U.S. 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 August 31, 2005.
___ Transition report under section 13 or 15(d) of the Securities Exchange Act
of 1934 for the transition period from ____ to ____.
Commission File No: 0-21951
THE HERITAGE ORGANIZATION, INC.
-------------------------------
(Name of small business issuer in its charter)
Colorado 84-1356383
--------------------------- --------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of Incorporation)
ATTN: Vickie Walker, P.O. Box 910
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Address of Principal Executive Office (street and number)
Addison, Texas 75001
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City, State and Zip Code
Issuer's telephone number: (214) 662-4094
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 issuers involved in bankruptcy proceedings during the past
five years.
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] 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. At October 18, 2005, the following
shares of common were outstanding: Common Stock, 14,000,000 shares.
Transitional Small Business Disclosure Format (Check one):
Yes [ ] No [X]
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS
(a) The unaudited financial statements of registrant for the three months ended
August 31, 2005, follow. The financial statements reflect all adjustments which
are, in the opinion of management, necessary to a fair statement of the results
for the interim period presented.
The Heritage Organization, Inc.
(A Development Stage Company)
FINANCIAL STATEMENTS
(Unaudited)
August 31, 2005
CONTENTS
Balance Sheet F-1
Statements of Operations F-2
Statements of Cash Flows F-3
Notes to Financial Statements F-4
THE HERTIAGE ORGANIZATION, INC.
(A Development Stage Company)
BALANCE SHEET
August 31, 2005
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 4,399
---------
Total Current Assets $ 4,399
=========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 5,586
Notes payable - related party 50,000
Accrued interest - related party 1,502
---------
Total Current Liabilities 57,088
---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.00001 par value; 10,000,000 shares authorized;
no shares issued and outstanding --
Common stock, $0.00001 par value; 99,000,000 shares authorized;
14,000,000 shares issued and outstanding 140
Class B common stock, $0.00001 par value; 1,000,000 shares
authorized; no shares issued and outstanding --
Additional paid-in capital 92,369
(Deficit) accumulated during the development stage (145,198)
---------
Total Stockholders' Equity (Deficit) (52,689)
---------
$ 4,399
=========
See accompanying notes to the financial statements
F-1
THE HERTIAGE ORGANIZATION, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
For the Period
from Inception For the three For the three
(August 28, 1996) months ended months ended
to August 31, 2005 August 31, 2005 August 31, 2004
------------------- --------------- ----------------
REVENUES $ 5 $ --- $ ---
------------------ --------------- ----------------
EXPENSES:
Amortization 300 --- ---
Bank charges 386 37 39
Consulting fees 62,800 --- ---
Directors fees 200 --- ---
Filing fee 1,515 1,290 ---
Legal & professional 63,455 10,253 3,058
Office expense 2,534 --- ---
Rent expense 5,400 150 150
------------------ --------------- ----------------
Total Expenses 136,590 11,730 3,247
------------------ --------------- ----------------
(LOSS) FROM CONTINUING OPERATIONS (136,585) (11,730) (3,247)
OTHER (EXPENSE):
Interest expense (8,613) (816) (522)
------------------- ---------------- -----------------
NET (LOSS) $ (145,198) $ (12,546) $ (3,769)
=================== ================ =================
NET (LOSS) PER SHARE $ * $ *
---------------- ---------------
Weighted Average Number of
Shares Outstanding 14,000,000 14,000,000
================ ================
* = less than $0.01 per share
See accompanying notes to the financial statements
F-2
THE HERTIAGE ORGANIZATION, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
For the Period
from Inception For the three For the three
(August 28, 1996) months ended months ended
to August 31, 2005 August 31, 2005 August 31, 2004
------------------ ---------------- ---------------
CASH FLOWS FROM (TO)
OPERATING ACTIVITIES:
Net (loss) $ (145,198) $ (12,546) $ (3,769)
Adjustments to reconcile net (loss) to net
cash flows from operating activities:
Amortization 300 -- --
Rent expense 5,400 150 150
Expenses paid by shareholders 15,609 -- --
Stock issued for directors' fees 59,960 -- --
Stock issued for consulting fees 3,040 -- --
Increase in accounts payable 5,586 5,178 263
Increase in accrued interest 1,502 191 222
--------------- --------------- -------------
Net Cash Flows (Used in) Operating Activities (53,801) (7,027) (3,134)
--------------- --------------- -------------
CASH FLOWS FROM (TO) INVESTING
ACTIVITIES:
Organization costs (300) -- --
--------------- --------------- -------------
Net Cash Flows (Used in) Investing
Activities (300) -- --
--------------- --------------- -------------
CASH FLOWS FROM (TO) FINANCING
ACTIVITIES:
Issuance of common stock 8,500 -- --
Payments on notes payable
- related party (3,000) -- --
Proceeds from notes payable
- related party 53,000 10,000 5,000
--------------- --------------- -------------
Net Cash Flows Provided By Financing
Activities 58,500 10,000 5,000
--------------- --------------- -------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 4,399 2,973 1,866
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD -- 1,426 3,334
--------------- --------------- -------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $ 4,399 $ 4,399 $ 5,200
=============== =============== =============
Supplemental Disclosures of Cash Flow
Information:
Interest paid $ 625 $ 300
=============== =============
See accompanying notes to the financial statements
F-3
THE HERITAGE ORGANIZATION, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
August 31, 2005
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements have been prepared by The Heritage
Organization, Inc. without audit pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted as allowed by such
rules and regulations, and management believes that the disclosures are adequate
to make the information presented not misleading. These financial statements
include all of the adjustments, which in the opinion of management, are
necessary to a fair presentation of financial position and results of
operations. All such adjustments are of a normal and recurring nature. These
financial statements should be read in conjunction with the audited financial
statements at May 31, 2005.
NOTE 2 - GOING CONCERN AND PLAN OF OPERATION
The Company's financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company is in the
development stage and has not earned any revenues from operations to date.
The Company is currently devoting its efforts to seeking business opportunities.
The Company's ability to continue as a going concern is dependent upon its
ability to develop additional sources of capital, and ultimately, achieve
profitable operations. The accompanying financial statements do not include any
adjustments that might result from the outcome of these uncertainties.
NOTE 3 - NOTES PAYABLE, RELATED PARTY
Notes Payable
- -------------
The Company has ten unsecured notes payable to a shareholder totaling $50,000 as
follows:
Maturity Date Interest Rate Principal Amount
- ------------- ------------- ----------------
September 18, 2005 6.50% $ 5,000
November 8, 2005 6.75% 5,000
November 21, 2005 7.00% 5,000
February 10, 2006 7.50% 5,000
March 18, 2006 7.75% 5,000
May 16, 2006 8.00% 5,000
June 2, 2006 8.00% 5,000
August 4, 2006 8.25% 5,000
August 18, 2006 8.50% 5,000
August 31, 2006 8.50% 5,000
--------------
$ 50,000
==============
The notes are payable on the earlier of the demand date or the maturity date
specified above. All outstanding notes payable are for a term of one year. The
Company has historically paid the shareholder accrued interest at the maturity
date of notes payable and has entered into a new one-year loan for the
outstanding principal balance. During the quarter ended August 31, 2005 the
Company renewed one note payable of $5,000 with an interest rate of 6.00% at the
rate of 8.25% and one note payable of $5,000 with an interest rate of 6.50% at
the rate of 8.50%. In addition, two new notes were entered into during the
quarter in the amount of $5,000 each at the rates of 8.00% and 8.50%. Also, a
new note was entered into on September 30, 2005, in the amount of $5,000 at the
rate of 8.75%.
The shareholder is the Company's sole lender. Management of the Company
anticipates that the shareholder will continue to renew its notes payable and
make new advances to the Company as necessary.
F-4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Liquidity and Capital Resources.
The Company remains in the development stage, and since inception, has
experienced no significant change in liquidity or capital resources or
stockholders' equity other than the receipt of net proceeds in the amount of
$8,500 from its inside capitalization funds, and $53,000 as loans from a
principal shareholder. Consequently, the Company's balance sheet for the quarter
ended August 31, 2005, reflects a total asset value of $4,399.
The Company does not have sufficient assets or capital resources to pay its
on-going expenses while it is seeking out business opportunities, and it has no
current plans to raise additional capital through sale of securities, or
otherwise. As a result, although the Company has no agreement in place with its
shareholders or other persons to pay expenses on its behalf, it is currently
anticipated that the Company will rely on loans, if available, from shareholders
or third parties to pay expenses at least until it is able to consummate a
business combination. There is no assurance that the Company will have
sufficient assets or capital to pay its ongoing expenses or continue as a going
concern.
Results of Operations.
During the period from August 28, 1996 (inception) through August 31, 2005, the
Company has engaged in no significant operations other than organizational
activities, acquisition of capital and registering its securities under the
Securities and Exchange Act of 1934, as amended. No revenues were received
during this period, and the Company experienced a cumulative net loss of
$145,198.
As of the end of the quarter ending August 31, 2005, the Company has not been
able to reach any agreement or definitive understanding with any person
concerning a business combination transaction between the Company and any other
entity or business. At the present time, no prospects exist for the potential
business combination of the Company and any other entity and none is presently
anticipated.
The Company intends to continue with its previous business plan to seek,
investigate and possibly acquire one or more properties or businesses. Such an
acquisition may be made by purchase, merger, exchange of stock, or otherwise and
may encompass assets or a business entity, such as a corporation, joint venture,
or partnership. The Company has very limited capital, and it is unlikely that
the Company will be able to take advantage of more than one such business
opportunity. The Company intends to seek opportunities demonstrating the
potential of long-term growth as opposed to short-term earnings.
The Company experienced a net loss of $12,546 for the quarter, compared with a
net loss of $3,769 for the same quarter of the previous fiscal year. The loss
during the quarter is primarily the result of legal and accounting costs related
to compliance with reporting requirements of the securities laws. The Company
does not expect to generate any revenue until it completes a business
combination, but it will continue to incur legal and accounting fees and other
costs associated with compliance with its reporting obligations. As a result,
the Company expects that it will continue to incur losses each quarter at least
until it has completed a business combination. Depending upon the performance of
any acquired business, the Company may continue to operate at a loss even
following completion of a business combination.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This report contains various forward-looking statements that are based on the
Company's beliefs as well as assumptions made by and information currently
available to the Company. When used in this report, the words "believe,"
"expect," "anticipate," "estimate" and similar expressions are intended to
identify forward-looking statements. Such statements may include statements
regarding seeking business opportunities, payment of operating expenses, and the
like, and are subject to certain risks, uncertainties and assumptions which
could cause actual results to differ materially from projections or estimates
contained herein. Factors which could cause actual results to differ materially
include, among others, unanticipated delays or difficulties in location of a
suitable business acquisition candidate, unanticipated or unexpected costs and
expenses, competition and changes in market conditions, lack of adequate
management personnel and the like. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated or
projected. The Company cautions against placing undue reliance on
forward-looking statements all of which speak only as of the date made.
ITEM 3. CONTROLS AND PROCEDURES
The Company's Chief Executive Officer and Chief Financial Officer, after
evaluating the effectiveness of the Company's disclosure controls and procedures
(as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of 1934, as amended) as of the end of the period covered by this quarterly
report (the "Evaluation Date"), has concluded that, as of the Evaluation Date,
the Company's disclosure controls and procedures were effective to provide
reasonable assurance of the timely collection, evaluation and disclosure of
information relating to the Company that would potentially be subject to
disclosure under the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder. There were no changes in the Company's
internal control over financial reporting during the quarter ended August 31,
2005 that materially affected, or were reasonably likely to materially affect,
the Company's internal control over financial reporting.
ITEM 4. RELATED PARTY TRANSACTIONS
Notes Payable
- -------------
The Company has ten unsecured notes payable to a shareholder totaling $50,000 as
follows:
Maturity Date Interest Rate Principal Amount
- ------------- ------------- ----------------
September 18, 2005 6.50% $ 5,000
November 8, 2005 6.75% 5,000
November 21, 2005 7.00% 5,000
February 10, 2006 7.50% 5,000
March 18, 2006 7.75% 5,000
May 16, 2006 8.00% 5,000
June 2, 2006 8.00% 5,000
August 4, 2006 8.25% 5,000
August 18, 2006 8.50% 5,000
August 31, 2006 8.50% 5,000
--------------
$ 50,000
==============
The notes are payable on the earlier of the demand date or the maturity date
specified above. All outstanding notes payable are for a term of one year. The
Company has historically paid the shareholder accrued interest at the maturity
date of notes payable and has entered into a new one-year loan for the
outstanding principal balance. During the quarter ended August 31, 2005 the
Company renewed one note payable of $5,000 with an interest rate of 6.00% at the
rate of 8.25% and one note payable of $5,000 with an interest rate of 6.50% at
the rate of 8.50%. In addition, two new notes were entered into during the
quarter in the amount of $5,000 each at the rates of 8.00% and 8.50%. Also, a
new note was entered into on September 30, 2005, in the amount of $5,000 at the
rate of 8.75%.
The shareholder is the Company's sole lender. Management of the Company
anticipates that the shareholder will continue to renew its notes payable and
make new advances to the Company as necessary.
Rent Expense
- ------------
Rent is being provided to the Company at no charge. For purposes of the
financial statements, the Company is accruing $50 per month as additional
paid-in capital for this use.
PART II
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
31.1 Certification pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities
Exchange Act of 1934, as amended.
32.1 Certification of Chief Executive Officer and President of the Company,
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
None
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: October 18, 2005 By: /s/ Vickie Walker
-----------------------
Vickie Walker
Secretary
Chief Executive Officer
Chief Financial Officer