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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 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 June 30, 2014

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

              For the transition period from ________ to _________

                        Commission file number: 001-33968


                          PSYCHIC FRIENDS NETWORK, INC.
                          (A Development Stage Company)

          Nevada                                                  45-4928294
(State or other jurisdiction                                  (I.R.S. Employer
     of incorporation)                                       Identification No.)

           2360 Corporate Circle, Suite 400, Henderson, NV 89074-7722
          (Address of principal executive offices, including zip code)

                                 (702) 608-7360
                (Issuer's telephone number, including area code)

                                       N/A
              (Former name, former address and former fiscal year,
                          if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-5 (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer", "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]                        Accelerated filer [ ]

Non-accelerated filer [ ]                          Smaller reporting company [X]

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:

The issuer has 88,977,543 outstanding shares of common stock outstanding as of
August 12, 2014.

TABLE OF CONTENTS Page ---- PART I - FINANCIAL INFORMATION Item 1. Financial Statements ........................................ 3 Item 2. Management's Discussion And Analysis Of Financial Condition And Results Of Operation .................................... 12 Item 3. Quantitative and Qualitative Disclosures About Market Risk... 14 Item 4. Controls And Procedures ..................................... 14 PART II - OTHER INFORMATION Item 1. Legal Proceedings ........................................... 15 Item 2. Unregistered Sales Of Equity Securities And Use Of Proceeds.. 15 Item 3. Defaults Upon Senior Securities ............................. 15 Item 4. Mine Safety Disclosures ..................................... 15 Item 5. Other Information ........................................... 15 Item 6. Exhibits .................................................... 15 2
PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS INDEX TO FINANCIAL STATEMENTS CONDENSED CONSOLIDATED BALANCE SHEETS...................................... 4 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ........................... 5 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ........................... 6 NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS .................. 7 3
Psychic Friends Network, Inc. (Formerly "Web Wizard, Inc.") (A Development Stage Company) CONDENSED CONSOLIDATED BALANCE SHEETS June 30, 2014 September 30, 2013 ------------- ------------------ (unaudited) ASSETS Current assets Cash $ 16,767 $ 75,393 Prepaid expenses -- -- Accounts receivable 75 -- ------------ ------------ Total current assets 16,842 75,393 Intangible assets Website development costs (net of $50,107 and $28,764 of accumulated amortization, respectively) 34,329 55,672 ------------ ------------ Total Assets $ 51,171 $ 131,065 ============ ============ LIABILITIES Current Liabilities Accounts payable and accrued liabilities $ 108,207 $ 58,682 Convertible notes payable, net of discount of $47,385 and $0, respectively 58,615 -- ------------ ------------ Total current liabilities 166,822 58,682 ------------ ------------ Total Liabilities 166,822 58,682 ------------ ------------ STOCKHOLDERS' EQUITY (DEFICIT) Common stock; 750,000,000 shares authorized at $0.001 par value; 84,977,543 and 84,907,543 issued and outstanding at June 30, 2014 and September 30, 2013, respectively 84,978 84,908 Additional paid-in capital 961,212 886,148 Deficit accumulated during development stage (1,161,841) (898,673) ------------ ------------ Total stockholders' equity (deficit) (115,651) 72,383 ------------ ------------ Total liabilities and stockholders' equity (deficit) $ 51,171 $ 131,065 ============ ============ The accompanying notes are an integral part of these condensed consolidated financial statements. 4
Psychic Friends Network, Inc. (Formerly "Web Wizard, Inc.") (A Development Stage Company) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) From inception Three months ended Nine months ended (May 9, 2007) ------------------------------- ------------------------------- through June 30, 2014 June 30, 2013 June 30, 2014 June 30, 2013 June 30, 2014 ------------- ------------- ------------- ------------- ------------- REVENUE $ 24 $ -- $ 1,735 $ 987 $ 4,156 ------------ ------------ ------------ ------------ ------------ OPERATING EXPENSES Payroll expenses 36,212 33,644 110,331 107,763 346,800 Depreciation and amortization 7,114 6,640 21,343 16,133 50,107 General and administrative 6,161 17,461 24,151 89,230 222,800 Consulting fees 16,250 25,172 51,620 108,613 275,908 Legal and professional 3,430 22,142 28,840 53,859 241,359 ------------ ------------ ------------ ------------ ------------ TOTAL OPERATING EXPENSES 69,167 105,059 236,285 375,598 1,136,974 ------------ ------------ ------------ ------------ ------------ NET LOSS FROM OPERATIONS (69,143) (105,059) (234,550) (374,611) (1,132,818) OTHER EXPENSE Bank charges and interest 21,430 -- 28,618 345 29,023 ------------ ------------ ------------ ------------ ------------ TOTAL OTHER EXPENSE 21,430 -- 28,618 345 29,023 ------------ ------------ ------------ ------------ ------------ NET LOSS BEFORE INCOME TAXES (90,573) (105,059) (263,168) (374,956) (1,161,841) PROVISION FOR INCOME TAX -- -- -- -- -- ------------ ------------ ------------ ------------ ------------ NET LOSS FOR THE PERIOD $ (90,573) $ (105,059) $ (263,168) $ (374,956) $ (1,161,841) ============ ============ ============ ============ ============ BASIC AND DILUTED (LOSS) PER COMMON SHARE $ (0.00) $ (0.00) $ (0.00) $ (0.00) ============ ============ ============ ============ WEIGHTED AVERAGE NUMBER OF COMMON SHARES (BASIC AND DILUTED) 84,977,543 84,411,664 84,958,569 84,155,354 ============ ============ ============ ============ The accompanying notes are an integral part of these condensed consolidated financial statements. 5
Psychic Friends Network, Inc. (Formerly "Web Wizard, Inc.") (A Development Stage Company) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) From inception Nine months ended (May 9, 2007) --------------------------------- through June 30, 2014 June 30, 2013 June 30, 2014 ------------- ------------- ------------- OPERATING ACTIVITIES Net loss $ (263,168) $ (374,956) $ (1,161,841) Adjustments to reconcile net loss from operations: Expenses paid for by director -- -- 4,411 Stock-based compensation for options issued -- 39,798 93,750 Amortization expense 21,343 16,133 50,107 Common stock issued for services 2,870 13,153 17,273 Amortization of debt discount 24,879 -- 24,879 Expenses paid for convertible note holders 18,000 -- 18,000 Change in operating assets and liabilities: Increase in accrued revenue (75) -- (75) Decrease in prepaid expenses -- 1,000 -- Increase in accrued interest 3,572 -- 3,572 Increase in accounts payable and accrued liabilities 45,953 769 104,635 ------------ ------------ ------------ NET CASH USED IN OPERATING ACTIVITIES (146,626) (304,103) (845,289) ------------ ------------ ------------ INVESTING ACTIVITIES Capitalization of website development costs -- (36,150) (84,436) ------------ ------------ ------------ NET CASH USED IN INVESTING ACTIVITIES -- (36,150) (84,436) ------------ ------------ ------------ FINANCING ACTIVITIES Proceeds from issuance of common stock -- -- 804,900 Proceeds from related parties -- -- 58,003 Repayments of amounts due to director -- -- (4,411) Proceeds from issuance of convertible notes payable 88,000 -- 88,000 ------------ ------------ ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 88,000 -- 946,492 ------------ ------------ ------------ NET (DECREASE) IN CASH AND CASH EQUIVALENTS (58,626) (340,253) 16,767 CASH AND CASH EQUIVALENTS -BEGINNING OF PERIOD 75,393 499,898 -- ------------ ------------ ------------ CASH AND CASH EQUIVALENTS -END OF PERIOD $ 16,767 $ 159,645 $ 16,767 ============ ============ ============ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest $ -- $ -- $ -- ============ ============ ============ Cash paid for taxes $ -- $ -- $ -- ============ ============ ============ NON-CASH INVESTING AND FINANCING ACTIVITIES: Debt discount on convertible notes $ 72,264 $ -- $ 72,264 ============ ============ ============ Common stock issued in asset acquisition $ -- $ 58,003 $ 58,003 ============ ============ ============ Liabilities assumed in asset acquisition $ -- $ 5,000 $ 400 ============ ============ ============ The accompanying notes are an integral part of these condensed consolidated financial statements. 6
Psychic Friends Network, Inc. (fka: Web Wizard, Inc.) (A Development Stage Company) NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2014 and September 30, 2013 NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS Psychic Friends Network, Inc. (OTC:PFNI) hereinafter, ("the Company") was incorporated in the State of Nevada on May 9, 2007 under the name "Web Wizard, Inc.". On February 17, 2012 the Company's board passed a motion to change the corporate name to "Psychic Friends Network, Inc." pursuant to an asset purchase agreement executed on January 27, 2012. As part of this agreement, all of the assets of PFN Holdings were purchased. These assets are an integral part of the Company's business development and ultimately the realization of the Company's anticipated cash flows. The Company is in the business of providing daily horoscopes and live psychic advice by telephone, internet or our soon to be released mobile application. Our website is www.psychicfriendsnetwork.com. First time customers will be offered promotions and are able to choose their psychic friend by specialties. They also are able to establish an ongoing relationship with their advisor, or they can choose to try someone new the next time they call. We will strive to stay on the cutting edge of technology in an effort to deliver our content. Currently this includes Facebook applications, and twitter pages, that reward our customers with free credits towards readings for sharing, liking or tweeting about PFN. We will also be giving all of our psychics their own website, to find new customers. BASIS OF PRESENTATION The Company is considered to be a development stage company and has not generated significant revenues from operations. There is no bankruptcy, receivership, or similar proceedings against our company. The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information. Certain information or footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The interim results for the nine months ended June 30, 2014 are not necessarily indicative of results for the full fiscal year. It is suggested that these financial statements be read in conjunction with the audited financial statements and notes thereto included in the Company's annual report on Form 10-K for the year ended September 30, 2013. GOING CONCERN The accompanying financial statements have been prepared assuming the Company will continue as a going concern. Its ability to continue as a going concern is dependent upon the ability of the Company to obtain the necessary financing to meet its obligations and pay its liabilities arising from normal business operations when they come due. Furthermore, as of June 30, 2014, the Company has accumulated losses from inception (May 9, 2007) of $1,161,841. Likewise, net cash of $845,289 has been used in operations during the same period. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that the Company will be able to continue as a going concern. These financial statements do not include any adjustments to the amounts and classification of assets and liabilities which may be necessary should the Company be unable to continue as a going concern. Management believes that the Company will need to obtain additional funding by borrowing funds from its directors and officers, or a private placement of common stock through various sales and public offerings. 7
Psychic Friends Network, Inc. (fka: Web Wizard, Inc.) (A Development Stage Company) NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2014 and September 30, 2013 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements involves the use of estimates, which have been made using judgment. Actual results may vary from these estimates. The financial statements have, in management's opinion, been prepared within the framework of the significant accounting policies summarized below: DEVELOPMENT STAGE COMPANY The Company is considered to be in the development stage, as defined under Accounting Codification Standard, (ASC 915) "Development Stage Entities". Since its formation, the Company has not yet realized material revenues from its planned operations. CASH AND CASH EQUIVALENTS The Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. ACCOUNTS RECEIVABLE Accounts receivable are reported at the customers' outstanding balances less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable. The Company evaluates receivables on a regular basis for potential reserve. FAIR VALUE OF FINANCIAL INSTRUMENTS The fair value of the Company's financial instruments, consisting of cash and accounts payable and accrued liabilities, is equal to fair value due to their short-term to maturity. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. REVENUE RECOGNITION The Company recognizes revenue on an accrual basis. The Company generally earns revenue through the online sale of service minutes. These purchases obligate the Company to arrange a telephonic conversation with a designated service provider of the customers choosing. The Company remits a portion of the fee to the service provider and retains the balance. At the time of sale, the formal arrangements are made and the Company has fulfilled its obligation. Furthermore, the Company's portions of any fees collected are non-refundable. Revenue is generally realized or realizable and earned when all of the following criteria are met: 1) persuasive evidence of an arrangement exists between the Company and our customer(s); 2) services have been rendered; 3) our price to our customer is fixed or determinable; and 4) collectability is reasonably assured. For the nine months ended June 30, 2014 and 2013, the Company recognized revenues of $1,735 and $987 for which each of the four aforementioned criteria were satisfied. 8
Psychic Friends Network, Inc. (fka: Web Wizard, Inc.) (A Development Stage Company) NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2014 and September 30, 2013 NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED) PER SHARE DATA In accordance with "ASC 260 - Earnings per Share", the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. At June 30, 2014 and September 30, 2013, the Company had no stock equivalents that were anti-dilutive and excluded in the loss per share computation. STOCK-BASED COMPENSATION The Company records stock based compensation in accordance with the guidance in ASC Topic 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using the intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company records the value for options granted over the vesting period of the options granted. Accordingly, the Company recognized expenses of $-0- and $39,798 during the nine months ended June 30, 2014 and 2013, respectively (see Note 5). WEBSITE DEVELOPMENT COSTS The Company capitalizes its costs to develop its website and when preliminary development efforts are successfully completed, management has authorized and committed project funding, and it is probable that the project will be completed and the website will be used as intended. Such costs are amortized on a straight-line basis over the estimated useful life of the related asset, which approximates three years. Costs incurred prior to meeting these criteria, together with costs incurred for training and maintenance, are expensed as incurred. Costs incurred for enhancements that are expected to result in additional material functionality are capitalized and expensed over the estimated useful life of the upgrades. The Company capitalized website costs of $-0- and $36,150 during the nine months ended June 30, 2014 and 2013, respectively. The Company's capitalized website amortization is included in depreciation and amortization in the Company's consolidated statements of operations, and totaled $21,343 and $16,133 for the nine months ended June 30, 2014 and 2013, respectively. ADVERTISING COSTS Advertising costs are to be expensed as incurred in accordance to Company policy; for the nine months ended June 30, 2014 and 2013, advertising expenses totaled $2,661 and $18,883, respectively. RECENT ACCOUNTING PRONOUNCEMENTS Management has evaluated all recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the SEC did not, or are not believed by management to, have a material impact on the Company's present or future financial position, results of operations or cash flows. 9
Psychic Friends Network, Inc. (fka: Web Wizard, Inc.) (A Development Stage Company) NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2014 and September 30, 2013 NOTE 3 - INTANGIBLE ASSET The following table presents the detail of other intangible assets for the periods presented: Gross Carrying Accumulated Net Carrying Weighted-Average Amount Amortization Amount Remaining Life ------ ------------ ------ -------------- June 30, 2014: Capitalized website development costs $ 84,436 $(50,107) $ 34,329 1.22 years -------- -------- -------- ---------- Total $ 84,436 $(50,107) $ 34,329 1.22 years ======== ======== ======== ========== NOTE 4 - CONVERTIBLE NOTE PAYABLE On February 6, 2014 the Company entered into a $53,000 Convertible Promissory Note with an unrelated third party finance company to fund operating expenses in the form of $44,000 in cash and $9,000 advanced directly to vendors for expenses. The Note shall accrued interest at 8% per annum with a 22% default rate and matures on November 10, 2014. The holder has the right to convert into common stock 180 days after issuance at a variable rate of 61% of the market price as defined in the debenture document. Upon default, the Note will be convertible at par or $0.001 per share. On May 8, 2014 the Company entered into a $53,000 Convertible Promissory Note with an unrelated third party finance company to fund operating expenses in the form of $44,000 in cash and $9,000 advanced directly to vendors for expenses. The Note shall accrued interest at 8% per annum with a 22% default rate and matures on February 12, 2015. The holder has the right to convert into common stock 180 days after issuance at a variable rate of 58% of the market price as defined in the debenture document. Upon default, the Note will be convertible at par or $0.001 per share. Accordingly, there has been a combined aggregate beneficial conversion feature discount of $72,264 was calculated on these notes and as of June 30, 2014, $24,879 in combined debt discount has been recorded in Bank charges and interest leaving a remainder of $47,385. As of June 30, 2014 there is an aggregate combined total of $3,572 in accrued interest assessed on these notes all of which was expensed during the nine months ended June 30, 2014. NOTE 5 - STOCKHOLDERS' EQUITY As summarized in Note 1, on January 27, 2012, our board of directors approved to effect a name change from Web Wizard, Inc. to Psychic Friends Network Inc. In addition to the name change, our board of directors approved a ten (10) new for one (1) old forward stock split of our authorized and issued and outstanding shares of common stock. Upon effect of the forward stock split, our authorized capital was increased from 75,000,000 to 750,000,000 shares of common stock and correspondingly, our issued and outstanding shares of common stock was increased from 8,225,000 to 82,250,000 shares of common stock as of September 30, 2011, all with a par value of $0.001. OPTIONS AND WARRANTS During July 2012, the Company's shareholders approved its 2012 Stock Option Plan ("the Plan"). Under the Plan, the Company may issue up to 8,250,000 shares at its discretion. On December 13, 2013, the Company granted 500,000 stock options to a consultant of the Company of which 200,000 vested immediately, 150,000 on December 13, 2014 and the balance of 150,000 on December 13, 2015. The options expire five (5) years following the vesting date and carry a strike price of $0.04. 10
Psychic Friends Network, Inc. (fka: Web Wizard, Inc.) (A Development Stage Company) NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS June 30, 2014 and September 30, 2013 NOTE 5 - STOCKHOLDERS' EQUITY - (CONTINUED) The 500,000 vested options were valued using the Black-Scholes model and the following inputs: 5 year life, volatility of 154%, interest rate of 1.55%, and 0% forfeiture rate. The resulting value was $0.0377 per option for a total value of $7,543. The 500,000 vested options were canceled in February of 2014. Accordingly for options granted during the years pursuant to ASC Topic 718, during the nine months ended June 30, 2014, the Company recognized expense of $-0- and $39,798, respectively. A summary of the status of the options granted at June 30, 2014 and September 30, 2013 and changes during the periods then ended is presented below: June 30, 2014 September 30, 2013 ------------------------ ------------------------- Weighted Average Weighted Average Shares Exercise Price Shares Exercise Price ------ -------------- ------ -------------- Outstanding at 500,000 $ 0.04 -- $ -- beginning of period Granted -- -- Exercised -- -- -- -- Expired or canceled 500,000 0.04 -- -- ------- ------ ------ ------ Outstanding at end of period -- $ -- -- $ -- ======= ====== ====== ====== Exercisable -- $ -- -- $ -- ======= ====== ====== ====== COMMON STOCK On December 13, 2013 the Company issued 70,000 shares of common stock to a consultant for consulting services rendered valued at $2,870 or $0.041 per share. NOTE 6 - SUBSEQUENT EVENTS On July 11, 2014, the Company approved an issuance of 4,000,000 shares valued at $36,000 or $0.009 per share in exchange for $36,000 of accrued salaries and compensation of two officers of the Company. On July 17, 2014, the Company entered into an agreement and plan of merger with PFN Sub, Corp and 321 Lend, Inc. The agreement stipulates that 18,000,000 shares of the Company valued at $270,000 or $0.015 per share shall be issued in exchange for the intellectual and ownership rights of 321 Lend, Inc. The merger will not officially close and the assets of 321 Lend, Inc. and Company's common stock will be held in escrow until $500,000 in capital financing is achieved. On July 29, 2014, the Company closed its previously announced merger with 321 Lend, Inc. pursuant to an Agreement and Plan of Merger. The Company has evaluated events subsequent to the balance sheet date through the issuance date of these financial statements in accordance with FASB ASC 855 and has determined there are no other events that would require adjustment to, or disclosure in, the financial statements. 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION This report contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing. Forward-looking statements may include the words "may," "could," "estimate," "intend," "continue," "believe," "expect" or "anticipate" or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Except for ongoing securities laws, we do not intend, and undertake no obligation, to update any forward-looking statement. Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any or our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to; increased competitive pressures from existing competitors and new entrants; our ability to efficiently and effectively finance our operations; deterioration in general or regional economic conditions; adverse state or federal legislation or regulation that increases the costs of compliance; ability to achieve future sales levels or other operating results; the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain; the psychic services market; our ability to develop a fully-functioning web portal; changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate; inability to efficiently manage our operations; the inability of management to effectively implement our strategies and business plans; and the other risks and uncertainties detailed in this report. Throughout this report references to "we", "our", "us", "PFN", "the Company", and similar terms refer to Psychic Friends Network, Inc. OVERVIEW CORPORATE HISTORY AND BACKGROUND Psychic Friends Network, Inc. (OTC:PFNI) hereinafter, ("the Company") was incorporated in the State of Nevada on May 9, 2007 under the name "Web Wizard, Inc.". On February 17, 2012 the Company changed its name to "Psychic Friends Network, Inc." pursuant to the terms of an asset purchase agreement executed on January 27, 2012. As part of such agreement, all of the assets of PFN Holdings were purchased. These assets are an integral part of the Company's business development and ultimately the realization of the Company's anticipated cash flows. BUSINESS The Company is in the business of providing daily horoscopes, astrological reports and live psychic advice by telephone, internet, or our soon to be released mobile application. Our latest development includes the launch of our newly updated website, where customers can now not only connect to the advisor of their choice by telephone, but by live audio and video chat as well. They can connect from computers, tablets or even mobile phones. Our website is www.psychicfriendsnetwork.com. First time customers are offered promotions and are able to choose their psychic friend by specialties, and by reading their bios and feedback. They also are able to establish an ongoing relationship with 12
their advisor, or they can choose to try someone new the next time they call. We will strive to stay on the cutting edge of technology in an effort to deliver our content. Currently this includes Facebook applications, and twitter pages, that can reward our customers with free credits towards readings for sharing, liking or tweeting about PFN. We will also soon be giving each of our psychics their own websites where we will incentivize them to find new customers. RESULTS OF OPERATIONS The following discussion of the financial condition and results of operations should be read in conjunction with the unaudited interim financial statements included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2014 VERSUS 2013: REVENUE We generated $24 in revenue for the three months ended June 30, 2014 compared to $0 during the same period in 2013, and $1,735 in revenue for the nine months ended June 30, 2014 compared to $987 for the same period in 2013. The Company commenced commercial operations as of September 30, 2013. We do not anticipate earning significant revenues until such time that we have sufficient capital to market our services. OPERATING EXPENSES During the three months ended June 30, 2014, total operating expenses for the Company were $69,143 compared to $105,059 during the same period in 2013 and $234,550 in total operating expenses for the nine months ended June 30, 2014 compared to $374,611 for the same period in 2013. The decrease in expenses was due to the higher expense incurred in the 2013 periods primarily for website development and advertising. NET LOSS Our net loss for the three months ended June 30, 2014 was $90,573 compared to $105,059 during the same period in 2013, and $263,168 net loss for the nine months ended June 30, 2014 compared to $374,956 for the same period in 2013. As we have incurred no substantial revenues, the net loss figures follow our operating expenses. LIQUIDITY AND CAPITAL RESOURCES As of June 30, 2014, we have yet to generate any material revenues from our business operations as our website, while operational, has yet to be marketed. As of June 30, 2014, we had $16,767 in cash and $51,171 in total assets, of which $34,329 is attributed to website development. Our total liabilities were $166,822. In the nine months ended June 30, 2014, the Company has borrowed an aggregate of $106,000 in investor financing via the issuance of convertible promissory notes. See Note 4 "Convertible Note Payable" within the notes to our financial statements. 13
The Company believes it currently does not have sufficient funds to execute its business plan. We anticipate that additional capital will be required to implement our business plan to pay for marketing efforts to support revenue for 2014. In order to obtain the necessary capital, the Company may need to sell additional shares of common stock or borrow funds from private lenders. Even if we are able to raise the funds required, it is possible that we could incur unexpected costs and expenses, fail to collect significant amounts owed to us or experience unexpected cash requirements that would force us to seek alternative financing. Further, if we issue additional equity or debt securities as a means of raising additional capital, stockholders may experience dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of common stock. OFF BALANCE SHEET ARRANGEMENTS None. CRITICAL ACCOUNTING POLICIES See Note 2 "Significant Accounting Policies" within the notes to our financial statements. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Not applicable. ITEM 4. CONTROLS AND PROCEDURES (A) EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer (our principal executive officer, principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure. As of the end of the quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our management, including our Chief Executive Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are not effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our Chief Executive Officer, as appropriate to allow timely decisions regarding required disclosure. (B) CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING There were no significant changes in the Company's internal control over financial reporting during the quarter ended June 30, 2014. 14
PART II--OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We are not currently a party to any legal proceedings nor are we aware of any threatened proceedings against us. ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE SAFETY DISCLOSURES N/A ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS Exhibit Number Description ------ ----------- 31 Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32 Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101 Interactive data files pursuant to Rule 405 of Regulation S-T. 15
SIGNATURES In accordance with the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PSYCHIC FRIENDS NETWORK, INC. Date: August 13, 2014 By: /s/ Marc Lasky ------------------------------------------- Marc Lasky Chief Executive and Financial Officer (Principal Executive Officer and Principal Financial and Accounting Officer) 1