SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 2000 COMMISSION FILE NO 33-21085
NEW SYSTEMS, INC.
Incorporated in the State of Nevada IRS No. 87-0454377
5 Clancy Lane South
Rancho Mirage, California 92270
(760) 346-5961
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 Exchange Act of
1934 during the preceding 12 months, or for such shorter period that the
registrant was required to file such report, and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
Common Stock, $.001 par value 1,200,002 shares issued
and outstanding as of April 28, 2000
PART I - FINANCIAL INFORMATION
INDEX
Page
Part I. Financial Information
Item 1. Financial Statements
a) Balance Sheet as of March 31, 2000 2
b) Income Statements for the three month periods ended
March 31, 2000 and 1999. 3
c) Statement of Cash Flows for the periods ended
March 31, 2000 and 1999. 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Result of Operations 5
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 7
Signature 8
Part I. Financial Information
ITEM 1. FINANCIAL STATEMENTS
New Systems. Inc.
Balance Sheet
March 31, 2000
(unaudited)
ASSETS
Current Assets:
Cash in bank $ 1,017
---------
Total Current Assets $ 1,017
---------
Total Assets $ 1,017
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Total Current liabilities $ 20,314
---------
Total Liabilities $ 20,314
---------
Stockholder's Equity:
Common Stock $ 1,200
Additional paid-in capital $ 422,946
Deficit accumulated during development stage $(443,443)
---------
Total Stockholders' Equity $ (19,297)
---------
Total Liability and Stockholders' equity $ 1,017
=========
The accompanying notes are an integral part of these
unaudited financial statements
2
New Systems, Inc.
Statements of Operations
(unaudited)
Cumulative from
For the Quarter ended December 10, 1987
March 31, (Date of Inception)
--------------------------- Through
2000 1999 March 31, 2000
----------- ----------- --------------
General and Administrative Expenses $ 6,353 $ 1,890 $ 277,883
----------- ----------- ---------
Loss from continued operations (6,353) (1,890) (277,883)
Discontinued operations
Loss from prior business discontinued 0 0 (349,672)
Gain from disposal of prior business 0 0 173,766
----------- ----------- ---------
Loss before extraordinary gain (6,353) (1,890) (453,789)
Extraordinary gain from forgiveness of debt 0 0 10,346
----------- ----------- ---------
Net Loss $ (6,353) $ (1,890) $(443,443)
=========== =========== =========
Basic and diluted loss per share
Continued operation $ (0.01) $ 0 $ (0.63)
Discontinued operations 0 0 (0.40)
Extraordinary gain 0 0 0.02
----------- ----------- ---------
Net loss per share $ (0.01) $ 0 $ (1.00)
=========== =========== =========
Weighted average common shares used in
per share calculation 1,200,002 1,000,000 444,000
=========== =========== =========
The accompanying notes are an integral part of these
unaudited financial statements
3
New Systems, Inc.
Statement of Cash Flows
(unaudited)
Cumulative from
For the Quarter ended December 10, 1987
March 31, (Date of Inception)
--------------------------- Through
2000 1999 March 31, 2000
----------- ----------- --------------
Cash flow from operating activities:
Net loss $(6,353) $(1,890) $(443,443)
Adjustments for:
Changes in current assets and liabilities 6,323 (305) 24,067
Other items 0 0 161,296
------- ------- ---------
Net cash flow used by operating activities $ (30) $(2,195) $(258,080)
------- ------- ---------
Net cash flow from investing activities $ 0 $ 0 $ (46,015)
------- ------- ---------
Net cash flow from financing activities $ 0 $ 0 $ 305,112
------- ------- ---------
Net increase (decrease) in cash $ (30) $(2,195) $ 1,017
Cash at beginning of period 1,047 2,195 0
------- ------- ---------
Cash at end of period $ 1,017 $ 0 $ 1,017
======= ======= =========
The accompanying notes are an integral part of these
unaudited financial statements
4
New Systems, Inc.
Notes to Financial Statements
(unaudited)
NOTE 1. ACCOUNTING POLICIES AND OTHER DISCLOSURES
The condensed financial statements included in this Form 1O-QSB Report are
unaudited and have been prepared to provide information with respect to the
interim three month periods ending March 31, 2000 and 1999, at a time when the
Issuer is in a development stage. These financial statements have also been
prepared assuming that the Issuer will obtain adequate financing to continue as
a going concern. Due to losses since its inception and inasmuch as the Issuer is
currently not engaged in any revenue producing activities, such financing will
most likely be obtained through the issuance of its equity securities. The
Issuer currently has 250,000,000 shares of common stock authorized for issuance
of which 1,200,002 shares are issued and outstanding. The issuance of any
additional shares of common stock will result in a decrease in the percentage
ownership which current shareholders have in the Issuer.
The Issuer is seeking to enter into a reorganization or merger with a business
venture or a business entity which is currently or has the potential to be
successful. The Issuer can give no assurance that such a business venture,
entity or opportunity can be located. If the Issuer should be successful in this
endeavor, the consummation of such transaction, either through a merger or other
type of reorganization would in all probability require that additional shares
of common stock be issued. Such a transaction would therefore further decrease
the present stockholder' percentage interest in the Issuer.
The Issuer's report on Form 10-KSB for the year ended December 31, 1999,
contains financial statements which have been audited by an independent
certified public accounting firm and their report on the Issuer's financial
statements is contained therein. Additional information regarding the Issuer's
activities since inception, the accounting policies followed by the Issuer and
other pertinent financial disclosures are contained in the footnotes
accompanying the audited financial statements. The unaudited financial
statements of which these footnotes are an integral part have been prepared in
conformity with generally accepted accounting principles for the interim periods
presented and in accordance with the rules and regulations of the Securities and
Exchange Commission.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The Issuer is not currently engaged in any business operations but is seeking to
find a suitable business to acquire or an entity with which it can enter into a
reorganization or merger. The form of reorganization will not be determined
until a suitable business opportunity is presented. The Issuer has very limited
financial resources and therefore, management is relying on its association with
KM Financial, Inc. to provide the Issuer with sufficient financial resources to
continue its search for an entity or business which the Issuer can acquire or
enter into a reorganization. Management is also relying on KM Financial, Inc. to
provide introductions to individuals who may be influential in locating a
business or entity interested in being acquired or reorganizing with the Issuer.
The Issuer intends to take advantage of any reasonable business proposal
presented which management believes will provide the Issuer and its stockholders
with a viable business opportunity. The board of directors will make the final
decision in determining whether to complete any acquisition or reorganization
unless otherwise required by applicable law, the articles of incorporation, its
bylaws or by contract. Consequently, stockholders' approval of any acquisition
or reorganization may not be sought unless required as heretofore stated.
5
The investigation of specific business opportunities and the negotiation,
drafting, and execution of relevant agreements, disclosure documents, and other
instruments will require substantial time and attention from management. Such an
investigation will also result in the Issuer incurring expenses for the payment
of accountants, attorneys, and possibly others involved in such an inquiry. If a
decision is made not to consummate, participate or complete the acquisition of
such a business opportunity any expenses incurred will not be recoverable.
Furthermore, there can be no assurance that the Issuer's participation in any
business opportunity will ultimately be successful,
Management is not able to determine the amount of time or the resources that
will be necessary to locate, investigate and possibly acquire or merge with a
business prospect. If and when the Issuer locates a business opportunity and if
such opportunity results in the completion of the intended transaction, there
can be no assurance that after the transaction is completed the Issuer will have
profitable operations. The possibility also exists that the Issuer will never be
able to acquire, regardless of the form or manner of such intended acquisition
an interest in any business prospects, products or opportunities.
Management will give consideration and assess the potential profitability and
the adequacy of the working capital of any business operations which the Issuer
may investigate and possibly acquire. The foregoing considerations are only some
of the factors which management will utilize in determining the terms and
conditions under which the Issuer would consummate any acquisition or
reorganization. Potential business opportunities, no matter which form they may
take, will, more likely than not, result in substantial dilution for the
Issuer's shareholders due to the need for the issuance of additional shares of
the Issuer's common stock to acquire a business opportunity.
LIQUIDITY, CAPITAL RESOURCES AND RESULTS OF OPERATIONS
As of March 31, 2000, the Issuer had expended all of its financial resources and
is considering the issuance of additional shares of its common stock in order to
obtain operating capital. The issuance of additional shares of its common stock
will result in an immediate dilution in the percentage ownership that existing
shareholders have in the Issuer. As a result of the Issuer's association with KM
Financial, Inc., management believes that additional financing will be obtained
in amounts sufficient to meet the Issuer's incidental ongoing expenses which are
primarily associated with maintaining its corporate status and maintaining its
reporting obligations to the Securities and Exchange Commission. Such expenses
have been and will in the future be categorized as general and administrative
expenses.
Any working capital obtained in the future will be used to prepare and file all
future reports, as required by the Securities and Exchange Commission, for at
least a one year period of time. During the corresponding period of the prior
year, ending March 31, 1999, the Issuer was not engaged in any business
operations nor in any other activities.
Since its inception, the Issuer has not conducted any profitable operations and
has utilized all funds received from its initial public offering in attempting
to conduct profitable operations, It is not anticipated that the Issuer will
generate any revenue in the future unless a profitable business opportunity is
located and a merger or a form of reorganization is consummated. The Issuer
6
intends to investigate various business opportunities which will likely result
in management incurring "out of pocket" expenses and could also include expenses
associated with legal and accounting services. Such costs and expenses will
increase the financial burden on the Issuer with no guarantee that any benefits
will result from such expenditures or from the efforts of management.
The Issuer currently has no employees and does not intend to employ anyone in
the future, unless its present business operations were to change. 'The sole
officer and director of the Issuer is providing a location for the Issuer's
offices on a "rent free basis" and is not being paid a salary or any other form
of compensation for any services which are or may be provided, other than
reimbursement of "out of pocket" costs and expenses.
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Index of Exhibits
Exhibit 11 - Computation of per share earnings
1. Included as a part of the financial statements described in Part
I of this Report
Exhibit 27 - Financial Data Schedule
1. Included in EDGAR submission
(b) Reports on Form 8-K
None
7
SIGNATURES
In accordance with the requirements of the Exchange Act, the Issuer caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NEW SYSTEMS, INC.
/s/ Lloyd T. Rochford
- ----------------------------
Chief Executive Officer
Chief Financial Officer
Date: May 15, 2000
8