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 ACT OF 1934
For the quarterly period ended September 30, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES ACT OF 1934
For the transition period from __________ to _______________
Commission file number: 0-25511
Source One, Incorporated
(Exact name of small business issuer as
specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
88-0379078
(IRS Employer Identification No.)
236 S. Rainbow Blvd., Suite 486, Las Vegas, NV 89128
(Address of principal executive offices)
(702) 363-0066
(Issuer's telephone number)
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: 11,292,000
Transitional Small Business Disclosure Format:
Yes [ ] No [x]
1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
The unaudited condensed financial statements presented herein
have been prepared by the Company in accordance with the
instructions to Form 10-QSB and do not include all of the
information and note disclosures required by generally accepted
accounting principles. These condensed financial statements
should be read in conjunction with the audited financial
statements and notes thereto for the period ended December 31,
1998 included in the Company's Form 10-SB12G. The accompanying
financial statements have not been examined by independent
accountants in accordance with generally accepted auditing
standards, but in the opinion of management such financial
statements include all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the Company's
financial position and results of operations. The results of
operations for the nine months ended September 30, 1999 may not
be indicative of the results that may be expected for the year
ending December 31, 1999.
2
SOURCE ONE, INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
(Unaudited)
SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998
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TABLE OF CONTENTS
Page Number
-----------
ACCOUNTANT'S REPORT ..................................... 1
FINANCIAL STATEMENT:
Balance Sheet ........................................... 2
Statement of Operations and Deficit
Accumulated During the Development Stage ............... 3
Statement of Changes in Stockholders' Equity ............ 4
Statement of Cash Flows ................................. 5
Notes to the Financial Statements ....................... 6
4
DAVID E. COFFEY
3561 Lindell Rd, Suite A Las Vegas, NV 89103
CERTIFIED PUBLIC ACCOUNTANT
(702) 871-3979
To the Board of Directors and Stockholders
of Source One Incorporated
Las Vegas, Nevada
The accompanying balance sheet of Source One Incorporated
(a development stage company) as of September 30, 1999 and the
related statements of operations, stockholders' equity and cash
flows for the three months and nine months ended September 30,
1999 and 1998 and from inception on November 18, 1997 through
September 30, 1999 were not audited by me and, accordingly, I do
not express an opinion on them. The accompanying balance sheet as
of December 31, 1998 was audited by me and I expressed an
unqualified opinion on it in my report dated February 3, 1999.
/s/ DAVID COFFEY
David Coffey C.P.A.
October 22, 1999
5
SOURCE ONE, INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
(Unaudited)
September 30, December 31,
1999 1998
------------ ------------
Unaudited
ASSETS
Cash $ 3,548 $ 9,953
Organizational costs less accumulated
amortization 2,642 3,270
Deposits 670 420
Accounts Receivable 0 3,357
Inventory 5,607 3,886
----------- -----------
Total Assets $ 12,467 $ 20,886
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable:
Trade $ 0 $ 1,261
----------- -----------
Total Liabilities 0 1,261
Stockholders' Equity
Common stock, authorized 20,000,000 shares
at $.001 par value, issued and outstanding
11,292,000 shares 11,292 11,292
Preferred stock, 5,000,000 shares
at $.001 per value, no shares issued
or outstanding 0 0
Additional paid-in capital 12,628 12,628
Deficit accumulated during
the development stage (11,453) ( 4,295)
----------- -----------
Total Stockholders' Equity 12,467 19,625
Total Liabilities and Stockholders'
Equity $ 12,467 $ 20,886
=========== ===========
The accompanying notes are an integral part of these financial statements.
-2-
6
SOURCE ONE, INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
(With Cumulative Figures From Inception)
(Unaudited)
For the Three For the Three For the Nine For the Nine Inception
Months Ended Months Ended Months Ended Months Ended Nov. 18, 1997
Sept. 30, 1999 Sept. 30, 1998 Sept. 30, 1999 Sept. 30, 1998 To Sept. 30, 1999
------------- ------------- ------------- ------------- -------------
Sales $ 4,069 $ 3,435 $ 11,971 $ 9,219 $ 32,063
Cost of sales 2,601 3,316 10,302 6,264 24,390
-------- ----------- --------- --------- -----------
Gross margin 1,468 119 1,669 2,955 7,673
Expenses
Amortization 210 210 628 628 1,543
Advertising 0 0 395 0 945
Consulting 50 300 900 1,695 4,895
Licencing and fees 459 0 694 328 1,408
Office expenses 369 354 755 1,320 2,692
Professional fees 1,100 0 5,275 0 5,275
Rent 0 0 180 0 390
Travel 0 822 0 1,692 1,692
Uncollectible Accounts 0 0 0 286 286
-------- ----------- --------- --------- -----------
Total expenses 2,188 1,686 8,827 5,949 19,126
Net Income (loss) ( 720) (1,567) (7,158) (2,994) $ (11,453)
==========
Deficit accumulated,
beginning of period (10,733) (3,420) (4,295) (1,993)
-------- ----------- --------- ---------
Deficit accumulated
during the
development stage $(11,453) $ (4,987) $ (11,453) $ (4,987)
======== =========== ========= =========
Earnings (loss) per share
Assuming Dilution: $ (.00) $ (.00) $ (.00) $ (.00) $ (.00)
======== =========== ========= ========= ===========
The accompanying notes are an integral part of these financial statements.
-3-
7
SOURCE ONE, INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM November 18, 1997 (Date of Inception)
To September 30, 1999
Additional
Common Stock Paid-in
Shares Amount Capital Total
---------- -------- -------- ---------
Balance,
November 18, 1997 0 $ 0 $ 0 $ 0
Issuance of common
stock for services 8,000,000 8,000 0 8,000
Issuance of common
stock for cash 3,292,000 3,292 20,628 23,920
Less net loss 0 0 0 (1,993)
Less offering costs 0 0 (4,100) (4,100)
---------- -------- -------- ---------
Balance,
December 31, 1997 11,292,000 11,292 16,528 25,827
Less net loss 0 0 0 (2,302)
Less offering costs 0 0 (3,900) (3,900)
---------- -------- -------- ---------
Balance,
December 31, 1998 11,292,000 11,292 12,628 19,625
Less net loss 0 0 0 (3,925)
---------- -------- -------- ---------
Balance,
March 31, 1999 11,292,000 11,292 12,628 15,700
Less net loss 0 0 0 (2,513)
---------- -------- -------- ---------
Balance,
June 30, 1999 11,292,000 11,292 12,628 13,187
Less net loss 0 0 0 (720)
---------- -------- -------- ---------
Balance,
September 30, 1999 11,292,000 $ 11,292 $ 12,628 $ 12,467
========== ======== ======== =========
The accompanying notes are an integral part of these financial statements.
-4-
8
SOURCE ONE INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
(With Cumulative Figures From Inception)
(Unaudited)
For the Three For the Three For the Nine For the Nine Inception
Months Ended Months Ended Months Ended Months Ended Nov. 18, 1997
Sept. 30, 1999 Sept. 30, 1998 Sept. 30, 1999 Sept. 30, 1998 To Sept. 30, 1999
------------- ------------- ------------- ------------- -------------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net Income (loss) $ ( 720) $ (1,567) $ (7,158) $ (2,994) $ (11,453)
Noncash expenses included in net loss
Amortization 210 210 628 628 1,543
(Decrease)Increase in accounts payable 0 300 (1,261) (5,161) 0
Increase in deposits 0 0 (250) 0 (670)
Decrease(Increase) in prepaid expenses (100) 2,309 0 0 0
(Increase)Decrease in Inventory 0 0 (1,721) (3,594) (5,607)
(Increase)Decrease in accounts receivables 0 0 3,357 378 0
--------- --------- ---------- ----------- -----------
NET CASH PROVIDED BY
OPERATING ACTIVITIES (610) 1,252 (6,405) (10,743) (16,187)
CASH FLOWS USED BY INVESTING ACTIVITIES
Organizational costs 0 0 0 0 4,185
--------- --------- ---------- ----------- -----------
NET CASH USED BY
INVESTING ACTIVITIES 0 0 0 0 4,185
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 0 0 0 0 11,292
Additional paid-in capital 0 0 0 0 20,628
Less offering costs 0 1,800 0 (3,900) (8,000)
--------- --------- ---------- ----------- -----------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 0 1,800 0 3,900 23,920
--------- --------- ---------- ----------- -----------
NET INCREASE(DECREASE) ( 610) ( 548) (6,405) (14,643) $ 3,548
===========
CASH AT BEGINNING OF PERIOD 4,158 12,288 9,953 26,383
--------- --------- ---------- -----------
CASH AT END OF PERIOD $ 3,548 $ 11,740 $ 3,548 $ 11,740
========= ========= ========== ===========
Supplemental disclosure of cash flow information:
Issuance of common stock in exchange
for services $ 8,000
===========
The accompanying notes are an integral part of these financial statements.
-5-
9
SOURCE ONE, INCORPORATED
(A DEVELOPMENT STAGE COMPANY)
September 30, 1999 and September 30, 1998
NOTES TO THE FINANCIAL STATEMENTS
Source One, Incorporated, (the Company) has elected to omit
substantially all footnotes to the financial statements for the
nine months ended September 30, 1999, since there have been no
material changes (other than indicated in other footnotes) to the
information previously reported by the Company in the audited
financial statements for the fiscal year ended December 31, 1998
as filed in the Registration Statement filed on Form 10-SB.
UNAUDITED INFORMATION
The information furnished herein was taken from books and records
of the Company without audit. However, such information reflects
all adjustments which are, in the opinion of management,
necessary to properly reflect the results of the period
presented. The information presented is not necessarily
indicative of the results from operations expected for the full
fiscal year.
-6-
10
Item 2. Management's Discussion and Analysis or Plan of
Operation
This Form 10-QSB includes, without limitation, certain
statements containing the words "believes", "anticipates",
"estimates", and words of a similar nature, which constitute
"forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. This Act provides a
"safe harbor" for forward-looking statements to encourage
companies to provide prospective information about themselves so
long as they identify these statements as forward looking and
provide meaningful, cautionary statements identifying important
factors that could cause actual results to differ from the
projected results. All statements other than statements of
historical fact made in this Form 10-QSB are forward-looking. In
particular, the statements herein regarding the world wide web's
role in the Company's future expansion, future cash requirements,
future profitablity and year 2000 issues are forward-looking
statements. Forward-looking statements reflect management's
current expectations and are inherently uncertain. The Company's
actual results may differ significantly from management's
expectations.
GENERAL
The Company currently operates at 236 S. Rainbow Bl., Suite 486, Las
Vegas, Nevada 89128. The Company's principal business is providing
promotional/incentive types of jewelry through the Internet and mail order.
Results of Operations for the Nine Month Period Ending September 30, 1999
- -------------------------------------------------------------------------
The following is a discussion of the results of operations for the nine
month period ended September 30, 1999, compared to the nine months ended
September 30, 1998.
Total revenues for the nine months ended September 30, 1999 were $11,971,
compared to $9,219 during the same period of 1998, which represents an
increase of $2,752. The increase is due to the sales of 14 karat gold products
and new vermeil products introduced in 1999. However, the cost of sales for
the nine months ended September 30, 1998 were 68% of the sales, or $2,955,
versus 86%, or $1,669, for the nine months ended September 30, 1999.
The net income for the nine months ended September 30, 1999 was $(7,158)
compared to $(2,994) for the same period of 1998. Management attributes this
decrease in net income to the increase in cost of goods sold for the Company
and general expenses. Total expenses for the nine months ended September 30,
1999 were $8,827, compared to $5,949, for the same period in 1998. Management
attributes this increase in expenditures due to the costs associated with
accounting and preparation of the Form 10-QSB to meet SEC reporting
requirements.
11
Liquidity and Capital Resources
- -------------------------------
Cash as of September 30, 1999 was $3,548, as compared to $9,953, as of
September 30, 1998.
PLAN OF OPERATION
During the next twelve months the Company's plan of operation is to look
to further expansion on the World Wide Web(WWW), where some 50 million
potential customers are looking to find the products and services they need.
The Company believes the World Wide Web could become the greatest resource for
the Company's future growth and expansion. The Company's plans include
modifying its web site. Management looks to include an on-line ordering
service and to offer a secured site to increase the Company's on-line e-
commerce. During the next twelve months, the Company's cash requirements will
include its lease payments on the Company's office space in Las Vegas, Nevada,
as well as miscellaneous overhead. Management believes that the Company's
existing cash resources and cash generated from operations will be sufficient
to fund the Company's ongoing operations through the remainder of 1999, but
will not be sufficient to fund the Company's ongoing operations and foregoing
cash requirements for day to day operations in the next twelve months.
If the Company does not succeed in seeing limited revenues or, at
minimum, the potential of limited revenues, in the next twelve months, it may
be forced to discontinue operations unless it is able to raise sufficient
capital to continue pursuing its business plan. Management is not experienced
in developmental companies and may not have estimated its needs for
advertising and associated expenses in acquiring a client base accurately. The
Company may require additional funds and time to achieve these goals. Even if
the Company begins generating revenues, it could require additional funding
for expansion. It may be difficult for the Company to succeed in securing
additional financing. The Company may be able to attract some private
investors, or officers and directors may be willing to make additional cash
contributions, advancements or loans. Or, in the alternative, the Company
could attempt some form of debt or equity financing. However, there is no
guarantee that any of the foregoing methods of financing would be successful.
If the Company fails to achieve at least a portion of its business goals in
the next twelve months with the funds available to it, there is substantial
uncertainty as to whether it will continue operations.
YEAR 2000 ISSUES
Management believes that the Company's accounting and operational systems
are year 2000 compliant. The Company is not dependent on computers other than
for its internal bookkeeping which is done on a system that is Year 2000
compliant. The Company has no relationship with any third parties which are
dependent on computers other than its bank. The Company's bank has reported
that it is Year 2000 compliant.
12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Item # Description
------ ------------
27 Financial Data Schedule
(b) Reports on Form 8-K
No Reports on Form 8-K have been filed for the quarter ended
September 30, 1999.
Items 1, 2, 3, 4 and 5 of Part II have been omitted as inapplicable.
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.
SOURCE ONE, INCORPORATED
November 8, 1999 By: /s/ MIGNON CARDENAS
Mignon Cardenas
President, Chief Financial Officer
and Duly Authorized Officer
13