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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-Q
[ 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 ___________.
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Commission file number 0-26909
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REWARD ENTERPRISES INC.
(Exact name of Registrant as specified in its charter.)
NEVADA Applied For
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
500 Miller Road
Richmond, British Columbia V7B 1Y3
(Address of principal executive offices, including zip code.)
(604) 275-6519
Registrant's telephone number, including area code.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act of
1934 during the preceding 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 [ ]
The number of shares outstanding of the Registrant's Common Stock,
$0.01 par value per share, at March 31, 2000 was 2,715,000 shares.
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ITEM 1. FINANCIAL STATEMENTS.
Board of Directors
Reward Enterprises Inc.
Richmond, British Columbia
CANADA
ACCOUNTANT'S REVIEW REPORT
We have reviewed the accompanying consolidated balance sheet of Reward
Enterprises Inc. (a development stage company) as of March 31, 2000,
and the related consolidated statements of operations and comprehensive
income (loss), shareholders' equity, and cash flows, for the nine
months period then ended, in accordance with Statements on Standards
for Accounting and Review Services issued by the American Institute of
Certified Public Accountants. All information included in these
financial statements is the representation of the management of Reward
Enterprises, Inc.
A review consists principally of inquiries of Company personnel and
analytical procedures applied to financial data. It is substantially
less in scope than an audit in accordance with generally accepted
auditing standards, the objective of which is the expression of an
opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements in order
for them to be in conformity with generally accepted accounting
principles.
As discussed in Note 2, the Company has been in the development stage
since its inception on December 12, 1997. Realization of a major
portion of the assets is dependent upon the Company's ability to meet
its future financing requirements, and the success of future
operations. The Company has no revenues and has sustained losses since
inception. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans regarding
those matters are described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
/s/ Williams & Webster, P.S.
Williams & Webster, P.S.
Spokane, Washington
May 9, 2000
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REWARD ENTERPRISES INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
March 31, June 30,
2000 1999
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 29,661 $ 102,614
-------- ---------
TOTAL CURRENT ASSETS 29,661 102,614
-------- ---------
PROPERTY AND EQUIPMENT
Computer hardware 9,985 8,665
Website 10,000 10,000
Software license 50,000 50,000
Accumulated depreciation
and amortization (10,498) -
-------- ---------
TOTAL PROPERTY AND EQUIPMENT 59,487 68,665
-------- ---------
TOTAL ASSETS $ 89,148 $ 171,279
======== =========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 37,500 $ 72,500
Loans payable, related party 3,600 -
-------- ---------
TOTAL CURRENT LIABILITIES 41,100 72,500
-------- ---------
TOTAL LIABILITIES 41,100 72,500
-------- ---------
COMMITMENTS AND CONTINGENCIES - -
-------- ---------
STOCKHOLDERS' EQUITY
Common stock, 200,000,000 shares
authorized, $0.01 par value;
2,715,000 shares issued and
outstanding 27,150 27,150
Additional paid-in capital 154,350 154,350
Subscriptions receivable - (10,000)
Accumulated deficit during
development stage (133,419) (72,506)
Accumulated other
comprehensive income (33) (215)
-------- ---------
TOTAL STOCKHOLDERS' EQUITY 48,048 98,779
-------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 89,148 $ 171,279
======== =========
The accompanying notes are an integral part of these financial
statements.
2
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REWARD ENTERPRISES INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
Three Months Ended Nine Months
Ended
03/31/00 03/31/99 03/31/00
(Unaudited) (Unaudited) Through
03/31/00 06/30/99 03/31/00
REVENUE $ - $ - $ -
--------- --------- ---------
EXPENSES
Consulting fees - - 7,500
Commissions - - -
Legal and professional
fees 5,000 - 21,920
Travel and entertainment 2,742 - 14,290
Depreciation and
amortization 3,499 - 10,498
Office and
administration 940 - 6,705
--------- --------- ---------
Total operating expenses 12,181 - 60,913
--------- --------- ---------
NET LOSS FROM OPERATIONS (12,181) - (60,913)
INCOME TAXES - - -
--------- --------- ---------
NET LOSS (12,181) - (60,913)
OTHER COMPREHENSIVE INCOME
Foreign currency translation
gain (loss) 22 - 182
--------- --------- ---------
COMPREHENSIVE LOSS $ (12,159) $ - $ (60,731)
========= ========= =========
NET LOSS PER COMMON SHARE $ NIL $ NIL $ (0.02)
========= ========= =========
WEIGHTED AVERAGE NUMBER OF
COMMON STOCK SHARES
OUTSTANDING, BASIC AND
DILUTED 2,715,000 1,000,000 2,715,000
========= ========= =========
The accompanying notes are an integral part of these financials
statements.
3-a
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REWARD ENTERPRISES INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
From 12/12/97
(Inception)
Nine Months Ended Through
03/31/99 03/31/00
(Unaudited) (Unaudited)
REVENUE $ - $ -
--------- ----------
EXPENSES
Consulting fees 9,000 64,000
Commissions 1,000 1,000
Legal and professional fees - 31,920
Travel and entertainment - 19,081
Depreciation and amortization - 10,498
Office and administration - 6,920
--------- ----------
Total operating expenses 10,000 133,419
--------- ----------
NET LOSS FROM OPERATIONS (10,000) (133,419)
INCOME TAXES - -
--------- ----------
NET LOSS (10,000) (133,419)
OTHER COMPREHENSIVE INCOME
Foreign currency translation
gain (loss) - (33)
--------- ----------
COMPREHENSIVE LOSS $ (10,000) $ (133,452)
========= ==========
NET LOSS PER COMMON SHARE $ (0.01) $ (0.09)
========= ==========
WEIGHTED AVERAGE NUMBER OF
COMMON STOCK SHARES
OUTSTANDING, BASIC AND
DILUTED 1,000,000 1,552,288
========= =========
The accompanying notes are an integral part of these financials
statements.
3-b
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REWARD ENTERPRISES INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Common Stock
Number AdditionalSubscriptions
of Shares Amount Paid-in Capital
Issuance of common stock in
April 1998: for valued at
$0.01 per share 1,000,000 $ 10,000 $ - $ (10,000)
Loss for year ending
June 30, 1998 - - - -
--------- -------- --------- ---------
Balance, June 30, 1998 1,000,000 10,000 - (10,000)
Issuance of common stock in
May 1999 for cash at $0.01
per share 1,400,000 14,000 - -
Issuance of common stock
May 1999 for cash at
$0.50 per share 315,000 3,150 154,350 -
Foreign translation gain
(loss) - - - -
Loss for year ending
June 30, 1999 - - - -
--------- -------- --------- ---------
Balance, June 30, 1999 2,715,000 27,150 154,350 (10,000)
Settlement of subscriptions
receivable - - - 10,000
Loss for period ending
March 31, 2000 - - - -
Foreign translation gain
(loss) - - - -
--------- -------- --------- ---------
Balance,
March 31, 2000
(unaudited) 2,715,000 $ 27,150 $ 154,350 $ -
========= ======== ========= =========
The accompanying notes are an integral part of these financials
statements.
4-a
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REWARD ENTERPRISES INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Accumulated
Other Total
Accumulated Comprehensive Stockholders'
Deficit Income Equity
Issuance of common stock in
April 1998: for valued at
$0.01 per share $ - $ - $ -
Loss for year ending
June 30, 1998 (10,000) - (10,000)
---------- ------ -----------
Balance, June 30, 1998 (10,000) - (10,000)
Issuance of common stock in
May 1999 for cash at $0.01
per share - - 14,000
Issuance of common stock
May 1999 for cash at $0.50
per share - - 157,500
Foreign translation gain
(loss) - (215) (215)
Loss for year ending
June 30, 1999 (62,506) - (62,506)
---------- ------ -----------
Balance, June 30, 1999 (72,506) (215) 98,779
Settlement of subscriptions
receivable - - 10,000
Loss for period ending
March 31, 2000 (60,913) - (60,913)
Foreign translation gain
(loss) - 182 182
---------- ------ -----------
Balance,
March 31, 2000
(unaudited) $ (133,419) $ (33) $ 48,048
========== ====== ===========
The accompanying notes are an integral part of these financials
statements.
4-b
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REWARD ENTERPRISES INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
From
12/12/97
(Inception)
Nine Months Ended through
03/31/00 03/31/99 03/31/00
(Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities:
Net loss $ (60,913) $ (10,000) $ (133,419)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Depreciation and
amortization 10,498 - 10,498
Increase in:
Other assets (5,000) - (65,000)
Loans payable 3,600 - 3,600
Stock subscriptions
receivable 10,000 - -
Accounts payable (35,000) 10,000 37,500
--------- --------- ----------
Net cash (used) in
operating activities (76,815) - (146,821)
--------- --------- ----------
Cash flows from investing
activities:
Purchase of property and
equipment (1,320) - (9,985)
--------- --------- ----------
Net cash used in investing
activities (1,320) - (9,985)
--------- --------- ----------
Cash flows from financing
activities:
Issuance of stock - - 181,500
--------- --------- ----------
Net increase in cash (78,135) - 24,694
Foreign translation gain
(loss) 182 - (33)
Cash, beginning of period 102,614 - -
--------- --------- ----------
Cash, end of period $ 24,661 $ - $ 24,661
========= ========= ==========
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest
and income taxes:
Interest $ - $ - $ -
========= ========= ==========
Income taxes $ - $ - $ -
========= ========= ==========
NON-CASH TRANSACTIONS
Stock subscribed in exchange
for payables $ (10,000) $ 10,000 $ -
========= ========= ==========
The accompanying notes are an integral part of these financials
statements.
5
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REWARD ENTERPRISES, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2000
NOTE - ORGANIZATION AND DESCRIPTION OF BUSINESS
Reward Enterprises Inc., formerly Sports Entertainment (hereinafter
"the Company"), was incorporated in December 1997 under the laws of
the State of Nevada primarily for the purpose of offering interactive
online Internet entertainment and game playing. The name change to
Reward Enterprises Inc. was effective on July 28, 1998.
In July and August 1999, the Company incorporated two subsidiaries in
the eastern Caribbean. See Note 5.
The Company is in the development stage and as of March 31, 2000 had
not realized any significant revenues from its planned operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Reward Enterprises
Inc. is presented to assist in understanding the Company's financial
statements. The financial statements and notes are representations
of the Company's management, which is responsible for their integrity
and objectivity. These accounting policies conform to generally
accepted accounting principles and have been consistently applied in
the preparation of the financial statements.
Development Stage Activities
The Company has been in the development stage since its formation on
December 12, 1997. It is primarily engaged in internet entertainment
and the business of gaming.
Going Concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.
As shown in the accompanying financial statements, the Company
incurred a comprehensive net loss of $55,731 and $10,000 for the nine
month periods ended March 31, 2000 and 1999, respectively. The
Company is currently putting technology in place that will, if
successful, mitigate these factors that raise substantial doubt about
the Company's ability to continue as a going concern. The financial
statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or the amounts
and classification of liabilities that might be necessary in the
event the Company cannot continue in existence.
Management has established plans designed to create sales of the
Company's products. Management intends to seek new capital from new
equity securities issuances that will provide funds needed to
increase liquidity, fund internal growth and fully implement its
business plan.
Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting, with a year-end of June 30.
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REWARD ENTERPRISES, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Basic and Diluted Loss Per Share
Net loss per share was computed by dividing the net loss by the
weighted average number of shares outstanding during the period. The
weighted average number of shares was calculated by taking the number
of shares outstanding and weighting them by the amount of time that
they were outstanding. Basic and diluted loss per share were the
same, as there were no common stock equivalents outstanding.
Cash and Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers
all short-term debt securities purchased with a maturity of three
months or less to be cash equivalents.
Provision for Taxes
At March 31, 2000, the Company had a net operating loss of
approximately $55,000. No provision for taxes or tax benefit has
been reported in the financial statements, as there is not a
measurable means of assessing future profits or losses.
Use of Estimates
The process of preparing financial statements in conformity with
generally accepted accounting principles requires the use of
estimates and assumptions regarding certain types of assets,
liabilities, revenues, and expenses. Such estimates primarily relate
to unsettled transactions and events as of the date of the financial
statements. Accordingly, upon settlement, actual results may differ
from estimated amounts.
Impaired Asset Policy
In March 1995, the Financial Accounting Standards Board issued a
statement titled "Accounting for Impairment of Long-lived Assets." In
complying with this standard, the Company reviews its long-lived
assets quarterly to determine if any events or changes in
circumstances have transpired which indicate that the carrying value
of its assets may not be recoverable. The Company does not believe
any additional adjustments are needed to the carrying value of its
assets at March 31, 2000.
Derivative Instruments
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This
new standard establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or
liabilities in the consolidated balance sheet and measure those
instruments at fair value.
7
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REWARD ENTERPRISES, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Derivative Instruments (continued)
At March 31, 2000, the Company has not engaged in any transactions
that would be considered derivative instruments or hedging
activities.
Interim Financial Statements
The interim financial statements as of and for the three months ended
March 31, 2000, included herein have been prepared for the Company,
without audit. They reflect all adjustments, which are, in the
opinion of management, necessary to present fairly the results of
operations for these periods. All such adjustments are normal
recurring adjustments. The results of operations for the periods
presented are not necessarily indicative of the results to be
expected for the full fiscal year.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant inter-company
transactions and balances have been eliminated in consolidation.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation and
amortization are provided using the straight-line method over the
estimated useful lives of the assets. The useful lives of property,
plant and equipment for purposes of computing depreciation and
amortization are five to seven years.
Depreciation expense of $1,498 has been recognized for the period
ended March 31, 2000.
NOTE 4 - INTANGIBLE ASSETS
The Company has capitalized $60,000 which is the contractual cost of
the website and software license purchased from an independent
supplier. No portion of this software - acquired at June 30, 1999 -
was internally developed and, accordingly, there are no internal
costs associated with this software which were charged to research
and development. Consistent with SOP 98-1, the costs of this
software - which was purchased solely for internal use and will not
be marketed externally - have been capitalized and are being
amortized over five years. Amortization expense of $9,000 has been
recognized for the period ended March 31, 2000.
NOTE 5 - SUBSIDIARIES
On July 22, 1999, the Company incorporated a subsidiary in Nevis,
eastern Caribbean under the name Reward Nevis Group, Inc. The shares
are held by another subsidiary, Reward International Group Ltd., a
Bermudian company, which was incorporated August 6, 1999. Reward
International Group Ltd. is wholly owned by Reward Enterprises Inc.
The Company contributed an initial investment of $5,000 toward the
start-up of the subsidiary.
8
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REWARD ENTERPRISES, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2000
NOTE 6 - COMMON STOCK
Upon incorporation, subscriptions for 10,000,000 shares of common
stock were issued at $.001 per share for $10,000. In July 1999, the
Board of Directors authorized a 1 for 10 reverse stock split. This
decreased the number of issued and outstanding shares to 1,000,000
and increased the par value of the stock to $0.01 per share. All
financial statement information herein has been changed to reflect
this stock split.
An additional share issuance under Regulation D, Rule 504, was for
1,400,000 common shares at $.01 and 315,000 common shares at $0.50
per share for total proceeds of $171,500.
At June 30, 1999, $10,000 in stock subscriptions was receivable.
During the nine months ended March 31, 2000, the subscriptions
receivable were satisfied.
NOTE 7 - STOCK OPTIONS
In September 1998, the Company adopted the Reward Enterprises Inc.
1999 Directors and Officers Stock Option Plan, a non-qualified plan.
This plan allows the Company to distribute up to 2,000,000 shares of
common stock to officers, directors, employees and consultants
through the authorization of the Company's board of directors.
During 1999, under Rule 701, the Company issued 2,500,000 common
stock options for the services of consultants. The options issued
include negotiation rights and begin vesting in June 1999, with 25%
of the eligible shares vesting each year until the recipients are
fully vested in their shares. The Company entered into consulting
agreements with three directors of the Company. Two of the directors
will receive $5,000 per month and 500,000 common stock options
exercisable at $0.10 per share and 500,000 common stock options
exercisable at $0.25 per share. The other director will receive
$2,500 per month and 250,000 common stock options exercisable at $.10
per share and 250,000 common stock options exercisable at 0.25 per
share. All options related to these agreements expire June 30, 2010.
The fair value of each option granted is estimated on the grant date
using the Black-Scholes Option Price Calculation. The following
assumptions were made in estimating fair value: Risk-free interest
rate of 5% and expected life of ten years. A minimum volatility of
1.25 was used which resulted in no adjustment to compensation.
9
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REWARD ENTERPRISES, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2000
NOTE 7 - STOCK OPTIONS (continued)
Following is a summary of the stock options during:
Weighted
Number Average
Of Exercise
Shares Price
Outstanding at 3-31-99 - -
========= ======
Granted 1,250,000 $ 0.10
Granted 1,250,000 $ 0.25
Exercised - $ -
Forfeited - $ -
--------- ------
Outstanding at 6-30-99 2,500,000 $ 0.18
Options exercisable at 6-30-99 2,500,000 $ 0.18
--------- ------
Outstanding at 3-31-2000 2,500,000
Options exercisable at 3-31-2000 2,500,000
=========
Weighted average fair value of
options granted (1999) at 3-31-2000 $ 0.18
======
NOTE 8 - RELATED PARTIES
Certain consultants who received common stock options under the
Company's non-qualified stock option plan are the Company's directors
and stockholders. (See Note 6). An associate of a director of the
Company provides office space to the Company at no charge. The value
of this space is not considered significant. The Company also
received funds from a related party. See Note 10.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
Database Development
The Company's purchase commitment for services to develop a website
at March 31, 2000 totaled $10,000, of which $5,000 was paid in 1999.
As of March 31, 2000, the Company considered that the majority of the
services contracted for were payable and accrued the balance owing of
$5,000 as part of accounts payable.
Software License Agreement
The Company's purchase commitment for a software license agreement at
March 31, 2000 totaled $50,000 of which $20,000 was paid in 1999. As
of March 31, 2000, the Company considered the contract payable and
accrued the balance of $30,000 as part of accounts payable.
10
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REWARD ENTERPRISES, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2000
NOTE 9 - COMMITMENTS AND CONTINGENCIES
As further consideration for the rights granted under the software
license, the licensee, Reward Enterprises Inc., will pay a royalty
calculated at 30% of gross revenue until aggregate royalty payments
of $100,000 have been paid. After the $100,000 has been paid, the
royalty rate will be reduced to 20% of gross revenue until an
aggregate $1,000,000 has been paid and, thereafter, royalty payments
will be 15% of gross revenue for the balance of the term of the
agreement. The term of the agreement is two years with an option to
renew for another two years. Royalty payments begin at the end of
the first month after the Company is no longer considered to be in
the development stage.
NOTE 10 - LOANS PAYABLE
The Company received funds from a related party in the form of a
loan. This has been recorded as an unsecured, non-interest bearing,
short-term loans being payable upon demand.
NOTE 11 - CONCENTRATIONS
The Company maintains two checking accounts at a financial institution
located in Delta, British Columbia, Canada. One checking account is
maintained in U.S. dollars, and the second in Canadian dollars. The
combined total of both accounts, as translated to U.S. dollars, was
$29,661 as of March 31, 2000. Neither account is insured by the FDIC.
NOTE 12 - TRANSLATION OF FOREIGN CURRENCY
The Company has adopted Financial Accounting Standard No. 52. Foreign
currency translation resulted in an aggregate exchange gain of $182 for
the period ended March 31, 2000. The Company recorded this transaction
in the Statement of Stockholders' Equity.
NOTE 13 - YEAR 2000
Like other companies, Reward Enterprises Inc. may be adversely affected
if the computer systems it, its suppliers or customers use do not
properly process and calculate date-related information and data from
the period surrounding and including January 1, 2000. This is commonly
known as the "Year 2000" issue. Additionally, this issue could impact
non-computer systems and devices such as production equipment,
elevators, etc. At this time, because of the complexities involved in
the issue, management cannot provide assurances that the Year 2000
issue will not have an impact on the company's operations.
The Company has reviewed its business and processing systems and
believes that the majority of its systems are already Year 2000
compliant or can be made so with software updates. Based on
preliminary assessments, the Company regards the costs associated with
Year 2000 readiness to be immaterial. Costs for Year 2000 compliance
is expensed as incurred.
11
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION.
THE FOLLOWING ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL
CONDITION OF THE COMPANY FOR THE PERIOD ENDING MARCH 31, 2000 SHOULD BE
READ IN CONJUNCTION WITH THE CONSOLIDATED FINANCIAL STATEMENTS,
INCLUDING THE NOTES THERETO, OF THE COMPANY CONTAINED ELSEWHERE IN THIS
FORM 10-QSB
OVERVIEW
Reward Enterprises, Inc. (the "Company") was incorporated in April
1998 as Sports Entertainment Productions Inc. to pursue opportunities
around the world in the Internet based entertainment industry. The
name was changed to Reward Enterprises, Inc in July 1998. The Company
has two subsidiary companies, Reward International Group Ltd, a Bermuda
corporation, and Reward Nevis Group, Inc., a Nevis based corporation.
Its main objective is to develop a profitable "Entertainment Mall"
through an e-commerce secure "portal." Entertainment options offered
will be videos, CDs, virtual casino-style games, free bingo, and dice
and specialty and interactive video games. The general entertainment
and e-commerce components will be marketed to the whole world while the
gaming related options will focus on Asia, Europe, Australia and South
America.
On June 15, 1999, Reward Nevis Group, Inc, a wholly owned
subsidiary of the Company entered into a non-exclusive software license
agreement with Chartwell Technologies Inc, of Laguna Hills, California
to acquire and development all software necessary to conduct the
Internet gaming activity and to handle all Internet cash transactions.
This software is customized and is a full service gaming system that
includes twelve casino games, a back-end administrative utility with
remote access, I.P. Tracking, e-Commerce software and technical
support. The license is non-exclusive and is currently licensed to
others. The Company is restricted in the use of this technology and
cannot sublicense it to others. It is for a period of two years and
has provision for renewal for additional two years. The royalty payable
is 15% of gross revenues generated. Pursuant to the agreement, $20,000
has been paid to Chartwell to date and a further payment of $10,000
will be made in the last quarter of 1999.
Management of the Company is currently in the development stage of
its business and is in the process of completing further agreements to
implement its business plan. The Company continues to evaluate its
business plan to determine its best course of action. The Company
continues to test the Web site operating and software systems,
including gaming, shopping and browsing features, and on-line ordering.
There are no new developments regarding this testing program.
RESULTS OF OPERATIONS
There are no revenues in the quarter ending March 31, 2000 as the
Company has not as yet activated its web site.
During the nine-month period ending March 31, 2000, the Company
incurred expenses of $45.232.
<PAGE> 16
A summary of this is as follows:
Legal and Professional fees $ 16,919
Consulting fees 7,500
Travel and promotion 15,262
Other 5,551
--------
Total $ 45,232
--------
The Company continues to carefully control its expenses, and
intends to seek financing in the near future to provide necessary funds
required in its business plan and to further develop its business
model.
The Company has no employees at the present time and engages
personnel through consulting agreements where necessary as well as
outside attorneys, accountants and technical consultants.
Cash on hand at March 31, 2000 was $29,663 and the Company has
sufficient funds to conduct ifs affairs.
LIQUIDITY AND CAPITAL RESOURCES
The Company has to date, financed its development stage by the
sale of common stock. At March 31, 2000, the Company had 2,715,000
shares of common stock outstanding and had raised a total of $181,500.
At March 31, 2000 it had cash on hand of $29,663 and said cash
resources are maintained with a large Canadian financial institution.
The Company recognizes that it will need additional cash during
the next twelve months and will endeavor to obtain additional cash
through the sale of common stock. There is no assurance that the
Company will be able to obtain additional capital as required, or
obtain the capital on terms and conditions acceptable to it.
The Company has sufficient cash to finance its operations at this
stage of its development but does intend to seek additional financing.
Its liabilities relate to its software license and website development.
YEAR 2000 COMPUTER SOFTWARE CONVERSION
All computer equipment owned by the Company has been acquired in
the past 12 months and is not considered to be a problem for Year 2000.
This assurance cannot be given for third party equipment for which the
Company has no control.
Since we have yet to acquire any technology in support of our
services, the planned acquisitions will most likely involve hardware
and software which is relatively new and therefore management does not
anticipate that it will incur significant operating expenses or be
required to invest heavily in computer systems improvements to be Year
2000 compliant.
While the Company is confident that its systems will be
compatible, no assurance can be given that this will not impact the
Company's results of operations.
<PAGE> 17
INFLATION
Inflation has not been a factor during the quarter ending March
31, 2000. While inflationary forces are moderately higher than in 1999,
the actual inflation is immaterial and is not considered a factor in
any contemplated capital expenditure program.
EXHIBIT INDEX
Exhibit No. Description
27 Financial Data Schedule
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.
Dated this 12th day of May, 2000.
REWARD ENTERPRISES INC.
(the "Registrant")
BY: /s/ Robert Dinning
Robert Dinning, Secretary/Treasurer,
Chief Financial Officer and a Member of
the Board of Directors.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Financial Condition at March 31, 2000 (Unaudited) and
the Consolidated Statement of Income for the three months ended March 31, 2000
(Unaudited) and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 29,661
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 29,661
<PP&E> 69,985
<DEPRECIATION> (10,498)
<TOTAL-ASSETS> 89,148
<CURRENT-LIABILITIES> 41,100
<BONDS> 0
0
0
<COMMON> 27,150
<OTHER-SE> 20,898
<TOTAL-LIABILITY-AND-EQUITY> 48,048
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12,181
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (12,181)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,181)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12,181)
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
