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: December 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
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D-Vine, Ltd.
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(Exact name of small business issuer as
specified in its charter)
Delaware 22-2732163
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
712 Fifth Avenue, 7th Floor, New York, New York 10019
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(Address of principal executive offices)
(212) 582-3400
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Issuer's telephone number
Not Applicable
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(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 ______
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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
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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: December 31, 1998 24,607,731
Fully Diluted
Transitional Small Business Disclosure Format (check one).
Yes ____; No X
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
D-VINE, LTD.
(A Development Stage Company)
BALANCE SHEETS
December 31,
Sept. 30, 1998
1997 Unaudited
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Assets
Current assets
Cash $ -0- $ -0-
--------- ---------
Current assets -0- -0-
Total assets $ -0- $ -0-
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 4,270 $ 4,270
Stockholders' equity
Common Stock authorized 50,000,000 shares, $0.01 par value each.
At September 30, 1998, there are 24,607,731 shares.(Note 1c) 246,077 246,077
Additional paid in capital 637,744 637,744
Common stock warrants - 1,000,000 warrants outstanding on June 30, 1998 50,000 50,000
Deficit accumulated during development stage (938,091) (938,091)
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Total stockholders' equity (4,270) (4,270)
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Total liabilities and stockholders' equity $ -0- $ -0-
========= =========
See accompanying notes to financial statements
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D-VINE, LTD.
(A Development Stage Company)
STATEMENT OF OPERATIONS
(Unaudited)
For the period
from
For the three For the three reorganization,
months ended months ended October 1, 1995
December 31, December 31, to December 31,
1997 1998 1998
------------- -------------- -----------------
Revenue $ -0- $ -0- $ -0-
Costs of goods sold -0- -0- -0-
----------- ----------- -----------
Gross profit -0- -0- -0-
Operations:
General and administrative(Note 1c) 52,145 -0- 106,248
Depreciation and amortization -0- -0- -0-
----------- ----------- -----------
Total expense 52,145 -0- 106,248
Net loss $ (52,145) $ -0- $ (106,248)
=========== =========== ===========
Net loss per share -basic $ (0.00) $ (0.00) $ (0.00)
=========== =========== ===========
Number of shares outstanding-basic 22,657,731 24,657,731 24,657,731
=========== =========== ===========
See accompanying notes to financial statements.
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D-VINE, LTD.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
For the period
from
reorganization,
For the three For the three October 1, 1995
months ended months ended to
December 31, December 31, December 31,
1997 1998 1998
-------------- --------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss (52,145) $ -0- $ (106,248)
Depreciation -0- -0- -0-
Adjustments used to reconcile net loss to net cash
provided by (used in) operating activities
Accounts payable 2,145 4,270
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TOTAL CASH FLOWS FROM OPERATIONS (50,000) -0- (101,978)
CASH FLOWS FROM INVESTING ACTIVITIES -0-
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TOTAL CASH FLOWS FROM INVESTING ACTIVITIES -0-
CASH FLOWS FROM FINANCING ACTIVITIES
Recognition of common shares (Note 1c) 20,000
Sale of stock purchase warrants 50,000 -0- 50,000
Issuance of shares of common stock 25,000
Capital contribution 2,978
Sale of preferred stock 4,000
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TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 50,000 -0- 101,978
NET INCREASE IN CASH -0- -0- -0-
CASH BALANCE BEGINNING OF PERIOD -0- -0- -0-
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CASH BALANCE END OF PERIOD $ -0- $ -0- $ -0-
======== ===== =========
See accompanying notes to financial statements.
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D-VINE, LTD.
(A Development Stage Company)
Notes to the Financial Statements
December 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, 1998 and information contained in Form 8-K.
NOTE 2 - RELATED PARTY TRANSACTIONS
The Company occupies office space at the office's of the Company President,
at 712 Fifth Avenue, 7th floor, New York, New York rent free, on a month to
month basis from Edward Tobin.
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 31, 1998. 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 three For the three
months ended months ended
December 31, 1998 December 31, 1997
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Total number common
shares outstanding 24,607,731 22,607,731
Effect of conversion of
common stock purchase warrants
into shares of common stock 1,000,000 1,000,000
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Total shares of common stock
outstanding fully diluted 25,607,731 23,607,731
========== ==========
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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 December 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 December 31, 1998, the Company has net operating loss carry forwards for
income tax purposes of $938,091. 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 December 31, 1998, are as
follows:
Deferred tax asset:
Net operating loss carry forward $ 318,951
Valuation allowance $(318,951)
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Net deferred tax asset $ -0-
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The Company recognized no income tax benefit for the loss generated in the
period from reorganization, October 1, 1995, to December 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 Strategis 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
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the Holder and its affiliates would exceed 9.9% of the outstanding shares of
common stock following such exercise.
As of December 31, 1998, the Company has reserved 1,000,000 shares of
common stock pending the conversion of Warrants.
NOTE 6 - SUBSEQUENT EVENTS
Subsequent to the date of the financial statements, the principals of the
Company made a cash contribution to the Company of $234,000 as Additional Paid
in Capital.
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
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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.
Results of Operations
Results of operations for the three months ended December 31, 1998 as
compared to the three months ended December 31, 1997.
Revenues were $-0-for the three months ended December 31, 1998 as compared
to $0 for the three months ended December 31, 1997. Costs of goods sold for the
three months ended December 31, 1998, were $0 as compared to $0 for the three
months ended December 31, 1997 representing a cost of goods sold percentage of
0% for the three months ended December 31, 1998 as compared to 0% for the three
months ended December 31, 1997.
General and administrative costs for the three months ended December 31,
1998 were $52,145, an increase of $52,145 over $-0- for the three months ended
December 31, 1997.
Liquidity and capital resources as of December 31, 1998
The Company's cash balance was $-0- and working capital was a negative
$4,270 as at December 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 December 31, 1998, the Company has a tax loss carry-
forward of $938,091. 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
business or 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.
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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 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
December 31, 1998.
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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 J. Tobin
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Edward J. Tobin
President & Director
(Principal Executive, Financial
and Accounting Officer)
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