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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 February 28, 2009

¨	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.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of April 14, 2009, the Company had outstanding 36,848,500 shares of its common stock, par value $0.001.

FNDS3000 CORP AND SUBSIDIARIES

FORM 10-Q

For the Quarterly Period Ended February 28, 2009

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	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	20
Item 4.	Controls and Procedures	20
Item 4T.	Controls and Procedures	20
PART II	Other Information	20
Item 1.	Legal Proceedings	20
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	21
Item 4.	Submission of Matters to a Vote of Security Holders	22
Item 5.	Other Information	22
Item 6.	Exhibits	22
Signatures		23

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements

FNDS3000 CORP AND SUBSIDIARIES

(A development stage enterprise)

CONDENSED CONSOLIDATED BALANCE SHEETS


	February 28, 2009			August 31, 2008
	(Unaudited)			(Audited)
ASSETS

Current assets:
Cash	$	1,214,892		$	317,077
Accounts receivable		122,560			70,160
Inventory, net		7,070			19,000
Deposits		11,727			46,470
Prepaid expenses and other current assets		76,094			11,037
Due from related party		33,864			35,097


Total current assets		1,466,207			498,841

Property, plant and equipment, net		107,990			114,411
Software license, net		1,589,363			1,597,438
Other intangibles, net		664,000			1,725,000


Total assets	$	3,827,560		$	3,935,690


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:
Accounts payable	$	119,970		$	76,674
Accrued payroll and benefits		85,191			162,232
Other accrued liabilities		91,285			15,980
Due to related party		91,000			20,860
Convertible note payable		1,000,000			—
Notes payable		466,886			974,262


Total current liabilities		1,854,332			1,250,008

Notes payable-long-term		250,000			250,000


Total liabilities		2,104,332			1,500,008


Commitments and contingencies

Stockholders’ equity:
Preferred stock; $0.001 par value: 5,000,000 shares authorized; no shares issued and outstanding
Common stock, $0.001 par; 100,000,000 shares authorized; 36,848,500 and 34,848,500 shares issued and outstanding, February 28, 2009 28,007,562 and 26,007,562 shares issued and outstanding, August 31, 2008		34,849			26,008
Paid-in capital		11,016,000			8,683,842
Accumulated deficit during development stage		(9,327,621	)		(6,274,168	)


Total stockholders’ equity		1,723,228			2,435,682


Total liabilities and stockholders’ equity	$	3,827,560		$	3,935,690

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

FNDS3000 CORP AND SUBSIDIARIES

(A development stage enterprise)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	For the Six Months Ended						For the Three Months Ended						Since Inception
	February 28, 2009			February 29, 2008			February 28, 2009			February 29, 2008			(January 24, 2006) to February 28, 2009
Revenues, net	$	478,798		$	5,000		$	218,632		$	—		$	724,986
Cost of sales		122,117			3,675			44,971			175			236,428

Gross profit		356,681			1,325			173,661			(175	)		488,558

Operating expenses:
Stock-based compensation-professional		100,000			679,982			37,500			665,750			2,868,109
Stock-based compensation-salaries		184,379			—			21,203			—			382,830
Salaries and benefits		1,122,156			379,474			616,277			196,306			2,696,439
Travel expense		188,335			193,896			110,208			70,314			608,762
Professional and consultant fees		305,618			65,435			162,497			25,381			718,735
Depreciation and amortization expense		321,724			9,365			178,063			8,591			454,296
Asset impairment		—			—			—			—			226,741
Commissions		68,728			—			19,964			—			117,570
Bad debt expense		—			—			—			—			17,000
Other selling, general and administrative		141,417			51,633			65,406			28,239			348,288

Total operating expenses		2,432,357			1,379,785			1,211,118			994,581			8,438,770


Loss from operations		(2,075,676	)		(1,378,460	)		(1,037,457	)		(994,756	)		(7,950,212	)


Other income (expense):
Interest and other income		8,984			1,885			6,151			443			18,275
Interest expense		(78,905	)		—			(63,608	)		—			(102,025	)
Gain/(loss) on currency translation		(7,856	)		2,800			(5,791	)		2,800			(15,977	)
Impairment of intangible assets		(836,000	)		—			(836,000	)		—			(836,000	)
Other loss		(64,000	)		—			(64,000	)		—			(64,000	)
Loss on asset disposal		—			—			—			—			(377,682	)

Total other income (expense)		(977,777	)		4,685			(963,248	)		3,243			(1,377,409	)


Net loss	$	(3,053,453	)	$	(1,373,775	)	$	(2,000,705	)	$	(991,513	)	$	(9,327,621	)


Net loss per share – basic and diluted	$	(0.10	)	$	(0.11	)	$	(0.06	)	$	(0.07	)


Weighted average shares outstanding – basic and diluted		30,193,091			13,078,157			32,983,686			14,297,990

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

FUNDS3000 CORP AND SUBSIDIARIES

(A development stage enterprise)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


							Since Inception
	For the Six Months Ended						(January 24, 2006) to
	February 28			February 29			through February 28,
	2009			2008			2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(3,053,453	)	$	(1,373,775	)	$	(9,327,621	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		321,724			9,365			454,296
Non-cash stock compensation		323,369			679,982			3,315,819
Allowance for impaired inventory		12,747			—			12,747
Allowance for impaired intangibles		—			—			226,741
Currency translation adjustment		—			—			5,698
Bad debt		—			—			17,000
Impairment of intangible assets		836,000			—			836,000
Loss on asset disposal		—			—			376,000
Other loss		64,000			—			64,000
Imputed interest on note payable		42,624			—			42,624
Change in operating assets and liabilities:
Accounts receivable		(52,400	)		—			(139,560	)
Due to/from related party		71,373			—			57,136
Prepaid expenses and other assets		(31,131	)		(19,989	)		(88,639	)
Accounts payable and accrued liabilities		54,601			(16,703	)		147,258
Accrued payroll and benefits		(77,041	)		—			85,191

Net cash used in operating activities		(1,487,587	)		(721,120	)		(3,915,310	)


CASH FLOWS FROM INVESTING ACTIVITIES
Investment in subsidiaries		—			—			(625,000	)
Purchase of property and equipment		(31,403	)		(102,938	)		(159,065	)
Loans to subsidiaries		—			—			(1,000	)
Purchase of software license		(50,825	)		(750,000	)		(898,263	)

Net cash used in investing activities		(82,228	)		(852,938	)		(1,683,328	)


CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from private placements		2,017,630			1,670,000			6,496,030
Stock payable		—			—			67,500
Borrowings on notes payable		1,000,000			—			1,000,000
Payments on notes payable		(550,000	)		—			(750,000	)

Net cash provided by financing activities		2,467,630			1,670,000			6,813,530


Net increase (decrease) in cash and cash equivalents		897,815			95,942			1,214,892

Cash and cash equivalents at beginning of year		317,077			34,238			—


CASH AND CASH EQUIVALENTS AT END OF YEAR	$	1,214,892		$	130,180		$	1,214,892


SUPPLEMENTAL DISCLOSURES

Cash operating activities:
Interest paid	$	31,078		$	—		$	33,010

Income taxes paid	$	—		$	—		$	—


SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES

Stock issued for common stock payable	$	—		$	174,900		$	180,300


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

(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 (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 February 28, 2009 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 in South Africa, and,

merchant processing solutions, predominantly through our subsidiary, Atlas Merchant Services, LLC.

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, we launched our first payroll card program in South Africa via a beta test phase and we are entering full live production. 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 will evaluate expansion to other African and Middle Eastern countries. The introduction of our prepaid card solution complements the South African Government’s drive toward the economic advancement of previously disadvantaged communities.

Americas Operating Unit

In July 2008, we acquired 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.

During March 2009, FNDS3000 Corp and Victor Geber, the owner of Atlas Merchant Services, Inc. commenced negotiations to enter into a transaction which would allow Mr. Gerber to purchase Atlas Merchant Services, LLC from the Company. Although we cannot provide any guarantee, the sale is expected to be finalized in April 2009. Based on current negotiations, a loss of $836,000 has been recognized in the quarter ended February 28, 2009.

Products and Services

Prepaid Debit Card – South Africa

Employers can use our products in lieu of cash to pay employees. Our prepaid debit cards can be utilized by employers for distribution to their employees who are then able to receive employment earnings by direct deposit unto our prepaid debit card. Employees are able to use the card to access cash through ATMs or purchase products and services wherever debit cards are accepted. Domestic and international ‘money transfers’ are also key features of our solution.

We market our prepaid debit cards predominantly under the Diamond Cash Card name or under the names of our business partners in South Africa.

Merchant Acquiring – Atlanta, Georgia

In the U.S., we utilize third party processors (“TPP”) and process the transactions from the use of these cards by the cardholder(s). We generate revenue through user fees that may involve a monthly flat fee and/or a transaction fee for each transaction processed.

Card Associations: MasterCard

Card associations sponsor certain types of card programs. In December 2008, we announced that we are the first and only non-South African third party processing company to be certified by MasterCard in South Africa. This provides access to the network of financial institutions and linked ATM’s and POS systems through an arrangement among banks, transaction processors and MasterCard.

Employees

As of February 28, 2009, our company was operated by John Hancock as our Chief Executive Officer, John Watson as our Executive Vice President, Joseph McGuire as our Chief Financial Officer and Treasurer, 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 approximately four additional 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 losses of $9,327,621 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 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, FndsTech 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 stock options granted to employees and officers 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 February 28, 2009 and February 29, 2008. 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 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 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 and debit cards before the funds are used.

Our merchants process transactions and incur processing and other fees throughout a given month through our Atlas subsidiary. 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 20th 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

Most of the Company’s accounts receivable arise from our merchant services 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 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 February 28, 2009, we have $7,070 of inventory, net of an allowance of $12,750 which the Company recognized this period.

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.

Additionally, as a result of negotiations to sell the Atlas subsidiary, we concluded that the carrying amount of our investment in Atlas exceeded its fair value and we recorded an estimated impairment charge of $836,000 in the quarter ended February 28, 2009.

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.

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 30,193,091 and 13,078,157 for the six months ended February 28, 2009 and February 29, 2008, respectively. Diluted net loss per common share 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 February 28, 2009, 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 February 28, 2009, 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 February 28, 2009 will not be fully realizable.

Note 5 – Recent Pronouncements

In May 2008, the FASB issued Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles.” This statement identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements in conformity with GAAP, and is effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board Auditing amendments to AU Section 411, “The Meaning of Present Fairly in Conformity with Generally Accepted Accounting Principles.” The Company does not believe that the adoption of this statement will have a material effect on our financial statements.

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.

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, $33,864, is being reimbursed with monthly payments of $5,000 beginning December, 2008.

Reimbursement for travel expenses which the company owes to employees and various members of management is approximately $15,000. We also owe Sherington Holdings LLC (“Sherington”), a shareholder of the Company, approximately $48,500 which represents travel-related expenses incurred by the Company.

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 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 Merchant Services 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. Interest of approximately $27,500 has been accrued as of February 28, 2009.

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.

The Securities Purchase Agreement between the Company and Sherington Holdings LLC (“Sherington”) was completed on January 6, 2009, as the Company received $2 million for selling 8,000,000 shares of common stock and a warrant to purchase 30% of the issued and outstanding shares of the Company on a fully diluted basis (the “Warrant”) at an exercise price of $0.35 per share to Sherington. The Warrant is exercisable through December 31, 2010 and it gives Sherington the right to purchase stock at $0.35 to maintain 30% ownership of the Company in the event that any stock purchase warrants and/or stock options held by third parties as of January 6, 2009 are later exercised.

In October and December 2008, Sherington provided total financing of $1 million in the form of a secured convertible note.

On February 9, 2009, the Company issued 100,000 shares of stock to the new Chairman of the Board and incurred $25,000 of equity-based compensation expense.

On February 27, 2009, Mike Dodak received 84,363 shares of stock and David Fann received 73,945 shares of stock in lieu of payment for accrued vacation. The payments were valued at $21,006 and $18,486, respectively.

Stock Options and Warrants

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.

On January 12, 2009, the Company granted 90,000 non-qualified stock options at an exercise price of $0.40 per share to a new employee. The grant is subject to the achievement of certain performance and other individual metrics. In addition, the award vests in 33.3% increments over the next three years and expires after five years.

For the three months ended February 28, 2009, the Company recognized $21,405 equity-based compensation expense due to vested options.

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. This lease has been extended six months. The current monthly lease amount (adjusted for utilities) is $4,721.

•

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 six months of fiscal 2009	$	29,335
Fiscal 2010		22,920
Fiscal 2011		18,540

Total	$	70,795

Management services

The Company has employment agreements with management. 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.

As a condition to the Sherington Agreement 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 with a base pay of $220,000 and John Watson has been appointed Executive Vice President and Director with a base pay of $180,000. On February 1, 2009, David Fann resigned as President of the Company but remains with the Company as Secretary and a 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.

In connection with the Atlas 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.

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

Our obligations under these agreements are as follows:


Remaining six months of fiscal 2009	$	260,000
Fiscal 2010		495,000
Fiscal 2011		382,500
Fiscal 2012		96,250

Total	$	1,233,750

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. During March 2009, FNDS3000 Corp and Victor Geber, the owner of Atlas Merchant Services, Inc. commenced negotiations to enter into a transaction which would allow Mr. Gerber to purchase Atlas Merchant Services, LLC from the Company. Although we cannot provide a guarantee, the sale is expected to be finalized in April 2009. Based on current negotiations, a loss of $836,000 has been recognized in the quarter ended February 28, 2009.

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 has a purchase price of $1,500,000, which was capitalized entirely as of August 31, 2008, and will be depreciated over seven years once the application has started to process transactions. During the fiscal year ended August 31, 2008, a total of $950,000 of the license fee was paid and an additional $97,438 of other developmental fees were capitalized.

The balance payable of $550,000 on the note as of August 31, 2008 has been paid off in three payments: $100,000 on November 30, 2008; $100,000 on December 2, 2008 and $350,000 on January 9, 2009. Additionally, during the six and three months ended February 28, 2009, $50,825 and $-0-, respectively, of additional developmental fees have been capitalized.

As of February 28, 2009, a total of $1,500,000 of license fees and $148,263 in other developmental fees have been capitalized and $29,945 in related interest payable was accrued. As we began processing transactions late November 2008, a total of $58,866 has been amortized during the three months ended February 28, 2009.

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. 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.

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.

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.

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 and it gives Sherington the right to purchase stock at $0.35 to maintain 30% ownership of the Company in the event that any stock purchase warrants and/or stock options held by third parties as of January 6, 2009 are later exercised. 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. As of February 28, 2009, $27,463 of interest payable has been accrued.

Other Loss

The Company has incurred $64,000 in Other Loss related to our merchant-acquiring activities due to chargebacks.

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.

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

prepaid debit cards to third parties in cooperation with financial institutions in South Africa, and,

merchant processing solutions, predominantly through our subsidiary, Atlas Merchant Services, LLC.

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. 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.

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.

Long-Lived Assets and Impairment

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 Six and Three Months Ended February 28, 2009 and February 29, 2008.

Revenue

Total revenue for the six months ended February 28, 2009 and February 29, 2008 was $478,798 and $5,000, respectively. Total revenue for the three months ended February 28, 2009 and February 29, 2008 was 218,632 and $-0-, respectively.

For the six months ended February 28, 2009, the increase in revenue can be attributed as follows: approximately $343,000 was from processing fees, $39,000 from sales of equipment and processing fees related to the Atlas Restaurant Solutions product line, $25,000 is customer service revenue, $56,000 in fees for cash advances by merchant banks, $11,000 from the sale of equipment and $5,000 from the sale of security tokens.

For the three months ended February 28, 2009, the increase in revenue can be attributed as follows: approximately $152,000 was from processing fees, $7,000 from sales of equipment and processing fees related to the Atlas Restaurant Solutions product line, $6,000 is customer service revenue, $48,000 in fees for cash advances by merchant banks, and $6,000 from the sale of equipment.

Total revenue for the six and three months ended February 29, 2008 was $5,000 and $-0-, respectively for the sale of cards.

Cost of Revenue

Total cost of revenue for the six months ended February 28, 2009 were $122,117 and $3,675, respectively. Total cost of revenue for the three months ended February 28, 2009 was $44,971 and $175, respectively.

For the six months ended February 28, 2009, the increase in the cost of revenue can be attributed as follows: approximately $45,000 was for costs incurred during the set up and beta testing of our South Africa operations, $11,000 for hosting fees and $6,000 for issuer authorizations. Approximately $29,000 was related to the Atlas Restaurant Solutions product, approximately $13,000 was the effect of recognizing the fair market value of Atlas’ inventory and $9,000 for other equipment. The remaining cost of approximately $9,000 was for other processing expenses.

For the three months ended February 28, 2009, the increase in the cost of revenue can be attributed as follows: approximately $13,000 was for costs incurred during the set up and beta testing of our South Africa operations, $4,000 for hosting fees and $2,000 for issuer authorizations. Approximately $13,000 was the effect of recognizing the fair market value of Atlas’ inventory, $6,000 was related to the Atlas Restaurant Solutions product and $4,000 for other equipment. The remaining cost of approximately $3,000 represents other processing expenses.

Cost of revenues for the six and three months ended February 29, 2008 was $3,675 and $175, respectively, for the purchase of blank cards.

Operating Expense

Total operating expense for the six months ended February 28, 2009 were $2,432,357 and $1,379,785, respectively. Total operating expense for the three months ended February 28, 2009 were $1,211,118 and $994,581, respectively.

Operating expense for the six months ended February 28, 2009 was comprised of approximately $100,000 of stock-based consultant expense, $184,000 expense for labor costs due to vested options, $1,122,000 for salaries and benefits, $306,000 for professional and consultant fees and $322,000 for depreciation and amortization. Travel expense was approximately $188,000, $69,000 was for sales commissions related to the Atlas processing income. Other Expense of approximately $141,000 includes $52,000 for rent and utilities, $25,000 for communication, $21,000 for insurance, $16,000 for investor relations, $13,000 for marketing and $14,000 in general office expense.

Operating expense for the three months ended February 28, 2009 were comprised of approximately $38,000 of stock-based consultant expense, $21,000 expense for labor costs related to vested options, $616,000 for salaries and benefits, $163,000 for professional and consultant fees and $178,000 for depreciation and amortization. Travel expense was approximately $110,000, $20,000 was for sales commissions related to the Atlas processing income. Other Expense of approximately $65,000 includes $27,000 for rent and utilities, $13,000 for communication, $9,000 for insurance, $10,000 for investor relations and $6,000 in general office expense.

Operating expense for the six months ended February 29, 2008 was comprised of approximately $680,000 of stock-based consultant expense, $379,000 for salaries and benefits, $65,000 for professional and consultant fees and $9,000 for depreciation and amortization. Travel expense was approximately $194,000 and other general office expense was approximately $52,000.

Operating expense for the three months ended February 29, 2008 was comprised of approximately $666,000 of stock-based consultant expense, $196,000 for salaries and benefits, $25,000 for professional and consultant fees and $9,000 for depreciation and amortization. Travel expense was approximately $70,000 and other general office expense was approximately $28,000.

Liquidity and Capital Resources

As of February 28, 2009, we had cash of $1,214,892 and negative working capital of $388,125. As of February 29, 2008, we had cash of $130,180 and working capital of $111,668.

Our operating activities resulted in a net cash outflow of $1,487,878 for the six months ended February 28, 2009 compared to a net cash outflow of $721,120 for the same period of the previous year. The net operating cash outflow for the current period primarily reflects a net loss, adjustments for non-cash items and increases in amounts due from related parties, accrued expenses and accounts payable. These increases are offset by decreases in trade accounts receivable, accrued salaries and benefits and prepaid expenses and other assets. The net operating cash outflow for the prior year period primarily reflects a net loss, adjustments for non-cash items and deceases in accounts payable and prepaid and other expenses.

Our investing activities resulted in a net cash outflow of $82,228 for the six months ended February 28, 2009 compared to a net cash outflow of $852,938 for the same period of the previous year. Cash used in investing activities for the six months ended February 28, 2009 was the result of an increase in the capitalized value of our GCC software license and purchases of computer equipment. Cash used in investing activities for the same period of the previous year was also a result of the capitalization of the value of our GCC software license and purchases of property and equipment.

Our financing activities resulted in a cash inflow of $2,467,630 for the six months ended February 28, 2009 compared to a cash inflow of $1,670,000 for the same period of the previous year. Cash provided by financing activities during the six months ended February 28, 2009 are proceeds of $2,017,630 from private placements of stock and a loan of $1,000,000 from Sherington. These inflows are offset by payments totaling $550,000 on the note payable to GCC for the software license. The inflows for the same period of the previous year are proceeds of $1,607,000 from private placements of stock.

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 doubt about our ability to continue as a going concern as the continuation of our business is dependent upon successful roll out 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 through the fiscal year ending August 31, 2009.

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 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. Management projects that we may require up to $500,000 to fund our operating expenditures for the next six month period.

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.

Off Balance Sheet Arrangements

The Company presently does not have any off balance sheet arrangements.

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 February 28, 2009, 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 February 28, 2009 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

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. On January 29, 2009, the parties entered into a Settlement Agreement pursuant to which the parties agreed to the following:

•

Mr. Blow agreed to release the Company from any and all claims in consideration for the Company to dismiss its claims with prejudice.

•

Mr. Blow and his affiliates (the “Blow Affiliates”) agreed pay the Company an aggregate sum of $200,000, payable in monthly installments of $10,000 on the first of each month beginning on June 1, 2009 plus accrued interest of seven percent (7%) per annum (each a “Settlement Amount” and collectively, the “Settlement Amounts”).

•

If Mr. Blow or the Blow Affiliates do not make payment of a Settlement Amount within 10 days of when such amount shall be due and payable, the parties have agreed that the Company shall be entitled to file a judgment against Mr. Blow and the Blow Affiliates, jointly and severally, in the aggregate principal amount of $435,000.

•

Upon satisfaction in full of the Settlement Amounts payable to the Company, the Company shall file a Satisfaction of Judgment within 30 days of receipt of the final Settlement Amount.

During March 2009, FNDS3000 Corp and Victor Geber, the former owner of Atlas Merchant Services, Inc. commenced negotiations to enter into a transaction which would allow Mr. Gerber to purchase Atlas Merchant Services, LLC from the Company. Although we cannot provide any guarantee, the sale is expected to be finalized in April 2009. Based on current negotiations, a loss of $836,000 has been recognized in the quarter ended February 28, 2009. If this sale does not occur, the matter could potentially result in litigation.

As of February 28, 2009, we know of no material, existing or pending legal proceedings against our company.

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 within Form 10-KSB for the year ended August 31, 2008 of FNDS3000 Corp which was filed with the Securities and Exchange Commission on December 8, 2008.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

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.

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
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)

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 undersigned thereunto duly authorized.


By:		/s/ John Hancock
Name:		John Hancock
Title:		Chief Executive Officer
Date:		April 14, 2009


By:		/s/ Joseph F. McGuire
Name:		Joseph F. McGuire
Title:		Chief Financial Officer
Date:		April 14, 2009

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