U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-12G
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF
SMALL BUSINESS ISSUERS
Under Section 12(b) or 12(g) of the Securities
Exchange Act of 1934
Fona Inc.
(Name of Small Business Issuer in its charter)
Nevada 41-1683548
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5353 Manhattan Circle, Suite 101
Boulder, Colorado 80303
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(Address of Principal Executive Offices)
Registrants telephone number: (303) 499-6000
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of each exchange on
to be so registered which each class is to be registered
Not Applicable
Securities to be registered under Section 12(g) of the Act:
Common Stock
(Title of class)
Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
definitions of "large accelerated filer," and "smaller reporting company" in
Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ]
Smaller Reporting Company [X] (Do not check if a smaller reporting company)
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ITEM 1. DESCRIPTION OF BUSINESS
Fona, Inc. (the "registrant" or "Company") was incorporated under the laws of
the state of Minnesota in November 1990 under the name Fonahome Corporation. On
March 24, 2009, the Company reincorporated in the state of Nevada and merged
with its wholly-owned subsidiary, Fona, Inc., adopting the surviving company's
name, Fona, Inc. The Company was originally formed to develop and market an
interactive information and advertising service.
The Company made a registered public offering of its common stock on May 8, 1992
to provide working capital to the Company. The offering was made pursuant to a
registration statement under the Securities Act of 1933 filed with the
Securities and Exchange Commission, the SEC, on April, 29, 1992.
Since December 1999, the Company has had no significant business operations
other than licensing its internet-based Rent411 services to Desfaire, Inc. a
company controlled by Nick T. Boosalis, a former officer and director of the
Company, and normal expenses incurred to keep the Company in good standing with
the State of Minnesota. During the nine-year period ended December 31, 2007, the
Company's aggregate revenues were approximately $409,000 consisting of license
fees paid by Desfaire, Inc. and its aggregate operating losses were
approximately $200,000. Approximately $454,000 of the Company's expenses during
the nine-year period related to fees paid to third parties to provide the
Rent411 services.
The Company has opted to become a "blank check" company and to further engage in
any lawful corporate undertaking, including, but not limited to, selected
mergers and acquisitions.
On March 3, 2009, the Company held a shareholder meeting approving the Stock
Purchase Agreement and an Agreement and Plan of Merger effectively changing the
name of the Company to Fona Inc., a Nevada corporation ("Re-incorporation
Merger") and simultaneously adopting the capital structure of Fona Inc., which
includes total authorized capital stock of 800,000,000 shares, of which
780,000,000 are common stock and 20,000,000 are blank check preferred stock. The
preferred stock may be issued from time to time in one or more series with such
designations, preferences and relative participating, optional or other special
rights and qualifications, limitations or restrictions there of, as shall be
stated in the resolutions adopted by the Corporation's Board providing for the
issuance of such preferred stock or series thereof.
On March 3, 2009, the shareholders also approved and ratified a January 22, 2008
Assignment Agreement under which the Company assigned the software and other
rights relating to its Rent411 services, including the license with Desfaire,
Inc. and substantially all of its worldwide copyrights, trademarks and other
assets, consisting of fully depreciated office equipment and furniture with
nominal market value, to The Boosalis Group, Inc., a company owned by Nick T.
Boosalis, in consideration for which The Boosalis Group, Inc. assumed
outstanding indebtedness of the Company totaling $34,714 and the issuance of a
total of 1,980,834 shares of the Company's common stock, including: 498,237
shares approved in December 2007 and 39,957 in December 2008 to Nick T. Boosalis
for forgiveness of loans to the Company totaling $80,729; 322,047 shares
approved in December 2007 to Richard Dillion, a former officer and director of
the Company, for forgiveness of loans to the Company totaling $48,307; and
1,100,000 shares approved in December 2007 to Desfaire, Inc. for a cash payment
of $11,000 and the payment on behalf of the Company of software development
costs of more than $125,000.
On March 24, 2009, the Articles of Merger of Fonahome Corporation, a Minnesota
Corporation, into Fona, Inc., A Nevada Corporation, were filed with the Nevada
Secretary of State.
On April 1, 2009, the Board of Directors approved the issuance of 3,954,950
shares of our common stock (representing 51% of our outstanding shares of common
stock following the issuance of such stock) , including 1,977,475 shares issued
to each of Sanford Schwartz and Michael Friess, each subsequently elected an
officer and director of the Company, in consideration for the payment by each of
$10,000, $5,000 paid in cash and $5,000 paid by the issuance to the Company of a
promissory note. The notes were paid in May, 2009. On April 1, 2009, following
the stock issuances to Mr. Schwartz and Mr. Friess, there were 7,894,111
outstanding shares of our common stock.
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On April 22, 2009, the Board of Directors accepted the resignation of Nick T
Boosalis and appointed Michael Friess as President, CEO, and Chairman of the
Board, Sanford Schwartz as Vice President and a director, and Chloe DiVita as
Secretary, Treasurer, CFO and a director of the Company.
Since December 2007, the Company has had insignificant operations. As such, the
Company may presently be defined as a "shell" company, whose sole purpose at
this time is to locate and consummate a merger or acquisition with a private
entity.
The Company has opted to register its common stock pursuant to section
12(g) of the Securities Exchange Act of 1934 in an effort to maximize
shareholder value. The best use and primary attraction of the Company as a
merger partner or acquisition vehicle will be its status as a reporting public
company. Any business combination or transaction is expected to result in a
significant issuance of shares and substantial dilution to present stockholders
of the Company.
The proposed business activities described herein classify the Company as a
"blank check" company. Many states have enacted statutes, rules and regulations
limiting the sale of securities of "blank check" companies in their respective
jurisdictions. Management does not intend to undertake any additional offerings
of the Company's securities, either debt or equity, until such time as the
Company has successfully implemented its business plan described herein.
The Company maintains headquarters at the office of its President. The Company's
website is www.fonainc.com. The Company is not required to deliver an annual
report to security holders and at this time does not anticipate the distribution
of such a report. The Company will file reports with the SEC.
The public may read and copy any materials the Company files with the SEC in the
SEC's Public Reference Section, Room 1580, 100 F Street N.E., Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Section by calling the SEC at 1-800-SEC-0330. Additionally, the SEC
maintains an Internet site that contains reports, proxy, and information
statements, and other information regarding issuers that file electronically
with the SEC, which can be found at http://www.sec.gov.
Employees
We currently have no employees. Michael Friess, Sanford Schwartz and Chloe
DiVita each devote approximately 5-10% of their time to the Company's business.
Our management expects to use consultants, attorneys and accountants as
necessary, and does not anticipate a need to engage any full-time employees so
long as we are seeking and evaluating business opportunities. The need for
employees and their availability will be addressed in connection with the
decision whether or not to acquire or participate in specific business
opportunities.
ITEM 1A. RISK FACTORS
A. Conflicts of Interest. There are certain conflicts of interest between us and
our officers and directors. They have other business interests to which they
currently devote attention, and are expected to continue to do so. As a result,
conflicts of interest may arise that can be resolved only through their exercise
of judgment in a manner which is consistent with their fiduciary duties to the
Company.
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It is anticipated that our principal shareholders may actively negotiate or
otherwise consent to the purchase of all or a portion of their common stock as a
condition to, or in connection with, a proposed merger or acquisition
transaction. In this process, our principal shareholders may consider their own
personal pecuniary benefit rather than the best interests of our other
shareholders, and the other shareholders are not expected to be afforded the
opportunity to approve or consent to any particular stock buy-out transaction.
B. Need for Additional Financing. We have very limited funds, and such funds are
unlikely to be adequate to take advantage of any available business
opportunities. Even if our funds prove to be sufficient to acquire an interest
in, or complete a transaction with, a business opportunity, we may not have
enough capital to exploit the opportunity. Our ultimate success may depend upon
our ability to raise additional capital. We have not investigated the
availability, source, or terms that might govern the acquisition of additional
capital and will not do so until we determine a need for additional financing.
If additional capital is needed, there is no assurance that funds will be
available from any source or, if available, that they can be obtained on terms
acceptable to us. If such funds are not available, our operations will be
limited to those that can be financed with our modest capital.
C. Regulation of Penny Stocks. Our securities, when available for trading, will
be subject to a Securities and Exchange Commission rule that imposes special
sales practice requirements upon broker-dealers who sell such securities to
persons other than established customers or accredited investors. For purposes
of the rule, the phrase "accredited investors" means, in general terms,
institutions with assets in excess of $5,000,000, or individuals having a net
worth in excess of $1,000,000 or having an annual income that exceeds $200,000
(or that, when combined with a spouse's income, exceeds $300,000). For
transactions covered by the rule, the broker-dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. Consequently, the rule may
affect the ability of broker-dealers to sell our securities and also may affect
the ability of our shareholders in this offering to sell their securities in any
market that might develop.
Shareholders should be aware that, according to Securities and Exchange
Commission Release No. 34-29093, the market for penny stocks has suffered from
patterns of fraud and abuse. Such patterns include (i) control of the market for
the security by one or a few broker-dealers that are often related to the
promoter or issuer; (ii) manipulation of prices through prearranged matching of
purchases and sales and false and misleading press releases; (iii) "boiler room"
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (iv) excessive and undisclosed
bid-ask differentials and markups by selling broker-dealers; and (v) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. The
Company's management is aware of the abuses that have occurred historically in
the penny stock market. Although we do not expect to be in a position to dictate
the behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our securities.
D. No Operating History or Revenue and Minimal Assets. The Company has had no
operating history nor any revenues or earnings from operations since 1999. The
Company has no significant assets or significant financial resources. The
Company will, in all likelihood, sustain operating expenses without
corresponding revenues, at least until the consummation of a business
combination. This may result in the Company incurring a net operating loss which
will increase continuously until the Company can consummate a business
combination with a profitable business opportunity. There is no assurance that
the Company can identify such a business opportunity and consummate such a
business combination.
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E. No Assurance of Success or Profitability. There is no assurance that we will
acquire a business opportunity. Even if we should become involved in a business
opportunity, there is no assurance that it will generate revenues or profits, or
that the market price of our common stock will be increased thereby.
F. Possible Business - Not Identified and Highly Risky. We have not identified
and have no commitments to enter into or acquire a specific business
opportunity. Therefore we can disclose the risks and hazards of a business or
opportunity that we may enter into in only a general manner, and cannot disclose
the risks and hazards of any specific business or opportunity. An investor can
expect a potential business opportunity to be quite risky. Our acquisition of or
participation in a business opportunity will likely be highly illiquid and could
result in a total loss to us and our shareholders if the business or opportunity
proves to be unsuccessful.
G. Type of Business Acquired. The type of business to be acquired may be one
that desires to avoid affecting its own public offering and the accompanying
expense, delays, uncertainties, and federal and state requirements which purport
to protect investors. Because of our limited capital, it is more likely than not
that any acquisition will involve other parties whose primary interest is the
acquisition of control of a publicly traded company. Moreover, any business
opportunity acquired may be currently unprofitable or present other negative
factors.
H. Impracticability of Exhaustive Investigation. Our limited funds and the lack
of full-time management will likely make it impracticable to conduct a complete
and exhaustive investigation and analysis of a business opportunity before we
commit to such opportunity. Management decisions, therefore, will likely be made
without detailed feasibility studies, independent analysis, market surveys and
the like, which, if we had more funds, would be desirable. We will be
particularly dependent in making decisions upon information provided by the
promoter, owner, sponsor, or others associated with the business opportunity
seeking our participation. A significant portion of our available funds may be
expended for investigative expenses and other expenses related to preliminary
aspects of completing an acquisition transaction, whether or not any business
opportunity investigated is eventually acquired.
I. Lack of Diversification. Because of our limited financial resources, it is
unlikely that we will be able to diversify our acquisitions or operations. This
probable inability to diversify our activities into more than one area will
subject us to economic fluctuations within a particular business or industry and
therefore increase the risks associated with our operations.
J. Requirement of Audited Financial Statements May Disqualify Business
Opportunities. Management of the Company believes that any potential business
opportunity must provide audited financial statements for review, and for the
protection of all parties to the business combination. One or more attractive
business opportunities may choose to forego the possibility of a business
combination with the Company, rather than incur the expenses associated with
preparing audited financial statements.
K. Other Regulation. An acquisition we make may be of a business that is subject
to regulation or licensing by federal, state, or local authorities. Compliance
with such regulations and licensing can be expected to be a time-consuming,
expensive process and may limit our other investment opportunities.
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L. Dependence Upon Management; Limited Participation of Management. We will be
heavily dependent upon the skills, talents, and abilities of our officers and
directors to implement our business plan, and may, from time to time, find that
the inability of such persons to devote their full-time attention to our
business results in a delay in progress toward implementing our business plan.
Furthermore, we will be entirely dependent upon the experience of our officers
and directors in seeking, investigating, and acquiring a business and in making
decisions regarding our operations. Because investors will not be able to
evaluate the merits of our possible business acquisitions, they should
critically assess the information concerning our officers and directors.
M. Lack of Continuity in Management. The Company does not have an employment
agreement with any of its officers or directors, and as a result, there is no
assurance that they will continue to manage the Company in the future. In
connection with the acquisition of a business opportunity, it is likely the
current officers and directors of the Company will resign. A decision to resign
will be based upon the identity of the business opportunity and the nature of
the transaction, and is likely to occur without the vote or consent of the
shareholders of the Company.
N. Indemnification of Officers and Directors. Our Articles of Incorporation
provide that we will indemnify our directors, officers, employees, and agents to
the fullest extent permitted by Nevada law. We will also bear the expenses of
such litigation for any of our directors, officers, employees, or agents, upon
such person's promise to repay us if it is ultimately determined that any such
person shall not have been entitled to indemnification. This indemnification
policy could result in substantial expenditures which we may be unable to
recoup.
O. Dependence Upon Outside Advisors. To supplement the business experience of
our officers and directors, we may be required to employ accountants, technical
experts, appraisers, attorneys, or other consultants or advisors. The selection
of any such advisors will be made by our officers without any input from
shareholders. Furthermore, it is anticipated that such persons may be engaged on
an "as needed" basis without a continuing fiduciary or other obligation to the
Company. In the event management considers it necessary to hire outside
advisors, they may elect to hire persons who are affiliates, if they are able to
provide the required services.
P. Leveraged Transactions. There is a possibility that any acquisition of a
business opportunity we make may be leveraged, i.e., we may finance the
acquisition of the business opportunity by borrowing against the assets of the
business opportunity to be acquired, or against the projected future revenues or
profits of the business opportunity. This could increase our exposure to losses.
A business opportunity acquired through a leveraged transaction is profitable
only if it generates enough revenues to cover the related debt and expenses.
Failure to make payments on the debt incurred to purchase the business
opportunity could result in the loss of a portion or all of the assets acquired.
There is no assurance that any business opportunity acquired through a leveraged
transaction will generate sufficient revenues to cover the related debt and
expenses.
Q. Competition. The search for potentially profitable business opportunities is
intensely competitive. We expect to be at a disadvantage when competing with
many firms that have substantially greater financial and management resources
and capabilities than we do. These competitive conditions will exist in any
industry in which we may become interested.
R. No Foreseeable Dividends. We have not paid cash dividends on our common stock
and do not anticipate paying such dividends in the foreseeable future.
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S. Loss of Control by Present Management and Shareholders. We may consider an
acquisition in which we would issue as consideration for the business
opportunity to be acquired, an amount of our authorized but unissued common
stock that would, upon issuance, represent the great majority of the voting
power and equity of the Company. The result of such an acquisition would be that
the acquired company's shareholders and management would control the Company,
and our management could be replaced by persons unknown at this time. Such a
merger would result in a greatly reduced percentage of ownership by our current
shareholders.
T. No Public Market Exists. There is no public market for our common stock, and
no assurance can be given that a market will develop or that a shareholder ever
will be able to liquidate his investment without considerable delay, if at all.
If a market should develop, the price may be highly volatile. Factors such as
those discussed in this "Risk Factors" section may have a significant impact
upon the market price of the securities. Because of the low price of the
securities, many brokerage firms may not be willing to effect transactions in
the securities. Even if a purchaser finds a broker willing to effect a
transaction in these securities, the combination of brokerage commissions, state
transfer taxes, if any, and any other selling costs may exceed the selling
price. Further, many lending institutions will not permit the use of such
securities as collateral for any loans.
U. Government Regulations. Although we will be subject to the reporting
requirements under the Exchange Act, management believes we will not be subject
to regulation under the Investment Company Act of 1940, as amended (the
"Investment Company Act"), since we will not be engaged in the business of
investing or trading in securities. If we engage in business combinations which
result in our holding passive investment interests in a number of entities, we
could be subject to regulation under the Investment Company Act. If so, we would
be required to register as an investment company and could be expected to incur
significant registration and compliance costs. We have obtained no formal
determination from the SEC as to our status under the Investment Company Act
and, consequently, violation of the Investment Company Act could subject us to
material adverse consequences.
V. Potential Acquisitions. If we enter into a business combination with a
foreign company, we will be subject to risks inherent in business operations
outside of the United States. These risks include, for example, currency
fluctuations, regulatory problems, punitive tariffs, unstable local tax
policies, trade embargoes, risks related to shipment of raw materials and
finished goods across national borders and cultural and language differences.
Foreign economies may differ favorably or unfavorably from the United States
economy in growth of gross national product, rate of inflation, market
development, rate of savings, and capital investment, resource self-sufficiency
and balance of payment positions, and in other respects.
ITEM 2. FINANCIAL INFORMATION
General Business Plan
At this time, the Company's purpose is to seek, investigate and, if such
investigation warrants, acquire an interest in business opportunities presented
to it by persons or firms who or which desire to seek the perceived advantages
of an Exchange Act registered corporation. The Company will not restrict its
search to any specific business, industry, or geographical location and the
Company may participate in a business venture of virtually any kind or nature.
This discussion of the proposed business is intentionally general and is not
meant to be restrictive of the Company's virtually unlimited discretion to
search for and enter into potential business opportunities. Management
anticipates that it may be able to participate in only one potential business
venture because the Company has nominal assets and limited financial resources.
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See "FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA." This lack of diversification
should be considered a substantial risk to shareholders of the Company because
it will not permit the Company to offset potential losses from one venture
against gains from another.
The Company may seek a business opportunity with entities which have recently
commenced operations, or which wish to utilize the public marketplace in order
to raise additional capital in order to expand into new products or markets, to
develop a new product or service, or for other corporate purposes. The Company
may acquire assets and establish wholly-owned subsidiaries in various businesses
or acquire existing businesses as subsidiaries.
The Company intends to advertise and promote the Company privately. The Company
has not yet prepared any notices or advertisements.
The Company anticipates that the selection of a business opportunity in which to
participate will be complex and extremely risky. Due to general economic
conditions, rapid technological advances being made in some industries and
shortages of available capital, management believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation. Such
perceived benefits may include facilitating or improving the terms on which
additional equity financing may be sought, providing liquidity for incentive
stock options or similar benefits to key employees, providing liquidity (subject
to restrictions of applicable statutes), for all shareholders and other factors.
The Company has, and will continue to have, little or no capital with which to
provide the owners of business opportunities with any significant cash or other
assets. However, management believes the Company will be able to offer owners of
acquisition candidates the opportunity to acquire a controlling ownership
interest in a publicly registered company without incurring the cost and time
required to conduct an initial public offering. The owners of the business
opportunities will, however, incur significant legal and accounting costs in
connection with the acquisition of a business opportunity, including the costs
of preparing Form 8-K's, 10-K's and 10-Q's, agreements and related reports and
documents. The Securities Exchange Act of 1934 (the "Exchange Act"),
specifically requires that any merger or acquisition candidate comply with all
applicable reporting requirements, which include providing audited financial
statements to be included within the numerous filings relevant to complying with
the Exchange Act. The officers and directors of the Company have not conducted
market research and are not aware of statistical data which would support the
perceived benefits of a merger or acquisition transaction for the owners of a
business opportunity.
The analysis of new business opportunities will be undertaken by, or under the
supervision of, the officers and directors of the Company. Management intends to
concentrate on identifying preliminary prospective business opportunities, which
may be brought to its attention through present associations of the Company's
officers and directors. In analyzing prospective business opportunities,
management will consider such matters as the available technical, financial and
managerial resources; working capital and other financial requirements; history
of operations, if any; prospects for the future; nature of present and expected
competition; the quality and experience of management services which may be
available and the depth of that management; the potential for further research,
development, or exploration; specific risk factors not now foreseeable but which
then may be anticipated to impact the proposed activities of the Company; the
potential for growth or expansion; the potential for profit; the perceived
public recognition of acceptance of products, services, or trades; name
identification; and other relevant factors The Company will not acquire or merge
with any company for which audited financial statements cannot be obtained prior
to the closing of the proposed transaction.
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The officers of the Company have limited experience in managing companies
similar to the Company and shall rely upon their own efforts, in accomplishing
the business purposes of the Company. The Company may from time to time utilize
outside consultants or advisors to effectuate its business purposes described
herein. No policies have been adopted regarding use of such consultants or
advisors, the criteria to be used in selecting such consultants or advisors, the
services to be provided, the term of service, or regarding the total amount of
fees that may be paid. However, because of the limited resources of the Company,
it is likely that any such fee the Company agrees to pay would be paid in stock
and not in cash.
The Company will not restrict its search for any specific kind of firms, but may
acquire a venture which is in its preliminary or development stage, which is
already in operation, or in essentially any stage of its corporate life. It is
impossible to predict at this time the status of any business in which the
Company may become engaged, in that such business may need to seek additional
capital, may desire to have its shares publicly traded, or may seek other
perceived advantages which the Company may offer. However, the Company does not
intend to obtain funds in one or more private placements to finance the
operation of any acquired business opportunity until such time as the Company
has successfully consummated such a merger or acquisition.
It is anticipated that the Company will require approximately $45,000 during the
next 12 months to implement its business plan described herein. The Company has
limited capital with which to pay these anticipated expenses. It is the intent
of management to provide the working capital necessary to support and preserve
the integrity of the Company but there is no legal obligation for management to
provide any additional funding to the Company. The Company has not identified
any alternative sources and there is substantial doubt about the Company's
ability to continue as a going concern.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business acquisition, the Company
may become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. It may also acquire
stock or assets of an existing business. On the consummation of a transaction,
it is probable that the present management and shareholders of the Company will
no longer be in control of the Company. In addition, the Company's directors
may, as part of the terms of the acquisition transaction, resign and be replaced
by new directors without a vote of the Company's shareholders or may sell their
stock in the Company. Any and all such sales will only be made in compliance
with the securities laws of the United States and any applicable state.
It is anticipated that any securities issued in any such reorganization would be
issued in reliance upon exemption from registration under applicable federal and
state securities laws. In some circumstances, however, as a negotiated element
of its transaction, the Company may agree to register all or a part of such
securities immediately after the transaction is consummated or at specified
times thereafter. If such registration occurs, of which there can be no
assurance, it will be undertaken by the surviving entity after the Company has
successfully consummated a merger or acquisition and the Company is no longer
considered a "shell" company. The issuance of substantial additional securities
and their potential sale into any trading market which may develop in the
Company's securities may have a depressive effect on the value of the Company's
securities in the future, if such a market develops, of which there is no
assurance.
With respect to any merger or acquisition, the negotiations with target company
management is expected to focus on the percentage of the Company which the
target company shareholders would acquire in exchange for all of their
shareholdings in the target company. Depending upon, among other things, the
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target company's assets and liabilities, the Company's shareholders will in all
likelihood hold a substantially lesser percentage ownership interest in the
Company following any merger or acquisition. The percentage ownership may be
subject to significant reduction in the event the Company acquires a target
company with substantial assets. Any merger or acquisition effected by the
Company can be expected to have a significant dilutive effect on the percentage
of shares held by the Company's then shareholders.
The Company will participate in a business opportunity only after the
negotiation and execution of appropriate written agreements. Although the terms
of such agreements cannot be predicted, generally such agreements will require
some specific representations and warranties by all of the parties thereto, will
specify certain events of default, will detail the terms of closing and the
conditions which must be satisfied by each of the parties prior to and after
such closing, will outline the manner of bearing costs, including costs
associated with the Company's attorneys and accountants, will set forth remedies
on default and will include miscellaneous other terms.
As stated hereinabove, the Company will not acquire or merge with any entity
which cannot provide independent audited financial statements prior to the
closing of the proposed transaction. Upon the effective date of this
registration statement, the Company is subject to all of the reporting
requirements included in the Exchange Act. Included in these requirements is the
affirmative duty of the Company to file independent audited financial statements
as part of its Form 8-K to be filed with the Securities and Exchange Commission
upon consummation of a merger or acquisition, as well as the Company's audited
financial statements included in its annual report on Form 10-K. The Company
does not intend to provide the Company's security holders with any disclosure
documents, including audited financial statements, concerning an acquisition or
merger candidate and its business prior to the consummation of any acquisition
or merger transaction.
The Company will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many established
venture capital and financial concerns which have significantly greater
financial and personnel resources and technical expertise than the Company. In
view of the Company's extremely limited financial resources and limited
management availability, the Company will continue to be at a significant
competitive disadvantage compared to the Company's competitors.
ITEM 3. PROPERTIES
The Company has no properties and at this time has no agreements to acquire any
properties. The Company currently maintains a mailing address at 5353 Manhattan
Circle, Suite 101, Boulder, CO 80303, which is the address of its President. The
Company pays no rent for the use of this mailing address. The Company does not
believe that it will need to maintain an office at any time in the foreseeable
future in order to carry out its plan of operations described herein.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANGEMENT
Principal Stockholders
The following table sets forth certain information as of August 31, 2010
regarding the beneficial ownership of the Company's common stock by (i) each
stockholder known by the Company to be the beneficial owner of more than 5% of
the Company's common stock, (ii) by each director and executive officer of the
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Company and (iii) by all executive officer's and directors of the Company as a
group. Each of the persons named in the table has sole voting and investment
power with respect to common stock beneficially owned.
NAME AND ADDRESS NUMBER OF PERCENTAGE
SHARES OWNED OF SHARES
OR CONTROLLED OWNED
Michael Friess 1,977,475 25.05%
5353 Manhattan Circle Ste 101
Boulder, Colorado 80303
Sanford Schwartz 1,977,475 25.05%
5353 Manhattan Circle Ste 101
Boulder, Colorado 80303
Nick T Boosalis(1) 2,252,233 28.58%
212 2nd St SE Suite 224
Minneapolis, MN 55414
The Boosalis Group 618,039 7.83%
212 2nd St SE Suite 224
Minneapolis, MN 55414
Desfaire 1,100,000 13.93%
212 2nd St SE Suite 224
Minneapolis, MN 55414
Richard Dillon 576,571 7.30%
703 Oakland Ave
St. Paul, MN 55102
All Officers and Directors 3,954,950 50.10%
as a Group (2 persons)
______________
(1) Includes 618,039 shares owned by The Boosalis Group, the sole shareholder of
which is Mr. Boosalis and 1,100,000 shares owned by Desfaire, Inc., 99% of the
common stock of which is owned by Mr. Boosalis.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
Officers and Directors
The following table sets forth certain information concerning each of the
Company's directors and executive officers:
NAME AGE POSITION
Michael Friess 60 Chairman of the Board
President and CEO
Sanford Schwartz 60 Vice President, Director
Chloe DiVita 33 Treasurer, Secretary,
Director and CFO
There are no agreements or understandings for any officer or director to resign
at the request of another person and none of the above named officers and
directors are acting on behalf of or will act at the direction of any other
person.
11
There is no family relationship between any director or executive officer of the
Company.
The Board of Directors presently has no committees.
Set forth below are the names of all directors and executive officers of the
Company, all positions and offices with the Company held by each such person,
the period during which he has served as such, and the business experience of
such persons during at least the last five years:
Michael Friess is currently a self-employed attorney licensed to practice law in
the State of Colorado. As a sole practioner, Mr. Friess operates under his own
name, Michael Friess, Attorney, and has been practicing law in Colorado for 17
years. He was a partner from January 1983 to December 1993 in the New York City
law firm of Schulte, Roth & Zabel, where his practice emphasized taxation. Mr.
Friess has served as Chairman of the Board and President of the Company from
April 2009 to the present. Mr. Friess served on the Board of Directors of
Oralabs Holding Corporation (NASDAQ: OLAB) from September 1997 until December
2006. In an average week Mr. Friess spends approximately 5 hours on Company
matters. Mr. Friess was appointed a director because of his extensive legal and
business acquisitions experience, including working with public blank check
companies interested in merging with a private operating company.
Chloe DiVita has served as Secretary, Treasurer, CFO and a director of the
Company from April 2009 to the present. For the past eight years, Mrs. DiVita
has been a self-employed accountant in Colorado operating under DiVita &
Associates, Inc. She has also been a business development consultant partnering
on many projects with Creative Business Strategies, LLC, a business consulting
firm. In an average week Mrs. DiVita spends approximately 15 hours on Company
matters. Mrs. DiVita was appointed a director because of her financial
background and experience working with public blank check companies interested
in merging with private operating companies.
Sanford Schwartz has been a director of the Company since April 2009. Mr.
Schwartz is the Chairman of Creative Business Strategies, LLC, a business
consulting firm in Boulder, Colorado co-founded by Mr. Schwartz in 1985 that
provides business development, management and restructuring services to business
owners and companies, including companies engaged in real estate management and
development and various sectors of the healthcare industry. In an average week
Mr. Schwartz spends approximately 5 hours on Company matters. Mr. Schwartz was
appointed a director because of his over 25 years of business acquisition and
development experience, including working with public blank check companies
interested in merging with a private operating company.
Previous Blank-Check Experience
Mr. Michael Friess, President and a director and executive officer of the
Company, Mr. Sanford Schwartz a director of the Company, and Mrs. Chloe DiVita,
CFO and director of the Company, have all been involved either as an officer or
director, or both, with other blank-check companies, which have completed some
form of corporate reorganization. To date, Mr. Friess and Mr. Schwartz have
acquired a majority interest in six companies, in addition to the Company, that
had no significant assets or business operations, obtained the management,
accounting and legal services and provided the funds required to register the
common stock of each of the companies pursuant to Section 12(g) of the
Securities Exchange Act of 1934 and, if necessary, to satisfy outstanding
obligations of the company and found private investors or private operating
companies interested in merging an operating company with the company.
Typically, Mr. Friess and Mr. Schwartz have then sold all or substantially all
of their interests in the company to the parties interested in merging a private
operating company with the company. Mrs. DiVita has served as Secretary, CFO and
a director of three of the six companies. The officers and directors of the
Company intend to work on developing additional registered blank check
companies. The following is a list of the blank-check companies with which the
Company's officers and directors have previously been involved during the last
five years:
12
Hemcure, Inc. (HMCU), Commission File #000-51543, initially registered with the
Securities and Exchange Commission in May of 1987, was organized to provide
administrative and marketing services to physicians or physician groups who
emphasized outpatient non-surgical treatment for hemorrhoids. Mr. Friess and Mr.
Schwartz acquired ownership of 46% of HMCU's then outstanding shares during
April, 2005 and during June 2006, sold all of their shares of HMCU to private
investors for $525,000, following which HMCU became Aurasound, Inc. listed on
the OTCBB symbol (ARAU). Current officers and directors of Fona, Inc. are not
currently officers, directors or employees of ARAU and, therefore, have no
direct knowledge of the business operations or possible pending acquisition,
business combinations or mergers of ARAU. ARAU appears to be current in all of
its filings with the Securities and Exchange Commission.
Implant Technologies, Inc. (IMLT), Commission File #000-17064, initially
registered in 1980, was formed for the purpose of developing and marketing
medical products. During April 2006, Mr. Friess and Mr. Schwartz acquired
ownership of 80% of IMLT's then outstanding shares of common stock and from
April 2006 to July, 2007, Mr. Friess served as Secretary, Treasurer and a
director and Mr. Schwartz served as a director of IMLT. During July 2007, they
sold all of their shares of IMLT to private investors for $582,500 and IMLT
became Oasis Online Technologies Corp listed on the OTCBB symbol (OOLN), a
company seeking acquisitions in the online security and authentication market.
Current officers and directors of Fona, Inc. are not currently officers,
directors or employees of OOLN and, therefore, have no direct knowledge of the
business operations or possible pending acquisition, business combinations or
mergers of OOLN. OOLN appeared to be current in its filings with the Securities
and Exchange Commission through May 2009.
Discovery Technologies, Inc. (DSVY), Commission File #000-18606, initially
registered in 1987, was formed to design, manufacture and market video products
that transmit pictures over standard voice-grade telephone lines. In June 2006,
the sole remaining director, appointed Michael Friess as President CEO and a
director of the company, and Sanford Schwartz as a director of the company and
Mr. Friess and Mr. Schwartz acquired ownership of 80% of DSVY's then outstanding
shares of common stock. During December 2007, Mr. Friess and Mr. Schwartz sold
their shares of DSVY for $550,000 and DSVY became China Green Agriculture listed
on the OTCBB symbol (CGAG). Immediately following the transaction, Mr. Friess
and Mr. Schwartz owned 111,386 shares of CGAG's common stock (representing
approximately 1% of CGAG's then outstanding shares of common stock). Current
officers and directors of the Company are not currently officers or directors or
employees of CGAG and, therefore, have no direct knowledge of the business
operations or possible pending acquisitions, business combinations or mergers of
CGAG. CGAG appears to be current in its filings with the Securities and Exchange
Commission.
Certified Technologies Corporation (CFDT), Commission File #000-52786, initially
registered in 1984, was formed to market a fire retardant chemical formulation
to the commercial aviation and business furniture industries. In February 2007,
Michael Friess and Sanford Schwartz acquired 51% of CFDT's then outstanding
shares of common stock and Mr. Friess was appointed President, CEO and a
director and Mr. Schwartz was appointed a director, and Chloe DiVita was
appointed Secretary, Treasurer and a director of CFTD. During May 2008, Mr.
Friess and Mr. Schwartz sold substantially all of their shares of CFTD for
13
$740,000 ande CFDT became Zhaoheng Hydropower CO listed on the OTCBB symbol
(ZHYP). Immediately following the transaction, Mr. Friess and Mr. Schwartz owned
444,498 shares of ZHYP's common stock (representing approximately 1% of ZHYP's
then outstanding shares of common stock). Current officers and directors of the
Company are not currently officers or directors or employees of ZHYP and,
therefore, have no direct knowledge of the business operations or possible
pending acquisitions, business combinations or merger of ZHYP. ZHYP appeared to
be current in all of its filings with the Securities and Exchange Commission
through May, 2009, and has since moved the Company from the United States and
filed a Form 15-12G terminating its filing requirements with the Securities and
Exchange Commission.
Henry County Plywood Corporation (HRYC), Commission File #000-53208, initially
registered in 1948, was formed to purchase, lease, sell, manufacture and deal in
lumber, and other wood products. In August 2006, Michael Friess and Sanford
Schwartz acquired 80% of HRYC's then outstanding shares of common stock and Mr.
Friess was appointed President, CEO and a director of the company, Sanford
Schwartz was appointed a director of the company and Chloe DiVita was appointed
Secretary, CFO and a director of the company. In October 2007, Messrs Friess and
Schwartz resigned as officers and directors of the Company, and in May 2008 Mr.
Friess was reappointed to the Board. In January 2009, Mr. Friess and Mr.
Schwartz sold most of their shares of HRYC for $500,000 and HRYC became Sino
Green land Corp listed on the OTCBB symbol (SGLA). Immediately following the
transaction, Mr. Friess and Mr. Schwartz owned a total of 999,778 shares of
SGLA's common stock (representing approximately 1% of SGLA's then outstanding
shares of common stock). Current officers and directors of the Company are not
currently officers or directors or employees of SGLA and, therefore, have no
direct knowledge of the business operations or possible pending acquisitions,
business combinations or merger of SGLA. SGLA appears to be current in all of
its filings with the Securities and Exchange Commission.
P I Services, Inc. (PISV), Commission File #000-53263, had its initial public
offering in September 1988. The company was formed as Sweet Little Deal. In
August 2007, Michael Friess and Sanford Schwartz acquired 80% of PISV's then
outstanding shares of common stock and Mr. Friess was appointed President and
Chairman of the Board of the company, Mr. Schwartz was appointed a director of
the company and Chloe DiVita was appointed Secretary, CFO and a director of the
Company. In January 2009, Physicians was reincorporated in the State of Nevada
through a merger with P I Services, Inc. In March 2010, Mr. Friess and Mr.
Schwartz sold most of their shares of PISV for $275,000 and PISV became China
Lithium Technologies Inc. listed on the OTCBB symbol (CLTT). Immediately
following the transaction, Mr. Friess and Mr. Schwartz owned a total of
1,330,468 shares of CLTT's common stock (approximately 3% of CLTT's then
outstanding shares of common stock). Current officers and directors of the
Company are not currently officers or directors or employees of CLTT and,
therefore, have no direct knowledge of the business operations or possible
pending acquisitions, business combinations or merger of CLTT. CLTT appears to
be current in all of its filing with the Securities and Exchange Commission.
Conflicts of Interest
The Company's officers and directors have in the past and may in the future be
officers and directors of other companies of a similar nature and with a similar
purpose as the Company. Consequently, there are potential inherent conflicts of
interest in Mr. Friess, Mr. Schwartz and Mrs. DiVita serving as officers and
directors of the Company. Insofar as the officers and directors are engaged in
other business activities, management anticipates it will devote only a minor
amount of time to the Company's affairs. The officers and directors of the
Company may in the future become shareholders, officers or directors of other
companies which may be formed for the purpose of engaging in business activities
similar to those conducted by the Company. The Company does not currently have a
right of first refusal pertaining to opportunities that come to management's
attention even if the opportunities relate to the Company's proposed business
operations.
14
The officers and directors are, so long as they are officers or directors of the
Company, subject to the restriction that all opportunities contemplated by the
Company's plan of operation which come to their attention in the performance of
their duties as officers and directors of the Company will be considered
opportunities of, and be made available to the Company. However, they are under
no obligation to make any opportunities that come to their attention in the
performance of their duties for any other companies or in any other manner
available to the Company. Except as set forth above, the Company has not adopted
any other conflict of interest policy with respect to such transactions.
Investment Company Act of 1940
Management believes the Company is not subject to regulation under the
Investment Company Act of 1940, insofar as the Company will not be engaged in
the business of investing or trading in securities. In the event the Company
engages in business combinations, which result in the Company holding passive
investment interests in a number of entities, the Company could be subject to
regulation under the Investment Company Act of 1940. In such event, the Company
would be required to register as an investment company and could be expected to
incur significant registration and compliance costs. The Company has obtained no
formal determination from the Securities and Exchange Commission as to the
status of the Company under the Investment Company Act of 1940. Any violation of
such Act would subject the Company to material adverse consequences.
ITEM 6. EXECUTIVE COMPENSATION
None of the Company's officers or directors receives any compensation for their
respective services rendered to the Company, nor have they received such
compensation. They have agreed to act without compensation until authorized by
the Board of Directors, which is not expected to occur until the Company has
generated revenues from operations after consummation of a merger or
acquisition. As of the date of this registration statement, the Company has
minimal funds available to pay officers or directors. Further, none of the
officers or directors are accruing any compensation pursuant to any agreement
with the Company.
It is possible that, after the Company successfully consummates a merger or
acquisition with an unaffiliated entity, that entity may desire to employ or
retain one or more members of the Company's management for the purposes of
providing services to the surviving entity, or otherwise provide other
compensation to such persons. However, the Company has adopted a policy whereby
the offer of any post-transaction remuneration to members of management will not
be a consideration in the Company's decision to undertake any proposed
transaction. Each member of management has agreed to disclose to the Company's
Board of Directors any discussions concerning possible compensation to be paid
to them by any entity which proposes to undertake a transaction with the Company
and further, to abstain from voting on such transaction. Therefore, as a
practical matter, if each member of the Company's Board of Directors is offered
compensation in any form from any prospective merger or acquisition candidate,
the proposed transaction will not be approved by the Company's Board of
Directors as a result of the inability of the Board to affirmatively approve
such a transaction.
It is possible that persons associated with management may refer a prospective
merger or acquisition candidate to the Company. In the event the Company
consummates a transaction with any entity referred by associates of management,
it is possible that such an associate will be compensated for their referral. It
is anticipated that this fee will be either in the form of restricted common
stock issued by the Company as part of the terms of the proposed transaction, or
will be in the form of cash consideration. However, if such compensation is in
the form of cash, such payment will be tendered by the acquisition or merger
candidate, because the Company has minimal cash available. The amount of such
compensation, if any, cannot be determined as of the date of this registration
statement.
15
No retirement, pension, profit sharing, stock option or insurance programs or
other similar programs have been adopted by the Registrant for the benefit of
its employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
No officer, director, promoter, or affiliate of the Company has or proposes to
have any direct or indirect material interest in any asset that we propose to
acquire through security holdings, contracts, options, or otherwise.
We may pay any consulting or finder's fee for consulting services to assist
management in evaluating a prospective business opportunity in stock or in cash.
Any such issuance of stock would be made on an ad hoc basis. Accordingly, we are
unable to predict whether or in what amount such compensation might be made.
We currently do not anticipate that we will pay any salary, consulting fee, or
finder's fee to any of our directors or executive officers, or to any other
affiliate except as described under "Executive Compensation" above.
We maintain a mailing address at the offices of our president, Michael Friess,
located at 5353 Manhattan Circle, Suite 101, Boulder, CO, 80303 for which we pay
no rent. We anticipate that following the consummation of a business combination
with an acquisition candidate, our office will be moved, but cannot predict
future office or facility arrangements with our officers, directors or
affiliates.
Nick T. Boosalis, and companies he control, own together 28.58% of the Company's
outstanding shares of common stock and Michael Friess and Sanford Schwartz each
own 25.05 % of the Company's outstanding shares of common stock. Prior to Mr.
Friess and Mr. Schwartz's purchases of the Company's common stock in April 2009,
Mr. Boosalis owned approximately 57% of the Company's then outstanding common
stock. Since the purchase of their shares, Mr. Friess and Mr. Schwartz own
approximately 50.1% of the Company's current outstanding common stock.
Although we have no current plans to do so, it is possible that we may enter
into an agreement with an acquisition candidate requiring the sale of all or a
portion of the common stock held by our largest shareholders and their
affiliates to the acquisition candidate or principals thereof, or to other
individuals or business entities, or requiring some other form of payment to our
current shareholders, or requiring the future employment of specified officers
and payment of salaries to them. It is more likely than not that any sale of
securities by our current shareholders to an acquisition candidate would be at a
price substantially higher than that originally paid by such shareholders. Any
payment to current shareholders in the context of an acquisition in which we are
involved would be determined entirely by the largely unforeseeable terms of a
future agreement with an unidentified business entity. On April 1, 2009, the
Board of Directors approved the issuance of 3,954,950 shares of our common stock
to two individuals, (Sanford Schwartz and Michael Friess), who subsequently were
appointed officers and directors of the Company for a $10,000 cash payment and a
note for an additional $10,000. The note was satisfied in May, 2009. This
resulted in a change in control in the Company.
16
During the six months ended June 30, 2010, Nick Boosalis, a former director, and
The Boosalis Group and Desfaire, Inc., affiliates of Mr. Boosalis, loaned the
Company a total of $5,488 to pay general working capital expenses of the
Company. Additionally, since August 2008, Creative Business Strategies, LLC an
affiliate of Sanford Schwartz, an officer and director of the Company, has
loaned the Company a total of $9,677 to pay general working capital expenses of
the Company, including costs associated with the filing of this registration
statement with the Securities and Exchange Commission. The loans are
non-interest bearing and are payable on demand.
On March 3, 2009, the shareholders of the company approved the issuance of
1,980,834 shares of our common stock to officers and directors of the Company,
including 538,194 shares to Nick t. Boosalis (of which 498,237 were approved by
the Board in December 2007 and 39,957 were approved by the Board in December
2008), then a director and officer of the Company, for forgiveness of loans to
the Company in the aggregate principal amount of $74,736 and $5,993
respectively; 322,047 shares to Richard Dillion (which were approved by the
Board in December 2007), then an officer and director of the Company, for
forgiveness of loans to the Company in the aggregate principal amount of
$48,307; and 1,100,000 shares to Desfaire, Inc. (which were approved by the
Board in December 2007), a company 99% of the common stock of which is owned by
Mr. Boosalis, for a cash payment of $11,000 and the payment by Desfaire on
behalf of the Company of software development costs of more than $125,000. No
payments of interest or principal or interest were made by the Company since
January 1, 2008.
On March 3, 2009, the shareholders of the Company approved and ratified a
January 22, 2008, Assignment Agreement pursuant to which the Company assigned
the software and other rights relating to the Rent411 services offered by the
Company, including a license to Desfaire, Inc., an affiliate of Nick T.
Boosalis, then an officer and director of the Company, and substantially all of
the worldwide copyrights, trademarks and other assets of the Company to the
Boosalis Group, a company owned by Mr.. Boosalis, in consideration for which The
Boosalis Group assumed outstanding indebtedness of the Company totaling $34,714.
Securities issued by blank check companies cannot be resold under Rule 144, but
must be registered under the Securities Act of 1933. The Company has no
obligation to register these or any other shares under the Securities Act of
1933.
The proposed business activities described herein classify the Company as a
"blank check" company. Many states have enacted statutes, rules and regulations
limiting the sale of securities of "blank check" companies in their respective
jurisdictions. Management does not intend at this time to undertake any efforts
to cause a market to develop in the Company's securities until such time as the
Company has successfully implemented its business plan described herein.
ITEM 8. LEGAL PROCEEDINGS
Currently, there are no legal proceedings.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
(a) Market Information.
There is not a market for
the Company's securities. There are no outstanding options or warrants to
purchase shares of common stock or securities convertible into shares of the
Company's common stock.
17
The Company has no obligations to register any of its shares of common stock
under the Securities Act of 1933. As of July 26, 2010, 873,191 of the Company's
outstanding shares Securities Act of 1933 are eligible for transfer without
registration under the Act.
(b) Holders.
As of September 20, 2010, there were approximately 272 holders of the Company's
Common Stock.
(c) Dividends.
No dividends have been paid by the Company on any of its securities in the two
most recent fiscal years and such dividends are not contemplated in the
foreseeable future.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
On December 31, 2007, the Board of Directors approved the issuance of 498,237
shares of the Company's common stock to Nick T. Boosalis in exchange for
forgiveness of approximately $74,736 of loans to the Company. The only
consideration received for the shares is the forgiveness of the debt owed by the
Company to Nick T. Boosalis. The shares were issued without registration under
the Securities Act of 1933 in reliance upon Section 4(2) of the Act. No
underwriters were involved and no commissions or other consideration was paid in
connection with the exchange.
On December 31, 2007, the Board of Directors approved the issuance of 322,047
shares of the Company's common stock to Richard Dillon in exchange for
forgiveness of approximately $48,307 of loans to the Company. The only
consideration received for the shares is the forgiveness of the debt owed by the
Company to Richard Dillon. The shares were issued without registration under the
Securities Act of 1933 in reliance upon Section 4(2) of the Act. No underwriters
were involved and no commissions or other consideration was paid in connection
with the exchange.
On December 31, 2007, the Board of Directors approved the issuance of 1,100,000
shares of the Company's common stock to Desfaire in exchange for consideration
of $11,000 cash previously paid to the Company in 2002 and 2003 and for payment
by Desfaire in prior years of more than $125,000 of software development costs
on behalf of the Company. The only consideration received for the shares is the
forgiveness of the debt owed by the Company to Desfaire. The shares were issued
without registration under the Securities Act of 1933 in reliance upon Section
4(2) of the Act. No underwriters were involved and no commissions or other
consideration was paid in connection with the exchange.
On December 31, 2008, the Board of Directors approved the issuance of 39,957
share of the Company's common stock to Nick T. Boosalis in exchange for
forgiveness of approximately $5,993 of loans to the Company. The only
consideration received for the shares is the forgiveness of the debt owed by the
Company to Nick T. Boosalis. The shares were issued without registration under
the Securities Act of 1933 in reliance upon Section 4(2) of the Act. No
underwriters were involved and no commissions or other consideration was paid in
connection with the exchange.
On April 1, 2009, the Board of Directors approved the issuance of 3,954,950
shares of its common stock representing 50.1% of its then outstanding shares of
common stock to two individuals, (Sanford Schwartz and Michael Friess), for a
$10,000 cash payment and a note for an additional $10,000. The note was settled
for cash in on May 1, 2009. The capital was used to pay for the preparation of
documents necessary to register the Company's common stock pursuant to Section
12 (g) of the Securities Exchange Act of 1934. This transaction resulted in a
change in control of the Company. The shares were issued without registration
under the Securities Act of 1933 in reliance upon Section 4(2) of the Act. No
underwriters were involved and no commissions or other consideration was paid in
connection with the exchange.
18
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES
Common Stock
Our Articles of Incorporation authorize the issuance of 780,000,000 shares of
common stock with a par value of $0.001 per share. As of August 31, 2010 there
were 7,894,111 shares of common stock issued and outstanding. Each record holder
of common stock is entitled to one vote for each share held on all matters
properly submitted to the shareholders for their vote. Cumulative voting for the
election of directors is not permitted by the Articles of Incorporation.
Holders of outstanding shares of common stock are entitled to such dividends as
may be declared from time to time by the Board of Directors out of legally
available funds; and, in the event of liquidation, dissolution or winding up of
our affairs, holders are entitled to receive, ratably, the net assets of the
Company available to stockholders. All of the issued and outstanding shares of
common stock are, and all unissued shares when offered and sold will be, duly
authorized, validly issued, fully paid, and nonassessable. To the extent we
issue additional shares of our common stock, the relative interests of then
existing shareholders may be diluted.
Preferred Stock
The Company's Articles of Incorporation authorize the issuance of up to
20,000,000 shares of preferred stock, with a par value of $.001 per share. The
preferred stock may be issued from time to time in one or more series with such
designations, preferences and relative participating, optional or other special
rights and qualifications, limitations or restrictions there of, as shall be
stated in the resolutions adopted by the Corporation's Board providing for the
issuance of such preferred stock or series thereof.
Transfer Agent
As of the date hereof, the company transfer agent is Corporate Stock Transfer,
Inc. in Cherry Creek Colorado.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Incorporation of the Company provide that the Company shall
indemnify its officers and directors to the fullest extent permitted by Nevada
law as provided within NRS 78.7502 and NRS 78.784. In addition, a director of
the Company shall not be personally liable to the Company or its shareholders
for monetary damages for breach of fiduciary duty as a director provided such
person acted in good faith and in a manner which he reasonable believed to be in
or not opposed to the best interest of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful.
19
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
INDEX TO FINANCIAL STATEMENTS
FONA INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
with
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Report of Independent Registered Public Accounting Firm F-2
Financial Statements:
Balance Sheets F-3
Statements of Operations F-4, F-5
Statement of Changes in Stockholders' (Deficit) F-6
Statements of Cash Flows F-7, F-8
Notes to Financial Statements F-9
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Fona, Inc.
We have audited the accompanying balance sheets of Fona, Inc. (A Development
Stage Company) as of December 31, 2009 and 2008, and the related statements of
operations, stockholders' (deficit), and cash flows for the two years ended
December 31, 2009 and 2008, and for the period from August 1, 2008 (date of
development stage) to December 31, 2009. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Fona Inc. (A Development Stage
Company) as of December 31, 2009 and 2008, and the results of its operations,
stockholders' (deficit), and its cash flows for the two years ended December 31,
2009 and 2008, and the period from August 1, 2008 (date of development stage) to
December 31, 2009, in conformity with accounting principles generally accepted
in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 1, the Company
has no business operations and has negative working capital and stockholders'
(deficits), which raise substantial doubts about its ability to continue as a
going concern. Management's plan in regard to this matter is also discussed in
Note 1. The financial statements do not include any adjustments that might
result from the outcome of these uncertainties.
/s/ Schumacher & Associates, Inc.
Schumacher & Associates, Inc.
Certified Public Accountants
7931 S. Broadway #314
Littleton, Colorado 80122
September 21, 2010
F-2
FONA, INC.
(A Development Stage Company)
BALANCE SHEETS
ASSETS
June 30, December 31, December 31,
2010 2009 2008
----------- ----------- -----------
(Unaudited)
Current Assets:
Cash $ 12,605 $ 18,600 $ 14
Prepaid Expenses 175 350 350
----------- ----------- -----------
Total Current Assets 12,780 18,950 364
----------- ----------- -----------
TOTAL ASSETS $ 12,780 $ 18,950 $ 364
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Accounts payable $ 8,473 $ 12,079 $ 6,052
Accounts payable, related parties 15,165 14,502 5,922
----------- ----------- -----------
Total Current Liabilities 23,638 26,581 11,975
----------- ----------- -----------
TOTAL LIABILITIES 23,638 26,581 11,975
----------- ----------- -----------
Commitments and contingencies
(Notes 3 and 4)
Stockholders' (DEFICIT)
Preferred stock, $.001 par value
20,000,000 shares authorized,
no shares issued and outstanding -- -- --
Common stock, $.001 par value
780,000,000 shares authorized,
7,894,111 issued and outstanding
at March 31, 2010 and December 31,
2009 and 3,939,161 issued and
outstanding at December 31, 2008 7,894 7,894 3,939
Additional paid-in capital 1,214,066 1,214,066 1,198,021
Accumulated (Deficit) (1,200,940) (1,200,940) (1,200,940)
Accumulated (Deficit) during the
Development stage (31,878) (28,651) (12,631)
----------- ----------- -----------
TOTAL STOCKHOLDERS' (DEFICIT) (10,858) (7,631) (11,611)
----------- ----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' (DEFICIT) $ 12,780 $ 18,950 $ 364
=========== =========== ===========
The accompanying notes are an integral part of the financial statements.
F-3
FONA, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
Period From
August 1,
2008
(date of
Six Months Six Months development
Ended Ended stage) to
June 30, June 30, June 30,
2010 2009 2010
----------- ----------- -----------
Revenues $ -- $ -- $ --
----------- ----------- -----------
Expenses:
Accounting fees -- 355 1,004
Attorney fees 1,619 10,178 22,979
Corporate fees 870 1,162 2,032
Printing and mailing costs -- 1,056 1,056
Transfer agent fees 704 1,825 3,998
Other 34 772 809
----------- ----------- -----------
Total Expenses 3,227 15,348 31,878
----------- ----------- -----------
Net Operating (Loss) (3,227) (15,348) (31,878)
----------- ----------- -----------
Net Income (Loss) $ (3,227) $ (15,348) $ (31,878)
=========== =========== ===========
Per Share Nil Nil (.01)
=========== =========== ===========
Weighted Average Shares
Outstanding 7,894,111 6,092,412 6,554,387
=========== =========== ===========
The accompanying notes are an integral part of the financial statements.
F-4
FONA, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
For the
Period from
August 1,
2008
(date of
development
Year Year stage)
Ended Ended through
December 31, December 31, December 31,
2009 2008 2009
------------ ------------ ------------
Revenues $ -- $ -- $ --
------------ ------------ ------------
Operating Expenses:
Accounting fees 355 649 1,004
Attorney fees 10,225 16,012 21,360
Corporate fees 1,162 300 1,162
Printing and mailing costs 1,056 -- 1,056
Transfer agent fees 2,450 1,377 3,294
Other 772 33 775
------------ ------------ ------------
Total Expenses 16,020 18,371 28,651
Net Operating (Loss) (16,020) (18,371) (28,651)
------------ ------------ ------------
Net (Loss) from continuing
Operations (16,020) (18,371) (28,651)
------------ ------------ ------------
Discontinued Operations:
(Loss) from discontinued
operations -- (198) --
Gain from sale of asset -- 36,032 --
------------ ------------ ------------
Net (Loss) $ (16,020) $ 17,463 $ (28,651)
============ ============ ============
Per Share
Continuing Operations $ Nil (.01) Nil
Discontinued Operations Nil .01 Nil
------------ ------------ ------------
Total $ Nil $ Nil $ Nil
============ ============ ============
Weighted Average Shares
Outstanding 6,994,766 3,900,187 6,085,355
============ ============ ============
The accompanying notes are an integral part of the financial statements.
F-5
FONA, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT)
For the Period from January 1, 2008 through June 30, 2010
(Period from January 1, 2010 to June 30, 2010 is unaudited)
Accumulated
(Deficit)
Additional During
Preferred Common Stock Paid In Accumulated Development
Stock Shares Amount Capital (Deficit) Stage Total
--------- --------- ----------- ----------- ----------- ----------- -----------
Balance at
January 1,
2008 -- 3,899,204 3,900 1,192,066 (1,231,033) -- (35,067)
Debt converted
to equity
at $.15 -- 39,957 39 5,955 -- -- 5,994
(Note 3)
Net loss-
year ended
December 31,
2008 -- -- -- -- 30,093 (12,631) 17,462
--------- --------- ----------- ----------- ----------- ----------- -----------
Balance at
December
31, 2008 -- 3,939,161 3,939 1,198,021 (1,200,940) (12,631) (11,611)
Issuance of
stock for cash
at .005 -- 3,954,950 3,955 16,045 -- -- 20,000
(Note 3)
Net loss-
period ended
December 31,
2009 -- -- -- -- -- (16,020) (16,020)
--------- --------- ----------- ----------- ----------- ----------- -----------
Balance at
December 31,
2009 -- 7,894,111 7,894 1,214,066 (1,200,940) (28,651) (7,631)
Net loss-
period ended
June 30, 2010
(unaudited) -- -- -- -- -- (3,227) (3,227)
--------- --------- ----------- ----------- ----------- ----------- -----------
Balance at
June 30, 2010
(unaudited) -- 7,894,111 $ 7,894 $ 1,214,066 $(1,200,940) $ (31,878) $ (10,858)
========= ========= =========== =========== =========== =========== ===========
The accompanying notes are an integral part of the financial statements.
F-6
FONA, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Period From
August 1,
2008
(Date of
Development
For the Year Ended Stage) to
December 31, December 31,
2009 2008 2009
------------ ------------ ------------
Cash Flows from Operating
Activities of Continued Operations:
Net income(loss) $ (16,020) $ 17,463 $ (28,651)
Less: Net (loss) from Discontinued
Operations -- (35,834) --
------------ ------------ ------------
Net (loss) from Continuing Operations (16,020) (18,371) (28,651)
------------ ------------ ------------
Adjustments to reconcile net loss
To net cash (used in) operating activities:
Increase in accounts payable 6,026 6,470 12,738
------------ ------------ ------------
Net Cash (Used in) Operating
Activities (9,994) (11,901) (15,913)
------------ ------------ ------------
Cash Flows from Investing Activities:
Net Cash Provided by
Investing Activities -- -- --
------------ ------------ ------------
Cash Flows from Financing Activities:
Sale of common stock 20,000 -- 20,000
Advances from related party 8,580 11,915 14,502
------------ ------------ ------------
Net Cash Provided by
Financing Activities 28,580 11,915 34,502
------------ ------------ ------------
Increase (Decrease) in Cash 18,586 14 18,589
------------ ------------ ------------
Cash, Beginning of Period 14 -- 11
------------ ------------ ------------
Cash, End of Period $ 18,600 $ 14 $ 18,600
============ ============ ============
Interest Paid $ -- $ -- $ --
============ ============ ============
Income Taxes Paid $ -- $ -- $ --
============ ============ ============
Supplemental Disclosure of Non-Cash Transactions:
Conversion of debt for stock and
debt forgiveness $ -- $ 5,993 $ 5,993
The accompanying notes are an integral part of the financial statements.
F-7
FONA, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
Period From
August 1,
2008
(Date of
Development
For the Six Months Ended Stage) to
June 30, June 30,
2010 2009 2010
------------ ------------ ------------
Cash Flows from Operating
Activities of Continued Operations:
Net (loss) $ (3,227) $ (15,348) $ (31,878)
------------ ------------ ------------
Adjustments to reconcile net loss
to net cash (used in) operating activities:
Increase (Decrease) in accounts payable (3,606) 5,678 9,132
Decrease in prepaid expenses 175 175 175
------------ ------------ ------------
Net Cash (Used in) Operating
Activities (6,658) (9,495) (22,571)
------------ ------------ ------------
Cash Flows from Investing Activities:
Net Cash Provided by
Investing Activities -- -- --
------------ ------------ ------------
Cash Flows from Financing Activities:
Sale of common stock -- 20,000 20,000
Advances from related party 663 8,580 15,165
------------ ------------ ------------
Net Cash Provided by
Financing Activities 663 28,580 35,165
------------ ------------ ------------
Cash Flows from (Used In):
Discontinued Operations -- -- --
------------ ------------ ------------
Net cash provided by (used in)
Discontinued Operations -- -- --
------------ ------------ ------------
Increase (Decrease) in Cash (5,995) 19,085 12,594
------------ ------------ ------------
Cash, Beginning of Period 18,600 14 11
------------ ------------ ------------
Cash, End of Period $ 12,605 $ 19,098 $ 12,605
============ ============ ============
Interest Paid $ -- $ -- $ --
============ ============ ============
Income Taxes Paid $ -- $ -- $ --
============ ============ ============
The accompanying notes are an integral part of the financial statements.
F-8
FONA INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2009 and 2008
(References to the periods ended June 30, 2010 and 2009 are unaudited)
(1) Summary of Accounting Policies, and Description of Business
This summary of significant accounting policies of Fona Inc. (the "Company"), a
"Development Stage Company", is presented to assist in understanding the
Company's financial statements. The financial statements and notes are
representations of the Company's management who is responsible for their
integrity and objectivity. These accounting policies conform to generally
accepted accounting principles in the United States of America and have been
consistently applied in the preparation of the financial statements.
(a) Organization and Description of Business
The Company was incorporated in November 1990 under the laws of the State of
Minnesota. In March 2009, the Company held a shareholder meeting approving a
migratory merger to Nevada and a name change to Fona, Inc., which became
effective March 24, 2010.
The Company initially developed and marketed an interactive information and
advertising service, but ceased all major operations in December, 1999.
Currently the Company is a Development Stage Company with plans to engage in any
lawful corporate undertaking, including, but not limited to, selected mergers
and acquisitions.
(b) Use of Estimates in the Preparation of Financial Statements
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 revenue and expenses during
the reporting period. Actual results could differ from those estimates.
(c) Per Share Information
Earnings (loss) per share of common stock is computed by dividing the net
earnings (loss) by the weighted average number of common shares outstanding
during the period. Diluted earnings per share is not shown for periods in which
the Company incurs a loss because it would be anti-dilutive.
(d) Basis of Presentation - Going Concern
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America, which
contemplates continuation of the Company as a going concern. However, the
Company has no business operations and has negative working capital and
stockholders' (deficits), which raise substantial doubt about its ability to
continue as a going concern.
In view of these matters, continuation as a going concern is dependent upon
continued operations of the Company, which in turn is dependent upon the
Company's ability to meet its financial requirements, raise additional capital,
and the success of its future operations.
Management has opted to resume the filing of Securities and Exchange Commission
(SEC) reporting documentation and then to seek a business combination.
Management believes that this plan provides an opportunity for the Company to
continue as a going concern.
(e) Recent Accounting Pronouncements
There were various accounting standards and interpretations issued during 2010,
2009 and 2008, none of which are expected to a have a material impact on the
Company's consolidated financial position, operations or cash flows.
F-9
FONA INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2009 and 2008
(References to the periods ended June 30, 2010 and 2009 are unaudited)
(1) Summary of Accounting Policies, Continued
(f) Risks and Uncertainties
The Company is subject to substantial business risks and uncertainties inherent
in starting a new business. There is no assurance that the Company will be able
to complete a business combination.
(g) Revenue Recognition
It is the Company's policy that revenue is recognized in accordance with SEC
Staff Accounting Bulletin (SAB) No. 104, "Revenue Recognition." Under SAB 104,
product revenues (or service revenues) are recognized when persuasive evidence
of an arrangement exists, delivery has occurred (or service has been performed),
the sales price is fixed and determinable and collectability is reasonably
assured.
(h) Cash and Cash Equivalents
The Company considers cash and cash equivalents to consist of cash on hand and
demand deposits in banks with an initial maturity of 90 days or less.
(i) Fair Value of Financial Instruments
Financial Accounting Standards Board ("FASB") issued Statement of Financial
Accounting Standards ASC Subtopic 825-10 ("ASC 825-10"), "Disclosures About Fair
Value of Financial Instruments." ASC 825-10 requires disclosure of fair value
information about financial instruments when it is practicable to estimate that
value. The carrying amount of the Company's cash, cash equivalents, accounts
payable, and accounts payable-related party approximate their estimated fair
values due to their short-term maturities.
(j) Income Taxes
The Company records deferred taxes in accordance with Statement of Financial
Accounting Standards (SFAS) ASC 740, "Accounting for Income Taxes." The
statement requires recognition of deferred tax assets and liabilities for
temporary differences between the tax bases of assets and liabilities and the
amounts at which they are carried in the financial statements, the effect of net
operating losses, based upon the enacted tax rates in effect for the year in
which the differences are expected to reverse. A valuation allowance is
established when necessary to reduce deferred tax assets to the amount expected
to be realized.
(k) Development stage
Based upon the Company's business plan, it is a development stage enterprise
since planned principal operations have not yet commenced. Accordingly, the
Company presents its financial statements in conformity with the accounting
principals generally accepted in the United States of America that apply in
establishing operating enterprises. As a development stage enterprise, the
Company discloses the deficit accumulated during the development stage and the
cumulative statements of operations and cash flows from commencement of
development stage to the current balance sheet date. The development stage began
August 1, 2008 when the Company commenced the process to become a publicly
reporting company.
(l) Concentrations
Financial instruments that potentially subject the company to concentrations of
credit risk consist principally of cash and cash equivalents. At June 30, 2010,
December 31, 2009 and 2008, the Company had no amounts of cash or cash
equivalents in financial institutions in excess of amounts insured by agencies
of the U.S. Government.
F-10
FONA INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2009 and 2008
(References to the periods ended June 30, 2010 and 2009 are unaudited)
(1) Summary of Accounting Policies, Continued
(m) Unaudited Financial Statements
The balance sheet as of June 30, 2010, the statements of operations and cash
flows for the six month periods ended June 30, 2010 and 2009, and the statement
of stockholders' (deficit) for the six month period ended June 30, 2010, have
been prepared by the Company without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures, normally included in the financial statements prepared in
accordance with accounting principles generally accepted in the United States of
America, have been condensed or omitted as allowed by such rules and
regulations, and the Company believes that the disclosures are adequate to make
the information presented not misleading. The results of operations for the six
months ended June 30, 2010 are not necessarily indicative of results expected
for the full year ending December 31, 2010. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and changes in
financial position at June 30, 2010 and for all periods presented, have been
made.
(n) Other
The Company has selected December 31 as its fiscal year end.
The Company has paid no dividends.
No advertising expense has been incurred.
The Company consists of one reportable business segment.
The Company has not entered into any leases.
(2) Income Taxes
Deferred income taxes arise from temporary timing differences in the recognition
of income and expenses for financial reporting and tax purposes. The Company's
deferred tax assets consist entirely of the benefit from net operating loss
(NOL) carry forwards. The net operating loss carry forward if not used, will
expire in various years through 2025, and is severely restricted as per the
Internal Revenue code due to the change in ownership. The Company's deferred tax
assets are offset by a valuation allowance due to the uncertainty of the
realization of the net operating loss carry forwards. Net operating loss carry
forwards may be further limited by other provisions of the tax laws.
The Company's deferred tax assets, valuation allowance, and change in valuation
allowance are as follows:
Estimated Estimated
NOL Tax Change in
Carry- NOL Benefit Valuation Valuation Net Tax
Year Ending forward Expires from NOL Allowance Allowance Benefit
- ----------------- --------- ------- --------- --------- --------- -------
December 31, 2009 931,514 2025 107,077 (107,077) (-) --
December 31, 2008 915,494 2025 107,077 (107,077) (-) --
Income taxes at the statutory rate are reconciled to the Company's actual
income taxes as follows:
Income tax benefit at statutory rate resulting from
net operating loss carryforward (15.0)%
State tax (benefit) net of Federal benefit (3.5)%
Deferred income tax valuation allowance 18.5%
-----------
Actual tax rate --
===========
F - 11
FONA INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2009 and 2008
(References to the periods ended June 30, 2010 and 2009 are unaudited)
(3) Common Stock and Migratory Merger
Pursuant to the Articles of Incorporation of Fona, Inc., the Company is
authorized to issue 780,000,000 common shares with $.001 par value. There were
7,894,111 shares of common stock issued and outstanding at December 31, 2009. In
April 2009, the Company issued a total of 3,954,950 shares of common stock to
two directors for $10,000 cash and a note for an additional $10,000. The note
was satisfied in May 2009. This resulted in a change in control of the Company.
On March 3, 2009, the Board of Directors unanimously approved an Agreement and
Plan of Merger effectively changing the name of the Company to Fona Inc., a
Nevada corporation ("Re-incorporation Merger") and simultaneously adopting the
capital structure of Fona Inc., which includes total authorized capital stock of
800,000,000, of which 780,000,000 are common stock and 20,000,000 are blank
check preferred stock. There were no preferred shares outstanding as of December
31, 2009.
In accordance with the Agreement and Plan of Merger, effective March 24, 2009,
Fonahome Corporation adopted the capital structure of Fona, Inc., which includes
total authorized capital stock of 800,000,000 shares, of which 780,000,000 are
common stock, with a par value of $.001 per share (the "Fona Common Stock") and
20,000,000 shares are blank check preferred stock, with a par value of $.001 per
share (the "Preferred Stock"). In addition, on March 24, 2009, the issued and
outstanding shares of our common stock automatically converted into shares of
Fona Common Stock at a ratio of one (1) share of our currently outstanding
common stock for one (1) share of Fona Common Stock.
All references in the accompanying financial statements to the number of shares
authorized and outstanding have been retroactively adjusted to reflect the new
capital structure and par values effective March 24, 2009.
On December 31, 2007, the Board of Directors approved the cancellation of
522,230 shares of common stock previously issued to PH Acquisition, Inc. in
accordance with an assignment agreement dated March 1, 1999. The Board also
authorized the issuance of 498,237 shares of common stock to Nick T. Boosalis
for forgiveness of debt totaling $74,736 and 322,047 shares of common stock to
Richard Dillon for forgiveness of debt totaling $48,307. At the same time, the
Board approved the sale of 1,100,000 shares of common stock to Desfaire, Inc.
for $11,000 previously paid to the company in 2002 and 2003 and for payment by
Desfaire in prior years of more than $125,000 of software development costs on
behalf of the Company.
On December 22, 2008, the Board of Directors approved the issuance of 39,957
shares of common stock to Nick T. Boosalis for forgiveness of debt totaling
$5,993.
(4) Related Party Transactions
The Company uses the offices of its President for its minimal office facility
needs for no consideration. No provision for these costs has been provided since
it has been determined that they are immaterial.
At December 31, 2009 and 2008, the Company owed two separate related parties for
expenses paid on behalf of the Company totaling $14,502 and $5,922,
respectively. The advances are uncollateralized, bear no interest and are due on
demand.
During the period from January 1, 2008 through January 22, 2008, the Company and
one or more other entities were under common control and the existence of that
control could result in operating results or financial position of the entity
significantly different from those that would have been obtained if the entities
were autonomous. In addition, during the period from January 1, 2008 through
January 22, 2008, the Company received license revenues totaling approximately
$1,900 (which are included in discontinued operations) from an entity controlled
by a director.
F-12
FONA INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
December 31, 2009 and 2008
(References to the periods ended June 30, 2010 and 2009 are unaudited)
(5) Discontinued Operations
Since December 1999 the Company has had minimal operations. During December 1999
the Company stopped marketing its product due to lack of sales and potential
profits. Following the Assignment Agreement effective on January 22, 2008 all
assets and liabilities related to previous operations were assumed by a former
director. The Company recognized a gain on the disposal of its assets, which had
a net book value of $0, and liabilities of $36,032. During the period ended
December 31, 2008 the company recognized a loss of ($198) related to the
discontinued operations.
(6) Subsequent Events
The Company has evaluated events subsequent to December 31, 2009 and through the
date the financial statements were available to be issued, to assess the need
for potential recognition or disclosure in this report. No events were noted
that require recognition or disclosure in the financial statements.
F-13
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
There are no disagreements with the accountants on accounting and financial
disclosures.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Index to Financial Statements
Balance Sheets F-3
Statements of Operations F-4, F-5
Statement of Changes in Stockholders' Equity F-6
Statements of Cash Flows F-7, F-8
Notes to Financial Statements F-9
(b) Index to Exhibits.
3.1 Articles of Incorporation of Fona, Inc.
3.2 Bylaws of Fona Inc.
3.3 Stock Purchase Agreement
4.1 Specimen Stock certificate
19.1 Assignment Agreement
17
SIGNATURES
In accordance with Section 12 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.
REGISTRANT FONA INC.
(Date) December 10, 2010
BY(Signature) /s/ Michael Friess
(Name and Title) Michael Friess
President, Chief Executive Officer and Director
(Date) December 10, 2010
BY(Signature) /s/ Sanford Schwartz
(Name and Title) Sanford Schwartz
Vice President and Director
(Date) December 10, 2010
BY(Signature) /s/ Chloe DiVita
(Name and Title) Chloe DiVita
Treasurer, Secretary and Chief
Financial Officer and Director
18
EXHIBIT INDEX
Exhibit No. Description of Exhibit
- ----------- ----------------------
3.1 Articles of Incorporation of Fona, Inc.
3.2 Bylaws of Fona Inc.
3.3 Stock Purchase Agreement
4.1 Specimen Stock certificate
19.1 Assignment Agreement
19