UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
- ------------------------------------------------------------------------
(Mark one)
XX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2001
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT OF 1934
For the transition period from ______________ to __________
- ------------------------------------------------------------------------
Commission File Number: 0-30669
-------
Del Cerro Enterprises, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada 88-0453649
---------------------- ----------------------
(State of incorporation) (IRS Employer ID Number)
200-675 West Hastings Street, Vancouver, British Columbia V6B 1N2
-----------------------------------------------------------------
(Address of principal executive offices)
(604) 408-1990
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 ( )
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date: May 3, 2002: 4,189,000
Transitional Small Business Disclosure Format (check one): YES ( ) NO (X)
Del Cerro Enterprises, Inc.
Form 10-QSB for the Quarter ended December 31, 2001
Table of Contents
Page
Part I - Financial Information ----
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or 10
Plan of Operation
Part II - Other Information
Item 1 - Legal Proceedings 11
Item 2 - Changes in Securities 11
Item 3 - Defaults on Senior Securities 11
Item 4 - Submission of Matters to a 11
Vote of Security Holders
Item 5 - Other Information 11
Item 6 - Exhibits and Reports on Form 8-K 11
Signatures 11
2
Item 1 - Part 1 - Financial Statements
DEL CERRO ENTERPRISES, INC.
(a development stage company)
BALANCE SHEETS
December 31, 2001 and 2000
December 31, December 31,
2001 2000
---- ----
ASSETS
------
Current Assets
Cash on hand and in bank $ - $ 777
------- ---------
Total current assets - 777
------- ---------
TOTAL ASSETS $ - $ 777
======= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities
Accounts payable - trade $ - $ -
------- ---------
Total current liabilities - -
------- ---------
Commitments and contingencies
Stockholders' Equity
Common stock - $0.001 par value.
50,000,000 shares authorized.
4,189,000 and 8,449,000 shares
issued and outstanding, respectively. 4,189 8,449
Additional paid-in capital 7,711 3,451
Deficit accumulated during the (11,900) (11,123)
development phase ------- -------
Total stockholders' equity - 777
------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ - $ 777
======== =========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
3
DEL CERRO ENTERPRISES, INC.
(a development stage company)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
Three months ended December 31, 2001 and 2000 and
Period from March 10, 1999 (date of inception) through December 31, 2001
Period from
March 10, 1999
Three months Three months (date of inception)
ended ended through
December 31, December 31, December 31,
2001 2000 2001
---- ---- ----
Revenues $ - $ - $ -
---------- ---------- ------------
Operating Expenses
Selling expenses - - -
General and administrative - 777 11,900
expenses ---------- ---------- ------------
Total operating expenses - 777 11,900
---------- ---------- ------------
Loss from operations - (777) (11,900)
Other income - - -
---------- ---------- ------------
Loss before provision - (777) (11,900)
for income taxes
Provision for income taxes - - -
---------- ---------- ------------
Net Loss - (777) (11,900)
Other comprehensive income - - -
---------- ---------- ------------
Comprehensive Loss $ - $ (777) $ (11,900)
========== =========== ===========
Net loss per weighted-
average share of common
stock outstanding,
calculated on Net Loss -
basic and fully diluted nil nil nil
========== ========== ===========
Weighted-average
number of shares of common
stock outstanding 4,189,000 8,449,000 7,736,995
========== =========== ============
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
4
DEL CERRO ENTERPRISES, INC.
(a development stage company)
STATEMENTS OF CASH FLOWS
Three months ended December 31, 2001 and 2000 and
Period from March 10, 1999 (date of inception) through December 31, 2001
Period from
March 10, 1999
Three months Three months (date of inception)
ended ended through
December 31, December 31, December 31,
2001 2000 2001
---- ---- ----
Cash Flows from Operating Activities
Net loss for the period $ - $ (777) $ (11,900)
Adjustments to reconcile net
loss to net cash
provided by operating activities
Depreciation - - -
Common stock issued for services - - 6,000
------- -------- ----------
Net cash used in operating - (777) (5,900)
activities ------- -------- ----------
Cash Flows from Investing - - -
Activities ------- -------- ----------
Cash Flows from Financing Activities
Proceeds from sales - - 5,900
of common stock ------- -------- ----------
Net cash used in financing - - 5,900
activities ------- -------- ----------
Increase (Decrease) in Cash - - -
Cash at beginning of period - 1,554 -
-------- -------- ----------
Cash at end of period $ - $ 777 $ -
======== ========= ==========
Supplemental Disclosure of
Interest and Income Taxes Paid
Interest paid for the period $ - $ - $ -
======== ======== ==========
Income taxes paid for the period $ - $ - $ -
======== ======== ==========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
5
DEL CERRO ENTERPRISES, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS
Del Cerro Enterprises, Inc. (Company) was incorporated on March 10, 1999
in accordance with the laws of the State of Nevada. The Company was
initially formed for the purpose of developing a high performance driving
school in conjunction with annual nationwide road races. In the 4th quarter
of 2001, the Company experienced a change in management control and,
accordingly, abandoned this initial business plan. The Company has had no
substantial operations or substantial assets since inception.
Due to the lack of sustaining operations from inception, the Company is
considered in the development stage and, as such, has generated no
significant operating revenues and has incurred cumulative operating losses
of approximately $11,900.
The Company follows the accrual basis of accounting in accordance with
generally accepted accounting principles and has a year-end of September 30.
During interim periods, the Company follows the accounting policies set
forth in its Annual Report Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934 on Form 10-KSB filed with the U. S.
Securities and Exchange Commission. The information presented herein may
not include all disclosures required by generally accepted accounting
principles and the users of financial information provided for interim
periods should refer to the annual financial information and footnotes
contained in its Annual Report Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934 on Form 10-KSB when reviewing the interim
financial results presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the instructions for Form 10-QSB, are unaudited
and contain all material adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial condition, results of
operations and cash flows of the Company for the respective interim periods
presented. The current period results of operations are not necessarily
indicative of results which ultimately will be reported for the full fiscal
year ending September 30, 2002.
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.
NOTE B - GOING CONCERN UNCERTAINTY
The Company is fully dependent upon either future sales of securities or
upon its current management and/or advances or loans from controlling
shareholders or corporate officers to provide sufficient working capital
to preserve the integrity of the corporate entity during the development
phase.
There is no assurance that the Company will be able to obtain additional
funding through the sales of additional securities or, that such funding,
if available, will be obtained on terms favorable to or affordable by the
Company. It is the intent of management and controlling shareholders to
provide sufficient working capital necessary to support and preserve the
integrity of the corporate entity.
However, there is no legal obligation for either management and/or
controlling shareholders to provide such additional funding.
6
DEL CERRO ENTERPRISES, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE C - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Cash and cash equivalents
-------------------------
The Company considers all cash on hand and in banks, including accounts
in book overdraft positions, certificates of deposit and other highly-liquid
investments with maturities of three months or less, when purchased, to be
cash and cash equivalents.
2. Organization costs
-----------------
The Company has adopted the provisions of AICPA Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" whereby all organization
and initial costs incurred with the incorporation and initial capitalization
of the Company were charged to operations as incurred.
3. Research and development expenses
---------------------------------
Research and development expenses are charged to operations as incurred.
4. Advertising expenses
--------------------
Advertising and marketing expenses are charged to operations as incurred.
5. Income Taxes
------------
The Company utilizes the asset and liability method of accounting for
income taxes. At December 31, 2001 and 2000, the deferred tax asset and
deferred tax liability accounts, as recorded when material, are entirely
the result of temporary differences. Temporary differences represent
differences in the recognition of assets and liabilities for tax and
financial reporting purposes, primarily accumulated depreciation and
amortization. As of December 31, 2001 and 2000, respectively, the
deferred tax asset is related solely to the Company's net operating loss
carryforward and is fully reserved.
6. Earnings (loss) per share
-------------------------
Basic earnings (loss) per share is computed by dividing the net income
(loss) by the weighted-average number of shares of common stock and common
stock equivalents (primarily outstanding options and warrants). Common
stock equivalents represent the dilutive effect of the assumed exercise
of the outstanding stock options and warrants, using the treasury stock
method. The calculation of fully diluted earnings (loss) per share assumes
the dilutive effect of the exercise of outstanding options and warrants at
either the beginning of the respective period presented or the date of
issuance, whichever is later. As of December 31, 2001 and 2000,
respectively, the Company had no warrants and/or options outstanding.
NOTE D - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash, accounts receivable, accounts payable and
notes payable, as applicable, approximates fair value due to the short
term nature of these items and/or the current interest rates payable in
relation to current market conditions.
7
DEL CERRO ENTERPRISES, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE E - INCOME TAXES
The components of income tax (benefit) expense for the three months ended
December 31, 2001 and 2000 and for the period from March 10, 1999
(date of inception) through December 31, 2001, respectively, are as follows:
Three months Three months
ended ended
December 31, December 31,
2001 2000 Cumulative
---- ---- ----------
Federal:
Current $ - $ - $ -
Deferred - - -
------- ------- -------
- - -
------- ------- -------
State:
Current $ - $ - $ -
Deferred - - -
------- ------- -------
- - -
------- ------- -------
Total $ - $ - $ -
======= ======= =======
As of December 31, 2001, the Company has a net operating loss carryforward
of approximately $-0- to offset future taxable income. Subject to current
regulations, this carryforward will begin to expire in 2015. The amount
and availability of the net operating loss carryforwards may be subject to
limitations set forth by the Internal Revenue Code. Factors such as the
number of shares ultimately issued within a three year look-back period;
whether there is a deemed more than 50 percent change in control; the
applicable long-term tax exempt bond rate; continuity of historical business;
and subsequent income of the Company all enter into the annual computation
of allowable annual utilization of the carryforwards.
The Company's income tax expense (benefit) for the three months ended
December 31, 2001 and 2000 and for the period from March 10, 1999
(date of inception) through December 31, 2001, respectively, differed from the
statutory federal rate of 34 percent as follows:
Three months Three months
ended ended
December 31, December 31,
2001 2000 Cumulative
---- ---- ----------
Statutory rate applied $ - $ (265) $ (4,045)
to loss before income taxes
Increase (decrease) in income
taxes resulting from:
State income taxes - - -
Other, including reserve for - 265 4,045
deferred tax asset ----- ------- -------
Income tax expense $ - $ - $ -
====== ======= =======
8
DEL CERRO ENTERPRISES, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE E - INCOME TAXES - Continued
Temporary differences, consisting primarily of statutory deferrals of
expenses for organizational costs and statutory differences in the
depreciable lives for property and equipment, between the financial
statement carrying amounts and tax bases of assets and liabilities give
rise to deferred tax assets and liabilities as of December 31, 2001 and
2000, respectively:
December 31, December 31,
2001 2000
---- ----
Deferred tax assets
Net operating loss carryforwards $4,045 $4,120
Less valuation allowance (4,045) (4,120)
------ ------
Net Deferred Tax Asset $ - $ -
====== ======
NOTE E - COMMON STOCK TRANSACTIONS
On March 15, 2000, the Company's Board of Directors approved and
implemented a 71 for 1 forward stock split on the issued and outstanding
shares of common stock. This action caused the issued and outstanding
shares to increase from 119,000 to 8,449,000. The effect of this action
is reflected in the accompanying financial statements as of the first day
of the first period presented.
On March 24, 2000, the Company issued an aggregate of 4,260,000 post-
forward split shares (60,000 pre-forward split shares) of restricted,
unregistered common stock to two officers for administrative services
and services related to the development and implementation of the Company's
business plan. These transactions were cumulatively valued at approximately
$6,000, which approximates the fair value of the services provided. These
amounts are charged to operations in the accompanying financial statements.
During September 2000, the Company successfully sold an aggregate 4,189,000
post-forward split shares (59,000 pre-forward split shares) of restricted,
unregistered common stock for gross proceeds of $5,900, pursuant to a private
placement memorandum to non-affiliated private investors. The Company relied
upon Section 4(2) of The Securities Act of 1933, as amended, for an exemption
from registration on these shares.
On August 2, 2001, the Company's officers surrendered and cancelled an
aggregate 4,260,000 shares of post-forward split shares of common stock to
the Company for no consideration. The effect of this action was to
reallocate the par value of the surrendered shares to additional paid-in
capital.
9
Part I - Item 2
Management's Discussion and Analysis of Financial Condition and Results
of Operations
(1) Caution Regarding Forward-Looking Information
Certain statements contained in this annual filing, including, without
limitation,statements containing the words "believes", "anticipates",
"expects" and words of similar import, constitute forward-looking
statements. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results,
performance or achievements of the Company, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements.
Such factors include, among others, the following: international, national
and local general economic and market conditions: demographic changes; the
ability of the Company to sustain, manage or forecast its growth; the
ability of the Company to successfully make and integrate acquisitions; raw
material costs and availability; new product development and introduction;
existing government regulations and changes in, or the failure to comply
with, government regulations; adverse publicity; competition; the loss of
significant customers or suppliers; fluctuations and difficulty in
forecasting operating results; changes in business strategy or development
plans; business disruptions; the ability to attract and retain qualified
personnel; the ability to protect technology; and other factors referenced
in this and previous filings.
Given these uncertainties, readers of this Form 10-QSB and investors are
cautioned not to place undue reliance on such forward-looking statements.
The Company disclaims any obligation to update any such factors or to
publicly announce the result of any revisions to any of the forward-looking
statements contained herein to reflect future events or developments.
(2) Results of Operations, Liquidity and Capital Resources
The Company has no assets, liabilities or operations as of March 31, 2002
and has a $-0- cash balance. to sustain corporate operations until such
time as Management can raise the funding necessary to advance its business
plan. The losses of approximately $11,900 through December 31, 2001 were
due to operating expenses including licenses and fees, accounting and audit
fees and office expenses. Sales of the Company's equity securities in
prior periods have allowed the Company to maintain a positive cash balance.
Due to a change in management during the 4th quarter of 2001, the Company
is in the process of developing a new business plan, the successful
implementation of which is not determinable at the date of this filing.
As of the date of this filing, the Company has no operations, assets or
liabilities. Accordingly, if no funding is received during the next twelve
months, we will be forced to rely on existing cash in the bank and may
become dependent upon management and/or significant shareholders to provide
sufficient working capital to preserve the integrity of the corporate entity
at this time. As of the date of this filing, management and significant
shareholders have verbally committed, if necessary, to provide sufficient
working capital necessary to support and preserve the integrity of the
corporate entity. However, management and/or significant shareholders have
no formal commitments or arrangements to advance or loan funds to Del
Cerro.
In such a restricted cash flow scenario, we would be unable to complete our
business plan steps, and would, instead, delay all cash intensive activities.
Without necessary cash flow, we may be dormant during the next twelve months,
or until such time as necessary funds could be raised in the equity
securities market.
10
Part II - Other Information
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
On August 2, 2001, Rodger Ward and his wife, Sherrie Ward, the Company's
former officers surrendered and cancelled an aggregate 4,260,000 shares
of post-forward split shares of common stock to the Company for no
consideration. The effect of this action was to reallocate the par value
of the surrendered shares to additional paid-in capital.
Item 3 - Defaults on Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
Exhibits - None
Reports on Form 8-K - None
- -------------------------------------------------------------------------
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.
Del Cerro Enterprises, Inc.
May 3, 2002 /s/ Ted J. Burylo
--------------------------
Ted J. Burylo
President and Director
May 3, 2002 /s/ Clive Brookes
--------------------------
Clive Brookes
Secretary and Director
11