SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2002
OR
o | TRANSITION REPORT PURSUANT TO 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, Inc.
(Exact name of registrant as specified in its charter)
Delaware | | 72-1148906 |
(State of incorporation) | | (IRS Employer Identification No.) |
| | |
3260 North Hayden, Suite 209 |
Scottsdale, Arizona 85251 |
(Issuer's Telephone Number, Including Area Code)
7025 East 1st Avenue, Suite 5, Scottsdale, Arizona 85251
(Former name, former address and former fiscal year, if changed since last report)
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 August 8, 2002 was 600,000.
1
MoneyZone.com, Inc.
(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 June 30, 2002 and December 31, 2001..........2
Statements of Operations for the Quarterly Period and Six Months
Ended June 30, 2002 and 2001..................................3
Statements of Cash Flows for the Six Months Ended June 30,
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, Inc.
(A Development Stage Company)
Balance Sheets
(Note 1)
June 30, December 31,
2002 2001
--------------- ---------------
(Unaudited) (Unaudited)
ASSETS
Current Assets
Cash $ 56 $ 98
Related party receivable (Note 3) - -
Prepaid expenses and other - -
--------------- --------------
Total Current Assets 56 98
Property & equipment, net of accumulated
depreciation of $ 0 and $ 0 14,000 14,000
--------------- --------------
Total Assets $ 14,056 $ 14,098
=============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable $ 29,220 $ 38,114
Accrued liabilities from discontinued
operations 227,847 227,847
Advances from affiliates - 284,555
Accrued interest - -
Convertible debenture (Note 3) - -
-------------- ---------------
Total liabilities 257,067 550,516
-------------- ---------------
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 June 30,
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 June 30, 2002
and December 31, 2001 15,000 15,000
Additional paid in capital 5,386,155 5,386,155
Deficit accumulated during development stage (5,659,166) (5,952,573)
-------------- ---------------
Total shareholders' equity (deficit) (243,011) (536,418)
-------------- ---------------
Total Liabilities and Shareholders'
Equity (Deficit) $ 14,056 $ 14,098
============== ===============
See accompanying notes to financial statements.
F-1
MoneyZone.com, Inc.
(A Development Stage Company)
Statements of Operations
For the Quarterly Period For the Six Months April 4, 1989
Ended June 30, Ended June 30, (inception) to
------------------------ ----------------------- June 30,
2002 2001 2002 2001 2002
----------- ----------- ----------- ----------- --------------
(Unaudited) (Unaudited) (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 2,697 - 4,947 - 1,422,871
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 2,697 - 4,947 - 5,289,637
----------- ----------- ----------- ----------- --------------
Loss prior to disposal
of business (2,697) - (4,947) - (5,182,832)
Loss from disposal of business
including a change in the estimate
for costs associated with the
disposal of the business - (184,431) - (242,552) (774,688)
----------- ----------- ----------- ----------- --------------
Loss before extraordinary item (2,697) (184,431) (4,947) (242,552) (5,957,520)
Extraordinary gain on debt
forgiveness by affiliated
company - - 298,354 - 298,354
----------- ----------- ----------- ----------- --------------
Net income (loss) $ (2,697) $ (184,431) $ 293,407 $ (242,552) $(5,659,166)
=========== =========== =========== =========== ==============
Weighted average common shares
Outstanding 100,000 100,000 100,000 81,053
=========== =========== =========== ===========
Basic and diluted net loss per
common share before
extraordinary item $ (0.03) $ (1.84) $ (0.05) $ (2.99)
=========== =========== =========== ===========
Basic and diluted net income per
common share from extraordinary
item $ - $ - $ 2.98 $ -
=========== =========== =========== ===========
Basic and diluted net income
(loss) per common share $ (0.03) $ (1.84) $ 2.93 $ (2.99)
============ ============ =========== ===========
See accompanying notes to financial statements.
F-2
MoneyZone.com, Inc.
(A Development Stage Company)
Statements of Cash Flows
For the Six Months April 4, 1989
Ended June 30, (inception) to
-------------------------- June 30,
2002 2001 2002
----------- ------------ ---------------
(Unaudited) (Unaudited) (Unaudited)
Cash flows from operating activities
Net loss before extraordinary item $ (4,947) $ (242,552) $ (5,957,520)
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 4,905 48,456 43,019
Accrued liabilities - (109,148) (23,551)
Accrued interest - - 68,741 ----------- ------------ ---------------
Net cash used in operating
activities (42) (281,684) (3,007,702)
----------- ------------ ---------------
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 securities - - 667,144
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 activities - - 3,938,364
----------- ------------ ---------------
Net increase (decrease) in cash (42) (28,768) 56
Cash and cash equivalents, beginning of period 98 71,062 -
----------- ------------- ---------------
Cash and cash equivalents, end of period $ 56 $ 42,294 $ 56
=========== ============= ===============
See accompanying notes to financial statements.
F-3
MoneyZone.com, Inc.
(A Development Stage Company)
Statements of Cash Flows (continued)
(Note 1)
For the Six Months April 4, 1989
Ended June 30, (inception) to
------------------------ June 30,
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.
F-4
MoneyZone.com, Inc.
(A Development Stage Company)
Notes to Financial Statements
Note 1. Organization, Business, and Consolidation
The financial statements presented are those of MoneyZone.com, Inc., a
Delaware 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,
Inc.
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 significan 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, Inc. for the quarterly
period ended June 30, 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.
F-5
MoneyZone.com, Inc.
(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
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.
Reclassifications
Certain amounts in prior periods have been reclassified to conform to
the current presentation.
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.
F-6
MoneyZone.com, Inc.
(A Development Stage Company)
Notes to Financial Statements (continued)
Note 5. Subsequent Events
Issuance of Common Stock
In July 2002, the Company issued a total of 3,000 shares of its common
stock to two of its officers and directors as compensation for services. Also,
in July 2002, the Company entered into consulting agreements with six separate
persons that were neither officers nor directors. Under the terms of these
consulting agreements, the Company issued a total of 497,052 shares of its
common stock. These shares of common stock are subject to various restrictions
on their resale as provided by the terms of the consulting agreements.
Pending Merger
On July 15, 2002, the Company entered into an Agreement and Plan for
Reorganization whereby it acquired 100 percent of the issued and outstanding
common stock of Quick Test 5, Inc. ("QT5"), a privately held company. The
closing of the transaction is subject to certain conditions including, but not
limited to, shareholder approval and compliance with the Securities Exchange Act
of 1934. Upon the closing of the transaction, MoneyZone.com, Inc. will perform a
5-for-1 forward split and issue an aggregate of 25,000,000 shares of its common
stock, the existing officers and directors will resign and the officers and
directors of QT5 will become the new officers and directors of MoneyZone.com,
Inc. MoneyZone.com, Inc. will also change its name to QT5, Inc. and apply for a
new symbol for trading on the OTC.
F-7
Item 2. Management's Discussion and Analysis or Plan of Operation
Operations
On June 30, 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 June 30, 2002, we had no revenues and a
net loss of $2,697. Expenses during this three month period were primarily
related to the costs associated with the maintenance of the entity.
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.
During the three months ended March 31, 2001, we had no revenues
and a net loss related to the disposal of the business of $184,431. Expenses
during this three month period were primarily related to the costs associated
with the disposal of the business.
Liquidity and Capital Resources
We had $56 in cash at June 30, 2002, and had $257,067 in accounts
payable and accrued liabilities from discontinued operations.
Subsequent Events
Resignation of Officer
In July 2002, Raymond Bills resigned as our Chairman, Chief Executive
Officer, President and Director. John Iannetta was named as President and to the
board of directors. Halla Moran was named as Secretary and to the board of
directors.
Issuance of Common Stock
In July 2002, we issued a total of 3,000 shares of our common stock to
two of our officers and directors as compensation for services. Also, in July
2002, we entered into consulting agreements with six separate persons that were
neither officers nor directors of us. Under the terms of these consulting
agreements, we issued a total of 497,052 shares of our common stock. These
shares of our common stock are subject to various restrictions on their resale
as provided by the terms of the consulting agreements.
Pending Merger
On July 15, 2002, we entered into an Agreement and Plan for
Reorganization whereby we acquired 100 percent of the issued and outstanding
common stock of Quick Test 5, Inc. ("QT5"), a privately held company. The
closing of the transaction is subject to certain conditions including, but not
limited to, shareholder approval and compliance with the Securities Exchange Act
of 1934. Upon the closing of the transaction, we will perform a 5-for-1 forward
split and issue an aggregate of 25,000,000 shares of its common stock, the
existing officers and directors will resign and the officers and directors of
QT5 will become the new officers and directors of us. We will also change our
name to QT5, Inc. and apply for a new symbol for trading on the OTC.
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
Subsequent Events
Resignation of Officer
In July 2002, Raymond Bills resigned as our Chairman, Chief Executive
Officer, President and Director. John Iannetta was named as President and to the
board of directors. Halla Moran was named as Secretary and to the board of
directors.
Issuance of Common Stock
In July 2002, we issued a total of 3,000 shares of our common stock to
two of our officers and directors as compensation for services. Also, in July
2002, we entered into consulting agreements with six separate persons that were
neither officers nor directors of us. Under the terms of these consulting
agreements, we issued a total of 497,052 shares of our common stock. These
shares of our common stock are subject to various restrictions on their resale
as provided by the terms of the consulting agreements.
Pending Merger
On July 15, 2002, we entered into an Agreement and Plan for
Reorganization whereby we acquired 100 percent of the issued and outstanding
common stock of Quick Test 5, Inc. ("QT5"), a privately held company. The
closing of the transaction is subject to certain conditions including, but not
limited to, shareholder approval and compliance with the Securities Exchange Act
of 1934. Upon the closing of the transaction, we will perform a 5-for-1 forward
split and issue an aggregate of 25,000,000 shares of its common stock, the
existing officers and directors will resign and the officers and directors of
QT5 will become the new officers and directors of us. We will also change our
name to QT5, Inc. and apply for a new symbol for trading on the OTC.
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 June
30, 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, INC.
(Registrant)
By: /s/ John Iannetta
---------------------------
John Iannetta, President*
Date: August 12, 2002
---------------------------
* John Iannetta also serves as our principal financial and accounting officer.
