SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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, 2002
[ ] Transition report under Section 13 or 15(d) of the Exchange
Act
For the transition period from __________ to __________
Commission file number 0-29487
CONUS HOLDINGS, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
NEVADA 33-0850619
- ------------------------------- ---------------------
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
1517 E. 7th Avenue, Suite C
Tampa, Florida 33605
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(Address of Principal Executive Offices)
(813) 248-0089
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(Issuer's Telephone Number, Including Area Code)
N/A
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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 [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: As of April 25, 2002 there
were 1,000,000 shares of common stock issued and outstanding, par value $0.001,
and no shares of preferred stock are issued and outstanding.
CONUS HOLDINGS, INC.
INDEX
Page
Part I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2002 (unaudited)
and December 31, 2001 3
Consolidated statements of operations for the three months
ended March 31, 2002 and 2001, and for the period from
inception, April 9, 1998, through March 31, 2002 (unaudited) 4
Consolidated statements of cash flows for the three months
ended March 31, 2002 and 2001, and for the period from
inception, April 9, 1998, through March 31, 2002 (unaudited) 5
Notes to consolidated financial statements 6
Item 2. Management's Discussion and Analysis or Plan of Operation 9
Part II Other Information 12
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
2
CONUS HOLDINGS, INC.
(A Development Stage Enterprise)
Consolidated Balance Sheets
ASSETS
March 31, December 31,
2002 2001
(unaudited)
---------------- -----------------
Cash $ 1,336 $ 13,296
Other current assets 3,091 3,091
---------------- -----------------
Total assets $ 4,427 $ 16,387
================ =================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Accrued interest $ 2,584 $ 1,200
Payable to related party 7,500 -
Convertible notes payable 11,500 11,500
---------------- -----------------
Total current liabilities 21,584 12,700
---------------- -----------------
Convertible notes payable 62,000 62,000
---------------- -----------------
Total non-current liabilities 62,000 62,000
---------------- -----------------
Total liabilities 83,584 74,700
---------------- -----------------
Commitments
Stockholders' equity (deficit)
Preferred stock, $0.001 par value; 2,000,000 shares authorized; no
shares issued and outstanding - -
Common stock, $0.001 par value; 20,000,000 shares authorized;
1,000,000 shares issued and outstanding 1,000 1,000
Deficit accumulated during the development stage (80,157) (59,313)
----------------- ------------------
Total stockholders' equity (deficit) (79,157) (58,313)
---------------- -----------------
Total liabilities and stockholders' equity (deficit) $ 4,427 $ 16,387
================ =================
3
CONUS HOLDINGS, INC.
(A Development Stage Enterprise)
Consolidated Statements of Operations
Period From
Three Three Inception,
Months Months April 9, 1998,
Ended Ended Through
March 31, March 31, March 31,
2002 2001 2002
--------------- ---------------- ------------------
Consulting fees $ (15,000) $ - $ (60,000)
General and administrative expenses (5,844) (1,558) (26,207)
---------------- ----------------- ------------------
Loss before extraordinary item (20,844) (1,558) (86,207)
Extraordinary item:
Gain on forgiveness of related party payable - - 6,050
--------------- ---------------- -----------------
Net loss $ (20,844) $ (1,558) $ (80,157)
Weighted average number of common shares
outstanding 1,000,000 1,000,000 1,000,000
=============== ================ =================
Net loss per share $ (0.02) $ (0.00) $ (0.08)
=============== ================ ================
4
CONUS HOLDINGS, INC.
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows
Period From
Inception,
Three Three April 9, 1998,
Months Ended Months Ended Through
March 31, March 31, March 31,
2002 2001 2002
--------------- ---------------- ------------------
Cash flows from operating activities
Net loss $ (20,844) $ (1,558) $ (80,157)
Adjustments to reconcile net loss to net cash
used by operating activities
Issuance of common stock for services - - 1,000
Increase in other current assets - - (3,091)
Increase in accrued expenses 1,384 - 2,584
Increase in payable to related party 7,500 1,558 7,500
--------------- ---------------- -----------------
Net cash used by operating
activities (11,960) - (72,164)
---------------- ---------------- ------------------
Cash flows from financing activities
Proceeds from convertible notes payable - - 73,500
--------------- ---------------- -----------------
Net cash provided by financing
activities - - 73,500
--------------- ---------------- -----------------
Net (decrease) increase in cash (11,960) - 1,336
---------------- ---------------- -----------------
Cash, beginning of period 13,296 - -
--------------- ---------------- -----------------
Cash, end of period $ 1,336 $ - $ 1,336
=============== ================ =================
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ - $ - $ -
=============== ================ =================
Income taxes $ - $ - $ -
=============== ================ =================
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CONUS HOLDINGS, INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 2002 and 2001,
and for the Period from Inception, April 9, 1998,
through March 31, 2002
1. Basis of Presentation, Capital Structure, and Significant Accounting
Policies
Basis of Presentation
Conus Holdings, Inc. (A Development Stage Enterprise) (the "Company")
was incorporated on April 9, 1998 under the laws of the State of
Nevada. The Company intends to develop operating opportunities through
business combinations or mergers. To date, the Company has not
conducted any significant operations, and its activities have focused
primarily on organizational efforts, corporate compliance matters and
locating potential merger candidates. Since the Company has not yet
commenced any principal operations, and has not yet earned significant
revenues, the Company is considered to be a development stage
enterprise as of March 31, 2002.
Conus Marketing, Inc. was incorporated in the State of Florida on
September 7, 2001 as a wholly owned subsidiary of the Company. In
addition, Conus Computers, Inc. was incorporated in the State of
Florida on September 14, 2001 as a wholly owned subsidiary. The
subsidiaries were formed with the objective of marketing and selling
various products through telemarketing, direct mail, coupons,
infomercials, and the Internet. Conus Marketing, Inc. and Conus
Computers, Inc. have conducted no operations to date, and are in
substance shell companies.
The accompanying consolidated financial statements include the accounts
of the Company and its two wholly owned subsidiaries from the date of
their formation.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in
the United States of America for interim financial information and the
instructions to Form 10-QSB. Accordingly, they do not include all the
information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial
statements. In the opinion of management, the interim financial
statements include all adjustments considered necessary for a fair
presentation of the Company's financial position, results of operations
and cash flows for the three months ended March 31, 2002. These
statements are not necessarily indicative of the results to be expected
for the full fiscal year. These statements should be read in
conjunction with the financial statements and notes thereto included in
the Company's Form 10-KSB for the year ended December 31, 2001 as filed
with the Securities and Exchange Commission.
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CONUS HOLDINGS, INC.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements
For the Three Months Ended March 31, 2002 and 2001,
and for the Period from Inception, April 9, 1998,
through March 31, 2002
1. Basis of Presentation, Capital Structure, and Significant Accounting
Policies (continued)
Capital Structure
On April 10, 1998, the Company's Board of Directors approved the
issuance of 1,000,000 shares of common stock to the Company's founders
for services which were valued at a nominal amount approximating fair
value ($1,000 recorded as general and administrative expenses in the
accompanying statement of operations). Of these shares, 824,500 shares
were issued to two officers of the Company, and as of December 31,
2000, such shares were owned by one officer. In August 2001, the
Company's then majority stockholder and sole officer and director sold
600,000 shares of the Company's common stock to BKR Investments, Inc.
Such transaction resulted in a change in control of the Company.
Going Concern and Management's Plans
The Company has not commenced significant operations and has limited
financial and other resources. Such matters raise substantial doubt
about the Company's ability to continue as a going concern.
Management's plans with respect to these conditions are to search for
additional sources of debt and/or equity financing and new operating
opportunities through business combinations or mergers. In the interim,
the Company will require minimal overhead, and key administrative and
management functions will be provided by consultants and stockholders.
Accordingly, the accompanying financial statements have been presented
under the assumption that the Company will continue as a going concern.
Management Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, and disclosure of contingent assets
and liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
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2. Related Party Transactions
The Company had a six-month consulting agreement with an entity owned
by the father of the Company's sole officer and director that expired
in February 2002. During the three months ended March 31, 2002, the
Company expensed $15,000 and paid $7,500 pursuant to this arrangement,
and as of March, 31, 2002, $7,500 is payable to this related party. The
father of the Company's sole officer and director owns 97,000 shares of
the Company's common stock as of March 31, 2002.
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion contains certain forward-looking statements
that are subject to business and economic risks and uncertainties, and the
Company's actual results could differ materially from those forward-looking
statements. The following discussion regarding the financial statements of the
Company should be read in conjunction with the financial statements and notes
thereto.
BACKGROUND OF THE COMPANY
The Company was organized under the Laws of the State of Nevada, on
April 9,1998, as a blank check or shell company whose primary purpose is to
engage in a merger with, or acquisition of one or a small number of private
firms. Such firms are expected to be private corporations, partnerships or sole
proprietorships. From inception through the present time, the primary activity
of the Company has been directed towards organizational efforts, compliance
matters and locating potential merger candidates.
On August 6, 2001, M. Richard Cutler, the then majority shareholder of
the Company and sole officer and director, entered into a Stock Purchase
Agreement with BKR Investments, Inc. a Florida corporation. Pursuant to the
terms of the Stock Purchase Agreement, Mr. Cutler sold 600,000 shares of the
Company's Common Stock owned by him that represented 60% of the outstanding
shares of the Company's Common Stock, to BKR Investments, Inc. for $25,000.
On August 17, 2001, in accordance with the Stock Purchase Agreement,
Mr. Cutler appointed Richard J. Diamond an officer and director of the Company.
Simultaneously therewith, Mr. Cutler resigned his positions as sole officer and
director of the Company, thereby leaving Mr. Diamond as the Company's sole
officer and director.
On or about September 15, 2001, the Company formed two Florida
companies as wholly owned subsidiaries, Conus Marketing, Inc. and Conus
Computers, Inc. The companies were formed with the objective of marketing and
selling various products through telemarketing, direct mail, coupons,
infomercials and the Internet. To this end, the Company began negotiating
several strategic marketing agreements and expected to begin operations during
September 2001. As a result of a dispute, the Company ended negotiations related
to the marketing agreements and terminated its initial plan of operations.
During this period the Company began negotiating with In-Touch Marketing, Inc.
regarding the potential acquisition of In-Touch Marketing's assets, however
these negotiations have been terminated. Accordingly, the Company is still a
"blank check" or "shell" company. The Company has not engaged in any significant
efforts to identify possible merger or acquisition candidates and has no market
studies available to it. At present, the Company has no business opportunities
under contemplation for acquisitions.
GENERAL OVERVIEW
The Company's activities since inception have been limited to
organizational matters, compliance efforts and locating potential merger
candidates, and the Company has not engaged in any operating activity since its
inception.
9
The Company has registered its Common Stock on a Form 10-SB
registration statement filed pursuant to the Securities Exchange Act of 1934
(the Exchange Act) and Rule 12(g) thereof. The Company files with the Securities
and Exchange Commission periodic reports under Rule 13(a) of the Exchange Act,
including quarterly reports on Form 10-QSB and annual reports on Form 10-KSB.
The Company was formed to engage in a merger with or acquisition of an
unidentified foreign or domestic private company which desires to become a
reporting (public) company whose securities are qualified for trading in the
United States secondary market. The Company meets the definition of a blank
check company contained in Section 7(b)(3) of the Securities Act of 1933, as
amended.
Management believes that there are perceived benefits to being a
reporting company with a class of publicly-traded securities which may be
attractive to foreign and domestic private companies.
These benefits are commonly thought to include (1) the ability to use
registered securities to make acquisition of assets or businesses; (2) increased
visibility in the financial community; (3) the facilitation of borrowing from
financial institutions; (4) improved trading efficiency; (5) shareholder
liquidity; (6) greater ease in subsequently raising capital; (7) compensation of
key employees through options for stock for which there is a public market; (8)
enhanced corporate image; and, (9) a presence in the United States capital
market.
A private company which may be interested in a business combination
with the Company may include (1) a Company for which a primary purpose of
becoming public is the use of its securities for the acquisition of assets or
businesses; (2) a company which is unable to find an underwriter of its
securities or is unable to find an underwriter of securities on terms acceptable
to it; (3) a company which wishes to become public with less dilution of its
Common Stock than would occur normally upon an underwriting; (4) a company which
believes that it will be able to obtain investment capital on more favorable
terms after it has become public; (5) a foreign company which may wish an
initial entry into the United States securities market; (6) a special situation
company, such as a company seeking a public market to satisfy redemption
requirements under a qualified Employee Stock Option Plan; and, (7) a company
seeking one or more of the other benefits believed to attach to a public
company.
The Company is authorized to enter into a definitive agreement with a
wide variety of private businesses without limitation as to their industry or
revenues. It is not possible at this time to predict with which private company,
if any, the Company will enter into a definitive agreement or what will be the
industry, operating history, revenues, future prospects or other characteristics
of that company.
As of the date hereof, Management has not made any final decision
concerning, and has not entered into any agreements for, a business combination.
When any such agreement is reached or other material fact occurs, the Company
will file notice of such agreement or fact with the Securities and Exchange
Commission on Form 8-K. Persons reading this Form 10-QSB are advised to see if
the Company has subsequently filed a Form 8-K.
10
As soon as the Company is eligible, it intends to apply to have its
Common Stock listed or admitted to quotation on the NASD OTC Bulletin Board or,
if it meets the financial and other requirements thereof, on the Nasdaq Small
Cap Market, National Market System, or other regional or national exchange.
THREE MONTHS ENDED MARCH 31, 2002 COMPARED WITH THE PERIOD ENDED MARCH 31, 2001
During the three months ended March 31, 2002 the Company incurred
general, administrative and consulting expenses in the amount of $20,844 as
compared to $1,558 for the same period ended March 31, 2001. The Company has
incurred these expenses in connection with its aggressive strategy to seek an
acquisition candidate. The most significant expenses incurred during the current
quarter related to consulting fees relating to the identification of potential
merger candidates ($15,000), corporate compliance costs ($3,000) and interest
expenses ($1,384).
Liquidity
The Company has financed its operations primarily through the sale of
convertible debentures. During September 2001 the Company sold an aggregate of
$11,500 of the Company's 5% senior subordinated convertible debentures due
December 31, 2002. The debentures are convertible into the Company's Common
Stock at $.001 per share.
On October 10, 2001, the Company authorized the issuance of 8%
subordinated convertible debentures due June 30, 2003 in the aggregate amount of
$500,000. These debentures are convertible into the Company's Common Stock at
$.50 per share. The Company sold an aggregate or $62,000 of these debentures and
terminated this offering.
At March 31, 2002 the Company had $1,336 in cash and total assets of
$4,427. As of that same date the Company had total current liabilities of
$21,584, and had a working capital deficit of $17,157.
As of March 31, 2002 the Company's total liabilities, including
non-current liabilities was $83,584 and the Company had a stockholder deficit of
$79,157.
Our liquidity and capital resources could improve in the short term by
loans from related parties and financing activities (both equity and convertible
debt related).
11
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There are no legal proceedings against the Company and the Company is
unaware of any proceedings contemplated against it.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to the security holders for a vote.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
None.
(b) Reports on Form 8-K.
None.
12
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.
CONUS HOLDINGS, INC.
Dated: May 15, 2002 By: /s/ Richard J. Diamond
------------------------------
Richard J. Diamond, President
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