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 February 29, 2000.
[ ] 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 88-0408426
-------- ------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
7432 South Carling Circle, Salt Lake City, Utah 84121
-------------------------------------------------------------
(Address of Principal Executive Offices)(Zip Code)
801-274-6415
--------------
(Issuer's Telephone Number, Including Area Code)
Not Applicable
----------------
(Former name, address and fiscal year, if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or
for such shorter period that the issuer was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Check whether the registrant has filed all documents and reports required
to be filed by Sections 12, 13, or 15(d) of the Exchange Act subsequent to
the distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of the Company's common stock ($0.001
par value), as of April 7, 2000 was 22,000,000 shares.
Total of Sequentially Numbered Pages: 13
Index to Exhibits on Page: 6
<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 5. OTHER INFORMATION . . . . . . . .. . . . . . .. . . . . . . . . 4
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . .. . . . . . . . . 5
SIGNATURES. . . . . . . . . . . . . . . . . . . . .. . . . . . . . . 5
2
<PAGE>
PART I
- ---------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS
- ---------------------------------------------------------------------------
The Company's unaudited financial statements, which are attached hereto
as pages F-7 through F-13, include: a) Balance Sheet - February 29, 2000 and
May 31, 1999; b) Statements of Operations - Three Months Ended February 29,
2000 and 1999; c) Statements of Operations - Nine Months Ended February 29,
2000 and 1999 and from Inception on June 25, 1996 through February 29, 2000;
c) Statements of Stockholders' Equity from Inception on June 25, 1996 through
February 29, 2000; d) Statements of Cash Flows - Nine Months Ended February
29, 2000 and 1999, and from Inception on June 25, 1996 through February 29,
2000; e) Notes to UnauditedFinancial Statements.
In the opinion of management, the accompanying unaudited financial
statements included in this quarterly report filed on 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.
- ---------------------------------------------------------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
- ---------------------------------------------------------------------------
Results of Operations
- ----------------------
Three Month Periods Ended February 29, 2000 and 1999
The Company had no revenue from continuing operations for the three
month periods ended February 29, 2000 and 1999.
General and administrative expenses for the three month period ended
February 29, 2000 consisted of general corporate administration, legal and
professional expenses, and accounting and auditing costs. These expenses were
$3,326 for the three month period ended February 29, 2000. There were no such
costs for the comparable period in 1999.
Interest expense in the three month period ended February 29, 2000, was
$292 on two notes payable to a third party in the principal amounts of $5,000
and $10,000 due March 31, 2000 and January 1, 2001 respectively. 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
$3,618 for the three months ended February 29, 2000 as compared to no gain or
loss for the same period in 1999.
Nine Month Periods Ended February 29, 2000 and 1999
The Company had no revenue from continuing operations for the nine month
periods ended February 29, 2000 and 1999 or from Inception on June 25, 1996 to
February 29, 2000.
General and administrative expenses for the nine month period ended
February 29, 2000, consisted of general corporate administration, legal and
professional expenses, and accounting and auditing costs. These expenses were
$10,896 for the nine month period ended February 29, 2000 and $13,351 from
Inception on June 25, 1996 to February 29, 2000. There were no such costs for
the comparable period in 1999.
3
<PAGE>
Interest expense in the nine month period ended February 29, 2000, was
$625 and from Inception on June 25, 1996 to February 29, 2000 was $625.
Interest was accrued on a two notes payable to a third party in the principal
amounts of $5,000 and $10,000 respectively: $5,000 is due March 31, 2000 and
$10,000 is due January 1, 2001. There was no interest expense during the
comparable period in 1999.
As a result of the foregoing factors, the Company realized a net loss of
$11,521 for the nine months ended February 29, 2000 as compared to no gain or
loss for the same period in 1999 and a net loss of $13,976 from Inception on
June 25, 1996 to February 29, 2000.
Liquidity and Capital Resources
- -------------------------------
At February 29, 2000, the Company had a working capital deficit of
$11,776. The Company's cash in the amount of $3,849 resulted from two loans
from a third party, which bear interest at the rate of 10% per annum. The
loans in the amounts of $5,000 and $10,000 are due March 31, 2000 and January
1, 2001 respectively. 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 2001. 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 an acquisition or
reorganization. At present, the Company has no understandings, commitments or
agreements with respect to the acquisition or reorganization 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
an acquisition or a reorganization in the future. Further, there can be no
assurance that the Company would be successful in consummating any acquisition
or reorganization 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 notes payable, as well as additional debt financing. The
holder of the notes 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 5. OTHER INFORMATION
- ---------------------------------------------------------------------------
On November 11, 1999, the Company received a cash infusion of $10,000
from a third party. In connection with this cash infusion, the Company
executed a note to the third party in consideration of the $10,000 loan. The
note is due in full on January 1, 2001 and accrues interest at 10% per annum.
Under the terms of the note, interest does not begin accruing until January 1,
2000.
4
<PAGE>
On November 15, 1999, the Company's board of directors approved: 1) a
10-for-one forward stock split on the Company's authorized common stock,
$0.001 par value; and 2) a 10-for-one forward stock split on the Company's
issued and outstanding common stock, $0.001 par value, with any fractional
shares rounded up to the nearest whole number ("forward stock split"). The
forward stock split became effective January 10, 2000, the date that the
Certificate of Amendment of Articles of Incorporation of the Company was filed
with the Secretary of State, State of Nevada. As a result of the forward
stock split, instead of the Company having 25,000,000 shares of common stock
authorized and 2,200,000 shares of common stock issued and outstanding, it now
has 250,000,000 shares of common stock authorized and 22,000,000 shares of
common stock issued and outstanding. Each share of common stock held of
record as of the Record Date, November 15, 1999, shall be increased to ten
shares of the same class.
- ---------------------------------------------------------------------------
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 nine month
period ended February 29, 2000 (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 ?th day of April, 2000.
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: April ?, 2000
- -------------------------------------
Kari Cunningham, President, Secretary, Treasurer and Director
/s/ Brian Ortega Date: April ?, 2000
- -------------------------------------
Brian Ortega, Director
5
<PAGE>
INDEX TO EXHIBITS
---------------------
SEC Ref Page
No. No. Description
- ------- ---- -----------
3(i)(a) * Articles of Incorporation of the Company, filed with
the State of Nevada on June 25, 1996.
3(i)(b) * Certificate of Amendment of Articles of Incorporation,
filed with the State of Nevada on April 26, 1999.
3(i)(c) * Certificate of Amendment of Articles of Incorporation,
filed with the State of Nevada on August 19, 1999.
3(i)(d) ** Certificate of Amendment of Articles of Incorporation,
filed with the State of Nevada on January 10, 2000.
3(ii) * Bylaws of the Company.
10(a) ** Promissory Note dated April 1, 1999 executed by the
Company.
10(b) ** Promissory Note dated January 1, 2000 executed by the
Company.
27 *** Financial Data Schedule for the nine month period ended
February 29, 2000.
* The listed exhibits are incorporated herein by this reference to the
Registration Statement on Form 10-SB, filed by the Company with the
Securities and Exchange Commission on August 6, 1999.
** The listed exhibits are incorporated herein by this reference to the
Quarterly Report on Form 10-QSB for the quarter ended November 30, 1999,
filed by the Company with the Securities and Exchange Commission on
January 13, 2000.
*** The Financial Data Schedule is presented only in the electronic filing
with the Securities and Exchange Commission.
6
<PAGE>
REPLACEMENT FINANCIAL, INC.
(A Development Stage Company)
Balance Sheet
ASSETS
--------
February 29, May 31,
2000 1999
(Unaudited) (Audited)
----------- -----------
CURRENT ASSETS
Cash $ 3,849 $ 4,745
----------- -----------
Total Current Assets 3,849 4,745
----------- -----------
TOTAL ASSETS $ 3,849 $ 4,745
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------
CURRENT LIABILITIES
Note payable - (Note 5) $ 15,000 $ 5,000
Accrued interest - (Note 5) 625 --
----------- -----------
Total Current Liabilities $ 15,625 $ 5,000
----------- -----------
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 and 250,000,000 shares
authorized May 31, 1999 and
February 29, 2000 respectively and
2,200,000 and 22,000,000 shares issued
and outstanding May 31, 1999 and
February 29, 2000 respectively 22,000 2,200
Additional paid-In capital (19,800) --
Deficit accumulated during the
development stage (13,976) (2,455)
----------- -----------
Total Stockholders' equity (Deficit) $ (11,776) $ (255)
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 3,849 $ 4,745
=========== ===========
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
REPLACEMENT FINANCIAL, INC.
(A Development Stage Company)
Unaudited Statements of Operations
For the
Three Months Ended
February 29,
2000 1999
---------- ----------
NET SALES $ -- $ --
---------- ----------
COST OF SALES -- --
---------- ----------
GROSS MARGIN -- --
---------- ----------
EXPENSES
General and administrative 3,326 --
---------- ----------
Interest expense 292 --
---------- ----------
Total Expenses 3,618 --
---------- ----------
LOSS FROM OPERATIONS $ (3,618) $ --
---------- ----------
NET LOSS $ (3,618) $ --
========== ==========
BASIC LOSS PER SHARE $ (0.00) $ (0.00)
========== ==========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 22,000,000 2,200,000
========== ==========
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
REPLACEMENT FINANCIAL, INC.
(A Development Stage Company)
Unaudited Statements of Operations
From
Inception on
For the June 25,
Nine Months Ended 1996 Through
February 29, February 29,
2000 1999 2000
---------- ---------- ----------
NET SALES $ -- $ -- $ --
---------- ---------- ----------
COST OF SALES -- -- --
---------- ---------- ----------
GROSS MARGIN -- -- --
---------- ---------- ----------
EXPENSES
General and administrative 10,896 -- 13,351
---------- ---------- ----------
Interest expense 625 -- 625
---------- ---------- ----------
Total Expenses 11,521 -- 13,976
---------- ---------- ----------
LOSS FROM OPERATIONS $ (11,521) $ -- $ (13,976)
---------- ---------- ----------
NET LOSS $ (11,521) $ -- $ (13,976)
========== ========== ==========
BASIC LOSS PER SHARE $ (0.00) $ (0.00)
========== ==========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 22,000,000 2,200,000
========== ==========
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE>
<TABLE>
REPLACEMENT FINANCIAL, INC.
(A Development Stage Company)
Unaudited Statements of Stockholders' Equity (Deficit)
From Inception on June 25, 1996 through February 29, 2000
<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)
10-for-one forward
stock split
January 10, 2000 -- -- 19,800,000 19,800 --
Net loss for the
nine months ended
February 29, 2000 -- -- -- -- (11,521)
------------ ------------ ------------ ------------ ------------
Balance, February 29,
2000 -- -- 22,000,000 22,000 (13,976)
============ ============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE>
REPLACEMENT FINANCIAL, INC.
(A Development Stage Company)
Unaudited Statements of Cash Flows
From
Inception on
For the June 25,
Nine Months Ended 1996 Through
February 29, February 29,
2000 1999 2000
---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (11,521) $ -- $ (13,976)
Adjustments to reconcile net loss
to net cash used by operating
activities:
Common stock issued for services -- -- 2,200
Accrued Interest 625 625
---------- ---------- ----------
Net Cash Used by Operating
Activities (10,896) (11,151)
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES -- -- --
---------- ---------- ----------
CASH FLOWS FORM FINANCING ACTIVITIES
Proceeds from note payable 10,000 -- 15,000
---------- ---------- ----------
Net Cash Provided by Financing
Activities 10,000 -- 15,000
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH (896) -- 3,849
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 4,745 -- --
---------- ---------- ----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 3,849 $ -- $ 3,849
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid $ -- $ -- $ --
Income taxes paid $ -- $ -- $ --
SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
Common stock issued for services $ -- $ -- $ 2,200
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE>
REPLACEMENT FINANCIAL, INC.
(A Development Stage Company)
Notes to the Unaudited Financial Statements
February 29, 2000
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 February 29, 2000, the Company has net operating loss carry forwards of
approximately $14,000 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.
F-12
<PAGE>
REPLACEMENT FINANCIAL, INC.
(A Development Stage Company)
Notes to the Unaudited Financial Statements
February 29, 2000
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 on its
$.001 par value authorized and outstanding common shares. The forward stock
split is reflected on a retroactive basis.
On November 15, 1999, the Company's board of directors approved a 10-for-1
forward stock split on its $.001 par value authorized and outstanding common
shares. The forward stock split became effective January 10, 2000 and
resulted that instead of having 2,200,000 shares outstanding, it now has
250,000,000 and 22,000,000 common shares authorized and outstanding
respectively. As no fractional shares have been issued, no provision has been
made for fractional shares. As a result of the forward split, the Company
credited $19,800 to Common Stock and charged $19,800 against Addition Paid-In
Capital.
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.
On November 11, 1999 the Company received a cash infusion of $10,000 from the
same third party mentioned above. In connection with this cash infusion, the
Company executed a promissory note to the third party in consideration of the
$10,000 loan. The note is due in full on January 1, 2001 and accrues interest
at 10% per annum. Under terms of the note, interest does not begin accruing
until January 2000.
As of February 29, 2000, the Company owed principal of $15,000 plus accrued
interest of $625.00 on these two notes.
F-13
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001090099
<NAME> REPLACEMENT FINANCIAL, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-START> JUN-01-1999
<PERIOD-END> FEB-29-2000
<EXCHANGE-RATE> 1
<CASH> 3,849
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,849
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,849
<CURRENT-LIABILITIES> 15,625
<BONDS> 0
0
0
<COMMON> 22,000
<OTHER-SE> (11,776)
<TOTAL-LIABILITY-AND-EQUITY> 3,849
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,326
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 292
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,618)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
