11 UNITED 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, 2002 ---------------- ( ) 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.) 42 - 2951 Panorama Drive Coquitlam, BC, Canada V3E 2W3 - ----------------------- -------- (Address of principal executive offices) (Zip Code) 604-941-4244 -------------------------------------- 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, 2002 ---------- ------------------------------------- Common Stock, $0.001 per share 10,535,000 -1- INDEX PAGE NUMBER -------- PART 1. ITEM1.. . . . Financial Statements . 3 Balance Sheet as at March 31, 2002 and September 30, 2001. . . . . . . . . . . . . . . 4 Statement of Operations For the three months ended March 31, 2002 and 2001, For the six months ended March 31, 2002 and 2001 and for the period from October 8,1998 (Date of Inception) to March 31, 2002. . . . . . . . . . . . 5 Statement of Cash Flows For the six months ended March 31, 2002 and 2001 and for the period from October 8,1998 (Date of Inception) to March 31, 2002. . . . . . . . . . . . 6 Notes to Financial Statements. . . . . . . . . . . . . . 7 ITEM 2. Plan of Operations 9 PART 11. . . . Signatures 10 -2- PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The accompanying balance sheet of Cigar King Corporation (a development stage company) at March 31, 2002 and the statement of operations for the three and six months ended March 31, 2002 and 2001, and for the period from October 8, 1998 (date of inception) to March 31, 2002 and the statement of cash flow for the six months ended March 31, 2002 and 2001 and for the period from October 8, 1998 (date of inception) to March 31, 2002 have been prepared by the Company's management in conformity with accounting principles generally accepted in the United States of America. 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 three months ended March 31, 2002, are not necessarily indicative of the results that can be expected for the year ending September 30, 2002. -3- CIGAR KING CORPORATION (A Development Stage Company) BALANCE SHEET March 31, 2002 and September 30, 2001 (Unaudited - Prepared by Management) MARCH 31, September 30, 2002 2001 ------------ --------------- ASSETS CURRENT ASSETS Bank. . . . . . . . . . . . . . . . . . . . . . . . . $ 18 $ 2 ------------ --------------- TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . $ 18 $ 2 ============ =============== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities . . . . . . $ 13,460 $ 13,267 Accounts payable - related parties . . . . . . . . . 1,341 1,206 ------------ --------------- TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . 14,801 14,473 ------------ --------------- 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. . . . . . . . . . . . 78,165 78,165 Deficit accumulated during the development stage. . . (103,483) (99,871) ------------ --------------- Total Stockholders' Deficiency. . . . . . . . . (14,783) (11,171) ------------ --------------- $ 18 $ 2 ============ =============== 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 and six months ended March 31, 2002 and 2001, and for the period from October 8, 1998 (Date of Inception) to March 31, 2002 (Unaudited - Prepared by Management) FOR THE FOR THE FOR THE THREE FOR THE THREE SIX SIX MONTHS MONTHS MONTHS MONTHS FROM INCEPTION ENDED ENDED ENDED ENDED TO MARCH 31, MARCH 31, MARCH 31, MARCH 31, MARCH 31, 2002 2001 2002 2001 2002 --------------- --------------- ------------- ------------ ---------------- SALES . . . . . . . . . . . . . . . . . $ - $ - $ - $ - $ - =============== --------------- ------------- ------------ ---------------- GENERAL AND ADMINISTRATIVE EXPENSES: Loss of license. . . . . . . . . . - - - - 50,000 Accounting and audit . . . . . . . 950 950 1,900 1,900 19,350 Bank charges and interest. . . . . 17 16 34 35 381 Consulting . . . . . . . . . . . . - - - - 9,650 Filing fees. . . . . . . . . . . . - - - 225 2,957 Legal. . . . . . . . . . . . . . . - - - - 110 Office and administrative expenses . . . . . . . . . . . 14 - 14 208 3,432 Rent . . . . . . . . . . . . . . . - - - - 4,500 Telephone. . . . . . . . . . . . . - - - - 2,700 Transfer agent's fees. . . . . . . 122 56 1,664 1,484 7,903 Travel . . . . . . . . . . . . . . - - - - 2,000 Website fees . . . . . . . . . . . - - - - 500 --------------- --------------- ------------- ------------ ---------------- NET LOSS. . . . . . . . . . . . . . . . $ (1,103) $ (1.022) $ ( 3,612) $ (3,852) $ ( 103,483) =============== =============== ============= ============ ================ NET LOSS PER COMMON SHARE Basic. . . . . . . . . . . . . . . $ - $ - $ - $ - =============== =============== ============= ============ AVERAGE OUTSTANDING SHARES Basic. . . . . . . . . . . . . . . 10,535,000 10,535,000 10,535,000 10,535,000 =============== =============== ============= ============ The accompanying notes are an integral part of these unaudited financial statements. -5- CIGAR KING CORPORATION (A Development Stage Company) STATEMENT OF CASH FLOWS For the six months ended March 31, 2002 and 2001 and for the period from October 8, 1998 (Date of Inception) to March 31, 2002 (Unaudited - Prepared by Management) FOR THE For the SIX Six FROM MONTHS Months INCEPTION ENDED Ended TO MARCH 31, March 31, MARCH 31, 2002 2001 2002 ---------- ------------ ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ (3,612 $ (3,852) $ (100,633) Adjustments to reconcile net loss to net cash provided by operating activities: Changes in current assets and liabilities: Capital contributions - expenses . . . . . . . . . . . . . . . . . . . . . . . . - - 10,950 Accounts payable - related parties . . . . . . . . . . . . . . . . . . . . . . . 135 - 1,341 Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,493 3,705 13,460 ---------- ------------ ----------- Net cash (deficiency) from operations . . . . . . . . . . . . . . . . . . . . . . 16 (147) (77,732) ---------- ------------ ----------- CASH FLOWS FROM INVESTING ACTIVITIES: - - - ---------- ------------ ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock. . . . . . . . . . . . . . . . . . . . . . - - 77,750 ---------- ------------ ----------- Net Increase (Decrease) in Cash. . . . . . . . . . . . . . . . . . . . . . . 16 (147) 18 Cash at Beginning of Period. . . . . . . . . . . . . . . . . . . . . . . . . 2 160 - ---------- ------------ ----------- CASH AT END OF PERIOD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 18 $ 13 $ 18 ========== ============ =========== The accompanying notes are an integral part of these unaudited financial statements. -6- CIGAR KING CORPORATION (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS March 31, 2002 (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 was organized for the purpose of engaging in quality cigar sales. The company has since abandoned the Cigar King concept and is looking for another project. No operations have been started. Since its inception the Company has completed Regulation D offerings of 10,535,000 of its common capital stock for cash. 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 - ------------- On March 31, 2002 the Company had a net operating loss carry forward of $100,633. The tax benefit of $30,190 from the loss carry forward has been fully offset by a valuation reserve because the use of the future tax benefit is doubtful since the Company is in the development stage and has not started operations. The net operating loss will expire in 2023. Earnings (Loss) per Share - ---------------------------- Earnings (loss) per share amounts are computed based on the weighted average number of shares actually outstanding. -7- CIGAR KING CORPORATION (A Development Stage Company) NOTES TO FINANCIAL STATEMENTS March 31, 2002 (Unaudited - Prepared by Management) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 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. 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. RELATED PARTY TRANSACTIONS Related parties acquired 43% of the common stock issued. 4. 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 for the coming year. -8- ITEM 2. PLAN OF OPERATIONS Current government regulations go against the development of a cigar kiosk business. In British Columbia smoking is not permitted on business premises, or in restaurants, and people have to smoke outside in most cases. Also, smoking is frowned upon for health reasons in our aging society. As a result, any business relating to marketing tobacco will have difficulties. The Company has decided to abandon its Cigar King concept. Management now plans to look for a new project to invest in as soon possible and has some potential projects in mind. Liquidity and Capital Resources - ---------------------------------- The directors have been personally advancing funds to the Company in order to meet its current obligations and plan to still do so until a viable project is found. Results of Operations - ----------------------- The Company has had no revenues from operations since its inception. -9- 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 6, 2002 /s/ "Michael J. Kennaugh" ---------------- ---------------------------- Date Michael J. Kennaugh - Director -10-