U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 333-4066
KAYENTA KREATIONS, INC.
(Exact name of registrant as specified in its charter)
NEVADA 87-0554463
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1020 Belmont Avenue
Salt Lake City, Utah 84105
(Address of principal executive offices)
(801) 521-4128
(Registrant's telephone number, including area code)
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such report(s), and (2)
has been subject to such filing requirements for the past 90
days.
YES [X] NO [ ]
The number of $.001 par value common shares outstanding at
September 30, 1998: 1,018,900
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
KAYENTA KREATIONS, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEETS
ASSETS
September 30, December 31,
1998 1997
----------- ----------
(Unaudited)
CURRENT ASSETS
Cash in bank $7,283 $16,777
Inventory 1,042 1,113
------- -------
Total Current Assets 8,325 17,890
------- -------
EQUIPMENT
Office equipment and displays, less
depreciation of $2,423 and $930 8,841 8,380
------- -------
OTHER ASSETS
Organization costs, net amortization
of $552 and $402 448 598
------- -------
Total Other Assets 448 598
------- -------
TOTAL ASSETS $17,614 $26,868
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $134 $542
State franchise tax payable 100 100
------- -------
Total Current Liabilities 234 642
------- -------
NONCURRENT LIABILITIES
Deferred taxes payable 86 86
------- -------
STOCKHOLDERS' EQUITY
Preferred stock; $.001 par value, 5,000,000 shares
authorized, no shares issued and outstanding - -
Common stock; $.001 par value, 50,000,000 shares
authorized, 1,018,900 and 1,018,900 shares
issued and outstanding respectively 1,019 1,019
Capital in excess of par value 47,193 47,193
Earnings (deficit) accumulated during the
development stage (30,918) (22,072)
------- -------
Total Stockholders' Equity 17,294 26,140
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,614 $26,868
======= =======
See notes to Condensed Financial Statements
<PAGE>
KAYENTA KREATIONS, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three For the Nine Cumulative
Months Ended Months Ended During the
September 30, September 30, Development
1998 1997 1998 1997 Stage
------ ------ ------- ------- ---------
SALES
Sales - net $42 $829 $185 $829 $839
Less cost of Sales (13) (332) (72) (332) (430)
------ ------ ------- ------- -------
Gross Margin 29 497 113 497 409
------ ------ ------- ------- -------
SELLING, GENERAL AND ADMINISTRATIVE
Accounting and legal 655 243 3,060 1,475 5,955
Amortization 50 50 150 150 552
Contract labor - 1,696 - 1,696
Travel - 940 108 2,644 1,981
Wages 126 - 216 - 2,233
Marketing 221 5,174 452 5,174 5,759
Equipment rental - 1,776 - 2,171 2,171
Administrative - - 259 - 2,296
Office expense 577 609 1,326 3,063 4,417
Utilities - - 42 - 785
Meals and entertainment 85 - 85 - 806
Depreciation 563 371 1,493 721 2,423
Taxes - 100 - 100 200
Equipment repairs 1,370 - 2,044 283 2,327
Miscellaneous - 163 - 163 137
------ ------- ------- ------- -------
Total Selling, General
and Administration 3,647 11,122 9,235 17,640 32,042
------ ------- ------- ------- -------
NET INCOME FROM OPERATIONS (3,618) (10,625) (9,122) (17,143) (31,633)
OTHER INCOME (EXPENSE)
Interest income 63 182 292 388 833
Interest expense (5) - (16) - (31)
------ ------- ------- ------- -------
NET INCOME BEFORE TAXES (3,560) (10,433) (8,846) (16,755) (30,831)
PROVISIONS FOR INCOME TAXES - - - - (87)
------ ------- ------- ------- -------
NET INCOME (LOSS) $(3,560)$(10,433) $(8,846) $(16,755)$(30,918)
====== ======= ======= ======= =======
EARNINGS (LOSS) PER SHARE $ (0.00)$ (0.01) $ (0.01) $ (0.02)$ (0.03)
====== ======= ======= ======= =======
See notes to Condensed Financial Statements
<PAGE>
KAYENTA KREATIONS, INC.
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three For the Nine Cumulative
Months Ended Months Ended During the
September 30, September 30, Development
1998 1997 1998 1997 Stage
------- ------- ------ ------- -------
CASH FLOWS FROM OPERATING ACTIVITIES
Cash from sales $42 $829 $185 $829 $839
Cash paid for organization costs - - - - (1,000)
Cash from interest 63 182 292 388 833
Cash paid for interest (5) - (16) - (31)
Cash paid for supplies and
employee services (3,183) (12,368) (7,902) (18,554) (30,107)
Cash paid for taxes - - (100) - (200)
------- ------- ------ ------- -------
Net Cash (Used) by Operating
Activities (3,083) (11,357) (7,541) (17,337) (29,666)
------- ------- ------ ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of equipment (1,953) (4,412) (1,953) (9,668) (11,263)
------- ------- ------ ------- -------
Net cash (Used) provided by
Investing Activities (1,953) (4,412) (1,953) (9,668) (11,263)
------- ------- ------ ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock - - - 54,725 62,725
Direct offering costs - - - (8,714) (14,533)
Contributed capital - - - - 20
------- ------- ------ ------- -------
Net Cash Provided (Used) By
Financing Activities - - - 46,011 48,212
------- ------- ------ ------- -------
NET INCREASE (DECREASE) IN CASH (5,036) (15,769) (9,494) 19,006 7,283
CASH - BEGINNING OF PERIOD 12,319 35,811 16,777 1,036 -
------- ------- ------ ------- -------
CASH - END OF PERIOD $ 7,283 $ 20,042 $ 7,283 $ 20,042 $ 7,283
======= ======= ====== ======= =======
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED (USED) BY OPERATING ACTIVITIES
NET INCOME (LOSS) $(3,560) $(10,443) $(8,846) $(16,755) $(30,918)
------ ------- ------ ------- -------
Adjustments to reconcile net income (loss) to net
cash provided (used) by operating activities
Amortization of organization
costs 50 50 150 150 552
Depreciation 563 371 1,493 721 2,423
Loss on equipment return - - - 283 -
Deferred taxes - - - - 86
Change in assets and liabilities
Organization costs - - - - (1,000)
Inventory 12 (2,431) 71 (2,833) (1,042)
Accounts payable (148) 1,081 (409) 1,082 133
Franchise taxes payable - 15 - 15 100
------ ------- ------ ------- -------
Total Adjustments 477 (914) 1,305 (582) 1,252
------ ------- ------ ------- -------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES $(3,083) $(11,357) $(7,541) $(17,337) $(29,666)
====== ======= ====== ======= =======
See notes to Condensed Financial Statements
<PAGE>
KAYENTA KREATIONS, INC
(A Development Stage Company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statement have been prepared by the
Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of
operation and cash flows at September 30, 1998 and 1997 and for
all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It
is suggested that these condensed financial statements be read in
conjunction with the financial states and notes thereto included
in the Company's December 31, 1997 audited financial statements.
The results of operations for the periods ended September 30, 1998
and 1997 are not necessarily indicative of the operating results
for the full year.
<PAGE>
Item 2: Management's Discussion & Analysis or Plan of Operations
The Company was incorporated on December 26, 1995. The
Company has not yet generated significant revenues from
operations and is considered a development stage company. To
date, activities have been limited to organizational matters, the
preparation and filing of the registration statement to register
a public offering of its securities, pursuant to which the
Company offered and sold 218,900 shares of common stock and
raised gross proceeds of $54,725, the closing of such offering
and the initial commencement of limited operations. The Company
has no significant assets other than the net proceeds from the
offering and the assets acquired therewith.
Management's plan of operation for the next twelve months is
to continue to use the net proceeds from the offering to produce
an inventory of products, and attempt to market such products.
The Company has also used offering proceeds to make equipment
purchases and other capital expenditures for assets being used in
connection with the business, including a computer system, a
digitized scanner software program, a fax machine, a laser
printer, a color printer and a photocopy machine. The balance of
the proceeds is being used to provide working capital for the
operation of the Company's proposed business.
There is absolutely no assurance that the Company will be
able, with the proceeds of the offering, to acheive profitable
operations. At this time, no assurances can be given with
respect to the length of time after commencement of operations
that it will be necessary to fund operations from proceeds of the
offering. If the marketing of the initial printing of books is
successful, management intends for the foreseeable future to
reinvest the revenues derived therefrom for additional printings
and editions of the coloring art books, and for development and
marketing costs relating to a line of colored pencils which the
Company also intends to eventually market.
Management believes that the net proceeds of the offering
will be sufficient for initial printing, and to begin marketing
the coloring art books, after which time management anticipates
that the Company will begin generating revenues from sales to
cover ongoing expenses. However, there is absolutely no
assurance of this and the Company has only limited sales thus
far. If the initial marketing of the coloring art books is
unsuccessful, investors will have lost their money and management
will not attempt to pursue further marketing efforts with respect
to such product, and it is unlikely the Company would have the
financial ability to do so in any event. Instead management will
call a shareholders meeting to decide whether to liquidate the
Company or what direction the Company will pursue, if any.
However, the Company presently has no plans, commitments or
arrangements with respect to any other potential business venture
and there is no assurance the Company could become involved with
any other business venture, especially any business venture
requiring significant capital.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
(a) None.
(b) None.
(c) See Part I, Item 1 (financial statments) and Item 2
(management's discussion) for financial information and
a discussion regarding use of proceeds.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None
<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.
Kayenta Kreations, Inc.
Date: November 13, 1998 by: /s/Michelle Barlow
Michelle Barlow, Chairman
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF KAYENTA KREATIONS, INC. AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 7,283
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 1,042
<CURRENT-ASSETS> 8,325
<PP&E> 11,264
<DEPRECIATION> 2,423
<TOTAL-ASSETS> 17,614
<CURRENT-LIABILITIES> 234
<BONDS> 0
0
0
<COMMON> 1,019
<OTHER-SE> 47,193
<TOTAL-LIABILITY-AND-EQUITY> 17,614
<SALES> 42
<TOTAL-REVENUES> 42
<CGS> 13
<TOTAL-COSTS> 13
<OTHER-EXPENSES> 3,647
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5
<INCOME-PRETAX> (3,560)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,560)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,560)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
