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 December 31, 2013
[ ] 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 84,977,543 outstanding shares of common stock outstanding as of
February 17, 2014.
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 .................................... 12
Item 3. Quantitative and Qualitative Disclosures About Market Risk... 14
Item 4. Controls And Procedures ..................................... 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ........................................... 14
Item 2. Unregistered Sales Of Equity Securities And Use Of Proceeds.. 14
Item 3. Defaults Upon Senior Securities ............................. 15
Item 4. Mine Safety Disclosures ..................................... 15
Item 5. Other Information ........................................... 15
Item 6. Exhibits .................................................... 15
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
CONDENSED BALANCE SHEETS................................................... 4
CONDENSED STATEMENTS OF OPERATIONS ........................................ 5
CONDENSED STATEMENTS OF CASH FLOWS ........................................ 6
NOTES TO THE CONDENSED FINANCIAL STATEMENTS ............................... 7
3
Psychic Friends Network, Inc.
(Formerly "Web Wizard, Inc.")
(A Development Stage Company)
CONDENSED BALANCE SHEETS
December 31, September 30,
2013 2013
---------- ----------
(unaudited)
ASSETS
Current assets
Cash $ 12,667 $ 75,393
Accrued revenue 818 --
---------- ----------
Total current assets 13,485 75,393
Intangible assets
Website development costs (net of $35,957 and $28,764
of accumulated amortization, respectively) 48,479 55,672
---------- ----------
Total Assets $ 61,964 $ 131,065
========== ==========
LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities $ 60,254 $ 58,682
---------- ----------
Total current liabilities 60,254 58,682
---------- ----------
Total Liabilities 60,254 58,682
---------- ----------
STOCKHOLDERS' EQUITY
Common stock; 750,000,000 shares authorized at $0.001 par value;
84,977,543 and 84,907,543 issued and outstanding at December 31, 2013
and September 30, 2013, respectively 84,978 84,908
Additional paid-in capital 896,491 886,148
Deficit accumulated during development stage (979,759) (898,673)
---------- ----------
Total stockholders' equity 1,710 72,383
---------- ----------
Total liabilities and stockholders' equity $ 61,964 $ 131,065
========== ==========
The accompanying notes are an integral part of
these condensed financial statements.
4
Psychic Friends Network, Inc.
(Formerly "Web Wizard, Inc.")
(A Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
From inception
For the Three Months Ended (May 9, 2007)
----------------------------------- through
December 31, December 31, December 31,
2013 2012 2013
------------ ------------ ------------
REVENUE $ 1,529 $ 462 $ 3,950
------------ ------------ ------------
OPERATING EXPENSES
Payroll expenses 37,908 37,705 274,377
Depreciation and amortization 7,193 3,127 35,957
General and administrative 9,487 41,708 208,136
Consulting fees 26,663 43,093 250,951
Legal and professional 1,364 12,765 213,883
------------ ------------ ------------
TOTAL OPERATING EXPENSES 82,615 138,398 983,304
------------ ------------ ------------
NET LOSS FROM OPERATIONS (81,086) (137,936) (979,354)
OTHER EXPENSE
Bank charges and interest -- 245 405
------------ ------------ ------------
TOTAL OTHER EXPENSE -- 245 405
------------ ------------ ------------
NET LOSS BEFORE INCOME TAXES (81,086) (138,181) (979,759)
PROVISION FOR INCOME TAX -- -- --
------------ ------------ ------------
NET LOSS FOR THE PERIOD $ (81,086) $ (138,181) $ (979,759)
============ ============ ============
BASIC AND DILUTED (LOSS) PER COMMON SHARE $ (0.00) $ (0.00)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
(BASIC AND DILUTED) 84,921,239 84,022,212
============ ============
The accompanying notes are an integral part of
these condensed financial statements.
5
Psychic Friends Network, Inc.
(Formerly "Web Wizard, Inc.")
(A Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
From inception
For the Three Months Ended (May 9, 2007)
---------------------------- through
December 31, December 31, December 31,
2013 2012 2013
---------- ---------- ----------
OPERATING ACTIVITIES
Net loss $ (81,086) $ (138,181) $ (979,759)
Adjustments to reconcile net loss from operations:
Expenses paid for by director -- -- 4,411
Stock-based compensation for options issued 7,543 17,190 101,293
Amortization expense 7,193 3,127 35,957
Common stock issued for services 2,870 5,653 17,273
Change in operating assets and liabilities:
Decrease in accounts receivable (818) -- (818)
Increase (Decrease) in accounts payable and accrued liabilities 1,572 (10,067) 60,254
---------- ---------- ----------
NET CASH USED IN OPERATING ACTIVITIES (62,726) (122,278) (761,389)
---------- ---------- ----------
INVESTING ACTIVITIES
Capitalization of website development costs -- (16,500) (84,436)
---------- ---------- ----------
NET CASH USED IN INVESTING ACTIVITIES -- (16,500) (84,436)
---------- ---------- ----------
FINANCING ACTIVITIES
Proceeds from issuance of common stock -- -- 804,900
Proceeds from related parties -- -- 58,003
Repayments of amounts due to director -- -- (4,411)
---------- ---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES -- -- 858,492
---------- ---------- ----------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS (62,726) (138,778) 12,667
CASH AND CASH EQUIVALENTS
-BEGINNING OF PERIOD 75,393 499,898 --
---------- ---------- ----------
CASH AND CASH EQUIVALENTS
-END OF PERIOD $ 12,667 $ 361,120 $ 12,667
========== ========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ -- $ -- $ --
========== ========== ==========
Cash paid for taxes $ -- $ -- $ --
========== ========== ==========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued in asset acquisition $ -- $ -- $ 58,003
========== ========== ==========
Liabilities assumed in asset acquisition $ -- $ -- $ 400
========== ========== ==========
The accompanying notes are an integral part of
these condensed financial statements.
6
Psychic Friends Network, Inc.
(fka: Web Wizard, Inc.)
(A Development Stage Company)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
December 31, 2013 and September 30, 2013
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Psychic Friends Network, Inc. (OTC:PFNI) hereinafter, ("the Company") was
incorporated in the State of Nevada on May 9, 2007 under the name "Web Wizard,
Inc.". On February 17, 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, 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 providing daily horoscopes and live psychic
advice by telephone, internet or our soon to be released mobile application. Our
website is www.psychicfriendsnetwork.com. First time customers will be offered
promotions and are able to choose their psychic friend by specialties. They also
are able to establish an ongoing relationship with their advisor, or they can
choose to try someone new the next time they call. We will strive to stay on the
cutting edge of technology in an effort to deliver our content. Currently this
includes Facebook applications, and twitter pages, that reward our customers
with free credits towards readings for sharing, liking or tweeting about PFN. We
will also be giving all of our psychics their own website, to find new
customers.
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.
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 months ended December 31, 2013 are not necessarily
indicative of results for the full fiscal year. It is suggested that these
financial statements be read in conjunction with the audited financial
statements and notes thereto included in the Company's annual report on Form
10-K for the year ended September 30, 2013.
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 December 31, 2013, the Company
has accumulated losses from inception (May 9, 2007) of $979,759. Likewise, net
cash of $761,389 has been used in operations during the same period. 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 which 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 through various
sales and public offerings.
7
Psychic Friends Network, Inc.
(fka: Web Wizard, Inc.)
(A Development Stage Company)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
December 31, 2013 and September 30, 2013
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, (ASC 915) "Development Stage Entities". Since
its formation, the Company has not yet realized material 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.
REVENUE RECOGNITION
The Company recognizes revenue on an accrual basis. The Company generally earns
revenue through the online sale of service minutes. These purchases obligate the
Company to arrange a telephonic conversation with a designated service provider
of the customers choosing. The Company remits a portion of the fee to the
service provider and retains the balance. At the time of sale, the formal
arrangements are made and the Company has fulfilled its obligation. Furthermore,
the Company's portions of any fees collected are non-refundable. Revenue is
generally realized or realizable and earned when all of the following criteria
are met: 1) persuasive evidence of an arrangement exists between the Company and
our customer(s); 2) services have been rendered; 3) our price to our customer is
fixed or determinable; and 4) collectability is reasonably assured. For the
three months ended December 31, 2013 and 2012, the Company recognized revenues
of $1,529 and $462 for which each of the four aforementioned criteria were
satisfied.
8
Psychic Friends Network, Inc.
(fka: Web Wizard, Inc.)
(A Development Stage Company)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
December 31, 2013 and September 30, 2013
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
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, 2013 and
September 30, 2013, 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.
The Company records the value for options granted over the vesting period of the
options granted. Accordingly, the Company recognized expenses of $7,543 and
$17,190 during the three months ended December 31, 2013 and 2012, respectively
(see Note 4).
WEBSITE DEVELOPMENT COSTS
The Company capitalizes its costs to develop its website and when preliminary
development efforts are successfully completed, management has authorized and
committed project funding, and it is probable that the project will be completed
and the website will be used as intended. Such costs are amortized on a
straight-line basis over the estimated useful life of the related asset, which
approximates three years. Costs incurred prior to meeting these criteria,
together with costs incurred for training and maintenance, are expensed as
incurred. Costs incurred for enhancements that are expected to result in
additional material functionality are capitalized and expensed over the
estimated useful life of the upgrades.
The Company capitalized website costs of $-0- and $16,500 during the three
months ended December 31, 2013 and 2012, respectively. The Company's capitalized
website amortization is included in depreciation and amortization in the
Company's consolidated statements of operations, and totaled $7,193 and $3,127
for the three months ended December 31, 2013 and 2012, respectively.
ADVERTISING COSTS
Advertising costs are to be expensed as incurred in accordance to Company
policy; for the three months ended December 31, 2013 and 2012, advertising
expenses totaled $-0- and $11,410, respectively.
RECENT ACCOUNTING PRONOUNCEMENTS
Management has evaluated all recent accounting pronouncements issued by the FASB
(including its Emerging Issues Task Force), the American Institute of Certified
Public Accountants, and the SEC did not, or are not believed by management to,
have a material impact on the Company's present or future financial position,
results of operations or cash flows.
9
Psychic Friends Network, Inc.
(fka: Web Wizard, Inc.)
(A Development Stage Company)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
December 31, 2013 and September 30, 2013
NOTE 3 - INTANGIBLE ASSET
The following table presents the detail of other intangible assets for the
periods presented:
Gross
Carrying Accumulated Net Carrying Weighted-Average
Amount Amortization Amount Remaining Life
------ ------------ ------ --------------
December 31, 2013:
Capitalized website
development costs $ 84,436 $(35,957) $ 48,479 1.72 years
-------- -------- -------- ----------
Total $ 84,436 $(35,957) $ 48,479 1.72 years
======== ======== ======== ==========
NOTE 4 - STOCKHOLDERS' EQUITY
As summarized in Note 1, on January 27, 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.
OPTIONS AND WARRANTS
During July 2012, the Company's shareholders approved its 2012 Stock Option Plan
("the Plan"). Under the Plan, the Company may issue up to 8,250,000 shares at
its discretion. On December 13, 2013, the Company granted 500,000 stock options
to a consultant of the Company of which 200,000 vested immediately, 150,000 on
December 13, 2014 and the balance of 150,000 on December 13, 2015. The options
expire five (5) years following the vesting date and carry a strike price of
$0.04.
The 500,000 vested options were valued using the Black-Scholes model and the
following inputs: 5 year life, volatility of 154%, interest rate of 1.55%, and
0% forfeiture rate. The resulting value was $0.0377 per option for a total value
of $7,543. Accordingly for options granted during the years pursuant to ASC
Topic 718, during the three months ended December 31, 2013, the Company
recognized expense of $7,543 and $17,190, respectively.
A summary of the status of the options granted at December 31, 2013 and
September 30, 2013 and changes during the periods then ended is presented below:
December 31, 2013 September 30, 2013
------------------------ -------------------------
Weighted Average Weighted Average
Shares Exercise Price Shares Exercise Price
------ -------------- ------ --------------
Outstanding at
beginning of period -- $ -- -- $ --
Granted 500,000 0.04 -- --
Exercised -- -- -- --
Expired or canceled -- -- -- --
------- ------ ------ ------
Outstanding at end
of period 500,000 $ 0.04 -- $ --
======= ====== ====== ======
Exercisable 200,000 $ 0.04 -- $ --
======= ====== ====== ======
10
Psychic Friends Network, Inc.
(fka: Web Wizard, Inc.)
(A Development Stage Company)
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
December 31, 2013 and September 30, 2013
NOTE 4 - STOCKHOLDERS' EQUITY - (CONTINUED)
COMMON STOCK
On December 13, 2013 the Company issued 70,000 shares of common stock to a
consultant for consulting services rendered valued at $2,870 or $0.041 per
share.
NOTE 5 - SUBSEQUENT EVENTS
On February 6, 2014 the Company entered into a Convertible Promissory Note with
Asher Enterprises, Inc. to fund operating expenses. The Note shall accrued
interest at 8% per annum with a 22% default rate and matures on November 10,
2014. The holder has the right to convert into common stock at a variable rate
of 61% of the Market Price as defined in the debenture document. Upon default,
the Note will be convertible at par or $0.001 per share.
The Company has evaluated events subsequent to the balance sheet date through
the issuance date of these financial statements in accordance with FASB ASC 855
and has determined there are no other events that would require adjustment to,
or disclosure in, the financial statements.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
This report contains "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements other than
statements of historical fact are "forward-looking statements" for purposes of
federal and state securities laws, including, but not limited to, any
projections of earnings, revenue or other financial items; any statements of the
plans, strategies and objections of management for future operations; any
statements concerning proposed new services or developments; any statements
regarding future economic conditions or performance; any statements or belief;
and any statements of assumptions underlying any of the foregoing.
Forward-looking statements may include the words "may," "could," "estimate,"
"intend," "continue," "believe," "expect" or "anticipate" or other similar
words. These forward-looking statements present our estimates and assumptions
only as of the date of this report. Except for ongoing securities laws, we do
not intend, and undertake no obligation, to update any forward-looking
statement. Although we believe that the expectations reflected in any of our
forward-looking statements are reasonable, actual results could differ
materially from those projected or assumed in any or our forward-looking
statements. Our future financial condition and results of operations, as well as
any forward-looking statements, are subject to change and inherent risks and
uncertainties. The factors impacting these risks and uncertainties include, but
are not limited to; increased competitive pressures from existing competitors
and new entrants; our ability to efficiently and effectively finance our
operations; deterioration in general or regional economic conditions; adverse
state or federal legislation or regulation that increases the costs of
compliance; ability to achieve future sales levels or other operating results;
the fact that our accounting policies and methods are fundamental to how we
report our financial condition and results of operations, and they may require
management to make estimates about matters that are inherently uncertain; the
psychic services market; our ability to develop a fully-functioning web portal;
changes in U.S. GAAP or in the legal, regulatory and legislative environments in
the markets in which we operate; inability to efficiently manage our operations;
the inability of management to effectively implement our strategies and business
plans; and the other risks and uncertainties detailed in this report.
Throughout this report references to "we", "our", "us", "PFN", "the Company",
and similar terms refer to Psychic Friends Network, Inc.
OVERVIEW
CORPORATE HISTORY AND BACKGROUND
Psychic Friends Network, Inc. (OTC:PFNI) hereinafter, ("the Company") was
incorporated in the State of Nevada on May 9, 2007 under the name "Web Wizard,
Inc.". On February 17, 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, 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.
BUSINESS
The Company is in the business of providing daily horoscopes, astrological
reports and live psychic advice by telephone, internet, or our soon to be
released mobile application. Our latest development includes the launch of our
newly updated website, where customers can now not only connect to the advisor
of their choice by telephone, but by live audio and video chat as well. They can
connect from computers, tablets or even mobile phones. Our website is
www.psychicfriendsnetwork.com. First time customers are offered promotions and
are able to choose their psychic friend by specialties, and by reading their
bios and feedback. They also are able to establish an ongoing relationship with
12
their advisor, or they can choose to try someone new the next time they call. We
will strive to stay on the cutting edge of technology in an effort to deliver
our content. Currently this includes Facebook applications, and twitter pages,
that can reward our customers with free credits towards readings for sharing,
liking or tweeting about PFN. We will also soon be giving each of our psychics
their own websites where we will incentivize them to find new customers.
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 DECEMBER 31, 2013 VERSUS 2012:
REVENUE
We generated $1,529 in revenue during the three months ended December 31, 2013
compared to $462 during the same period in 2012. The Company commenced
commercial operations as of September 30, 2013. We do not anticipate earning
significant revenues until such time that we have sufficient capital to market
our services.
OPERATING EXPENSES
During the three months ended December 31, 2013, total operating expenses for
the Company were $82,615 compared to $137,936 during the same period in 2012.
The three month decrease in expenses was due to the higher expense incurred in
that quarter of 2012 primarily for website development.
NET LOSS
Our net loss for the three months ended December 31, 2013 was $81,086 compared
to $137,936 during the same period in 2012. As we have incurred no substantial
revenues, the net loss figures follow our operating expenses.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 2013, we have yet to generate any material revenues from our
business operations as our website has yet to be fully marketed.
As of December 31, 2013, we had $12,667 in cash and $61,964 in total assets, of
which $48,479 was due to website development. Our total liabilities were
$60,254.
The Company believes it currently does not have sufficient funds to execute its
business plan. We anticipate that additional capital will be required to
implement our business plan to pay for marketing efforts to support our revenue
forecast for 2014. In order to obtain the necessary capital, the Company may
need to sell additional shares of common stock or borrow funds from private
lenders.
Even if we are able to raise the funds required, it is possible that we could
incur unexpected costs and expenses, fail to collect significant amounts owed to
us or experience unexpected cash requirements that would force us to seek
alternative financing. Further, if we issue additional equity or debt securities
as a means of raising additional capital, stockholders may experience dilution
13
or the new equity securities may have rights, preferences or privileges senior
to those of existing holders of common stock.
OFF BALANCE SHEET ARRANGEMENTS
None.
CRITICAL ACCOUNTING POLICIES
See Note 2 "Significant Accounting Policies" within the notes to our financial
statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. 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, of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on that evaluation, our management,
including our Chief Executive Officer have concluded that, as of the end of the
period covered by this report, our disclosure controls and procedures are not
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 Officer, as appropriate to allow timely decisions regarding
required disclosure.
(B) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no significant changes in the Company's internal control over
financial reporting during the quarter ended December 31, 2013.
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
On December 20, 2013, the Company issued 70,000 shares to a vendor in lieu of
cash as payment for services. The securities were issued exempt from
registration under the Securities Act of 1933 pursuant to Section 4(a)(2)
thereof.
14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
N/A
ITEM 5. OTHER INFORMATION
On February 6, 2014, the Company entered into a securities purchase agreement
with an accredited investor pursuant to which the Company issued a convertible
promissory note ("Note") in exchange for $53,000 in proceeds. The Note accrues
interest at an annual rate of eight percent, matures on November 10, 2014, is
convertible into shares of Company common stock at a price equal to sixty-one
percent of the average of the lowest trading prices for five of the ten days
prior to the conversion date.
The securities were issued exempt from registration under the Securities Act of
1933 pursuant to Section 4(a)(2) thereof.
ITEM 6. EXHIBITS
Exhibit
Number Description
------ -----------
10.1 Securities Purchase Agreement
10.2 Convertible Promissory Note
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.
15
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: February 17, 2014 By: /s/ Marc Lasky
-------------------------------------------
Marc Lasky
Chief Executive and Financial Officer
(Principal Executive Officer and
Principal Financial and Accounting Officer)
1