SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15 (d) of
Securities Exchange Act of 1934
For Period ended January 31, 2005
Commission File Number 000-50673
DUNGANNON INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0901631
(State of Incorporation) (I.R.S. Employer Identification No.)
805-510 West Hastings Street
Vancouver, British Columbia V6B 1LB
(Address of Principal Executive Offices) (Zip Code)
(604) 689-1818
(Registrant's telephone number, including area code)
Check 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 such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past90 days. Yes [X] No [ ]
There were 3,177,000 shares of Common Stock outstanding as of January 31, 2005
PART 1 FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENT
DUNGANNON INTERNATIONAL, INC.
(A Development Stage Company)
Balance Sheets
- --------------------------------------------------------------------------------
As of As of
January 31, July 31,
2005 2004
-------- --------
ASSETS
CURRENT ASSETS
Cash $ 1,206 $ 1,728
-------- --------
TOTAL CURRENT ASSETS 1,206 1,728
-------- --------
TOTAL ASSETS $ 1,206 $ 1,728
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes payable $ 10,470 $ 5,970
-------- --------
TOTAL CURRENT LIABILITIES 10,470 5,970
-------- --------
TOTAL LIABILITIES 10,470 5,970
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, ($0.0001 par value, 20,000,000
shares authorized; none issued and outstanding -- --
Common stock, ($0.0001 par value, 80,000,000
shares authorized; 3,177,000 shares issued and
outstanding as of January 31, 2005 and July 31, 2004) 318 318
Additional paid-in capital 20,382 20,382
Deficit accumulated during development stage (29,964) (24,942)
-------- --------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (9,264) (4,242)
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT) $ 1,206 $ 1,728
======== ========
See Notes to Financial Statements
1
DUNGANNON INTERNATIONAL, INC.
(A Development Stage Company)
Statements of Operations
- --------------------------------------------------------------------------------
February 18, 1999
Six Months Six Months Three Months Three Months (inception)
Ended Ended Ended Ended through
January 31. January 31. January 31. January 31. January 31.
2005 2004 2005 2004 2005
----------- ----------- ----------- ----------- -----------
REVENUES
Revenues $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- -----------
TOTAL REVENUES -- -- -- -- --
GENERAL & ADMINISTRATIVE EXPENSES 5,022 197 2,316 136 29,964
----------- ----------- ----------- ----------- -----------
TOTAL GENERAL & ADMINISTRATIVE EXPENSES 5,022 197 2,316 136 29,964
OTHER INCOME & (EXPENSES) -- -- -- -- --
----------- ----------- ----------- ----------- -----------
NET LOSS $ (5,022) $ (197) $ (2,316) $ (136) $ (29,964)
=========== =========== =========== =========== ===========
BASIC LOSS PER SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 3,177,000 3,177,000 3,177,000 3,177,000
=========== =========== =========== ===========
See Notes to Financial Statements
2
DUNGANNON INTERNATIONAL, INC.
(A Development Stage Company)
Statement of Changes in Stockholders' Equity (Deficit)
From February 18, 1999 (inception) through January 31, 2005
- --------------------------------------------------------------------------------
Deficit
Accumulated
Common Stock Additional During
Common Stock Subscription Paid-in Development
Stock Amount Receivable Capital Stage Total
----- ------ ---------- ------- ----- -----
February 18, 1999 (inception) -- $ -- $ -- $ -- $ -- $ --
Net loss, February 18, 1999 (inception)
through July 31, 1999 -- --
---------- ------- ------- ------- -------- --------
BALANCE, JULY 31, 1999 -- -- -- -- -- --
========== ======= ======= ======= ======== ========
February 23, 2000 -
Founders shares issued for cash 3,000,000 300 2,700 3,000
June 15, 2000 -
Cash received for private placement 200 200
Net loss, for the year ended
July 31, 2000 (3,624) (3,624)
---------- ------- ------- ------- -------- --------
BALANCE, JULY 31, 2000 3,000,000 300 200 2,700 (3,624) (424)
========== ======= ======= ======= ======== ========
September 15, 2000 -
Private placement issued for cash
and subscription receivable 177,000 18 (415) 17,682 17,285
Net loss, for the year ended
July 31, 2001 (6,001) (6,001)
---------- ------- ------- ------- -------- --------
BALANCE, JULY 31, 2001 3,177,000 318 (215) 20,382 (9,625) 10,860
========== ======= ======= ======= ======== ========
May 8, 2002 -
Cancellation of subscription receivable 215 215
Net loss, for the year ended
July 31, 2002 (5,808) (5,808)
---------- ------- ------- ------- -------- --------
BALANCE, JULY 31, 2002 3,177,000 318 -- 20,382 (15,433) 5,267
========== ======= ======= ======= ======== ========
Net loss, for the year ended
July 31, 2003 (4,865) (4,865)
---------- ------- ------- ------- -------- --------
BALANCE, JULY 31, 2003 3,177,000 318 -- 20,382 (20,298) 402
========== ======= ======= ======= ======== ========
Net loss, for the year ended
July 31, 2004 (4,644) (4,644)
---------- ------- ------- ------- -------- --------
BALANCE, JULY 31, 2004 3,177,000 318 -- 20,382 (24,942) (4,242)
========== ======= ======= ======= ======== ========
Net loss, for the six months ended
January 31, 2005 (5,022) (5,022)
---------- ------- ------- ------- -------- --------
BALANCE, JANUARY 31, 2005 3,177,000 $ 318 $ -- $20,382 $(29,964) $ (9,264)
========== ======= ======= ======= ======== ========
See Notes to Financial Statements
3
DUNGANNON INTERNATIONAL, INC.
(A Development Stage Company)
Statements of Cash Flows
- --------------------------------------------------------------------------------
February 18, 1999
Six Months Six Months Three Months Three Months (inception)
Ended Ended Ended Ended through
January 31, January 31, January 31, January 31, January 31,
2005 2004 2005 2004 2005
-------- -------- -------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (5,022) $ (197) $ (2,316) $ (136) $(29,964)
Adjustments to reconcile net loss to net
cash provided (used) in operating acitivities:
Increase (decrease) in accounts payable -- (81) -- -- --
-------- -------- -------- -------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (5,022) (278) (2,316) (136) (29,964)
CASH FLOWS FROM INVESTING ACTIVITIES
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES -- -- -- -- --
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds received from notes payable 4,500 -- 2,500 -- 10,470
Common stock -- -- -- -- 318
Additional paid-in capital -- -- -- -- 20,382
-------- -------- -------- -------- --------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 4,500 -- 2,500 -- 31,170
-------- -------- -------- -------- --------
NET INCREASE (DECREASE) IN CASH (522) (278) 184 (136) 1,206
CASH AT BEGINNING OF PERIOD 1,728 483 1,022 341 --
-------- -------- -------- -------- --------
CASH AT END OF PERIOD $ 1,206 $ 205 $ 1,206 $ 205 $ 1,206
======== ======== ======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid $ -- $ -- $ -- $ -- $ --
======== ======== ======== ======== ========
Income taxes paid $ -- $ -- $ -- $ -- $ --
======== ======== ======== ======== ========
See Notes to Financial Statements
4
DUNGANNON INTERNATIONAL, INC.
(A Development Stage Company)
Notes to Financial Statements
As of January 31, 2005
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
The Company was organized February 18, 1999 (Date of Inception) under the laws
of the State of Delaware, as Dungannon International, Inc. The Company has no
operations and in accordance with SFAS #7, the Company is considered a
development stage company. The Company is authorized to issue 80,000,000 shares
of $0.0001 par value common stock and 20,000,000 shares of $0.0001 par value
preferred stock.
The interim financial statements included herein, presented in accordance with
United States generally accepted accounting principles and stated in US dollars,
have been prepared by the Company, 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 pursuant to such rules and regulations, although the Company believes
that the disclosures are adequate to make the information presented not
misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments, which, in the opinion of management, are necessary for fair
presentation of the information contained therein. It is suggested that these
interim financial statements be read in conjunction with the financial
statements of the Company for the year ended July 31, 2004 and note thereto. The
Company follows the same accounting policies in the preparation of interim
reports.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF ACCOUNTING
The financial statements have been prepared using the accrual basis of
accounting. Under the accrual basis of accounting, revenues are recorded as
earned and expenses are recorded at the time liabilities are incurred. The
Company has adopted a July 31, year-end.
B. USE OF 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 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.
5
DUNGANNON INTERNATIONAL, INC.
(A Development Stage Company)
Notes to Financial Statements
As of January 31, 2005
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
C. CASH EQUIVALENTS
For the purpose of the statements of cash flows, all highly liquid investments
with an original maturity of three months or less are considered to be cash
equivalents. There are no cash equivalents as of January 31, 2005.
D. DEVELOPMENT STAGE
The Company continues to devote substantially all of its efforts in the
development of its plan to market and sell proprietary human resource database
services to companies in the building, architectural, and construction
industries.
E. INCOME TAXES
Income taxes are provided in accordance with Statement of Financial accounting
Standards No. 109 (SFAS 109), Accounting for Income Taxes. A deferred tax asset
or liability is recorded for all temporary differences between financial and tax
reporting and net operating loss carryforwards. Deferred tax expense (benefit)
results from the net change during the year of deferred tax assets and
liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion of all of the deferred
tax assets will be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment.
F. BASIC EARNINGS (LOSS) PER SHARE
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for earnings
(loss) per share for entities with publicly held common stock. SFAS No. 128
supersedes the provisions of APB No. 15, and requires the presentation of basic
earnings (loss) per share and diluted earnings (loss) per share. The Company has
adopted the provisions of SFAS No. 128 effective February 18, 1999 (inception).
Basic net loss per share amounts is computed by dividing the net income by the
weighted average number of common shares outstanding. Diluted earnings per share
are the same as basic earnings per share due to the lack of dilutive items in
the Company.
6
DUNGANNON INTERNATIONAL, INC.
(A Development Stage Company)
Notes to Financial Statements
As of January 31, 2005
NOTE 3. WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares of
common or preferred stock.
NOTE 4. GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company generated net losses of
$29,964 during the period from February 18, 1999 (inception) through January 31,
2005. This condition raises substantial doubt about the Company's ability to
continue as a going concern. The Company's continuation as a going concern is
dependent on its ability to meet its obligations, to obtain additional financing
as may be required and ultimately to attain profitability. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
Management plans to raise additional funds through debt or equity offerings.
Management has yet to decide what type of offering the Company will use or how
much capital the Company will raise. There is no guarantee that the Company will
be able to raise any capital through any type of offerings.
NOTE 5. INCOME TAXES
As of January 31, 2005
----------------------
Deferred tax assets:
Net operating tax carryforwards $ 4,495
Other 0
-------
Gross deferred tax assets 4,495
Valuation allowance (4,495)
-------
Net deferred tax assets $ 0
=======
Realization of deferred tax assets is dependent upon sufficient future taxable
income during the period that deductible temporary differences and carryforwards
are expected to be available to reduce taxable income. As the achievement of
required future taxable income is uncertain, the Company recorded a valuation
allowance.
7
DUNGANNON INTERNATIONAL, INC.
(A Development Stage Company)
Notes to Financial Statements
As of January 31, 2005
NOTE 6. SCHEDULE OF NET OPERATING LOSSES
1998 Net Operating Income $ 0
1999 Net Operating Loss (3,624)
2000 Net Operating Loss (6,001)
2001 Net Operating Loss (5,808)
2002 Net Operating Loss (4,865)
2003 Net Operating Loss (4,644)
2004 Net Operating Loss (six months) (5,022)
--------
Net Operating Loss $(29,964)
========
As of January 31, 2005, the Company has a net operating loss carryforward of
approximately $29,964, which will expire 20 years from the date the loss was
incurred.
NOTE 7. RELATED PARTY TRANSACTION
The Company's neither owns nor leases any real or personal property. A director
without charge provides office services. Such costs are immaterial to the
financial statements and, accordingly, have not been reflected therein. The
officers and directors of the Company are involved in other business activities
and may, in the future, become involved in other business opportunities. If a
specific business opportunity becomes available, such persons may face a
conflict in selecting between the Company and their other business interests.
The Company has not formulated a policy for the resolution of such conflicts.
NOTE 8. NOTES PAYABLE - RELATED PARTY
During the six months ended January 31, 2005, the sole officer and director
loaned the Company a total of $4,500. As of January 31, 2005, the total amount
owed is $10,470. This amount does not bear any interest and is due upon demand.
NOTE 9. COMMON STOCK
The Company is authorized to issue 80,000,000 shares of its $0.0001 par value
common stock and 20,000,000 shares of it $0.0001 par value preferred stock.
On February 23, 2000, the Company issued 3,000,000 shares of its $0.0001 par
value common stock to an individual who is an officer and director of the
Company in exchange for cash of $3,000.
8
DUNGANNON INTERNATIONAL, INC.
(A Development Stage Company)
Notes to Financial Statements
As of January 31, 2005
On June 15, 2000, the Company received $200 in cash for shares that were issued
in the private placement.
On September 15, 2000, the Company issued 177,000 of its $0.0001 par value
common stock for a total of $17,700 pursuant to a private placement, of which
the Company received $17,485 in cash and cash equivalents and $215 in
subscriptions receivable.
On May 8, 2002, the Company received $215 to cancel the entire balance of
subscriptions receivable.
For the six months ended January 31, 2005, there were zero issuances of common
stock.
NOTE 10. STOCKHOLDERS' EQUITY
The stockholders' equity section of the Company contains the following classes
of capital stock as of January 31, 2005:
* Preferred stock, $ 0.0001 par value; 20,000,000 shares authorized: -0-
shares issued and outstanding.
* Common stock, $ 0.0001 par value; 80,000,000 shares authorized:
3,177,000 shares issued and outstanding.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
CERTAIN FORWARD-LOOKING INFORMATION
Information provided in this Quarterly report on Form 10-QSB may contain
forward-looking statements within the meaning of Section 21E or Securities
Exchange Act of 1934 that are not historical facts and information. These
statements represent the Company's expectations or beliefs, including, but not
limited to, statements concerning future and operating results, statements
concerning industry performance, the Company's operations, economic performance,
financial conditions, margins and growth in sales of the Company's services,
capital expenditures, financing needs, as well as assumptions related to the
forgoing. For this purpose, any statements contained in this Quarterly Report
that are not statement of historical fact may be deemed to be forward-looking
statements. These forward-looking statements are based on current expectations
and involve various risks and uncertainties that could cause actual results and
outcomes for future periods to differ materially from any forward-looking
statement or views expressed herein. The Company's financial performance and the
forward-looking statements contained herein are further qualified by other risks
including those set forth from time to time in the documents filed by the
Company with the Securities and Exchange Commission, including the Company's
most recent Form 10SB.
CONDITION AND RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED JANUARY 31, 2005
Our current cash balance is $1206. Revenues were -0- for the quarter ending
January 31, 2005 and -0- for the same quarter ending 2003. Operating Expenses
were $2316 for the three months ended January 31, 2005 and $136 for the same
period in 2004. Dungannon International, Inc. is a development stage company
involved in the business of acquiring revenue generating environmental
enterprise products/services. It is the Company's goal to seek small-sized,
high-growth potential environment business acquisitions to eventually form a
diversified multi-based environmental company.
Dungannon was formed and has been evolving since its inception to seek out and
enter into operating and/or financing arrangements and strategic alliances to
develop and introduce proven and/or new technologies and processes which address
environmental concerns in general and "green" alternative energy, waste
management/recycling and agricultural crop yield technology, in particular. The
mission of the Company is to create a profit by identifying, screening,
evaluating environmental products, services or enterprises and acquiring or
establishing an operating involvement or alliance with those entities or
prospective businesses approved by management. The ultimate goal of Dungannon is
to seek profitable operating positions in environmental business ventures that
are selected. As resources allow, the Company will seek to acquire potential
high-growth environmental businesses to eventually form a diversified,
multi-business environmental company.
As of this date, we have begun minimal operations and have not acquired any
environmental products, services or enterprises despite continuing efforts to do
so; however, the above strategies have been put in place as management
guidelines in acquiring those potential environmental entities. We are currently
a development stage Company, and no revenues have been generated.
Currently the Company has only minimal assets of $1206 cash as of January 31,
2005 and there is no assurance that the Company will be successful in growing
its assets or accomplishing its goals given its present state.
We have taken the following steps in furthering the company's business plan: (1)
formed a developmental alliance with another similarly directed by more
developed Canadian environmental company to review and introduce for the
alliances, (2) identified six possible acquisition environmental candidates, the
investigation of which tow are still ongoing at the present time, (3) designed
10
methods of review process for possible acquisition of environmental services,
products or companies, and (4) commenced review and designed methods of
evaluations of those target ventures for possible acquisition. The Company has
also filed Form 10-SB with the Securities and Exchange Commission
in order to make our financial information equally available to any interested
parties or investors. On October 28, 2003 the Company obtained an unpriced
quotation on the Pink Sheets L.L.C. for its common stock.
In order to progress with our business plan, the company plans the following
future steps to be completed over one year: complete all Form 10-SB filing
requirements during the second quarter, 2005, obtain a listing on the Over-the
Counter Electronic Bulletin Board during the second quarter, 2005, prepare a
private placement memorandum and raise capital of $200,000 in investment capital
to commence full-scale operations and begin executing our business plan.
None of these activities are revenue generating. Due to limited resources and
lack of operational performance, there is not a guarantee that the Company will
succeed in executing its business plan or its projected activities over the next
12 months. Because we have no operating history, it is difficult to evaluate our
business and future prospects. Our revenue and income potential is unproven and
our business model may not work. Our independent auditors have issued a "going
concern" opinion which raises substantial doubts to our ability to remain in
business, much less properly execute our business plan and ever achieve
profitability, without securing any new investment capital.
RISK FACTORS RELATED TO DUNGANNON INTERNATIONAL, INC.
RISKS
Investors in Dungannon International should carefully consider the following
risk factors associated with our plans and product:
WE ARE A DEVELOPMENT STAGE COMPANY WITH NO OPERATING HISTORY. THIS WILL MAKE IT
DIFFICULT FOR OUR SHAREHOLDERS TO EVALUATE OUR FUTURE PLANS AND PROSPECTS.
Investors should carefully evaluate any investment in our company due to the
inherent risks, expenses, delays, and difficulties that will likely be a part of
our development. As we are implementing a business plan with no near-term
revenues, we expect to incur net losses in the foreseeable future. The ability
of Dungannon to establish itself as a viable environmental operating and/or
investment commercial enterprise based upon establishing a sound asset base has
not been proven and its prospects to do so must, therefore, must be considered
speculative.
THE EARLY OR DEVELOPMENT STAGE ENVIRONMENTAL ACQUISITION, INVESTMENT AND
BUSINESS ACTIVITIES TO BE UNDERTAKEN BY DUNGANNON MUST BE CONSIDERED
SPECULATIVE.
Although management will adopt certain sound evaluation criteria with respect to
investment and acquisitions to be made by Dungannon, the development stage
environmental acquisition, investment and business activities to be undertaken
by Dungannon must be considered speculative. The value of the assets of
Dungannon may be materially affected by the failure of one or more of the
enterprises in which Dungannon invests or operates.
NO DIVIDENDS HAVE BEEN PAID ON DUNGANNON'S COMMON SHARES SINCE INCEPTION AND
THERE IS NO ASSURANCE THAT SUCH DIVIDENDS WILL BE EARNED OR PAID IN THE FUTURE.
For the foreseeable future, Dungannon expects to re-invest in Dungannon's
operations, all profits that would otherwise be available for distribution to
shareholders for cash dividends. While the payment of stock dividends is an
alternative, there is no assurance that these will ever be paid in the future.
11
OUR FINANCIAL STATUS CREATES A DOUBT WHETHER WE WILL CONTINUE AS A GOING
CONCERN. OUR INDEPENDENT AUDITORS HAVE ISSUED AN AUDIT OPINION FOR DUNGANNON
INTERNATIONAL WHICH INCLUDES A STATEMENT DESCRIBING OUR GOING CONCERN STATUS. IF
OUR BUSINESS PLAN FOR THE FUTURE IS NOT SUCCESSFUL, INVESTORS WILL LIKELY LOSE
ALL OF THEIR INVESTMENT IN OUR STOCK.
As noted in our accompanying financial statements, our current financial
condition of nominal assets and no current operating business activities
necessary for revenues and operating capital create substantial doubt as to our
ability to continue as a going concern. If our business plan does not work, we
could remain as a start-up company with no material operations, revenues, or
profits. Currently the Company has only minimal assets of $1206 cash as of
January 31, 2005 and there is no assurance that the company will be successful
in growing its assets or accomplishing its goals given its present state.
OUR BUSINESS STRATEGY REQUIRES US TO RAISE CASH OF $200,000. WITHOUT THIS
FUNDING, WE COULD REMAIN AS A DEVELOPMENT STAGE COMPANY WITH NO MATERIAL
OPERATIONS, REVENUES OR PROFITS.
We require new funding of $200,000 in order to implement our business plan. We
have not determined a source for this funding. We currently have no funding
commitments from any individuals or entities. If we use equity capital as a
source of funding, potential new shareholders may be unwilling to accept either
the likely dilution of their per share value or the high level of risk involved
with our current business model. Without this funding, we may be only partially
successful or completely unsuccessful in implementing our business plan, and our
shareholders may lose part or all of their investment.
THERE IS NO TRADING MARKET FOR OUR COMMON STOCK. WE HAVE NO CURRENT PUBLIC
OFFERING AND NO PROPOSED PUBLIC OFFERING OF OUR EQUITY.
On October 28, 2003 the Company obtained an unpriced quotation on the Pink
Sheets L.L.C. for its common stock. There are no minimum quantitative standards
that a company must meet in order to obtain an unpriced quotation on the Pink
Sheets and the securities quoted on the Pink Sheets are not governed by any
regulatory body. At this time, no trading market has been established for our
common stock or any other securities of the Company and there can be no
assurance that a trading market will develop in the future, or if developed,
that it will be sustained. Furthermore, investors who desire to sell their
shares of common stock in any market that develops may encounter substantial
difficulty in doing so because of the fact that the price thereof may fluctuate
rapidly as a result of changing economic conditions as well as conditions in the
securities markets. There is no guarantee of trading volume or trading price
levels sufficient for investors to sell their stock, recover their investment in
our stock, or profit from the sale of their stock.
OUR SOLE OFFICER/DIRECTOR BENEFICIALLY OWNS 94% OF THE OUTSTANDING SHARES OF OUR
COMMON STOCK. IF HE CHOOSES TO SELL HIS SHARES IN THE FUTURE, IT MIGHT HAVE AN
ADVERSE EFFECT ON THE MARKET PRICE OF OUR STOCK.
Due to the controlling amount of our officer/director's share ownership in our
company, if he decides to sell his shares in the public market, the market price
of our stock could decrease and all shareholders suffer a dilution of the value
of their stock. If our officer/director decides to sell any of his common stock,
he will be subject to Rule 144 under the 1933 Securities Act. Rule 144 restricts
the ability of directors and officers (affiliates) to sell their shares by
limiting the sales of securities made under Rule 144 during any three-month
period to the greater of: (1) 1% of the outstanding common stock of the issuer;
or (2) the average weekly reported trading volume in the outstanding common
stock reported on all securities exchanges during the four calendar weeks
preceding the filing of the required notice of the sale under Rule 144 with the
SEC.
12
DUE TO THE LARGE AMOUNT OF AUTHORIZED BUT UNISSUED COMMON STOCK, THE COMPANY'S
SECURITIES MAY BE ISSUED TO MANAGEMENT, PROMOTERS OR THEIR AFFILIATES OR
ASSOCIATES WITHOUT SHAREHOLDER APPROVAL OR NOTICE.
Due to Mr. Gary Ciccozzi's status as sole director, officer and controlling
shareholders of the Company, he could issue large amounts of common stock to
management, promoters or their affiliates or associates without shareholder
approval or notice. However, Mr. Ciccozzi, so long as he is an officer/director
of the Company is subject to the restriction that any such issuance would be
toward furthering the Company's business plan. A breach of this requirement will
be a breach of his fiduciary duty as an officer/director of the Company.
THE CURRENT OFFICER/DIRECTOR, GARY CICCOZZI, IS THE SOLE OFFICER/DIRECTOR OF THE
COMPANY, AND AT THE SAME TIME, HE IS INVOVLED IN OTHER BUSINESS ACTIVITIES.
DUNGANNON INTERNATIONAL'S NEEDS FOR HIS TIME AND SERVICES COULD CONFLICT WITH
HIS OTHER BUSINESS ACTIVITIES. THIS POSSIBLE CONFLICT OF INTEREST COULD RESULT
IN HIS INABILITY TO PROPERLY MANAGE DUNGANNON INTERNATIONAL'S AFFAIRS, RESULTING
IN OUR REMAINING A SMALL COMPANY WITH NO MATERIAL OPERATIONS, REVENUES, OR
PROFITS.
Our president and chief executive officer Mr. Gary Ciccozzi is the President of
VisionQuest Enterprise Group, Inc., a public company listed on the TSX Venture
Exchange and its wholly owned subsidiary, World Enviro-solutions Technology
Corp. ("WEST"), Vancouver, British Columbia. VisionQuest is classified in Canada
as an enterprise management and development company and its subsidiary WEST is a
Canadian environmental acquisition/development similar in scope to Dungannon.
Although Mr. Ciccozzi is active in our management, he does not devote his
full-time and resources to our business. Because Mr. Ciccozzi has these divided
responsibilities, he may not be able to devote enough time to properly execute
our business plan, which could result in missed business opportunities and
worse-than-expected operating results. Mr. Ciccozzi will spend minimal time
working for the Company but has committed to share environmental enterprise
opportunities developed for Canada with Dungannon for the United States market.
Currently Mr. Ciccozzi does not have an employment agreement with the Company.
Furthermore, because Mr. Ciccozzi is involved in other business interests
similar to that of the company, he could encounter potential conflicts of
interest between his divided responsibilities. There is no agreement in place to
prevent Mr. Ciccozzi from redirecting future clients and/or business
opportunities away from the Company. Additionally, we do not have a formal
policy for the resolution of any such conflicts or interest should they arise.
In addition, the Company's executive officer/director/controlling shareholder
currently is and could become, in his individual capacity,
officer/director/controlling shareholder and/or partner in other entities
engaged in a variety of businesses that may in the future engage in various
transactions with the Company.
We have not formulated a plan to resolve any possible conflicts that may arise
between our needs for Ciccozzi's services and his other business
responsibilities.
DUNGANNON WILL BE COMPETING FOR ENVIRONMENTAL OPERATING AND INVESTMENT
OPPORTUNITIES WITH OTHER ENTITIES, MANY OF WHICH MAY HAVE GREATER FINANCIAL
RESOURCES THAN DUNGANNON.
In the environmental industry in which Dungannon intends to operate, there is
considerable competition and there are several well capitalized environmental
investment capital sources seeking to identify potential in environmental
enterprises' products. Such competition may reduce the availability of suitable
investments or increase costs and/or price of acquisitions.
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EXECUTIVE MANAGEMENT OF DUNGANNON'S BUSINESS IS PRIMARILY PROVIDED BY
DUNGANNON'S PRESIDENT.
At this stage of its corporate development, Dungannon has necessarily limited
the establishment of extensive administrative and operating infrastructure.
Instead, Dungannon will likely rely, for necessary skills, on external
adviser/consultants with extensive senior level management experience in such
fields as environmental enterprises, finance, process and production, marketing,
legal and regulatory, and investment. Accordingly, the future success of
Dungannon is very dependent upon the ongoing availability and commitment of its
officer, director and advisor consultants, not all of who will be bound by
formal contractual employment agreements. The absence of these formal
contractual relationships may be considered to represent an area of risk.
DUNGANNON MAY REQUIRE ADDITIONAL FUNDING WHICH MAY BE DILUTIVE TO COMMON
SHAREHOLDERS.
While there may be some immediate contribution to operating overhead from
prospective acquired and/or portfolio companies, in the event that existing
operating expenses cannot be supported by portfolio company revenues when the
proceeds of any corporate equity and/or debt offering may have been expended,
Dungannon may be required to seek additional funding which may be dilutive to
common shareholders.
DUNGANNON'S INVESTMENT/ACQUISITION POLICIES MAY BE CHANGED AT THE DISCRETION OF
ITS BOARD OF DIRECTORS.
Any funds invested or loaned into Dungannon will be entrusted to the Company's
sole director in whose judgment investors must depend with only limited
information about specific intentions. The Company's investment/acquisition
policies may be changed at the discretion of its sole director.
OUR COMMON STOCK IS SUBJECT TO THE PENNY STOCK RULE
The Securities and Exchange Commission Rule 15g-9 established the definition of
a "penny stock," for the purposes relevant to the company, as any equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions. For any transaction involving a penny stock, unless exempt,
the rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience objectives of the person; and
(ii) make a reasonable determination that the transactions in penny stocks are
suitable for that person and the person has sufficient knowledge and experience
in financial matters to be capable of evaluating the risks of transactions in
penny stocks. The broker or dealer must also deliver, prior to any transaction
in a penny stock, a disclosure schedule prepared by the Commission relating to
the penny stock market, which, in highlight form, (i) sets forth the basis on
which the broker or dealer made the suitability determination; and (ii) that the
broker or dealer received a signed, written agreement from the investor prior to
the transaction. The effective result of this Rule 15g-9, is that if the share
price is below $5.00 there will be fewer purchasers qualified by their brokers
to purchase shares of the company, and therefore a less liquid market for the
securities.
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
Change in Accountants
On March 14, 2005 the Company dismissed Beckstead and Watts, LLP, as its
independent accountants. The reports of Beckstead and Watts, LLP, on the
financial statements for the three month period ending October 31, 2004
contained no adverse opinion or disclaimer of opinion and were not modified as
to audit scope or accounting principles. The report of Beckstead and Watts, LLP,
on the financial statements for the three month period ending October 31, 2004
2004 contained an explanatory paragraph relating to the uncertainty of the
Company's ability to continue as a going concern.
On March 14, 2005, the Company engaged Armando Ibarra, CPA as its new
independent accountants. During the two most recent fiscal years and through
March 14, 2005 the Company had not consulted Armando Ibarra, CPA regarding the
application of accounting principles to a specified transaction, either
completed or proposed; or the type of audit opinion that might be rendered on
the financial statements of the registrant, and neither a written report was
provided to the Company or oral advice was provided that Armando Ibarra, CPA
concluded was an important factor considered by the Company in reaching a
decision as to the accounting, auditing, or financial reporting issue.
The Board of Directors of the Company, participated in and approved the decision
to change independent accountants. The Company filed a current report on Form
8-K on March 18, 2005, disclosing the change of independent auditors, and such
report is incorporated herein by reference.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 31.1 - Certification of Chief Executive Officer pursuant to
Section 302 of The Sarbanes-Oxley Act Of 2002
Exhibit 31.2 - Certification of Chief Financial Officer pursuant to
Section 302 of The Sarbanes-Oxley Act Of 2002
Exhibit 32.1 - Certification of Chief Executive Officer pursuant to
Section 906 of The Sarbanes-Oxley Act Of 2002
Exhibit 32.2 - Certification of Chief Financial Officer pursuant to
Section 906 of The Sarbanes-Oxley Act Of 2002
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SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Company has duly caused this disclosure statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
DUNGANNON INTERNATIONAL, INC.
Date: March 21, 2005
By: /s/ Gary Ciccozzi
-------------------------------
Gary Ciccozzi, President
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