UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For quarterly period ended: March 31, 2005; or
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF
1934
For the transition period _________ to __________
Commission File Number: 000-27259
REWARD ENTERPRISES, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 98-0203927
------ ----------
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
202 CURRY STREET, SUITE 100, CARSON CITY, NV 89703
(Address of principal executive offices) (Zip Code)
(713) 937-1117
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that a registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes |X| No |_|
State the number of shares outstanding of the issuer's common equity: $0.001 par
value, as of March 31, 2005, was 493,166,224.
Transitional Small Business Disclosure Format. Yes |_| No |X|
REPORT ON FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 2005
INDEX
FINANCIAL STATEMENTS........................................................3
PART I - FINANCIAL INFORMATION..............................................9
ITEM 1. FINANCIAL STATEMENTS.............................................9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
OR PLAN OF OPERATIONS.........................................9
ITEM 3. CONTROLS AND PROCEDURES.........................................10
PART II - OTHER INFORMATION................................................11
ITEM 1. LEGAL PROCEEDINGS...............................................11
ITEM 2. CHANGES IN SECURITIES...........................................11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.................................11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.............11
ITEM 5. OTHER INFORMATION...............................................11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K................................11
SIGNATURES.................................................................12
EXHIBIT 31.1...........................................................31.1-1
EXHIBIT 31.2...........................................................31.2-1
EXHIBIT 32.1...........................................................32.1-1
2
REWARD ENTERPRISES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
March 31, 2005 and June 30, 2004
3
REWARD ENTERPRISES, INC.
(A Development Stage Company)
Balance Sheets
March 31, June 30,
2005 2004
-------------- --------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ -- $ --
-------------- --------------
Total Current Assets $ -- $ --
-------------- --------------
TOTAL ASSETS $ -- $ --
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 111,109 $ 68,057
Accounts payable - related parties 75,386 --
Interest payable -- 21,342
Notes payable, net of discount -- 81,500
-------------- --------------
Total Current Liabilities 186,495 170,899
-------------- --------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: 10,000,000 shares authorized of $0.001 par value, no shares issued
and outstanding -- --
Common stock: 500,000,000 shares authorized of $0.001 par value,
493,166,224 and 4,412,200 shares issued and outstanding, respectively 493,166 4,412
Additional paid-in capital 2,934,643 3,314,643
Accumulated deficit prior to development stage (3,434,726) (3,434,726)
Accumulated deficit during the development stage (179,578) (55,228)
-------------- --------------
Total Stockholders' Equity (Deficit) (186,495) (170,899)
-------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ -- $ --
============== ==============
The accompanying condensed notes are an integral part of the financial
statements.
4
REWARD ENTERPRISES, INC.
(A Development Stage Company)
Statements of Operations
(Unaudited)
From Inception
of Development
Stage
On January 1,
2004
For the Nine Months Ended For the Three Months Ended Through
March 31, March 31, March 31,
------------- ------------- ------------- ------------- -------------
2005 2004 2005 2004 2005
------------- ------------- ------------- ------------- -------------
REVENUES $ -- $ -- $ -- $ -- $ --
EXPENSES
General and administrative 118,438 25,263 66,427 25,263 168,062
------------- ------------- ------------- ------------- -------------
Total Expenses 118,438 25,263 66,427 25,263 168,062
------------- ------------- ------------- ------------- -------------
LOSS FROM OPERATIONS (118,438) (25,263) (66,427) (25,263) (168,062)
------------- ------------- ------------- ------------- -------------
OTHER (EXPENSES)
Interest expense (5,912) (2,200) -- (2,200) (11,516)
------------- ------------- ------------- ------------- -------------
Total Other (Expense) (5,912) (2,200) -- (2,200) (11,516)
------------- ------------- ------------- ------------- -------------
LOSS BEFORE DISCONTINUED OPERATIONS (124,350) (27,463) (66,427) (27,463) (179,578)
------------- ------------- ------------- ------------- -------------
NET LOSS FROM DISCONTINUED
OPERATIONS -- (274,472) -- (153,831) --
------------- ------------- ------------- ------------- -------------
NET LOSS $ (124,350) $ (301,935) $ (66,427) $ (181,294) $ (179,578)
============= ============= ============= ============= =============
BASIC LOSS PER SHARE OF COMMON STOCK $ (0.00) $ (0.01) $ (0.00) $ (0.00)
============= ============= ============= =============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 328,777,483 4,412,200 493,166,224 4,412,200
============= ============= ============= =============
The accompanying condensed notes are an integral part of these financial
statements.
5
REWARD ENTERPRISES, INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
From Inception
of Development
Stage
On January 1,
For the Nine Months Ended 2004
March 31, Through
-------------------------------- March 31,
2005 2004 2005
-------------- -------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (124,350) $ (301,935) $ (179,578)
Adjustments to reconcile net loss to net cash provided (used) by
operating activities:
Discontinued operations -- 274,472 --
Changes in operating assets and liabilities:
Increase in accounts payable-related parties 75,386 9,859 75,386
Increase (decrease) in accounts payable and accrued liabilities 48,964 17,604 104,192
-------------- -------------- --------------
Net Cash Provided (Used) by Operating Activities -- -- --
CASH FLOWS FROM INVESTING ACTIVITIES -- -- --
CASH FLOWS FROM FINANCING ACTIVITIES -- -- --
NET INCREASE (DECREASE) IN CASH -- -- --
-------------- -------------- --------------
CASH AT BEGINNING OF PERIOD -- -- --
-------------- -------------- --------------
CASH AT END OF PERIOD $ -- $ -- $ --
-------------- -------------- --------------
CASH PAID FOR:
Interest $ -- $ -- $ --
Income taxes $ -- $ -- $ --
The accompanying condensed notes are an integral part of these financial
statements.
6
REWARD ENTERPRISES, INC.
(A Development Stage Company)
Condensed Notes to the Financial Statements
March 31, 2005 and June 30, 2004
NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed financial statements have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted in
accordance with such rules and regulations. The information furnished in the
interim condensed financial statements include normal recurring adjustments and
reflects all adjustments, which, in the opinion of management, are necessary for
a fair presentation of such financial statements. Although management believes
the disclosures and information presented are adequate to make the information
not misleading, it is suggested that these interim condensed financial
statements be read in conjunction with the Company's most recent audited
financial statements and notes thereto included in its June 30, 2004 Annual
Report on Form 10-KSB. Operating results for the three months and nine months
ended March 31, 2005 are not necessarily indicative of the results that may be
expected for the year ending June 30, 2005.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going concern
which contemplates the realization of assets and liquidation of liabilities in
the normal course of business. The Company has not yet established an ongoing
source of revenues sufficient to cover its operating costs and allow it to
continue as a going concern. The ability of the Company to continue as a going
concern is dependent on the Company obtaining adequate capital to fund operating
losses until it becomes profitable. If the Company is unable to obtain adequate
capital, it could be forced to cease operations.
In order to continue as a going concern, develop a reliable source of revenues,
and achieve a profitable level of operations the Company will need, among other
things, additional capital resources. Management's plans to continue as a going
concern include raising additional capital through sales of common stock.
However, management cannot provide any assurances that the Company will be
successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 - SHARE EXCHANGE
On November 23, 2004, the Company and the shareholders of Consumer Choice
Financial Services, Inc., (CCF) a Nevada corporation, completed a share exchange
whereby CCF shareholders delivered 100% ownership interest in CCF in exchange
for 380,000,000 restricted shares in the Company. The acquisition of CCF
resulted in the shareholders of CCF becoming the controlling shareholders of the
Company. CCF is a newly formed corporation with no assets, liabilities or
operations, and accordingly the acquisition of CCF was recorded at the
predecessor cost to its shareholders which is approximately nothing. This
acquisition is being accounted for as a merger whereby the operating company,
Reward Enterprises, Inc. is the continuing entity for all accounting purposes.
This transfer resulted in a reclassification of $380,000 from prior additional
paid in capital to common stock for accounting purposes. (See Note 6)
7
REWARD ENTERPRISES, INC.
(A Development Stage Company)
Notes to the Financial Statements
March 31, 2005 and June 30, 2004
NOTE 4 - STOCK SPLIT
Effective October 13, 2004 the Company enacted a 1-for-10 reverse split of its
issued and outstanding shares and its authorized shares which changed the issued
and outstanding shares to 113,170,534 shares and its authorized shares from five
billion (5,000,000,000) to five hundred million (500,000,000). All references to
shares outstanding and per share amounts have been adjusted to reflect the
reverse split on a retroactive basis.
NOTE 5 - RELATED PARTY TRANSACTIONS
As of March 31, 2005, the Company owed related parties $75,386 for amounts
advanced to the Company to cover its operating expenses.
NOTE 6 - COMMON STOCK
On November 23, 2004 the Company and the shareholders of Consumer Choice
Financial Services, Inc. (CCF) a Nevada corporation, completed a share exchange
whereby CCF shareholders delivered 100% ownership interest in CCF in exchange
for 380,000,000 restricted shares in the Company valued at par of $0.001. (See
Note 3)
On October 25, 2004, the Note Payable of $81,500 and the related accrued
interest were converted into 108,754,016 shares of the Company's common stock at
a par value of $0.001 per share.
8
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying balance sheets of Reward Enterprises, Inc. (the
"Company") at March 31, 2005 and June 30, 2004, and the related statements of
operations and cash flows for the three months and nine months ended March 31,
2005 and 2004, have been prepared by our 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 nine months and quarter ended March 31, 2005, are not
necessarily indicative of the results that can be expected for the fiscal year
ending June 30, 2005.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATIONS
The following information should be read in conjunction with the
financial statements and notes thereto appearing elsewhere in this Form 10-QSB.
Forward-Looking And Cautionary Statements
This report contains certain forward-looking statements. These
statements relate to future events or our future financial performance and
involve known and unknown risks and uncertainties. These factors may cause our
company's, or our industry's actual results, levels of activity, performance or
achievements to be materially different from those expressed or implied by the
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "should," "expects," "intends,"
"plans," "anticipates," "believes," "estimates," "predicts," "potential,"
"continue," or the negative of these terms or other comparable terminology.
These statements are only predictions. Although we believe that the
expectations reflected in the forward-looking statements are reasonable, we
cannot guarantee future results, levels of activity, performance or
achievements.
Business Overview
The Company's goal is to become a nationwide provider of consumer
financial services focused on sub-prime lending to consumers for auto loans,
mortgages, insurance products, branded MasterCard and Visa credit cards and
debit cards and various other consumer financial services. The Company has
completed a merger with Consumers Choice Financial Services, Inc. of Houston, TX
("CCF") that would provide an entry into the consumer financial services
business. Through the acquisition of CCF, the Company can potentially offer a
broad range of integrated consumer loans to sub-prime consumers. CCF has systems
in place that identify targeted sub-prime consumers that maintain good earning
power but have items on their credit reports that have caused their credit
scores to drop into the sub-prime category. With associations currently in
place, CCF would market consumer loan products to these targeted customers and
contract with other financial institutions that would service the subsequent
loans that were made.
We expect that we need approximately $150,000 over the next 12 month
period. Without adequate funding the product will not progress. Obtaining
financing depends on current market conditions, the willingness of the
investment community to make investments into a consumer financial services
business, the timing of key developments of the banking license and other
similar factors. We cannot provide any assurances that we will be able to secure
the funding.
Results of Operations
Net losses from operations for the quarter ended March 31, 2005 were
$66,427, as compared to $27,463 for the same period in 2004. The net loss for
2005 translates into a loss of $0.00 per share compared to a loss of $0.00 per
share for the same period in 2004. Our expenses in 2005 were primarily
professional fees incurred in keeping our securities filings current from the
inception of the development stage, which began in January 2004. In the first
quarter of 2004, we had expenses of $181,294 related to our discontinued
operations. We had no revenues in the quarter ended March 31, 2005.
9
Net losses from operations for the nine months ended March 31, 2005
were $124,350, as compared to $27,463 for the same period in 2004. The net loss
for 2005 translates into a loss of $0.00 per share compared to a loss of $0.01
per share for the same period in 2004. Our expenses in 2005 were primarily
professional fees incurred in bringing our securities filings current from the
inception of the development stage, which began in January 2004. For the nine
months ended March 31, 2004, we had expenses of $274,472 related to our
discontinued operations. We had no revenues in the same period in 2005.
Liquidity and Capital Resources
We had no cash on hand at March 31, 2005, compared to $-0- at June 30,
2004. We used approximately $-0- of cash for operations during the nine months
ended March 31, 2005 compared to $-0- for the same period of 2004.
Several of our shareholders have advanced funds and paid expenses on
our behalf during the nine months ended March 31, 2005 in the amount of $75,386.
We expect that the shareholders will continue to make such advances until CCF
has sufficient operating capital to pay its own costs.
We estimate that existing sources of liquidity and the funds provided
by anticipated capital activity will not satisfy our projected working capital
requirements through fiscal 2004. Our ability to maintain sufficient liquidity
through fiscal 2004 is dependent on our raising additional capital and such
capital may not be available on acceptable terms, if at all. Additional
financing may result in substantial and immediate dilution to existing
stockholders. If adequate funds are not available to satisfy either short or
long-term capital requirements, we may be required to curtail operations
significantly or to seek funds through arrangements with strategic partners,
existing investors or other parties.
ITEM 3. CONTROLS AND PROCEDURES
(A) Evaluation Of Disclosure Controls And Procedures
As of the end of the period covered by this report, we carried out an
evaluation, under the supervision and with the participation of management,
including our Chief Executive Officer and Principal Financial Officer, of the
effectiveness of the design and operation of our disclosure controls and
procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Securities
Exchange Act of 1934. Based upon that evaluation, our Chief Executive Officer
and Principal Financial Officer concluded that our disclosure controls and
procedures are effective to cause the material information required to be
disclosed by us in the reports that we file or submit under the Exchange Act to
be recorded, processed, summarized and reported within the time periods
specified in the SEC's rules and forms. There have been no significant changes
in our internal controls or in other factors which could significantly affect
internal controls subsequent to the date we carried out our evaluation.
(B) Changes In Internal Controls Over Financial Reporting
In connection with the evaluation of the Company's internal controls
during the quarter ended March 31, 2005, the Company's Chief Executive Officer
and the Principal Financial Officer have determined that there are no changes to
the Company's internal controls over financial reporting that has materially
affected, or is reasonably likely to materially effect, the Company's internal
controls over financial reporting.
10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not aware of any pending claims or assessments that may have a
material adverse impact on Reward's financial position or results of operations.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 31.1 Certification of Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2 Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.1 Certification of Chief Executive Officer and Principal
Accounting Officer Pursuant to 18 U.S.C. Section 1350, as
Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
(b) Report on Form 8-K:
None.
11
SIGNATURES
In accordance with the requirements of the Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
REWARD ENTERPRISES, INC.
Date: June 17, 2005 /s/ Mike Terrell
------------------
Secretary/Director
Principal Financial Officer
12