U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: June 30, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 333-43126
MOBILE DESIGN CONCEPTS, INC.
(Exact name of registrant as specified in its charter)
NEVADA 87-0650219
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification
No.)
6500 S. 400 W., Suite C, Salt Lake City, Utah 84107
(Address of principal executive offices)
(801) 266-2420
(Registrant's telephone number, including area code)
Check whether the issuer (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 report(s), YES [X] NO [ ]
and (2) has been subject to such filing requirements for the past 90 days.
YES [ ] NO [X ]
The number of $.001 par value common shares outstanding at June 30, 2001:
4,812,800
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
See attached.
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MOBILE DESIGN CONCEPTS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED FINANCIAL STATEMENTS
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JUNE 30, 2001
MOBILE DESIGN CONCEPTS, INC.
[A Development Stage Company]
CONTENTS
PAGE
- Unaudited Condensed Balance Sheets,
June 30, 2001 and December 31, 2000 2
- Unaudited Condensed Statements of Operations,
for the three months ended June 30, 2001 and
2000, for the six months ended June 30, 2001
and for the periods from inception on March 10,
2000 through June 30, 2000 and 2001 3
- Unaudited Condensed Statements of Cash Flows,
for the six months ended June 30, 2001 and
for the periods from inception on March 10,
2000 through June 30, 2000 and 2001 4
- Notes to Unaudited Condensed Financial Statements 5 - 8
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MOBILE DESIGN CONCEPTS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
June 30, December 31,
2001 2000
___________ ___________
CURRENT ASSETS:
Cash $ 58,153 $ 576
Inventory - 9,978
___________ ___________
Total Current Assets 58,153 10,554
___________ ___________
PROPERTY AND EQUIPMENT, held
for lease, net 24,041 -
___________ ___________
$ 82,194 $ 10,554
____________ ____________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - related party $ 45 $ 45
Accounts payable - trade 1,845 812
Interest payable - 80
Line of credit - 5,606
___________ ___________
Total Current Liabilities 1,890 6,543
___________ ___________
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
1,000,000 shares authorized,
no shares issued and outstanding - -
Common stock, $.001 par value,
50,000,000 shares authorized,
4,812,800 and 4,500,000 shares
issued and outstanding, respectively 4,813 4,500
Capital in excess of par value 82,387 4,500
Deficit accumulated during the
development stage (6,896) (4,989)
___________ ___________
Total Stockholders' Equity 80,304 4,011
____________ ____________
82,194 $ 10,554
____________ ____________
The accompanying notes are an integral part of these unaudited condensed
financial statements.
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MOBILE DESIGN CONCEPTS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
From Inception
For the Three For the Six on March 10,
Months Ended Months Ended 2000 Through
June 30, June 30, June 30,
________________ ________________ ____________
2001 2000 2001 2000 2001
________ ________ _______ _______ ____________
REVENUE $1,800 $ - $1,800 $ - $ 1,800
OPERATING EXPENSES:
General and
Administrative 3,149 88 3,359 633 8,231
________ ________ _______ _______ ____________
LOSS FROM OPERATIONS (1,349) (88) (1,559) (633) (6,431)
OTHER EXPENSES:
Interest 192 - 348 - 465
________ ________ _______ _______ ____________
LOSS BEFORE INCOME TAXES (1,541) (88) (1,907) (633) (6,896)
CURRENT TAX EXPENSE - - - - -
DEFERRED TAX EXPENSE - - - - -
________ ________ _______ _______ ____________
NET LOSS $(1,541) $ (88) $(1,907)$ (633) $ (6,896)
_________ ________ _______ _______ ____________
LOSS PER COMMON SHARE $ (.00) $ (.00) $ (.00)$ (.00) $ (.00)
_________ ________ _______ _______ ____________
The accompanying notes are an integral part of these unaudited condensed
financial statements.
-3-
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MOBILE DESIGN CONCEPTS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
From Inception
For the Six on March 10,
Months Ended 2000 Through
June 30, June 30,
______________________________
2001 2000 2001
__________ ________ __________
Cash Flows From Operating Activities:
Net loss $ (1,907) $ (633) $ (6,896)
Adjustments to reconcile net
loss to net cash used
by operating activities:
Depreciation Expense 1,184 - 1,184
Changes in assets and
liabilities:
Increase in accounts payable
- related party - 45 45
Increase in accounts payable
- trade 1,033 - 1,845
Increase (decrease) in
interest payable (80) - -
___________ ________ __________
Net Cash Provided (Used)
by Operating Activities 230 (588) (3,822)
___________ ________ __________
Cash Flows From Investing Activities:
Payments for property and equipment (15,247) - (25,225)
___________ ________ __________
Net Cash Provided (Used) by
Investing Activities (15,247) - (25,225)
___________ ________ __________
Cash Flows From Financing Activities:
Proceeds from issuance of
common stock 78,200 9,000 87,200
Proceeds from line of credit 5,000 - 10,606
Payments on line of credit (10,606) - (10,606)
___________ ________ __________
Net Cash Provided (Used)
by Financing Activities 72,594 9,000 87,200
___________ ________ __________
Net Increase in Cash 57,577 8,412 58,153
Cash at Beginning of Period 576 - -
___________ ________ __________
Cash at End of Period $ 58,153 $ 8,412 $ 58,153
___________ ________ __________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 348 $ - $ 465
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
For the periods ended June 30, 2001:
None
The accompanying notes are an integral part of these unaudited condensed
financial statements.
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MOBILE DESIGN CONCEPTS, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Mobile Design Concepts, Inc. (the Company) was organized
under the laws of the State of Nevada on March 10, 2000. The Company plans
to design and manufacture mobile kiosks and other structures. The Company
has not yet generated significant revenues from its planned principal
operations and is considered a development stage company as defined in SFAS
No. 7. The Company has, at the present time, not paid any dividends and
any dividends that may be paid in the future will depend upon the financial
requirements of the Company and other relevant factors.
Condensed Financial Statements - The accompanying financial statements have
been prepared by the Company without audit. In the opinion of management,
all adjustments (which include only normal recurring adjustments) necessary
to present fairly the financial position, results of operations and cash
flows at June 30, 2001 and 2000 and for the periods then ended have been
made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the company's December 31, 2000
audited financial statements. The results of operations for the period
ended June 30, 2001 are not necessarily indicative of the operating results
for the full year.
Loss Per Share - The computation of loss per share is based on the weighted
average number of shares outstanding during the period presented in
accordance with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share". [See Note 8]
Cash and Cash Equivalents - For purposes of the statement of cash flows,
the Company considers all highly liquid debt investments purchased with a
maturity of three months or less to be cash equivalents.
Property and Equipment - Property and equipment are stated at cost.
Expenditures for repairs and maintenance are charged to operating expense
as incurred. Expenditures for additions and betterments that extend the
useful lives of property and equipment are capitalized, upon being placed
in service. When assets are sold or otherwise disposed of, the cost and
related accumulated depreciation or amortization are removed from the
accounts and any resulting gain or loss is included in operations.
Organization Costs - Organization costs, which reflect amounts expended to
organize the Company, amounted to $545 and were expensed during the period
ended March 31, 2000.
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, the disclosures of contingent assets and
liabilities at the date of the financial statements, and the reported
amount of revenues and expenses during the reported period. Actual results
could differ from those estimated.
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MOBILE DESIGN CONCEPTS, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Recently Enacted Accounting Standards - Statement of Financial Accounting
Standards (SFAS) No. 136, "Transfers of Assets to a not for profit
organization or charitable trust that raises or holds contributions for
others", SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities - deferral of the effective date of FASB Statement No. 133 (an
amendment of FASB Statement No. 133)", SFAS No. 138 "Accounting for Certain
Derivative Instruments and Certain Hedging Activities - and Amendment of
SFAS No. 133", SFAS No. 139, "Recission of SFAS No. 53 and Amendment to
SFAS No. 63, 89 and 21", and SFAS No. 140, "Accounting to Transfer and
Servicing of Financial Assets and Extinguishment of Liabilities", were
recently issued. SFAS No. 136, 137, 138, 139 and 140 have no current
applicability to the Company or their effect on the financial statements
would not have been significant.
NOTE 2 - PROPERTY AND EQUIPMENT
The following is a summary of property and equipment - at cost, less
accumulated depreciation and amortization:
June 30, December 31,
2001 2000
___________ ___________
Leased Equipment: modular structure $ 15,740 $ -
Leased Equipment: beverage equipment 9,485 -
Less: accumulated depreciation
and amortization (1,184) -
___________ ___________
$ 24,041 $ -
___________ ___________
The modular structure and the beverage equipment are depreciated over
their estimated useful lives of ten and three years, respectively.
Depreciation and amortization expense for the periods ended June 30,
2001 and 2000, amounted to $1,184 and $0, respectively. The structure is
now being leased by the Company
[See Note 9].
NOTE 3 - LINE OF CREDIT
The Company entered into a line of credit arrangement with a bank. The
line provided for borrowings up to $20,606 with a variable interest rate
that was 2% above the bank's prime rate. The initial rate was 11.5% per
annum. The line of credit was repaid in April 2001. At June 30, 2001 and
December 31, 2000 the outstanding balance on the line of credit was $0 and
$5,606.
NOTE 4 - CAPITAL STOCK
Preferred Stock - The Company has authorized 1,000,000 shares of preferred
stock, $.001 par value, with such rights, preferences and designations and
to be issued in such series as determined by the Board of Directors. No
shares were issued and outstanding at June 30, 2001 and December 31, 2000.
Common Stock - During April 2000, in connection with its organization, the
Company issued 4,500,000 shares of its previously authorized, but unissued
common stock for cash. The shares were issued for $9,000 (or $.002 per
share).
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MOBILE DESIGN CONCEPTS, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 4 - CAPITAL STOCK [Continued]
The Company began a public offering of 500,000 shares of common stock on
May 14, 2001. The Company arbitrarily set an offering price of $.25 per
share and there is no minimum number of shares to sell. At June 30, 2001,
the Company had sold 312,800 shares for cash of $78,200 (or $.25 per
share).
NOTE 5 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". FASB
109 requires the Company to provide a net deferred tax asset/liability
equal to the expected future tax benefit/expense of temporary reporting
differences between book and tax accounting methods and any available
operating loss or tax credit carryforwards. The Company has available at
June 30, 2001 an operating loss carryforwards of approximately $6,900 which
may be applied against future taxable income and which expire in various
years through 2021.
The amount of an ultimate realization of the benefits from the operating
loss carryforwards for income tax purposes is dependent, in part, upon the
tax laws in effect, the future earnings of the Company, and other future
events, the effects of which cannot be determined. Because of the
uncertainty surrounding the realization of the loss carryforwards the
Company has established a valuation allowance equal to the amount of the
loss carryforwards and, therefore, no deferred tax asset has been
recognized for the loss carryforwards. The net deferred tax asset is
approximately $2,300 as of June 30, 2001, with an offsetting valuation
allowance at June 30, 2001 of the same amount. The change in the valuation
allowance for the six months ended June 30, 2001 was approximately $700.
NOTE 6 - RELATED PARTY TRANSACTIONS
Management Compensation - As of June 30, 2001, the Company has not paid any
compensation to any officer or director of the Company.
Office Space - The Company has not had a need to rent office space. An
officer/shareholder of the Company is allowing the Company to use his/her
offices as a mailing address, as needed, at no expense to the Company.
NOTE 7 - GOING CONCERN
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of
the Company as a going concern. However, the Company was only recently
formed and has not yet been successful in establishing profitable
operations. These factors raise substantial doubt about the ability of the
Company to continue as a going concern. In this regard, management is
proposing to raise any necessary additional funds not provided by
operations through loans or additional sales of its common stock. There is
no assurance that the Company will be successful in raising this additional
capital or achieving profitable operations. The financial statements do
not include any adjustments that might result from the outcome of these
uncertainties.
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MOBILE DESIGN CONCEPTS, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 8 - LOSS PER SHARE
The following data shows the amounts used in computing loss per share:
From Inception
For the Three For the Six on March 10,
Months Ended Months ended 1998, Through
June 30, June 30, June 30
___________________ ____________________ _________
2001 2000 2001 2000 2001
________ _________ _________ _________ _________
Loss from continuing
operations available
to common
shareholders
(numerator) $ (1,541) $ (88) $ (1,907) $ (633) $ (6,896)
________ _________ _________ _________ _________
Weighted average
number of common
shares outstanding
used in loss per
share for theperiod
(denominator) 69,547 4,500,000 4,534,966 4,500,000 4,290,522
________ _________ _________ _________ _________
Dilutive earnings per share was not presented, as the Company had no common
equivalent shares for all periods presented that would affect the
computation of diluted earnings per share.
NOTE 9 - CONTRACTS AND AGREEMENTS
The Company has a lease agreement for the use of their mobile structure to
a third party for use in selling coffee and other beverages. The agreement
is for three years beginning March 20, 2001. The lease monthly payments
started at $600 per month and reach $1,250 per month during the 3rd year.
At June 30, 2001, future minimum rentals for the remaining lease term
amounted to $36,900.
NOTE 10 - SIGNIFICANT CUSTOMERS
The Company has just recently commenced operations and all of the revenues
received by the Company are from a single client, the loss of which could
have a material impact on the operations of the Company.
-8-
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ITEM 2: MANAGEMENT'S DISCUSSION & ANALYSIS OR PLAN OF OPERATIONS
PLAN OF OPERATIONS.
Our company was recently incorporated under the laws of Nevada on March
10, 2000, is a small start up company that only recently commenced active
business operations, has not yet generated significant revenues from operation
and is considered a development stage company. In August, 2000, the Company
filed a registration statement on Form SB-2 with the U.S. Securities &
Exchange Commission under the Securities Act of 1933, to register the
offering, on a "best efforts, no minimum" basis, of up to 500,000 shares of
$.001 par value common stock, at a price of $.25 per share. This registration
statement was declared effective on May 14, 2001. The Company has sold 312,800
shares of common stock and raised gross proceeds of $78,200 pursuant to this
offering. The offering closed June 27, 2001. Management's plan of operation
for the next twelve months is to use funds generated from sale of shares in
this offering to provide initial working capital for the operation of the
proposed business.
Our plan of operation is to use our existing capital together with the
proceeds from this offering to complete construction of up to three additional
kiosks for sale or lease to third parties. In addition, we have established a
one-year $20,606 revolving line of credit with our bank that bears interest at
the rate of prime plus 2%, for a current rate of 11.5%. To date we have
repaid all amounts advanced to us under the line of credit with the proceeds
from this offering.
We estimate our general and administrative expenses during the next
twelve months to be approximately $15,000, including rent, office, legal, and
accounting expenses. We estimate the cost of constructing our kiosks at
$20,000 to $25,000 initially, and the cost of constructing additional kiosks
to be somewhat lower as the construction process becomes more uniform and
design problems have been resolved. Our prototype was completed in February,
2001 and we anticipate that additional kiosks will be completed sequentially
based on demand with a total construction time of approximately 45 days.
Since less than all offered shares were sold, we will reduce our construction
budget as appropriate and may attempt to finance the construction of
additional kiosks using a purchase contract or lease with the potential
operator as security for a loan.
We plan to generate revenue from the lease and sale of our kiosks to
third parties. We plan to initially lease our kiosks for a monthly rental of
from $12,000 to $15,000 per year under a lease with a term of three years that
may be renewed on an annual basis after the initial three-year term. We
believe that an operator at a good location will continue to rent the kiosk
for its useful life, which we estimate at ten to fifteen years. We also plan
to sell kiosks at prices ranging from $40,000 to $65,000, depending on the
design features and equipment included in the particular unit. Our proposed
lease rates and sales prices will be subject to adjustment based on demand,
changes in our cost structure and competitive conditions prevailing in our
industry.
We anticipate that the proceeds from the sale of the offering together
with our current assets and bank line of credit will be sufficient to permit
us to implement our business plan and conduct our operations for a period of
at least twelve months. If we receive only limited funds in this offering,
we will delay construction of additional kiosks, if necessary. We may have to
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seek additional funds within the next twelve months. We have no assurance of
receiving any additional funding.
The accompanying financial statements have been prepared assuming that
we will continue as a going concern. As discussed in Note 7 to the financial
statements, the Company was only recently formed, has incurred losses since
its inception and has not yet been successful in establishing profitable
operations, raising substantial doubt about its ability to continue as a going
concern. Management's plans in regards to these matters are also described in
Note 7. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties. In the event the proposed
business is unsuccessful, there is no assurance we could successfully become
involved in any other business venture. Management presently has no plans,
commitments or arrangements with respect to any other proposed business
venture.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) None.
(b) None.
(c) See Part I, Item 1 (financial statements) and Item 2 (management's
discussion) for financial information and a discussion regarding
use of proceeds.
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
None
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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.
Mobile Design Concepts, Inc.
Date: August 1, 2001 by: /s/ Steven N. Bednarik
Steven N. Bednarik, President and Secretary/Treasurer