FINANCING ACTIVITIES
Officer loan payable 500 500
Sale of shares of common stock 2,000 3,551
Commitments and contingencies -0- -0- -0- -0-
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES -0- 2,000 -0- 500 4,051
NET INCREASE (DECREASE) IN CASH -0- 934 -0- (406) 528
CASH BALANCE BEGINNING OF PERIOD -0- -0- -0- 934 -0-
CASH BALANCE END OF PERIOD $-0- $934 $-0- $528 $528
See accompanying notes to financial statements.
D-LANZ DEVELOPMENT GROUP, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
Additional Deficit accumulated
Date Preferred Preferred Common Common paid during development
Stock Stock Stock Stock in capital stage Total
12-31-1991 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1992 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1993 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1994 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1995 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
12-31-1996 -0- $-0- 1,551,394 $1,551 $(1,551) $-0-
9 -30-1997(1) 2,000,000 2,000 2,000
9-30-1997(2) 6,448,606 6,449 246,051 252,500
12-31-1997 Net (1,066) (1,066)
loss
12-31-1997 -0- $-0- 10,000,000 10,000 246,051 $(2,617) 253,434
Unaudited
6-30-1998(3) 100,000 100 900 1,000
6-30-1998 Net loss (1,906) (1,906)
6-30-1998 -0- $-0- 10,000,000 $10,100 $246,951 $(4,523) $252,528
(1) Sale of shares pursuant to Regulation D at $.001 per share.
(2) Issuance of shares for acquisition of License Rights valued at $.04 per share
(3) Issuance of shares for consulting fees at $.001 per share.
See accompanying notes to financial statements.
D-LANZ DEVELOPMENT GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of D-lanz Development
Group, Inc., (the "Company"), reflect all adjustments which are, in the opinion
of management, necessary to a fair statement of the results of the interim
periods presented. All such adjustments are of a normal recurring nature. The
financial statements should be read in conjunction with the notes to financial
statements contained in the Company's Annual Report on Form 10KSB for the year
ended December 31, 1997.
2. NET INCOME PER SHARE
Primary earnings per share are based on the total number of shares of
common stock outstanding on June 30, 1998. On that date, the total number of
shares of common stock outstanding was 10,100,000.
3. ACCOUNTING FOR INCOME TAXES
The Company follows Statement of Financial Accounting Standards (SFAS)
No.109, "Accounting for Income Taxes," which requires an asset and liability
approach of accounting for income taxes. Deferred tax assets and liabilities are
computed annually for differences between financial statement basis and tax
basis of assets, liabilities and available general business tax credit
carry-forwards. A valuation allowance is established when necessary to reduce
deferred tax assets to the amount expected to be realized.
4. MARKETABLE SECURITIES
The Company adopted Financial Accounting Standards Board ("FASB") Statement
No. 115, "Accounting for Certain Investments in Debt and Equity Securities",
which requires that investments in equity securities that have readily
determinable fair values and investments in debt securities be classified in
three categories: held-to-maturity, trading and available-for-sale. Based on the
nature of the assets held by the Company and Management's investment strategy,
the Company's investments have been classified as available-for-sale. Management
determines the appropriate classification of debt securities at the time of
purchase and reevaluates such designation as of each balance sheet date.
Securities classified as available-for-sale are carried at estimated fair
value, as determined by quoted market prices, with unrealized gains and losses,
net of tax, reported in a separate component of stockholders' equity. At March
31, 1998, the Company had no investments that were classified as trading or
held-to-maturity as defined by the Statement.
The following is a summary of cash, cash equivalents and available-for-sale
securities by balance sheet classification at March 31, 1998:
Gross Gross Estimated
Unrealized Unrealized Fair
` Cost Gains Gains Value
------ ------------- ------------- -------------
Cash $528 $528
Total cash and
cash equivalents $528 $528
Note 5. Issuance of Common Shares
On May 23, 1998, the Company filed a registration statement with the
Securities and Exchange Commission under the Securities Act of 1933 on Form S-8,
registering the sale of 300,000 common shares at $.01 per share in consideration
for services rendered and to be rendered for an aggregate consideration of
$3,000. The common shares were issued to Roger Fidler, Esq, Attorney for the
Company as escrow agent relating to the prospective payment of the common shares
as performance pursuant to two consulting contracts occurs. The consulting
contracts require payment as follows: 150,000 shares to Sound Capital, inc. and
150,000 common shares to Thurcon Capital, inc. The common shares were
conditionally issued subject to the obligation of the escrow agent to return the
common shares to the stock transfer agent for cancellation in the event of
nonperformance by the prospective consultants.
As of June 30, 1998, the Company has released an aggregate of 100,000
common shares pursuant to the partial performance of the consultants as follows:
50,000 common shares to Sound Capital, Inc. and 50,000 common shares to Thurcon
capital, Inc. in consideration of services valued at an aggregate of $1,000 or
$.01 per share.
Note 6. Consulting Contracts
On April 5, 1998, the Company entered into a six month financial consulting
and public relations agreement with Thurcon Capital Corporation, Inc.
('Thurcon'). In consideration for the services, Thurcon will participate in the
Company's Employee Stock Option Program and receive options to purchase 150,000
common shares at a price of $.01 per share. These options will be issued in
50,000 share increments, on April 15, 1998, July 15, 1998 and October 15, 1998.
The Company agrees to register these shares on Form S-8 as soon after the
execution of this agreement as is possible.
On April 5, 1998, the Company entered into a six month financial consulting
and public relations agreement with Sound Capital, Inc. ('Sound Capital'). In
consideration for the services, Thurcon will participate in the Company's
Employee Stock Option Program and receive options to purchase 150,000 common
shares at a price of $.01 per share. These options will be issued in 50,000
share increments, on April 15, 1998, July 15, 1998 and October 15, 1998. The
Company agrees to register these shares on Form S-8 as soon after the execution
of this agreement as is possible. As additional consideration Sound Capital will
receive a cash fee for a minimum period of six months of $1,500 per month, with
a single additional payment of $1,500 due upon execution of this agreement for
expenses. The fee shall be paid monthly in advance.
As of June 30, 1998, the Company has registered the aggregate of 300,000
common shares on Form S-8 and issued 300,000 common shares into escrow with
Roger Fidler, Esq. as escrow agent for this transaction. The Company has
released an aggregate of 100,000 common shares pursuant to the financial
consulting agreements for an aggregate consideration of $1,000 or $.01 per
share.
At June 30, 1998, the Company is holding 200,00 common shares in escrow
pending the execution of the balance of the agreements.
The Company has reflected the issuance of the 100,000 common shares as
outstanding as of June 30, 1998.
Item 2. Management's Discussion and Analysis or Plan of Operation
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
for the six months ended June 30, 1997 and 1998
-------------------------------------------------
Except for the description of historical facts contained herein, this Form
10Q-QSB contains certain forward looking statements that involve risks and
uncertainties as detailed herein and from time to time in the Company's filings
with the Securities and Exchange Commission and elsewhere. Such statements are
based on management's current expectations and are subject to a number of
factors and uncertainties which could cause actual results to differ materially
from those described in the forward-looking statements. These factors include,
among others, the Company's fluctuations in sales and operating results, risks
associated with international operations and regulatory, competitive and
contractual risks and product development.
Results of operations for the six months ended June 30, 1998 as compared
to the six months ended June 30, 1997.
- - - ---------------------------------------------------------------------------
Revenues were $0 for the six months ended June 30, 1998 as compared to
$0 for the six months ended June 30, 1997. Costs of goods sold for the six
months ended June 30, 1998, were $0 as compared to $0 for the six months
ended June 30, 1997 representing a cost of goods sold percentage of 0% for the
six months ended June 30, 1998 as compared to 0% for the six months ended
June 30, 1997. The cost of goods sold percentage during the second quarter of
fiscal 1998 remains approximately consistent with the percentage during the
second quarter of fiscal 1997.
General and administrative costs for the six months ended June 30, 1998
were $1,906, an increase of 0% over expenses of $0 for the six months ended June
30, 1997.
Liquidity and capital resources as of the end of the six months ended
June 30, 1998.
- - - ----------------------------------------------------------------------------
The Company's cash balance was $528 and working capital was
$28 as at June 30, 1998.
The Company's primary short-term needs for capital, which are subject to
change, are for development of its manufacturing to adequately deliver new
products and an increase in inventory levels to fill large anticipated orders.
Income tax: As of June 30, 1998, the Company has a tax loss carry-forward
of $4,523. The Company's ability to utilize its tax credit carry-forwards in
future years will be subject to an annual limitation pursuant to the "Change in
Ownership Rules" under Section 382 of the Internal Revenue Code of 1986, as
amended. However, any annual limitation is not expected to have a material
adverse effect on the Company's ability to utilize its tax credit
carry-forwards.
The Company currently plans to expend approximately $2.0 million for the
expansion and development of its manufacturing, marketing and general
administrative capabilities in connection with the fulfillment of the Company's
marketing program and the anticipated launch of the Company's products currently
under development. Additionally, the Company utilizes cash generated from
operating activities to meet its capital requirements.
The Company expects its capital requirements to increase over the next
several years as it commences new research and development efforts, undertakes
new product development, increases sales and administration infrastructure and
embarks on developing in-house manufacturing capabilities and facilities. The
Company's future liquidity and capital funding requirements will depend on
numerous factors, including the extent to which the Company's products under
development are successfully developed and gain market acceptance, the timing of
regulatory actions regarding the Company's potential products, the costs and
timing of expansion of sales, marketing and manufacturing activities, facilities
expansion needs, procurement and enforcement of patents important to the
Company's business, results of clinical investigations and competition.
The Company believes that its available cash and cash from operations and
the commitment by management to provide working capital as required to sustain
the existence of the Company will be sufficient to satisfy its funding needs
until the Company's program for funding operations and business startup begins.
Thereafter, if cash generated from operations is insufficient to satisfy the
Company's working capital and capital expenditure requirements, the Company may
be required to sell additional equity or debt securities or obtain additional
credit facilities. There can be no assurance that such financing, if required,
will be available on satisfactory terms, if at all.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
No legal proceedings are pending against the Company.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security-Holders
None.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
D-LANZ DEVELOPMENT GROUP, INC.
/s/Roger Fidler
Mr. Roger Fidler,
President
Dated: August 3, 1998