QUARTERLY REPORT FOR SMALL BUSINESS ISSUERS SUBJECT
TO THE 1934 ACT REPORTING REQUIREMENTS
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
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2004
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________to_______
Commission file number: 333-106955
HERITAGE MANAGEMENT INC.
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(Exact name of small business issuer in its charter)
Nevada 75-2877108
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
5031 Gordon Smith, Rowlett, Texas 75043
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(Address of principal executive offices) Zip Code
Issuer's telephone number 972-771-0907
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Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding twelve 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 PRECEDING FIVE YEARS
Check whether the registrant 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 class of common
equity, as of the last practicable date: As of August 19, 2004 the Company had
3,875,400 shares of voting Common Stock, $.001 par value issued and outstanding.
Transitional Small Business Disclosure Format (check one): ________ _______
PART I - FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
HERITAGE MANAGEMENT, INC.
BALANCE SHEET
June 30, 2004
(Unaudited)
ASSETS
Current assets:
Cash 43,082
Note receivable 12,608
Advances 51,156
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Total current assets 106,846
Property, Plant & Equipment, net of accumulated depreciation 23,240
Other assets:
Mortgage note receivable 14,000
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TOTAL ASSETS $ 144,086
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable - non-related party 7,764
Accrued expenses - affiliate 8,097
Loans payable - current portion 3,230
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Total current liabilities 19,091
Loans payable 9,638
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TOTAL LIABILITIES $ 28,729
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STOCKHOLDERS' DEFICIT:
Common stock, $.001 par value, 50,000,000 shares authorized, 3,689,200
shares issued and outstanding 3,689
Additional paid in capital 126,111
Accumulated deficit (14,443)
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Total Stockholders' Deficit (115,357)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 144,086
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HERITAGE MANAGEMENT, INC.
STATEMENT OF OPERATIONS
Three and Six Months Ended June 30, 2004 and 2003
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
----------- ----------- ----------- -----------
Revenue $ 8,945 $ 58,610 $ 20,114 $ 109,948
Operating expenses:
Depreciation 1,837 -- 3,673 --
Other general and administrative 30,213 77,131 44,173 96,384
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32,050 77,131 47,846 96,384
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Income (loss) from operations $ (23,105) $ (18,521) $ (27,732) $ 13,564
----------- ----------- ----------- -----------
Other income:
Interest income 244 254 512 504
Interest expense (437) (179) (437) (179)
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(193) 75 75 325
----------- ----------- ----------- -----------
Net income (loss) before provision for
income taxes (23,298) (18,446) (27,657) 13,889
Provision (benefit) for income taxes -- (2,968) -- 2,553
----------- ----------- ----------- -----------
Net income (loss) $ (23,298) $ (15,478) $ (27,657) $ 11,336
=========== =========== =========== ===========
Net loss per share:
Basic and diluted $ (0.01) $ (0.00) $ (0.01) $ (0.00)
=========== =========== =========== ===========
Weighted average shares outstanding:
Basic and diluted 3,660,668 3,350,000 3,505,334 3,350,000
----------- ----------- ----------- -----------
HERITAGE MANAGEMENT, INC.
STATEMENT OF CASH FLOWS
Six Months Ended June 30, 2004 and 2003
(Unaudited)
2004 2003
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Cash flows from operating activities:
Net loss $(27,657) $ 11,336
Adjustments to reconcile net loss to cash
used in operating activities:
Depreciation 3,673 1,864
Changes in assets and liabilities:
Note receivable 5,513 (504)
Advances (17,857) 3,019
Accounts payable and accrued expenses 1,080 (796)
Advances from affiliate 93
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Net cash provided by (used in) operating activities (35,155) 14,919
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Cash flows from investing activities:
Capital expenditures -- (30,875)
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Net cash used in investing activities -- (30,875)
Cash flows from financing activities:
Sale of common stock for cash 79,800 --
Payments on note payable (1,563) ( 503)
Proceeds from note payable -- 16,459
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Net cash provided by (used in) financing activities 78,237 15,956
Net decrease in cash 43,082 --
Cash, beginning of period -- --
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Cash, end of period $ 43,082 $ --
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Supplemental information:
Income taxes paid $ -- $ --
Interest paid $ -- $ --
HERITAGE MANAGEMENT, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1: PRESENTATION
The balance sheet of Heritage Management, Inc. ("Heritage") as of June 30, 2004,
the related statements of operations for the three and six months ended June 30,
2004 and the statements of cash flows for the three and six months ended June
30, 2004 included in the financial statements have been prepared by Heritage
without audit. In the opinion of management, the accompanying financial
statements include all adjustments (consisting of normal, recurring adjustments)
necessary to summarize fairly Heritage's financial position and results of
operations. The results of operations for the three and six months ended June
30, 2004 are not necessarily indicative of the results of operations for the
full year or any other interim period. The information included in this Form
10-QSB should be read in conjunction with Management's Discussion and Analysis
and Financial Statements and notes thereto included in Heritage's December 31,
2003 Form 10-KSB.
NOTE 2 - COMMON STOCK
During the 2nd quarter Heritage sold 339,200 shares of common stock for net
proceeds of $79,800.
NOTE 3 - ADVANCES
These represent advances on commissions to be paid on loans that are in the
underwriting process and/or closing process.
ITEM 2. MANANGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with our Financial
Statements and Notes thereto which appear elsewhere in this document. The
results shown herein are not necessarily indicative of the results to be
expected in any future periods. This discussion contains forward-looking
statements based on current expectations, which involve uncertainties. Actual
results and the timing of events could differ materially from the
forward-looking statements as a result of a number of factors. Readers should
also carefully review factors set forth in other reports or documents that we
file from time to time with the Securities and Exchange Commission.
Overview
During the second quarter, we spend significant time on the following areas
which took some emphasis from our immediate revenue but prepares a path for
increased future revenues.
Firstly, we were engaged in raising funds under our IPO under which we were
approved to sraise a minimum $60,000 and a maximum of $500,000. We closed the
offering on July 13, 2004 after selling a total of 527,400 shares and raising a
total of $131,850. This capital will allow us to put into action our plan of
growth and operation which was described in our Form SB-1 filed with the U.S.
Securities & Exchange Commission.
Secondly, we worked on a warehouse line of credit of $1,000,000 which we were
able to get approved in early July. This warehouse line allows us to be a
`correspondent', selling `closed loans' and then sell them on the secondary
mortgage market. This allows us to sell `table funded loans' which should net
the Company an additional $250 to $750 per loan.
Thirdly, we began making Home Equity Line of Credit loans (HELOCs). This has
only been allowed in Texas since September 2003. So there is significanbt
interest in this type of loan. The market for this loan can be seen by looking
at the interest or this type of loan in states where it has been legal for many
years.
Fourthly, we will be purchasing the rights to the name `Discount Mortgage
Source' and rights to the website `DiscountMortgageSource.com'. This will give
us the ability to offer online loan application and approval to higher credit
buyers, and allow us to follow up on buyers who cannot get approval through our
online process. Since we were going to develop our own website, this will
shorten the time involved and allow us to offer online applications and
approvals immediately.
RESULTS FOR THE FISCAL QUARTER ENDED June 30, 2004
Our fiscal quarter ended on June 30, 2004. Any reference to the end of the
fiscal quarter refers to the end of the first fiscal quarter for the periods
discussed herein.
REVENUE. Revenue for the three months ended June 30, 2004 and 2003 was $8,945
and $58,610 respectively and revenues for the six months ended June 30, 2004 and
2003 were $20,114 and $109,948 respectively.
EXPENSES. Total expenses for the three months ended June 30, 2004 and 2003 were
$32,050 and $77,131 respectively. Expenses for the six months ended June 30,
2004 and 2003 were $47,846 and $96,384 respectively.
The weighted average shares outstanding increased due to the selling of shares
under our SB-1 offering referred to in the previous section.
LIQUIDITY AND CAPITAL RESOURCES. We posted a net loss of $23,298 and $15,478 for
the three months ended March 31, 2004 and 2003 respectively and posted a net
loss of $27,657 and a net income of $11,336 for the six months ended June 30,
2004 and 2003 respectively.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures
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We maintain controls and procedures designed to ensure that information
required to be disclosed in the reports that we file or submit under
the Securities Exchange Act of 1934 is recorded, processed, summarized
and reported within the time periods specified in the rules and forms
of the Securities and Exchange Commission. Based upon their evaluation
of those controls and procedures performed as of the end of the period
covered by this report, our chief executive officer and principal
financial officer concluded that our disclosure controls and procedures
were adequate.
(b) Changes in internal controls
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There were no significant changes in our internal controls or in other
factors that could significantly affect these controls subsequent to
the date of the evaluation of those controls by the chief executive
officer and principal financial officer.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not involved in any lawsuits and are not aware of any pending litigation.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Not applicable.
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.
Date: August 19, 2004 HERITAGE MANAGEMENT, INC.
By: /s/ E. Lee Murdock
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E. Lee Murdock,
Chief Executive Officer
and Chief Financial Officer
Exhibit 31
CERTIFICATION
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I, E. Lee Murdock, certify that:
1. I have reviewed this annual report on Form 10-QSB of Heritage Management,
Inc.
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the small business issuer,
including its consolidated subsidiaries, is made known to us by others
within those entities, particularly during the period in which this report
is being prepared;
b) evaluated the effectiveness of the small business issuer's disclosure
controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
c) disclosed in this report any change in the small business issuer's
internal control over financial reporting that occurred during the small
business issuer's most recent fiscal quarter (the small business issuer's
fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the small business
issuer's internal control over financial reporting;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
Date: August 19, 2004
/s/ E. Lee Murdock
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E. Lee Murdock
Chief Executive Officer and Chief Financial Officer
Exhibit 32
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Heritage Management, Inc. (the
"Company") on Form 10-QSB for the period ending June 30, 2004, as filed with the
Securities and Exchange Commission on the date hereof (the "Report'), I, E. Lee
Murdock, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all
material respects, the financial condition and result of operations of the
Company.
/s/ E. Lee Murdock
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E. Lee Murdock
Chief Executive Officer and Chief Financial Officer
August 19, 2004