UNITED STATES 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 March 31, 2000.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ______ to ______.
Commission File Number: 000-28409
EASTPORT RED'S INCORPORATED
(Name of Small Business Issuer in its charter)
Nevada 84-1416078
(State or Other Jurisdiction of (IRS Employer ID Number)
Incorporation or Organization)
3434 E. 7800 S., #237, Salt Lake City, Utah 84121
(Address of Principal Executive Offices and Zip Code)
Issuer's telephone number: (801) 274-6415
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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 [ ]
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 practicable date:
As of April 21, 2000, there were 11,000,000 shares of common stock
issued and outstanding.
FORM 10-QSB
EASTPORT RED'S INCORPORATED
TABLE OF CONTENTS
---------------------
PAGE
------
PART I
ITEM 1. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION. . . . . . . . . . . . . . . . . . . . . . .13
PART II
ITEM 5. OTHER INFORMATION . . . . . . . .. . . . . . . . . . . . . . .14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . .14
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
2
PART I
- ---------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------
In the opinion of management, the accompanying unaudited financial
statements included in this Form 10-QSB reflect all adjustments (consisting
only of normal recurring accruals) necessary for a fair presentation of the
results of operations for the periods presented. The results of operations
for the periods presented are not necessarily indicative of the results to
be expected for the full year.
[THIS SPACE INTENTIONALLY LEFT BLANK]
3
EASTPORT RED'S INCORPORATED
[A Development Stage Company]
UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2000
PRITCHETT, SILER & HARDY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
4
EASTPORT RED'S INCORPORATED
[A Development Stage Company]
CONTENTS
----------
PAGE
------
- - Accountants' Review Report 1
- - Unaudited Condensed Balance Sheets, March 31,
2000 and December 31, 1999 2
- - Unaudited Condensed Statements of Operations,
for the three months ended March 31, 2000 and
1999 and for the period from inception on July 18,
1997 through March 31, 2000 3
- - Unaudited Condensed Statements of Cash Flows,
for the three months ended March 31, 2000 and
1999 and for the period from inception on July 18,
1997 through March 31, 2000 4
- - Notes to Unaudited Condensed Financial Statements 5 - 7
5
PRITCHETT, SILER & HARDY, P.C.
CERTIFIED PUBLIC ACCOUNTANTS
430 EAST 400 SOUTH
SALT LAKE CITY, UTAH 84111
(801) 328-2727 - FAX (801) 328-1123
ACCOUNTANTS' REVIEW REPORT
Board of Directors
EASTPORT RED'S INCORPORATED
Salt Lake City, Utah
We have reviewed the accompanying condensed balance sheet of Eastport Red's
Incorporated (A Development Stage Company) as of March 31, 2000, and the
related condensed statements of operations and cash flows for the three months
ended March 31, 2000 and 1999, and for the period from inception on July 18,
1997 through March 31, 2000. All information included in these financial
statements is the representation of the management of Eastport Red's
Incorporated.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review consists
principally of inquiries of Company personnel and analytical procedures
applied to financial data. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of which
is the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed financial statements reviewed by us, in order
for them to be in conformity with generally accepted accounting principles.
The accompanying condensed financial statements have been prepared assuming
the Company will continue as a going concern. As discussed in Note 5 to the
financial statements, the company has no on-going operations, and has incurred
losses since its inception. These factors raise substantial doubt about its
ability to continue as a going concern. Management's plans in regards to
these matters are also described in Note 5. The financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.
/s/ Pritchett, Siler & Hardy, P.C.
PRITCHETT, SILER & HARDY, P.C.
April 16, 2000
Salt Lake City, Utah
6
EASTPORT RED'S INCORPORATED
[A Development Stage Company]
CONDENSED BALANCE SHEETS
[Unaudited - See Accountants' Review Report]
ASSETS
--------
March 31, December 31,
2000 1999
----------- -----------
CURRENT ASSETS:
Cash in bank $ 5,558 $ 7,793
----------- -----------
Total Current Assets 5,558 7,793
----------- -----------
$ 5,558 $ 7,793
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------
CURRENT LIABILITIES:
Note payable - related party $ 750 $ 750
Accrued interest payable - related party 188 169
----------- -----------
Total Current Liabilities 938 919
----------- -----------
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value,
5,000,000 shares authorized,
0 shares issued and outstanding - -
Common stock, $.001 par value,
20,000,000 shares authorized,
11,000,000 shares issued and
outstanding 11,000 11,000
Capital in excess of par value - -
Deficit accumulated during the
development stage (6,380) (4,126)
----------- -----------
Total Stockholders' Equity 4,620 6,874
----------- -----------
$ 5,558 $ 7,793
=========== ===========
Note: The Balance Sheet of December 31, 1999, was taken from the audited
financial statements at the date and condensed.
The accompanying notes are an integral part of these unaudited condensed
financial statements.
-2-
7
EASTPORT RED'S INCORPORATED
[A Development Stage Company]
CONDENSED STATEMENTS OF OPERATIONS
[Unaudited - See Accountants' Review Report]
For the Three From Inception
Months Ended on July 18,
March 31, 1997 Through
---------------------- March 31,
2000 1999 2000
---------- ---------- -------------
REVENUE $ -- $ -- $ --
EXPENSES:
General and Administrative (2,235) (23) (6,192)
---------- ---------- -------------
LOSS BEFORE OTHER EXPENSES (2,235) (23) (6,192)
OTHER EXPENSES:
Interest expense (19) -- (188)
---------- ---------- -------------
LOSS BEFORE INCOME TAXES (2,254) (23) (6,380)
CURRENT TAX EXPENSE -- -- --
DEFERRED TAX EXPENSE -- -- --
---------- ---------- -------------
NET LOSS $ (2,254) $ (23) $ (6,380)
---------- ---------- -------------
LOSS PER COMMON SHARE $ (.00) $ (.00) $ (.00)
---------- ---------- -------------
The accompanying notes are an integral part of these unaudited condensed
financial statements
-3-
8
EASTPORT RED'S INCORPORATED
[A Development Stage Company]
CONDENSED STATEMENTS OF CASH FLOWS
[Unaudited - See Accountants' Review Report]
For the Three From Inception
Months Ended on July 18,
March 31, 1997 Through
---------------------- March 31,
2000 1999 2000
---------- ---------- -------------
Cash Flows (Used) by Operating
Activities:
Net loss $ (2,254) $ (23) $ (6,380)
Adjustments to reconcile net loss to
net cash used by operating activities:
Stock issued for services - - 1,000
Changes in accrued interest related
party 19 - 188
---------- ---------- -------------
Net Cash Provide (Used) by
Operating Activities (2,235) (23) (5,192)
---------- ---------- -------------
Cash Flows Provided from Investing
Activities: - - -
---------- ---------- -------------
Net Cash Provided by Investing
Activities - - -
---------- ---------- -------------
Cash Flows Provided from Financing
Activities:
Proceeds from issuance of common stock - - 10,000
Increase in notes payable related
party - - 750
---------- ---------- -------------
Net Cash Provided by Financing
Activities - - 10,750
---------- ---------- -------------
Net Increase in Cash (2,235) (23) 5,558
Cash at Beginning of Period 7,793 10 -
---------- ---------- -------------
Cash at End of Period $ 5,558 $ (13) $ 5,558
---------- ---------- -------------
Supplemental Disclosure of Cash
Flow Information:
Cash paid during the period for:
Interest paid $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash
Investing and Financing Activities:
For the periods ended March 31, 2000 and 1999
None
The accompanying notes are an integral part of these financial statements.
-4-
9
EASTPORT RED'S INCORPORATED
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Eastport Red's Incorporated (the Company) was organized under
the laws of the State of Nevada on July 18, 1997. The Company has not
commenced planned principal operations and is considered a development stage
company as defined in Statement of Financial Accounting Standards (SFAS) No.
7. The Company is seeking potential business ventures. 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
March 31, 2000 and 1999 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, 1999
audited financial statements. The results of operations for the periods ended
March 31, 2000 are not necessarily indicative of the oeprating results for the
full year.
Organization Costs - Organization costs, which reflect amounts expended to
organize the Company, amounted to $1,000 and were expensed during the period
ended December 31, 1997.
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 6]
Cash and Cash Equivalents - For purposes of the financial statements, the
Company considers all highly liquid debt investments purchased with a maturity
of three months or less to be cash equivalents.
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. 132, "Employer's Disclosure about Pensions and Other
Postretirement Benefits", SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities", SFAS No. 134, "Accounting for Mortgage-Backed
Securities...", SFAS No. 135, "Rescission of FASB Statement No. 75 and
Technical Corrections", SFAS No. 136, "Transfers of Assets to a not for profit
organization or charitable trust that raises or holds contributions for
others", and 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.)," were recently issued. SFAS No. 132,
133, 134, 135, 136 and 137 have no current applicability to the Company or
their effect on the financial statements would not have been significant.
-5-
10
EASTPORT RED'S INCORPORATED
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 2 - CAPITAL STOCK
Common Stock - During July 1997, in connection with its organization, the
Company issued 1,000,000 shares of its previously authorized, but unissued
common stock. The shares were issued for services rendered at $1,000 (or
$.001 per share).
During May 1999, the Company issued 10,000,000 shares of its previously
authorized, but unissued common stock for cash of $10,000 (or $.001 per
share).
NOTE 3 - INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109 "Accounting for Income Taxes". SFAS
No. 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, 2000, unused operating loss
carryforwards of approximately $6,400 which may be applied against future
taxable income and which expire in various years from 2019 through 2020. 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 assets are approximately $2,200 and
$1,300 as of March 31, 2000 and December 31, 1999, respectively, with an
offsetting valuation allowance at each year end of the same amount resulting
in a change in the valuation allowance of approximately $800 during the three
months ended March 31, 2000.
NOTE 4 - RELATED PARTY TRANSACTIONS
Management Compensation - As of March 31, 2000, the Company has not paid any
compensation to an officer/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 home
as a mailing address, as needed, at no expense to the Company.
Notes Payable - During October 1997, an officer/shareholder of the Company
advanced $750 to the Company. The note is payable upon demand and accrues
interest at 10% per annum. Accrued interest amounted to $188 and $169 at
March 31, 2000 and December 31, 1999, respectively.
NOTE 5 - 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 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 through 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.
-6-
11
EASTPORT RED'S INCORPORATED
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 6 - LOSS PER SHARE
The following data show the amounts used in computing loss per share for the
periods presented:
For the Three From Inception
Months Ended on July 18,
March 31, 1997 Through
---------------------- March 31,
2000 1999 2000
---------- ---------- -------------
Loss from continuing operations
available to common shareholders
(numerator) $ (2,254) $ (23) $ (6,380)
---------- ---------- -------------
Weighted average number of
common shares outstanding used
in loss per share for the period
(denominator) 11,000,000 1,000,000 4,372,847
---------- ---------- -------------
-7-
12
- ---------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- ---------------------------------------------------------------------------
Results of Operations
- ----------------------
Three Month Periods Ended March 31, 2000 and 1999
and from Inception on July 18, 1997 through March 31, 2000
The Company had no revenue from continuing operations for the
three-month periods ended March 31, 2000 and 1999 or from Inception on July
18, 1997 through March 31, 2000.
General and administrative expenses for all periods consisted of
general corporate administration, legal and professional expenses, and
accounting and auditing costs. These expenses were $2,235, $23 and $6,192
for the three-month periods ended March 31, 2000, March 31, 1999 and from
Inception on June 18, 1997 to March 31, 2000 respectively.
Interest expense in the three-month periods ended March 31, 2000,
March 31, 1999 and from Inception on June 18, 1997 through March 31, 2000
was $19, $0 and $188 respectively. Interest was accrued on a note payable
to a former officer of the Company in the principal amount of $750 which is
due on demand and bears interest at 10% per annum.
As a result of the foregoing factors, the Company realized a net loss
of $2,254, $23 and $6,380 for the three-month periods ended March 31, 2000,
March 31, 1999 and from Inception on June 18, 1997 through March 31, 2000
respectively.
Liquidity and Capital Resources
- --------------------------------
The Company remains in the development stage and, since inception, has
had no revenues. At March 31, 2000, the Company had working capital of
$4,620. The Company had cash in the amount of $5,558. All cash raised by
the Company to date, has come from the sale of 10,000,000 shares of the
Company's common stock to First Avenue, Ltd. for $10,000, as well as a $750
loan to the Company by its previous President, Marlon Hill. Ken W. Kurtz,
the Company's President, Secretary, Treasurer and Director is a general and
limited partner of First Avenue, Ltd. The shares were sold to First
Avenue, Ltd. to obtain capital to pay the costs of becoming a reporting
company under the Securities Exchange Act of 1934, as amended. Management
is hopeful that in becoming a reporting company will increase the number of
prospective business ventures that may be available to the Company.
Management believes that the Company has sufficient cash to meet its
anticipated needs through at least the first calendar quarter of 2001.
However, there can be no assurances to that effect, as the Company has no
revenues and its need for capital may change dramatically if it acquires an
interest in a business opportunity during that period.
Plan of Operations
- -------------------
The Company's plan of operations centers around its search for
potential businesses, products, technologies and companies for acquisition
or reorganization.
13
PART II
- ---------------------------------------------------------------------------
ITEM 5. OTHER INFORMATION
- ---------------------------------------------------------------------------
None.
- ---------------------------------------------------------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ---------------------------------------------------------------------------
a) Exhibits: Included only with the electronic filing of this
report is the Financial Data Schedule for the three-month period
ended March 31, 2000 (Exhibit Ref. No. 27).
b) Reports on Form 8-K: None.
- ---------------------------------------------------------------------------
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.
Eastport Red's Incorporated
/s/ Ken Kurtz, as President
-----------------------------------
Date: April 21, 2000 By: Ken Kurtz, President, Secretary
Treasurer, Director
14