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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 June 30, 2000
-------------
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: 0-30536
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FoneCash, Inc.
(Exact name of registrant as specified in its charter)
---------------------------------------------
Delaware 22-3530573
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
90 Park Avenue, 1700, New York, New York 10016-1301
(Address of principal executive offices) (Zip-Code)
Registrant's telephone number, including area code: (212) 984-0641
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), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
The number of outstanding shares of the registrant's Common Stock, par
value $.0001 per share, was 3,836,338 on June 30, 2000.
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Fonecash, Inc.
Quarterly Report on Form 10-QSB
For the Quarter Ended on June 30, 2000
Table of Contents
Part I. FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited)
Balance Sheets as of June 30, 2000 and December 31, 1999
Statements of Operations for Period Ending June 30, 2000
Statements of Cash Flow for Period Ending June 30, 2000
Notes to Financial Statements
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations
Part II OTHER INFORMATION
Incorporated by reference to the Company's Form 10-SB,
Amendment 3 registration statement, along with all exhibits,
submitted on May 23, 2000
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STEWART H. BENJAMIN
CERTIFIED PUBLIC ACCOUNTANT, P. C.
27 SHELTER HILL ROAD
PLAINVIEW, NY 11803
TELEPHONE: (516) 933-9781
FACSIMILE: (516) 827-1203
To the Board of Directors and Stockholders
FoneCash, Inc.
New York, New York
I have reviewed the accompanying balance sheets of FoneCash, Inc. (a development
stage company) as of June 30, 2000 and December 31, 1999, and the related
statements of operations, stockholders' equity and cash flows, for the six
months ended June 30, 2000 and 1999, and for the period from August 7, 1997
(inception), to June 30, 2000, in accordance with the statements on Standards
for Accounting and Review Service, issued by the American Institute of Certified
Public Accountants. All information included in these financial statements is
the representation of the management of FoneCash, Inc.
A review consists principally of inquiries of Company personnel analytical
procedures applied to financial data. It is substantially less in scope than an
audit in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, I do not express such an opinion.
Based on my review, I am not aware of any material modifications that should be
made to the accompanying financial statements in order for them to be in
conformity with generally accepted accounting principles.
/s/ Stewart H. Benjamin
Certified Public Accountant, P.C.
Plainview, New York
August 7, 2000
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FONECASH, INC
(A Development Stage Company)
Balance Sheets
ASSETS
------
<TABLE>
<CAPTION>
June 30 December 31
2000 1999
<S> <C> <C>
Current assets:
Cash $ 44,220 $ 208,702
Inventory (Note 1) 73,454 45,143
Prepaid expenses (Note 4) 25,000 25,000
----------- -----------
142,674 278,845
----------- -----------
Property and equipment, net (Note 5) 70,657 83,333
----------- -----------
Other assets:
Organization costs, net (Note 1) 154 190
Patent rights, net (Note 6) 3,500 4,000
Cash surrender value of life insurance (Note 8) 10,894 17,732
Deposits 250 250
----------- -----------
14,798 22,172
----------- -----------
$ 228,129 $ 384,350
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,484 $ 9,790
Due to an officer/stockholder (Note 10) 20,926 26,586
Note payable (Note 9) 45,044 7,500
----------- -----------
74,454 43,876
----------- -----------
Stockholders' equity(deficit): (Note 2)
Preferred stock; $.0001 par value; authorized -
5,000,000 shares; issued - none -- --
Common stock; $.0001 par value; authorized -
20,000,000 shares; issued and outstanding -
3,836,338 shares 383 383
Additional paid-in capital 1,282,072 1,282,072
Deficit accumulated during the development stage (1,128,780) (941,981)
----------- -----------
Total stockholders' equity 153,675 340,474
----------- -----------
$ 228,129 $ 384,350
=========== ===========
</TABLE>
See accompanying notes and accountant's review report.
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FONECASH, INC.
(A Development Stage Company)
Statements of Operations
<TABLE>
<CAPTION>
Six Six Aug.7,1997
Months Ended Months Ended (Inception) to
June 30, June 30, June 30,
2000 1999 2000
------------ ------------ --------------
<S> <C> <C> <C>
Cost and expenses:
Depreciation $ 22,464 $ 4,167 $ 64,131
Amortization 536 537 1,714
Research and development, related party 24,090 -- 376,996
Officer's compensation 28,129 -- 103,129
Impairment of investment in related party -- -- 50,000
General and administrative 115,734 97,036 537,580
----------- ----------- -----------
190,953 101,740 1,133,550
----------- ----------- -----------
Other Income (expenses)
Interest income 4,154 -- 4,770
----------- ----------- -----------
Net loss $ (186,799) $ (101,740) $(1,128,780)
=========== =========== ===========
Primary and diluted loss per common share $ (.05) $ (.04) (.39)
=========== =========== ===========
Weighted average common shares outstanding 3,836,338 2,836,854 2,889,563
=========== =========== ===========
----------------------------------------------------------------------------------------
</TABLE>
See accompanying notes and accountant's review report.
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FONECASH, INC.
(A Development Stage Company)
Statements of Change in Stockholders' Equity
For the Period August 7,1997 (Inception) to June 30, 2000
<TABLE>
<CAPTION>
Deficit
Common Stock Additional Accumulated
------------------------- Paid-in from
Shares Amount Capital Inception
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balances, August 7,1997 (Inception) -- $ -- $ -- $ --
Common stock issued for services
and costs advanced, valued at $.0001
per share 2,000,000 200 -- --
Common stock issued for services
valued at $.15 per share 200,000 20 29,980 --
Net loss for the period (61,404)
----------- ----------- ----------- -----------
Balances, December 31, 1997 2,200,000 220 29,980 (61,404)
Sale of common stock 204,500 20 84,965 --
Net Loss (95,211)
----------- ----------- ----------- -----------
Balances, December 31,1998 2,404,500 240 114,945 (156,615)
Sale of common stock 1,098,505 110 837,160 --
Services contributed by the president of
the Company -- -- 60,000 --
Common stock issued for services
Valued at $.81 per share 333,333 33 269,967 --
Net loss (785,366)
----------- ----------- ----------- -----------
Balances, December 31, 1999 3,836,338 383 1,282,072 (941,981)
Net Loss for the period (186,799)
----------- ----------- ----------- -----------
Balances, June 30, 2000 3,836,338 383 1,282,072 $(1,128,780)
=========== =========== =========== ===========
</TABLE>
See accompanying notes and accountant's review report.
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FONECASH, INC
(A Development Stage Company)
Statements of Cash Flow
<TABLE>
<CAPTION>
Six Six Aug. 7,1997
Months Ended Months Ended (Inception) to
June 30 June 30 June 30
2000 1999 2000
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $ (186,799) $ (101,740) (1,128,780)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 22,464 4,167 64,131
Amortization 536 537 1,714
Cash surrender value of life insurance 6,838 -- (10,894)
Common stock issued for services -- -- 360,200
Changes in assets and liabilities:
(Increase) in inventory (28,311) -- (73,454)
(Increase) in prepaid expenses -- (25,585) (25,000)
(Increase) in utility deposit -- (250) (250)
Increase (decrease) in accounts payable (1,306) (977) 8,484
Increase (decrease) in amounts due to
an officer/stockholder (5,660) (40,212) 20,926
----------- ----------- -----------
Net cash used in operating activities (192,238) (164,060) (782,923)
----------- ----------- -----------
Cash flows from investing activities:
Organization costs -- -- (368)
Purchase of property and equipment (9,788) (25,000) (134,788)
Acquisition of patent rights -- (5,000) (5,000)
Increase in notes receivable -- (14,800) --
Investment in related company -- (50,000) --
Deposit -- (325,000) --
----------- ----------- -----------
Net cash used in investing activities (9,788) (419,800) (140.156)
----------- ----------- -----------
Cash flow from financing activities:
Proceeds from short-term debt 42,500 -- 50,000
Repayment of short term debt (4,956) -- (4,956)
Proceeds from sale of common stock -- 616,531 922,255
----------- ----------- -----------
Net cash provided by financing activities 37,544 616,531 967,299
----------- ----------- -----------
Net increase (decrease) in cash (164,482) 32,671 44,220
Cash at beginning of year 208,702 9,628 --
----------- ----------- -----------
Cash at end of period $ 44,220 $ 42,299 $ 44,220
=========== =========== ===========
Supplemental disclosure of noncash investing and financing
activities:
Services contributed by the president of the Company $ -- $ -- $ 60,000
Common stock issued for research and development costs $ -- $ -- $ 270,000
Common stock issued for services and costs advanced $ -- $ -- $ 200
=========== =========== ===========
</TABLE>
See accompanying notes and accountant's review report.
7
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FONECASH, INC.
(A Development Stage Company)
Notes to Financial Statements
Note 1 - Summary of Significant Accounting Policies
Description of Business and Basis of Presentation
The financial statements presented are those of FoneCash, Inc., a development
stage company (the "Company"). The Company was incorporated under the laws of
the State of Delaware on August 7, 1997. The Company has acquired the rights to
market a patented electronic terminal that is used by retail merchants and
in-home salespersons when payment is made with a credit or debit card. Revenues
will be generated from sales of the terminals and from transaction charges to
banks. No revenues have been earned as of June 30, 2000, but management
anticipates sales to commence in September 2000 after real-time trials are
performed with a select group of merchants and in-home salespersons.
These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information. In the opinion
of management, such interim statements reflect all adjustments (consisting of
normal recurring accruals) necessary to present fairly the financial position
and the results of operations and cash flows for the interim periods presented.
The results of operations for these interim periods are not necessarily
indicative of the results to be expected for the full year.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reporting amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the period. Actual results
could differ from those estimates.
Inventory
Inventory is stated at the lower of cost or market, with cost determined on a
first-in, first-out basis and market based on the lower of replacement cost or
realizable value.
Property and equipment and depreciation
Property and equipment are stated at cost. Depreciation for both financial
reporting and income tax purposes is computed using the straight-line method
over the estimated lives of the assets. Maintenance and repairs are charged to
expense when incurred. When property and equipment are retired or otherwise
disposed of, the related cost and accumulated depreciation are removed from the
respective accounts and any gain or loss is credited or charged to income.
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Intangible Assets
Intangible assets consist of organization costs and patent rights. Intangible
assets are amortized on a straight-line basis over five years. Amortization
expense for the six months ended June 30, 2000 was $536.
Fair Value of Financial Instruments
The fair value of the Company's receivables due from an officer/stockholder is
not practicable to estimate due to the related party nature of the underlying
transactions and the indefinite payment terms.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the statement of
operations in the period that includes the enactment date.
Loss Per Common Share
Loss per common share is computed by dividing the net loss by the weighted
average shares outstanding during the period.
Note 2 - Stockholders' Equity
Common Stock
Since the date of inception, the Company has issued 3,836,338 shares of common
stock, which includes 2,000,000 shares that were issued to officers and
directors of the Company for services and costs advanced, valued at $.0001 per
share, 200,000 shares that were valued at $.15 per share, and 333,333 shares
that were valued at $.81 per share. In 1999 the president of the Company
contributed services to the Company valued at $60,000, as reflected in the
statements of stockholders' equity and statements of operations (in addition to
$31,000 received in cash).
Dividends may be paid on outstanding shares as declared by the Board of
Directors from time to time. Each share of common stock is entitled to one vote.
Preferred Stock
No shares of the Company's no par value preferred stock have been issued or are
outstanding. Dividends, voting rights and other terms, rights and preferences of
the preferred shares have not been designated but may be designated by the Board
of Directors from time to time.
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Note 3 - Income Taxes
There is no provision for income taxes since the Company has incurred net
operating losses. At June 30, 2000, the Company has net operating loss carry
forwards of $1,092,664, which may be available to offset future taxable income
through 2020. A deferred tax asset has not been recorded for the net operating
loss carryforwards due to uncertainties as to the ultimate realization of the
deferred tax asset.
Note 4 - Prepaid Expenses
Prepaid expenses consists of a payment of $25,000 on April 29,1999 for the cost
of printing brochures containing product and company information. The printing
costs will be charged to income as the brochures are distributed. No brochures
have been distributed as of June 30, 2000.
Note 5 - Property and Equipment
Property and equipment consist entirely of a production mold purchased during
the year ended December 31, 1999 for $125,000. The Company purchased additional
molds in the amount of $9,788 during the six months ended June 30, 2000. The
molds have an estimated useful life of 3 years and are depreciated using the
straight-line method. Depreciation expense was $22,464 for the six months ended
June 30, 2000.
Note 6 - Patent Rights
On November 1, 1997 the Company entered into a license agreement with Thomas J.
Ulrich. Under this agreement the Company will acquire an exclusive license under
the licensor's patent rights for U.S. patent number 4,803,719, pertaining to
telephone line powered applications, for the primary purpose of utilizing the
licensor's invention through sales of products and services. The Company is
required to make payments of $30,000 for a non-refundable license execution fee
based upon capital funding, and for royalties based upon gross sales of all
licensed products sold. As of March 31, 2000 a license execution fee of $5,000
was capitalized and is being amortized over the remaining life of the patent of
5 years. The balance of the license execution fee of $25,000 is due upon funding
of an Initial Public Offering or other financing exceeding $500,000. The
agreement also provides for a royalty of 3% of the gross sales of all licensed
products and an annual minimum fee of $10,000 in 2000 and $20,000 for each year
thereafter. In addition, minimum sales revenues of $500,000 for the year 2000 to
a total of $2 million in sales after the year 2003 and thereafter were agreed
to.
Note 7 - Long -Lived Assets
The Company accounts for long-lived assets in accordance with the provisions of
Statement of Financial Accounting Standards (SFAS) No. 121, Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed Of.
This statement requires that long-lived assets and certain identifiable
intangibles be reviewed
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for impairment whenever events or changes in circumstance indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by an asset. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair value of
the assets. Assets to be disposed of are reported at the lower of carry amount
or fair value less costs to sell.
Note 8 - Cash Surrender Value of Life Insurance
The variable universal life insurance policy carried on the life of the
president of the Company has a cash value of $10,894 on June 30, 2000. There
were no borrowings against the cash surrender value.
Note 9 - Note Payable
The Company has a bank line of credit with Fleet Bank, N.A. that provides
short-term borrowings up to $50,000. Interest on advances is payable monthly at
two and three quarters of one percent (2.75%) over the prime rate. The note
payable to the bank is uncollateralized and is personally guaranteed by officers
of the Company. There is an outstanding balance on the bank line of credit of
$45,044 as of June 30, 2000
Note 10 - Related Party Transactions
The Company was indebted to an officer/stockholder for expenses advanced on
behalf of the Company, in the amount of $20,926 at June 30, 2000. There are no
specific terms for repayment.
In 1999 the president of the Company contributed services to the Company valued
at $60,000, as reflected in the statements of stockholders' equity and
statements of operations (in addition to $31,000 received in cash).
The Company leases its executive offices and storage facilities from the
president of the Company under a month-to-month operating lease. Rent expenses
was $10,000 for the six months ended June 30, 2000, $17,373 for the year ended
December 31, 1999, and $32,485 for the periods prior to 1999.
The Company utilizes Advance Data Information Corporation ("ADI"), a Taiwan
corporation owned by a director/shareholder of the Company, as its research and
development laboratory. Research and development expenses under this arrangement
totaling $24,090 charged to operations during the six months ended June 30,
2000.
The Company purchased 1,000,000 shares representing an 8% interest in
Tradeandswap.com, Inc. ("Trade and Swap") for $50,000. A consultant of the
Company is a shareholder and principal officer of Trade and Swap.
Tradeandswap.com, Inc. is a privately-held corporation that facilitates barter
and trade swaps for individuals and businesses over a proprietary Internet web
site. The investment in Trade and Swap is carried at cost, as there is no
readily available market for these shares. If an other-than-temporary impairment
resulting from a decline in fair value in the investment shall be
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considered to have occurred, the cost basis shall be written down to fair value
as a new cost basis and the amount of the write-down shall be included in
earnings as a realized loss. During the year ended December 31, 1999, the
Company has written its investment in Trade and Swap down to zero since no
future benefit can be determined as Trade and Swap operates in a volatile
industry and has no proven record of success. An impairment loss $50,000 has
been reported in the Statement of Operations.
Note 11 - Consulting Agreements
On February 4, 1998 the Company entered into a consulting agreement with East
Coast Entertainment, Inc. ("ECE") requiring payments of $50,000 per year in
monthly installments once the Company attains gross revenues of $300,000.ECE
will be assigned administrative duties including, but not limited to, publicity,
advertising, public relations, investors relations programs, news releases,
hiring of all necessary outside contractors for any specialized projects,
printing and development of the Company's annual reports, preparation of any
design, print or art work, camera ready art, distribution of reports and
corporate releases to State and Federal securities agencies. ECE is entitled to
$100,000 annually once the Company achieves $500,000 in gross revenues. ECE is
entitled to participate in the Company's stock option plans and group health
plans pursuant to the same terms that apply to all senior key executives and
other employees of the Company. The agreement is renewable annually for a period
of ten years. No expenses have been recognized under this arrangement for the
six months ended June 30, 2000.
The Company entered into another consulting agreement with Advance Data
Information Corporation ("ADI"), a Taiwan corporation owned by Dr. Wu, a
director/stockholder of the Company, in which ADI will act as the research and
development laboratory for the Company. The Company shall have exclusive
ownership rights to any and all products that are developed as a result of this
agreement. The Company has issued 200,000 shares of its common stock to Dr. Wu
in August 1997, valued at $.15 per share, and 333,333 shares in June 1999,
valued at $.81 per share for services rendered.
Note 12 - Contract for Deployment and Installation Services
Pursuant to a letter of intent dated June 5, 1999 between the Company and Fusion
Capital Corp. ("Fusion"), a Florida corporation, the Company agreed to purchase
a majority of the common stock of Fusion. The Company simultaneously issued a
loan to Fusion of $37,000 to be granted in 10 installments of $3,700 from June
14,1999 through August 16,1999. Ten separate promissory notes of $3,700 were
executed, each providing for interest at a rate of 6%, and each of the ten notes
payable within 12 months from the date of issuance with the first payment due on
June 14, 2000. The balance due on the notes of $37,990 as of December 31, 1999
includes accrued interest of $990.
In April 2000, the Company entered into negotiations with Fusion for deployment
and installation services for the 500 terminals which the Company planned for
its trials with merchants in order to prove its revenue concept. On May 1,2000,
the Company and Fusion entered into a Contract for Deployment and Installation,
whereby the principal
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balance of the notes totaling $37,000 was converted to an advance payment
pursuant to the contract, as reflected in the statements of operations, and the
accrued interest of $990 was written off.
Note 13 - Planned Acquisition
On June 19, 2000, the Company signed a letter of intent to acquire 50% of the
stock of Fonecash.com Ltd. ("FoneCash Hong Kong"), a newly created Hong Kong
company. Under the terms of the letter of intent, in exchange for its ownership
interest, the Company will grant to FoneCash Hong Kong, an exclusive license in
the Company's proprietary technology, referred to as the "FoneCash Terminal".
The transaction is subject to carious terms and condition, including the
execution of a definitive acquisition agreement, complete of due diligence and
shareholder approval.
Item 2. Management's Discussion and Analysis
This Quarterly Report on Form 10-QSB, including the information incorporated by
reference herein, includes "forward looking statement" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Act") and Section
21E of the Securities Act of 1934, as amended ("Act of 34"). All of the
statements contained in this Quarterly Report on Form 10-QSB, other than
statements of historical fact, should be considered forward looking statements,
including, but not limited to, those concerning the Company's strategies,
objectives and plans for expansion of its operation, products and services and
growth in demand for it's products and services. There can be no assurances that
these expectations will prove to have been correct. Certain important factors
that could cause actual results to differ materially from the Company's
expectations (the "Cautionary Statements") are disclosed in this Quarterly
report on Form 10-QSB. All subsequent written and oral forward looking
statements by or attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by such Cautionary Statements. Investors
are cautioned not to place undue reliance on these forward looking statements
which speak only as of the date hereof and are not intended to give any
assurance as to future results. The Company undertakes no obligation to publicly
release any revisions to these forward-looking statements to reflect events or
reflect the occurrence of unanticipated events.
Fonecash, Inc. (the "Company") was incorporated under the laws of the State of
Delaware on August 7,1997 and is in its development stage. It has had no
operating revenues to date and has not sold any of its products and services.
The Company incurred operating losses of $1,128,780 from Inception to June 30,
2000. The Company expects its accumulated deficit to grow for the foreseeable
future as total costs and expenses increase due principally to increased
marketing expenses associated with its plans to undertake manufacturing of its
terminals in China and setting up its servers which are used in the processing
of the credit and debit card data.
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General
The Company has developed, under an exclusive license agreement with a holder of
a U.S. Patent, a system of processing credit cards for an under served community
of low volume merchants and in-home salespersons consisting of a terminal and a
system of computers, utilizing established communications networks, both wired
and wireless, for processing the data from credit and debit cards.
Terminals are electronic collectors of credit and debit data from the magnetic
stripe on cards. In the case of debit and credit cards the Fonecash system
collects the data from the magnetic stripe when a merchant accepts the card for
payment of goods or services. This data is transmitted to processors where the
validity of the card number is confirmed and the amount of the purchase is
authorized to the cardholder's account. Settlement occurs when the collected and
stored data is sent to the card issuing bank which charges the customer's
account and electronically deposits payment in the merchant's bank account,
usually within 24 - 48 hours.
The Company intends to market a product line and a complete processing system
that is high quality and simple to operate, because the Company, and not the
individual merchant, takes the responsibility for closing the day's receipts and
uploading the data to a third party payment processor, such as Paymenttech,
Visanet, or First Data Resources, for settlement which results in payments being
deposited in the merchants' bank account within 48 hours. Because the Company,
not only provides a terminal, but also, provides a service that facilitates the
collection of daily payment receipts, and transmits these electronic receipts
for payment and deposit of funds to each merchant, the Company believes that it
will be able to compete with the current makers of terminals, who only sell
terminals, but also, able to compete with payment processors who only support
terminals which transmit credit card data to their computers after the merchant
has manually closed out the day's electronic receipts and transmitted the totals
to the payment processor.
The Company intends to establish up to three master distributors in the United
States with the most likely candidates being current Independent Sales
Organizations (ISO's) who are already engaged in the business of distributing
automated credit card processing terminals to established merchants who have
been approved by their sponsoring banks. These ISO's have trained commissioned
sales persons and have an interest in placement of any terminal in the market
regardless of manufacturer.
The Company has never operated under any other name, nor has it ever been
involved with any bankruptcy, receivership or similar proceeding or engaged in
any material reclassification, merger, consolidation, or purchase or sale of
assets.
Results of Operation
General and administrative expenses during the three months ending June 30, 2000
were $115,734 as compared to $97,036 for the same period in 1999, representing
an increase of 19 %. The increase during the six month period ending June 30,
2000 was primarily due to an expansion of the general operations of the Company,
including legal,
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accounting, and printing associated with the filing of various documents with
the Securities and Exchange Commission.
Officers compensation and related benefits during this six months was $28,129
and represented compensation to its president; there were no compensation
expenses for the six months ended June 30,1999.
Balance Sheet Data
The Company's combined cash and cash equivalents totaled $44,220 for the period
ending June 30, 2000. This is a increase of $1,921 from $42,299 for the period
ending June 30, 1999.
The Company does not expect to generate a positive internal cash flow for at
least the next nine months due to expected increases in spending for salaries
and the expected costs of marketing and sales activities.
Property and equipment was valued at $70,657 for the period ending June 30, 2000
and this represents an increase of $28,311 for purchases of additional molds
used the manufacturing of its products in Taiwan. The molds have a useful life
of 3 years and are depreciated on a straight-line basis.
Part II Other Information
Item 1 Legal Proceedings
None
Item 2 Changes in Securities
None
Items 3 Defaults upon Senior Securities
None
Item 4 Submission of Matters to a Vote of Security Holders
None
Item 5 Other Information
On June 19, 2000, the Company signed a Letter of Intent with
Universal Information Technology Limited ("UITL"), a company
registered in Hong Kong, whereby the Company and UITL will created a
new company, Fonecash.com Limited ("Fonecash Hong Kong"). The
Company, in order to acquire 50% of the stock of Fonecash.com
Limited ("Fonecash Hong
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Kong"), will grant to Fonecash.com Hong Kong, an exclusive license
to the Company's proprietary technology, referred to as the
"FoneCash Terminal". The transaction is subject to various terms and
conditions including the execution of a definitive acquisition
agreement, completion of due diligence and shareholder approval.
Item 6 Exhibits and reports on Form 8-K
a. Exhibit Index
b. Reports of Form 8-K
The Company did not file any reports on Form 8-K during the quarter
ended June 30, 2000.
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned who is duly authorized
to sign as an officer and as the principal officer of the Company.
Fonecash, Inc
By: /s/ Daniel E. Charboneau
---------------------------------------------------------
Daniel E. Charboneau, Chairman/CEO
Date: August 14, 2000
----------------------
Exhibit Index
Exhibit No:
10.1 Letter of Intent between FoneCash, Inc (USA) and Universal Information
Technology Limited (HK).
27 Financial Data Schedule
16
