U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 quarter ended June 30, 1999
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________
Commission File Number: 0-26075
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American Kiosk Corporation
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(Exact name of small business issuer as specified in its charter)
Delaware 59-3452641
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4400 PGA Blvd., suite 500, Palm Beach Gardens, FL 33410
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(Address of Principal Executive Office)
(561) 627-9002
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(Issuer's Telephone Number)
Not Applicable
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(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 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 Yes X No
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No
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Not Applicable
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the Issuer's classes of
common Equity, as of the latest practical date:
Common Stock $.001 Par value 4,226,200 as of 8/13/99
Transitional Small Business Disclosure Format (check one) Yes No X
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1
<PAGE>
Part I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following unaudited financial statements and documents required by
Item 310(b) of Regulation S - B are attached hereto as Exhibits " A - D ":
Condensed Balance Sheets - As of
June 30, 1999, and December 31, 1998 Exhibit "A"
Condensed Statements of Changes
In Shareholder's Equity - For the
Period from December 31, 1998 through
June 30, 1999 Exhibit "B"
Condensed Statements of Operations -
For the three months ended & six months
ended June 30, 1999 and 1998, as well as
the period from inception April 26, 1997
to June 30, 1999. Exhibit "C"
Condensed Statements of Cash Flows -
For the six months ended June 30, 1999 and 1998,
as well as the period from inception
April 26, 1997 to June 30, 1999 Exhibit "D"
Notes to Condensed Financial Statements
2
<PAGE>
Exhibit A
AMERICAN KIOSK CORPORATION
(A Development Stage Company)
Condensed Balance Sheet as of
June 30, 1999 and December 31, 1998
Year End
6/30/99 12/31/98
----------- -----------
(Unaudited)
ASSETS
Current Assets:
Cash and Equivalents $ 177,169 $ 350,136
Accounts Receivable $ 16,835 $ 7,674
Inventories $ 58,672 $ 80,925
Deposits & Other Current Assets $ 199,507 $ 30,590
Deferred Loan Costs $ 114,292 $ 37,431
----------- -----------
Total Current Assets $ 566,475 $ 506,756
Property & Equipment $ 253,862 $ 38,559
Loans to Area Reps $ 117,907
Other Assets $ 239,234 $ 181,895
----------- -----------
Total Assets $ 1,177,478 $ 727,210
=========== ===========
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable & Accruals $ 102,581 $ 119,293
Convertible Notes Payable $ 293,125 $ 293,125
Deferred Franchise Revenue $ 39,950 $ 39,950
----------- -----------
Total Current Liabilities $ 435,656 $ 452,368
----------- -----------
Notes Payable - 30 Month $ 1,517,572 $ 365,050
----------- -----------
Total Liabilities $ 1,953,228 $ 817,418
----------- -----------
Shareholders' Equity:
Common Stock, $.0001 Par $ 420 $ 415
Additional Paid-in-capital $ 1,131,689 $ 1,108,484
Unearned Compensation $ (48,600) $ (48,600)
Deficit Accumulated During the
Development Stage $(1,859,259) $(1,150,507)
----------- -----------
Total Shareholders' Equity $ (775,750) $ (90,208)
----------- -----------
Total Liabilities and Equity $ 1,177,478 $ 727,210
=========== ===========
3
<PAGE>
Exhibit B
AMERICAN KIOSK CORPORATION
(A Development Stage Company)
Condensed Statement of Changes in Shareholder's Equity
for the six months ended June 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Common Additional Accumulated
Stock Paid-in During Development Unearned Shareholder's
Shares Amount Capital Stage Compensation Equity
--------- ------ ---------- ------------------ ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1998 4,149,900 $415 $1,108,484 $(1,150,507) $(48,600) $ (90,208)
Stock Issued Along With Secured Notes 46,416 $ 5 $ 23,205 $ 23,210
Net Loss $ (708,752) $(708,752)
--------- ---- ---------- ----------- -------- ---------
Balance June 30, 1999 4,196,316 $420 $1,131,689 $(1,859,259) $(48,600) $(775,750)
========= ==== ========== =========== ======== =========
</TABLE>
4
<PAGE>
Exhibit C
AMERICAN KIOSK CORPORATION
(A Development Stage Company)
Condensed Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Period
From 4/26/97
3 Mo. Ended 3 Mo. Ended 6 Mo. Ended 6 Mo. Ended (Inception)
6/30/1999 6/30/1998 6/30/1999 6/30/1998 To 6/30/99
----------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Total Revenues $ 12,784 $ 26,016 $ 22,583 $ 26,016 $ 88,074
Cost of Goods $ (9,427) $ 0 $ (22,447) $ 0 $ (45,106)
Selling, General & Admin Expenses $ (308,195) $ (141,922) $ (665,320) $ (222,387) $(1,838,525)
---------- ---------- ---------- ---------- -----------
Loss From Operations $ (304,838) $ (115,906) $ (665,184) $ (196,371) $(1,795,557)
Other Expenses $ (24,768) $ 0 $ (43,569) $ 0 $ (63,703)
Net (Loss) $ (329,606) $ (115,906) $ (708,753) $ (196,371) $(1,859,260)
========== ========== ========== ========== ===========
Net Loss Per Share $ (0.079) $ (0.037) $ (0.170) $ (0.061) $ (0.539)
========== ========== ========== ========== ===========
Weighted Avg Shares Outstanding 4,189,606 3,143,105 4,178,521 3,199,644 3,450,368
========== ========== ========== ========== ===========
</TABLE>
5
<PAGE>
Exhibit D
AMERICAN KIOSK CORPORATION
(A Development Stage Company)
Condensed Statement of Cash Flow
(Unaudited)
<TABLE>
<CAPTION>
Period
From 4/26/97
6 Mo. Ended 6 Mo. Ended (Inception)
6/30/99 6/30/98 to 6/30/99
----------- ----------- ------------
<S> <C> <C> <C>
Cash Used in Operating Activities $(1,133,397) $ (180,580) $(1,875,525)
----------- ----------- -----------
Cash Flows From Investing Activities:
Expenditures for Property and Equipment $ (215,303) $ 14,005 $ (309,051)
Other $ (11,855) $ (256,005)
----------- ----------- -----------
Net Cash Provided by (Used In) Investing Activities $ (215,303) $ 2,150 $ (565,056)
----------- ----------- -----------
Cash Flows From Financing Activities:
Issuance of Notes Payable $ 1,152,522 $ 1,808,572
Proceeds From Issuance of Stock $ 23,210 $ 178,500 $ 809,177
----------- ----------- -----------
Cash Provided by Financing Activities $ 1,175,732 $ 178,500 $ 2,617,749
----------- ----------- -----------
Net Increase (Decrease) in Cash and Cash Equivalents $ (172,968) $ 70 $ 177,168
Cash and Cash Equiv, Beginning of Period $ 350,136 $ 705
----------- ----------- -----------
Cash and Cash Equiv, At End of Period $ 177,168 $ 775 $ 177,168
=========== =========== ===========
</TABLE>
6
<PAGE>
AMERICAN KIOSK CORPORATION
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
Note 1 - Financial Statements
In the opinion of the Company's management, the accompanying unaudited condensed
financial statements contain all adjustments, consisting of only normal
recurring adjustments, necessary to present fairly the financial position of the
Company as of June 30, 1999 and the results of operations for the three months
and six months ended June 30, 1999 and 1998, and for the period from April 26,
1997 (inception) to June 30, 1999, and cash flows for the six months ended June
30, 1999 and 1998 and for the period from April 26, 1997 (inception) to June 30,
1999. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. These statements should be read in
conjunction with the audited financial statements for the fiscal year ended
December 31, 1998, and notes thereto contained in the Company's Form 10-SBA
filed with the Securities and Exchange Commission on July 27, 1999. The results
of operations for the three months and six months ended June 30, 1999 are not
necessarily indicative of operating results to be expected for the full fiscal
year.
Note 2 - Inventories
Inventories at June 30, 1999 consist of:
Food and supplies ................. $ 8,992
Equipment and displays ............ 49,680
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$58,672
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Note 3 - Notes Payable and Stock Issuance
During the three months ended June 30, 1999, the Company issued 13,400 shares of
Common Stock (46,416 for the six months ended June 30, 1999) valued at $.50 per
share related to the funding of additional Private Placement Units of 11%
Secured Notes aggregating $327,122 (1,152,522 for the six months ended June 30,
1999).
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTORY STATEMENT
The following information should be read in conjunction with the financial
statements and notes appearing elsewhere in this report.
Certain statements included in this Form 10-QSB are forward looking and are
based upon the Company's current expectations and are subject to risks and
uncertainties that could cause actual results to differ significantly from
results expressed or implied in any forward-looking statements made by or on
behalf of the Company. The Company assumes no obligation to update any
forward-looking statements contained herein or that may be made from time to
time by or on behalf of the Company.
BUSINESS
The Company, incorporated in Delaware in May, 1997, has developed and
implemented a national brand franchise system of kiosk-style and stand alone,
drive-thru retail outlets to deliver popular food products to consumers. The
Company initially is focusing primarily on brick oven pizza. The Company is
still classified as a "development Company", however, two drive-thru units are
scheduled to open in September of 1999 in the West Palm Beach and Atlanta areas.
The Company is engaged in the sale of fast food pizza and other products,
and franchises to operate fast food pizza outlets from stand alone drive-thru
retail units and kiosk style units. The Company's outlets sell a proprietary
"brick oven pizza", baked in a patented oven.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1999, the Company had working capital of $130,819 compared to
working capital of $54,388 at December 31, 1998. This increase is attributable
primarily to the sale of private placement units offset by operating deficits,
purchase of operating equipment and loans to area representatives.
RESULTS OF OPERATIONS
REVENUES
Revenues for the three months ended June 30, 1999, were $12,784 as compared
to $26,016 for the three months ended June 30, 1998. Revenues for the six months
ended June 30, 1999, were $22,583 as compared to $26,016 for the six months
ended June 30, 1998. The revenues generated were from the Beta Test unit and
limited franchise sales. The Company expects minor increases in revenue for the
3rd quarter as the two new drive-thru units are not expected to open for
business until September, 1999. With both of these units operating in the 4th
quarter, more significant revenue increases will be expected then.
COST OF GOODS
Cost of goods sold for the three months ended June 30, 1999, were $9,427 as
compared to $0.00 for the same period ending June 30, 1998. Cost of goods sold
for the six months ended June 30, 1999, were $22,447 as compared to $0.00 for
the six months ended June 30, 1998.
8
<PAGE>
SELLING EXPENSES & ADMINISTRATIVE COSTS
Selling, General and Administrative costs for the three months ended June
30, 1999 were $308,195 as compared to $141,922 for the period ending June 30,
1998. Selling, general and administrative costs for the six months ended June
30, 1999 were $665,320 as compared to $222,387 for the six months ended June 30,
1998. This increase in costs is attributable to the costs incurred in the
development of a larger and more attractive drive-thru stand alone unit.
NET PROFIT/LOSS
The Company's net loss per share for the three months ended June 30, 1999
was 7.9 cents as compared to 3.7 cents per share for the three months ended June
30, 1998. The net loss per share for the six months ended June 30, 1999 was 17.0
cents as compared to 6.1 cents for the six months ended June 30, 1998. These
increases in net loss per share are attributable to the expenses associated with
the further development of the drive-thru unit.
ADDITIONAL CAPITAL
The Company, during the last quarter, raised $327,122 from a private
placement consisting of 11% secured notes, bringing the total raised under this
plan to $1,517,572.
9
<PAGE>
PART II: OTHER INFORMATION
ITEM 1-5 Not Applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits.
Exhibit No. Description
- ----------- -----------
*27 Financial Data Schedule
*Filed as exhibit to this Report.
b. Reports on Form 8-K.
No reports were filed.
In accordance with Section 12 (g) of the Securities Exchange Act of 1934,
the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERICAN KIOSK CORPORATION
By: /s/ Richard J. Michael
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Richard J. Michael, President
By: /s/ Larry E. Graybill
---------------------------------------
Larry E. Graybill
Vice-President, Chief Financial Officer
and Principal Accounting Officer
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 177,169
<SECURITIES> 0
<RECEIVABLES> 16,835
<ALLOWANCES> 2,995
<INVENTORY> 58,672
<CURRENT-ASSETS> 566,475
<PP&E> 269,202
<DEPRECIATION> 15,340
<TOTAL-ASSETS> 1,177,478
<CURRENT-LIABILITIES> 435,656
<BONDS> 1,517,572
0
0
<COMMON> 420
<OTHER-SE> (776,170)
<TOTAL-LIABILITY-AND-EQUITY> 1,177,478
<SALES> 12,784
<TOTAL-REVENUES> 12,784
<CGS> (9,427)
<TOTAL-COSTS> (9,427)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2995
<INTEREST-EXPENSE> 22,932
<INCOME-PRETAX> (329,606)
<INCOME-TAX> 0
<INCOME-CONTINUING> (329,606)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (326,606)
<EPS-BASIC> (.079)
<EPS-DILUTED> (.079)
</TABLE>
