U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
FORM 10-QSB
(Mark One)
[X] Quarterly report pursuant section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended June 30, 2001
[ ] Transition report pursuant section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from......to......
Commission file number 000-29023
Caddo Enterprises, Inc.
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(Exact name of small business issuer in its charter)
Nevada 98-0210155
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(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
Suite 104, 1456 St. Paul Street, Kelowna, British Columbia, Canada V1Y 2E6
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(Address of principal executive offices)
(250) 868-8177
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(Issuer's telephone number)
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. Yes X No
Number of shares outstanding of the issuer's classes of common equity, as of
June 30, 2001:
500,000 Shares of Common Stock (One Class)
Transitional Small Business Disclosure Format: Yes ___ No X
This document consists of 15 pages, excluding exhibits. The Exhibit Index is on
page 14.
CADDO ENTERPRISES, INC.
INDEX
Part I-Financial Information
Item 1. Financial Statements......................................... 3
Item 2. Plan of Operation............................................ 8
Part II-Other Information
Item 6. Exhibits and Reports on Form 8-K ............................ 14
Signatures............................................................ 15
2
Part I. Item 1. Financial Information
CADDO ENTERPRISES, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEET
(Unaudited)
June 30, 2001
ASSETS
DEFERRED OFFERING COSTS ............................................. $ 5,000
========
LIABILITIES AND SHAREHOLDERS' DEFICIT
LIABILITIES:
Accounts payable and accrued liabilities .......................... $ 750
--------
TOTAL LIABILITIES 750
--------
SHAREHOLDERS' DEFICIT (Note B):
Common stock ...................................................... 50
Additional paid-in capital ........................................ 30,040
Deficit accumulated during the development stage .................. (25,840)
--------
TOTAL SHAREHOLDERS' DEFICIT 4,250
--------
$ 5,000
========
See accompanying notes to condensed financial statements.
3
CADDO ENTERPRISES, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
September 19,
1997
Three Months Ended Nine Months Ended (inception)
June 30, June 30, Through
------------------- -------------------- June 30,
2001 2000 2001 2000 2001
-------- -------- --------- -------- -------------
COSTS AND EXPENSES
Legal fees ................. $ 1,611 $ 714 $ 15,373 $ 2,222 $ 18,309
Accounting fees ............ 250 250 750 500 4,250
Printing ................... - 658 - 2,106 2,869
Licenses and fees .......... 109 - 162 - 362
Stock-based compensation
for organizational costs
(Note B) .................. - - - - 50
------- ------- -------- ------- --------
LOSS FROM OPERATIONS (1,970) (1,622) (16,285) (4,828) (25,840)
------- ------- -------- ------- --------
INCOME TAXES (Note C) ........ - - - - -
------- ------- -------- ------- --------
NET LOSS $(1,970) $(1,622) $(16,285) $(4,828) $(25,840)
======= ======= ======== ======= ========
BASIC AND DILUTED
LOSS PER COMMON SHARE ....... $ * $ * $ (0.03) $ *
======= ======= ======== =======
BASIC AND DILUTED WEIGHTED
AVERAGE COMMON SHARES
OUTSTANDING ................. 500,000 500,000 500,000 500,000
======= ======= ======== =======
* Less than .01 per share
See accompanying notes to condensed financial statements.
4
CADDO ENTERPRISES, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
September 19,
1997
Nine Months Ended (inception)
June 30, Through
---------------------- June 30,
2001 2000 2001
---------- --------- -------------
Net cash used in operating
activities ............................ $ (22,035) $ (5,315) $ (30,040)
--------- -------- ---------
Cash flows from financing activities:
Third party expenses paid by
affiliate on behalf of the
company, recorded as additional-
paid-in capital...................... 22,035 5,315 30,040
--------- -------- ---------
Net cash provided by financing
activities ............................ 22,035 5,315 30,040
--------- -------- ---------
Net change in cash - - -
Cash, beginning of period .............. - - -
--------- -------- ---------
Cash, end of period $ - $ - $ -
========= ======== =========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest ........................... $ - $ - $ -
========= ======== =========
Income taxes ....................... $ - $ - $ -
========= ======== =========
Non-cash financing transactions:
500,000 shares common stock
issued for services ............. $ - $ - $ 50
========= ======== =========
See accompanying notes to condensed financial statements.
5
CADDO ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE A: BASIS OF PRESENTATION
The condensed financial statements presented herein have been prepared by the
Company in accordance with the accounting policies in its audited financial
statements for the year ended September 30, 2000 as filed in its Form 10-KSB on
January 12, 2001 and should be read in conjunction with the notes thereto. The
Company entered the development stage in accordance with Statement of Financial
Accounting Standard ("SFAS") No. 7 on September 19, 1997 and is a "blank check"
company with the purpose to evaluate, structure and complete a merger with, or
acquisition of, a privately owned corporation.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to provide a fair presentation of
operating results for the interim period presented have been made. The results
of operations for the periods presented are not necessarily indicative of the
results to be expected for the year.
Interim financial data presented herein are unaudited.
NOTE B: RELATED PARTY TRANSACTIONS
Following its inception, the Company issued an officer 500,000 shares of common
stock in exchange for services related to management and organization costs of
$50.
The Company has no cash operating account. An affiliate, R.D. Capital, Inc., has
assumed the responsibility to pay obligations on behalf of the Company. The
payments are accounted for as contributed capital in the accompanying condensed
financial statements. During the three and nine months ended June 30, 2001, R.D.
Capital made payments to vendors totaling $1,720 and $22,035, respectively, on
behalf of the Company.
Through June 30, 2001, R.D. Capital has contributed capital totaling $30,040.
NOTE C: INCOME TAXES
The Company records its income taxes in accordance with SFAS No. 109,
"Accounting for Income Taxes". The Company incurred net operating losses during
the periods shown on the condensed financial statements resulting in a deferred
tax asset, which was fully allowed for, therefore the net benefit and expense
result in $-0- income taxes.
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CADDO ENTERPRISES, INC.
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
NOTE D: FORM SB-2 FILING
The Company filed a Registration Statement on Form SB-2 with the Securities and
Exchange Commission ("SEC") in November of 2000 to offer for sale 200,000 common
shares at $1.00 per share. To date, the SEC has not declared the Form SB-2
effective.
7
CADDO ENTERPRISES, INC.
PLAN OF OPERATION
We intend to seek to acquire assets or shares of an entity actively engaged
in a business that generates revenues, in exchange for its securities. We have
not identified a particular acquisition target and have not entered into any
negotiations regarding an acquisition. As soon as this registration statement
becomes effective under Section 12 of the `34 Act, we intend to contact
investment bankers, corporate financial analysts, attorneys and other investment
industry professionals through various media. None of our officers, directors,
promoters or affiliates have engaged in any preliminary contact or discussions
with any representative of any other company regarding the possibility of an
acquisition or merger with us as of the date of this registration statement.
Depending upon the nature of the relevant business opportunity and the
applicable state statutes governing how the transaction is structured, the
Company's Board of Directors expects that it will provide our shareholders with
complete disclosure documentation concerning a potential business opportunity
and the structure of the proposed business combination prior to consummation.
Disclosure is expected to be in the form of a proxy or information statement, in
addition to the post-effective amendment.
While any disclosure must include audited financial statements of the
target entity, we cannot assure you that such audited financial statements will
be available. As part of the negotiation process, the Board of Directors does
intend to obtain certain assurances of value, including statements of assets and
liabilities, material contracts, accounts receivable statements, or other
indicia of the target entity's condition prior to consummating a transaction,
with further assurances that an audited statement would be provided prior to
execution of a merger or acquisition agreement. Closing documents will include
representations that the value of the assets transferred will not materially
differ from the representations included in the closing documents, or the
transaction will be voidable.
Due to our intent to remain a shell corporation until a merger or
acquisition candidate is identified, it is anticipated that its cash
requirements shall be minimal, and that all necessary capital, to the extent
required, will be provided by the directors or officers. We do not anticipate
that we will have to raise capital in the next twelve months. We also do not
expect to acquire any plant or significant equipment.
We have not, and do not intend to enter into, any arrangement, agreement or
understanding with non-management shareholders allowing non-management
shareholders to directly or indirectly participate in or influence our
management of the Company. Management currently holds 60.8% of our stock. As a
result, management is in a position to elect a majority of the directors and to
control our affairs.
We have no full time employees. Our President and Secretary have agreed to
allocate a portion of their time to our activities, without compensation. These
officers anticipate that our business plan can be implemented by their devoting
approximately five (5) hours each per
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month to our business affairs and, consequently, conflicts of interest may arise
with respect to their limited time commitment. We do not expect any significant
changes in the number of employees.
Our officers and directors may become involved with other companies who
have a business purpose similar to ours. As a result, potential conflicts of
interest may arise in the future. If a conflict does arise and an officer or
director is presented with business opportunities under circumstances where
there may be a doubt as to whether the opportunity should belong to the Company
or another "blank check" company they are affiliated with, they will disclose
the opportunity to all the companies. If a situation arises where more than one
company desires to merge with or acquire that target company and the principals
of the proposed target company have no preference as to which company will merge
with or acquire the target company, the company that first filed a registration
statement with the Securities and Exchange Commission will be entitled to
proceed with the proposed transaction.
General Business Plan
Our purpose is to seek, investigate and, if investigation warrants, acquire
an interest in business opportunities presented to it by persons or firms that
desire to seek the perceived advantages of an Exchange Act registered
corporation. We will not restrict our search to any specific business, industry,
or geographical location and we may participate in a business venture of
virtually any kind or nature. This discussion of the proposed business is
purposefully general and is not meant to restrict our discretion to search for
and enter into potential business opportunities. Management anticipates that it
may be able to participate in only one potential business venture because we
have nominal assets and limited financial resources. This lack of
diversification should be considered a substantial risk to our shareholders
because it will not permit us to offset potential losses from one venture
against gains from another.
We may seek a business opportunity with entities that have recently
commenced operations, or that wish to utilize the public marketplace in order to
raise additional capital in order to expand into new products or markets, to
develop a new product or service, or for other corporate purposes. We may
acquire assets and establish wholly owned subsidiaries in various businesses or
acquire existing businesses as subsidiaries.
We anticipate that the selection of a business opportunity will be complex
and extremely risky. Due to general economic conditions, rapid technological
advances being made in some industries and shortages of available capital,
management believes that there are numerous firms seeking the perceived benefits
of a publicly registered corporation. The perceived benefits may include
facilitating or improving the terms for additional equity financing that may be
sought, providing liquidity for incentive stock options or similar benefits to
key employees, providing liquidity (subject to restrictions of applicable
statutes) for all shareholders and other factors. Potentially, available
business opportunities may occur in many different industries and at various
stages of development, all of which will make the task of
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comparative investigation and analysis of these business opportunities extremely
difficult and complex.
We have, and will continue to have, no capital to provide the owners of
business opportunities with any significant cash or other assets. However,
management believes we will be able to offer owners of acquisition candidates
the opportunity to acquire a controlling ownership interest in a publicly
registered company without incurring the cost and time required to conduct an
public offering. The owners of the business opportunities will, however, incur
significant legal and accounting costs in connection with acquisition of a
business opportunity, including the costs of preparing Form 8-K's, 10-KSBs,
10-QSBs, agreements and related reports and documents. The `34 Act specifically
requires that any merger or acquisition candidate comply with all applicable
reporting requirements, which include providing audited financial statements to
be included within the numerous filings relevant to complying with the `34 Act.
Nevertheless, the officers and directors of the Company have not conducted
market research and are not aware of statistical data that would support the
perceived benefits of a merger or acquisition transaction for the owners of a
business opportunity.
The analysis of new business opportunities will be undertaken by our
officers and directors, none of whom is a professional business analyst.
Management intends to concentrate on identifying preliminary prospective
business opportunities that may be brought to our attention through present
associations of our officers and directors, or by our shareholders. In analyzing
prospective business opportunities, management will consider:
o the available technical, financial and managerial resources;
o working capital and other financial requirements;
o history of operations, if any;
o prospects for the future;
o nature of present and expected competition;
o the quality and experience of management services that may be
available and the depth of that management;
o the potential for further research, development, or exploration;
o specific risk factors not now foreseeable but could be anticipated to
impact our proposed activities;
o the potential for growth or expansion;
o the potential for profit;
10
o the perceived public recognition of acceptance of products, services,
or trades;
o name identification; and
o other relevant factors.
Our officers and directors expect to meet personally with management and
key personnel of the business opportunity as part of their "due diligence"
investigation. To the extent possible, the Company intends to utilize written
reports and personal investigations to evaluate the above factors. We will not
acquire or merge with any company that cannot provide audited financial
statements within a reasonable period of time after closing of the proposed
transaction.
Our management, while probably not especially experienced in matters
relating to the prospective new business of the Company, shall rely upon their
own efforts and, to a much lesser extent, the efforts of our shareholders, in
accomplishing our business purposes. We do not anticipate that any outside
consultants or advisors, except for our legal counsel and accountants, will be
utilized by us to accomplish our business purposes. However, if we do retain an
outside consultant or advisor, any cash fee will be paid by the prospective
merger/acquisition candidate, as we have no cash assets. We have no contracts or
agreements with any outside consultants and none are contemplated.
We will not restrict our search for any specific kind of firms, and may
acquire a venture that is in its preliminary or development stage or is already
operating. We cannot predict at this time the status of any business in which we
may become engaged, because the business may need to seek additional capital,
may desire to have its shares publicly traded, or may seek other perceived
advantages that we may offer. Furthermore, we do not intend to seek capital to
finance the operation of any acquired business opportunity until we have
successfully consummated a merger or acquisition.
We anticipate that we will incur nominal expenses in the implementation of
its business plan. Because we has no capital to pay these anticipated expenses,
present management will pay these charges with their personal funds, as interest
free loans, for a minimum of twelve months from the date of this registration
statement. If additional funding is necessary, management and or shareholders
will continue to provide capital or arrange for additional outside funding.
However, the only opportunity that management has to have these loans repaid
will be from a prospective merger or acquisition candidate. Management has no
agreements with us that would impede or prevent consummation of a proposed
transaction. We cannot assure, however, that management will continue to provide
capital indefinitely if a merger candidate cannot be found. If a merger
candidate cannot be found in a reasonable period of time, management may be
required reconsider its business strategy, which could result in our
dissolution.
11
SB-2 Filing
On November 8, 2000, we filed a Form SB-2 (File No. 333-49510) for the
purpose of raising $200,000. The funds will be use to implement our business
plan as described above, and to make the company a more attractive merger
candidate by having cash available for use by the potential target company. The
offering will be conducted under Rule 419.
Acquisition of Opportunities
In implementing a structure for a particular business acquisition, we may
become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. It may also acquire
stock or assets of an existing business. On the consummation of a transaction,
it is probable that our present management and shareholders will no longer be in
control. In addition, our directors may, as part of the terms of the acquisition
transaction, resign and be replaced by new directors without a vote of our
shareholders. Furthermore, management may negotiate or consent to the purchase
of all or a portion of our stock. Any terms of sale of the shares presently held
by officers and/or directors will be also afforded to all other shareholders on
similar terms and conditions. Any and all sales will only be made in compliance
with the securities laws of the United States and any applicable state.
While the actual terms of a transaction that management may not be a party
to cannot be predicted, it may be expected that the parties to the business
transaction will find it desirable to avoid the creation of a taxable event and
thereby structure the acquisition in a so-called "tax-free" reorganization under
Sections 368(a)(1) or 351 of the Internal Revenue Code (the "Code"). In order to
obtain tax-free treatment under the Code, it may be necessary for the owners of
the acquired business to own 80% or more of the voting stock of the surviving
entity. In that event, the shareholders of the Company would retain 20% or less
of the issued and outstanding shares of the surviving entity, which would result
in significant dilution in the equity of the shareholders.
As part of the "due diligence" investigation, our officers and directors
will meet personally with management and key personnel, may visit and inspect
material facilities, obtain independent analysis of verification of certain
information provided, check references of management and key personnel, and take
other reasonable investigative measures to the extent of our limited financial
resources and management expertise. How we will participate in an opportunity
will depend on the nature of the opportunity, the respective needs and desires
of the parties, the management of the target company and our relative
negotiation strength.
With respect to any merger or acquisition, negotiations with target company
management are expected to focus on the percentage of our Company that the
target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
target company's assets and liabilities, our shareholders will probably hold a
substantially lesser percentage ownership interest following any merger or
acquisition. The percentage ownership may be subject to significant reduction
12
in the event we acquire a company with substantial assets. Any merger or
acquisition effected by us can be expected to have a significant dilutive effect
on the percentage of shares held by our then shareholders.
We will participate in a business opportunity only after the negotiation
and execution of appropriate written agreements. Although we cannot predict the
terms of the agreements, generally the agreements will require some specific
representations and warranties by all of the parties, will specify certain
events of default, will detail the terms of closing and the conditions that must
be satisfied by each of the parties prior to and after the closing, will outline
the manner of bearing costs, including costs associated with our attorneys and
accountants, will set forth remedies on default and will include miscellaneous
other terms.
As stated previously, we will not acquire or merge with any entity that
cannot provide independent audited financial statements concurrent with the
closing of the proposed transaction. We are subject to the reporting
requirements of the `34 Act. Included in these requirements is our affirmative
duty to file independent audited financial statements as part of its Form 8-K to
be filed with the Securities and Exchange Commission upon consummation of a
merger or acquisition, as well as our audited financial statements included in
our annual report on Form 10-KSB and quarterly reports on Form 10-QSB. If the
audited financial statements are not available at closing, or if the audited
financial statements provided do not conform to the representations made by the
candidate to be acquired in the closing documents, the closing documents will
provide that the proposed transaction will be voidable at the discretion of our
present management. If the transaction is voided, the agreement will also
contain a provision providing for the acquisition entity to reimburse us for all
costs associated with the proposed transaction.
Competition
We will remain an insignificant participant among the firms that engage in
the acquisition of business opportunities. There are many established venture
capital and financial concerns that have significantly greater financial and
personnel resources and technical expertise than we do. In view of our combined
extremely limited financial resources and limited management availability, we
will continue to be at a significant competitive disadvantage compared to our
competitors.
LEGAL PROCEEDINGS
There is no litigation pending or threatened by or against us.
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CADDO ENTERPRISES, INC.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibit No. Description
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3.1* Articles of Incorporation
3.2* Amendment to Articles of Incorporation
3.3* Bylaws
4.1* Specimen Informational Statement
4.1.1* Form of Lock-up Agreement Executed by the Company's
Shareholders
*Filed as an Exhibit to the Company's Registration Statement on Form 10-SB,
dated November 22, 1999, and incorporated herein by this reference.
Reports on Form 8-K
None.
14
CADDO ENTERPRISES, INC.
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.
CADDO ENTERPRISES, INC.
Date: August 10, 2001 By: /s/ Devinder Randhawa
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Devinder Randhawa, President
By: /s/ Bob Hemmerling
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Bob Hemmerling, Secretary
15