10QSB 1 mbnt10qsb.txt QUARTERLY REPORT FOR THE PERIOD ENDING JUNE 30, 2004
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                    U. S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(MARK ONE)
 [ ]     QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934
         For the quarterly period ended June 30, 2004

 [ ]     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
         ACT OF 1934
         For the transition period from __________ to __________

                         Commission File Number 000-28585

                               Mobile Nation, Inc.
                          (formerly Wolfstone Corporation)
                 (Name of small business issuer in its charter)

            Nevada                                               68-0427395
-------------------------------                               ----------------
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

                               2647 Douglas Circle
                              Henderson, NV  89074
                    (Address of principal executive offices)

         Issuer's telephone number (including area code): (702) 914-9824

         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 registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes [X]  No [ ]

         The number of shares outstanding of the registrant's only class of
common stock, $0.001 par value per share, was 5,735,000 shares as of August 23,
2004.

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1

                         PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

Item 1.   Financial Statements................................................3
          Balance Sheet (unaudited)...........................................3
          Statements of Operations (unaudited)................................4
          Statements of Cash Flows (unaudited)................................5
          Notes to Financial Statements.......................................6

Item 2.  Management's Discussion and Analysis of Plan
           of Operation.......................................................9

Item 3. Controls and Procedures..............................................12

PART II. OTHER INFORMATION

Item 1.   Legal Proceedings..................................................13

Item 2.   Changes in Securities and Use of Proceeds..........................13

Item 3.   Defaults upon Senior Securities....................................13

Item 4.   Submission of Matters to a Vote
           of Security Holders...............................................13

Item 5.   Other Information..................................................13

Item 6.   Exhibits and Reports on Form 8-K...................................14

Signatures...................................................................14

2

PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS AND EXHIBITS

                                  MOBILE NATION, INC
                             (A Development Stage Company)
                                    BALANCE SHEETS
                                    JUNE 30, 2004


                                        (unaudited)

Assets
Current assets:
       Prepaid  Expenses                 $       448
                                         -----------
Total current assets                             448
                                         -----------
Total assets                             $       448
                                         ===========

Liabilities and Shareholders' Deficit
Current liabilities:

      Accounts payable, trade           $      3,886
      Accrued interest, related parties        9,577
      Due to related parties                 125,000
                                         -----------
Total current liabilities                    138,443
                                        ------------
Total liabilities                            138,443
                                        ------------
Commitments and contingencies                    -

Shareholders' Deficit
 Preferred stock, 10,000 shares
  authorized; no shares
  issued or outstanding, no rights
  or privileges designated;                      -

Common stock, par value $.001 per share,
  20,000,000 shares authorized;
  5,735,000 issued and outstanding,            5,735

  Additional paid-in capital                 216,799
  Deficit accumulated during the
   development stage                        (360,529)
                                        -------------
Total shareholders' deficit                 (137,995)
                                        -------------
Total liabilities and shareholders'
   deficit                                $      448
                                        =============

The accompanying notes are an integral part of the financial statements

3

                                          MOBILE NATION, INC
                                    (A Development Stage Company)

                                      STATEMENTS OF OPERATIONS
                                      -------------------------
                                                        For the                         From
                                                   Three months ended              March 15, 1990
                                                         June 30,                  (Inception) to
                                                  2004             2003             June 30, 2004
                                                ----------     -----------          --------------
                                               (unaudited)     (unaudited)           (unaudited)
                                                                            
 Revenues                                      $    -          $    -             $      -

Operating expenses:

      General and administrative                  7,278             676                350,952
      Interest expense                            2,625               -                  9,577
                                              --------------    --------------     --------------
Total operating expenses                          9,903             676                350,952
                                              --------------    --------------     --------------
Loss before income taxes                         (9,903)           (676)               360,529
                                              --------------    --------------     --------------
Provisions for income taxes                          -                -                   -
                                               ----------------  ----------------   --------------
Net loss                                       $  (9,903)           (676)          $  (360,529)


Net loss per share:
     (restated):
      Basic                                    $ (0.00)          $   -               $   (0.85)
      Diluted                                  $ (0.00)          $   -               $   (0.85)

Weighted Shares Outstanding

      Basic                                   5,735,000            735,000             422,474
      Diluted                                 5,735,000            735,000             422,474


                   The accompanying notes are an integral part of the financial statements.
4 MOBILE NATION, INC (A Development Stage Company) STATEMENTS OF CASH FLOWS ----------------------- For the From Three months ended March 15, 1990 June 30, (Inception) to 2004 2003 June 30, 2004 ---------- ----------- -------------- (unaudited) (unaudited) (unaudited) Cash flows from operating activities: Net loss $ (9,903) $ (676) $ (360,529) Adjustment to reconcile net loss to net cash used in operating activities: Increase (decrease) in prepaid expenses - 676 - Increase (decrease) in accounts payable 3,072 - 3,866 Increase (decrease) in accrued interest 2,625 - 9,577 Fair value of salaries donated as capital - - 151,500 Common stock issued for services - - 25,053 ------------ ------------ ------------- Net cash used in operating activities (4,206) - (170,533) ------------ ------------ -------------- Cash flows from investing activities : Advances form stockholders - - 22,725 ------------ ------------ -------------- Net cash provided by investing activities - - 22,725 ------------ ------------ -------------- Cash flows from financing activities: Contributed capital 600 - 23,256 Proceeds from note payable, director - - 50,000 Proceeds from convertible note payable - - 77,700 Repayments of convertible note payable (2,700) - (2,700) ------------ ------------ -------------- Net cash provided by financing activities (2,100) - 148,256 ------------ ------------ -------------- Net increase (decrease) in cash (6,306) - 448 Cash at beginning of period 6,754 - - ------------ ------------ -------------- Cash at end of period $ 448 $ - $ 448 ============ ============ =============== The accompanying notes are an integral part of the financial statements.
5 MOBILE NATION, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION AND BUSINESS Integrated Direct, Inc. (IDI) was incorporated in the state of Delaware on March 15, 1990. IDI operated a direct mail business until it filed for protection under Chapter 11 of the bankruptcy code on September 22, 1992. On June 8, 1994, the case was converted to Chapter 7 and on December 17, 1998, IDI was discharged from its debts and it emerged from bankruptcy (see below). On February 23, 1999, IDI reincorporated in the state of Nevada and issued 295,408 common stock shares in exchange for all of the 5,905,735 common stock shares of IDI, effecting a 20 to 1 reverse stock split and changing its domicile from Delaware to Nevada. On that date, IDI changed its name to Wolfstone Corporation (the Company). There were no assets or liabilities of IDI prior to this transaction. Between April 1999 and August 2003, Wolfstone attempted three merger/acquisitions but was not able to raise sufficient capital to support the transactions. In June 2003, an attempted merger with Mobile Nation, Inc. was established by issuing 4,000,000 shares of common stock. Mobile Nation management assumed substantial control of Wolfstone and the Company's name was changed to Mobile Nation, Inc. In October 2003, the parties in the above transaction returned 3,520,000 securities issued with no claims or rights to the assets optioned in the original plan, effectively rescinding the transaction. The Company is a development stage and is currently assessing various business options and strategies. 2. BASIS OF PRESENTATION The accompanying unaudited financial statements and related footnotes have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission for Form 10-QSB. Certain information and footnote disclosures normally included in financial statements prepared in accordance with the above accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion 7of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information read the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-KSB for the year ended March 31, 2004. The results of operations for the three months ended June 30, 2004 are not necessarily indicative of the operating results that may be expected for the year ending March 31, 2005. 6 MOBILE NATION, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS Going concern These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern that contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. As at June 30, 2004, the Company has not recognized revenue to date and has accumulated operating losses of approximately $360,000 since its inception. The Company's ability to continue as a going concern is contingent upon the successful completion of additional financing arrangements and its ability to achieve and maintain profitable operations. Management plans to raise equity capital to finance the operating and capital requirements of the Company. Amounts raised will be used to further development of the Company's products, to provide financing for marketing and promotion, to secure additional property and equipment, and for other working capital purposes. While the Company is expending its best efforts to achieve the above plans, there is no assurance that any such activity will generate funds that will be available for operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. These financial statements do not include any adjustments that might arise from this uncertainty. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Bankruptcy proceedings As mentioned above, the Company emerged from bankruptcy on December 17, 1998, when it was formally discharged from its debts. However, by September 1995 substantially all of its assets had been converted to approximately $95,000 of cash. At that time, the Company recognized income from discharge of indebtedness of approximately $994,000 and the remaining cash was used to pay various creditors. Afterwards, the Company still existed but had no other assets, liabilities or operations until it acquired its oil and gas properties. Because there was no change in the stockholder ownership interests as a result of the bankruptcy or when the Company emerged from bankruptcy, it did not qualify for fresh start accounting pursuant to Statement of Position No. 90-7. Development stage activities Prior to the Company's purchase of oil and gas properties, merger between Wolfstone and Mobile Nation, Inc. and the subsequent rescission of the acquisitions, the Company had not conducted any recent operations and had been in bankruptcy. All of the Company's operating results and cash flows reported in the accompanying financial statements from its inception are considered to be those related to development stage activities and represent the 'cumulative from inception' amounts from its development stage activities required to be reported pursuant to Statements of Financial Accounting Standards (SFAS) No. 7, Development Stage Enterprises. 7 MOBILE NATION, INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO FINANCIAL STATEMENTS Use of Estimates In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that effect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. Recent accounting pronouncements Management does not believe that any recently issued, but not yet effective accounting pronouncements if currently adopted would have a material effect on the accompanying financial statements. 4. RELATED PARTY TRANSACTIONS Note payable, director During the year ended March 31, 2004, the Company received $50,000 from a director. This note bears interest at 6% per annum, is unsecured and due on or before December 31, 2004. As of June 30, 2004, this note had accrued interest of $1,875. Convertible note payable, AFG During the year ended March 31, 2004, the Company received $90,000 from Affinity Financial Group, Inc. (AFG) and has repaid $12,300 leaving an outstanding balance of $77,700. Affinity Financial Group, Inc. is wholly owned by Rex A. Morden, a director and officer of the Company. The note is unsecured, due upon demand as funds are available and is convertible, at the option of the holder, into common shares at 80% of the then current market price at any time prior to the repayment of the principal and any accumulated accrued interest. During the three months ended June 30, 2004, $2,700 was repaid. As of June 30, 2004, this note had accrued interest of $7,702. 8 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS Company History Our original business was to operate a direct mail business. Our original company name was Integrated Direct, Inc. (Integrated Direct), and was incorporated in the state of Delaware on March 15, 1990. It filed for protection under Chapter 11 of the bankruptcy code on September 22, 1992. On June 8, 1994, the case was converted to Chapter 7 and on December 17, 1998, Integrated Direct was discharged from its debts as it emerged from bankruptcy. On February 23, 1999, Integrated Direct reincorporated in the state of Nevada and simultaneously changed its name to Wolfstone Corporation (Wolfstone). There were no assets or liabilities prior to this transaction. Between April 1999 and August 2003, Wolfstone attempted three merger/acquisition transactions, however, Wolfstone was not able to raise sufficient capital to support any of the planned mergers/acquisition. In each instance, the parties agreed to rescind any transactions with all securities issued by the parties being returned. The last aborted merger/acquisition occurred in June 2003 between Wolfstone and Mobile Nation, Inc., (Mobile Nation) was issued 4,000,000 shares of common stock. The new business plan for the Company involved the vision of providing portable wireless broadband services, utilizing "advanced wireless" technologies. The management of Mobile Nation assumed substantial control of Wolfstone and the company's name was changed to Mobile Nation, Inc. On July 3, 2003, prior to the Board consummating the merger transaction with Mobile Nation, Inc, the technology company, the Registrant affected a 50 to 1 reverse split of its common stock. The par value and authorized share count of the common stock was not affected by the reverse split. In September 2003, Mobile Nation was unable to secure key assets essential to its original plan of deployment and operations. As a result, on October 13, 2003, the parties to the above purchase transactions returned all the securities issued with no claims or rights to the assets optioned in the original plan, effectively rescinding the transaction. Members of the technology group continue to look for the resources from the limited holders of spectrum required to launch the operation. Because there can no assurance that the required spectrum will never be available, key technology principals moved on the other projects. At this same time in October, 2003, five of the then directors tendered their resignations A new director was added to the remaining two-man Board of Directors to pursue alternative business opportunities, a 10-for-1 stock split was affected and members of the Board of Directors retained the 480,000 pre- stock split shares (4,800,000 post split shares) of restricted common stock for management services rendered and to be rendered over the balance of the calendar year. In November, the new director was granted 200,000 shares post stock split for services to be rendered for the balance of the calendar year. On October 27, 2003 a note payable was issued to a company director, C.W. Gilluly for $50,000 loaned to the company. The note is at an interest rate of six percent (6%) per annum and is due in full with accumulated interest on December 31, 2004. In connection with the rescission, a note payable issued to Affinity Financial Group, Inc.for $75,000 was assumed by the Company for proceeds expended in the reorganization effort of the Company by the former Mobile Nation. The note is at an interest rate of ten percent (10%) and is due in full with all accumulated interest on April 1, 2005. The Note is convertible, at the holder's option, into the Company's common stock at a conversion rate of 80% of the market price of the stock at the time of the conversion. 9 Company Overview We were incorporated in the State of Nevada on March 15, 1990. Because there was no change in the stockholder ownership interests as a result of the previously filed bankruptcy proceeding, when we emerged from bankruptcy it did not qualify for fresh start accounting. Accordingly, we have a limited operating history upon which an evaluation of our current business and its prospects, can be based --- each of which must be considered in light of the risks, expenses and problems frequently encountered by all companies in the early stages of development, and particularly by such companies entering new and rapidly developing markets. We are considering various business plans and are currently developing other business strategies. There can be no assurance that we will have, or create, the ability to manage our operations, including the ability to meet the amount and timing of capital expenditures and other costs relating to the expansion of our operations, compete with the introduction and development of different or more extensive approaches to the market by direct and indirect our competitors, including those with greater financial, technical and marketing resources, or overcome our inability to attract, retain and motivate qualified personnel and address general economic conditions. We have not achieved profitability to date, and anticipate that we will continue to incur losses for the foreseeable future. As of June 30, 2004 we had an accumulated deficit of approximately $360,529. There can be no assurances that we can achieve or sustain profitability or that our operating losses will not increase in the future. We are currently assessing various options and strategies. The analysis of new businesses opportunities and evaluating new business strategies will be undertaken by the board and senior management. In analyzing prospective businesses opportunities, management will consider, to the extent applicable, the available technical, financial and managerial resources of any given business venture. Management will also consider the nature of present and expected competition; potential advances in research and development or exploration; the potential for growth and expansion; the likelihood of sustaining a profit within given time frames; the perceived public recognition or acceptance of products, services, trade or service marks; name identification; and other relevant factors. We anticipate that the results of operations of a specific business venture may not necessarily be indicative of the potential for future earnings, which may be impacted by a change in marketing strategies, business expansion, modifying product emphasis, changing or substantially augmenting management, and other factors. We will analyze all relevant factors and make a determination based on a composite of available information, without reliance on any single factor. The period within which we will decide to participate in a given business venture cannot be predicted and will depend on certain factors, including the time involved in identifying businesses, the time required us to complete our analysis of such businesses, the time required to prepare appropriate documentation and other circumstances. Going Concern - We have experienced operating losses since our inception on March 15, 1990 through the period ended June 30, 2004. The financial statements have been prepared assuming we will continue to operate as a going concern that contemplates the realization of assets and the settlement of liabilities in the normal course of business. No adjustment has been made to the recorded amount of assets or the recorded amount or classification of liabilities which would be required if we were unable to continue our operations. (See Financial Footnote 2) We believe we can provide enough funds to operate for the next twelve (12) months without the need to raise additional capital to meet its obligations in the normal course of business. 10 Results of Operations During the three month period ended June 30, 2004, we did not generate any revenues. In addition, we do not expect to generate any profit during the balance of the fiscal year ending March 31, 2005. In our most recent three month operating period ended June 30, 2004, we did not generate any revenues. During the three months ended June 30, 2004 we had no business activity and had a net loss of $(9,903) as compared to net loss ($676) for the same period ending June 30, 2003. All of these expenses represented general and administrative expenses, particularly accounting and audit fees to maintain our reporting status, and accrued interest on note payable of $3,072 and $0 for the quarter ended June 30, 2003 respectively. Plan of Operation We have scaled operations down to a minimum. We are now searching for a merger candidate and/or significant acquisition. In our opinion, we do not have available funds to satisfy our working capital requirements. We need to raise additional capital immediately to conduct our operations. Such additional capital may be raised through public or private financing, as well as borrowings and other sources. We cannot guaranty that additional funding will be available on favorable terms, if at all. If adequate funds are not available, we may have to contemplate a plan of reorganization and/or liquidation in the event that we do not acquire financing. We are not currently conducting any research and development activities, other than the search for a merger candidate. We do not anticipate conducting any other such activities in the next three months. We do not anticipate that we will hire any employees in the next three to six months, unless we acquire financing. We believe our future success depends in large part upon the success in finding a qualified merger candidate. Liquidity and Capital Resources We show little cash available to operate and will rely on the current officers and directors to provide monies as needed to maintain our operations as we seek and evaluated business opportunities. We have had limited other financial resources available, which has had an adverse impact on our liquidity, activities and operations. These limitations have adversely affected our ability to obtain certain projects and pursue additional business. Without realization of additional capital, it would be unlikely for us to continue as a going concern. In order for us to remain a going concern we will need to find additional capital. Additional working capital may be sought through additional debt or equity private placements, additional notes payable to banks or related parties (officers, directors or stockholders), or from other available funding sources at market rates of interest, or a combination of these. The ability to raise necessary financing will depend on many factors, including the nature and prospects of any business to be acquired and the economic and market conditions prevailing at the time financing is sought. No assurances can be given that any necessary financing can be obtained on terms favorable or at all. 11 Effect of Inflation Inflation did not have any significant effect on the operations of the Company during the quarter ended June 30, 2004. Further, inflation is not expected to have any significant effect on future operations of the Company. Impact of New Accounting Pronouncements During the past several fiscal years and for the three months ended June 30, 2004, there were several new accounting pronouncements issued by the Financial Accounting Standards Board (FSAB) the most recent of which was Statements on Financial Accounting Standards (SFAS) No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity and FASB Interpretation No. 46, Consolidation of Variable Interest Entities. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company's financial position or operating results. Item 3. Controls and Procedures Our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively) have concluded, based on their evaluation as of June 30, 2004, that the design and operation of our "disclosure controls and procedures" (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) are effective to ensure that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act is accumulated, recorded, processed, summarized and reported to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding whether or not disclosure is required. During the quarter ended June 30, 2004, there were no changes in our "internal controls over financial reporting" (as defined in Rule 13a- 15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. 12 PART II OTHER INFORMATION ITEM 1. Legal Proceedings The Company is not a party to any legal proceedings. ITEM 2. Changes in Securities and Use of Proceeds None. ITEM 3. Defaults upon Senior Securities None. ITEM 4. Submission of Matters to a Vote of Security Holders None. ITEM 5. Other Information None. 13 ITEM 6. Exhibits and Reports on Form 8-K a) Exhibits Exhibit Number Title of Document ---------------------------------------------------------------- 31.1 Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certifications of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: August 23, 2004 MOBILE NATION, INC. BY: /S/ REX A. MORDEN ------------------------ Rex A. Morden President, Chief Executive Officer, and Director (principal and executive officer) Dated: August 23, 2004 BY: \S\ MICHAEL MCGHEE -------------------------- Michael McGhee Executive President, Finance (principal financial and accounting officer) 14 EXHIBITS FILED WITH THIS REPORT ON FORM 10-QSB Exhibit No. Description ------------- ------------------------------------------------------ 31.1 Certifications Required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002 15