UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended September 30, 1999.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No fee required) for the transition period from _____ to ______.
Commission File Number: 000-26971
AREA INVESTMENT AND DEVELOPMENT COMPANY
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(Name of Small Business Issuer in Its Charter)
Utah 87-0284871
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2133 East 9400 South, Suite 151, Sandy, Utah 84093
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(Address of Principal Executive Offices)(Zip Code)
801-944-0701
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(Issuer's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Exchange Act:
Title of Each Class: None
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Name of each exchange on which registered: N/A
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Securities to be registered under Section 12(g) of the Exchange Act:
Common Stock, $0.01 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 during the past 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. [X] Yes [ ] No
The number of shares outstanding of the Company's common stock ($0.01
par value), as of November 1, 1999, was 9,048,173 shares.
Total of Sequentially Numbered Pages: 16
Index to Exhibit on Page: 5
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . .3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION . . . . . . . . . . . . . . . . . . . . . . . . .3
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . . . . . . .4
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
INDEX TO EXHIBITS. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
2
PART I
ITEM 1. FINANCIAL STATEMENTS
The Company's unaudited financial statements, which are attached hereto as
pages F-1 through F-11, which include: a) Balance Sheet - September 30, 1999;
b) Statements of Operations - Nine Months Ended September 30, 1999 and 1998,
and From Inception to September 30, 1999; c) Statements of Stockholders'
Equity From Inception to September 30, 1999; d) Statements of Cash Flows -
Nine Months Ended September 30, 1999 and 1998, and From Inception to September
30, 1999; e) Notes to Consolidated Financial Statements.
In the opinion of management, the accompanying unaudited financial
statements included in this Form 10-QSB reflect all adjustments (consisting
only of normal recurring accruals) necessary for a fair presentation of the
results of operations for the periods presented. The results of operations
for the periods presented are not necessarily indicative of the results to be
expected for the full year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
Nine Month periods Ended September 30, 1999 and 1998
The Company had revenue of $227 from continuing operations for the periods
ended September 30, 1999 compared to $51,915 for the periods ended September
30, 1998. From Inception on June 10, 1970 the Company had revenue of $52,142.
The revenues of $227 from continuing operations for the periods ended
September 30, 1999 was the result of interest income the Company earned. The
revenues of $51,915 from continuing operations for the periods ended September
30, 1998 was the result of debt settlement. The revenues of $52,142 from
Inception on June 10, 1970 was the result of $51,915 in debt settlement and
$227 in interest income.
General and administrative expenses for the period ended September 30, 1999
were $90,000, compared to $480 for the period ended September 30, 1998 and
$239,097 from Inception on June 10, 1970 to September 30, 1999. General and
administrative expenses during the period ended September 30, 1999, consisted
of a finder/consulting fee in the amount of $90,000 to Hudson Consulting
Group, Inc. for introducing a potential candidate or acquisition by the
Company. General and administrative expenses of $480 during the period ended
September 30, 1998, consisted of interest expense.
The Company has a net loss of $89,773 for the period ended September 30,
1999, a net income of $51,435 for the period ended September 30, 1998 and a
net loss of $186,955 from Inception on June 10, 1970 to September 30, 1999.
The Company's net gain for the year period ended September 31, 1998 is
attributable to management's negotiation of accounts payable due to a prior
consultant in the amount of $51,915.
The Company does not expect to generate any meaningful revenue or incur
operating expenses unless and until it acquires an interest in an operating
company.
3
Liquidity and Capital Resources
At September 30, 1999, the Company had a working capital of $20,227. The
Company's cash in the amount of $20,227 resulted interest income of $227 and
from the sale of 2,000,000 of the Company's common stock to Ken Kurtz, the
Company's president and a director. The shares were sold to obtain capital to
pay the costs of becoming a reporting company under the Securities Exchange
Act of 1934. Management is hopeful that becoming a reporting company will
increase the number of prospective business ventures that may be available to
the Company. Management believes that the Company has sufficient cash to
meet the anticipated needs of the Company's operations through at least the
calendar year of 2000. However, there can be no assurances to that effect, as
the Company has no revenues and the Company's need for capital may change
dramatically if it acquires an interest in a business opportunity during that
period. The Company's current operating plan is to (i) handle the
administrative and reporting requirements of a public company; and (ii) search
for potential businesses, products, technologies and companies for
acquisition. At present, the Company has no understandings, commitments or
agreements with respect to the acquisition of any business, product,
technology or company and there can be no assurance that the Company will
identify any such business, product, technology or company suitable for
acquisition in the future. Further, there can be no assurance that the
Company would be successful in consummating any acquisition on favorable terms
or that it will be able to profitably manage the business, product, technology
or company it acquires. If the Company is unable to participate in a business
venture by the end of the first calendar quarter of 2000, it may require
additional capital to continue its search for a business venture and avoid
dissolution. There is no assurance additional capital will be available to
the Company on acceptable terms.
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. Exhibits required to be attached by Item 601 of Regulation
S-B are listed in the Index to Exhibits beginning on page 5 of this Form
10-QSB. The Index to Exhibits is incorporated herein by reference.
Included only with the electronic filing of this report is the Financial
Data Schedule for the nine-month period ended September 30, 1999.
(b) Reports on Form 8-K. No reports on Form 8-K have been filed during the
last quarter of the period covered by this report.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed by the undersigned, thereunto duly authorized,
this 1st day of November, 1999.
AREA INVESTMENT AND DEVELOPMENT COMPANY
/s/ Ken Kurtz
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Ken Kurtz, President, Secretary,
Treasurer and Director
4
INDEX TO EXHIBITS
SEC Ref Page
No. No. Description
3(i) * Articles of Incorporation, including amendments,
incorporated herein by reference from the Company's
previous filings.
3(ii) * Bylaws, incorporated herein by reference from the
Company's previous filings.
27 ** Financial Data Schedule for the nine-month period
ended September 30, 1999.
* The listed exhibits are incorporated herein by this reference to the
Registration Statement on Form 10-SB filed by the Company with the
Securities and Exchange Commission on August 9, 1999.
** The Financial Data Schedule is presented only in the electronic filing
with the Securities and Exchange Commission.
5
AREA INVESTMENT AND DEVELOPMENT COMPANY
(A Development Stage Company)
FINANCIAL STATEMENTS
(Unaudited)
September 30, 1999
F-1
C O N T E N T S
Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . F-4
Statements of Stockholders' Equity (Deficit) . . . . . . . . . . . . . . F-5
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . F-7
Notes to the Financial Statements. . . . . . . . . . . . . . . . . . . . F-8
F-2
AREA INVESTMENT AND DEVELOPMENT COMPANY
(A Development Stage Company)
Unaudited Balance Sheet
ASSETS
--------
August 31,
1999
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CURRENT ASSETS
Cash $ 20,227
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Total Current Assets 20,227
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TOTAL ASSETS $ 20,227
===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
------------------------------------------------
CURRENT LIABILITIES
Accounts Payable $ -
-----------
Total Current Liabilities -
-----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.01 par value, 50,000,000
shares authorized, 9,048,173 shares issued
and outstanding 90,482
Additional Paid-in Capital 116,700
Deficit accumulated during the development stage (186,955)
-----------
Total Stockholders' Equity (Deficit) 20,227
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 20,227
===========
The accompanying notes are an integral part of these financial statements.
F-3
AREA INVESTMENT AND DEVELOPMENT COMPANY
(A Development Stage Company)
Unaudited Statements of Operations
From
inception on
For the June 10,
Nine Months Ended 1970 Through
September 30, September 30,
1999 1998 1999
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INCOME
Settlement of debt $ -- $ 51,915 $ 51,915
Interest Income 227 -- 227
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GROSS INCOME $ 227 $ 51,915 $ 52,142
COST OF SALES -- -- --
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GROSS MARGIN $ 227 $ 51,915 $ 52,142
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EXPENSES
General and administrative $ 90,000 $ 480 $ 239,097
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Total Expenses $ 90,000 $ 480 $ 239,097
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LOSS FROM OPERATIONS (89,773) 51,435 (186,955)
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NET LOSS $ (89,773) $ 51,435 $ (186,955)
========== ========== =============
BASIC LOSS PER SHARE $ (0.01) $ 0.02
========== ==========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 7,158,063 3,048,173
========== ==========
The accompanying notes are an integral part of these financial statements.
F-4
AREA INVESTMENT AND DEVELOPMENT COMPANY
(A Development Stage Company)
Unaudited Statements of Stockholders' Equity (Deficit)
From Inception on June 10, 1970 through September 30, 1999
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Par Value Capital Stage
------------- ------------- ------------- -------------
Balance at inception on
June 10, 1970 - $ - $ - $ -
Issuance of common stock for
cash at $0.03 per share 304,000 3,040 6,080 -
Issuance of common stock for
cash at $0.0064 per share 734,775 7,348 (2,648) -
Net loss from inception on
June 10, 1970 through
December 31, 1993 - - - (13,820)
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Balance, December 31, 1993 1,038,775 10,388 3,432 (13,820)
No Activity 1994 - - - -
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Balance, December 31, 1994 1,038,775 10,388 3,432 (13,820)
Issuance of common stock for
services at $0.01 per share 1,836,225 18,362 - -
Net loss for the year ended
December 31, 1995 - - - (18,362)
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Balance, December 31, 1995 2,875,000 28,750 3,432 (32,182)
Reverse stock split
59.7 to 1 3-15-96 (2,826,827) (28,268) 28,268 -
Net loss for the year ended
December 31, 1996 - - - (70,328)
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Balance, December 31, 1996 48,173 482 31,700 (102,510)
Issuance of common stock for
services at $0.01 per share 3,000,000 30,000 - -
Net loss for the year ended
December 31, 1997 - - - (46,107)
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Balance, December 31, 1997 3,048,173 30,482 31,700 (148,617)
The accompanying notes are an integral part of these financial statements.
F-5
AREA INVESTMENT AND DEVELOPMENT COMPANY
(A Development Stage Company)
Unaudited Statements of Stockholders' Equity (Deficit) (continued)
From Inception on June 10, 1970 through September 30, 1999
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Shares Par Value Capital Stage
------------- ------------- ------------- -------------
Balance, December 31, 1997 3,048,173 30,482 31,700 (148,617)
Net income for the year ended
December 31, 1998 - - - 51,435
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Balance, December 31, 1998 3,048,173 30,482 31,700 (97,182)
Issuance of common stock for
cash and debt at $0.01 per share 6,000,000 60,000 85,000 -
Net loss for the nine months
ended September 30, 1999 - - - (89,773)
------------- ------------- ------------- -------------
Balance, September 30, 1999 9,048,173 90,482 116,700 (186,955)
The accompanying notes are an integral part of these financial statements.
F-6
AREA INVESTMENT AND DEVELOPMENT COMPANY
(A Development Stage Company)
Unaudited Statement of Cash Flows
From
Inception on
For the June 10,
Nine Months Ended 1970 Through
September 30, September 30,
1999 1998 1999
------------- ------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income/(loss) $ (89,773) $ 51,435 $ (186,955)
Adjustments to reconcile net loss to net cash
used by operating activities:
Stock issued for Debt Settlement (non-cash) 2,539 - 2,539
Stock issued for Services (non-cash) - - 48,362
Increase/((Decrease) Accounts Payable (35,000) (51,435) -
------------- ------------- -------------
Net Cash Used by Operating Activities (122,234) - (136,054)
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CASH FLOWS FROM INVESTING ACTIVITIES - - -
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CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Common Stock for Cash 142,461 - 156,281
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Net Cash Provided by Financing Activities 142,461 - 156,281
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NET INCREASE (DECREASE) IN CASH 20,227 - 20,227
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD - - -
------------- ------------- -------------
CASH AND CASH EQUIVALENTS AT
END PER PERIOD $ 20,227 $ - $ 20,227
============= ============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ - $ - $ -
Income taxes paid $ - $ - $ -
SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
Common stock issued for services $ - $ - $ 48,362
The accompanying notes are an integral part of these financial statements.
F-7
AREA INVESTMENT AND DEVELOPMENT COMPANY
(A Development Stage Company)
Notes to the Unaudited Financial Statements
September 30, 1999
NOTE 1 - NATURE OF ORGANIZATION
The financial statements presented are those of Area Investment and
Development Company (the "Company"). The Company was organized under
the laws of the State of Utah on June 10, 1970. The Company was
organized for the purpose of seeking potential business ventures.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year end.
b. Provision for Taxes
At September 30, 1999, the Company has net operating loss carry forwards
of approximately $187,000 that may be offset against future taxable
income through 2015. No tax benefit has been reported in the financial
statements because the Company believes there is a 50% or greater chance
the carry forwards will expire unused. Accordingly, the potential tax
benefits of the loss carry forwards are offset by a valuation allowance
of the same amount.
c. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
d. Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
e. Basic Loss Per Share
The computation of basic loss per share of common stock is based on the
weighted average number of shares outstanding during the period of the
financial statements.
F-8
AREA INVESTMENT AND DEVELOPMENT COMPANY
(A Development Stage Company)
Notes to the Unaudited Financial Statements (continued)
September 30, 1999
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles applicable to a going concern which contemplates
the realization of assets and liquidation of liabilities in the normal
course of business. However, the Company does not have significant cash
or other material assets, nor does it have an established source of
revenues sufficient to cover its operating costs and to allow it to
continue as a going concern.
Because the Company lacked assets or resources to compensate or induce
personnel to assist it with a program of reviving or combining the
Company with an operational business, the Company entered into a
Financial Consulting Agreement ("Agreement") with Park Street
Investments, Inc. ("Park Street") in June of 1997. Park Street is a
Utah Corporation 100% owned by Ken Kurtz, the Company's President,
majority shareholder and director.
According to the Agreement, Park Street has agreed to assist the Company
with its corporate maintenance, administration, financial statement
preparation and securities filings. In addition, Park Street is to
actively pursue, negotiate and structure a merger or business
combination with a third party on behalf of the Company. Park Street
has also agreed to pay for the costs associated with these
responsibilities until the Company effects a combination with another
entity.
As consideration for its services and payment of the Company's costs
therewith, the Company's board authorized the issuance of 3,000,000
restricted common stock shares valued at $.01 per share. By November 25,
1997 all 3,000,000 shares were issued. Of this, Park assigned 2,000,000
shares to Ken Kurtz, who is both the Company's and Park's President and
500,000 shares to each of the Company's two directors for their
assistance with Park in implementing its contract with the Company.
Also according to the Agreement, Park Street shall be entitled to as
much as 10% of the total issued and outstanding shares of the Company
after a business combination. Park Street shall also be entitled to any
cash consideration it can negotiate from a potential reorganization
entity.
Because the exact number of shares to be outstanding after a business
combination is currently unknown and because the exact percentage of
ownership that Park Street is entitled to will be subject to
negotiations between the Company, Park Street, and a potential target
Company, the actual number of shares to be owned by Park Street will be
modified by mutual agreement by the parties involved. Moreover, the
amount of cash that Park Street is to receive is also subject to
negotiations and is currently unknown. In no event, shall Park Street's
ownership percentage exceed more than 10% of the total outstanding
shares of the Company after a business combination.
F-9
AREA INVESTMENT AND DEVELOPMENT COMPANY
(A Development Stage Company)
Notes to the Unaudited Financial Statements (continued)
September 30, 1999
This agreement resulted in a change in control of the Company giving Ken
Kurtz majority control of the Company's common stock. This stock
issuance is not deemed to be at arms length.
In January 1999, the Company began discussions with representatives of
Fax4free.com, Inc. - an online service provider - for the possibility of
a business combination. As such, the Company changed its business plan
from seeking a business combination with an unidentified Company to
effecting a business transaction with Fax4free.com, Inc. In
anticipation of such business combination, the Company authorized an
offering for 4,000,000 shares of its common stock under Regulation D
Rule 504 at $.03125 per share to raise $125,000. Proceeds were to be
used to pay expenses related to the business combination and to pay off
the remainder of the Company's debts.
On March 30, 1999, the Company closed the offering after having sold the
4,000,000 shares to seven investors of which 3,918,750 shares were sold
for $122,461 in cash and 81,250 were sold for $2,539 in debt settlement.
On March 24, 1999, the Company paid off the remainder of its debts in
the amount of $32,461 and paid a finder/consulting fee in the amount of
$90,000 to Hudson Consulting Group, Inc. ("Hudson") for introducing
Fax4free.com, Inc. to the Company. Hudson has agreed to assist in
locating another merger acquisition candidate as part of its $90,000 fee
which has been already paid. Management has opted to expense the entire
$90,000 fee which is non-refundable because Hudson does not have an
exclusive agreement with management and is not obligated to perform.
Therefore, there are no assurances that the Company may not be obligated
to pay additional fees to other parties in the future.
On April 5, 1999 the Company sold and issued 2,000,000 restricted shares
of its common stock to it its President, Ken W. Kurtz for $20,000 cash.
Later in April, the company terminated its negotiations with
Fax4free.com, Inc.
NOTE 4 - CONTINGENT LIABILITY
On or before the corporate year end of June 30, 1992, the Company
reported uncollected receivables of $22,554, $11,643 of which were loans
to stockholders.
Reported liabilities were $1,700. The corporation continued in this
state of no activity thereafter. In 1995, prior management personally
assumed all corporate debt in exchange for the forgiveness of the loans
to stockholders and the uncollected receivables of the Company, thus
leaving the Company with no assets or liabilities.
NOTE 5 -CHANGE IN COMPANY MANAGEMENT
In June 1997 the Company appointed Ken Kurtz, a director at the time, as
the Company's President. In September 1997, the Company appointed Tammy
Gehring and Carrie Kurtz as additional directors and as
Secretary/Treasurer and Vice President respectively. Ms. Gehring is
also employed by Park. Mrs. Kurtz is the wife of the Company's
President/Director.
F-10
AREA INVESTMENT AND DEVELOPMENT COMPANY
(A Development Stage Company)
Notes to the Unaudited Financial Statements (continued)
September 30, 1999
NOTE 6 -REDUCED SETTLEMENT OF PAYABLE
Present management negotiated a settlement of accounts payable due to a
prior consultant. On June 25, 1998, the payable was reduced by $51,915,
going from $86,915 to $35,000. In February 1999, the Company issued
81,250 common stock shares to a creditor towards payment of its $35,000
note payable. The 81,250 share issuance was valued at $.03125 per share
and hence reduced the $35,000 obligation by $2,539. On March 24, 1999,
the Company paid off the remainder of its debts in the amount of $32,461
from proceeds of its January 1999 Regulation D Rule 504 common stock
offering. Currently, the Company has no debts.
NOTE 7 -ISSUANCE OF STOCK
In June of 1997, the company entered into a consulting agreement with
Park Street Investments, Inc. ("Park"), a firm 100% owned by the
Company's President whereby Park has agreed to pay all necessary
expenses to maintain the company in good standing and to seek out a
merger with a viable operating entity. Park has also agreed to provide
all administrative assistance, office space and costs as part of its
Agreement. In consideration for the above, the Company authorized the
issuance of 3,000,000 restricted common stock shares valued at $.01 per
share. By November 25, 1997 all 3,000,000 shares were issued. Of this,
Park assigned 2,000,000 shares to Ken Kurtz, who is the Company's and
Park's President and 500,000 shares to each of the Company's two
directors for their assistance with Park in implementing its contract
with the Company.
In January 1999, the Company authorized an offering for 4,000,000 shares
of its common stock under Regulation D Rule 504 at $.03125 per share to
raise $125,000. Proceeds were to be used to pay expenses related to the
business combination and to pay off the remainder of the Company's
debts. On March 30, 1999, the Company closed the offering after having
sold the 4,000,000 shares to seven investors of which 3,918,750 shares
were sold for $122,461 in cash and 81,250 were sold for $2,539 in debt
settlement.
On April 5, 1999 the Company sold and issued 2,000,000 restricted shares
of its common stock to it its President, Ken W. Kurtz for $20,000 cash.
F-11