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 March 31, 2000 ------------------------------------------------- ( ) 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 31, 2000 - ----------------------------------- -------------------------------- Common Stock, $0.001 per share 10,535,000 INDEX Page PART 1. Number ------ ITEM 1. Financial Statements (unaudited) ............................. 3 Balance Sheet as at March 31, 2000 and September 30, 1999 .................... 4 Statement of Operations For the three months ended March 31, 2000, for the three months ended March 31, 1999, for the six months ended March 31, 2000 and for the six months ended March 31, 1999 and for the period from October 8, 1998 (Date of Incorporation) to March 31, 2000 .............. 5 Statement of Changes in Shareholders' Equity For the period from October 8, 1998 (Date of Incorporation) to March 31, 2000 ......... 6 Statement of Cash Flows For the three months ended March 31, 2000, for the three months ended March 31, 1999, for the six months ended March 31, 2000 and for the six months ended March 31, 1999 and for the period from October 8, 1998 (Date of Incorporation) to March 31, 2000 .............. 7 Notes to the Financial Statements ................... 8 ITEM 2. Plan of Operations ........................................... 11 PART 11 Signatures ................................................... 12 2 PART 1 - FINANCIAL INFORMATION - -------------------------------------------------------------------------------- ITEM 1. FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The accompanying balance sheet of Cigar King Corporation (a development stage company) at March 31, 2000 and the statement of operations and statement of cash flow for the three months ended March 31, 2000, for the three months ended March 31, 1999, for the six months ended March 31, 2000, for the six months ended March 31, 1999 and for the period from October 8, 1998 (date of incorporation) to March 31, 2000 and the statement of stockholders' equity for the period from October 8, 1998 (date of incorporation) to March 31, 2000 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 six months ended March 31, 2000, 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 March 31, 2000 and September 30, 1999 (Unaudited - Prepared by Management) MARCH 31, September 30, 2000 1999 ---- ---- ASSETS CURRENT ASSETS Bank $ 853 $ 8,024 Accounts receivable 128 128 Due from director 44 -- -------- -------- 1,025 8,152 OTHER ASSETS Rights to Cigar King concept - Note 3 50,000 50,000 -------- -------- $ 51,025 $ 58,152 ======== ======== LIABILITIES Accounts payable and accrued liabilities $ 4,600 $ 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 70,865 70,865 Deficit accumulated during the development stage (34,975) (27,748) -------- -------- Total Stockholders' Equity 46,425 53,652 -------- -------- $ 51,025 $ 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 March 31, 2000, for the three months ended March 31, 1999 For the six months ended March 31, 2000, for the six months ended March 31, 1999 and for the period from October 8, 1998 (Date of Inception) to March 31, 2000 (Unaudited - Prepared by Management) FOR THE For the THREE Three FROM MONTHS Months For the Six For the Six INCEPTION ENDED Ended Months Ended Months Ended TO MARCH 31, March 31, March 31, March 31, MARCH 31, 2000 1999 2000 1999 2000 ---- ---- ---- ---- ---- SALES $ - $ - $ - $ - $ - ------------ ------------ ------------ ------------ ------------ GENERAL AND ADMINISTRATIVE EXPENSES: Accounting and audit 1,350 - 2,350 6,700 11,050 Bank charges and interest 22 33 44 153 229 Consulting 1,400 - 2,900 3,950 6,850 Filing fees - 1,420 564 1,420 1,984 Legal 80 - 80 2,530 2,610 Office and adminstrative expenses 571 434 1,471 598 2,674 Rent 1,500 1,500 1,500 Telephone 750 - 750 - 1,200 Transfer agent's fees 1,218 180 1,218 3,160 4,378 Travel - - - 2,000 2,000 Website fees - - - - 500 ------------ ------------ ------------ ------------ ------------ NET LOSS $ (6,891) $ (2,067) $ (10,877) $ (20,511) $ (34,975) ============ ============ ============ ============ ============ NET LOSS PER COMMON SHARE Basic $ - $ - $ - $ - AVERAGE OUTSTANDING SHARES Basic 10,535,000 10,535,000 10,535,000 7,790,977 ============ ============ ============ ============ 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 March 31, 2000 (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 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 - Capital contribution 3,650 Net operating loss for the period from October 8, 1998 to March 31, 2000 - - - (34,975) ---------- ----------- --------- ---------- BALANCE MARCH 31, 2000 10,535,000 $ 10,535 $ 70,865 $ (34,975) ========== =========== ========= ========== 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 March 31, 2000, for the three months ended March 31, 1999 For the six months ended March 31, 2000, for the six months ended March 31, 1999 and for the period from October 8, 1998 (Date of Inception) to March 31, 2000 (Unaudited - Prepared by Management) FOR THE For the THREE Three MONTHS Months For the Six For the Six FROM INCEPTION ENDED Ended Months Ended Months Ended TO MARCH 31, March 31, March 31, March 31, MARCH 31, 2000 1999 2000 1999 2000 ---- ---- ---- ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (6,891) $ (2,067) $(10,877) $(20,511) $(34,975) Adjustments to reconcile net loss to net cash provided by operating activities: Capital contributions 3,650 - 3,650 - 3,650 Increase in accounts receivable - 1,250 - - (128) Increase in due from a director (44) - (44) - (44) Increase in accounts payable 1,350 (6,759) 100 4,200 4,600 -------- -------- -------- -------- -------- Net cash used in operations (1,935) (7,576) (7,171) (16,311) (26,897) -------- -------- -------- -------- -------- 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 (1,935) (7,576) (7,171) 11,439 853 Cash at Beginning of Period 2,788 19,015 8,024 - - -------- -------- -------- -------- -------- CASH AT END OF PERIOD $ 853 $ 11,439 $ 853 $ 11,439 $ 853 ======== ======== ======== ======== ======== The accompanying notes are an integral part of these unaudited financial statements. 7 CIGAR KING CORPORATION (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS March 31, 2000 (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 March 31, 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. Earnings (Loss) per Share ------------------------- Earnings (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. 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 March 31, 2000 (Unaudited - Prepared by Management) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED Comprehensive Income -------------------- The Company adopted Statement of Financial Accounting Standards No. 130. The adoption of this standard had no impact on the total stockholder's equity. Recent Accounting Pronouncements -------------------------------- The Company does not expect that the adoption of other recent accounting pronouncements will have a material impact on its financial statements. Financial Instruments --------------------- The carrying amounts of financial instruments, including cash and accounts payable are considered by management to be their estimated fair values. 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. 9 CIGAR KING CORPORATION (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS March 31, 2000 (Unaudited - Prepared by Management) 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. 10 - -------------------------------------------------------------------------------- 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. The management is having difficulty in determining suitable locations for the kiosks due to the adverse reactions of the public to smoking. 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. 11 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) June 12,2000 - ----------------------------- ---------------------------------------- Date Steven Bruce - President and Director 12