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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 SEPTEMBER 30, 2003
[ ] Transition report under Section 13 or 15(d) of the Exchange
Act
For the transition period from __________ to __________
Commission file number 0-49649
DONAR ENTERPRISES, INC.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
DELAWARE 23-3083371
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(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) identification No.)
2000 Hamilton Street, #520
Philadelphia, Pennsylvania 19130
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(Address of Principal Executive Offices)
(215) 893-3662
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(Issuer's Telephone Number, Including Area Code)
n/a
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(Former Name, Former Address and Former Fiscal Year,
If changed since Last Report)
Indicate by check mark whether the registrant (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 a 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: As of October 14, 2003 there
were outstanding 7,122,667 shares of common stock, par value $0.001, and no
shares of preferred stock.
Transitional Small Business Disclosure Format: Yes [ ] No [X]
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DONAR ENTERPRISES, INC.
INDEX
Page
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Part I Financial Information .......................................... 3
Item 1. Financial Statements ........................................... 3
Balance Sheets as of September 30, 2003 (unaudited) and
December 31, 2002 ............................................ 4
Statements of Operations for the three and nine month
periods ended September 30, 2003 and 2002 and for the
period from inception through September 30, 2003
(unaudited) .................................................. 5
Statements of Cash Flows for the nine month periods ended
September 30, 2003 and 2002 and for the period from
inception through September 30, 2003 (unaudited) ............. 6
Notes to financial statements .................................. 7
Item 2. Management's Discussion and Analysis or Plan of Operation ...... 8
Item 3. Controls & Procedures .......................................... 10
Part II Other Information .............................................. 10
Item 1. Legal Proceedings .............................................. 10
Item 2. Changes in Securities .......................................... 10
Item 3. Defaults Upon Senior Securities ................................ 10
Item 4. Submission of Matters to a Vote of Security Holders ............ 10
Item 5. Other Information .............................................. 10
Item 6. Exhibits and Reports on Form 8-K ............................... 11
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited financial statements
included in this Form 10-QSB reflect all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of the results of
operations for the periods presented. The results of operations for the
periods presented are not necessarily indicative of the results to be expected
for the full year.
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DONAR ENTERPRISES, INC.
(A Development Stage Company)
BALANCE SHEETS
For the Period Ending September 30, 2003 and the Year Ended December 31, 2002
ASSETS
September
30, 2003 December
(Unaudited) 31, 2002
----------- -----------
Current assets:
Cash in bank .......................................... $ 52,389 $ 39,082
Accounts receivable ................................... 3,273 351
----------- -----------
Total current assets ............................ $ 55,662 $ 39,433
----------- -----------
TOTAL ASSETS .................................. $ 55,662 $ 39,433
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LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Due to stockholder .................................... $ 6,664 $ 6,109
Accounts payable - trade .............................. 1,350 1,350
Officer's salary payable .............................. 42,500 --
----------- -----------
Total current liabilities ....................... 50,514 7,459
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Stockholders' equity (deficit):
Preferred stock: $.001 par value, 20,000,000
shares authorized, none issued or outstanding ....... -- --
Common stock: $.001 par value, 100,000,000
shares authorized, 7,122,667 and 5,406,000
issued and outstanding in 2003 and 2002,
respectively ........................................ 7,123 5,406
Additional paid-in capital ............................ 349,010 264,894
Deferred officer's compensation ....................... -- (222,500)
Accumulated amortization, officer's compensation ...... -- 222,500
(Deficit) accumulated during the development stage .... (350,985) (238,326)
----------- -----------
Total stockholders' equity (deficit) ............ 5,148 31,974
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............ $ 55,662 $ 39,433
=========== ===========
The accompanying notes are an integral part of the financial statements.
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DONAR ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
For the Three and Nine Month Periods Ended September 30, 2003 and 2002 and for the
period from inception through September 30, 2003
For the Three For the Nine From Inception
Months Ended Months Ended on May 25,
September 30, September 30, 2001 through
------------------------ ------------------------- September 30,
2003 2002 2003 2002 2003
---------- ---------- ---------- ---------- ----------
Revenue:
Sales, net of discounts and
allowances ............................ $ 5,209 $ 1,480 $ 12,777 $ 1,648 $ 19,963
Interest income ........................ 45 17 190 17 272
---------- ---------- ---------- ---------- ----------
Total: .................... 5,254 1,497 12,967 1,665 20,235
Expenses:
General and administrative
expenses .............................. 21,600 380 132,345 93,192 371,220
---------- ---------- ---------- ---------- ----------
Net income (loss) from operations ......... $ (16,346) $ 1,117 $ (119,378) $ (91,527) $ (350,985)
========== ========== ========== ========== ==========
Per share information: Basic and fully
diluted
Weighted average number of common shares
outstanding .............................. 7,122,667 5,030,667 6,324,519 4,843,556
========== ========== ========== ==========
Net (loss) per common share ............... $ (0.002) $ 0.000 $ (0.019) $ (0.019)
========== ========== ========== ==========
The accompanying notes are an integral part of the financial statements.
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DONAR ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the Nine Month Periods Ended September 30, 2003 and 2002 and for the period
from inception through September 30, 2003
For the Nine From Inception
Months Ended on May 25,
September 30, 2001 through,
--------------------------- September 30,
2003 2002 2003
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss)......................................... $ (119,378) $ (91,527) $ (350,985)
Adjustments to reconcile net (loss) to
net cash (used in) operating activities:
Issuance of stock for services rendered ....... 80,833 -- 318,333
Deferred offering costs ....................... 6,208 (2,093) --
Deferred officer's compensation ............... -- -- --
Amortization of deferred officer's
compensation ................................. -- 92,708 --
(Increase) decrease in assets:
Accounts receivable ........................... (2,922) (837) (3,273)
Increase (decrease) in liabilities:
Accounts payable .............................. -- 1,350 1,350
Officer's salary payable ...................... 42,500 -- 42,500
------------ ------------ ------------
Total adjustments ........................... 126,619 91,128 358,910
------------ ------------ ------------
Net cash (used in) operating activities ....... 7,241 (399) 7,925
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CASH FLOWS FROM INVESTING ACTIVITIES: ............... -- -- --
------------ ------------ ------------
Net cash provided by investing activities ..... -- -- --
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock ........ 5,000 25,900 37,800
Advances from stockholder ..................... 1,066 1,227 6,664
------------ ------------ ------------
Net cash provided by financing activities ..... 6,066 27,127 44,464
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH ..................... 13,307 26,728 52,389
CASH, BEGINNING OF THE PERIOD ....................... 39,082 -- --
------------ ------------ ------------
CASH, END OF THE PERIOD ............................. $ 52,389 $ 26,728 $ 52,389
============ ============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS INFORMATION:
Cash paid for: Income taxes ........................ $ -- $ -- $ --
============ ============ ============
Interest ............................ $ -- $ -- $ --
============ ============ ============
The accompanying notes are an integral part of the financial statements.
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DONAR ENTERPRISES, INC.
Notes to the Interim Financial Statements
1. MANAGEMENT'S REPRESENTATION OF INTERIM FINANCIAL INFORMATION
The accompanying unaudited interim financial statements have been prepared by
Donar Enterprises, 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 and footnotes included in the Company's report on
Form 10-KSB for the year ended December 31, 2002.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Company's financial statements, including the notes thereto, appearing
elsewhere in this Report.
Forward-Looking Statements
This Quarterly Report contains forward-looking statements about the Company's
business, financial condition and prospects that reflect management's
assumptions and beliefs based on information currently available. The Company
can give no assurance that the expectations indicated by such forward-looking
statements will be realized. If any of management's assumptions should prove
incorrect, or if any of the risks and uncertainties underlying such
expectations should materialize, the Company's actual results may differ
materially from those indicated by the forward-looking statements.
The key factors that are not within the Company's control and that may have a
direct bearing on operating results include, but are not limited to, acceptance
of the Company's services, its ability to expand its customer base,
managements' ability to raise capital in the future, the retention of key
employees and changes in the regulation of the Company's industry.
There may be other risks and circumstances that management may be unable to
predict. When used in this Quarterly Report, words such as, "believes,"
"expects," "intends," "plans," "anticipates," "estimates" and similar
expressions are intended to identify forward-looking statements, although there
may be certain forward-looking statements not accompanied by such expressions.
All forward-looking statements are intended to be covered by the safe harbor
created by Section 21E of the Securities Exchange Act of 1934.
Brief History of the Company
Donar Enterprises, Inc. ("Donar" or the "Company"), a Delaware corporation
incorporated on May 25, 2001, is a company with a principal business objective
to provide electronic filing services for clients that need to electronically
file prospectuses, registration statements, and other documents pursuant to
federal securities laws with the Securities and Exchange Commission (SEC) via
the SEC's electronic data gathering system entitled Electronic Data Gathering
Analysis and Retrieval ("EDGAR"). This program requires participants or their
agents to file disclosure information with the SEC in an electronic format
rather than by the traditional paper filing package. This electronic format,
usually in ASCII, includes additional submission information and coding "tags"
within the document for aid in the SEC's analysis of the document and retrieval
by the public. This electronic format is delivered by direct
telecommunications. EDGAR allows registrants to file, and the public to
retrieve, disclosure information electronically.
EDGAR(R) is a federally registered trademark of the U.S. Securities and
Exchange Commission. The Company and its web sites are NOT affiliated with or
approved by the U.S. Securities and Exchange Commission.
Management's Plan of Operation
In this 3 month operating period ended September 30, 2003, the Company incurred
an operating net loss of $16,346 for selling, general and administrative
expenses related to operations.
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As of September 30, 2003, the Company has $52,389 in cash with which to satisfy
any future cash requirements. The Company will need a minimum of $95,000 to
satisfy its cash requirements for the next twelve months. The Company may not
be able to operate if it does not obtain additional equity and/or debt
financing. The Company depends upon capital to be derived from future financing
activities such as subsequent offerings of its common stock or loans or
contributions from its sole officer and director. There can be no assurance
that the Company will be successful in raising such capital or financing and
thus, be able to satisfy its cash requirements. The Company currently has no
arrangements or commitments for accounts and accounts receivable financing.
There can be no assurance that any such financing can be obtained or, if
obtained, that it will be on reasonable terms.
Business Strategy Behind Distribution of the Company's Services
The economics underlying the Company's business strategy are simple. For each
new client the Company is able to garner, the Company will usually be able to
generate approximately $500 to $2,500 in initial revenues. From that point
forward, as long as the client continues to utilize the Company's EDGAR filing
services, each client should be worth a minimum of approximately $2,000 in
annual revenues due to the filing of each client's quarterly and annual SEC
regulatory filings. It must be noted however that many companies may wish to
electronically file documents in-house or in fact may turn to other sources,
such as accounting or law firms that provides professional services to these
companies, which may detrimentally impact the Company's anticipated revenue
sources. As such, the Company's industry segment is characterized by what is
commonly referred to as "recurring revenue." The Company has established
relationships with a limited number of clients. The Company plans on
increasing its client base through advertising campaigns on the Internet and by
direct mail. Management expects that the Company will continue generating small
amounts of revenue from the Company's current clients during the fourth quarter
of 2003. As the Company attracts more clientele, revenues are expected to
increase.
The Company may attempt to employ additional personnel if it is able to
generate sufficient revenues. However, there is no assurance that the services
of such persons will be available or that they can be obtained upon terms
favorable to the Company. If and when the Company is successful in achieving a
positive cash flow, it is likely that it will consider expanding, which will
also increase costs.
Growth Strategy of the Company
The Company believes that the current marketplace of established EDGAR filers
is highly fragmented, with literally dozens of EDGAR filers located throughout
the country. As such, the Company believes that there is an opportunity for a
publicly traded EDGAR company to acquire several, smaller and more established
EDGAR filers with already-established client bases. In short, the Company would
like to be a consolidator of its industry. The Company intends to use its
securities as the principal medium of payment for all acquisitions. However,
to the extent certain cash payments are required; the Company will attempt to
minimize those payments in view of the Company's lack of cash. The Company
gives no assurance, however, that it will be successful as a consolidator. As
of the date of this report, there are no agreements to acquire any specific
competitor.
The Company has re-designed its website and developed two additional web sites
under separate Internet domain names providing its clientele with additional
information on its services, including additional information on the EDGAR
process. Additionally, the Company plans to select and implement an online
credit card payment system, an automated services and fees quotation system for
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not standard filings, standard forms download to further simplify the overall
EDGAR formatting process and the capabilities to search the EDGAR database for
submitted filings. Other growth strategies include an aggressive targeted
marketing campaign, advertisement in trade publications, and yearly services
agreements with current and potential clients for their total yearly EDGAR
filing needs for a lump sum price.
The Company is still considered to be a development stage company, with no
significant revenue, and is dependent upon the raising of capital through
placement of its common stock. There can be no assurance that the Company will
be successful in raising the capital it requires through the sale of its common
stock.
ITEM 3. CONTROLS AND PROCEDURES
The Company maintains a system of controls and procedures designed to provide
reasonable assurance as to the reliability of the financial statements and
other disclosures included in this report, as well as to safeguard assets from
unauthorized use or disposition. Within 90 days prior to the filing of this
report, the Company's Chief Executive Officer and principal financial officer
have evaluated the effectiveness of the design and operation of the Company's
disclosure controls and procedures with the assistance and participation of
other members of management. Based upon that evaluation, the Company's Chief
Executive Officer and principal financial officer concluded that the Company's
disclosure controls and procedures are effective for gathering, analyzing and
disclosing the information the Company is required to disclose in the reports
it files under the Securities Exchange Act of 1934 within the time periods
specified in the SEC's rules and forms. There have been no significant changes
in the Company's internal controls or in other factors which could
significantly affect internal controls subsequent to the date the Company
carried out its evaluation.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no legal proceedings against the Company and the Company is unaware
of such proceedings contemplated against it.
ITEM 2. CHANGES IN SECURITIES
There have been no changes or modifications in the Company's securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There has been no default upon senior securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No matters were submitted to a vote of the security holders during the
quarterly period covered by this report.
ITEM 5. OTHER INFORMATION
There is no information with respect to which information is not otherwise
called for by this form.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 99.1 Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
Exhibit 99.2 Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter ended September 30, 2003,
for which this report is filed.
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.
DONAR ENTERPRISES, INC.
Date: October 14, 2003 By: /s/ William Tay
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William Tay
President, Chief Executive
Officer, Secretary, Treasurer
and Director
(principal financial officer,
principal accounting officer,
director)
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Exhibit 99.1
CERTIFICATIONS
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I, William Tay, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Donar Enterprises,
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 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 to ensure that material
information relating to the registrant, 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) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;
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
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: October 14, 2003 /s/ William Tay
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Name: William Tay
Title: Chief Executive Officer and
Chief Financial Officer
A signed original of this written statement required by Section 302 of the
Sarbanes-Oxley Act of 2002 has been provided to Donar Enterprises, Inc. and
will be retained by Donar Enterprises, Inc. and furnished to the Securities and
Exchange Commission or it staff upon request.
Exhibit 99.2
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 Donar Enterprises, Inc. (the
"Company") on Form 10-QSB for the period ending September 30, 2003 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, William Tay, Chief Executive Officer and Chief Financial Officer of the
Company, certify, pursuant to 18 U.S.C. 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.
Date: October 14, 2003 /s/ William Tay
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Name: William Tay
Title: Chief Executive Officer and
Chief Financial Officer
A signed original of this written statement required by Section 906 has been
provided to Donar Enterprises, Inc., and will be retained by Donar Enterprises,
Inc. and furnished to the Securities and Exchange Commission or its staff upon
request.