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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarter Ended March 31, 2004 Commission File No. 0-27781
MNS EAGLE EQUITY GROUP III, INC.
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(Exact name of Registrant as specified in its charter)
NEVADA 84-1517723
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(State or other jurisdiction of (I.R.S. Empl. Ident. No.)
incorporation or organization)
12373 E. Cornell Avenue
Aurora, Colorado 80014
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(Address of Principal Executive Offices)
(303) 478-4442
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(Registrant's Telephone Number, including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
at least the past 90 days.
Yes X No
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The number of shares outstanding of each of the Registrant's classes of common
equity, as of March 31, 2004 are as follows:
Class of Securities Shares Outstanding
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Common Stock, $.001 par value 647,584
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TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheet (Unaudited):
As of March 31, 2004 ....................................... 3
Statements of Operations (Unaudited):
For the three months ended March 31, 2004
and 2003 and for the period February 28, 1997
(inception) through March 31, 2004 ........................ 4
Statements of Cash Flows (Unaudited):
For the three months ended March 31, 2004
and 2003 and for the period February 28, 1997
(inception) through March 31, 2004 ........................ 5
Notes to Financial Statements (Unaudited) .................. 6
Item 2. Management's Discussion and Analysis or Plan of Operation .. 7
Item 3. Controls and Procedures .................................... 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ........................... 10
Signatures.................................................. 10
2
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Balance Sheet (Unaudited)
March 31, 2004
ASSETS
Total assets $ --
=======
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Due to a related party $ 7,540
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Stockholders' deficit:
Preferred stock; $.001 par value; authorized -
5,000,000 shares; issued - none --
Common stock; $.001 par value; authorized -
50,000,000 shares; issued and outstanding -
647,584 shares 648
Additional paid-in capital 402
Deficit accumulated during the development stage (8,590)
-------
(7,540)
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Total liabilities and stockholders' deficit $ --
=======
See notes to financial statements
3
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Statements of Operations (Unaudited)
Feb. 28, 1997
Three Months Ended (inception) to
March 31, 2004, March 31,
2004 2003 2004
--------- --------- ------------
Costs and expenses:
Amortization $ -- $ -- $ 445
General and administrative 1,481 1,125 8,145
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Net loss applicable to common
stockholders $ (1,481) $ (1,125) $ (8,590)
========= ========= =========
Basic and diluted net loss per
common share $ (.002) $ (.002)
========= =========
Weighted average number of
common shares outstanding 647,584 647,584
========= =========
See notes to financial statements
4
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Statements of Cash Flows (Unaudited)
Feb. 28, 1997,
Three Months Ended (inception) to
March 31, March 31,
2004 2003 2004
------------ ----------- --------------
Cash flows from operating activities:
Net loss $(1,481) $(1,125) $(8,590)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization -- -- 445
Changes in operating assets and liabilities:
Increase in accounts payable -- -- --
Increase in amounts due to a
related party 1,481 1,125 7,540
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Net cash used in operating activities -- -- (605)
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Cash flows from investing activities:
Organization costs -- -- (100)
------- ------- -------
Net cash used in investing activities -- -- (100)
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Cash flows from financing activities:
Proceeds from sale of common stock -- -- 803
Deferred offering costs -- -- (98)
------- ------- -------
Net cash provided by financing activities -- -- 705
------- ------- -------
Net increase (decrease) in cash -- -- --
Cash at beginning of year -- -- --
------- ------- -------
Cash at end of period $ -- $ -- $ --
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Supplemental disclosure of noncash
investing and financing activities:
Common stock issued for organizational costs $ -- $ -- $ 345
======= ======= =======
Common stock issued for deferred offering costs $ -- $ -- $ 77
======= ======= =======
See notes to financial statements
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MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Notes to Financial Statements (Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB and do not include all of the information
and disclosures required by generally accepted accounting principles for
complete financial statements. All adjustments which are, in the opinion of
management, necessary for a fair presentation of the results of operations for
the interim periods have been made and are of recurring nature unless otherwise
disclosed herein. The results of operations for such interim periods are not
necessarily indicative of operations for a full year.
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FORWARD-LOOKING STATEMENTS
This report contains certain forward-looking statements and information
relating to MNS Eagle Equity Group III, Inc. ("MNS" or "Company") that are based
on the beliefs of its management as well as assumptions made by and information
currently available to its management. When used in this report, the words
"anticipate", "believe", "estimate", "expect", "intend", "plan" and similar
expressions, as they relate to MNS or its management, are intended to identify
forward-looking statements. These statements reflect management's current view
of MNS concerning future events and are subject to certain risks, uncertainties
and assumptions, including among many others: a general economic downturn; a
downturn in the securities markets; a general lack of interest for any reason in
going public by means of transactions involving public blank check companies;
federal or state laws or regulations having an adverse effect on blank check
companies, Securities and Exchange Commission regulations which affect trading
in the securities of "penny stocks," and other risks and uncertainties. Should
any of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described in this report as anticipated, estimated or expected. Readers should
realize that MNS is in the development stage, with only very limited assets, and
that for MNS to succeed requires that it either originate a successful business
(for which it lacks the funds) or acquire a successful business. MNS's
realization of its business aims as stated herein will depend in the near future
principally on the successful completion of its acquisition of a business, as
discussed below.
Item 2. Management's Discussion and Analysis or Plan of Operation.
BACKGROUND. MNS, a Nevada corporation, was incorporated on February 28,
1997. MNS issued 725,000 shares of common stock to MNS Eagle Equity Group, Inc.
("MNS Parent") for cash, organization costs and deferred offering costs. MNS is
in the development stage with no significant assets or liabilities and has been
essentially inactive, except for organizational activities and the private
placement offering described below.
MNS Parent offered for sale, at the price of US$1.00 per unit, a total of
100,000 Units. Each Unit consisted of a share of common stock in six different
corporations for a total of six (6) shares of stock, including one share of
common stock, $.001 par value per share, of MNS Eagle Equity Group, Inc., the
former parent, and one share of common stock, $.001 par value per share, of each
of the following corporations organized in the State of Nevada and which were at
that time wholly owned subsidiaries of MNS Parent, namely: MNS Eagle Equity
Group I, Inc., MNS Eagle Equity Group II, Inc., MNS Eagle Equity Group III,
Inc., MNS Eagle Equity Group IV, Inc. and MNS Eagle Equity Group V, Inc. No
minimum number of Units had to be sold.
On October 31, 1997, MNS Parent closed the private placement offering. A
total of 7,500 units were sold for $7,500. The proceeds were allocated by MNS
Parent as follows: $5,000 to the parent and $500 to each of the wholly owned
subsidiaries.
PLAN of OPERATION
MNS is a blank check company whose plan of operation over the next twelve
months is to seek and, if possible, acquire an operating business or valuable
assets by entering into a business combination. MNS will not be restricted in
its search for business combination candidates to any particular geographical
area, industry or industry segment, and may enter into a combination with a
private business engaged in any line of business, including service, finance,
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mining, manufacturing, real estate, oil and gas, distribution, transportation,
medical, communications, high technology, biotechnology or any other.
Management's discretion is, as a practical matter, unlimited in the selection of
a combination candidate. Management of MNS will seek combination candidates in
the United States and other countries, as available time and resources permit,
through existing associations and by word of mouth. This plan of operation has
been adopted in order to attempt to create value for MNS's shareholders. For
further information on MNS's plan of operation and business, please consult
MNS's 10KSB available on the EDGAR system of the U.S. Securities and Exchange
Commission.
MNS does not intend to do any product research or development. MNS does not
expect to buy or sell any real estate, plant or equipment except as such a
purchase might occur by way of a business combination that is structured as an
asset purchase, and no such asset purchase currently is anticipated. Similarly,
MNS does not expect to add additional employees or any full-time employees
except as a result of completing a business combination, and any such employees
likely will be persons already then employed by the company acquired.
COMPETITION. MNS will be in direct competition with many entities in its
efforts to locate suitable business opportunities. Included in the competition
will be business development companies, venture capital partnerships and
corporations, small business investment companies, venture capital affiliates of
industrial and financial companies, broker-dealers and investment bankers,
management and management consultant firms and private individual investors.
Most of these entities will possess greater financial resources and will be able
to assume greater risks than those which MNS, with its limited capital, could
consider. Many of these competing entities will also possess significantly
greater experience and contacts than MNS's Management. Moreover, MNS also will
be competing with numerous other blank check companies for such opportunities.
EMPLOYEES. MNS has no full-time employees, and its only employees currently
are its officers. It is not expected that MNS will have additional full-time or
other employees except as a result of completing a combination.
RESULTS OF OPERATIONS
FIRST QUARTER 2004 - During the three months ended March 31, 2004, MNS
incurred a net loss of $1,481. Expenses related primarily to miscellaneous
filing fees and accounting costs. The Company paid no rent or salaries and had
no operations.
FIRST QUARTER 2003 - During the three months ended March 31, 2003, MNS
incurred a net loss of $1,125. Expenses related primarily to miscellaneous
filing fees and accounting costs. The Company paid no rent or salaries and had
no operations.
LIQUIDITY and CAPITAL RESOURCES
MNS had $-0- cash on hand at the end of the quarter and had no other assets
to meet ongoing expenses or debts that may accumulate. Since inception, MNS has
accumulated a deficit of $8,590.
MNS has no commitment for any capital expenditure and foresees none.
However, MNS will incur routine fees and expenses incident to its reporting
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duties as a public company, and it will incur expenses in finding and
investigating possible acquisitions and other fees and expenses in the event it
makes an acquisition or attempts but is unable to complete an acquisition. MNS's
cash requirements for the next twelve months are relatively modest, principally
accounting expenses and other expenses relating to making filings required under
the Securities Exchange Act of 1934 (the "Exchange Act"), which should not
exceed $5,000 in the fiscal year ending December 31, 2004. Any travel, lodging
or other expenses which may arise related to finding, investigating and
attempting to complete a combination with one or more potential acquisitions
could also amount to thousands of dollars.
MNS's current management and its counsel have informally agreed to continue
rendering services to MNS and to not demand payment of sums owed unless and
until MNS completes an acquisition. The terms of any such payment will have to
be negotiated with the principals of any business acquired. The existence and
amounts of MNS debt may make it more difficult to complete, or prevent
completion of, a desirable acquisition. In addition, offices are provided to MNS
without charge.
MNS will only be able to pay its future debts and meet operating expenses
by raising additional funds, acquiring a profitable company or otherwise
generating positive cash flow. As a practical matter, MNS is unlikely to
generate positive cash flow by any means other than acquiring a company with
such cash flow. MNS believes that management members or shareholders will loan
funds to MNS as needed for operations prior to completion of an acquisition.
Management and the shareholders are not obligated to provide funds to MNS,
however, and it is not certain they will always want or be financially able to
do so. MNS shareholders and management members who advance money to MNS to cover
operating expenses will expect to be reimbursed, either by MNS or by the company
acquired, prior to or at the time of completing a combination. MNS has no
intention of borrowing money to reimburse or pay salaries to any MNS officer,
director or shareholder or their affiliates. There currently are no plans to
sell additional securities of MNS to raise capital, although sales of securities
may be necessary to obtain needed funds. MNS's current management and its
counsel have agreed to continue their services to MNS and to accrue sums owed
them for services and expenses and expect payment reimbursement only.
Should existing management or shareholders refuse to advance needed funds,
however, MNS would be forced to turn to outside parties to either loan money to
MNS or buy MNS securities. There is no assurance whatever that MNS will be able
at need to raise necessary funds from outside sources. Such a lack of funds
could result in severe consequences to MNS, including among others:
(1) failure to make timely filings with the SEC as required by the
Exchange Act, which also probably would result in suspension of
trading or quotation in MNS's stock and could result in fines and
penalties to MNS under the Exchange Act;
(2) curtailing or eliminating MNS's ability to locate and perform suitable
investigations of potential acquisitions; or
(3) inability to complete a desirable acquisition due to lack of funds to
pay legal and accounting fees and acquisition-related expenses.
MNS hopes to require potential candidate companies to deposit funds with
MNS that it can use to defray professional fees and travel, lodging and other
due diligence expenses incurred by MNS's management related to finding and
investigating a candidate company and negotiating and consummating a business
combination. There is no assurance that any potential candidate will agree to
make such a deposit.
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Item 3. Controls and Procedures
Within 90 days of the filing of this Form 10-QSB, an evaluation was carried
out by Stephen M. Siedow, our CEO, President and Chief Financial Officer, of the
effectiveness of our disclosure controls and procedures. Disclosure controls and
procedures are procedures that are designed with the objective of ensuring that
information required to be disclosed in our reports filed under the Securities
Exchange Act of 1934, such as this Form 10-QSB, is recorded, processed,
summarized and reported within the time period specified in the Securities and
Exchange Commission's rules and forms. Based on that evaluation, Mr. Siedow
concluded that as of March 31, 2004, and as of the date that the evaluation of
the effectiveness of our disclosure controls and procedures was completed, our
disclosure controls and procedures were effective to satisfy the objectives for
which they are intended.
There were no changes in our internal control over financial reporting
identified in connection with the evaluation performed that occurred during the
fiscal quarter covered by this report that has materially affected or is
reasonably likely to materially affect, our internal control over financial
reporting.
Item 6. Exhibits and Reports on Form 8-K.
(a) EXHIBITS. The following exhibits are filed as part of this report.
31 Certification of the Chief Executive Officer, President and Chief
Financial Officer filed pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32 Certification of the Chief Executive Officer, President 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. None
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this Report on Form 10-QSB to be signed on its behalf by the undersigned,
thereunto duly authorized.
DATED: May 3, 2004
MNS EAGLE EQUITY GROUP III, INC.
By /s/ Stephen M. Siedow
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Stephen M. Siedow
Chief Executive Officer,
President and
Chief Financial Officer
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