<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended September 30, 2000.
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from to
Commission file number
eTELCHARGE.COM, INC
(Name of Small Business Issuer in its Charter)
NEVADA 75-2847694
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
eTELCHARGE.COM, INC
407 N. CEDAR RIDGE, SUITE 342,
DUNCANVILLE, TEXAS 75116.
(972) 298-3800
(Address and telephone number of issuer's principal executive offices)
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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange act after the
distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 9,697,637 as of September
30, 2000.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ ]
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eTELCHARGE.COM, INC.
INDEX
<TABLE>
<CAPTION>
Page
Number
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<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets at September 30, 2000 (Unaudited) and December 31, 1999 2
Statements of Operations for the three months ended September 30, 1999
and the three months ended September 30, 2000 (unaudited) 3
Statements of Operations for the period from June 7, 1999 (inception) to
September 30, 1999 and the nine months ended September 30, 2000
(unaudited) 4
Statements of Cash Flows for the period from June 7, 1999 (inception) to
September 30, 1999 and the nine months ended September 30, 2000
(unaudited) 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of Operations. 7
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 9
SIGNATURES 9
EXHIBITS 10
</TABLE>
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
eTELCHARGE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
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<S> <C> <C>
Current assets
Cash and cash equivalents $ 201,366 $ 30,988
Receivable from shareholder -- 1,000
--------- ---------
Total current assets 201,366 31,988
Equipment, net of accumulated depreciation of $2,250 (unaudited)
and $0 at September 30, 2000 and December 31, 1999, respectively 30,845 1,000
Proprietary rights, net of accumulated amortization of
$17,500 (unaudited) and $1,750 at September 30, 2000
and December 31, 1999, respectively 45,500 61,250
--------- ---------
TOTAL ASSETS $ 277,711 $ 94,238
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Payable to related party $ 2,500 $ 101,000
Payroll liabilities 11,510 --
--------- ---------
Total current liabilities 14,010 101,000
Shareholders' equity (deficit)
Common stock -- $.003 par value; 10,000,000 shares authorized; 9,697,637
(unaudited) and 8,752,970 issued and outstanding
at September 30, 2000 and December 31, 1999, respectively 29,093 26,259
Additional paid-in capital 489,516 (6,620)
Deficit accumulated during the development stage (254,908) (26,401)
--------- ---------
Total shareholders' equity (deficit) 263,701 (6,762)
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) $ 277,711 $ 94,238
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
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eTELCHARGE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Three
months ended months ended
September 30, September 30,
1999 2000
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<S> <C> <C>
Revenue $ -- $ --
General and administrative expenses -- 134,569
------------ ----------
Net loss from operations -- 134,569
Other income -- 355
------------ ----------
Net loss before provision for income taxes -- 134,214
Income tax provision -- --
------------ ----------
Net loss $ -- $ 134,214
============ ==========
Loss per common share attributable to
common stockholders
Basic and fully diluted $ .00 $ .01
Weighted average common shares outstanding 6,100,000 9,673,804
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
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eTELCHARGE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Period from Nine Period from
June 7, 1999 months June 7, 1999
(inception) to ended (inception) to
September 30, September 30, September 30,
1999 2000 2000
------------- ------------- -------------
<S> <C> <C> <C>
Revenue $ -- $ -- $ --
General and administrative expenses 23,139 230,692 257,092
---------- ---------- ----------
Net loss from operations 23,139 230,692 257,092
Other income (expenses) -- 2,184 2,184
---------- ---------- ----------
Net loss before provision for income taxes 23,139 228,508 254,908
Income tax provision -- -- --
---------- ---------- ----------
Net loss $ 23,139 $ 228,508 $ 254,908
========== ========== ==========
Loss per common share attributable to
common stockholders
Basic and fully diluted $ .00 $ .03
Weighted average common shares outstanding 6,100,000 9,055,826
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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eTELCHARGE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Period from Nine Period from
June 7, 1999 months June 7, 1999
(inception) to ended (inception) to
September 30, September 30, September 30,
1999 2000 2000
-------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $ (23,139) $(228,508) $(254,908)
Non-cash charges included in operations
Initial issuance of common stock for services 23,139 -- 23,139
Depreciation and amortization -- 18,000 19,750
Change in accrued liabilities -- 11,510 11,510
------------- --------- ---------
Net cash used for operating activities -- (198,998) (200,509)
------------- --------- ---------
Cash flows from investing activities
Purchase of fixed assets -- (32,094) (33,095)
------------- --------- ---------
Cash flows from financing activities
Proceeds from issuance of common stock -- 498,970 547,970
Payments on payable to related party -- (98,500) (114,000)
Cash received on receivable from shareholder -- 1,000 1,000
------------- --------- ---------
Net cash provided by financing activities -- 401,470 434,970
------------- --------- ---------
Increase (decrease) in cash -- 170,378 201,366
Beginning cash -- 30,988 --
------------- --------- ---------
Ending cash $ -- $ 201,366 $ 201,366
============= ========= =========
Supplemental schedule of non-cash financing activities:
Issuance of common stock in exchange for
receivable from shareholder $ -- $ -- $ 1,000
============= ========= =========
Issuance of payable to related party in
exchange for proprietary rights $ -- $ -- $ 116,500
============= ========= =========
Supplemental schedule of cash flows:
Cash paid during the period for:
Interest $ -- $ -- $ --
============= ========= =========
Income taxes $ -- $ -- $ --
============= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
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eTELCHARGE.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. HISTORY AND ORGANIZATION
eTELCHARGE.COM, Inc. (the "Company") was incorporated in the State of Nevada on
June 7, 1999. The Company was formed for the purpose of providing an internet
credit option for online shoppers to charge items sold over the internet to
their telephone bill. The Company is in the process of raising equity financing
to fund its future operations. As such, the Company is considered to be in the
development stage.
2. BASIS OF PRESENTATION
The accompanying interim financial statements have been prepared by the Company
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission (the "SEC"). Certain information and footnote disclosures
normally included in financial statements prepared in conformity with generally
accepted accounting principles ("GAAP") have been omitted or condensed pursuant
to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading. It is
suggested that these statements be read in conjunction with the Company's
audited financial statements and notes thereto included in the Company's Form
10KSB for the year ended December 31, 1999.
In management's opinion, these interim financial statements reflect all
adjustments (consisting of normal and recurring adjustments) necessary for a
fair presentation of the financial position and results of operations for each
of the periods presented. The accompanying unaudited interim financial
statements for the nine months ended September 30, 2000 are not necessarily
indicative of the results which can be expected for the entire year.
3. SHAREHOLDERS' EQUITY (DEFICIT)
During the three and nine month period ending September 30, 2000, the Company
raised $112,500 and $498,200, respectively, in cash proceeds through the
issuance of common stock.
4. PAYABLE TO RELATED PARTY AND PROPRIETARY RIGHTS
During the three and nine month periods ending September 30, 2000, the Company
made payments on note from a related party of $22,000 and $98,500, respectively.
5. GOING CONCERN
The Company is in the development stage and has incurred only expenses to
date. The Company's ability to execute its business plan is dependent on
its ability to continue to raise funding (primarily through equity
issuances) as necessary. The financial statements do not include any
adjustments to reflect the possible effects on the recoverability and
classification of assets or classification of liabilities which may result
from the inability of the Company to continue as a going concern.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
This Quarterly Report on Form 10-QSB contains certain "forward-looking"
statements as such term is defined in the Private Securities Litigation Reform
Act of 1995 and information relating to the Company and its subsidiaries that
are based on the beliefs of the Company's management as well as assumptions made
by and information currently available to the Company's management. When used in
this report, the words "anticipate," "believe," "estimate," "expect" and
"intend" and words or phrases of similar intent, as they relate to the Company
or its subsidiaries or Company management, are intended to identify
forward-looking statements. Such statements reflect the current risks,
uncertainties and assumptions related to certain factors including, without
limitations, changes or anticipated changes in regulatory environments,
competitive factors, general economic conditions, customer relations,
relationships with vendors, the interest rate environment, governmental
regulation and supervision, seasonality, distribution networks, product
introductions and acceptance, technological change, changes in industry
practices, onetime events and other factors described herein and in other
filings made by the company with the Securities and Exchange Commission. Based
upon changing conditions, should any one or more of these risks or uncertainties
materialize, or should any underlying assumptions prove incorrect, actual
results may vary materially from those described herein as anticipated,
believed, estimated, expected or intended. The Company does not intend to update
these forward-looking statements.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
The Company is a start up enterprise with no material operations to date and
although it is in an early stage of development it is not contemplating seeking
any merger partners.
Management anticipates that revenues for the Company will be generated from
online retailers, manufacturers and consumers. Merchants will be charged an
annual membership of $250 U.S. Dollars, a billing discount fee of 5% to 8% of
the purchase price, not including taxes or other added charges and a 15 cent
($0.15) per transaction charge. Consumers will incur a 10% service fee and a ten
dollar ($10.00) annual fee. The costs of telecommunications for the Company
include: (1) AT&T's billing and collection charge of 8%, which is adjustable to
5% of the total charge of the call upon an increase in sales volume; and (2) 45
cents per transaction for AT&T's transport and service bureau switching.
Management believes it will be able to leverage the telecom traffic of
eTeleCharge.com to negotiate a lower billing rate within six to nine months.
Furthermore, the Company will implement a six phase program to accomplish its
goal of market dominance. Phase I involved developing the idea into a completely
workable concept, which the Company has already accomplished. Phase II involved
incorporating eTELCHARGE.COM, which the Company has successfully done.
Additionally, in this phase, the Company anticipates entering into market
affiliate agreements to generate market awareness and usage of its cybernetic
billing icon. The Company will also implement its advertising plan of issuing
press releases to related trade publications, general interest media
publications, print media and Internet media, including Pizza Marketing
Quarterly, Digitrends, Current Technology, Super Floral, Atlantic Unbound Books,
Pizza Today, Net Commerce.
Phase III, which the Company anticipates implementing over the next two years,
involves making adjustments and improvements in its initial product software
developments and marketing. In order to identify the areas that need
improvement, the Company anticipates it will meet with its first online
retailers and AT&T, and further conduct online consumer interviews. In 2001, the
Company will implement Phase IV of its plan, which involves offering its system
to over 1,000 online retailers. Furthermore, the Company anticipates it will
secure an agreement with one or more of the major online retailers such as
amazon.com, barnesandnoble.com, borders.com, buysoftware.com, albertsons.com
food.com, dominicks.com, kroger.com, safeway.com, cdnow.com, movielink.com, and
videosnow.com. The Company will also unveil its billing system at industry
affiliated trade shows, and increase press releases to national and global
media. In 2002, the Company anticipates beginning Phase V of the plan by
focusing on expanding its network on the global level. This plan includes
reinforcing the Company's premier national "good cause" marketing strategy and
increasing presentations at industry affiliated trade shows. The final phase of
the plan Phase VI, has been earmarked for consumer growth and will begin in
2003. The Company plans to enter into agreements with every established online
merchant, with the goal that its billing system will be used to purchase goods
online as frequently, if not more so, than credit cards.
7
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The initiation of all of the Company's plans is dependent upon the Company
raising sufficient working capital to allow the Company to begin operations on a
day to day basis, however there can be no assurance that the Company will be
successful in doing so. Due to the lack of capital and the Company's need for
working capital to initiate its business plan the Company's auditors have issued
a going concern paragraph as part of their audit option for the Company's
financial statement at and for the period ended December 31, 1999. The Company
has generated no revenues since its inception and during the nine months ended
September 30, 2000 incurred a net loss of $228,508. The Company's cash used in
operations has been generated through the issuance of its common shares. Total
cash proceeds for the issuance of common shares totaled $498,970 for the nine
months ended September 30, 2000. The Company has used $98,500 to pay down a note
payable to a related party which was incurred in connection with the acquisition
of certain proprietary rights.
8
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PART II
Item 6. Exhibits and Reports on Form 8-K
Exhibit Description
27.1 Financial Data Schedule
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
eTELCHARGE.COM, Inc.
Date: November 13, 2000 By /s/ CARL O. SHERMAN
--------------------------------
Carl O. Sherman, Sr., President
9
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
27.1 Financial Data Schedule
</TABLE>
10
