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| FUEG > SEC Filings for FUEG > Form 10-Q on 16-Aug-2012 | All Recent SEC Filings |
16-Aug-2012
Quarterly Report
The following discussion and analysis and results of operations should be read in conjunction with the unaudited consolidated financial statements and accompanying notes and the other financial information appearing elsewhere in this Report and reports included herein by reference. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. For this purpose, any statements contained in this Report that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking information includes statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales and marketing efforts, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management, and other matters. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as "may," "will," "should," "expects," "anticipates," "contemplates," "estimates," "believes," "plans," "projected," "predicts," "potential," or "continue" or the negative of these similar terms. The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking information to encourage companies to provide prospective information about themselves without fear of litigation so long as that information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the information.
These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we cannot predict. In evaluating these forward-looking statements, you should consider various factors, including the following: (a) those risks and uncertainties related to general economic conditions, (b) whether we are able to manage our planned growth efficiently and operate profitable operations, (c) whether we are able to generate sufficient revenues or obtain financing to sustain and grow our operations, and (d) whether we are able to successfully fulfill our primary requirements for cash, which are explained below under "Liquidity and Capital Resources". We assume no obligation to update forward-looking statements, except as otherwise required under the applicable federal securities laws.
Plan of Operation
We are in the business of operating a non-wagering, non-games of chance (such as poker, chess and backgammon), multi-platform, multiplayer and social software company. The Company has developed and recently began marketing and operating a non wagering internet gaming website by incorporating proprietary technologies that will provide players with streaming video, audio and messaging capabilities. We believe that these enhancements will dramatically enhance the players' online gaming experiences. Management is not aware of any online games sites which offer players the ability to see one another and speak live during game play.
Results of Operations
Comparison of Three Months Ended June 30, 2012 and 2011:
Revenues
During the three months ended June 30, 2012, we had revenues of $35,833 compared to no revenues for the three months ended June 30, 2011.
Selling, general and administrative expenses
Our selling, general and administrative expenses for the three months ended June 30, 2012 increased by $258,856, or approximately 130%, to $458,740, as compared to selling, general and administrative expenses for the three months ended June 30, 2011 of $199,884. These expenses are comprised mainly of prizes and marketing of $275,854, advertising expenses of $34,282, computer consulting of $57,346 and payroll of $51,600.
Net loss
As a result of the foregoing, for the three months ended June 30, 2012, net loss was $784,785.
Net loss for the three-month period ended June 30, 2011 was $200,669. The increase was primarily due to financing costs and an increase in selling, general and administrative expenses.
Revenues
During the six months ended June 30, 2012, we had revenues of $35,833 compared to revenues of $105,000 for the six months ended June 30, 2011.
Selling, general and administrative expenses
Our selling, general and administrative expenses for the six months ended June 30, 2012 increased by $344,392, or approximately 109%, to $660,190, as compared to selling, general and administrative expenses for the six months ended June 30, 2011 of $315,798. These expenses are comprised mainly of prizes and marketing of $289,979, advertising expenses of $109,786, computer consulting of $100,446 and payroll of $83,200.
Net loss
As a result of the foregoing, our net loss for the six months ended June 30, 2012, net loss was $1,510,377.
Net loss for the six-month period ended June 30, 2011 was $209,167. The increase was primarily due to financing costsand an increase in selling, general and administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
Our balance sheet as of June 30, 2012 reflects that we had $9,288 cash on hand. On June 30, 2012, our total current liabilities was $2,148,383 and a working capital deficiency was $2,118,071 compared to a working capital deficiency of $852,428on December 31, 2011. We had a stockholders' deficiency of $1,884,735 at June 30, 2012. The increase in working capital deficiency and stockholders' deficiency was due to financing costs, selling, general and administrative expenditures during the six months ended June 30, 2012.
As of June 30, 2012 the company had a total of $1,341,000 owed to ten entities and individuals, of which $416,000 are due upon demand and $925,000 have specific due dates, ranging from September 15, 2012 through December 21, 2012. During the six months ended June 30, 2012 the Company borrowed an aggregate of $685,000.
During July 2012 the Company borrowed $100,000 against the May 29, 2012 Note Purchase Agreement. This note is due on January 10, 2013. During August, 2012 the Company borrowed 50,000 against a Note Purchase Agreement dated August 9, 2012. The Note Purchase Agreement calls for intrest at 5%. per annum and each note issued pursuant to such agreement is payable within 5 months from the date of issuance or earlier from proceeds of a private offering or though a registration statement. As part of the August 9, 2012 Note Purchase Agreement the Company granted the lender 250,000 shares of common stock.
Going Concern Consideration
The Company is a development stage Company. For the period December 24, 2009 (date of inception) through June 30, 2012, the Company has had a net loss of $2,508,565. Our independent auditor has expressed substantial doubt about our ability to continue as a going concern and believes that our ability is dependent on our ability to begin operations and to achieve profitability.
The Company believes that it will need approximately $3,600,000 to fund its expenses over the next twelve months. On a monthly basis, if the Company had these funds it would utilize, among other uses, approximately $125,000 for advertising and marketing, $100,000 for salaries and office expenses and $60,000 for software development. There can be no assurance that additional capital will be available to the Company. The Company currently has no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources of capital.
We cannot be certain that the required additional financing will be available or available on terms favorable to us. If additional funds are raised by the issuance of our equity securities, such as through the issuance and exercise of warrants, then existing stockholders will experience dilution of their ownership interest. If additional funds are raised by the issuance of debt or other equity instruments, we may be subject to certain limitations in our operations, and issuance of such securities may have rights senior to those of the then existing holders of common stock. If adequate funds are not available or not available on acceptable terms, we may be unable to fund expansion, develop or enhance services or respond to competitive pressures.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and liabilities as of the date of the financial statements and during the applicable periods. We base these estimates on historical experience and on other factors that we believe are reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions and could have a material impact on our financial statements.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, results of operations or liquidity.
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