U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For Quarter Ended: JUNE 30, 2004
Commission File Number: 0-29507
TULVINE SYSTEMS, INC.
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(Exact name of small business issuer as specified in its charter)
DELAWARE 52-2102141
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(State of Incorporation) (IRS Employer ID No)
7633 EAST 63rd PLACE, SUITE 220, TULSA, OKLAHOMA 74133
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(Address of principal executive office)
(918) 459-8469
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(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 [ ].
The number of shares outstanding of registrant's common stock, par value $.0001
per share, as of July 20, 2004 was 5,000,000 shares.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X].
TULVINE SYSTEMS, INC.
INDEX
Page
No.
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Part I Financial Information (unaudited)
Item 1. Financial Statements
Balance Sheet - June 30, 2004 3
Statements of Operations - 4
Three Months Ended June 30, 2004 and 2003
Statements of Operations - Six Months Ended 5
June 30, 2004 and 2003, and the period from
inception (October 21, 1999) to
June 30, 2004
Statements of Cash Flows - 6
Six Months Ended June 30, 2004 and 2003, and
the period from inception (October 21, 1999)
to June 30, 2004
Notes to Financial Statements 7-9
Item 2. Managements Discussion and Analysis or Plan of Operation 10-11
Item 3. Controls and Procedures 12
Part II Other Information 13-15
2
TULVINE SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JUNE 30, 2004
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 500
Marketable securities 127,000
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Total assets $ 127,500
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 13,350
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Total liabilities 13,350
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STOCKHOLDERS' EQUITY
Common stock, $.0001 par value. Authorized 100,000,000 shares; 500
issued and outstanding 5,000,000 shares
Additional paid in capital 125,500
Accumulated deficit (11,850)
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Total stockholders' equity 114,150
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Total liabilities and stockholders' equity $ 127,500
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See accompanying notes to financial statements.
3
TULVINE SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2004 AND 2003
(UNAUDITED)
THREE MONTHS ENDED JUNE 30,
2004 2003
------------ ------------
SALES AND REVENUES $ -- $ --
COST OF SALES -- --
------------ ------------
GROSS PROFIT -- --
OTHER (INCOME) EXPENSE
General and administrative expense 13,350 --
Unrealized gain on marketable securities (2,000) --
------------ ------------
11,350 --
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EARNINGS (LOSS) BEFORE INCOME TAXES (11,350) --
INCOME TAXES -- --
------------ ------------
NET EARNINGS (LOSS) (11,350) --
============ ============
NET EARNINGS (LOSS) PER SHARE $ (0.01) $ --
============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING 1,395,604 1,000,000
============ ============
See accompanying notes to financial statements.
4
TULVINE SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2004 AND 2003,
AND THE PERIOD FROM INCEPTION (OCTOBER 21, 1999) TO JUNE 30, 2004
(UNAUDITED)
FROM
INCEPTION
(OCTOBER 21, 1999)
SIX MONTHS ENDED JUNE 30, TO JUNE 30,
2004 2003 2004
------------ ---------- ------------
SALES AND REVENUES $ -- $ -- $ --
COST OF SALES -- -- --
------------ ---------- ------------
GROSS PROFIT -- -- --
OTHER (INCOME) EXPENSE
General and administrative expense 13,350 -- 13,850
Unrealized gain on marketable securities (2,000) -- (2,000)
------------ ---------- ------------
11,350 -- 11,850
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EARNINGS (LOSS) BEFORE INCOME TAXES (11,350) -- (11,850)
INCOME TAXES -- -- --
------------ ---------- ------------
NET EARNINGS (LOSS) (11,350) -- (11,850)
============ ========== ============
NET EARNINGS (LOSS) PER SHARE $ (0.01) $ -- $ (0.01)
============ ========== ============
WEIGHTED AVERAGE SHARES
OUTSTANDING 1,197,802 1,000,000 1,021,004
============ ========== ============
See accompanying notes to financial statements.
5
TULVINE SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2004 AND 2003,
AND THE PERIOD FROM INCEPTION (OCTOBER 21, 1999) TO JUNE 30, 2004
(UNAUDITED)
FROM
INCEPTION
(OCTOBER
SIX MONTHS 21, 1999)
ENDED JUNE 30, TO JUNE 30,
2004 2003 2004
--------- --------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $(11,350) $ -- $(11,850)
Adjustments to reconcile net earnings (loss)
to net cash used in operating activities:
Unrealized gain on marketable securities (2,000) -- (2,000)
Increase in accounts payable 13,350 -- 13,350
--------- --------- ---------
Net cash used in operating activities -- -- (500)
--------- --------- ---------
CASH FLOWS PROVIDED BY INVESTING ACTIVITIES -- -- --
--------- --------- ---------
Net cash provided by investing activities -- -- --
--------- --------- ---------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Proceeds from sale of common stock -- -- 1,000
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Net cash provided by financing activities -- -- 1,000
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NET INCREASE IN CASH AND CASH EQUIVALENTS -- -- 500
CASH AND CASH EQUIVALENTS, beginning of period 500 500 --
--------- --------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 500 $ 500 $ 500
========= ========= =========
See accompanying notes to financial statements.
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TULVINE SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(1) ORGANIZATION AND BUSINESS OPERATIONS - Tulvine Systems, Inc. (a
development stage company) (the "Company") was organized October
21, 1999, under the laws of the State of Delaware. The Company has
no operations and in accordance with SFAS No. 7 is considered a
development stage company. The Company was formed to serve as a
vehicle to effect a merger, exchange of capital stock, asset
acquisition or other business combination with a domestic or
foreign private business.
The Company's ability to commence operations is contingent upon
its ability to identify a prospective target business and raise
the capital it will require through the issuance of equity
securities, debt securities, bank borrowings or a combination
thereof.
(2) USE OF ESTIMATES - The preparation of the financial statements in
conformity with accounting principles generally accepted in the
United States of America 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.
(3) CASH AND CASH EQUIVALENTS - For purposes of the statement of cash
flows, the Company considers all highly liquid investments
purchased with an original maturity of three months or less to be
cash equivalents.
(4) GENERAL - The financial statements included in this report have
been prepared by the Company pursuant to the rules and regulations
of the Securities and Exchange Commission for interim reporting
and include all adjustments (consisting only of normal recurring
adjustments) that are, in the opinion of management, necessary for
a fair presentation. These financial statements have not been
audited.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have
been condensed or omitted pursuant to such rules and regulations
for interim reporting. The Company believes that the disclosures
contained herein are adequate to make the information presented
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not misleading. However, these financial statements should be read
in conjunction with the financial statements and notes thereto
included in the Company's Annual Report for the period ended
December 31, 2003, which is included in the Company's Form 10-KSB.
(5) MARKETABLE SECURITIES - Marketable investment securities are
classified into the following categories:
o Trading securities reported at fair value with unrealized
gains and losses included in earnings;
o Available-for-sale securities reported at fair value with
unrealized gains and losses, net of deferred income taxes,
reported in other comprehensive income; and
o Held-to-maturity securities reported at amortized cost.
Fair value is determined from quoted market prices.
(6) INCOME TAXES - Deferred income taxes are recognized for income and
expense items that are reported for financial purposes in
different years than for income tax purposes.
(7) NET EARNINGS PER SHARE - Net earnings per share amounts are
computed using the weighted average number of shares outstanding
during the period. Fully diluted earnings per share is presented
if the assumed conversion of common stock equivalents results in
material dilution.
B. UNCERTAINTY
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. The Company has been in the development stage
since inception (October 21, 1999) and has not yet commenced any formal business
operations. All activity to date relates to the Company's formation and proposed
fund raising. Management intends to continue its efforts to identify a
prospective target business for acquisition, merger or other business
combination and raise the capital required through the issuance of equity
securities, debt securities, bank borrowings or a combination thereof.
The ability of the Company to continue as a going concern during the next year
depends on the Company's success in executing these plans. The financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.
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C. MARKETABLE SECURITIES
The following summarizes the Company's investment in securities at June 30,
2004:
Trading securities:
Cost $ 125,000
Unrealized gain 2,000
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Fair value $ 127,000
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The Company included in operations $2,000 in unrealized gains during the three
and six month periods ended June 30, 2004.
D. STOCKHOLDER'S EQUITY
The Company has 100,000,000 shares of its $0.0001 par value common stock
authorized and 5,000,000 shares issued. There are no warrants or options
outstanding.
The Company issued 4,000,000 shares of its common stock in a non-cash exchange
for marketable securities valued at $125,000 on June 21, 2004. The unregistered
common shares will be restricted pursuant to Rule 144.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The Company has registered its common stock on a Form 10-SB
registration statement filed pursuant to the Securities Exchange Act of
1934 (the "Exchange Act") and Rule 12(g) thereof. The Company files
with the Securities and Exchange Commission periodic and episodic
reports under Rule 13(a) of the Exchange Act, including quarterly
reports on Form 10-QSB and annual reports on Form 10-KSB. As a
reporting company under the Exchange Act, the Company may register
additional securities on Form S-8 (provided that it is then in
compliance with the reporting requirements of the Exchange Act) and on
Form S-3 (provided that it has during the prior 12 month period timely
filed all reports required under the Exchange Act).
The Company was formed to engage in a merger with or acquisition of an
unidentified foreign or domestic private company that desires to become
a reporting company whose securities have been registered under the
Exchange Act. The Company may be deemed to meet the definition of a
"blank check" company contained in Section (7)(b)(3) of the Securities
Act of 1933, as amended.
Management believes that there are perceived benefits to being a
reporting company which may be attractive to foreign and domestic
private companies. These benefits are commonly thought to include:
(1) the ability to use securities to make acquisition of assets
or businesses;
(2) increased visibility in the financial community;
(3) the facilitation of borrowing from financial institutions;
(4) improved trading efficiency;
(5) the potential for shareholder liquidity;
(6) greater ease in subsequently raising capital;
(7) compensation of key employees through options for stock for
which there may be a public market;
(8) enhanced corporate image; and
(9) a presence in the United States capital market.
A private company which may be interested in a business combination
with the Company may include:
(1) a company for which a primary purpose of becoming a reporting
company is the use of its securities for the acquisition of
assets or businesses;
(2) a company which is unable to find an underwriter of its
securities or is unable to find an underwriter of securities
on terms acceptable to it;
(3) a company which wishes to become a reporting company with
less dilution of its common stock than would occur normally
upon an underwriting;
(4) a company which believes that it will be able to obtain
investment capital on more favorable terms after it has
become a reporting company;
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(5) a foreign company which may wish an initial entry into the
United States securities market;
(6) a special situation company, such as a company seeking to
satisfy redemption requirements under a qualified Employee
Stock Option Plan; and
(7) a company seeking one or more of the other benefits believed
to attach to a reporting company.
Management is actively engaged in seeking a qualified private company
as a candidate for a business combination. The Company is authorized to
enter into a definitive agreement with a wide variety of private
businesses without limitation as to their industry or revenues. It is
not possible at this time to predict with which private company, if
any, the Company will enter into a definitive agreement or what will be
the industry, operating history, revenues, future prospects or other
characteristics of that company.
As of the date hereof, management has not made any final decision
concerning or entered into any agreements for a business combination.
When any such agreement is reached or other material fact occurs, the
Company will file notice of such agreement or fact with the Securities
and Exchange Commission on Form 8-K. Persons reading this Form 10-QSB
are advised to see if the Company has subsequently filed a Form 8-K.
The current shareholders of the Company have agreed to not sell or
otherwise transfer any of their common stock of the Company except in
connection with a business combination.
The Company does not intend to trade its securities in the secondary
market until completion of a business combination. It is anticipated
that following such occurrence, the company will take the steps
required to cause its common stock to be admitted to quotation on the
NASD OTC Bulletin Board or, if it then meets the financial and other
requirements thereof, on the Nasdaq SmallCap Market, National Market
System or regional or national exchange.
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ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
----------------------------------------------------
Disclosure controls and procedures are controls and other procedures
that are designed to ensure that information required to be disclosed
in the reports that are filed or submitted under the Exchange Act is
recorded, processed, summarized and reported, within the time periods
specified in the Securities and Exchange Commission's rules and forms.
Disclosure controls and procedures include, without limitation,
controls and procedures designed to ensure that information required to
be disclosed in the reports that are filed under the Exchange Act is
accumulated and communicated to management, including the principal
executive officer, as appropriate, to allow timely decisions regarding
required disclosure. Under the supervision of and with the
participation of management, including the principal executive officer,
the Company has evaluated the effectiveness of the design and operation
of its disclosure controls and procedures as of June 30, 2004, and,
based on its evaluation, our principal executive officer has concluded
that these controls and procedures are effective.
(b) Changes in Internal Controls
--------------------------------
There have been no significant changes in internal controls or in other
factors that could significantly affect these controls subsequent to
the date of the evaluation described above, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
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PART II - OTHER INFORMATION
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ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On June 21, 2004, the Company issued 4,000,000 of its common shares in
exchange for marketable securities valued at $125,000. The small business
issuer claimed exemption from registration based upon Section 4(2) of the
Securities and Exchange Act of 1933.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 31 Certification pursuant to 18 U.S.C. Section 1350
Section 302 of the Sarbanes-Oxley Act of 2002
Exhibit 32 Certification pursuant to 18 U.S.C. Section 1350
Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
None.
SIGNATURE
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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.
TULVINE SYSTEMS, INC.
Date: August 19, 2004 By: /s/ Ross E. Silvey
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Ross E. Silvey, President and
Principal Accounting Officer
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