SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
For the transition period from _______ to _______
Commission file number 0-25582
GRACE DEVELOPMENT, INC.
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(Exact name of registrant as specified in its charter)
COLORADO 84-1110469
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
2685 So. Dayton Way Unit 42 Denver, CO 80231
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(Address of principal executive offices, including zip code)
303-337-5700
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(Registrant's telephone number, including area code)
Indicate by checkmark 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 |_| No |X|
As at July 1, 1999, the registrant had outstanding 7,599,962 shares of Common
Stock.
PART 1 - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS.
Please see enclosed financial statements.
PART 2 - OTHER INFORMATION
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION.
The following discussion should be read in conjunction with the Financial
Statements and Notes thereto contained elsewhere herein. Please note that no
assurance exists as to the actual future outcome of Management's plans,
assumptions, or estimates.
MISSION STATEMENT. The current mission of the Company is to seek out and acquire
qualified business acquisition opportunities that may satisfy certain needs, to
be modified from time to time as determined by Management. Generally these needs
include the following considerations: The experience or ability of management of
the acquisition. The financial history of the acquisition; the opportunity of
the acquisition to generate significant future revenues and profits in its
business area or areas; the ability of the acquisition to satisfy the cash needs
of an operating public company; and the ability to expand business operations in
the future.
PLAN OF OPERATION. Currently, the Company has no or nominal revenues, while
operating as a company seeking mergers, acquisitions and similar opportunities.
The Company's plan of operation for the next twelve-month period is to focus
upon the acquisition and/or establishment of revenue generating businesses. The
Company believes it can satisfy current cash requirements. Management believes
the ability of the Company to achieve profitability is conditioned upon several
variables, but primarily the successful pursuit of acquisitions, including the
establishment of new operating businesses.
FORWARD STATEMENTS. Certain statements herein constitute forward-looking
statements. These statements involve known and unknown risks, uncertainties and
other factors that may cause actual results, levels of activity, performance, or
achievements to be materially different from any future results, levels of
activity, performance, or achievements expressed or implied by such
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "will," "should," "could," "expects,"
"plans," "anticipates," "believes," "estimates," "predicts," "potential," or
"continue" or the negative of such terms or other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance, or achievements. Moreover, neither any other person nor
we assumes responsibility for the accuracy and completeness of such statements.
The Company does not undertake to update any of the forward-looking statements
herein.
YEAR 2000 (Y2K) READINESS DISCLOSURE. The Company may be subject to external
Year 2000-related failures or disruptions that might generally affect industry
and commerce. Moreover, businesses might experience substantial slow-downs in
business if consumers avoid products and services
such as air travel both before and after January 1, 2000 arising from concerns
about reliability and safety because of the Year 2000 issue. All of these
factors could have a material adverse effect on the business, financial
condition and results of operations during this calendar year change.
Information technology time and date data processes including, but not limited
to, calculating, comparing and sequencing data from, into and between the 20th
and 21st centuries contained in the products and services which may be offered
by the Company through future endeavors should function accurately, continuously
and without degradation in performance and without requiring intervention or
modification in any manner that will or could adversely affect performance,
given Management's position not to start any business or acquire any business
unless satisfactory confirmation of Y2K readiness is addressed (as best as
reasonable).
SIGNATURES
Pursuant the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Grace Development Inc. (Registrant)
by: /s/ Jacob Barrocas,
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President and Treasurer
(Principal Executive Officer
and Principal Financial Officer)
Date 07/16/99
GRACE DEVELOPMENT, INC.
FINANCIAL STATEMENTS
MARCH 31, 1995
CONTENTS
Page
FINANCIAL STATEMENTS
Balance Sheets F3
Statements of Operations F4
Statements of Cash Flows F5
Notes to Financial Statements F7-F9
F-2
GRACE DEVELOPMENT, INC.
(A Development Stage Company)
BALANCE SHEETS
March 31, December 31,
1995 1994
(Unaudited) (Audited)
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ASSETS
TOTAL ASSETS $ -- $ --
=========== ===========
LIABILITIES AND DEFICIENCY IN ASSETS
CURRENT LIABILITIES
Accrued liabilities 2,000 1,500
----------- -----------
TOTAL CURRENT LIABILITIES $ 2,000 $ 1,500
COMMITMENTS AND CONTINGENCIES (Note 5)
DEFICIENCY IN ASSETS
Preferred stock; no par value; 10,000,000 shares authorized; -- --
no shares issued and outstanding
Common stock; no par value; 800,000,000 shares authorized;
7,269,962 and 7,149,962 shares issued and outstanding 1,090,150 770,150
Deficit accumulated during the development stage (1,092,150) (771,650)
----------- -----------
TOTAL DEFICIENCY IN ASSETS (2,000) (1,500)
----------- -----------
TOTAL LIABILITIES AND DEFICIENCY IN ASSETS $ -- $ --
=========== ===========
See accompanying notes.
F-3
GRACE DEVELOPMENT, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS - (UNAUDITED)
For the three months Cumulative
Ended March 31, Since
-------------------------- Inception
1995 1994 January 6, 1989
--------- ----------- ---------------
COSTS AND EXPENSES
Interest $ -- $ 218 $ 3,296
Other operating expenses -- 100 3,850
Loss on Security Deposit -- -- 200,000
Professional fees 320,500 12,253 885,004
----------- ----------- -----------
TOTAL COSTS AND EXPENSES AND NET LOSS $ (320,500) $ (12,571) $(1,092,150)
=========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING (PRIMARY AND
FULLY DILUTED) 7,253,518 2,194,072
BASIC NET LOSS PER SHARE
(PRIMARY AND FULLY DILUTED) $ (0.044) $ (0.013)
=========== ===========
See accompanying notes.
F-4
GRACE DEVELOPMENT, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the three months Cumulative
Ended March 31, Since
------------------------ Inception
1995 1994 January 6, 1989
--------- --------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (320,500) $ (12,571) $(1,092,150)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Stock issued for compensation 320,000 -- 885,004
Expenses paid by shareholder -- 13,703 --
Changes in assets and liabilities:
Increase (decrease) in accounts payable -- (1,132) --
Increase in accrued liabilities 500 -- 2,000
Amounts due to investor -- -- --
----------- ----------- -----------
NET CASH USED BY OPERATING ACTIVITIES -- -- (5,146)
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issuance -- 1,796
Additional capital contributed -- -- 3,350
----------- ----------- -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES -- -- 5,146
CASH FLOWS FROM INVESTING ACTIVITIES -- -- --
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH -- -- --
----------- ----------- -----------
CASH, beginning of year -- -- --
----------- ----------- -----------
CASH, end of year -- -- --
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF NON-CASH
FINANCING TRANSACTIONS
Stock issued in satisfaction of debt $ 200,000 $ -- $ 200,000
=========== =========== ===========
See accompanying notes.
F-5
GRACE DEVELOPMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
March 31, 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS HISTORY OF DEVELOPMENT STAGE COMPANY Grace Development, Inc. (the
"Company") was incorporated under the laws of the State of Colorado on January
6, 1989, for the purpose of seeking, investigating and if warranted, acquiring
an interest in business opportunities presented to it by persons or firms that
wish to obtain the perceived advantages of becoming a publicly held corporation.
The Company is still in the development stage as more fully defined in Statement
No. 7 of the Financial Accounting Standards Board because the Company's
principal operations have not yet commenced.
In March 1990, the Company's Board of Directors determined that a planned merger
with another previously unrelated entity, By American U.S.A. ("BAU"), would not
be finalized because of a variety of factors including the fact that the
purported new officers and directors never filled their offices and acted as
officers and directors of the Company, and that the purported new principal
place of business of the Company and BAU were closed with no forwarding
addresses available. Consequently, the 9,000,000 shares of the Company's common
stock which were going to be issued to BAU in connection with this transaction
were returned to the Company and regarded as never issued. The Company's
original Board of Directors was reconstituted in March 1990, once it became
apparent that the proposed merger had not been consummated.
During March 1990, the Company's former officer and director reconveyed his
300,000 shares of the Company's common stock to the Company for no
consideration. These shares were then canceled.
In February 1991, the Company's original officers and directors resigned and new
officers and directors were appointed.
Because of the lack of funds as further described in Note 3, herein, the Company
became inactive in approximately March 1990, and conducted no activities until
April 1993, when it began to perform limited administrative activities.
CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, cash and
cash equivalents would consist of money market funds and demand deposits in
banks. The Company has no such items at March 31, 1995 or December 31, 1994
USE OF ESTIMATES The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates
F-6
GRACE DEVELOPMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
March 31, 1995
NET LOSS PER COMMON SHARE Basic per share information is computed by dividing
income available to common stockholders by the weighted average number of common
shares outstanding. No warrants or options were outstanding
DEVELOPMENT STAGE COMPANY The Company has been devoting its efforts to raising
capital, establishing sources of supply, and developing markets for its planned
operations. Since the Company has had no revenues, it is considered a
development stage company.
INCOME TAXES Income taxes are computed under the provisions of the Financial
Accounting Standards Board (FASB) Statement No. 109 (SFAS 109), Accounting for
Income Taxes. SFAS 109 is an asset and liability approach that requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of the difference in events that have been recognized in the
Company's financial statements compared to the tax returns.
FAIR VALUE OF FINANCIAL INSTRUMENTS Financial instruments are carried at
amounts, which reasonably approximate their fair value due to the short-term
nature of these amounts or due to variable rates of interest, which are
consistent with market rates.
RECLASSIFICATIONS AND RESTATEMENTS Certain amounts in the prior year financial
statements have been reclassified for comparative purposes to conform to the
presentation of the current year financial statements.
2. INCOME TAXES
The Company has accumulated net operating losses, which can be used to offset
future earnings. Accordingly, no provision for income taxes is recorded in the
financial statements. A deferred tax asset for the future benefits of net
operating losses is offset by a 100% valuation allowance due to the uncertainty
of the Company's ability to utilize the losses. As of December 31, 1994, the
Company has net operating loss carryforwards available as follows:
Year
Year Amount Expires
---- ------ -------
1994 $ 745,276 2009
1993 8,976 2008
1992 774 2007
1991 668 2006
1990 7,554 2005
1989 8,402 2004
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$771,650
========
However, if subsequently there are ownership changes in the Company, as
defined in Section 382 of the Internal Revenue Code, as a result of those
changes, the Company's ability to utilize net operating losses and capital
losses available before the ownership change may be restricted to a percentage
of the market value of the Company at the time of ownership change. Therefore,
substantial net operating loss carryforwards could, in all likelihood, be
limited or eliminated in future years due to a change in ownership as defined in
the Code. The utilization of the remaining carryforwards is dependent on the
Company's ability to generate sufficient taxable income during the carryforward
periods and no further significant changes in ownership.
F-7
GRACE DEVELOPMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
March 31, 1995
3. GOING CONCERN AND MANAGEMENT'S PLANS
The Company has minima1 capital resources presently available to meet
obligations, which normally can be expected to be incurred by similar companies,
and has an accumulated deficit of $(1,092,150) at March 31, 1995. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. In order to begin any significant operations after its period of
inactivity, the Company will have to pursue other sources of capital, such as
additional equity financing or debt financing. There is no assurance that the
Company will be able to obtain such financing. The financial statements, herein,
do not include any adjustments that might result from the outcome of this
uncertainty.
4. PREFERRED STOCK
The Company is authorized to issue 10,000,000 shares of preferred stock with no
par value. The preferred stock may be issued by the Board of Directors in one or
more series. The Board shall determine the distinguishing features of each,
including preferences, rights and restrictions, by resolution upon the
establishment of such series. No such shares have been issued to date.
5. COMMON STOCK
Stock Issued for Services
During the periods described below, the Company issued shares of its common
stock to consultants for services to the Company. Forms S-8 have been filed with
the Securites and Exchange Commission relative to such issuances of stock.
Shares have been recorded using the maximum offering price unless otherwise
stated. The value of these shares was charged to expense.
On July 24, 1994, the Company issued 1,000,000 shares, valued at $200,000, for
consulting services. These shares were issued in connection with a consulting
agreement with respect to the location, acquisition and financing of business
opportunities and operating an acquisitions fund. The acquisition agreement
which the Company entered into was later rescinded. The Company disputes the
issuance of shares to the consultant and believes these shares should be
cancelled and returned. The subject shares are currently reflected as
outstanding and are considered to be contingently returnable.
F-8
GRACE DEVELOPMENT, INC.
(A Development Stage Company)
Notes to Financial Statements
March 31, 1995
5. COMMON STOCK - CONTINUED
Stock Issued for Services - continued
In November 11, 1994, the Company issued 100,000 shares, valued at $200,000, for
consulting services and professional fees.
In November 21, 1994, the Company issued 50,000 shares, valued at $150,000, for
consulting services and professional fees.
In January 1995 the Company issued 450,000 shares, valued at $320,000, for
consulting services and professional fees.
Stock Issued for Debt
On November 5, 1994, the Company issued 5,000,000 shares in satisfaction of a
$200,000 debt the $200,000 represented a non-refundable security deposit
established on behalf of the Company for a potential acquisition which was later
rescinded.
F-9