FUSA CAPITAL CORP
Item 6. Management's Analysis of Financial Condition and Plan of Operation.
A. Management's Analysis of Financial Condition
This section should be read in conjunction with the audited financial statements included in Part F/S of this filing.
In the approximately forty one (41) months of operation from September 13, 2000 (Date of Inception) to December 31, 2004, the Company generated limited revenues of $6,664 and incurred a cumulative net loss of $410,092. The Company's loss resulted primarily from costs of start-up activities, including consulting fees and other general and administrative expenses.
As noted by the Auditors, the Company has limited operations and has only commenced planned principal operations as of March, 2005, which raises substantial doubt about its ability to continue as a going concern. Due to the Company's lack of any current revenue source, the Company is dependent upon its ability to secure equity and/or debt financing. There are no assurances that the Company will be successful in securing such funding. It is important to note that without additional capital, either from chief executive officer Jenifer Osterwalder or from outside sources, it would be unlikely for the Company to continue as a going concern and it may be forced to terminate business operations.
Over the next twelve months, the Company plans to take the following material steps to further implement our business plan. (1) Plan of Operation: FUSA is a start up software company. The company is considered high-risk for many reasons. Although we have indications of interest from investors interested in purchasing $3 million of our common stock, there can be no assurances that such financing will actually take place. We anticipate receiving the proceeds of this investment in June, 2005.
We intend to spend about $1 million US on marketing and business development this year. Most of our marketing efforts initially will be aimed toward getting consumers to visit our website and begin searching for audio and video. Our business plan is dependent on a high volume of visitors to our site in a short period of time. We intend to begin marketing our website in April, 2005. Also in April, our first sales person is scheduled to begin working for us. We anticipate that our sales person will spend most of his/her time initially learning about our product and understanding the needs and requirements of consumers who use search for audio and video on our website.
In June of 2005, we believe that we will have enough visits our site, and therefore enough customer usage data and evidence of interest and usability, to begin our sales efforts on the enterprise level. We intend to have trained a sales force by this time and to be ready to concentrate on negotiating licensing transactions with some of the largest entertainment and news companies in the world. Our strategy involves enticing potential enterprise clients with the richness of our consumer data, the substantial interest and use we hope to have already generated with our website and size of potential revenue returns that our software can provide to these clients via enhancements in the way that they market video and audio content.
The first sales person we will hire probably cost us $100,000 CAD per year in salary plus 5% commissions. We hope to be able to hire an additional sales person by late summer or early fall, with roughly the same salary requirements. We anticipate spending about $1million US on operations and salaries. In addition to the payments for office space, we believe that we will have to spend around $150,000 CAD for our servers and network administration costs.
Our 12 month plan is to complete our search engine software, have it utilized by consumers on our websites and then license our software to content enterprises and Original Equipment Manufacturers.
(2) Material Steps Required to Implement the Twelve-Month Plan:
Our twelve-month plan requires us to accomplish the following steps:
1. Complete search engine software development
2. Make our websites operational
3. Deploy search engine on our websites
4. Drive traffic to our websites
5. Hire Initial Sales/Business Development Person
6. Develop technical team
7. Compile usage statistics for our websites
8. Identify most likely customers amongst content providers
9. Develop rapport with likely content customers
10. Present content customers with sales presentation
11. Hire second sales person
12. Develop beta test with one or more content customers
13. Deploy beta test
14. Evaluate beta test
15. Negotiate and sign license agreements with one or more content customers
16. Identify most likely OEM customers
17. Develop beta test with one or more OEM customers
18. Deploy beta test
19. Evaluate beta test
20. Negotiate and sign license agreements with one or more OEM customers
21. Architect subsequent versions and upgrades to core technology
22. Begin development on subsequent versions and upgrades to core technology
(3) Estimated Costs and Timetable for Completion of Steps:
The following lists costs and dates for the completion of various steps in our twelve-month plan. Costs include an initial cost plus any amounts that will be incurred through 4/30/06 in maintaining or finishing the indicated milestone, such as maintenance or salary costs.
Date Milestone(s) Cost
4/30/05 Search engine complete $50,000
06/01/05 Drive Traffic $250,000
Hire Sales Person
06/30/05 Develop technical team $250,000
Compile usage statistics
Develop customer rapport
09/30/05 Sales Presentation $150,000
Hire second sales person
Develop beta test
Deploy beta test
12/31/05 Evaluate beta test $100,000
Sign license agreements
Identify OEM customers
Develop OEM beta test
Deploy beta test
4/30/05 Evaluate OEM beta test $200,000
Sign OEM license agreements
Begin upgrade development
Management's Analysis of Financial Performance
The Company had no significant operations from the period January 1, 2004 until December 31, 2004. It financed its operations, which were limited to securing a business combination and its public reporting requirements, loans obtained from an unrelated third party. Moreover, we have limited capital resources currently. In the approximately four years of operation from September 13, 2000 (Date of Inception) to December 31, 2004, the Company generated revenues amounting to $6,664 from ongoing operations and posted a net loss of $410,092 resulting from start-up, general administrative expenses, general administrative expenses for related parties, and legal expense. The Company is considered a development stage company. We believe this information of no value for investors in evaluating the business presently as the nature of our business has changed substantially since March 7, 2005, when we acquired FTIC.
The Company is authorized to issue 500,000,000 shares of its $0.0001 par value Common Stock and 5,000,000 shares of its $0.001 Preferred Stock. During September 2000, the Company issued 5,750,000 shares of its $0.001 par value common stock to a former officer and current director in exchange for cash and a vehicle in the amount of $22,949. During December 2000, the Company issued 600,000 shares of its $0.001 par value common stock in exchange for consulting services valued. The consulting services were valued at $60,000.
During December 2000, the Company completed an offering pursuant to Regulation D, Rule 505 of the Securities Act of 1933, as amended, and issued a total of 1,303,000 shares of its $0.001 par value common stock in exchange for cash of $65,150. The funds were released to the Company on December 15, 2002. On May 31, 2002, the Company completed its offering pursuant to Regulation D, Rule 504 of the Securities Act of 1933, as amended, and issued a total of 633,250 shares of its $0.001 par value common stock in exchange for cash of $63,325. The funds were released to the Company in May 2002. During June 2002, the Company issued 310,000 shares of its $0.001 par value common stock in exchange for consulting services. The consulting services were valued at $31,000. During June 2002, the Company issued 552,938 shares of its $0.001 par value common stock in exchange for consulting services. The consulting services were valued at $55,294. There have been no other issuances of common and/or preferred stock.
FUSA financed its operations during the period from September 13, 2000 to December 31, 2004 primarily by issuing capital stock to its founder, officers, and unaffiliated investors in exchange for cash and services, As of December 31, 2004, FUSA has received $6,664 in revenue.
As of December 31, 2004, FUSA had $609 in assets, $86,723 in current liabilities, and a working capital deficit of $86,114 The current assets consisted of $184 in cash and marketable securities and $425 in the form of a prepaid expense.
B. Plan of Operation
The Company believes that it has insufficient resources to support its operations for the next twelve to eighteen months. This conclusion is based upon the fact that fixed costs for the Company could be substantial in implementing its vision as currently contemplated. Although the Company has indications from investors that they will invest up to $3 million USD in common stock of the Company, there is no legal obligation for them to do so and such a financing may not occur. Currently, the Company does not pay salaries and does not anticipate paying salaries until the financing is complete. However, without realizing revenues, the Company will face financial difficulties and need to raise additional capital. It is the intent of the Company, in the next twelve months, to raise funds and then to generate revenues sufficient to operate and grow as a going concern. The Company's audited financial statements clearly indicate concern on the part of the auditor as to the viability of the Company as a going concern. If the Company does not realize significant revenues in the near-term or does not secure additional capital, it may be difficult to continue operations.
FUSA believes that it has insufficient resources to support its operations for the next twelve to eighteen months. Without realizing revenues or additional investment, FUSA will face financial difficulties and needs to raise additional capital. It is the intent of FUSA, in the next twelve months, to generate investment and revenues sufficient to operate and grow as a going concern.