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 March 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 333-69006
WOODLAND HATCHERY, INC.
(Exact name of small business issuer as specified in its charter)
NEVADA 84-1407365
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1442 LOWER RIVER ROAD, WOODLAND, UT 84036
(Address of principal executive offices)
(801) 367-7197
(Issuer's telephone number)
NOT APPLICABLE
(Former name, address and fiscal year, if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the issuer 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 has filed all documents and reports required to be
filed by Sections 12, 13, or 15(d) of the Exchange Act subsequent to 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 classes of common
equity, as of March 31, 2003: 11,470,000 shares of common stock.
Transitional Small Business Format: Yes [ ] No [ X ]
FORM 10-QSB
MARCH 31, 2003
WOODLAND HATCHERY, INC.
(A Development Stage Company)
INDEX
Page
PART I.. Financial Information
Item I. Unaudited Financial Statements 3
Unaudited Balance Sheet, March 31, 2003 4
Unaudited Statements of Operations for the Three Months Ended
March 31, 2003 and 2002 and Cumulative Amounts Since Inception 5
Unaudited Statements of Cash Flows for the Three Months Ended
March 31, 2003 and 2002 and Cumulative Amounts Since Inception 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
or Plan of Operation 8
Item 3. Controls and Procedures 10
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 10
(Inapplicable items have been omitted)
2
PART I.
FINANCIAL INFORMATION
Item 1. Unaudited 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.
3
WOODLAND HATCHERY, INC.
-----------------------
(A Development Stage Company)
UNAUDITED BALANCE SHEET
-----------------------
March 31, 2003
--------------
ASSETS
---------------
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . $ 2,711
Prepaid expenses . . . . . . . . . . . . . . . . . 3,844
Inventories. . . . . . . . . . . . . . . . . . . . 751
---------
Total current assets . . . . . . . . . . . . . . 7,306
Property and equipment, net. . . . . . . . . . . . . . 24,156
---------
Total assets . . . . . . . . . . . . . . . . $ 31,462
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
----------------------------------------------
Current liabilities - accounts payable . . . . . . . . $ 3,011
---------
Commitments. . . . . . . . . . . . . . . . . . . . . . -
Stockholders' equity:
Preferred stock, $.001 par value, 5,000,000 shares
authorized, no shares issued and outstanding . . -
Common stock, $.001 par value, 50,000,000 shares
authorized, 11,470,000 shares issued and
outstanding. . . . . . . . . . . . . . . . . . . 11,470
Additional paid-in capital . . . . . . . . . . . . 73,280
Deficit accumulated during the development stage . (56,299)
---------
Total stockholders' equity . . . . . . . . . 28,451
---------
Total liabilities and stockholders' equity . $ 31,462
=========
The accompanying notes are an integral part of these financial statements
4
WOODLAND HATCHERY, INC.
-----------------------
(A Development Stage Company)
UNAUDITED STATEMENTS OF OPERATIONS
----------------------------------
Three Months Ended
March 31, Cumulative
2003 2002 Amounts
------------ ----------- ----------
Revenue . . . . . . . . . . . . . . . . . $ - - -
General and administrative costs. . . . . 5,079 4,621 54,905
Interest expense. . . . . . . . . . . . . - - 1,394
------------ ----------- ----------
Loss before income taxes. . . . (5,079) (4,621) (56,299)
Provision for income taxes. . . . . . . . - - -
------------ ----------- ----------
Net Loss. . . . . . . . . . . . $ (5,079) (4,621) (56,299)
============ =========== ===========
Loss per common share - basic and diluted $ - -
============ ===========
Weighted average common shares -
basic and diluted . . . . . . . . . . . 11,470,000 11,395,000
============ ===========
The accompanying notes are an integral part of these financial statements
5
WOODLAND HATCHERY, INC.
-----------------------
(A Development Stage Company)
UNAUDITED STATEMENTS OF CASH FLOWS
----------------------------------
Three Months Ended
March 31, Cumulative
2003 2002 Amounts
-------- -------- ----------
Cash flows from operating activities:
- ---------------------------------------------------
Net loss. . . . . . . . . . . . . . . . . . . . . . $(5,079) (4,621) (56,299)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation . . . . . . . . . . . . . . . . 564 317 3,436
Loss on disposal of assets . . . . . . . . . - - 361
Common stock issued for services . . . . . . - - 18,750
(Increase) decrease in:
Prepaid expenses . . . . . . . . . . . . . . 243 - (3,844)
Inventories. . . . . . . . . . . . . . . . . 191 - (751)
Increase (decrease) in accounts payable. . . 1,169 (18,031) 3,011
-------- -------- ----------
Net cash used in operating activities . . (2,912) (22,335) (35,336)
-------- -------- ----------
Cash flows from investing activities:
- ---------------------------------------------------
Purchase of fixed assets. . . . . . . . . . . . . . - (3,269) (27,953)
-------- -------- ----------
Net cash used in investing activities . . - (3,269) (27,953)
-------- -------- ----------
Cash flows from financing activities:
- ---------------------------------------------------
Proceeds from issuance of common stock, net . . . . - - 66,000
-------- -------- ----------
Net cash provided by financing activities - - 66,000
-------- -------- ----------
Net increase (decrease) in cash . . . . . (2,912) (25,604) 2,711
Cash, beginning of period . . . . . . . . . . . . . 5,623 53,974 -
-------- -------- ----------
Cash, end of period . . . . . . . . . . . . . . . . $ 2,711 28,370 2,711
======== ======== ==========
The accompanying notes are an integral part of these financial statements
6
WOODLAND HATCHERY, INC.
----------------------
(A Development Stage Company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
---------------------------------------
March 31, 2003
--------------
Note 1 - Basis of Presentation
- -----------------------------------
The accompanying unaudited condensed financial statements have been prepared by
management in accordance with the instructions in Form 10-QSB and, therefore, do
not include all information and footnotes required by generally accepted
accounting principles and should, therefore, be read in conjunction with the
Company's Form 10-KSB for the year ended December 31, 2002, filed with the
Securities and Exchange Commission. These statements do include all normal
recurring adjustments which the Company believes necessary for a fair
presentation of the statements. The interim operations are not necessarily
indicative of the results to be expected for the full year ended December 31,
2003.
Note 2 - Additional footnotes included by reference
- ----------------------------------------------------------
Except as indicated in Notes above, there have been no other material changes in
the information disclosed in the notes to the financial statements included in
the Company's Form 10-KSB for the year ended December 31, 2002, filed with the
Securities and Exchange Commission. Therefore, those footnotes are included
herein by reference.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATION
FORWARD-LOOKING STATEMENT NOTICE
When used in this report, the words "may," "will," "expect," "anticipate,"
"continue," "estimate," "project," "intend," and similar expressions are
intended to identify forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934 regarding events, conditions, and financial trends that may affect the
Company's future plans of operations, business strategy, operating results, and
financial position. Persons reviewing this report are cautioned that any
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties and that actual results may differ materially
from those included within the forward-looking statements as a result of various
factors.
DESCRIPTION OF BUSINESS
GENERAL
We were formed as a Nevada corporation on May 15, 1997 as Kafco Corp. On April
11, 2001 we changed our name to Woodland Hatchery, Inc. We are developing a
fish hatchery to provide fish for private fly-fishing enterprises and the
wholesale and retail sales of organic fish. The Utah Department of Agriculture
is implementing an organic agriculture program. The program will include
guidelines and rules to raising organic fish. We intend to comply with the
requirements to have our fish certified as organic. Our hatchery is located in
Utah and we will market and sell our fish initially in Utah. We may consider
marketing and selling fish in the nearby states of Wyoming, Idaho and Colorado
once we have proven operations.
OUR BUSINESS
Our hatchery is located in Woodland, Utah, a location approximately twenty
minutes east of Park City in the Upper Provo River Valley. The address is 1442
Lower River Road, Woodland, Utah. It is our intent to provide rainbow and brown
trout for private fly-fishing enterprises and also to provide organically grown
fish for wholesale and retail customers.
We are leasing ground and water rights from Seth Winterton, the father of Cody
Winterton, our president. Our lease payments are $1,200 per year. The lease
allows us unrestricted access and use of approximately one acre of land through
which the hatchery waterways run. The lease is for an initial period of twenty
years beginning in June 2001 and is renewable annually after expiration unless
either party gives notice to terminate the lease. All improvements to the land
will belong to the owner of the property upon termination of the lease. We have
selected this site because rainbow trout require large amounts of high quality
water with a minimum dissolved oxygen concentration of 5 mg/L. The selected
site is ideal for a fish hatchery because of the natural quality, volume and
temperature of the water.
Trout production facilities usually consist of indoor rearing facilities and
outdoor raceways and ponds. The rearing facilities are usually used for
producing trout from the fertilized eggs to fingerlings. We have completed
construction of the hatchery which consists of two concrete raceways with free
flowing water, including two small incubators. A flowing stream has been
diverted to run through the raceways to simulate a natural stream or riverbed.
Total cost for construction was $23,500. The concrete design makes the walls
and floors easy to clean and also allows water to be diverted away from the
raceways, allowing them to sun-dry to kill diseases that may potentially arise.
8
Our breeding operations commenced with the purchase of 2,000 pounds of six inch
trout, weighing eight ounces per fish. The initial purchase consisted of 1,000
pounds of German Browns purchased from The Wyoming Trout Ranch and 1,000 pounds
of Kamaloop Rainbow Trout purchased from Black Canyon Trout Farm in Idaho.
These species were chosen based on our environment including water temperature,
seasons and water flows. We had hoped to have fish ready to sell in the fall of
2002, however, the trout have taken longer to mature than we originally
anticipated. We currently hope to begin selling trout in the summer or fall of
2003.
In addition to purchasing fingerling trout, we will breed our own fish. Each
season, twenty or so of the largest and strongest of each species will be kept
for breeding. These brood fish will provide the eggs for subsequent
generations. Once our breeding stock is established we do not anticipate having
to purchase additional fish. Our goal is to produce sufficient fingerlings to
have 17,000 pounds of six inch marketable trout ready to sell in 2003.
We have contracted to sell the initial 2,000 pounds of fish we produce to
Winterton Ranches. At the time of sale, the fish will have increased in size to
approximately 14 to 18 inches and will have doubled in weight. Winterton
Ranches will use the fish to stock ponds already existing on their property. We
currently lease our property from Winterton Ranches who has adjoining property
with ours. Winterton Ranches has an existing fish permit from the State of Utah
which will allow us to transfer fish to their facilities without restriction.
We entered into a fish purchase agreement with Winterton Ranches on July 1,
2001. Winterton Ranches is adjacent to our hatchery and is owned by Seth
Winterton, our president's father. The original agreement provided that
Winterton Ranches would purchase 10,000 pounds of trout at market price, subject
to availability, beginning on July 1, 2002 through July 1, 2004. Because it has
taken longer for the fish to mature than we anticipated, we were unable to
deliver any fish to Winterton Ranches during 2002. Because of the delay in
achieving our target production levels, on December 15, 2002, Winterton Ranches
modified the purchase agreement. Winterton has agreed to accept as many fish
as we can produce beginning in the summer of 2003. Should Winterton Ranches
fail to purchase our entire inventory of trout, we believe that other outlets
exist for our fish. However, we are not seeking additional customers at the
present time. Should we sell to parties other than Winterton Ranches, we will
apply for the appropriate transportation permit.
Should our operations reach 50,000 pounds, we will then have to obtain permits
from the Environmental Protection Agency for our hatchery. At the current time,
we are not subject to any EPA regulations and do not anticipate reaching
production of 50,000 pounds in the near future. We are not aware of any other
governmental regulation with which we must comply in order to operate our
hatchery.
THREE MONTH PERIODS ENDED MARCH 31, 2003 AND 2002
Our hatchery has not generated any revenue to date. We anticipate that we will
begin generating revenue under our agreement with Winterton Ranches as soon as
our initial generation of fish reaches maturity and a breeding stock is
established. Hopefully, this will occur later in 2003. Expenses during the
first three months of 2003 and 2002 were relatively stable and consisted
entirely of general and administrative costs. These costs were $5,079 during
the three months ended March 31, 2003 and $4,621 during the comparable period in
2002. Expenses during both periods were almost exclusively related to legal,
professional and accounting costs associated with preparing and filing our
public reports. As a result of these factors, we realized a net loss of $5,079
for the three months ended March 31, 2003 and a net loss of $4,621 for the
comparable period in 2002.
9
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2003 our total assets were $31,462 consisting of $2,711 in cash,
$3,844 in prepaid expenses, $751 in inventory and $24,156 in property and
equipment. Total current liabilities at March 31, 2003 consisted of $3,011 in
accounts payable.
We do not have any material commitments for capital expenditures and believe
that our current cash needs can be met with cash on hand and expected revenue
from fish sales. Should we find it necessary to raise additional capital, we
may sell common stock or enter into debt financing arrangements.
ITEM 3. CONTROLS AND PROCEDURES
Within the 90-day period prior to the date of this report, we evaluated the
effectiveness and operation of our disclosure controls and procedures pursuant
to Rule 13a-14 of the Securities Exchange Act of 1934. Based on that
evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that our disclosure controls and procedures are effective. There have
been no significant changes in internal controls or other factors that could
significantly affect internal controls subsequent to the date we carried out our
evaluation.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Reports on Form 8-K: No reports on Form 8-K were filed by the Company during
the quarter ended September 30, 2002.
Exhibits:
EXHIBIT NUMBER TITLE LOCATION
99.1 Certification of Chief Executive Officer and Chief Financial. . . Attached
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
99.2 Certification of Chief Executive Officer and Chief Financial. . . Attached
Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
SIGNATURES
In accordance with the Exchange Act, the registrant caused this report to be
signed on its behalf by the undersigned thereunto duly authorized.
WOODLAND HATCHERY, INC.
Date: May 13, 2003 /s/Cody Winterton
-----------------------------------------
Cody Winterton
President and Chief Financial Officer
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