U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
Commission File Number: 001-15241
Famous Internet Mall, Inc.
--------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 33-0786959
- --------------------------- ----------------------
(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
11974 Avenida Consentido, San Diego, California 92128
--------------------------------------------------------------
(Address of principal executive offices including zip code)
(619) 675-4449
--------------------------
(Issuer's telephone number)
Check whether the issuer (1) 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
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 September 30, 1999, the Registrant had 5,000,000 shares of
common stock, no par value per share, outstanding.
Transitional Small Business Disclosure Format (check one): Yes__ No X
<PAGE>
FAMOUS INTERNET MALL, INC.
--------------------------
(Formerly Mall of Fame, Inc.)
(A DEVELOPMENT STAGE COMPANY)
Index to Financial Statements
Balance sheets, September 30, 1999 and
December 31, 1998.............................................. F-1
Statements of operations, for the nine months
ended September 30, 1999,
February 5, 1998 (inception) through December 31, 1998 and
February 5, 1998 (inception) through September 30, 1999......... F-2
Statement of shareholders' equity, from February 5, 1998(inception)
through September 30, 1999. .................................... F-3
Statements of cash flows, for the nine months ended September 30,
1999, February 5, 1998 (inception) through December 31, 1998 and
February 5, 1998 (inception) through September 30, 1999......... F-4
Summary of significant accounting policies......................... F-7
Notes to financial statements...................................... F-9
F-1
<PAGE>
FAMOUS INTERNET MALL, INC.
(Formerly Mall of Fame, Inc.)
--------------------------
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
September 30, December 31,
1999 1998
---- ----
ASSETS
CASH .................................. $ 1,621 $3,546
DUE FROM OFFICER (Note B) ............. 918 918
OTHER RECEIVABLES ..................... 405 395
FURNITURE AND EQUIPMENT, less accumulated
depreciation of $10,346 and $6,375,
respectively (Note D) 14,936 18,907
-------- ------
$ 17,880 $ 23,766
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES
Accounts payable .................... $ -- $ 630
Accrued payroll taxes .............. 3,336 1,836
-------- --------
TOTAL LIABILITIES 3,336 2,466
-------- --------
COMMITMENTS (Note H).................. -- --
SHAREHOLDERS' EQUITY (Note F)
Common stock, $.001 par value; 50,000,000
shares authorized; 5,000,000 shares issued
and outstanding 5,000 5,000
Additional paid-in capital ......... 96,000 96,000
Deficit accumulated during
development stage. (86,456) (79,700)
-------- --------
TOTAL SHAREHOLDERS' EQUITY 14,544 21,300
-------- --------
$ 17,880 $23,766
======== ========
See accompanying summary of significant accounting policies and
notes to the financial statements.
F-2
<PAGE>
FAMOUS INTERNET MALL, INC.
--------------------------
(Formerly Mall of Fame, Inc.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
February 5, February 5,
1998 1998
Nine Months (Inception) (Inception)
Ended Through Through
September 30, December 31, September 30,
1999 1998 1999
---- ---- ----
OPERATING EXPENSES
Salaries and payroll taxes . $ -- $ 12,918 $ 12,918
Internet and web site development,
related party (Note B) .... -- 6,500 6,500
Internet and web site
development ........... -- 20,000 20,000
Consulting ............. -- 20,000 20,000
Legal and accounting .... 2,500 2,500 5,000
Stock transfer fees ..... -- 2,000 2,000
Depreciation and
amortization ........... 3,971 6,409 10,380
Other ................. 285 3,264 3,549
----------- ----------- -----------
OPERATING LOSS (6,756) (73,591) (80,347)
NON-OPERATING INCOME (EXPENSES)
Investment income ..... -- 49 49
Loss on sale of marketable
securities (Note C) ... -- (6,158) (6,158)
----------- ----------- -----------
NET LOSS BEFORE INCOME TAXES (6,756) (79,700) (86,456)
INCOME TAXES (Note E) ......... -- -- --
----------- ----------- -----------
NET LOSS $ (6,756) $ (79,700) $(86,456)
=========== =========== ===========
Basic loss per common
share ........... $ * $ (002) $ (002)
=========== =========== ===========
Basic weighted average
common shares outstanding . 5,000,000 4,818,182 4,882,353
=========== =========== ===========
Diluted loss per
common share ........... $ * $ (002) $ (002)
=========== =========== ===========
Diluted weighted average
common shares outstanding . 5,000,000 4,818,182 4,882,353
=========== =========== ===========
* Less than $.01 per share
See accompanying summary of significant accounting policies and
notes to the financial statements.
F-3
<PAGE>
FAMOUS INTERNET MALL, INC.
--------------------------
(Formerly Mall of Fame, Inc.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF SHAREHOLDER'S EQUITY
February 5, 1998 (inception) through September 30, 1999
Accumulated
Deficit
Additional During the Total
Common Stock Paid-In Development Shareholders'
Shares Par Value Capital Stage Equity
------ --------- ------- -----
Balance, February 5, 1998
(inception) .. -- $ -- $ -- $ -- $ --
February 6, 1998, sale of common
stock to officers ($.001/share)
(Note F)
3,000,000 3,000 -- -- 3,000
March 15, 1998, sale of common stock, pursuant
to confidential offering memorandum, net of
$2,000 in offering costs ($.001/share) (Note F)
2,000,000 2,000 96,000 -- 98,000
Net loss for the period ended December 31, 1998
-- -- -- (79,700) (79,700)
--------- --------- --------- --------- ---------
BALANCE, DECEMBER 31, 1998
5,000,000 5,000 96,000 (79,700) 21,300
Net loss for the nine months ended September 30, 1999
-- -- -- (6,756) (6,756)
--------- --------- --------- --------- ---------
BALANCE, September 30, 1999
5,000,000 $ 5,000 $ 96,000 $ (86,456) $14,544
========= ========= ========= ========= =========
See accompanying summary of significant accounting policies and
notes to the financial statements.
F-4
<PAGE>
FAMOUS INTERNET MALL, INC.
--------------------------
(Formerly Mall of Fame, Inc.)
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
February 5, February 5,
1998 1998
Nine Months (Inception) (Inception)
Ended Through Through
September 30, December 31, Sept. 30,
1999 1998 1999
---- ---- ----
OPERATING ACTIVITIES
Net loss ....................... $ (6,756) $ (79,700) $ (86,456)
Transactions not requiring cash:
Depreciation ................. 3,971 6,375 10,346
Loss on sale of marketable
securities (Note C) .. -- 6,158 6,158
Changes in current assets and
current liabilities:
Due from officer and other
receivables .............. (10) (1,313) (1,323)
Accounts payable and
accrued expenses ......... 870 2,466 3,336
--------- --------- ---------
NET CASH (USED IN)
OPERATING ACTIVITIES (1,925) (66,014) (67,939)
--------- --------- ---------
INVESTING ACTIVITIES
Purchase of equipment ......... -- (25,282) (25,282)
Purchases of marketable
securities (Note C) ........... -- (14,797) (14,797)
Proceeds from sale of
marketable securities (Note C) . -- 8,639 8,639
--------- --------- ---------
NET CASH (USED IN)
INVESTING ACTIVITIES -- (31,440) (31,440)
--------- --------- ---------
FINANCING ACTIVITIES
Proceeds from issuance of
common stock ................... -- 103,000 103,000
Payments for offering costs .. -- (2,000) (2,000)
--------- --------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES -- 101,000 101,000
--------- --------- ---------
NET CHANGE IN CASH (1,925) 3,546 1,621
Cash, beginning of period ......... 3,546 -- --
--------- --------- ---------
CASH, END OF PERIOD $ 1,621 $ 3,546 $ 1,621
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest ................... $ -- $ -- $ --
========= ========= =========
Income taxes ............... $ -- $ -- $ --
========= ========= =========
See accompanying summary of significant accounting policies and notes
to the financial statements.
F-6
<PAGE>
FAMOUS INTERNET MALL, INC.
--------------------------
(Formerly Mall of Fame, Inc.)
(A DEVELOPMENT STAGE COMPANY)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Development stage company
Famous Internet Mall, Inc. (the "Company") is in the development
stage in accordance with Statement of Financial Accounting
Standard (SFAS) No. 7.
Use of estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets, liabilities, and 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.
Cash equivalents
For the purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents.
Marketable securities
Marketable securities consist of various equity securities and are
stated at current market value. All equity securities are
considered "trading" securities under the provisions of Statement
of Financial Accounting Standard No. 115, "Accounting for Certain
Investments in Debt and Equity Securities". Accordingly, realized
and unrealized gains and losses on equity securities are reflected
in the accompanying statements of operations.
Equipment and depreciation
Property and equipment are stated at cost. Expenditures for
maintenance and repairs are charged to income as incurred.
Additions and improvements are capitalized. The cost and related
accumulated depreciation of property and equipment sold or
otherwise disposed of are removed from the accounts and any gain
or loss is reported in the current year's revenue or expense.
Depreciation expense is calculated by the straight-line method
over the estimated useful lives of the assets, which are five
years for furniture and three years for equipment.
Income taxes
Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes
currently due plus deferred taxes related primarily to differences
between the recorded book basis and the tax basis of assets and
liabilities for financial and income tax reporting. The
deferred tax assets and liabilities represent the future tax
return consequences of those differences, which will either be
taxable or deductible when the assets and liabilities are
recovered or settled. Deferred taxes are also recognized for
operating losses that are available to offset future taxable
income and tax credits that are available to offset future federal
income taxes.
F-7
<PAGE>
FAMOUS INTERNET MALL, INC.
--------------------------
(Formerly Mall of Fame, Inc.)
(A DEVELOPMENT STAGE COMPANY)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Internet and web site development
The Company expenses all internal and external costs
incurred to develop internal-use computer software. As a
development stage company, management has determined that the
web site is not expected to provide substantive service
potential to the Company.
Earnings/(loss) per share
The Company reports earnings per share using a dual
presentation of basic and diluted earnings per share. Basic
earnings per share excludes the impact of common stock
equivalents. Diluted earnings per share utilizes the average
market price per share when applying the treasury stock method in
determining common stock equivalents. However, the Company has
a simple capital structure for the period presented and,
therefore, there is no variance between the basic and diluted
earnings per share.
Fair value of financial instruments
SFAS 107, "Disclosure About Fair Value of Financial
Instruments," requires certain disclosures regarding the fair
value of financial instruments. The Company has determined,
based on available market information and appropriate valuation
methodologies, the fair value of its financial
instruments approximates carrying value. The carrying amounts of
cash, receivables, accounts payable, and other current
liabilities approximate fair value due to the short-term
maturity of the instruments.
New accounting pronouncements
The Company has adopted the following new accounting
pronouncements for the year ended December 31, 1998. There
was no effect on the financial statements presented from the
adoption of the new pronouncements. SFAS No. 130, "Reporting
Comprehensive Income," requires the reporting and display of total
comprehensive income and its components in a full set of general-
purpose financial statements.
The Company did not have comprehensive income for the
periods presented; therefore, comprehensive income and net
income are equal. SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information," is based on the
"management" approach for reporting segments. The management
approach designates the internal organization that is used by
management for making operating decisions and assessing
performance as the source of the Company's reportable segments.
SFAS No. 131 also requires disclosure about the Company's
products, the geographic areas in which it earns revenue and
holds long-lived assets, and its major customers. SFAS 131 is
not applicable, as the Company had no revenue-producing
operations for the periods presented. SFAS No. 132,
"Employers' Disclosures about Pensions and Other Post-
retirement Benefits," which requires additional disclosures
about pension and other post-retirement benefit plans, but does
not change the measurement or recognition of those plans.
F-8
<PAGE>
FAMOUS INTERNET MALL, INC.
--------------------------
(Formerly Mall of Fame, Inc.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Note A: Background
- ------------------
Famous Internet Mall, Inc. (the "Company") was incorporated
under the laws of Nevada on February 5, 1998. The principal
activities since inception have been organizational matters and
the sale and issuance of shares of its $.001 par value common
stock. The Company was formed to create and design a fully
functional, interactive internet web site which will allow the
public to access an internet shopping mall to market and sell
the products and/or services of celebrities.
On September 15, 1998, the Company changed its name from Mall of
Fame, Inc. to Famous Internet Mall, Inc.
Note B: Related party transactions
- ----------------------------------
As of September 30, 1999 and December 31, 1998, an officer owed
the Company $918 for payroll taxes not withheld from his
salary. The $918 is included in the accompanying financial
statements as due from officer.
During the period from February 5, 1998 (inception) through
December 31, 1998, the Company paid an officer $6,500 for
internet and web-site development. The $6,500 is included in the
accompanying financial statements as internet and web-site
development, related party.
Note C: Marketable securities
- -----------------------------
During the period from February 5, 1998 (inception) through
December 31, 1998, the Company purchased $14,797 in marketable
securities. The Company sold all of the securities prior to
December 31, 1998 for $8,639; resulting in a $6,158 realized
loss on the sale of marketable securities. The Company
held no marketable securities at September 30, 1999 and
December 31, 1998. The Company conducted no marketable
securities transactions during the nine months ended September 30,
1999.
Note D: Furniture and Equipment
- -------------------------------
Furniture and equipment consisted of the following at September
30, 1999 and December 31, 1998:
September 30, December 31,
1999 1998
---- ----
Furniture ....................... $ 21,640 $ 21,640
Equipment ....................... 3,642 3,642
-------- --------
25,282 25,282
Less: accumulated depreciation .......... (10,346) (6,375)
-------- --------
$ 14,936 $ 18,907
======== ========
Depreciation expense for the nine months ended September 30, 1999
and from February 5, 1998 (inception) through December 31, 1998
was $3,971 and $6,375, respectively.
F-9
<PAGE>
FAMOUS INTERNET MALL, INC.
--------------------------
(Formerly Mall of Fame, Inc.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Note E: Income taxes
- ---------------------
A reconciliation of the U.S statutory federal income tax rate to
the effective rate is as follows:
September 30, December 31,
1999 1998
---- ----
U.S. federal statutory graduated rate ......15.00% 15.00%
State income tax rate, net of federal
benefit .... 7.00% 7.00%
Net operating loss for which no tax benefit
is currently available ........... -22.00% -22.00%
------- -------
0.00% 0.00%
======= =======
At September 30, 1999, deferred taxes consisted of a net tax
asset of $21,730 due to operating loss carryforwards of
$86,456, which was fully allowed for in the valuation allowance
of $21,730. The valuation allowance offsets the net deferred asset
for which there is no assurance of recovery. The change in the
valuation allowance for the nine months ended September 30,
1999 and from February 5, 1998 (inception) through December 31,
1998 was $1,521 and $20,209, respectively. Net operating loss
carryforwards will expire in 2019.
The valuation allowance will be evaluated at the end of each
year, considering positive and negative evidence about whether
the asset will be realized. At that time, the allowance will
either be increased or reduced; reduction could result in the
complete elimination of the allowance if positive evidence
indicates that the value of the deferred tax asset is no longer
impaired and the allowance is no longer required.
Note F: Common stock sales
- --------------------------
On February 6, 1998, the Company sold 3,000,000 shares of
common stock to officers for cash totaling $3,000. These shares
are "restricted securities" and may be sold only in compliance
with Rule 144 of the Securities Act of 1933, as amended (the
"Act").
On March 15, 1998, the Company offered for sale 2,000,000
shares of its $.001 par value common stock for $.05 per share
pursuant to Rule 504 of Regulation D of the Act. The Company sold
2,000,000 shares for net proceeds of $98,000 after deducting
offering costs of $2,000.
Note G: Concentrations
From February 5, 1998 (inception) through December 31,
1998, the Company incurred $20,000 in consulting expenses and
$26,500 for the development of an internet web site to two
vendors and an officer (see Note B). The $46,500 made up 58.3
percent and 53.8 percent of the Company's expenses for the
periods from February 5, 1998 (inception) through December 31,
1998 and from February 5, 1998 (inception) through September 30,
1999, respectively.
F-10
<PAGE>
FAMOUS INTERNET MALL, INC.
--------------------------
(Formerly Mall of Fame, Inc.)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Note H: Commitments
- -------------------
In accordance with its Confidential Offering Memorandum,
the Company is committed to use the proceeds from the offering
for the following: computer and office equipment ($25,000);
consulting fees ($20,000); web site development ($20,000);
officer salaries ($12,000); accounting and legal fees ($10,000),
and; working capital and miscellaneous expenses ($13,000).
As of September 30, 1999, the remaining commitments for these
categories are as follows: accounting and legal fees
($5,000), and; working capital and miscellaneous expenses
($8,544).
Note I: Going concern
As of September 30, 1999, the Company has recurring operating
losses and a limited supply of cash, which raises substantial
doubt about its ability to continue as a going concern.
From February 5, 1998 (inception) through September 30, 1999,
the Company raised initial working capital through a public
offering of its common stock, which is expected to permit the
Company to continue its start-up operations through October
31, 1999. The Company anticipates conducting debt
financings or additional common stock offerings, which are not
yet beyond the planning stages, to fund its proposed operations.
The Company is largely dependent upon the proceeds anticipated
to be received from proposed future debt financings or common
stock offerings to carry out its proposed operations. There
is no assurance that the Company will be successful in its
efforts to raise the proceeds needed to commence its proposed
operations. The financial statements do not include any
adjustments that might result from the outcome of this
uncertainty.
Note J: Year 2000 compliance
The Year 2000 issue (Y2K) is the result of computer programs
written using two digits rather than four to define the
applicable year. Any of the Company's computer and
telecommunications programs that have date sensitive software may
recognize a date using "00" as the year 1900 instead of 2000.
This could result in system failure or miscalculations
causing disruptions in operations, including the ability to
process transactions, send invoices, or engage in similar
normal business activities.
The Company cannot determine the extent to which the Company is
vulnerable to third parties' failure to remediate their own Y2K
problems. As a result, there can be no guarantee that the
systems of other companies on which the Company's business relies
will be timely converted, or that failure to convert by another
company, or a conversion that is incompatible with the Company's
systems, would have a material adverse affect on the Company. In
view of the foregoing, there can be no assurance that the Y2K
issue will not have a material adverse effect on the Company's
business.
SIGNATURES
The issuer has duly caused this offering statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the
City of San Diego, State of California on November 24, 1999.
FAMOUS INTERNET MALL, INC.
/s/ Christopher Q. Lucidi
Christopher Q. Lucidi,
Vice-President and Secretary
