SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the quarter ended September 30, 1999
Commission File No. 0-24684
LONE WOLF ENERGY, INC.
(Name of small business issuer in its charter)
Colorado
(State or other jurisdiction of Incorporation or Organization)
73-1550360
(IRS Employer Identification Number )
2400 NW 30th, #814
0klahoma City, Oklahoma 73112
(405) 946-4850
(Address, including zip code and telephone number, including area
Code of registrant's executive offices)
K&S VENTURES, INC.
(Former Name of Registrant)
Securities registered under Section 12 (b) of the Exchange Act: none
Securities registered under Section 12 (g)
of the Exchange Act:
Common Stock, $0.001 par value
(Title of class)
Check whether the issuer (1) filed all reports 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), 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: As of September 30, 1999 there were
11,670,000 shares of the Company's common stock issued and outstanding.
Documents Incorporated by Reference: None
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PART 1. - FINANCIAL INFORMATION
Item 1. Financial Statements
LONE WOLF ENERGY, INC.
(A Development Stage Company)
BALANCE SHEETS
September 30, 1999 and December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
--------- ---------
ASSETS
<S> <C> <C>
Current Assets
Cash, general checking $2,307 $282
Accrued interest receivable 11,991 0
Current portion of notes receivable 60,496 0
--------- ---------
Total current assets 74,794 282
Notes receivable, excluding current portion 597,765 0
Investments 32,344 0
Cash, restricted savings 104,140 0
--------- ---------
TOTAL ASSETS $809,043 $282
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current installments of long-term obligations $51,854 $0
Accounts payable 3,232 0
Accrued interest payable 2,902 0
Note payable 7,000
--------- ---------
Total current liabilities 64,988 0
Long-term obligations, excluding current installments 427,606 0
Deposits 24,140 0
Note payable-shareholder 100,000 0
Deferred revenue 166,867 0
--------- ---------
TOTAL LIABILITIES 783,601 0
--------- ---------
Stockholders' Equity
Preferred Stock, $0.001 par value, 20,000,000 shares authorized,
No shares issued and outstanding 0 0
Common Stock, $0.001 par value, 100,000,000 shares authorized,
11,670,000 shares issued and outstanding at September 30, 1999 and
11,170,000 at December 31, 1998 11,670 11,170
Additional Paid in Capital 45,941 45,941
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Retained Earnings (Deficit) 5,103 (19,557)
Deficit Accumulated During The Development Stage (37,272) (37,272)
--------- ---------
Total stockholders' equity 25,442 282
--------- ---------
TOTAL LIABILITIES' AND STOCKHOLDERS' EQUITY $809,043 $282
========= =========
</TABLE>
The accompanying notes are an integral part of the Financial Statements
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LONE WOLF ENRGY, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
For the three months and nine months ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
----------------------------- -----------------------------
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue $26,811 $0 $95,730 $0
Expenses
Legal 2,248 8,481 24,481 11,425
Accounting 0 4,508 2,750 4,595
Consulting 6,000 0 14,500 0
Transfer Agent 375 254 1,403 1,032
Telephone 921 0 3,205 0
Office 19 0 351 0
Public Relations 496 0 1,441 0
Filing Fees 294 0 564 0
Interest 12,681 0 22,254 0
Miscellaneous 0 1,364 120 1,818
----------- ----------- ----------- -----------
Total Expenses 23,034 14,607 71,069 18,870
----------- ----------- ----------- -----------
Net Income(Loss) $3,777 $(14,607) $24,661 $(18,870)
----------- ----------- ----------- -----------
Weighted Average Shares Outstanding 11,670,000 4,250,000 11,670,000 4,250,000
----------- ----------- ----------- -----------
Loss Per Share $0.00 $0.00 $0.00 $0.00
----------- ----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the Financial Statements
4
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LONE WOLF ENERGY INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the nine months ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
September 30, September 30,
1999 1998
--------- ---------
<S> <C> <C>
Operating Activities:
Net Income (loss) $24,661 $(18,870)
Change in Accounts Payable 3,232 12,530
Increase in Interest Payable 2,902 0
Increase in Notes Payable 7,000
Increase in Long-Term Debt 479,460 0
Increase in Deposits 20,000
Increase in Deferred Revenue 166,866 0
Increase in Interest Receivable (11,991) 0
Increase in Notes Receivable (658,261) 0
Increase in Investments (32,344) 0
--------- ---------
Cash provided by (Used In) Operating Activities 15,525 (6,430)
--------- ---------
Financing Activities:
Common Stock Issued For Services Rendered 500
Contribution of Capital by Stockholders 6,340
--------- ---------
Cash provided by financing activities 500 6,430
Investing Activities -- --
--------- ---------
Change in Cash 2,025 --
Cash at Beginning of Period 282 --
--------- ---------
Cash at End of Period $2,307 $0
--------- ---------
</TABLE>
The accompanying notes are an integral part of the Financial Statements
5
<PAGE>
LONE WOLF ENERGY, INC.
A Development Stage Company
(Formerly K&S Ventures, Inc.)
NOTES TO FINANCIAL STATEMENTS
For the three months and nine months ended September 30, 1999 and 1998
1. SIGNIFICANT ACCOUNTING POLICIES
Organization
Lone Wolf Energy, Inc. (formerly K&S Ventures, Inc.) was incorporated on
March 4, 1991 in the state of Colorado. In February 1999 the Company signed a
Master Sales Agreement with Eagle Capital, Inc. (OTCBB: ECIC) to sell
specialized equipment used in producing patented IMSI blocks for mortarless dry
stack construction. The agreement calls for the Company to provide ten mobile
block plants and five portable Q-Bond plants over the next three years.
Basis of Accounting
Assets, liabilities, equity, revenue and expenses are recorded under the
accrual method of accounting in conformity with generally accepted accounting
principles.
Cash and cash equivalents
The Company considers all cash and marketable securities as cash
equivalents.
Income Taxes
For the years prior to 1997, the Company was taxed under the provisions of
Subchapter S of the Internal Revenue Code. Under the provisions of the Code, all
losses or taxable income flowed to the stockholders of the Company. In January
1997, the Company's standing as a Subchapter S corporation, as defined by the
Internal Revenue Code, was changed because of the purchase of common stock
during 1997 by a corporate shareholder. Beginning with the year ended December
31, 1997, the Company will be considered a "C" corporation for income tax
purposes.
Fiscal Year End
The Company's fiscal year end is December 31.
Earnings (Loss) per Share
Primary income (loss) per share is calculated by dividing net income (loss)
by the weighted average shares of common stock of the Company outstanding during
the period .
Use of Estimates
The preparation of financial statements in conformity with generally
accepted principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported revenues and expenses during the reporting
period. Actual results could differ from those estimates.
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<PAGE>
2. STOCKHOLDERS' EQUITY
Issuance of Common Stock
During 1998 6,500,000 shares were issued at 0.001 for services rendered by
related parties and stockholders. There were 500,000 additional shares of
stock that were to be issued which were overlooked in 1998 and were Issued
in the quarter ended June 30, 1999.
3. INCOME TAXES
The deferred tax assets and liabilities are as follows:
Net operating loss carryforward $14,909
Less: valuation allowance 14,909
-------
Net deferred tax asset $ 0
-------
As of December 31, 1998, the Company has a net operating loss carryforward
of approximately $37,000 for income tax purposes and expires as follows:
Year of Loss Expires Carryforward Amount Deferred Tax Asset
or (Liability)
1997 2012 $ 11,000 $ 4,332
1998 2013 26,000 10,577
----------- ----------
$ 37,000 $ 14,909
=========== ==========
Deferred taxes reflect a combined federal and state tax rate of
approximately 40%.
4. DEVELOPMENT STAGE OPERATIONS
The Company has been is a development stage enterprise. Its primary focus
since inception of the new operating plan has been raising capital. In 1999 it
is being reported as an operating entity.
5. NOTES RECEIVABLE
The Company purchased a piece of equipment for resale for $500,000. The
sale call for the Company to receive 84 monthly installments of $12,000
beginning in May of 1999. The sale price was imputed using an interest rate
of 12%, which resulted in a sale price of $679,000. The current and
long-term portions of the note receivable represent the balance due on this
debt.
6. CASH-RESTRICTED SAVINGS
This represents a deposit on the equipment sold plus $100,000, which was
loaned to the Company by a shareholder which is pledged to the bank as
additional collateral on the loan the any has against the equipment purchased.
7
<PAGE>
7. LONG-TERM OBLIGATIONS
This is an 8 1/2 % seven year note payable to a bank in monthly
installments of $7,918 including principal and Interest on the equipment
the Company purchased and resold. It is secured by the equipment, $100,000
cash loaned by a shareholder and the personal guarantee of another
shareholder. The bank also received an option to purchase 500,000 shares of
the Company's stock at $0.15 per share for making the loan.
8. DEFERRED REVENUE
This is the difference between the purchase price of the equipment sold and
the imputed sale price. The original balance at April 8, 1999 $179,700 is being
recognized on the installment method with $2,193 per month being recognized over
the 84 month term of the agreement.
8
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
Plan of Operations
In February of 1999 the Company signed a Master Equipment Sales Agreement
with Eagle Capital, Inc, (OTCBB:ECIC) to sell specialized equipment used in
producing patented IMSI blocks for mortarless dry stack construction. The
Agreement calls for the Company to provide ten mobile blocks plants and five
portable Q-Bond plants over the next three years. Through the guarantees of
certain key shareholders the Company has already obtained $500,000 in financing
for the first plant. In April of 1999 Eagle ordered the first plant and paid a
deposit of $48,000 covering the first two and last two payments on the plant.
The Company incurred approximately $22,000 in legal fees to get this contract
signed.
In May of 1999 the company signed a letter of intent to acquire EP
Distributing Company. EP Distributing and its affiliated groups brokers in the
nutritional area with its primary line being Earths' Pharmacy products which
include 17 private labeled nutritional products which are sold through some
retail pharmacies, Doctors, Radio Talk show sponsorship and the internet
(www.epphysiciansformula.com). The Company is currently negotiating financing to
complete this acquisition.
Results of operations
Due to problems incurred on the sale contract the Company negotiated a
payment of approximately $44,000 in cash and stock which is included in the year
to date quarter revenues. The Company turned profitable from operations in the
second quarter of 1999 and anticipates this to continue and grow as more plants
are ordered and the current plant is shipped and production payments begin.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Change in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
Exhibits
None
Reports on Form 8-K
None
9
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LONE WOLF ENERGY, INC.
/s/ Douglas A. Newman
-------------------------------------
By: Douglas A. Newman, Sec,y
Date: November 10, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEPTEMBER
10QSB 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-START> JUL-01-1999 JAN-01-1999
<PERIOD-END> SEP-30-1999 SEP-30-1999
<CASH> 2,307 2,307
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 74,794 74,794
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 809,043 809,043
<CURRENT-LIABILITIES> 64,988 64,988
<BONDS> 0 0
0 0
0 0
<COMMON> 11,670 11,670
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 809,043 809,043
<SALES> 26,811 95,730
<TOTAL-REVENUES> 26,811 95,730
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 23,034 71,069
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 3,777 24,661
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 3,777 24,661
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 3,777 24,661
<EPS-BASIC> 0 0
<EPS-DILUTED> 0 0
</TABLE>
