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
Commission File Number: 0-30565
Date of Report: June 30, 2000.
KNOWLEDGE NETWORKS, INC.
Nevada 91-2014670
(Jurisdiction of Incorporation) (I.R.S. Employer Identification No.)
24843 Del Prado, Suite 318, Dana Point, CA 92629
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (949) 248-1765
Securities registered pursuant to Section 12(g) of the Act: 10,361,750 Common
Stock
Yes [X] No [ ] (Indicate by check mark whether the Registrant (1) has filed
all report 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 reports). This Report is filed
voluntarily.
As of June 30, 2000, the number of shares outstanding of the Registrant's Common
Stock was 10,361,750
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INTRODUCTION
Our 1934 Act Registration on Form 10-SB became effective on or about July
7, 2000. We are not required to file this Quarterly Report, but do so
voluntarily in order to provide current financial information. Our inception was
December 16, 1998. Our first fiscal year ended December 31, 1999. Our 1934 Act
Registration on Form 10-SB became effective on or about July 7, 2000. We were
not required to file an annual report on Form 10-K-SB for our first fiscal year.
Our Audited Financial Statements for the year ended December 31, 1999 are filed
as a part of our Form 10-SB which became effective July 7, 2000.
ITEM 1. FINANCIAL STATEMENTS.
The Purpose of this voluntary filing is to provide the following un-audited
financial information: Financial Statements Un-Audited: for the six months ended
June 30, 2000
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
(A) (A) PLAN OF OPERATION FOR THE NEXT TWELVE MONTHS.
(1) CASH REQUIREMENTS AND OF NEED FOR ADDITIONAL FUNDS, TWELVE MONTHS. We
do not have enough cash to fund our operations optimally for the next twelve
months at our current ratio of revenues to expenses. We must increase our
revenues by increasing our customer base and/or borrow from our circle of
shareholders or seek additional investment from them.
(2) OTHER REQUIREMENTS, NEXT TWELVE MONTHS.
(I) SUMMARY OF PRODUCT RESEARCH AND DEVELOPMENT. None.
(II) EXPECTED PURCHASE OR SALE OF PLANT AND SIGNIFICANT EQUIPMENT.
None.
(III) EXPECTED SIGNIFICANT CHANGE IN THE NUMBER OF EMPLOYEES. None.
(B) DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
REVENUES. From January 1, 2000, through June 30, 2000 we enjoyed revenues
of $22,500 (as compared to $12,000 in the comparable period of 1999). From April
1, 2000 through June 30, 2000, our revenues were $12,500 (as compared to $6,000
in the comparable period of 1999).
EXPENSES/NET LOSS.From January 1, 2000, through June 30, 2000 we incurred
expenses/net loss of $34,884/$16,384 (as compared to $45,253/$33,253 in the
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comparable period of 1999). From April 1, 2000 through June 30, 2000, our
expenses/net loss were $$20,845/$8,345 (as compared to $22,030/$16,030 in the
comparable period of 1999).
REVENUES/EXPENSE RATIO IMPROVING. Our net losses have decreased in every
period, even as revenues have remained somewhat flat. Management believes that
only a modest increase in our customer base would increase revenues to the level
of marginal profitability.
FUTURE PROSPECTS Our young business is improving, little by little. The
size and scope of our operations are modest. We have not yet demonstrated
profitability. The industry is subject to continuous exponential change,
requiring us to keep up with changing contemporary software in a highly
competitive market. Sudden or unexpected changes in the nature of our client's
needs, due to changing industry standards could present us with unexpected
expenses, and, in the worst case, the loss of clients. For these reasons, we
cannot predict with confidence, when and whether we might achieve profitability
or develop a sufficiently expanded customer base to insure our continued
viability. While we believe we are developing a market niche, there can be no
assurance of our success. Notwithstanding the foregoing cautionary statements,
assuming the continuation of current conditions, we would expect to proceed to
build our customer base and continue with our existing business plan, with
minimal advances and deferrals by our existing shareholders.
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PART II: OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGE IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
We filed a Current Report on Form 8-K about June 2, 2000 for the sole
purpose of providing our more recent Un-Audited Financial Statements for the
five months ended May 31, 2000, under cover of Exhibit 5/31/00.
EXHIBIT INDEX
FINANCIAL STATEMENTS AND DOCUMENTS
Financial Statements Un-Audited: Exhibit Number
for the six months ended June 30, 2000 00QF2-6/30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Form 10-Q Report for the Quarter ended June 30, 2000, has been signed below by
the following person on behalf of the Registrant and in the capacity and on the
date indicated.
Dated: June 30, 2000
KNOWLEDGE NETWORKS, INC.
by
/s/Kirt W. James /s/Jeff Harry
Kirt W. James Jeff Harry
President/Director Secretary/Director
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EXHIBIT 00QF2-6/30
UN-AUDITED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
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KNOWLEDGE NETWORKS, INC.
BALANCE SHEET (UNAUDITED)
For the fiscal year ended December 31, 1999
And the period ended June 30, 2000
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, December 31,
2000 1999
----------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,214 $ 5,585
Notes Receivable . . . . . . . . . . . . . . . . . . . 63,993 63,993
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . 67,207 69,578
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . $ 67,207 $ 69,578
LIABILITIES & STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . . . $ 14,013 $ 0
Total Liabilities. . . . . . . . . . . . . . . . . . . 14,013 0
STOCKHOLDERS' EQUITY
Common Stock, $.001 par value; authorized 100,000,000
shares; issued and outstanding, 10,361,750 shares
and 10,361,750 shares respectively. . . . . . . . . 10,362 10,362
Additional Paid-In Capital . . . . . . . . . . . . . . 142,806 142,806
Accumulated Equity (Deficit) . . . . . . . . . . . . . (99,974) (83,590)
Less: Subscription receivable
Total Stockholders' Equity . . . . . . . . . . . . . . 53,194 69,578
TOTAL STOCKHOLDERS' EQUITY . . . . . . . . . . . . . . $ 67,207 $ 69,578
</TABLE>
The accompanying notes are an integral part of these financial statements.
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KNOWLEDGE NETWORKS, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
For the periods ended June 30, 1999 and 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
From
Inception on
From April From April From January From January December 16,
1, 2000 to. 1, 1999 to 1, 2000 to 1, 1999 to 1998 through
June 30,. . . June 30, June 30, June 30, June 30,
2000 1999 2000 1999 2000
Revenues. . . . . . . . . . $ 12,500 $ 6,000 $ 22,500 $ 12,000 $ 67,183
Bad debt. . . . . . . . . . 0 0 0 0 11,154
Consulting fees . . . . . . 12,500 19,876 24,500 41,378 125,681
General and Administrative. 8,345 2,154 14,384 3,875 30,322
Total Expenses. . . . . . . 20,845 22,030 38,884 45,253 167,157
Net Loss from Operations. . (8,345) (16,030) (16,384) (33,253) (99,974)
Net Income (Loss) . . . . . ($8,345) ($16,030) ($16,384) ($33,253) ($99,974)
Loss per Share. . . . . . . $ 0.00081 $ 0.00161 $ 0.00158 $ 0.00334 $ 0.00995
Weighted Average
Shares Outstanding. . . 10,361,750 9,958,360 10,361,750 9,958,360 10,048,290
</TABLE>
The accompanying notes are an integral part of these financial statements.
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KNOWLEDGE NETWORKS, INC.
STATEMENT OF CASH FLOWS (UNAUDITED)
For the periods ended June 30, 1999 and 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
From inception,
December 16,
1988 through
June 30, . June 30,
2000 1999 2000
-----------------------------------------------------------------------------------------
Operating Activities
Net Income (Loss). . . . . . . . . . . . . . . ($16,384) ($33,253) ($99,974)
Adjustments to reconcile net loss to
net cash provided by operations
Increase in accounts payable . . . . . . . . 14,013 0 0
Bad debt . . . . . . . . . . . . . . . . . 0 11,154 11,154
Issuance of stock for services . . . . . . 0 25,004 25,004
Net cash flows used Operations . . . . . . . . (2,371) 2,905 (63,816)
Cash flows used in Investment Activities
Cash payments for notes receivable . . . . . . $ 0 ($63,993) ($63,993)
Net Cash used in Investment Activities . . . . 0 (63,993) (63,993)
Cash Flows from Financing Activities
Cash received from subscriptions receivable. 0 9,800 9,800
Cash received from spin-off. . . . . . . . . 0 0 3,710
Issuance of stock for cash . . . . . . . . . 0 103,500 103,500
Net Cash Flows from Financing Activities . . . 0 113,300 117,010
Net increase (decrease) in cash. . . . . . . . (2,371) 52,212 (10,799)
Cash, beginning of period. . . . . . . . . . . $ 5,585 $ 3,655 $ 0
Cash, end of period. . . . . . . . . . . . . . $ 3,214 $ 55,867 ($10,799)
</TABLE>
The accompanying notes are an integral part of these financial statements.
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KNOWLEDGE NETWORKS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)(UNAUDITED)
For the period from inception of the Corporation
On December 16, 1998, through December 31, 1998
For the year ended December 31, 1999 and the period ended June 30, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Additional Accumulated Total Stock-
Common Par Paid-In Equity holders' Equity
Stock Value Capital (Deficit) (Deficit)
Common Stock issued at inception . . . . 8,020,000 $ 8,020 $ 0 $ 0 $ 8,020
Sale of Common Stock
at $0.01 per share . . . . . . . . . 980,000 980 8,820 0 0
Distribution to shareholders in spin off 0 0 6,844 0 0
Loss during the period from December 16,
through December 31, 1998. . . . . . 0 0 0 (11,209) 0
Balance at December 31, 1998 . . . . . . 9,000,000 $ 9,000 $ 15,664 ($11,209) $ 13,455
---------- ------------ ------------- ---------- -----------------
Sale of Common Stock
at $0.10 per share . . . . . . . . . 1,035,000 1,035 102,465 0 0
Issuance of Common Stock for
services at $0.10 per share. . . . . 249,250 249 24,677 0 0
Issuance of Common Stock
at par for services rendered . . . . 77,500 78 0 0 0
Loss during the period from January 1
through December 31, 1999. . . . . . 0 0 0 (72,381) 0
Balance at December 31, 1999 . . . . . . 10,361,750 $ 10,362 $ 142,806 ($83,590) $ 69,578
---------- ------------ ------------- ---------- -----------------
Loss during the period from January 1
through June 30, 2000. . . . . . . . 0 0 0 (16,384) 0
Balance at June 30, 2000 . . . . . . . . 10,361,750 $ 10,362 $ 142,806 ($99,974) $ 53,194
---------- ------------ ------------- ---------- -----------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
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KNOWLEDGE NETWORKS, INC.
Notes to The Financial Statements
December 31, 1999 and June 30, 2000
NOTE I - Summary of Significant Accounting Policies
a. Organization
Knowledge Networks, Inc., ("the Company") is a Nevada corporation organized on
December 16,
1998. The Company was created on this date through a spin off of the operations
and assets to the shareholders of Knowledge Networks Acquisitions, IncThe
Company specializes in Microsoft consulting and training as well as
telecommunications consulting, training and outsourcing.
b. Accounting Method
The Company recognizes income and expenses on the accrual basis of accounting.
c. Earnings (Loss) Per Share
The computation of earnings per share of common stock is based on the weighted
average number
of shares outstanding at the date of the financial statements.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with maturities of three
months or less to
be cash equivalents.
e. Provision for Income Taxes
No provision for income taxes has been recorded due to net operating loss
carryforwards totaling approximately $85,830 that will be offset against future
taxable income.
Deferred tax assets and the valuation account is as follows at December 31, 1999
and June 30, 2000.
June 30, December 31,
2000 1999
----------------------------------------------------
Deferred tax asset:
NOL carrryforward $ 9,648 $ 9,648
Valuation allowance (9,648)) (9,648)
Total 0 0
NOTE 2 - Going Concern
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company is dependent upon raising
capital to continue operations. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
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KNOWLEDGE NETWORKS, INC.
Notes to the Financial Statements
December 31, 1999 and June 30, 2000
NOTE 3 - Related Party Transactions
During 1999, $63,993 was paid to an officer of the Company. The note is due
within the next twelve months with no provision for interest.
During 1999,326,750 shares of common stock were issued to officers and
shareholders for consulting services of $25,004.
During 1999 and the first three months of 2000, $44,683 and $17,500 in sales,
respectively, were to a shareholder.
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