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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
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(Mark One)
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from _____ to ______
Commission file number 0-25022
MoneyZone.com
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Nevada 72-1148906
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(State Or Other Jurisdiction Of (I.R.S. Employer
Incorporation Or Organization) Identification No.)
6000 Fairview Road Ste. 1410 Charlotte, NC 28210
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(Address Of Principal Executive Offices)
(704) 522-1410
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(Issuer's Telephone Number, Including Area Code
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ___
Transitional Small Business Disclosure Format:
Yes ___ No X
The total number of shares of the registrant's Common Stock, $.15 par
value, outstanding on November 14, 2001, was 105,000.
MoneyZone.com
(A Development Stage Company)
Index to Form 10-QSB
Page
Part I-- FINANCIAL INFORMATION
Item 1. Financial Statements
Historical Financial Statements
Balance Sheet as of September 30, 2001........................... 2
Statements of Operations for the Quarters and Nine Months
Ended September 30, 2001 and 2000.............................. 3
Statements of Cash Flows for the Nine Months Ended
September 30, 2001 and 2000.................................... 4
Notes to Financial Statements.................................... 6
Item 2. Management's Discussion and Analysis or Plan of Operation..... 9
Part II-- OTHER INFORMATION
Item 1. Legal Proceedings............................................. 11
Item 2. Changes in Securities and Use of Proceeds..................... 11
Item 3. Defaults Upon Senior Securities............................... 11
Item 4. Submission of Matters to a Vote of Security Holders........... 11
Item 5. Other Information............................................. 11
Item 6. Exhibits and Reports on Form 8-K.............................. 11
Signature ............................................................ 12
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MoneyZone.com
(A Development Stage Company)
Balance Sheets
September 30, December 31,
2001 2000
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(Unaudited) (Unaudited)
ASSETS
Current Assets
Cash $ 198 $ 71,062
Related party receivable - 600,000
Prepaid expenses and other - 35,000
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Total current assets 198 706,062
Property & equipment, net of
accumulated depreciation of $0 and $0 14,000 14,000
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Total Assets $ 14,198 $ 720,062
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LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities
Accounts payable $ - $ 196,775
Accrued liabilities from discontinued
operations - 238,348
Advances from affiliate 284,555 -
Accrued interest - 50,000
Convertible debenture - 3,000,000
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Total liabilities 284,555 3,485,123
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Shareholders' deficit
Preferred stock; $.15 par value; authorized
10,000,000 shares; 100,000 and 0 shares
issued and outstanding at June 30, 2001
and December 31, 2000 15,000 -
Common stock; $.15 par value; authorized
333,333 shares; 105,000 and 41,873
shares issued and outstanding at June 30,
2001 and December 31, 2000 15,750 6,281
Additional paid in capital 5,390,405 2,938,314
Deficit accumulated during
developmental stage (5,691,512) (5,709,656)
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(270,357) (2,765,061)
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$ 14,198 $ 720,062
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See accompanying notes to financial statements.
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MoneyZone.com
(A Development Stage Company)
Statements of Operations
April 4, 1989
(inception)
For the Three Months For the Nine Months to
Ended September 30, Ended September 30, September 30,
-------------------------- -------------------------- ------------
2001 2000 2001 2000 2001
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(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Service income $ - $ 52,194 $ - $ 52,194 $ 70,453
Other income 287,275 5,589 287,275 19,316 323,627
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Total income 287,275 57,783 287,275 71,510 394,080
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Costs and expenses
Costs related to attempted
business acquisitions - - - - 192,020
Web site and related costs - 267,207 - 467,411 795,640
Sales and marketing costs - 192,044 - 411,320 616,203
General and administrative 26,579 213,223 247,571 684,768 1,665,495
Interest and financing costs - 104,000 21,560 104,000 1,112,917
Consulting fees - - - - 502,191
Loss on sale of marketable
securities - - - - 602,891
Offering costs - - - - 66,464
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Total liabilities 26,579 776,474 269,131 1,667,499 5,553,821
------------ ------------ ------------ ------------ ------------
Income (loss) prior to
disposal of business 260,696 (718,691) 18,144 (1,595,989) (5,159,741)
Loss from disposal of business
including provision of
$115,398 for operating losses
during the phase-out period - - - - (531,771)
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Net income (loss) $ 260,696 $ (718,691) $ 18,144 $ (1,595,989) $ (5,691,512)
============ ============ ============ ============ ============
Basic and diluted net income
(loss) per common share $ 2.61 $ (17.26) $ 0.21 $ (38.33)
============ ============ ============ ============
Weighted average common
shares outstanding 100,000 41,638 87,438 41,638
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See accompanying notes to financial statements.
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MoneyZone.com
(A Development Stage Company)
Statements of Cash Flows
For the Nine Months
Ended September 30,
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2001 2000
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(Unaudited) (Unaudited)
Cash flows from operating activities
Net income (loss) $ 18,144 $ (1,595,989)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities
Interest expense 21,560 -
Depreciation and amortization - 29,946
Liabilities from discontinued
operations (284,775) -
Changes in operating assets and liabilities
Marketable securities - 300,246
Accounts receivable - (42,514)
Prepaid expenses - (849,720)
Deposits - (2,228)
Accounts payable (67,575) (21,002)
Accrued liabilities (77,773) 8,467
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Net cash used in operating activities (390,419) (2,172,794)
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Cash flows from investing activities
Sale of property and equipment 35,000 -
Purchase of property and equipment - (264,216)
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Net cash provided by (used in)
investing activities 35,000 (264,216)
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Cash flows from financing activities
Proceeds from sale of common stock, net - 477,470
Proceeds from notes payable and debentures - 3,000,000
Advances from affilate 284,555 203,697
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Net cash provided by financing activities 284,555 3,681,167
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Net increase (decrease) in cash (70,864) 1,244,157
Cash and cash equivalents, beginning of period 71,062 974,611
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Cash and cash equivalents, end of period $ 198 $ 2,218,768
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See accompanying notes to financial statements.
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MoneyZone.com
(A Development Stage Company)
Statements of Cash Flows (continued)
For the Nine Months
Ended September 30,
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2001 2000
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(Unaudited) (Unaudited)
Supplemental Information
Common stock issued under terms of
convertible debt, 56,327 shares issued $ 2,471,560 $ -
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Issuance of 5,000 shares of common
stock in lieu of a cash payment $ 5,000 $ -
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See accompanying notes to financial statements.
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MoneyZone.com
(A Development Stage Company)
Notes to Financial Statements
Note 1. Organization, Business, and Consolidation
The financial statements presented are those of MoneyZone.com, a Nevada
corporation and a development stage company (the "Company"). The Company was
incorporated on April 4, 1989 under the laws of the State of Nevada under the
name Chelsea Atwater, Inc., later changing its name to CEREX Entertainment
Corporation and subsequently to CERX Entertainment Corporation, CERX Venture
Corporation and, on July 8, 1999, in connection with the merger of
EBonlineinc.com, Inc., a Delaware corporation, with the Company, to
EBonlineinc.com. Upon consummation of the merger, EBonlineinc.com, Inc. ceased
to exist and the Company was the sole surviving entity. On December 16, 1999,
the Board of Directors approved the Company changing its name to MoneyZone.com.
The Company's activities to date have been directed toward raising capital,
developing, implementing and marketing an Internet site designed to facilitate
mergers, acquisitions, and the funding of corporate finance activities.
Note 2. Interim Reporting
The financial statements of MoneyZone.com for the quarter and nine months
ended September 30, 2001 have been prepared by the Company, are unaudited, and
are subject to year-end adjustments. These unaudited financial statements
reflect all known adjustments (which include only normal, recurring adjustments)
which are, in the opinion of management, necessary for a fair presentation of
the financial position, results of operations, and cash flows for the periods
presented in accordance with generally accepted accounting principles. The
results presented herein for the interim periods are not necessarily indicative
of the actual results to be expected for the fiscal year.
The notes accompanying the consolidated financial statements in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2000
include accounting policies and additional information pertinent to an
understanding of these interim financial statements.
Note 3. Summary of Significant Accounting Policies
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reporting 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 period.
Actual results could differ from those estimates.
Deferred Income Taxes
Deferred income taxes reflect temporary differences in reporting results of
operations for income tax and financial accounting purposes. Deferred tax assets
are reduced by a valuation allowance when, in the opinion of management, it is
more likely than not that some portion or all of the deferred tax assets will
not be realized.
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MoneyZone.com
(A Development Stage Company)
Notes to Financial Statements (continued)
Note 3. Summary of Significant Accounting Policies (continued)
Stock-Based Compensation
In October, 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation" SFAS No. 123 encourages, but does not require, companies to record
compensation expense for stock-based employee compensation plans at fair value.
The Company has elected to account for its stock-based compensation plans using
the intrinsic value method prescribed by Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB No. 25). Under the
provisions of APB No. 25, compensation cost for stock options is measured as the
excess, if any, of the quoted market price of the Company's common stock at the
date of grant over the amount an employee must pay to acquire the stock.
Loss Per Common Share
Loss per common share is computed by dividing the net loss by the weighted
average shares outstanding during the period. Common stock equivalents are not
included in the weighted average calculation since their effect would be
anti-dilutive.
Fair Value of Financial Instruments
SFAS 107, "Disclosures about Fair Value of Financial Instruments," requires
the Company to report the fair value of financial instruments, as defined.
Substantially all of the Company's assets and liabilities are carried at fair
value or contracted amounts which approximate fair value. Estimates of fair
value are made at a specific point in time, based on relative market information
and information about the financial instrument, specifically, the value of the
underlying financial instrument.
Property and Equipment
Property and equipment are carried at cost and are depreciated on a
straight-line basis over the estimated useful life of the related assets of five
years.
Cash and Cash Equivalents
For purposes of the consolidated financial statements, the Company
considers all demand deposits held in banks and certain highly liquid
investments with maturities of 90 days or less other than those held for sale in
the ordinary course of business to be cash equivalents.
Stock Split
On March 30, 2001, the Company affected a 150 for 1 reverse split of the
Company's common stock and decreased the number of authorized shares from
50,000,000 to 333,333. The increase in the number of authorized shares is
subject to the approval of the holders of a majority of the outstanding shares
and compliance with the Securities Exchange Act of 1934, as amended.
Reclassifications
Certain amounts in prior periods have been reclassified to conform to the
current presentation.
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MoneyZone.com
(A Development Stage Company)
Notes to Financial Statements (continued)
Note 4. Termination of Merger
On April 9, 2001, we entered into an Agreement and Plan of Merger with our
wholly owned subsidiary, Sutton Merger Corp., a Delaware corporation ("Merger
Sub") and Sutton Online, Inc., a Delaware corporation ("Sutton Online")(the
"Merger Agreement"). Pursuant to the Merger Agreement, Merger Sub will merge
into Sutton Online whereby Sutton Online will be the surviving corporation (the
"Merger").
The Merger is subject to certain conditions including, but not limited to,
the approval of the stockholders of the Company and compliance with the
Securities and Exchanges Act of 1934. The Company intends to file an Information
Statement pursuant to Section 14 (c) of the Securities Act of 1934 relating to,
among other things, the Merger.
The Merger provides that each outstanding share of common stock of Sutton
Online, par value $.025 per share ("Sutton Online Common Stock") will be
converted into one share of our common stock, $.15 par value per share. Each
outstanding warrant to purchase Sutton Online Common Stock will be converted
into a warrant exercisable into the same number of shares of our common stock at
the same exercise price.
The foregoing description of the transactions contemplated by the Plan of
Merger is a summary only and is qualified in its entirety by reference to the
complete copy of the Plan of Merger attached as an exhibit to our Form 8-K dated
April 9, 2001, filed on April 12, 2001.
On May 25, 2001, MoneyZone.com announced that it has entered into a
Termination Agreement with its wholly owned subsidiary, Sutton Merger Corp., a
Delaware corporation and Sutton Online, Inc., a Delaware corporation.
Pursuant to the Termination Agreement, the Agreement and Plan of Merger,
dated April 9, 2001, among the Company, MergerSub and Sutton Online was
terminated and the proposed merger of MergerSub into Sutton Online was
abandoned. The parties entered into a Termination Agreement due to an inability
to close the merger transaction in a timely fashion.
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PART I - FINANCIAL INFORMATION (CONTINUED)
Item 2. Management's Discussion and Analysis and Plan of Operation
General Overview
On March 7, 2001, we entered into an Agreement ("Agreement") with Global
Capital Partners Inc. CAP regarding the conversion of the MoneyZone Convertible
Debenture and the acquisition of certain of our assets by Global Capital
Partners Inc.
Under the terms of the MoneyZone Convertible Debenture, Global Capital
Partners Inc. was entitled to receive 9,886,236 shares (pre-reverse split) of
our common stock. Under the terms of the Agreement, Global Capital Partners,
Inc. converted the Debenture into 8,448,990 shares (pre-reverse split) of our
common stock.
On March 30, 2001, we (i) effected a reverse stock split (the "Reverse
Stock Split") of our outstanding common stock, par value $.001 per share,
effective at 5:00 p.m. on that date, by issuing one newly issued share of common
stock for each 150 shares of the Company's presently issued and outstanding
common stock; and (ii) after effecting the Reverse Stock Split, the number of
authorized shares decreased from 50,000,000 shares to 333,333 shares.
On April 9, 2001, we entered into an Agreement (the "Revised Agreement")
with Global Capital Partners Inc. which amended and superseded in its entirety
the March 7, 2001 Agreement regarding the conversion of the MoneyZone
Convertible Debenture. Under the terms of the MoneyZone Convertible Debenture,
Global Capital Partners Inc. was entitled to receive 9,886,236 shares of our
stock. Under the terms of the Revised Agreement, we agreed to issue Global
Capital Partners Inc. 8,448,990 shares (pre-reverse split) of our Common Stock
and 100,000 shares of our Series A Preferred Stock. The Series A Preferred Stock
issued to Global Capital Partners Inc. carries special voting rights granting
the holder to 200 votes per share of the Series A Preferred Stock. Under the
terms of the Revised Agreement, we are no longer transferring all of our assets
to Global Capital Partners Inc.
Also, on April 9, 2001, we entered into an Agreement and Plan of Merger
with our wholly owned subsidiary, Sutton Merger Corp., a Delaware corporation
("Merger Sub") and Sutton Online, Inc., a Delaware corporation ("Sutton
Online")(the "Merger Agreement"). Pursuant to the Merger Agreement, Merger Sub
will merge into Sutton Online whereby Sutton Online will be the surviving
corporation (the "Merger").
The Merger was subject to certain conditions including, but not limited to,
the approval of the stockholders of the Company and compliance with the
Securities and Exchanges Act of 1934. The Company intends to file an Information
Statement pursuant to Section 14 (c) of the Securities Act of 1934 relating to,
among other things, the Merger.
The Merger provides that each outstanding share of common stock of Sutton
Online, par value $.025 per share ("Sutton Online Common Stock") will be
converted into one share of our common stock, $.15 par value per share. Each
outstanding warrant to purchase Sutton Online Common Stock will be converted
into a warrant exercisable into the same number of shares of our common stock at
the same exercise price.
The foregoing description of the transactions contemplated by the Plan of
Merger is a summary only and is qualified in its entirety by reference to the
complete copy of the Plan of Merger attached as an exhibit to our Form 8-K dated
April 9, 2001, filed on April 12, 2001.
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On May 25, 2001, MoneyZone.com announced that it has entered into a
Termination Agreement with its wholly owned subsidiary, Sutton Merger Corp., a
Delaware corporation and Sutton Online, Inc., a Delaware corporation.
Pursuant to the Termination Agreement, the Agreement and Plan of Merger,
dated April 9, 2001, among the Company, MergerSub and Sutton Online was
terminated and the proposed merger of MergerSub into Sutton Online was
abandoned. The parties entered into a Termination Agreement due to an inability
to close the merger transaction in a timely fashion.
Liquidity and Capital Resources
MoneyZone.com had $198 in cash at September 30, 2001, and had no accounts
payable.
Results Of Operations
During the nine months ended September 30, 2001, we had miscellaneous
revenues of $289,775 from the reversal of liabilities accrued at December 31,
2000 related to the discontinued operations and recognized net income from
operations of $23,144. Expenses for the nine months are related primarily to
general and administrative expenses and interest expense through the date of
conversion on our convertible debenture.
During the nine months ended September 30, 2000, we had $71,510 in
revenues, and a net loss from operations of $1,595,989. Expenses for this year
are related primarily to the development of the proprietary website, sales and
marketing expenses, and costs associated with our convertible debentures.
New Accounting Standards
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This Statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. The
effective date of SFAS No. 133 was deferred by the issuance of SFAS No. 137.
SFAS No. 133 was then further amended by SFAS No. 138. The deferred effective
date of SFAS No. 133 is for fiscal years beginning after June 15, 2000. We
adopted SFAS No. 133 as amended by SFAS No. 138 effective with the year
beginning January 1, 2001.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
In September 2001, we issued 5,000 shares of our common stock in lieu of a
cash payment to settle amounts remaining under the terms of our office lease at
a price of $1.00 per share.
We effected the foregoing issuance without registration under the
Securities Act of 1933, as amended. The issued shares were not registered under
the Securities Act of 1933 in reliance on the exemption from registration
provided by Section 4(2) under the Securities Act and Regulation D promulgated
thereunder.
Item 3. Defaults on Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
None
b. Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended
September 30, 2001.
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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.
Moneyzone.com
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(Registrant)
Date: November 14, 2001 /s/ Randall F. Greene
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Name: Randall F. Greene
Title:Chief Executive Officer
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