Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2012
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________ to _________
Commission file number: 001-33968
PSYCHIC FRIENDS NETWORK, INC.
(A Development Stage Company)
Nevada 45-4928294
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
2360 Corporate Circle, Suite 400, Henderson, NV 89074-7722
(Address of principal executive offices, including zip code)
(702) 608-7360
(Issuer's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-5 (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [X] No [ ]
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
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS:
The issuer has 82,272,174 outstanding shares of common stock outstanding as of
March 31, 2012.
TABLE OF CONTENTS
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements ........................................ 3
Item 2. Management's Discussion And Analysis Of Financial Condition
And Results Of Operation .................................... 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk... 21
Item 4. Controls And Procedures ..................................... 21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ........................................... 22
Item 2. Unregistered Sales Of Equity Securities And Use Of Proceeds.. 22
Item 3. Defaults Upon Senior Securities ............................. 22
Item 4. Mine Safety Disclosures ..................................... 22
Item 5. Other Information ........................................... 22
Item 6. Exhibits .................................................... 22
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
BALANCE SHEETS............................................................. 4
STATEMENTS OF OPERATIONS .................................................. 5
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) ............................... 6
STATEMENTS OF CASH FLOWS .................................................. 7
NOTES TO THE FINANCIAL STATEMENTS ......................................... 8
3
Psychic Friends Network, Inc.
(Formerly "Web Wizard, Inc.")
(A Development Stage Company)
BALANCE SHEETS
March 31, September 30,
2012 2011
---------- ----------
(Unaudited) (Audited)
ASSETS
Current assets
Cash $ 249,387 $ 108
Other current assets 2,750 --
---------- ----------
Total current assets $ 252,137 $ 108
========== ==========
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities $ 4,559 $ 5,600
Loans from related parties 400 45,680
---------- ----------
Total current liabilities 4,959 51,280
---------- ----------
Total liabilities 4,959 51,280
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock; 750,000,000 shares authorized at $0.001 par value;
83,223,334 and 82,250,000 issued and outstanding at
March 31, 2012 and September 30, 2011, respectively 83,217 82,250
Additional paid-in capital 278,687 (58,350)
Deficit accumulated during the development stage (114,726) (75,072)
---------- ----------
Total stockholders' deficit 247,178 (51,172)
---------- ----------
Total liabilities and stockholders' equity (deficit) $ 252,137 $ 108
========== ==========
The accompanying notes are an integral part of these financial statements.
4
Psychic Friends Network, Inc.
(Formerly "Web Wizard, Inc.")
(An Development Stage Company)
STATEMENTS OF OPERATIONS
(unaudited)
From inception
Three months ended Six months ended (May 9, 2007)
-------------------------------- --------------------------------- through
March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011 March 31, 2012
-------------- -------------- -------------- -------------- --------------
REVENUE $ -- $ -- $ -- $ -- $ 1,434
OPERATING EXPENSES
Bank charges and interest 50 18 68 36 405
Office expenses -- -- -- -- 246
Professional fees 29,396 3,200 32,696 8,200 92,742
Transfer and filing fees 2,200 675 6,890 675 21,267
Travel and entertainment -- -- -- -- 1,500
------------ ------------ ------------ ------------ ------------
Total Operating Expenses 31,646 3,893 39,654 8,911 116,160
------------ ------------ ------------ ------------ ------------
NET LOSS FROM OPERATIONS (31,646) (3,893) (39,654) (8,911) (114,726)
OTHER (INCOME) EXPENSE -- -- -- -- --
------------ ------------ ------------ ------------ ------------
NET LOSS BEFORE INCOME TAXES (31,646) (3,893) (39,654) (8,911) (114,726)
PROVISION FOR INCOME TAXES -- -- -- -- --
------------ ------------ ------------ ------------ ------------
NET LOSS FOR THE PERIOD $ (31,646) $ (3,893) $ (39,654) $ (8,911) $ (114,726)
============ ============ ============ ============ ============
BASIC AND DILUTED (LOSS)
PER COMMON SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES 82,921,450 82,250,000 82,587,559 82,250,000
============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
5
Psychic Friends Network, Inc.
(Formerly "Web Wizard, Inc.")
(An Development Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
From Inception May 9, 2007 through March 31, 2012
Accumulated
Deficit
Common Stock Additional During the
--------------------- Paid-in Development Total
Issued Amount Capital Stage Equity
------ ------ ------- ----- ------
Balance at inception - May 9, 2007 -- $ -- $ -- $ -- $ --
Shares issued for cash - June 5, 2007
at $0.001 per share 74,000,000 74,000 (66,600) -- 7,400
Shares issued for cash - July 31, 2007
at $0.02 per share 8,250,000 8,250 8,250 -- 16,500
Net (loss) for period from inception on
May 9, 2007 to September 31, 2007 -- -- -- 1,398 1,398
---------- ------- -------- --------- --------
Balance, September 31, 2007 82,250,000 82,250 (58,350) 1,398 25,298
Net (loss) for the year ended
September 31, 2008 -- -- -- (37,052) (37,052)
---------- ------- -------- --------- --------
Balance, September 31, 2008 82,250,000 82,250 (58,350) (35,654) (11,754)
Net (loss) for the year ended
September 31, 2009 -- -- -- (11,134) (11,134)
---------- ------- -------- --------- --------
Balance, September 31, 2009 82,250,000 82,250 (58,350) (46,788) (22,888)
Net (loss) for the year ended
September 31, 2010 -- -- -- (7,832) (7,832)
---------- ------- -------- --------- --------
Balance, September 31, 2010 82,250,000 82,250 (58,350) (54,620) (30,720)
Net (loss) for the year ended
September 31, 2011 -- -- -- (20,452) (20,452)
---------- ------- -------- --------- --------
Balance, September 31, 2011 82,250,000 82,250 (58,350) (75,072) (51,172)
Net loss for the quarter ended
December 31, 2011 -- -- -- (8,008) (8,008)
---------- ------- -------- --------- --------
Balance, December 31, 2011 82,250,000 82,250 (58,350) (83,080) (59,180)
Shares issued for cash - January 27, 2012
at $0.75 333,334 327 249,673 -- 250,000
Shares issued for asset purchase agreement
- January 27, 2012 at $.001 600,000 600 57,403 -- 58,003
Shares issued for debt conversion
- February, 9, 2012 at $0.75 40,000 40 29,960 -- 30,000
Net loss for the quarter ended
March 31, 2012 -- -- -- (31,646) (31,646)
---------- ------- -------- --------- --------
Balance, March 31, 2012 83,223,334 $83,217 $278,687 $(114,726) $247,178
========== ======= ======== ========= ========
The accompanying notes are an integral part of these financial statements.
6
Psychic Friends Network, Inc.
(Formerly "Web Wizard, Inc.")
(An Development Stage Company)
STATEMENTS OF CASH FLOWS
(unaudited)
From inception
Six months ended (May 9, 2007)
--------------------------------- through
March 31, 2012 March 31, 2011 March 31, 2012
-------------- -------------- --------------
OPERATING ACTIVITIES
Net loss $ (39,654) $ (8,911) $(114,726)
Adjustments to reconcile net loss from operations:
Change in operating assets and liabilities:
Increase (decrease) in accounts payable and accrued expense (1,040) 2,175 4,560
--------- --------- ---------
Net cash used in operating activities (40,694) (6,736) (110,166)
--------- --------- ---------
INVESTING ACTIVITIES -- -- --
--------- --------- ---------
FINANCING ACTIVITIES
Proceeds from issuance of common stock 280,000 6,700 303,900
Advances from related parties 9,973 -- 55,653
--------- --------- ---------
Net cash provided by financing activities 289,973 6,700 359,553
--------- --------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 249,279 (36) 249,387
CASH AND CASH EQUIVALENTS
-BEGINNING OF PERIOD 108 252 --
--------- --------- ---------
CASH AND CASH EQUIVALENTS
-END OF PERIOD $ 249,387 $ 216 $ 249,387
========= ========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ -- $ -- $ --
========= ========= =========
Cash paid for taxes $ -- $ -- $ --
========= ========= =========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Liabilities relieved for asset purchase agreement $ 58,003 $ -- $ 58,003
========= ========= =========
Liabilities assumed for asset purchase agreement $ 400 $ -- $ 400
========= ========= =========
The accompanying notes are an integral part of these financial statements.
7
PSYCHIC FRIENDS NETWORK, INC.
(fka: Web Wizard, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2012
(Unaudited)
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Psychic Friends Network, Inc. (PFNI.BB) ("the Company") was incorporated in the
State of Nevada on May 9, 2007 under the name "Web Wizard, Inc.". On January 30,
2012 the Company's board passed a motion to change the corporate name to
"Psychic Friends Network, Inc." pursuant to an asset purchase agreement executed
on January 27, 2012. As part of this agreement ("the Asset Purchase"), all of
the assets of PFN Holdings were purchased. These assets are an integral part of
the Company's business development and ultimately the realization of the
Company's anticipated cash flows.
The Company is in the business of website development. Our website is
www.psychicfriendsnetwork.com. We were originally incorporated and operated with
an aim to providing web services and products that enable small and medium-sized
businesses to establish, maintain, promote and optimize their Internet presence.
We commenced business operations by selling a Web design solutions package to a
restaurant located in Canada.
BASIS OF PRESENTATION
The Company is considered to be a development stage company and has not
generated significant revenues from operations. There is no bankruptcy,
receivership, or similar proceedings against our company.
The accompanying unaudited interim financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America and the rules and regulations of the United States Securities and
Exchange Commission for interim financial information.
The financial information as of March 31, 2012 are derived from the audited
financial statements presented in the Company's Annual Report on Form 10-K for
the years ended September 30, 2011 and 2010. The unaudited interim financial
statements should be read in conjunction with the Company's Annual Report on
Form 10-K, which contains the audited financial statements and notes thereto,
together with the Management's Discussion and Analysis, for the years ended
September 30, 2011 and 2010.
Certain information or footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America have been condensed or omitted, pursuant to the
rules and regulations of the Securities and Exchange Commission for interim
financial reporting. Accordingly, they do not include all the information and
footnotes necessary for a comprehensive presentation of financial position,
results of operations, or cash flows. It is management's opinion, however, that
all material adjustments (consisting of normal recurring adjustments) have been
made which are necessary for a fair financial statement presentation. The
interim results for the three and six month periods ended March 31, 2012 are not
necessarily indicative of results for the full fiscal year.
GOING CONCERN
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. Its ability to continue as a going concern is
dependent upon the ability of the Company to obtain the necessary financing to
meet its obligations and pay its liabilities arising from normal business
operations when they come due. Furthermore, as of March 31, 2012, the Company
has accumulated losses from inception (May 9, 2007) of $114,726. Likewise, net
cash used in operations from inception (May 9, 2007) through March 31, 2012 is
$110,166. The outcome of these matters cannot be predicted with any certainty at
this time and raise substantial doubt that the Company will be able to continue
as a going concern. These financial statements do not include any adjustments to
the amounts and classification of assets and liabilities that may be necessary
should the Company be unable to continue as a going concern. Management believes
that the Company will need to obtain additional funding by borrowing funds from
its directors and officers, or a private placement of common stock.
8
PSYCHIC FRIENDS NETWORK, INC.
(fka: Web Wizard, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2012
(Unaudited)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States of America.
Because a precise determination of many assets and liabilities is dependent upon
future events, the preparation of financial statements involves the use of
estimates, which have been made using judgment. Actual results may vary from
these estimates.
The financial statements have, in management's opinion, been prepared within the
framework of the significant accounting policies summarized below:
DEVELOPMENT STAGE COMPANY
The Company is considered to be in the development stage, as defined under
Accounting Codification Standard, Development Stage Entities ("ASC-915"). Since
its formation, the Company has not yet realized any revenues from its planned
operations.
CASH AND CASH EQUIVALENTS
The Company considers highly liquid financial instruments purchased with a
maturity of three months or less to be cash equivalents.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company's financial instruments, consisting of cash and
accounts payable and accrued liabilities, is equal to fair value due to their
short-term to maturity. Unless otherwise noted, it is management's opinion that
the Company is not exposed to significant interest, currency or credit risks
arising from these financial instruments.
PER SHARE DATA
In accordance with "ASC-260 - Earnings per Share", the basic loss per common
share is computed by dividing net loss available to common stockholders by the
weighted average number of common shares outstanding. Diluted loss per common
share is computed similar to basic loss per common share except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if the potential common shares had been issued and
if the additional common shares were dilutive. At December 31, 2011, the Company
had no stock equivalents that were anti-dilutive and excluded in the loss per
share computation.
9
PSYCHIC FRIENDS NETWORK, INC.
(fka: Web Wizard, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2012
(Unaudited)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
STOCK-BASED COMPENSATION
The Company records stock based compensation in accordance with the guidance in
ASC Topic 718 which requires the Company to recognize expenses related to the
fair value of its employee stock option awards. This eliminates accounting for
share-based compensation transactions using the intrinsic value and requires
instead that such transactions be accounted for using a fair-value-based method.
As the Company has never granted any stock options the adoption of this
accounting policy had no effect on its financial position or results of
operations.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company has evaluated all of the recent accounting pronouncements through
the filing date of these financial statements and feels that none of them will
have a material effect on the Company's interim financial statements.
NOTE 3 - CONVERTIBLE NOTES PAYABLE
On January 25, 2012, PFN Holdings issued a promissory note for $5,000 to a third
party. The note bears no interest and is unsecured. The principle amount of the
note, and all accrued interest is due and payable to PFN Holdings on or before
January 25, 2014 unless, in connection with the Asset Purchase Agreement, the
full amount is converted into Company common shares at $0.75 per share. No
beneficial conversion feature resulted from the issuance of the note payable. In
connection with the asset purchase agreement, on January 27, 2012, the note was
fully converted to shares of the Company's common stock and PFN Holdings
transferred the $5,000 to the Company.
NOTE 4 - COMMON STOCK & EQUITY
In connection with the asset purchase agreement, as summarized in Note 1, on
February 7, 2012, our board of directors approved to effect a name change from
Web Wizard, Inc. to Psychic Friends Network Inc.
In addition to the name change, our board of directors approved a ten (10) new
for one (1) old forward stock split of our authorized and issued and outstanding
shares of common stock. Upon effect of the forward stock split, our authorized
capital was increased from 75,000,000 to 750,000,000 shares of common stock and
correspondingly, our issued and outstanding shares of common stock was increased
from 8,225,000 to 82,250,000 shares of common stock as of September 30, 2011,
all with a par value of $0.001.
COMMON STOCK ISSUED
In June 2007, the Company issued 74,000,000 post-split shares of common stock at
a price of $0.001 per share, for total proceeds of $7,400.
In July 2007, the Company issued 8,250,000 post-split shares of common stock at
a price of $0.001 per share, for total proceeds of $16,500.
In February 2012, the Company issued 40,000 post-split shares of common stock at
a price of $0.75 per share, for total proceeds of $30,000.
10
PSYCHIC FRIENDS NETWORK, INC.
(fka: Web Wizard, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2012
(Unaudited)
NOTE 4 - COMMON STOCK & EQUITY - (CONTINUED)
COMMON STOCK ISSUED (CONTINUED)
In January 2012, the Company authorized the issuance of 6,667 post-split shares
of common stock at a price of $0.75 per share, for total proceeds of $5,000 in
connection with convertible notes payable (see Note 3).
In January 2012, the Company authorized the issuance of 326,667 post-split
shares of common stock at a price of $0.75 per share, for total proceeds of
$245,000.
ASSET PURCHASE AGREEMENT
Pursuant to the "Asset Purchase Agreement" (Note 1), on January 27, 2012 the
Company issued 50,600,000 post-split shares of common stock for the purchase of
intangible assets with a fair value of $-0- from PFN Holdings. In connection
with the issuance of stock, the majority shareholder of the Company agreed to
forgive $58,403 in related party advances and cancel 50,000,000 post-split
shares of common stock held by the shareholder. The value of the liabilities
assumed was reduced to $58,003 through the assumption of $400 of liabilities of
PFN Holdings by the Company. The Company has presented the common stock issued
in this transaction on a net basis on the statement of stockholders' deficit.
As the assets purchased had a fair value of $-0- on the date of the transaction,
the value of the shares issued was based on the net value of the liabilities
extinguished of $58,003, which was recorded as additional paid-in capital due to
the fact that the liabilities were with a related party. Of the $58,003 of net
liabilities forgiven in the transaction, the shareholder agreed to pay $2,750 at
a later date, which amount has been recorded as a receivable at March 31, 2012.
OPTIONS AND WARRANTS
At March 31, 2012, the Company had no issued or outstanding stock options or
warrants.
NOTE 5 - RELATED PARTY TRANSACTIONS
During the year ended September 30, 2009, the Company entered into a verbal loan
agreement with an officer of the Company, whereby the Company borrowed amounts
from time to time which are interest-free, payable on demand. During the six
months ended March 31, 2012, advances of $9,973 were made pursuant to this
agreement. According to the terms of the "Asset Purchase Agreement" with PFN
Holdings (Note 4 & 6), all related party advances were fully repaid as of March
31, 2012.
NOTE 6 - SUBSEQUENT EVENT
The asset purchase agreement entered into by the company and PFN Holdings
specifies that the company will acquire a number of assets related to providing
psychic consultation services under the trade name "Psychic Friends Network" in
exchange for 50,600,000 shares of common stock, following a 10 for 1 split
currently issued common stock. In conjunction with this acquisition, the
company's sole director and officer Ya Tang Chao will cancel 50,000,000
post-split shares of its common stock. The cancelation and reissuance described
in this agreement and as discussed in Note 3, were issued in April of 2012.
11
PSYCHIC FRIENDS NETWORK, INC.
(fka: Web Wizard, Inc.)
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
March 31, 2012
(Unaudited)
NOTE 6 - SUBSEQUENT EVENT (CONTINUED)
On March 31, 2012 the company entered into a contractor agreement with ACP
Capital Inc. ("ACP") whereas the company desired to retain ACP to provide
consulting services related to raising capital. The agreement shall become
effective March 31, 2012 and shall continue until March 31, 2014 or until
earlier terminated pursuant to the agreement. In accordance with the agreement,
the company is required to issue to ACP 25,000 shares per quarter, for a total
of 100,000 shares annually in consideration of the contractor services. The
first payment of shares will be issued during the quarter ending June 30, 2012.
On April 15, 2012 the company entered into an investor relations service
agreement with Circadian Group ("circadian") whereas the company desired to
retain circadian for a twelve (12) month period for services related to investor
relations. In accordance with the agreement, the company is required to make
cash payments of $1,500 a month for three (3) months beginning on April 15th,
2012 and nine (9) payments of $2,000 beginning on July 15th, 2012 and ending
March 15th, 2013. The company is also required to issue 75,000 restricted common
shares of stock to circadian in accordance with the agreement.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
This report contains forward-looking statements. The forward-looking statements
are contained principally in the section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations." These statements
involve known and unknown risks, uncertainties and other factors which may cause
our actual results, performance or achievements to be materially different from
any future results, performances or achievements expressed or implied by the
forward-looking statements. These risks and uncertainties include, but are not
limited to, the factors described in the section captioned "Risk Factors" below.
In some cases, you can identify forward-looking statements by terms such as
"anticipates," "believes," "could," "estimates," "expects," "intends," "may,"
"plans," "potential," "predicts," "projects," "should," "would" and similar
expressions intended to identify forward-looking statements. Forward-looking
statements reflect our current views with respect to future events and are based
on assumptions and subject to risks and uncertainties. Given these
uncertainties, you should not place undue reliance on these forward-looking
statements. These forward-looking statements include, among other things,
statements relating to:
* our anticipated growth strategies and our ability to manage the
expansion of our business operations effectively;
* our ability to maintain or increase our market share in the
competitive markets in which we do business;
* our ability to keep up with rapidly changing technologies and evolving
industry standards, including our ability to achieve technological
advances;
* our dependence on the growth in demand for our services;
* our ability to diversify our service offerings and capture new market
opportunities; and
* the loss of key members of our senior management.
Also, forward-looking statements represent our estimates and assumptions only as
of the date of this report. You should read this report and the documents that
we reference and filed as exhibits to this report completely and with the
understanding that our actual future results may be materially different from
what we expect. Except as required by law, we assume no obligation to update any
forward-looking statements publicly, or to update the reasons actual results
could differ materially from those anticipated in any forward-looking
statements, even if new information becomes available in the future.
USE OF CERTAIN DEFINED TERMS
Except where the context otherwise requires and for the purposes of this report
only:
* the "Company," "we," "us," and "our" refer to the business of Psychic
Friends Network Inc., a Nevada corporation (formerly, Web Wizard
Inc.);
* "Exchange Act" refers the Securities Exchange Act of 1934, as amended;
* "SEC" refers to the Securities and Exchange Commission;
* "Securities Act" refers to the Securities Act of 1933, as amended; and
* "U.S. dollars," "dollars" and "$" refer to the legal currency of the
United States.
13
OVERVIEW
CORPORATE HISTORY AND BACKGROUND
We were incorporated on May 9, 2007 under the laws of the state of Nevada. Our
principal offices are located at 2360 Corporate Circle, Suite 400, Henderson,
NV, 89074-7722. Our telephone number is 702-608-7360. Our year end is September
30. There are no bankruptcy, receivership, or similar proceedings against our
company. Our website is www.psychicfriendsnetwork.com. We were originally
incorporated and operated with an aim to providing web services and products
that enable small and medium-sized businesses to establish, maintain, promote
and optimize their Internet presence. We commenced business operations by
selling a Web design solutions package to a restaurant located in Canada. We
were not able to secure sufficient revenue or financing to continue our original
business and on January 27, 2012 we entered into the agreements described above
with the intention of changing our business to that providing psychic
consultation services under the trade name "The Psychic Friends Network".
ACQUISITION OF PSYCHIC FRIENDS NETWORK
On January 27, 2012, we entered into three separate agreements regarding the
acquisition of certain assets related to providing psychic consultation services
under the trade name "The Psychic Friends Network". The agreements contemplated
an acquisition of such assets, along with a concurrent financing.
On March 30, 2012 we closed an asset purchase with PFN Holdings, INC. pursuant
to which we acquired a number of assets related to providing psychic
consultation services under the trade name "The Psychic Friends Network" in
exchange for 50,600,000 shares of our common stock. In conjunction with this
acquisition, our prior sole director and officer Ya Tang Chao cancelled
50,000,000 shares of our common stock.
In conjunction with the asset purchase agreement, we also entered into a
financing agreement with Right Power Services Ltd., a British Virgin Islands
Company. Pursuant to the agreement, Right Power agreed to provide us with a
total of $745,000 in financing. The first tranche of $245,000 of the financing
was provided to us prior to the closing of the asset purchase at a price of
$0.75 per share for a total issuance of 326,667 shares, and the second tranche
of $250,000 was provided to us on April 30, 2012 at a purchase price of $0.75
per share for an issuance of 333,333 shares of common stock. An additional
$250,000 is to be provided within 90 days of the asset purchase closing at a
price which is the higher of $0.75 per share or 90% of the average of the
closing prices of our common stock for ten trading immediately preceding the
date of the investment. If we are able to close on the remaining $250,000 of the
post-closing financing, PFN Holdings, Inc. will receive an additional 40,000,000
shares of common stock.
BUSINESS
OUR SERVICES
We are an entertainment company that plans to provide live psychic advice via
telephone and the internet, as well as daily and weekly horoscopes. We plan to
generate revenue via "per minute'" or "on demand" phone charges as well as
web-based fees. Typically customers connect to their preferred psychic by
telephone or website, and phone operations have been recently been updated to
accept such calls. However, we are in the process of adding several new ways to
connect. These include mobile applications, as well as audio, video and text
chat by internet. These additional connection methods include the anticipated
14
creation of mobile and web based applications, where customers will receive
daily discounted readings, and other astrological content for an ongoing monthly
subscription fee. Our business is reliant on a large volume of small customers
and because of this we are not dependent on any one group of customers. Our
management operated a phone service during the 1990s under the same trademark of
The Psychic Friends Network. At the peak of its popularity in the 1990s, The
Psychic Friends Network averaged 14,000 calls per day, and the average customer
spent approximately $350 over a 12-month period. Unfortunately, due to certain
regulatory changes which allowed customers to retain their phone service while
not paying for 900 number charges, the company was forced to file for bankruptcy
reorganization protection in 1998. By 1999, Mike and Marc Lasky repurchased all
of the intellectual property assets back from the bankruptcy trustee.
Since our acquisition of the PFN Holdings' assets, we have begun working on a
new updated website that we call PFN 2.0. The main focus will be to make better
use of current technologies and social media in addition to increasing the
overall experience for our customers.
We anticipate that we will soon be able to provide customers with multiple
methods of connection to our advisors, including toll free and click to call
telephone services, audio, video and text chat internet services, and mobile
phone applications and SMS services. At this time, we are providing the service
of connecting customers for one on one telephone calls with psychics. The
one-on-one call service is the core business of The Psychic Friends Network.
People can call from the comfort of their homes, offices, or wherever they
choose, and they will be instantly connected to their favourite Master Psychic,
for a confidential reading. Callers have the option to choose a psychic by
category, such as, Tarot, Astrology, Love & Relationships, Money and Career,
Dreams or even Past Lives. They may also choose to speak to the next available
psychic or to speak to the same psychic each time they call, which allows them
to establish an ongoing relationship, simply by calling that psychic's
extension. Callers can choose to pay by credit card, debit card, pay by check,
or by using pre-paid Gift Cards. The prices that we charge are flexible, so that
we are able to test multiple pricing points to see what will optimize profits.
We plan to offer first time caller promotional rates, such as 10 minutes for
$10, or 3 minutes free. The key for us is to get new callers in the door.
Historically, we found that over 60% of our callers end up calling back. This is
primarily due to the stringent selection process we have for choosing the
psychics we engage for our service.
We also offer attractive bonuses to the psychics that reward them for getting
call-backs. We measure our success by percentage of call-backs, not by total
minutes spent on the phone by customers. We have instituted a policy to instruct
our psychics to inform the callers on a regular basis as to the time they have
spent on the call. We also include a money back guarantee for unsatisfied
customers.
With the advent of new technologies, like Mobile applications, VOIP, and social
media tools, we are now able to offer psychics from all over the world, and we
can now accept international calls from customers. We believe that these
technological improvements will allow us to capture a large audience. As part of
the PFN 2.0 website we are developing, we will be including a number of services
which we were not previously able to offer. These are currently under
development and include:
* ONE-ON-ONE WEB-BASED READINGS: A new feature that we plan to offer is
the ability for customers to connect to their psychic through our new
"Skype" like feature. This means that the customer can log into their
account and in real time check the bios, specialty categories and
availability of all of our psychics. Once they find their account and
then choose their available psychic, they will be able to instantly
chat with that psychic. We plan on integrating the ability to text
chat, audio only chat and video chat. The video chat feature will
allow customers to see the psychics and see the psychic's action, such
as Tarot cards being flipped for the reading. In addition to the
improvement in the customer service experience, this service will also
15
allow us to increase the efficiency of our scheduling. If the psychic
is unavailable, a customer can actually log in to their account and
schedule a reading in the near future. This is advantageous to the
customer as well as the psychic, who does not have to sit by their
computer and phone, hoping for calls to come in. Like our phone-based
readings, customers will have the option to pay by credit card, debit
card, personal check, or by using pre-paid gift cards. They can choose
to pre-pay for minute packages as well as get discounted monthly
subscription rates. The purchases can be made online or by calling in
over the phone.
* MOBILE APPLICATIONS: Thanks to the advances in mobile technology, we
plan to offer several ways for our customers to get our Psychic
branded content through mobile phones in ways which we were not able
to take advantage of previously. This includes PSMS, BilltoMobile, and
Mobile Applications for the iPhone, Blackberrry and Android based
phones.
* PSMS or Premium SMS, allows the caller to send a text message with our
branded keywords, to our short code. Through this type of service, we
will be able to offer a daily horoscope sent to our customers' mobile
phones. The billing for this service will show up as a monthly item on
their mobile phone invoice. We also plan to offer live psychic advice
through mobile devices that allow users to send a text to one of our
live psychics and receive an immediate reply. We anticipate that we
will be charging $0.99 per message received, also billed directly
through the customer's mobile phone invoice.
* BilltoMobile is a new service that we plan to offer, which will allow
our customers to pay via their mobile phone, instead of by credit
card, debit card, or check. This will be a convenient way for
customers to pay for our services, instead of having to find a credit
card or other form of payment.
* We anticipate that mobile applications will become a major part of our
psychic content offerings. We have begun developing various mobile
applications that our customers will be able to download directly from
the application stores on their mobile phones. We plan to offer live
psychic readings, as well as Astrological content. The applications
will be free to download, but after a short free trial, the content
will be paid.
MARKETING
During the 1990's and early 2000's, our management operated Psychic Friends,
LLC, a company involved in connecting customers for one on one telephone calls
with psychics under the same trademark: "The Psychic Friends Network". This
company only had market presence in the U.S and Canada; made up primarily of
women, 30-60 years old, and skewed towards African Americans. We believe that
the our target market is much larger today, due in part to new technologies like
the Internet, mobile phones and social media. We believe that our new offerings
will expand our market to individuals from 18-65, of all races. This market will
likely still be predominated by women, but we believe that more men will be
interested in our Internet and social media offerings than they would be in one
on one phone interaction. We believe that the market for psychic services is
substantial. An example of the size of the potential market, and also a
potential advertising venue for our services, is a syndicated radio show called
Coast to Coast. The show attracts an estimated 4.5 million listeners every
night, making it the most listened to late night show in North America. In
addition, we can now access customers in international jurisdictions because of
the new technologies that allow anyone to connect directly to one of our
psychics at the push of a button in real time. Additionally, many of the new
markets which will have access to our services, such as China and India, already
have strong traditions or connections to psychic phenomenon.
16
During the peak of The Psychic Friends Network, operated by Psychic Friends,
LLC, the company was averaging 14,000 calls per day, and 90% of the callers were
generated through TV advertising. Currently, there are virtually no psychic
phone services being advertised on television. The few competitors that we have
are almost exclusively adverting on the Internet. This provides us an
opportunity to take advantage of a vastly underserved market.
We plan to advertise and market our services via the following avenues:
INFOMERCIALS - we anticipate that paid advertisements on television/radio will
be used to provide information about our services and direct traffic to our
different mediums.
WEB-BASED ANALYTICS - we plan to use advertisements, social media and search
engine optimization to help inform our target audience as well as make us stand
out from our peers.
WORD OF MOUTH - from historical experience, we believe that our clients will
tend to be repeat customers and friends of past customers. Word of mouth and
positive client experiences are a very important source of marketing and based
on providing a high level of service.
RESULTS OF OPERATIONS
The following discussion of the financial condition and results of operations
should be read in conjunction with the unaudited interim financial statements
included herewith. This discussion should not be construed to imply that the
results discussed herein will necessarily continue into the future, or that any
conclusion reached herein will necessarily be indicative of actual operating
results in the future.
FOR THE THREE MONTHS ENDED MARCH 31, 2012 AND 2011:
REVENUE
We generated no revenues during the three months ended March 31, 2012 and 2011.
OPERATING EXPENSES
During the three months ended March 31, 2012, total operating expenses for the
Company were $31,646 compared to $3,893 for the three months ended March 31,
2011. The increase in expenses was due to the profession fee costs incurred in
our acquisition of PFN Holdings, Inc. in March 2012.
NET LOSS
Our net loss for the three months ended March 31, 2012 was $31,646 as compared
to a net loss of $3,893 for the three months ended March 31, 2011. This increase
in net loss was due to our increased operating expenses.
FOR THE SIX MONTHS ENDED MARCH 31, 2012 AND 2011:
REVENUE
We generated no revenues during the six months ended March 31, 2012 and 2011.
17
OPERATING EXPENSES
During the six months ended March 31, 2012, total operating expenses for the
Company were $39,654 compared to $8,911 for the six months ended March 31, 2011.
The increase in expenses was due to the profession fee costs incurred in our
acquisition of PFN Holdings, Inc. in March 2012.
NET LOSS
Our net loss for the six months ended March 31, 2012 was $39,654 as compared to
a net loss of $8,911 for the six months ended March 31, 2011. This increase in
net loss was due to our increased operating expenses.
FROM INCEPTION (MAY 9, 2007) TO MARCH 31, 2012:
REVENUE
We generated nominal net revenues in the amount of $1,434 during the period from
May 9, 2007 (inception) to March 31, 2012.
OPERATING EXPENSES
Total operating expenses for the period from May 9, 2007 (inception) through
March 31, 2012 were $116,160.
NET LOSS
Our accumulative net loss for the period from May 9, 2007 (inception) to March
31, 2012 was $114,716.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2012, we have yet to generate any revenues from our business
operations.
As of March 31, 2012, we had $249,387 cash and $2,750 current assets. Our total
liabilities were $4,959.
In April 2012, we received $250,000 in investment financing from the sale of
common stock pursuant to our financing agreement with Right Power Services, Ltd.
PLAN OF OPERATION AND FUNDING
We expect that working capital requirements will continue to be funded through a
combination of our existing funds and further issuances of securities. Our
working capital requirements are expected to increase in line with the growth of
our business.
As of March 31, 2012, we estimate that our expenses over the next 12 months will
be approximately $1,320,000 as described in the table below. These estimates may
change significantly depending on the nature of our future business activities
and our ability to raise capital from shareholders or other sources.
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Estimated
Completion Date Estimated
Description (from 3/31/12) Expenses ($)
----------- -------------- ------------
Legal and accounting fees 12 months 100,000
Website and app development 4 months 175,000
Management and consulting costs 12 months 275,000
Marketing 8 months 600,000
Acquisition of fixed assets 12 months 100,000
General and administrative expenses 12 months 70,000
---------
TOTAL 1,320,000
=========
We have entered into a financing agreement with Right Power Services Ltd.,
pursuant to which we are owed a final tranche of an additional $250,000 in
equity financing, but there can be no assurance that we will be able to close
this remaining financing, and this financing may not be sufficient to meet our
needs for the upcoming 12 months. We have no lines of credit or other bank
financing arrangements. Generally, we have financed operations to date through
the proceeds of the private placement of equity and debt instruments. We intend
to finance these expenses with further issuances of securities, and debt
issuances. Thereafter, we expect we will need to raise additional capital and
generate revenues to meet long-term operating requirements. Additional issuances
of equity or convertible debt securities will result in dilution to our current
shareholders. Further, such securities might have rights, preferences or
privileges senior to our common stock. Additional financing may not be available
upon acceptable terms, or at all. If adequate funds are not available or are not
available on acceptable terms, we may not be able to take advantage of
prospective new business endeavours or opportunities, which could significantly
and materially restrict our business operations. We currently do not have a
specific plan of how we will obtain such funding; however, we anticipate that
additional funding will be in the form of equity financing from the sale of our
common stock.
INFLATION
Inflation and changing prices have not had a material effect on our business and
we do not expect that inflation or changing prices will materially affect our
business in the foreseeable future. However, our management will closely monitor
the price change in travel industry and continually maintain effective cost
control in operations.
OFF BALANCE SHEET ARRANGEMENTS
We do not have any off balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity or
capital expenditures or capital resources that is material to an investor in our
securities.
CRITICAL ACCOUNTING POLICIES
The financial statements of the Company have been prepared in accordance with
generally accepted accounting principles in the United States of America.
Because a precise determination of many assets and liabilities is dependent upon
future events, the preparation of financial statements involves the use of
estimates, which have been made using judgment. Actual results may vary from
these estimates.
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The financial statements have, in management's opinion, been prepared within the
framework of the significant accounting policies summarized below:
DEVELOPMENT STAGE COMPANY
The Company is considered to be in the development stage, as defined under
Accounting Codification Standard, Development Stage Entities ("ASC-915"). Since
its formation, the Company has not yet realized any revenues from its planned
operations.
CASH AND CASH EQUIVALENTS
The Company considers highly liquid financial instruments purchased with a
maturity of three months or less to be cash equivalents.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company's financial instruments, consisting of cash and
accounts payable and accrued liabilities, is equal to fair value due to their
short-term to maturity. Unless otherwise noted, it is management's opinion that
the Company is not exposed to significant interest, currency or credit risks
arising from these financial instruments.
PER SHARE DATA
In accordance with "ASC-260 - Earnings per Share", the basic loss per common
share is computed by dividing net loss available to common stockholders by the
weighted average number of common shares outstanding. Diluted loss per common
share is computed similar to basic loss per common share except that the
denominator is increased to include the number of additional common shares that
would have been outstanding if the potential common shares had been issued and
if the additional common shares were dilutive. At December 31, 2011, the Company
had no stock equivalents that were anti-dilutive and excluded in the loss per
share computation.
STOCK-BASED COMPENSATION
The Company records stock based compensation in accordance with the guidance in
ASC Topic 718 which requires the Company to recognize expenses related to the
fair value of its employee stock option awards. This eliminates accounting for
share-based compensation transactions using the intrinsic value and requires
instead that such transactions be accounted for using a fair-value-based method.
As the Company has never granted any stock options the adoption of this
accounting policy had no effect on its financial position or results of
operations.
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RECENT ACCOUNTING PRONOUNCEMENTS
The Company has evaluated all of the recent accounting pronouncements through
the filing date of these financial statements and feels that none of them will
have a material effect on the Company's interim financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION AND DISCLOSURE CONTROLS AND PROCEDURES
(A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports filed under the Securities
Exchange Act of 1934, as amended, is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commission's rules and forms, and that such information is accumulated and
communicated to our management, including our Chief Executive Officer (our
principal executive officer, principal financial officer and principle
accounting officer) to allow for timely decisions regarding required disclosure.
As of the end of the quarter covered by this report, we carried out an
evaluation, under the supervision and with the participation of our Chief
Executive Officer (our principal executive officer, principal financial officer
and principle accounting officer), of the effectiveness of the design and
operation of our disclosure controls and procedures. Based on that evaluation,
our management, including our Chief Executive and Financial Officer have
concluded that, as of the end of the period covered by this report, our
disclosure controls and procedures are effective in ensuring that information
required to be disclosed in our Exchange Act reports is (1) recorded, processed,
summarized and reported in a timely manner, and (2) accumulated and communicated
to our management, including our Chief Executive and Financial Officer, as
appropriate to allow timely decisions regarding required disclosure.
(B) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were significant changes in the Company's internal control over financial
reporting during the three months ended March 31, 2012 covered by this Quarterly
Report on Form 10-Q, due to our acquisition of the assets of PFN Holdings, Inc.,
and subsequent change of directors and officers, that have materially affected,
or are reasonably likely to materially affect, our internal control over
financial reporting. These changes have served to remediate our prior material
weaknesses.
21
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings nor are we aware of any
threatened proceedings against us.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
N/A
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
Exhibit
Number Description
------ -----------
31* Certification of Principal Executive Officer and Principal Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32* Certification of Principal Executive Officer and Principal Financial
Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
101* Interactive data files pursuant to Rule 405 of Regulation S-T.
----------
* Filed herewith
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PSYCHIC FRIENDS NETWORK, INC.
Date: May 21, 2012 By: /s/ Marc Lasky
-------------------------------------------
Marc Lasky
Chief Executive and Financial Officer
(Principal Executive Officer and
Principal Financial and Accounting Officer)
2
