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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10QSB
[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 000-30995
L.C.M. EQUITY, INC.
(Exact name of registrant as specified in its charter)
NEVADA N/A
(State of other jurisdiction (IRS Employer Identification
of incorporation or organization) Number)
1028 Hamilton Street
Suite 404
Vancouver, British Columbia
Canada V6B 2R9
(Address of principal executive offices)
(604) 408-7553
(Registrant's telephone number, including area code)
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 [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of June 30, 2000: 5,150,000
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Board of Directors
L.C.M. Equity, Inc.
Vancouver, British Columbia
Canada
ACCOUNTANT'S REVIEW REPORT
We have reviewed the accompanying consolidated balance sheet of L.C.M.
Equity, Inc. (a development stage company) as of June 30, 2000 and the
related consolidated statements of operations and comprehensive loss,
stockholders' equity and cash flows for the three months ended June 30,
2000 and June 30, 1999, and for the period from January 12, 1999
(inception) to June 30, 2000. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of
interim financial information consists principally of applying
analytical procedures to financial data and making inquiries of persons
responsible for financial and accounting matters. 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, we do not express such an opinion.
Based on our review, we are 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.
The financial statements for the period ended March 31, 2000 were
audited by us and we expressed an unqualified opinion on them in our
report dated June 21, 2000, but we have not performed any auditing
procedures since that date.
As discussed in Note 2, the Company has been in the development stage
since its inception and has no revenues. Realization of a major
portion of the assets is dependent upon the Company's ability to meet
its future financing requirements, and the success of future
operations. These factors raise substantial doubt about the Company's
ability to continue as a going concern. Management's plans regarding
those matters are described in Note 2. The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.
/s/ William & Webster, P.S.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
September 25, 2000
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L.C.M. EQUITY, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
June 30, March 31,
2000 2000
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 74,552 $ 114,279
GST refund receivable 842 -
--------- ----------
Total Current Assets 75,394 114,279
--------- ----------
PLANT, PROPERTY & EQUIPMENT
Computer hardware and software 3,995 -
Accumulated depreciation (219) -
--------- ----------
Total Plant, Property & Equipment 3,776 -
--------- ----------
TOTAL ASSETS $ 79,170 $ 114,279
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ - $ 1,032
Accrued payroll and employee benefits 2,866 -
--------- ----------
Total Current Liabilities 2,866 1,032
--------- ----------
COMMITMENTS AND CONTINGENCIES - -
--------- ----------
STOCKHOLDERS' EQUITY
Common stock, 200,000,000 shares authorized,
$.001 par value; 5,150,000 shares issued and
outstanding 5,150 5,150
Additional paid-in capital 128,850 128,850
Deficit accumulated during development stage (56,804) (20,753)
Accumulated other comprehensive loss (892) -
--------- ----------
Total Stockholders' Equity 76,304 113,247
--------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 79,170 $ 114,279
========= ==========
See accompanying notes and accountant's review report.
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L.C.M. EQUITY, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
From
For the Three Months Ended 01/12/99
June 30, June 30, (Inception)
2000 1999 to 06/30/00
(Unaudited) (Unaudited) (Unaudited)
REVENUES $ - $ - $ -
--------- --------- ---------
OPERATING EXPENSES
General and
administrative 1,375 - 1,832
Advertising 676 - 676
Rent 825 - 1,169
Management fees - - 11,632
Wages 8,112 - 8,112
Payroll taxes and employee
benefits 422 - 422
Depreciation 219 - 219
Web site maintenance 3,380 - 9,810
Accounting and legal 20,804 - 21,954
Stock transfer fees 320 - 1,070
--------- --------- ---------
Total Operating Expenses 36,133 - 56,896
--------- --------- ---------
LOSS FROM OPERATIONS (36,133) - (56,896)
Other Income:
Miscellaneous income 39 - 39
Interest income 43 - 53
--------- --------- ---------
Total Other Income 82 - 92
--------- --------- ---------
LOSS BEFORE INCOME TAXES (36,051) - (56,804)
INCOME TAXES - - -
--------- --------- ---------
NET LOSS (36,051) - (56,804)
OTHER COMPREHENSIVE LOSS
Foreign currency
translation (892) - (892)
--------- --------- ---------
NET COMPREHENSIVE LOSS $ (36,943) $ - $ (57,696)
========= ========= =========
NET LOSS PER COMMON SHARE,
BASIC AND DILUTED $ (0.01) $ nil $ (0.02)
========= ========= =========
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES OUTSTANDING,
BASIC AND DILUTED 5,150,000 2,500,000 2,786,491
========= ========= =========
See accompanying notes and accountant's review report.
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L.C.M. EQUITY, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Deficit
Accumulated
During Other Total
Common Stock Development Compre- Stock-
Number Additional Capital hensive holders'
of Shares Amount Paid-in Stage Loss Equity
Issuance of common
stock in March 1999
for cash at $0.005
per share 2,500,000 $ 2,500 $ 10,000 $ - $ - $ 12,500
Net loss for period
ending March 31, 1999 - - - (1,900) - (1,900)
--------- ------- --------- ----------- ------- ---------
Balance,
March 31, 1999 2,500,000 2,500 10,000 (1,900) - 10,600
Issuance of common
stock in March
2000 for cash at
an average of $0.01
per share 2,650,000 2,650 118,850 - - 121,500
Net loss for year
ending March 31, 2000 - - - (18,853) - (18,853)
--------- ------- --------- ----------- ------ --------
Balance,
March 31, 2000 5,150,000 5,150 128,850 (20,753) - 113,247
Foreign currency
translation loss - - - - (892) (892)
Net loss for the period
ending June 30, 2000 - - - (36,051) - (36,051)
--------- ------- --------- ---------- ------ --------
Balance,
June 30, 2000
(unaudited) 5,150,000 $ 5,150 $ 128,850 $ (56,804) $ (892) $ 76,304
========= ======= ========= ========== ====== ========
See accompanying notes and accountant's review report.
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L.C.M. EQUITY, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
From
01/12/99
(Inception)
For the Three Months Ended to
June 30, June 30, March 31,
2000 1999 2000
(Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities:
Net loss $ (36,051) $ - $ (56,804)
Adjustments to reconcile net
loss to net cash used by operations:
Depreciation expense 219 - 219
Changes in assets and liabilities:
Increase in accounts payable
and accrued payroll 992 - 2,024
---------- -------- -----------
Net cash used in operating
activities (34,840) - (54,561)
---------- -------- -----------
Cash flows from investing activities:
Purchase of equipment (3,995) - (3,995)
---------- -------- -----------
Net cash used for investing
activities (3,995) - (3,995)
---------- -------- -----------
Cash flows from financing activities:
Issuance of stock for cash - - 134,000
---------- -------- -----------
Net cash provided by financing
activities - - 134,000
---------- -------- -----------
Net increase (decrease) in cash (38,835) - 75,444
Other comprehensive income (loss) (892) - (892)
Cash, beginning of period 114,279 10,600 -
---------- -------- -----------
Cash, end of period $ 74,552 $ 10,600 $ 74,552
========== ======== ===========
SUPPLEMENTAL DISCLOSURES:
Interest expense $ - $ - $ -
========== ======== ===========
Income taxes $ - $ - $ -
========== ======== ===========
See accompanying notes and accountant's review report.
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L.C.M. EQUITY, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
June 30,2000
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
L.C.M. Equity, Inc. (herein after "the Company"), was incorporated on
January 12, 1999 under the laws of the State of Nevada primarily for
the purpose of acting as a holding company for subsidiaries that sell
goods or provide services via the internet. As of June 30, 2000, the
Company's principal office is located Vancouver, British Columbia,
Canada.
In March 2000, the Company formed a subsidiary, Uscribble.com Writing
Inc. ("Uscribble"). Uscribble has created a web site that is an
interactive literary site for aspiring amateur writers. L.C.M.
Equity, Inc. and Uscribble.com Writing Inc. are in the development
stage and, at June 30, 2000, had not realized any significant
revenues from their planned operations.
The Company serves as a holding company for its subsidiary's
operations. References herein to the Company include the Company and
it subsidiary, unless the context otherwise requires.
The Company's and its subsidiary's fiscal year-ends are March 31.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to
assist in understanding the Company's financial statements. The
financial statements and notes are representations of the Company's
management, which is responsible for their integrity and objectivity.
These accounting policies conform to generally accepted accounting
principles and have been consistently applied in the preparation of
the financial statements.
Interim Financial Statements
The interim financial statements as of and for the three months ended
June 30, 2000, included herein, have been prepared for the Company
without audit. They reflect all adjustments, which are, in the
opinion of management, necessary to present fairly the results of
operations for these periods. All such adjustments are normal
recurring adjustments. The results of operations for the periods
presented are not necessarily indicative of the results to be
expected for the full fiscal year.
Accounting Method
The Company's financial statements are prepared using the accrual
method of accounting.
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L.C.M. EQUITY, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
June 30,2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Use of Estimates
The process of preparing financial statements in conformity with
generally accepted accounting principles requires the use of
estimates and assumptions regarding certain types of assets,
liabilities, revenues, and expenses. Such estimates primarily relate
to unsettled transactions and events as of the date of the financial
statements. Accordingly, upon settlement, actual results may differ
from estimated amounts.
Development Stage Activities
The Company has been in the development stage since its formation on
January 12, 1999. It is primarily engaged in acting as a holding
company for subsidiaries that sell goods or provide services via the
internet.
Uscribble, the Company's subsidiary, has been in the development
stage since its formation on March 20, 2000. Uscribble has created a
web site that is an interactive literary site for aspiring amateur
writers.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and its subsidiary. All significant intercompany
transactions and balances have been eliminated in consolidation.
Concentration of Risk
The Company maintains three cash accounts in one commercial bank in
Vancouver, British Columbia, Canada. One of the Company's cash
accounts is a business checking account maintained in U.S. dollars,
which totaled $56,499 as of June 30, 2000. This account is not
insured.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity
of three months or less when purchased to be cash equivalents.
Fair Value of Financial Instruments
The carrying amounts for cash, marketable securities, accounts
receivable, accounts payable, notes payable and accrued liabilities
approximate their fair value.
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L.C.M. EQUITY, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
June 30,2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Derivative Instruments
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This
standard establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. It requires
that an entity recognize all derivatives as either assets or
liabilities in the consolidated balance sheet and measure those
instruments at fair value.
At June 30, 2000, the Company had not engaged in any transactions
that would be considered derivative instruments or hedging
activities.
Impaired Asset Policy
In March 1995, the Financial Accounting Standards Board issued a
statement titled "Accounting for Impairment of Long-lived Assets." In
complying with this standard, the Company reviews its long-lived
assets quarterly to determine if any events or changes in
circumstances have transpired which indicate that the carrying value
of its assets may not be recoverable. The Company does not believe
any additional adjustments are needed to the carrying value of its
assets at June 30, 2000.
Compensated Absences
The Company's employees are entitled to paid vacations dependent upon
the length of service. Personal time is allowed to be accrued into
the next year. Accordingly, $324 has been accrued as accrued
vacation pay and included in accrued payroll and employee benefits.
Revenue Recognition
Revenues and cost of revenues are recognized when services or
products are furnished or delivered. At June 30, 2000, no revenues
were realized or recognized by the Company or its subsidiary.
Advertising Expense
Advertising costs are charged to operations when incurred. For the
three-month period ended June 30, 2000, the Company expensed $676 for
advertising.
Income Taxes
At June 30, 2000, the Company had accumulated net operating losses of
approximately $56,000. No provision for taxes or tax benefit has
been reported in the financial statements, as there is not a
measurable means of assessing future profits or losses.
F-8
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L.C.M. EQUITY, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
June 30,2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Basic and Diluted Loss Per Share
Net loss per share was computed by dividing the net loss by the
weighted average number of shares outstanding during the period. The
weighted average number of shares was calculated by taking the number
of shares outstanding and weighting them by the amount of time that
they were outstanding. Basic and diluted loss per share were the
same, as there were no common stock equivalents outstanding.
Reclassifications
Certain amounts from prior periods have been reclassified to conform
with the current period presentation. This reclassification has
resulted in no changes to the Company's accumulated deficit or net
losses presented.
Going Concern
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern.
As shown in the accompanying financial statements, the Company has
generated no revenues since inception. The Company recorded a loss
of $36,973 for the period ended June 30, 2000, and has an accumulated
deficit of $56,804 at that date. The Company, being a development
stage enterprise, is currently putting technology in place which
will, if successful, mitigate these factors which raise substantial
doubt about the Company's ability to continue as a going concern.
The financial statements do not include any adjustments relating to
the recoverability and classification of recorded assets, or the
amounts and classification of liabilities that might be necessary in
the event the Company cannot continue in existence.
Management has established plans designed to increase the sales of
the Company's services. Management intends to seek new capital from
new equity securities issuances that will provide funds needed to
increase liquidity, fund internal growth and fully implement its
business plan.
Year 2000
The Company, like other firms, could be adversely affected if the
computer systems used by it, its suppliers or customers do not
properly process and calculate date-related information and data from
the period surrounding and including January 1, 2000. This is
commonly known as the "Year 2000" issue. Additionally, this issue
could impact non-computer systems and devices such as production
equipment.
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L.C.M. EQUITY, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
June 30,2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Management believes that Year 2000 issues should not adversely
affect the ability of its clients and customers to conduct business
with the Company. As of June 30, 2000, the Company has not
experienced any significant problems. Any costs associated with
Year 2000 compliance will be expensed when incurred.
NOTE 3 - PROPERTY AND EQUIPMENT
At June 30, 2000, the Company's fixed assets consist of computer
hardware and software, which are being depreciated on the straight-
line method over the estimated useful lives of 3 to 5 years.
Depreciation expense for the period ending June 30, 2000 was $219.
Maintenance and repairs are expensed as incurred. Replacements and
betterments are capitalized. The cost and related reserves of assets
sold or retired are removed from the accounts, and any resulting gain
or loss is reflected in results of operations.
NOTE 4 - COMMON STOCK
Upon incorporation, the Company authorized the issuance of
200,000,000 shares of common stock at a par value of $0.001 per
share, of which there were 5,150,000 and 2,500,000 shares outstanding
at March 31, 2000 and 1999, respectively. There were no stock
issuances during the three month periods ended June 30, 2000 or June
30, 1999.
In March 1999, 2,500,000 shares of common stock were sold through a
private placement at a price of $0.005 per share. The offering was
made pursuant to exemptions afforded by Sections (4)2 or 3(b) of the
Securities Act of 1933 and Rule 504 of Regulation D. The private
placement raised a total of $12,500, which proceeds will be used for
general corporate purposes. Of the total shares issued, 1,111,115
shares were issued to officers and directors of the Company.
In March 2000, 2,650,000 shares of common stock were sold through a
private placement at an average price of $0.01 per share. The shares
were issued pursuant to Rule 144 of the 1933 Securities Act and are
restricted as to public transfer for a minimum period of one year.
Of the total shares issued, 2,100,000 shares were issued to officers
and directors of the Company.
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L.C.M. EQUITY, INC.
(A Development Stage Enterprise)
NOTES TO THE FINANCIAL STATEMENTS
June 30,2000
NOTE 5 - TRANSLATION OF FOREIGN CURRENCY
The Company has adopted Financial Accounting Standard No. 52.
Monetary assets and liabilities denominated in foreign currencies are
translated into United States dollars at rates of exchange in effect
at the balance sheet date. Gains or losses are included in income
for the year, except gains or losses relating to long-term debt,
which are deferred and amortized over the remaining term of the debt.
Non-monetary assets and liabilities and items recorded in income
arising from transactions denominated in foreign currencies are
translated at rates of exchange in effect at the date of the
transaction.
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ITEM 6. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The Company has inadequate cash to maintain operations during
the next twelve months. In order to meet its cash requirements the
Company will have to raise additional capital through the sale of
securities or loans. As of the date hereof, the Company has not made
sales of additional securities and there is no assurance that it will
be able to raise additional capital through the sale of securities
in the future. Further, the Company has not initiated any
negotiations for loans to the Company and there is no assurance that
the Company will be able to raise additional capital in the future
through loans. In the event that the Company is unable to raise
additional capital, it may have to suspend or cease operations.
The Company does not intend to conduct any research or
development of its services during the next twelve months other than
as described herein.
The Company does not intend to purchase a plant or significant
equipment.
The Company will hire employees on an as needed basis, however,
the Company does not expect any significant changes in the number of
employees.
The Company expects to earn revenues in the fourth quarter of
2000. There is no assurance, however, that the Company will earn
said revenues as planned.
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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 on this 19th day
of October, 2000
L.C.M. EQUITY, INC.
(registrant)
By: /s/ Lisa Zumpano
Lisa Zumpano Secretary/Treasurer,
and a member of the Board of
Directors
