U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 2-93231-NY
FASHION TECH INTERNATIONAL, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 87-0395695
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
1340 East 130 North, Springville, Utah 84663
(Address of principal executive offices)
(801) 364-9262
(Issuer's telephone number)
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:
State the number of shares outstanding of each of the issuer's
classes of common equity. As of September 30, 2000 the Company
had 3,591,143 shares of common stock outstanding.
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FORM 10-QSB
FASHION TECH INTERNATIONAL, INC.
INDEX
Page
PART I. Financial Information
Balance Sheets - September 30, 2000 and 3
March 31, 2000
Statements of Operations - Three and Six 4
Months Ended September 30, 2000 and 1999, and
Beginning of Development Stage to
September 30, 2000
Statements of Cash Flows - Three and Six 5
Months Ended September 30, 2000 and, 1999, and
Beginning of Development Stage to June
30, 1999
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of 9
Financial Condition and Results of
Operations
PART II. Other Information 10
Signatures 10
2
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PART I. FINANCIAL INFORMATION
FASHION TECH INTERNATIONAL, INC
[A Development Stage Company]
CONDENSED BALANCE SHEETS
[Unaudited]
ASSETS
September 30, March 31,
2000 2000
___________ ___________
CURRENT ASSETS:
Cash in bank $ 212 $ 4,218
___________ ___________
Total Current Asset 212 4,218
___________ ___________
$ 212 $ 4,218
___________ ___________
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ - $ 163
Accounts payable - related party 1,500 -
___________ ___________
Total Current Liabilities 1,500 163
___________ ___________
STOCKHOLDERS' DEFICIT:
Preferred stock, $.001 par value,
5,000,000 shares authorized,
no shares issued and
outstanding - -
Common stock, $.001 par value,
120,000,000 shares authorized,
3,591,143 shares issued and
outstanding 3,591 3,591
Capital in excess of par value 550,448 550,448
Retained deficit (413,549) (413,549)
Deficit accumulated during the
development stage (141,778) (136,435)
___________ ___________
Total Stockholders' Deficit (1,288) 4,055
___________ ___________
$ 212 $ 4,218
___________ ___________
Note: The balance sheet of March 31, 2000 was taken from the audited
financial statements at that date and condensed
The accompanying notes are an integral part of this unaudited
financial statement.
3
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FASHION TECH INTERNATIONAL, INC
[A Development Stage Company]
CONDENSED STATEMENTS OF OPERATIONS
[Unaudited]
From the
re-entering of
For the Three For the Six the development
Months Ended Months Ended stage on April 1,
September 30, September 30, 1985 through
________________ _______________ September 30,
2000 1999 2000 1999 2000
_____________________________________________
REVENUE: $ - $ - $ - $ - $ -
_____________________________________________
COST OF SALES - - - - -
_____________________________________________
GROSS PROFIT - - - - -
EXPENSES:
General and Administrative 4,500 164 5,343 7,899 143,288
_____________________________________________
LOSS FROM OPERATONS
BEFORE OTHER EXPENSES (4,500) (164) (5,343) (7,899) (143,288)
_____________________________________________
OTHER EXPENSES:
Interest Expense - - - (323) (434)
Gain on disposal of assets - - - - 1,944
_____________________________________________
TOTAL OTHER EXPENSES - - - (323) 1,510
_____________________________________________
LOSS BEFORE INCOME TAXES (4,500) (164) (5,343) (8,222) (141,778)
CURRENT TAX EXPENSE - - - - -
DEFERRED TAX EXPENSE - - - - -
_____________________________________________
NET LOSS $(4,500) $ (164) $(5,343) $(8,222) $(141,778)
_____________________________________________
LOSS PER COMMON SHARE $ (.00) $ (.00) $ (.00) $ (.00) $ (.17)
_____________________________________________
The accompanying notes are an integral part of these unaudited
condensed financial statements.
4
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FASHION TECH INTERNATIONAL, INC
[A Development Stage Company]
CONDENSED STATEMENTS OF CASH FLOWS
[Unaudited]
From the
Re-entering of
Development
For the Six Stage on
Monthe Ended April 1,
September 30, 1985 Through
___________________ September 30,
2000 1999 2000
________ _________ ___________
Cash Flows From Operating Activities:
Net loss $ (5,343) $ (8,222) $ (141,778)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Non-cash expenses paid by
stock issuances - - 50,000
Change in assets and liabilities:
Increase (decrease) in accounts payable (163) (2,451) (1,944)
Increase in accounts payable -
related party 1,500 - 1,500
Increase in accrued interest - 323 434
________ ________ ___________
Net Cash Flows (Used) by
Operating Activities (4,006) (10,350) (91,788)
________ ________ ___________
Cash Flows From Investing Activities:
Net Cash Flows (Used) by
Investing Activities - - -
________ ________ ___________
Cash Flows From Financing Activities:
Proceeds from common stock issuance - - 70,000
Proceeds from notes payable - - 22,000
________ ________ ___________
Net Cash Flows Provided by
Financing Activities - - 92,000
________ ________ ___________
Net Increase (Decrease) in Cash (4,006) (10,350) 212
Cash at Beginning of Period 4,218 19,846 -
________ ________ ___________
Cash at End of Period $ 212 $ 9,496 $ 212
________ ________ ___________
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ - $ - $ -
Income taxes $ - $ - $ -
Supplemental Schedule of Noncash Investing and Financing
Activities:
For the period ended September 30, 2000:
None
For the period ended September 30, 1999:
During this period, the Company issued 3,000,000 shares of
common stock for relief of debt for $22,434.
The accompanying notes are an integral part of these unaudited
condensed financial statements.
5
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FASHION TECH INTERNATIONAL, INC
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization - Fashion Tech International, Inc (The Company) was
organized under the laws of the State of Utah on April 22, 1983
under the name Portofino Investment, Inc. The name of The
Company was changed to Fashion Tech International, Inc on January
31, 1984. The Company currently has no ongoing operations and is
considered to have re-entered the development stage as defined in
SFAS No. 7 on April 1, 1985. The Company is currently seeking
business opportunities or potential business acquisitions.
Condensed Financial Statements - The accompanying financial
statements have been prepared by the Company without audit. In
the opinion of management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at
September 30, 2000 and 1999 and for the periods then ended have
been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted.
It is suggested that these condensed financial statements be read
in conjunction with the financial statements and notes thereto
included in the Company's March 31, 2000 audited financial
statements. The results of operations for the periods ended
September 30, 2000 are not necessarily indicative of the
operating results for the full year.
Loss Per Share - The computation of loss per share of common
stock is based on the weighted average number of shares
outstanding during the periods presented, in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings
Per Share" [See Note 5].
Cash and Cash Equivalents - For purposes of the statement of cash
flows, the Company considers all highly liquid debt investments
purchased with a maturity of three months or less to be cash
equivalents.
Recently Enacted Accounting Standards - Statement of Financial
Accounting Standards (SFAS) No. 136, "Transfers of Assets to a
not for profit organization or charitable trust that raises or
holds contributions for others, " and SFAS No. 137, " Accounting
for Derivative Instruments and Hedging Activities - deferral of
the effective date of FASB Statement No. 133 (an amendment of
FASB Statement No. 133)," were recently issued. SFAS No. 136 and
137 have no current applicability to the Company.
Accounting Estimates - The preparation of unaudited condensed
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, the disclosures of contingent assets and liabilities
at the date of the unaudited condensed financial statements and
the reported amount of revenues and expenses during the reported
period. Actual results could differ from those estimated.
Restatement - The unaudited condensed financial statements for
all periods have been restated to reflect a 100 for 1 reverse
stock split which was effective during April 1999.
6
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FASHION TECH INTERNATIONAL, INC
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 2 - CAPITAL STOCK
On April 28, 1999 the company amended its Articles of
Incorporation changing the par value from $0.005 to $0.001.
The company also authorized 5,000,000 shares of preferred
stock with a par value of $0.001. The company also changed
its domicile from Utah to Nevada.
On April 28, 1999, the Company authorized a 1 for 100 reverse
stock split thus reducing the number of shares outstanding to
591,082. The unaudited condensed financial statements for all
periods have been restated to reflect the change.
On June 7, 1999, the Company issued 3,000,000 shares of common
stock for conversion of a $22,000 note payable and $434 of
accrued interest.
NOTE 3 - INCOME TAXES
The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109 "Accounting
for Income Taxes". FASB 109 requires the Company to provide a
net deferred tax asset/liability equal to the expected future tax
benefit/expense of temporary reporting differences between book
and tax accounting methods and any available operating loss or
tax credit carryforwards. At September 30, 2000, the Company has
available unused operating loss carryforwards of approximately
$141,700, which may be applied against future taxable income and
which expire in various years through 2019.
The amount of and ultimate realization of the benefits from the
operating loss carryforwards for income tax purposes is
dependent, in part, upon the tax laws in effect, the future
earnings of the Company, and other future events, the effects of
which cannot be determined. Because of the uncertainty
surrounding the realization of the loss carryforwards the Company
has established a valuation allowance equal to the tax effect of
the loss carryforwards and, therefore, no deferred tax asset has
been recognized for the loss carryforwards. The net deferred tax
assets are approximately $48,000 as of September 30, 2000 with an
offsetting valuation allowance of the same amount resulting in a
change in the valuation allowance of approximately $2,000 during
2000.
NOTE 4 - RELATED PARTY TRANSACTIONS
Management Compensation - During the periods ended September 30,
2000 the Company did not pay any compensation to any
officer/directors of the Company.
Office Space - The Company has not had a need to rent office
space. An officer/shareholder of the Company is allowing the
Company to use his home as a mailing address, as needed, at no
expense to the Company.
7
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FASHION TECH INTERNATIONAL, INC
[A Development Stage Company]
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
NOTE 5 - LOSS PER SHARE
The following data show the amounts used in computing loss per
share and the effect on income and the weighted average number of
shares of dilutive potential common stock for the three and six
months ended September 30, 2000 and 1999 and from the re-entering
of development stage on April 1, 1985 through September 30, 2000:
From the
re-entering of
the development
For the Three For the Six stage on
Months Ended Months Ended April 1,
September 30, September 30, 1985 through
__________________ __________________ September 30,
2000 1999 2000 1999 2000
___________________________________________________
Loss from continuing
operations available to
common stock
holders (numerator) $ (4,500) $ (164) $ (5,343) $ (8,222) $ (141,778)
__________________________________________________
Weighted average number
of common shares
outstanding used in
earnings per share
during the period 3,591,143 2,668,066 3,591,143 3,132,127 814,601
__________________________________________________
Dilutive earnings per share was not presented, as the Company had
no common equivalent shares for all periods presented that would
effect the computation of diluted earnings (loss) per share.
NOTE 6 - GOING CONCERN
The accompanying unaudited condensed financial statements have
been prepared in conformity with generally accepted accounting
principles, which contemplate continuation of the Company as a
going concern. However, the Company, has incurred losses since
its inception, has insufficient working capital, and has no on-
going operations. These factors raise substantial doubt about
the ability of the Company to continue as a going concern. In
this regard, management is seeking potential business
opportunities and is proposing to raise any necessary additional
funds not provided by operations through loans and/or through
additional sales of its common stock. There is no assurance that
the Company will be successful in raising additional capital or
achieving profitable operations. The unaudited condensed
financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
8
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three and Six-Month Periods Ended September 30, 2000 and 1999
The Company had no revenue from continuing operations for the
three and six-month periods that ended September 30, 2000 and
1999.
General and administrative expenses for the three and six-month
periods that ended September 30, 2000 and 1999, consisted of
general corporate administration, legal and professional
expenses, and accounting and auditing costs. These expenses were
$4,500 and $164 for the three months ended, and $5,343 and $7,899
for six-months ended September 30, 2000 and 1999, respectively.
Interest expense for both the three and six-month periods that
ended September 30, 2000 and 1999, was $0 and $323, respectively.
As a result of the foregoing factors, the Company realized a net
loss of $4,500 for the three months ended and $5,343 for the six
months ended September 30, 2000, as compared to a net loss of
$164 and $8,222 for the same periods in 1999.
Liquidity and Capital Resources
At September 30, 2000, the Company had a working capital deficit
of $1,288, as compared to working capital of $4,055 at March 31,
2000. This decrease in working capital is attributable to
general and administrative expenses incurred during the last two
quarters without any increase in cash.
The Company does not have sufficient cash to meet its operational
needs for the next twelve months. Management, like in the past,
will attempt to raise capital for its current operational needs
through debt financing, equity financing or a combination of
financing options. However, there are no existing
understandings, commitments or agreements for such an infusion;
nor can there be assurances to that effect. Moreover, the
Company's need for capital may change dramatically if and during
that period, it acquires an interest in a business opportunity.
Unless the Company can obtain additional financing, its ability
to continue as a going concern is in doubt.
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 venture, and there can be no
assurance that the Company will identify a business venture
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 any business venture it acquires.
9
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PART II. OTHER INFORMATION
Item 5. Other Information
The independent auditors of the Company for the years ended
March 31, 2000 and 1999 were HJ & Associates, LLC, formerly Jones
Jensen & Company ("HJ"). On November 10, 2000, the Company
terminated the engagement of HJ as its independent auditors. The
accounting firm of Pritchett, Siler & Hardy, P.C. ("PSH") has
been approved by the Board of Directors of the Company to serve
as independent auditors of the Company for the year ending March
31, 2001. The Company has been advised that neither PSH nor any
of its members or associates has any relationship with the
Company or any of its affiliates, except in the firm's proposed
capacity as the Company's independent auditors.
During the fiscal years ended March 31, 2000 and 1999, the
financial statements of the Company did not contain any adverse
opinion or disclaimer of opinion from the Company's former
independent auditors, and were not modified as to uncertainty,
audit scope, or accounting principles, except the reports issued
by HJ contained a statement expressing doubt about the ability of
the Company to continue as a going concern due to its status as a
development stage company with no significant operating results.
During the two year period ended March 31, 2000, and from that
date to the present, there were no disagreements with the former
independent auditors on any matter of accounting principles,
financial statement disclosure, or auditing scope or procedure
which, if not resolved to the former independent auditor's
satisfaction, would have caused it to make reference to the
subject matter of the disagreement in connection with its audit
report.
EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS: Included as exhibits to this report are the following:
Exhibit No. 1 Exhibit Reference No. 16 Letter on Change in Certifying
Accountant
Exhibit No. 2 Exhibit Reference No. 27 Financial Data Schedule
REPORTS ON FORM 8-K: None
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FASHION TECH INTERNATIONAL, INC.
Date: November 10, 2000 By: /s/ Pam Jowett, President
10
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