SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10QSB
Quarterly Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended Commission File Number
- ----------------- ----------------------
September 30, 2001 000-31553
HOUSTON OPERATING COMPANY
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(Exact name of registrant as specified in its charter)
Delaware 76-0307819
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(State of incorporation) (I.R.S. Employer
Identification No.)
11145 Rockland Drive, Littleton, CO 80127
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (720) 981-0523
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 for such shorter period that the registrant was
required to file such reports), and (2) has been subject to the filing
requirements for at least the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
7,795,171 common shares as of September 30, 2001
HOUSTON OPERATING COMPANY, INC.
Financial Statements
For the Three Month Period Ended September 30, 2001
(Unaudited)
PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
Michael Johnson & Co. LLC
9175 E. Kenyon Ave., #100
Denver, CO 80237
(303) 796-0099
FAX (303) 796-0137
REPORT ON REVIEW BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT
To the Board of Directors
Houston Operating Company, Inc.
Littleton, Colorado
We have reviewed the accompanying balance sheet of Houston Operating Company,
Inc. as of September 30, 2001 and the related statements of operations for the
three month and nine months period ended September 30, 2001 and 2000, and the
cash flows for the nine months ended September 30, 2001 and 2000 included in the
accompanying Securities and Exchange Commission Form 10-QSB for the period ended
September 30, 2001. These financial statements are the responsibility of the
Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements as a whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet as of December 31, 2000, and the related statements
of operations, stockholders' equity and cash flows for the year then ended (not
presented herein). In our report dated April 10, 2001, we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying balance sheet as of September 30, 2001
is fairly stated in all material respects in relation to the balance sheet from
which it has been derived.
/s/ Michael Johnson & Co., LLC.
Michael Johnson & Co., LLC.
Denver, Colorado
November 8, 2001
F-1
HOUSTON OPERATING COMPANY, INC.
BALANCE SHEETS
(Unaudited)
September 30, December 31,
2001 2000
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ASSETS:
Current Assets:
Cash $ 512 $ 541
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Total Current Assets 512 541
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TOTAL ASSETS $ 512 541
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LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable and accrued expenses $ 1,383 $ 1,353
Advances from shareholders' 1,896 1,896
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Total Current Liabilities 3,279 3,249
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Stockholders' Deficit:
Common stock, $.001 par value; 50,000,000
shares authorized; 7,795,171 shares issued
and outstanding, respectively 7,795 7,795
Additional paid-in capital 38,350 38,350
Retained deficit (48,912) (48,853)
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Total Stockholders' Deficit (2,767) (2,708)
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TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 512 $ 541
================ =============
See accountant's review report.
F-2
HOUSTON OPERATING COMPANY, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2001 2000 2001 2000
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REVENUES: $ - $ - $ - $ -
OPERATING EXPENSES:
Sales and marketing - - - -
General and administrative 30 4,000 59 4,474
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Total Operating Expenses 30 4,000 59 4,474
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Net Loss from Operations (30) (4,000) (59) (4,474)
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Other Income and expenses:
Interest income - - - -
Interest expense - - - -
Other - - - -
- - - -
--------------- ----------------- -------------- --------------
Net Loss $ (30) $ (4,000) $ (59) $ (4,474)
=============== ================= ============== ==============
Weighted average number of
shares outstanding 7,795,171 5,795,171 7,795,171 5,795,171
=============== ================= ============== ==============
Basic and diluted net loss per share * * * *
=============== ================= ============== ==============
* Less than $.01
See accountant's review report.
F-3
HOUSTON OPERATING COMPANY, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit Totals
Balance - December 31, 1997 2,795,171 $ 2,795 $ 28,820 $ (38,874) $ (7,259)
Net loss for period - - - (1,725) (1,725)
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Balance - December 31, 1998 2,795,171 2,795 28,820 (40,599) (8,984)
--------- ------- -------- ---------- ---------
Conversion of loan payable to additional paid-in
capital - - 9,530 - 9,530
Net loss for year - - - (1,000) (1,000)
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Balance - December 31, 1999 2,795,171 2,795 38,350 (41,599) (454)
--------- ------- -------- ---------- ---------
Stock issuance for cash 1,000,000 1,000 - - 1,000
Stock issuance for services 4,000,000 4,000 - - 4,000
Net loss for year - - - (7,254) (7,254)
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Balance - December 31, 2000 7,795,171 7,795 38,350 (48,853) (2,708)
--------- ------- -------- ---------- ---------
Net loss for period - - - (59) (59)
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Balance - September 30, 2001 7,795,171 $ 7,795 $ 38,350 $ (48,912) $ (2,767)
--------- ------- -------- ---------- ---------
See accountant's review report.
F-4
HOUSTON OPERATING COMPANY, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
2001 2000
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Cash Flows From Operating Activities:
Net (Loss) $ (59) $(4,474)
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock issued for services - 4,000
Changes in assets and liabilities:
Increase in accounts payable 30 -
30 4,000
Net Cash Used in Operating Activities (29) (474)
Cash Flow From Financing Activities:
Advances from Stockholders - 474
Issuance of Common Stock - 1,000
Net Cash Provided By Financing Activities - 1,474
Increase (Decrease) in Cash (29) 1,000
Cash and Cash Equivalents - Beginning of period 541 -
Cash and Cash Equivalents - End of period $ 512 $ 1,000
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Supplemental Cash Flow Information:
Interest paid $ - $ -
============= ============
Taxes paid $ - $ -
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See accountant's review report.
F-5
HOUSTON OPERATING COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
1. Presentation of Interim Information
In the opinion of the management of Houston Operating Company, Inc., the
accompanying unaudited financial statements include all normal adjustments
considered necessary to present fairly the financial position as of
September 30, 2001, and the results of operations for the three month and
nine months ended September 30, 2001 and 2000, and cash flows for the nine
months ended September 30, 2001 and 2000. Interim results are not
necessarily indicative of results for a full year.
The financial statements and notes are presented as permitted by Form
10-QSB, and do not contain certain information included in the Company's
audited financial statements and notes for the fiscal year ended December
31, 2000.
F-6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 2001
The Company had no income in the nine month period ended September 30, 2001 or
2000 but incurred expenses of $59 for 2001 and $4,474 for 2000. The loss for the
nine month period for 2001 was ($59) and in 2000 it was $(4474). The loss per
share was less than ($.01) in the period in 2001 and none in 2000.
For the current fiscal year the Company anticipates incurring a loss as a result
of legal and accounting expenses, expenses associated with registration under
the Securities and Exchange Act of 1934, and expenses associated with locating
and evaluating acquisition candidates. The Company anticipates that until a
business combination is completed with an acquisition candidate, it will not
generate revenues, and will continue to operate at a loss prior to and after
completing a business combination depending upon the performance of the acquired
business.
RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 2001 COMPARED TO
QUARTER ENDED SEPTEMBER 30, 2000
The Company had no revenues in the quarter in 2001 or 2000. The Company incurred
expenses of $30 in the quarter in 2001 compared to $4000 in the quarter in 2000.
The loss for the quarter was ($30) in 2001 and $4000 in 2000. The Company had a
loss per share of less than ($.01) in the quarter in 2001 and ($.01) in 2000 in
the quarter.
LIQUIDITY AND CAPITAL RESOURCES
The Company does not have capital sufficient to meet the Company's cash needs,
including the costs of compliance with the continuing reporting requirements of
the Securities and Exchange Act of 1934. The Company will have to seek loans or
equity placements to cover such cash needs. In the event the Company isable to
complete a business combination during this period, lack of its existing capital
may be a sufficient impediment to prevent it from accomplishing the goal of
completing a business combination. There is no assurance, however, that without
funds it will ultimately allow registrant to complete a business combination.
Once a business combination is completed, the Company's needs for additional
financing are likely to increase substantially.
Irrespective of whether the Company's cash assets prove to be inadequate to meet
the Company's operational needs, the Company might seek to compensate providers
of services by issuances of stock in lieu of cash.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULT UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
Appointment of New Directors and Resignation of Directors
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Reports on Form 8-K were made for the period for which
this report is filed. None.
SIGNATURES
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.
Date: 11/14/01
HOUSTON OPERATING COMPANY
/s/ J.R. Nelson
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J.R. NELSON, President