UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report under Section 13 or 15 (d) of
Securities Exchange Act of 1934
For the Period ended June 30, 2009
Commission File Number 333-145876
DESCANSO AGENCY, INC.
(Name of small business issuer in its charter)
Nevada 20-8766002
(State of Incorporation) (IRS Employer ID Number)
4203 Genesee Avenue, Suite 103 #510
San Diego, CA 92117
775-352-4084
(Address and telephone number of principal executive offices)
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 such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company.
Large accelerated filer [ ] Accelerated Filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do Not Check if a Smaller Reporting Company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
As of June 30, 2009, the registrant had 9,250,000 shares of common stock, $0.001
par value, issued and outstanding.
ITEM 1. FINANCIAL STATEMENTS.
The un-audited quarterly financial statements for the period ended June 30, 2009
immediately follow.
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DESCANSO AGENCY, INC.
(A Development Stage Company)
Balance Sheets
Unaudited Audited
June 30, December 31,
2009 2008
-------- --------
ASSETS
CURRENT ASSETS
Cash $ 1,978 $ 4,073
-------- --------
Total Current Assets 1,978 4,073
-------- --------
TOTAL ASSETS $ 1,978 $ 4,073
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
LIABILITIES
Accounts Payable $ 6,100 $ 2,900
Loan Payable (From Director) 10,390 5,590
-------- --------
TOTAL LIABILITIES $ 16,490 $ 8,490
======== ========
STOCKHOLDERS' EQUITY
50,000,000 shares Common Stock authorized at
$0.001/par value 9,250,000 shares issued
and outstanding @ June 30, 2009 $ 9,250 $ 9,250
Additional Paid-in Capital 27,750 27,750
Deficit accumulated (51,512) (41,417)
-------- --------
TOTAL STOCKHOLDERS' EQUITY (14,512) (4,417)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,978 $ 4,073
======== ========
The accompanying notes are an integral part of these financial statements.
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DESCANSO AGENCY, INC.
(A Development Stage Company)
Statements of Operations
Inception
Three Months Three Months Six Months Six Months (April 3, 2007)
Ending Ending Ending Ending Through
June 30, June 30, June 30, June 30, June 30,
2009 2008 2009 2008 2009
---------- ---------- ---------- ---------- ----------
REVENUES
Revenues $ -- $ -- $ -- $ -- $ --
---------- ---------- ---------- ---------- ----------
TOTAL REVENUES -- -- -- -- --
OPERATING EXPENSE
Administrative Expense 4,475 6,123 10,095 22,245 51,512
---------- ---------- ---------- ---------- ----------
NET (LOSS) $ (4,475) $ (6,123) $ (10,095) $ (22,245) $ (51,512)
========== ========== ========== ========== ==========
Basic earnings per share $ -- $ -- $ -- $ -- $ --
Weighted average number of
common shares outstanding 6,275,000 6,275,000 6,275,000 6,275,000 6,275,000
The accompanying notes are an integral part of these financial statements.
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DESCANSO AGENCY, INC.
(A Development Stage Company)
Statements of Changes in Stockholders' Equity
Common Additional Deficit Accum
Common Stock Paid-in During
Stock Amount Capital Dev Stage Total
----- ------ ------- --------- -----
Stock issued for cash June 29, 2007 4,750,000 $ 4,750 $ 14,250 $ -- $ 19,000
Stock issued for cash November 2, 2007 4,500,000 4,500 13,500 18,000
Net (loss) for the year 2007 (11,142) (11,142)
---------- ------- -------- --------- ---------
BALANCE DECEMBER 31, 2007 9,250,000 9,250 27,750 (11,142) 25,858
========== ======= ======== ========= =========
Net (loss) for the year 2008 (30,275) (30,275)
---------- ------- -------- --------- ---------
BALANCE DECEMBER 31, 2008 9,250,000 9,250 27,750 (41,417) (4,417)
========== ======= ======== ========= =========
Net(loss) 6 months ended June 30, 2009 (10,095) (10,095)
---------- ------- -------- --------- ---------
BALANCE JUNE 30,2009 9,250,000 $ 9,250 $ 27,750 $ (51,512) $ (14,512)
========== ======= ======== ========= =========
The accompanying notes are an integral part of these financial statements.
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DESCANSO AGENCY, INC.
(A Development Stage Company)
Statements of Cash Flows
Inception
Three Months Three Months Six Months Six Months (April 3, 2007)
Ending Ending Ending Ending Through
June 30, June 30, June 30, June 30, June 30,
2009 2008 2009 2008 2009
-------- -------- -------- -------- --------
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss) $ (4,475) $ (6,123) $(10,095) $(22,245) $(51,512)
Accounts Payable 2,400 -- 3,200 -- 6,100
Loan Payable 2,000 900 4,800 900 10,390
-------- -------- -------- -------- --------
Total cash provided by (used in)
operating activities (75) (5,223) (2,095) (21,345) (35,022)
======== ======== ======== ======== ========
CASH FLOW FROM INVESTING ACTIVITIES
Net cash provided by (used in) investing
activities -- -- -- -- --
-------- -------- -------- -------- --------
Total cash provided by (used in)
investing activities -- -- -- -- --
======== ======== ======== ======== ========
CASH FLOW FROM FINANCING ACTIVITIES
Issuance of Common Stock -- -- -- -- 37,000
-------- -------- -------- -------- --------
Total cash provided by (used in)
financing activities -- -- -- -- 37,000
======== ======== ======== ======== ========
Net increase (decrease) in cash (75) (5,223) (2,095) (21,345) 1,978
Cash at beginning of period 2,053 11,826 4,073 27,948 --
-------- -------- -------- -------- --------
Cash at end of period $ 1,978 $ 6,603 $ 1,978 $ 6,603 $ 1,978
======== ======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
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DESCANSO AGENCY, INC.
(A Development Stage Company)
Notes to Financial Statements
As at June 30, 2009
NOTE 1 - NATURE AND PURPOSE OF BUSINESS
Descanso Agency, Inc. (the "Company") was incorporated under the laws of the
State of Nevada on April 3, 2007. The Company is "a development stage company"
that intends to open travel agencies specializing in Mexican tourism. Its
activities to date have been limited to capital formation, organization and
development of its business plan and limited operations.
NOTE 2 - NATURE OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid debt instruments purchased with maturity
of three months or less to be cash equivalents.
REVENUE RECOGNITION
The Company considers revenue to be recognized at the time the service is
performed.
USE OF ESTIMATES
The preparation of the Company's financial statements requires management to
make estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from these
estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's short-term financial instruments consist of cash and cash
equivalents and accounts payable. The carrying amounts of these financial
instruments approximate fair value because of their short-term maturities.
Financial instruments that potentially subject the Company to a concentration
of credit risk consist principally of cash. During the period the Company did
not maintain cash deposits at financial institution in excess of the $250,000
limit covered by the Federal Deposit Insurance Corporation. The Company does not
hold or issue financial instruments for trading purposes nor does it hold or
issue interest rate or leveraged derivative financial instruments.
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DESCANSO AGENCY, INC.
(A Development Stage Company)
Notes to Financial Statements
As at June 30, 2009
NOTE 2 - NATURE OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
EARNINGS PER SHARE
Basic Earnings per Share ("EPS") is computed by dividing net income available to
common stockholders by the weighted average number of common stock shares
outstanding during the year. Diluted EPS is computed by dividing net income
available to common stockholders by the weighted-average number of common stock
shares outstanding during the year plus potential dilutive instruments such as
stock options and warrant. The effect of stock options on diluted EPS is
determined through the application of the treasury stock method, whereby
proceeds received by the Company based on assumed exercises are hypothetically
used to repurchase the Company's common stock at the average market price during
the period. Loss per share is unchanged on a diluted basis since the assumed
exercise of common stock equivalents would have an anti-dilutive effect.
INCOME TAXES
The Company uses the asset and liability method of accounting for income taxes
as required by SFAS No. 109 "Accounting for Income Taxes". SFAS 109 requires the
recognition of deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
basis of certain assets and liabilities. Deferred income tax assets and
liabilities are computed annually for the difference between the financial
statement and tax bases of assets and liabilities that will result in taxable or
deductible amounts in the future, based on enacted tax laws and rates applicable
to the periods in which the differences are expected to affect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. Income tax expense is the tax
payable or refundable for the period, plus or minus the change during the period
in deferred tax assets and liabilities.
Deferred income taxes may arise from temporary differences resulting from income
and expense items reported for financial accounting and tax purposes in
different periods. Deferred taxes are classified as current or non-current,
depending on the classification of the assets and liabilities to which they
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DESCANSO AGENCY, INC.
(A Development Stage Company)
Notes to Financial Statements
As at June 30, 2009
NOTE 2 - NATURE OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
relate. Deferred taxes arising from temporary differences that are not related
to an asset or liability are classified as current or non-current depending on
the periods in which the temporary differences are expected to reverse. The
Company had no significant deferred tax items arise during any of the periods
presented.
CONCENTRATION OF CREDIT RISK
The Company does not have any concentration of related financial credit risk.
RECENT ACCOUNTING PRONOUNCEMENTS
Recently issued accounting pronouncements will have no significant impact on the
Company and its reporting methods.
NOTE 3 - COMMON STOCK
Transactions, other than employees' stock issuance, are in accordance with
paragraph 8 of SFAS 123. Thus issuances shall be accounted for based on the fair
value of the consideration received. Transactions with employees' stock issuance
are in accordance with paragraphs (16-44) of SFAS 123. These issuances shall be
accounted for based on the fair value of the consideration received or the fair
value of the equity instruments issued, or whichever is more readily
determinable.
On June 28, 2007 the Company issued 3,750,000 shares of common stock to the
Company's sole officer and director, for cash in the amount of $0.004 per share
for a total of $15,000.
On June 29, 2007 the Company sold 1,000,000 shares of its common stock at $0.004
per share to 2 independent investors for proceeds of $4,000.
On October 22, 2007 the Company's offering pursuant to the SB-2 Registration
Statement filed by the company on September 4, 2007, and declared effective on
September 17, 2007, was completed selling 4,500,000 shares to 36 un-affiliated
investors for total proceeds to the company of $18,000.
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DESCANSO AGENCY, INC.
(A Development Stage Company)
Notes to Financial Statements
As at June 30, 2009
NOTE 4 - RELATED PARTY TRANSACTIONS
The sole officer and director of the Company may, in the future, become involved
in other business opportunities as they become available, thus he may face a
conflict in selecting between the Company and his other business opportunities.
The Company has not formulated a policy for the resolution of such conflicts.
The director was not paid for any underwriting services that he performed on
behalf of the Company with respect to the Company's SB-2 offering.
While the company is seeking additional capital, the president has advanced
funds to the company to pay for organizational costs incurred. These funds are
interest free with no specific terms of repayment. The balance due to the
president on June 30, 2009 was $10,390.
NOTE 5 - GOING CONCERN
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As shown in the accompanying financial
statements, the Company has no sales and has incurred a net loss of $51,512
since inception. The future of the Company is dependent upon its ability to
obtain financing and upon future profitable operations form the development of
its travel agencies. The financial statements do not include any adjustments
relating to the recoverability and classifications of recorded assets, or the
amounts of and classification of liabilities that might be necessary in the
event the Company cannot continue in existence.
Management has raised funds through an equity offering pursuant to the Company's
SB-2 registration statement with the U.S. Securities and Exchange Commission.
There is no guarantee that the capital raised will be sufficient or that any
future offerings, if necessary, would be successful.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
Statements contained herein which are not historical facts are forward-looking
statements as that term is defined by the Private Securities Litigation Reform
Act of 1995. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, forward-looking statements are
subject to risks and uncertainties that could cause actual results to differ
from those projected. The Company cautions investors that any forward-looking
statements made by the Company are not guarantees of future performance and
actual results may differ materially from those in the forward-looking
statements. Such risks and uncertainties include, without limitation:
established competitors who have substantially greater financial resources and
operating histories, regulatory delays or denials, ability to compete as a
start-up company in a highly competitive market, and access to sources of
capital.
The following discussion and analysis should be read in conjunction with our
financial statements and notes thereto included elsewhere in this Form 10-Q.
Except for the historical information contained herein, the discussion in this
Form 10-Q contains certain forward-looking statements that involve risks and
uncertainties, such as statements of our plans, objectives, expectations and
intentions. The cautionary statements made in this Form 10-Q should be read as
being applicable to all related forward-looking statements wherever they appear
in this Form 10-Q. The Company's actual results could differ materially from
those discussed here.
BUSINESS
Since inception, our core business has been the intention of establishing a
Mexican specialized travel service company focusing on the fastest growing
segment of the travel industry: wedding and party destination travel. This type
of destination travel is defined as taking the common wedding or party and
transporting the entire event and its hosts and guests to a foreign location.
Our specialty will include two types of destination travelers: small and large
travel parties seeking stimulating and entertaining bachelor and bachelorette
locations at larger hotels, and travelers seeking quiet romantic weddings and
holiday getaway short trips at small boutique hotels. We plan to utilize the
extensive operational background in the travel business of Raul Getino, our
founding principal and sole officer and director, with over eighteen years
experience in travel companies, in order to complete this stage and expand our
business plan. Our director has designed and implemented marketing campaigns for
other travel companies utilizing his extensive knowledge in providing upscale
weddings, and specialized romantic getaways to boutique hotel destinations in
Mexico. He has successfully marketed these specialized wedding and romantic tour
packages to travel companies and wedding planners in Mexico and the United
States prior to our incorporation.
We need to be able to generate sufficient cash inflows to implement our business
plan. In 2008 and 2009, world-wide negative financial events and a dramatic
reduction in investor and lender funding have affected our abilities to secure
new sources of cash flows. We have relied upon our director to loan funds
necessary to advance our business plan. We are now seeking outside sources of
funding to replace the funding provided by our director. While we seek
additional funding, we will attempt to implement our business plan at a reduced
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rate until new financial resources are available. We will focus on raising
additional monies through sales of our equity securities or through loans from
banks or third parties for our cash flow needs.
During the next twelve months, we plan to continue at a slow pace to develop our
business and the implementation of our plan of operations. We will delay renting
any new facilities and purchasing any new physical assets. We will pay our
director's fees as our cash flow dictates. We intend to delay for six months
starting our Internet website and beginning marketing our services. We will also
delay hiring any employees or contracting with independent travel agents until
we start our Internet website and begin our marketing. We expect to operate at a
loss during the next twelve months.
After securing new funding, we plan to utilize the services of our founder and
two contract agents to make sales and handle customer service. Agent
compensation will be based on a contract basis from any bookings created
exclusively by the agent on an equal commission split. We will provide our
home-based agents with an 800 phone line and internet service to access our
website for sales to the agent's customers and be available to all customers for
customer service. Customer service is expected to be minimal during this stage
due to the automated nature of the website and the anticipated low level of site
usage.
LIQUIDITY AND CAPITAL RESOURCES
Our cash balance at June 30, 2009 was $1,978. Our general and administrative
expenses are expected to average less than $800 per month for the next 12
months.
We anticipate that our operational, and general & administrative expenses for
the next 12 months will total approximately $9,000. We do not anticipate the
purchase or sale of any significant equipment. We also do not expect any
significant changes in the number of employees; we plan to add two contract
staff personnel. At this time we have not entered into any agreements or
negotiations with a sales and marketing entity to undertake marketing for us.
The foregoing represents our best estimate of our cash needs based on current
planning and business conditions. The exact allocation, purposes and timing of
any expenditure may vary significantly depending upon our progress with the
execution of our business plan.
In the event we are not successful in reaching our initial revenue targets,
additional funds may be required, and we may not be able to proceed with our
business plan for the development and marketing of our core services. Should
this occur, we would likely seek additional financing to support the continued
operation of our business. We anticipate that depending on market conditions and
our plan of operations, we would incur operating losses in the foreseeable
future. We base this expectation, in part, on the fact that we may not be able
to generate enough gross profit from the sale of our travel products and
services to cover our operating expenses.
RESULTS OF OPERATIONS
The Company's financial resources have been substantially reduced. We have
determined we need to raise additional monies through sales of our equity
securities or through loans from banks or third parties to continue our business
plans. No assurances can be given that we will be able to raise additional funds
to satisfy our financial requirements. It is possible we cannot continue with
our business operations as detailed in our original business plan because of a
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lack of financial resources. We may look for other potential business
opportunities that might be available to the Company. There can be no
certainties that there will be any other business opportunities available; nor
the nature of the business opportunity; nor any indication of the financial
resources required of any possible business opportunity.
We have generated no revenues since inception and have incurred $51,512 in net
losses through June 30, 2009.
The following table provides selected financial data about our company for the
period ended June 30, 2009.
Balance Sheet Data: 6/30/09
------------------- -------
Cash $ 1,978
Total assets $ 1,978
Total liabilities $ 16,490
Shareholders' equity $(14,512)
There was $37,000 cash provided by financing activities from inception through
June 30, 2009, this consisted of $15,000 from the sale of shares to our
director, $22,000 resulting from the sale of our common stock to 38 independent
investors.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
ITEM 4. CONTROLS AND PROCEDURES.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including
our principal executive officer and the principal financial officer (our
president), we have conducted an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures, as defined in Rules
13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the
end of the period covered by this report. Based on this evaluation, our
principal executive officer and principal financial officer concluded as of the
evaluation date that our disclosure controls and procedures were effective such
that the material information required to be included in our Securities and
Exchange Commission reports is accumulated and communicated to our management,
including our principal executive and financial officer, recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms relating to our company, particularly during
the period when this report was being prepared.
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CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There was no change in our internal controls over financial reporting that
occurred during the period covered by this report, which has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
We are not currently involved in any legal proceedings and we are not aware of
any pending or potential legal actions.
ITEM 1A. RISK FACTORS.
There has been no change to the Risk Factors as disclosed in the Company's
annual report on Form 10-K for December 31, 2008 as filed with the Securities
and Exchange Commission on March 4, 2009.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
There were no sales of unregistered securities during the period covered by this
report.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
There were no defaults upon senior securities during the period covered by this
report.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of security holders during the period
covered by this report.
ITEM 5. OTHER INFORMATION.
There was no information required to be disclosed on Form 8-K during the period
covered by this report.
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ITEM 6. EXHIBITS.
The following exhibits are included with this quarterly filing. Those marked
with an asterisk and required to be filed hereunder, are incorporated by
reference and can be found in their entirety in our original Form SB-2
Registration Statement, filed under SEC File Number 333-145876, at the SEC
website at www.sec.gov:
Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation*
3.2 Bylaws*
31.1 Rule 13a-14(a)/15d-14(a) Certification
31.2 Rule 13a-14(a)/15d-14(a) Certification
32.1 Certification Pursuant to 18 U.S.C. 1350
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
July 29, 2009 Descanso Agency, Inc.
/s/ Raul Getino
---------------------------------------------------
By: Raul Getino
(Chief Executive Officer, Chief Financial Officer,
Principal Accounting Officer, President, Secretary,
Treasurer & Sole Director)
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