U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[x] Quarterly Report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 2004.
--------------------------------------------------------------------------
[ ] Transition Report under Section 13 or 15(d)of the Exchange Act For the
Transition Period from ________ to ___________
--------------------------------------------------------------------------
Commission File Number: 000-50344
--------------------------------------------------------------------------
Neighborhood Connections, Inc.
--------------------------------------------------
(Name of Small Business Issuer in its charter)
Nevada 16-1630142
------------------------------- ----------------------------------
(State or other jurisdiction of I.R.S. Employer Identification No.
incorporation or organization)
6802 San Remo, Houston, Texas 77083
--------------------------------------------- -------------
(Address of principal executive offices) (zip code)
(281) 575-1208
---------------------------------------------------------
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 of 1934 during the past 12
months (or 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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the Registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Common Stock, $0.001 par value per share, 60,000,000 shares authorized,
6,420,000 issued and outstanding as of June 30, 2004. Preferred Stock,
$0.001 par value per share, 15,000,000 shares authorized, none issued nor
outstanding as of June 30, 2004.
Traditional Small Business Disclosure Format (check one)
Yes [ ] No [X]
1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements................................. 3
Independent Accountants' Review Report............... 4
Balance Sheet (unaudited)............................ 5
Statements of Operations (unaudited)................. 6
Statements of Cash Flows (unaudited)................. 7
Notes to Financial Statements........................ 8-9
Item 2. Management's Discussion and Analysis of Plan
of Operation........................................ 10
Item 3. Controls and Procedures.............................. 14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................... 15
Item 2. Changes in Securities and Use of Proceeds............ 15
Item 3. Defaults upon Senior Securities...................... 15
Item 4. Submission of Matters to a Vote
of Security Holders................................. 15
Item 5. Other Information..................................... 15
Item 6. Exhibits and Reports on Form 8-K...................... 15
Signatures...................................................... 16
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS
As prescribed by Item 310 of Regulation S-B, the independent auditor has
reviewed these unaudited interim financial statements of the registrant
for the six months ended June 30, 2004. The financial statements reflect
all adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim period presented. The unaudited
financial statements of registrant for the six months ended June 30, 2004,
follow.
3
Beckstead and Watts, LLP
- ----------------------------
Certified Public Accountants
3340 Wynn Road, Suite B
Las Vegas, NV 89102
702.257.1984
702.362.0540 fax
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
August 12, 2004
Board of Directors
Neighborhood Connections, Inc.
(a Development Stage Company)
Las Vegas, NV
We have reviewed the accompanying balance sheet of Neighborhood Connections,
Inc. (a Nevada corporation) (a development stage company) as of June 30, 2004
and the related statements of operations for the three and six months ended
June 30, 2004 and 2003 and for the period September 18, 2002 (Inception) to
June 30, 2004, and statements of cash flows for the six months ended June 30,
2004 and 2003 and for the period September 18, 2002 (Inception) to June 30,
2004. These financial statements are the responsibility of the Company's
management.
We conducted our reviews in accordance with standards established by the Public
Company Accounting Oversight Board (United States). A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which will
be performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying financial statements referred to above
for them to be in conformity with generally accepted accounting principles
in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 3 to the financial
statements, the Company has had limited operations and has not commenced
planned principal operations. This raises substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Beckstead and Watts, LLP
4
Neighborhood Connections, Inc.
(a Development Stage Company)
Balance Sheet
(unaudited)
Balance Sheet
March 31,
2004
-------------
Assets
Current assets:
Cash and equivalents $ 94
-------------
94
-------------
$ 94
=============
Liabilities and Stockholders' Equity
Current liabilities: -
-------------
Stockholders' equity:
Series A preferred stock, $0.001 par value, 5,000,000 shares
authorized, zero shares issued or outstanding -
Series B preferred stock, $0.001 par value, 5,000,000 shares
authorized, zero shares issued or outstanding -
Series C preferred stock, $0.001 par value, 5,000,000 shares
authorized, zero shares issued or outstanding -
Common stock, $0.001 par value, 60,000,000 shares authorized,
6,420,000 shares issued and outstanding 6,420
Additional paid-in capital 12,780
Earnings (Deficit) accumulated during development stage (19,106)
-------------
94
-------------
$ 94
=============
The accompanying Notes are an integral part of these financial statements.
5
Neighborhood Connections, Inc.
(a Development Stage Company)
Statement of Operations
(unaudited)
For the Three Months and Six Months Ending June 30, 2004 and 2003
and For the Period September 18, 2002 (Inception) to June 30, 2004
Statement of Operations
Three Months Ending Six Months Ending Sept. 18, 2002
June 30, June 30, (Inception) to
-------------------- -------------------- June 30,
2004 2003 2004 2003 2004
--------- --------- --------- --------- -----------------
Revenue $ - $ - $ - $ - $ 1,050
-------- -------- --------- --------- -------------
Expenses:
Impairment of
goodwill - - 3,600 - 3,600
Organizational
costs - - - 415 1,821
General and
administrative
expenses -
related party - - - - 2,000
General and
administrative
expenses 30 30 954 60 12,735
-------- -------- --------- --------- ---------------
Total expenses 30 30 4,554 475 20,156
-------- -------- --------- --------- ---------------
Net (loss) $ (30) $ (30) $ (4,554) $ (475) $ (19,106)
======== ======== ========= ========= ===============
Weighted average
number of
common shares
outstanding 6,420,000 5,000,000 6,420,000 5,000,000
========= ========= ========= =========
Net (loss)
per share $ (0.00) $ (0.00) $ (0.00) $ (0.00)
======== ======== ========= =========
The accompanying Notes are an integral part of these financial statements.
6
Neighborhood Connections, Inc.
(a Development Stage Company)
Statements of Cash Flows
For the Six Months Ending June 30, 2004 and 2003
and For the Period September 18, 2002 (Inception) to June 30, 2004
Statements of Cash Flows
September 18, 2002
Six Months Ending (Inception) to
June 30, June 30,
2004 2003 2004
----------- ----------- ------------------
Cash flows from operating activities
Net (loss) $ (4,554) $ (30) $ (19,106)
Adjustments to reconcile net
(loss) to net cash (used) by
operating activities:
----------- ----------- ----------------
Net cash (used) by operating
activities (4,554) (30) (19,106)
----------- ----------- ----------------
Cash flows from investing activities
Net cash used by investing
activities - - -
----------- ----------- ---------------
Cash flows from financing activities
Issuance of common stock - - 19,200
----------- ----------- ---------------
Net cash provided by financing
activities - - 19,200
----------- ----------- ---------------
Net increase in cash (4,554) (30) 94
Cash - beginning 4,648 2,273 -
----------- ----------- ---------------
Cash - ending $ 94 $ 2,243 $ 94
=========== =========== ===============
Supplemental disclosures:
Interest paid $ - $ - $ -
=========== =========== ===============
Income taxes paid $ - $ - $ -
=========== =========== ===============
The accompanying Notes are an integral part of these financial statements.
7
Neighborhood Connections, Inc.
(A Development Stage Company)
Notes
The condensed 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
condensed interim financial statements be read in conjunction with the
financial statements of the Company for the year ended December 31, 2003 and
notes thereto included in the Company's 10-KSB annual report. The Company
follows the same accounting policies in the preparation of interim reports.
Results of operation for the interim period are not indicative of annual
results.
Note 2 - Significant accounting policies and procedures
Organization
- ------------
On March 19, 2004, the Company entered into an "Acquisition Agreement and Plan
of Merger" whereby the Company has acquired all outstanding shares of common
stock of JCG, Inc. from its sole stockholder in an exchange for $3,600 in cash.
The business combination has been accounted for use the purchase method. The
Company recorded goodwill of $3,600 in connection with the acquisition.
Goodwill
- --------
The Financial Accounting Standards Board ("FASB") recently issued Statements of
Financial Accounting Standards Nos. 141 "Business Combinations", 142 "Goodwill
and Other Intangible Assets? and 144 ?Accounting for the Impairment or Disposal
of Long-Lived Assets". ("SFAS 141", "SAFS 142" and "SFAS 144"). All of these
pronouncements are effective for fiscal years beginning after December 31, 2001.
Under SFAS 141, a company must use the purchase method of accounting for all
business acquisitions. SFAS 142 requires a company to periodically evaluate
impairment (as opposed to amortize) goodwill and intangible assets.
Effective January 1, 2004, the Company adopted SFAS 142 and as such, will test
the goodwill balance for impairment at least on an annual basis. Such an
analysis will be based upon the expected future cash flows of JCG, Inc.
Goodwill resulting from the acquisition of JCG, Inc. was analyzed during the
period ended March 31, 2004 and an impairment was recognized in the amount
of $3,600.
8
Neighborhood Connections, Inc.
(A Development Stage Company)
Notes
Note 3 - Going concern
These financial statements have been prepared in accordance with generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and the satisfaction of liabilities
and commitments in the normal course of business. As at June 30, 2004, the
Company has recognized minimal revenue to date and has accumulated operating
losses of approximately $19,106 since inception. The Company's ability to
continue as a going concern is contingent upon the successful completion of
additional financing arrangements and its ability to achieve and maintain
profitable operations. Management plans to raise equity capital to finance
the operating and capital requirements of the Company. Amounts raised will be
used to further development of the Company's products, to provide financing
for marketing and promotion, to secure additional property and equipment, and
for other working capital purposes. While the company is expending its best
efforts to achieve the above plans, there is no assurance that any such
activity will generate funds that will be available for operations.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. These financial statements do not include any
adjustments that might arise from this uncertainty.
Note 4 - Related party transactions
The Company does not lease or rent any property. A director provides office
services without charge. 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 5 - Stockholders' Equity
The Company is authorized to issue 60,000,000 shares of its $0.001 par value
common stock, 5,000,000 shares of its $0.001 par value Series A preferred
stock, 5,000,000 shares of its $0.001 par value Series B preferred stock, and
5,000,000 shares of its $0.001 par value Series C preferred shares.
For the six months ending June 30, 2004, there have been no other issuances of
common and or preferred stock.
9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS
Neighborhood Connections, Inc. is a development stage pay telephone service
company which provides management for the collection of pay telephone coin
revenues.
As at June 30, 2004, the Company has not recognized significant revenue to
date and has accumulated operating losses of approximately $19,106 since
inception. The Company's ability to continue as a going concern is contingent
upon the successful completion of additional financing arrangements and its
ability to achieve and maintain profitable operations. The financial
statements have been prepared assuming the Company will continue to operate as
a going concern which contemplates the realization of assets and the
settlement of liabilities in the normal course of business. No adjustment
has been made to the recorded amount of assets or the recorded amount or
classification of liabilities which would be required if the Company
were unable to continue its operations.
Results of Operations
- ---------------------
For the three months ended June 30, 2004, the Company generated no revenues
as compared to no revenues for the same period last year. For the three
months ended June 30, 2004, the Company incurred a net loss of $(30) as
compared to net loss of $(30) for the same period last year. For the six
months ended June 30, 2004, the Company generated no revenues as compared to
no revenues for the same period last year. For the six months ended June 30,
2004, the Company incurred a net loss of $(4,554) as compared to net loss of
$(475) for the same period last year. The increase in net loss for the first
six months included $3,600 as impairment of goodwill to purchase, JCG, Inc. a
fully reporting company, and general and administrative expenses of $924.
Since the Company's inception the Company has lost $19,106.
Plan of Operation
- -----------------
Management does not believe that the Company will be able to generate
significant profit during the coming year, unless the company can define
a better strategy to market its pay telephone services. Management does
not believe the company will generate any significant profit in the near
future, as developmental, and marketing costs will most likely exceed any
anticipated revenues.
10
Liquidity and Capital Resources
- -------------------------------
The Company is authorized to issue 60,000,000 shares of its $0.001 par value
common stock and 15,000,000 shares of its $0.001 par value preferred stock.
On September 18, 2002, the Company issued 5,000,000 shares of its $.001 par
value common stock for cash of $5,000.
On June 30, 2003, the Company issued 1,420,000 shares of its $0.001 par value
common stock at $0.01 per share for cash of $14,200. The shares were issued
pursuant to a Securities and Exchange Commission Rule 504 offering. Of the
total, $1,420 is considered common stock, and $12,780 is considered additional
paid-in capital.
On June 30, 2003, Neighborhood was issued a permit to sell securities by the
State of Nevada, pursuant to our application for registration by qualification
of our offering of Common Stock in that state (See Exhibit 99 "Notice of
Effectiveness"). The application for registration by qualification was filed
pursuant to the provisions of NRS 90.490, which requires the public filing and
delivery to investors of a substantive disclosure document before sale. On
June 30, 2003, Neighborhood completed a private offering of shares of our
common stock pursuant to Regulation D, Rule 504 of the Securities Act of 1933,
as amended, and the registration by qualification of said offering in the
State of Nevada, whereby Neighborhood sold 1,420,000 shares of Common Stock
for an accumulated total of $14,200 to approximately 40 unaffiliated
shareholders of record, none of whom were or are officers, directors or
affiliates of the Company. The entire offering was conducted exclusively in
the State of Nevada, pursuant to the permit issued by the State of Nevada.
The Company filed an original Form with the Securities and Exchange Commission
on or about July 7, 2003.
As of June 30, 2004, therefore, the number of common shares issued and
outstanding is six million four hundred twenty thousand (6,420,000).
The Company does not have any preliminary agreements or understandings
between the company and its stockholders/officers and directors with
respect to loans or financing to operate the company. The Company
currently has no arrangements or commitments for accounts and accounts
receivable financing.
11
Employees
- ---------
The Company currently has one employee, who also serves an officer and
director of the Company. The Company does not plan to hire any
additional employees until it can become an profitable entity.
The Company has no material commitments for capital expenditures nor
does it foresee the need for such expenditures over the next year.
Market For Company's Common Stock
(i) Market Information
- ----------------------
(1) On or about January 28, 2003, the common stock of the Company was cleared
for trading on the National Quotation Bureau "Pink Sheets." No shares have
traded since the Company began trading on the Pink Sheets.
(2)(i) There is currently no Common Stock which is subject to outstanding
options or warrants to purchase, or securities convertible into, the Company's
Common Stock.
(ii) There is currently no common Stock of the Company which could be sold
under Rule 144 under the Securities Act of 1933, as amended, or that the
registrant has agreed to register for sale by the security holders.
(iii) There is currently no common equity that is being or is proposed to be
publicly offered by the registrant, the offering of which could have a material
effect on the market price of the issuer's common equity.
(iv) The Company did not repurchase any of its shares during the first quarter
of the fiscal year covered by this report.
(ii) Dividends
- --------------
Holders of common stock are entitled to receive such dividends as the board
of directors may from time to time declare out of funds legally available for
the payment of dividends. No dividends have been paid on our common stock, and
we do not anticipate paying any dividends on our common stock in the foreseeable
future.
12
Forward-Looking Statements
- - --------------------------
This Form 10-QSB includes "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. All statements, other than
statements of historical facts, included or incorporated by reference in this
Form 10-QSB which address activities, events or developments which the Company
expects or anticipates will or may occur in the future, including such things
as future capital expenditures (including the amount and nature thereof),
finding suitable merger or acquisition candidates, expansion and growth of the
Company's business and operations, and other such matters are forward-looking
statements. These statements are based on certain assumptions and analyses
made by the Company in light of its experience and its perception of
historical trends, current conditions and expected future developments as
well as other factors it believes are appropriate in the circumstances.
However, whether actual results or developments will conform with the
Company's expectations and predictions is subject to a number of risks and
uncertainties, general economic market and business conditions; the business
opportunities (or lack thereof) that may be presented to and pursued by the
Company; changes in laws or regulation; and other factors, most of which
are beyond the control of the Company.
This Form10-QSB contains statements that constitute "forward-looking
statements." These forward-looking statements can be identified by the use of
predictive, future-tense or forward-looking terminology, such as "believes,"
"anticipates," "expects," "estimates," "plans," "may," "will," or similar
terms. These statements appear in a number of places in this Registration and
include statements regarding the intent, belief or current expectations of
the Company, its directors or its officers with respect to, among other
things: (i) trends affecting the Company's financial condition or results of
operations for its limited history; (ii) the Company's business and growth
strategies; and, (iii) the Company's financing plans. Investors are cautioned
that any such forward-looking statements are not guarantees of future
performance and involve significant risks and uncertainties, and that actual
results may differ materially from those projected in the forward-looking
statements as a result of various factors. Factors that could adversely
affect actual results and performance include, among others, the Company's
limited operating history, dependence on continued growth in the irrigation
industry, potential fluctuations in quarterly operating results and expenses,
government regulation dealing with irrigation systems, technological change
and competition.
Consequently, all of the forward-looking statements made in this Form 10-QSB
are qualified by these cautionary statements and there can be no assurance
that the actual results or developments anticipated by the Company will be
realized or, even if substantially realized, that they will have the expected
consequence to or effects on the Company or its business or operations. The
Company assumes no obligations to update any such forward-looking statements.
13
Item 3. Controls and Procedures
As of the end of the period covered by this report, the Company conducted an
evaluation, under the supervision and with the participation of the principal
executive officer and principal financial officer, of the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act")). Based on this
evaluation, the principal executive officer and principal financial officer
concluded that the Company's disclosure controls and procedures are effective
to ensure that information required to be disclosed by the Company in reports
that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms. There was no change in the Company's
internal control over financial reporting during the Company's most recently
completed fiscal quarter that has materially affected, or is reasonably likely
to materially affect, the Company's internal control over financial reporting.
14
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is not a party to any legal proceedings.
ITEM 2. Changes in Securities and Use of Proceeds
None.
ITEM 3. Defaults upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
During the quarter ended, no matters were submitted to the Company's
security holders.
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Title of Document
-----------------------------------------------
31.1 Certifications of the Chief Executive Officer and Chief Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certifications of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
The Company filed a Current Report dated March 19, 2004, pursuant to Item 1
("Changes in Control of Registrant"); Item 2 ("Acquisition or Disposition of
Assets"); Item 5 ("Other Events"); and, Item 7. ("Exhibits"), entitled "Audited
Financial Statements" and "Agreement and Plan of Merger between Neighborhood
Connections, Inc. and JCG, Inc."
15
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by
the undersigned, thereunto duly authorized.
Neighborhood Connections, Inc.
------------------------------
(Registrant)
Dated: August 16, 2004 By: /s/ Ruth Selmon
--------------- ------------------------------
Ruth Selmon
Chief Executive Officer
Chief Financial Officer
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.
NEIGHBORHOOD CONNECTIONS, INC.
Date: August 16, 2004 By: /s/ Ruth Selmon
--------------- -------------------------------
Ruth Selmon
Chief Executive Officer
16