U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended July 31, 2004
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from
Commission File No. 000-50495
MODENA 3 INC.
(Exact name of small business issuer as specified in its charter)
Delaware 98-0412433
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6540 E.Hastings St. #615 Burnaby
British Columbia V5B 4Z5
(Address of Principal Executive Offices)
(604)889-6911
(Issuer's telephone number)
(Former name, address and fiscal year, if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the issuer was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Check whether the registrant has filed all documents and reports required to be
filed by Sections 12, 13, or 15(d) of the Exchange Act subsequent to the
distribution of securities under a plan confirmed by a court. Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of September 14, 2004: 100,000 shares of common stock.
MODENA 3 INC.
FINANCIAL STATEMENTS
INDEX
Part I-- FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
Item 3. Control and Procedures
Part II-- OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signature
Item 1. Financial Information
-----------------------------
BASIS OF PRESENTATION
The accompanying reviewed financial statements are presented in accordance with
generally accepted accounting principles for interim financial information and
the instructions to Form 10-QSB and item 310 under subpart A of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal
occurring accruals) considered necessary in order to make the financial
statements not misleading, have been included. Operating results for the nine
months ended July 31, 2004 are not necessarily indicative of results that may
be expected for the year ending October 31, 2004. The financial statements are
presented on the accrual basis.
MODENA 3, INC.
FINANCIAL STATEMENTS
AS OF JULY 31, 2004
AND FROM INCEPTION (NOVEMBER 18, 2003)
THROUGH JULY 31, 2004
Modena 3, Inc.
Financial Statements Table of Contents
FINANCIAL STATEMENTS Page #
Balance Sheet 1
Statement of Operations and Retained Deficit 2
Statement of Stockholders Equity 3
Cash Flow Statement 4
Notes to the Financial Statements 5-7
MODENA 3, INC.
BALANCE SHEET
As of July 31, 2004
ASSETS
CURRENT ASSETS JULY 31, 2004
Cash $ (0)
--------
TOTAL ASSETS $ (0)
========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accrued expenses $ 1,250
--------
TOTAL LIABILITIES 1,250
STOCKHOLDER'S EQUITY
Common Stock - par value $0.001;
100,000,000 shares authorized;
100,000 issued and outstanding 100
Additional paid in capital 0
Accumulated Deficit (1,350)
--------
Total stockholder's equity (1,250)
--------
TOTAL LIABILITIES AND EQUITY $ (0)
========
The accompanying notes are an integral part of these financial statements.
F-1
MODENA 3, INC.
STATEMENT OF OPERATIONS
For the nine months ended July 31, 2004, and
from inception (November 18, 2003) through July 31,2004
Nine Months From Inception to
July 31, 2004 July 31, 2004
SALES $ 0 $ 0
COST OF SALES 0 0
----------- -----------
GROSS PROFIT 0 0
GENERAL AND ADMINISTRATIVE EXPENSES 1,350 1,350
----------- -----------
NET LOSS (1,350) (1,350)
ACCUMULATED DEFICIT, BEGINNING BALANCE 0 0
----------- -----------
ACCUMULATED DEFICIT, ENDING BALANCE $ (1,350) $ (1,350)
=========== ===========
NET EARNINGS PER SHARE
Basic and Diluted
Net loss per share (Less than .01)
Basic and Diluted Weighted Average
Number of Common Shares Outstanding 100,000
The accompanying notes are an integral part of these financial statements.
F-2
MODENA 3, INC.
STATEMENT OF OPERATIONS
For the three months ended July 31, 2004
Three Months
July 31, 2004
SALES $ 0
COST OF SALES 0
------------
GROSS PROFIT 0
GENERAL AND ADMINISTRATIVE EXPENSES 250
------------
NET LOSS (250)
============
The accompanying notes are an integral part of these financial statements.
F-3
MODENA 3, INC.
STATEMENT OF STOCKHOLDER'S EQUITY
From inception (November 18, 2003) through July 31, 2004
SHARES COMMON STOCK ACCUMULATED DEFICIT TOTAL
------------- ------------- ----------------- ------------
Stock issued on acceptance
Of incorporation expenses
November 18, 2003 100,000 $ 100 $ 0 $ 100
Net loss (1,350) (1,350)
------------ ------------ ---------------- ------------
Total at July 31, 2004 100,000 $ 100 $ (1,350) $ (1,250)
============= ============= =============== ============
The accompanying notes are an integral part of these financial statements.
F-4
MODENA 3, INC.
STATEMENT OF CASH FLOWS
For the nine months ended July 31, 2004 and
from inception (November 18, 2003) through July 31, 2004
From
CASH FLOWS FROM OPERATING ACTIVITIES July 31,2004 Inception
Net income (loss) $(1,350) $(1,350)
Increases (Decrease) in accrued expenses 1,250 1,250
------- -------
NET CASH PROVIDED OR (USED) IN OPERATIONS (100) (100)
CASH FLOWS FROM INVESTING ACTIVITIES
None 0 0
CASH FLOWS FROM FINANCING ACTIVITIES
Stock issued on incorporation expenses 100 100
CASH RECONCILIATION
Net increase (decrease) in cash 0 0
Beginning cash balance 0 0
------- -------
CASH BALANCE AT END OF PERIOD $ 0 $ 0
======= =======
The accompanying notes are an integral part of these financial statements.
F-5
MODENA 3, INC.
NOTES TO FINANCIAL STATEMENTS
1. Summary of significant accounting policies:
------------------------------------------
Industry:
--------
Modena 3, Inc. (the Company), a Company incorporated in the state of Delaware as
of November 18, 2003, plans to locate and negotiate with a business entity for
the combination of that target company with The Company. The combination will
normally take the form of a merger, stock-for-stock exchange or stock-
for-assets exchange. In most instances the target company will wish to structure
the business combination to be within the definition of a tax-free
reorganization under Section 351 or Section 368 of the Internal Revenue Code of
1986, as amended. No assurances can be given that The Company will be successful
in locating or negotiating with any target company.
The Company has been formed to provide a method for a foreign or domestic
private company to become a reporting ("public") company whose securities are
qualified for trading in the United States secondary market.
The Company has adopted its fiscal year end to be October 31.
Results of Operations and Ongoing Entity:
----------------------------------------
The Company is considered to be an
ongoing entity. The Company's shareholders fund any shortfalls in The Company's
cash flow on a day to day basis during the time period that The Company is in
the development stage.
Liquidity and Capital Resources:
-------------------------------
In addition to the stockholder funding capital
shortfalls; The Company anticipates interested investors that intend to fund the
Company's growth once a business is located.
Cash and Cash Equivalents:
-------------------------
The Company considers cash on hand and amounts on
deposit with financial institutions which have original maturities of three
months or less to be cash and cash equivalents.
Basis of Accounting:
-------------------
The Company's financial statements are prepared in accordance with generally
accepted accounting principles.
Income Taxes:
------------
The Company utilizes the asset and liability method to measure and record
deferred income tax assets and liabilities. Deferred tax assets and liabilities
reflect the future income tax effects of temporary differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases and are measured using enacted tax rates that apply
to taxable income in the years in which those temporary differences are expected
to be recovered or settled. Deferred tax assets are reduced by a valuation
allowance when in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. At this
time, The Company has set up an allowance for deferred taxes as there is no
company history to indicate the usage of deferred tax assets and liabilities.
F-6
Fair Value of Financial Instruments:
-----------------------------------
The Company's financial instruments may include cash and cash equivalents,
short-term investments, accounts receivable, accounts payable and liabilities to
banks and shareholders. The carrying amount of long-term debt to banks
approximates fair value based on interest rates that are currently available to
The Company for issuance of debt with similar terms and remaining maturities.
The carrying amounts of other financial instruments approximate their fair value
because of short-term maturities.
Concentrations of Credit Risk:
-----------------------------
Financial instruments which potentially expose The Company to concentrations of
credit risk consist principally of operating demand deposit accounts. The
Company's policy is to place its operating demand deposit accounts with high
credit quality financial institutions. At this time The Company has no deposits
that are at risk.
2. Related Party Transactions and Going Concern:
--------------------------------------------
The Company's financial statements have been presented on the basis that it is a
going concern in the development stage, which contemplates the realization of
assets and the satisfaction of liabilities in the normal course of business. At
this time The Company has not identified the business that it wishes to engage
in.
The Company's shareholders fund The Company's activities while The Company takes
steps to locate and negotiate with a business entity for combination; however,
there can be no assurance these activities will be successful.
3. Accounts Receivable and Customer Deposits:
-----------------------------------------
Accounts receivable and Customer deposits do not exist at this time and
therefore have no allowances accounted for or disclosures made.
4. Use of Estimates:
----------------
Management uses estimates and assumptions in preparing these financial
statements in accordance with generally accepted accounting principles. Those
estimates and assumptions affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities, and the reported revenue
and expenses. Management has no reason to make estimates at this time.
5. Revenue and Cost Recognition:
----------------------------
The Company uses the accrual basis of accounting in accordance with generally
accepted accounting principles for financial statement reporting.
6. Accrued Expenses:
----------------
Accrued expenses consist of accrued legal, accounting and office costs during
this stage of the business.
F-7
7. Operating Lease Agreements:
--------------------------
The Company has no agreements at this time.
8. Stockholder's Equity:
--------------------
Common Stock includes 100,000,000 shares authorized at a par value of $0.001, of
which 100,000 have been issued for the amount of $100 on November 18, 2003 in
acceptance of the incorporation expenses for the Company.
9. Required Cash Flow Disclosure for Interest and Taxes Paid:
---------------------------------------------------------
The company has paid no amounts for federal income taxes and interest. The
Company issued 100,000 common shares of stock to its sole shareholder in
acceptance of the incorporation expenses for the Company.
10. Earnings Per Share:
------------------
Basic earnings per share ("EPS") is computed by dividing earnings available to
common shareholders by the weighted-average number of common shares outstanding
for the period as required by the Financial Accounting Standards Board (FASB)
under Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Shares". Diluted EPS reflects the potential dilution of securities that could
share in the earnings.
F-8
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations
------------------------------------------------------------------------
Plan of Operation
-----------------
The Registrant is continuing its efforts to locate a merger Candidate for the
purpose of a merger. It is possible that the registrant will be successful in
locating such a merger candidate and closing such merger. However, if the
registrant cannot effect a non-cash acquisition, the registrant may have to
raise funds from a private offering of its securities under Rule 506 of
Regulation D. There is no assurance the registrant would obtain any such equity
funding.
Results of Operation
--------------------
The Company did not have any operating income from inception (November 18, 2003)
through July 31, 2004. For the quarter ended July 31, 2004, the registrant
recognized a net loss of $250. Some general and administrative expenses during
the year were accrued. Expenses for the year were comprised of costs mainly
associated with legal, accounting and office.
Liquidity and Capital Resources
-------------------------------
At July 31, 2004 the Company had no capital resources and will rely upon the
issuance of common stock and additional capital contributions from shareholders
to fund administrative expenses pending acquisition of an operating company.
Item 3. Controls and Procedures
-------------------------------
(a) Evaluation of disclosure controls and procedures.
Our Chief Executive Officer and Chief Financial Officer (collectively the
"Certifying Officers") maintain a system of disclosure controls and procedures
that is designed to provide reasonable assurance that information, which is
required to be disclosed, is accumulated and communicated to management timely.
Under the supervision and with the participation of management, the Certifying
Officers evaluated the effectiveness of the design and operation of our
disclosure controls and procedures (as defined in Rule [13a-14(c)/15d-14(c)]
under the Exchange Act) within 90 days prior to the filing date of this report.
Based upon that evaluation, the Certifying Officers concluded that our
disclosure controls and procedures are effective in timely alerting them to
material information relative to our company required to be disclosed in our
periodic filings with the SEC.
(b) Changes in internal controls.
Our Certifying Officer has indicated that there were no significant changes in
our internal controls or other factors that could significantly affect such
controls subsequent to the date of his evaluation, and there were no such
control actions with regard to significant deficiencies and material weaknesses.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is currently not a party to any pending legal proceedings
and no such action by, or to the best of its knowledge, against the
Company has been threatened.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security
Holders.
No matter was submitted during the quarter ending January 31, 2004,
covered by this report to a vote of the Company's shareholders,
through the solicitation of proxies or otherwise.
Item 5. Other Information.
None
Item 6. Exhibits and Reports of Form 8-K.
(a) Exhibits
31.1 Certification pursuant to Section 302 of Sarbanes Oxley Act
of 2002
32.1 Certification pursuant to Section 906 of Sarbanes Oxley Act
of 2002
(b) Reports of Form 8-K
None
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, there unto
duly authorized.
MODENA 3 INC.
Registrant
Date: September 14, 2004 By: /s/ Christopher Penner
-----------------------------------
Christopher Penner
President, Chief Executive Officer,
Chief Financial Officer