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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE EXCHANGE ACT
COMMISSION FILE NUMBER 0-27781
MNS EAGLE EQUITY GROUP III, INC.
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(Exact name of small business issuer as specified in its charter)
NEVADA 84-1517723
------------------------------ ---------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12373 E. Cornell Avenue
Aurora, Colorado 80014
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(Address of principal executive offices)
(303) 478-4442
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(Issuer's telephone number)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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 [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ X ] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity: Common stock, $.001 par value, 284,689 shares outstanding at November
30, 2005.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ]
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TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Balance Sheet (Unaudited) as of September 30, 2005 .............. 3
Statements of Operations (Unaudited) for the three and
nine months ended September 30, 2005 and 2004 and for the
period February 28, 1997 (inception) to September 30, 2005.... 4
Statements of Cash Flows (Unaudited) for the nine
months ended September 30, 2005 and 2004 and for the
period February 28, 1997 (inception) to September 30, 2005.... 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 ...................................................... 11
2
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Balance Sheet (Unaudited)
September 30, 2005
ASSETS
Total assets $ --
========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 870
Due to an officer/stockholder 13,655
--------
14,525
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 -
284,689 shares 285
Additional paid-in capital 3,924
Deficit accumulated during the development stage (18,734)
--------
(14,525)
--------
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, 1977
Three Months Ended Nine Months Ended (inception)to
September 30, September 30, Sept. 30,
------------------------ ---------------------- ---------
2005 2004 2005 2004 2005
--------- --------- --------- --------- ---------
Costs and expenses:
Amortization $ $ $ $ $ 445
General and administrative 5,062 1,698 8,146 3,384 18,289
--------- --------- --------- --------- ---------
Net loss applicable to common
stockholders $ (5,062) $ (1,698) $ (8,146) $ (3,384) $ (18,734)
========= ========= ========= ========= =========
Basic and diluted net loss per
common share $ (.01) $ ** $ (.01) $ **
========= ========= ========= =========
Weighted average number of
common shares outstanding 508,930 647,584 600,559 647,584
========= ========= ========= =========
** Less than $(.01) per share.
See notes to financial statements.
4
MNS EAGLE EQUITY GROUP III, INC.
(A Development Stage Company)
Statements of Cash Flows (Unaudited)
Feb. 28, 1997
Nine Months Ended (inception) to
September 30, Sept. 30,
----------------------- --------
2005 2004 2005
-------- -------- --------
Cash flows from operating activities:
Net loss $ (8,146) $ (3,384) $(18,734)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization 445
Capital contribution 2,553 3,885
Changes in operating assets and liabilities:
Increase in accounts payable 78 870
Increase in amounts due to an officer/stockholder 8,872 753 13,655
-------- -------- --------
Net cash used in operating activities 726 -- 121
-------- -------- --------
Cash flows from investing activities:
Organization costs (100)
-------- -------- --------
Net cash used in investing activities -- -- (100)
-------- -------- --------
Cash flows from financing activities:
Proceeds from sale of common stock 803
Repurchases of common stock (726) (726)
Deferred offering costs (98)
-------- -------- --------
Net cash provided by financing activities (726) -- (21)
-------- -------- --------
Net increase (decrease) in cash -- -- --
Cash at beginning of year -- -- --
-------- -------- --------
Cash at end of year $ -- $ -- $ --
======== ======== ========
Supplemental disclosure of noncash investing and
financing activities:
Capital contribution $ 2,553 $ 3,885
======== ========
Common stock issued for organizational costs $ 345
========
Common stock issued for deferred offering costs $ 77
========
See notes to financial statements.
5
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 a recurring nature unless
otherwise disclosed herein. The results of operations for such interim periods
are not necessarily indicative of operations for a full year.
Note 2 - Related party transactions
During the three and nine-month periods ended September 30, 2005, the Company
incurred corporate, administrative and accounting fees of approximately $5,100
and $7,900 respectively ($1,700 and $2,700 for the three and nine-month periods
ended September 30, 2004) for services performed by the Company's president and
for expenses paid by the president on behalf of the Company. The Company has a
payable to its president in the amount of $13,655 at September 30, 2005. In
addition, the Company uses the office of its president for corporate and
administrative purposes.
Note 3 - Share repurchase
On August 23, 2005, the Company purchased from nine shareholders 335,689 shares
of its $.001 par value common stock for $671.38 or $.002 per share. On September
27, 2005, the Company purchased from four shareholders 27,206 shares of its
$.001 par value common stock for $54.41 or $.002 per share. These shares were
cancelled by the Company. The Company's president advanced the necessary funds
to complete the stock purchases. After the repurchase, 100% of the Company's
outstanding shares are owned directly by the Company's president.
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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 has no 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 Eagle Equity Group III, Inc., 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.
MNS owns no real estate and has no full time employees, and it will have no
operations of its own unless and until it engages in one or more of the
activities described below under this ITEM 1. MNS is a "blank check" company
which intends to enter into a business combination with one or more as yet
unidentified privately held businesses.
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
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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,
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 FORM 10-KSB 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 employees. MNS only has one officer, who is also the
sole director of the Company. 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
THIRD QUARTER 2005 - During the three and nine months ended September 30,
2005, MNS incurred a net loss of $5,062 and $8,146. General and administrative
expenses related primarily to accounting and legal fees, miscellaneous filing
fees, office costs and supplies and other miscellaneous expenses, of which
approximately $5,100 and $7,900 were related party expenses. The Company paid no
rent or salaries and had no operations.
THIRD QUARTER 2004 - During the three and nine months ended September 30,
2004, MNS incurred a net loss of $1,698 and $3,384. General and administrative
expenses related primarily to accounting and legal fees, miscellaneous filing
fees, office costs and supplies and other miscellaneous expenses, of which
approximately $1,700 and $2,700 were related party expenses. The Company paid no
rent or salaries and had no operations.
LIQUIDITY and CAPITAL RESOURCES
MNS had no 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 $18,734.
MNS has no commitment for any capital expenditure and foresees none.
However, MNS will incur routine fees and expenses incident to its reporting
8
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"), and are not expected
to exceed $10,000 in the fiscal year ending December 31, 2005. 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 has 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's debt may
make it more difficult to complete, or prevent completion of, a desirable
acquisition. In addition, offices are provided to MNS by its president 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 has agreed to
continue its services to MNS and to accrue sums owed for services and expenses
and expect payment.
Should existing management or shareholders refuse to advance needed funds,
MNS would be forced to turn to outside parties to either loan money to MNS or
buy MNS securities. There is no assurance whatsoever that MNS will be able 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.
9
OFF-BALANCE SHEET ARRANGEMENTS
MNS does not have any off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that is material to
investors.
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 September 30, 2005, 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.
PART II. OTHER INFORMATION
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.
DATE: January 4, 2006
MNS EAGLE EQUITY GROUP III, INC.
By: /s/ Stephen M. Siedow
--------------------------------------
Stephen M. Siedow, Chief Executive
Officer, President and Chief
Financial Officer
10