UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1999 ------------------------------------------------- ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------------- ------------------------ Commission File number 0-25541 ----------------------------------------- CIGAR KING CORPORATION ------------------------------------------------------------ (Exact name of registrant as specified in charter) Nevada 91-1948357 - -------------------------------------------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 825 - 1200 West 73rd Avenue Vancouver, BC, Canada V6P 6G5 - ------------------------------------ --------------- (Address of principal executive offices) (Zip Code) 604-267-1100 ---------------------------------------------------------- Registrant's telephone number, including area code --------------------------------------------------------------------- (Former name, address, and fiscal year, if changed since last report) 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 reports), Yes [X] No [ ] and ( ) has been subject to filing requirements for the past 90 days. Yes [X] No [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the last practicable date. Class Outstanding as of March 26, 2000 - ----------------------------------- -------------------------------- Common Stock, $0.001 per share 10,535,000 INDEX Page Number ------ PART 1. ITEM 1. Financial Statements (unaudited)......................................... 3 Balance Sheet as at December 31, 1999.................................... 4 Statement of Operations For the three months ended December 31, 1999 and for the three months ended December 31, 1998 and for the period from October 8, 1998 (Date of Incorporation) to December 31, 1999.................... 5 Statement of Changes in Shareholders' Equity For the period from October 8, 1998 (Date of Incorporation) to December 31, 1999............................... 6 Statement of Cash Flows For the three months ended December 31, 1999 and for the three months ended December 31, 1998 and for the period from October 8, 1998 (Date of Incorporation) to December 31, 1999....................... 7 Notes to the Financial Statements....................................... 8 ITEM 2. Plan of Operations...................................................... 10 PART 11 Signatures.............................................................. 11 2 PART 1 - FINANCIAL INFORMATION - -------------------------------------------------------------------------------- ITEM 1. FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The accompanying balance sheet of Cigar King Corporation (a development stage company) at December 31, 1999 and the statement of operations and statement of cash flow for the three months ended December 31, 1999, for the three months ended December 31, 1998 and for the period from October 8, 1998 (date of incorporation) to December 31, 1999 and the statement of stockholders' equity for the period from October 8, 1998 (date of incorporation) to December 31, 1999 have been prepared by the Company's management and they do not include all information and notes to the financial statements necessary for a complete presentation of the financial position, results of operations, cash flows, and stockholders' equity in conformity with generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the quarter ended December 31, 1999, are not necessarily indicative of the results that can be expected for the year ending September 30, 2000. 3 CIGAR KING CORPORATION (A Development Stage Company) BALANCE SHEET December 31, 1999 (Unaudited - Prepared by Management) DECEMBER 31, September 30, 1999 1999 ---- ---- ASSETS CURRENT ASSETS Bank $ 2,788 $ 8,024 Accounts receivable 128 128 -------- -------- 2,916 8,152 OTHER ASSETS Rights to Cigar King concept - Note 3 50,000 50,000 -------- -------- $ 52,916 $ 58,152 ======== ======== LIABILITIES Accounts payable and accrued liabilities $ 3,250 $ 4,500 -------- -------- STOCKHOLDERS' EQUITY Common stock 200,000,000 shares authorized, at $0.001 par value, 10,535,000 shares issued and outstanding 10,535 10,535 Capital in excess of par value 67,215 67,215 Deficit accumulated during the development stage (28,084) (24,098) -------- -------- Total Stockholders' Equity 49,666 53,652 -------- -------- $ 52,916 $ 58,152 ======== ======== The accompanying notes are an integral part of these unaudited financial statements. 4 CIGAR KING CORPORATION (A Development Stage Company) STATEMENT OF OPERATIONS For the three months ended December 31, 1999, for the three months December 31, 1998 and for the period from October 8, 1998 (Date of Inception) to December 31, 1999 (Unaudited - Prepared by Management) FOR THE THREE For the Three From Inception MONTHS ENDED Months Ended To DECEMBER 31, December 31, December 31, 1999 1998 1999 ---- ---- ---- SALES $ -- $ -- $ -- ----------- ----------- ----------- GENERAL AND ADMINISTRATIVE EXPENSES: Accounting and audit 1,000 5,000 9,700 Bank charges and interest 22 115 207 Consulting 1,500 3,950 5,450 Filing fees 564 -- 1,984 Legal -- 2,500 2,530 Office and adminstrative expenses 900 214 2,103 Telephone -- -- 450 Transfer agent's fees -- 2,965 3,160 Travel -- 2,000 2,000 Website fees -- -- 500 ----------- ----------- ----------- NET LOSS $ 3,986 $ 16,744 $ 28,084 =========== =========== =========== NET LOSS PER COMMON SHARE Basic $ 0.0075 $ 0 .0035 $ 0.0030 =========== =========== =========== AVERAGE OUTSTANDING SHARES Basic 10,535,000 4,850,952 9,471,415 =========== =========== =========== The accompanying notes are an integral part of these unaudited financial statements. 5 CIGAR KING CORPORATION (A Development Stage Company) STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY For the period from October 8, 1998 (Date of Inception) to December 31, 1999 (Unaudited - Prepared by Management) CAPITAL IN COMMON STOCK EXCESS OF ACCUMULATED SHARES AMOUNT PAR VALUE DEFICIT ------ ------ --------- ------- BALANCE OCTOBER 8, 1998 (date of inception) -- $ -- $ -- $ -- Issuance of common shares for cash at $0.002 - November 20, 1998 4,500,000 4,500 -- -- Issuance of common shares for cash at $0.01 - November 25, 1998 6,000,000 6,000 54,000 -- Issuance of common shares for cash at $0.25 - December 4, 1998 35,000 35 8,715 -- Net operating loss for the period from Operating 8, 1998 to December 31, 1999 -- -- -- (28,084) ---------- ---------- --------- ------------- BALANCE DECEMBER 31, 1999 10,535,000 $ 10,535 $ 62,715 $ (28,084) ========== ========== ========= ============= The accompanying notes are an integral part of these unaudited financial statements. 6 CIGAR KING CORPORATION (A Development Stage Company) STATEMENT OF CASH FLOWS For the three months ended December 31, 1999, for the three months ended December 31, 1998 and for the period from October 8, 1998 (Date of Inception) to December 31, 1999 (Unaudited - Prepared by Management) FOR THE THREE For the Three From Inception MONTHS ENDED Months Ended To DECEMBER 31, December 31, December 31, 1999 1998 1999 ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (3,986) $ (16,744) $ (28,084) Adjustments to reconcile net loss to net cash provided by operating activities: Increase in accounts receivable -- (1,250) (128) Increase in accounts payable 300 9,259 3,250 -------- ------------ --------- Net Cash from Operations (2,661) (8,735) (24,962) -------- ------------ --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Rights to Cigar King concept -- (50,000) (50,000) -------- ------------ --------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock -- 77,750 77,750 -------- ------------ --------- Net Increase in Cash (2,661) 19,015 2,788 Cash at Beginning of Period 11,440 -- -- -------- ------------ --------- CASH AT END OF PERIOD $ 8,779 $ 19,015 $ 2,788 ======== ============ ========= The accompanying notes are an integral part of these unaudited financial statements. 7 CIGAR KING CORPORATION (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS December 31, 1999 (Unaudited - Prepared by Management) 1. ORGANIZATION The Company was incorporated under the laws of the State of Nevada on October 8, 1998 with the authorized common shares of 200,000,000 shares at $0.001 par value. The Company is in the development stage. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Accounting Methods The Company recognizes income and expenses based on the accrual method of accounting. Dividend Policy The Company has not yet adopted a policy regarding payment of dividends. Income Taxes The Company may incur an operating loss for the year ending September 30, 2000 which will be available for carryover and applied against future taxable income resulting in a tax benefit. The potential tax benefit from any loss carry forward has been fully offset by a valuation reserve because the use of any future tax benefit is doubtful since the Company has no operations. Any loss carry forward from the year ended September 30, 2000 will expire in the year 2020. Loss per Share Loss per share amounts are computed based on the weighted average number of shares actually outstanding using the treasury stock method in accordance with FABS Statement No. 128. Cash and Cash Equivalents The Company considers all highly liquid instruments purchased with a maturity, at the time of purchase, of less than three months, to be cash equivalents. 8 CIGAR KING CORPORATION (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS December 31, 1999 (Unaudited - Prepared by Management) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Financial Instruments The carrying amounts of financial instruments, including cash, prepaid expenses and deferred offering costs are considered by management to be their standard fair values. These values are not necessarily indicative of the amounts that the Company could realize in a current market exchange. Estimates and Assumptions Management uses estimates and assumptions in preparing financial statements in accordance with generally accepted accounting principles. Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses. Actual results could vary from the estimates that were assumed in preparing these financial statements. 3. PURCHASE OF RIGHTS TO CIGAR KING CONCEPT On November 24, 1998 the Company acquired the exclusive rights to use the name "Cigar King" to market high quality cigars through a climate controlled kiosk merchandising display case, by the payment of $50,000. The purchase price will be amortized to expense over five years after operations begin. 4. RELATED PARTY TRANSACTIONS Related parties acquired 43% of the common stock issued. The officers and directors of the Company are involved in other business activities and they may, in the future, become involved in additional business ventures which also may require their attention. If specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has formulated no policy for the resolution of such conflicts. 5. GOING CONCERN Continuation of the Company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective through additional equity funding, and long term financing, which will enable the Company to operate in the future. Management recognizes that, if it is unable to raise additional capital, the Company cannot operate in the future. 9 - -------------------------------------------------------------------------------- ITEM 2. PLAN OF OPERATIONS - -------------------------------------------------------------------------------- The Company's management is in the process of reviewing the costing of kiosk systems and determining the profitability of various locations that are under consideration for installation of the kiosks. It is difficult to obtain good locations for the kiosks since in the Greater Vancouver area there are certain bans against smoking in public areas. Nevertheless, the selling of tobacco has not been restricted although the government with each new budget imposes greater taxes on tobacco products. Management is still searching for idle locations for its kiosks. Liquidity and Capital Resources The Company will need additional working capital to finance its activities. The additional working capital may be obtained through additional equity funding and long term financing. Results of Operations The Company has had no revenues from operations since its inception. 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CIGAR KING CORPORATION (Registrant) March 27, 2000 " Steven Bruce" - ---------------------------------- ------------------------------------------ Date Steven Bruce. - President and Director 11