SANDSTON CORP - Quarter Report: 2008 September (Form 10-Q)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(Mark
One)
x
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For
the
quarterly period ended September
30, 2008
¨
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
For
the
transition period from _____ to ____
Commission
File Number: 0-21142
SANDSTON
CORPORATION
(Exact
name of small business issuer as specified in its charter)
|
Michigan
|
38-2483796
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
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40950
Woodward Avenue, Suite 304, Bloomfield Hills, MI 48304
(Address
of principal executive offices) (Zip Code)
(248)
723-3007
(Issuer's
telephone number, including area code)
Indicate
by check mark whether the issuer (1) has filed all reports required to be filed
by section 13 or 15(d) of the Securities 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 the past
90
days. x
YES ¨
No
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company.
See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
|
Large
Accelerated Filer ¨
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Accelerated
Filer ¨
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Non-
Accelerated Filer ¨
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Smaller
Reporting Company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). x
YES ¨
No
Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date: No par value Common
Stock:
10,796,981
shares outstanding as of November 7, 2008
PART
I — FINANCIAL INFORMATION
Item
1. Financial
Statements
Sandston
Corporation
Condensed
Balance Sheet
September
30, 2008 and December 31, 2007
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September 30,
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|||||||
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2008
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December 31,
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||||||
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(Unaudited)
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2007
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||||||
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Assets
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|||||||
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Current
assets:
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|||||||
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Cash
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$
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50,909
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$
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69,062
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|||
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Deposit
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1,800
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1,800
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|||||
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Total
assets
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$
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52,709
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$
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70,862
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|||
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Liabilities
and Shareholders’ Equity
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|||||||
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Current
liabilities - accounts payable
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$
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4,048
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$
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1,537
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|||
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Shareholders’
deficit:
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|||||||
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Common
stock, no par value, 30,000,000 shares authorized, 10,796,981 shares
issued and outstanding
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33,799,784
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33,799,784
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|||||
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Accumulated
deficit
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(33,751,123
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)
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(33,730,459
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)
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|||
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Total
shareholders’ equity
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48,661
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69,325
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|||||
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Total
liabilities and shareholders’ equity
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$
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52,709
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$
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70,862
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|||
See
notes
to condensed financial statements.
Page
2
Sandston
Corporation
Condensed
Statements of Operations
For
The Three- and Nine-Month Periods Ended September 30, 2008 and
2007
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Three Months Ended Sept. 30,
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Nine Months Ended Sept. 30,
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||||||||||||
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2008
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2007
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2008
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2007
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||||||||||
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(Unaudited)
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(Unaudited)
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(Unaudited)
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(Unaudited)
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||||||||||
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Net
revenues
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$
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-
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$
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-
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$
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-
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$
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-
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|||||
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General
and administrative expenses
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4,977
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4,313
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20,664
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25,380
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|||||||||
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Loss
before income taxes
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(4,977
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)
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(4,313
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)
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(20,664
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)
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(25,380
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)
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|||||
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Income
taxes
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-
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-
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-
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-
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|||||||||
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Net
loss
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$
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(4,977
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)
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$
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(4,313
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)
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$
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(20,664
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)
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$
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(25,380
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)
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|
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Loss
per share amounts – basic and diluted (Note 2):
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$
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-
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$
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-
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$
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-
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$
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-
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|||||
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Weighted
average shares outstanding – basic and diluted (Note 2):
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10,796,981
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10,796,981
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10,796,981
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10,796,981
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|||||||||
See
notes
to condensed financial statements.
Page
3
Sandston
Corporation
Condensed
Statements of Cash Flows
For
The Three- and Nine-Month Periods Ended September 30, 2008 and
2007
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Nine Months Ended Sept. 30,
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|||||||
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2008
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2007
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||||||
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(Unaudited)
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(Unaudited)
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||||||
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Cash
flows from operating activities:
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|||||||
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Net
loss
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$
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(20,664
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)
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$
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(25,380
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)
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|
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Adjustments
to reconcile net loss to net cash flows used in operating
activities:
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|||||||
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Changes
in liabilities that provided cash:
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|||||||
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Accounts
payable
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2,511
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788
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|||||
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Net
cash used in operating activities
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(18,153
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)
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(24,592
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)
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|||
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Net
decrease in cash
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(18,153
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)
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(24,592
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)
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|||
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Cash
at beginning of period
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69,062
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98,459
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|||||
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Cash
at end of period
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$
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50,909
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$
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73,867
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|||
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Supplemental
disclosures of cash flow information:
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|||||||
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Cash
paid for interest
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$
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-
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$
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-
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|||
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Cash
paid for income taxes
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-
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-
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|||||
See
notes
to condensed financial statements.
Page
4
Sandston
Corporation
Notes
To Condensed Financial Statements
For
The Three- and Nine-Month Periods Ended September 30, 2008 and
2007
Note
1 - Basis of Presentation
Pursuant
to a recommendation of the Company’s Board of Directors and approval by its
shareholders on January 13, 2004, the Company sold to NC Acquisition Corporation
(the "Purchaser") on March 31, 2004 all of its tangible and intangible assets,
including its real estate, accounts, equipment, intellectual property,
inventory, subsidiaries, goodwill, and other intangibles, except for $30,000
in
cash, (the "Net Asset Sale"). The Purchaser also assumed all of the Company’s
liabilities pursuant to the Net Asset Sale. Following the Net Asset Sale, the
Company’s only remaining assets were $30,000 in cash and it had no liabilities.
It also retained no subsidiaries. On April 1, 2004 the Company amended its
Articles of Incorporation to change its name from Nematron Corporation to
Sandston Corporation (the “Company”) and to implement a shareholder approved
one-for-five reverse stock split of the Company’s common stock, whereby every
five issued and outstanding shares of the Company’s common stock became one
share. On April 1, 2004 the Company also sold a total of 5,248,257 post-split
shares to Dorman Industries, LLC (“Dorman Industries”) for $50,000. Dorman
Industries is a Michigan limited liability company wholly owned by Mr. Daniel
J.
Dorman, the Company’s Chairman of the Board, President and Principal Accounting
Officer. Pursuant to its purchase of these shares, Dorman Industries became
the
owner of 62.50% of the then outstanding common stock of the Company and
currently is the beneficial owner of 48.6% of the Company’s outstanding common
stock.
Effective
April 1, 2004, the Company became a "public shell" corporation.
The
Company intends to build long-term shareholder value by acquiring and/or
investing in and operating strategically positioned companies. The Company
expects to target companies in multiple industry groups. The Company has yet
to
acquire, or enter into an agreement to acquire, any company or
entity.
In
the
opinion of management, all adjustments considered necessary for a fair
presentation of the consolidated financial statements for the interim periods
have been included. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the Securities
and Exchange Commission’s rules and regulations, although the Company believes
that the disclosures are adequate to make the information presented not
misleading. These condensed consolidated financial statements should be read
in
conjunction with the consolidated financial statements and notes thereto
included in the Company’s latest annual report on Form 10-KSB.
The
results of the operations for the three- and nine-month periods ended September
30, 2008 and 2007 are not necessarily indicative of the results to be expected
for the full year. Additionally, since the Net Asset Sale, which was effective
April 1, 2004, the Company has no revenue generating activities.
Liquidity
and Management Plans
The
Company became a "public shell" corporation on April 1, 2004 following the
Net
Asset Sale and since that date its operational activities have been limited
to
considering sundry and various acquisition opportunities, and its financial
activities have been limited to administrative activities and incurring
expenditures for accounting, legal, filing, printing, office and auditing
services. These expenditures have been paid with the $30,000 cash retained
from
the businesses that were sold, from $50,000 of proceeds from the sale of common
stock on April 1, 2004 to Dorman Industries, and from $120,000 of proceeds
from
the sale, through a private placement, of unregistered common stock in December
2006 to certain accredited investors.
Page
5
Note
2 – Earnings Per Share
The
weighted average shares outstanding used in computing basic loss per share
for
the three- and nine-month periods ended September 30, 2008 and 2007 have been
adjusted to give effect to the one-for-five reverse stock split discussed in
Note 1. The Company has no dilutive securities.
Item
2. Management's
Discussion and Analysis of Results of Operations
Readers
should refer to a description of the Net Asset Sale described in Note 1 to
the
condensed financial statements included in this Form 10-Q. As described therein,
the net assets and industrial controls businesses of the Company were sold
effective as of the close of business on March 31, 2004. Since April 1, 2004,
the Company has not engaged in any revenue generating activities, although
it
has considered various investment opportunities and it has incurred
administrative expenses related to legal, accounting, and administrative
activities. The Company has had no employees since that date. The administrative
activities of the Company are performed by the Chairman, who also serves as
the
CEO, President, and Principal Financial Officer.
Three
Month Periods Ended September 30, 2008 and 2007
Direct
administrative expenses of the Company totaled $4,977 and $4,313 for the
three-month periods ended September 30, 2008 and 2007, respectively. The
increase of $664, or 15.4%, is due to more administrative services required
in
the current period compared to the year earlier period.
Nine
Month Periods Ended September 30, 2008 and 2007
Direct
administrative expenses of the Company totaled $20,664 and $25,380 for the
nine-month periods ended September 30, 2008 and 2007, respectively. The decrease
of $4,716, or 18.6%, is due to fewer administrative services required in the
current period compared to the year earlier period. In 2007, the Company
incurred costs for legal, printing and other services for the Company’s annual
meeting held in 2007; there was no annual meeting in the current
period.
Liquidity
and Capital Resources
Primary
sources of liquidity for the Company following the March 31, 2004 Net Asset
Sale
have been cash balances that have been used to pay administrative expenses.
Operating expenses of the Company have been funded with $30,000 of available
cash retained from the Net Asset Sale and from $50,000 of cash generated by
the
sale of additional shares of common stock to Dorman Industries on April 1,
2004.
In December 2006, the Company sold through a private placement of unregistered
securities 2.4 million shares of Common Stock for a total of $120,000. As
reflected in the accompanying balance sheet at September 30, 2008, cash totals
$50,909. Based on such balance and management’s forecast of activity levels
during the foreseeable future, management believes that the present cash balance
will be sufficient to pay its current liabilities and its administrative
expenses as such expenses become due. The Company has not identified as yet
potential acquisition candidates, the acquisition of which would mean that
the
Company would cease being a “public shell” and begin operating
activities.
While
it
is the Company's objective to ultimately be able to use the securities of the
Company as a currency in the acquisition of portfolio businesses, the initial
acquisitions of portfolio businesses may require the Company to be infused
with
additional capital thereby diluting the Company's shareholders, including Dorman
Industries to the extent that it does not participate in the capital
infusion.
Page
6
Uncertainties
Relating to Forward Looking Statements
"Item
2 -
Management's Discussion and Analysis of Results of Operation" and other parts
of
this Form 10-Q contain certain "forward-looking statements" within the meaning
of the Securities Act of 1934, as amended. While management of the Company
believes any forward-looking statements it has made are reasonable, actual
results could differ materially since the statements are based on current
management expectations and are subject to risks and uncertainties. These risks
and uncertainties include, but are not limited to the following:
|
·
|
Uncertainties
discussed elsewhere in “Management's Discussion and Analysis of Results of
Operations”
|
|
·
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The
potential inability of the Company to locate potential businesses
and to
negotiate the closing of identified businesses so as they become
businesses of the Company;
|
|
·
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Unforeseen
increases in operating expenses;
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|
·
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The
inability to attract or retain management, sales and/or engineering
talent
for any acquired business;
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|
·
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The
inability to continue financing the administrative expenses of the
Company out of available funds and the inability to raise additional
funds
to cover any shortfall.
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Item
3. Quantitative
and Qualitative Disclosures About Market Risk.
Not
applicable.
Item
4T. Controls
and Procedures
(a) Evaluation
of disclosure controls and procedures.
The
Company maintains disclosure controls and procedures (as defined in Exchange
Act
Rules 13a-15(e) and 15d-15(e)) that are designed to provide reasonable assurance
that the information required to be disclosed in the reports it files with
the
Securities and Exchange Commission is collected and then processed, summarized
and disclosed within the time periods specified in the rules of the Securities
and Exchange Commission. Under the supervision and with the participation of
the
Company’s management, including the Company’s Chief Executive Officer and Chief
Financial Officer, the Company has evaluated the effectiveness of the design
and
operation of its disclosure controls and procedures as of the end of the period
covered by this report. Based on such evaluation, the Company’s Chief Executive
Officer and Chief Financial Officer have concluded that these procedures are
effective.
Based
on
its evaluation of disclosure controls and procedures in effect at December
31,
2007, the Company’s Chief Executive Officer and Chief Financial Officer have
concluded that the Company’s disclosure controls and procedures were not
effective as of the end of our fiscal year ended December 31, 2007 for the
reason that follows: Even though management had timely performed its assessment
of internal control over financial reporting, the Company failed to include
that
report in its Annual Report on Form 10-KSB filed March 7, 2008. Such disclosure
was required due to changes in SEC filing regulations related to non-accelerated
filers and smaller reporting companies such as the Company.
As
a
result of such failure, the Company has taken steps to enhance the ability
of
its system of disclosure controls and procedures to timely identify and respond
to changes in SEC filing regulations applicable to the Company. It is to be
noted that our conclusion that our disclosure controls and procedures were
not
effective as of the end of our fiscal year ended December 31, 2007 did not
result in any change to our original conclusion that our internal control over
financial reporting was effective or in any change to our financial statements
for the fiscal year ended December 31, 2007.
Page
7
(b) Changes
in internal controls.
There
have been no changes in our internal control over financial reporting (as
defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act
of
1934, as amended) that occurred during the period covered by this report that
have materially affected, or are reasonably likely to materially affect, the
Company’s internal control over financial reporting. Although
there have been no such changes in our internal control over financial
reporting, the Company has taken steps to enhance the ability of its system
of
internal control over financial reporting to timely identify and respond to
changes in SEC filing regulations related to non-accelerated
filers.
PART
II - OTHER INFORMATION
Item
6. Exhibits
and Reports on Form 8-K
Exhibits
included herewith are set forth on the Index to Exhibits, which is incorporated
herein by reference.
SIGNATURES
In
accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
|
Sandston
Corporation
|
||
|
November
7, 2008
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/s/
Daniel J. Dorman
|
|
|
Date
|
|
President,
CEO and Principal Financial
Officer
|
Page
8
INDEX
TO EXHIBITS
|
Exhibit Number
|
Description of Exhibit
|
|
|
31.1
|
Certification
of the Principal Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
31.2
|
Certification
of the Principal Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
32.0
|
|
Certification
of President, CEO (Principal Executive Officer) and Principal Financial
Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section
906 of the Sarbanes-Oxley Act of
2002
|
Page
9