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, 2000
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from:
Commission file number 000-30115
KUSHI NATURAL FOODS CORP.
(Exact name of Small Business Issuer as specified in its charter.)
DELAWARE 13-3912047
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
c/o Madison Venture Capital II, Inc., 150 East 58th Street,
New York, New York 10022
(Address of principal executive offices, including zip code.)
(212) 583-1363
(Issuer's telephone number, including area code.)
--------------------------------------------------------------------------------
(Former Address, if changed since last report.)
Check whether the Issuer (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 [_]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: Common Stock par value per
share, at November 1, 2000 was 10,588,718 shares.
<PAGE>
Part I
Financial Information
Item 1. Financial Statements
KUSHI NATURAL FOODS CORP.
(A Development Stage Enterprise)
BALANCE SHEET
SEPTEMBER 30, 2000
(Unaudited)
ASSETS
Current Assets:
Cash and Cash Equivalents $ 42,518
---------
Total Assets $ 42,518
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $ 18,932
Commitments and Contingencies
Stockholders' Equity:
Preferred Stock, $.0001 par value; 5,000,000 shares
authorized, none issued and outstanding $ --
Common Stock, $.0001 par value; 35,000,000 shares
authorized, 10,588,718 shares issued and outstanding 1,059
Additional Paid-In Capital 213,494
Deficit Accumulated in the Development Stage (190,967)
---------
Total Stockholders' Equity 23,586
---------
Total Liabilities and Stockholders' Equity $ 42,518
=========
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
KUSHI NATURAL FOODS CORP.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
From
August 1, 1996
Nine Months Ended Three Months Ended (Inception)
----------------------------- ----------------------------- ----------------
September 30, September 30, To September 30,
----------------------------- ----------------------------- ----------------
2000 1999 2000 1999 2000
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues $ -- $ -- $ -- $ -- $ --
Costs and Expenses:
Selling, General and Administrative
Expenses 4,114 2,250 798 750 51,295
------------ ------------ ------------ ------------ ------------
Loss from Operations (4,114) (2,250) (798) (750) (51,295)
Other Income:
Interest Income 701 659 240 277 1,613
------------ ------------ ------------ ------------ ------------
Loss from Continuing Operations (3,413) (1,591) (558) (473) (49,682)
------------ ------------ ------------ ------------ ------------
Discontinued Operations:
Loss from Operations of Discontinued
Joint Venture -- -- -- -- (99,143)
Loss on Write-Off of Investment in
Discontinued Joint Venture -- -- -- -- (42,142)
------------ ------------ ------------ ------------ ------------
-- -- -- -- (141,285)
------------ ------------ ------------ ------------ ------------
Net Loss $ (3,413) $ (1,591) $ (558) $ (473) $ (190,967)
============ ============ ============ ============ ============
Earnings Per Common Share - Basic
Weighted Average Common Shares
Outstanding 10,588,718 8,603,718 10,588,718 8,603,718
============ ============ ============ ============
Net Loss Per Common Share - Basic $ (.00) $ (.00) $ (.00) $ (.00)
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
KUSHI NATURAL FOODS CORP.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Cumulative From
August 1, 1996
Nine Months Ended (Inception)
----------------------------- ----------------
September 30, To September 30,
----------------------------- ----------------
2000 1999 2000
----------------------------- ---------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net Loss $ (3,413) $ (1,591) $(190,967)
Adjustments to Reconcile Net Loss to Net Cash
(Used) by Operating Activities:
Stock Compensation -- -- 3,970
Loss from Operations of Discontinued Joint Venture -- -- 99,143
Loss on Write-Off of Investment in Discontinued Joint
Venture -- -- 42,142
Changes in Operating Assets and Liabilities:
Increase (Decrease) in Accounts Payable (6,701) (250) 18,932
--------- --------- ---------
Net Cash (Used) by Operating Activities (10,114) (1,841) (26,780)
--------- --------- ---------
Cash Flows from Investing Activities:
Investment in Joint Venture -- -- (47,854)
Cash Acquired Pursuant to Spin-Off -- -- 115,167
--------- --------- ---------
Net Cash Provided by Investing Activities -- -- 67,313
--------- --------- ---------
Cash Flows from Financing Activities:
Proceeds of Stock Subscriptions Receivable 1,985 -- 1,985
--------- --------- ---------
Net Cash Provided by Financing Activities 1,985 -- 1,985
--------- --------- ---------
Increase (Decrease) in Cash and Cash Equivalents (8,129) (1,861) 42,518
Cash and Cash Equivalents - Beginning 50,647 60,792 --
--------- --------- ---------
Cash and Cash Equivalents - Ending $ 42,518 $ 58,951 $ 42,518
========= ========= =========
Supplemental Disclosure of Cash Information:
Cash Paid for Income Taxes $ -- $ -- $ --
========= ========= =========
Cash Paid for Interest $ -- $ -- $ --
========= ========= =========
Non-Cash Investing and Financing Activities:
Contributed Capital by Former Officers Pursuant
to Debt Cancellation $ -- $ -- $ 78,250
========= ========= =========
Issuance of Common Stock as Consideration for
the Net Assets of Kushi Macrobiotics Corp. $ -- $ -- $ 130,348
========= ========= =========
Increase in Stock Subscriptions Receivable Upon Sale of
Common Stock $ -- $ -- $ 1,985
========= ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
KUSHI NATURAL FOODS CORP.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
September 30, 2000
(Unaudited)
NOTE 1 - Basis of Presentation
In the opinion of the Company, the accompanying unaudited financial
statements reflect all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows for the periods presented.
The results for interim periods are not necessarily indicative of the
results to be obtained for a full fiscal year.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
PLAN OF OPERATION.
Results of Operations - Through September 30, 2000.
The Company was incorporated under the laws of the State of Delaware on
August 1, 1996, and is in the early developmental and promotional stages. To
date the Company's only activities have been acquiring the "Kushi Assets", as
defined below, liquidating the same and activities directed at developing its
present business plan and raising its initial capital. The Company has not
commenced any commercial operations. The Company has no full-time employees and
neither owns nor leases any real estate. The Company was formed in connection
with the merger acquisition of Kushi Macrobiotics Corp. ("KMC") with American
Phoenix Group, Inc. (APGI") in 1996. Prior to such acquisition, KMC had operated
a business of marketing a line of natural foods (the "Kushi Cuisine"). This
business was not successful and management determined that it would be in the
shareholder's interest for KMC to operate a different business. In the APGI
reverse merger, the shareholders of APGI became the owners of 85% of the shares
of KMC, which changed its name to American Phoenix Group, Inc. As a condition to
the merger, KMC was required to divest itself of all assets related to the Kushi
Cuisine business. This divestiture was effected by transferring all of the
assets related to the Kushi Cuisine business, principally inventory and
receivables, and approximately $115,000 to a newly formed entity, the Company,
and spinning off the shares of the Company to the KMC shareholders on a three
for one basis simultaneously with the consummation of the KMC merger with APGI.
The Kushi Cuisine assets and a portion of the cash were contributed to a joint
venture which failed and the Company lost its investment therein of
approximately $48,000. Since its loss of its investment in the joint venture in
1997 the Company has been an dormant "shell corporation" with its activities
only activities being those relating to finding an acquisition partner. The net
loss during the three month and periods ended September 30, 1999 and 2000, were
$ 473 and $ 558, respectively. The increase in the net loss resulted from an
increase in Selling, General and Administrative Expense (SG&A) from $750 to $798
and a decrease in interest income ($240 in 2000 versus $277 in 1999). The
increase in SG&A reflects expenses incident to the Company's becoming a company
required to file reports under the Exchange Act of 1933. The decrease in
interest income reflects interest rates paid on the Company's cash accounts plus
the application of cash balances to expenses in prior periods. Net loss
increased during the nine month period ended September 30, 2000 over the net
loss for the nine month period ended September, 1999 for the same reasons.
Liquidity and Capital Resources.
On September 30, 2000, the Company had $42,518 in cash and cash
equivalents. As the Company does not have active operations, these funds should
be sufficient for the Company's needs as a "blank check shell company" for the
foreseeable future.
6
<PAGE>
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings.
There are no material legal proceedings commenced or maintained by, or
against, the Company.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
The Company has no debt securities outstanding.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters submitted for a vote of the security holders during
the period covered by this report.
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports were filed on Form 8-K during the quarter ended September 30,
2000.
7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Exchange Act, the Registrant has caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
KUSHI NATURAL FOODS CORP.
Dated: New York, New York By: /s/ Dr. Eugene Stricker
November 1, 2000 -------------------------------------
Dr. Eugene Stricker,
President and Principal Executive and
Financial Officer
By: /s/ Daniel A. France
-------------------------------------
Daniel A. France, Treasurer and
Principal Accounting Officer
8
