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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 SEPTEMBER 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 September 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 September 30, 2000 and the
related consolidated statements of operations and comprehensive loss,
stockholders' equity and cash flows for the six months and three months
ended September 30, 2000 and September 30, 1999, and for the period from
January 12, 1999 (inception) to September 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 year 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/ Williams & Webster, P.S.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
October 30, 2000
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L.C.M. EQUITY, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
September 30, March 31,
2000 2000
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 41,297 $ 114,279
Prepaids 1,000 -
GST refund receivable 950 -
--------- ---------
Total Current Assets 43,247 114,279
--------- ---------
PLANT, PROPERTY & EQUIPMENT
Computer hardware and software 4,217 -
Accumulated depreciation (438) -
--------- ---------
Total Plant, Property & Equipment 3,779 -
--------- ---------
TOTAL ASSETS $ 47,026 $ 114,279
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,505 $ 1,032
Accrued payroll and employee benefits 841 -
--------- ---------
Total Current Liabilities 2,346 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 (88,999) (20,753)
Accumulated other
comprehensive loss (321) -
--------- ---------
Total Stockholders' Equity 44,680 113,247
--------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 47,026 $ 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 For the 01/12/99
Three Months Ended Six Months Ended (Inception)
09/30/00 09/30/99 09/30/00 09/30/99 09/30/00
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
REVENUES $ - $ - $ - $ - $ -
---------- --------- --------- --------- ---------
OPERATING EXPENSES
General and
administrative 656 - 1,711 - 2,168
Advertising - - 676 - 676
Promotion 3,989 - 3,989 - 3,989
Rent 485 - 1,310 - 1,654
Management fees - - - - 11,632
Wages 13,164 - 21,276 - 21,276
Payroll taxes and
employee benefits 1,559 - 1,981 - 1,981
Depreciation 219 - 438 - 438
Web site maintenance 3,939 - 7,319 - 13,749
Accounting and legal 8,491 - 29,295 - 30,445
Stock transfer fees - - 320 - 1,070
---------- --------- --------- --------- ---------
Total Operating
Expenses 32,502 - 68,315 - 89,078
---------- --------- --------- --------- ---------
LOSS FROM OPERATIONS (32,502) - (68,315) - (89,078)
Other Income (Expenses):
Miscellaneous income - - 39 - 39
Misecellaneous expense (38) - (38) - (38)
Interest income 25 - 68 - 78
---------- --------- --------- --------- ---------
LOSS BEFORE
INCOME TAXES (32,515) - (68,246) - (88,999)
INCOME TAXES - - - - -
---------- --------- --------- --------- ---------
NET LOSS (32,515) - (68,246) - (88,999)
OTHER COMPREHENSIVE
INCOME (LOSS)
Foreign currency
translation 963 - (321) - (321)
---------- --------- --------- --------- ---------
NET COMPREHENSIVE
LOSS $ (31,552) $ - $ (68,567) $ - $ (89,320)
========== ========= ========= ========= =========
NET LOSS PER COMMON
SHARE, BASIC AND
DILUTED $ (0.01) $ - $ (0.01) $ - $ (0.03)
========= ========= ========= ========= =========
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING,
BASIC AND DILUTED 5,150,000 2,500,000 5,150,000 2,500,000 3,114,955
========= ========= ========= ========= =========
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 Accumulated Total
Common Stock Additional During Compre- Stock-
Number Paid-in Development hensive holders'
of Shares Amount Capital 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 - - - - (321) (321)
Net loss for the
period ending
09/30/00 - - - (68,246) - (68,246)
--------- ------- --------- --------- ------ ---------
Balance,
09/30/00
(unaudited) 5,150,000 $ 5,150 $ 128,850 $ (88,999) $ (321) $ 44,680
========= ======= ========= ========= ====== =========
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
For the Six Months Ended (Inception) to
09/30/00 09/30/99 09/30/99
(Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities:
Net loss $ (68,246) $ - $(88,999)
Adjustments to reconcile net
loss to net cash used by
operations:
Depreciation expense 438 - 438
Changes in assets and liabilities:
Increase in GST refund
receivable (950) - (950)
Increase in prepaid expenses (1,000) - (1,000)
Increase in accounts payable
and accrued payroll 1,314 - 2,346
--------- -------- --------
Net cash used in
operating activities (68,444) - (88,165)
--------- -------- --------
Cash flows from investing activities:
Purchase of equipment (4,217) - (4,217)
--------- -------- --------
Net cash used for
investing activities (4,217) - (4,217)
--------- -------- --------
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 (72,661) - 41,618
Other comprehensive
income (loss) (321) - (321)
Cash, beginning of period 114,279 10,600 -
--------- -------- --------
Cash, end of period $ 41,297 $ 10,600 $ 41,297
========= ======== ========
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 Company)
Notes to the Consolidated Financial Statement
September 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 September 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 September
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 six months ended
September 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.
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.
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L.C.M. EQUITY, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statement
September 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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
$31,011 as of September 30, 2000. This account is not insured.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original
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.
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 September 30, 2000, the Company had not engaged in any transactions that
would be considered derivative instruments or hedging activities.
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L.C.M. EQUITY, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statement
September 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 adjustments are needed to the carrying value of
its assets at September 30, 2000.
Compensated Absences
The Company's employees are entitled to paid vacations dependent upon the
length of service. Accordingly, as of September 30, 2000, $841 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 September 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 September 30, 2000, the Company expensed $150 for
advertising, which amount is included in promotion expense.
Income Taxes
At September 30, 2000, the Company had accumulated net operating losses of
approximately $89,000 from inception. 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.
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.
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L.C.M. EQUITY, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statement
September 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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 $68,246 for the
six month period ended September 30, 2000, and has an accumulated deficit of
$88,999 at that date. The Company, being a development stage enterprise, is
currently putting technology in place that 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.
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 September 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 September 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 three to five years. Depreciation
expense for the six-month period ending September 30, 2000 was $428.
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.
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L.C.M. EQUITY, INC.
(A Development Stage Company)
Notes to the Consolidated Financial Statement
September 30, 2000
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 September 30, 2000 and
March 31, 2000, respectively. All shares have equal voting rights, are non-
assessable and have one vote per share. Voting rights are not cumulative
and, therefore, the holders of more than 50% of the common stock could, if
they choose to do so, elect all of the directors of the Company.
There were no stock issuances during the three-month periods ended September
30, 2000 or September 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.
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. The Company's policy has been modified
regarding non-monetary assets and liabilities and items recorded in income
arising from transactions denominated in foreign currencies, which are
translated at average rates of exchange in effect during the reporting
period.
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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 13th day of November, 2000
L.C.M. EQUITY, INC.
(registrant)
By: /s/ Lisa Zumpano
Lisa Zumpano Secretary/Treasurer, and a
member of the Board of Directors
