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U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[ ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to __________
Commission File Number 000-28585
Mobile Nation, Inc.
(formerly Wolfstone Corporation)
(Name of small business issuer in its charter)
Nevada 68-0427395
- ------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2638 Pershing Circle
Henderson, NV 89074
--------------------------------------
(Address of principal executive offices)
Issuer's telephone number (including area code): (702) 914-9824
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 registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
The number of shares outstanding of the registrant's only class of
common stock, $0.001 par value per share, was 573,500 shares as of August 15,
2005.
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<page>1
Table of Contents
-----------------
Item 1. Financial Statements............................................F-1
Balance Sheet (unaudited).......................................F-1
Statements of Operations (unaudited)............................F-2
Statements of Cash Flows (unaudited)............................F-3
Notes to Financial Statements...................................F-4
Item 2. Management's Discussion and Analysis of Plan
of Operation....................................................3
Item 3. Controls and Procedures...........................................6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................................7
Item 2. Changes in Securities and Use of Proceeds.........................7
Item 3. Defaults upon Senior Securities...................................7
Item 4. Submission of Matters to a Vote
of Security Holders..............................................7
Item 5. Other Information.................................................7
Item 6. Exhibits and Reports on Form 8-K..................................8
Signatures.................................................................9
<page>2
PART I. FINANCIAL INFORMATION
MOBILE NATION, INC
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
-------------
June 30, 2005
-------------
Assets
------
Current assets:
Cash $ 811
------------
Total current assets 811
-------------
Total assets $ 811
=============
Liabilities and Stockholders' Deficit
-------------------------------------
Current liabilities:
Accounts payable, trade $ 7,320
Accrued interest, related parties 21,017
Due to related parties 147,500
------------
Total current liabilities 175,837
------------
Total liabilities 175,837
------------
Commitments and contingencies -
Stockholders' Deficit:
Preferred stock, 10,000 shares authorized,
no shares issued and outstanding, no
rights or privileges designated -
Common stock, $.001 par value, 20,000,000
shares authorized, 573,500 shares
issued and outstanding 574
Paid-in capital in excess of par 221,960
Deficit accumulated during the
development stage (397,560)
------------
Total Stockholders' Deficit (175,026)
------------
Total Liabilities and Stockholders' Deficit $ 811
============
The accompanying notes are an integral part of the financial statements.
<page>F-1
<table>
MOBILE NATION, INC
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
-------------------------
For the From
Three months ended March 15, 1990
June 30, (Inception) to
2005 2004 June 30, 2005
---------- ----------- --------------
(unaudited) (unaudited) (unaudited)
Revenues $ - $ - $ -
Operating expenses:
General and administrative 15,486 7,278 376,003
Interest expense 3,075 2,625 21,557
-------------- -------------- --------------
Total operating expenses 18,561 9,903 397,560
-------------- -------------- --------------
Loss before income taxes (18,561) (9,903) (397,560)
-------------- -------------- --------------
Provisions for income taxes - - -
---------------- --------------- --------------
Net loss $ (18,561) (9,903) $ (397,560)
================ =============== ==============
Net loss per share:
(restated):
Basic $ (0.03) $ (0.02) $ (5.17)
Diluted $ (0.03) $ (0.02) $ (5.17)
Weighted Shares Outstanding
Basic 573,500 573,500 76,953
Diluted 573,500 573,500 76,953
The accompanying notes are an integral part of the financial statements.
</table>
<page>F-2
<table>
MOBILE NATION, INC
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
-----------------------
For the From
Three months ended March 15, 1990
June 30, (Inception) to
2005 2004 June 30, 2005
---------- ----------- --------------
(unaudited) (unaudited) (unaudited)
Cash flows from operating activities:
Net loss $ (18,561) $ (9,903) $(397,560)
Adjustment to reconcile net loss to net
cash used in operating activities:
Increase (decrease) in prepaid expenses 2,024 - -
Increase (decrease) in accounts payable 7,320 3,072 7,320
Increase (decrease) in accrued interest 3,075 2,625 21,017
Fair value of salaries donated as capital - - 151,500
Common stock issued for services - - 25,053
------------ ------------ -------------
Net cash used in operating activities (6,142) (4,206) (192,670)
------------ ------------ -------------
Cash flows from investing activities :
Advances form stockholders - - 22,725
------------ ------------ -------------
Net cash provided by investing activities - - 22,725
------------ ------------ -------------
Cash flows from financing activities:
Contributed capital - 600 23,256
Proceeds from note payable, director - - 55,000
Proceeds from note payable, AFG - - 17,500
Proceeds from convertible note payable - - 77,500
Repayments of convertible note payable - (2,700) (2,700)
------------ ------------ -------------
Net cash provided by financing activities (2,100) 170,756
------------ ------------ -------------
Net increase (decrease) in cash (6,142) (6,306) 811
Cash at beginning of period 6,953 6,754 -
------------ ------------ -------------
Cash at end of period $ 811 $ 448 $ 811
============ ============ =============
The accompanying notes are an integral part of the financial statements.
</table>
<page>F-3
MOBILE NATION, INC.
FORMERLY WOLFSTONE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization and business
Mobile Nation, Inc. (the Company) was incorporated in the state of Delaware on
March 15, 1990 under the name Integrated Direct, Inc. (IDI). IDI operated a
direct mail business until it filed for protection under Chapter 11 of the
bankruptcy code on September 22, 1992. On June 8, 1994, the case was converted
to Chapter 7 and on December 17, 1998, IDI was discharged from its debts and it
emerged from bankruptcy (see below). On February 23, 1999, IDI reincorporated
in the state of Nevada and issued 40 common stock shares (295,408 pre split) in
exchange for all of the 5,905,735 common stock shares of IDI, effecting a 20 to
1 reverse stock split and changing its domicile from Delaware to Nevada. On
that date, IDI changed its name to Wolfstone Corporation (Wolfstone). There
were no assets or liabilities of IDI prior to this transaction. Between April
1999 and August 2003, Wolfstone attempted three merger/acquisitions but was not
able to raise sufficient capital to support the transactions. In June 2003, an
attempted merger with Mobile Nation, Inc. was established by issuing 4,000,000
shares of common stock. Mobile Nation, Inc.'s management assumed substantial
control of Wolfstone and the Company's name was changed to Mobile Nation, Inc.
In October 2003, the parties in the above transaction returned 3,520,000
securities issued with no claims or rights to the assets optioned in the
original plan, effectively rescinding the transaction. The Company is a
development stage and is currently assessing various business options and
strategies.
Bankruptcy proceedings
As mentioned above, the Company emerged from bankruptcy on December 17, 1998,
when it was formally discharged from its debts. However, by September 1995
substantially all of its assets had been converted to approximately $95,000 of
cash. At that time, the Company recognized income from discharge of
indebtedness of approximately $994,000 and the remaining cash was used to pay
various creditors. Afterwards, the Company still existed but had no other
assets, liabilities or operations until it acquired its oil and gas properties
in a business combination that was subsequently rescinded (see below).
Because there was no change in the stockholder ownership interests as a result
of the bankruptcy or when the Company emerged from bankruptcy, it did not
qualify for fresh start accounting pursuant to Statement of Position No. 90-7.
Business combinations and subsequent rescission
During April 1999, the Company acquired oil and gas properties through two
subsidiaries in transactions accounted for as purchases and described below.
In both acquisitions, the purchase price was allocated to the fair values of
the assets acquired with no portion of the purchase price allocated to
goodwill.
The Company acquired 100% of the outstanding common stock of Texas
International Petroleum, Inc. (TIP), a Texas corporation, on April 3, 1999, in
exchange for 2,000,000 common stock shares and 2,000 Class B preferred shares
valued at $40 per share. TIP owned oil and gas properties.
<page>F-8
MOBILE NATION, INC.
FORMERLY WOLFSTONE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
TIP acquired 100% of the outstanding common stock of Subsurface Energy Corp.
(SEC), a Texas corporation, on April 9, 1999 in exchange for 1,628,727 TIP
Class A preferred convertible shares valued at $20 per share and 5,000 Class B
preferred shares of the Company valued at $40 per share. The conversion rate
was 1:1 and entitled the stockholder to convert into common stock shares of
Wolfstone Corporation. On June 6, 1999, stockholders of the TIP Class A
preferred stock converted their shares into 1,628,727 shares of Wolfstone
common stock.
However, the Company was not able to raise sufficient capital to support the
planned drilling program involving the oil and gas properties acquired and
formal oil and gas operations were never commenced. As a result, in April
2000, the parties to the above purchase transactions entered into an agreement
to rescind the purchase transactions with all securities issued by the Company
being returned to the Company and the oil and gas properties acquired being
returned to TIP and SEC with no claims or rights to the oil and gas properties.
In June 2003, 4,000,000 shares of common stock were issued in a
merger/acquisition with Mobile Nation, Inc. On July 3, 2003, the Board of
Directors consummated the merger and changed the name to Mobile Nation, Inc.
In connection with this merger, the Board authorized a 50 to 1 reverse split of
its common stock.
In September 2003, Mobile Nation was unable to raise sufficient capital to
secure key assets essential to the merger and, on October 13, 3,520,000 shares
were returned with no claims or rights.
Asset Purchase Agreement and subsequent termination
On May 4, 2004, the Company entered into an Asset Purchase Agreement
(Agreement) pursuant to Section 363 of the United States Bankruptcy Code to
purchase the Assets of Lodging & Gaming Systems, Inc. (LGS) and Gamet
Technologies, Inc. (GAMET). Both companies are incorporated in the State of
Nevada, with corporate headquarters located at 1865 Plumas Street, Suite 3
Reno, Nevada 8909. LGS and GAMET are in the business of developing,
manufacturing and selling software technologies for casino management systems
and operations.
On December 29, 2003, LGS and GAMET (collectively referred to as Debtor) filed
voluntary petitions under Chapter 11 of the United States Bankruptcy Code in
the United States Bankruptcy Court for the District of Nevada, as case numbers
03-54225 and 03-54226, jointly administered under case number 03-54224.
On July 23, 2004, upon completing extensive due-diligence the company
terminated the Asset Purchase Agreement dated May 4, 2004 between GAMET
Technology, Inc. and Lodging & Gaming Systems, Inc.
Basis of presentation and going concern uncertainty
The financial statements of the Company have been prepared assuming that the
Company will continue as a going concern. However, the Company has sustained
recurring losses and as of June 30, 2005 has no business operations and has
little working capital. These conditions, among others, give rise to
substantial doubt about the Company's ability to continue as a going concern.
Management is continuing to seek additional equity capital to fund a merger or
acquisition or to purchase an ongoing business. Until such time, the Company
anticipates its working capital needs to be funded through advances from its
major stockholders. Management believes that these steps will provide the
Company with adequate funds to sustain its growth and continued existence.
There is, however, no assurance that the steps taken by management will meet
all of the Company's needs or that it will continue as a going concern. The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Development stage activities
Prior to the Company's purchase of oil and gas properties, merger between
Wolfstone and Mobile Nation, Inc. and the subsequent rescission of the
acquisitions, the Company had not conducted any recent operations and had been
in bankruptcy. All of the Company's operating results and cash flows reported
in the accompanying financial statements from its inception are considered to
be those related to development stage activities and represent the 'cumulative
from inception' amounts from its development stage activities required to be
reported pursuant to Statements of Financial Accounting Standards (SFAS) No. 7,
Development Stage Enterprises.
<page>F-9
MOBILE NATION, INC.
FORMERLY WOLFSTONE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Management estimates
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 reporting period.
Actual results could differ from those estimates.
Cash and cash flows
For purposes of the statement of cash flows, cash includes demand deposits and
time deposits with maturities of less than three months. None of the Company's
cash is restricted. Additionally, no interest or taxes were paid during each
of the years ended March 31, 2005 and 2004 or during the period March 15, 1990
(inception) through June 30, 2005.
Stock splits
On February 21, 2002 and September 12, 2002, the Company effected a 6 to 1 and
a 25 to 1 reverse split, respectively, of its common stock. Additionally, on
June 23, 2003, November 14, 2003, and February 16, 2005 the Company effected a
50 to 1 reverse stock split, a 10 for 1 forward common stock split, and a 10 to
1 reverse stock split. The par value of the common stock was not affected by
these splits and remains at $.001 per share. Consequently, the aggregate par
value of the issued common stock was adjusted by reclassifying the par value
amount of the common stock shares from 'Common Stock' to 'Additional Paid in
Capital' and all per share amounts and outstanding shares have been
retroactively restated in the accompanying financial statements for all periods
presented to reflect these stock splits.
Net loss per share
Basic loss per share amounts are computed by dividing the net loss by the
weighted average number of common stock shares outstanding. Diluted loss per
share amounts reflect the maximum dilution that would have resulted from the
conversion of the preferred stock shares (Note 2) and the convertible note
payable (Note 4). Diluted loss per share amounts are computed by dividing the
net loss by the weighted average number of common stock shares outstanding plus
the assumed conversion of preferred stock shares and the convertible note
payable into an equivalent number of common stock shares.
For the three months ended June 30, 2005 and 2004, and for the period March 15,
1990 (inception) through June 30, 2005, basic loss per share amounts are based
on 573,500, 573,500 and 76,983, respectively, weighted average shares of
common stock outstanding, respectively. No effect has been given to the
assumed conversion of the convertible preferred stock shares and the
convertible note payable as the effect would be antidilutive.
2. CAPITAL STRUCTURE DISCLOSURES
Preferred Stock
Originally, in connection with the Company's April 1999 acquisition of oil and
gas properties (Note 1), the Company designated 7,000 shares of Class B 5%
cumulative preferred stock, which were convertible into the Company's common
stock shares at a ratio of 3:1. The Class B stockholders had liquidation
preference over the common stockholders. However, with the rescission of this
acquisition in April 2000, these shares were cancelled.
<page>F-10
MOBILE NATION, INC.
FORMERLY WOLFSTONE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
On September 10, 2000, the Company issued 1,100,000 shares of convertible
preferred stock. The holders of the convertible preferred stock could convert
each such share of convertible preferred stock into 2 shares of common stock.
No other rights or preferences were established. The obligation resulted from
services performed in the amount of $2,200 in connection with
officers/directors maintaining and funding the ongoing expenses of the Company.
It was subsequently determined that the preferred issuance, as approved in the
minutes of the Company did not fall within the authorized capital structure of
the Company and the obligation was restructured to match the intent of the
preferred shares issuance, which would have resulted in 55 preferred shares
being issued. During the year ended March 31, 2003, all convertible preferred
stock was converted to 44,874 common stock shares (2,200,000 pre split) and no
preferred stock shares remain outstanding.
Stock options and warrants
As of June 30, 2005 and during the period March 15, 1990 (inception) through
June 30, 2005, the Company had not adopted any employee stock option plans
and, other than the common stock subject to repurchase (Note 3), no other
stock options or warrants have been granted or issued.
3. COMMITMENTS AND CONTINGENCIES
Leases
The Company's office facilities are currently being provided without charge by
a corporation owned by the Company's president. The fair rental value of this
space provided is not material.
At June 30, 2005, the Company was not obligated under any noncancelable
operating or capital lease agreements.
Common stock subject to repurchase
In connection with the Company's acquisition of SEC (Note 1), the Company
agreed to repurchase up to 10,625 common stock shares owned by certain former
SEC stockholders at a price of $20.00 per share totaling $212,500. With the
rescission of the Company's acquisition of SEC this obligation was canceled.
Litigation
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. However, the Company is currently not a party
to any legal proceeding, pending or threatened.
4. RELATED PARTY TRANSACTIONS
Advances from stockholders/officers
During the three months ended June 30, 2005 and 2004, and for the period
March 15, 1990 (inception) through June 30, 2005, the Company received $0,
$0 and $22,725, respectively, of non-interest bearing advances
from its stockholders/officers. The advances were due upon demand as
funds were available and were unsecured.
<page>F-11
MOBILE NATION, INC.
FORMERLY WOLFSTONE CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
Notes payable, directors
During the year ended March 31, 2004, the Company received $50,000 from a
director. This note bears interest at 6% per annum, is unsecured and due on or
before December 31, 2005. As of June 30, 2005, accrued interest payable
totaled $4,875.
During the year ended March 31, 2005, the Company received $5,000 from the
Company's President and director. This notes bears interest at 8% per annum,
is unsecured and due on or before December 31, 2005. At June 30, 2005,
accrued interest payable totaled $307.
Notes payable, AFG
During the year ended March 31, 2005, the Company received $17,500 from
Affinity Financial Group, Inc. (AFG). Affinity Financial Group, Inc. is wholly
owned by Rex A. Morden, a director and officer of the Company. The notes bear
interest at 8% per annum, are unsecured and due on or before December 31, 2005.
At June 30, 2005, accrued interest payable totaled $633.
Convertible note payable, AFG
During the year ended March 31, 2004, the Company received $77,700 from
Affinity Financial Group, Inc. (AFG) in exchange for a convertible note
payable. During the year ended March 31, 2005, $2,700 of this amount was
repaid. Affinity Financial Group, Inc. is wholly owned by Rex A. Morden, a
director and officer of the Company. The note is unsecured, due upon
demand as funds are available and is convertible, at the option of the
holder, into common shares at 80% of the then current market price at any
time prior to the repayment of the principal and any accumulated accrued
interest. At June 30, 2005, accrued interest payable totaled $15,202.
5. INCOME TAXES
The Company recognizes deferred tax assets and liabilities based on the
estimated future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. In addition, future tax benefits, such as those
from net operating loss carry forwards, are recognized to the extent that
realization of such benefits is more likely than not. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date. At March 31, 2005 the Company had a deferred tax asset
totaling approximately $129,000 which relates to the Company's cumulative net
operating loss carry forward totaling approximately $379,000. This deferred
tax asset has been fully offset by a valuation reserve. The Company does not
have any other deferred tax assets or liabilities.
<page>F-12
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
The Company is not a party to any legal proceedings.
ITEM 2. Changes in Securities and Use of Proceeds
None.
ITEM 3. Defaults upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
ITEM 5. Other Information
None.
<page>7
ITEM 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit
Number Title of Document
----------------------------------------------------------------
31.1 Certifications of the Chief Executive Officer and Chief Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certifications of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
b) Reports on Form 8-K
None.
<page>8
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Dated: August 15, 2005 MOBILE NATION, INC.
BY: /S/ REX A. MORDEN
------------------------
Rex A. Morden
President, Chief Executive Officer,
and Director (principal and
executive officer)
Dated: August 15, 2005 BY: \S\ MICHAEL MCGHEE
--------------------------
Michael McGhee
Executive President, Finance
(principal financial and accounting
officer)
<page>9
EXHIBITS FILED WITH THIS REPORT ON FORM 10-QSB
Exhibit No. Description
------------- ------------------------------------------------------
31.1 Certifications Required by Rule 13a-14(a) of the
Securities Exchange Act of 1934, as amended, as
Adopted Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
31.2 Certification of Chief Executive Officer and Chief
Financial Officer Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
<page>10