U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For
the quarterly period September 30, 2009
[_]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For
the transition period from
to
.
Commission File No.
000-53075
DATONE,
INC.
(Exact
name of small business issuer as specified in its charter)
|
Delaware
|
|
16-1591157
|
|
(State
or other jurisdiction of incorporation or formation)
|
|
(I.R.S.
employer identification number)
|
7325
Oswego Road
Liverpool,
New York 13090
(Address
of principal executive offices)
Issuer's
telephone number: (315) 451-7515
Issuer's
facsimile number: (315) 453-7311
_______________________________________________
No
change
(Former
name, former address and former
fiscal
year, if changed since last report)
Copies
to:
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 shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [ ] No [X]
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE
YEARS
Indicate
by check mark whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court. Yes [ ] No
[ ]
APPLICABLE
ONLY TO CORPORATE ISSUERS
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: 4,963,226 shares of $.0001
par value common stock outstanding as of November 11, 2009.
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. (Check
one):
Large
Accelerated Filer
[ ] Accelerated
Filer [ ]
Non-Accelerated
Filer
[ ] Smaller
reporting company [X]
(Do
not check if a smaller reporting company)
CONTENTS
|
|
Page
|
|
|
|
|
Consolidated
Balance Sheets (Unaudited)
|
|
|
September
30, 2009 and December 31, 2008
|
4
|
|
|
|
|
Consolidated
Statements of Operations (Unaudited)
|
|
|
For
the Three and Nine Months Ended September 30, 2009 and
2008
|
5
|
|
|
|
|
Consolidated
Statements of Cash Flows (Unaudited)
|
|
|
For
the Nine Months Ended September 30, 2009 and 2008
|
6
|
|
|
|
|
Notes
to Consolidated Financial Statements (Unaudited)
|
7
|
|
DATONE,
INC. AND SUBSIDIARY
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
(UNAUDITED)
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
|
Cash
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Commissions
and sales receivables
|
|
|
14,577
|
|
|
|
30,503
|
|
|
Total
Current Assets
|
|
|
14,577
|
|
|
|
30,503
|
|
|
|
|
|
|
|
|
|
|
|
|
Telephone
and office equipment, net of accumulated depreciation
|
|
|
|
|
|
|
|
|
|
of $1,459,288 and $1,459,765, respectively
|
|
|
-
|
|
|
|
-
|
|
|
Vehicles,
net of accumulated depreciation of $66,096 and
|
|
|
|
|
|
|
|
|
|
$65,606, respectively
|
|
|
5,179
|
|
|
|
5,669
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$
|
19,756
|
|
|
$
|
36,172
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
137,042
|
|
|
$
|
148,448
|
|
|
Bank
overdraft
|
|
|
6,056
|
|
|
|
8,313
|
|
|
Accrued
liabilities
|
|
|
76,679
|
|
|
|
64,571
|
|
|
Short-term
debt
|
|
|
4,845
|
|
|
|
7,091
|
|
|
Short-term
debt - related parties
|
|
|
408,011
|
|
|
|
338,234
|
|
|
Total
Current Liabilities
|
|
|
632,633
|
|
|
|
566,657
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders'
Deficit:
|
|
|
|
|
|
|
|
|
|
Common
Stock, $0.0001 par value, 100,000,000 shares authorized,
|
|
|
|
|
|
|
|
|
|
4,963,226 shares issued and outstanding
|
|
|
496
|
|
|
|
496
|
|
|
Additional-paid
in capital
|
|
|
1,771,863
|
|
|
|
1,727,459
|
|
|
Accumulated
deficit
|
|
|
(2,385,236
|
)
|
|
|
(2,258,440
|
)
|
|
Total
Stockholders' Deficit
|
|
|
(612,877
|
)
|
|
|
(530,485
|
)
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
$
|
19,756
|
|
|
$
|
36,172
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
|
|
|
DATONE,
INC. AND SUBSIDIARY
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
(UNAUDITED)
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
|
$
|
29,491
|
|
|
$
|
30,624
|
|
|
$
|
72,457
|
|
|
$
|
99,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COST
OF REVENUE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
163
|
|
|
|
164
|
|
|
|
490
|
|
|
|
490
|
|
|
Cost
of revenue
|
|
|
10,972
|
|
|
|
9,333
|
|
|
|
22,664
|
|
|
|
39,482
|
|
|
Total cost of revenue
|
|
|
11,135
|
|
|
|
9,497
|
|
|
|
23,154
|
|
|
|
39,972
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
|
18,356
|
|
|
|
21,127
|
|
|
|
49,303
|
|
|
|
59,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payroll
wages and taxes
|
|
|
11,081
|
|
|
|
11,131
|
|
|
|
32,633
|
|
|
|
37,791
|
|
|
Rent
|
|
|
15,000
|
|
|
|
15,000
|
|
|
|
45,000
|
|
|
|
45,000
|
|
|
Gain
on sale of equipment
|
|
|
(200
|
)
|
|
|
-
|
|
|
|
(200
|
)
|
|
|
-
|
|
|
General
and administrative
|
|
|
13,517
|
|
|
|
30,260
|
|
|
|
57,285
|
|
|
|
74,865
|
|
|
Total
operating expenses
|
|
|
39,398
|
|
|
|
56,391
|
|
|
|
134,718
|
|
|
|
157,656
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
from operations
|
|
|
(21,042
|
)
|
|
|
(35,264
|
)
|
|
|
(85,415
|
)
|
|
|
(98,030
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME (EXPENSES):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expenses
|
|
|
(107
|
)
|
|
|
-
|
|
|
|
(107
|
)
|
|
|
-
|
|
|
Interest
expense
|
|
|
(28,975
|
)
|
|
|
(7,697
|
)
|
|
|
(41,274
|
)
|
|
|
(19,784
|
)
|
|
Total other income (expenses)
|
|
|
(29,082
|
)
|
|
|
(7,697
|
)
|
|
|
(41,381
|
)
|
|
|
(19,784
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
$
|
(50,124
|
)
|
|
$
|
(42,961
|
)
|
|
$
|
(126,796
|
)
|
|
$
|
(117,814
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss Per Share - Basic and Diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Common Shares Outstanding -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
4,963,226
|
|
|
|
4,963,226
|
|
|
|
4,963,226
|
|
|
|
4,963,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
|
|
|
DATONE,
INC. AND SUBSIDIARY
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(UNAUDITED)
|
|
|
|
Nine Months Ended
|
|
|
|
|
September
30,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net
Loss
|
|
$
|
(126,796
|
)
|
|
$
|
(117,814
|
)
|
|
Adjustments
to reconcile net loss to net cash used in
|
|
|
|
|
|
|
|
|
|
operating
activities:
|
|
|
|
|
|
|
|
|
|
Depreciation
expense
|
|
|
490
|
|
|
|
490
|
|
|
Amortization
of debt discount
|
|
|
12,973
|
|
|
|
-
|
|
|
Imputed
interest
|
|
|
23,904
|
|
|
|
15,974
|
|
|
Related
party debt issued for rent expense
|
|
|
45,000
|
|
|
|
45,000
|
|
|
Related
party debt issued for interest expense
|
|
|
6,804
|
|
|
|
1,623
|
|
|
Gain
on sale of equipment
|
|
|
(200
|
)
|
|
|
-
|
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
15,926
|
|
|
|
86
|
|
|
Prepaid
expenses
|
|
|
-
|
|
|
|
35
|
|
|
Accounts
payable
|
|
|
(11,406
|
)
|
|
|
14,266
|
|
|
Accrued
liabilities
|
|
|
12,108
|
|
|
|
10,887
|
|
|
Net
Cash Used in Operating Activities
|
|
|
(21,197
|
)
|
|
|
(29,453
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Proceeds
from Sale of Equipment
|
|
|
200
|
|
|
|
-
|
|
|
Net
Cash Provided by Investing Activities
|
|
|
200
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Bank
Overdraft
|
|
|
(2,257
|
)
|
|
|
5,874
|
|
|
Proceeds
from related party debt
|
|
|
25,500
|
|
|
|
32,000
|
|
|
Payments
on related party debt
|
|
|
-
|
|
|
|
(6,000
|
)
|
|
Payments
made on debt
|
|
|
(2,246
|
)
|
|
|
(2,421
|
)
|
|
Net
Cash Provided by Financing Activities
|
|
|
20,997
|
|
|
|
29,453
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Change in Cash
|
|
|
-
|
|
|
|
-
|
|
|
Cash
at Beginning of Period
|
|
|
-
|
|
|
|
-
|
|
|
Cash
at End of Period
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES:
|
|
|
|
|
|
|
|
|
|
Cash
paid for interest
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Cash
paid for taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH
INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Debt
discount from beneficial conversion feature
|
|
$
|
20,500
|
|
|
$
|
-
|
|
|
Forgiveness
of related party debt
|
|
|
-
|
|
|
|
66,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
accompanying notes are an integral part of these consolidated financial
statements.
|
|
DATONE,
INC. AND SUBSIDIARY
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE
1 - BASIS OF PRESENTATION
The
accompanying unaudited consolidated interim financial statements of Datone, Inc.
and Subsidiary have been prepared in accordance with accounting principles
generally accepted in the United States of America and the rules of the
Securities and Exchange Commission, and should be read in conjunction with
Datone’s audited 2008 annual financial statements and notes thereto filed on
Form 10K with the SEC. In the opinion of management, all adjustments, consisting
of normal reoccurring adjustments, necessary for a fair presentation of
financial position and the results of operations for the interim periods present
have been reflected herein. The results of operation for interim periods are not
necessarily indicative of the results to be expected for the full year. Notes to
the consolidated financial statements, which would substantially duplicate the
disclosure required in Datone’s fiscal 2008 financial statements have been
omitted.
Reclassifications
Certain
prior period amounts have been reclassified to conform to current period
presentation.
NOTE
2 – GOING CONCERN
The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States, which
contemplates the Company as a going concern. However, the Company has
sustained substantial operating losses in recent years. The company
has a current ratio of .050 for the period ended September 30, 2009, and has a
deficit in stockholders’ equity. These factors raise substantial doubt about the
Company’s ability to continue as a going concern. The Company’s
ability to continue as a going concern is dependent upon obtaining the
additional capital as well as additional revenue to be successful in its planned
activity. The Company is actively pursuing alternative financing and
has had discussions with various third parties, although no firm commitments
have been obtained. In the interim, shareholders of the Company have
committed to meeting its minimal operating expenses. Management
believes that actions presently being taken to revise the Company’s operating
and financial requirements provide them with the opportunity to continue as a
going concern.
These
financial statements do not reflect adjustments that would be necessary if the
Company were unable to continue as a “going concern”. While
management believes that the actions already taken or planned, will mitigate the
adverse conditions and events which raise doubt about the validity of the “going
concern” assumption used in preparing these financial statements, there can be
no assurance that these actions will be successful.
If
the Company were unable to continue as a “going concern”, then substantial
adjustments would be necessary to the carrying values of assets, the reported
amounts of its liabilities, the reported revenues and expenses, and the balance
sheet classifications used.
NOTE
3 – RELATED PARTY TRANSACTIONS
Datone
has six notes payable to Joseph C. Passalaqua, a shareholder of
Datone. The notes are due on demand and carry interest ranging from
10% to 18% per annum which is compounded on the unpaid principal and interest.
The outstanding principal and interest on the notes was $50,022 and $38,730 as
of September 30, 2009 and December 31, 2008, respectively.
Datone
also has four convertible notes payable to Joseph Passalaqua at September 30,
2009. The notes were issued between April 30, 2009 and July 16, 2009. They bear
interest at 8% per annum which is compounded on the unpaid principal and
interest. The notes are convertible into common shares of Datone at a rate of
$0.001 per share and mature between November 1, 2009 and February 17, 2010. The
outstanding principal and interest on the notes was $21,012 as of September 30,
2009.
Datone
leases office space from the wife of Joseph Passalaqua (Callaway Properties) at
a monthly rate of $5,000. The rent expense is accrued as a related party note
payable that is due on demand and does not bear interest. Datone imputed
interest on the note payable at a rate of 10% per annum. Imputed interest
expense was $23,904 and $15,974 for the nine months ended September 30, 2009 and
2008, respectively. The unpaid balance on the loan was $344,503 and $299,502 as
of September 30, 2009 and December 31, 2008, respectively.
NOTE
4 - DEBT
A
summary of the debt outstanding at September 30, 2009 and December 31, 2008 is
as follows:
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Note
payable to bank, monthly installments of $261, interest of 4.5% per annum,
maturing August 2009.
|
|
$
|
-
|
|
|
$
|
2,246
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
payable to Key Bank, interest of 9.25% per annum, due on
demand.
|
|
|
4,845
|
|
|
|
4,845
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
payable to Callaway Properties, no interest, due on demand
|
|
|
344,504
|
|
|
|
299,504
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
payable to Joseph Passalaqua, interest of 10% to 18% per annum, due on
demand
|
|
|
50,022
|
|
|
|
38,730
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible
notes payable to Joseph Passalaqua, interest of 8% per annum, maturing
November 1, 2009 – February 17, 2010, convertible at $0.001 per
share
|
|
|
21,012
|
|
|
|
-
|
|
|
|
|
|
420,383
|
|
|
|
345,325
|
|
|
Less: Unamortized
discount from beneficial conversion feature
|
|
|
(7,527
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
debt
|
|
$
|
412,856
|
|
|
$
|
345,325
|
|
Datone
evaluated the Joseph Passalaqua convertible notes for derivative accounting
consideration under FASB ASC 815-15 and FASB ASC 815-40. Datone determined the
embedded conversion option in the convertible notes met the criteria for
classification in stockholders’ equity under FASB ASC 815-15 and FASB ASC
815-40. Therefore, derivative accounting was not applicable for these
convertible notes.
Datone
then evaluated the conversion options under FASB ASC 470-20 and determined there
was a beneficial conversion feature associated with the conversion options.
Datone calculated the intrinsic value of the conversion options and recorded an
aggregate discount on the loans of $22,500. The discount is being amortized over
the life of the loans using the effective interest rate method. Amortization
recorded for the nine months ended September 30, 2009 was
$12,973.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
Forward
Looking Statements
Some
of the information in this section contains forward-looking statements that
involve substantial risks and uncertainties. You can identify these statements
by forward-looking words such as "may," "will," "expect," "anticipate,"
"believe," "estimate" and "continue," or similar words. You should read
statements that contain these words carefully because they:
|
o
|
discuss
our future expectations;
|
|
o
|
contain
projections of our future results of operations or of our financial
condition; and
|
|
o
|
state
other "forward-looking"
information.
|
We
believe it is important to communicate our expectations. However, there may be
events in the future that we are not able to accurately predict or over which we
have no control. Our actual results and the timing of certain events could
differ materially from those anticipated in these forward-looking statements as
a result of certain factors, including those set forth under "Risk Factors,"
"Business" and elsewhere in this prospectus. See "Risk Factors."
Organization
and Basis of Presentation
Datone,
Inc. is currently a provider of both privately owned and company owned payphones
(COCOT’s) and stations in New York. The Company receives revenues from the
collection of the payphone coinage, a portion of usage of service from each
payphone and a percentage of long distance calls placed from each payphone from
the telecommunications service providers. In addition, the Company also receives
revenues from the service and repair of privately owned payphones,and sales of
payphone units.
Critical
Accounting Policies
The
preparation of financial statements and related disclosures in conformity with
accounting principles generally accepted in the United States of America
requires management to make judgments, assumptions and estimates that affect the
amounts reported in our consolidated financial statements and accompanying
notes. We base our estimates and judgments on historical experience and on
various other assumptions that we believe are reasonable under the
circumstances. However, future events are subject to change, and the best
estimates and judgments routinely require adjustment. The amounts of assets and
liabilities reported in our consolidated balance sheet, and the amounts of
revenues and expenses reported for each of our fiscal periods, are affected by
estimates and assumptions which are used for, but not limited to, the accounting
for allowance for doubtful accounts, goodwill and intangible asset impairments,
restructurings, inventory and income taxes. Actual results could differ from
these estimates. The following critical accounting policies are significantly
affected by judgments, assumptions and estimates used in the preparation of our
consolidated financial statements.
Revenue
Recognition Policies
The
Company derives its primary revenue from the sources described below, which
includes dial around revenues, coin collections, and telephone equipment repairs
and sales. Other revenues generated by the company include, and
commissions.
Dial
around revenues are generated from calls to gain access to a different long
distance carrier than is already programmed into the phone. Revenues from dial
around calls are recorded based upon estimates until the coin collection
revenues are generated when callers deposit coins into the phones to make calls.
Coin revenues are recorded in an amount equal to the coins
collected. Revenues on commissions, and telephone equipment repairs
and sales are realized when the services are provided.
NINE
MONTHS ENDED SEPTEMBER 30, 2009 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 2008
Revenue
Our
total revenue decreased by $27,141 or approximately 27%, from $99,598 in the
nine months ended September 30, 2008 to $72,457 in the nine months ended
September 30, 2009. This decrease was primarily attributable to a
decrease in commission revenue. As well as a reduced number of
payphones coupled with increased competition from wireless communication
service.
Our
commissions increased by $1,140 or approximately 14%, from $7,905 in the nine
months ended September 30, 2008 to $9,045 in the nine months ended September 30,
2009. This increase was primarily attributable to a higher volume of payphones
usage.
Our
coin call revenue decreased by $4,191 or approximately 15%, from $28,781 in the
nine months ended September 30, 2008 to $24,509 in the nine months ended
September 30, 2009. The decrease in coin call revenue was primarily
attributable to a reduced number of payphones in the network.
Our
non-coin call revenue, which consists primarily of dial-around revenue,
decreased $23,166 or approximately 50% from $46,449 in the nine months ended
September 30, 2008 to $23,283 in the nine months ended September 30,
2009. This decrease was primarily attributed to a lower volume
of toll free calling (ex. 1-800, 1-888, 1-877, 1-866 calls) in this
quarter.
Service
and Repair Sales decreased by $924 or approximately 6% to $15,539 for the nine
months ended September 30, 2009 from $16,463 for the same period in 2008. This
decrease is due to less payphones to repair and service because the number of
payphones have decreased, the number of payphones breaking down and requiring
repair is consequently less. We only receive service revenue for
company-owned payphones and repair revenue for privately-owned payphones. Some
privately-owned payphones represent unprofitable locations that we previously
owned but have since sold to the site owner.
Cost
of Revenue
Our
overall cost of sales decreased by $16,818 or approximately 42%, from $39,972 in
the nine months ended September 30, 2008 to $23,154 in the nine months ended
September 30, 2009. This decrease in our overall cost is primarily a
decrease in telecommunication costs.
Our
telecommunication costs decreased by $22,662 or approximately 57% from $39,482
in the nine months ending September 30, 2008 to $16,820 for the nine months
ending September 30, 2009. Our ongoing strategy is to identify and
remove unprofitable payphones. Once a low revenue payphone is
identified, we offer the site owner an opportunity to purchase the
equipment. If the site owner does not purchase the payphone, we
remove it from the site, which is evidenced by our decreased telecommunication
costs as a result of removing phones for the nine months ended September 30,
2009 over the same period in 2008. At the same time, our plan is to
continue to look out for ideal locations with high traffic to install our
payphones.
Depreciation
expense remained constant at $490 in the nine months ending September 30, 2009
and 2008.
Our
commissions expense increased by $1,978 or approximately 184% to $3,053 in the
nine months ending September 30, 2009 from $1,075 for the nine months ending
September 30, 2008. This increase was due a new location that receives a monthly
commission.
Operating
Expenses
Operating
expenses decreased by $22,678 or approximately 15% to $134,718 for the nine
months ended September 30, 2009 compared to $157,656 for the same period in
2008. This was due to the fees we pay our accountants and attorneys for
performing their services.
Salaries
and related payroll taxes decreased by $5,158 or approximately 14% to $32,633
for the nine months ended September 30, 2009 compared to $37,791 for the same
period in 2008. This decrease is due to employee not taking payroll on a regular
basis.
Our
insurance expense decreased by $5,050 or approximately 91% to $477 for the nine
months ended September 30, 2009 compared to $5,527 for the same period in
2008. This decrease was due to a decrease in insurance
premiums.
Professional
fees decreased by $11,132 or approximately 21% to $42,197 for the nine months
ended September 30, 2009 compared to $53,329 for the same period in
2008. This decrease is due to a decrease in fees we pay to
accountants and attorneys throughout the year for performing various
tasks.
Our
telephone, utilities, office, and vehicle expenses, together account for a
decrease of $2,276 or approximately 17% to $11,340 for the nine months ended
September 30, 2009 compared to $13,616 for the same period in 2008.
Interest
Expense
Net
interest expense increased $21,490 or approximately 109% for the nine months
ended September 30, 2009 to $41,274 from $19,784 for the nine months ended
September 30, 2008. This increase was due to more interest-rate
debt.
Net
Loss from Operations
We
had a net loss of $126,796 for the nine months ended September 30, 2009 as
compared to a net loss of $117,814 for the nine months ended September 30,
2008. The increase was due to the reasons stated above.
THREE
MONTHS ENDED SEPTEMBER 30, 2009 COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 2008
Revenue
Our
total revenue decreased by $1,133 or approximately 4%, from $30,624 in the three
months ended September 30, 2008 to $29,491 in the three months ended September
30, 2009. This decrease was primarily attributable to decreases in
dial around and service and repair revenue offset by increases in commissions
and coin call revenue.
Our
commissions increased due to a higher volume of calls and our coin call revenue
increased due to an increase in the number of payphones in our
network.
Our
non-coin call revenue, which consists primarily of dial-around revenue,
decreased due to a lower volume of toll free calling (ex.
1-800,1-888,1-877,1-866) calls in this quarter and service and repair sales
decreased due to less payphones to repair and service because the number of
payphones have decreased, the number of payphones breaking down and requiring
repair is consequently less. We only receive service revenue for
company-owned payphones and repair revenue for privately-owned payphones. Some
privately-owned payphones represent
unprofitable locations that we
previously owned but have since sold to the site owner.
Cost
of Revenue
Our
overall cost of sales increased by $1,638 or approximately 17%, from $9,497 in
the three months ended September 30, 2008 to $11,135 in the three months ended
September 30, 2009. This increase was primarily attributable to an
increase in commission expense offset by a decrease in telecommunications
costs.
Our
telecommunication costs decreased due to a change in service provider with lower
telecommunication rates. Our ongoing strategy is to identify and
remove unprofitable payphones. Once a low revenue payphone is identified, we
offer the site owner an opportunity to purchase the equipment. If the site owner
does not purchase the payphone, we remove it from the site, which is evidenced
by our decreased telecommunication costs as a result of removing phones for the
three months ended September 30, 2009 over the same period in
2008. At the same time, our plan is to continue to look out for ideal
locations with high traffic to install our payphones.
Depreciation
expense remained constant at $164 in the three months ending September 30, 2009
and 2008 respectively.
Our
commissions expense increased due to a new location that receives a monthly
commission.
Operating
Expenses
Operating
expenses decreased by $16,993 or approximately 30% to $39,398 for the three
months ended September 30, 2009 compared to $56,391 for the same period in 2008.
This was due to a decrease in fees we pay our accountants and attorneys
throughout the year as well as a decrease in salaries and related payroll taxes
due to employee not taking payroll on a regular basis and the reclassification
of corporate taxes.
Interest
Expense
Net
interest expense increased $21,278 or approximately 276%% for the three months
ended September 30, 2009 to $28,975 from $7,697 for the three months ended
September 30, 2008. This increase was due to more interest-rate
debt.
Net Loss from
Operations
We
had a net loss of $50,124 for the three months ended September 30, 2009 as
compared to a net loss of $42,961 for the three months ended September 30, 2008.
This increase was due to the reasons stated above.
LIQUIDITY
AND CAPITAL RESOURCES
Our
primary liquidity and capital resource needs are to finance the costs of our
operations and to make capital expenditures.
We
had no cash on hand as of September 30, 3009.
We
believe that we will continue to need financing activities to fund
operations.
Net
cash used in operating activities was $21,197 during the nine month period ended
September 30, 2009, mainly representative of the net loss incurred during 2009.
This compares to net cash used in operating activities of $29,453 for the nine
month period ended September 30, 2008.
Net
cash provided by investing activities was $200 during nine month period ended
September 30, 2009, representing the proceeds received for the sale of
equipment. This compares to net cash provided by financing activities
of $0 for the nine month period ended September 30, 2008.
Net
cash provided by financing activities was $20,997 during nine month period ended
September 30, 2009, mainly representing the proceeds from notes and related
party notes. This compares to net cash provided by financing
activities of $29,453 for the nine month period ended September 30, 2008 due to
proceeds from notes and related party notes.
Our
expenses to date are largely due to rents for the office space, professional
fees for financial services performed and the cost of sales for telephone
communication costs.
We
believe that our results of financing activities will provide us with the
necessary funds to satisfy our liquidity needs for the next 6 months. To the
extent that such funds are insufficient, our principal stockholder has agreed to
fund our operations for the next six-month period and beyond in the form of a
loan or loans. However, there is no formal agreement with our
principal stockholder, Greenwich Holdings LLC in writing or otherwise to do so
and accordingly may not be enforced against Greenwich Holdings, Inc. in the
event that it decides not to continue to fund the Company.
Working
Capital
As
of September 30, 2009, we had total assets of $19,756 and total liabilities of
$632,633. As of September 30, 3009, we had a working capital deficit
of $618,056.
DATONE,
INC.
Item 3. Quantitative and
Qualitative Disclosure About Market Risks
.
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 pursuant to the
Securities Exchange Act of 1934, as amended the ("Exchange Act"), is recorded,
processed, summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules, regulations and related forms, and
that such information is accumulated and communicated to our principal executive
officer and principal financial officer, as appropriate, to allow timely
decisions regarding required disclosure.
We
have carried out an evaluation, under the supervision and with the participation
of our management, including our principal executive officer and principal
financial officer, of the effectiveness of the design and operation of our
disclosure controls and procedures. Based on this evaluation, our principal
executive officer and principal financial officer concluded that our disclosure
controls and procedures were effective.
(b) Changes
in internal controls.
There
have been no significant changes in our internal controls or other factors that
could significantly affect such controls and procedures subsequent to the date
we completed our evaluation. Therefore, no corrective actions were
taken.
PART
II - OTHER INFORMATION
Item 1. Legal
Proceedings
.
To
the best knowledge of the Company's officers and directors, the Company is
currently not a party to any pending legal proceedings.
Item 1A. Risk
Factors
.
There
have been no material changes to the risk factors previously disclosed under
item 1 of the Company’s Registration Statement on Form SB as initially filed
with the United States Securities and Exchange Commission on February 1,
2008.
Item 2. Unregistered sales
of Equity Securities and Use of Proceeds
.
None.
Item 3. Defaults Upon
Senior Securities
.
None
.
Item 4. Submission of
Matters to a Vote of Security Holders
.
Item 5. Other
Information
.
|
|
*3.1
|
Certificate
of Incorporation.
|
|
|
31.1
|
Certification
pursuant to Section 302 of Sarbanes Oxley Act of
2002.
|
|
|
31.2
|
Certification
pursuant to Section 302 of Sarbanes Oxley Act of
2002.
|
|
|
32.1
|
Certification
pursuant to Section 906 of Sarbanes Oxley Act of
2002.
|
|
|
32.2
|
Certification
pursuant to Section 906 of Sarbanes Oxley Act of
2002.
|
*
Filed as an exhibit to the Company's Registration Statement on Form SB, as
initially filed with the Securities and Exchange Commission on February 1, 2008,
and incorporated herein by this reference.
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, there unto duly
authorized.
|
Dated: November
11, 2009
|
|
DATONE,
INC.
|
|
|
|
|
|
|
By:
|
/s/ Craig Burton
|
|
|
|
Craig
Burton
|
|
|
|
President,
Chief Executive Officer
|
Digital Asset Monetary N... (PK) (USOTC:DATI)
Historical Stock Chart
Von Nov 2024 bis Dez 2024
Digital Asset Monetary N... (PK) (USOTC:DATI)
Historical Stock Chart
Von Dez 2023 bis Dez 2024
