U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______.
Commission File No. 0-27780
NEW HORIZON KIDS QUEST, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1719363
- ------------------------------------ ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16355 36th Avenue North, Suite 700, Plymouth, MN 55446
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 557-1111
--------------
Check whether the registrant (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 the past 90 days.
YES (X) NO ( )
As of May 15, 2000, the Registrant had outstanding 3,293,300 shares of its
Common Stock, $.01 par value.
<PAGE>
NEW HORIZON KIDS QUEST, INC.
FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 2000
INDEX
-----
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION 3
ITEM 1. Condensed Consolidated Financial Statements
a) Condensed Consolidated Balance Sheets --
March 31, 2000 and December 31, 1999 3
b) Condensed Consolidated Statements of
Operations -- Three months ended March 31, 2000
and 1999 5
c) Condensed Consolidated Statements of
Cash Flows -- Three months ended
March 31, 2000 and 1999 6
d) Notes to Condensed Consolidated Financial
Statements 7
ITEM 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9
PART II. OTHER INFORMATION 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13
ITEM 7. FINANCIAL DATA SCHEDULE 13
Signatures 14
</TABLE>
2
<PAGE>
PART I. - FINANCIAL INFORMATION
ITEM 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NEW HORIZON KIDS QUEST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------ ------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents ..................... $ 114,474 $ 155,987
Accounts receivable ........................... 808,002 864,146
Current portion of notes receivable ........... 159,746 156,747
Prepaid expenses and other current assets ..... 98,601 98,016
------------ ------------
Total current assets ........................ 1,180,823 1,274,896
------------ ------------
PROPERTY AND EQUIPMENT:
Furniture, fixtures, equipment and leaseholds . 10,012,300 10,023,548
Less--Accumulated depreciation and amortization (5,161,446) (4,662,433)
------------ ------------
Total property and equipment ................ 4,850,854 5,361,115
OTHER ASSETS:
Goodwill (net of accumulated amortization
of $178,923 and $167,885, respectively) .... 483,362 494,400
Notes receivable, net of current portion ...... 918,432 951,460
Other ......................................... 136,816 167,731
------------ ------------
$ 7,570,287 $ 8,249,602
============ ============
</TABLE>
See accompanying notes which are an integral part of these balance sheets.
3
<PAGE>
NEW HORIZON KIDS QUEST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
----------- -----------
(UNAUDITED)
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt ................ $ 1,248,200 $ 1,425,490
Accounts payable .................................... 393,436 834,460
Accrued expenses .................................... 831,628 709,054
----------- -----------
Total current liabilities ......................... 2,473,264 2,969,004
LONG-TERM DEBT, less current maturities ................ 1,184,555 1,381,963
----------- -----------
Total liabilities ................................. 3,657,819 4,350,967
----------- -----------
SHAREHOLDERS' EQUITY:
Undesignated preferred stock, 3,500,000 shares
authorized; no shares issued and outstanding ...... -- --
Series A convertible preferred stock, $.01 par value,
1,500,000 shares authorized; no shares issued and
outstanding ....................................... -- --
Common stock, $.01 par value, 20,000,000 shares
authorized; 3,293,300 shares issued and outstanding 32,933 32,933
Additional paid-in capital .......................... 7,196,197 7,196,197
Accumulated deficit ................................. (3,316,662) (3,330,495)
----------- -----------
Total shareholders' equity ........................ 3,912,468 3,898,635
----------- -----------
$ 7,570,287 $ 8,249,602
=========== ===========
</TABLE>
See accompanying notes which are an integral part of these balance sheets.
4
<PAGE>
NEW HORIZON KIDS QUEST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31
-------------------------------
2000 1999
----------- -----------
<S> <C> <C>
REVENUE .............................. $ 4,202,813 $ 4,009,072
COSTS AND EXPENSES:
Direct Expenses ................... 3,252,328 3,235,910
Depreciation and Amortization ..... 503,512 458,569
Pre-Opening Expenses .............. 6,331 40,584
----------- -----------
Total Costs and Expenses ........ 3,762,171 3,735,063
----------- -----------
CENTER OPERATING INCOME .............. 440,642 274,009
Selling, General and Administrative 342,101 358,602
Amortization ...................... 22,961 28,576
----------- -----------
OPERATING INCOME (LOSS) .............. 75,580 (113,169)
Interest Expense .................. (69,475) (96,858)
Interest Income ................... 26,507 30,190
Minority Interest ................. (13,379) 3,833
----------- -----------
NET INCOME (LOSS) Before Income Taxes 19,233 (176,004)
Provision for Income Taxes ........ 5,400 --
----------- -----------
NET INCOME (LOSS) .................... $ 13,833 $ (176,004)
=========== ===========
NET INCOME (LOSS) PER SHARE:
Basic and diluted ................. $ .00 $ (.05)
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic ............................. 3,293,300 3,293,300
=========== ===========
Diluted ........................... 3,401,000 3,293,300
=========== ===========
</TABLE>
See accompanying notes which are an integral part of these statements.
5
<PAGE>
NEW HORIZON KIDS QUEST, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
---------------------------
2000 1999
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) ............................................. $ 13,833 $(176,004)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities--
Depreciation and amortization ............................. 526,473 487,145
Change in operating assets and liabilities:
Accounts receivable ..................................... 56,144 227,296
Prepaid expenses and other .............................. (585) (39,142)
Accounts payable ........................................ (441,024) (115,960)
Other assets ............................................ 30,531 (13,246)
Accrued expenses ........................................ 122,574 101,306
--------- ---------
Net cash provided by operating activities ............. 307,946 471,395
--------- ---------
INVESTING ACTIVITIES:
Purchases of property and equipment ........................... (4,790) (638,935)
Payments received on notes receivable ......................... 30,029 27,293
--------- ---------
Net cash used in investing activities ....................... 25,239 (611,642)
--------- ---------
FINANCING ACTIVITIES:
Payments on line of credit, net ............................... -- (81,687)
Payments on long-term obligations ............................. (374,698) (286,649)
Additional borrowings of long-term debt ....................... -- 447,381
--------- ---------
Net cash provided by (used in) financing activities ......... (374,698) 79,045
--------- ---------
Net decrease in cash and cash equivalents ................... (41,513) (61,202)
CASH AND CASH EQUIVALENTS,
beginning of period ........................................... 155,987 208,717
--------- ---------
CASH AND CASH EQUIVALENTS,
end of period ................................................. $ 114,474 $ 147,515
========= =========
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION:
Cash paid during the period for--
Interest .................................................... $ 74,915 $ 96,286
========= =========
Taxes ....................................................... $ 5,398 $ 31,000
========= =========
</TABLE>
See accompanying notes which are an integral part of these statements.
6
<PAGE>
NEW HORIZON KIDS QUEST, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The condensed consolidated financial statements included herein have been
prepared by New Horizon Kids Quest, Inc. (the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission.
The Company's business is seasonal and, accordingly, interim results are not
indicative of results for a full year. In the opinion of the Company, all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the financial position of the Company as of March 31, 2000, and
the results of its operations for the three months ended March 31, 2000 and
1999, have been reflected in the accompanying financial statements. Certain
information in footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations, although the
Company believes that the disclosures provided herein are adequate to make the
information presented not misleading. It is suggested that these consolidated
financial statements be read in conjunction with the financial statements for
the years ended December 31, 1999 and 1998, and the footnotes thereto, included
in the Company's Form 10-KSB, filed with the Securities and Exchange Commission.
1. Basis of Presentation:
Principles of Consolidation -- The consolidated financial statements
include the accounts of New Horizon Kids Quest, Inc. and its wholly owned
subsidiaries (together, the "Company"). All intercompany balances and
transactions have been eliminated in consolidation.
2. Earnings Per Share:
Basic earnings per common share is computed by dividing net income by the
weighted average number of shares of common stock outstanding during the year.
Diluted earnings per share is computed similarly to the computation of basic
earnings per share except that the denominator is increased by the assumed
exercise of dilutive options and warrants using the treasury stock method.
Options and warrants totaling 566,100 were excluded from the computation of
diluted earnings per share in 1999 because their effect is antidilutive. A
reconciliation of these amounts is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31
-------------------------------------
2000 1999
---------------- ---------------
<S> <C> <C>
Weighted average common shares outstanding:
Basic.................................. 3,293,300 3,293,300
Dilutive effect of option plan......... 107,700 --
--------- ---------
Diluted................................ 3,401,000 3,293,300
========= =========
</TABLE>
7
<PAGE>
3. Segment Disclosures:
The Company has two segments reportable under the guidelines of SFAS No.
131: Idaho Traditional Care and New Horizon Kids Quest, Inc.
<TABLE>
<CAPTION>
NEW HORIZON IDAHO
KIDS QUEST, TRADITIONAL
FOR THE THREE MONTH PERIOD ENDED MARCH 31, INC. CARE CONSOLIDATED
----------------- ---------------- -----------------
<S> <C> <C> <C>
2000
Revenue............................................. $ 3,162,210 $ 1,040,603 $ 4,202,813
Depreciation and amortization....................... 478,985 47,488 526,473
Interest income..................................... 26,507 -- 26,507
Income from continuing operations................... 5,533 8,300 13,833
Capital expenditures................................ (5,165) 9,955 4,790
1999
Revenue............................................. $ 3,030,329 $ 978,743 $ 4,009,072
Depreciation and amortization....................... 429,954 57,191 487,145
Interest income..................................... 30,190 -- 30,190
Loss from continuing operations..................... (67,435) (108,569) (176,004)
Capital expenditures................................ 517,972 120,963 638,935
</TABLE>
8
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company currently provides hourly child care at nineteen locations in
nine states, including two with supervised video entertainment centers. The
Company also provides traditional child care at ten New Horizon Child Care
Centers in Idaho, one location in Joliet, Illinois, at its Mall of America
location in Bloomington, Minnesota, and at The Venetian Resort~Hotel~Casino in
Las Vegas, Nevada.
Two of the Company's Kids Quest centers operate in enclosed shopping malls,
including a center in Knott's Camp Snoopy at Mall of America in Bloomington,
Minnesota. The Mall of America center was licensed in June 1999, to provide
traditional care, in addition to hourly care. Seventeen of the Company's Kids
Quest centers are operated in conjunction with casinos. With the opening of its
Texas Station Kids Quest in February 1999, the Company now operates four centers
in casinos owned or managed by Station Casinos, Inc. in Nevada and Missouri.
Station Casinos, Inc. has also agreed to include Kids Quest centers in three
additional Station Casinos, Inc. properties. Seven of the Company's Kids Quest
centers were previously operated in conjunction with casinos owned or managed by
Grand Casinos, Inc. in Minnesota, Mississippi, and Louisiana. In 1998, Grand
Casinos, Inc. concluded its management of casinos in Mille Lacs and Hinckley,
Minnesota, with the Mille Lacs Band of Ojibwe assuming management of the
casinos. In December 1998, Grand Casinos, Inc. transferred the management
contracts for the two Louisiana casinos to newly formed Lakes Gaming, Inc., now
a publicly held corporation, and Grand Casinos, Inc. merged into Park Place
Entertainment Corporation, combining Grand Casinos, Inc.'s Mississippi
properties with the gaming operations previously held by Hilton Hotels. In March
2000, Lakes Gaming, Inc. concluded its management of the casino in Avoyelles,
Louisiana, with the Tunica-Biloxi Tribe of Louisiana assuming management of this
casino. As a result of these transactions, the Company now operates two Kids
Quest centers in Minnesota casinos owned and managed by the Mille Lacs Band, one
Kids Quest center in a Louisiana casino owned and managed by the Tunica-Biloxi
Tribe of Louisiana, one Kids Quest center in a Louisiana casino managed by Lakes
Gaming, Inc., and three Kids Quest centers in Mississippi casinos owned and
managed by Park Place Entertainment Corporation. The Company's newest hourly
care center opened December 22, 1999, at the Cliff Castle Casino in Camp Verde,
Arizona. In addition, the Company opened an hourly care facility at the Avi
Hotel and Casino in Laughlin, Nevada, on July 16, 1999. The Company closed its
traditional care and arcade facilities at Treasure Island Hotel and Casino in
Redwing, Minnesota, on April 2, 1999, and its hourly care and arcade facilities
at Bullwhackers in Blackhawk, Colorado, on October 31, 1999. The closures were
primarily the result of poor financial performance. The Company will continue to
operate an hourly child care facility at Treasure Island. The Company currently
has contracts to open two additional Kids Quest centers within the next six
months at the Jackpot Junction Hotel and Casino in Morton, Minnesota, and
Ho-Chunk Casino and Bingo in the Wisconsin Dells. The Ho-Chunk center will also
include a supervised, non-violent video entertainment center.
During 1995 and 1996, the Company acquired an aggregate of twelve existing
child care centers in Boise, Idaho, which the Company now operates as New
Horizon Child Care centers. The Company has subsequently opened two additional
facilities in August of 1996 and January of 1999. In July and August of 1999,
the Company closed two of its centers in Boise, Idaho, and a third center was
closed in January, 2000. The centers did not meet the Company's quality
standards and were located in areas where an over supply of child care
facilities existed. In August of 1999, one of the Company's centers was
partially destroyed by fire. The fire occurred after hours, and the Company's
loss from destroyed property is fully covered by insurance. The Company will not
resume providing child care at this location. The Company now operates a total
of ten traditional child care centers in the Boise market.
The Company operates an employee child care center in Joliet, Illinois, for
the employees of Empress Casino and Mobil Oil Corporation and, on April 19,
2000, the Company opened a New Horizon Child Care Center providing employee
child care at The Venetian Resort~Hotel~Casino in Las Vegas, Nevada. The
Venetian, a $1.2 billion property, is the first casino to provide on-site child
care for its employees on the Las Vegas strip.
Since its inception as an hourly children's entertainment and recreational
facility, Kids Quest has expanded its product line to include supervised video
arcades, traditional child care and employee child care. The Company plans to
continue to seek opportunities for additional venues for all of its product
lines.
9
<PAGE>
The Company's business is seasonal with revenues and operating income for
Kids Quest being the highest and New Horizon Child Care being the lowest in the
summer months. Consequently, results of operations for any interim period may
not be indicative of results to be achieved for a full fiscal year.
Results of Operations
Revenue for the three months ended March 31, 2000, increased $193,741, or
5%, to $4,202,813 from $4,009,072 for the same period in 1999. The Company
opened three new Kids Quest centers and an employee child care center since the
beginning of 1999, which accounted for $243,900 of additional revenue. Revenue
for the Kids Quest centers open during both periods decreased $10,866 to
$2,792,704 for the three months ended March 31, 2000, from $2,803,570 for the
same period in 1999. The Company attributes this decrease to the fact that the
Company's hourly child care center and video entertainment center at Mohegan Sun
were relocated to a significantly smaller space in November 1999. The move was
necessary to allow for construction of Mohegan's $800 million hotel addition and
casino expansion, which is scheduled to open in August 2001 and will include a
new 15,075 square foot Kids Quest and non-violent video entertainment center.
All relocation costs were paid by Mohegan Sun. Mohegan Sun is also obligated to
reimburse New Horizon Kids Quest for all lost profits during the relocation
period. The calculation of lost profits is based on prior year revenues adjusted
for CPI increases. Revenues for the Idaho New Horizon Child Care centers open
during both periods increased $245,431, or 31%, to $1,035,121 for the three
months ended March 31, 2000, from $789,690 for the same period in 1999. The Kids
Quest and Idaho centers that were closed since the first quarter of 1999
accounted for revenue declines of $284,724 for the three month period ended
March 31, 2000, as compared to the same period in 1999.
Costs and expenses for the three months ended March 31, 2000, increased
$27,108, or 1%, to $3,762,171 from $3,735,063 for the same period in 1999.
Centers opened since the beginning of 1999 accounted for an increase of
$188,076. Existing Kids Quest locations experienced a nominal increase in costs
and expenses for the period. Costs and expenses for the Idaho New Horizon Child
Care centers open during both periods increased $185,669, or 24%, to $950,864
for the three months ended March 31, 2000, compared to $765,195 for the same
period in 1999. The cost increases were due primarily to increased operating
costs as a result of enrollment transfers from the four closed centers. These
increases were offset by a decrease of $350,187 for the three month period ended
March 31, 2000, as compared to the same period in 1999 for the Kids Quest and
Idaho centers that were closed since the first quarter of 1999.
Selling, general, and administrative expenses decreased $16,501, or 5%, to
$342,101 for the three month period ended March 31, 2000, from $358,602 for the
same period in 1999. Management expects selling, general, and administrative
expenses to increase with the addition of and negotiation for new locations;
however, such expenses should decrease as a percentage of revenue with the
continued expansion of the Company's business.
Pursuant to the terms of the Company's contracts with casino operators,
casino operators are entitled to establish a discounted rate below the fair
market value for Kids Quest's services to be charged by Kids Quest to the public
in order to attract customers to Kids Quest and ultimately to their casinos. The
casino operator must reimburse the Company for the difference between such
amount charged and the fair market value. The Company received $280,244 of
reimbursements for rate discounts for the three month period ended March 31,
2000, versus $267,815 for the same period in 1999, an increase of $12,429, or
5%. The majority of these rate discount reimbursements were from three casinos
owned by Park Place Entertainment Corporation and four Indian casinos currently
or previously managed by Lakes Gaming, Inc. (formerly Grand Casinos, Inc.) There
can be no assurance that such discounts and reimbursements will not be modified
or be discontinued altogether or that future Kids Quest agreements will provide
for a discounted rate to the public. In the event that casino operators choose
not to provide for a discounted hourly rate, the Company may charge higher
hourly rates. While this may cause patronage to decline and ultimately result in
lower revenues, the Company currently has ten locations that operated without
any rate discount and has found no evidence to conclude that higher
non-discounted rates to customers have a significant impact on a location's
patronage and resulting revenue.
Interest expense for the three month period ended March 31, 2000, decreased
$27,383, or 28%, to $69,475 from $96,858 for the same period in 1999. The
decrease in interest expense is due primarily to the expiration of two equipment
leases.
10
<PAGE>
Net income for the three month period ended March 31, 2000, was $13,833
compared to a net loss of $176,044 for the same period in 1999. Centers opened
since the beginning of 1999 accounted for an increase in center operating income
of $55,824. Center operating income for the Kids Quest centers open during both
periods decreased $14,416 as compared to the same period in 1999. Kids Quest
centers closed since the first quarter of 1999 resulted in an improvement in
center operating income of $24,058 for the period as compared to the same period
in 1999. Center operating income for the Idaho New Horizon Child Care centers
increased $101,167 to $85,820 for the three months ended March 31, 2000 compared
to a loss of $15,347 for the prior year period. The improvement in Idaho is
primarily due to the closing of four centers and the transfer of a majority of
their enrollment to other Company centers.
Liquidity and Capital Resources
During the three month period ended March 31, 2000, the Company generated
$307,946 from operations, invested $4,790 in property and equipment, and
received payments on notes receivable of $30,029. Additionally, the Company made
payments on long-term obligations of $374,698. The Company ended the period with
a cash balance of $114,474. During the same period in 1999, the Company
generated $471,395 from operations, invested $638,935 in property and equipment,
and received payments on notes receivable of $27,293. The Company ended the
period with a cash balance of $147,515.
The Company's capital needs depend upon the Company's expansion efforts.
The Company incurs pre-opening expenses in connection with each of its Kids
Quest centers as well as acquisition or development expenses to add traditional
child care centers. The Company is actively seeking additional Kids Quest
contracts and has engaged in site analysis for the construction of additional
New Horizon Child Care centers. The Company will require additional financing in
2000 as it adds Kids Quest or New Horizon Child Care locations or if the Company
were to pursue additional acquisitions during the year. In addition, the Company
is currently obligated to loan Station Casinos, Inc. up to $500,000 for
leasehold improvements in connection with the Kids Quest location at Texas
Station in Las Vegas, Nevada, which opened in February of 1999. The Company is
currently seeking financing. The Company believes that it will be able to
arrange such additional financing and will be able to fund additional expansion
with the additional financing and with cash flow from operations. However, if
financing is not obtained, the Company may be required to reduce expenditures
for 2000.
Year 2000 Compliance
Beginning in early 1998, the Company began evaluating its year 2000
readiness. The Company began testing its various information systems to
determine if they would correctly recognize and process data information beyond
the year 1999. The evaluation performed included in-house testing of systems by
Company employees, use of various purchased evaluation software, and discussions
with material software vendors. The results of the Company's evaluations
resulted in the conclusion that much of the Company's software, as well as the
imbedded technology of some of the Company's hardware equipment, was not year
2000 compliant. During 1999, the Company upgraded its systems with software and
hardware that is year 2000 compatible. Many of these upgrades had been
previously planned in the normal course of business without regard to the year
2000 issue. A significant portion of the upgrades were provided by vendors
pursuant to previously existing software development and service agreements with
the remaining upgrades requiring expenditure by the Company. The Company
completed the majority of the upgrades, primarily related to revenue recognition
and internal accounting, in January of 1999. The Company's total expenditures
for these upgrades were less than $30,000 to complete system upgrades to year
2000 compliance.
To date, the Company has experienced no business interruption due to year
2000 issues. The Company will continue its evaluation effort into the year 2000
to identify any previously unanticipated or unidentified year 2000 issues. If
any additional issues or complications arise that may potentially cause any
business interruption, the Company believes it can effectively rely on manual
systems to assure minimal business interruption as a result of year 2000 system
failures.
11
<PAGE>
Private Securities Litigation Reform Act
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
Form 10-QSB (as well as information included in oral statements or other written
statements made or to be made by the Company) may contain statements that are
forward-looking, such as statements relating to plans for future expansion and
other business development activities, as well as other capital spending,
financial sources and the effects of regulation and competition. Such
forward-looking information involves important risks and uncertainties that
could significantly affect future results and, accordingly, such results may
differ from those expressed in any forward-looking statement made by or on
behalf of the Company. These risks and uncertainties include, but are not
limited to, those relating to development and construction activities, access to
sources for additional capital, dependence on existing management and third
party contracts, domestic or global economic conditions, changes in federal or
state laws or the administration or enforcement of such laws, litigation or
claims, year 2000 compliance, as well as all other risks and uncertainties
described in the Company's filings.
12
<PAGE>
PART II. - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits List
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed a form 8-K on February 3, 2000 and
March 23, 2000.
13
<PAGE>
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.
NEW HORIZON KIDS QUEST, INC.
By: /s/ William M. Dunkley
--------------------------------
William M. Dunkley
Chief Executive Officer
By: /s/ Patrick R. Cruzen
--------------------------------
Patrick R. Cruzen
Chief Financial Officer
Date: May 15, 2000
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 114,474
<SECURITIES> 1,414
<RECEIVABLES> 859,680
<ALLOWANCES> 51,678
<INVENTORY> 17,035
<CURRENT-ASSETS> 1,180,823
<PP&E> 10,012,300
<DEPRECIATION> 5,161,446
<TOTAL-ASSETS> 7,570,287
<CURRENT-LIABILITIES> 2,924,310
<BONDS> 0
<COMMON> 32,933
0
0
<OTHER-SE> 3,879,535
<TOTAL-LIABILITY-AND-EQUITY> 7,570,287
<SALES> 212,416
<TOTAL-REVENUES> 4,202,813
<CGS> 149,589
<TOTAL-COSTS> 149,589
<OTHER-EXPENSES> 3,991,023
<LOSS-PROVISION> (11,136)
<INTEREST-EXPENSE> 69,475
<INCOME-PRETAX> 19,233
<INCOME-TAX> 5,400
<INCOME-CONTINUING> 13,833
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,833
<EPS-BASIC> .00
<EPS-DILUTED> .00
</TABLE>
