UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2011
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____ TO ____
Commission File Number: 33-45904C
FONA, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 41-1683548
---------------------------- ---------------------------------
(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
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5353 Manhattan Circle Suite 101 Boulder, Colorado 80303
(Address of principal executive offices including zip code)
(303) 499-6000
(Issuer's telephone number)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ X ] No [ ]
Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if smaller reporting company) ---
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Indicate by checkmark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [X] No [ ]
As of May 9, 2011, the Registrant had 7,894,111 shares of common stock, $.001
par value.
1
INDEX
Page
Number
------
Part I. Financial Information
Item 1. Financial Statements
Balance Sheets as of March 31, 2011
(unaudited) and December 31, 2010 4
Statements of Operations, Three Months
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ended March 31, 2011 and 2010, and the period
from August 1, 2008 (date of commencement of
development stage) through March 31, 2011 (unaudited) 5
Statements of Cash Flows, Three Months
ended March 31, 2011 and 2010, and the period
from August 1, 2008 (date of commencement of
development stage) through March 31, 2011 (unaudited) 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk 9
Item 4T. Controls and Procedures. 9
Part II. Other Information 10
Item 1. Legal Proceedings 10
Item 1A. Risk Factors 10
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits 10
2
PART I. FINANCIAL STATEMENTS
ITEM 1 FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by Fona, Inc., without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC). In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position of the Company as of March 31, 2011 and 2010 and for the periods then
ended have been made. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted. It is suggested that these condensed financial statements
be read in conjunction with the financial statements and notes thereto included
in the Company's December 31, 2010 audited financial statements. The results of
operations for these interim periods are not necessarily indicative of the
results for the entire year.
3
FONA, INC.
(A Development Stage Company)
BALANCE SHEETS
ASSETS
March 31, December 31,
2011 2010
------------ ------------
(unaudited) (see note 1)
Current Assets:
Cash 56 15
Prepaid Expenses 263 350
------------ ------------
Total Current Assets 319 365
------------ ------------
TOTAL ASSETS $ 319 $ 365
============ ============
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LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Accounts payable 6,965 7,554
Accounts payable, related party 31,755 21,665
Accrued expenses -- 2,304
------------ ------------
Total Current Liabilities 38,720 31,523
------------ ------------
TOTAL LIABILITIES 38,720 31,523
------------ ------------
Commitments and contingencies
(Notes 1,2,3,4, and 5)
Stockholders' (Deficit)
Preferred Stock, $.001 par value 20,000,000
shares authorized; No shares
issued and outstanding (Note 4)
Common stock, $.001 par value
780,000,000 shares authorized,
7,894,111 issued and
outstanding
(Note 4) 7,894 7,894
Additional paid-in capital 1,214,066 1,214,066
Accumulated (Deficit) (1,200,940) (1,200,940)
Accumulated (Deficit) during the
development stage (59,421) (52,178)
------------ ------------
TOTAL STOCKHOLDERS' (DEFICIT) (38,401) (31,158)
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' (DEFICIT) $ 319 $ 365
============ ============
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The accompanying notes are an integral part of the financial statements.
4
FONA, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(unaudited)
For the
Period from
August 1,
2008 (date of
development
Three Months Three Months stage)
Ended Ended through
March 31, March 31, March 31,
2011 2010 2011
------------ ------------ ------------
Revenue $ -- $ -- $ --
------------ ------------ ------------
Expenses:
Accounting and audit fees 5,000 -- 15,204
Attorney fees 552 -- 32,714
Transfer agent fees 488 363 5,162
Printing and mailing fees -- -- 1,056
General corporate fees 1,180 120 4,452
Other 24 -- 833
------------ ------------ ------------
Total Expenses 7,244 483 59,421
------------ ------------ ------------
Net Operating (Loss) (7,244) (483) (59,421)
------------ ------------ ------------
Net (Loss) $ (7,244) $ (483) $ (59,421)
============ ============ ============
Per Share $ nil $ nil $ (.01)
============ ============ ============
Weighted Average Shares
Outstanding 7,894,111 7,894,111 6,932,046
============ ============ ============
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The accompanying notes are an integral part of the financial statements.
5
FONA, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(unaudited)
Period from
August 1,
2008 (date of
Development
For the Three Months Ended stage) to
March 31, March 31,
2011 2010 2011
------------ ------------ ------------
Cash Flows from Operating Activities:
Net Income (Loss) $ (7,244) $ (483) $ (59,421)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Increase (decrease) in accounts
payable and accrued expenses (2,893) (4,443) 7,623
Decrease in prepaid expenses 88 88 88
------------ ------------ ------------
Net Cash (Used in) Operating Activities (10,049) (4,838) (51,710)
------------ ------------ ------------
Cash Flows from Investing Activities -- -- --
------------ ------------ ------------
Net Cash (Used in) Investing Activities -- -- --
Cash Flows from Financing Activities:
Sales of common stock -- -- 20,000
Advance from related party 10,090 -- 31,755
------------ ------------ ------------
Net Cash Provided by Financing
Activities 10,090 -- 51,755
------------ ------------ ------------
Increase (decrease) in Cash 41 (4,838) 45
------------ ------------ ------------
Cash, Beginning of Period 15 18,600 11
------------ ------------ ------------
Cash, End of Period $ 56 $ 13,762 $ 56
============ ============ ============
Interest Paid $ -- $ -- $ --
============ ============ ============
Income Taxes Paid $ -- $ -- $ --
============ ============ ============
Supplemental Disclosure of
Non-Cash Transactions:
Conversion of debt for stock and
debt forgiveness $ -- $ -- $ 5,993
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The accompanying notes are an integral part of the financial statements.
6
FONA, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2011 (Unaudited)
(1) Unaudited Financial Statements
The balance sheet as of March 31, 2011, the statements of operations and the
statements of cash flows for the three months ended March 31, 2011 and 2010,
have been prepared by Fona, Inc. (the "Company") without audit, pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures, normally included in the financial
statements prepared in accordance with accounting principles generally accepted
in the United States of America, have been condensed or omitted as allowed by
such rules and regulations, and the Company believes that the disclosures are
adequate to make the information presented not misleading. In the opinion of
management, all adjustments (which include only normal recurring adjustments)
necessary to present fairly the financial position, results of operations and
changes in financial position at March 31, 2011 and for all periods presented,
have been made.
It is suggested that these statements be read in conjunction with the December
31, 2010 audited financial statements and the accompanying notes included in the
Company's Registration on Form 10-K, filed with the Securities and Exchange
Commission.
(2) Basis of Presentation
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America, which
contemplates continuation of the Company as a going concern. However, the
Company has negative working capital and stockholders' deficits and no active
business operations, which raises substantial doubt about its ability to
continue as a going concern.
In view of these matters, realization of certain of the assets in the
accompanying balance sheet is dependent upon continued operations of the
Company, which in turn is dependent upon the Company's ability to meet its
financial requirements, raise additional capital, and the success of its future
operations. However, the Company has sustained losses from operations and has
net capital and working capital deficits, which raises substantial doubt about
its ability to continue as a going concern.
Management has opted to resume the filing of Securities and Exchange Commission
(SEC) reporting documentation and then to seek a business combination.
Management believes that this plan provides an opportunity for the Company to
continue as a going concern.
(3) Development Stage Company
Based upon the Company's business plan, it is a development stage enterprise
since planned principal operations have not yet commenced. Accordingly, the
Company presents its financial statements in conformity with the accounting
principles generally accepted in the United States of America that apply in
establishing operating enterprises. As a development stage enterprise, the
Company discloses the deficit accumulated during the development stage and the
cumulative statements of operations and cash flows from commencement of
development stage to the current balance sheet date. The development stage began
August 1, 2008 when it commenced activities to become a reporting company with
the Securities and Exchange Commission with the intention of becoming a publicly
traded company.
7
FONA, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
March 31, 2011 (Unaudited)
(4) Common Stock
Pursuant to the Articles of Incorporation as amended, the Company is authorized
to issue 780,000,000 common shares with $.001 par value. As of March 31, 2011,
there were 7,894,111 shares of common stock issued and outstanding.
(5) Related Party Transactions
At March 31, 2011 and December 31, 2010, the Company owed $31,755 and $21,665,
respectively, to related parties for expenses of the Company. An affiliate of
Sanford Schwartz, a current director, was owed $26,267 and $16,177 at March 31,
2011 and December 31, 2010 respectively, and affiliates of Nick T. Boosalis, a
former director, were owed $5,488 at March 31, 2011 and December 31, 2010. The
advances are loans that are uncollateralized, bear no interest and are due on
demand.
The Company uses the offices of its President for its mailing address and
minimal office facility needs for no consideration. No provision for these costs
has been provided since it has been determined that they are minimal.
(6) Subsequent Events
The Company has evaluated all subsequent events from March 31, 2011 through the
date of issuance of the financial statements and found no items requiring
disclosure.
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ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company generated no revenues during the period ended March 31, 2011, and
management does not anticipate any revenues until following the conclusion of a
merger or acquisition, if any, as contemplated by the Company's business plan.
The Company has limited capital. The Company anticipates operational costs will
be limited until such time as significant evaluation work is undertaken
regarding prospective mergers or acquisitions. It is the belief of management
that sufficient working capital necessary to support and preserve the integrity
of the corporate entity will be available. However, there is no legal obligation
for management to provide additional future funding. The Company has not
identified any alternative sources for capital; consequently, there is
substantial doubt about the Company's ability to continue as a going concern.
At March 31, 2011, the Company had no material commitments for capital
expenditures.
ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not required by smaller reporting companies.
ITEM 4 CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures.
Under the supervision and with the participation of the Company's management,
including the principal executive officer and principal financial officer, as of
the end of the period covered by this report, the Company conducted an
evaluation of the effectiveness of the design and operation of the Company's
disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e)
under the Exchange Act. The Company's disclosure controls and procedures are
designed to provide reasonable assurance that the information required to be
included in the Company's reports to the Commission is recorded, processed,
summarized and reported within the time periods specified in Commission rules
and forms and to provide reasonable assurance that such information is
accumulated and communicated to our management, including our principal
executive officer and principal financial officer, as appropriate to allow
timely decisions regarding required disclosure. Based on this evaluation, the
Company's principal executive officer and principal financial officer concluded
that, as of the period covered by this report, the Company's disclosure controls
and procedures are effective at these reasonable assurance levels.
Our internal control system is designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with accounting
principles generally accepted in the United States. There is no assurance that
our disclosure controls or our internal controls over financial reporting can
prevent all errors. An internal control system, no matter how well designed and
operated, has inherent limitations, including the possibility of human error.
Because of the inherent limitations in a cost-effective control system,
misstatements due to error may occur and not be detected. We monitor our
disclosure controls and internal controls and make modifications as necessary.
Our intent in this regard is that our disclosure controls and our internal
controls will improve as systems change and conditions warrant.
(b) Changes in internal controls.
Our Certifying Officers have indicated that there were no changes in our
internal controls over financial reporting or other factors that could
significantly affect such controls subsequent to the date of his evaluation, and
there were no such control actions with regard to significant deficiencies and
material weaknesses.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 1A. Risk Factors
Not required by smaller reporting companies.
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds
None during the three-month period covered by this report.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None during the three-month period covered by this report.
Item 5. Other Information
None.
Item 6. Exhibits
Exhibit 31 Rule 13a-14(a)/15d-14(a) Certifications
Exhibit 32 Section 1350 Certifications
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10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this quarterly report to be signed
on its behalf by the undersigned, thereunto duly authorized.
REGISTRANT Fona, Inc.
BY(Signature) /s/ Michael Friess
(Name and Title) Michael Friess, Chairman of the
Board, President and
Chief Executive Officer
(Date) May 9, 2011
BY(Signature) /s/ Chloe DiVita
(Name and Title) Chloe DiVita, Treasurer,
Secretary, Director and
Chief Financial Officer
(Date) May 9, 2011
BY(Signature) /s/ Sanford Schwartz
(Name and Title) Sanford Schwartz, Director,
(Date) May 9, 2011
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