SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003
Commission File Number: 333-56046
SHADOWS BEND DEVELOPMENT, INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
87-0617649
(IRS Employer Identification Number)
200 Lafayette Street, Suite 750, Baton Rouge, LA 70801
(Address of principal executive offices)(Zip Code)
(225) 343-7811
(Registrant's telephone no., including area code)
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
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 [ ] No [X]
The number of shares outstanding, $.001 par value, of the Company's Common Stock
as of September 30, 2003 was 4,311,833.
SHADOWS BEND DEVELOPMENT, INC.
FORM 10-QSB
PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
The financial statements of the company are set forth beginning on page F-1.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
Shadows BendDevelopment, Inc. ("Shadows Bend" or the "Company") was initiated in
2000 with a business plan to acquire, develop, and operate "specialty care"
facilities designed to help people diagnosed with Alzheimer's or other related
illnesses. This business model was effectively abandoned in December 2002 as
described in the Company's Form 10-KSB for the year ended December 31, 2002.
RESULTS OF OPERATIONS
COMPARISION OF NINE MONTHS ENDED SEPTEMBER 30, 2003 TO NINE MONTHS ENDED
SEPTEMBER 30, 2002
The Company experienced a net loss of $ (6,869,272) for the nine months ended
September 30, 2002. The Company had no operations in 2003.
LIQUIDITY AND CAPITAL RESOURCES Since its inception, the Company has not
generated significant revenue and has been dependent on debt and equity raised
from individual investors to sustain its operations. At September 30, 2003, the
Company had negative working capital of $ (173,864). These factors raise
substantial doubt about the Company's ability to continue as a going concern.
The Company, during the quarter ended September 30, 2003, did not have the cash
resources to continue in business for the balance of the fiscal year ending
December 31, 2003. The Company considered a public sale or private placement of
its common stock, but no active trading market for its existing outstanding
shares had been established and, accordingly, this option was remote. The
performance of the two facilities acquired to establish Alzheimer care
facilities was not satisfactory, resulting in delinquencies on existing debt and
significantly impacting the Company's ability to obtain additional conventional
loans or HUD financing. For these reasons, the Company returned the two acquired
companies to their former owners, thereby eliminating the cash demands on the
Company. This relegated the Company to the status of a non-operating public
shell that could be used to re-capitalize a possibly more attractive operating
company.
The Company's long-term viability as a going concern is dependent on certain key
factors as follows:
* The ability of the Company to obtain adequate sources of funding to
continue operations.
* The ability of the Company to find a suitable operating company with
which to merge.
There can be no assurance that the Company will be successful in obtaining
financing or with respect to identifying a viable merger candidate and, if it is
successful, as to when such objectives may be achieved.
ITEM 3. CONTROLS AND PROCEDURES.
Michael Sciacchetano, the Company's Chief Executive Officer and Acting Chief
Accounting Officer, has concluded that the Company's disclosure controls and
procedures are appropriate and effective. He has evaluated these controls and
procedures as of a date within 90 days of the filing date of this report on Form
10-QSB. There were no significant changes in the Company's internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
PART II
ITEM 6. EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K
a. Documents Filed with Report
1. Financial Statements
The financial statements listed on the accompanying
Index to Financial Statements are filed as part of
this Report.
2. Exhibits
Exhibit No. Description of Exhibit Page
31.1 Certification of Chief Executive Officer E-2
Pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934(1)
31.2 Certification of Chief Executive Officer E-4
Pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934(1)
32 Certification Pursuant to Rule 13a-14(b) E-6
under the Securities Exchange Act of 1934
and Section 1350 of Chapter 63 of Title 18
of United States Code (1)
(1) Filed or, in the case of Exhibit 32, furnished herewith.
b. Reports on Form 8-k
1. None
SHADOWS BEND DEVELOPMENT, INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
__________
UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
September 30, 2003 and 2002
SHADOWS BEND DEVELOPMENT, INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
TABLE OF CONTENTS
__________
Page
Unaudited Consolidated Condensed Financial Statements:
Unaudited Consolidated Condensed Balance Sheet as of
September 30, 2003 and December 31, 2002 2
Unaudited Consolidated Condensed Statement of Operations
for the three months and nine months ended September 30, 2003
and 2002, and for the period from the beginning of the
development stage, December 31, 2002, to September 30, 2003 3
Unaudited Condensed Statement of Cash Flows for the six
months ended September 30, 2003 and 2002, and for the period
from from the beginning of the development stage,
December 31, 2002, to September 30, 2003 4
Selected Notes to Unaudited Consolidated Condensed Financial
Statements 5
F-1
SHADOWS BEND DEVELOPMENT, INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
BALANCE SHEET
September 30, 2003 and December 31, 2002
__________
Sept. 30, December 31,
2003 2002
ASSETS (Unaudited) (Note)
Current assets:
Cash and cash equivalents $ - $ -
Total current assets - -
Total assets $ - $ -
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 31,178 $ 31,178
Accounts payable to related parties 142,686 142,686
Total current liabilities 173,864 173,864
Stockholders' equity:
Common stock, $0.001 par value, 50,000,000 shares
authorized, 4,311,833 shares issued and outstanding 4,312 4,312
Additional paid-in capital 7,886,012 7,886,012
Accumulated deficit (8,064,188) (8,064,188)
Total stockholders' deficit (173,864) (173,864)
Total liabilities and stockholders' deficit $ - $ -
Note: The balance sheet at December 31, 2002 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
The accompanying notes are an integral part of these
unaudited consolidated condensed financial statements.
F-2
SHADOWS BEND DEVELOPMENT, INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
UNAUDITED CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
for the three months and nine months ended September 30, 2003 and 2002 and
for the period from the beginning of the development
stage, December 31, 2002, to September 30, 2003
__________
Three Months Ended Nine Months Ended December 31,
Sept. 30, Sept. 30, Sept. 30, Sept. 30, 2002, to
2003 2002 2003 2002 Sept. 30,2003
Loss from operation
of discontinued
long-term health
segment $ - $(3,086,457) $ - $(6,869,272) $ -
Net loss $ - $(3,086,457) $ - $(6,869,272) $ -
Basic and diluted net
loss per common share $ - $ (0.28) $ - $ (0.71)
Basic and diluted
weighted average
shares outstanding 4,311,833 4,110,993 4,311,833 4,034,785
The accompanying notes are an integral part of these
unaudited consolidated condensed financial statements.
F-3
SHADOWS BEND DEVELOPMENT, INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
UNAUDITED CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
for the nine months ended September 30, 2003 and 2002 and
for the period from the beginning of the development
stage, December 31, 2002, to September 30, 2003
__________
Nine Months Nine Months December 31,
Ended Ended 2002, to
Sept. 30, Sept. 30, Sept. 30,
2003 2002 2003
Cash flows from operating activities:
Net loss $ - $(6,869,272) $ -
Adjustments to reconcile net loss to
net cash used by operating activities - 6,904,148 -
Net cash provided by operating
activities - 34,876 -
Cash flows from financing activities:
Payments of notes payable - (30,218) -
Net cash used by financing
activities - (30,218) -
Net decrease in cash and cash equivalents - 4,658 -
Cash and cash equivalents at beginning of
period - 1,387 -
Cash and cash equivalents at end of period $ - $ 6,045 $ -
The accompanying notes are an integral part of these
unaudited consolidated condensed financial statements.
F-4
SHADOWS BEND DEVELOPMENT, INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
__________
1. Organization
Shadows Bend Development, Inc. (the "Company") is a Nevada Corporation
that was previously involved in an effort to buy or develop long-term
care facilities equipped for the care of Alzheimer patients; however, on
December 31, 2002, those efforts were discontinued and the Company
disposed of all operations associated with long-term care. The Company is
considered a development stage enterprise as defined in Statement of
Financial Accounting Standards ("SFAS") No. 7 because the Company had
devoted substantially all of its efforts to capital raising and the
establishment of a new business. The Company's planned principal
operations have not commenced and no revenue has been generated.
2. Interim Financial Statements
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB
and Article 10 of Regulation S-B. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three month and nine month periods ended
September 30, 2003 and 2002 are not necessarily indicative of the results
that may be expected for the respective full years.
A summary of the Company's significant accounting policies and other
information necessary to understand these consolidated interim financial
statements is presented in the Company's audited financial statements for
the years ended December 31, 2003 and 2002. Accordingly, the Company's
audited financial statements should be read in connection with these
financial statements.
3. 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
and disclosures of contingent assets or liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
4. Income Tax
The difference between the Federal statutory income tax rate and the
Company's effective income tax rate is primarily attributable to an
increase in valuation allowance for deferred tax assets relating to net
operating losses.
Continued
F-5
SHADOWS BEND DEVELOPMENT, INC.
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS, Continued
__________
5. Going Concern Consideration
Since its inception, the Company has not generated significant revenue
and has been dependent on debt and equity raised from individual
investors to sustain its operations. During the years ended December 31,
2002 and 2001, the Company incurred net losses of $(7,512,345) and
$(456,318), respectively. At December 31, 2002, the Company had negative
working capital of $(173,864) and a stockholders' deficit of $(173,864).
These factors raise substantial doubt about the Company's ability to
continue as a going concern.
The Company has considered a public sale or private placement of its
common stock, but no active trading market for its existing outstanding
shares has been established. The Company has abandoned its plan to
develop Alzheimer's care facilities because the performance of the two
facilities acquired on June 1, 2002, was not satisfactory, resulting in
delinquencies on existing debt and prompting the Company, on December 31,
2002, to return the two companies acquired during 2002 to the former
owners, thereby eliminating the cash demands on the Company. This action
returned the Company to the status on a non-operating public shell that
can be used to re-capitalize a possibly more attractive operating
Company. The Company's long-term viability as a going concern is
dependent on certain key factors as follows:
* The ability of the Company to obtain adequate sources of funding to
continue current operations.
* The ability of the Company to find suitable operating company with
which to merge.
F-6
Exhibit 31.1
Certification of Chief Executive Officer
Pursuant to Rule 13a-14(a) under
The Securities Exchange Act of 1934
I, Michael Sciacchetano, certify that:
1.I have reviewed this quarterly report on Form 10-QSB of Shadows Bend
Development, Inc.;
2.Based on my knowledge, this quarterly 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 quarterly report;
3.Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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
quarterly report;
4.The issuer's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the issuer and have:
a. Designed such disclosure controls and procedures, or caused such
controls and procedures to be designed under our supervision, to
ensure that material information relating to the issuer, including
its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
c. Evaluated the effectiveness of the 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
d. Disclosed in this report any change in the issuer's internal control
over financial reporting that occurred during the issuer's most
recent fiscal quarter (the issuer's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably
likely to materially affect, the issuer's internal control over
financial reporting; and
5.The issuer's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the issuer's auditors and the audit committee of issuer's board of
directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the issuer's ability to record,
process, summarize and report financial information; 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: , 2004
/s/ Michael Sciacchetano
- --------------------------
Michael Sciacchetano
President
Exhibit 31.2
Certification of Chief Executive Officer
Pursuant to Rule 13a-14(a) under
The Securities Exchange Act of 1934
I, Michael Sciacchetano, certify that:
1.I have reviewed this quarterly report on Form 10-QSB of Shadows Bend
Development, Inc.;
2.Based on my knowledge, this quarterly 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 quarterly report;
3.Based on my knowledge, the financial statements, and other financial
information included in this quarterly 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
quarterly report;
4.The issuer's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) for the issuer and have:
c. Designed such disclosure controls and procedures, or caused such
controls and procedures to be designed under our supervision, to
ensure that material information relating to the issuer, including
its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
d. Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
e. Evaluated the effectiveness of the 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
f. Disclosed in this report any change in the issuer's internal control
over financial reporting that occurred during the issuer's most
recent fiscal quarter (the issuer's fourth fiscal quarter in the case
of an annual report) that has materially affected, or is reasonably
likely to materially affect, the issuer's internal control over
financial reporting; and
5.The issuer's other certifying officers and I have disclosed, based on
our most recent evaluation of internal control over financial reporting,
to the issuer's auditors and the audit committee of issuer's board of
directors (or persons performing the equivalent functions):
g. All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the issuer's ability to record,
process, summarize and report financial information; and
h. Any fraud, whether or not material, that involves management or other
employees who have a significant role in the issuer's internal
controls.
Date: , 2004
/s/ Michael Sciacchetano
- --------------------------
Michael Sciacchetano
Principal Financial Accounting Officer
Exhibit 32
Certification Pursuant to Rule 13a-14(b) under the
Securities Exchange Act of 1934 and Section 1350 if
Chapter 63 of Title 18 of United States Code
I, Michael Sciacchetano, do hereby certify that:
1.This annual report of Shadows Bend Development, Inc. containing the
financial statements for the quarters ended September 30, 2003 and 2002
fully complies with the requirements of Section 13(a) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m); and
2.The information contained in this annual report fairly presents, in all
material respects, the financial condition and results of operations of
Shadows Bend Development, Inc.
Date: , 2004
/s/ Michael Sciacchetano
- ---------------------
Michael Sciacchetano
President
/s/ Michael Sciacchetano
- ---------------------
Michael Sciacchetano,
Principal Financial Accounting Officer
A signed original of this written statement required by Section 906 has been
provided to Shadows Bend Development, Inc. and will be retained by Shadows Bend
Development, Inc. and furnished to the Securities and Exchange Commission or its
staff upon request.