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: SEPTEMBER 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 October 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 - September 30, 2004 3
Statements of Operations - 4
Three Months Ended September 30, 2004 and 2003
Statements of Operations - 5
Nine Months Ended September 30, 2004 and 2003, and the
period from inception (October 21, 1999) to September 30, 2004
Statements of Cash Flows - 6
Nine Months Ended September 30, 2004 and 2003, and the
period from inception (October 21, 1999) to September 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
SEPTEMBER 30, 2004
(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 500
Marketable securities 125,000
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Total assets $ 125,500
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 13,939
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Total liabilities 13,939
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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 128,000
Accumulated deficit (16,939)
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Total stockholders' equity 111,561
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Total liabilities and stockholders' equity $ 125,500
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See accompanying notes to financial statements
3
TULVINE SYSTEMS, INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
(UNAUDITED)
2004 2003
------------ ------------
SALES AND REVENUES $ -- $ --
COST OF SALES -- --
------------ ------------
GROSS PROFIT -- --
OTHER (INCOME) EXPENSE
General and administrative expense 2,750 --
Interest expense 339 --
Unrealized (gain) loss on marketable securities 2,000 --
------------ ------------
5,089 --
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EARNINGS (LOSS) BEFORE INCOME TAXES (5,089) --
INCOME TAXES -- --
------------ ------------
NET EARNINGS (LOSS) (5,089) --
============ ============
NET EARNINGS (LOSS) PER SHARE $ (0.00) $ --
============ ============
WEIGHTED AVERAGE SHARES
OUTSTANDING 5,000,000 1,000,000
============ ============
See accompanying notes to financial statements.
4
TULVINE SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003,
AND THE PERIOD FROM INCEPTION (OCTOBER 21, 1999) TO SEPTEMBER 30, 2004
(UNAUDITED)
FROM
INCEPTION
(OCTOBER 21, 1999)
TO SEPTEMBER 30,
2004 2003 2004
---------- ---------- ----------------
SALES AND REVENUES $ -- $ -- $ --
COST OF SALES -- -- --
---------- ---------- ----------------
GROSS PROFIT -- -- --
OTHER (INCOME) EXPENSE
General and administrative expense 15,940 -- 16,440
Interest expense 499 -- 499
Unrealized (gain) loss on marketable
securities -- -- --
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16,439 -- 16,939
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EARNINGS (LOSS) BEFORE INCOME TAXES (16,439) -- (16,939)
INCOME TAXES -- -- --
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NET EARNINGS (LOSS) (16,439) -- (16,939)
========== ========== ================
NET EARNINGS (LOSS) PER SHARE $ (0.01) $ -- $ (0.01)
========== ========== ================
WEIGHTED AVERAGE SHARES
OUTSTANDING 2,474,453 1,000,000 1,223,699
========== ========== ================
See accompanying notes to financial statements.
5
TULVINE SYSTEMS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003,
AND THE PERIOD FROM INCEPTION (OCTOBER 21, 1999) TO SEPTEMBER 30, 2004
(UNAUDITED)
FROM
INCEPTION
(OCTOBER 21, 1999)
TO SEPTEMBER 30,
2004 2003 2004
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings (loss) $ (16,439) $ -- $ (16,939)
Adjustments to reconcile net earnings (loss) to net
cash used in operating activities:
Unrealized (gain) loss on marketable securities -- -- --
Increase in accounts payable 13,939 -- 13,939
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Net cash used in operating activities (2,500) -- (3,000)
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CASH FLOWS PROVIDED BY INVESTING ACTIVITIES
------------- ------------- -------------
-- -- --
------------- ------------- -------------
Net cash provided by investing activities -- -- --
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CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
Proceeds from sale of common stock -- -- 1,000
Contribution by stockholder 2,500 -- 2,500
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Net cash provided by financing activities 2,500 -- 3,500
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NET INCREASE IN CASH AND CASH EQUIVALENTS -- -- 500
CASH AND CASH EQUIVALENTS, beginning of period 500 500 --
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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
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are adequate to make the information presented 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 September 30,
2004:
Trading securities:
Cost $ 125,000
Unrealized loss -
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Fair value $ 125,000
==============
The Company included in operations $2,000 in unrealized losses during the three
month period ended September 30, 2004 and no loss during the nine month period
ended September 30, 2004.
D. STOCKHOLDERS' 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.
In August 2004, a stockholder contributed $2,500 which was used to pay accounts
payable.
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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 September 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 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: November 16, 2004 By: /s/ Ross E. Silvey
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Ross E. Silvey, President and
Principal Accounting Officer
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