U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: MARCH 31, 1998 ------------------- [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT For the transition period from _______________ to _______________ Commission file number 33-1599 --------------------------------------------- D-VINE, LTD. ---------------------------------------------------- (Exact name of small business issuer as specified in its charter) DELAWARE 22-2732163 - ---------------------------------- --------------------- (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 712 FIFTH AVENUE, 7TH FLOOR, NEW YORK NEW YORK 10019 ------------------------------------------------------------------------- (Address of principal executive offices) (212) 582-3400 -------------------------------------- (Issuer's telephone number) NOT APPLICABLE -------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) 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 ____ APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes _____ No X --- APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practical date: 24,607,731 DECEMBER 31, 1998 --------------------------------- Transitional Small Business Disclosure Format (check one). Yes ________; No X --- 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS D-VINE, LTD. (A Development Stage Company) BALANCE SHEETS March 31, Sept. 30, 1998 1997 Unaudited ---- --------- ASSETS Current assets Cash $ -0- $ -0- --------- --------- Current assets -0- -0- Total assets $ -0- $ -0- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $ 2,125 $ 4,270 Stockholders' equity Common Stock authorized 50,000,000 shares, $0.01 par value each. At September 30, 1997 and March 31, 1998, there are 22,607,731 and 22,607,731 shares outstanding respectively. 226,077 226,077 Additional paid in capital 637,744 637,744 Common stock warrants - 1,000,000 warrants outstanding on 50,000 March 31, 1998 Deficit accumulated during development stage (865,946) (918,091) --------- --------- Total stockholders' equity (2,125) (4,270) --------- --------- Total liabilities and stockholders' equity $ -0- $ -0- ========= ========= See accompanying notes to financial statements. 3 D-VINE, LTD. (A Development Stage Company) STATEMENT OF OPERATIONS FOR THE PERIOD FROM FOR THE SIX FOR THE SIX REORGANIZATION, MONTHS ENDED MONTHS ENDED OCT. 1, 1995, TO MARCH 31, MARCH 31, MARCH 31, 1997 1998 1998 UNAUDITED UNAUDITED UNAUDITED -------------- -------------- ------------------ Revenue $ -0- $ -0- $ -0- Costs of goods sold -0- -0- -0- ------------ ------------ ----------- Gross profit -0- -0- -0- Operations: General and administrative 5,125 52,145 86,248 Depreciation and amortization -0- -0- -0- ------------ ------------ ----------- Total expense 5,125 52,145 86,248 Net loss $ (5,125) $ (52,145) $ (86,248) ============ ============ =========== Net loss per share - basic $ (0.00) $ (0.00) $ (0.00) ============ ============ =========== Number of shares outstanding-basic 22,607,731 22,657,731 22,657,731 ============ ============ =========== See accompanying notes to financial statements. 4 D-VINE, LTD. (A Development Stage Company) STATEMENT OF CASH FLOWS UNAUDITED FOR THE PERIOD FROM FOR THE FOR THE REORGANIZATION, SIX MONTHS SIX MONTHS OCTOBER 1, 1995 ENDED ENDED TO MARCH 31, MARCH 31, MARCH 31, 1997 1998 1998 ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (5,125) $(52,145) $(86,248) Depreciation -0- -0- -0- Adjustments used to reconcile net loss to net cash provided by (used in) operating activities Prepaid expenses (19,500) Accounts payable 2,152 2,145 4,270 -------- -------- -------- TOTAL CASH FLOWS FROM OPERATIONS (22,500) (50,000) (81,978) CASH FLOWS FROM INVESTING ACTIVITIES -0- -0- -------- -------- TOTAL CASH FLOWS FROM INVESTING ACTIVITIES -0- -0- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Shareholder loan Sale of stock purchase warrants 50,000 50,000 Issuance of shares of common stock 25,000 25,000 Capital contribution 2,978 Sale of preferred stock 4,000 -------- -------- -------- TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 25,000 50,000 81,978 NET INCREASE IN CASH 2,500 -0- -0- CASH BALANCE BEGINNING OF PERIOD -0- -0- -0- -------- -------- -------- CASH BALANCE END OF PERIOD $ 2,500 $ -0- $ -0- ======== ======== ======== See accompanying notes to financial statements. 5 D-VINE, LTD. (A Development Stage Company) STATEMENT OF STOCKHOLDERS EQUITY COMMON DEFICIT ACCUMULATED PREFERRED PREFERRED COMMON COMMON ADDITIONAL PAID PURCHASE STOCK DURING DEVELOPMENT DATE STOCK STOCK STOCK STOCK IN CAPITAL WARRANTS STAGE TOTAL - ---- ------ ----- ----- ----- ---------- -------- ----- ----- 09-30-1994 16,666,657 $166,667 $ 665,176 $(831,843) $ -0- 09-28-1995 10 $ 1 3,999 4,000 ---- ---- --------- -------- 09-30-1995 10 $ 1 16,666,657 $166,667 $ 669,175 $(831,843) $ 4,000 ==== ==== ========== ======== ========= ========= ======== Reverse split 150 to 1 10 $ 1 107,731 1,077 834,765 (831,843) $ 4,000 Capital contribution 2,978 2,977 Conversion of preferred stock to common (10) (1) 20,000,000 200,000 (199,999) -0- 09-30-1996 Net profit (loss) (6,978) (6,977) ----------------- ---- ---------- -------- --------- --------- -------- 09-30-1996 -0- $-0- 20,107,731 $201,077 $ 637,744 $(838,821) $ -0- Issuance of shares for consulting fees 2,500,000 25,000 25,000 Net loss (27,125) (27,125) ---- ---- ---------- -------- --------- --------- -------- 09-30-1997 -0- $-0- 22,607,731 $226,077 $ 637,744 (865,946) (2,125) Unaudited - --------- Sale of warrants at $0.05 50,000 Net loss (52,145) (52,145) ---- ---------- -------- --------- ---------- --------- -------- 03-31-1998 -0- $-0- 22,607,731 $226,077 $ 637,744 $50,000 $(918,091) $ (4,270) ==== ==== ========== ======== ========= ========== ========= ======== See accompanying notes to financial statements. 6 D-VINE, LTD. (A Development Stage Company) Notes to the Financial Statements March 31, 1998 NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited financial statements of D-Vine, Ltd. (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 in conjunction with the audited consolidated financial statements contained in Form 10-KSB of September 30, 1997. NOTE 2 - RELATED PARTY TRANSACTIONS During the six month period ended March 31, 1997 and 1998 , a shareholder of the Company paid expenses on its behalf in the amounts of $1,500 and $-0-, respectively. NOTE 3 - EARNINGS PER SHARE In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE ("Statement No. 128"). Statement No. 128 applies to entities with publicly held common stock or potential common stock and is effective for financial statements issued for periods ending after December 15, 1997. Statement No. 128 replaces APB Opinion 15, Earnings per Share ("EPS"). Statement No. 128 requires dual presentation of basic and diluted earnings per share by entities with complex capital structures. Basic EPS includes no dilution and is computed by dividing net income by the total number of common shares outstanding for the period. Shares used in calculating basic and diluted net income per share were as follows: For the six For the six months ended months ended March 31, 1998 March 31, 1997 -------------- -------------- Total number common shares outstanding 22,607,731 22,607,731 Effect of conversion of common stock purchase warrants into shares of common stock 1,000,000 ---------- ---------- Total shares of common stock outstanding fully diluted 23,607,731 22,607,731 ========== ========== 7 NOTE 4- INCOME TAXES The Company provides for the tax effects of transactions reported in the financial statements. The provision if any, consists of taxes currently due plus deferred taxes related primarily to differences between the basis of assets and liabilities for financial and income tax reporting. The deferred tax assets and liabilities, if any represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. As of March 31, 1998, the Company had no material current tax liability, deferred tax assets, or liabilities to impact on the Company's financial position because the deferred tax asset related to the Company's net operating loss carryforward and was fully offset by a valuation allowance. At March 31, 1998, the Company has net operating loss carry forwards for income tax purposes of $918,091. This carryforward is available to offset future taxable income, if any, and expires in the year 2010. The Company's utilization of this carryforward against future taxable income may become subject to an annual limitation due to a cumulative change in ownership of the Company of more than 50 percent. The components of the net deferred tax asset as of March 31, 1998 are as follows: Deferred tax asset: Net operating loss carry forward $ 312,151 Valuation allowance $(312,151) --------- Net deferred tax asset $ -0- ========= The Company recognized no income tax benefit for the loss generated in the period from reorganization, October 1, 1995, to March 31, 1998. SFAS No. 109 requires that a valuation allowance be provided if it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company's ability to realize benefit of its deferred tax asset will depend on the generation of future taxable income. Because the Company has yet to recognize significant revenue from the sale of its products, the Company believes that a full valuation allowance should be provided. NOTE 5 - COMMON STOCK PURCHASE WARRANTS In August, 1997, the Company sold for an aggregate consideration of $50,000 to Ocean Strategic Holdings Limited, a Guernsey corporation, 1,000,000 Warrants to purchase 1,000,000 shares of common stock at $0.01 per share. The Warrants are exercisable beginning August 1, 1998 until 5:00 p.m.(New York time) on August 1, 2001. The Warrant agreement contains various terms and conditions, amongst which include the following as well as other provisions: that the Company will preserve the Warrant Holders position subsequent to any adjustment to the Company's capital structure. In addition, in no event may the Warrant Holder be entitled to exercise any portion of this Warrant such that giving effect to such exercise, the aggregate number of shares of common stock beneficially owned by 8 the Holder and its affiliates would exceed 9.9% of the outstanding shares of common stock following such exercise. The Company has reserved 1,000,000 shares of common stock pending the conversion of Warrants. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company is considered a development stage company with no assets or capital and with no operations or income since approximately 1988. The costs and expenses associated with the preparation and filing of this registration statement and other operations of the Company have been paid for by shareholders of the Company. It is anticipated that the Company will require only nominal capital to maintain the corporate viability of the Company and necessary funds will most likely be provided by the Company's existing shareholders or its officers and directors in the immediate future. The Company is actively seeking business opportunities. The statements contained in this Report on Form 10-QSB that are not historical facts are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) that involve risks and uncertainties. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as "believes," "expects," "may," "will," "should" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. From time to time, the Company or its representatives have made or may make forward-looking statements, orally or in writing. Such forward-looking statements may be included in various filings made by the Company with the Securities and Exchange Commission (the "SEC"), or press releases or oral statements made by or with the approval of an authorized executive officer of the Company. These forward-looking statements, such as statements regarding anticipated future revenues, capital expenditures, Year 2000 compliance and other statements regarding matters that are not historical facts, involve predictions. The Company's actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Potential risks and uncertainties that could affect the Company's future operating results include, but are not limited to: (i) economic conditions, including economic conditions related to entry into any new business venture; (ii) the availability of equipment from the Company's vendors at current prices and levels; (iii) the intense competition in the markets for the Company's new products and services; (iv) the Company's ability to integrate acquired companies and businesses in a cost-effective manner; (v) the Company's ability to effectively implement its branding strategy; and (vi) the Company's ability to develop, market, provide, and achieve market acceptance of new service offerings to new and existing clients. 9 RESULTS OF OPERATIONS Results of operations for the six months ended March 31, 1998 as compared to the six months ended March 31, 1997. Revenues were $-0- for the six months ended March 31, 1998 as compared to $0 for the six months ended March 31, 1997. Costs of goods sold for the six months ended March 31, 1998, were $0 as compared to $0 for six months ended March 31, 1997 representing a cost of goods sold percentage of 0% for the six months ended March 31, 1998 as compared to 0% for the six months ended March 31, 1997. General and administrative costs for the for the six months ended March 31, 1998 were $52,145, an increase of $48,895 over $3,250 for the six months ended March 31, 1998. Liquidity and capital resources as of March 31, 1998. The Company's cash balance was $-0- and working capital was a negative $4,270 as at March 31, 1998. The Company's primary short-term needs for capital, which are subject to change, are for the acquisition of new business opportunities. Income tax: As of March 31, 1998, the Company has a tax loss carry-forward of $918,091. 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 continue to accept funds from or accrue expenses incurred officers, directors and other related parties to seek new a new business opportunity. The Company expects its capital requirements to increase over the next several years as it commences new search and development efforts, undertakes new product development, increases sales and administration infrastructure and embarks on developing in-house business 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 present management can fund the continued capital requirements, the timing of regulatory actions regarding the Company's potential acquisitions, the costs and timing of expansion of sales, marketing activities, facilities expansion needs, and competition in any business entered into. The Company believes that its available cash and cash from management contributions will be sufficient to satisfy its funding needs. Thereafter, if cash generated from any newly acquired or developed business operations is insufficient to satisfy the Company's working capital and capital expenditure requirements, the Company may be required to sell additional 10 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 None. 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. ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K The Company did not file a report on Form 8-K during the three months ended March 31, 1998. 11 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. D-VINE, LTD. (Registrant) Date: March 15, 1999 By: /s/ Edward Tobin ------------------------------- Edward Tobin President & Director (Principal Executive, Financial and Accounting Officer) 12