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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended: SEPTEMBER 30, 2004
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from________________ to ________________
649.COM, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Texas 0-30381 760495640
- ------------------------------- ---------------- -------------------
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
Suite 212, 1166 Alberni Street V6E 3Z3
- ------------------------------------------ ---------------------------------
Vancouver, British Columbia, Canada
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (604) 648-2090
(including area code)
-----------
- ------------------------------------------ ---------------------------------
(Former name, former address and former (Zip Code)
fiscal year, if changed since last report)
- --------------------------------------------------------------------------------
Page 1
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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Not applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. 475,206 COMMON SHARES AS AT NOVEMBER
10, 2004.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT
Yes [ ] No [X]
(Check one)
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Page 2
649.COM INC.
(A Development Stage Company)
FORM 10-QSB
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . F-2
Consolidated Statement of Operations. . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statement of Cash Flow . . . . . . . . . . . . . . . . . . . . F-4
Notes to the Consolidated Financial Statements. . . . . . . . . . . . . . . F-5
- --------------------------------------------------------------------------------
Page F-1
649.com, Inc.
(A Development Stage Company)
Consolidated Balance Sheets
(U.S. Dollars)
- ---------------------------------------------------------------------------------------------------------
September 30, December 31,
2004 2003
(Unaudited) (Audited)
$ $
- ---------------------------------------------------------------------------------------------------------
ASSETS
Current Assets
Cash 4,227 81
Prepaid - 19
- ---------------------------------------------------------------------------------------------------------
Total Assets 4,227 100
=========================================================================================================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable (Note 3) 210,264 184,224
Accrued liabilities 750 2,000
Notes payable (Note 4) 9,104 -
Due to stockholders (Note 5) 8,242 8,242
Due to non-related parties (Note 6) 425,967 421,414
- ---------------------------------------------------------------------------------------------------------
Total Current Liabilities 654,327 615,880
- ---------------------------------------------------------------------------------------------------------
Stockholders' Deficit
Common Stock: 50,000,000 common shares authorized with a par value 475 475
of $0.001; 475,206, (December 31, 2003 - 475,206) (Note 7(b))
Preferred stock, 5,000,000 shares authorized with a par value of $0.001 - -
Additional Paid-in Capital 1,577,603 1,577,603
Donated Capital (Notes 5 and 6) 464,917 416,167
Deficit Accumulated During the Development Stage (2,693,095) (2,610,025)
- ---------------------------------------------------------------------------------------------------------
Total Stockholders' Deficit (650,100) (615,780)
- ---------------------------------------------------------------------------------------------------------
Total Liabilities and Stockholders' Deficit 4,227 100
=========================================================================================================
The accompanying notes are an integral part of these financial statements
- --------------------------------------------------------------------------------
Page F-2
649.com, Inc.
(A Development Stage Company)
Consolidated Statements of Operations
(U.S. Dollars)
(Unaudited)
====================================================================================================
Accumulated from
June 13, 1990
Three Months Ended Nine Months Ended (Date of Inception)
September 30, September 30, to September 30,
2004 2003 2004 2003 2004
$ $ $ $ $
====================================================================================================
Revenue - - - - 45,500
- ----------------------------------------------------------------------------------------------------
Expenses
Accounts payable written-off - - - - (83,512)
Consulting fees - 30,000 - 90,000 140,000
Depreciation and amortization - - - - 4,111
Equipment and software written-off - - - - 54,188
General and administrative 12,315 12,777 34,216 36,670 613,315
Imputed interest 16,420 16,496 48,854 49,019 330,021
Internet and web hosting fees - 15,000 - 45,000 85,000
Prepaid expenses written-off - - - - 36,000
Research and development - - - - 124,650
Stock-based compensation - - - - 1,434,822
- ----------------------------------------------------------------------------------------------------
Total Expenses 28,735 74,273 83,070 220,689 2,738,595
- ----------------------------------------------------------------------------------------------------
Net Loss for the Period (28,735) (74,273) (83,070) (220,689) (2,693,095)
====================================================================================================
Basic and Diluted Loss Per Share - - - -
====================================================================================================
Weighted Average Number 475,206 475,206 475,206 475,206
of Common Shares Outstanding
====================================================================================================
The accompanying notes are an integral part of these financial statements
- --------------------------------------------------------------------------------
Page F-3
649.com, Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
Nine Months Ended September 30
(U.S. Dollars)
(Unaudited)
============================================================================
2004 2003
$ $
- ----------------------------------------------------------------------------
Cash Flows To Operating Activities
Net loss for the period (83,070) (220,689)
Adjustments to reconcile net loss to cash
Imputed interest 48,750 49,019
Changes in operating assets and liabilities
Decrease in prepaid expenses and other current assets 19 -
Increase in accounts payable and accrued liabilities 24,790 157,288
- ----------------------------------------------------------------------------
Net Cash Used In Operating Activities (9,511) (14,382)
- ----------------------------------------------------------------------------
Cash Flows From Financing Activities
Advances from a non-related party 4,553 12,363
Proceeds from notes payable 9,104 -
- ----------------------------------------------------------------------------
Net Cash Provided By Financing Activities 13,657 12,363
- ----------------------------------------------------------------------------
Increase (Decrease) in Cash 4,146 (2,019)
Cash - Beginning of Period 81 2,452
- ----------------------------------------------------------------------------
Cash - End of Period 4,227 433
============================================================================
The accompanying notes are an integral part of these financial statements
- --------------------------------------------------------------------------------
Page F-4
649.com, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(Unaudited)
1. Nature of Operations and Continuance of Business
649.com, Inc. (formerly, Market Formulation and Research Corp.) (a
Development Stage Company) (the "Company") was originally incorporated
under the laws of the State of Nevada on June 13, 1990 as MMM-Hunter
Associates, Inc. The Company was re-incorporated in Texas on March 1, 1996
under the name Market Formulation and Research Corp., for the purpose of
providing market formulation and research services. On May 12, 1999, the
Company amended its articles of incorporation, changed the name of the
Company to 649.com, Inc., and effected a 5-for-1 forward stock split.
On September 15, 1999, the Company entered into a Plan of Reorganization
and Acquisition (the "Acquisition Agreement") with 649.com, Inc., a private
company based in Alberta, Canada ("649"). Under the terms of the
Acquisition Agreement, the Company was required to issue 6,500,000 shares
of its common stock and $100,000 cash to the sole stockholder of 649, Bay
Cove Investments Limited, in exchange for all of the outstanding common
shares of 649. The total purchase price was $100,000. As of December 31,
1999, the cash portion of the acquisition price had not yet been paid, and
accordingly, such amount is included in due to stockholders (Note 5). No
amount was recorded for the issuance of 6,500,000 shares. The debt to the
stockholder was settled on November 15, 2002.
This acquisition was essentially a recapitalization of the Company and a
reverse takeover by 649. Pursuant to reverse takeover accounting, goodwill
and other intangible assets were not recorded. The acquisition was
accounted for using the purchase method of accounting for reverse takeovers
whereby the historical financial statements are those of 649. The purchase
price was allocated based on the net book value of the net assets of 649 on
the date of acquisition and cash consideration of $100,000 and liabilities
assumed of $120,383 were treated as a reduction of paid in capital in
accordance with rules of accounting for reverse takeovers.
The Company is considered a development stage company in accordance with
Statement of Financial Accounting Standards (SFAS) No. 7. These
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States, on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities and commitments in the normal course of
business. As at September 30, 2004, the Company has not recognized any
revenue, has a working capital deficit of $650,100, and has accumulated
operating losses of $2,693,095 since its inception. The continuation of the
Company is dependent upon the continuing financial support of creditors and
stockholders and obtaining long-term financing, the completion of product
development and achieving profitability. These conditions raise substantial
doubt about the Company's ability to continue as a going concern. These
financial statements do not include any adjustments that might arise from
this uncertainty.
2. Significant Accounting Principles
a) Basis of Accounting
These consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United
States of America and are presented in United States dollars.
b) Consolidation
These consolidated financial statements include the accounts of the
Company and its wholly-owned Canadian subsidiary, 649.com, Inc.
c) Year End
The Company's fiscal year end is December 31.
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Page F-5
649.com, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(Unaudited)
2. Significant Accounting Principles (continued)
d) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of
three months or less at the time of issuance to be cash equivalents.
e) Foreign Currency Transactions/Balances
The Company's functional currency is the United States dollar.
Occasional transactions occur in Canadian currency, and management has
adopted SFAS No. 52, "Foreign Currency Translation". Monetary assets
and liabilities denominated in foreign currencies are translated into
United States dollars at rates of exchange in effect at the balance
sheet date. Non-monetary assets, liabilities and items recorded in
income arising from transactions denominated in foreign currencies are
translated at rates of exchange in effect at the date of the
transaction.
f) Use of Estimates and Assumptions
The preparation of financial statements in conformity with generally
accepted accounting principles in the United States of America
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 periods. Actual results could differ from those
estimates.
g) Revenue Recognition
The Company will sell licenses derived from its Internet based 6/49
lottery game once the beta testing is complete.
The Company will recognize revenue in accordance with Securities and
Exchange Commission Staff Accounting Bulletin No. 104 ("SAB 104"),
"Revenue Recognition in Financial Statements." Revenue will be
recognized only when the price is fixed or determinable, persuasive
evidence of an arrangement exists, the service is performed, and
collectibility is reasonably assured.
The Company will account for the licensing fees on a gross basis
pursuant to the requirements of Emerging Issues Task Force No. 99-19
(EITF 99-19).
When determining whether to utilize gross or net recognition of
license fees, the Company will consider the following criteria. The
Company is the primary obligor to the transaction, the Company has
full pricing latitude, the Company can modify the product
specifications as it sees fit, the Company will perform part of the
service to the end customer, the Company carries sole risk of physical
inventory loss, the Company realizes full credit risk, and commission
is not fixed.
In determining the terms of our licensing agreement we examined the
terms that were standard in the industry at the time. Our main pricing
is structured on a licensing basis. The Company anticipates the
license fee will be $250,000 for each license sold and an ongoing
royalty of 5% of the licensees gross ticket sales.
h) Long-Lived Assets
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" establishes a single accounting model for long-lived assets to
be disposed of by sale including discontinued operations. SFAS 144
requires that these long-lived assets be measured at the lower of the
carrying amount or fair value less cost to sell, whether reported in
continuing operations or discontinued operations.
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Page F-6
649.com, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(Unaudited)
2. Significant Accounting Principles (continued)
i) Concentration of Credit Risk
Financial instruments that potentially subject the Company to credit
risk consist principally of cash. Cash was deposited with a high
credit quality institution.
j) Software Development Costs
Costs incurred in the research and development of software products
are charged to operations as incurred until technological feasibility
has been established. After technological feasibility is established,
any additional costs are to be capitalized in accordance with SFAS No.
86, "Accounting for the Cost of Computer Software to be Sold, Leased
or Otherwise Marketed". The establishment of technological feasibility
and the ongoing assessment of recoverability of capitalized software
development costs require considerable judgment by management with
respect to certain external factors such as anticipated future
revenues, estimated economic life and changes in software and hardware
technologies. No software development costs have been capitalized as
of September 30, 2004.
k) Accounting for Employee Stock Options
In conformity with the provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation," the Company has determined that it will not
change to the fair value method prescribed by SFAS No. 123 and will
continue to follow Accounting Principles Board Opinion No. 25 for
measurement and recognition of employee stock-based transactions.
l) Basic and Diluted Net Income (Loss) Per Share
The Company computes net income (loss) per share in accordance with
SFAS No. 128, "Earnings per Share" (SFAS 128). SFAS 128 requires
presentation of both basic and diluted earnings per share (EPS) on the
face of the income statement. Basic EPS is computed by dividing net
income (loss) available to common shareholders (numerator) by the
weighted average number of common shares outstanding (denominator)
during the period. Diluted EPS gives effect to all dilutive potential
common shares outstanding during the period including stock options,
using the treasury stock method, and convertible preferred stock,
using the if-converted method. In computing diluted EPS, the average
stock price for the period is used in determining the number of shares
assumed to be purchased from the exercise of stock options or
warrants. Diluted EPS excludes all dilutive potential common shares if
their effect is anti-dilutive. Loss per share information does not
include the effect of any potential common shares, as their effect
would be anti-dilutive.
m) Comprehensive Loss
SFAS No. 130, "Reporting Comprehensive Income," establishes standards
for the reporting and display of comprehensive loss and its components
in the financial statements. As at September 30, 2004, the Company has
no items that represent comprehensive loss and, therefore, has not
included a schedule of comprehensive loss in the financial statements.
n) Financial Instruments
The Company's financial instruments consist of cash, accounts payable,
accrued liabilities, notes payable, advances from related parties and
others. Unless otherwise noted, it is management's opinion that the
Company is not exposed to significant interest, currency or credit
risks arising from these financial instruments. The fair value of
cash, accounts payable and accrued liabilities, advances from related
parties and other advances approximates their carrying value due to
the immediate or short-term maturity of these financial instruments.
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Page F-7
649.com, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(Unaudited)
2. Significant Accounting Principles (continued)
o) New Accounting Pronouncements
In December 2003, the United States Securities and Exchange Commission
issued Staff Accounting Bulletin No. 104, "Revenue Recognition" (SAB
104), which supersedes SAB 101, "Revenue Recognition in Financial
Statements." The primary purpose of SAB 104 is to rescind accounting
guidance contained in SAB 101 related to multiple element revenue
arrangements, which was superseded as a result of the issuance of EITF
00-21, "Accounting for Revenue Arrangements with Multiple
Deliverables." While the wording of SAB 104 has changed to reflect the
issuance of EITF 00-21, the revenue recognition principles of SAB 101
remain largely unchanged by the issuance of SAB 104. The adoption of
SAB 104 did not have a material impact on the Company's financial
statements.
p) Comparative Figures
The comparative figures for common shares issued have been restated to
reflect a rollback of 100 to 1.
q) Interim Financial Statements
These interim unaudited financial statements have been prepared on the
same basis as the annual financial statements and in the opinion of
management, reflect all adjustments, which include only normal
recurring adjustments, necessary to present fairly the Company's
financial position, results of operations and cash flows for the
periods shown. The results of operations for such periods are not
necessarily indicative of the results expected for a full year or for
any future period.
3. Accounts Payable
a) On October 1, 2003, the Company reached an agreement with Syntec
Software S.A. to waive on-line software development fees owing for the
period from February 1, 2003 to October 1, 2003. The value of these
fees of $90,000 was treated as donated capital.
b) On October 1, 2003, the Company reached an agreement with WebLink
Management S.A. to waive Internet and web hosting fees for the period
from January 1, 2003 to September 1, 2003. The value of these fees of
$45,000 was treated as donated capital. The fiscal 2002 Internet and
web hosting fees in the amount of $40,000 will be paid on or before
May 1, 2005, or as and when the Company starts earning revenue from
the sale of licenses and/or the receipt of royalties.
4. Notes Payable
a) On July 2, 2004, the Company received $5,000 by way of a promissory
note from Hokley Limited ("Hokley") a non-related party. The
promissory note is unsecured, bears interest at 8% per annum along
with a loan fee of 10% and is due on July 2, 2006. Repayment of the
principal, accrued interest and loan fee is payable by the Company on
July 2, 2006.
b) On September 24, 2004, the Company received a $4,000 by way of a
promissory note from Hokley. The promissory note is unsecured, bears
interest at 10%, along with a loan fee of 10% and is due on September
24, 2005. Repayment of the principal, accrued interest and loan fee is
payable by the Company on September 24, 2005.
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Page F-8
649.com, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(Unaudited)
5. Related Party Transactions/Balances
The Company made advances to, and received advances from, its largest
stockholder, Bay Cove Investments Limited ("Bay Cove"). No formal
arrangement exists for such advances, which have historically been made or
received on an "as-needed" basis. During fiscal 2002 EuroCapital Holdings
AVV ("EuroCapital") a non-related party assumed the amount due to Bay Cove.
On November 15, 2002 the Company issued 29,000,000 common shares at $.0034
per share to settle debt of $98,600.
As of September 30, 2004, the Company owes this stockholder $8,242 (2003:
$8,242). During the nine months ended of September 30, 2004 imputed
interest of $927 (2003: $927) was charged to operations and treated as
donated capital.
6. Due to Non-Related Parties
The amounts owing to non-related parties are non-interest bearing with no
specific terms of repayment and due on demand. During the nine months ended
of September 30, 2004 imputed interest of $47,927 (2003: $48,092) was
charged to operations and treated as donated capital.
7. Common Stock
a) The Company has a Stock Option Plan approved and registered December
1, 1999. Pursuant to this plan the Company can issue up to 10% of the
outstanding common shares on December 1 of each year to certain key
directors and employees. As at of September 30, 2004 and December 31,
2003 there were no outstanding stock options.
The options are granted for services provided to the Company.
Statement of Financial Accounting Standards No. 123 ("SFAS 123")
requires that an enterprise recognize, or at its option, disclose the
impact of the fair value of stock options and other forms of stock
based compensation in the determination of income. The Company has
elected under SFAS 123 to continue to measure compensation costs on
the intrinsic value basis set out in APB Opinion No. 25. As stock
options are granted at exercise prices based on the market price of
the Company's shares at the date of grant, no compensation cost is
recognized. However, under SFAS 123, the impact on net income and
income per share of the fair value of stock options must be measured
and disclosed on a fair value based method on a pro forma basis. As
performance stock for non-employees is issued for services rendered,
the fair value of the shares issued is recorded as compensation cost,
at the date the shares are issued, based on a discounted average
trading price of the Company's stock as quoted on the Pink Sheets.
The fair value of the employee's purchase rights, pursuant to stock
options, under SFAS 123, will be estimated using the Black-Scholes
model.
b) On September 27, 2004 a resolution was passed by the shareholders of
the Company to authorize a reverse split of the issued and outstanding
common shares of the Company to a maximum of 1 new share for every 100
old shares held. Following the reverse split, the Company's authorized
capital was increased back to 50,000,000 common shares. These
financial statements have been retroactively restated to reflect the
changes to the issued and authorized common stock.
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Page F-9
649.com, Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
(expressed in U.S. dollars)
(Unaudited)
649.COM INC. (SIXN.PK)
(A Development Stage Company)
QUARTERLY REPORT (SEC FORM 10-QSB)
OVERVIEW
We have developed a proprietary instant on-line lottery software program that we
intend to license to legally operated lottery organizations, which are typically
land-based government operated agencies. The game which is played on-line is
similar to the well-known land-based lottery game known as "PowerBall" in the
USA and 'lotto 649' in Canada, the United Kingdom, Spain, France, Holland and
Germany.
It is anticipated, revenue will be earned from the sale of licenses and from
royalty fees generated from the gross revenue of the Licensee's Lottery
operation.
649.com expects to sell licenses to operate an on-line Lottery game for
approximately $250,000 and expects to earn an on going royalty fee of 5% of the
licensees' ticket sales. We do not propose to sell a License to any company
that is not operating under government license or in a jurisdiction that
disallows on-line gaming. We propose to sell Licenses to government lottery
agencies around the world and to foreign-based corporations in jurisdictions
that support Internet gaming including Australia, England, South Africa, Isle of
Man, Liechtenstein, St Kitts and others.
We entered into an Agreement with Syntec Software on 15th July, 2002 whereby
Syntec agreed to update and redevelop the 649.com software program game client
interface in flash and to provide a full management suite and tracking system as
well as the integration of a cashier system. Syntec also agreed to move the
database from Oracle and create a database in MYSQL.
Under the terms of the Agreement, Syntec had undertaken to complete the play for
fun model by December 30th 2002 and the pay-for-play model by April 2003. Syntec
has completed both models, which are ready for launch.
We have requested Syntec Software to further develop a new software program,
similar to a conventional lottery game, which will enable a land based lottery
organization to potentially sell millions of tickets on-line, for a specific
draw date, as an alternative to the instant draw. They have agreed to provide
this new software as soon as we have raised working capital to pay them.
In October 2003, we amended our original Agreement with Syntec who agreed to
waive the fees for the period dating February 1st to October 1st 2003 and not
charge any additional fees, until such time that the software has been launched.
We had requested J. Alexander Securities Inc. to act as a market maker for
649.com. Their mandate was to file a Form 211 Application with the NASD under
SEC Rule 15c2-11, in order for 649.com to be reinstated on the OTC.BB.
In July 2004, we decided to terminate our business relationship with J.
Alexander Securities, as they were unable to achieve the mandate. We have,
subsequently, requested that Pennaluna & Company act as a market maker for
649.com.
On September 27, 2004 a resolution was passed by the Shareholder's and,
subsequently, the Director's of the Company, to authorize a rollback of the
issued and outstanding shares of the Company to a maximum of 100:1. Following
the rollback, the Company's authorized capital was increased back to 50,000,000
shares.
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Page 3
The President of the Company was given authority to take the necessary actions
and subsequently the CUSIP and trading symbol have changed to 830028 20 5 and
SIXN, respectively. This change was effective as of October 15, 2004.
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Page 4
ITEM 2. MANAGEMENTS' DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
PLAN OF OPERATIONS
The following discussion contains certain forward-looking statements that are
subject to business and economic risks and uncertainties, and our actual results
could differ materially from those forward-looking statements. The following
discussion regarding our financial statements should be read in conjunction with
the financial statements and notes thereto.
We are a development stage company. In a development stage company, management
devotes most of its activities to establishing a new business. Planned principal
activities have not yet generated any revenue and the Company has suffered
recurring losses from inception, totaling $2,693,095 and has a working capital
deficit of $650,100. These factors raise substantial doubt about the Company's
ability to continue as a going concern.
We do not expect to report any revenue from operations at least until after the
sale of a license. Even after the sale of a license, there can be no assurance
that we will generate positive cash flow and there can be no assurances as to
the level of revenues, if any, that we may actually achieve from the on-line
lottery game. However, management has the expertise to market the Lottery
licenses and expects to sell one or more licenses within six months of being
reinstated on the OTC.BB. Each License will be sold for approximately $250,000
and will also generate an ongoing royalty fee of 5% of tickets sold by the
Licensee. We also expect to earn revenue from selling banner advertising on our
web site as soon as the software program has been launched, although with the
decrease in advertising rates and the lack of advertisers, we may find
difficulty in generating any significant revenue from this source. We will also
earn revenue from sending players to other gaming sites. This is typically
achieved through an affiliate program that is offered by a gaming site who would
pay as much as $100 per referral.
RESULTS OF CONTINUING OPERATIONS
Nine months ended September 30, 2004 ("2004") compared to the nine months ended
September 30, 2003 ("2003"):
The Company has no revenue for 2004 and 2003. Expenses decreased by $137,619 to
$83,070 in 2004 as compared to $220,689 in 2003. There were no consulting fees
in 2004 as compared to $90,000 in 2003. There were no Internet and web hosting
fees in 2004 as compared to $45,000 in 2003.
The net loss for 2004 was $83,070 as compared to $220,689 in 2003. Our net loss
per share remained at $nil for 2004 and 2003.
FINANCIAL CONDITION AND LIQUIDITY
At September 30, 2004 the Company had cash and cash equivalents totaling $4,227
compared to $81 at December 31, 2003.
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Page 5
On July 2, 2004, the Company received cash advances of $5,000 from a non-related
party, bearing interest at a rate of 8% per annum and a loan fee of 10%. The
funds are repayable on July 2, 2006.
On September 24, 2004, the Company received cash advances of $4,000 from a
non-related party, bearing interest at a rate of 10% per annum and a loan fee of
10%. The funds are repayable on September 24, 2005.
We have also received $4,553 from another non-related party. These funds are
non-interest bearing, unsecured and with no specific terms of repayment.
These funds were used to fund our operating activities of $9,511 and increase
our cash position by $4,146. As a result, our cash position has increased
during 2004 to $4,227 and our working capital deficit, as at September 30, 2004,
is $650,100.
ITEM 3. CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that
information that is required to be disclosed in the Securities Exchange Act of
1934 reports are recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms, and that such information is
accumulated and communicated to our management to allow timely decisions
regarding required disclosure.
Within 90 days prior to the date of this report, our management carried out an
evaluation, under the supervision and with the participation of the management
on the effectiveness of the design and operation of our disclosure controls and
procedures pursuant to Exchange Act Rule 13a-15. Based upon the foregoing, our
President concluded that our disclosure controls and procedures are effective in
connection with the filing of this Quarterly Report on Form 10-QSB for the
period ended September 30, 2004.
There were no significant changes in our internal controls or in other factors
that could significantly affect these controls subsequent to the date of their
evaluation, including any significant deficiencies or material weaknesses of
internal controls that would require corrective action.
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Page 6
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On September 27th 2004, the Shareholder's approved, in lieu of a Special
Meeting, a resolution to authorize the rollback of the issued and outstanding
shares of the Company to a maximum of 100:1. Following the rollback, the
Company's authorized capital was to be increased back to 50,000,000 shares.
The Shareholder's further resolved to authorize the Board of Director's to
change the Registrant's name, at a future date, if deemed to be in the best
interest of the Company.
On all of the above matters, the Shareholder's voted THIRTY MILLION, FOUR
HUNDRED & TWENTY-FIVE THOUSAND (30,425,000) shares for the resolution and zero
shares against the resolution. No shareholder's withheld their vote or abstained
from voting on each of the above matters.
The President of the Company was given authority to take the necessary actions
and subsequently the CUSIP and trading symbol have changed to 830028 20 5 and
SIXN, respectively. This change was effective as of October 15, 2004.
The Registrant filed a Form 8-K with the SEC on October 15 2004, which gave a
detailed report of the transpired events.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS
None.
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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.
649.COM INC.
(Registrant)
/s/ Mark Glusing Date: November 10, 2004
- --------------------------------
Mark Glusing
President / Director
In accordance with the Securities Exchange Act this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
/s/ Mark Glusing Date: November 10, 2004
Mark Glusing
President / Director
- --------------------------------
/s/ Cary Martin Date: November 10, 2004
Cary Martin
Secretary / Treasurer / Director
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