SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the quarterly period ended March 31, 2004
Commission file number 1-9431
SUNNINGDALE, INC.
(Name of Small Business Issuer in Its Charter)
Delaware 94-3012230
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
936A Beachland Boulevard, Suite 13, Vero Beach, Florida 32963
(Address of Principal Executive Offices) (Zip Code)
(772) 231-7544
(Issuer's Telephone Number, Including Area Code)
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 past 90 days.
Yes [X] No [ ]
Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes [X] No [ ]
The number of shares of the issuer's common stock outstanding as of March 31,
2004 was 225,000 shares, par value $.001 per share.
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SUNNINGDALE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 2004
(Unaudited)
ASSETS
Current assets
Cash $ 33,000
---------
Total assets $ 33,000
---------
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Liabilities:
Accounts payable $ 0
Accrued expenses 29,000
---------
Total liabilities, all current 29,000
---------
Shareholders' equity (deficit):
Preferred stock; $0.01 par value; 1,000,000 shares authorized; none issued or
outstanding Common stock; $0.0001 par value; 10,000,000 shares authorized;
225,000 shares issued and outstanding 7,000
Additional paid-in capital 504,000
Accumulated deficit (507,000)
---------
Total shareholders' equity (deficit) 4,000
---------
Total liabilities and shareholders' equity (deficit) $ 33,000
---------
See notes to consolidated financial statements.
F-2
SUNNINGDALE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTHS ENDED MARCH 31, SIX MONTHS ENDED MARCH 31,
------------------------------------ ------------------------------------
2004 2003 2004 2003
----------------- ----------------- ----------------- -----------------
Revenues $ 0 $ 0 $ 0 $ 0
----------------- ----------------- ----------------- -----------------
Operating expenses:
Accounting and legal 37,000 3,000 39,000 5,000
General and administrative 3,000 7,000 4,000 13,000
----------------- ----------------- ----------------- -----------------
Total expenses 40,000 10,000 43,000 18,000
----------------- ----------------- ----------------- -----------------
Net loss (40,000) (10,000) (43,000) (18,000)
Accumulated deficit, beginning of period (467,000) (393,000) (464,000) (385,000)
----------------- ----------------- ----------------- -----------------
Accumulated deficit, end of period $ (507,000) $ (403,000) $ (507,000) $ (403,000)
----------------- ----------------- ----------------- -----------------
Net loss per share $ (0.18) $ (0.10) $ (0.22) $ (0.17)
----------------- ----------------- ----------------- -----------------
Weighted average common shares outstanding 225,000 104,861 200,000 104,861
----------------- ----------------- ----------------- -----------------
See notes to consolidated financial statements.
F-3
SUNNINGDALE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
SIX-MONTHS ENDED MARCH 31
------------------------
2004 2003
-------- --------
Cash flows from operating activities:
Net loss $(43,000) $(18,000)
Adjustments to reconcile net income to net cash provided by operations:
Accounts payable (2,000) 5,000
Accrued expenses 22,000 0
-------- --------
Net cash used in operating activities (23,000) (13,000)
-------- --------
Cash flows from financing activities:
Advances from Genesee Holdings, Inc. 0 13,000
Proceeds from the issuance of stock 50,000 0
-------- --------
Net cash provided by financing activities 50,000 13,000
-------- --------
Net increase in cash 27,000 0
-------- --------
Cash at beginning of year 6,000 0
-------- --------
Cash at end of period $ 33,000 $ 0
See notes to consolidated financial statements.
F-4
SUNNINGDALE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTH PERIODS ENDED MARCH 31, 2004 AND 2003
1. Summary of significant accounting policies
Principles of consolidation and basis of presentation
The consolidated financial statements include the accounts of Sunningdale,
Inc. (the "Company") and its majority and wholly owned subsidiaries,
PHYTOpharmaceuticals, Inc. and SRE ESCAgenetics Corporation, after
elimination of all significant intercompany accounts and transactions. The
Company's subsidiaries did not have any significant operating activities
during the periods presented.
Operations
Formed in 1986, the Company was organized to develop and commercialize
high-value, plant-derived products for the agricultural and pharmaceutical
markets. In January 1995, the Company scaled back its business activities
and became largely a dormant business. In January 1996, the Company filed
a bankruptcy petition for protection under Chapter 11 of the U.S.
Bankruptcy Code, and the Company's plan of reorganization became effective
on August 22, 1996. The bankruptcy proceeding was officially closed
effective March 31, 1997.
Prior to April 2003, Genesee Holdings, Inc. ("Holdings") owned ninety
percent of the outstanding common stock of the Company. During April 2003,
Holdings sold its interest to Kevin R. Keating ("Keating"), the Principal
Stockholder. The Principal Stockholder owns ninety three percent of the
outstanding common stock of the Company.
On August 22, 2003, the Company entered into an agreement and plan of
reorganization, as amended on September 24, 2003, with Shecom and on
November 5, 2003, completed the merger of Shecom Acquisition Corporation
with and into Shecom, thereby acquiring 100% of the capital stock of
Shecom. On February 29, 2004 the Company's Board of Directors unanimously
adopted and shareholders holding a majority of the Common Stock approved a
resolution authorizing and approving a Mutual Termination Agreement (the
"Agreement") pursuant to which the merger by and between the Company,
Shecom Acquisition Corporation and Shecom Corporation will be rescinded.
The Board and such shareholders believed that it was in the best interests
of the Company and its shareholders to terminate and rescind the merger
because Shecom was unable to produce audited financial statements which
resulted in the Company's inability to comply with the Commission's
requirements for reporting entities. Specifically, due to Shecom's
inability to produce audited financial statements, the Company was unable
to provide the financial statements required to complete its Current
Report on Form 8-K or to provide financial statements for its Quarterly
Reports on Form 10-Q.
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The Agreement provided that each party would release and discharge the
other from any and all claims, actions and liabilities arising from or in
connection with the Plan and Agreement of Reorganization, the events
leading up to and including the termination and rescission of the merger
as well as any and all claims arising from the Agreement.
The Agreement became effective on April 15, 2004 on which date, the
Shareholders tendered to the Company the shares received by them pursuant
to the merger and the Company delivered to the Shareholders the shares
they received in the merger. The Company no longer has any ownership
interest in Shecom, which is now 100% owned by the Shareholders and the
Shareholders no longer have any ownership interest in the Company. The
Company canceled the shares tendered to it upon receipt. On April 15, 2004
the Company changed its name to Sunningdale, Inc.
As a result of the termination and rescission of the merger, the
accompanying financial statements were prepared as if the merger had never
taken place.
The Company plans to pursue a business combination or other strategic
transaction. Ultimately, the continuation of the Company as a going
concern is dependent upon the establishment of profitable operations.
Because the achievement of these plans is dependent upon future events,
there can be no assurance that future profitable operations will occur as
planned.
Use of estimates
The preparation of 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 amounts
reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
Net loss per share
Net loss per share is calculated on the basis of weighted average number
of common shares outstanding. Common stock equivalents are excluded from
the computation, as their effect is anti-dilutive.
2. Shareholders' equity
The Company has authorized 100,000,000 shares of Common Stock with a par
value of $.0001 per share and 1,000,000 shares of Preferred Stock with a
par value of $.01 per share. On March 30, 2004, the Company issued 25,000
shares of the Company's restricted common stock to Keating Reverse Merger
Fund LLC at a purchase price of $2.00 per share for an aggregate
consideration of $50,000. There were 225,000 shares of Common Stock issued
and outstanding at March 31, 2004. No shares of preferred stock are
outstanding.
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The Company declared a one for 140 reverse split of all outstanding common
stock during April 2003 and a one-for-five reverse split during January
2004. All periods presented have reflected the reverse stock split.
3. Income taxes
The Company has accumulated net operating loss carryforwards of
approximately $320,000 that are available to offset future taxable income,
if any, through 2020. Realization of the net operating loss carryforwards
is dependent upon future profitable operations. Accordingly, management
has recorded a valuation allowance to reduce deferred tax assets
associated with net operating loss carryforwards to zero at March 31,
2004.
4. Related party transactions
Kevin R. Keating is the father of the principal stockholder of Keating
Investments, LLC, the investment banking firm that rendered services to
the Company in connection with the merger (Note 1). Mr. Keating is not
affiliated with and has no equity interest in Keating investments, LLC and
disclaims any beneficial interest in the Company common stock to be issued
to Keating Investments, LLC. Similarly, Keating Investments, LLC disclaims
any beneficial interest in the shares of Company common stock currently
owned by Kevin R. Keating.
In April 2004, the Company reimbursed Keating Securities, LLC for legal
expenses incurred by the Company in connection with the merger, which were
initially paid by Keating Securities.
ITEM 2 - Plan of Operation
Effective as of August 22, 1996, the Company was reorganized pursuant to a plan
of reorganization that was confirmed by the U.S. Bankruptcy Court. The Company
has had no revenues from operations since the reorganization date. The Company
does not plan to continue the business activities that it previously conducted.
It plans to pursue a business combination or other strategic transaction. The
Company believes its status as a public company may be attractive to a private
company wishing to avoid an initial public offering but there is no guarantee
that a business combination or other strategic transaction will be consummated.
The Company's principal stockholder has agreed to provide such funds as are
necessary to meet its ongoing obligations. If a business combination or other
strategic transaction is not consummated in a suitable timeframe or cannot be
consummated due to excessive cost or for any other reason, there is substantial
doubt the Company will be able to continue as a going concern.
ITEM 3 - Controls and Procedures
The Company was dormant during the fiscal quarter ended March 31, 2004. The
Company has had no employees since November 1996. Within 90 days prior to the
filing date of this report, to the extent applicable to a dormant company, the
Company carried out an evaluation of the effectiveness of the design and
operation of the Company's disclosure controls and procedures (as defined in
Exchange Act Rule 13a-14(c) and 15d-14(c)). Based upon that evaluation, the
Chief Executive and Financial Officer concluded that the Company's disclosure
controls and procedures are effective.
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There are no significant changes in the Company's internal controls or in other
factors that could significantly affect these controls subsequent to the date of
the evaluation.
ITEM 5 - Other Information
On February 29, 2004 the Company's Board of Directors unanimously adopted and
shareholders holding a majority of the Common Stock approved a resolution
authorizing and approving a Mutual Termination Agreement (the "Agreement")
pursuant to which the merger by and between the Company, Shecom Acquisition
Corporation and Shecom Corporation will be rescinded.
The Board and such shareholders believed that it was in the best interests of
the Company and its shareholders to terminate and rescind the merger because
Shecom was unable to produce audited financial statements which resulted in the
Company's inability to comply with the Commission's requirements for reporting
entities. Specifically, due to Shecom's inability to produce audited financial
statements, the Company was unable to provide the financial statements required
to complete its Current Report on Form 8-K or to provide financial statements
for its Quarterly Reports on Form 10-Q.
The Agreement provided that each party would release and discharge the other
from any and all claims, actions and liabilities arising from or in connection
with the Plan and Agreement of Reorganization, the events leading up to and
including the termination and rescission of the merger as well as any and all
claims arising from the Agreement.
The Agreement became effective on April 15, 2004 on which date, the Shareholders
tendered to the Company the shares received by them pursuant to the merger and
the Company delivered to the Shareholders the shares they received in the
merger. The Company no longer has any ownership interest in Shecom, which is now
100% owned by the Shareholders and the Shareholders no longer have any ownership
interest in the Company. The Company canceled the shares tendered to it upon
receipt. On April 15, 2004 the Company changed its name to Sunningdale, Inc.
The Company has filed a Form 8-K, which describes the terms of the Mutual
Termination Agreement, a copy of which is attached hereto as Exhibit 2.1.
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PART II
ITEM 1 - Legal Proceedings - None
ITEM 2 - Changes in Securities and Use of Proceeds - None
ITEM 3 - Defaults upon Senior Securities - None
ITEM 4 - Submission of Matters to a Vote of Security Holders - None
ITEM 5 - Other Information
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit # Exhibit Title
--------- -------------
2.1* Mutual Termination Agreement
3.1** Certificate of Incorporation
3.2*** By-Laws
31 Certification pursuant to Rule 13a-14(a) and 15d-14(a)
32 Certification pursuant to Section 1350 of Title 18 of
the United States Code
------------------
* Incorporated by reference to the Company's Form 8-K filed on March 10, 2004.
** Incorporated by reference to the Company's Form 10-QSB for the quarter ended
December 31, 1998.
*** Incorporated by reference to the Company's Form 10-QSB for the quarter ended
December 31, 1996.
(b) Forms 8-K
The following current reports on Form 8-K were filed during the quarter ended
March 31, 2004: Form 8-K dated March 10, 2004, reporting the Mutual Termination
Agreement.
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, thereunto duly
authorized.
SUNNINGDALE, INC.
By: /s/ KEVIN R. KEATING
----------------------
Name: Kevin R. Keating
Title: Chief Executive Officer
and Chief Financial Officer
Dated: May 13, 2004
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