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 MARCH 31, 2004
[ ] 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.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 23-3083371
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
2000 Hamilton Street, #520
Philadelphia, Pennsylvania 19130-3883
(Address of Principal Executive Offices)
(215) 893-3662
(Issuer's Telephone Number, Including Area Code)
N/A
(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 April 7, 2004 there
were outstanding 7,443,467 shares of common stock, par value $0.001, and no
shares of preferred stock.
Transitional Small Business Disclosure Format: Yes [ ] No [x]
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.
DONAR ENTERPRISES, INC.
(A Development Stage Company)
BALANCE SHEETS
ASSETS
March 31,
2004 December
(Unaudited) 31, 2003
----------- -----------
ASSETS
Current Assets
Cash $ 55,009 $ 54,194
Accounts receivable - Net of allowance for
doubtful accounts 2,385 877
----------- -----------
Total Current Assets $ 57,394 $ 55,071
----------- -----------
TOTAL ASSETS $ 57,394 $ 55,071
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ 1,350 $ 1,350
Due to stockholder 7,309 7,012
Officer's salary payable 85,000 63,750
----------- -----------
Total Current Liabilities 93,659 72,112
----------- -----------
Total Liabilities 93,659 72,112
Stockholders' Equity
Preferred stock: $.001 par value;
authorized 20,000,000 shares;
none issued or outstanding - -
Common stock: $.001 par value;
100,000,000 shares authorized,
7,443,467 and 7,122,667 issued and
outstanding in 2004 and 2003,
respectively 7,443 7,123
Additional paid-in capital 364,730 349,010
Deficit accumulated during the
development stage (408,438) (373,174)
----------- -----------
Total Stockholders' Deficit (36,265) (17,041)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 57,394 $ 55,071
=========== ===========
See accompanying notes to financial statements
DONAR ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
From
Inception
3 Months 3 Months [5/25/01]
Ended Ended through
03/31/04 03/31/03 03/31/04
------------ ------------ ------------
Revenues $ 2,385 $ 2,590 $ 23,638
Interest Income 48 77 368
------------ ------------ ------------
Total Income 2,433 2,667 24,006
General and Administrative Expenses 37,697 11,681 432,444
------------ ------------ ------------
Net Loss from Operations $ (35,264) $ (9,014) $ (408,438)
------------ ------------ ------------
Net Loss Before Income Taxes $ (35,264) $ (9,014) $ (408,438)
Provision for Income Taxes - - -
------------ ------------ ------------
Net Loss $ (35,264) $ (9,014) $ (408,438)
============ ============ ============
Loss Per Share $ (0.005) $ (0.002)
============ ============
Weighted Average Shares Outstanding 7,229,600 5,672,667
============ ============
See accompanying notes to financial statements
DONAR ENTERPRISES, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
From
Inception
3 Months 3 Months [5/25/01]
Ended Ended through
03/31/04 03/31/03 03/31/04
------------ ------------ ------------
Cash Flows Provided by/(Used for) Operating Activities
Net Loss $ (35,264) $ (9,014) $ (408,438)
Adjustments to reconcile net (loss) to net cash provided by
operating activities:
Issuance of stock for services rendered 16,040 10,000 334,373
Amortization of deferred offering costs - - -
Increase in deferred offering costs - - -
Amortization of deferred officer's compensation - - -
Decrease (increase) in assets:
Increase in accounts receivable (1,508) (1,230) (2,385)
Increase (decrease) in liabilities:
Accrued liabilities - - -
Accounts payable - 91 1,350
Officer's salary payable 21,250 - 85,000
------------ ------------ ------------
Net Cash Provided by/(Used for) in Operating Activities 518 (153) 9,900
Cash Flows Provided by Investing Activities
Purchase of equipment 0 0 0
------------ ------------ ------------
Net Cash Used by Investing Activities 0 0 0
Cash Flows Provided by Financing Activities
Proceeds from issuance of common stock - 5,000 37,800
Advances from stockholder 297 100 7,309
------------ ------------ ------------
Net Cash Provided by Financing Activities 297 5,100 45,109
Net Increase (decrease) in Cash 815 4,947 55,009
Beginning Cash Balance 54,194 39,082 0
------------ ------------ ------------
Ending Cash Balance $ 55,009 $ 44,029 $ 55,009
============ ============ ============
Supplemental Disclosure Information:
Cash paid during the year for interest $ - $ - $ -
Cash paid for income taxes - - -
See accompanying notes to financial statements
DONAR ENTERPRISES, INC.
Notes to the Interim Financial Statements
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, 2003.
DONAR ENTERPRISES, INC.
Notes to the Interim Financial Statements
NOTE A Summary of Significant Accounting Policies
Company Background
Donar Enterprises, Inc. ("Donar" or "the Company") was incorporated under the
laws of the State of Delaware on May 25, 2001. The Corporation is organized to
engage in any lawful act or activity for which a corporation may be organized
under the General Corporation Law of the State of Delaware including, without
limitation, to provide document formatting and electronic filing services to
public corporations and individuals.
Donar has been in the development stage since its formation on May 25, 2001.
Planned principal operations have only recently commenced, but Donar has not
generated significant revenue.
The financial statements of the Company have been prepared in accordance with
U. S. generally accepted accounting principles. The following summarizes the
more significant of such policies:
Cash & Cash Equivalents
For purposes of balance sheet classification and the statements of cash flows,
the Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
Income Taxes
The Company applies Statement of Financial Accounting Standard (SFAS) No. 109,
"Accounting for Income Taxes," which requires the asset and liability method of
accounting for income taxes. The asset and liability method requires that the
current or deferred tax consequences of all events recognized in the financial
statements are measured by applying the provisions of enacted tax laws to
determine the amount of taxes payable or refundable currently or in future
years.
Net Loss Per Common Share
The Company follows Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" (SFAS No. 128"). Basic earnings (loss) per common share
("EPS") calculations are determined by dividing net income (loss) by the
weighted average number of shares of common stock outstanding during the year.
Diluted earnings (loss) per common share calculations are determined by
dividing net income (loss) by the weighted average number of common shares and
dilutive common share equivalents outstanding. Common stock equivalents were
not considered during the periods presented, as their effect would be anti-
dilutive. There are no common stock equivalants.
DONAR ENTERPRISES, INC.
Notes to the Interim Financial Statements
NOTE A Summary of Significant Accounting Policies [continued]
Revenue Recognition
Revenues from document formatting and electronic filing services are recognized
at the time the services are provided and products are delivered to the
customer.
The Company records accounts receivable for revenue earned but has not been
collected. It deems receivables to be uncollectible when they have made
reasonable efforts to collect the amounts owed. The Company has set up an
allowance for doubtful accounts in the amount of $1,929.
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with U. S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and 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.
Segment Information
The Company follows SFAS No. 131, "Disclosure about Segments of an Enterprise
and Related Information". Certain information is disclosed, per SFAS No. 131,
based on the way management organizes financial information for making
operating decisions and assessing performance. The Company currently operates
in one business segment and will evaluate additional segment disclosure
requirements as it expands operations.
Comprehensive Income
There have been no items of comprehensive income since the Company's inception
on May 25, 2001.
Impairment of Long-Lived Assets
The Company periodically reviews the carrying amount of property, plant and
equipment and its identifiable intangible assets to determine whether current
events or circumstances warrant adjustments to such carrying amounts. If an
impairment adjustment is deemed necessary, such loss is measured by the amount
that the carrying value of such assets exceeds their fair value.
Considerable management judgement is necessary to estimate the fair value of
assets, accordingly, actual results could vary significantly from such
estimates. Assets to be disposed of are carried at the lower of their
financial statement carrying amount or fair value less costs to sell. As of
March 31, 2004, management does not believe there is any impairment of the
carrying amounts of assets.
DONAR ENTERPRISES, INC.
Notes to the Interim Financial Statements
NOTE A Summary of Significant Accounting Policies [continued]
Fair Value of Financial Instruments
Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of March 31, 2004. The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values. These financial instruments included cash,
accounts payable and accrued expenses, and notes payable. Fair values were
assumed to approximate carrying values for these financial instruments because
they are short term in nature, their carrying amounts approximate fair values,
or they are receivable or payable on demand.
Deferred Offering Costs
The Company defers costs associated with the raising of capital until such time
as the offering is completed, at which time the costs are charged against the
capital raised. Should the offering be terminated, the costs are charged to
operations during the period when the offering is terminated. There are not
deferred changes outstanding at March 31, 2004.
Recent Pronouncements
In July, 2001, the Financial Accounting Standards Board (FASB issued Statement
of Financial Accounting Standards (SFAS 141, Business Combinations, and SFAS
142, Goodwill and Intangible Assets. SFAS 141 is effective for all business
combinations completed after June 30, 2001. SFAS 142 is effective for the year
beginning January 1, 2002; however certain provisions of the Statement apply to
goodwill and other intangible assets acquired between July 1, 2001, and the
effective date of SFAS 142. The Company does not believe the adoption of these
standards will have a material impact on the Company's financial statements.
In July 2001, the Financial Accounting standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS No. 143, Accounting for Asset
Retirement Obligations. This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. This Statement applies to
all entities. It applies to legal obligations associated with the retirement
of long-lived assets that result from the acquisition, construction,
development and (or) the normal operation of a long-lived asset, except for
certain obligations of lessees. This Statement is effective for financial
statements issued for fiscal years beginning after June 15, 2002. The Company
has no long-lived assets as of March 31, 2004.
In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets. This statement addresses financial accounting
and
DONAR ENTERPRISES, INC.
Notes to the Interim Financial Statements
NOTE A Summary of Significant Accounting Policies [continued]
reporting for the impairment or disposal of long-lived assets and supersedes
FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and
for Long- Lived Assets to Be Disposed Of. The provisions of the statement are
effective for financial statements issued for fiscal years beginning after
December 15, 2001.
NOTE B Going Concern
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplates continuation of the Company as a going concern. The Company has
generated losses since its inception on May 25, 2001, aggregating $408,438
through March 31, 2004. Additionally, the Company was recently formed, and has
not been able to establish operations since the date of inception. The
Management's plans include the development of the Company's operations to a
commercial level and pursuing additional equity financing.
The financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.
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. (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 site 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 March 31, 2004, the Company incurred an
operating net loss of $35,264 for selling, general and administrative expenses
related to operations.
As of March 31, 2004, the Company has $55,009 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 second
quarter of 2004. 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.
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
(a) Evaluation of Disclosure Controls and Procedures. The Company's chief
executive officer and chief financial officer have evaluated the effectiveness
of the design and operation of the Company's disclosure controls and procedures
(as defined in Exchange Act Rule 13a-14(c)) as of a date within 90 days of the
filing date of this quarterly report. Based on that evaluation, the chief
executive officer and chief financial officer have concluded that the Company's
disclosure controls and procedures are effective to ensure that material
information relating to the Company is made known to such officers by others
within these entities, particularly during the period this quarterly report was
prepared, in order to allow timely decisions regarding required disclosure.
(b) Changes in Internal Controls. There have not been any 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.
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
During the three month period ended March 31, 2004, there was no modification
of any instruments defining the rights of holders of the Company's common stock
and no limitation or qualification of the rights evidenced by the Company's
common stock as a result of the issuance of any other class of securities or
the modification thereof.
During the period ended March 31, 2004, the Company issued a total of 320,800
restricted shares of Common Stock to a relative of the Company's president for
a total of $16,040 in services rendered. The shares were deemed to have been
issued pursuant to an exemption provided by Section 4(2) of the Act, which
exempts from registration "transactions by an issuer not involving any public
offering."
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.
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:
A Form 8-K was filed by the Company dated February 3, 2004 regarding change in
certifying accountant.
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: April 7, 2004 By: /s/ William Tay
------------------------------------
William Tay
President, CEO, CFO, Secretary,
Treasurer and Director
Exhibit 99.1
CERTIFICATIONS
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: April 7, 2004
/s/ William Tay
---------------------------------
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 March 31, 2004 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: April 7, 2004
/s/ William Tay
---------------------------------
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.