- Quarterly Report (10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2008

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from to

Commission File Number: 333-138512

FNDS3000 CORP

(Exact name of small business issuer as specified in its charter)


DELAWARE		51-0571588

(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

818 A1A North Suite 201 Ponte Vedra Beach, Florida 32082

(Address of principal executive offices)

904-273-2702

(Registrant’s telephone number)

(Former name, if changed since last report)

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 is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.


Large accelerated filer ¨		Accelerated filer ¨
Non-accelerated filer ¨		Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

APPLICABLE ONLY TO CORPORATE ISSUERS

As of January 14, 2009, the Company had outstanding 36,590,192 shares of its common stock, par value $0.001.

FNDS3000 CORP AND SUBSIDIARIES

FORM 10-Q

For the Quarterly Period Ended November 30, 2008

INDEX


PART I	Financial Information	3
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	20
Item 4.	Controls and Procedures	21
Item 4T.	Controls and Procedures	21
PART II	Other Information	21
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	22
Item 4.	Submission of Matters to a Vote of Security Holders	22
Item 5.	Other Information	22
Item 6.	Exhibits	22
Signatures		24

PART I—FINANCIAL INFORMATION

Item 1.

Financial Statements

FNDS3000 CORP AND SUBSIDIARIES

(f/k/a FundsTech Corp.)

(A development stage enterprise)

CONDENSED CONSOLIDATED BALANCE SHEETS


	November 30, 2008			August 31, 2008
	(Unaudited)			(Audited)
ASSETS
Current assets:
Cash	$	113,128		$	317,077
Accounts receivable		87,786			70,160
Inventory		19,290			19,000
Deposits		10,660			46,470
Prepaid expenses and other current assets		7,298			11,037
Due from related party		38,800			35,097

Total current assets		276,962			498,841
Property, plant and equipment, net		104,891			114,411
Software license		1,648,263			1,597,438
Other intangibles, net		1,612,500			1,725,000

Total assets	$	3,642,616		$	3,935,690

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	199,670		$	76,674
Accrued payroll and benefits		278,008			162,232
Other accrued liabilities		28,589			15,980
Due to related party		66,533			20,860
Notes payable		874,262			974,262

Total current liabilities		1,447,062			1,250,008
Convertible note payable		320,000			—
Notes payable-long-term		250,000			250,000

Total liabilities		2,017,062			1,500,008

Commitments and contingencies
Stockholders’ equity:
Preferred stock; $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding
Common stock, $0.001 par; 100,000,000 shares authorized; 28,590,192 and 26,590,192 issued and outstanding, November 30, 2008 28,007,562 and 26,007,562 issued and outstanding, August 31, 2008		26,590			26,008
Paid-in capital		8,938,277			8,683,842
Prepaid service paid in common stock		(12,500	)		—
Accumulated deficit during development stage		(7,326,813	)		(6,274,168	)

Total stockholders’ equity		1,625,554			2,435,682

Total liabilities and stockholders’ equity	$	3,642,616		$	3,935,690

The accompanying notes are an integral part of these condensed consolidated financial statements.

FNDS3000 CORP AND SUBSIDIARIES

(f/k/a FundsTech Corp.)

(A development stage enterprise)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For The Three Months Ended November 30,						Since Inception (January 24, 2006) to November 30,2008
	2008			2007
Revenues, net	$	260,166		$	5,000		$	506,354
Cost of sales		77,146			3,500			191,457

Gross profit		183,020			1,500			314,897
Operating expenses:
Stock-based compensation-professional		62,500			14,131			2,829,109
Stock-based compensation-salaries		163,176			—			361,627
Salaries and benefits		505,879			194,868			2,080,162
Travel expense		78,127			120,336			498,554
Professional and consultant fees		143,121			28,354			557,738
Depreciation and amortization expense		143,661			774			276,233
Asset impairment		—			—			226,741
Commissions		48,764			—			97,606
Bad debt expense		—			—			17,000
Other selling, general and administrative		76,008			19,699			282,879

Total operating expenses		1,221,236			378,161			7,227,649

Loss from operations		(1,038,216	)		(376,661	)		(6,912,752	)

Other income (expense):
Interest and other income		2,833			—			12,124
Interest expense		(15,197	)		—			(38,317	)
Gain/(loss) on currency translation		(2,065	)		—			(10,186	)
Loss on investment		—			—			(376,000	)
Loss on asset disposal		—			—			(1,682	)

Total other income (expense)		(14,429	)		—			(414,061	)

Net loss	$	(1,052,645	)	$	(376,661	)	$	(7,326,813	)

Net loss per share – basic and diluted	$	(0.04	)	$	(0.03	)

Weighted average shares outstanding – basic and diluted		26,918,862			23,716,648

The accompanying notes are an integral part of these condensed consolidated financial statements.

FUNDS3000 CORP AND SUBSIDIARIES

(f/k/a FundsTech Corp.)

(A development stage enterprise)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	For the Three Months Ended						Since Inception (January 24, 2006) to through November 30,
	November 30,
	2008			2007			2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,052,645	)	$	(2,757,265	)	$	(7,326,813	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		143,068			1,309			275,640
Non-cash stock compensation		225,676			1,580,422			3,218,126
Allowance for impaired intangibles		—			—			226,741
Currency translation adjustment		—			—			5,698
Bad debt		—			17,000			17,000
Write-off of investment		—			376,000			376,000
Change in operating assets and liabilities:
Accounts receivable		(17,626	)		(7,000	)		(104,786	)
Due to/from related party		41,970			—			27,733
Prepaid expenses and other assets		39,259			(14,135	)		(18,249	)
Accounts payable and accrued liabilities		135,604			68,501			228,261
Accrued payroll and benefits		115,776			—			278,008

Net cash used in operating activities		(368,918	)		(735,168	)		(2,796,641	)

CASH FLOWS FROM INVESTING ACTIVITIES
Investment in subsidiaries		—			(375,000	)		(625,000	)
Purchase of property and equipment		(21,048	)		(10,354	)		(148,710	)
Loans to subsidiaries		—			(1,000	)		(1,000	)
Purchase of software license		(50,825	)		—			(898,263	)

Net cash used in investing activities		(71,873	)		(386,354	)		(1,672,973	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from private placements		16,842			979,900			4,562,742
Borrowings on notes payable		320,000			—			320,000
Payments on notes payable		(100,000	)		—			(300,000	)

Net cash provided by financing activities		236,842			979,900			4,582,742

Net increase (decrease) in cash and cash equivalents		(203,949	)		(141,622	)		113,128
Cash and cash equivalents at beginning of year		317,077			175,860			—

CASH AND CASH EQUIVALENTS AT END OF YEAR	$	113,128		$	34,238		$	113,128

SUPPLEMENTAL DISCLOSURES
Cash operating activities:
Interest paid	$	15,197		$	1,142		$	16,339

Income taxes paid	$	—		$	—		$	—

SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Stock issued for common stock payable	$	—		$	149,900		$	149,900

Stock issued and note payable-related party assumed for acquisition	$	—		$	—		$	116,875

Acquisition of assets
Inventory	$	—		$	—		$	19,000
Property and equipment		—			—			28,000
Other intangible		—			—			1,800,000
Software		—			—			236,599

Total assets acquired		—			—			2,083,599
Less cash paid		—			—			(250,000	)

Stock issued and note payable assumed for acquisition of assets	$	—		$	—		$	1,833,599

The accompanying notes are an integral part of these condensed consolidated financial statements.

FNDS3000 CORP AND SUBSIDIARIES

(f/k/a FundsTech Corp.)

(a Development Stage Enterprise)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of FNDS3000 Corp (f/k/a FundsTech Corp.) (the “Company”, FNDS3000”, “we”, “our” or “us”) and subsidiaries have been prepared in accordance with United States generally accepted accounting principles for interim financial statements. Therefore, they include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the Form 10-KSB for the year ended August 31, 2008 of FNDS3000 Corp which was filed on December 8, 2008.

The interim condensed consolidated financial statements present the condensed consolidated balance sheets, statements of operations, and cash flows of FNDS3000 Corp and its subsidiaries. The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The interim condensed consolidated financial information is unaudited. In the opinion of management, all adjustments necessary to present fairly the financial position as of November 30, 2008 and the results of operations and cash flows presented herein have been included in the condensed consolidated financial statements. Interim results are not necessarily indicative of results of operations for the full year.

Our fiscal year ends on August 31 of the applicable calendar year. All references to fiscal periods apply to our fiscal quarters or year which ends on the last day of the calendar month end.

The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Note 2 – Formation, Background and Operations of the Company

Corporate History

FNDS3000, which is considered to be a development stage enterprise as defined in Financial Accounting Standards Board Statement No. 7, was incorporated under the laws of the state of Delaware on January 24, 2006. The Company’s year end is August 31 ^st .

We are headquartered in Ponte Vedra Beach, Florida.

On March 28, 2008, the Company, with written consent of the board of directors as well as the consent of stockholders holding a majority of the outstanding shares of common stock amended the Company’s Articles of Incorporation to change the Company’s name to FNDS3000 Corp from FundsTech Corp.

Summary of Business

We are a financial transaction processing company that provides the following services:

prepaid debit cards to third parties in cooperation with financial institutions throughout the world, predominantly through our Europe, Middle East, and Africa (“EMEA”) Operating Unit, and

merchant processing solutions, predominantly through our Americas Operating Unit.

Europe, Middle East, and Africa Operating Unit

We have installed our first prepaid debit card issuing platform. In September 2008, after the completion of all necessary certifications, the Company commenced providing processing services to its customers in South Africa. We launched our first payroll card program in South Africa via a beta test phase and went into full live production in November 2008. The issuing of our initial Diamond Cash Card is a significant milestone in our corporate history. Our major strategic objective was to install our prepaid card-issuing platform in Johannesburg, South Africa to serve as a launching pad for tapping into the expanding unbanked or under-banked markets. The prepaid platform will service South Africa and we anticipate expansion to many other African and Middle Eastern countries. The introduction of our prepaid card solution

compliments the South African Government’s drive toward the economic advancement of previously disadvantaged communities. We plan to launch our next program in the Middle East. We are in the process of securing a customer base in that region commencing in the United Arab Emirates.

Looking ahead, we are targeting our prepaid debit cards to a market with over 1 billion individuals worldwide who do not have bank accounts (“unbanked”). Our products allow employers to replace payroll checks for all workers. In addition, employers can use our products in lieu of cash to pay employees. Domestic and international sharing of money, ‘money transfer’, is a key feature of our solution. Many of our products carry worldwide brand marks and can be used anywhere in the world that accepts those brands. Other services include gift cards, bill pay, prepaid cellular, and other prepaid products.

Americas Operating Unit

In July 2008, we announced the acquisition of the assets of Atlas Merchant Services, Inc., an Atlanta-based company, that markets debit and credit card programs to merchants and employers throughout the United States. At the time of acquisition, the company was generating approximately $1 million in annual revenue. The acquisition provides us with proprietary software solutions for the virtual POS/internet market and an Electronic Funds Transfer platform for our U.S. and worldwide customers. This enables us to line extend our current product offering to existing and new customers and can be used advantageously in a cross-selling market strategy. Our merchant processing solutions provide comprehensive credit, debit, and check card payment programs. The combination of card issuing and merchant processing enables the Company to provide turnkey financial transaction solutions to virtually any market worldwide.

Atlas Merchant Services, LLC was incorporated under the laws of the state of Nevada on June 18, 2008 and is a wholly-owned subsidiary of FNDS3000 Corp. Transaction processing services provide FNDS3000 with a powerful, end-to-end processing network and customized merchant support services for their expanding base of merchants.

Additionally, Atlas LLC has focused on its launch of a new product, “Atlas Restaurant Solutions”, an on-line ordering system that provides restaurateurs a low-cost and immediate solution for exposure on the internet. The on-line ordering system gives the restaurant owner the ability to take orders and payments over the internet, in addition to promoting its restaurant and product offerings. Additionally, we expect to market this product internationally in the near future.

Products and Services

Our primary products are The FNDS3000 ATM and Prepaid Debit Cards and the FNDS3000 Stored Value MasterCard cards which are re-loadable financial products primarily for the unbanked or under banked market. We have begun providing these cards through distributors to consumers in that market sector since the Company’s fourth quarter of 2006. The unbanked or under banked market is generally made up of consumers that do not have checking accounts and/or the ability to obtain debit or credit cards. We are also in the process of providing these products to third party companies for co-branding with their company name and logo, and have been marketing these products under a three year Marketing Agreement with Global Cash Card.

We sell prepaid debit cards and provide processing and management services. We currently market our products directly to distributors for distribution into the United States and non-U.S. markets. We also market our prepaid debit cards to employers for distribution to their employees who are then able to receive employment earnings by direct deposit. Employees are able to use the card to access cash through ATMs or purchase products and services wherever personal identification number-based (“PIN”) debit cards are accepted. We also plan to target third parties and pursue relationships that may help us grow our business through strategic partnerships, complementary sales channels and acquisitions.

We also provide processing services to financial institutions and independent sales organizations (“ISO”), in non-U.S. markets to assist with the processing of debit card transactions. We market debit cards predominantly under the FNDS3000 name or under the names of our business partners. In the U.S., we utilize third party processors (“TPP”) who issue debit cards on our behalf to cardholders and process the transactions from the use of these cards by the cardholder(s). They can also transfer money from various locations throughout the United States including Money Gram and Western Union, stores and other locations for deposit on the cards of the cardholders. We refer to these retail locations where money can be transferred, or loaded, onto our cards as points of presence (“POP”). To date, our relationship with all of the POPs that we have access to have been established through our third party processors. We generate revenue through user fees that may involve a monthly flat fee and/or a transaction fee for each transaction processed.

Our prepaid debit cards are presently marketed through sales channels that primarily target the unbanked or under banked market, which consists primarily of those customers who cannot qualify for a credit card or bank account or

who are otherwise unattractive to banks, such as people who have no credit history or very low income. We market our product through sales channels to large business entities with a significant number of unbanked or under banked employees. The employers then distribute these cards to their employees who do not have a bank account. Then the employer directly deposits the employee’s net payroll onto the card thus avoiding the time and expense of issuing and distributing payroll checks. We also issue cards for a variety of different markets and demographics such as travel cards and gift cards as well as others. We use an interactive activation system for automated activation of cards and customer relationship management technology. We also have access to networking software that supports a network to allow cash to be loaded onto cards.

We are also marketing the licensing of a debit card software solution to financial institutions as well as independent sales organizations who wish to offer their own debit card program. We intend to sell these programs either directly or through distributors in non-U.S. markets.

Card Associations: MasterCard

Card associations sponsor certain types of card programs. All of the cards we market that have a hologram logo on the front require approval from the card association holding the trade mark for the hologram logo. We obtain access to the network of financial institutions and linked ATM’s and POS systems through an arrangement among banks, transaction processors and MasterCard though various third party processors in the U.S and through sponsorship financial institutions in non U.S. markets. Our third party providers, through licenses and other arrangements, provides access to most networks making it unnecessary for us to negotiate access to each of the individual networks separately. As our customer base grows, we intend to analyze the cost savings of direct network access. However, the large processors that provide processing services have a large cost structure based on high volume and we expect that it will be some time before we will contemplate direct network access.

Banks

Banks have a direct relationship to the card associations, and are responsible for sponsoring our third party processors in the U.S. and us or other third parties where we have direct relations in non-U.S. markets. Without a TPP or an ISO with a card association or our direct relationship with the banks, we would not be able to offer our products for sale to customers. Once an approval from a card association is obtained, we work with a bank to create the product or program. The agreement between the bank and the card association will determine customer service requirements and will set out the card account requirements including maximum load amounts, usage, withdrawals, etc. The bank has set transaction fees which are charged to the card holder. We are initially charged these fees, and pass them to the customer each time a transaction occurs. The bank also charges the processor a transaction fee for certain transactions which are collected at the time of the transaction by the processor and distributed to the bank. The bank also charges us a monthly fee to keep the card account active. This fee is collected by the processor who distributes those funds to the bank and to us.

Processors

Processors collect money and handle financial transactions among the banks, distributors and customers. Banks require that an approved processor have a relationship with the Third Party Policy or ISO so that all of the customer transactions are tracked and debits/credits to the customer card accounts are properly adjusted. The terms of these contracts articulate how we work with the processor to address fraudulent use of the cards, how any potential shortfall is addressed for a legitimate customer load and the availability of customer service information. The processor has necessary regulatory and banking approvals to conduct transactions from point of sale terminals and banks to apply credits and debits to the customer cards. We have relationship with various third parties to provide processing services in the U.S., while we intend to be the processor in non-U.S. markets. In the U.S., the third party processors of our company’s transactions are responsible to facilitate customer reconciliations. We pay a fee to the processor for the initial set up of the card program and the processor charges a fee to the customer for certain transactions performed by the customer. These fees are collected by the processor and distributed to the appropriate party. Fraud risk is minimized in lower floor limits (the ability of a store to process a transaction without a “real time” verification of the card balance), and the fact that these cards are intended to be used within certain national jurisdictions. Fraudulent use of cards is governed by the checks and velocity use parameters that are in place. The processor has a schedule of fees for services provided to the card holder. We are charged these fees, and pass them onto the customer each time a transaction occurs.

Growth Strategy

We plan on increasing our revenues by issuing payroll cards through our distributors to our existing backlog of customers in South Africa. We intend to offer our products in additional countries in Africa and the Middle East during 2009. We also intend to offer additional product offerings such as card to card transfer of funds and SMS messaging that will add more revenue per card not only in the United States, but in foreign markets, particularly Africa, Europe, India and China. Our success will be largely dependent upon the marketing of our products to a variety of markets, the

offering of additional products and/or services and increased relationships with card association companies, banks and distributors.

Employee

As of November 30, 2008, our company was operated by Michael Dodak as our Chief Executive Officer, Joseph McGuire as our Chief Financial Officer and Treasurer, David Fann as our President and Secretary, Victoria Vaksman as our Executive Vice President of Europe, Middle East and Africa, Vic Gerber as our Executive Vice President of the Americas and Joe Tumbarello as our Chief Operating Officer. The Company has approximately 20 full time employees. We intend to periodically hire independent contractors to execute our marketing, sales, and business development functions. Our company will hire employees when circumstances warrant. As we have begun processing operations in South Africa, we intend to hire between six and ten individuals who will reside in South Africa and include operational, administrative, customer service and IT personnel.

Note 3—Going Concern

Our financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and liquidation of liabilities in the normal course of business. We have incurred minimal profits from operations since our inception. In addition, we expect to have ongoing requirements for capital investment to implement our business plan. As such, our ability to continue as a going concern is contingent upon us being able to secure an adequate amount of debt or equity capital to enable us to meet our operating cash requirements and successfully implement our business plan. In addition, our ability to continue as a going concern must be considered in light of the problems, expenses and complications frequently encountered by entrance into established markets and the competitive environment in which we operate.

Since inception, our operations have primarily been funded through private equity financing, and we expect to continue to seek additional funding through private or public equity and debt financing. Finally, we expect that operating revenues from the sales of our products and other related revenues will increase.

However, there can be no assurance that our plans discussed above will materialize and/or that we will be successful in funding our estimated cash shortfalls through additional debt or equity capital and/or any cash generated by our operations. These factors, among others, indicate that there is substantial doubt about our ability to continue as a going concern for a reasonable period of time.

Our financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.

Note 4—Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of FNDS3000 Corp and its wholly-owned subsidiaries: Atlas Merchant Services, LLC, Fundstech Corp. SA. (PTY), FNDS3000 Corp SA. and Transaction Data Management, Inc., which is inactive. Significant inter-company accounts and transactions are eliminated in consolidation.

Reclassifications

Certain items may be reclassified in the 2008 condensed consolidated financial statements to conform to the 2009 presentation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make certain 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. The reported amounts of revenues and expenses during the reporting period may be affected by the estimates and assumptions we are required to make. Estimates that are critical to the accompanying financial statements arise from our belief that we will secure an adequate amount of cash to continue as a going concern, that our allowance for doubtful accounts is adequate to cover potential losses in our receivable portfolio, and that all long-lived assets are recoverable.

In addition, the determination and valuation of derivative financial instruments is a significant estimate. The markets for our products are characterized by intense competition, rapid technological development, evolving standards, short product life cycles and price competition, all of which could impact the future realization of our assets. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the period that they are determined to

be necessary. It is at least reasonably possible that our estimates could change in the near term with respect to these matters.

Fair Value of Financial Instruments

The Company includes fair value information in the notes to financial statements when the fair value of its financial instruments is different from the book value. When the book value approximates fair value, no additional disclosure is made, which is the case for financial instruments outstanding as of November 30, 2008 and 2007. The Company assumes the book value of those financial instruments that are classified as current approximates fair value because of the short maturity of these instruments. For non-current financial instruments, the Company uses quoted market prices or, to the extent that there are no available quoted market prices, market prices for similar instruments.

Financial Instruments

The Company’s financial instruments consist primarily of cash, accounts receivable, accounts payable, and notes receivable and payable. These financial instruments are stated at their respective carrying values, which approximate their fair values.

Cash and Cash Equivalents

For purposes of the statement of cash flows, we consider all highly liquid investments with an original maturity of three months or less to be cash equivalents.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of temporary cash investments and trade accounts receivable. The Company maintains cash balances at a financial institution in Ponte Vedra Beach, Florida. Accounts at this institution are secured by the Federal Deposit Insurance Corporation up to $250,000. At times, balances may exceed federally insured limits. The Company has not experienced any losses in such accounts. Management believes that the Company is not exposed to any significant credit risk with respect to its cash and cash equivalents.

Revenue Recognition and Deferred Revenue

We currently generate revenues from consulting fees, which arise from providing advisory services under a one-year Consulting Agreement with Global Cash Card.

We will generate the following types of revenue as new business is developed:

•

Initiation fees, which arise from sales of our stored value and debit cards.

•

Transaction fees, which arise from the use and loading of cash for ATM, debit or stored value cards.

•

Maintenance fees, which arise from charges for keeping the cards active.

•

Financial float fees, which arise from cash obtained with the instant load of cash and convenience of stored value, ATM and debit cards before the funds are used.

Our merchants process transactions and incur processing and other fees throughout a given month. Early in the following month, our transaction processors will calculate our revenues associated with those transactions to produce a revenue and expense report. That report and the associated payment, is then provided to the Company on or about the 20 ^th of that month.

In general, our revenue recognition policy for fees and services arising from our products is consistent with the criteria set forth in the Securities and Exchange Commission’s (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition in Financial Statements” for determining when revenue is realized or realizable and earned. In accordance with the requirements of SAB 104, we recognize revenue when, (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) our price to the buyer is fixed or determinable; and (4) collectibility of the receivables is reasonably assured. More specifically, initiation fee revenue for our stored value cards are recognized when shipped, transaction fee revenue is recognized when the transaction is recorded, maintenance and financial float fees revenue are recognized when the products are used. Consulting fees are recognized as work is performed and per contractual terms with the customer. Costs of revenue, including the cost of printing the prepaid cards, are recorded at the time revenue is recognized.

Accounts Receivable and Allowance for Doubtful Accounts

Our credit terms for stored-value cards is net 10 days from the date of shipment. The Company’s accounts receivable arise from our processing partners and are usually paid within 20 days from when the prior month’s invoices are due. Accounts receivable are determined to be past due if payment is not made in accordance with the terms of our contracts and receivables are written off when they are determined to be uncollectible. We perform ongoing credit evaluations of all of our customers and generally do not require collateral.

We evaluate the allowance for doubtful accounts on a regular basis for adequacy. The level of the allowance account, and related bad debts are based upon our review of the collectibility of our receivables in light of historical experience, adverse situations that may affect our customers’ ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

Inventories

Inventories will consist of reloadable stored-value ATM cards and spare equipment, and will be valued at lower of cost (first-in, first-out) or market. Management provides a reserve to reduce inventory to its net realizable value. Certain factors could impact the realizable value of inventory, so management will continually evaluate the recoverability based on assumptions about customer demand and market conditions. The evaluation may take into consideration expected demand, new product development, the effect new products might have on the sale of existing products, product obsolescence, and other factors. The reserve, or write-down, is equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. If actual market conditions are less favorable than those projected by management, additional inventory reserves or write-downs may be required. If actual market conditions are more favorable, reserves or write-downs may be reversed. As of November 30, 2008, we have $19,290 of inventory.

Property and Equipment

Equipment and improvements are stated at cost less accumulated depreciation and amortization. Depreciation and amortization of equipment and improvements are provided over the estimated useful lives of the assets, or the related lease terms if shorter, by the straight-line method. Useful lives range as follows:


Category		Useful Lives
Computers and networks		3 years
Machinery and equipment		5-7 years
Furniture and fixtures		5-7 years
Office equipment		3-10 years
Leasehold improvements		Lesser of lease term or useful life of asset

Major additions will be capitalized, while minor additions and maintenance and repairs, which do not extend the useful life of an asset, will be expensed as incurred. Upon disposition, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is reflected in current operations.

Long-Lived Assets and Impairment

SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” requires that long-lived assets, including certain identifiable intangibles, be reviewed for impairment whenever events or changes in circumstances indicate that the carrying value of the assets in question may not be recoverable.

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of a long-lived asset may not be recoverable. The Company periodically evaluates whether events and circumstances have occurred that may warrant revision of the estimated useful lives of its long-lived assets or whether the remaining balance of long-lived assets should be evaluated for possible impairment. We assessed the impairment of intangible assets with indefinite useful lives, specifically the software acquired during the acquisition of Atlas, and that review indicated that the fair value was less than the carrying value. As of August 31, 2008, the software was considered to be impaired and we recorded an impairment charge in our income statement.

Net Earnings or (Loss) Per Share

We compute net earnings or loss per share in accordance with SFAS No. 128, “Earnings per Share” and the SEC’s SAB 98. Under the provisions of SFAS No. 128 and SAB 98, basic net earnings or loss per share is computed by dividing the net earnings or loss available to common stockholders for the period by the weighted average number of common shares outstanding during the period. Diluted net earnings or loss per share is computed by dividing the net earnings or

loss for the period by the number of common and common equivalent shares outstanding during the period (we currently have no common stock equivalent shares which arise from the issuance of options and warrants).

Basic net loss per common share has been computed based upon the weighted average number of shares of common stock outstanding during the periods. The number of shares used in the computation is 26,918,862 and 23,716,648 for the three months ended November 30, 2008 and 2007, respectively. Diluted net loss per common share, assuming exercising of the options granted, is not presented as the effect of conversion is anti-dilutive.

Purchased and Developed Software

Purchased and developed software includes the costs to purchase third-party software and to develop internal-use software for sale. The Company follows the guidance in Statement of Position No. 98-1, “Accounting for the Costs of Computer Software Developed or Obtained for Internal Use” (“SOP 98-1”) for capitalizing software projects. Software costs are amortized over the expected economic life of the product, generally three years.

Equity—Based Compensation

We have adopted the fair value recognition provisions of SFAS No. 123(R), “Share-Based Payment,” using the modified prospective application transition method. Under the fair value recognition provisions of SFAS No. 123(R), we recognize stock-based compensation net of an estimated forfeiture rate and only recognize compensation cost for those shares expected to vest over the requisite service period of the award. The Company issues stock as compensation for services at the current market fair value.

We account for equity instruments issued for services based on the fair value of the consideration received or the fair value of the equity instruments, whichever is more reliably measurable. Stock based compensation was determined using the fair value of the services performed due to the lack of historical fair value of the equity instruments.

Determining the appropriate fair value model and calculating the fair value of share-based payment awards require the input of highly subjective assumptions, including the expected life of the share-based payment awards and stock price volatility. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, our stock-based compensation expense could be materially different in the future. In addition, we are required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. If our actual forfeiture rate is materially different from our estimate, the stock-based compensation expense could be significantly different from what we have recorded in the current period.

Foreign Currency Translation

The financial position and results of operations of the FNDS300 SA operations are measured using the parent’s currency as the functional currency. Assets and liabilities of these operations are translated at the exchange rate in effect at the transaction date. Income statement accounts, with the exception of amortized assets or liabilities, are translated at the average exchange rate during the year. Translation adjustments arising from the use of differing exchange rates from period to period are included in exchange gain or loss in the income statement. Gains and losses that result from foreign currency transactions are included in the calculation of Net income/(loss).

Income Taxes

We compute income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes.” Under SFAS 109, deferred taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates applicable to future years to differences between the financial statement carrying amounts and the tax basis of existing assets and liabilities. Also, the effect on deferred taxes of a change in tax rates is recognized in income in the period that included the enactment date. Significant temporary differences arise from accounts payable and accrued liabilities that are not deductible for tax reporting until they are paid, and accounts receivable, less deferred revenues, that are not recognized as revenue for tax and reporting purposes until we receive payment.

For the period January 24, 2006 (inception) to November 30, 2008, the Company incurred net operating losses in an amount exceeding the net income. However, no benefit for income taxes has been recorded due to the uncertainty of the realization of this deferred tax asset. At November 30, 2008, the Company had in excess of $6,000,000 of federal and state net operating losses allocated to continuing operations available. The net operating loss carry forward, if not utilized, will begin to expire in 2024.

For financial reporting purposes based upon continuing operations, the Company has incurred a loss in each period since its inception. Based on the available objective evidence, including the Company’s history of losses, management believes it is more likely than not that the net deferred tax assets at November 30, 2008 will not be fully realizable.

Note 5—Recent Pronouncements

In December 2007, the FASB issued a revision and replacement of SFAS 141 (“SFAS 141R”), “Business Combinations,” to increase the relevance, representational faithfulness, and comparability of the information a reporting entity provides in its financial reports about a business combination and its effects. SFAS 141R replaces SFAS 141, “Business Combinations” but, retains the fundamental requirements of SFAS 141 that the acquisition method of accounting be used and an acquirer be identified for all business combinations. SFAS 141R expands the definition of a business and of a business combination and establishes how the acquirer is to: (1) recognize and measure in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquired company; (2) recognize and measure the goodwill acquired in the business combination or a gain from a bargain purchase; and (3) determine what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141R is applicable to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, and is to be applied prospectively. Early adoption is prohibited. SFAS 141R will impact the Company only if it elects to enter into a business combination subsequent to December 31, 2008.

In December 2007, the FASB issued SFAS No. 160 “Non-controlling Interests in Consolidated Financial Statements—an amendment of ARB No. 51”, which is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards that require:

•

The ownership interests in subsidiaries held by parties other than the parent be clearly identified, labeled, and presented in the consolidated statement of financial position within equity, but separate from the parent’s equity.

•

The amount of consolidated net income attributable to the parent and to the non-controlling interest be clearly identified and presented on the face of the consolidated statement of income.

In June 2007, the FASB ratified EITF 06-11 Accounting for the Income Tax Benefits of Dividends on Share-Based Payment Awards. See discussion of Income Taxes above.

In February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities,” which is an elective, irrevocable election to measure eligible financial instruments and certain other assets and liabilities at fair value on an instrument-by-instrument basis. The election may only be applied at specified election dates and to instruments in their entirety rather than to portions of instruments. Upon initial election, the entity reports the difference between the instruments’ carrying value and their fair value as a cumulative-effect adjustment to the opening balance of retained earnings. At each subsequent reporting date, an entity reports in earnings, unrealized gains and losses on items for which the fair value option has been elected. SFAS 159 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and is applied on a prospective basis. Early adoption of SFAS 159 is permitted provided the entity also elects to adopt the provisions of SFAS 157 as of the early adoption date selected for SFAS 159. The Company has elected not to adopt the provisions of SFAS 159 at this time.

In September 2006, the FASB issued SFAS 157, “Fair Value Measurements,” to increase consistency and comparability in fair value measurements by defining fair value, establishing a framework for measuring fair value in generally accepted accounting principles, and expanding disclosures about fair value measurements. SFAS 157 emphasizes that fair value is a market-based measurement, not an entity-specific measurement. It clarifies the extent to which fair value is used to measure recognized assets and liabilities, the inputs used to develop the measurements, and the effect of certain measurements on earnings for the period. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and is applied on a prospective basis. On February 6, 2008, the FASB announced it will issue a FASB Staff Position (“FSP”) to allow a one-year deferral of adoption of SFAS 157 for non-financial assets and non-financial liabilities that are recognized at fair value on a nonrecurring basis. The FSP will also amend SFAS 157 to exclude SFAS 13, “Accounting for Leases,” and its related interpretive accounting pronouncements. The FSP is expected to be issued in the near future. The Company does not believe adoption of this standard will have an impact on our financial position or results of operations.

In June 2006, the FASB issued Financial Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109.” FIN 48 clarifies the accounting for uncertainty in tax positions and requires that a Company recognize in its financial statements the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 are effective for fiscal years beginning after December 15, 2006. The adoption of FIN 48 is not expected to have a material effect on the Company’s future reported financial position or results of operations.

In February 2006, the FASB issued SFAS No.155, “Accounting for Certain Hybrid Financial Instruments-an amendment of FASB Statements No.133 and 140,” to simplify and make more consistent the accounting for certain financial instruments. SFAS No.155 amends SFAS No.133, “Accounting for Derivative Instruments and Hedging Activities,” to permit fair value measurement for any hybrid financial instrument with an embedded derivative that otherwise would require bifurcation, provided that the whole instrument is accounted for on a fair value basis. SFAS No.155 amends SFAS No.140, “Accounting for the Impairment or Disposal of Long-Lived Assets,” to allow a qualifying special-purpose entity to hold a derivative financial instrument that pertains to a beneficial interest other than another derivative financial instrument. SFAS No.155 applies to all financial instruments acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006, with earlier application allowed. This standard is not expected to have a material effect on the Company’s future reported financial position or results of operations.

Note 6—Related Party Transactions

Because the Company has paid certain operating expenses on behalf of a related party, a receivable has been established. The balance, $38,800, is to be reimbursed with monthly payments of $5,000 beginning December, 2008.

Additionally, FNDS3000 owes various members of management approximately $48,500 for travel reimbursement, approximately $10,800 is owed to an officer for deferred payroll expense and we owe a director a total of $7,000 for monthly fees.

On October 8, 2008, the Company became indebted to an external director for $50,000. The indebtedness, plus applicable interest, was paid on October 31, 2008.

On October 24, 2008, the Company became indebted to an executive manager for $20,000. The indebtedness, plus applicable interest, was paid on October 31, 2008.

Note 7—Equity Transactions

Common Stock

On September 12, 2008, the Company entered into a three month consulting arrangement with a company for investor awareness and other services and issued 150,000 shares of common stock as consideration, for a value of $75,000. Of this value, $62,500 has been recognized as expense. The remaining amount of $12,500, which was accounted for as Prepaid services paid in common stock, was subsequently expensed in December upon completion of the services.

On November 19, 2008, the Company sold 52,630 shares for a value of $18,421.

Stock Options

On June 1, 2008, Michael Dodak, CEO, was granted 1,000,000 cashless stock options at an exercise price of $0.30 per share with an estimated fair valuation of $98,078. These stock options were exercised in a cashless transaction in October, 2008 with Mr. Dodak receiving 190,000 shares of our common stock as a result.

On June 1, 2008, David Fann, President, was granted 1,000,000 cashless stock options at an exercise price of $0.30 per share with an estimated fair valuation of $98,078. These stock options were exercised in a cashless transaction in October, 2008 with Mr. Fann receiving 190,000 shares of our common stock as a result.

On October 1, 2008, the Company granted 35,000 stock options with an exercise price of $0.45 per share to an employee of our South African subsidiary as part of his compensation. These options are subject to a vesting period and performance criteria.

On October 15, 2008, the Company entered into a three year employment agreement with Joseph F. McGuire as Chief Financial Officer. The terms of the contract include an initial salary of $65,000 and 500,000 stock options at an exercise price of $0.39 per share with a vesting period of 90 days which were granted on his hire date, July 17, 2008. The valuation date for this grant was October 15, 2008 when the stock had a value of $0.40. Under a Black-Scholes model the main assumptions for the estimate are a discount rate of 3.30% as of July 31, 2008 and a volatility rate of 67.6%. With an estimation of the fair value of the grant of $114,388 and one-third of the options vested, a total of $38,130 has been recognized as compensation expense during the quarter ended November 30, 2008. After meeting certain performance criteria since his hire date, Mr. McGuire’s salary increased to $130,000 and he received an additional 500,000 stock options, which are subject to a vesting period, with an exercise price of $0.40, the closing stock price on that date. The valuation date for this grant was October 15, 2008 when the stock had a value of $0.40. Under a Black-Scholes model the main assumptions for the estimate are a discount rate of 2.73% and a volatility rate of 69.0%. With an estimation of the fair value of the grant of $114,872, the total has been recognized as compensation expense during the quarter ended November 30, 2008.

Note 8—Commitments and Obligations

The Company has the following office rent arrangements:

•

The Company moved its corporate address location and signed a new lease agreement on a 26 month basis starting November 1, 2007 and continuing through January 31, 2009. The current monthly lease amount (adjusted for utilities) is $4,721. We are currently negotiating the renewal.

•

Atlas has two leased offices. The Georgia location has a monthly rent of $1,460 and expires May 14, 2011. The Tennessee location has an open-ended lease and a monthly rent of $450.

Our lease obligations under the current leases are as follows:


Remaining 9 months of fiscal 2009	$	26,632
Fiscal 2010		22,920
Fiscal 2011		18,540

Total	$	68,092

Management services

The Company has employment agreements with management and certain key service providers. As of June 1, 2008, the Company has entered into a three year employment agreement with Michael Dodak as CEO. The terms of the contract include an initial salary of $220,000 and 1,000,000 cashless stock options at an exercise price of $0.30 per share. There are other performance bonuses available at the discretion of the board of directors. There is an 18 month severance if terminated early.

As of June 1, 2008, the Company has entered into a three year employment agreement with David Fann as president. The terms of the contract include an initial salary of $220,000 and 1,000,000 cashless stock options at an exercise price of $0.30 per share. There are other performance bonuses available at the discretion of the board of directors. There is an 18 month severance if terminated early.

In connection with the acquisition, the Company entered into an employment agreement with Victor F. Gerber for a term of three years pursuant to which Mr. Gerber was appointed as an Executive Vice President. Mr. Gerber shall receive a salary of $150,000 and an annual bonus to be determined by the Board of Directors. If Mr. Gerber’s employment with the Company is terminated by the Company without cause at any time prior to July 1, 2011, Mr. Gerber shall receive from the Company severance pay in an amount equal to the greater of his then current base compensation in effect at the time of such termination through either June 30, 2011 or eighteen (18) months from the date of notice, whichever is greater, in a lump sum payable no later than the termination date. In the event of a corporate transaction (i.e. any merger or sale resulting in the issuance of 40% or more of the outstanding shares of the Company), the amount of severance pay will be equal to his then current base compensation for 24 months plus any annual bonus due plus all paid time off in a lump sum payable no later than the closing date of the corporate transaction.

As of October 15, 2008, the Company has entered into a three year employment agreement with Joseph F. McGuire as Chief Financial Officer. The terms of the contract include an initial salary of $65,000 and 500,000 stock options at an exercise price of $0.39 per share with a vesting period. After meeting certain performance criteria since hire date, July 17, 2008, Mr. McGuire’s salary increased to $130,000 and he received an additional 500,000 stock options as of October 15, 2008 with the exercise price at the closing price on that date with a vesting period.

On October 29, 2008, we entered into the Original Agreement with Sherington for the October 2008 Note in the principal amount of $320,000. Pursuant to the terms of the Original Agreement, the Company and Sherington closed on the sale and purchase of the October 2008 Note on October 31, 2008. The October 2008 Note bears interest at 10%, matures December 13, 2008 and is convertible into the Company’s common stock, at Sherington’s option, at a conversion price of $0.25 per share. The Company may only redeem the October 2008 Note with the written consent of Sherington. In the event that the Company issues securities at a price below the conversion price, then the conversion price shall be reduced by a weighted average. As of the October 29, 2008, the Company is obligated on the October 2008 Note issued to Sherington. The October 2008 Note is a debt obligation arising other than in the ordinary course of business which constitute a direct financial obligation of the Company. The Company’s obligations under the October

2008 Note are secured by all of the assets of Atlas Merchant Services LLC, a wholly owned subsidiary of the Company, as well as the membership interest of Atlas LCC held by the Company. On December 1, 2008, we entered into the Amended Agreement with Sherington, which amended the Original Agreement. The Amended Agreement provided for an increase in the principal amount of indebtedness subject to the Amended Agreement from $320,000 to $1,000,000. On December 1, 2008, the Company issued the December 2008 Note and the December 2008 Note replaced the October 2008 Note, and the October 2008 Note was cancelled. Pursuant to the Amended Agreement and the December 2008 Note, Sherington provided an additional $680,000 in funding on December 1, 2008, resulting in total funding of $1,000,000.

On November 19, 2008, the Company issued 52,630 shares for services rendered, for a value of $18,421.

Notes payable

Under the July 2008 Agreement for the purchase of certain assets from Atlas Merchant Services, Inc., the Company agreed to pay the seller $1,000,000 in cash payable in four equal separate installments on the date of closing, prior to March 31, 2009, prior to June 30, 2009 and prior to June 30, 2010. In the event that certain financing statements are not terminated by the seller, then the Company is not obligated to make the payments due March 31, 2009, prior to June 30, 2009 and prior to June 30, 2010. The Company issued the seller 3,000,000 shares of common stock and the seller may receive up to an additional 2,000,000 shares of common stock if certain monthly gross margin targets are achieved. The Company has the right of first refusal to purchase all shares that the seller may resell. The Company utilized cash on hand in connection with the acquisition of the above assets

On November 21, 2007, FNDS3000 made a down payment and entered into a Software License Agreement (the “License”) with World Processing, Ltd to allow FNDS3000 to provide a software platform for electronic payment and transaction processing. The License will be depreciated over seven years once the application has started to process transactions. As of November 30, 2008, a total of $1,500,000 of license fees and another $148,263 in other developmental fees has been capitalized. There will be additional payments due of $450,000, over a certain period of time with interest, due when the license is certified to process transactions over certain financial networks. This is expected to occur during the 2008-2009 fiscal year. Under the License agreement there are royalties to be paid when certain transaction volumes are met.

On October 29, 2008, we entered into a Note Purchase Agreement (the “Agreement”) with Sherington Holdings, LLC (“Sherington”) for the sale of a secured convertible promissory note in the principal amount of $320,000 (the “October 2008 Note”). Pursuant to the terms of the Agreement, the Company and Sherington closed on the sale and purchase of the October 2008 Note on October 31, 2008. The October 2008 Note bears interest at 10%, matures December 13, 2008 and is convertible into the Company’s common stock, at Sherington’s option, at a conversion price of $0.25 per share. The Company may only redeem the October 2008 Note with the written consent of Sherington. In the event that the Company issues securities at a price below the conversion price, then the conversion price shall be reduced by a weighted average. As of the October 29, the Company is obligated on the October 2008 Note issued to Sherington. The October 2008 Note is a debt obligation arising other than in the ordinary course of business which constitute a direct financial obligation of the Company. The Company’s obligations under the October 2008 Note are secured by all of the assets of Atlas Merchant Services LLC, a wholly owned subsidiary of the Company, as well as the membership interest of Atlas LCC held by the Company. The October 2008 Note was offered and sold to Sherington in a private placement transaction made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated thereunder. Sherington is an accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.

Note 9—Subsequent Events

On December 1, 2008, we entered into the Amended Agreement with Sherington, which amended the Original Agreement. The Original Agreement provided for the sale of the October 2008 Note. Pursuant to the terms of the Original Agreement, the Company and Sherington closed on the sale and purchase of the October 2008 Note on October 31, 2008. The Amended Agreement provided for an increase in the principal amount of indebtedness subject to the Amended Agreement from $320,000 to $1,000,000. On December 1, 2008, the Company issued the December 2008 Note and the December 2008 Note replaced the October 2008 Note, and the October 2008 Note was cancelled. Pursuant to the Amended Agreement and the December 2008 Note, Sherington provided an additional $680,000 in funding on December 1, 2008, resulting in total funding of $1,000,000.

at a conversion price of $0.25 per share, which conversion price may be adjusted in accordance with the terms of the December 2008 Note. The Company may only redeem the December 2008 Note with the written consent of Sherington.

The Company’s obligations under the December 2008 Note are secured by all of the assets of Atlas Merchant Services LLC, a wholly-owned subsidiary of the Company, as well as 100% of the membership interest of Atlas.

On December 1, 2008, the Company and Sherington entered into a Securities Purchase Agreement (the “Equity Agreement”) with Sherington pursuant to which Sherington agreed to purchase and the Company has agreed to sell 8,000,000 shares of common stock (the “Shares”) and a warrant to purchase 30% of the issued and outstanding shares of the Company on a fully diluted basis as of January 6, 2009 (the “Warrant”) at an exercise price of $0.35 per share. The Warrant is exercisable through December 31, 2010. The purchase price for the Shares and the Warrant is $2,000,000. On January 6, 2009, the parties closed the sale and purchase of the Shares and the Warrant. In addition, the Company and Sherington entered into a Registration Rights Agreement pursuant to which the Company provided Sherington with the right to demand the filing of two registration statements registering the Shares, the shares of common stock underlying the Warrants and the shares of common stock issuable upon conversion of that certain Secured Convertible Promissory Note in the principal amount of $1,000,000 previously purchased by Sherington.

Further, as a condition to closing, Messrs Dodak and Fann have acknowledged and agreed that their employment agreements have been converted to Consulting Agreements effective December 5, 2008 with respect to Mr. Dodak and February 1, 2009 with respect to Mr. Fann. Mr. McGuire, the Chief Financial Officer of the Company, has agreed to amend certain terms of his employment agreement by the end of February 2009.

On December 4, 2008, Michael Dodak stepped down as CEO of the Company.

Effective December 5, 2008, Mr. John Hancock joined the company as Chief Executive Officer and Director and John Watson has been appointed Executive Vice President and DirectorMr. John Watson was appointed Executive Vice President and Director.

Effective January 6, 2009, Mr. Raymond Goldsmith succeeded Michael Dodak as Chairman of the Board. Mr. Dodak resigned as a director but remains with the Company as an executive consultant.

On January, the Company paid GCC the remaining principle balance, $350,000, on the note payable as per the contract.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Cautionary Statement Regarding Forward-Looking Statements

In addition to historical information, this Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements that do not represent historical facts. We use words such as “may,” “will,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” “continue” and similar expressions to identify forward-looking statements. Forward-looking statements in this Form 10-Q Report include, but are not limited to, those discussed in the section entitled “Management’s Discussion and Analysis or Plan of Operation”, our plans and expectations regarding future financial results, operating results, business strategies, projected costs, products, competitive positions, management’s plans and objectives for future operations, and industry trends. These forward-looking statements are based on information available to us as of the date of this Form 10-Q Report and current expectations, forecasts and assumptions and involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. Such risks and uncertainties include a variety of factors, some of which are beyond our control. Please see “Item 1A: Risk Factors” and our other filings with the Securities and Exchange Commission for additional information on risks and uncertainties that could cause actual results to differ. These forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we are under no obligation to, and expressly disclaim any responsibility to, update or alter our forward-looking statements, whether as a result of new information, future events or otherwise.

Estimates of future financial results are inherently unreliable.

From time to time, representatives of FNDS3000 may make public predictions or forecasts regarding the Company’s future results, including estimates regarding future revenues, expense levels, earnings or earnings from operations. Any forecast regarding the Company’s future performance reflects various assumptions. These assumptions are subject to significant uncertainties, and, as a matter of course, many of them will prove to be incorrect. Further, the achievement of any forecast depends on numerous factors (including those described in this discussion), many of which are beyond the Company’s control. As a result, there can be no assurance that the Company’s performance will be consistent with

any of management’s forecasts or that the variation from such forecasts will not be material and adverse. Investors are cautioned not to base their entire analysis of the Company’s business and prospects upon isolated predictions, but instead are encouraged to utilize the entire available mix of historical and forward-looking information made available by the Company, and other information affecting the Company and its products, when evaluating the Company’s prospective results of operations.

In addition, representatives of the Company may occasionally comment publicly on the perceived reasonableness of published reports by independent analysts regarding the Company’s projected future performance. Such comments should not be interpreted as an endorsement or adoption of any given estimate or range of estimates or the assumptions and methodologies upon which such estimates are based. Undue reliance should not be placed on any comments regarding the conformity, or lack thereof, of any independent estimates with the Company’s own present expectations regarding its future results of operations. The methodologies employed by the Company in arriving at its own internal projections and the approaches taken by independent analysts in making their estimates are likely different in many significant respects. Although the Company may presently perceive a given estimate to be reasonable, changes in the Company’s business, market conditions or the general economic climate may have varying effects on the results obtained through the use of differing analyses and assumptions. The Company expressly disclaims any continuing responsibility to advise analysts or the public markets of its view regarding the current accuracy of the published estimates of outside analysts. Persons relying on such estimates should pursue their own independent investigation and analysis of their accuracy and the reasonableness of the assumptions on which they are based.

Critical Accounting Policies

Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make significant estimates and judgments that affect the reported amounts of assets, liabilities, revenue, and expenses and related disclosure of contingent assets and liabilities. We evaluate estimates, including those related to stock based compensation and revenue recognition on an ongoing basis. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity, that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following are the critical accounting policies used in the preparation of our financial statements:

Revenue Recognition, Deferred Revenue and Cost Recognition

Substantially all of our revenues are generated from fees charged to merchants for card-based payment processing services. We typically charge these merchants a bundled rate, primarily based upon the merchant’s monthly charge volume and risk profile. Our fees principally consist of discount fees, which are a percentage of the dollar amount of each credit or debit transaction. We charge all merchants higher discount rates for card-not-present transactions than for card-present transactions in order to compensate ourselves for the higher risk of underwriting these transactions. We derive the balance of our revenues from a variety of fixed transaction or service fees, including fees for monthly minimum charge volume requirements, statement fees, annual fees and fees for other miscellaneous services, such as handling chargebacks. We recognize discounts and other fees related to payment transactions at the time the merchants’ transactions are processed. We recognize revenues derived from service fees at the time the service is performed. Related interchange and assessment costs are also recognized at that time.

We follow the requirements of EITF 99-19, “Reporting Revenue Gross as a Principal Versus Net as an Agent”, in determining our revenue reporting. Generally, where we have merchant portability, credit risk and ultimate responsibility for the merchant, revenues are reported at the time of sale on a gross basis equal to the full amount of the discount charged to the merchant. This amount includes interchange paid to card issuing banks and assessments paid to credit card associations pursuant to which such parties receive payments based primarily on processing volume for particular groups of merchants. Interchange fees are set by Visa and MasterCard and are based on transaction processing volume and are recognized at the time transactions are processed.

In general, our revenue recognition policy for fees and services arising from our products is consistent with the criteria set forth in the Securities and Exchange Commission’s (“SEC”) Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition in Financial Statements” for determining when revenue is realized or realizable and earned. In accordance with the requirements of SAB 104, we recognize revenue when, (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) our price to the buyer is fixed or determinable; and (4) collectability of the receivables is reasonably assured. More specifically, initiation fee revenue for our stored value cards are recognized when shipped, transaction fee revenue is recognized when the transaction is recorded, maintenance and financial float fees revenue are recognized when the products are used. Consulting fees are recognized as work is performed and per contractual terms

with the customer. Costs of revenue, including the cost of printing the prepaid cards, are recorded at the time revenue is recognized.

Accounts Receivable and Allowance for Doubtful Accounts

Goodwill and Intangibles

We have capitalized intangible assets such as the purchase of the Global Cash Card software license and the Atlas customer list and software (i.e. the right to receive future cash flows related to transactions of these applicable merchants) and amortize accounts at the time of attrition. The provisions of SFAS No. 142, “Goodwill and Other Intangible Assets”, require the completion of an annual impairment test with any impairment recognized in current earnings.

Stock—Based Compensation

On December 16, 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (“SFAS 123R”), which is a revision of SFAS No. 123 “Accounting for Compensation” (“SFAS 123”). SFAS 123R supersedes APB Opinion No 25, “Accounting for Stock Issued to Employees,” and amends SFAS No. 95, “Statements of Cash Flows.” Generally, the approach in SFAS 123R is similar to the approach described in SFAS 123. SFAS 123R requires all share-based payments to employees to be recognized in the income statement based on their grant date fair values over the corresponding service period and also requires an estimation of forfeitures when calculating compensation expense. The company has adopted SFAS 123R following the modified prospective method.

Results of Operations for the Three Months Ended November 30, 2008 and 2007.

Revenue

Total revenues for the three months ended November 30, 2008 and 2007 were $260,166 and $5,000, respectively.

For the three months ended November 30, 2008, approximately $179,000 was from processing fees, $32,000 from sales of equipment and processing fees related to the Atlas Restaurant Solutions product line, $19,000 is customer service revenue and $5,000 from the sale of equipment. Included in the remaining amount of approximately $25,000 was $3,600 of miscellaneous income.

Total revenues for the three months ended November 30, 2007 were $5,000 for the sale of cards.

Cost of Revenue

Cost of revenues for the three months ended November 30, 2008 and 2007 were $77,146 and $3,500, respectively.

For the three months ended November 30, 2008, approximately $44,000 was for costs incurred during the set up and beta testing of our South Africa operations, including $7,500 for hosting fees, $7,000 for call center expenses and $4,000 for issuer authorizations. Approximately $23,000 was related to the Atlas Restaurant Solutions product and $5,400 for other equipment. The remaining cost of approximately $5,000 was for other processing expenses.

Cost of revenues for the three months ended November 30, 2007 was $3,500 for the purchase of blank cards.

Operating Expenses

Operating expenses for the three months ended November 30, 2008 and 2007 were $1,221,236 and $378,161, respectively.

Operating expenses for the three months ended November 30, 2008 were comprised of approximately $62,500 of stock-based consultant expense, $163,000 expense for vested options, $506,000 for salaries and benefits, $143,000 for professional and consultant fees and $144,000 for depreciation and amortization. International travel expense was $63,000, $15,000 was for Atlas travel and $49,000 was for sales commissions related to the Atlas processing income. Other Expense of approximately $76,000 includes $24,000 for rent, $13,000 for communication, $11,000 for insurance, $11,000 for marketing, $7,000 for investor relations and $10,000 in general office expense.

Operating expenses for the three months ended November 30, 2007 was comprised of approximately $14,000 stock-based consultant expense, $195,000 for salaries and benefits, $28,000 for legal and auditing fees, $120,000 for travel, $8,000 for investor relations and $20,000 for general office expense.

Results of Operations

The Company’s operating loss for the three months ended November 30, 2008 and 2007 was $1,052,645 and $376,661, respectively.

Liquidity and Capital Resources

Presently, our revenue is not sufficient to meet our operating and capital expenses. Management projects that we will require additional funding to expand our current operations. There is some substantial doubt about our ability to continue as a going concern as the continuation of our business is dependent upon successful and sufficient market acceptance of our products and maintaining a break even or profitable level of operations. We have incurred operating losses since inception, and this is likely to continue into the fiscal year ending August 31, 2009.

Management projects that we may require an additional $2,000,000 to $3,000,000 to fund our operating expenditures for the next twelve month period.

Our cash on hand as of November 30, 2008 and 2007 was $113,128 and $34,238, respectively. As of November 30, 2008 and 2007, we had negative working capital of $1,170,100 and $20,966, respectively. We require funds to enable us to address our minimum current and ongoing expenses, continue with marketing and promotion activity connected with the development and marketing of our products and increase market share. We anticipate that our cash on hand and the revenue that we anticipate generating going forward from our operations may not be sufficient to satisfy all of our cash requirements for the next twelve month period. If we require any additional monies during this time, we plan to raise any such additional capital primarily through the private placement of our equity securities.

Due to the uncertainty of our ability to meet our current operating and capital expenses, in their report on our audited annual financial statements for the period ended August 31, 2008, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that led to this disclosure by our independent auditors. There is substantial doubt about our ability to continue as a going concern as the continuation and expansion of our business is dependent upon obtaining further financing, successful and sufficient market acceptance of our products, and, finally, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

The financial requirements of our company for the next twelve months are primarily dependent upon the financial support through credit facilities of our directors and additional private placements of our equity securities to our directors and shareholders or new shareholders. The issuance of additional equity securities by us may result in a significant dilution in the equity interests of our current shareholders. Even though our company has determined that we may not have sufficient working capital for the next twelve month period, our company has not yet pursued such financing options. There is no assurance that we will be able to obtain further funds required for our continued operations or that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due and we will be forced to scale down or perhaps even cease our operations. We do not currently have any plans to merge with another company, and we have not entered into any agreements or understandings for any such merger.

We can give no assurance that we will be successful in implementing any phase or all phases of the proposed business plan or that we will be able to continue as a going concern.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this item.

ITEM 4.

CONTROLS AND PROCEDURES.

Not applicable

ITEM 4T.

CONTROLS AND PROCEDURES

As of November 30, 2008, the Company’s management evaluated, with the participation of its principal executive officer and its principal financial officer, the effectiveness of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation, the Company’s principal executive officer and its principal financial officer concluded that the Company’s disclosure controls and procedures were adequate as of November 30, 2008 to ensure that information required to be disclosed in reports filed or submitted by the Company under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms.

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

As of November 30, 2008, we know of no material, existing or pending legal proceedings against our company. On October 2, 2007 we filed a lawsuit in Dallas, Texas for breach of contract against Information Services Group, Inc and its owner, Ken Blow. We have asked for specified damages of $438,090 as well as additional unspecified damages. The proceedings have moved to mediation which we expect to take place in early 2009. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A.

RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and, as such, are not required to provide the information under this item, however, a detailed discussion of risk factors can be found in

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On November 19, 2008, we sold 52,630 shares of stock at an offering price of $0.35 per share for proceeds of $18,421 to one accredited investor.

We entered into an Amended and Restated Note Purchase Agreement (the “Amended Agreement”) with Sherington Holdings, LLC (“Sherington”) on December 1, 2008, which amended the Note Purchase Agreement entered by and between the Company and Sherington on October 29, 2008 (the “Original Agreement”). The Original Agreement provided for the sale of a secured convertible promissory note in the principal amount of $320,000 (the “October 2008 Note”). Pursuant to the terms of the Original Agreement, the Company and Sherington closed on the sale and purchase of the October 2008 Note on October 31, 2008. The Amended Agreement provided for an increase in the principal amount of indebtedness subject to the Amended Agreement from $320,000 to $1,000,000. On December 1, 2008, the Company issued that certain Amended and Restated Secured Convertible Promissory Note in the principal amount of $1,000,000 (the “December 2008 Note”). and the December 2008 Note replaced the October 2008 Note, and the October 2008 Note was cancelled. Pursuant to the Amended Agreement and the December 2008 Note, Sherington provided an additional $680,000 in funding on December 1, 2008, resulting in total funding of $1,000,000.

The December 2008 Note bears interest at 10% and matures on the earliest of the close of business on December 31, 2009; upon or after the occurrence of an event of default; or, if Sherington shall not have purchased 8,000,000 shares of the Company’s common stock on or before January 5, 2009 pursuant to the Equity Agreement discussed below, on February 28, 2009. The December 2008 Note is convertible into the Company’s common stock, at Sherington’s option, at a conversion price of $0.25 per share, which conversion price may be adjusted in accordance with the terms of the December 2008 Note. The Company may only redeem the December 2008 Note with the written consent of Sherington.

As of the date hereof, the Company is obligated on the December 2008 Note. The December 2008 Note is a debt obligation arising other than in the ordinary course of business which constitutes a direct financial obligation of the Company. The Company’s obligations under the December 2008 Note are secured by all of the assets of Atlas Merchant Services LLC (“Atlas”), a wholly owned subsidiary of the Company, as well as 100% of the membership interest of Atlas.

The above securities were offered and sold to the investors in a private placement transaction made in reliance upon exemptions from registration pursuant to Section 4(2) under the Securities Act of 1933 and Rule 506 promulgated thereunder. The investors were accredited investor as defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS


Exhibit Number		Exhibit Description

4.1		Securities Purchase Agreement entered by and between FNDS3000 Corp and Sherington Holdings, LLC dated December 1, 2008 (1)

4.2		Registration Rights Agreement entered by and between FNDS3000 Corp and Sherington Holdings, LLC dated January 6, 2009 (2)

4.3		Warrant to Purchase Common Stock issued by FNDS3000 Corp to Sherington Holdings, LLC dated January 6, 2009 (2)

31.1		Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)

31.2		Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. (filed herewith)

32.1		Certification of Chief Executive Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith)



32.2		Certification of Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002. (filed herewith)

(1)	Incorporated by reference to the Form 8K Current Report filed with the Securities and Exchange Commission on December 5, 2008.

(2)	Incorporated by reference to the Form 8K Current Report filed with the Securities and Exchange Commission on January 12, 2009.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the following persons on the 13 ^th day of January, 2009.

FNDS3000 CORP.

By: /s/ John Hancock

John Hancock

Chief Executive Officer

By: /s/ Joseph F. .McGuire

Joseph F. McGuire

Chief Financial and Accounting Officer

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