UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE PERIOD ENDED June 30, 2001
OR
[ ] 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 333-40954
KINSHIP SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Utah 87-0648148
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
22 East 100 South, Suite 400
Salt Lake City, Utah 84111
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(Address of principal executive officers)
(801) 521-8636
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(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since
last report)
Indicate by check mark whether the registrant (l) 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 periods that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days: X Yes No; X Yes No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13, or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by the court. Yes No Not
Applicable
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Common Stock: 1,372,750 shares issued as of July 1, 2001, No Par
Value. Authorized - 50,000,000 common voting shares. The company has
only one class of shares.
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INDEX
Kinship Systems, Inc.
For Quarter Ending June 30, 2001
Part I. Financial Information
Item 1. Financial Statements
Condensed Balance Sheets - June 30, 2001 (Unaudited)
and December 31, 2000.
Condensed Statements of Operations (Unaudited) - For the three
months ended June 30, 2001 and 2000, for the six months ended
June 30, 2001, and for the period from February 1, 2000 (Date
of Inception) through June 30, 2000 and 2001
Condensed Statements of Cash Flows (Unaudited) - For the six
months ended June 30, 2001, and for the periods February 1, 2000
(Date of Inception) through June 30, 2000 and 2001
Notes to Condensed Financial Statements (Unaudited) -
June 30, 2001
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Part II. Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Matters
Item 6. Exhibits and Reports on Form 8-K
Signatures
2
Part I - Financial Information
Item 1. Financial Statements
KINSHIP SYSTEMS, INC.
(A Development Stage Enterprise)
INDEX TO FINANCIAL STATEMENTS
Page
Financial Statements:
Condensed Balance Sheets (Unaudited) - June 30, 2001 and
December 31, 2000 4
Condensed Statements of Operations (Unaudited) for the
Three Months Ended June 30, 2001 and 2000, for the Six
Months Ended June 30, 2001, and for the Periods from
February 1, 2000 (Date of Inception) through
June 30, 2000 and 2001 5
Condensed Statements of Cash Flows (Unaudited) for the Six
Months Ended June 30, 2001 and for the Periods from February
1, 2000 (Date of Inception) through June 30, 2000 and 2001 6
Notes to Condensed Financial Statements (Unaudited) 7
3
KINSHIP SYSTEMS, INC.
(A Development Stage Enterprises)
CONDENSED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2001 2000
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ASSETS
Current Assets
Cash $ 85,633 $ 10,955
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Total Current Assets 85,633 10,955
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Deferred Offering Costs - 24,907
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Total Assets $ 85,633 $ 35,862
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 1,196 $ 17,986
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Total Current Liabilities 1,196 17,986
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Stockholders' Equity
Common stock - no par value; 50,000,000 shares
authorized; 1,372,750 and 1,270,000 shares
issued and outstanding, respectively 98,684 25,813
Deficit accumulated during the development stage (14,247) (7,937)
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Total Stockholders' Equity 84,437 17,876
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Total Liabilities and Stockholders' Equity $ 85,633 $ 35,862
======================
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KINSHIP SYSTEMS, INC.
(A Development Stage Enterprise)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the For the Period
For The Six Months February 1, 2000
Three Months Ended Ended (Date of Inception) Through
June 30, June 30, June 30,
---------------------- ---------- ----------------------
2001 2000 2001 2000 2001
---------- ---------- ---------- ---------- ----------
Revenue $ - $ - $ - $ - $ -
General and administrative
expenses 4,180 259 7,035 1,072 14,972
---------- ---------- ---------- ---------- ----------
Interest Income 725 - 725 - 725
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Net Loss $ (3,455) $ (259) $ (6,310) $ (1,072) $ (14,247)
========== ========== ========== ========== ==========
Basic and Diluted Loss
Per Share $ (0.00) $ (0.00) $ (0.00) $ (0.00) $ (0.01)
========== ========== ========== ========== ==========
Weighted Average Number
of Shares Outstanding 1,338,876 1,270,000 1,304,628 1,270,000 1,282,170
========== ========== ========== ========== ==========
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KINSHIP SYSTEMS, INC.
(A Development Stage Enterprise)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
From February 1, 2000
For the Six (Date of Inception)
Months Ended Through
June 30, June 30,
---------- ----------------------
2001 2000 2001
---------- ---------- ----------
Cash Flows from Operating Activities
net loss $ (6,310) $ (1,072) $ (14,247)
Adjustments to reconcile net loss to
net cash used by operating activities:
Accounts payable 358 - 1,196
Stock issued for services - 813 813
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Net Cash Used by Operating Activities (5,952) (259) (12,238)
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Net Cash From Investing Activities - - -
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Cash Flows From Financing Activities
Deferred offering costs (22,120) - (29,879)
Proceeds from issuance of common stock 102,750 25,000 127,750
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Net Cash Provided (Used) by Financing
Activities 80,630 25,000 97,871
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Net Increase in Cash and Cash Equivalents 74,678 24,741 85,633
Cash and Cash Equivalents at Beginning
of Period 10,955 - -
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Cash and Cash Equivalents at End of Period $ 85,633 $ 24,741 $ 85,633
========== ========== ==========
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KINSHIP SYSTEMS, INC.
(A Development Stage Enterprise)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Statements - The accompanying financial
statements are unaudited. In the opinion of management, all
necessary adjustments (which include only normal recurring
adjustments) have been made to present fairly the financial
position, results of operations and cash flows for the periods
presented. Certain information and disclosures normally included
in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. It
is suggested that these condensed financial statements be read in
conjunction with the Company's financial statements and notes
thereto included in the Form 10-KSB dated December 31, 2000. The
results of operations for the three and six month periods ended
June 30, 2001 are not necessarily indicative of the operating
results to be expected for the full year.
Basis of Presentation - The accompanying financial statements
have been prepared on a going concern basis, which contemplates
the realization of assets and the satisfaction of liabilities in
the normal course of business. During the six months ended June
30, 2001 and the period from February 1, 2000 (date of inception)
through June 30, 2000, the Company incurred net losses of $6,310
and $1,072, respectively. As of June 30, 2001, the Company has
had no revenues and the accumulated deficit from inception
totaled $14,247. These factors, among others, indicate that the
Company may be unable to continue as a going concern. The
accompanying financial statements do not include any adjustments
relating to the carrying amount and classification of recorded
assets or the amount and classification of liabilities that might
be necessary should the Company be unable to continue as a going
concern. The Company completed an SB-1 Registration Statement on
April 30, which raised a net of $72,871 in additional capital.
The Company's ability to continue as a going concern is dependent
upon its ability to generate sufficient cash flows to meet its
obligations on a timely basis, to obtain additional financing and
ultimately to attain successful operations.
NOTE 2 - COMMITMENTS AND CONTINGENCIES
The Company has entered into an agreement with the president to
provide a $1,000 stipend per month that will not accrue until the
Company has revenues or until after six months. After that time,
the anticipated salaries for the three full time officers will be
determined by the Board of Directors. For services performed
previous to the Company receiving revenues or the six month time
period, the officers each received 10,000 shares of common stock
as compensation.
NOTE 3 - STOCKHOLDERS' EQUITY
On April 30, 2001, the Company closed its initial public offering
and issued 102,750 common shares upon receiving cash proceeds of
$102,750. Deferred offering costs in the amount of $29,879 were
recognized as a reduction from the proceeds of the offering.
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Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Kinship was incorporated in Utah on February1, 2000 and has been
involved exclusively to this point in start-up operations including
incorporation, initial organization and an initial public offering
("IPO") of its shares closed as of April 30, 2001 by which it raised
gross proceeds of $102,750 by selling 102,750 of its common voting
shares at $1.00/share to 28 investors, most of whom reside in Utah.
The use of proceeds from the IPO are more particularly described under
Part II, Item 2 of this Report.
The accumulated deficit for Kinship during the development stage
resulting from general and administrative costs were $7,937 as of
December 31, 2000 and $14,247 as of June 30, 2001. Net losses from
inception (2/1/2000) to June 30, 2001 were $14,247.
Kinship has commenced its initial marketing activities by a mass
mailing of advertising and description of its products to law
enforcement agencies within several western states. Mr. Limpert has
also met with ProSource and TM designs regarding bids and procedures
for additional marketing activities. No accounting for these initial
marketing efforts is presently available.
Kinship would anticipate that it may have actual revenues to report as
early as the next quarterly filing, though no warranty or assurance of
this projection can be made. In all events, the next periodic filing
will contain a continuing review and explanation of the use of
proceeds of the IPO, as well as marketing efforts.
Liquidity and Sources of Capital
As noted above, Kinship has not engaged in business operations to
date. It raised in its subscription account $102,750 of gross
proceeds from its recently completed IPO. As to these funds the
company has accrued obligations for offering related costs to the
accountants, legal counsel as well as miscellaneous printing and
filing costs of approximately $22,120, leaving estimated net operating
proceeds to be employed in future business operations of approximately
$80,630. It has just commenced expending funds for its marketing
activities, though no accounting for these initial expenditures is
available. Its accrued accumulated deficit to date is $14,247 with
stockholders equity of $98,684.
Kinship is fully dependent on implementing its original business plan
of marketing and distributing its unique proprietary software from the
limited net proceeds of its recently completed IPO. The company
believes that it has the minimal capital to implement its operations
and business plan as generally outlined in its prior IPO and 10-KSB
filing. However, no assurance or warranty that the company will be
successful in its marketing efforts can be made or is implied.
Further, if Kinship is not successful in reaching a state of
profitability from the use of the net offering proceeds, there is no
presently committed or determined alternative source or means of
financing.
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It is possible that Kinship could seek subsequent private placement
financing funds or other means to continue its business operations,
though no assurance or warranty that funds will be available or that
the company would deem it as feasible or appropriate to seek such
alternative financing can be made, if the initial IPO proceeds are not
sufficient to sustain continuing operations.
Forward-Looking Information
Certain statements in this Section and elsewhere in this report are
forward-looking in nature and relate to trends and events that may
affect the Company's future financial position and operating results.
Such statements are made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. The terms
"expect,""anticipate,""intend," and "project" and similar words or
expressions are intended to identify forward-looking statements.
These statements speak only as of the date of this report. The
statements are based on current expectations, are inherently
uncertain, are subject to risks, and should be viewed with caution.
Actual results and experience may differ materially from the forward-
looking statements as a result of many factors, including changes in
economic conditions in the markets served by the company, increasing
competition, fluctuations in raw materials and energy prices, and
other unanticipated events and conditions. It is not possible to
foresee or identify all such factors. The company makes no commitment
to update any forward-looking statement or to disclose any facts,
events, or circumstances after the date hereof that may affect the
accuracy of any forward-looking statement.
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Part II - Other Information
Item 1. Legal Proceedings
Kinship is not presently engaged in any legal proceedings, nor does it
know of any claims for or against the company by any party.
Item 2. Changes in Securities and Use of Proceeds
The company has not had any change in its securities since its last
report filing on Form 10-KSB.
In accordance with SEC Rule 463 the company reports the use of
proceeds to date from its initial public offering "IPO" completed on
April 30, 2001:
1. Gross proceeds sold - $102,750
2. Accrued offering related costs including printing, accounting,
legal and related filing fees - $22,120
3. Amount expended to July 1, 2001 on marketing and operations - $0
4. Net proceeds for future operations: $80,630
Item 4. Submission of Matters to a Vote of Security Holders
During the present quarter there has been no matter submitted to
security holders for a vote. Kinship presently anticipates holding
its first annual shareholders meeting at a date to be designated in
the fourth quarter of 2001 for the election of directors and other
routine matters, but has not presently set a definitive date for such
meeting. Shareholders will be independently advised of any such
formal annual meeting date.
Item 5. Other Matters
Kinship has applied through ACAP financial of Salt Lake City, Utah for
a NASDAQ listing of its common stock on the Electronic Bulletin Board.
The application is still in a review process with the National
Association of Securities Dealers, (NASD). The company is hopeful
limited trading may commence in the next few weeks. Kinship cannot
warrant any trading or the trading range if this registration is
completed, but is informed that ACAP intends to propose an opening bid
of $1.00 per share. The company has been assigned the trading symbol,
"KSYS."
Item 6. Exhibits and Reports on Form 8-K
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
REGISTRANT: KINSHIP SYSTEMS, INC.
Date: August 6, 2001 By: /s/ Terry Derru
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Mr. Terry Derru
President
Date: August 6, 2001 By: /s/ Andrew Limpert
----------------------
Mr. Andrew Limpert
Chief Financial and Accounting Officer
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