U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the Quarterly
Period Ended: January 31, 2005
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Commission file number: 000-49896
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DOWNSIDE UP, INC.
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(Exact name of small business issuer as specified in its charter)
Colorado 84-1493157
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16200 WCR 18E, Loveland, Colorado 80537
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(Address of principal executive offices) (Zip Code)
970-635-0346
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(Issuer's telephone number)
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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
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State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
As of March 4, 2005, 1,230,000 shares of common stock, no par value, were
outstanding.
Transitional Small Business Disclosure Format: Yes No X
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DOWNSIDE UP, INC.
Index
Page
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed balance sheet, January 31, 2005 (Unaudited) ............. 3
Condensed statements of operations (Unaudited) - three and
nine months ended January 31, 2005 and 2004 ................... 4
Condensed statements of cash flows (Unaudited) - nine
months ended January 31, 2005 and 2004 ........................ 5
Notes to condensed financial statements (Unaudited) ............... 6
Item 2. Plan of Operation ......................................... 7
Item 3. Controls and Procedures ................................... 7
Part II OTHER INFORMATION ................................................. 8
Item 1. Legal Proceedings
Item 2. Unregistered Sales of Equity Securities and use of
Proceeds
Item 3 Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits
Signatures ........................................................ 8
DOWNSIDE UP, INC.
Condensed Balance Sheet
January 31, 2005
(Unaudited)
Assets
Total assets ....................................................... $ --
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Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable and accrued liabilities ....................... $ 350
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Total current liabilities ........................ 350
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Shareholders' deficit:
Common stock ................................................... 2,672
Additional paid-in capital ..................................... 18,021
Deficit accumulated during development stage ................... (21,043)
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Total shareholders' deficit ...................... (350)
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Total liabilities and shareholders' deficit ........................ $ --
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See accompanying notes to condensed financial statements
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DOWNSIDE UP, INC.
Condensed Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
January 31, January 31,
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2005 2004 2005 2004
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Costs and expenses:
Contributed rent (Note 2) .............. $ 300 $ 300 $ 900 $ 900
Other general and administrative costs . 600 600 2,020 2,000
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900 900 2,920 2,900
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Loss before income taxes and interest income (900) (900) (2,920) (2,900)
Interest income ....................... -- -- -- --
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Loss before
income taxes ......... (900) (900) (2,920) (2,900)
Income tax provision (Note 3) .......... -- -- -- --
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Net loss ................ $ (900) $ (900) $ (2,920) $ (2,900)
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Basic and diluted loss per share ........... $ (0.00) $ (0.00) $ (0.00) $ (0.00)
=========== =========== =========== ===========
Weighted average common shares outstanding . 1,230,000 1,230,000 1,230,000 1,230,000
=========== =========== =========== ===========
See accompanying notes to condensed financial statements
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DOWNSIDE UP, INC.
Condensed Statements of Cash Flows
(Unaudited)
Nine Months Ended
January 31,
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2005 2004
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Net cash used in operating activities .............................. $(3,320) $ --
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Cash flows from financing activities:
Proceeds from capital contributions ............................ -- --
received from officer (Note 2) .............................. 3,320 --
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Net cash provided by
financing activities ...................... 3,320 --
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Net change in cash ........................... -- --
Cash:
Beginning of period ............................................ -- --
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End of period .................................................. $ -- $ --
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Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes ................................................ $ -- $ --
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Interest .................................................... $ -- $ --
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See accompanying notes to condensed financial statements
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DOWNSIDE UP, INC.
Notes to Condensed Financial Statements
(Unaudited)
Note 1: Basis of Presentation
The financial statements presented herein have been prepared by the Company in
accordance with the accounting policies in its audited financial statements for
the year ended April 30, 2003 as filed in its Form 10-KSB and should be read in
conjunction with the notes thereto. The Company has no revenue producing
operations and is classified as a "blank check" company. The Company's business
plan is to evaluate, structure and complete a merger with or acquisition of, a
privately owned corporation.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to provide a fair presentation of
operating results for the interim periods presented have been made. The results
of operations for the period presented are not necessarily indicative of the
results to be expected for the year.
Interim financial data presented herein are unaudited.
Note 2: Related Party Transactions
Amery Coast Corporation, an affiliate under common control, has contributed
office space to the Company for all periods presented in the accompanying
financial statements. The Company's Board of Directors has valued this service
at approximately $100 per month, based on prevailing local market rates. The
accompanying financial statements include a charge to rent expense and a credit
to paid-in capital of $900 and $900, respectively, for the nine months ended
January 31, 2005 and 2004.
During the nine months ended January 31, 2005, the Company's president paid
general and administrative costs on behalf of the Company totaling $3,320. The
payments have been contributed to the Company and are included in the
accompanying financial statements as "Additional paid-in Capital".
Note 3: Income Taxes
The Company records its income taxes in accordance with Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes". The Company incurred
net operating losses during the periods shown on the condensed financial
statements resulting in a deferred tax asset, which was fully allowed for,
therefore the net benefit and expense result in $-0- income taxes.
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Part I - Item 2. Plan of Operation
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The Company's plan of operation is to seek out, investigate, and pursue a
merger, acquisition, or other business combination with an entity desiring the
perceived benefits of offered by the Company as a result of its having a class
of securities registered under the Securities Exchange Act. There have been no
revenues from operations since inception, and none are anticipated prior to
completing a business combination. The Company has one part time employee,
incurs minimal rent and administrative expenses, and has no other recurring
operational expenses except professional fees incurred as necessary. The
Company's president devotes time as required to the affairs of the Company.
The Company has been operating on working capital contributed by the Company's
president. There is no assurance that the Company's president will continue to
provide working capital.
To date, the Company has not identified a suitable target entity for any type of
business combination, and management has no particular type of merger,
acquisition, or business opportunity in mind. No restrictions have been placed
on management's discretion to seek out and participate in an appropriate
business opportunity. Due to financial resources, it is anticipated that only a
single potential business venture will be pursued.
Selection of an appropriate business opportunity is complex and risky due to the
Company's limited financial resources, the speculative nature of operations,
management's limited time commitment to the Company, management's potential
conflicts of interest, the burdens of being a reporting company, lack of market
research, and competition in the marketplace.
The Company's success is dependent upon consummating a business combination and
there are no assurances that this will occur.
Part I - Item 3. Controls and Procedures
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The Principal Executive Officer has conducted an evaluation of the effectiveness
of disclosure controls and procedures pursuant to Exchange Act Rule 13a-14(c)
and 15d-14(c). This evaluation was conducted within 90 days prior to the filing
of this report. Based on that evaluation, the Principal Executive Officer
concluded that the disclosure controls and procedures are effective in ensuring
that all material information required to be filed in this annual report has
been made known to them in a timely fashion. There have been no significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date the Principal Executive Officer
completed the evaluation.
Part II - Other Information
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Items 1 through 5
No response required.
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Item 6: Exhibits
1. Exhibit 31:
Certification - Principal Executive Officer and Principal Financial
Officer
2. Exhibit 32:
Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002 - Chief Executive
Officer and Principal Financial Officer
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.
Downside Up, Inc.
Date: March 7, 2005 By: /s/ James B. Wiegand
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James B. Wiegand,
Principal Executive Officer and
Principal Financial Officer
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