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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



Form 10-QSB


[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934  For the quarterly period ended March 31, 2003


OR


[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934   For the transition period from _____to ______


Commission file number: 000-30536



FoneCash, Inc.

(Exact name of registrant as specified in its charter)



              Delaware                                                                                                                        22-3530573

 (State or other jurisdiction of                                                                                                   (I.R.S. Employer

 incorporation or organization)                                                                                                  Identification No.)


162 M Homestead Street, Manchester, CT                                                                                         06040

  (Address of principal executive offices)                                                                                         (Zip-Code)



Registrant's telephone number, including area code: (860) 805-0701



   Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                                                        Yes [X]   No [  ]


   Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12,13,or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.                            Yes [X]   No [  ]


   The number of outstanding shares of the registrant's Common Stock, par value $.0001 per share, was 58,574,056 on March 31, 2003.


SEC 2334 (8-03)

Potential persons who are to respond to the collection of information contained in this form are not required to

respond unless the  form displays a currently valid OMB control number.

1






Fonecash, Inc.

Quarterly Report on Form 10-QSB

For the Quarter Ended on March 31, 2003


Table of Contents




PART I - FINANCIAL INFORMATION


Item 1.  Consolidated Financial Statements (Unaudited)


               Consolidated Balance Sheets as of March 31, 2003 and December 31, 2002


               Consolidated Statement of Operations for the Period Ending March 31, 2003


               Consolidated Statement of Cash Flows for the Period Ending March 31, 2003


               Notes to Consolidated Financial Statements


Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations


Item 3.  Controls and Procedures



PART II - OTHER INFORMATION



Item 1.  Legal Proceedings


Item 2.  Changes in Securities and Use of Proceeds


Item 3.  Defaults Upon Senior Securities


Item 4.  Submission of Matters to a Vote of Security Holders


Item 5.  Other Information


Item 6.  Exhibits and Reports on Form 8-K


SIGNATURES


CERTIFICATION









2






PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements


FONECASH, INC. AND SUBSIDIARIES

(A Development Stage Company)

Consolidated Balance Sheets

      

ASSETS

  

March 31,

  

December 31,

  

2003

  

2002

Current assets:

     

    Accounts receivable

$

--

 

$

--

    Inventory

 

--

  

--

    Prepaid expenses

 

--

  

--

Total Current Assets

 

--

  

--

      

Property and equipment, net

 

--

  

--

      

Other assets:

     

    Patent rights, net

 

--

  

--

Total Assets

$

--

 

$

--

      

LIABILITIES AND STOCKHOLDERS' DEFICIT

      

Current liabilities:

     

    Accounts payable

$

427,855

 

$

424,180

    Due to officer/stockholder

 

545,493

  

519,243

    Notes payable

 

252,881

  

252,881

Total Current Liabilities

 

1,226,229

  

1,196,304

Stockholders' deficit :

     

    Preferred stock; $.0001 par value; authorized -

     

        10,000,000 shares; issued - none

 

--

  

--

    Common stock; $.0001 par value; authorized -

     

        500,000,000 shares; issued and outstanding -

     

        58,574,056 shares

 

5,857

  

5,857

    Additional paid-in capital

 

4,374,353

  

4,374,353

    Treasury stock, 500 shares at cost

 

(1,500)

  

(1,500)

    Deficit accumulated during the development stage

 

(5,604,939)

  

(5,575,014)

Total Stockholders' (Deficit)

 

(1,226,229)

  

(1,196,304)

Total Liabilities and Stockholders' (Deficit)

$

--

 

$

--


The accompanying notes are an integral part of these statements.

3






FONECASH, INC. AND SUBSIDIARIES

(A Development Stage Company)

Consolidated Statements of Operations

         
         
  

Three

  

Three

  

Aug. 7, 1997

  

Months Ended

  

Months Ended

  

(Inception) to

  

March 31,

  

March 31,

  

March 31,

  

2003

  

2002

  

2003

         

Revenue:

        

  Sales

$

--

 

$

--

 

$

10,840

  Cost of sales

 

--

  

--

  

5,662

    Gross profit

 

--

  

--

  

5,178

  Interest income

 

--

  

5

  

5,257

         

    Total revenue

 

--

  

5

  

10,435

         

Costs and expenses:

        

  Depreciation

 

--

  

6,707

  

210,426

  Amortization

 

--

  

250

  

4,118

  Research and development, related party

 

--

  

--

  

432,256

  Officer's compensation

 

26,250

  

221,000

  

1,004,570

  Impairment of investment in related party

 

--

  

--

  

50,000

  Impairment of investment in subsidiaries

 

--

  

--

  

450,000

  Loss on disposition of assets

 

--

  

--

  

11,449

  SEC litigation settlement

 

--

  

--

  

110,977

  General and administrative

 

3,675

  

106,853

  

3,341,578

  

29,925

  

334,810

  

5,615,374

         

Net loss

$

(29,925)

 

$

(334,805)

 

$

(5,604,939)

         

Basic and diluted loss per common share

$

(.00)

 

$

(.02)

   
         

Weighted average common shares outstanding

 

58,574,056

  

16,791,556

   
         






The accompanying notes are an integral part of these statements.

4







FONECASH, INC. AND SUBSIDIARIES

(A Development Stage Company)

Consolidated Statements of Changes in Stockholders' Equity

For the Period August 7, 1997 (Inception) to March 31, 2003

                

Deficit

                

Accumulated

       

Additional

        

During the

 

Common Stock

  

Paid-in

  

Treasury Stock

  

Development

 

Shares

 

 

Amount

  

Capital

  

Shares

 

 

Amount

  

Stage

Balances, August 7, 1997 (inception)

--

 

$

--

 

$

--

  

--

 

$

--

 

$

--

                 

    Common stock issued for services

                

        and costs advanced, valued at

                

        $.0001 per share

2,000,000

  

200

  

--

  

--

  

--

  

--

                 

    Common stock issued for services,

                

        valued at $.15 per share

200,000

  

20

  

29,980

  

--

  

--

  

--

                 

    Net loss for the period

               

(61,404)

 

 

  

 

  

 

  

 

  

 

  

 

Balances, December 31, 1997

2,200,000

  

220

  

29,980

  

--

  

--

  

(61,404)

                 

    Sale of common stock ($.4156 per share)

204,500

  

20

  

84,965

  

--

  

--

  

--

                 

    Net loss

               

(95,211)

 

 

  

 

  

 

  

 

  

 

  

 

Balances, December 31, 1998

2,404,500

  

240

  

114,945

  

--

  

--

  

(156,615)

                 

    Sale of common stock ($.7622 per share)

1,098,505

  

110

  

837,160

  

--

  

--

  

--

                 

    Services contributed by the

                

        president of the Company

--

  

--

  

60,000

  

--

  

--

  

--

                 

    Common stock issued for services,

                

        valued at $.81 per share

333,333

  

33

  

269,967

  

--

  

--

  

--

                 

    Net loss

               

(785,366)

 

 

  

 

  

 

  

 

  

 

  

 

Balances, December 31, 1999

3,836,338

  

383

  

1,282,072

  

--

  

--

  

(941,981)


continued





The accompanying notes are an integral part of these statements.

5







FONECASH, INC. AND SUBSIDIARIES

(A Development Stage Company)

Consolidated Statements of Changes in Stockholders' Equity

For the Period August 7, 1997 (Inception) to March 31, 2003

                

Deficit

                

Accumulated

       

Additional

        

During the

 

Common Stock

  

Paid-in

  

Treasury Stock

  

Development

 

Shares

 

 

Amount

  

Capital

  

Shares

 

 

Amount

  

Stage

    Sale of common stock ($1.25 per share)

25,000

  

3

  

31,247

  

--

  

--

  

--

                 

    Common stock issued for services,

                

        valued at $.11 per share

1,466,667

  

147

  

157,353

  

--

  

--

  

--

                 

    Common stock issued for services,

                

        valued at $.5312 per share

623,367

  

62

  

331,071

  

--

  

--

  

--

                 

    Purchase of treasury stock

--

  

--

  

--

  

500

  

(1,500)

  

--

                 

    Net loss

               

(897,368)

 

 

  

 

  

 

  

 

  

 

  

 

Balances, December 31, 2000

5,951,372

 

$

595

 

$

1,801,743

  

500

 

$

(1,500)

 

$

(1,839,349)

                 

    Common stock issued for services,

                

        valued at $.12 per share

6,959,708

  

696

  

858,080

  

--

  

--

  

--

                 

    Sale of common stock ($.017 per share)

1,087,976

  

109

  

17,891

  

--

  

--

  

--

                 

    Common stock issued in acquisition

                

        of subsidiaries, valued at $.50 per share

900,000

  

90

  

449,910

  

--

  

--

  

--

                 

    Net loss

               

(1,878,498)

 

 

  

 

  

 

  

 

  

 

  

 

Balances, December 31, 2001

14,899,056

 

$

1,490

 

$

3,127,624

  

500

 

$

(1,500)

 

$

(3,717,847)

                 

    Sale of common stock ($.012 per share)

10,746,826

  

1,074

  

122,878

  

--

  

--

  

--

                 

    Common stock issued for services,

                

        valued at $.03 per share

32,928,174

  

3,293

  

1,123,851

  

--

  

--

  

--

                 

    Net loss

 

  

 

  

 

  

 

  

 

  

(1,857,167)

                 

Balances, December 31, 2002

58,574,056

  

5,857

  

4,374,353

  

500

  

(1,500)

  

(5,575,014)

                 

    Net loss for the period

 

  

 

  

 

  

 

  

 

  

(29,925)

Balances, March 31, 2003

58,574,056

 

$

5,857

 

$

4,374,353

  

500

 

$

(1,500)

 

$

(5,604,939)


The accompanying notes are an integral part of these statements.

6






FONECASH, INC. AND SUBSIDIARIES

(A Development Stage Company)

Consolidated Statements of Cash Flows

         
  

Three

  

Three

  

Aug. 7, 1997

  

Months Ended

  

Months Ended

  

(Inception) to

  

March 31,

  

March 31,

  

March 31,

  

2003

  

2002

  

2003

Cash flows from operating activities:

        

    Net loss

$

(29,925)

 

$

(334,805)

 

$

(5,604,939)

    Adjustments to reconcile net loss to net

        

         cash used in operating activities

        

         Depreciation

 

--

  

6,707

  

210,426

         Amortization

 

--

  

250

  

4,118

         Common stock issued for services

 

--

  

300,000

  

2,834,753

         Common stock issued in acquisition of subsidiaries

 

--

  

--

  

450,000

         Notes issued for payment of expenses

 

--

  

--

  

41,280

         Write-down of lost inventory

 

--

  

--

  

204,338

         Write off uncollectible accounts

 

--

  

--

  

10,840

         Loss on disposition of assets

 

--

  

--

  

11,449

         Changes in assets and liabilities

        

            Increase in accounts receivable

 

--

  

--

  

(10,840)

            Increase in inventory

 

--

  

--

  

(204,338)

            Increase (decrease) in accounts payable

 

3,675

  

(12,270)

  

427,855

    Net cash used in operating activities

 

(26,250)

  

(40,118)

  

(1,625,058)

Cash flows from investing activities:

        

    Organization costs

 

--

  

--

  

(368)

    Purchases of property and equipment

 

--

  

--

  

(220,625)

    Acquisition of patent rights

 

--

  

--

  

(5,000)

    Net cash used in investing activities

 

--

  

--

  

(225,993)

Cash flows from financing activities:

        

    Proceeds from short-term debt

 

--

  

2,625

  

274,949

    Repayment of short-term debt

 

--

  

(6,789)

  

(63,348)

    Increase (decrease) in amounts

        

       due to an officer/stockholder

 

26,250

  

(3,900)

  

545,493

    Purchase of treasury stock

 

--

  

--

  

(1,500)

    Proceeds from sale of common stock

 

--

  

48,750

  

1,095,457

    Net cash provided by financing activities

 

26,250

  

40,686

  

1,851,051

Net increase (decrease) in cash

 

--

  

568

  

--

Cash at beginning of period

 

--

  

--

  

--

Cash at end of period

$

--

 

$

568

 

$

--


The accompanying notes are an integral part of these statements.

7






FONECASH, INC. AND SUBSIDIARIES

(A Development Stage Company)

Form 10QSB

Quarter Ended March 31, 2003

Notes to Consolidated Financial Statements


Note 1 – Condensed Consolidated Financial Statements


Basis of Presentation


The accompanying interim unaudited consolidated financial statements include the accounts of FoneCash, Inc. and its subsidiaries which are hereafter referred to as (the "Company"). All intercompany accounts and transactions have been eliminated in consolidation. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-QSB of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, such interim statements reflect all adjustments (consisting of normal recurring accruals) necessary to present fairly the financial position and the results of operations and cash flows for the interim periods presented. The results of operations for these interim periods are not necessarily indicative of the results to be expected for the year ending December 31, 2003. These financial statements should be read in conjunction with the audited financial statements and footnotes included in the Company's report on Form 10-KSB for the year ended December 31, 2002.


Description of Business


The financial statements presented are those of FoneCash, Inc. and its subsidiaries, a development stage company (the “Company”).  The Company was incorporated under the laws of the State of Delaware on August 7, 1997.  The Company ceased operations in the fourth quarter of 2002.  The Company’s initial business activity was to acquire the rights to market an electronic terminal that was to be used by retail merchants and in-home salespersons when payment was made with a credit or debit card.  Currently the Company is seeking a merger candidate.


The Company has limited operations and in accordance with Statement of Financial Accounting Standards No. 7 (SFAS #7), the Company is considered a development stage company.


Use of Estimates in the Preparation of Financial Statements


The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reporting 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 period.  Actual results could differ from those estimates.


Loss Per Common Share


Loss per common share is computed by dividing the net loss by the weighted average shares outstanding during the period.



8







Item 2.  Management's Discussion and Analysis


This Quarterly Report on Form 10-QSB, including the information incorporated by reference herein, includes "forward looking statement" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Act") and Section 21E of the Securities Act of 1934, as amended ("Act of 34"). All of the statements contained in this Quarterly Report on Form 10-QSB, other than statements of historical fact, should be considered forward looking statements, including, but not limited to, those concerning the Company's strategies, objectives and plans for expansion of its operation, products and services and growth in demand for it's products and services. There can be no assurances that these expectations will prove to have been correct. Certain important factors that could cause actual results to differ materially from the Company's expectations (the "Cautionary Statements") are disclosed in this Quarterly report on Form 10-QSB. All subsequent written and oral forward looking statements by or attributable to the Company or persons acting on behalf are expressly qualified in their entirety by such Cautionary Statements. Investors are cautioned not to place undue reliance on these forward looking statements which speak only as of the date hereof and are not intended to give any assurance as to future results. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or reflect the occurrence of unanticipated events.


Fonecash, Inc. (the "Company") was incorporated under the laws of the State of Delaware on August 7, 1997 and is in its development stage.  The Company currently has no ongoing business operation and is actively seeking a potential merger or acquisition candidate.  The Company has not yet found such a candidate and as of this date no negotiations have been conducted with any potential candidate.


The Company incurred operating losses of $ (5,604,939) from Inception to March 31, 2003.  The Company expects its accumulated deficit to grow for the foreseeable future as total costs and expenses continue without any revenue or business activity.  There can be no assurances that the Company will locate a potential merger or acquisition candidate or that if such a candidate is located that management can successfully negotiate and consummate a business combination with any such entity.


General


Fonecash, Inc. (the "Company") was incorporated under the laws of the State of Delaware on August 7, 1997.  During the fourth quarter of December 2002, the Company began to wind down its operations. This occurred because of management’s inability to raise sufficient funds to finance the continued development of the Company’s business plan.


Until that point, the Company had been engaged in the payment processing of transactions for banks and their merchants through its terminals and proprietary system. As part of that operation, the Company was developing a wired and wireless gateway to convert consumers' credit and debit card information collected by mobile merchants into a format that can be processed by banks. The Company intended to act as a payment system service provider between banks, mobile merchants and their customers. The Company intended to charge merchants a fixed transaction fee to process their payments.


Currently, the Company remains in development stage and has no operating profits to date. With the cessation of its pursuit of the credit card processing business, the Company currently has no business operations. The Company is actively seeking a possible merger candidate in an effort to provide shareholders value.


The Company incurred operating losses of $29,925 during the period ended March 31, 2003 compared to a loss of $334,805 during the same period in 2002. This decrease in the Company’s operating loss of $304,880 was attributable to a reduction in Officer’s Compensation and General and Administrative Expenses.  The Company spent a total of $432,256 on Research and Development from Inception to March 31, 2003.  The Company expects its accumulated deficit to grow for the foreseeable future.

9






The Company's Operations to Date


The Company was developing a system of processing credit cards for an under served community of low volume merchants and in-home salespersons consisting of a fixed wire or wireless terminal and a system of computers, utilizing established communications networks, both wired and wireless, for processing the data from credit and debit cards. The Company ceased this operation during the fourth quarter of 2002.


The  Company  has never  operated  under any  other  name,  nor has it ever been involved with any bankruptcy,  receivership or similar  proceeding or engaged in any material  reclassification,  merger,  consolidation,  or purchase or sale of assets.


Results of Operation


General and administrative expenses during the period ending March 31, 2003 were $3,675 as compared to $106,853 for the same period in 2002, representing a decrease of $103,177.  The decrease during the three month period ending March 31, 2003 was primarily due to the cessation of the business activities of the Company.


Balance Sheet Data


The Company's combined cash and cash equivalents totaled $ -0- for the period ending March 31, 2003. This is the same as at the end of the same period in 2002.


The Company does not expect to generate a positive internal cash flow for at least the next six months due to it having no current revenue generating activities.


Property and equipment was valued at $ –0- the period ending March 31, 2003 which is the same amount as in 2002 for the same period.


Item 3. Controls and Procedures


As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the C ompany’s principal executive officer, of the effectiveness of the design and operation of the C ompany’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-14.  Based upon that evaluation, the principal executive officer concluded that the C ompany’s disclosure controls and procedures are effective in timely alerting them to material information relating to the C ompany required to be included in the Company’s periodic SEC filings. As such no changes were made in controls and procedures.













10






PART II - OTHER INFORMATION



Item 1.  Legal Proceedings


The Company was served with a summons and complaint for failure to pay the monthly payments on its line of credit with Fleet National Bank.  Pursuant to the lawsuit, the Company would be liable to Fleet National Bank for the outstanding principal balance of $107,645 plus attorney’s fees.  Management has indicated its intentions to defend the action and will repay the principal balance in monthly installments upon receipt of capital contributions from investors.


On April 8, 2002 the Securities and Exchange Commission filed a complaint alleging that a registration statement and amendments, filed with the Commission by the Company in December 2001, January 2002 and March 2002, and signed by the former president of the Company, Daniel E. Charboneau, contained material misrepresentations and omissions.  On January 6, 2004, a United States District Judge from the District of Columbia entered a default judgment against the Company restraining the Company from further violations of Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13a-13 of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20, 13a-1 and 13a-13 thereunder.  As part of this order the Court also ordered penalties and interest in the amount of $110,977.


Item 2.  Changes in Securities


None.


Items 3.  Defaults upon Senior Securities


             None


Item 4.  Submission of Matters to a Vote of Security Holders


                  None


Item 5.   Other Information


                  None



Item  6.  Exhibits and Reports on Form 8-K.


(a)  Exhibits.


Exhibit 31.1 – Certification required by Rule 13a-14(a) or Rule 15d-14(a),

Exhibit 32.1 – Certification Required by Rule 13a-14(b) or Rule 15d-14(b) and section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350


(b)  The Registrant filed no reports on Form 8-K during the period ended March 31, 2003.






11






Signatures


In accordance with the  requirements of the Exchange Act, the registrant  caused this report to be signed on its behalf by the undersigned who is duly authorized to sign as an officer and as the principal officer of the Company.


Fonecash, Inc


By:      /s/ Abraham Pierce

         ---------------------------------------------------------

         Abraham Pierce, Chairman/CEO


Date:    January 4, 2004








































12