FORM 10-QSB
-----------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2005
OR
[_] 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 0-31949
INNOFONE.COM, INC.
------------------
(Exact name of registrant as specified in its charter)
Nevada 98-0202313
-------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3470 Olney-Laytonsville Rd., Suite 118, Olney, MD 20832
------------------------------------------------- ------------------
(Address of principal executive office) (Zip Code)
(301) 774-6913
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
The number of shares outstanding of each of Issuer's classes of common equity as
of March 31, 2005
Common Stock at Par Value $0.001 16,369,484
-------------------------------- -----------------------
Title of Class Number of Shares
Transitional Small Business Disclosure Format yes no X
----- -----
This document is made up of 11 pages.
INNOFONE.COM, INC.
Index
-----
Page
------
Part I
Item 1. Financial Statements
Condensed Balance Sheet................................. 3
Condensed Statements of Operations...................... 4
Statements of Shareholders' Deficiency.................. 5
Statement of Cash Flows................................. 6
Notes to Condensed Financial Statements................. 7
Item 2. Management's Discussion and Analysis or Plan of
Operation.............................................. 9
Part II
Items 1-6. Other Information....................................... 10
Signatures.............................................. 11
2
(Stated in United States dollars)
I N N O F O N E . C O M ,
I N C O R P O R A T E D
For the quarter ended March 31, 2005
(Unaudited)
INNOFONE.COM, INCORPORATED
Condensed Balance Sheet
(Stated in United States dollars)
March 31, 2005 with comparative figures as at June 30, 2004
================================================================================
March 31, 2005 June 30, 2004
--------------------------------------------------------------------------------
(unaudited) (unaudited)
Assets
------
Current assets $ 0 $ 0
================================================================================
Liabilities and Shareholders' Deficiency
-----------------------------------------
Current liabilities:
Accounts payable and accrued liabilities $ 0 $ 0
---------------------------------------------------------------------------
Shareholders' deficiency:
Share capital:
Common shares 4,888,078 4,878,930
Additional paid-in capital 9,204,984 9,023,332
---------------------------------------------------------------------------
14,093,062 13,902,262
Deficit (14,093,062) (13,902,262)
---------------------------------------------------------------------------
0 0
--------------------------------------------------------------------------------
$ 0 $ 0
================================================================================
See accompanying notes to financial statements.
3
INNOFONE.COM, INCORPORATED
Condensed Statements of Operations
(Stated in United States dollars)
For the three months ended March 31, 2005 with comparative figures for the three
months ended March 31, 2004
===================================================================================================================
Three months ended Nine months ended
March 31, 2005 March 31, 2004 March 31, 2005 March 31, 2004
-------------------------------------------------------------------------------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
Sales $ - $ - $ - $ -
Cost of sales - - - -
-------------------------------------------------------------------------------------------------------------------
Gross profit - - - -
Selling, general and administrative expenses 115,800 104,000 215,800 499,000
-------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (115,800) $ (104,000) $ (215,800) $ (499,000)
===================================================================================================================
Basic net loss per share $ 0 $ 0 $ 0 $ (0.07)
===================================================================================================================
Weighted average number of common
shares outstanding 16,835,484 4,955,891 11,865,484 7,361,484
===================================================================================================================
See accompanying notes to financial statements.
4
INNOFONE.COM, INCORPORATED
Statement of Shareholders' Deficit
(Stated in United States Dollars)
For The Period Ended March 31, 2005
====================================================================================================================
Additional
Common Paid-In
Shares Capital Deficit Total
--------------------------------------------------------------------------------------------------------------------
BALANCE, June 30, 2001 4,773,965 $ 7,098,052 $ (13,654,877) $ (1,782,860)
Stock options exercised 475 (427) - 48
Convertible notes converted to stock 520 415,480 - 416,000
Issuance of stock for Digital Micro
Distribution Canada Inc. 67,000 - - 67,000
Issuance of stock for equipment 146 7,154 - 7,300
Convertible notes converted to stock 666 199,334 - 200,000
Net earnings - - 335,940 335,940
--------------------------------------------------------------------------------------------------------------------
BALANCE, June 30, 2002 4,842,772 7,719,593 (13,318,937) (756,572)
Convertible note converted to stock 2,300 647,700 - 650,000
Issuance of shares for legal services 500 1,887 - 2,387
Issuance of shares for consulting services 26,378 180,932 - 207,310
Net loss - - (209,697) (209,697)
--------------------------------------------------------------------------------------------------------------------
BALANCE, June 30, 2003 4,871,950 8,550,112 (13,528,634) (106,572)
Issuance of shares for consulting services 7,060 448,140 - 455,200
Net loss - - (348,628) (348,628)
--------------------------------------------------------------------------------------------------------------------
BALANCE, June 30, 2004 4,879,010 8,998,252 (13,877,262) -
--------------------------------------------------------------------------------------------------------------------
BALANCE September 30, 2004 4,879,010 8,998,252 (13,877,262) -
Issuance of shares for consulting services 10,000 90,000 - 100,000
Net loss - - (100,000) (100,000)
--------------------------------------------------------------------------------------------------------------------
BALANCE December 31, 2004 4,889,010 9,088,252 (13,977,262) -
Issuance of shares for consulting services (net) (932) 116,732 - 115,800
Net loss - - (115,800) (115,800)
--------------------------------------------------------------------------------------------------------------------
BALANCE March 31, 2005 4,888,078 9,204,984 (14,093,062) -
====================================================================================================================
See accompanying notes to financial statements.
5
INNOFONE.COM, INCORPORATED
Statement of Cash Flows
(Stated in United States dollars)
For the three months ended March 31, 2005 with comparative figures for the three
months ended March 31, 2004
=======================================================================================
Three Months Ending
March 31, 2005 March 31, 2004
---------------------------------------------------------------------------------------
(unaudited) (unaudited)
Cash flows provided by (used in):
Operations:
Net earnings (loss) $ 115,800 $ 104,000
Shares issued for consulting services (115,800) -
Changes in non-cash operating working capital
Accounts payable - (104,000)
----------------------------------------------------------------------------------
- -
---------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents nil nil
Cash and cash equivalents, beginning of period nil nil
---------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ nil $ nil
=======================================================================================
Cash interest paid for the quarter ended March 31, 2005 and March 31, 2004 was
$0 and $0 respectively.
See accompanying notes to financial statements
6
INNOFONE.COM, INCORPORATED
Notes to the Financial Statements
March 31, 2005
1. BASIS OF PRESENTATION
Bulletin Board Listing
----------------------
In January 2001, the Company completed a Registration Statement that has been
filed with the United States Securities and Exchange Commission in order for the
Company's shares to be eligible for trading in the United States on the National
Association of Securities Dealings over-the-counter Bulletin Board.
2. SIGNIFICANT ACCOUNTING POLICIES
These financial statements have been prepared by management in accordance with
accounting principles generally accepted in the United States, the more
significant of which are outlined below.
Use of Estimates
----------------
The preparation of financial statements in conformity with United States
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 year.
Actual results could differ from those estimates.
Foreign Currency Translation
----------------------------
The Company's reporting currency is the United States dollar because the Company
is a United States corporation and it is trading publicly in the United States.
The statements of operations are translated into United States dollars using the
average exchange rate for the year. The balance sheets are translated into
United States dollars using the year-end exchange rate.
Stock Option Plans
------------------
The Company applies the fair value based method of accounting prescribed by SFAS
No. 123, Accounting for Stock-Based Compensation in accounting for its stock
options granted to both employees and non-employees. As such, compensation
expense is recorded on the date of grant based on the fair value of the award
and is recognized over the service period.
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of
-----------------------------------------------------------------------
The Company accounts for long-lived assets in accordance with the provisions of
SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and Long-Lived
Assets to be Disposed of. This statement requires that long-lived assets and
certain identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying
amount of the assets exceeds the fair value of the assets. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less costs to
sell.
3. CAPITAL STOCK
The number of outstanding shares of the Company as at December 31, 2004 is
computed as follows:
7
INNOFONE.COM, INCORPORATED
Notes to Financial Statements
(Stated in United States Dollars)
March 31, 2005
Common
============================================================================
Outstanding Shares as at June 30, 2000 20,750,000
Shares issued in exchange for legal fees 1,403,333
Options exercised in exchange for marketing costs 30,000
Options exercised 430,000
Promissory notes converted to common stock 3,851,500
Common stock subscribed 1,000,004
Preferred stock to be converted to common stock 3,750,000
----------------------------------------------------------------------------
Outstanding Shares as at June 30, 2001 31,214,837
Shares issued in exchange for equipment 146,000
Options exercised 475,000
Shares issued to DMD CANADA shareholders 67,000,000
Shares issued on conversion of debt 1,186,668
----------------------------------------------------------------------------
Outstanding Shares as at June 30, 2002 100,022,505
Shares issued in exchange for consulting fees 23,357,826
Shares issued in exchange for legal fees 500,000
Reverse stock split: 175 shares for one share (123,172,444)
Share issuance on conversion of debt 2,300,000
Share issuance on exchange for consulting fees 3,021,800
Reverse stock split: 20 shares for one share (5,728,203)
----------------------------------------------------------------------------
Outstanding shares as at June 30, 2003 301,484
Share issuance for consulting fees 7,000,000
----------------------------------------------------------------------------
Outstanding shares as at June 30, 2004 7,301,484
Share issuance for consulting fees 10,000,000
----------------------------------------------------------------------------
Outstanding shares as at December 31, 2004 17,301,484
----------------------------------------------------------------------------
Share issuance for consulting fees (net) (932,000)
----------------------------------------------------------------------------
Outstanding shares as at March 31, 2005 16,369,484
============================================================================
8
Management's Discussion and Analysis For the Quarter ended March 31, 2005
Forward-Looking Statements
--------------------------
The following discussion of the financial condition and results of operations of
the Company should be read in conjunction with the Management's Discussion and
Analysis of Financial Condition and Results of Operations and the Consolidated
Financial Statements and Notes thereto for the year ended June 30, 2004 filed
with the SEC on October 15, 2004. This quarterly report includes forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934. Words such as "may," "plans," "expects," "anticipates," "approximates,"
"believes," "estimates," "intends," "hopes," "potential," or "continue", and
variations of such words and similar expressions, are intended to identify such
forward-looking statements. The Company intends such forward-looking statements,
all of which are qualified by this statement, to be covered by the safe harbor
provisions for forward-looking statements contained in the Private Litigation
Securities Reform Act of 1995, and is including this statement for purposes of
complying with these safe harbor provisions. The Company has based these
statements on its current expectations and projections about future events.
These forward-looking statements are not guarantees of future performance, and
are subject to risks and uncertainties that could cause actual results to differ
materially from those projected in these statements. Forward-looking statements
include, but are not limited to:
Readers are cautioned not to place undue reliance on these forward-looking
statements, which reflect management's views only as of the date hereof. The
Company is not obligated to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this Quarterly Report on Form 10-QSB might not occur.
Readers should carefully review the risk factors described in the previously
filed Form 10-KSB and in any other documents the Company files from time to time
with the Securities and Exchange Commission, including any future Annual Reports
on Form 10-KSB and Quarterly Reports on Form 10-QSB.
Overview
--------
Innofone.com Inc. currently operates out of Maryland with mailing address of
3470 Olney-Laytonsville Rd., Suite 118, Olney, MD 20832.
The Company currently does not have sufficient funds with which to sustain its
operations. The company plans to issue stock to try and raise operating capital
for the company. There is no assurance that this can be done. There is little
chance that the company will receive a dividend from the bankruptcy of its
previously owned subsidiary, Innofone Canada.
The Company is currently reviewing and implementing new disclosure controls and
procedures to ensure that they fully comply with the new Securities Exchange Act
Rules 13a-15 and 15d-15.
(a) Plan of Operations
(b) Acquisitions
(c) Future
The company plans to look for new acquisitions and will not invest or operate
any current or previously owned subsidiaries.
The company has relocated to Maryland and may change it's offices again if the
company is successful in finding a new acquisition.
Due to the lack of sufficient operating funds, Mr Richardson is currently
funding operations.
9
(b) Results of Operations
As reflected in the company's statement of operations the company has recorded
no sales for the year and the company does not currently conduct any operations.
The current officers and directors are covering all expenses of the company via
short-term loans and advances which have been and will continue to be paid off
in stock until the company has the cash flow to cover these expenses. These
services include the preparation of company filings, the search of acquisition
targets and legal expenses.
PART II- OTHER INFORMATION.
Item 1. Legal Proceedings.
There are currently no legal proceedings against the company at this time.
Item 2. Change in Securities.
1,280,000 shares were returned by Mr. Richardson
348,000 shares were issued for consulting services
Item 3. Defaults Upon Senior Securities.
There was no material default in payments of any Senior Securities it has all
been paid in full with stock.
Item 4. Submission of Matters to a Vote of Security Holders.
There were no matters requiring a vote of security holders during this period.
Item 5. Other Information.
None.
10
SIGNATURES
----------
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INNOFONE.COM, INC.
------------------
Date: May 10, 2005 By: /s/ Frederic Richardson
---------------------------------
Frederic Richardson, President
11