U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Mark One
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
OR
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-25022
MoneyZone.com
(Name of Small Business Issuer in Its Charter)
Nevada 72-1148906
(State Or Other Jurisdiction Of (I.R.S. Employer
Incorporation Or Organization) Identification No.)
7025 East 1st Avenue, Suite 5, Scottsdale, Arizona 85251
(Address Of Principal Executive Offices) (Zip Code)
(480) 945-2232
(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 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 |_|
Transitional Small Business Disclosure Format: Yes |_| No |X|
The total number of shares of the registrant's Common Stock, par value
$.15 per share, outstanding on May 17, 2002 was 100,000.
1
MoneyZone.com
(A Development Stage Company)
Index to Form 10-QSB
Page
----
Part I-- FINANCIAL INFORMATION
Item 1. Financial Statements
Historical Financial Statements
Balance Sheets as of March 31, 2002 and December 31, 2001..... 2
Statements of Operations for the Three Ended
March 31, 2002 and 2001....................................... 3
Statements of Cash Flows for the Three Months Ended March 31,
2002 and 2001................................................. 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............................................ 10
Item 2. Changes in Securities and Use of Proceeds.................... 10
Item 3. Defaults Upon Senior Securities.............................. 10
Item 4. Submission of Matters to a Vote of Security Holders.......... 10
Item 5. Other Information............................................ 10
Item 6. Exhibits and Reports on Form 8-K............................. 10
Signature ................................................... 11
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MoneyZone.com
(A Development Stage Company)
Balance Sheets
(Note 1)
March 31, December 31,
2002 2001
---------------- ----------
(Unaudited) (Unaudited)
ASSETS
Current Assets
Cash $ 98 $ 98
Related party receivable (Note 3) - -
Prepaid expenses and other
------------- ------------
- -
Total Current Assets 98 98
Property & equipment, net of accumulated
depreciation of $ 0 and $ 0 14,000 14,000
------------- ------------
Total Assets $ 14,098 $ 14,098
============= ============
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
Current liabilities
Accounts payable $ 26,565 $ 38,114
Accrued liabilities from discontinued operations 227,847 227,847
Advances from affiliates - 284,555
Accrued interest - -
Convertible debenture (Note 3) - -
_____________ ______________
Total liabilities 254,412 550,516
------------- --------------
Commitments and contingencies (Notes 1 and 4)
Shareholders' equity (deficit) (Note 3)
Preferred stock; $.15 par value; authorized
10,000,000 shares; 100,000 and 100,000 shares
issued and outstanding at March 31, 2002 and
December 31, 2001 15,000 15,000
Common stock; $.15 par value; authorized
333,333 shares; 100,000 and 100,000 shares issued
and outstanding at March 31, 2002 and December 31,
2001 15,000 15,000
Additional paid in capital 5,386,155 5,386,155
Deficit accumulated during development stage (5,656,469) (5,952,573)
-------------- --------------
Total shareholders' equity (deficit) (240,314) (536,418)
-------------- --------------
Total Liabilities and Shareholders'
Equity (Deficit) $ 14,098 $ 14,098
============== ==============
See accompanying notes to financial statements.
- 2 -
MoneyZone.com
(A Development Stage Company)
Statements of Operations
April 4, 1989
For the Three Months (inception) to
Ended March 31, March 31,
------------------------- ----------
2002 2001 2002
--------- -------- ------------
(Unaudited) (Unaudited) (Unaudited)
Service Income $ - $ - $ 70,453
Interest Income - - 36,352
--------- -------- ------------
Total Income - - 106,805
--------- -------- ------------
Costs and expenses
Costs related to attempted
business acquisitions - - 192,020
Web site and related costs - - 795,640
Sales and marketing costs - - 616,203
General and administrative 2,250 - 1,420,174
Interest and financing costs - - 1,091,357
Consulting fees - - 502,191
Loss on sale of marketable securities - - 602,891
Offering costs
--------- -------- ------------
- - 66,464
--------- -------- ------------
Total costs and expenses 2,250 - 5,284,690
--------- -------- ------------
Income (loss) prior to disposal of business 2,250 - (5,180,135)
Loss from disposal of business including a
change in the estimate for costs associated
with the disposal of the business - (58,121) (774,688)
--------- -------- ------------
Loss before extraordinary item (2,250) (58,121) (5,954,823)
Extraordinary gain on debt
forgiveness by
affiliated company 298,354 - 298,354
--------- -------- ------------
Net income (loss) $296,104 $(58,121) $(5,656,469)
========= ======== ============
Weighted average common shares
Outstanding 100,000 61,895
========= ========
Basic and diluted net loss per common
share before
extraordinary item $ (0.02) $ (0.94)
========= ========
Basic and diluted net income per
common share
from extraordinary item $ 2.98 -
========== ========
Basic and diluted net income
(loss) per common share $ 2.96 $ (0.94)
=========== ========
See accompanying notes to financial statements.
- 3 -
MoneyZone.com
(A Development Stage Company)
Statements of Cash Flows
April 4, 1989
For the Three Months (inception) to
Ended March 31, March 31,
--------------------------- ----------
2002 2001 2002
-------------------- -------------- ------------
(Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities
Net loss before extraordinary item $ (2,250) $ (58,121) $ (5,954,823)
Adjustments to reconcile net loss to net cash
used in operating activities:
Loss from disposal of business - - 531,771
Accretion of interest and financing costs - 21,560 1,044,060
Write-down to market of trading securities - - 27,398
Depreciation and amortization - - 69,444
Loss on sale of marketable securities - - 602,891
Capital contributed by shareholder for
legal fees - - 53,343
Common stock issued for costs advanced and
services - - 179,368
Changes in operating assets and liabilities
Prepaid expenses and other - - 353,334
Accounts payable 2,250 20,622 40,364
Accrued liabilities - (87,575) (23,551)
Accrued interest - - 68,741
-------------------- -------------- ------------
Net cash used in operating
activities - (103,514) (3,007,660)
-------------------- -------------- ------------
Cash flows from investing activities
Purchase of property and equipment - - (336,317)
Proceeds from sale of property and equipment - 35,000 35,000
Purchase of marketable securities - - (1,297,433)
Proceeds from sale of marketable - - 667,144
securities
Net cash acquired on acquisition of
EBonlineinc.com, Inc. - - 1,000
-------------------- -------------- ------------
Net cash used in investing activities
- (35,000) (930,606)
-------------------- -------------- ------------
Cash flows from financing activities
Proceeds from issuance of convertible debenture - - 1,977,500
Proceeds from issuance of warrants and common
stock, net - - 2,089,152
Proceeds from notes payable - - 159,372
Advances (to) from stockholders - - (287,660)
-------------------- -------------- ------------
Net cash provided by financing - - 3,938,364
activities -------------------- -------------- ------------
Net increase (decrease) in cash - (68,514) 98
Cash and cash equivalents, beginning of period 98 71,062
--------------------- ------------------
Cash and cash equivalents, end of period $ 98 $ 2,548 $ 98
===================== ================== =============
See accompanying notes to financial statements.
- 4 -
MoneyZone.com
(A Development Stage Company)
Statements of Cash Flows (continued)
(Note 1)
April 4, 1989
For the Three Months (inception) to
Ended March 31, March 31,
--------------------------- -----------
2002 2001 2002
-------------------- -------------- ------------
(Unaudited) (Unaudited) (Unaudited)
Supplemental disclosure of cash flow
information
Common stock issued under terms of
convertible debentures, 56,327
shares issued and 100,000 shares of
preferred stock issued in
conjunction with the conversion of
the convertible debentures $ - $ 2,471,560 $ 2,471,560
=================== ================= =================
Common stock issued for property $ - $ $ 62,500
=================== ================== =================
Common stock issued for services $ - $ - $ 381,590
=================== ================== ================
Forgiveness of debt $ 298,354 $ - $ 504,252
================== ================== ================
See accompanying notes to financial statements.
- 5 -
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 CERX 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.
Until its decision to discontinue it operations, the Company's
activities had been directed toward raising capital, developing, implementing
and marketing an Internet site designed to facilitate mergers, acquisitions, and
the funding of corporate finance activities.
The Company has suffered significant losses from operations and has a
working capital deficiency that raises substantial doubt about its ability to
continue as a going concern. In December 2000, the Board of Directors approved
the discontinuance of its operations and its online internet related corporate
finance activities. Since that time, the Company began exploring strategic
alternatives, including a sale, merger or liquidation.
Note 2. Interim Reporting
The financial statements of MoneyZone.com for the quarterly period
ended March 31, 2002 have been prepared by the Company, are unaudited, and are
subject to year-end adjustments. These unaudited financial statements reflect
all known adjustments (which included 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, 2001
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 reported 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. Management believes that the
estimates utilized in the preparation of financial statements are prudent and
reasonable.
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.
- 6 -
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.
Marketable Securities
The Company classifies its marketable securities as available for sale.
Available for sale securities are carried at fair market value, with unrealized
gains and losses reported as a separate component of shareholders' equity.
During the year ending December 31, 2000, the Company sold securities with a
cost (determined on a specific identification basis) of $1,270,035 for $667,144
resulting in realized losses of $602,891.
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
The Company has reflected its investment in various trade names and
domain names at its cost basis. Due to the nature of these assets, they are
neither depreciated nor amortized.
Cash and Cash Equivalents
For purposes of the 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.
Reclassifications
Certain amounts in prior periods have been reclassified to conform to
the current presentation.
- 7 -
MoneyZone.com
(A Development Stage Company)
Notes to Financial Statements (continued)
Note 4. Forgiveness of Debt
In conjunction with the sale of its preferred stock to an independent
third party, Global Capital Partners Inc. agreed to forgive its outstanding
advances to the Company in the amount of $298,354.
- 8 -
Item 2. Management's Discussion and Analysis or Plan of Operation
Operations
On March 31, 2002, we continued to maintain our operations at a
minimal operating level in contemplation of a sale or merger.
Results of Operations
During the three months ended March 31, 2002, we had no revenues
and a net loss of $2,250 before forgiveness of debt of $298,354. Expenses for
during this three month period were primarily related to the costs associated
with the maintenance of the entity.
During the three months ended March 31, 2001, we had no revenues and a
net loss related to the disposal of the business of $58,121. Expenses for during
this three month period were primarily related to the costs associated with the
disposal of the business.
Liquidity and Capital Resources
We had $98 in cash at March 31, 2002, and had $254,412 in accounts
payable and accrued liabilities from discontinued operations.
Subsequent Event
In conjunction with the sale of its preferred stock to an independent
third party, Global Capital Partners Inc. agreed to forgive its outstanding
advances to us in the amount of $298,354.
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. The
Company has adopted SFAS No. 133 as amended by SFAS No. 138 effective with the
fiscal year beginning January 1, 2001. It is not anticipated that the adoption
of SFAS No. 133 as amended by SFAS No. 138 will have any significant impact on
net income due to the Company's limited use of derivative instruments.
In June 2001, the FASB issued SFAS No. 141, "Business Combinations" which
requires that all business combination initiated after June 30, 2001 be
accounted for under the purchase method of accounting. The pooling of interest
method will no longer be permitted.
In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets" ("SFAS 142") which requires that goodwill be reviewed for impairment
instead of being amortized to earnings. The statement is effective for fiscals
years beginning after December 15, 2001 with early adoption permitted. The
Company adopted SFAS 142 on January 1, 2002. As of the filing of this report,
there are no transitional impairment losses related to a cumulative effect of a
change in accounting principle as a result of adopting SFAS 141 and SFAS 142.
3
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
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. There were no reports filed on Form 8-K
during the quarter ended March 31, 2002.
4
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
MoneyZone.com
(Registrant)
By: /s/ Raymond A. Bills
(Raymond A. Bills, Chairman,
Chief Executive Officer
President and Director*)
Date: May 20, 2002
* Raymond A. Bills also serves as our principal financial and accounting officer.
