--------------------------------------------------------------------------------
Kirt W. James
PRESIDENT
Knowledge Networks, Inc.
24843 Del Prado, #318
Dana Point, CA 92629
(Name and Address of Person Authorized to Receive Notices
and Communications on Behalf of the Person Filing Statement)
--------------------------------------------------------------------------------
WITH A COPY TO:
KARL E. RODRIGUEZ, ESQ
34700 Pacific Coast Highway, Suite 303
Capistrano Beach, CA 92624
(949) 248-9561
fax (949) 248-1688
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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: September 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: 36,699,750 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 September 30, 2000, the number of shares outstanding of the Registrant's
Common Stock was 36,699,750
ITEM 1. FINANCIAL STATEMENTS.
The following financial statements are attached hereto and incorporated
herein by this reference.
--------------------------------------------------------------------------------
Exhibit FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Un-Audited Financial Statements
00QF-3 for the three months and nine months ended September 30, 2000
--------------------------------------------------------------------------------
1
<PAGE>
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.
There has been minimal change in our financial condition and operations
since our last audited report. The following tables provide quarterly
comparisons from our last two quarters. First revenues are increasing, but the
changes are barely substantial.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
REVENUES.
SECOND QUARTER.
Inception
Dec 16,
1999
to
June 30
Operations. . . April 1 to June 30 Jan 1 to June 30
2000 1999 2000 1999 2000
----------------------------------------------------------------------------------
Revenues: . . . $ 12,500 $ 6,000 $30,000 $12,000 $74,683
----------------------------------------------------------------------------------
REVENUES.
THIRD QUARTER.
Inception
May 19,
1999
to
Sept 30
Operations. . . July 1 to Sept 30 Jan 1 to Sept 30
2000 1999 2000 1999 2000
----------------------------------------------------------------------------------
Revenues: . . . $ 15,000 $ 6,000 $42,500 $12,000 $87,183
----------------------------------------------------------------------------------
</TABLE>
The Remainder of this Page is Intentionally left Blank
2
<PAGE>
EXPENSES
SECOND QUARTER
Inception
May 19,
1999
to
June 30
Operations April 1 to June 30 Jan 1 to June 30
2000 1999 2000 1999 2000
--------------------------------------------------------------------------------
Bad Debts 0 0 0 0 11,154
Consulting Fees 12,500 19,876 32,000 41,378 133,181
General & Administrative 8,345 2,154 14,384 3,875 30,322
Total Expenses 20,845 22,030 46,384 45,253 174,657
--------------------------------------------------------------------------------
EXPENSES
THIRD QUARTER
Inception
May 19,
1999
to
Sept 30
Operations July 1 to Sept 30 Jan 1 to Sept 30
2000 1999 2000 1999 2000
--------------------------------------------------------------------------------
Bad Debts 0 0 0 0 11,154
Consulting Fees 12,500 19,876 40,000 41,378 145,681
General & Administrative 16,361 2,154 44,071 3,875 47,269
Total Expenses 28,861 22,030 84,071 45,253 204,104
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
NET LOSS. . . . Inception
SECOND QUARTER. May 19,
1999
to
June 30
Operations . . April 1 to June 30 Jan 1 to June 30
2000 1999 2000 1999 2000
--------------------------------------------------------------------------------------
Net (Loss). . . (8,345) (16,030) (16,384) (33,253) (99,974)
--------------------------------------------------------------------------------------
NET LOSS. . . . Inception
THIRD QUARTER . May 19,
1999
to
Sept 30
Operations . . July 1 to Sept 30 Jan 1 to Sept 30
2000 1999 2000 1999 2000
--------------------------------------------------------------------------------------
Net (Loss). . . (13,861) (16,030) (41,571) (33,253) (125,161)
--------------------------------------------------------------------------------------
</TABLE>
NET LOSSES. Our net losses have continued generally each quarter of year
2000. Management believes that only a modest increase in our customer base would
increase revenues to the level of marginal profitability. There is no assurance
that profitability will be achieved at any forseeable time.
3
<PAGE>
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.
PART II: OTHER INFORMATION
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
4
<PAGE>
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.
EXHIBIT INDEX
FINANCIAL STATEMENTS AND DOCUMENTS
--------------------------------------------------------------------------------
Exhibit FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
Un-Audited Financial Statements
00QF-3 for the three months and nine months ended September 30, 2000
--------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Form 10-Q Report for the Quarter ended September 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: September 30, 2000 KNOWLEDGE NETWORKS, INC.
by
/s/Kirt W. James /s/Jeff Harry
Kirt W. James Jeff Harry
president/director secretary/director
5
<PAGE>
--------------------------------------------------------------------------------
EXHIBIT 00QF-3
UN-AUDITED FINANCIAL STATEMENTS
FOR THE THREE MONTHS AND SIX MONTHS ENDED
SEPTEMBER 30, 2000
--------------------------------------------------------------------------------
6
<PAGE>
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
(Unaudited)
----------------------------------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,475 $ 5,585
Notes Receivable . . . . . . . . . . . . . . . . . . . 63,993 63,993
---------- --------------
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . 66,468 69,578
---------- --------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . $ 66,468 $ 69,578
========== ==============
LIABILITIES & STOCKHOLDERS' EQUITY
LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . . . $ 13,123 $ 0
---------- --------------
Total Liabilities. . . . . . . . . . . . . . . . . . . 13,123 0
---------- --------------
STOCKHOLDERS' EQUITY
Common Stock, $.001 par value; authorized 100,000,000
shares; issued and outstanding, 10,361,750 shares
and 35,699,750 shares respectively. . . . . . . . . 35,700 10,362
Additional Paid-In Capital . . . . . . . . . . . . . . 142,806 142,806
Accumulated Equity (Deficit) . . . . . . . . . . . . . (125,161) (83,590)
Less: Subscription receivable
Total Stockholders' Equity . . . . . . . . . . . . . . 53,345 69,578
---------- --------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY . . . . . . . $ 66,468 $ 69,578
========== ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
KNOWLEDGE NETWORKS, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
For the periods ended September 30, 1999 and 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
From
Inception on
From July From July From January From January December 16,
1, 2000 to. 1, 1999 to 1, 2000 to 1, 1999 to 1998 through
September 30, September 30, September 30, September 30, September 30,
2000 1999 2000 1999 2000
---------------------------------------------------------------------------------------------------------------
Revenues. . . . . . . . . . $ 15,000 $ 6,000 $ 42,500 $ 12,000 $ 87,183
-------------- -------------- -------------- -------------- --------------
Bad debt. . . . . . . . . . 0 0 0 0 11,154
Consulting fees . . . . . . 12,500 19,876 40,000 41,378 141,181
General and Administrative. 16,361 2,154 44,071 3,875 60,009
-------------- -------------- -------------- -------------- --------------
Total Expenses. . . . . . . 28,861 22,030 84,071 45,253 212,344
Net Loss from Operations. . (13,861) (16,030) (41,571) (33,253) (125,161)
Net Income (Loss) . . . . . ($13,861) ($16,030) ($41,571) ($33,253) ($125,161)
============== ============== ============== ============== =============
Loss per Share. . . . . . . $ (0.00110) $ (0.00161) $ (0.00374) $ (0.00334) $ (0.01198)
============== ============== ============== ============== =============
Weighted Average
Shares Outstanding. . . 12,565,054 9,958,360 11,101,546 9,958,360 10,450,982
============== ============== ============== ============== =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
KNOWLEDGE NETWORKS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICT)(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 September 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
Issuance of Common Stock
at par for services rendered . . . . 25,338,000 25,338 0 0 0
Loss during the period from January 1
through September 30, 2000 . . . . . 0 0 0 (41,571) 0
---------- ------------ ------------- ----------- -----------------
Balance at September 30, 2000. . . . . . 35,699,750 $ 35,700 $ 142,806 ($125,161) $ 53,345
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
KNOWLEDGE NETWORKS, INC.
STATEMENT OF CASH FLOWS (UNAUDITED)
For the periods ended September 30, 1999 and 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C>
From inception,
December 16,
1988 through
September 30, September 30,
2000 1999 2000
----------------------------------------------------------------------------------------
Operating Activities
Net Income (Loss). . . . . . . . . . . . . . ($41,571) ($33,253) ($125,161)
Adjustments to reconcile net loss to
net cash provided by operations
Increase in accounts payable . . . . . . . . 13,123 0 13,123
Bad debt . . . . . . . . . . . . . . . . 0 11,154 11,154
Issuance of stock for services . . . . . 25,338 25,004 50,342
-------- -------- --------
Net cash flows used Operations . . . . . . . (3,110) 2,905 (50,542)
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. . . . . . . (3,110) 52,212 2,475
Cash, beginning of period. . . . . . . . . . $ 5,585 $ 3,655 $ 0
-------- -------- --------
Cash, end of period. . . . . . . . . . . . . $ 2,475 $ 55,867 $ 2,475
================ ========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
KNOWLEDGE NETWORKS, INC.
NOTES TO FINANCIAL STATEMENTS
for the fiscal year ended December 31, 1999
and for the periods ended September 30, 1999 and 2000
NOTES TO FINANCIAL STATEMENTS
Knowledge Networks, Inc. ("the Company") has elected to omit substantially all
footnotes to the financial statements for the nine months ended September 30,
2000, since there have been no material changes (other than indicated in other
footnotes) to the information previously reported by the Company in their Annual
Report filed on Form 10-KSB for the Fiscal year ended December 31, 1999.
UNAUDITED INFORMATION
The information furnished herein was taken from the books and records of the
Company without audit. However, such information reflects all adjustments which
are, in the opinion of management, necessary to properly reflect the results of
the period presented. The information presented is not necessarily indicative
of the results from operations expected for the full fiscal year.
11
<PAGE>
