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: March 31, 2002
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)
(Former name, former address and former fiscal year, if changed since last
report)
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 [X] NO [ ]
The number of $.001 par value common shares outstanding at March 31, 2002:
4,812,800
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
See attached.
MOBILE DESIGN CONCEPTS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2002
MOBILE DESIGN CONCEPTS, INC.
[A Development Stage Company]
CONTENTS
PAGE
- Unaudited Condensed Balance Sheet,
March 31, 2002 2
- Unaudited Condensed Statements of Operations,
for the three months ended March 31, 2002 and
2001 and for the period from inception on
March 10, 2000 through March 31, 2002 3
- Unaudited Condensed Statements of Cash Flows,
for the three months ended March 31, 2002 and
2001 and for the period from inception on
March 10, 2000 through March 31, 2002 4
- Notes to Unaudited Condensed Financial Statements 5 - 8
MOBILE DESIGN CONCEPTS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED BALANCE SHEET
ASSETS
March 31,
2002
___________
CURRENT ASSETS:
Cash $ 41,464
___________
Total Current Assets 41,464
___________
LEASE PROPERTIES, net 23,382
___________
$ 64,846
____________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - related party $ 5,045
Accounts payable - trade 1,750
___________
Total Current Liabilities 6,795
___________
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 shares issued and
outstanding 4,813
Capital in excess of par value 68,770
Deficit accumulated during the
development stage (15,532)
___________
Total Stockholders' Equity 58,051
____________
$ 64,846
____________
The accompanying notes are an integral part of these unaudited condensed
financial statements.
-2-
MOBILE DESIGN CONCEPTS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the Three From Inception
Months Ended on March 10,
March 31, 2000
Through
___________________ March 31,
2002 2001 2002
________ ________ ________
REVENUE $ - $ - $ 4,800
EXPENSES:
General and Administrative 3,783 210 19,867
________ ________ ________
LOSS FROM OPERATIONS (3,783) (210) (15,067)
OTHER EXPENSES:
Interest expense - 156 465
________ ________ ________
LOSS BEFORE INCOME TAXES (3,783) (366) (15,532)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
________ ________ ________
NET LOSS $(3,783) $ (366) $(15,532)
________ ________ ________
LOSS PER COMMON SHARE $ (.00) $ (.00) $ (.00)
________ ________ ________
The accompanying notes are an integral part of these unaudited condensed
financial statements.
-3-
MOBILE DESIGN CONCEPTS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
NET INCREASE (DECREASE) IN CASH
For the Three From Inception
Months Ended on March 10,
March 31, 2000 Through
____________________ March 31,
2002 2001 2002
_________ ________ ________
Cash Flows Provided by Operating Activities:
Net loss $ (3,783) $ (366) $(15,532)
Adjustments to reconcile net loss to
Net cash used by operating activities:
Depreciation 1,368 - 5,535
Changes is assets and liabilities:
Increase in accounts
payable - related party - - 5,045
Increase in accounts payable 40 (812) 1,750
Increase in Interest payable - (80) -
_________ ________ ________
Net Cash Provided (Used) by
Operating Activities (2,375) (1,258) (3,202)
_________ ________ ________
Cash Flows Provided by
Investing Activities:
Purchase of lease properties - (3,694) (28,917)
_________ ________ ________
Net Cash Provided by
Investing Activities - (3,694) (28,917)
_________ ________ ________
Cash Flows Provided by
Financing Activities:
Proceeds from issuance of common stock - - 87,200
Proceeds from line of credit - 5,000 10,606
Payments for stock offering costs - - (13,617)
Payments on line of credit - - (10,606)
_________ ________ ________
Net Cash Provided by
Financing Activities - 5,000 73,583
_________ ________ ________
Net Increase in Cash (2,375) 48 41,464
Cash at Beginning of Period 43,839 576 -
_________ ________ ________
Cash at End of Period $ 41,464 $ 624 $41,464
_________ ________ ________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ 156 $ 273
Income taxes $ - $ - $ -
Supplemental Schedule of Non-cash Investing and Financing Activities:
For the period ended March 31, 2002:
None
For the period ended March 31, 2001:
None
The accompanying notes are an integral part of these unaudited condensed
financial statements.
-4-
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, manufacture, and lease 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. The Company's fiscal year-end is December 31.
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 9]
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 major renewals and betterments that extend the useful
lives of property and equipment are capitalized, upon being placed in
service. Expenditures for maintenance and repairs are charged to expense
as incurred. Depreciation is computed for financial statement purposes on
a straight-line basis over the estimated useful lives of the assets, which
ranges from three to ten years.
Revenue Recognition - The Company recognizes revenue based on the terms of
lease agreements with third parties.
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.
Recently Enacted Accounting Standards - Statement of Financial Accounting
Standards ("SFAS") No. 141, "Business Combinations", SFAS No. 142,
"Goodwill and Other Intangible Assets", SFAS No. 143, "Accounting for
Asset Retirement Obligations", and SFAS No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", were recently issued. SFAS
No. 141, 142, 143 and 144 have no current applicability to the Company or
their effect on the financial statements would not have been significant.
-5-
MOBILE DESIGN CONCEPTS, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 March 31, 2002 and 2001 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, 2001 audited financial statements. The results of operations for the
periods ended March 31, 2002 are not necessarily indicative of the
operating results for the full year.
NOTE 2 - LEASE AGREEMENT
The Company had entered into a lease agreement for the use of their mobile
structure and equipment to a third party for use in selling coffee and
other beverages. The agreement was for three years beginning March 20,
2001. The lease monthly payments started at $600 per month and were to
accelerate and reach $1,250 per month during the 3rd year. However,
during the three months ended March 31, 2002 the lease agreement was
terminated. The Company is currently seeking another lessee for the
structure and equipment or a buyer to purchase the structure and
equipment.
NOTE 3 - LEASE PROPERTIES
The following is a summary of property and equipment - at cost, less
accumulated depreciation:
March 31,
2002
__________
Leased equipment: modular structure $ 15,740
Leased equipment: beverage equipment 13,177
Less: accumulated depreciation (5,535)
__________
$ 23,382
__________
The modular structure and the beverage equipment are depreciated over
their estimated useful lives of ten and three years, respectively.
Depreciation expense for the three months ended March 31, 2002 and
2001, amounted to $1,368 and $0, respectively.
-6-
MOBILE DESIGN CONCEPTS, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 4 - LINE OF CREDIT
In August 2000, an officer of the Company entered into a line of credit
arrangement with a bank using a personal vehicle as collateral. 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 matured on August 1, 2001. At December 31, 2000 the
outstanding balance on the line of credit was $5,606. During the year
ended December 31, 2001, the Company paid off the line of credit in full
and closed the account and had the collateral released from the bank.
NOTE 5 - CAPITAL STOCK
Preferred Stock - The Company has authorized 1,000,000 shares of preferred
stock with a $.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 are issued and outstanding at March 31, 2002.
Common Stock - The Company has authorized 50,000,000 shares of common
stock with a $.001 par value. At March 31, 2002, the Company had 4,812,800
shares issued and outstanding.
The Company has completed a public offering of 312,800 shares of common
stock for cash of $78,200, or $.25 per share. Stock offering costs of
$13,617 have been offset against the proceeds in capital in excess of par
value.
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.
NOTE 6 - 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 March 31, 2002 an operating loss carryforwards of
approximately $15,500 which may be applied against future taxable income
and which expires in various years through 2022.
The amount of and 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 $3,100 and $800 as of March 31, 2002 and 2001, respectively,
with an offsetting valuation allowance at March 31, 2002 and 2001 of the
same amount. The change in the valuation allowance for the period ended
March 31, 2002 and 2001 was approximately $1,000 and $200, respectively.
-7-
MOBILE DESIGN CONCEPTS, INC.
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 7 - RELATED PARTY TRANSACTIONS
Management Compensation - For the three months ended March 31, 2002 and
2001, the Company did not pay 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. The
cost value of this service is considered nominal and, therefore, has not
been recorded as an expense by the Company.
Accounts Payable - Officers and shareholders of the Company have paid
expenses on behalf of the Company totaling $5,045. These funds are due
upon demand and have no stated interest rate.
NOTE 8 - 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, has incurred
losses since its inception 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.
NOTE 9 - LOSS PER SHARE
The following data shows the amounts used in computing loss per share:
For the Three From Inception
Months Ended on March 10,
March 31, 2000 Through
_____________________ March 31,
2002 2001 2002
_________ _________ ________
Loss from continuing operations
available to common shareholders
(numerator) $(3,783) $ (366) $(15,532)
_________ _________ _________
Weighted average number of
common shares outstanding
used in loss per share for
the period (denominator) 4,812,800 4,500,000 4,472,751
_________ _________ _________
Dilutive loss per share was not presented, as the Company had no common
stock equivalent shares for all periods presented that would affect the
computation of diluted loss per share.
-8-
ITEM 2: MANAGEMENT'S DISCUSSION & ANALYSIS OR PLAN OF OPERATIONS
PLAN OF OPERATIONS.
The 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 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 the
existing capital together with the proceeds from the offering to provide
initial working capital for the operation of the proposed business and
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 the offering. We estimate
general and administrative expenses during the next twelve months will be
approximately $15,000 including rent, office, legal, and accounting expenses.
We estimate the cost of constructing kiosks at $20,000 to $25,000 initially.
The cost of constructing additional kiosks will be somewhat lower as the
construction process becomes more uniform and design problems have been
resolved. The prototype was completed in February, 2001 and we anticipate that
additional kiosks can be completed as needed based on demand, with a total
construction time of approximately 45 days. Since less than all offered
shares were sold, we will reduce the construction budget as necessary 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 the kiosks to
third parties. We plan to initially lease the 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 the
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. Since less than all offered shares were sold in this
offering, we will delay construction of additional kiosks, as necessary. We
may have to seek additional funds within the next twelve months. We have no
assurance of receiving any additional funding.
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 has incurred losses
since inception and has not 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.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings. No
such action is contemplated by the Company nor, to the best of its knowledge,
has any action been threatened against the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) No instruments defining the rights of the holders of any class of
registered securities have been materially modified.
(b) No rights evidenced by any class of registered securities have
been materially limited or qualified by the issuance or
modification of any other class of securities.
(c) During the period covered by this report, there were not any
securities that the issuer sold without registering the securities
under the Securities Act.
(d) 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.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There has not been any material default in the payment of principal,
interest, a sinking or purchase fund installment, or any other material
default not cured within 30 days, with respect to any indebtedness of the
issuer exceeding 5 percent of the total assets of the issuer.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter has been submitted to a vote of security holders during the
period covered by this report, through the solicitation of proxies or
otherwise.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-B. None
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
quarter for which this report is filed.
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: May 14, 2002 by: /s/ Steven N. Bednarik
Steven N. Bednarik, President and Secretary/Treasurer