U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: March 31, 2006
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 333-4066
KAYENTA KREATIONS, INC.
(Exact name of registrant as specified in its charter)
NEVADA 87-0554463
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
311 South State Street, Suite 460, Salt Lake City, Utah 84111
(Address of principal executive offices)
(801) 364-9262
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (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 report(s), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). YES [X] NO [ ]
The number of $.001 par value common shares outstanding at March 31, 2006:
1,316,292
FORWARD-LOOKING STATEMENT NOTICE
When used in this report, the words "may," "will," "expect,"
"anticipate,""continue," "estimate," "project," "intend," and similar
expressions are intended to identify forward-looking statements regarding
events, conditions, and financial trends that may affect the Company's future
plans of operations, business strategy, operating results, and financial
position. Persons reviewing this report are cautioned that any forward-looking
statements are not guarantees of future performance and are subject to risks
and uncertainties and that actual results may differ materially from those
included within the forward-looking statements as a result of various factors.
Such factors include general economic factors and conditions that may directly
or indirectly impact the Company's financial condition or results of
operations.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
See attached.
KAYENTA KREATIONS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2006
KAYENTA KREATIONS, INC.
[A Development Stage Company]
CONTENTS
PAGE
- Unaudited Condensed Balance Sheet,
March 31, 2006 2
- Unaudited Condensed Statements of Operations,
for the three months ended March 31, 2006
and 2005 and from inception on December 26,
1995 through March 31, 2006 3
- Unaudited Condensed Statements of Cash Flows,
for the three months ended March 31, 2006
and 2005 and from inception on December 26,
1995 through March 31, 2006 4
- Notes to Unaudited Condensed Financial
Statements 5 - 9
KAYENTA KREATIONS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED BALANCE SHEET
ASSETS
March 31,
2006
___________
CURRENT ASSETS:
Cash $ -
___________
Total Current Assets -
___________
$ -
___________
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 3,185
Advances from related party 1,193
Accrued interest to related party 24
___________
Total Current Liabilities 4,402
___________
STOCKHOLDERS' EQUITY (DEFICIT):
Preferred stock, $.001 par value,
5,000,000 shares authorized,
no shares issued and outstanding -
Common stock, $.001 par value,
50,000,000 shares authorized,
1,316,292 shares issued and
outstanding 1,316
Capital in excess of par value 95,006
Deficit accumulated during the
development stage (100,724)
___________
Total Stockholders' Equity (Deficit) (4,402)
___________
$ -
___________
The accompanying notes are an integral part of these unaudited condensed
financial statements.
- 2 -
KAYENTA KREATIONS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF OPERATIONS
For the Three Months From Inception
Ended March 31, on December 26,
______________________ 1995 Through
2006 2005 March 31, 2006
__________ __________ ______________
REVENUE $ - $ - $ -
EXPENSES:
General and administrative 3,085 1,730 31,407
__________ __________ ______________
LOSS BEFORE OTHER INCOME (EXPENSE) (3,085) (1,730) (31,407)
OTHER INCOME (EXPENSE)
Interest expense (24) - (3,995)
__________ __________ ______________
LOSS BEFORE INCOME TAXES (3,109) - (35,402)
CURRENT TAX EXPENSE - - -
DEFERRED TAX EXPENSE - - -
__________ __________ ______________
LOSS FROM CONTINUING
OPERATIONS (3,109) (1,730) (35,402)
__________ __________ ______________
DISCONTINUED OPERATIONS:
Loss from operations of
discontinued coloring art
book business (including
gain on disposal of $0, $0,
and $0 respectively) - - (64,924)
Income tax benefit - - -
__________ __________ ______________
LOSS FROM DISCONTINUED
OPERATIONS - - (64,924)
__________ __________ ______________
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE - - (398)
__________ __________ ______________
NET LOSS $ (3,109) $ (1,730) $ (100,724)
__________ __________ ______________
LOSS PER COMMON SHARE:
Continuing operations $ (.00) $ (.00)
Discontinued operations - -
Cumulative effect of change in
accounting principle - -
__________ __________
Net Loss Per Common Share $ (.00) $ (.00)
__________ __________
The accompanying notes are an integral part of these unaudited condensed
financial statements.
- 3 -
KAYENTA KREATIONS, INC.
[A Development Stage Company]
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
For the Three Months From Inception
Ended March 31, on December 26,
______________________ 1995 Through
2006 2005 March 31, 2006
__________ __________ ______________
Cash Flows from Operating Activities:
Net loss $ (3,109) $ (1,730) $ (100,724)
Adjustments to reconcile net loss
to net cash used by operating
activities:
Amortization expense - - 602
Depreciation - - 9,610
Effect of change in accounting
principle - - 398
Loss on disposal of assets - - 4,485
Changes in assets and liabilities:
Increase (decrease) in accounts
payable 1,892 - 3,185
Increase in accrued interest -
related party 24 - 1,641
__________ __________ ______________
Net Cash (Used) by
Operating Activities (1,193) (1,730) (80,803)
__________ __________ ______________
Cash Flows from Investing Activities:
Payment of organization costs - - (1,000)
Purchase of equipment - - (13,323)
__________ __________ ______________
Net Cash (Used) by
Investing Activities - - (14,323)
__________ __________ ______________
Cash Flows from Financing Activities:
Proceeds from common stock issuance - - 72,725
Proceeds from advances from
shareholders 1,193 1,730 36,914
Stock offering costs - - (14,533)
Capital Contributions - - 20
__________ __________ ______________
Net Cash Provided by
Financing Activities 1,193 1,730 95,126
__________ __________ ______________
Net Increase (Decrease) in Cash - - -
Cash at Beginning of Period - - -
__________ __________ ______________
Cash at End of Period $ - $ - $ -
__________ __________ ______________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the periods for:
Interest $ - $ - $ 80
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing Activities:
For the three months ended March 31, 2006:
None
For the three months ended March 31, 2005:
None
The accompanying notes are an integral part of these unaudited condensed
financial statements.
- 4 -
KAYENTA KREATIONS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Kayenta Kreations, Inc. ("the Company") was organized under
the laws of the State of Nevada on December 26, 1995. The Company
previously produced and marketed a children's coloring art book depicting
various aspects of life in the Southwestern and Western United States.
The Company discontinued its coloring art book business effective December
30, 2001 [See Note 2]. The Company is currently seeking other business
opportunities. The Company has not generated significant revenues and is
considered a development stage company as defined in Statement of
Financial Accounting Standards No. 7. The Company has, at the present
time, not paid any dividends and any dividends that may be paid in the
future will depend upon the financial requirements of the Company and
other relevant factors.
Condensed Financial Statements - The accompanying financial statements
have been prepared by the Company without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position, results
of operations and cash flows at March 31, 2006 and 2005 and for the
periods then ended have been made.
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. It is suggested that these condensed financial statements be
read in conjunction with the financial statements and notes thereto
included in the Company's December 31, 2005 audited financial statements.
The results of operations for the periods ended March 31, 2006 and 2005
are not necessarily indicative of the operating results for the full year.
Cash and Cash Equivalents - The Company considers all highly liquid debt
investments purchased with a maturity of three months or less to be cash
equivalents.
Inventory - Inventory is carried at the lower of cost or market using the
first-in, first-out (FIFO) method.
Revenue Recognition - The Company recognizes revenue from sales upon
delivery of the product.
Income Taxes - The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes." This statement requires an asset and liability approach
for accounting for income taxes.
Discontinued Operations - The Company has adopted Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets". SFAS No. 144 modifies previous disclosures and
requires additional disclosures for discontinued operations and the assets
associated with discontinued operations [See Note 2].
Loss Per Share - The Company computes loss per share in accordance with
Statement of Financial Accounting Standards No. 128 "Earnings Per Share,"
which requires the Company to present basic and dilutive loss per share
when the effect is dilutive [See Note 7].
-5-
KAYENTA KREATIONS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Continued]
Accounting Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the
disclosures 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
estimated by management.
Recently Enacted Accounting Standards - Statement of Financial Accounting
Standards ("SFAS") No. 151, "Inventory Costs - an amendment of ARB No. 43,
Chapter 4", SFAS No. 152, "Accounting for Real Estate Time-Sharing
Transactions - an amendment of FASB Statements No. 66 and 67", SFAS No.
153, "Exchanges of Nonmonetary Assets - an amendment of APB Opinion No.
29", SFAS No. 123 (revised 2004), "Share-Based Payment", SFAS No. 154,
"Accounting Changes and Error Corrections - a replacement of APB Opinion
No. 20 and FASB Statement No. 3", SFAS No. 155, "Accounting for Certain
Hybrid Financial Instruments - an amendment of FASB Statements No. 133 and
140", and SFAS No. 156, "Accounting for the Servicing of Financial
Assets," were recently issued. SFAS No. 151, 152, 153, 123 (revised
2004), 154, 155 and 156 have no current applicability to the Company or
their effect on the financial statements would not have been significant.
Reclassification - The financial statements for periods prior to March 31,
2006 have been reclassified to conform to the headings and classifications
used in the March 31, 2006 financial statements.
NOTE 2 - DISCONTINUED OPERATIONS
On December 30, 2001, the Company discontinued all its existing coloring
art book business and sold its remaining assets to repay debt [See Note
6]. The Company has accounted for this disposal in accordance with
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets". At March 31, 2006, the
Company had no assets or liabilities associated with its discontinued
business operations.
The following is a summary of the results of operations of the Company's
discontinued business operations:
For the Three Months From Inception
Ended March 31, on December 26,
______________________ 1995 Through
2006 2005 March 31, 2006
__________ __________ ______________
Revenue $ - $ - $ 2,814
Cost of goods sold - - (1,518)
General and administrative - - (64,410)
Other income (expense) - - (1,810)
__________ __________ ______________
Net loss $ - $ - $ (64,924)
__________ __________ ______________
- 6 -
KAYENTA KREATIONS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - CAPITAL STOCK
Preferred Stock - The Company has authorized 5,000,000 shares of preferred
stock, $.001 par value, with such rights, preferences and designations and
to be issued in such series as determined by the Board of Directors. No
shares were issued and outstanding at March 31, 2006.
Common Stock - In December 1995, in connection with its organization, the
Company issued 500,000 shares of its previously authorized but unissued
common stock. Total proceeds from the sale of stock amounted to $5,000
(or $.01 per share).
In March 1996, the Company issued 300,000 shares of its previously
authorized but unissued common stock. Total proceeds from the sale of
stock amounted to $3,000 (or $.01 per share).
In February 1997, the Company issued 218,900 shares of its previously
authorized, but unissued common stock. Total proceeds from the sale of
stock amounted to $54,725 (or $.25 per share). Stock offering costs of
$14,533 were netted against the proceeds as a reduction to capital in
excess of par value.
In February 2002, the Company issued 197,392 shares of its previously
authorized but unissued common stock to repay loans and accrued interest
totaling $19,742 owed to shareholders of the Company (or approximately
$.10 per share).
In February 2002, the Company issued 100,000 shares of its previously
authorized but unissued common stock to a shareholder of the Company.
Total proceeds from the sale of stock amounted to $10,000 (or $.10 per
share).
Capital Contribution / Distribution - In 1996, an officer/shareholder of
the Company contributed $20 to the Company. In 2001, the Company repaid a
loan and accrued interest totaling $1,219 owed to an officer/shareholder
of the Company by transferring equipment with a net book value of $1,499.
The difference of $280 was recorded as a capital distribution [See Note
5].
In December 2004, an officer of the Company forgave debt and accrued
interest in the amount of $9,762. In accordance with AICPA Technical
Practice Aids, Practice Alert 00-1, "Accounting for Certain Equity
Transactions", Extinguishment of Related Party Debt, the forgiveness has
been recorded to Capital in excess of par value.
In December 2005, an officer of the Company forgave debt and accrued
interest in the amount of $8,886. In accordance with AICPA Technical
Practice Aids, Practice Alert 00-1, "Accounting for Certain Equity
Transactions", the forgiveness has been recorded to Capital in excess of
par value.
- 7 -
KAYENTA KREATIONS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 4 - GOING CONCERN
The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of
America, which contemplate continuation of the Company as a going concern.
However, the Company has incurred losses since its inception and has no on-
going operations. Further, the Company has current liabilities in excess
of current assets. These factors raise substantial doubt about the
ability of the Company to continue as a going concern. In this regard,
management is proposing to raise any necessary additional funds not
provided by operations through loans or through additional sales of its
common stock. There is no assurance that the Company will be successful
in raising this additional capital or in achieving profitable operations.
The financial statements do not include any adjustments that might result
from the outcome of these uncertainties.
NOTE 5 - RELATED PARTY TRANSACTIONS
Management Compensation - The Company has not paid any compensation to its
officers and directors, as the services provided by them to date have only
been nominal.
Office Space - The Company has not had a need to rent office space. An
officer/shareholder of the Company is allowing the Company to use her
office as a mailing address, as needed, at no expense to the Company.
Advance from Shareholder - As of March 31, 2006, a shareholder of the
Company has made advances totaling $1,193 to the Company. The advances
bear interest at 10% per annum and are due on demand. Accrued interest
expense at March 31, 2006 amounted to $24.
Stock Issuances - In February 2002, the Company issued 197,392 shares of
common stock to repay loans and accrued interest totaling $19,742 owed to
shareholders of the Company [See Note 3].
In February 2002, the Company issued 100,000 shares of common stock to a
shareholder of the Company for $10,000 [See Note 3].
Capital Distribution - In December 2001, the Company discontinued its
existing business operations and sold its remaining assets, having a net
book value of $1,499, to an officer and stockholder in exchange for
cancellation of a loan and accrued interest owed to the officer and
stockholder in the total amount of $1,219. The assets were assigned, sold
and transferred to the officer in satisfaction of the debt. The
difference
between the net book value of the assets and the amount of the debt was
$280 and has been recorded as a capital distribution in the financial
statements [See Note 3].
- 8 -
KAYENTA KREATIONS, INC.
[A Development Stage Company]
NOTES TO FINANCIAL STATEMENTS
NOTE 6 - CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE
The Company was previously amortizing its organization costs, which
reflect amounts expended to organize the Company, but during 1999, in
accordance with Statement of Position 98-5, the Company expensed the
remaining $398 in organization costs which has been accounted for as a
change in accounting principle.
NOTE 7 - LOSS PER SHARE
The following data show the amounts used in computing loss per share for
the periods presented:
For the Three Months
Ended March 31,
______________________
2006 2005
__________ __________
Loss from continuing operations
(numerator) $ (3,109) $ (1,730)
Loss from discontinued operations
(numerator) - -
Gain (loss) on disposal of
discontinued operations (numerator) - -
Cumulative effect of change in
accounting principle (numerator) - -
__________ __________
Loss available to common
shareholders (numerator) $ (3,109) $ (1,730)
__________ __________
Weighted average number of common
shares outstanding during the
period used in loss per share
(denominator) 1,316,292 1,316,292
__________ __________
Dilutive loss per share was not presented, as the Company had no common
equivalent shares for all periods presented that would affect the
computation of diluted loss per share.
- 9 -
ITEM 2: MANAGEMENT'S DISCUSSION & ANALYSIS OR PLAN OF OPERATIONS
The Company was incorporated on December 26, 1995. The Company has not
yet generated any significant revenues from operations and is considered a
development stage company. Management's plan of operation for the next twelve
months is to continue to receive shareholder advances to provide general
working capital. 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. The Company has experienced losses from its inception. The
Company was engaged in the business of producing and marketing specialty
children's coloring art books and art coloring pencils. This business was not
successful and operations were eventually discontinued. The Company is not
presently engaged in any significant business activities and has no
operations. Presently the Company's principal activity has been to investigate
potential acquisitions. However, the Company has not located any suitable
potential business acquisition and has no plans, commitments or arrangements
with respect to any potential business venture. There is no assurance the
Company could become involved with any business venture, especially any
business venture requiring significant capital. There is no written agreement
with respect to any potential business acquisition. If any suitable potential
business acquisition is located and completed, it will in all likelihood
involve a change in management and shareholder control of the company. At
December 31, 2004, indebtedness of the Company to certain shareholders in the
amount of $9,242 was forgiven and contributed to capital. The Company has no
operating capital or income producing assets. In light of these circumstances,
the ability of the Company to continue as a going concern is substantially in
doubt. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty. Management believes their plans
will provide the corporation with the ability to continue in existence.
Management plans to maintain its filings and curtail operations and activities
to keep it in existence. This may require additional advances from
stockholders to pay accounting and legal fees associated with its filings.
ITEM 3. CONTROLS AND PROCEDURES.
The issuer's principal executive officer or officers and principal
financial officer or officers, or persons performing similar functions, are
responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and
internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the issuer and have:
designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under their supervision, to
ensure that material information relating to the issuer, including its
consolidated subsidiaries, is made known to them by others within those
entities, particularly during the period in which the periodic reports are
being prepared;
designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under their
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
evaluated the effectiveness of the issuer's disclosure controls and
procedures as of the end of the fiscal quarter (the "Evaluation Date").
Based on their evaluation as of the Evaluation Date, their conclusions
about the effectiveness of the disclosure controls and procedures were that
nothing indicated:
any significant deficiencies in the design or operation of internal
controls which could adversely affect the issuer's ability to record, process,
summarize and report financial data;
any fraud, whether or not material, that involves management or other
employees who have a significant role in the issuer's internal controls; or
any material weaknesses in internal controls that have been or should be
identified for the issuer's auditors and disclosed to the issuer's auditors
and the audit committee of the board of directors (or persons fulfilling the
equivalent function).
Changes in internal control over financial reporting. There was no
significant change in the issuer's internal control over financial reporting
that occurred during the most recent fiscal quarter that has materially
affected, or is reasonably likely to materially affect, the issuer's internal
control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings. No
such action is contemplated by the Company nor, to the best of its knowledge,
has any action been threatened against the Company.
ITEM 2. SALES OF UNREGISTERED EQUITY SECURITIES AND USE OF PROCEEDS
(a) During the period covered by this report, there were no equity
securities of the issuer, sold by the issuer, that were not
registered under the Securities Act. During the past three years,
the only securities that the issuer sold without registering the
securities under the Securities Act was on February 27, 2002, when
additional common stock was issued to Lynn Dixon; 100,000 shares
in exchange for $10,000 cash, and 130,142 shares in cancellation
of indebtedness totaling $13,014.17 of principal and accrued
interest. Also, 67,250 shares were issued to an entity controlled
by Eslie Barlow in cancellation of indebtedness totaling $6,179.64
of principal and accrued interest. This increased the total issued
and outstanding common stock to 1,316,292 shares. The Company
issued these shares in reliance upon the exemption provided by
Section 4(2) under the Securities Act, for transactions by an
issuer not involving any public offering. No public solicitation
was employed, the purchasers bought the securities with investment
intent and the securities are restricted securities as that term
is defined in Rule 144.
(b) During the period covered by this report, there were no securities
that the issuer sold by registering the securities under the
Securities Act.
(c) During the period covered by this report, there was no repurchase
made of equity securities registered pursuant to section 12 of the
Exchange Act. None of the issuer's securities is registered
pursuant to section 12 of the Exchange Act.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There has not been any material default in the payment of principal,
interest, a sinking or purchase fund installment, or any other material
default not cured within 30 days, with respect to any indebtedness of the
issuer exceeding 5 percent of the total assets of the issuer.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter has been submitted to a vote of security holders during the
period covered by this report, through the solicitation of proxies or
otherwise.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS.
Exhibit Index - Exhibits required by Item 601 of Regulation S-B.
(31) Certifications required by Rules 13a-14(a) or 15d-14(a).
(32) Section 1350 Certifications
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Kayenta Kreations, Inc.
Date: May 10, 2006 by: /s/ Brenda White
Brenda White, Chairman