U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended August 31, 1999
Commission file no. 0-26329
EZ TALK, INC.
------------------------------------------------------------
(Name of Small Business Issuer in its Charter)
Florida 65-0867538
- ------------------------------------ -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
222 Lakeview Avenue, Suite 160-217
West Palm Beach, FL 33401
- ------------------------------------ -----------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (561) 832-5699
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
None None
- ----------------------------------- -----------------------------
Securities to be registered under Section 12(g) of the Act:
Common Stock, $.0001 par value per share
--------------------------------------------------------
(Title of class)
Copies of Communications Sent to:
Donald F. Mintmire
Mintmire & Associates
265 Sunrise Avenue, Suite 204
Palm Beach, FL 33480
Tel: (561) 832-5696 - Fax: (561) 659-5371
<PAGE>
Indicate by Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that 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
--- ---
As of August 31, 1999, there are 2,050,000 shares of voting stock of
the registrant issued and outstanding.
<PAGE>
PART I
Item 1. Financial Statements
INDEX TO FINANCIAL STATEMENTS
Balance Sheets............................................................F-2
Statements of Operations..................................................F-3
Statements of Changes in Stockholders' Equity.............................F-4
Statements of Cash Flows..................................................F-5
Notes to Financial Statements.............................................F-6
F-1
<PAGE>
<TABLE>
<CAPTION>
EZ TALK, INC.
(A Development Stage Enterprise)
Balance Sheets
November 30, 1999 February 28, 1999
-------------------- --------------------
(unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 52,341 $ 58,242
-------------------- --------------------
Total Current Assets 52,341 58,242
-------------------- --------------------
Total Assets $ 52,341 $ 58,242
==================== ====================
IABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accrued expenses $ 3,385 $ 6,885
-------------------- --------------------
Total Current Liabilities 3,385 6,885
-------------------- --------------------
Total Liabilities 3,385 6,885
-------------------- --------------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.0001 par value, authorized
10,000,000 shares; none issued 0 0
Common stock, $0.0001 par value, authorized
50,000,000 shares; 2,050,000
issued and outstanding 205 205
Additional paid in capital 59,895 59,895
Deficit accumulated during the development stage (11,144) (8,743)
-------------------- --------------------
Total Stockholders' Equity 48,956 51,357
-------------------- --------------------
Total Liabilities and Stockholders' Equity $ 52,341 $ 58,242
==================== ====================
</TABLE>
The accompanying notes are an integral part of the financial statements
F-2
<PAGE>
<TABLE>
<CAPTION>
EZ TALK, INC.
(A Development Stage Enterprise)
Statements of Operations
(Unaudited)
For the Nine From June 10, 1998 From June 10, 1998
Months Ended (Inception) Through (Inception) Through
November 30, 1999 November 30, 1998 November 30, 1999
-------------------- ---------------------- ---------------------
<S> <C> <C> <C>
Revenues $ 0 $ 0 $ 0
-------------------- ---------------------- ---------------------
Expenses
General and administrative expenses 265 1,258 2,408
Consulting fees - related party 0 0 100
Professional fees 2,136 0 5,251
Professional fees - related party 0 0 3,385
-------------------- ---------------------- ---------------------
Total expenses 2,401 1,258 11,144
-------------------- ---------------------- ---------------------
Net loss $ (2,401)$ (1,258)$ (11,144)
==================== ====================== =====================
Net loss per weighted average share, basic $ (.00)$ (.00)$ (.01)
==================== ====================== =====================
Weighted average number of shares 2,050,000 1,906,358 2,003,801
==================== ====================== =====================
</TABLE>
The accompanying notes are an integral part of the financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
EZ TALK, INC.
(A Development Stage Enterprise)
Statements of Changes in Stockholders' Equity
Deficit
Accumulated
Additional During the Total
Number of Common Paid-in Development Stockholders'
Shares Stock Capital Stage Equity
-------------- ----------- ------------ -------------- ---------------
<S> <C> <C> <C> <C> <C>
BEGINNING BALANCE, June 10, 1998 (Inception) 0 $ 0 $ 0 $ 0 $ 0
June 10, 1998 - services ($0.0001/sh) 1,000,000 100 0 0 100
June 15, 1998 - cash ($0.01/sh) 500,000 50 4,950 0 5,000
July 15, 1998 - cash ($0.01/sh) 500,000 50 4,950 0 5,000
September 15, 1998 - cash ($1.00/sh) 50,000 5 49,995 0 50,000
servicecashsssssssssssssssss ssssss (
Net loss 0 0 0 (8,743) (8,743)
-------------- ----------- ------------ -------------- ---------------
BALANCE, February 28, 1999 2,050,000 $ 205 $ 59,895 $ (8,743)$ 51,357
-------------- ----------- ------------ -------------- ---------------
Net loss 0 $ 0 $ 0 $ (2,401)$ (2,401)
-------------- ----------- ------------ -------------- ---------------
BALANCE, November 30, 1999 (Unaudited) 2,050,000 $ 205 $ 59,895 $ (11,144)$ 48,956
============== =========== ============ ============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
EZ TALK, INC.
(A Development Stage Enterprise)
Statements of Cash Flows
(Unaudited)
For the Nine Months From June 10, 1998 From June 10, 1998
Ended (Inception) Through (Inception) Through
November 30, 1999 November 30, 1998 November 30, 1999
----------------------- --------------------- ---------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,401)$ (1,258)$ (11,144)
Adjustments to reconcile net loss to net cash used for
operating activities
Stock issued in lieu of cash - related parties 0 0 100
Change in assets and liabilities
Increase (decrease) in accrued expenses (3,500) 0 3,385
----------------------- --------------------- ---------------------
Net cash used by operating activities (5,901) (1,258) (7,659)
----------------------- --------------------- ---------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 0 60,000 60,000
----------------------- --------------------- ---------------------
Net cash provided by financing activities 0 60,000 60,000
----------------------- --------------------- ---------------------
Net increase (decrease) in cash (5,901) 58,742 52,341
CASH, beginning of period 58,242 0 0
----------------------- --------------------- ---------------------
CASH, end of period $52,341 $58,742 $52,341
======================= ===================== =====================
</TABLE>
The accompanying notes are an integral part of the financial statements
F-5
<PAGE>
EZ TALK, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
(Information with respect to the nine months
ended November 30, 1999 is unaudited)
(1) Summary of Significant Accounting Principles
The Company EZ Talk, Inc. is a Florida chartered development stage
corporation which conducts business from its headquarters in Palm
Beach, Florida. The Company was incorporated on June 10, 1998.
The Company has not yet engaged in its expected operations. The
Company's future operations will be to market a hands-free speaker
system for telephones to various consumer groups. Current activities
include raising additional equity and negotiating with potential key
personnel and facilities.
There is no assurance that any benefit will result from such
activities.
The financial statements have been prepared in conformity with
generally accepted accounting principles. The financial statements for
the nine months ended November 30, 1999 and for the period from June
10, 1998 (Inception) through November 30,1998 include all adjustments
which in the opinion of management are necessary for fair presentation,
and such adjustments are of a normal and recurring nature. In preparing
the financial statements, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
as of the date of the statements of financial condition and operations
for the period then ended. Actual results may differ significantly from
those estimates.
The following summarize the more significant accounting and reporting
policies and practices of the Company:
a) Start-up costs Costs of start-up activities, including organization
costs, are expensed as incurred, in accordance with Statement of
Position (SOP) 98-5.
b) Net loss per share Basic net loss per weighted average share is
computed by dividing the net loss by the weighted average number of
common shares outstanding during the period.
(2) Stockholders' Equity The Company has authorized 50,000,000 shares of
$0.0001 par value common stock and 10,000,000 shares of $0.0001 par
value preferred stock. Rights and privileges of the preferred stock are
to be determined by the Board of Directors prior to issuance. On June
10, 1998, the Company issued 850,000 founders shares to its president
for the value of services rendered in connection with the organization
of the Company. On the same date, the Company issued 150,000 founders
shares to its secretary/treasurer and director for the value of
consulting services rendered in connection with the organization of the
Company. On June 15, 1998, the Company issued 500,000 shares of common
stock at $0.01 per share for $5,000 in cash. On July 15, 1998, the
Company issued 500,000 shares of common stock at $0.01 per share for
$5,000. On September 15, 1998, the Company issued 50,000 shares of
common stock at $1.00 per share for $50,000 in cash.
(3) Income Taxes Deferred income taxes (benefits) are provided for certain
income and expenses which are recognized in different periods for tax
and financial reporting purposes. The Company has net operating loss
carry-forwards for income tax purposes of approximately $11,144, with
$8,743 expiring in 2019, and $2,401 expiring in 2020.
The amount recorded as deferred tax assets as of November 30, 1999 is
approximately $2,100, which represents the amount of tax benefit of the
loss carryforward. The Company has established a 100% valuation
allowance against this deferred tax asset, as the Company has no
history of profitable operations.
F-6
<PAGE>
EZ TALK, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
(4) Going Concern As shown in the accompanying financial statements, the
Company incurred a net loss of $11,144 for the period from June 10,
1998 (Inception) through November 30, 1999. The ability of the Company
to continue as a going concern is dependent upon commencing operations
and obtaining additional capital and financing. The financial
statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern. The Company is
currently seeking financing to allow it to begin its planned
operations.
F-7
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
General
Since its inception, the Company has conducted minimal business
operations except for organizational and capital raising activities. The Company
has not realized significant revenues since its inception due to the fact that
it has generally has been inactive, having conducted no business operations
except organizational and fund raising activities since its inception. As a
result, from inception (June 10, 1998) through November 30, 1999, the Company
had no income. Cumulative operating expenses as of November 30, 1999 were
$11,144. The Company proposes to engage in the business of distributing
hands-free portable phone speaker systems..
Dervaes decided to pursue the distribution and sale of a hands-free
portable phone speaker business via the Company because of the belief that his
many years of business experience, when combined with Ms. Johanna Bonnier's
experience in the marketing and sales of consumer products, will allow them to
develop a successful marketing and distribution company which will have the
advantages of, among other things, greater availability of capital and potential
for growth through the vehicle of a public company as compared to a
privately-held company. The time required to be devoted by Dervaes and Bonnier,
to manage the day-to-day affairs of the Company is presently estimated to be
approximately five to ten hours per week. This time commitment is expected to
increase at such time, if ever, as EZT obtains sufficient funding with which to
commence the search for a corporate headquarters.
After obtaining a license to distribute a hands-free portable phone
speaker system the Company will be dependent upon Mr. Dervaes to develop the
client base with whom to place distribution agreements. Mr. Dervaes has
extensive business experience and has managed his own business for the last two
(2) years. While Mr. Dervaes has been successful in the past, there can be no
assurance that he will be successful in building the client base necessary for
the successful operation of the Company.
Plan of Operation
If the Company is unable to generate sufficient revenue from operations
to implement its expansion plans, management intends to explore all available
alternatives for debt and/or equity financing, including but not limited to
private and public securities offerings.
Mr. Dervaes, at least initially, will be solely responsible for
obtaining a license to distribute a hands-free portable phone speaker system .
However, at such time, if ever, as sufficient operating capital becomes
available, Mr. Dervaes expects to employ additional staffing and marketing
personnel. In addition, the Company expects to continuously engage in market
research in order to monitor new market trends, seasonality factors and other
critical information deemed relevant to EZT's business.
The Company's objective is to become a dominant market leader in the
sales of hands-free portable phone speaker systems, beginning in Palm Beach
County, Florida, (the Southeastern United States), expanding to New York City
<PAGE>
(the Northeastern United States), and then to Los Angeles (Far West United
States) and, eventually throughout the entire United States, thereafter into
selected geographical territories world-wide. To achieve this objective, and
assuming that sufficient operating capital becomes available, the Company
intends to: (i) provide a comprehensive hands-free portable phone speaker
packages with associated financing programs to both individuals and bulk
purchasers and, (ii) focus initially on Palm Beach County (the Southeastern) and
New York City(Northeastern) United States markets which have high growth
opportunities.
Due to the limited capital available to the Company, the principal
risks during its initial marketing phase are that the Company is dependent upon
Mr. Dervaes' efforts, that Mr. Dervaes lacks experience and that the Company
will not be able to establish a sufficiently profitable client base to establish
the business.
For the period from June 10, 1998 (Inception) through November 30,
1999, the Company had a cumulative loss from operations aggregating $11,144.
Financial Condition, Capital Resources and Liquidity
The Company has generally been inactive, having conducted no business
operations except organizational and fund raising activities since its
inception. To date the Company has no products, no customers, no revenues, and a
history of losses. EZT received gross proceeds in the amount of $60,000 from the
sale of 1,050,000 shares of common stock, $.0001 par value per share (the
"Common Stock"), in two(2) offerings conducted pursuant to Section 3(b) of the
Securities Act of 1933, as amended (the "Act"), and Rule 504 of Regulation D
promulgated thereunder ("Rule 504"). These offerings were made in the State of
New York and Florida. The Company undertook its first offering of shares of
Common Stock pursuant to Rule 504 on June 15, 1998 and its second offering of
shares of Common Stock pursuant to Rule 504 on September 15, 1998. A
Confidential Offering Circular was used in connection with these offerings, and
a summary of the business plan of the Company was included with each Offering
Circular.
The Company has no potential capital resources from any outside sources
at the current time. It is anticipated that the Company will require only
nominal capital to maintain the corporate viability of the Company. Any
additional capital needed will most likely be provided by the Company's existing
shareholders or its officers and directors.
The ability of the Company to continue as a going concern is dependent
upon the availability of obtaining additional capital and financing from such
shareholders and directors.
Net Operating Losses
The Company has net operating loss carryforwards for income tax
purposes of $11,144 with $8,743 expiring in 2019, and $2,401 expiring in 2020.
Until the Company's current operations begin to produce earnings, it is unclear
whether the Company can utilize such carryforwards.
Year 2000 Compliance
The Year 2000 issue is the result of potential problems with computer
systems or any equipment with computer chips that use dates where the date has
been stored as just two digits (e.g. 98 for 1998). On January 1, 2000, any
<PAGE>
clock or date recording mechanism including date sensitive software which uses
only two digits to represent the year, may recognize the date using 00 as the
year 1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruption of operations, including among other things,
a temporary inability to process transactions, send invoices, or engage in
similar activities.
The Company did not experience a materially negative impact during the
Year 2000 date switch-over and it has determined that there will be minimal
impact if any to its business, operations or financial condition since all of
the internal software to be developed and utilized by the Company will be and
has been upgraded to support Year 2000 versions.
There can be no assurance, however, that the systems of other companies
on which the Company's systems may have to rely also will be timely converted or
that any such failure to convert by another company would not have an adverse
affect on the Company's systems. Currently the Company does not rely on other
systems that might have an adverse affect on any Company systems and does not
anticipate any such reliance in the near future.
Forward-Looking Statements
This Form 10-QSB includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. All statements, other
than statements of historical facts, included or incorporated by reference in
this Form 10-QSB which address activities, events or developments which the
Company expects or anticipates will or may occur in the future, including such
things as future capital expenditures (including the amount and nature thereof),
finding suitable merger or acquisition candidates, expansion and growth of the
Company's business and operations, and other such matters are forward-looking
statements. These statements are based on certain assumptions and analyses made
by the Company in light of its experience and its perception of historical
trends, current conditions and expected future developments as well as other
factors it believes are appropriate in the circumstances. However, whether
actual results or developments will conform with the Company's expectations and
predictions is subject to a number of risks and uncertainties, general economic
market and business conditions; the business opportunities (or lack thereof)
that may be presented to and pursued by the Company; changes in laws or
regulation; and other factors, most of which are beyond the control of the
Company. Consequently, all of the forward-looking statements made in this Form
10-QSB are qualified by these cautionary statements and there can be no
assurance that the actual results or developments anticipated by the Company
will be realized or, even if substantially realized, that they will have the
expected consequence to or effects on the Company or its business or operations.
The Company assumes no obligations to update any such forward-looking
statements.
PART II
Item 1. Legal Proceedings.
The Company knows of no legal proceedings to which it is a party or to
which any of its property is the subject which are pending, threatened or
contemplated or any unsatisfied judgments against the Company.
<PAGE>
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults in Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted during the quarter ending November 30, 1999,
covered by this report to a vote of the Company's shareholders, through the
solicitation of proxies or otherwise.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits required to be filed herewith by Item 601 of Regulation
S-B, as described in the following index of exhibits, are incorporated
herein by reference, as follows:
Exhibit No. Description
- ----------- --------------------------------
3(i).1 Articles of Incorporation of EZT effective June 10, 1998
3(ii).1 Bylaws of EZT
27.1 * Financial Data Schedule
- ----------------
(1) Incorporated herein by reference to the Company's Registration Statement on
Form 10-SB.
* Filed herewith
(b) No Reports on Form 8-K were filed during the quarter ended August 31,
1999.
SIGNATURES
----------
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
EZ Talk, Inc.
(Registrant)
Date: January 13, 2000 By: /s/ A. Rene Dervaes, Jr.
------------------------------
A Rene Dervaes, Jr., President
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
Date Signature Title
---- --------- -----
January 13, 2000 By: /s/ A. Rene Dervaes, Jr. President & Director
---------------------------
A. Rene Dervaes, Jr.
January 13, 2000 By: /s/ Johanna Bonnier Secretary and Treasurer
---------------------------
Johanna Bonnier
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001088399
<NAME> EZ TALK, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. Currency
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Feb-28-1999
<PERIOD-START> Mar-01-1999
<PERIOD-END> Nov-30-1999
<EXCHANGE-RATE> 1
<CASH> 52,341
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 52,341
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 52,341
<CURRENT-LIABILITIES> 3,385
<BONDS> 0
0
0
<COMMON> 205
<OTHER-SE> 48,956
<TOTAL-LIABILITY-AND-EQUITY> 52,341
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,401
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,401)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,401)
<EPS-BASIC> (.00)
<EPS-DILUTED> 0
</TABLE>
