UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended August 31, 1999.
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 (No fee required) for the transition period from _____ to ______.
Commission file number: 000026965
Replacement Financial, Inc.
-----------------------------
(Name of Small Business Issuer in Its Charter)
Nevada 84-1402775
-------- ------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2432 South Carling Circle, Salt Lake City, Utah 84121
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(Address of Principal Executive Offices)(Zip Code)
801-944-0701
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(Issuer's Telephone Number, Including Area Code)
Securities to be registered under Section 12(b) of the Exchange Act:
Title of Each Class: None
------
Name of each exchange on which registered: N/A
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Securities to be registered under Section 12(g) of the Exchange Act:
Common Stock, $0.001 par value
--------------------------------
(Title of class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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. [X] Yes [ ] No
The number of shares outstanding of the Company's common stock ($0.001
par value), as of October 13, 1999, was 2,200,000 shares.
Total of Sequentially Numbered Pages: 10
<PAGE>
TABLE OF CONTENTS
PART I
ITEM 1. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION. . . . . . . . . . . . . . . . . . . . . . . . 3
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . 4
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2
<PAGE>
PART I
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ITEM 1. FINANCIAL STATEMENTS
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The Company's unaudited financial statements which are attached hereto
as pages F-1 through F-6 include: a) Balance Sheet - August 31, 1999; b)
Statements of Operations - Three Months Ended August 31, 1999 and 1998, and
Inception to August 31, 1999; c) Statements of Stockholders' Equity Inception
to August 31, 1999; d) Statements of Cash Flows - Three Months Ended August
31, 1999 and 1998, and Inception to August 31, 1999; e) Notes to Consolidated
Financial Statements.
In the opinion of management, the accompanying unaudited financial
statements included in this Form 10-QSB reflect all adjustments (consisting
only of normal recurring accruals) necessary for a fair presentation of the
results of operations for the periods presented. The results of operations
for the periods presented are not necessarily indicative of the results to be
expected for the full year.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- ------------------------------------------------------------------------------
Results of Operations
Three Month periods Ended August 31, 1999 and 1998
The Company had no revenue from continuing operations for the
three-month periods ended August 31, 1999 and 1998.
General and administrative expenses for the three month periods ended
August 31, 1999, consisted of general corporate administration, legal and
professional expenses, and accounting and auditing costs. These expenses were
$2,950 for the three-month period ended August 31, 1999. There were no such
costs for the comparable period in 1998.
Interest expense in the three-month period ended August 31, 1999, was
$208 on a note payable to a third party in the principal amount of $5,000 due
March 31, 2000. There was no interest expense during the comparable period in
1998.
As a result of the foregoing factors, the Company realized a net loss of
$3,158 for the three months ended August 31, 1999, as compared to no gain or
loss for the same period in 1998.
3
<PAGE>
Liquidity and Capital Resources
At August 31, 1999, the Company had a working capital deficit of $3,413.
The Company's cash in the amount of $1,795 resulted from a loan from a third
party, which bears interest at the rate of 10% per annum and is due March 31,
2000. The funds were loaned to the Company to fund its revival and finance
its becoming a reporting company under the Securities Exchange Act of 1934.
Management believes that the Company has sufficient cash to meet its
anticipated needs through at least the first calendar quarter of 2000.
However, there can be no assurances to that effect, as the Company has no
revenues and its need for capital may change dramatically if it acquires an
interest in a business opportunity during that period. The Company's current
operating plan is to (i) handle the administrative and reporting requirements
of a public company; and (ii) search for potential businesses, products,
technologies and companies for acquisition. At present, the Company has no
understandings, commitments or agreements with respect to the acquisition of
any business, product, technology or company and there can be no assurance
that the Company will identify any such business, product, technology or
company suitable for acquisition in the future. Further, there can be no
assurance that the Company would be successful in consummating any acquisition
on favorable terms or that it will be able to profitably manage the business,
product, technology or company it acquires. If the Company is unable to
participate in a business venture, it may require additional capital to
continue its search for a business venture and avoid dissolution. In this
event, it is anticipated that the Company will seek extension of its note
payable, as well as additional debt financing. The holder of the note payable
has verbally committed to provide these considerations for a term of at least
twenty-four (24) months from May 31, 1999, or until the Company acquires or
establishes active business operations.
PART II
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ------------------------------------------------------------------------------
(a) Exhibits. Exhibits required to be attached by Item 601 of Regulation
S-B are listed in the Index to Exhibits of this Form 10-QSB, which is
incorporated herein by reference. Included only with the electronic
filing of this report is the Financial Data Schedule for the three-month
period ended August 31, 1999 (Exhibit Ref. No. 27).
(b) Reports on Form 8-K. No reports on Form 8-K have been filed during the
last quarter of the period covered by this report.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed by the undersigned, thereunto duly
authorized, this 14th day of October, 1999.
Replacement Financial, Inc.
/s/ Kari Cunningham
-------------------------------------
Kari Cunningham, 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
dated indicated.
/s/ Kari Cunningham Date: October 14, 1999
- -------------------------------------
Kari Cunningham, President, Secretary, Treasurer and Director
/s/ Brian Ortega Date: October 14, 1999
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Brian Ortega, Director
4
<PAGE>
REPLACEMENT FINANCIAL, INC.
(A Development Stage Company)
Unaudited Balance Sheet
ASSETS
--------
August 31,
1999
-----------
CURRENT ASSETS
Cash $ 1,795
-----------
Total Current Assets 1,795
-----------
TOTAL ASSETS $ 7,795
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------
CURRENT LIABILITIES
Note payable - (Note 5) $ 5,000
Accrued interest - (Note 5) $ 280
-----------
Total Current Liabilities 5,208
-----------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.001 par value,
5,000,000 shares authorized, -0- shares
issued and outstanding --
Common stock, $0.001 par value,
25,000,000 shares authorized, 2,200,000
issued and outstanding 2,200
Deficit accumulated during the development stage (5,613)
-----------
Total Stockholders' equity (Deficit) (3,413)
-----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 1,795
===========
The accompanying notes are an integral part of these financial statements
F-1
<PAGE>
<TABLE>
REPLACEMENT FINANCIAL, INC.
(A Development Stage Company)
Unaudited Statements of Operations
<CAPTION>
From
inception on
For the June 25,
Three Month Ended 1996 Through
August 31, August 31,
1999 1998 1999
---------- ---------- ----------
<S> <C> <C> <C>
NET SALES $ -- $ -- $ --
---------- ---------- ----------
COST OF SALES -- -- --
---------- ---------- ----------
GROSS MARGIN -- -- --
---------- ---------- ----------
EXPENSES
General and administrative 2,950 -- 5,405
---------- ---------- ----------
Interest expense 208 -- 208
---------- ---------- ----------
Total Expenses 3,158 -- 5,613
---------- ---------- ----------
LOSS FROM OPERATIONS $ (3,158) $ -- $ (5,613)
---------- ---------- ----------
NET LOSS $ (3,158) $ -- $ (5,613)
========== ========== ==========
BASIC LOSS PER SHARE (0.00) (0.00)
========== ==========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 2,200,000 2,200,000
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements
F-2
<PAGE>
<TABLE>
REPLACEMENT FINANCIAL, INC.
(A Development Stage Company)
Unaudited Statements of Stockholders' Equity (Deficit)
From Inception on June 25, 1996 through August 31, 1999
<CAPTION>
Deficit
Accumulated
Preferred Stock Common Stock During the
----------------- ----------------- Development
Shares Amount Shares Amount Stage
---------- ------ ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Balance, at inception
on June 25, 1996 -- -- -- -- --
Issuance of common
stock for services at
$0.001 per share -- -- 2,200,000 2,200 --
Net loss from
Inception on June 25,
1996 through May 31,
1997 -- -- -- -- (2,200)
---------- ------ ----------- ------------- -----------
Balance, May 31,
1997 -- -- 2,200,000 2,200 (2,200)
Net loss for the year
ended May 31, 1998 -- -- -- -- (2,200)
---------- ------ ----------- ------------- -----------
Balance, May 31,
1998 -- -- 2,200,000 2,200 (2,200)
Net loss for the year
ended May 31, 1999 -- -- -- -- (255)
---------- ------ ----------- ------------- -----------
Balance, May 31,
1999 -- -- 2,200,000 2,200 (2,455)
Net loss for the
quarter ended August
31, 1999 -- -- -- -- (3,158)
---------- ------ ----------- ------------- -----------
Balance, August 31,
1999 -- -- 2,200,000 2,200 (5,613)
========== ====== =========== ============= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
F-3
<PAGE>
<TABLE>
REPLACEMENT FINANCIAL, INC.
(A Development Stage Company)
Unaudited Statements of Cash Flows
<CAPTION>
From
inception on
For the June 25,
Three Month Ended 1996 Through
August 31, August 31,
1999 1998 1999
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (3,158) $ -- $ (5,613)
Adjustments to reconcile net loss
to net cash used by operating
activities:
Common stock issued for services -- -- 2,200
Accrued Interest 208 208
---------- ---------- ----------
Net Cash Used by Operating
Activities (2,950) (3,205)
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES -- -- --
---------- ---------- ----------
CASH FLOWS FORM FINANCING ACTIVITIES
Proceeds from note payable -- -- 5,000
---------- ---------- ----------
Net Cash Provided by Financing
Activities -- -- 5,000
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH (2,950) -- 1,795
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 4,745 -- --
---------- ---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 1,795 $ -- $ 1,795
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ -- $ -- $ --
Income taxes paid $ -- $ -- $ --
SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
Common stock issued for services $ -- $ -- $ 2,200
</TABLE>
The accompanying notes are an integral part of these financial statements
F-4
<PAGE>
REPLACEMENT FINANCIAL, INC.
(A Development Stage Company)
Notes to the Unaudited Financial Statements
August 31, 1999
NOTE 1 - NATURE OF ORGANIZATION
The financial statements presented are those of Replacement
Financial, Inc. (the Company). The Company was organized under the
laws of the State of Nevada on June 25, 1996. The Company was
organized for the purpose of seeking potential business ventures.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Accounting Method
The financial statements are prepared using the accrual method of
accounting. The Company has elected a May 31 year end.
b. Provision for Taxes
At August 31, 1999, the Company has net operating loss carry forwards
of approximately $5,600 that may be offset against future taxable
income through 2015. No tax benefit has been reported in the
financial statements because the Company believes there is a 50% or
greater chance the carry forwards will expire unused. Accordingly,
the potential tax benefits of the loss carry forwards are offset by a
valuation allowance of the same amount.
c. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
d. 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.
e. Basic Loss Per Share
The computation of basic loss per share of common stock is based on
the weighted average number of shares outstanding during the period
of the financial statements.
<PAGE>
REPLACEMENT FINANCIAL, INC.
(A Development Stage Company)
Notes to the Unaudited Financial Statements
August 31, 1999
NOTE 3 - GOING CONCERN
The Company's financial statements are prepared using generally
accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities
in the normal course of business. However, the Company does not have
significant cash or other material assets, nor does it have an
established source of revenues sufficient to cover its operating
costs and to allow it to continue as a going concern. In the event
that the Company needs additional cash for operational expenses, the
Company will seek an extension of its note payable to a third party.
The third party has indicated his willingness to provide these
considerations until the Company combines with a viable operating
business.
NOTE 4 - FORWARD STOCK SPLIT
On March 10, 1999, the Company approved a 100-for-1 forward stock
split. The forward stock split is reflected on a retroactive basis.
NOTE 5 - NOTE PAYABLE - RELATED PARTY
On April 1, 1999 the Company executed a promissory note to a third
party in consideration of a $5,000 loan. The note is due in full on
March 31, 2000 and accrues interest at 10% per annum. As of August
31, 1999, the Company owed principal of $5,000 plus accrued interest
of $208.33.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
UNAUDITED FINANCIAL STATEMENTS FILED WITH THE COMPANY'S AUGUST 31, 1999
QUARTERLY REPORT ON FORM 10-QSB AND IS ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001090099
<NAME> REPLACEMENT FINANCIAL, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1999
<PERIOD-END> AUG-31-1999
<EXCHANGE-RATE> 1
<CASH> 1,795
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,795
<CURRENT-LIABILITIES> 5,208
<BONDS> 0
0
0
<COMMON> 2,200
<OTHER-SE> (5,613)
<TOTAL-LIABILITY-AND-EQUITY> 1,795
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,950
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 208
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,158)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
