FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-15415
KINETIKS.COM, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 76-0478045
(State or other jurisdiction of IRS Employer
incorporation or organization) Identification Number
c/o C. Garold Sims, 1775 Sherman Street, Suite 2015, Denver, Colorado 80203
(Address of Principal Offices) (Zip Code)
Registrant's telephone number, including area code: 303-830-6660
N/A
(Former name,former address and former fiscal year,if changed since last report)
Check whether the Issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the last
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 [ ] No [X]
As of April 27, 1999, 5,389,083 shares of Common Stock have been
issued, 3,389,083 shares of Common Stock of the Registrant were
outstanding.
Transitional Small Business Disclosure Format (check one) Yes[ ] No[X]
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-15415
KINETIKS.COM, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 76-0478045
(State or other jurisdiction of IRS Employer
incorporation or organization) Identification Number
c/o C. Garold Sims, 1775 Sherman Street, Suite 2015, Denver, Colorado 80203
(Address of Principal Offices) (Zip Code)
Registrant's telephone number, including area code: 303-830-6660
N/A
(Former name,former address and former fiscal year,if changed since last report)
Check whether the Issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the last
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 [ ] No [X]
As of April 27, 1999, 5,389,083 shares of Common Stock have been
issued, 3,389,083 shares of Common Stock of the Registrant were
outstanding.
Transitional Small Business Disclosure Format (check one) Yes[ ] No[X]
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-15415
KINETIKS.COM, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 76-0478045
(State or other jurisdiction of IRS Employer
incorporation or organization) Identification Number
c/o C. Garold Sims, 1775 Sherman Street, Suite 2015, Denver, Colorado 80203
(Address of Principal Offices) (Zip Code)
Registrant's telephone number, including area code: 303-830-6660
N/A
(Former name,former address and former fiscal year,if changed since last report)
Check whether the Issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the last
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 [ ] No [X]
As of April 27, 1999, 5,389,083 shares of Common Stock have been
issued, 3,389,083 shares of Common Stock of the Registrant were
outstanding.
Transitional Small Business Disclosure Format (check one) Yes[ ] No[X]
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly periods ended March 31, 1998,
June 30, 1998, and September 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-15415
KINETIKS.COM, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 76-0478045
(State or other jurisdiction of IRS Employer
incorporation or organization) Identification Number
c/o C. Garold Sims, 1775 Sherman Street, Suite 2015, Denver, Colorado 80203
(Address of Principal Offices) (Zip Code)
Registrant's telephone number, including area code: 303-830-6660
N/A
(Former name,former address and former fiscal year,if changed since last report)
Check whether the Issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the last
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 [ ] No [X]
As of April 27, 1999, 5,389,083 shares of Common Stock have been
issued, 3,389,083 shares of Common Stock of the Registrant were
outstanding.
Transitional Small Business Disclosure Format (check one) Yes[ ] No[X]
INDEX
PART I.FINANCIAL INFORMATION:
Item1. Financial Statements
Balance Sheets at March 31, 1998 (unaudited) and
December 31, 1997
Statements of Operations for the Three Months Ended
March 31, 1998 (unaudited) and March 31, 1997
(unaudited)
Statements of Cash Flows for the Three Months Ended
March 31, 1998 (unaudited) and March 31, 1997
(unaudited)
Balance Sheets at June 30, 1998 (unaudited) and
December 31, 1997
Statements of Operations for the Three Months Ended
June 30, 1998 (unaudited) and June 30, 1997
(unaudited)
Statements of Operations for the Six Months Ended
June 30, 1998 (unaudited) and for the Six Months
Ended June 30, 1997 (unaudited)
Statements of Cash Flows for the Six Months Ended
June 30, 1998 (unaudited) and June 30, 1997
(unaudited)
Balance Sheets at September, 1998 (unaudited) and
December 31, 1997
Statements of Operations for the Three Months Ended
September 30, 1998 (unaudited) and September 30, 1997
(unaudited)
Statements of Operations for the Nine Months Ended
September 30, 1998 (unaudited) and for the Nine
Months Ended September 30, 1997 (unaudited)
Statements of Cash Flows for the Nine Months Ended
September 30, 1998 (unaudited) and September 30, 1997
(unaudited)
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
PART I.FINANCIAL INFORMATION
Item 1. Financial Statements
The consolidated financial statements included herein
have been prepared by Kinetiks.com, Inc. (the Company)
without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission (SEC).
Certain information and footnote disclosures normally
included in financial statements prepared in accordance
with generally accepted accounting principles have been
omitted pursuant to such SEC rules and regulations. In
the opinion of management of the Company the foregoing
statements contain all adjustments necessary to present
fairly the financial position of the Company as of
March 31, 1998, June 30, 1998, September 30, 1998, its
results of operations for the three, six, and nine
month periods ended March 31, 1998, June 30, 1998,
September 30, 1998 and its cash flows for the three,
six, and nine month periods ended March 31, 1998, June
30, 1998, September 30, 1998. The Company's balance
sheet as of December 31, 1997 included herein has been
derived from the Company's audited financial statements
as of that date included in the Company's annual report
on Form 10-KSB. The results for these interim periods
are not necessarily indicative of the results for the
entire year. The accompanying financial statements
should be read in conjunction with the financial
statements and the notes thereto filed as a part of the
Company's annual report on Form 10-KSB Kinetiks.com,Inc.
Kinetiks.com, Inc.
(A Development Stage Company)
Balance Sheets
March 31,1998 December 31,1997
(unaudited)
Assets
Current assets:
Cash 0 0
Total current assets 0 0
0 0
Liabilities and Stockholders' (Deficit)
Current liabilities:
Judgments payable 136,292 106,908
Notes payable 116,500 116,500
Accounts payable 939,168 965,499
Accrued compensation 170,463 170,463
Other accrued expenses 30,241 27,158
Total current liabilities 1,392,664 1,386,528
Note payable to shareholder officer 185,036 180,952
Stockholders' (deficit):
Preferred stock, $.001 par value, 500,000
shares authorized;none issued 0 0
Common stock, $.001 par value; 20,000,000
shares authorized; 5,389,083 issued;
3,389,083 outstanding December 31,1997 5,390 5,390
Less Treasury stock, 2,000,000 shares (2,000) (2,000)
Additional paid-in capital 5,811,272 5,811,272
Deficit accumulated during the development stage (7,392,362) (7,382,142)
Total stockholders' (deficit) (1,577,700) (1,567,480)
0 0
See accompanying notes
Kinetiks.com, Inc.
(A Development Stage Company)
Balance Sheets
June 30,1998 December 31,1997
(unaudited)
Assets
Current assets
Cash 1,155 0
Total current assets 1,155 0
1,155 0
Liabilities and Stockholders' (Deficit)
Current liabilities:
Judgments payable 136,292 106,908
Notes payable 116,500 116,500
Accounts payable 937,722 965,499
Accrued compensation 105,503 170,463
Other accrued expenses 32,558 27,158
Total current liabilities 1,356,241 1,386,528
Note payable to shareholder officer 0 180,952
Stockholders' (deficit):
Preferred stock, $.001 par value, 500,000
shares authorized;none issued 0 0
Common stock, $.001 par value; 20,000,000
shares authorized;5,389,083 issued;
3,389,083 outstanding as of December 31, 1997 5,390 5,390
Less treasury stock, 2,000,000 shares (2,000) (2,000)
Additional paid-in capital 6,061,517 5,811,272
Deficit accumulated during the development stage (7,419,993) (7,382,142)
Total stockholders' (deficit) (1,355,086) (1,567,480)
1,155 0
See accompanying notes
Kinetiks.com, Inc.
(A Development Stage Company)
Balance Sheets
September 30,1998 December 31,1997
(unaudited)
Assets
Current assets:
Cash 142 0
Total current assets 142 0
142 0
Liabilities and Stockholders' (Deficit)
Current liabilities:
Judgments payable 199,937 106,908
Notes payable 157,063 116,500
Accounts payable 874,578 965,499
Accrued compensation 105,503 170,463
Other accrued expenses 36,583 27,158
Total current liabilities 1,373,664 1,386,528
Note payable to shareholder officer 0 180,952
Stockholders' (deficit):
Preferred stock, $.001 par value, 500,000
shares authorized; none issued 0 0
Common stock, $.001 par value; 20,000,000
shares authorized;5,389,083 issued;
3,389,083 outstanding as of December 31, 1997 5,390 5,390
Less Treasury stock, 2,000,000 shares (2,000) (2,000)
Additional paid-in capital 6,061,517 5,811,272
Deficit accumulated during the development stage (7,438,429) (7,382,142)
Total stockholders' (deficit) (1,373,522) (1,567,480)
142 0
See accompanying notes
Kinetiks.com, Inc.
(A Development Stage Company)
Statements of Operations
For the three months ended March 31,
1998 1997
(unaudited) (unaudited)
Revenue 0 231,480
Operating expenses:
Cost of revenue 0 66
Sales and Marketing 0 101,295
General and administrative 3,054 300,497
3,054 401,858
Operating loss (3,054) (170,378)
Other Income (expense):
Interest expense (7,166) (8,068)
Interest income 0 133
Net loss (10,220) (178,313)
Net loss per common and common
equivalent share 0 (0.05)
Shares used in computing net
loss per common and common
equivalent share 3,389,083 3,389,083
See accompanying notes
Kinetiks.com, Inc.
(A Development Stage Company)
Statements of Operations
For the three months ended June 30,
1998 1997
(unaudited) (unaudited)
Revenue 0 0
Operating expenses:
General and administrative 22,598 0
22,598 0
Operating loss (22,598) 0
Other Income (expense):
Interest expense (5,033) (8,068)
Net loss (27,631) (8,068)
Net loss per common and common
equivalent share (0.01) (0.05)
Shares used in computing net
loss per common and common
equivalent share 3,389,083 3,389,083
See accompanying notes
Kinetiks.com, Inc.
(A Development Stage Company)
Statements of Operations
For the six months ended June 30,
1998 1997
(unaudited) (unaudited)
Revenue 0 231,480
Operating expenses:
Cost of revenue 0 66
Sales and Marketing 0 101,295
General and administrative 25,652 300,497
25,652 0
Operating loss (25,652) (170,378)
Other Income (expense):
Interest expense (12,179) (16,136)
Interest income 0 133
Net loss (37,851) (186,647)
Net loss per common and common
equivalent share (0.01) (0.06)
Shares used in computing net
loss per common and common
equivalent share 3,389,083 3,389,083
See accompanying notes
Kinetiks.com, Inc.
(A Development Stage Company)
Statements of Operations
For the three months ended September 30,
1998 1997
(unaudited) (unaudited)
Revenue 0 0
Operating expenses:
General and administrative 14,411 0
14,411 0
Operating loss (14,411) 0
Other Income (expense):
Interest expense (4,025) (8,068)
Net loss (18,436) (8,068)
Net loss per common and common
equivalent share (0.01) 0
Shares used in computing net
loss per common and common
equivalent share 3,389,083 3,389,083
See accompanying notes
Kinetiks.com, Inc.
(A Development Stage Company)
Statements of Operations
For the nine months ended September 30,
1998 1997
(unaudited) (unaudited)
Revenue 0 231,480
Operating expenses:
Cost of revenue 0 66
Sales and Marketing 0 101,295
General and administrative 40,063 300,497
40,063 401,858
Operating loss (40,063) (170,378)
Other Income (expense):
Interest expense (16,224) (24,204)
Interest income 0 133
Net loss (56,287) (194,715)
Net loss per common and common
equivalent share (0.02) (0.06)
Shares used in computing net
loss per common and common
equivalent share 3,389,083 3,389,083
See accompanying notes
Kinetiks.com, Inc.
(A Development Stage Company)
Statements of Cash Flows
For the three months ended March 31,
1998 1997
(unaudited) (unaudited)
Operating Activities:
Net cash used in operating activities (240) (149,032)
Investing activities:
Proceeds from short-term investments 0 3,109
Net cash provided by investing
activities 0 3,109
Financing Activities:
Proceeds from notes payable 240 105,000
Repayment of notes 0 0
Net cash provided by financing
activities 240 105,000
Net change in cash 0 (40,923)
Cash at beginning 0 40,923
Cash at end 0 0
See accompanying notes
Kinetiks.com, Inc.
(A Development Stage Company)
Statements of Cash Flows
For the six months ended June 30,
1998 1997
(unaudited) (unaudited)
Operating Activities:
Net cash used in operating activities (19,811) (149,032)
Investing activities:
Proceeds from short-term investments 0 3,109
Net cash provided by investing
activities 0 3,109
Financing Activities:
Proceeds from notes payable 27,666 105,000
Repayment of notes (6,700) 0
Net cash provided by financing
activities 20,966 105,000
Net change in cash 1,155 (40,923)
Cash at beginning 0 40,923
Cash at end 1,155 0
See accompanying notes
Kinetiks.com, Inc.
(A Development Stage Company)
Statements of Cash Flows
For the nine months ended September 30,
1998 1997
(unaudited) (unaudited)
Operating Activities:
Net cash used in operating activities (33,721) (149,032)
Investing activities:
Pproceeds from short-term investments 0 3,109
Net cash provided by investing
activities 0 3,109
Financing Activities:
Proceeds from notes payable 40,563 105,000
Repayment of notes (6,700) 0
Net cash provided by financing
activities 33,863 105,000
Net change in cash 142 (40,923)
Cash at beginning 0 40,923
Cash at end 142 0
See accompanying notes
Kinetiks.com, Inc.
Notes to Financial Statements
March 31, 1998, June 30, 1998, September 30, 1998,
(Unaudited)
1.Earnings per share
The Company used SFAS No. 128 when calculating earnings
per share. This statement replaces the presentation of
primary earnings or loss per share (EPS) with a
presentation of basic EPS. It also requires dual
presentation of basic and diluted EPS for all entities
with complex capital structures and requires
reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator
of the diluted EPS computation. Basic EPS excludes
dilution; diluted EPS reflects the potential dilution
that could occur if securities or other contracts to
issue common stock were exercised or converted into
common stock or resulted in the issuance of common
stock that then shared in the earnings of the entity.
2.Commitments and Contingencies
Leases
The Company leased its office space and certain office
equipment under noncancellable operating lease
agreements expiring through the year 2000. An officer
and director and a former officer and director
personally guaranteed certain of these leases. Due to
the lack of operating funds and the inability of the
Company to raise additional equity capital, the Company
defaulted on all of its leases, and accordingly, the
lease creditors accelerated all remaining payments.
Certain of the lease creditors filed legal proceedings
against the Company during the years ended December 31,
1997 and obtained court ordered judgments against the
Company and the officer and director and former officer
and director. As of December 31, 1998 judgments from
lease creditors were $113,613.
Securities and Exchange Commission
The Company has failed to timely file the required
Forms 10-KSB and 10-QSB as required by the Securities
and Exchange Commission. The Company and its officers
and directors could be subject to certain fines and
penalties from the SEC for its failure to timely file
these reports. The Company cannot determine the
effect, if any, that this uncertainty may have on its
financial position.
3.Notes Payables
March 31, June 30, September 30,
1998 1998 1998
Note payable, shareholder,
interest at 10.91%, no
stated repayment terms and 9,000 9,000 9,000
without collateral.
Note payable, shareholder,
interest at 8%, principal
and interest due April 1997,
without collateral. 50,000 50,000 50,000
Note payable, interest at
8%, principal and interest
due April 1997, without
collateral. 5,000 5,000 5,000
Note payable, shareholder,
no stated interest, no
stated repayment terms,
without collateral. 2,500 2,500 2,500
Note payable, shareholder,
business development
company, interest at 18% (in
default), due March 30,
1997,and without collateral. 25,000 25,000 25,000
Note payable, shareholder,
business development
company, interest at 8%, no
stated repayment terms, and
without collateral. - 27,426 40,369
Note payable, shareholder,
venture capital firm,
interest at 10%, principal
and interest due March 1997,
without collateral. 25,000 25,000 25,000
Note payable, shareholder
officer, interest at 9%,
principal and interest due
January 1997, without
collateral. 140,576 - -
Total 257,076 143,926 156,869
The note of $9,000 represents a restructured note
between the Company and a shareholder. In January 1997
the Company and the shareholder exchanged an existing
note payable in the amount of $30,000 and accrued
interest with a new $9,000 note payable and surrendered
to the shareholder the Company's boat, which had a net
book value at the date of this restructuring of
$26,815. The new note bears interest at 10.91%, has no
stated repayment terms, and is without collateral.
In March 1997, the Company borrowed $50,000 from a
shareholder and issued warrants to purchase 100,000
shares of the Company's common stock at $.25 per share.
In April 1997, when the Company was unable to pay this
note, the Company issued additional warrants to
purchase 100,000 shares of the Company's common stock
at .25 per share. The exercise price of the warrants
approximated the fair market value of the Company's
stock on the dates of these grants.
In March 1997, the Company borrowed $5,000 from a
shareholder and issued warrants to purchase 10,000
shares of the Company's common stock at $.25 per share.
In April 1997, when the Company was unable to pay this
note, the Company issued additional warrants to
purchase 10,000 shares of the Company's common stock at
$.25 per share. The exercise price of the warrants
approximated the fair market value of the Company's
stock on the dates of these grants.
During 1997, the Company borrowed funds from a former
employee and shareholder. The balance remaining is
$2,500. There are no repayment terms and interest does
not accumulate.
During 1997 the Company borrowed $25,000 from The
Rockies Fund (The "Fund"), a shareholder that is a
"business development company" under the Investment
Company Act of 1940. In connection with the execution
of the $25,000 note, the Company issued warrants to
purchase 50,000 shares of the Company's common stock at
$.25 per share. Additionally, the note agreement
requires the Company to issue 50,000 warrants monthly
for every month that the note is in default. As of
December 31, 1998, the Company has granted 1,150,000
warrants to this shareholder.
During the period that ended December 31, 1998 the
Company borrowed an additional $61,476 from The Rockies
Fund, Inc. This note bears interest at 8%, has no
stated repayment terms and is without collateral.
There were no warrants issued in conjunction with this
note.
During the period ended March 31, 1999 the Company
borrowed an additional $29,128 from the Fund. This
note bears interest at 8%, has no stated repayment
terms and is without collateral. No warrants were
issued pursuant to this note.
As of April 1999 the president of the Fund, certain of
his family members, and other entities that are
controlled by the president of the Fund, Inc. and his
wife, own shares and warrants totaling 1,073,500 and
1,300,000, respectively. The shares owned represent
approximately 32% of the outstanding shares of the
Company. Of the shares owned, 900,000 shares were
purchased at $.05 per share directly from the former
president and vice president of the Company in private
transactions. The remaining shares owned were
purchased in open market transactions.
Beginning in 1994 the SEC began an investigation into
certain matters, including the administrative and
record keeping practices of the Fund, its securities
trading activities and those of its officers and
directors. In September 1996, the Fund received
notification from the SEC that the SEC staff was
planning to recommend that an enforcement action be
brought against the Fund, its president, and each of
its directors due to certain violations of federal
securities laws. The SEC invited the Fund to make a
submission setting forth the Fund's position and
arguments regarding the SEC staff's planned
recommendation. The Fund did so in October 1996, and
at the SEC's request, the Fund supplemented its
submission in December 1996. An administrative trial
was held before
the SEC's Chief Administrative Judge in November 1998.
During this trial the Fund vigorously contested the
SEC's allegations. No decision has been rendered.
In January 1997, the Company borrowed $25,000 from
Caribou Capital, Inc. ("Caribou"), a nonaffiliate. In
connection with this borrowing, the Company issued
warrants to purchase 50,000 shares of the Company's
common stock at
$.25 per share. In March 1997, when the Company was
unable to pay this note, the Company issued additional
warrants to purchase 50,000 shares of the Company's
common stock at $.25 per share. The exercise price of
the warrants approximated the fair market value of the
Company's stock on the date of grant.
The note payable to shareholder officer consisted of
amounts advanced by Mr. Carr to fund the operating and
start-up expenses of the Company and the contribution
of certain operating assets. The note bore interest at
9% per annum and matured in January 1997.
The note to the officer and director was extinguished
May 5, 1998. As of this date, the note payable's
balance was $131,470 and had accrued $55,282 in
interest. Other debts included accrued salaries and
its associated accrued interest when combined totaled
$65,966, and corporate expenses that had been
personally paid by the Carrs, were also extinguished.
The Company paid Mr. and Mrs. Carr $6,700 to eliminate
these liabilities and the Company also received a
release of any legal liability from the Carrs with
regard to the Company. Since Mr. Carr is still an
officer of the Company and its sole director, the
extinguishment of these liabilities were considered a
contribution to capital in the amount of $250,245.
Commitments and Contingencies
Leases
The Company leased its office space and certain office
equipment under noncancellable operating lease
agreements expiring through the year 2000. An officer
and director and a former officer and director
personally guaranteed certain of these leases. Due to
the lack of operating funds and the inability of the
Company to raise additional equity capital, the Company
defaulted on all of its leases, and accordingly, the
lease creditors accelerated all remaining payments.
Certain of the lease creditors filed legal proceedings
against the Company during the years ended December 31,
1997 and obtained court ordered judgments against the
Company and the officer and director and former officer
and director.
Securities and Exchange Commission
The Company has failed to timely file the required
Forms 10-KSB and Forms 10-QSB as required by the SEC.
The Company and its officers and directors could be
subject to certain fines and penalties from the SEC for
its failure to timely file these reports. The Company
cannot determine the effect, if any, that this
uncertainty may have on its financial position.
ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in
conjunction with the Financial Statements and Notes
thereto appearing elsewhere in this report.
Certain statements in this Management's Discussion and
Analysis of Financial Condition and Results of
Operations which are not historical facts are forward-
looking statements such as statements relating to
future operating results, existing and expected
competition, financing and refinancing sources and
availability and plans for future development or
expansion activities and capital expenditures. Such
forward-looking statements involve a number of risks
and uncertainties that may significantly affect the
Company's liquidity and results in the future and,
accordingly, actual results may differ materially from
those expressed in any forward-looking statements.
Such risks and uncertainties include, but are not
limited to, those related to effects of competition,
leverage and debt service financing and refinancing
efforts, and general economic conditions.
The following discussion and analysis should be read in
conjunction with the consolidated financial statements
and notes thereto appearing elsewhere in this report.
During 1998 the Company had no active operations. The
Company focussed its attention on the preparation of,
and completion of, the necessary independent audits in
order to file all the United States Securities and
Exchange Commission (the "SEC") public reports that
have not been filed during the past three fiscal years.
The funds with which to complete the preparation for,
and the independent audits of, fiscal years 1996, 1997,
and 1998 were loaned to the Company by The Rockies
Fund, Inc. (See Financial Footnotes). The total
amount loaned during 1998 was $61,476. The note bears
interest at 8%, is without collateral and states no
specific repayment terms. Subsequently, during the
first quarter of 1999 The Rockies Fund loaned the
Company approximately $29,000 in additional funds in
order to continue completion of the independent audits
and filing of the public reports.
The Rockies Fund, Inc. is assisting the Company in
developing its corporate strategy. This includes
focussing attention on the reduction of debt that
totals over $1.3 million dollars and discussing a
merger or an acquisition with potential partners.
Although The Fund has spoken with many prospects on
behalf of the Company, nothing has been finalized. If
the Company can not come to favorable debt settlements
with its creditors the Company may be forced to explore
alternative business strategies.
The Company believes that the Fund will assist with
funding until the proper strategy is developed.
However, there is no commiitment.
Results of Operations for the Three Months Ended March
31, 1998 as compared to the Three Months Ended March 31, 1997:
There were no active operations.
Revenues
Revenue for the three-month period decreased $231,480,
or 100%. The Company had no revenue. During the
three-month period that ended March 31, 1997 the
Company had $231,480 in revenue. A year earlier the
Company had operations.
Expenses
Operating expenses decreased substantially, $398,804 or
99.2%. The only operating expense incurred during this
three-month period was for an accounting
consultant to start preparation for the annual audits.
The Company incurred $7,166 in interest expense in
relation to the outstanding debt.
Based on the foregoing information, the Company
recorded a $(10,220) loss.
Liquidity and Capital resources: March 31, 1998 as
compared to December 31, 1997
The Company continued to have no assets.
Current liabilities increased from $1,386,528 to
$1,392,664, or $6,136. Judgments increased as of March
31, 1998 to $136,292 from $106,908 as of December 31, 1997
(See Legal Proceedings).
Results of Operations for the Six Months Ended June 30,
1998 as compared to the Six Months Ended June 30, 1997:
There were no active operations.
Revenues
The Company had no revenue during this period. This
represents a decline of $231,480 or 100%. The six
months ended June 30, 1997 included the first quarter
of the fiscal year when the Company still had revenue
from operations.
Expenses
The company had general and administrative operating
expenses of $25,652. All of this expense is related to
accounting preparation for the annual independent
audit.
Interest expense was incurred in the amount of $12,179.
The net loss during this period was $(37,851), or (.01)
per share.
Liquidity and Capital resources: June 30, 1998 as
compared to December 31, 1997
As of June 30, 1998 there was cash-on-hand in the
amount of $1,155. This is in comparison to zero assets
as of the close of the previous fiscal year. This
money was received as part of the loan by The Rockies
Fund, Inc. and was used to fund accounting preparation
for the audit.
The combination of judgments and accounts payable
increased to $1,074,014. Judgments increased to
$136,292 representing an increase of $29,384 from the
December 31, 1997 balance.
Note payable to officer/shareholder decreased as did
interest payable and accrued salaries due to a
settlement reached between Gregory S. Carr. The
Company's sole officer and director, Dyann L. Carr, a
former officer and director of the Company. The
Company paid the Carrs $6,700, approximately 2 1/2% of
the outstanding claims against the Company, to
eliminate all outstanding debt. In addition the Carrs
released the Compnay from any liabilities. Since Mr.
Carr is still an officer and director the
extinguishment of these liabilities were considered a
contribution to capital in the amount of $250,245.
Results of Operations for the Nine Months Ended
September 30, 1998 as compared to the Nine Months Ended
September 30, 1997:
There were no active operations.
Revenues
There was no revenue for the nine-month period ended
September 30, 1998.
Expenses
Operating expenses for the nine-month period were
$40,063. This represents a decrease of $361,795 or
90%. The major expense recorded during this nine-month
period was for accounting consulting. Total interest
expense for the first nine-months of 1998 was $16,224
versus $24,204 in 1997. The decrease is due to the
elimination of the founders' substantial note in May of
1998 that had been accruing interest at the rate of 8%.
Net loss for the nine-month period was $(56,287), or,
or ($.02) per share.
Liquidity and Capital resources: September 30, 1998 as
compared to December 31, 1997
There was $142 cash as of September 30, 1998 as
compared to no assets as of December 31, 1997.
Judgments and accounts payable totaled $1,074,515.
This represents an increase in judgments payable of
$93,029 to $199,937.
The second note between the Company and The Rockies
Fund increased from zero to $40,369 as of September 30,
1998. As previously stated, these funds have been used
to complete independent audit for the years ended
December 31, 1996, December 31, 1997, and December 31,
1998, and allow the Company to meet current
liabilities. Interest accrues annually at 8%. There
is no collateral or stated repayment terms.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Due to the lack of operating funds and the inability to
raise additional capital, the Company has defaulted in
its payments to a number of creditors and former
employees. Numerous persons have filed legal
proceedings against the Company during 1997 and 1998.
Claims have been asserted not only against the Company,
but also in certain instances against Gregory S. Carr
and Dyann Carr personally as guarantors of loans or
leases. The Company does not have sufficient funds to
pay any of the judgments or claims against it.
Corporate
Advanta Business Services Corporation filed a complaint
on May 16, 1997 against the Company and the Carrs for
non-payment under an equipment lease. The complaint
was filed in the Superior Court of New Jersey, Camden
County, New Jersey then transferred to Dallas County
Court, Dallas, Texas. A judgment in the amount of
$39,495.11 was entered against the Company and the
Carrs in August 1997.
Greentree Financial Services filed suit against the
Company and the Carrs individually for non-payment of
an equipment lease. Suit was filed on May 27, 1997,
in County Civil Court #3, Harris County, Texas. A
judgment against the Company and the Carrs was entered
on January 7, 1999 in the amount of $34,919.16.
On January 12, 1998, Lease Acceptance Corporation
against the Company and the Carrs in the Circuit Court
for the County of Oakland, Pontiac, Michigan. The suit
alleged non-payment of a lease for office furniture.
The suit was referred by the court to mediation, but
was not successfully resolved through the mediation
process. A default judgment was entered on June 1,
1998, in the amount of $19,209.70 against the Company
and the Carrs.
Berger & Co., a temporary employment agency, filed suit
against the Company in 9th Judicial District Court for
Montgomery County, Texas on May 14, 1997. Plaintiff
alleged non-payment of sums due for temporary technical
personnel used by the Company. Judgment was entered
in Berger and Company's favor. As a result of a second
amended final judgment, the court entered a judgment in
favor of Berger & Co. on June 3, 1998 in the amount of
$44,435.00.
Staffware, Inc., another temporary employment agency,
filed suit for non-payment of fees for temporary staff
County Civil Court, No. 1, in Harris County, Texas on
March 1, 1997. A default judgment was entered against
the Company in the amount of $26,865.11.
The Assessor's Office of Montgomery County, Texas filed
suit against the Company on November 9, 1998 in the
amount of $1,582.95 representing unpaid property taxes
for 1996 and 1997. Property taxes were assessed by
Montgomery County on exhibition equipment stored in a
satellite storage facility. In addition Montgomery
County filed an additional suit representing the unpaid
portion of the property taxes representing the school
district in the amount of $3,951. The Company has no
funds with which to pay these unpaid property taxes.
SDX, Inc., a marketing firm, filed suit against the
Company on October 26, 1996 in Pct. 1, Pos. 2,
Houston, Texas over the disputed terms of a contract it
entered into with the Company. On June 13, 1997, the
court entered judgment in SDX, Inc.'s favor in the
amount of $4,750. The company as no available funds to
satisfy the judgment.
Federal Express Corporation filed suit against the
Company on September 19, 1997 in Montgomery County
District Court, Montgomery County, Texas seeking to
recover $10,274.30 plus interest for unpaid delivery
fees. A default judgment was entered on December 16,
1997. The judgment remains unsatisfied due to the
Company's lack of available funds. Federal Express
obtained a writ of execution on December 17, 1998.
Pennebaker Designs filed suit against the Company and
the Carrs on July 2, 1997 in the District Court for
Harris County, Texas alleging damages in the amount of
$12, 997.50. The case was dismissed on May 28, 1998
for non-suit.
Sanwa Leasing Corporation filed suit against the
Company and the Carrs on August 19, 1997 in the Sixth
Judicial District, Oakland County, Michigan alleging
$19, 989.04. A default judgment was entered on
November 4, 1997.
Employee
Hank Savage, a former employee, filed a claim for
unpaid wages in the office of the Labor Commissioner,
State of California on April 16, 1997. The Commission
awarded the former employee a total of $6,870.93. This
amount of the award includes sums for unpaid wages,
commissions due, and penalty. The Company has no funds
available to pay the award.
Additional vendors, note holders, and former employees
have refrained from suing the Company because of its
known inability to satisfy the claims of creditors.
Item 2. Change in Securities
None.
Item 3. Defaults Upon Senior Securities
The following securities were in default:
March 31, June 30, September 30,
1998 1998 1998
Note payable, shareholder,
interest at 10.91%, no
stated repayment terms and 9,000 9,000 9,000
without collateral.
Note payable, shareholder,
interest at 8%, principal
and interest due April 1997,
without collateral. 50,000 50,000 50,000
Note payable, interest at
8%, principal and interest
due April 1997, without
collateral. 5,000 5,000 5,000
Note payable, shareholder,
business development
company, interest at 18% (in
default), due March 30,
1997,and without collateral. 25,000 25,000 25,000
Note payable, shareholder,
venture capital firm,
interest at 10%, principal
and interest due March 1997,
without collateral. 25,000 25,000 25,000
Note payable, shareholder
officer, interest at 9%,
principal and interest due
January 1997, without
collateral. 140,576 - -
Total 254,576 114,000 114,000
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of the shareholders
during the fiscal year 1998.
Item 5. Other Information
The Company recognizes the need to ensure its
operations will not be adversely impacted by Year 2000
software failures. Software failures due to processing
errors potentially arising from calculations using the
Year 2000 date are a known risk. The Company is
addressing this risk to the availability and integrity
of financial systems and the reliability of the
operational systems.
Item 6. Exhibits
(a) Reports on Form 8-K
The period ended March 31, 1998: none
The period ended June 30, 1998:
June 18, 1998 Change in independent auditor.
The Board of Directors approved the
hiring of Gerald R. Hendricks and Co., PC
The periods ended September 30, 1998 and December 31, 1998: none
SIGNATURE
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 hereunto
duly authorized.
KINETIKS.COM, INC.
Dated: 05/20/1999 By:/s/ Gregory S. Carr
Gregory S. Carr, Secretary
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