UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
ANNUAL REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2005
COMMISSION FILE NUMBER 0-24408
INFINICALL CORP.
(f/k/a FFONEFRIEND, INC.)
(Exact Name of Filer as Specified in its Charter)
DELAWARE 33-0611753
(State of Incorporation) (I.R.S. Employer ID Number)
5670 Wilshire Blvd., Ste. 2605
Los Angeles, California 90036
(Address of Principal Executive Offices)
(310) 289-2338
(Filer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act: Common Stock,
$.001 par value (Title of class)
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 issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [_]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of issuer's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $ 0
As of July 15, 2005, there were no shares of Preferred Stock and 168,225,598
shares of Common Stock issued and outstanding. The aggregate market value of
voting stock held by non-affiliates of 41,944,706 shares outstanding at July 1,
2005 was approximately $398,474.70. This amount was computed using the average
of the bid and ask price as of July 1, 2005, which was $0.0095.
TABLE OF CONTENTS
PART I
Item 1. Description of Business
Item 2. Description of Property
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
Item 6. Management's Discussion and Analysis or Plan of Operation
Item 7. Financial Statements
Item 8. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
Item 8A. Controls and Procedures
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act
Item 10. Executive Compensation
Item 11. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholders Matters
Item 12. Certain Relationships and Related Transactions
Item 13. Exhibits and Reports on Form 8-K
Item 14. Principal Accountant Fees and Services
SIGNATURES
FORWARD-LOOKING STATEMENTS
The information set forth herein should be read in conjunction with the
Company's financial statements and related footnotes included elsewhere herein.
The Company's actual results could differ materially from those anticipated by
its management.
PART I
ITEM 1 - DESCRIPTION OF BUSINESS
InfiniCall Corporation f/k/a FoneFriend, Inc. ("InfiniCall" or the "Company") is
a development stage company and currently has no revenues. It was originally
incorporated in 1992 in Delaware under the name Picometrix, Inc., doing business
in an industry other than Internet telephony. After the Company's merger with
IJNT.Net, it was engaged in the provision of wireless communications services,
including Internet access services. Soon thereafter, it became a publicly traded
company under the name IJNT.Net. In 1997, it acquired another business and
changed its name to Universal Broadband Networks, Inc. ("UBN"), whose primary
business was the provision of Internet and related services using microwave
technology. On October 31, 2000, UBN filed a voluntary petition for
reorganization pursuant to Chapter 11, Title 11 of the United States Code, 11
U.S.C. 101 et seq., in the United States Bankruptcy Court for the District of
Eastern California. Pursuant to an Amended and Restated Plan of Merger dated
June 12, 2002, between FoneFriend, Inc. a Nevada corporation founded in April,
2001 ("FoneFriend Nevada") and UBN, which was approved by the Bankruptcy Court
and, in November 2002, UBN completed its acquisition of all the assets of
FoneFriend Nevada. Subsequent to this acquisition, FoneFriend Nevada was
dissolved and UBN, a Delaware corporation, changed its name to FoneFriend Inc.
("FoneFriend Delaware"). Fonefriend Delaware changed its name to InfiniCall
Corporation in 2004. Shares of InfiniCall's common stock are currently quoted in
the Over-The-Counter Bulletin Board market under the stock symbol "INFL.OB". The
Company maintainesd its corporate offices at 5670 Wilshire Blvd., Ste. 2605, Los
Angeles, California 90036. The Company's telephone number is: (310) 289-2338.
The corporate e-mail address is: ir@infinicall.net.
PURPOSE AND GOAL
The Company is in the process of becoming a provider of Internet-based
telecommunications services in the U.S. and worldwide by seizing on the current
and future opportunities in Voice-over-Internet-Protocol ("VoIP") telephony
technology and voice-data integrated communications services in the e-commerce
market place.
The management believes it has the vision, insight, and expertise to develop a
unique, highly profitable venture in the Internet telephony marketplace. The
Company may raise funding through succeeding public offerings of its securities,
or other sources of private capital and/or debt financing.
BUSINESS OF THE COMPANY
OVERVIEW
InfiniCall Corporation provides telecommunications services to consumers. It's
flagship product has been its long-distance telephone service that permits
subscribers to complete domestic and international calls using a combination of
software, a personal computer and an internet connection. Currently InfiniCall's
long-distance service is offered to consumers at $15.00 per month for unlimited
domestic calls. Calls to a selected group of countries are also included with
unlimited time access as part of the monthly subscription fee. The Company has
grown to supplying services to more than 238,000 subscribers.
All of InfiniCall's consumer subscribers use proprietary software to make and
receive telephone calls from their personal computer. InfiniCall plans, in the
near future, to offer subscribers a hardware device that will allow conventional
telephones to access InfiniCall services. Additionally InfiniCall will begin
assigning telephone numbers that are reachable by all conventional telephone
networks. InfiniCall subscribers will thus be able to give-out a telephone
number that they may be reached at by any land-line or wireless telephone
network.
INTERNET TELEPHONY INDUSTRY BACKGROUND
The Voice over Internet Protocol ("VoIP") industry has grown dramatically from
the early days of calls made through personal computers. According to a research
study from Insight Research, VoIP-based services will grow from $13.0 billion in
2002 to nearly $197.0 billion in 2007, representing a significant opportunity
for VoIP providers. Internet telephony ("IT") has emerged as a low cost
alternative to traditional long distance telephone services and is rapidly
catching the attention of the general public as well as corporate users. As
quality of service improves, technology matures, e-commerce develops and the
cost (savings) become compelling, people worldwide will begin to use the
Internet as a primary source for telephony applications. Replacing traditional
long distance telephony with Internet telephony will yield significant cost
savings to users worldwide. In fact, these costs have been dropping over time,
falling from approximately $0.30 per minute in 1988 to approximately $0.05 per
minute in 2004, and it is estimated that these costs will continue to drop as IT
technology advances. Whereas the IT market was less than 1% in 1997, analysts
have predicted that Internet telephony could account for more than 20% by 2007.
International Data Corporation projects that the Internet telephony market will
grow rapidly with call minutes from businesses reaching nearly 230 billion
minutes in 2005, up from only 328 million minutes in 2000. According to industry
research conducted by several marketing research firms, such as Frost &
Sullivan, International Data Corporation and Probe Research, significant growth
is forecasted for the Internet telephony industry. Highlights of recent reports
include the following predictions:
o An estimated sixty million personal computer (PC) users made one or more
calls over the Internet in 2004.
o International telephone long-distance revenues were estimated at over $80
Billion worldwide in 2004. o Fifteen percent of the world's phone calls
will likely be over the Internet networks by 2007.
o Internet telephony sales are forecast to explode to $349 billion in 2006,
as quality and services improve.
Internet telephony has the potential to enable companies to substantially reduce
their telecommunications costs. Internet telephone calls are less expensive than
traditional international long distance calls primarily because they are routed
over the Internet, bypassing a significant portion of international long
distance tariffs. Packet-based networks, unlike circuit-based networks, do not
require that a fixed amount of bandwidth be reserved for each call. That allows
voice and data calls to be pooled, which means that packet networks can carry
more calls with the same amount of bandwidth. This greater efficiency creates
network cost savings that can be passed onto the consumer in the form of lower
long distance rates.
COMPETITION
THE INTERNET TELEPHONY MARKET IS HIGHLY COMPETITIVE.
Many other companies offer services similar to the Company's service, and many
of those companies have already established a substantial presence in the IP
telephony market. Competitor companies currently have substantially greater
financial, distribution and marketing resources than the Company. As a result,
we may not be able to compete successfully in the Internet Telephony market.
There is a risk that new product introductions or enhancements by competitors
could reduce the sales or market acceptance of our services. To become and
remain competitive, we plan to continue to invest significant resources in
research and development, sales and marketing and customer support. However,
given the formidable competition, the Company continues to run the risk that it
will not have sufficient resources to withstand these market forces and may seek
a consolidation or strategic alliance with one or more of its competitors.
INTERNATIONAL COMMUNICATIONS SERVICES
Internationally, the competitive marketplace varies from region to region. In
markets where the telecommunications marketplace has been fully deregulated, the
competition continues to increase. Even recently deregulated markets, such as
India, allows for new entrants to establish a foothold and offer competitive
services more easily. Competitors include both government owned phone companies
as well as emerging competitive carriers. As consumers and telecommunications
providers have come to understand the benefits that may be realized from
transmitting voice over the Internet, a substantial number of companies have
emerged to provide VoIP services. The principal competitive factors in the
market include: price, quality of service, breadth of geographic presence,
customer service, reliability, network capacity, the availability of enhanced
communications services and brand recognition.
COMPETITORS
Some of the many entrants into the VoIP industry are Vonage America Inc.,
Packet8, Primus' Lingo and Net2Phone.
Dialpad and Skype are two significant Internet telephony companies with more
than 100 million registered users combined. Both companies offer software that
is downloaded to a user's computer and internet telephone calls are then placed
through the computer while the user is online. The majority of these calls are
computer-to-computer. Computer-to-PSTN (Public Switched Telephone Network) calls
are increasing.
Overall, the Company's competition is from:
1. incumbent wired PSTN network Providers and resellers.
2. new entrant Internet gateway service providers,
3. Internet telephony software providers, and
With respect to the bulk of all calls made via PSTN (the "telephone company"),
in 1997, the average domestic toll call cost 17 cents per minute and the average
international call cost 74 cents per minute. Current pricing schemes by the
largest providers-AT&T, MCI and Sprint-as well as competition from newer
entrants such as Vartec and IXC continue to push pricing downward for domestic
calls, but not dramatically for international calls. Regarding Internet
telephony gateway providers, numerous companies have entered the Internet
telephony marketplace recently, and are focusing on corporate users to whom the
cost savings resulting from infrastructure gateway switches are sold, as opposed
to the residential or small home office user. Internet telephony software
companies, of which Net2Phone and Skype are leading providers, target the
technical PC user. Companies such as Vonage target traditional residential and
business markets. Cost savings are the major benefit to the user who already has
incurred the cost of a PC and only needs to add telephony software and the cost
of an Internet service provider (ISP) account.
The Company's direct competition primarily comes from Net2Phone and Vonage
America Inc., both U.S. companies based in New Jersey.. Net2Phone uses its own
proprietary network infrastructure and Vonage is limited to customers who elect
to purchase broadband internet service such as DSL or high-speed internet cable
service. For the most part, the Company's competitors currently utilize similar
technologies. However, they generally have a higher product cost, are higher
priced in the consumer market, require programming and/or some computer
knowledge and typically market a broadband VoIP product.
In addition, PSTN network companies, including, AT&T, Deutsche Telekom, and
Qwest, currently maintain, or plan to maintain, packet-switched networks to
route the voice traffic of other telecommunications companies. These companies
are large entities with substantial resources, and large budgets available for
research and development, which may eventually further enhance the quality and
acceptance of voice transmission over the Internet. However, many of these
companies are new to the Internet telephony market, and may not build brand
recognition among consumers for these services. These companies also may not
provide the range of products and services that are necessary to independently
provide a broad set of voice-enabled web services. AT&T, for example, has
attempted to enter the market but has focused its effort on the cable market and
it is unclear if it will continue to pursue voice over the Internet. Qwest has
taken steps to enter the market by building a high capacity network in the
United States. In addition, Qwest has also entered into a three-year strategic
alliance with Netscape to provide one-stop access to Internet services including
long distance calling, e-mail, voice mail, faxes, Internet access and conference
calls.
REVENUE SOURCES
MONTHLY SUBSCRIPTION FEE. In addition to the present subscriber fee of $15.00
per month, InfiniCall has begun offering a total of five levels of service which
will include (i) receiving unlimited calls and free telephone dialing service
for 5 minutes; (ii) for $5.00 per month, in addition to receiving a local
telephone number, the subscriber may complete 15 minutes of calls per day
throughout the United States; (iii) for $16.00 per month, a local telephone
number and unlimited calls within the United States with 300 minutes to selected
international markets; (iv) for $21 per month, a local telephone number,
unlimited calling within the United States and selected international markets
and; (v), for $30.00 per month, a local telephone number, unlimited United
States calling and broadband (DSL) service.
SUPPORT SERVICES
Customer Service
The Company will outsource major functions such as R&D, manufacturing, network
infrastructure and services, and Customer Relationship Management (CRM) to
eliminate the need for initial capital outlay, and minimize the requirement for
in-house resources, facilities, and competencies. As a result of our Services
and Marketing Agreement and Network Carrier Services Agreement with InfiniCom,
the Company has outsourced the infrastructure and services required to service
its customer base.
EMPLOYEES
The Company currently has two full time and three part time employees. We
believe our relationships with all personnel are good. The Company plans to hire
additional personnel at such time as our business growth demands.
Irrespective of whether the Company's cash assets prove to be inadequate to meet
the Company's operational needs, the Company might seek to compensate providers
of services by issuances of stock in lieu of cash.
The Company has no plans for any research and development in the next twelve
months. The Company has no plans at this time for purchases or sales of fixed
assets which would occur in the next twelve months.
The Company expects to hire about 5 to 10 employees in the next twelve months,
however, if it achieves a business growth, it may acquire or add employees of an
unknown number in the next twelve months.
The Company's auditor has issued a "going concern" qualification as part of his
opinion in the Audit Report. There is substantial doubt about the ability of the
Company to continue as a "going concern." The Company is a start up business and
currently has very limited capital and no capital commitments., other than its
equity credit line with Dutchess Private Equities, LP. The effects of such
conditions could easily be to cause the Company's bankruptcy, except there would
be no significant assets to liquidate in Bankruptcy.
SALE OF FONEFRIEND TECHNOLOGY TO YAP INTERNATIONAL
On July 2, 2004 thje Company entered into an Asset Purchase Agreement ("Purchase
Agreement") with YAP International, Inc. ("YAP") to transfer certain assets and
technology relating to the FoneFriend technology and related assets, which
assets and technology we determined were unnecessary under our revised Plan of
Operation, In exchange for 5,416,151 shares of the common stock of YAP as set
forth in the Company's Form 8-K dated October 28, 2004, on October 25, 2004, the
Company received a letter ("Yap Letter") from Yap which purported to rescind
that Purchase Agreement. The Purchase Agreement transferred to Yap certain
tangible and intangible assets of the Company relating to the FoneFriend Device
("Purchased Assets") in exchange for shares of the common stock of Yap ("Yap
Shares"). The Yap Letter did not specifically rescind any of the collateral
documents which were signed by the parties at the closing of the Yap transaction
nor did Yap return any of the Purchased Assets to the Company. The Yap shares
which were delivered to Yap's transfer agent specified the number of Yap shares
to be issued to the Company's shareholders without regards to the Liquidating
Trust which should have been addressed. The Company thereafter advised Yap that
it would not consent to a distribution negating the Liquidating Trust stock
position.
ITEM 2 - DESCRIPTION OF PROPERTY
On December 31, 2004, the Company relocated its offices to a office of
InfiniCom, which is located at 5670 Wilshire Blvd., Ste. 2605, Los Angeles,
California 90036. The telephone number is: (310) 289-2338. To date rent is being
waived and/or included as part of the services provided by InfiniCom Networks,
Inc.
ITEM 3 - LEGAL PROCEEDINGS
In October, 2003, the Company received notice of a lawsuit commenced against its
predecessor company, FoneFriend, Inc., a Nevada corporation ("FoneFriend of
Nevada"), seeking past due legal fees of approximately $21,000. The assets of
this predecessor company were acquired by the Company in a stock for assets
purchase transaction and FoneFriend of Nevada was dissolved. Should the Company
become a party to this litigation, it believes it has an affirmative defense as
to the amount sought and will attempt to negotiate a reduced settlement or
defend against such action should it be commenced.
In November, 2003, the Company has received a threat of litigation from the
bankrupt estate of Allegiance Telecom, seeking approximately $5,000. No lawsuit
has yet been commenced. Should the Company become a party to any such
litigation, it believes it has affirmative defenses to such charges and intends
to defend against any such action should it be commenced.
In January, 2003, the Company entered into a settlement agreement with a former
officer and director. As partial consideration under the settlement agreement,
the Company was required to pay plaintiff the sum of $20,000 on December 1,
2003. The plaintiff accepted a payment of $10,000 from the Company in December
of 2003 and agreed to accept a final payment of $12,500 on January 4, 2004. The
Company has not yet made the final payment to plaintiff. In accordance with the
terms of the settlement, the plaintiff may, upon the Court's order, file with
the Court a "Stipulation for Entry of Judgment." The Company intends to settle
this matter as soon as finances permit. The plaintiff has not yet moved to file
or enforce the judgment.
The Company was named as a party to a lawsuit filed by Mr. Mark Foglia early in
2005 against InfiniCom Networks Inc. as a result of what Mr. Foglia claims
InfiniCom Networks Inc. owes to him as a result of his efforts in exacting the
InfiniCall/InfiniCom Networks Inc. transaction. The Company has been indemnified
by InfiniCom Networks Inc. should Mr. Foglia sustain his claim.
The Company recently was sued in a Florida court by a creditor claiming a debt
of $5,000. The Company asserts that the Florida court lacked jurisdiction.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted by the Company to a vote of the Company's shareholders
through the solicitation of proxies or otherwise, during the fiscal year covered
by this report.
PART II
ITEM 5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Our common stock is currently quoted on the OTC Bulletin Board under the
symbol "INFL.OB". The following table shows the high and low prices of our
common stock since we began trading under the name of FoneFriend, Inc. on March
6, 2003, as reported by the National Daily Quotation Service and the
Over-The-Counter Bulletin Board. Prior to December 5, 2002, our common stock was
traded under the name of our predecessor company, Universal Broadband Networks,
Inc. (UBNTQ:OTCBB). For the period beginning with the fiscal year ended March
31, 2002, through December 5, 2002, our predecessor corporation was in
bankruptcy (under the name of Universal Broadband Networks, Inc.) and its common
stock traded at a high of $.02 (on April 1, 2002) and a low of $.003 (on
December 5, 2002), under the symbol "UBNTQ" as mentioned before.
FISCAL 2002 HIGH LOW
First Quarter N/A N/A
Second Quarter N/A N/A
Third Quarter N/A N/A
Fourth Quarter $ 4.00 $ 3.50
HIGH LOW
First Quarter $ 3.90 $ 2.01
Second Quarter $ 2.05 $ 0.14
Third Quarter $ 0.45 $ 0.13
FISCAL 2004
First Quarter $0.11 $0.04
Second Quarter $0.43 $0.11
Third Quarter $0.10 $0.03
There currently is a limited public market for InfiniCom's common stock which is
quoted on the Over the Counter Bulletin Board, and no assurance can be given
that a market will develop or that a shareholder ever will be able to liquidate
his investment without considerable delay, if at all. If a market should
develop, the price may be highly volatile. Unless and until InfiniCom's common
shares are quoted on the NASDAQ system or listed on a national securities
exchange, it is likely that the common shares will be defined as "penny stocks"
under the Exchange Act and SEC rules thereunder. The Exchange Act and penny
stock rules generally impose additional sales practice and disclosure
requirements upon broker-dealers who sell penny stocks to persons other than
certain "accredited investors" (generally, institutions with assets in excess of
$5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000, or $300,000 jointly with spouse) or in transactions
not recommended by the broker-dealer.
For transactions covered by the penny stock rules, the broker-dealer must make a
suitability determination for each purchaser and receive the purchaser's written
agreement prior to the sale. In addition, the broker-dealer must make certain
mandated disclosures in penny stock transactions, including the actual sale or
purchase price and actual bid and offer quotations, the compensation to be
received by the broker-dealer and certain associated persons, and deliver
certain disclosures required by the SEC. So long as InfiniCom's common shares
are considered "penny stocks", many brokers will be reluctant or will refuse to
effect transactions in InfiniCom's shares, and many lending institutions will
not permit the use of penny stocks as collateral for any loans.
(b) As of March 31, 2005, there were 610 shareholders of record of the Company's
common stock, par value $.001 per share, and no shareholders of preferred stock.
(c) The Company has neither declared nor paid any cash dividends on its common
stock, and it is not anticipated that any such dividend will be declared or paid
in the foreseeable future.
Effective August 11, 1993, the Securities and Exchange Commission (the
"Commission") adopted Rule 15g-9, which established the definition of a "penny
stock," for purposes relevant to the Company, as any equity security that has a
market price of less than $5.00 per share or with an exercise price of less than
$5.00 per share, subject to certain exceptions. For any transaction involving a
penny stock, unless exempt, the rules require: (i) that a broker or dealer
approve a person's account for transactions in penny stocks; and (ii) that the
broker or dealer receive from the investor a written agreement to the
transaction, setting forth the identity and quantity of the penny stock to be
purchased. In order to approve a person's account for transactions in penny
stocks, the broker or dealer must (i) obtain financial information and
investment experience and objectives of the person; and (ii) make a reasonable
determination that the transactions in penny stocks are suitable for that person
and that person has sufficient knowledge and experience in financial matters to
be capable of evaluating the risks of transactions in penny stocks. The broker
or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prepared by the Commission relating to the penny stock
market, which, in highlight form, (i) sets forth the basis on which the broker
or dealer made the suitability determination; and (ii) states that the broker or
dealer received a signed, written agreement from the investor prior to the
transaction. Disclosure also has to be made about the risks of investing in
penny stock in both public offerings and in secondary trading, and about
commissions payable to both the broker-dealer and the registered representative,
current quotations for the securities and the rights and remedies available to
an investor in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for the penny
stock held in the account and information on the limited market in penny stocks.
Dividends
The Company has not paid any dividends to date, and has no plans to do so in the
immediate future. Instead, we intend to retain all earnings, if any, for use in
the operation and expansion of our business and marketing plan.
ITEM 6 - PLAN OF OPERATION
PLAN OF OPERATION
The discussions contained in this filing contain "forward-looking statements"
that involve risk and uncertainties. These statements may be identified by the
use of terminology such as "believes", "expects", "may", "should", or
"anticipates", or expressing this terminology negatively or similar expressions
or by discussions of strategy. The cautionary statements made in this filing
should be read as being applicable to all related forward-looking statements
wherever they appear in this filing. Our actual results could differ materially
from those discussed in this filing. Important factors that could cause or
contribute to such differences include those discussed under the caption
entitled "risk factors," as well as those discussed elsewhere in this filing.
Background
InfiniCall Corporation is a development stage company and currently has no
revenues. It was originally incorporated in 1992 in Delaware under the name
Picometrix, Inc., doing business in an industry other than Internet telephony.
After the Company's merger with IJNT.Net, it was engaged in the provision of
wireless communications services, including Internet access services. Soon
thereafter, it became a publicly traded company under the name IJNT.Net. In
1997, it acquired another business and changed its name to Universal Broadband
Networks, Inc. ("UBN"), whose primary business was the provision of Internet and
related services using microwave technology. On October 31, 2000, UBN filed a
voluntary petition for reorganization pursuant to Chapter 11, Title 11 of the
United States Code, 11 U.S.C. 101 et seq., in the United States Bankruptcy Court
for the District of Eastern California. Pursuant to an Amended and Restated Plan
of Merger dated June 12, 2002, between FoneFriend, Inc. a Nevada corporation
founded in April, 2001 ("FoneFriend Nevada") and UBN, which was approved by the
Bankruptcy Court and, on November 21, 2002, UBN completed its acquisition of all
the assets of FoneFriend Nevada. Subsequent to this acquisition, FoneFriend
Nevada was dissolved and UBN, a Delaware corporation, changed its name to
FoneFriend Inc. ("FoneFriend Delaware"). Fonefriend Delaware changed its name to
InfiniCall Corporation in 2004. Shares of InfiniCall's common stock are
currently quoted in the Over-The-Counter Bulletin Board market under the stock
symbol "INFL.OB". The Company maintained its corporate offices in the State of
California at 5670 Wilshire Blvd., Ste. 2605, Los Angeles, California 90036. The
Company's telephone number is: (310) 289-2338. The corporate e-mail address is:
ir@infinicall.net.
InfiniCom Acquisition
On July 1, 2004, the Company completed the acquisition of 50,000 Voice over
Internet Protocol ("VoIP") customers from InfiniCom Networks, Inc., a California
corporation, ("InfiniCom") whereby the Company issued 96,428,571 shares of our
common stock to InfiniCom, in addition to cash of $250,000 and a promissory note
for $500,000. Further, on July 8, 2004, the Company acquired an additional
10,000 VoIP customers from InfiniCom in exchange for 19,285,714 shares of common
stock and a promissory note for $150,000. Both promissory notes bear simple
interest at the rate of six (6%) percent per annum and are due upon demand.
To date, InfiniCom has transitioned in excess of 180,000 additional
customer/subscribers to the Company's database. Agreements for the additional
customers are presently being negotiated with the understanding that the cost of
such additional customers will not exceed the cost of the original subscribers.
At the onset of the original transaction between InfiniCall and InfiniCom,
InfiniCall did not possess the banking relationships necessary to accept credit
card payments from its customers. InfiniCall had represented to InfiniCom that
it had sufficient banking relationships to support the credit card acceptance
requirement. InfiniCom agreed to provide the card acceptance work while
InfiniCall secured its own bank card merchant processing account.
InfiniCall had represented to InfiniCom that it had the capacity to directly
service it's customers. InfiniCall did not have the manpower, systems or
organizational structure to support customer care. InfiniCom sourced a
third-party vendor to supply customer care functions. Under the terms of the
original agreement with InfiniCom, InfiniCall should have realized a profit of
$2.20 from each subscriber for every full billing month. The business model was
built principally around the agreement InfiniCom has with its underlying
telecommunication providers. The principal carrier agreement under which
InfiniCall's customers would complete their calls specified a price of $0.005
for all continental United States terminated minutes; $0.009 for all `On Net'
international destinations; and a variable rate for all other international and
non-continental U.S. destinations. The agreement also provided for monthly
billing with payment due within 10 calendar days of invoice presentation.
InfiniCall had estimated that the number of minutes the average subscriber would
demand from the network would be 2,100 for the month. Originally InfiniCom was
required to make a deposit with its telecommunications provider of $660,000
based on the original 50,000 subscribers anticipated under the original
agreement with InfiniCall. The source of this deposit was to be from InfiniCall
as part of the subsctiber transaction. The deposit was due to InfiniCom's
telecommunications provider prior to customer turn-up. InfiniCom suffered a rate
increase from it's telecommunications provider when it was unable to make the
required deposit. Additionally, InfiniCom was put on a `Credit Hold' and was
placed on weekly billing with payments due within 3 business days.
Original Cost New Cost
1st Month Estimate 791,280 1,043,280
Subsequent Month Estimate 602,880 794,880
Actual cost for the first month was $1,031,917 on subscription billings of
$897,660, a loss of $134,257 not inclusive of other operating costs. At the
beginning of August, InfiniCall management had represented that InfiniCom would
start receiving payments from the proceeds of stock sales allowed pursuant to
InfiiCall's current SB-2. As earlier stated, these payments were never made as
agreed. InfiniCom secured a third-party investor to support the customer
traffic.
On October 4, 2004 InfiniCall was unable to make payments sufficient to cover
the operating costs that had accrued since the beginning of July. In order for a
third-party investor to continue to support the network usage of the subscriber
base, the operating structure offered to InfiniCall would be transferred to the
investor on a temporary basis. InfiniCom continued to work with InfiniCall
management to reach a new agreement and secure financing for its activities.
InfiniCall presently has agreed in principal with InfiniCom for a new rate
structure which InfiniCom has exacted from the underlying carrier and revenues
should become realized by September, 2005.
Our New Plan of Operation
The Company acquires customers/subscribers by direct marketing, viral marketing
and performance based Internet marketing. We forecast that much of our customer
growth will come from performance based Internet marketing agreements. The
advantage of performance based Internet marketing agreements is that there is no
cost to the Company without compensating revenues.
An example of one such performance based marketing agreement we have entered
into is the agreement with InfiniCom. InfiniCom agrees to supply subscribers at
a cost of $150 each. Annual revenue from each subscriber is $180 under this
arrangement. InfiniCom warrants that it will replace the customer if any
particular customer drops service with us prior to 52 weeks from the date that
customer is delivered.
Our customers utilize a proprietary software program, offered by InfiniCom,
which allows each customer to place long distance and international telephone
calls directly from its desktop or laptop computer. The customer is offered an
unlimited calling plan, at a rate of $15 U.S., per month, to selected countries
such as the U.S., Canada, Western Europe and certain countries in Asia.
We use third-party providers to support customer care. After certain subscriber
counts have been achieved, we may decide to support internal customer care
operations from cash flow.
We are currently considering offering our customers a stand-alone, Internet
appliance device (much like our previous FoneFriend device), which will allow
our customers to use their ordinary telephone handset to make calls using our
service. We plan to offer this product at no cost to our customers (and
potential customers) in exchange for their commitment to a 24-month service
agreement. Alternatively, we may offer such product at a charge to those
customers who use our service on a month-to-month basis.
Going Concern Opinion
We estimate we will need approximately $2,000,000 in additional capital during
the next 12 months to cover overhead and develop our business. Debt equity
financing, is intended to address our capital requirements. If we develop
revenues from operations during 2005 as a result of the InfiniCom transaction,
the need for capital at the projected level will decrease.
Overall, we have funded our cash needs from inception through March 31, 2004,
with a series of debt and equity transactions, including an Equity Line of
Credit. The failure of the Equity Line of Credit or other equity financing to
satisfy our working capital needs would have a material adverse effect on our
operations and financial condition.
ITEM 7 - FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Infinicall Corporation
We have audited the accompanying balance sheet of Infinicall Corporation as of
March 31, 2005, and the related statements of income, stockholders' deficit, and
cash flows for the year then ended. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Infinicall Corporation as of
March 31, 2005, and the results of its operations and its cash flows for the
year then ended in conformity with accounting principles generally accepted in
the United States of America.
The financial statements for the year ended March 31, 2004 were audited by other
accountants whose report dated July 7, 2004 on those financial statements
included an explanatory paragraph describing conditions that raised substantial
doubt about the Company's ability to continue as a going concern.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 9, conditions exist which
raised substantial doubt about the Company's ability to continue as a going
concern unless it is able to generate sufficient cash flows to meet its
obligations and sustain its operations. Management's plans in regard to these
matters are also described in Note 9. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Jaspers + Hall, PC
Jaspers + Hall, PC
Denver, CO
August 17, 2005
INFINICALL CORPORATION
(FORMERLY, FONEFRIEND, INC.)
(A Development Stage Company)
BALANCE SHEETS
March 31,
2005 2004
----------------------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,244 $ 94
Inventory 6,000
PROPERTY AND EQUIPMENT, net 9,370 12,125
Other assets:
Technology rights - net of amortization 262,887
Deposits 4,560
----------------------------------
TOTAL ASSETS $ 14,614 $ 285,666
==================================
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 385,390 $ 364,204
Notes payable 543,000 141,178
----------------------------------
Total current liabilities 928,390 505,382
Long term liabilities - notes payable 25,000
Total liabilities 530,382
STOCKHOLDERS' DEFICIT
Common stock, $0.001 par value; 200,000,000 shares authorized;
168,229,598 shares issued and outstanding 168,226 17,758
Additional paid-in capital 21,508,543 6,428,604
Prepaid consulting expenses - (776,050)
Accumulated deficit (22,590,545) (5,915,028)
----------------------------------
Total stockholders' deficit (913,776) (244,716)
----------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 14,614 $ 285,666
==================================
The accompanying notes are an integral part of these financial statements.
INFINICALL CORPORATION
(FORMERLY, FONEFRIEND, INC.)
(A Development Stage Company)
STATEMENTS OF OPERATIONS
YEARS ENDED MARCH 31, 2005 AND 2004
AND THE PERIOD FROM APRIL 24, 2001 (INCEPTION) TO MARCH 31, 2005
Cumulative
from inception
Year ended Year ended (April 24, 2001) to
31-Mar-05 31-Mar-04 31-Mar-05
---------------------------------------------
Net revenues $ - $ - $ -
---------------------------------------------
Operating expenses:
General and administrative 845,508 206,588 1,979,430
Impairment of investment and intangible assets 14,070,934 844,862 15,780,903
- -
Consulting expenses 1,676,861 1,816,196 4,190,567
Total Operating Expenses 16,593,303 2,867,646 21,950,900
---------------------------------------------
Operating loss (16,593,303) (2,867,646) (21,950,900)
---------------------------------------------
Non-operating income (expense):
Interest expense (64,698) (9,705) (74,403)
Litigation settlement (16,716) (81,940) (98,656)
---------------------------------------------
Total non-operating expense (81,414) (91,645) (173,059)
---------------------------------------------
Loss before income tax (16,674,717) (2,959,291) (22,123,959)
Provision for income taxes (800) (800) (2,400)
---------------------------------------------
Net Loss (16,675,517) (2,960,091) (22,126,359)
Dividend paid to preferred shareholders - 464,186 464,186
---------------------------------------------
Net loss applicable to common shareholders $(16,675,517) $(3,424,277) $(22,590,545)
=============================================
Basic and diluted weighted average number of common
stock outstanding 144,066,034 10,825,173
==============================
Basic and diluted net loss per share for common stock (0.116) ($0.32)
==============================
The accompanying notes are an integral part of these financial statements.
* Weighted average number of shares used to compute basic and diluted loss per
share is the same since the effect of dilutive securities is antidilutive
INFINICALL CORPORATION
(FORMERLY, FONEFRIEND, INC.)
STATEMENT OF STOCKHOLDER' EQUITY (DEFICIT)
FOR THE PERIOD APRIL 24, 2001 (INCEPTION) TO MARCH 31, 2005
Additional Unamortized Total
Preferred shares Common shares Paid - In prepaid Accumulated Stockholders'
No. shares Par Value No. shares Par Value Capital consulting Deficit Equity (deficit)
fees
------------------------------------------------------------------------------------------------------------------------------------
Balance at July 1, 2002 $ - 8,956,361 8,956 3,069,182 $ - (1,036,686) 2,041,452
-
Loss from operations (211,316) (211,316)
Common Shares issued on 9/30/2002 85,500 86 427,415 427,501
----------------------------------------------------------------------------------------------------
Balance at September 30, 2002 9,041,861 9,042 3,496,597 (1,248,002) 2,257,637
Loss from Operations (118,281) (118,281)
Common Shares cancelled (300,000) (300) (300)
Common shares issued on 11/21/2002 58,139 58 29,942 30,000
----------------------------------------------------------------------------------------------------
Total common shareholders'
equity pre-merger, 11/21/2002 8,800,000 8,800 3,526,539 (1,366,283) 2,169,056
Shares cancelled upon merger (8,800,000) (8,800)
Merger of FoneFriend, Inc. (Nevada
Corporation) on November 21, 2002
with and into FoneFriend, Inc.
(Delaware Corp.):
Exchange of Nevada shares for Delaware shares 2,200,000 2,200
Issued new Delaware shares to
management consultants and
Liquidating Trust for Creditors 5,446,000 5,446 1,154
Shares issued for consulting 825,000 825 213,675 214,500
Loss from operations from 11/21/2002
to 3/31/2003 (1,124,468) (1,124,468)
Balance at March 31, 2003 820,361 820 8,471,000 8,471 3,741,368 (2,490,751) 1,259,908
----------------------------------------------------------------------------------------------------
Preferred Shares Cancelled (6,000) (6) 6 -
Shares issued for consulting & prepaid
consulting 6,225,000 6,225 2,170,064 (776,050) 1,400,239
Shares issued for legal settlement 60,000 60 41,940 42,000
Conversion of preferred stock to
common stock (814,361) (814) 814,361 814 -
Shares issued for dividend to
preferred shareholders 2,443,083 2,443 461,743 464,186
Shares issued for legal fees 17,500 17 13,483 13,500
Shares cancelled (272,500) (272) - (272)
Loss for the year ending March 31, 2004 (3,424,277) (3,424,277)
----------------------------------------------------------------------------------------------------
Balance at March 31, 2004 - $ - 17,758,444 17,758 6,428,604 (776,050) (5,915,028) (244,716)
Amortization of prepaid fees 776,050 776,050
Shares issued for legal fees 200,000 200 17,800 18,000
Shares issued for consulting 7,874,500 $7,876 $820,566 828,442
Shares issued for debt settlement 8,469,273 $8,469 $184,123 192,592
Shares issued for option 350,000 $350 $3,150 3,500
Sgares issued for acquisitions 126,073,749 $126,073 $12,977,682 13,103,755
Shares issued for services 625,000 $625 $30,375 31,000
Shares issued to Dutchess 6,874,632 $6,875 $1,046,243 $1,053,118
Net loss ($16,675,517) ($16,675,517)
----------------------------------------------------------------------------------------------------
Balance March 31, 2005 168,225,598 $ 168,226 $ 21,508,543 $ - $ (22,590,545) $ (913,776)
====================================================================================================
The accompanying notes are an integral part of these financial statements.
INFINICALL CORPORATION
(FORMERLY, FONEFRIEND, INC.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Cumulative
from inception
(April 24, 2003)
to March 31,
2005 2004 2005
------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (16,675,517)$ (3,424,277) $ (22,590,545)
Adjustments to reconcile loss from development
stage operations to net cash used in operating
activities
Shares issued for compensation, consulting
services & prepaid expense 1,026,455 2,176,289 6,952,583
Shares issued for legal settlement 68,376 42,000 110,376
Shares issued for legal fees 18,000 13,500 31,500
Shares issued for interest expense 16,500 - 16,500
Shares issued for expenses 195,577 195,577
Loss on settlement of debt 16,716 - 16,716
Shares issued for dividends to preferred shareholders - 464,186 464,186
Write off of inventory 6,000 10,000 16,000
Capitalized development costs - - (1,626,305)
Impairment of capitalized development costs - 694,862 1,559,969
Impairment of long lived assets 14,070,934 14,070,934
Impairment of investment - 150,000 150,000
Depreciation and amortization expense 667,216 37,821 709,889
(Increase) decrease in current assets:
Decrease in prepaid expenses - (619,453) (633,050)
Purchase of inventory equipment - - (16,000)
Decrease in Deposits 4,561 (4,561) 4,561
Increase (decrease) in current liabilities:
(Decrease) in accounts payable and accrued expenses (4,423) 354,216 329,536
Litigation settlement payable - - 20,000
Increase in consulting contract payable 87,140 - 87,140
Other - - (23,096)
------------------------------------------
Total adjustments 16,173,052 3,318,860 22,437,016
------------------------------------------
Net cash used by development stage operations (502,465) (105,417) (153,529)
------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment - - (15,840)
Acquisition of technology license - - (300,000)
Acquisition of investment - - (150,000)
Cash payment to universal broadband - - (50,000)
Cash payments towards the acquisition of customer list (250,000) - (250,000)
------------------------------------------
Net cash used in investing activities (250,000) - (765,840)
------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans payable 500,000 85,290 686,188
Loan from officers and others (6,226) - (26,236)
Issuance of stock for cash 263,841 - 264,661
------------------------------------------
Net cash provided by financing activities 757,615 85,290 924,613
------------------------------------------
Net increase (decrease) in cash & cash equivalents 5,150 (20,127) 5,244
CASH & CASH EQUIVALENTS, BEGINNING BALANCE 94 20,221 -
------------------------------------------
CASH & CASH EQUIVALENTS, ENDING BALANCE $ 5,244 $ 94 $ 5,244
==========================================
The accompanying notes are an integral part of these financial statements.
INFINICALL CORPORATION
(FORMERLY, FONEFRIEND INC.)
A Development stage Company)
NOTES FINANCIAL STATEMENTS
March 31, 2005
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Infinicall Corporation formerly, FoneFriend, Inc. (the "Company") was
incorporated on April 24,2001, under the laws of the State of Nevada, and on
November 21, 2002, was merged with and into FoneFriend, Inc., a Delaware
corporation. The Company maintains corporate offices at 8447 Wilshire Blvd., 5th
Floor, Beverly Hills, California 90211. The Company's telephone number is: (323)
653-6110.
The Company is a development stage enterprise, as defined in Financial
Accounting Standards Board No. 7. The Company's planned principal operations
have not commenced. The primary business of the Company is to market an Internet
telephony device and related services to customers worldwide, called the
"FoneFriend". The underlying technology of FoneFriend has been licensed by the
Company from FoneFriend Systems, Inc. and will enable the Company's subscribers
to make and receive unlimited long distance telephone calls over the Internet,
using only their standard residential telephone set (without the need for a
computer), for a low monthly fee. Due to the small cost of transmitting calls
over the Internet, the Company anticipates that it will realize significant
profit margins, in excess of the traditional telecommunications industry.
On July 1, 2004 the Company completed its acquisition of 50,000 Voice over
Internet Protocol (VoIP) customers from InfiniCom Networks, Inc., a California
corporation, whereby the Company issued 96,428,571 shares of its common stock to
InfiniCom, in addition to cash of $250,000 and a promissory note for $500,000
with simple interest at the rate of six (6%) percent, per annum. Prior to the
Acquisition the Company had approximately 23,114,603 common shares issued and
outstanding. As a result of the Acquisition the shares outstanding increased to
119,543,174 of which InfiniCom controls 80.66%.
As of December 31, 2004, Infinicom Networks, Inc has 126,073,749 shares of the
Company which results in them owning 74.94% of the shares of the Company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Change in Fiscal Year End
The Company's fiscal year is March 31. The Company changed its fiscal year end
in 2003, from April 30 to March 31.
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.
Cash and Cash Equivalents
Cash and cash equivalents include cash in hand and cash in time deposits,
certificates of deposit and all highly liquid debt instruments with original
maturities of three months or less.
Inventories - Equipment
Inventories - equipment are valued at the lower of cost (determined on a
weighted average basis) or market. The Management compares the cost of
inventories with the market value and allowance is made for writing down the
inventories to there market value, if lower.
Property & Equipment
Property and equipment, comprising of furniture and office equipment, are stated
at cost. Expenditures for maintenance and repairs are charged to earnings as
incurred; additions, renewals and betterments are capitalized. When property and
equipment are retired or otherwise disposed of, the related cost and accumulated
depreciation are removed from the respective accounts, and any gain or loss is
included in operations. Depreciation of property and equipment is provided using
the straight-line method for substantially all assets with estimated lives of 5
years.
Capitalized Development Costs
Capitalized development costs consisted of expenditures made by the Company to
improve the product and develop marketing channels for the product, and which
were deemed by management to have future value to the Company. Such capitalized
development costs were being amortized over their useful lives. The company
evaluated the value of the Capitalized development costs and recorded an
impairment charge equal to the value of the Capitalized development costs (note
6).
Long-Lived Assets
Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144"), which addresses financial accounting and reporting for the
impairment or disposal of long-lived assets and supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," and the accounting and reporting provisions of APB Opinion No.
30, "Reporting the Results of Operations for a Disposal of a Segment of a
Business." The Company periodically evaluates the carrying value of long-lived
assets to be held and used in accordance with SFAS 144. SFAS 144 requires
impairment losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows estimated
to be generated by those assets are less than the assets' carrying amounts. In
that event, a loss is recognized based on the amount by which the carrying
amount exceeds the fair market value of the long-lived assets. Loss on
long-lived assets to be disposed of is determined in a similar manner, except
that fair market values are reduced for the cost of disposal.
Accounts Payable & Accrued Expenses
Accounts payable and accrued expenses consist of the following on March 31,
2004:
Accounts payable $ 27,528
Accrued consulting 73,641
Accrued expenses- other 284,221
-------------
$ 385,390
Revenue Recognition
The Company's revenue recognition policies are in compliance with Staff
accounting bulletin (SAB) 104. Revenue is recognized when services are rendered,
the service cost is fixed or determinable, the service is delivered, no other
significant obligations of the Company exist and collectibility is reasonably
assured. Generally, the Company will extend credit to its customers/clients and
would not require collateral. The Company will perform ongoing credit
evaluations of its customers/clients. The company did not earn any revenue
through March 31, 2005.
Research and Development
Expenditures for software development costs and research are expensed as
incurred. Such costs are required to be expensed until the point that
technological feasibility is established. The period between achieving
technological feasibility and the general availability of such software has been
short. Consequently, costs otherwise capitalizable after technological
feasibility is achieved are generally expensed because they are insignificant.
Income Taxes
Deferred taxes are provided for on a liability method for temporary differences
between the financial reporting and tax basis of assets and liabilities that
will result in taxable or deductible amounts in the future. Deferred tax assets
and liabilities are adjusted for the effects of changes in tax laws and rates on
the date of enactment. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion
or all of the deferred tax assets will be realized.
Fair Value of Financial Instruments
Statement of financial accounting standard No. 107, Disclosures about fair value
of financial instruments, requires that the Company disclose estimated fair
values of financial instruments. The carrying amounts reported in the statements
of financial position for current assets and current liabilities qualifying as
financial instruments are a reasonable estimate of fair value.
Basic and Diluted Net Loss per Share
Net loss per share is calculated in accordance with the Statement of financial
accounting standards No. 128 (SFAS No. 128), "Earnings per share". SFAS No. 128
superseded Accounting Principles Board Opinion No.15 (APB 15). Net loss per
share for all periods presented has been restated to reflect the adoption of
SFAS No. 128. Basic net loss per share is based upon the weighted average number
of common shares outstanding. Diluted net loss per share is based on the
assumption that all dilutive convertible shares and stock options were converted
or exercised. Dilution is computed by applying the treasury stock method. Under
this method, options and warrants are assumed to be exercised at the beginning
of the period (or at the time of issuance, if later), and as if funds obtained
thereby were used to purchase common stock at the average market price during
the period.
Statement of Cash Flows
In accordance with Statement of Financial Accounting Standards No. 95,
"Statement of Cash Flows," cash flows from the Company's operations is
calculated based upon the local currencies. As a result, amounts related to
assets and liabilities reported on the statement of cash flows will not
necessarily agree with changes in the corresponding balances on the balance
sheet.
Segment Reporting
Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure
About Segments of an Enterprise and Related Information" requires use of the
"management approach" model for segment reporting. The management approach model
is based on the way a company's management organizes segments within the company
for making operating decisions and assessing performance. Reportable segments
are based on products and services, geography, legal structure, management
structure, or any other manner in which management disaggregates a company. SFAS
131 has no effect on the Company's consolidated financial statements as
substantially all of the Company's operations are conducted in one industry
segment.
Issuance of Shares for Service
The Company accounts for the issuance of equity instruments to acquire goods and
services based on the fair value of the goods and services or the fair value of
the equity instrument at the time of issuance, whichever is more reliably
measurable.
Reclassifications
Certain comparative amounts have been reclassified to conform with the current
year's presentation.
Recent Pronouncements
On April 30 2003, the FASB issued FASB Statement No. 149 (FAS 149), Amendment of
Statement 133 on Derivative Instruments and Hedging Activities. FAS 149 amends
and clarifies the accounting guidance on (1) derivative instruments (including
certain derivative instruments embedded in other contracts) and (2) hedging
activities that fall within the scope of FASB Statement No. 133 (FAS 133),
Accounting for Derivative Instruments and Hedging Activities. FAS 149 also
amends certain other existing pronouncements, which will result in more
consistent reporting of contracts that are derivatives in their entirety or that
contain embedded derivatives that warrant separate accounting. FAS 149 is
effective (1) for contracts entered into or modified after June 30, 2003, with
certain exceptions, and (2) for hedging relationships designated after June 30,
2003. The guidance is to be applied prospectively. The adoption of SFAS No. 149
does not have a material impact on the Company's financial position or results
of operations or cash flows.
On May 15, 2003, the Financial Accounting Standards Board (FASB) issued FASB
Statement No. 150 (FAS 150), Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity. FAS 150 changes the accounting
for certain financial instruments that, under previous guidance, could be
classified as equity or "mezzanine" equity, by now requiring those instruments
to be classified as liabilities (or assets in some circumstances) in the
statement of financial position. Further, FAS 150 requires disclosure regarding
the terms of those instruments and settlement alternatives. FAS 150 affects an
entity's classification of the following freestanding instruments: a)
Mandatorily redeemable instruments b) Financial instruments to repurchase an
entity's own equity instruments c) Financial instruments embodying obligations
that the issuer must or could choose to settle by issuing a variable number of
its shares or other equity instruments based solely on (i) a fixed monetary
amount known at inception or (ii) something other than changes in its own equity
instruments d) FAS 150 does not apply to features embedded in a financial
instrument that is not a derivative in its entirety. The guidance in FAS 150 is
generally effective for all financial instruments entered into or modified after
May 31, 2003, and is otherwise effective at the beginning of the first interim
period beginning after June 15, 2003. For private companies, mandatorily
redeemable financial instruments are subject to the provisions of FAS 150 for
the fiscal period beginning after December 15, 2003. The adoption of SFAS No.
150 does not have a material impact on the Company's financial position or
results of operations or cash flows.
In December 2003, the Financial Accounting Standards Board (FASB) issued a
revised Interpretation No. 46, "Consolidation of Variable Interest Entities"
(FIN 46R). FIN 46R addresses consolidation by business enterprises of variable
interest entities and significantly changes the consolidation application of
consolidation policies to variable interest entities and, thus improves
comparability between enterprises engaged in similar activities when those
activities are conducted through variable interest entities. The Company does
not hold any variable interest entities.
In March 2004, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue No. 03-1, "The Meaning of Other-Than-Temporary Impairment and its
Application to Certain Investments." The EITF reached a consensus about the
criteria that should be used to determine when an investment is considered
impaired, whether that impairment is other-than-temporary, and the measurement
of an impairment loss and how that criteria should be applied to investments
accounted for under SFAS No. 115, "ACCOUNTING IN CERTAIN INVESTMENTS IN DEBT AND
EQUITY SECURITIES." EITF 03-01 also included accounting considerations
subsequent to the recognition of an other-than-temporary impairment and requires
certain disclosures about unrealized losses that have not been recognized as
other-than-temporary impairments. Additionally, EITF 03-01 includes new
disclosure requirements for investments that are deemed to be temporarily
impaired. In September 2004, the Financial Accounting Standards Board (FASB)
delayed the accounting provisions of EITF 03-01; however the disclosure
requirements remain effective for annual reports ending after June 15, 2004. The
Company will evaluate the impact of EITF 03-01 once final guidance is issued.
In December 2004, the FASB issued SFAS No. 123(R) (revised 2004), "Share-Eased
Payment", which amends FASB Statement No.123 and will be effective for public
companies for interim or annual periods beginning after June 15,2005. The new
standard will require entities to expense employee stock options and other
share-based payments. The new standard may be adopted in one of three ways - the
modified prospective transition method, a variation of the modified prospective
transition method or the modified retrospective transition method. The Company
is evaluating how it will adopt the standard and evaluating the effect that the
adoption of SF AS 123(R) will have on our financial position and results of
operations.
In November 2004, the FASB issued SFAS No. 151, Inventory Costs, an amendment of
ARB No. 43, Chapter 4. This statement amends the guidance in ARB No.43, Chapter
4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle
facility expense, freight, handling costs, and wasted material (spoilage).
Paragraph 5 of ARB No.43, Chapter 4, previously stated that "...under some
circumstances, items such as idle facility expense, excessive spoilage, double
freight, and rehandling costs may be so abnormal as to require treatment as
current period charges..." SF AS No.151 requires that those items be recognized
as current-period charges regardless of whether they meet the criterion of "so
abnormal." In addition, this statement requires that allocation of fixed
production overheads to the costs of conversion be based on the normal capacity
of the production facilities. The provisions of SFAS 151 shall be applied
prospectively and are effective for inventory costs incurred during fiscal years
beginning after June 15,2005, with earlier application permitted for inventory
costs incurred during fiscal years beginning after the date this Statement was
issued. The adoption of SF AS No.151 is not expected to have a material impact
on the Company's financial position and results of operations.
In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets,
an amendment of APB Opinion No.29. The guidance in APE Opinion No.29, Accounting
for Nonmonetary Transactions, is based on the principle that exchanges of
nonmonetary assets should be measured based on the fair value of assets
exchanged. The guidance in that Opinion, however, included certain exceptions to
that principle. This Statement amends Opinion 29 to eliminate the exception for
nonmonetary exchanges of similar productive assets that do not have commercial
substance. A nonmonetary exchange has commercial substance if the future cash
flows of the entity are expected to change significantly as a result of the
exchange. SFAS No. 153 is effective for nonmonetary exchanges occurring in
fiscal periods beginning after June 15, 2005. The adoption of SFAS No.153 is not
expected to have a material impact on the Company's financial position and
results of operations.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and Equipment are stated at cost. Property and equipment at March 31,
2004, consists of the following:
Furniture and office equipment $ 19,611
Accumulated depreciation (10,241)
--------------
$ 9,730
==============
NOTE 4 - NOTES PAYABLE
Notes payable are comprised of the following:
Unsecured note, interest rate 10%, interest payable on last $13,000
day of each month, due on demand
Unsecured note, interest rate 6%, payable on demand to acquire 500,000
the customer data base
Unsecured note, interest rate 6%, interest payable
on last day of each month, due on demand 5,000
Unsecured note, interest rate 8%, interest payable
on last day of each month, due April 1, 2005 5,000
Unsecured note, interest rate 8%, interest payable
on last day of each month, due April 1, 2005 5,000
Unsecured note, interest rate 8%, interest payable
on last day of each month, due April 1, 2005 5,000
Unsecured note, interest rate 8%, interest payable
on last day of each month, due April 1, 2005 5,000
Unsecured note, interest rate 8%, interest payable
on last day of each month, due April 1, 2005 5,000
------------
TOTAL $543,000
------------
NOTE 5 - STOCKHOLDERS' EQUITY
Common Stock
During the period ended December 31, 2004, the Company issued common stocks for
various services to following parties:
The Company issued 7,874,500 shares of common stock for consulting services.
These issuances have been valued at the fair market value on the date of
issuance and amounted to $ 828,442.
The Company issued 200,000 shares of common stock for legal services. These
issuances have been valued at the fair market on the date of issuance and
amounted to $18,000.
The Company issued 1,631,659 shares of common stock valued at $124,216 in
exchange of settlement of debt amounting $107,500 resulting in a loss of
$16,716.
On July 1, 2004, the Company closed its acquisition of 50,000 Voice over
Internet Protocol (VoIP) customers from InfiniCom Networks, Inc. The Company
acquired 50,000 customers for consideration of $7,500,000, which was paid by
$250,000 in cash, a promissory note for $500,000 and 96,428,571 shares of common
stock. The Company issued 96,428,571 shares of common stock on June 30, 2004,
valued at $8,928,571.
The Company issued 19,428,571 shares of its common stock and executes a
promissory note for $150,000 in exchange for an additional 10,000 VoIP
customers, which occurred on July 8, 2004.
The Company issued 10,216,607 shares of its common stock to InfiniCom Networks,
Inc. in consideration of adjustment of the purchase price of the original 60,000
customers purchased by the Company amounting to $ 2,410,152, payment of accrued
interest on notes amounting to $ 9,000 and partial payment of notes amounting to
$ 135,000.
The Company issued 275,000 shares of common stock valued at $27,500 to Ms. Robin
Glanzl as an inducement to join the Company and act as the Company's President.
The Company issued 6,874,632 shares of common stock valued at $1,053,118 to
Dutchess Private Equity Fund, LP. Of the proceeds, $ 599,419 was used to offset
against Notes Payable to Dutchess, $195,577 for related expense, and $263,841
were in cash.
The Company issued 350,000 shares towards the exercise of option. The monies due
on the exercise of the option amounted to $ 3,500 which has been applied towards
the consulting monies due to the optionee.
The Company issued 350,000 shares of common stock for severance pay. These
issuances have been valued at $3,500.
The Company issued 6,837,614 shares to J. Michael Issa, Liquidating Trustee in
satisfaction of a court order. These issuances have been valued at $68,376.
Stock Options
As of March 31, 2005, there are no longer any stock options or warrants
outstanding.
Equity Line of Credit
On February 25, 2004, the Company entered into an Equity Line of Credit
Agreement with Dutchess Private Equities Fund L.P., covering the sale of up to
$3 million of the Company's common stock over the next thirty six months. The
stock may be sold at the Company's discretion, at a discount to the market price
of the Company's shares at the time of sale.
Subject to the conditions set forth in this Agreement, following the Investor's
receipt of a validly delivered Put Notice, the Investor shall be required to
purchase from the Company during the related Pricing Period that number of
Shares having an aggregate Purchase Price equal to the lesser of (i) the Put
Amount set forth in the Put Notice, and (ii) 20% of the aggregate trading volume
of the Common Stock during the applicable Pricing Period times (x) 94% of the
lowest bid prices of the Company's Common Stock during the specified Pricing
Period, but only if said Shares bear no restrictive legend, are not subject to
stop transfer instructions, pursuant to Section 2(h), prior to the applicable
Closing Date.
Under the agreement, the Common Stock of the Company shall be authorized for
quotation on the Principal Market and trading in the Common Stock shall not have
been suspended by the Principal Market or the SEC, at any time beginning on the
date hereof and through and including the respective Closing Date (excluding
suspensions of not more than one Trading Day resulting from business
announcements by the Company, provided that such suspensions occur prior to the
Company's delivery of the Put Notice related to such Closing).
NOTE 6 - IMPAIRMENT OF INVESTMENT AND INTANGIBLE ASSETS
On July 1, 2004, the Company completed the acquisition of 50,000 Voice over
Internet Protocol customers from InfiniCom.
Pursuant to the terms of the
definitive agreements, consisting of a Services and Marketing Agreement, a
Network Carrier Services Agreement and a Stock Acquisition Agreement
(collectively referred to as the "Agreements") dated June 6, 2004, as modified
by the Letter Agreement of July 1, 2004, the Company issued 96,428,571 shares of
its common stock, $250,000 in cash and a promissory obligation to pay $500,000
in exchange for the 50,000 Voice over Internet Protocol customers. Pursuant to
the Letter Agreement of July 1, 2004, FoneFriend issued an additional 19,285,714
shares of its common stock and execute a promissory note for $150,000 in
exchange for an additional 10,000 VoIP customers, which occurred on July 8,
2004.
On November 12, 2004, the Company issued 10,216,607 shares of its common stock
to InfiniCom Networks, Inc. in consideration of adjustment of the purchase price
of the original 60,000 customers purchased by the Company amounting to
$2,512,319, payment of accrued interest on notes amounting to $ 9,000 and
partial payment of notes amounting to $ 135,000.
The Company purchased a license to use the FoneFriend technology for $ 300,000
for a period of ten years from FoneFriend Systems, Inc. under a license
agreement dated April 30, 2001. This license agreement allows the Company to
manufacture market and utilize a proprietary technology referred to as
FoneFriend. The Company had amortized $ 55,670 through December 31, 2004 on the
license.
The Company evaluated valuation of the Company's long-lived assets (voice over
internet protocol customers and technology rights license) at December 31, 2004
and determined that long-lived assets have been impaired and were of no value,
based upon the fair market value of similar assets and future cash flow
projected from these assets. The impaired intangible assets comprised of the
following:
Customer Data Base $ 13,826,604
Technology rights license 244,330
-------------
Impairment loss (14,070,934)
-------------
$ -
-------------
The Company recorded an impairment expense equal to the book value of the
long-lived assets amounting $14,070,934 in the accompanying financial
statements.
The Company recorded an impairment expense equal to the book value of
development cost amounting $694,862 in the accompanying financial statements.
NOTE 7 - INCOME TAX
Since the Company has not generated taxable income, no provision for income
taxes has been provided (other than minimum franchise taxes payable to the State
of California).
Through March 31, 2004, the Company incurred net operating losses for federal
tax purposes of $5,900,000. The net operating loss carry-forward may be used to
reduce taxable income through the year 2019. The availability of the Company's
net operating loss carry-forwards are subject to limitation if there is a 50% or
more positive change in the ownership of the Company's stock. The Company's
total deferred tax asset is as follows:
March 31,
2005
---------------
Tax benefit of net operating
loss carry-forward $ 9,035,000
Valuation allowance (9,035,000)
---------------
$ -
===============
The following is a reconciliation of the provision for income taxes at the U.S.
federal income tax rate to the income taxes reflected in the Statement of
Operations:
March 31,
2005
-------------------------
Tax expense (credit) at statutory rate-federal (34)%
State tax expense net of federal tax (6)
Changes in valuation allowance 40
-------------------------
Tax expense at actual rate -
=========================
The valuation allowance increased to $6,675,000 in the year ended March 31,
2005, since the realization of the operating loss carry-forwards are doubtful.
It is reasonably possible that the Company's estimate of the valuation allowance
will change.
NOTE 8 - LITIGATION
In October, 2003, the Company received notice of a lawsuit commenced against its
predecessor company, FoneFriend, Inc., a Nevada corporation ("FoneFriend of
Nevada"), seeking past due legal fees of approximately $21,000. The assets of
this predecessor company were acquired by the Company in a stock for assets
purchase transaction and FoneFriend of Nevada was dissolved. Should the Company
become a party to this litigation, it believes it has an affirmative defense as
to the amount sought and will attempt to negotiate a reduced settlement or
defend against such action should it be commenced.
In November, 2003, the Company has received a threat of litigation from the
bankrupt estate of Allegiance Telecom, seeking approximately $5,000. No lawsuit
has yet been commenced. Should the Company become a party to any such
litigation, it believes it has affirmative defenses to such charges and intends
to defend against any such action should it be commenced.
In January, 2003, the Company entered into a settlement agreement with a former
officer and director. As partial consideration under the settlement agreement,
the Company was required to pay plaintiff the sum of $20,000 on December 1,
2003. The plaintiff accepted a payment of $10,000 from the Company in December
of 2003 and agreed to accept a final payment of $12,500 on January 4, 2004. The
Company has not yet made the final payment to plaintiff. In accordance with the
terms of the settlement, the plaintiff may, upon the Court's order, file with
the Court a "Stipulation for Entry of Judgment." The Company intends to settle
this matter as soon as finances permit. The plaintiff has not yet moved to file
or enforce the judgment.
The Company was named as a party to a lawsuit filed by Mr. Mark Foglia early in
2005 against InfiniCom Networks Inc. as a result of what Mr. Foglia claims
InfiniCom Networks Inc. owes to him as a result of his efforts in exacting the
InfiniCall/InfiniCom Networks Inc. transaction. The Company has been indemnified
by InfiniCom Networks Inc. should Mr. Foglia sustain his claim.
The Company recently was sued in a Florida court by a creditor claiming a debt
of $5,000. The Company asserts that the Florida court lacked jurisdiction.
NOTE 9 - GOING CONCERN
The Company's financial statements are prepared using the generally accepted
accounting principles applicable to a going concern, which contemplates the
realization of assets and liquidation of liabilities in the normal course of
business. However, the Company has accumulated deficit of $ 22,590,545 at March
31, 2005. The Company incurred net losses of $16,675,517 in the year ended March
31, 2005. In view of the matters described above, recoverability of a major
portion of the recorded asset amounts shown in the accompanying balance sheets
is dependent upon continued operations of the Company, which in turn is
dependent upon the Company's ability to raise additional capital, obtain
financing and to succeed in its future operations. The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and classification of liabilities that might
be necessary should the Company be unable to continue as a going concern.
Management has taken the following steps to revise its operating and financial
requirements, which it believes are sufficient to provide the Company with the
ability to continue as a going concern. The Company is actively pursuing
additional funding and potential merger or acquisition candidates and strategic
partners, which would enhance stockholders' investment. Management believes that
the above actions will allow the Company to continue operations through the next
fiscal year.
NOTE 10 - RELATED PARTY TRANSACTIONS
On July 1, 2004 the Company completed a transaction with InfiniCom wherein the
Company issued 96,428,571 shares of restricted common stock. In addition, on
July 8, 2004, the Company issued an additional 19,285,714 shares of restricted
common stock and on November 12, the Company issued 10,216,607 shares to
InfiniCom, which represents, as of this filing approximately 75% or the
Company's issued and outstanding shares. Concurrent with the transaction with
InfiniCom, the Company executed a Services and Marketing Agreement and a Network
Carrier Agreement creating an outsourcing relationship between the Company and
InfiniCom wherein InfiniCom is operating our day to day operations.
Additionally, as a result of the agreements with InfiniCom, the Company moved
its offices to offices supplied by InfiniCom at not additional costs to the
Company.
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On July 6, 2005, the Board of Directors of the Company dismissed Kabani &
Company, C.P.A., an accountancy corporation, as the Company's independent
accountants and appointed the firm of Jaspers & Hall, P.C. to serve as
independent public accountants of the Company for the fiscal year ending March
31, 2005.
Kabani & Company's report on the Company's consolidated financial statements for
the fiscal year ended March 31, 2004 did not contain an adverse opinion or
disclaimer of opinion, or was modified as to uncertainty, audit scope or
accounting principles; however, they were modified to include an explanatory
paragraph wherein they expressed substantial doubt about the Company's ability
to continue as a going concern.
During the year ended December 31, 2004 there were no disagreements with Kabani
& Company on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure which, if not resolved to
Kasbani & Company's satisfaction, would have caused them to make reference to
the subject matter of such disagreements in connection with their report on the
Company's consolidated financial statements for such years.
ITEM 8A - CONTROLS AND PROCEDURES
The Company is a development stage company with no revenues and during 2005 our
Board of Directors had responsibility for our internal controls and procedures
over our financial reporting.
We have implemented and maintain disclosure controls and procedures which
consist of: the control environment, risk assessment, control activities,
information and communication and monitoring. Our scope of internal control
therefore extends to policies, plans procedures, processes, systems, activities,
initiatives, and endeavors required of a company with our limited transactions,
revenues, expenses, and operations. These controls and procedures are designed
to ensure that the information required to be disclosed in our Exchange Act
reports is recorded, processed, summarized and reported within the time periods
specified in the SEC's rules.
There have been no significant changes (including corrective actions with regard
to significant deficiencies or material weaknesses) in our internal controls or
in other factors that could significantly affect the controls subsequent to the
date of the evaluation referenced below.
Within 90 days prior to the date of this report, we carried out an evaluation,
under the supervision of Mr. James A. Trodden, of the effectiveness of the
design and operation of the Company's disclosure controls and procedures. Based
on the foregoing, Mr. Trodden concluded that, given the Company's limited
operations, our disclosure controls and procedures were effective.
PART III
ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
The current Executive officers and directors of the Company at March 31, 2004
were:
NAME POSITION
Robin Glanzl President
James A. Trodden Secretary
Business Experience
The following is a brief account of the business experience during at least the
past five years of the persons designated to be officers of the Company,
indicating the principal occupation and employment during that period by each,
and the name and principal business of the organizations by which they were
employed.
Robin Glanzl, Ms. Robin Glanzl received her Bachelor of Arts degree and her
Juris Doctor degree from the University of Southern California. In her early
years as an attorney she was affiliated with the United States Department of
State through the Federal Trade Commission where she investigated and prosecuted
alleged violations of the federal anti-trust laws throughout the country,
covering unfair competition, predatory pricing practices, false advertising and
franchising. She helped to develop the first federal standards for broadcast
advertising.
During the last twenty-five years of her legal career she has engaged primarily
in corporate development and transactional law in a broad range of matters such
as mergers, acquisitions, securities, international oil and gas engineering and
leases, franchise development, the entertainment industry covering film,
television and record projects as well as labor union dispute resolution. She
wrote procedure manuals on copyright and trademark law and held seminars for
senior management and major private developers in the franchise industry. She
helped to take a national franchise company to significant international status.
She has worked with large, multinational corporations such as Fluor Corporation,
Carnation Company, Burger King, Inc., ABC Television, Inc, and Capitol
Industries (Records), Inc as well as regional and private local corporations.
Whether as general counsel, assistant general counsel or corporate counsel Mrs.
Glanzl worked closely with top management in helping operations, sales and
marketing departments to plan meaningful goals within the framework of
applicable statutes and regulations. She has been recognized for making
significant contributions in evaluating or reconciling the reliability and
consistency between financial records and operational reports and other data
when companies she worked with contemplated buying out or associating with other
businesses or companies. Mrs. Glanzl taught anti-trust and contract and business
law at USC's School of Business, Whittier College School of Law and Woodbury
University.
She has served on the board of several small companies as secretary and kept the
corporate minutes books. She has also done the regulatory work and corporate
bookkeeping for large domestic and international companies. During the last
fourteen years she has worked significantly in the telephony industry assisting
in the purchase, development and reshaping of troubled companies, especially in
the areas of report and document reconciliation and evaluation as well as
operationally in the initial post acquisition periods.
Mrs. Glanzl serves on the board of two charities in the greater Los Angeles area
dealing with battered women and medical research and treatment. She has long
been involved in a national charity combating child abuse. She has been an
arbitrator with the American Arbitration Association and is certified in fee
mediation dispute by the California State Bar. She is certified to practice law
before the United States Supreme Court, the federal courts and California state
courts.
James A. Trodden, director. Mr. Trodden has practiced law for over forty years.
During his career, Mr. Trodden has represented national and international
corporate clients. Over the past five years, Mr. Trodden has been engaged in
representing clients before the Securities and Exchange Commission, the National
Association of Securities Dealers and other federal and state agencies.
DENNIS H. JOHNSTON, ESQ. serves as the Company's Corporate Secretary, and is
also an independent director. Mr. Johnston has more than 20 years of experience
as a practicing attorney specializing in the representation of corporations and
financial institutions. He has assisted in organizing and financing numerous
private and publicly traded companies and has handled mergers and acquisitions
with a total value in excess of $3 billion. Mr. Johnston received undergraduate
degrees in business and economics from UCLA and a law degree with Dean's List
Honors from Loyola University of Los Angeles, where he was an Editor of The
Loyola Law Review. He is a former partner at the nationally recognized law firms
of Manatt, Phelps, Rothenberg, & Tunney, and Wyman, Bautzer, Kuchel & Silbert.
The persons who are directors of the Company at March 31, 2005 are:
NAME
Robin Glanzl
James A. Trodden
Dennis H. Johnston
Business Experience
The following is a brief account of the business experience during at least the
past five years of the persons designated to be directors of the Filer,
indicating the principal occupation and employment during that period by each,
and the name and principal business of the organizations by which they were
employed.
Robin Glasnzl - See above.
James A. Trodden - See above.
Dennis H. Johnston - See above.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires that the Company's officers and directors, and persons who own more
than ten percent of the registered class of the Company's equity securities,
file reports of ownership and changes in ownership with the Securities and
Exchange Commission. Officers, directors and greater than ten percent
stockholders are required by regulation to furnish to the Company copies of all
Section 16(a) forms they file. The Company is unaware of any persons who failed
to file forms on a timely basis during the past two fiscal years as required
under Section 16(a)
Conflicts of Interest
Members of the Company's management are associated with other firms involved in
a range of business activities. Consequently, there are potential inherent
conflicts of interest in their acting as officers and directors of the Company.
Insofar as most of the officers and directors are engaged in other business
activities, management anticipates it will devote substantially less than full
time to the Company's affairs. There can be no assurance that management will
resolve all conflicts of interest in favor of the Company.
Audit Committee
We do not have an Audit Committee, our board of directors during 2004 performed
some of the same functions of an Audit Committee, such as: recommending a firm
of independent certified public accountants to audit the annual financial
statements; reviewing the independent auditors independence, the financial
statements and their audit report; and reviewing management's administration of
the system of internal accounting controls. The Company does not currently have
a written audit committee charter or similar document.
Code of Ethics
A code of ethics relates to written standards that are reasonably designed to
deter wrongdoing and to promote:
1. Honest and ethical conduct, including the ethical handling of actual or
apparent conflicts of interest between personal and professional relationships;
2. Full, fair, accurate, timely and understandable disclosure in reports and
documents that are filed with, or submitted to, the Commission and in other
public communications made by an issuer;
3. Compliance with applicable governmental laws, rules and regulations;
4. The prompt internal reporting of violations of the code to an appropriate
person or persons identified in the code; and
5. Accountability for adherence to the code.
We have not adopted a corporate code of ethics that applies to our principal
executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions in that in the past we had
minimal operational activities and a limited staff.
Nominating Committee
We do not have a Nominating Committee or Nominating Committee Charter. Our board
of directors performed some of the functions associated with a Nominating
Committee. We have elected not to have a Nominating Committee in that we are a
development stage company with limited operations and resources.
ITEM 10- EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION
In view of the cash shortages experienced by the Company, Ms. Glanzl was
compensated during fiscal 2005 with payments less than $25,000. Ms. Glanzl was
due as salary compensation in the amount of $10,000 per month commencing August,
2004. As an inducement to Ms. Glanzl joining the Company, the Board of Directors
granted her 200,000 shares of the Company's restricted stock and 75,000 shares
of free trading stock.
Mr. Trodden waived salary payments.
ITEM 11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDERS MATTERS
The following table sets forth, to our knowledge, certain information regarding
the beneficial ownership of the common stock, and the address of such beneficial
owner, as of March 31, 2005, for (i) each person known by the Company to be the
beneficial owner of 5% or more of the outstanding common stock, (ii) each of the
Company's officers, directors and consultants, and (iii) all of the Company's
executive officers, directors, consultants and Principal Stockholders as a
group. The notes accompanying the information in the table below are necessary
for a complete understanding of the figures provided below. The number of common
shares owned includes shares of common stock issuable upon the exercise of
options that are currently exercisable or will become exercisable within 60 days
of the date of this filing. For each beneficial owner, officer, director or
consultant, his or her percentage of shares outstanding is based upon 19,008,444
shares outstanding as of March 31, 2004, plus 865,000 additional shares that
such beneficial owners have the right to acquire within 60 days of the date of
this Report (i.e., a total of 19,873,444).
SHAREHOLDER NAME AND ADDRESS RELATIONSHIP TO COMPANY SHARES OWNED PERCENTAGE OF SHARES OUTSTANDING
Infinicom Networks Inc. Shareholder 125,930,892 75%
5670 Wilshire Blvd, Ste. 2605
Los Angeles, CA
ITEM 12. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On July 1, 2004 the Company completed a transaction with InfiniCom wherein the
Company issued 96,428,571 shares of restricted common stock. In addition, on
July 8, 2004, the Company issued an additional 19,285,714 shares of restricted
common stock and on November 12, the Company issued 10,216,607 shares to
InfiniCom, which represents, as of this filing approximately 75% or the
Company's issued and outstanding shares. Concurrent with the transaction with
InfiniCom, the Company executed a Services and Marketing Agreement and a Network
Carrier Agreement creating an outsourcing relationship between the Company and
InfiniCom wherein InfiniCom is operating our day to day operations.
Additionally, as a result of the agreements with InfiniCom, the Company moved
its offices to offices supplied by InfiniCom at not additional costs to the
Company.
ITEM 13 - EXHIBITS AND REPORTS
(a) Exhibits filed with this annual report.
Exhibit No. Description
------------ -----------
31.1 Section 302 Certification (CEO)
31.2 Section 302 Certification (CFO)
32.1 Section 906 Certification (CEO)
32.2 Section 906 Certification (CFO)
ITEM 14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES
General. Jaspers & Hall ("Jaspers") is the Company's principal auditing
accountant firm. The Company's Board of Directors has considered whether the
provision of audit services is compatible with maintaining Jaspers'
independence.
The Company's Board acts as the audit committee and had no "pre-approval
policies and procedures" in effect for the auditors' engagement for the audit
year 2002 and 2003.
The auditors' full time employees performed all audit work.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Filer has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
InfiniCall Corporation
Date: August 12, 2005 By: /s/ Robin Glanzl
----------------
Robin Glanzl, President
and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Filer and in the
capacities and on the dates indicated.
/s/ Robin Glanzl August 12, 2005
------------------------------------
Robin Glanzl, President and Director
August 12, 2005
/s/ James A. Trodden
------------------------------------
James A. Trodden, Secretary & Interim Financial Offier