The maximum number of shares that may be optioned and sold under the plan is 10,000,000. The plan became effective with its adoption and remains in effect for ten years, with options expiring ten years from grant, unless terminated
earlier. Options granted under the plan vest according to terms imposed by the Plan Administrator. The Administrator may not impose a vesting schedule upon any option grant which is more restrictive than twenty percent (20%)
per year vesting with the initial vesting to occur not later than one (1) year after the option grant date. There are no options outstanding under the plan as of June 30, 2010 and June 30, 2009, respectively.
NOTE 3 – GOING CONCERN
The Company has had recurring operating losses since inception and is dependent upon financing to continue operations. These factors indicate that the Company may be unable to continue in existence should immediate
and short term financing options not be available. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might
be necessary in the event the Company cannot continue its existence. These financial statements do not include any adjustments that might result from the outcome of this uncertainty. Currently the Company has minimal cash on
hand and few material assets. In addition, the Company has not established nor maintained a recurring source of revenues to sufficiently cover or offset any current, anticipated or planned operating costs to allow it to continue as a
going concern. It is the intent of the Company to find additional capital funding, grow revenues organically through new program launches and marketing campaigns and/or a profitable business venture to acquire or merge.
NOTE 4 – SIGNIFICANT TRANSACTIONS
On February 24, 2010 the principal officers and key management (Messrs Smith and Kenyon) each received 175,000,000 shares of common stock of the Company. The shares were provided for payment for services from October
1, 2009 until February 28, 2010, a period which covers $100,000 in accrued wages for each Messrs Smith and Kenyon. The value of the shares was determined to be $0.011 per share or $3,850,000. The excess of the value of the shares
issued over the value of the debt converted is $3,650,000 and has been recorded as a reduction of additional paid-in-capital.
On May 25, 2010 the Company entered into a contract for services with Quest Capital Markets, Inc. As part of the contract Quest Capital Markets, Inc. received a note payable. This note contained the right to convert the unpaid
balance with accrued interest into shares of common stock of the Company at par value. Since the total beneficial conversion liability is limited to the amount of the proceeds allocated to the convertible instrument a “debt conversion
liability” account has been established in the amount of $240,000. The related beneficial conversion feature will be amortized over the life of the note.
On May 25, 2010 the Company borrowed $10,500 from Quest Capital Markets, Inc. As part of the contract Quest Capital Markets, Inc. received a note payable. This note payable contained the right to convert the unpaid balance
with accrued interest into shares of common stock of the Company at par value. Since the total beneficial conversion liability is limited to the amount of the proceeds allocated to the convertible instrument a “debt conversion liability”
account has been established in the amount of $10,500. The related beneficial conversion feature will be amortized over the life of the note.
On June 15, 2010 the Company entered into a contract for services with JPA Capital. As part of the contract JPA Capital received a note payable. This note contained the right to convert the unpaid balance with accrued interest
into shares of common stock of the Company at par value. Since the total beneficial conversion liability is limited to the amount of the proceeds allocated to the convertible instrument a “debt conversion liability” account has been
established in the amount of $120,000. The related beneficial conversion feature will be amortized over the life of the note.
NOTE 5 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events for the period of June 30, 2010 through the date the financial statements were issued, and concluded, that there were no events or transactions during this period that required
recognition or disclosure in its condensed financial statements.
The following discussion should be read in conjunction with our financial statements and related notes thereto as filed with the Securities and Exchange Commission.
Overview
From 2004 until 2008 the Company was in the business of developing, deploying and marketing semi-custom and customized branded prepaid and prepaid card solutions. Due to continued losses from operations during
2008, the Company began winding down its principal business operations and commenced a search for a new business venture. The Company has no material assets and significant liabilities. Former board members and management
were unsuccessful in securing a new business venture for the Company and on January 22, 2009, transferred control of the Company to Ronald N. Vance, former company counsel, to seek for and, if possible, locate a suitable
operating business venture willing to take control of the Company.
On August 12, 2009, the Company changed its status from shell Company to operating Company. Pursuant to business operations established in the second half of 2009, the Company has begun operations. The core
focus of the restarted operations is marketing financial products and services. As a result, the Company does not plan to reinstate its previous program management status, and will instead rely on third party processors, program
managers and banks to coordinate, issue and manage prepaid card portfolios on behalf of the Company. The Company will focus on the marketing of network branded third party card programs and alternative personal financial
solutions. In efforts to support the restarted operations and to deliver organic revenue, the Company executed an agreement with a new bank and turnkey prepaid card program manager, Central National Bank. By contracting with
Central National Bank, the Company is moving to provide a network branded prepaid card to customers as a primary vehicle for delivering other financial products and services such as bill payment, payment reporting and online
personal financial management tools. The Company throughout the first quarter of 2010 has also begun negotiations to engage businesses in the sales process. The targeted focus of the Company is to partner with businesses
which deliver non-bank personal and financial services such as insurance agencies, micro-loan centers, rent to own, local/regional credit unions and check cashing businesses. As of the date of this report, the Company has begun
entering into operating agreements and continued negotiations with several businesses to implement the turnkey solution provided by our banking partner. While new agreements are in place, it is too early and thus, indeterminable
how restarting operations may positively or adversely affect the business. As a result, the Company, while attempting to create newfound revenue streams, will continue seeking opportunities for outside business ventures and
raising funds to aid in restarting, marketing and launching new network branded prepaid card programs and supporting the operations.
Recent Developments
For the second quarter ending June 30, 2010, all primary operational efforts have been prioritized and focused on entering into new operating agreements and marketing products and services in support of continued operations.
In continuing with the direction outlined in the first quarter, the Company continued to focus on developing marketing partnerships to facilitate the distribution of prepaid debit cards, personal financial services and payment reporting
services, all of which are designed to assist consumers in managing individual personal finances, including spending, budgeting and financial awareness. The Company had previously executed agreements to operate under a new
banking partnership, a new processor relationship and a leading retail load network.
By working closely with Central National Bank, management believes we will be able to offer a predictable low cost model that will provide our customers and strategic distribution partners the flexibility of working with wide
reaching portfolio program channels and will align cardholders with a suite of financial tools that include personal budgeting tools, online card balance viewing, bill payment, convenient reloading options online or at retail and a
financial management spending analysis tool. Currently in the first quarter of 2010 the Company has one program being marketed, a network branded payroll card being distributed via a commissioned sales force. In addition,
throughout the first quarter the Company has worked to develop a customized payroll program for a leading private retail group in the western United States. We anticipate launching this program in the late part of the second quarter
of 2010 or early in the third quarter of 2010. This customized payroll program represents potential organic revenue opportunities to the Company.
A number of initiatives undertaken by the Company have taken longer than expected or anticipated. Capital constraints coupled with key management time constraints, increasing regulatory requirements and lengthening
approval timeframes all contributed to slower than planned marketing and product rollouts. The Company expects that organic revenues generated in the coming quarters will allow the Company to hire third parties to staff and
support the program development and primary growth objectives.
In further support of continued operations, the company made a number of material changes to its operations in the second quarter of 2010:
On June 15, 2010, the Company entered into a twelve month consulting agreement with JPA Capital, LLC, with an automatic renewal of one year if not cancelled. This agreement was put in place to assist the Company with public
relations and corporate communications to more fully communicate with the Company’s investors and the investment community. The Company has agreed to compensate the consultant $10,000 per month. Subsequently, the
Company entered into a convertible debenture to ensure payment of the agreement. (see Note 4)
On June 15, 2010, the Company entered into a Convertible debenture for $120,000, due on demand, bearing interest at 10% per annum. The note is due on or before June 15, 2011. The debenture contains a provision for
conversion at the holder’s option including accrued interest into the Company’s common stock at a conversion price equal to $0.001. The related beneficial conversion feature will be amortized over the life of the note.
On June 9, 2010, the Company entered into a consulting agreement with Island Financial Solutions. The purpose of the agreement is to expand prepaid card opportunities and alternative payment platforms across a broad region
outside of the United States.
On May 27, 2010, the Company entered into a call center agreement with Globe Wired. As our outsourced call center provider Globe Wired shall be responsible for all inbound service calls and all outbound targeted marketing
in conjunction with personal financial services offerings.
On May 25, 2010, the Company entered into a twenty-four month consulting service agreement with Quest Capital Markets, Inc. The Company will be utilizing Quest’s contacts and business experience to help secure funding
and assist with any potential mergers/acquisitions. The Company has agreed to compensate the consultant $10,000 per month. Subsequently, the Company entered into a convertible debenture to ensure payment of the agreement.
(see Note 4)
On May 25, 2010, the Company entered into a Convertible debenture for $240,000, due on demand, bearing interest at 10% per annum. The note is due on or before May 25, 2012. The debenture contains a provision for
conversion at the holder’s option including accrued interest into the Company’s common stock at a conversion price equal to $0.001. The related beneficial conversion feature will be amortized over the life of the note.
On May 22, 2010, the Company entered into a convertible promissory grid note bearing interest at the rate of 8% per annum. The holder has the option to lend additional amounts to the borrower from time to time in the future,
on the terms set forth in this agreement. The note contains a provision for the conversion at the holder’s option including accrued interest, into the Company’s common stock at a conversion price equal to $0.001. The principal
amount of the note at May 22, 2010 is $10,500. The related beneficial conversion feature will be amortized over the life of the note.
On May 14, 2010, the Company terminated all prior agreements by and between Newport Coast Securities and the Company. The Company is seeking strategic advice from other parties and the termination was deemed mutual.
On April 9, 2010 the Company entered into a Services Agreement with the National Organizations for the Advancement of Haitians “NOAH”. The agreement covers in principal, all efforts to distribute prepaid cards and raise
payment history awareness with the groups and individuals affiliated with NOAH.
Throughout the first and second quarters of 2010, the Company continued to negotiate with key vendors and prior service providers. A continued and substantial backlog of liabilities remains on the records of the Company,
but management remain confident that those liabilities will be addressed in the coming quarters. Of the major items outstanding, the single largest are the lapsed settlement agreements with former directors Knitowski, Dang and their
related parties, Dang, Ecewa, Curo and Sagoso. The Company has recently been in contact with certain principals as listed above. It is expected that cash payments or alternative arrangements will be made in the third or fourth
quarters to mitigate any languishing liabilities to those particular parties.
Key Accounting Policies
Key accounting policies are defined as those that are reflective of significant judgments and uncertainties, and potentially result in materially different results under different assumptions and conditions. There were no changes
to our key accounting policies for the quarter ended June 30, 2010.
Results of Operations
For the Three months ended June 30, 2010
In the quarter ended June 30, 2010 we were restarting operations and thus realized no material revenues. There was no income in the corresponding period ended June 30, 2010.
Revenue
Revenue from continuing operations was $150 and $0 for the quarters ended June 30, 2010 and 2009, respectively, representing an increase of $150. As previously discussed, we revised the business strategy to focus on
restarting operations and take the company into financial services marketing and move away from direct program management.
Cost of Sales and Gross Profit
Cost of sales was $0 and $0 for the quarters ended June 30, 2010 and 2009, respectively. There was no active business in both periods.
The resulting gross profit (loss) was $150 and $0 for the quarters ended June 30, 2010 and 2009, respectively. Management expects gross profit margin to be unpredictable and volatile as the new operations begin. Fluctuations
can be anticipated due to uncertainties in accessing markets coupled with higher product costs mixed with the volatility of entering markets where products have been commoditized. Management believes that by eliminating previously
high fixed processing and banking costs associated with program management, the Company can focus on improving margins by delivering organic revenues through new marketing partnerships and alliances.
Operating Expenses
Operating expenses were $239,484 and $50,077 for the quarters ended June 30, 2010 and 2009, respectively, representing an increase of $189,407 or 378%. The components of our first quarter 2010 operating expense are salaries
and wages (53%) professional fees (6%) and general and administrative (41%).
Salaries and wages expense were $129,230 and $0 for the quarters ended June 30, 2010 and 2009, respectively, representing an increase of $129,230 or 100%. The Company has two employees, both of whom are working largely
under accrued wages and non-cash compensation until such a time certain milestones are achieved or the Company has the funds to pay cash compensation or until the Company and employees mutually agree to new compensation
terms.
General and administrative expenses were $95,004 and $1,356 for the quarters ended June 30, 2010 and 2009, respectively, representing an increase of $93,648 or 6,900%. The increase resulted largely from the fact the Company
has paid several vendors in the form of stock and has commenced operations adding insurance and other overhead expenses as required.
Net loss
We incurred net losses of $276,780 and $49,552 for the quarters ended June 30, 2010 and 2009, respectively, representing an increase in net loss of $227,228 or 459%. As we continue to seek restarted operations, organic growth
in conjunction with strategic alternatives and a reverse acquisition or merger opportunity, we expect gross profit margins and the losses to ease when 2011 is compared to 2010.
For the Six months ended June 30, 2010
In the quarter ended June 30, 2010 we were restarting operations and thus realized no material revenues. There was no income in the corresponding period ended June 30, 2010.
Revenue
Revenue from continuing operations was $300 and $87 for the six months ended June 30, 2010 and 2009, respectively, representing an increase of $213. As previously discussed, we revised the business strategy to focus on
restarting operations and take the company into financial services marketing and move away from direct program management.
Cost of Sales and Gross Profit
Cost of sales was $316 and $0 for the six months ended June 30, 2010 and 2009, respectively. There was no active business in both periods.
The resulting gross profit (loss) was ($16) and $87 for the six months ended June 30, 2010 and 2009, respectively. Management expects gross profit margin to be unpredictable and volatile as the new operations begin.
Fluctuations can be anticipated due to uncertainties in accessing markets coupled with higher product costs mixed with the volatility of entering markets where products have been commoditized. Management believes that by
eliminating previously high fixed processing and banking costs associated with program management, the Company can focus on improving margins by delivering organic revenues through new marketing partnerships and alliances.
Operating Expenses
Operating expenses were $1,011,857 and $94,231 for the six months ended June 30, 2010 and 2009, respectively, representing an increase of $917,626 or 974%. The components of our six months ended June 30, 2010 operating
expense are salaries and wages (25.5%) professional fees (5.0%) and general and administrative (69.5%).
Salaries and wages expense were $258,460 and $0 for the six months ended June 30, 2010 and 2009, respectively, representing an increase of $258,460 or 100%. The Company has two employees, both of whom are working largely
under accrued wages and non-cash compensation until such a time certain milestones are achieved or the Company has the funds to pay cash compensation or until the Company and employees mutually agree to new compensation
terms. During the first quarter, the two key management employees, Messrs Smith and Kenyon agreed to non cash payments for accrued wages of $100,000 each. These non cash payments covered the period of October 1, 2009
through February 28, 2010. The compensation provided was 175,000,000 common shares of Company stock per employee.
General and administrative expenses were $702,886 and $3,387 for the quarters ended June 30, 2010 and 2009, respectively, representing an increase of $699,499 or 20,652%. The increase resulted largely from the fact the Company
has paid several vendors in the form of stock and has commenced operations adding insurance and other overhead expenses as required.
Other income
As previously stated, on February 25, the Company also resolved an outstanding $40,000 arbitration debt under a debt conversion agreement with Triple Crown. Under this agreement, the arbitration award was paid jointly to
the recipient (Transfers4Less) by Triple Crown and the Company’s insurance provider. The Company has shown the insurance settlement as other income.
Net loss
We incurred net losses of $1,013,443 and $95,556 for the quarters ended June 30, 2010 and 2009, respectively, representing an increase in net loss of $917,887 or 961%. As we continue to seek restarted operations, organic growth
in conjunction with strategic alternatives and a reverse acquisition or merger opportunity, we expect gross profit margins and the losses to ease when 2011 is compared to 2010.
Liquidity and Capital Resources
As of June 30, 2010, cash totaled $36,549 as compared with an overdraft of $1,144 at December 31, 2009, resulting in an increase of $37,693 in cash and cash equivalents. The increase in cash and cash equivalents was attributed
to funding the operational expenses and cost of goods sold with new convertible debt and the issue of common stock. In the six months ended June 30, 2010, we used $504,808 of cash in operations. For the comparable period in the
prior year we used $32,906 of cash in operations.
Working capital was ($948,940) at June 30, 2010, as compared with working capital of ($979,968) at December 31, 2009. This decrease in working capital was a result of using new funds and stock to fund operations and related
expenses.
Off-Balance Sheet Arrangements
During the quarter ended June 30, 2010, we did not engage in any off-balance sheet arrangements.
Stock-Based Compensation
"On June 30, 2009, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 168, The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles-a
replacement of FASB Statement No. 162. On the effective date of this standard, FASB Accounting Standards Codification™ (ASC) became the source of authoritative U.S. accounting and reporting standards for nongovernmental
entities, in addition to guidance issued by the Securities and Exchange Commission (SEC). FASB ASC significantly changes the way financial statement preparers, auditors, and academics perform accounting research."
"This statement is effective for financial statements issued for interim and annual periods ending after September 15, 2009. If an accounting change results from the application of this guidance, an entity should disclose the
nature and reason for the change in accounting principle in their financial statements. This new standard flattens the GAAP hierarchy to two levels: one that is authoritative (in FASB ASC) and one that is non-authoritative (not in
FASB ASC). Exceptions include all rules and interpretive releases of the SEC under the authority of federal securities laws, which are sources of authoritative GAAP for SEC registrants, and certain grandfathered guidance having
an effective date before March 15, 1992. This standard creates Topic 105, Generally Accepted Accounting Principles, in FASB ASC."
"FASB Statement No. 168 is the final standard that will be issued by FASB in that form. It was added to FASB ASC through Accounting Standards Update No. 2009-02 on June 30, 2009. There will no longer be, for example,
accounting standards in the form of statements, staff positions, Emerging Issues Task Force (EITF) abstracts, or AICPA Accounting Statements of Position. Instead, FASB will issue Accounting Standards Updates. FASB will
not consider Accounting Standards Updates as authoritative in their own right. Instead, they will serve only to update FASB ASC, provide background information about the guidance, and provide the basis for conclusions on
changes made to FASB ASC."
"FASB ASC is a major restructuring of accounting and reporting standards designed to simplify user access to all authoritative U.S. generally accepted accounting principles (GAAP) by providing the authoritative literature
in a topically organized structure. FASB ASC disassembled and reassembled thousands of nongovernmental accounting pronouncements (including those of FASB, the EITF, and the AICPA) to organize them under
approximately 90 topics and include all accounting standards issued by a standard setter within levels A-D of the current U.S. GAAP hierarchy. FASB ASC also includes relevant portions of authoritative content issued by the
SEC, as well as selected SEC staff interpretations and administrative guidance issued by the SEC; however, FASB ASC is not the official source of SEC guidance and does not contain the entire population of SEC rules,
regulations, interpretive releases, and staff guidance. Moreover, FASB ASC does not include governmental accounting standards. FASB ASC is not intended to change U.S. GAAP or any requirements of the SEC."
Subsequent Events
The following material events occurred subsequent to the quarter ended June 30, 2010:
On July 19, 2010, the Company became an official affiliate marketer of Lower My Bills.
On July 21, 2010, the Company became a marketing affiliate for myFICO.
Both of these products help the Company’s position of creating awareness about personal finances and the importance of continually monitoring personal financial transactions,
As a smaller reporting company, we have elected not to provide the disclosure required by this item.
Controls and Procedures
Any control system, no matter how well designed and operated, can provide only reasonable (not absolute) assurance that its objectives will be met. Furthermore, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, have been detected.
Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s “disclosure controls and procedures”, as such term
is defined in Rules 13a — 15(e) and 15d — 15(e) of the Securities Exchange Act of 1934 (“Exchange Act”) as of the end of the period covered by the report.
Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2010, the Company’s disclosure controls and procedures were not effective to provide reasonable assurance
that (i) the information required to be disclosed by us in this Report was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (ii) information required to be disclosed by us
in our reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.
Internal Control Over Financial Reporting
With the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, the Company also conducted an evaluation of the Company’s internal control over financial reporting to
determine whether any changes occurred during the Company’s second quarter ended June 30, 2010, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Based on such evaluation, management concluded that, as of the end of the period covered by this report, there have not been several changes in the Company’s internal control over financial reporting (as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial
reporting.
Specific changes include (but are not limited to):
| § | Addition of independent Board Member for oversight and independence; |
| § | Planned addition of personnel when Company expands; |
| § | Re-implementation of Company audit committee. |
OTHER INFORMATION
The Company continues to receive demands for payments from creditors. The Company has insufficient funds to defend these actions or to pay the creditors. However, management has been proactive to reach out to most
vendors and creditors in an attempt to negotiate or resolve outstanding debt. In addition, the Company is proactively working with interested third parties to convert debt on behalf of the Company. Converted debt notifications will
be filed on Form 8-K with the Securities and Exchange Commission. Separately, Management anticipates that if the Company is unable to settle these claims, the Company may be dissolved.
In addition to the other information set forth in this report, you should carefully consider the factors discussed under the caption “Risk Factors” in Part I, "Item 1. Description of Business" in our Annual Report on Form 10-K
for the year ended December 31, 2009 which could materially affect our business prospects, financial condition or future results. There have been no other material changes during the three months ended March 31, 2010 to the risk
factors discussed in the periodic report noted above.
None
None
None
