UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
FORM 10-QSB
______________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2003
COMMISSION FILE NUMBER 0-24408
FONEFRIEND, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 33-0611753
------------------------ ---------------------------
(State of Incorporation) (I.R.S. Employer ID Number)
2722 Loker Avenue, Suite G
Carlsbad, CA 92008
----------------------------------------
(Address of Principal Executive Offices)
(760) 607-2330
----------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Indicate by check whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No / /
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes /X/ No / /
As of August 15, 2003, there were 820,361 shares of Preferred Stock and
9,186,000 shares of Common Stock outstanding.
FONEFRIEND, INC.
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets at June 30, 2003 and March 31, 2003............ 1
Statements of Operations for the three month period
ended June 30, 2003 and pro-forma two month period
ended June 30, 2002........................................... 2
Statements of Cash Flows for the three-month period
ended June 30, 2003 and the pro-forma two month period
ended June 30, 2002........................................... 3
Statements of Stockholders' Equity for the three month
period ended June 30, 2003.................................... 4
Notes to Financial Statements................................. 7
Item 2. Management's Discussion and Analysis of Financial
Condition And Results of Operations.......................... 11
Item 3. Controls and Procedures...................................... 14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings............................................ 14
Item 2. Changes in Securities........................................ 14
Item 3. Defaults Upon Senior Securities.............................. 14
Item 4. Submission of Matters to a Vote of Security Holders.......... 15
Item 5. Other Information............................................ 15
Item 6. Exhibits and Reports on Form 8-K............................. 15
FONEFRIEND, INC.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEETS
(Amounts in Dollars)
ASSETS
June 30, March 31,
2003 2003
----------- -----------
Current Assets
Cash in banks and on hand $ 157 $ 20,221
Inventory-equipment $ 16,000 $ 16,000
Current portion of prepaid expenses $ 148,525 $ 143,000
----------- -----------
Total current assets $ 164,682 $ 179,221
----------- -----------
Furniture & equipment, net of depreciation - Note 3 $ 12,255 $ 12,713
----------- -----------
Other Assets
Non-current prepaid expenses and deposits $ 13,597 $ 13,597
Capitalized development costs $ 694,863 $ 694,863
Technology rights, FoneFriend license $ 300,000 $ 300,000
Stock in FoneFriend Systems, Inc. $ 150,000 $ 150,000
Organizational costs, net of amortization - Note 3 $ 110 $ 120
----------- -----------
Total other assets $ 1,158,570 $ 1,158,580
----------- -----------
TOTAL ASSETS $ 1,335,507 $ 1,350,514
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 4,302 $ 4,302
Loans from officers and others $ 57,188 $ 60,888
Payroll taxes payable $ 5,416 $ 5,416
----------- -----------
Total current liabilities $ 66,906 $ 70,606
----------- -----------
Loans payable, non-current $ 25,000 $ 20,000
----------- -----------
TOTAL LIABILITIES $ 91,906 $ 90,606
----------- -----------
Stockholders' Equity - Note 4
Preferred stock, $.001 par value, authorized
50,000,000 shares, issued and outstanding
820,361 shares $ 820 $ 820
Common stock, $.001 par value, authorized
200,000,000 shares, issued and outstanding,
8,926,000 at June 30, 2003 and 8,471,000 at
March 31, 2003 $ 8,926 $ 8,471
Additional paid in capital $ 3,800,063 $ 3,741,368
Operating deficit $(2,566,208) $(2,490,751)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY $ 1,243,601 $ 1,259,908
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,335,507 $ 1,350,514
----------- -----------
See Accompanying Notes to Financial Statements
1
FONEFRIEND, INC.
STATEMENTS OF OPERATIONS
(Amounts in Dollars)
Pro-forma
Three Months Three Months
Ended June 30, Ended June 30,
2003 2002
-------------- --------------
Revenue $ -- $ --
-------------- --------------
Expenses
Advertising $ 200 $ 11,580
Automobile $ -- $ 3,969
Commissions related to fund raising activity $ -- $ 5,152
Consulting fees $ 55,565 $ 90,981
Depreciation and amortization $ 873 $ 657
Insurance $ 227 $ 1,494
Legal fees $ -- $ 9,234
Meals and entertainment $ 75 $ 1,410
Office supplies $ 1,234 $ 3,063
Officer/stockholder payments $ -- $ 10,962
Salaries and payroll $ -- $ 27,515
Postage $ 202 $ 5,307
Rent $ 11,524 $ 9,531
Telephone $ 3,084 $ 7,058
Travel $ 2,100 $ 6,881
Other $ 373 $ 14,931
-------------- --------------
Total expenses $ 75,457 $ 209,725
-------------- --------------
Loss from development stage operations $ (75,457) $ (209,725)
-------------- --------------
See Accompanying Notes to Financial Statements
2
FONEFRIEND, INC.
STATEMENTS OF CASH FLOWS
(Amounts in Dollars)
Pro-forma
Three Months Three Months
Ended June 30, Ended June 30,
2003 2002
-------------- --------------
Operating Activities
Loss from development stage operations $ (75,457) $ (209,725)
Adjustments to loss from development
stage operations:
Prepaid expenses $ 53,625 $ --
Inventory-equipment $ -- $ (10,000)
Accounts payable $ -- $ --
Depreciation and amortization $ 873 $ 1,337
Deposits $ -- $ (25,500)
Other $ (405) $ (4,250)
-------------- --------------
Net cash provided (used) by development
stage operations $ (21,364) $ (248,138)
-------------- --------------
Investing Activities
Increase in capitalized development costs $ -- $ (60,000)
-------------- --------------
Financing Activities
Loans from officers and others $ 1,300 $ --
-------------- --------------
Net cash provided by financing activities $ 1,300 $ --
-------------- --------------
Net cash increase (decrease) for the period $ (20,064) $ (308,138)
Cash at beginning of period $ 20,221 $ 685,359
-------------- --------------
Cash at end of period $ 157 $ 377,221
-------------- --------------
See Accompanying Notes to Financial Statements
3
FONEFRIEND, INC.
STATEMENTS OF STOCKHOLDERS'EQUITY
(Amounts in Dollars)
Additional Total
No. Shares Par Paid-In Accumulated Stockholders'
Outstanding Value Capital Deficit Equity
----------- ----------- ----------- ----------- ------------
Common shares
Beginning
balance, 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 September
30, 2002 85,500 $ 86 $ 427,415 $ 427,501
----------- ----------- ----------- ----------- ------------
Balance,
September
30, 2002 9,041,861 $ 9,042 $ 3,496,597 $(1,248,002) $ 2,257,637
Loss from
Operations to
November
21, 2002 $ (118,281) $ (118,281)
Common shares
cancelled (300,000) $ (300) $ (300)
Common shares
issued November
21, 2002 58,139 $ 58 $ 29,942 $ $ 30,000
----------- ----------- ----------- ----------- ------------
Total common
shareholders'
equity pre-
merger, November
21, 2002 8,800,000 $ 8,800 $ 3,526,539 $(1,366,283) $ 2,169,056
----------- ----------- ----------- ----------- ------------
Merger of FoneFriend, Inc. (Nevada corporation) on November
21, 2002 with and into FoneFriend, Inc. (Delaware corporation)
Exchange of
Nevada shares
for Delaware
shares 2,200,000 $ 2,200
Issue new
Delaware
Shares:
To: management 4,600,000 $ 4,600
4
FONEFRIEND, INC.
STATEMENT OF STOCKHOLDERS' EQUITY - Continued
Additional Total
No. Shares Par Paid-In Accumulated Stockholders'
Outstanding Value Capital Deficit Equity
----------- ----------- ----------- ----------- ------------
To: UBN Trust 423,000 $ 423
To: D. Johnston 423,000 $ 423
Transfer par value
to paid-in capital $ (1,154) $ 1,154
Issue common
shares to
consultants,
December 2002 825,000 $ 825 $ 213,675 $ 214,500
Loss from
operations
from November
21, 2002 to
March 31, 2003 $(1,124,468) $ (1,124,468)
Total common
shareholders'
equity, March
31, 2003
Delaware
Corporation 8,471,000 $ 8,471 $ 3,741,368 $(2,490,751) $ 1,259,088
Issue common
shares to
consultants,
June 2003 455,000 $ 455 $ 58,695 $ 59,150
Loss from
operations
from April 1,
2003 to June
30, 2003 $( 75,457) $( 75,457)
----------- ------------
Total common
shareholders'
equity, June
30, 2003
Delaware
Corporation 8,926,000 $ 8,926 $ 3,800,063 $(2,566,208) $ 1,242,781
----------- ----------- ----------- ----------- ------------
Preferred shares
Preferred shares
issued November
21, 2002, Nevada 820,361 $ 820 $ 820
Cancel Nevada
preferred shares,
November 21,
2002 (820,361) $( 820) $( 820)
----------- ----------- ------------
5
FONEFRIEND, INC.
STATEMENT OF STOCKHOLDERS' EQUITY - Continued
Additional Total
No. Shares Par Paid-In Accumulated Stockholders'
Outstanding Value Capital Deficit Equity
----------- ----------- ----------- ----------- ------------
Issue Delaware
preferred shares
for Nevada
preferred shares,
November 21,
2002 820,361 $ 820 $ 820
----------- ----------- ------------
Total stockholders'
equity, June 30,
2003 $ 1,243,601
------------
See Accompanying Notes to Financial Statements
6
FONEFRIEND, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2003
NOTE 1 - DESCRIPTION OF BUSINESS
A. Background
FoneFriend, Inc. ("FoneFriend" or 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 a corporate office at 2722 Loker Avenue, Suite G, Carlsbad, California
92008. The Company's telephone number is: (760) 607-2330.
The Company is a development stage enterprise and has not generated any revenue
during its history. 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 residiential telephone set (without the need for a
computer), for a low monthly fee of about $10.00 or less. 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.
B. Basis of Presentation
The accompanying financial statements have been prepared in accordance with
Generally Accepted Accounting Principles ("GAAP") which contemplates
continuation of the Company as a going concern. Management is attempting to
raise additional capital.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Fiscal Year
The Company's fiscal year is March 31 (after the above-described merger of
FoneFriend, Inc. of Nevada with and into FoneFriend, Inc. of Delaware). The
accompanying unaudited financial statements are for June 30, 2003 and the three
month period then ended.
B. Significant Estimates
In the process of preparing its financial statements in accordance with GAAP,
the Company estimates the carrying value of certain assets and liabilities that
are subjective
7
FONEFRIEND, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
in nature. The primary estimates included in the Company's financial statements
include capitalized development costs and the ongoing value of its purchased
technology license.
C. Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid investments with
maturity dates of three months or less at the date of purchase. These items are
carried at cost, which approximates fair value due to their short-term maturity
dates.
D. Prepaid Expenses and other Current Assets
The Company has cash outlays in advance of expense recognition for items such as
rent, interest, financing fees, and service contracts. All amounts identified as
prepaid expenses that will be utilized during the next twelve months are
identified as current assets, while any portion that will not be utilized during
the next twelve months are classified as non-current assets.
E. Furniture and Equipment
Furniture and equipment are carried at cost and depreciated over the estimated
useful lives of the individual assets.
F. Capitalized Development Costs
Capitalized development costs consist of expenditures made by the Company to
improve the product and develop marketing channels for the product, and which
are deemed by management to have future value to the Company. Such capitalized
development costs will be amortized over the estimated useful life once product
sales begin.
G. Technology Rights, FoneFriend License
The Company purchased a license to use the FoneFriend technology 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. During the
development stage operations, the Company is carrying the asset at cost and will
begin amortization over the remaining life of the license when product sales
begin. The remaining value to the Company will be reviewed quarterly and if
management determines that impairment of the asset has occurred, the carrying
value will be adjusted accordingly.
8
FONEFRIEND, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
H. Stock in FoneFriend Systems, Inc.
The Company purchased stock in FoneFriend Systems, Inc. as a long-term
investment. Such investment is carried at cost and will be evaluated
periodically by management to determine whether impairment has occurred. Should
management determine that the value has been impaired, the carrying value will
be adjusted accordingly.
NOTE 3 - DEPRECIATION AND AMORTIZATION
The Company's management has estimated the useful lives of furniture, equipment
and certain organization costs. The following tables show the gross asset
amounts and the accumulated depreciation and amortization:
A. Furniture and Equipment
2003
------------------------
June 30, March 31,
---------- ----------
Cost $ 16,245 $ 15,840
Less accumulated depreciation $( 3,990) $( 3,127)
---------- ----------
Net value $ 12,255 $ 12,713
---------- ----------
B. Organizational Costs
2003
------------------------
June 30, March 31,
---------- ----------
Cost $ 195 $ 195
Less accumulated depreciation $( 85) $( 75)
---------- ----------
Net value $ 110 $ 120
---------- ----------
NOTE 4 - MERGER AND CAPITAL STOCK
The merger of FoneFriend, Inc. of Nevada with and into FoneFriend, Inc. of
Delaware was consummated on November 21, 2002 wherein the assets of FoneFriend,
Inc. of Nevada were acquired by Universal Broadband Networks, Inc. ("UBN") in a
tax-free reorganization pursuant to IRC 368 (the "Merger"). The Merger was
effectuated as a "C" type reorganization whereby UBN issued stock in exchange
for all of the assets FoneFriend, Inc. of Nevada, after which that corporation
was dissolved. UBN was the surviving corporation and changed its name to
FoneFriend, Inc. (a Delaware corporation) immediately subsequent to the Merger.
Pursuant to the express terms of the Fourth
9
FONEFRIEND, INC.
NOTES TO FINANCIAL STATEMENTS - Continued
Amended Plan of Reorganization, as approved by the U.S. Bankruptcy court (the
"Plan"), the Merger was accomplished as follows:
1. All of UBN's issued and outstanding shares of capital stock were
cancelled and extinguished and the stockholders of UBN prior to
the Merger have no further interest or rights in UBN.
2. UBN issued 2,200,000 shares of newly created common stock in
favor of FoneFriend, Inc. (Nevada corporation) in exchange for
all of FoneFriend, Inc.'s assets and 115,750 of newly created
common stock in favor of a Liquidating Trust for the benefit of
UBN's creditors. As a result, the merged entity had a total of
2,315,750 shares of newly created common stock issued and
outstanding, of which former shareholders of the dissolved
Nevada corporation owned 95%, and J. Michael Issa, Esq., as
Trustee of the Liquidating Trust (which was created under the
Plan), owned 5%.
3. The issuance of stock pursuant to the Plan, as filed within the
U.S. Bankruptcy Court, was ordered by the Court to be exempt
from all applicable Federal, State and local securities law,
pursuant to 11 U.S.C. ss.1145 (a).
4. The dissolved Nevada corporation's management distributed the
newly issued 2,200,000 shares of FoneFriend, inc. (Delaware
corporation) to its former shareholders, on a pro-rata basis.
Each of such former shareholders received one share of stock in
FoneFriend, Inc. (Delaware corporation) for every four-share
shares held in the dissolved Nevada corporation.
5. Immediately subsequent to the Merger, the Company authorized the
issuance of 820,361 shares of a newly created Series A Preferred
Stock (each share of which is convertible into one share of
common stock) to be issued to shareholders of preferred stock in
the dissolved Nevada corporation prior to the Merger.
6. The Company then issued 4,600,000 shares of common stock to
various management personnel and consultants in order to hire or
retain their services. The Company also issued 423,000 shares of
common stock to Dennis H. Johnston, Esq. as compensation for his
services in connection with the Merger. Additionally, the
Company issued 307,250 shares of common stock to the Liquidating
Trust so as to be in compliance with the Anti-Dilution
Protection provisions of the Plan.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the Company's financial statements and related footnotes included elsewhere
herein. This discussion contains forward-looking statements that involve risks
and uncertainties. The Company's actual results could differ materially from
those anticipated by management.
OVERVIEW
The Company has experienced significant losses during development stage
operations and has yet to realize any revenues from its operations.
During the forth quarter of fiscal year 2003, management of the Company
evaluated the future benefit of the Company's capitalized development costs and
determined that it was prudent to write down the value of that asset to its
estimated fair value.
RESULTS OF OPERATIONS
The Company had no revenue during the three months ended June 30, 2003
or during its entire history.
Expenses of the Company for the first three months of the current
fiscal year, ending March 31, 2004, decreased to $75,457, from $209,725 for the
first three months of the fiscal year ending March 31, 2003. The decrease was
due primarily to a reduction in personnel, consultants and professional services
and their related expenses. Current expenses consist primarily of salaries,
overhead and other general expenses related to developing its product and
bringing that product to market.
During the third quarter of fiscal 2003, the Company issued 825,000
shares of stock to consultants for future services to be provided to the
Company. The value of such shares issued to consultants is being amortized to
expense over a twelve-month period.
During the first quarter of fiscal 2004, the Company issued a total of
455,000 shares of stock to consultants and a law firm for current and future
services provided to the Company. The value of such shares issued is being
amortized to expense over a twelve-month period.
Reduction in Shares Outstanding: On May 30, 2003, Francois Van Der
Hoeven informed the Company that he had resigned as Senior Vice President of
Marketing. Mr. Van Der Hoeven had not worked at the Company's offices since on
or about February 14, 2003, due to the Company's inability to pay his then
existing salary requirements. As a result, he commenced employment with another
firm and did not execute his executive employment contract with the Company
after the completion of the Merger.
11
This contract was the primary basis for the issuance of 1,300,000
shares as consideration for his providing of services to the Company for a
3-year term. The Company has placed a top transfer order on Mr. Van Der Hoeven's
stock certificate pending an amicable resolution of the negotiations until such
time as he either returns the certificate or the Company issues a cancellation
of his shares.
FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company anticipates that it will market its product through direct
marketing to segments of the population that use significant long distance
service to foreign countries.
The initial target markets will be areas in which the population
includes significant European, Hispanic and Asian segments. These segments of
the population typically spend substantial time on international long distance
calls to their native countries.
Other products may be developed that compete with the Company's
product, thereby reducing future potential revenue.
Further, since the Company's product requires significant lead time in
the manufacturing process, any delay in filling orders could affect customer
satisfaction.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2003, the Company had limited working capital and the
Company had no material unused sources of liquid assets. Also at June 30, 2003,
the Company had no existing credit facility. As a result, the Company is
delinquent in certain general and administrative expenses and has a shortage of
cash to pay its pending accounts payable.
A part of the Company's strategy is to seek external financing to grow
its commercial business. Management is presently in the process of finalizing a
private offering memorandum for distribution to qualified investors in an
attempt to raise up to $5,000,000 in additional capital in order to effectuate
its business plan. The Company's current operating capital has been provided
primarily through cash advances from its officers and various third parties.
While the Company intends to generate working capital from its product
and related services, we expect our minimum capital needs during the current
fiscal year to be approximately $2.0 million to implement our intended plan of
business and generate positive cash flow. This amount will primarily be used for
manufacturing, implementing a large scale network system, marketing programs and
for general working capital. However, the Company may not be able to obtain the
required financing, or such financing may not be available on acceptable terms.
12
Due to the Company's historical operating losses, there can be no
assurance that projected capital requirements will not substantially exceed
current and future capital resources.
Additional working capital needs of the Company may require issuance of
equity securities, either on a public or private basis. Such issuances would, if
consummated, affect the ongoing capital structure of the Company and may result
in substantial dilution to shareholders. If additional funds are raised through
the issuance of equity, convertible debt, or similar securities of the Company,
the percentage of ownership of the Company's current shareholders will be
reduced, and such new securities may have rights or preferences senior to those
of the common stock held be current shareholders. No agreement with respect to
any such financing has been entered into, and such issuance may not be
consummated. In the event that funding sources are not available as and when
needed by the Company, it could have a severe adverse impact on the combined
business and results of operations of the Company and could result in the
Company being unable to continue as a going concern. Management is continually
monitoring and evaluating the financing sources available to achieve the
Company's goals.
Due to the losses sustained by the Company and its lack of working
capital, the Company's ability to remain a going concern depends upon its
ability to generate sufficient cash flow to meet its obligations and to obtain
additional financing as may be required.
FORWARD LOOKING INFORMATION: CERTAIN CAUTIONARY STATEMENTS: "SAFE HARBOR"
STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995:
Statements contained in this Management's Discussion and Analysis of
Financial Condition and Results of Operations which are not historical facts are
forward looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Examples of
such forward looking statements include the Company's expectations regarding its
intended plan of operation, the potential sale of its product, the Company's
planned financing of this venture and the sufficiency of the Company's available
liquidity for working capital, the Company's belief that its technology-based
business will grow and result in profitability, that it is positioned to take
advantage of new opportunities, and that it will focus on strengthening and
growing its business and commercializing innovative technologies and services.
Actual results may differ materially from those stated or implied in the forward
looking statements. Further, certain forward looking statements are based upon
assumptions of future events which may not prove to be accurate and are subject
to risks and uncertainties that could cause actual results to differ materially
from those set forth or implied by forward looking statements. These risks and
uncertainties include but are not limited to those referred to in the Company's
annual report on Form 10-KSB, for the fiscal year ended March 31, 2003,
including the Company's entry into a new commercial business, its ability to
access the capital markets and obtain working capital, risks associated with
technological changes in the market for telecommunications and voice
13
transmission over the internet, risks of competition in the emerging internet
telephony industry, and other risks described in the Company's Securities and
Exchange Commission filings.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures
As required by Rule 13a-15 under the Securities Exchange Act of 1934
(the "Exchange Act"), within the 90 days prior to the filing date of this
report, the Company carried out an evaluation of the effectiveness of the design
and operation of the Company's disclosure controls and procedures. This
evaluation was carried out under the supervision and with the participation of
the Company's management, including the Company's president, its (who has served
as the principal financial and accounting officer) and its President and CEO
(who serves as the principal operating officer). Based upon that evaluation, the
Company's Chairman and President have concluded that the Company's disclosure
controls and procedures are effective in alerting them to material information
regarding the Company's financial statement and disclosure obligation in order
to allow the Company to meet its reporting requirements under the Exchange Act
in a timely manner.
(b) Changes in internal control.
There have been no changes in internal controls or in other factors
that could significantly affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
During the three months ended June 30, 2003, the Company issued a total
of 455,000 shares of stock to three consultants and a law firm for current and
future services provided to the Company. The value of such shares issued is
being amortized to expense over a twelve-month period.
Subsequent to June 30, 2003, the Company issued a total of 260,000
shares of common stock, of which 200,000 was issued to a marketing consultant
and 60,000 shares was issued in connection with the settlement of litigation
previously reported with Michael Imbesi, C.I.C. Productions, Inc. and Cary D.
Arnold.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
14
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
Subsequent Event
On July 30, 2003, the Company received notice that Francois Van Der
Hoeven had resigned as a director. As set forth in the Company's most recent
annual report on Form 10-KSB, Mr. Van Der Hoeven had previously resigned as
Senior Vice President of Marketing in May of 2003. In addition, the Company had
notified its transfer agent to place a stop transfer order on 1,300,000 shares
that were previously issued to him in anticipation of his services over a 3-year
employment term. Mr. Van Der Hoeven's shares are being counted as outstanding
until such time as the certificate is either returned or the Company issues a
cancellation order.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit No. Description
----------- -------------------------------------------------------
17.1 Resignation of Director (Francois Van Der Hoeven)
31.1 Chief Executive Officer certification pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 Chief Financial Officer certification pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Chief Executive Officer certification pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32.2 Chief Financial Officer certification pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
(b) No reports on Form 8-K were filed during the three
months ended June 30, 2003.
***SIGNATURE PAGE FOLLOWS***
15
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized by FoneFriend, Inc. (the "Registrant")
By: /S/ Jackelyn Giroux
--------------------------------------------------
Jackelyn Giroux, President, Director
By: /S/ Dennis H. Johnston
-------------------------------------------------
Dennis H. Johnston, Secretary, General Counsel, Director
By: /S/ Edward N. Jones
--------------------------------------------------
Edward N. Jones, Chief Financial Officer
Dated: August 19, 2003
16