10QSB 1 heritagemgmt10qsb93004.txt HERITAGE MANAGEMENT INC. 9/30/04 QUARTERLY REPORT FOR SMALL BUSINESS ISSUERS SUBJECT TO THE 1934 ACT REPORTING REQUIREMENTS 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 September 30, 2004 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________to__________ Commission file number: 333-106955 HERITAGE MANAGEMENT INC. (Exact name of small business issuer in its charter) Nevada 75-2877108 ------ ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5031 Gordon Smith Rowlett Texas 75043 ----------------------------------- ---------- (Address of principal executive offices) (Zip Code) Issuer's telephone number 972-771-0907 ------------ 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 preceding twelve 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 the past 90 days. Yes X No --- --- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant 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 No --- --- APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's class of common equity, as of the last practicable date: As of November 5, 2004 the Company had 3,885,400 shares of voting Common Stock, $.001 par value issued and outstanding. Transitional Small Business Disclosure Format (check one): --- --- PART I - FINANCIAL INFORMATION ITEM I. FINANCIAL STATEMENTS HERITAGE MANAGEMENT, INC. CONSOLDIATED BALANCE SHEET September 30, 2004 (Unaudited) ASSETS CURRENT ASSETS: Cash $ 65,110 Note receivable 12,852 Advances 69,045 --------- Total current assets 147,007 Property, Plant & Equipment, net of accumulated depreciation 23,555 OTHER ASSETS: Mortgage note receivable 14,000 --------- Total other assets 14,000 --------- TOTAL ASSETS $ 184,562 ========= LIABILITIES AND STOCKHOLDERS' DEFICIT LIABILITIES Accounts payable $ 8,018 Current protion - loans payable 3,307 --------- Total current liabilities 11,325 Loans payable 8,978 --------- TOTAL LIABILITIES 20,303 STOCKHOLDERS' EQUITY Common stock, $0.001 par value, 50,000,000 authorized, 3,885,400 shares issued and outstanding 3,885 Additional paid-in-capital 174,965 Accumulated deficit (14,591) --------- Total Stockholders' Equity 164,259 --------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 184,562 =========
HERITAGE MANAGEMENT, INC. CONSOLIDATED STATEMENT OF OPERATIONS Nine Months Ended Septemberr 30, 2002 (Unaudited) Three months Three months Nine months Nine months Ended Ended Ended Ended Sept 30, 2004 Sept 30, 2003 Sept 30, 2004 Sept 30, 2003 ------------------------------------------------------------------------ Revenue $38,632 $58,078 $58,746 $168,026 Operating expenses: Depreciation 1,935 1,864 5,608 3,700 General and administrative 36,482 37,675 80,655 147,115 ------------------------------------------------------------------------ Total Operating Expense 38,417 39,539 86,263 150,815 ------------------------------------------------------------------------ Net income (loss) from oeprations 215 18,539 (27,517) 17,211 ======================================================================== Other income: Interest income 244 252 756 756 Interest expense (607) (650) (1,044) (829) ------------------------------------------------------------------------ (363) (398) (288) (73) ------------------------------------------------------------------------ Net income (loss) before provision for income taxes (148) 18,141 (27,805) 17,138 Provision for income taxes 0 6,095 0 6,095 ------------------------------------------------------------------------ Net income (loss) ($148) $12,046 ($27,805) $11,043 ======================================================================== Loss per share - basic and diluted $0.00 $0.00 ($0.01) $0.00 ======================================================================== Weighted average shares outstanding: Basic and diluted 3,858,878 3,350,000 3,801,522 3,350,000 ========================================================================
HERITAGE MANAGEMENT, INC. CONSOLDATED STATEMENT OF CASH FLOWS Nine Months Ended Septemberr 30, 2004 and 2003 (Unaudited) Nine months Nine months Ended Ended Sept 30, 2004 Sept 30, 2003 ------------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income ($27,805) $11,043 Adjustments to reconcile net loss to net cash (used) by operating activities: Depreciation 5,608 3,700 Changes in assets and liabilities: Note receiveable 5,269 756 Advances (35,746) (1,018) Accounts payable and accrued expenses 1,334 10,368 Advances from affiliate (8,004) 4,652 ------------------------------------ Net cash provided by (used in) operating activities: (59,344) 29,501 Cash flows from investing activities: Capital expenditures (2,250) (30,875) Cash flows from financing activities: Sale of common stock 133,850 - Less: offering expenses (5,000) Payments on note payable (2,146) (503) Proceeds from note payable - 16,459 ------------------------------------ Net cash provided by (used in) financing activities 126,704 15,956 ------------------------------------ Net increase in cash $65,110 $14,582 Cash, beginning of period - - ------------------------------------ Cash, end of period $65,110 $14,582 ==================================== Supplemental information: Income taxes paid $- $6,095 Interest paid $1,044 $829
HERITAGE MANAGEMENT, INC. NOTES TO FINANCIAL STATEMENTS (Unaudited) NOTE 1: PRESENTATION The balance sheet of Heritage Management, Inc. ("Heritage") as of September 30, 2004, the related statements of operations for the three and nine months ended September 30, 2004 and the statements of cash flows for the three and nine months ended September 30, 2004 included in the financial statements have been prepared by Heritage without audit. In the opinion of management, the accompanying financial statements include all adjustments (consisting of normal, recurring adjustments) necessary to summarize fairly Heritage's financial position and results of operations. The results of operations for the three and nine months ended September 30, 2004 are not necessarily indicative of the results of operations for the full year or any other interim period. The information included in this Form 10-QSB should be read in conjunction with Management's Discussion and Analysis and Financial Statements and notes thereto included in Heritage's December 31, 2003 Form 10-KSB. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with our Financial Statements and Notes thereto which appear elsewhere in this document. The results shown herein are not necessarily indicative of the results to be expected in any future periods. This discussion contains forward-looking statements based on current expectations, which involve uncertainties. Actual results and the timing of events could differ materially from the forward-looking statements as a result of a number of factors. Readers should also carefully review factors set forth in other reports or documents that we file from time to time with the Securities and Exchange Commission. Overview During the second quarter, we spend significant time on the following areas which took some emphasis from our immediate revenue but prepares a path for increased future revenues. Firstly, we were engaged in raising funds under our IPO under which we were approved to raise a minimum $60,000 and a maximum of $500,000. We closed the offering on July 13, 2004 after selling a total of 527,400 shares and raising a total of $131,850. This capital will allow us to put into action our plan of growth and operation which was described in our Form SB-1 filed with the U.S. Securities & Exchange Commission. Secondly, we worked on a warehouse line of credit of $1,000,000 which we were able to get approved in early July, and started funding loans in the quarter ended September 30. This warehouse line allows us to be a 'correspondent', selling 'closed loans' and then sell them on the secondary mortgage market. This allows us to sell 'table funded loans' which should net the Company an additional $250 to $750 per loan. Thirdly, we began making and funding Home Equity Line of Credit loans (HELOCs). This has only been allowed in Texas since September 2003, so we have seen a significant interest in this type of loan. We expect this interest to continue and expect that we will continue to fund these types of loans. RESULTS FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 2004 Our fiscal quarter ended on September 30, 2004. Any reference to the end of the fiscal quarter refers to the end of the first fiscal quarter for the periods discussed herein. REVENUE. Revenue for the three months ended September 30, 2004 and 2003 was $38,632 and $58,078 respectively and revenues for the nine months ended September 30, 2004 and 2003 were $58,746 and $168,026 respectively. EXPENSES. Total expenses for the three months ended September 30, 2004 and 2003 were $38,417 and $39,539 respectively. Expenses for the nine months ended September 30, 2004 and 2003 were $86,263 and $150,815 respectively. The weighted average shares outstanding increased due to the selling of shares under our SB-1 offering referred to in the previous section. LIQUIDITY AND CAPITAL RESOURCES. We posted a net loss of $148 and a profit of $24,236 for the nine months ended September 30, 2004 and 2003 respectively and posted a net loss of $27,805 and a net income of $23,233 for the six months ended September 30, 2004 and 2003 respectively. ITEM 3. CONTROLS AND PROCEDURES (a) Evaluation of disclosure controls and procedures ------------------------------------------------ We maintain controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. Based upon their evaluation of those controls and procedures performed as of the end of the period covered by this report, our chief executive officer and principal financial officer concluded that our disclosure controls and procedures were adequate. (b) Changes in internal controls ---------------------------- There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the evaluation of those controls by the chief executive officer and principal financial officer. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We are not involved in any lawsuits and are not aware of any pending litigation. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. ITEM 5. OTHER INFORMATION Not applicable. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are filed as part of this report. Exhibit No. Document 31.1 Certification of Chief Executive Officer and Chief Financial Officer required by Rule 13a-14/15d-14(a) under the Exchange Act. 32.1 Certification of Chief Executive Officer 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) The following Report on Form 8-K was filed on August 23, 2004: Change in Registrant's Certifying Accountant. SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Date: November 5, 2004 HERITAGE MANAGEMENT, INC. By: /s/ E. Lee Murdock ----------------------------- E. Lee Murdock, Chief Executive Officer and Chief Financial Officer Exhibit 31 CERTIFICATION I, E. Lee Murdock, certify that: 1. I have reviewed this report on Form 10-QSB of Heritage Management, Inc. 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and Date: November 5, 2004 /s/ E. Lee Murdock ------------------ E. Lee Murdock Chief Executive Officer and Chief Financial Officer Exhibit 32 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Heritage Management, Inc. (the "Company") on Form 10- QSB for the period ending September 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report'), I, E. Lee Murdock, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ E. Lee Murdock ------------------ E. Lee Murdock Chief Executive Officer and Chief Financial Officer November 5, 2004