As filed with the Securities and Exchange Commission on December 26, 2001.
Registration No. 333-

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM SB-2
                             REGISTRATION STATEMENT
                                    UNDER THE
                             SECURITIES ACT OF 1933

                            ------------------------

                                 FONECASH, INC.
                 (Name of Small Business Issuer in its Charter)


            Delaware                       3578                  22-3530573
(State or other jurisdiction of  Primary Standard Industrial  (I.R.S. Employer
 incorporation or organization)  Classification Code Number) Identification No.)

          (Address, including zip code, and telephone number, including
             area code of registrant's principal executive offices)

                         Daniel E. Charboneau, President
                           90 Park Avenue, Suite 1700
                               New York, NY 10016
                                 (212) 984-0641
            (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)

                          Copies of communications to:
                             Michael S. Krome, P.C.
                                  8 Teak Court
                           Lake Grove, New York 11755
                          Telephone No.: (631) 737-8381
                          Facsimile No.: (631) 737-8382

Approximate  date of  commencement  of proposed  sale to the public:  As soon as
practicable after this Registration Statement becomes effective.

If any of the  securities  being  registered on this Form are to be offered on a
delayed or continuous  basis  pursuant to Rule 415 under the  Securities  Act of
1933, check the following box. |X|

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933,  please check the following box
and list  the  Securities  Act  registration  statement  number  of the  earlier
effective registration statement for the same offering. |_|




If this Form is a  post-effective  amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933,  check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering. |_|

If this Form is a  post-effective  amendment filed pursuant to Rule 462(d) under
the Securities Act of 1933,  check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering. |_|

If delivery  of the  prospectus  is  expected  to be made  pursuant to Rule 434,
please check the following box. |_|


                         Calculation of Registration Fee
 ===============================================================================

                               Proposed         Proposed            Amount
Title              Amount      Maximum          Maximum             of
of Securities      to be       Offering Price   Aggregate           Registration
To be Registered   Registered  Per Share        Offering Price (1)  Fee
----------------   ----------  --------------   ------------------  --------
Common Stock,  (1) 7,275,730       $0.07        $509,301            $134.46
Par value $.0001
Per share


(1)  Estimated  solely for the purpose of calculating the filing fee pursuant to
     Rule 457(c) under the Securities Act of 1933.

The registrant hereby amends this  registration  statement on such date or dates
as may be necessary to delay its effective date until the registrant  shall file
a further amendment which specifically  states that this registration  statement
shall  thereafter  become  effective  in  accordance  with  Section  8(a) of the
Securities  Act of  1933 or  until  this  registration  statement  shall  become
effective on such date as the Commission,  acting pursuant to said Section 8(a),
may determine.

================================================================================

                                       ii






The  information  in this  prospectus  is not complete  and may be changed.  The
selling  stockholders  may not sell  these  securities  until  the  registration
statement filed with the Securities and Exchange  Commission is effective.  This
prospectus is not an offer to sell these  securities and it is not soliciting an
offer to buy  these  securities  in any  state  where  the  offer or sale is not
permitted.

        Preliminary Prospectus Subject to Completion dated December     , 2001

                                 Fonecash, Inc.

                        7,275,730 shares of common stock
                    ----------------------------------------

          o    This is an offering of  7,275,730  shares of our common  stock by
               stockholders of Fonecash, Inc.

          o    The selling  stockholders  will receive all of the proceeds  from
               the sale of 7,275,730 of their shares,  less any  commissions  or
               discounts  paid to brokers or other  agents.  We will not receive
               any of the proceeds from the sale of these shares.

          o    The selling  stockholders  may offer the shares from time to time
               through  public or private  transactions,  at  prevailing  market
               prices, or at privately negotiated prices.


MARKET FOR THE SHARES
Fonecash  shares are  currently  listed on the Over the Counter  Bulletin  Board
operated  by the  NASD.  On the  last  day  prior to  filing  this  Registration
statement, the closing price for the shares was $0.07.

The  securities  offered in this  prospectus  involve a high degree of risk. You
should carefully consider the factors described under the heading "Risk Factors"
beginning on page 5.

NEITHER  THE  SECURITIES  AND  EXCHANGE  COMMISSION  NOR  ANY  STATE  SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS  IS TRUTHFUL OR  COMPLETE.  ANY  REPRESENTATION  TO THE CONTRARY IS A
CRIMINAL OFFENSE.

                    ----------------------------------------

                                       1




                                TABLE OF CONTENTS

                                                                            Page

Summary ...................................................................   2
The Offering ..............................................................   3
Summary Financial .........................................................   3
Risk Factors ..............................................................   3
Use of Proceeds ...........................................................  10
Business ..................................................................  11
Management's Discussion and Analysis or Plan of Operation .................  19
Management ................................................................  23
Executive Compensation ....................................................  25
Certain Relationships and Related Transactions ............................  26
Principal Stockholders ....................................................  26
Offering by Selling Securityholders .......................................  26
Description of Securities .................................................  27
Plan of Distribution ......................................................  28
Legal Proceedings .........................................................  29
Indemnification of Directors and Officers .................................  29
Delaware Business Combination Provisions ..................................  30
Where You Can Find More Information .......................................  30
Transfer Agent ............................................................  31
Interest of Named Experts and Counsel .....................................  31
Legal Matters .............................................................  31
Experts ...................................................................  31
Financial Statements ......................................................  32



PROSPECTUS SUMMARY

This prospectus summary highlights selected  information  contained elsewhere in
this  prospectus.  You should read the following  summary together with the more
detailed information  regarding our company and the shares of common stock being
sold in this offering, which information appears elsewhere in this prospectus.


ABOUT OUR COMPANY

                          How our company is organized

Fonecash,  Inc. (the "Company") was incorporated  under the laws of the State of
Delaware  on  August  7,1997  and is in its  development  stage.  It has  had no
operating  revenues to date. The Company  incurred  operating losses of $941,981
from  Inception  to December 31, 2000,  the end of its latest  fiscal year.  The
Company spent a total of $352,906 on Research and Development  from Inception to
December 31, 2000. The Company expects its  accumulated  deficit to grow for the
foreseeable future.

                                       2


                              Where you can find us

Fonecash  maintains an office at 90 Park Avenue,  Suite 1700 New York, NY 10016.
The phone number is (212) 984-0641.

                                  The Offering

Shares offered by the Selling Shareholders:            7,275,730 shares

Shares Outstanding as of December 17, 2001:           19,900,000 shares


Use of Proceeds - Fonecash,  Inc. will not receive any proceeds from the sale of
the shares by the Selling Shareholders.

Our Trading Symbol - The Common Stock of Fonecash,  Inc. trades under the symbol
"FCSH".

                          SUMMARY FINANCIAL INFORMATION

                                                                09/30/01

Balance Sheet Data:
Total Assets                                                 $   314,024
Total Liabilities                                                431,605
Total Stockholders' Equity                                       117,581

Statement of Operations:
Revenues                                                     $     7,143
Expenses                                                         434,086
Income (Loss) from Operations                                   (932,213)
Net Income (Loss)                                               (925,070)
Income (Loss) Per Share                                             (.13)
Shares Used In Computing Net Income (Loss) Per Share           6,919,720

RISK FACTORS

         An investment in our common stock is highly  speculative and involves a
high degree of risk.  Therefore,  you should  consider  all of the risk  factors
discussed  below, as well as the other  information  contained in this document.
You should not  invest in our  common  stock  unless you can afford to lose your
entire investment and you are not dependent on the funds you are investing.

Risk Factors Related to Fonecash, Inc.'s Operations

Development stage company;  lack of revenues and accumulated deficit;  continued
losses for the  foreseeable  future;  no assurance of  profitability;  auditor's
report with going concern disclosure.

         The Company is in the  development  stage and, to date, has only earned
nominal revenues from operations. Since inception in August, 1997, the Company's
principal  activities have been research and development and sales and marketing
activities  principally related to its products and services.  As a consequence,

                                       3


as of September 30, 2001, the Company had an accumulated  deficit of $1,200,023.
The Company has continued to incur losses since August 1997. Potential investors
should  be aware of the  problems,  delays,  expenses,  difficulties  and  risks
encountered by a company in the  development  stage,  particularly  in a rapidly
changing industry, many of which may be beyond the Company's control. Such risks
may  include,  but  are not  limited  to,  unanticipated  problems  relating  to
developing and marketing new products. In addition, the Company will also face a
number of risks  specific to entities  attempting  to  introduce  new  products,
including,  but not  limited  to, the  existence  or  development  of  competing
products, the existence or development of new technologies that are incompatible
with the Company's products, the inability of the Company to respond in a timely
manner to changing  technologies,  the potential  obsolescence  of the Company's
products  as a result of changing  technologies,  and the failure of a market to
develop for the  Company's  products.  The Company  expects to continue to incur
losses until such time, if ever, as the Company's  revenues exceed its expenses.
There can be no assurance that the Company will ever achieve profitability.  The
Company's  independent  auditor's report on the Company's  financial  statements
includes an explanatory  paragraph that states...  that the Company has suffered
recurring  1osses  from  operations  which  raises  substantial  doubt about the
Company' s ability to continue as a going concern.  The financial  statements do
not  include  any  adjustments  that  might  result  from  the  outcome  of this
uncertainty.

We May Continue to Lose Money,  and If We Do Not Achieve  Profitability,  We May
Not Be Able to Continue Our Business.

         Through   December  17,  2001,  we  have  generated  no  revenues  from
operations,  have incurred  substantial  expenses and have sustained  losses. In
addition,  we expect to continue to incur significant  operating expenses.  As a
result, we will need to generate significant revenues to achieve  profitability,
which may not occur. We expect our operating expenses to increase  significantly
as a result of our planned expansion. Since we have not yet completed developing
our website and we have no operating  history of  marketing  our services to the
public, our business may never generate sufficient revenues to meet our expenses
or achieve profitability.  Even if we do achieve profitability, we may be unable
to sustain or  increase  profitability  on a  quarterly  or annual  basis in the
future.

Early stage of market development; uncertainty of industry infrastructure.

         The  market  for  the  Company's  products  is at  an  early  stage  of
development,  is evolving rapidly,  and is characterized by an increasing number
of market entrants who have introduced, or are developing competing products. As
is typical of a new and rapidly evolving industry,  demand and market acceptance
for recently introduced products are subject to a high level of uncertainty.  If
the Company's market fails to develop or develops more slowly than expected,  or
the Company's products do not achieve market acceptance by significant number of
individuals  and  businesses,  the  Company's  business,  financial  conditions,
prospects and operating results will be materially and affected.

Rapid and significant  technological change; no certainty of industry standards;
no assurance of market acceptance.

         The  transaction  automation  system  industry  is subject to rapid and
significant   technological  change  that  may  render  the  Company's  products
obsolete.  In addition,  such rapid changes may, in a very short period of time,
impose  additional,  unforeseen  costs on the Company in that the Company may be
required  to  modify  its  products  to adapt to such  changes.  There can be no
assurance that the Company will be able to  successfully  modify its products as
may be necessary in a timely manner, or at all.

         In  addition,  the  Company's  products  are  designed  around  certain
technical standards with respect to wireless  telecommunications and current and
future sales of the Company's products will be dependent on industry  acceptance

                                       4


of  such  standards.  While  the  Company  intends  that  its  products  will be
compatible  with the standards  promulgated  by leading  industry  participants,
widespread adoption of a proprietary or "closed" standard (i.e., a standard that
precludes  all  participants  other than those it was  specifically  designed to
accommodate) could preclude the Company from effectively providing its products.
In addition,  even if a  non-proprietary  industry  standard is established,  no
assurance  can be given that the  technology  upon which such  standard is based
will be available to the Company on  commercially  reasonable  terms, or at all,
which could have a material adverse effect on the Company's business,  financial
condition, prospects and operating results.

         Even if the Company's products are compatible with industry  standards,
there can be no assurance the Company's  products will achieve market acceptance
or that the Company will be  successful  in  developing  new products  that meet
changing customer needs. Furthermore, there can be no assurance that the Company
will be able to respond to technological  changes or evolving industry standards
in a timely  manner,  if at all.  The  inability  of the  Company  to respond to
changing  market  conditions,   technological  developments,  evolving  industry
standards or changing customer requirements would have a material adverse effect
on the Company's business, financial condition, prospects and operating results.

We expect to have quarter-to-quarter  fluctuations in revenues, expenses, losses
and cash flow, some of which could be significant.

         Results of operations will depend upon numerous factors,  some of which
are beyond our control,  including regulatory actions,  market acceptance of our
products and services, new product and service  introductions,  and competition.
Therefore,  we may have  significant  fluctuations  in revenue  from  quarter to
quarter.

We are  dependent  on our key  personnel  and if we lose  those  personnel,  our
business  would fail.  Fonecash  depends upon the continued  involvement  of Mr.
Daniel E. Charboneau,  the Company's President and Chief Executive Officer, John
Wu, the Company's  Vice Present of  Engineering  Michael Wong,  Chief  Financial
Officer and David Cheung, the Company's Vice President of Marketing. The loss or
unavailability of any of such individuals could materially  adversely affect the
Company.  On January 1, 2000,  the Company  entered  into  five-year  employment
agreements with Messrs.  Charboneau, Wu, Wong and Cheung. The Company intends to
be the sole  beneficiary of a "key person" life insurance  policy on the life of
Mr. Charboneau in the principal amount of $5 million.

Competition.

         The market for  Terminals is rapidly  evolving,  resulting in a dynamic
competitive   environment.   The  Company  competes  with  companies  that  have
substantially  greater  financial  marketing,   technical  and  human  resources
capabilities.  In  addition,  companies  that may enter  the  market  with.  new
products and services that may be competitive with products and services offered
or to be offered by the Company.  Because  there are  potential  entrants to the
field,  it is extremely  difficult to assess which companies are likely to offer
competitive  products  and  services  in the  future,  and in some  cases  it is
difficult to discern whether an existing  product or service is competitive with
the Company's services.  Competitive factors in the Terminal market include core
technology,  breadth of product functionality and features,  product performance
and quality, marketing and distribution resources,  customer service and support
and price.  The Company  expects  competition  to persist and  intensify  in the
future.

Some of our competitors may be able to use their financial  strength to dominate
the market, which may affect our ability to generate revenues.

         Some of our competitors are much larger companies than us and which are
very well  capitalized and can tap their strong market values for further growth

                                       5


which may impede  our  ability to  generate  enough  sales to cover the costs of
marketing  the products  and several of our  competitors  have longer  operating
histories,  greater name  recognition,  larger  client  bases and  significantly
greater  financial,  technical and marketing  resources  than the Company.  Such
competitors may be able to undertake more extensive marketing  campaigns,  adopt
more aggressive  pricing  policies and make more attractive  offers to potential
clients.  In addition,  many of the Company's current or potential  competitors,
such as Verifone,  Hypercom, Datacard, NBS and International Verifact have broad
distribution channels that may be used to distribute competing products directly
to end-users or  purchasers.  No assurance can be given that the Company will be
able to compete  effectively  with  current or future  competitors  or that such
competition will not have a material  adverse effect on the Company's  business,
financial condition, prospects or operating results.

Risks of defects and development delays.

         The Company has not sold a material amount of its existing products and
proposed  products.  Products  based on  sophisticated  hardware,  software and.
computing systems often encounter  development delays and may contain undetected
errors or failures  when  introduced.  As a result,  the Company may  experience
delays in the  development  of the  hardware,  software  and  computing  systems
underlying  the  Company's  proposed  products.  In  addition,  there  can be no
assurance that, despite testing by the Company and potential  customers,  errors
will not be found in the underlying  hardware,  software or computing system, or
that the Company will not experience  development delays,  which could result in
delays in the  market  acceptance  of its  products  and could  have a  material
adverse effect on the Company's  business,  financial  condition,  prospects and
operating results.

Changes in  technology  and Internet  software  may make it difficult  for us to
adapt and compete with better-funded competitors.

         We are developing our own commerce based web site. However,  technology
and Internet  software is  characterized  by rapid  technological  developments,
evolving   industry   standards,   changing   customer   demands  and   frequent
introductions  of new  products,  services  and  enhancements.  Because  we have
limited   funding,   our  success  depends  upon  our  ability  to  improve  the
performance,  content  and  reliability  of our  products  in  response  to both
evolving  demands of the  business  and  consumer  communities  and  competitive
product  offerings.  We  cannot  assure  you  that  we  will  be  able  to do so
successfully  or that any  enhancements  or new products that we introduce  will
gain acceptance in the marketplace.  If we are not successful or if our products
are not accepted, we could lose potential customers to our competitors.

Dependence on intellectual property rights; risk of infringement.

         The Company relies on applicable copyright,  trade secret and trademark
laws to protect certain  proprietary  information of the Company.  To the extent
proprietary  technology is involved, the Company relies on trade secrets that it
seeks to protect,  in part,  through  confidentiality  agreements  with  certain
employees,  consultants and other parties.  No assurance can be given that these
agreements  will not be breached,  that the Company will have adequate  remedies
for any breach,  or that the Company's  trade secrets will not otherwise  become
known to, or  independently  developed by, existing or potential  competitors of
the  Company.  The Company  generally  does not seek to protect its  proprietary
information through patents or registered trademarks, although it may seek to do
so in the future.  In  addition,  no assurance  can be given that the  Company's
products will not infringe any  intellectual  property or proprietary  rights of
others. The Company may be involved from time to time in litigation to determine
the  enforceability,  scope and validity of its rights.  Litigation  in order to
protect the Company's  intellectual  property rights could result in substantial
cost to the Company and  diversion  of effort by the  Company's  management  and
technical personnel.

                                       6


Need for additional personnel.

         Since its  inception in the Company has  primarily  engaged in research
and  development  activities and sales and marketing.  The Company's  ability to
implement its business  plan,  the essential  elements of which are research and
development  and sales and marketing  activities  will depend upon the Company's
ability to hire and retain senior level, highly-skilled personnel experienced in
the operation of certain aspects of the Company's business,  such as accounting,
management,  sales and marketing.  Competition for such personnel is intense and
there can be no assurance  that the Company will be successful in attracting and
retaining personnel. The Company's failure to attract and retain such additional
personnel would have a material adverse effect on the Company.

Management of growth.

         If there is market  acceptance  for the  products  to be offered by the
Company,  the  Company  anticipates  that it  will be  required  to  expand  its
operations to address such market demand. In addition,  the Company  anticipates
significantly  increasing the size of its research and development and sales and
marketing  staff  following  the  completion of this  Offering.  There can be no
assurance that such internal expansion will be successfully completed, that such
expansion will enable the Company to generate sufficient  revenues,  or that the
Company  will be able to compete  successfully  against the  significantly  more
extensive  and  well-funded  sales and  marketing  and research and  development
operations of the Company's  existing and potential  competitors.  The Company's
rapid  growth  and  the  integration  of  operations  are  expected  to  place a
significant  strain  on the  Company's  managerial,  operational  and  financial
resources. The inability of the Company to promptly address and respond to these
circumstances  could have a material  adverse effect on the Company's  business,
financial condition, prospects or operating results.

Our business is Internet based and the failure of the Internet to grow or remain
a viable commercial medium could harm our growth.

         Our success  depends in large part on the  maintenance  of the Internet
infrastructure as a reliable network backbone that provides adequate speed, data
capacity and security.  Sales of our web-based products are tied to the adequacy
of the Internet infrastructure and the continued growth and commercial viability
of the Internet. Our success also depends on the timely development of products,
such as high-speed  modems,  that enable reliable  Internet access and services.
The  Internet  may continue to  experience  significant  growth in the number of
users,   frequency  of  use  and  amount  of  data  transmitted.   The  Internet
infrastructure  may not be able to  support  the  demands  placed  on it and the
performance  or  reliability  of the Internet may be adversely  affected by this
continued growth. In addition,  the Internet could lose its commercial viability
if the number of people who use the Internet does not continue to grow. A number
of factors,  including  unreliable  service,  unavailability of  cost-effective,
high-speed access to the Internet or concerns about security,  could impede this
growth. The  infrastructure or complementary  products and services necessary to
maintain the Internet as a viable  commercial  medium may not be developed,  and
the Internet may not continue to be a viable commercial medium for us.

We will need additional  capital to finance our business plan and such financing
may be unavailable or too costly.

         Our  ability to  research  and  develop  the core  technologies  we are
planning to utilize is dependant on our ability to secure financing and allocate
sufficient  funds  required  to  support  our  marketing  activity.   Additional
financing  may not be available  on favorable  terms or even at all. If we raise
additional funds by selling stock, the percentage  ownership of our then current
stockholders  will be reduced.  If we cannot raise adequate funds to satisfy our
capital  requirements,  we may have to limit our operations  significantly.  Our
ability to raise  additional  funds may  diminish if the public  equity  markets
become less supportive of the industry.

                                       7


If we are found liable in a product  liability  lawsuit  arising from the use of
our products, our business and financial condition may be harmed.

         We may face  potential  risk of product  liability  claims  because our
products are used in activities where injury may occur from their use.  Although
we will seek to have product liability insurance coverage when we have completed
products  for sale and prior to the  delivery  of these  products,  we cannot be
certain that this insurance will adequately  cover all product  liability claims
or that we will be able to maintain this  insurance at a reasonable  cost and on
reasonable  terms.  If we are found liable for damages with respect to a product
liability  claim and our insurance  coverage is inadequate to satisfy the claim,
then our business, operating results and financial condition could be materially
and adversely affected.


Risks Related to Offering

Management  Beneficially Owns Thirty percent (30%) of Our Common Stock and Their
Interest Could Conflict With Yours.

         Our directors and executive  officers and other  founders  beneficially
own approximately 30%  of our outstanding common stock assuming all warrants are
exercised.  As a result, the directors and executive  officers  collectively are
able to  substantially  influence all matters  requiring  stockholder  approval,
including  the  election of  directors  and  approval of  significant  corporate
transactions.  Such  concentration  of  ownership  may also  have the  effect of
delaying or  preventing a change in control,  which may be to the benefit of the
directors and executive officers but not in the interest of the shareholders.

Immediate Substantial Dilution.

         Upon  completion  of this  Offering,  purchasers  of the  Common  Stock
offered hereby will  experience  immediate and  substantial  dilution of the net
tangible book value of their  investment  in the Company of $0.04 per share,  or
approximately $0.06 per share.

No Dividends.

         The Company  has never paid any  dividends  with  respect to its Common
Stock  and does not  anticipate  paying  dividends  on its  Common  Stock in the
foreseeable   future.  Any  earnings  which  the  Company  may  realize  in  the
foreseeable future will be retained to finance the growth of the Company.

Anti-takeover provisions; issuance of preferred stock.

         The  Company's  Board of  Directors  has the  authority  to issue up to
5,000,0000  shares of preferred stock in one or more series and to determine the
number of  shares  in each  series,  as well as the  designations,  preferences,
rights and  qualifications  or  restrictions of those shares without any further
vote or action by the  stockholders.  The rights of the holders of Common  Stock
will be subject to, and may be adversely  affected by, the rights of the holders
of any  preferred  stock  that may be  issued in the  future.  The  issuance  of
preferred  stock could have the effect of making it more  difficult  for a third
party to acquire a majority of the outstanding  voting stock of the Company.  In
addition, the Company is subject to the anti-takeover  provisions of Section 203
of the Delaware General  Corporation Law. In general,  this statute  prohibits a
publicly-held  Delaware  corporation  from engaging in a "business  combination"
with an "interested  stockholder"  for a period of three years after the date of
the transaction in which the person became an interested  stockholder unless the
business combination is approved in a prescribed manner

Future Sales of Common Stock by Our Existing Stockholders Could Adversely Affect
Our Stock Price.

         As of the date of the filing, Fonecash, Inc. has 19,900,000 outstanding
shares of Common  Stock.  Out of the  19,900,000  shares  currently  outstanding
7,275,730 are being  registered  with this  offering.  The  remaining  shares of

                                       8


common,  which are not being registered hereby,  are "restricted  securities" as
defined under Rule 144, substantially all of which are available for sale in the
public market,  subject to the provisions of Rule 144 under the Securities  Act,
or pursuant to this  Registration  Statement.  Sales of  substantial  amounts of
Common Stock in the public market, or the perception that such sales will occur,
could have a material  negative  effect on the market price of our Common Stock.
This  problem  would be  exacerbated  if we issue  Common  Stock in exchange for
equipment and services.

We expect to issue  additional  stock in the future to finance our business plan
and the  potential  dilution  caused by the  issuance of stock in the future may
cause the price of our common stock to drop.

         As of September 30, 2001 we had outstanding  9,039,340 shares of common
stock, not all of which are included in this registration statement.  Subsequent
to the  effective  date  of this  offering,  we will  need to  raise  additional
capital,  which may result in the issuance of additional shares of common stock,
or debt instruments. Shares may be issued under an available exemption, a latter
registration  statement,  or both. If and when additional  shares are issued, it
may cause  dilution in the value of shares  purchased  in this  offering and may
cause the price of our common stock to drop.  These  factors  could also make it
more difficult to raise funds through future offerings of common stock.

Our Directors  Have Limited  Liability  and Therefore  Cannot be Held Liable for
Monetary Damages.

         Under our Certificate of  Incorporation,  the directors  cannot be held
liable to Fonecash,  Inc. or to the stockholders for monetary damages for breach
of fiduciary duties except under certain limited circumstances.

We may not be able to maintain a trading market for your shares.

         Trading in our Common  Stock,  is conducted  on the OTC Bulletin  Board
operated by the NASD. Said trading is dependent upon us continuing to be able to
comply  with Rule 6530 of the NASD,  which  requires  us to file  reports as set
forth in the  Securities  Exchange  Act of 1934.  Because  we may not be able to
obtain or  maintain  a listing on the OTC  Bulletin  Board,  your  shares may be
difficult or impossible to sell.  However,  if we are unable to qualify for this
listing, or if we will become unable to maintain our listing on the OTC Bulletin
Board,  we believe that our stock will trade on  over-the-counter  market in the
so-called "pink sheets".  Consequently,  selling your Common Stock would be more
difficult  because  only smaller  quantities  of stock could be bought and sold,
transactions could be delayed,  and security analysts' and news media's coverage
of Fonecash, Inc. may be reduced. These factors could result in lower prices and
larger spreads in the bid and ask prices for our stock.

Our common  stock is a "penny  stock,"  and  compliance  with  requirements  for
Dealing in penny stocks may make it difficult for holders of our common stock to
resell their shares.

         Currently there is no public market for our common stock. If the common
stock  is  ever   listed  in  the  public   market  in  what  is  known  as  the
over-the-counter  market  and at least for the  foreseeable  future,  our common
stock  will be deemed to be a "penny  stock"  as that  term is  defined  in Rule
3a51-1 under the Securities  Exchange Act of 1934. Rule 15g-2 under the Exchange
Act  requires  broker/dealers  dealing  in penny  stocks  to  provide  potential
investors  with a document  disclosing  the risks of penny  stocks and to obtain
from these  inventors a manually  signed and dated  written  acknowledgement  of
receipt of the document before  effecting a transaction in a penny stock for the
investor's  account.  Compliance  with  these  requirements  may  make  it  more
difficult  for  holders  of our  common  stock to resell  their  shares to third
parties  or  otherwise,  which  could  have a  material  adverse  effect  on the
liquidity and market price of our common stock.

         Penny  stocks  are  stocks  with a price of less  than  $5.00 per share
unless traded on NASDAQ or a national securities exchange;

                                       9


         Penny stocks are also stocks which are issued by  companies  with:  net
tangible  assets of less than $2.0 million (if the issuer has been in continuous
operation for at least three years); or $5.0 million (if in continuous operation
for less than three years); or average revenue of less than $6.0 million for the
last three years.

It is more  difficult for our  shareholders  to sell their shares because we are
not, and may never be, eligible for NASDAQ or any National Stock Exchange.

         We are not presently,  and it is likely that for the foreseeable future
we will not be,  eligible  for  inclusion in NASDAQ or for listing on any United
States  national  stock  exchange.  To be eligible  to be included in NASDAQ,  a
company is required to have not less than $4,000,000 in net tangible  assets,  a
public float with a market value of not less than $5,000,000,  and a minimum bid
of price of $4.00 per share.  At the present  time, we are unable to state when,
if ever, we will meet the Nasdaq  application  standards.  Unless we are able to
increase our net worth and market  valuation  substantially,  either through the
accumulation  of surplus  out of earned  income or  successful  capital  raising
financing activities, we will never be able to meet the eligibility requirements
of NASDAQ.  As a result,  it will more difficult for holders of our common stock
to resell  their  shares to third  parties  or  otherwise,  which  could  have a
material adverse effect on the liquidity and market price of our common stock

We require additional funds to achieve our current business  strategy,  which we
may not be able to obtain.

         We will need to raise  additional  funds through public or private debt
or sale of equity to develop and establish  our marketing  program and establish
our  website.  Such  financing  may not be available  when needed.  Even if such
financing is available,  it may be on terms that are materially  adverse to your
interests  with  respect  to  dilution  of  book  value,  dividend  preferences,
liquidation preferences, or other terms. If we are unable to obtain financing on
reasonable  terms, we could be forced to delay,  scale back or eliminate product
and  service  development  programs.  In  addition,  such  inability  to  obtain
financing  on  reasonable  terms  could  have a material  adverse  effect on our
business,  operating results,  or financial condition to such extent that we are
forced to restructure, file for bankruptcy, sell assets or cease operations, any
of which could put your investment dollars at significant risk.

         This  Prospectus  contains  forward-looking  statements,  which involve
risks and uncertainties.  Such  forward-looking  statements include, but are not
limited to,  statements  regarding future events and our plans and expectations.
Fonecash,  Inc.'s actual results could differ  materially from those anticipated
in these  forward-looking  statements as a result of certain factors,  including
those set forth in the following risk factors and elsewhere in this  Prospectus.
In addition to the other  information  in this  Prospectus,  the following  risk
factors  should be  considered  carefully in evaluating  Fonecash,  Inc. and our
business before purchasing the Common Stock offered by this Prospectus.

         USE OF PROCEEDS

       The  shares  of  common  stock  offered  by  this  prospectus  are  being
registered for the account of the selling stockholders,  and we will not receive
any proceeds from the sale of common stock by the selling stockholders.


         MARKET FOR SHARES OF FONECASH

The Company's common stock has traded on the OTC Bulletin Board under the symbol
"FCSH"  since  July 3,  2000.  The  following  table sets forth the high and low
closing prices for the common stock for the periods indicated:

                                       10


                          2000                   High              Low
                     ---------------            ------            -----
                     Fourth Quarter             $0.30             $0.21
                     Third Quarter              $3.00             $1.69

As of December 31, 2000, there were  approximately  170 holders of record of the
common stock. On March 31, 2001, the closing sales price of the Company's common
stock was $0.25 per share.

         DIVIDENDS

         We have  never paid a cash  dividend  on our  common  stock.  It is our
present policy to retain earnings, if any, to finance the development and growth
of our business.  Accordingly,  we do not anticipate that cash dividends will be
paid until our earnings and  financial  condition  justify such  dividends,  and
there can be no assurance that we can achieve such earnings.

         BUSINESS

Fonecash,  Inc. (the "Company") was incorporated  under the laws of the State of
Delaware  on  August  7,1997  and is in its  development  stage.  It has  had no
operating  revenues to date. The Company  incurred  operating losses of $941,981
from  Inception to December  31,1999.  The Company  spent a total of $352,906 on
Research and Development from Inception to December 31,1999. The Company expects
its accumulated deficit to grow for the foreseeable future.

The Company's Operations to Date

The  Company  has  developed a system of  processing  credit  cards for an under
served community of low volume merchants and in-home salespersons  consisting of
a  terminal  and a system of  computers,  utilizing  established  communications
networks, both wired and wireless, for processing the data from credit and debit
cards.

Terminals are  electronic  collectors of credit and debit data from the magnetic
stripe  on cards.  In the case of debit and  credit  cards the  Fonecash  system
collects the data from the magnetic stripe when a merchant  accepts the card for
payment of goods or services.  This data is transmitted to processors  where the
validity  of the card  number is  confirmed  and the amount of the  purchase  is
authorized to the cardholder's account. Settlement occurs when the collected and
stored  data is sent to the card  issuing  bank  which  charges  the  customer's
account and  electronically  deposits  payment in the  merchant's  bank account,
usually within 24 - 48 hours.

The Company  intends to market a product line and a complete  processing  system
that is high  quality and simple to operate,  because the  Company,  and not the
individual merchant, takes the responsibility for closing the day's receipts and
uploading  the data to a third party  payment  processor,  such as  Paymenttech,
Visanet, or First Data Resources, for settlement. This results in payments being
deposited in the merchants'  bank account  within 48 hours.  Because the Company
not only provides a terminal,  but also, provides a service that facilitates the
collection of daily payment  receipts,  and transmits these electronic  receipts
for payment and deposit of funds to each merchant,  the Company believes that it
will be able to compete  with the  current  makers of  terminals,  who only sell
terminals,  but also with payment  processors who only support  terminals  which
transmit credit card data to them only after the merchant has manually collected
the  day's  electronic  receipts  which  are  then  transmitted  to the  payment
processor.

                                       11


The Company  intends to establish up to three master  distributors in the United
States  with  the  most  likely  candidates  being  current   Independent  Sales
Organizations  (ISO's) who are already  engaged in the business of  distributing
automated  credit card  processing  terminals to established  merchants who have
been approved by their sponsoring banks.  These ISO's have trained  commissioned
sales  persons and have an interest in  placement  of any terminal in the market
regardless of manufacturer.

The  Company  has never  operated  under any  other  name,  nor has it ever been
involved with any bankruptcy,  receivership or similar  proceeding or engaged in
any material  reclassification,  merger,  consolidation,  or purchase or sale of
assets.

On October 10, 1997, the Company signed a consulting agreement with Advance Data
Information, Ltd., (hereinafter "ADI"), located in Taipei, Taiwan, to act as the
research and  development  division,  supplying the design  engineering  for the
hardware and the software of the Company's  products.  ADI is a privately  owned
company  of Dr.  John  Wu, a U.S.  citizen,  and a  director/stockholder  of the
Company,  who employs eight engineers in all stages of the  engineering  process
from  concept to design of hardware  and  operating  systems to  selection  of a
manufacturer and inspection and quality control of the final product. In return,
the Company shall have exclusive  ownership  rights to any and all products that
are  developed  as a result of this  agreement.  The Company has issued  200,000
shares of its common stock at par value to Dr. Wu in return for this  Agreement,
and the Board of Directors voted to issue another 333,333 shares at par value in
return for services renedered by Dr. Wu from Inception to December 31, 1999.

On  November 1, 1997,  the Company  entered  into a License  Agreement  with Mr.
Thomas J. Ulrich by which it acquired exclusive, worldwide rights to U.S. patent
No. 4,803,719, dated June 4,1987, which provides a method for powering telephone
devices directly from the telephone line without external power. The patent runs
until the year 2004. The Company has agreed to pay Mr. Ulrich a signing bonus of
$5000 and another $25,000 upon first funding from an Initial Public Offering. To
date only $5,000 has been paid.  The agreement also provides for a royalty of 3%
of the gross sales of all licensed products and an annual minimum fee of $10,000
in 2000 and $20,000  for each year  thereafter.  This annual  minimum fee is due
only if royalties  do not meet the minimum  sales of $10,000 in 2000 and $20,000
for any of the subsequent years. In addition, minimum sales revenues of $500,000
for the  year  2000  ranging  to $2  million  in  sales  for the  year  2003 and
thereafter  were agreed to. If minimum  sales  targets are not met,  the License
Agreement can be canceled,  or  modifications to this Agreement can be discussed
between the Licensor and the Company mutually  acceptable to both parties.  This
patent  allows the Company to make an  electronic  terminal  that can be used by
merchants  when  payment is made with a credit or a debit card.  The terminal is
called  "fonecash"  and, in  conjunction  with the  Company's  servers which are
connected  to a payment  processor,  is  flexible  enough  to  expand  into many
markets,   including  the  hospitality  industry,  mobile  sales  organizations,
multi-level  marketing  companies,  home  shopping,  home banking,  secure movie
payment, pre-pay card activation and many similar applications.

On February 4, 1998 the Company  entered into a consulting  agreement  with East
Coast  Entertainment,  Inc.  ("ECE")  requiring  payments of $50,000 per year in
monthly installments once the Company attains gross revenues of $300,000.ECE has
agreed  to  perform  administrative  duties  including,   but  not  limited  to,
publicity,  advertising,  public relations,  investor relations  programs,  news
releases,  hiring  of all  necessary  outside  contractors  for any  specialized
projects, printing and development of the Company's annual reports,  preparation
of any design, print or art work, camera ready art,  distribution of reports and
corporate releases to State and Federal securities agencies.  ECE is entitled to
$100,000 annually once the Company achieves  $500,000 in gross revenues.  ECE is

                                       12


entitled to  participate  in the  Company's  stock option plans and group health
plans  pursuant  to the same terms that apply to all senior key  executives  and
other employees of the Company. The agreement is renewable annually for a period
of ten years.  No expenses have been recognized  under this  arrangement for the
period ended December 31, 1999.

Much of the Company's  effort from  inception to the present has been focused on
the  design and  engineering  of the  products,  and the making of molds for the
volume  manufacturing  process.  The  Company  has spent a total of  $352,906 on
research and  development  during the last two fiscal years. To date the Company
has  produced  two  terminals;  one is a desk model and the other is a hand-held
model similar to a cell phone. The Company has completed the manufacture of 1000
terminals  which are to be used for the actual  field trials of both models with
potential customers.  Before manufacturing,  testing for Federal  Communications
Commission  (FCC)  approval  was  completed  and  the  Company's  terminals  are
certified  for Parts 15 and 68 of the FCC Rules &  Regulations  (Code of Federal
Regulations,  47, Parts 15 & 68) which  pertain to all devices that are attached
to the  telephone  network in the United  States.  Although the Company has sold
none of its products during this development  stage, the terminals are now ready
to be sold.

Also,  much of the time from  inception  to the  present  the  Company  has been
involved in the raising of  capital.  From June 1998 to early 1999,  the Company
sold  502,500  shares of common  stock to  accredited  investors  for a total of
$167,750,  pursuant to Section 4(2) of the  Securities  Act of 1933, as amended.
Then,  from April 1999 to December 31, 1999,  the Company sold 657,372 shares of
common stock for $621,455  pursuant to a Regulation  D, Rule 504  offering,  and
finally in 1999,  the Company  sold  143,133  shares of common stock to non-U.S.
citizens for $133,050,  pursuant to Regulation S of the  Securities Act of 1933,
as amended.  These funds were used for  development  of the Company's  products,
marketing activities, working capital, and investments.

Another intended use of the funds was for possible  acquisitions.  The Company's
philosophy  has been to search for  targets of  opportunity  that would  provide
revenues  and  services.  Management  believes  that if the  Company  could gain
revenues and needed  equipment or services by an acquisition,  it would not have
to spend funds to create that same needed equipment or service.  The Company has
searched for companies  with a marketing  and sales force,  or with revenues and
communication equipment.

The Company has  considered  acquiring  its partner in Taiwan,  ADI. The Company
believes  such an  acquisition  would  help  satisfy  its  permanent  need for a
research and  development  division in order to stay ahead of the fast  changing
developments  in the  telecommunications  industry  which is the backbone of the
Company's transmission network.

Another  potential  acquisition  is a company in  Florida,  Fusion  Capital,  an
Independent Sales Organization  (ISO), which was formed in 1996, and has been in
the business of placing credit card terminals  among merchants and has a trained
sales force and proven  revenues.  Such an acquisition  would alleviate the need
for the Company to recruit, hire and train its own sales force for the placement
of the fonecash terminals.

Pursuant to a letter of intent dated June 5, 1999 between the Company and Fusion
Capital Corp. ("Fusion"), a Florida corporation,  the Company agreed to purchase
a majority of the common stock of Fusion Capital Corp.  ("Fusion").  The Company
simultaneously  issued  a  loan  to  Fusion  of  $37,000  to  be  granted  in 10
installments of $3,700 from June 14,1999,  through August 16,1999.  Ten separate
promissory notes of $3,700 were executed,  each providing for interest at a rate
of 6%, and each of the ten notes was  payable  within 12 months from the date of
issuance  with the first  payment due on June 14,  2000.  The balance due on the

                                       13


notes  was  $37,990  as of  December  31,  1999.  Discussions  on  the  proposed
acquisition have commenced but no definitive terms have been agreed upon.

When the notes were first issued in June 1999, payment of principal and interest
on the notes was due 6 months  later with the first note due  December 14, 1999.
Re-negotiation of the payment dates took place in November 1999, and the Company
agreed in December  1999 to extend the due date of the principal and interest on
these  notes for 12 months  with the first note due on June 14, 2000 as noted in
the notes to the financial  statements for the year ending December 31, 1999 and
the three months ended March 31, 2000.  Therefore,  for the period  ending March
31, 2000,  no payment of principal or interest had been made.  The terms of this
receivable were extended but not written down.

In April 2000, the Company entered into  negotiations with Fusion for deployment
and  installation  services for the 500 terminals  which the Company planned for
its trials with  merchants  in order to prove its revenue  concept as  explained
further under Item 2 below.  The Company  requested  Fusion to estimate the cost
for the deployment and  installation of 500 terminals.  Fusion replied that they
would  undertake  these  services in exchange for  converting  the principal and
interest on the  promissory  notes and that this would be a fixed cost contract.
Since the Company had made its own estimate for the cost of these services to be
$72.50,  the  Company  agreed to  convert  the notes  from a loan to an  advance
pursuant to a Contract for Deployment and Installation,  which was signed on May
1, 2000.  By  converting  the note payable to cover the cost of  deployment  and
installation, the cost per unit was $74 (which amount is included in general and
administrative expenses in the Company's Statement of Operations).  The Company,
however,  elected to write off the interest of $990 that had  accumulated at the
period ending December 31, 1999.

On May 1, 2000, the Company signed a Deployment and Installation  Agreement with
Fusion  Capital  Corp.  Under the terms of this  Agreement,  Fusion  will deploy
install,  and train the merchants who have been selected to  participate  in the
first trials of the Company's terminals.  Further, the Company agreed to convert
the  principal of the loan  payment of $37,000  into an advance  payment for the
services connected with the placement of 500 terminals.  The entire Agreement is
attached as an exhibit.

The  Company  has  reached  no  substantive  stage in its  discussions  with any
potential  target,  nor to merge or acquire any  company.  While there have been
discussions  about  several  possible  mergers,  much depends upon the Company's
approval for public  trading of its stock since any merger would take place only
with the  issuance of cash and stock in order to conserve  cash while making the
best use of its publicly  trading stock.  Each potential  acquisition may dilute
investors'  ownership through the issuance of additional shares of the Company's
stock, but a positive effect on the Company's balance sheet could occur from the
added value created as a result of each acquisition.  There can be no assurance,
however,  that these  acquisitions  will  favorably  affect  the  Company or its
shareholders.

The Company's Target Market

The Company believes that the following four potential  markets for its products
and system will experience the highest benefit and,  therefore,  these potential
markets are the first priority for the Company's future sales efforts. While the
Company  has sold none of its  products  or  services  into these  markets,  the
Company  believes  that the benefits of its products and services  will increase
the potential of sales to these specific targets.

1. MOBILE SALES REPRESENTATIVES. The Company anticipates that a large market for
the fonecash  terminal will be the traveling sales  representative.  Fonecash is
portable and ideal for this  application.  The  salesperson  carrying  this unit

                                       14


could  be   selling   cosmetics,   household   products,   insurance   policies,
encyclopedias  or a number of other items.  After a demonstration of products or
an  explanation  of services,  the in-home  salesperson  could accept payment by
credit or debit card by merely  attaching the fonecash  terminal to the standard
telephone.  While the Company has not sold any of its products to in-home  sales
persons,  it believes that use of the fonecash terminal by in-home  salespersons
represents a significant potential.

2. HOME INSTALLED  UNIT.  The Company  believes that new programs such as secure
Pay Per-View TV, home banking,  home shopping clubs,  groceries delivered to the
home,  restricted  Internet  access,  payments of income taxes, and a variety of
other programs,  that demand some form of pre-payment  will become  increasingly
prevalent.  Payment by means of a verified  and  authorized  credit card will be
available  through the fonecash  terminal.  The telephone  system is the largest
wide area network  (WAN) in the world and its use in  connecting to almost every
merchant  gives the fonecash  terminal the capability to act as a payment device
for most any service.  The fonecash terminal is user installed,  cheap enough to
be  considered a give-away  item,  and will be  positioned  to address  multiple
markets  because its  Interactive  Voice  Response  (IVR)  system  which will be
installed  on  computers  will be designed to handle up to thousands of separate
customers.  Payment  using a terminal is  superior  to speaking  the credit card
number to a merchant on the  telephone  because one is not  revealing the credit
card  number to a unknown  person,  thus  avoiding  one of the ways  credit card
numbers are stolen and sold to thieves who can use the data to make purchases or
sell the data to others who will use the credit card fraudulently.

3.  PRE-PAY  CALLING  CARD  ACTIVATION.  The Company  believes  that the pre-pay
telephone  calling  card market has been  evolving for years and that such cards
are now used  widely in  developed  countries.  In the  United  States,  pre-pay
telephone  calling  cards are often sold  behind the  counter at small  merchant
locations such as neighborhood 7/11 or gas station convenience stores. Since the
cards are  delivered  ready to be used by anybody,  this has created the problem
for the merchant who has to protect  these cards from being stolen and therefore
has to  keep  the  cards  behind  the  counter  out of  sight  of the  potential
customers.  The better  arrangement  would be to have the card located on stands
throughout the store instead of behind the counter. The fonecash terminal solves
this problem.  When  installed on the  merchant's  telephone  line, the fonecash
terminal  allows  the  merchant  to swipe the  telephone  card after it has been
purchased  and activate  the card by swiping it through the  fonecash  terminal.
This advantage means the merchants can place cards anywhere in the store knowing
they  are  useless  plastic  until  activated  by the  terminal.  The use of the
fonecash  terminal  to  activate  cards also  gives the  provider  other  unique
advantages  such as tracking  sales,  recharging  cards on the fly,  credit card
purchases  for cards,  credit card  authorization  services,  and many other new
services.

4. LOW VOLUME  MERCHANTS  These are  merchants  with  fewer than 20 credit  card
transactions a month.  These  merchants have the ability to take credit cards in
payment for purchase of goods and services  because various banks have opened up
merchant bank accounts for these merchants.  These merchants,  however,  have no
electronic  transaction terminal.  These merchants take credit card transactions
by making a paper impression of the card, then, after having the cardholder sign
a  receipt,  they  take  these  paper  receipts  to a bank  where  they are then
processed  with the funds  being  received  in the  merchant's  account 4-5 days
later.  The process is long and the delay in depositing the funds causes serious
cash flow problems for the merchant. Because the Company makes and will market a
high quality, simple to operate terminal, it anticipates that it will be able to
attract many of these low volume  merchants  who are seeking a fast,  simple and
easy to operate solution to their processing needs.

                                       15


The Company's Future Strategy

The Company's goal is to establish  itself as a prominent force in the automated
transaction industry by pursuing the following strategies:

o Develop other markets for  transaction  automation,  such as in-home sales and
the home market,  wireless  transmission and accessing Social Security  benefits
and  payment of income  taxes.  o Target the low volume,  paper based  merchants
which the Company estimates number approximately 1.3 million accounts by some 83
banks and financial  institutions in the United States. o Develop  opportunities
for transaction automation in the international payment processing market, which
the Company  believes is largely  untapped and potentially  larger than the U.S.
market. o Entering new segments of the payment  processing  market by developing
terminals for in-home use to transfer money onto pre-pay telephone cards.

Management  of the  Company  believes  that the  foregoing  factors  are the key
elements of its operational strategy.

Sources of Revenues

Through December  31,1999,  the Company had received no revenues from operations
nor has it sold any of its products. If the Company can realize its goals as set
forth above,  revenue could  potentially come from fees that merchants and banks
would pay to the Company for its terminals and use of its processing system.

Manufacturing

The  manufacturing  of the  Company's  products is done by  Yue-Shoung,  Ltd. an
electronic  manufacturer  of  telephones  and  telephone  equipment,  located in
Taiwan,  with revenues of $250 million in 1998.  This  supplier  makes a line of
electronic  products,  including  touch  screen  displays,  close-circuit  video
security systems,  video telephones and similar electronic products. The Company
has no  relationship  with  Yue-Shoung  other than as supplier to buyer,  nor is
there a  contractual  relationship  of any kind.  Manufacturing  is done under a
purchase order issued to Yue-Shoung by Advance  Information Data (ADI),  Taiwan,
which terms of payment  are  one-third  cash  deposit at the start of making the
mold for production of the plastic housing;  one-third cash payment at the start
of the  production  run,  and  one-third  cash  payment  at the  completion  and
inspection of the final  product.  The Company  reimburses  ADI for payment made
under its existing agreement with ADI for consulting and procurement services.

Marketing Strategy

The Company  intends to establish up to three master  distributors in the United
States  with  the  most  likely  candidates  being  current   Independent  Sales
Organizations  (ISO's) who are already  engaged in the business of  distributing
automated  credit card  processing  terminals to established  merchants who have
been approved by their sponsoring banks.  These ISO's have trained  commissioned
sales  persons and have an interest in  placement  of any terminal in the market
regardless of manufacturer.

The  Company  intends to engage a firm in 2000 to create  promotional  brochures
regarding the Company's terminals and services,  emphasizing price,  quality and
support  services.  This material is expected to be sold at cost to distributors
to be  used  in  their  sales  presentation.  Annually,  the  Company  plans  to
participate  in 4 to 6 forums and  exhibitions,  such as the  Retail  Merchants'
Show, the Debit Forum, the American Bankers' Association, the Fraud and Security

                                       16


Forum,  the COMDEX show,  where wireless  products and  innovative  computer and
telecommunication   products  are   presented,   and  the  Food  and  Restaurant
exhibition.  The  Company  also  intends  to engage a firm to  design  and place
advertisements  in several of the  industry's  leading  publications,  including
Credit Card Management,  the Blue Book Directory of the Credit Card Industry and
P0S News, a monthly publication from Faulkner & Gray, a publisher in New York.

The Company's  own  marketing  executives  also intend to visit  executives  and
decision  makers  among  the  banks  and  processors.  At this  level,  cost and
performance are top  priorities,  as banks are looking for solutions to overhead
and insisting  that any change results in increased  profits.  At this time, the
Company  intends to focus on  marketing  only one core  product that it strongly
believes  is needed  and  wanted by banks  that have a problem  with the cost of
processing paper receipts.

The Industry

The industry is generally referred to as the transaction payment industry and is
divided  into two  major  segments.  In one  segment  are the  manufacturers  of
hardware,  known as terminals,  which are  electronic  devices for capturing the
data from some medium, such as a magnetic stripe on a plastic card, or from data
stored on a microchip embedded on a plastic card.

In the other segment of this industry are the  transaction  payment  processors,
such as First Data Corporation (FDC),  Paymentech,  Nova Information Systems and
several other  smaller  processors,  who, when the data from these  terminals is
transmitted  to their  computers by wired or wireless  transmission,  verify the
card as being valid and authorize the purchase for the specific amount indicated
by the merchant.

The Verification, Authorization and Settlement Process

When a consumer presents a Visa or Mastercard to a merchant in payment for goods
or  services,  the clerk  swipes the card through an  electronic  terminal  that
connects by phone lines to a card processor (FDR,  Paymentech,  or others) whose
servers access the Visa/Mastercard  network to get verification that the card is
valid and to get authorization for the amount to be charged to the cardholder so
that  the  amount  does  not  exceed  the  cardholder's  credit  limit.  If  the
authorization transaction succeeds, the cardholder's bank that issued the credit
card will put a "hold" for the purchase  amount so that,  when the settlement or
deposit  transaction  takes  place,  the  funds  will  be  available  to pay the
merchant.  An approval  number is generated and the merchant has the  cardholder
sign a receipt which is kept on file by the merchant for up to six years.

Settlement can take place at any time,  but typically,  it is done at the end of
the  merchant's  work  day.  All the  credit  card  transactions  since the last
settlement period will be communicated to the payment processor's servers over a
phone line. The payment  processor submits a "Deposit  Transaction"  through the
Visa/Mastercard  network, in effect debiting the amount of the purchase from the
cardholder's  card issuing bank and  depositing  these funds into the merchant's
sponsoring  bank.  It all takes  place in minutes or  seconds  depending  on the
transactions to be settled.


The FoneCash System

Currently  there are two models of the fonecash  terminal,  one a desk model and
another is a  hand-held  model which are  manufactured  by  Yue-Shoung,  Ltd. in
Taiwan, and available for sale by the Company unlike any similar terminal in the
market.  Fonecash  terminals  operate on a different  system than the  terminals

                                       17


currently sold by its competitors, utilizing an Interactive Voice Response (IVR)
network  which  means that the  merchant is being  prompted  through the various
steps  involved in taking  credit  cards for payment of goods and  services  and
connected to the Company's  servers which uses commercially  available  software
developed and certified to connect to various payment processors,  such as First
Data  Resources  and  Paymentech,  who then,  connect  to the  Visa/  Mastercard
networks for verification, authorization and settlement services. The process of
verification, authorization and settlement is the same for the Company's system,
except that the Company's servers are in-between the Company's terminals and the
payment processor's  servers.  The Company believes that this will eliminate the
resistance of the payment  processors to certifying new terminals  because their
servers do not "see" what terminal is  transmitting  data; all their servers see
is a stream of data from another  server  (computer).  The  Company's  system is
intended to capture the  transactions  of small  merchants  onto its servers and
bundle the  transactions  together for  settlement so that the volume is greater
and thus  become  more  attractive  to the  payment  processors  because  of the
increased transactions which translated into a rise in revenues.

Competition

The  Company  does  not  believe  that  it  faces   competition   from  existing
manufacturers or payment processors which operate in the traditional transaction
processing  industry  because those  companies are not  interested in low volume
merchants,  and low  volume  merchants  resist  the cost  related  to  automated
terminals.  The Company  intends to target the very  segment of the market which
these companies  neglect because of their low volume.  Management  believes that
the fonecash  system's  simplicity and ease of operation will make it attractive
to these  merchants  even if they are able to  obtain  service  from the  larger
companies  offering  terminals and payment processing  services.  Moreover,  the
Company  knows of no other  companies  planning to target  this market  niche or
which offer both terminals and payment processing services under one system.

Terminal Manufacturers

According to The Nilson Report,  a bi-monthly  publication of the credit payment
systems industry, in Oxnard, California, the leader among the terminal makers is
Verifone,  a  U.S.  based  company,  publicly  held  and  since  1997,  part  of
Hewlett-Packard.  It is generally conceded that Verifone has market share of 65%
of the  terminal  market  worldwide,  based upon  delivery and  installation  of
products.

Hypercom was founded in Australia,  has a U.S. base in Phoenix, Arizona and is a
privately held company. Management believes Hypercom is the second largest maker
of on-line  stationary  terminals with approximately 16% share of the market for
sale and installation of these electronic devices.

Lipman is an Israeli based maker of terminals and, since 1995 has gained some 10
per cent of the market for sales of these terminals.

Dassault  and  Ingenico  are both French  companies  and,  along with some other
makers, such as Goldstar of South Korea, make a line of terminals used mostly in
these companies  respective  domestic markets.  The Company believes their sales
amount to no more than 10,000 units a year.  These three makers,  along with all
the other smaller firms, amount to 9% of the market for terminals.

Payment Processors - Barriers to Entry

All credit cards  transactions  must be cleared  through a  transaction  payment
processor, and all automatic credit card terminals which connect directly to the
computers  of the  transaction  payment  processors  must  be  certified  by the
transaction  processor.  Certification  involves testing the capabilities of the
terminal  software by repeated  transmission  of test data which  simulate  real
transactions,  in order to prove to the transaction  processor that the terminal

                                       18


software is compliant with all requirements of the processor's  computer system.
Transaction  processors  are not  anxious  to  fully  certify  and  support  new
transaction  equipment because it is expensive to provide customer assistance to
a large  number of terminal  models.  Every piece of newly  certified  terminals
translates to higher  training cost for their  customer  service  personnel and,
therefore, they try to stick with one piece of equipment.

Strategies to Overcome Barriers to Market

The Company  believes that the resistance of the  transaction  processors to the
introduction of new terminals is overcome  because the fonecash  terminal is not
supported by the processor but by the Company.  The processor  merely receives a
stream of data in digital form from the  Company's  computers for the benefit of
low volume  merchants with merchant  account  numbers who would not be utilizing
the processors because of the lack of an electronic  terminal.  These low volume
merchants represent an enlarged customer base for the processors,  acquired with
very little effort or expense on their part.

In addition  to a  different  method of handling  the  processing  of data,  the
Company  makes a line of  products  that are  simple in  design;  do not need an
external power source and are as easy to operate as an ordinary  telephone.  The
combination  of these  factors the Company  believes are  sufficient to overcome
opposition  from the  established  payment  processors and the resistance of low
volume merchants to the purchase of more expensive equipment and services.

Risks from Competitors

Even though the Company believes it has strategies to overcome barriers to entry
into this industry and that it has no direct  competitors in its specific target
market,  the  terminal  manufacturers  and the  payment  processors  have longer
operating histories and significantly  greater financial,  technical,  marketing
and other  resources  than the Company.  Many of these  companies have extensive
customer  bases and strong  customer  relationships  that they  could  leverage,
including relationships with the Company's potential customers.  These companies
also have significantly more established customer service organizations than the
Company  will be  able to  develop.  In  addition,  these  companies  may  adopt
aggressive  pricing  policies.  There can be no assurances that that the Company
will be able to counter the impact or the level of the pricing.

            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The following is our plan of operation for the following 12 months, and
should be read in  conjunction  with our financial  statements and notes thereto
appearing in this prospectus.

         We are a  development  stage  company in the  process of  developing  a
marketing plan for carbon composite  products sales via traditional  methods and
Internet access. The products and services that we intend to offer are described
in the "Business" description. We have generated no revenues to date.

GENERAL

All phases of the Company's  operations are subject to influences outside of the
company's control. Any one, or a combination,  of these factors could materially
affect  the  results  of  the  Company's   operations.   These  factors  include
competitive  pressures,  interest rates fluctuations,  inflation,  especially of
parts and labor,  and other market  conditions.  Forward-looking  statements are
made by or on behalf of the Company  based on  knowledge of its business and the
environment in which it operates,  but because of the factors  listed above,  as
well as other  commercial,  environmental  and  business  factors over which the
Company  has  no  control,   actual   results  may  differ  from  those  in  the
forward-looking statement.  Consequently,  all of the forward-looking statements

                                       19


made are qualified in their  entirety by these  cautionary  statements and there
can be no assurance that the actual results or  developments  anticipated by the
Company will be realized or, even if substantially realized, that they will have
the expected effect on the business and/or operations of the Company.

The Company has had no revenues  since its  inception  in August 1997 due to the
fact  that  the  Company  is in  the  development  stage  mode.  There  were  no
compensation  expenses  for the  first  two  years.  There  were  organizational
expenses of $910 which are being  amortized on a  straight-line  basis over five
years.  The Company had a net loss of $353,618  for the initial two year period.
Depreciable  assets for this period  consisted of $25,000 for  production  molds
which have a useful life of three years. $6,250 was considered as a depreciation
expense for this period.

The Company incurred  operating losses of $1,050,863 from Inception to March 31,
2000. The Company  expects its  accumulated  deficit to grow for the foreseeable
future  as total  costs and  expenses  increase  due  principally  to  increased
marketing expense  associated with its plans to undertake trials of its products
and  services.  There  can be no  assurances  that  the  Company  will  complete
successful  trials of its products and services,  nor that  sufficient  revenues
will be generated from the possible sales of such products and services to allow
the Company to operate profitably.

For the three months ending March 31, 2000 general and  administrative  expenses
were $64,996 as compared to $24,046 for the same period in 1999, representing an
increase of $40,950. The increase during the three month period ending March 31,
2000 was primarily due to an expansion of the general operations of the Company,
including  legal,  accounting,  and printing  associated with the filing of this
Form 10-SB and amendments with the Securities and Exchange Commission.

Compensation  and  related  benefits  during  this three  months was $16,000 and
represented  compensation  paid  to  the  Company's  president;  there  were  no
compensation  expenses for the nine months ended March 31, 1999.  From inception
to March 31, 2000, total compensation expenses were $91,000.

The Company's combined cash and cash equivalents totaled $121,020 for the period
ending  March 31,  2000.  This is an  increase of $82,864  from  $38,156 for the
period ending March 31, 1999.

Pursuant to a letter of intent dated June 5, 1999 between the Company and Fusion
Capital Corp. ("Fusion"), a Florida corporation,  the Company agreed to purchase
a majority of the common stock of Fusion Capital Corp.  ("Fusion").  The Company
simultaneously  issued  a  loan  to  Fusion  of  $37,000  to  be  granted  in 10
installments  of $3,700 from June 14, 1999 through August 16, 1999. Ten separate
promissory notes of $3,700 were executed,  each providing for interest at a rate
of 6% and  each of the ten  notes  payable  within  12  months  from the date of
issuance  with the first  payment due on June 14,  2000.  The balance due on the
notes  was  $37,990  as of  December  31,  1999.  Discussions  on  the  proposed
acquisition have commenced but no definitive terms have been agreed upon.

When the notes were first issued in June 1999, payment of principal and interest
on the notes was due 6 months  later with the first note due  December 14, 1999.
Re-negotiation of the payment dates took place in November 1999, and the Company
agreed in December  1999 to extend the due date of the principal and interest on
these notes for 12 months with the first note due on June 14, 2000,  as noted in
the notes to the financial  statements for the year ending December 31, 1999 and
the three months ended March 31, 2000.  Therefore,  for the period  ending March
31, 2000,  no payment of principal or interest had been made.  The terms of this
receivable were extended but not written down.


                                       20


In April 2000, the Company entered into  negotiations with Fusion for deployment
and  installation  services for the 500 terminals  which the Company planned for
its trials with  merchants  in order to prove its revenue  concept as  explained
further under Item 2 below.  The Company  requested  Fusion to estimate the cost
for the deployment and  installation of 500 terminals.  Fusion replied that they
would  undertake  these  services in exchange for  converting  the principal and
interest on the  promissory  notes and that this would be a fixed cost contract.
Since the Company had made its own estimate for the cost of these services to be
$72.50,  the  Company  agreed to convert  the notes as an advance  pursuant to a
Contract for  Deployment  and  Installation  which was signed on May 1, 2000. By
converting  the note payable to cover the cost of deployment  and  installation,
the  cost  per  unit  was  $74  (which   amount  is   included  in  general  and
administrative expenses in the Company's Statements of Operations). The Company,
however,  elected to write off the interest of $990 that had  accumulated at the
period ending December 31, 1999.

Fusion has  agreed to deploy,  install,  and train the  merchants  who have been
selected to participate in the first trials of the Company's terminals. Further,
the Company  agreed to convert the principal of the loan payment of $37,000 into
an  advance  payment  for the  services  connected  with  the  placement  of 500
terminals.

The  Company  does not expect to generate a positive  internal  cash flow for at
least the next nine months due to expected increase in spending for salaries and
the expected costs of marketing and sales activities.

Property and  equipment  was valued at $134,788 for the period  ending March 31,
2000 and this represents an increase of $9,788 for purchases of additional molds
used the  manufacturing of its products in Taiwan.  The molds have a useful life
of 3 years and are depreciated on a straight-line basis.

The Company currently has limited internal and external sources of liquidity.

At this time the Company has no material commitment for capital expenditures.

There are no known trends,  events or uncertainties  that are expected to have a
material  impact on the net sales and income  from  operations  once the Company
conducts  its first  trials with  merchants.  The  industry and the needs of the
market are well  established.  The Company  believes  that it will serve a niche
market with its products and services that has yet to be served adequately.  The
Company's business is not subject to seasonal aspects.

The Company  was  incorporated  in the State of  Delaware  on August  7,1997 and
acquired  the rights to a patent  that  allowed the Company to develop a simple,
portable  electronic terminal that could be used by mobile merchants and in-home
salespersons.  The Company  anticipates that it can generate revenues from sales
of the  terminals  and from  charges  collected  from  each  transaction.  As of
December  31,1999,  no revenues have been  generated  from sales but  management
anticipates  sales to commence in 2000 after real-time trials are performed with
a select group of merchants and in-home salespersons.

The Company was started by Messrs. Daniel Charboneau,  the Chairman of the Board
and Chief  Executive  Officer,  and John Wu,  Director and owner of Advance Data
Information,  Ltd, a Taiwan based  research  and  development  company.  Messrs.
Charboneau  and Wu have paid  certain  expenses  on behalf of the  Company  from
personal funds and from Mr. Wu's business. Also, The Company borrowed a total of
$45,344 from  related  parties to fund its initial  operations  with a remaining
balance of $26,586.  (See Note 11 of the Financial  Statements.)  No amount over
$60,000 has been borrowed from any related party.


                                       21


For the period from inception through December 31, 1998, the Company's  capital,
raised from the sale of its common shares,  totaled $84,985 of which $75,357 was
used for working  capital,  legal and  accounting  expenses,  and  registering a
domain  name on the  Internet.  The cash  balance at the end of this  period was
$9,628.

From January 1999 to April 1999, the Company raised  additional seed capital for
a total of $82,765,  and then,  during the remainder of 1999, the Company raised
$621,455  through  a private  placement  of its  common  stock  under  exemption
provided  by Rule 504 of  Regulation  D under  the  Securities  Act of 1933,  as
amended.  Finally,  another  $133,050  was  raised  through  the sale of  shares
pursuant to Regulation S of the Securities Act of 1933, as amended. The proceeds
were used to manufacture a starting inventory of terminals,  marketing and sales
activities, technical and engineering services, and working capital. The Company
used these  funds to  register  a web site  located  at www.  fonecash.com.  The
Company has engaged Computer Solutions,  located in North Carolina, to construct
the web site  encompassing  products  and  services of the  Company,  as well as
investor relations.  The total capital raised from inception in 1997 until March
31, 2000 was $922,255.

The Company's plan of operation for the next twelve months is as follows:

The Company plans to market its credit card processing  service to merchants who
are not able to get a bank to sponsor them as VISA/Mastercard  merchants because
they are too new, or low volume merchants who have sponsoring banks, but have no
electronic terminal because of their resistance to the high prices for terminals
and payment processing services associated with the leasing or purchase of these
devices,  and in-home  salespersons  who believe they can increase sales if they
have a device for taking credit and debit cards.

The Company  will seek to add other low volume  merchants  who are  customers of
domestic  banks and negotiate  orders for  installation  of terminals with these
merchants. In addition, the Company will seek to negotiate with existing in-home
sales organizations such as Amway, Mary Kay, Avon,  insurance companies and home
health care providers for distribution and sales among their member distributors
and sales force.

The purpose of these  trials is not to prove that the  terminals  are capable of
performing  the task to which the Company will put them because these  terminals
are being  made under U.S.  patent  issued in 1987 which has been  proven in the
general market. Any domestic telephone that accepts credit cards in payments for
calls uses the electrical  circuitry  that is  represented  by this patent.  The
purpose of the field  trials that the  Company  intends to perform is related to
proving that the merchants  will find the Company's  terminals  easy to use. The
trials are scheduled with certain  participants,  including Amway  distributors,
insurance  agents,  low volume  merchants who are customers of  Nationsbank  and
Wells Fargo and in-home health care providers.  The trials will be conducted for
approximately  30 days,  after which,  costs and profits will be calculated  and
satisfaction  of the using  merchant will be collected and used for  promotional
purposes.

In order to implement its growth plans,  including the trials referred to above,
through the end of June 30, 2000, the Company must raise  $500,000.  After these
trials have been completed  successfully,  the Company  anticipates that it will
obtain  orders for its product and  services  which are then able to be financed
through traditional methods such as Purchase Order financing, Account Receivable
financing, or Letters of Acceptance.

DESCRIPTION OF PROPERTY

The Company owns no property.  The Company's  principal  office is located at 90
Park Avenue, Suite 1700, New York, New York 10016 and consist of 600 square feet
of  space  at a cost  of  $600  to  $800 a  month,  depending  on the  level  of
secretarial services that are used. The Company leases an additional location of

                                       22


approximately  1200 square feet at 475 Dobbs Ferry Road, White Plains,  New York
where it houses  computers  and  inventory on a two year basis with an option to
renew for another two years. The monthly rental is $1,850.

EMPLOYEES

The  Company  employs  three full time  employees  in the United  States,  three
employees in  Shanghai,  China and 14  engineers  in  Kaoshiung,  Taiwan who are
engaged in  development  of the  Company's  products as well as its software and
operating system.



                                   MANAGEMENT

Directors and Executive Officers

The  directors  and  officers of the Company are listed  below with  information
about their respective backgrounds.


         NAME                      AGE     POSITION
         Daniel E. Charboneau       69     CEO/Chairman/President
         John Jiann-Shong Wu        47     Director
         Daniel S. MacDonald        64     Director
         David  Cheung(1)           44     Director,  Vice  President  Marketing
         Michael  Wong(2)           35     Director,  Vice  President/CFO
         Yuan  L.  Jeang            34     Vice  President/Engineering

(1)      Mr.  Cheung  was  appointed  as a  member  of the  Company's  Board  of
         Directors on March 30, 2000.
(2)      Mr. Wong was appointed as a member of the Company's  Board of Directors
         on March 30, 2000.

Mr. Charboneau has a five year employment contracts starting in August, 1997 and
Dr. Wu a five year contract  starting from July 1, 1999. The Company retains the
services of its  vice-presidents  as  consultants on an as needed basis and does
not pay them a regular salary.

All current  directors were appointed to their office in February 2000, and will
hold  office  until  the next  annual  stockholders'  meeting  and  until  their
successors  have been elected or  qualified  or until their death,  resignation,
retirement, removal, or disqualification.  Vacancies on the board will be filled
by a majority vote of the remaining directors.  Officers of the Company serve at
the discretion of the Board of Directors.

None of the directors holds other directorships in other reporting companies.

The Company's management comprises:

DANIEL E. CHARBONEAU, CEO/President/Chairman of the Board:

Mr. Charboneau is an experienced  management executive with over twenty years of
accomplishments  in the area of marketing,  sales,  organizational  development,
manufacturing  and  profit-center  responsibilities.  He has worked with several
multi-national   companies,   including  Bechtel   International  where  he  was

                                       23


Organization  Development Consultant from 1974 to 1980, and with 3M in Asia from
1980 to 1984. From 1984 to 1987, Mr. Charboneau operated as a consultant to U.S.
and European businesses who were interested in investment in Asia. In 1987, in a
joint  venture  with  A&H,  a  jewelry  maker in Rhode  Island,  Mr.  Charboneau
established  a  manufacturing  plant in  Taiwan  whose  products  were  exported
worldwide.  In addition to his duties on the Board of Directors,  Mr. Charboneau
directs the development of technologies,  products, markets and manages business
relations with Asian suppliers.

JOHN JIANN-SHONG WU, Director/Co-founder:

Born in China,  Dr. Wu became an  American  citizen  in 1978 and lives  with his
family in San Jose, California when he is not in Taiwan. Educated in Taiwan, Dr.
Wu received His Master  Degree in Computer  Science  from  Florida  Institute of
Technology  and his doctorate in  Electrical  Engineering  from Leland  Stanford
Junior  University.  From 1975 to 1982 he was a Researcher  with Taiwan National
Science,  and from  1982 to 1988 a Senior  Engineer  and  Project  Manager  with
General  Electric  Company  in  Singapore.  From 1989 to 1990,  he was a Project
Manager with Digital  Equipment  Corporation and from 1990 to 1991 he was Senior
Consulting  Engineer with Hewlett  Packard.  Dr. Wu has designed many  products,
both  hardware  and  software,  and founded his R&D  facility to promote  better
design of electrical  and  telephonic  products.  From 1991 to 1996,  Dr. Wu was
co-founder  and Vice  President  of V-Star  Electronics,  then,  from 1997 until
present,  Dr. Wu started his own advanced  laboratory,  Advance Data Information
and became a co-founder in FoneCash.

DANIEL S. MACDONALD, Director

Mr.  MacDonald  has 22 years of  experience in the mutual fund industry and is a
Certified  Financial  Planner and holds  licenses in real estate,  insurance and
securities.  He has  resided  in Japan  for from  1962 to 1972 as  International
Liaison for the Japanese Chamber of Commerce; he speaks Japanese fluently.  From
1972 to 1986,  he serves  in  various  capacities  with  Oppenheimer  Management
Corporation,  first in San Francisco as Regional Sales Manager and ending in New
York as Senior Vice President and National Sales Manager. In 1989, Mr. MacDonald
started  MDIC,  Inc. in  Bronxville,  New York,  and for the last 11 years until
present,  remains as owner and manager of this  financial  services  corporation
specializing in mutual funds.

MICHAEL WONG, 35, was appointed  Director and Chief  Financial  Officer on March
30,2000.  Born in  Malaysia  in 1965,  he grew up in  Singapore.  Mr.  Wong is a
financial  management  professional,  who received his higher education in Great
Britain and received his BA in Accounting and Finance in 1991. Upon returning to
Singapore,  he joined Price Waterhouse as a tax accountant.  Four year later, he
joined  American  International  Group,  assisting  in the  business and product
development.  Subsequently,  he had the  opportunity  to venture  into the China
market where he was involved in business development and infrastructure work. In
1999, he was involved in corporate restructuring for a chemical company in China
and gradually became interested in environmental and telecommunication sectors.

DAVID CHEUNG, 34 was appointed Director & Vice President of Corporate  Marketing
on March 30, 2000.  After  finishing  his higher  education in Great Britain and
receiving his MBA in Finance from  Lancaster  International  Business  School of
Lancaster University, he joined a subsidiary of Costain Construction as a member
of its business development team,  specializing in the hospitality sector. After
returning  to Hong  Kong,  he was  involved  in  several  major  infrastructures
projects, such as hotels, power plants, roads and bridges, as well as heading up
a consultancy  team for  re-marketing of French clothing  manufacturer in China.
Mr.  Cheung joined the Emperor Group in 1998 to lead and implement the strategic
business  management  turn around of the Group's hotel and newspaper  divisions.
Once back in China,  he became a consultant  to  companies in the fine  chemical
processing, the Internet and the telecommunications sectors.


                                       24


YUAN LONG  JEANG,  age 44, Vice  President  of R&D,  holds a Ph.D in  Electrical
Engineering,  from Chen Kung  University,  Taiwan.  Mr. Jeang was  Professor and
Chief  of  Image  Processing  Research  Laboratory  of the  Kaohsiung  Technical
University  for 10 years.  Mr.Jeang was Chief  Designer for Taiwan Films Limited
where he managed all technical aspects of computer generated  effects,  composit
design, 3D production and computer generated graphics.  For the past five years,
he has  worked  closely  with Dr.  Wu  designing  algorithms  for video and data
compression,  and has developed standards for cellular phone  authentication and
encryption.

EXECUTIVE COMPENSATION

On August  7,1997,  the Company  entered into an employment  agreement  with its
chairman and majority shareholder,  Mr. Charboneau. Under the terms of this five
year agreement,  Mr. Charboneau shall receive a salary of $120,000 per year. Mr.
Charboneau  has never been paid this  salary and has  elected not to accrue this
back pay as a liability on the  Company's  books.  The Company may terminate the
agreement  for  cause  with  notice.  Disability  for up to two years at 100% of
yearly  salary is  provided,  and should Mr.  Charboneau  die during the term of
employment,  the Company shall pay his estate  $250,000.  The Company pays for a
keyman life  insurance of $2 million,  $1 million with The  Travelers  Group for
term life  policy,  and $1  million  with  Nationwide  Insurance  Company  for a
variable  life policy.  The Company is  beneficiary  in case of the death of Mr.
Charboneau.

Mr Wu's  contract  of  employment  is  essentially  the  same as the one for Mr.
Charboneau, regarding benefits, but his annual salary is $105,000.

Currently, the other officers or key personnel receive no compensation,  provide
services to the Company on an ad hoc basis and are paid as  consultants.  If the
Company becomes profitable and produces  commensurate cash flow from operations,
then the  Company's  Board of  Directors  will  decide  the  level of  full-time
employment,  compensation and the timing for the commencement of their full-time
involvement.

The Company currently has no employee stock option, annuity, or pension plans in
place  although the Company does intent to provide these benefits at some future
date if it can establish sales and positive cash flow.

Directors do not currently receive any cash compensation.




                                       25


CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There were no transactions between  Fonecash,  Inc. and related  parties for the
period of the past two years.


PRINCIPAL STOCKHOLDERS

         The following table describes,  as of the date of this prospectus,  the
beneficial ownership of our Common Stock by persons known to us to own more than
5% of such stock and the ownership of Common Stock by our directors,  and by all
officers and directors as a group.

         Name & Address of           Amount Shares              % of Class
         Beneficial Owner           Beneficially Owned              Owned
         -----------------------  ------------------------    ----------------
         Daniel E. Charboneau            4,046,387                  20.0%
         215 Central Park Ave.
         Hartsdale, NY 10530

         John Jiann-Shong Wu             2,000,000                  10.0%
         21 Street, 6 Fl,
         No. 211
         Chung-Cheng 4 Road
         Kaoshiung, Taiwan

Total Shares of Officers                 6,046,387                  30.0%
and Directors as a Group


                       OFFERING BY SELLING SECURITYHOLDERS

         The following tables set forth certain  information  concerning each of
the selling  security  holders.  The shares are being  registered  to permit the
selling security  holders and their  transferees or other successors in interest
to offer the shares from time to time

         Selling  security  holders are under no  obligation  to sell all or any
portion of their shares.  Particular selling shareholders may not have a present
intention  of selling  their  shares and may sell less than the number of shares
indicated.  The following table assumes that the selling  shareholders will sell
all of their shares.

         None of the Selling  Shareholders  were or are officers or directors of
Fonecash, Inc. or are broker-dealers or affiliates of broker-dealers.



                                               Number of Shares         Percentage          Number of Shares          Percentage of
                                               of Common Stock          Of Beneficial       Owned After               Beneficial
                                               Prior to Offering        Ownership           Exercise of Warrants      After Exercise
                                               ------------------       --------------      --------------------      --------------
                                                                                                          
Michael S. Krome                                    250,000                  1.3                   --                      1.3
Stockgroup Information Systems, Inc(1)              493,200                  2.5                   --                      2.5
Charlotte B. Given                                  320,000                  1.6                   --                      1.6
James E. Czekner                                    100,000                   *                    --                        *
Julie Thompson                                      200,000                  1.1                   --                      1.1
Sharline Gordon                                     100,000                   *                    --                        *
Ken G.Upton                                          62,530                   *                    --                        *
Joseph B. LaRocco                                   100,000                   *                    --                      2.6
Action Stock, Inc(2)                                500,000                  2.6                   --                        *
Penny King Holdings Corporation(3)                1,312,500                  0.7                1,312,500                   13
National Capital Merchants Group, Ltd(4)          1,312,500                  0.7                1,312,500                   13
                                                  ----------                                -------------------
         Totals:                                  4,775,730                                     2,625,000

     (*) less than 1% of the issued and outstanding shares
     (1) For purposes of control, Marcus New, is the control person of Stockgroup Information Systems, Inc.
     (2) For purposes of control, Brent Fouch, is the control person of Action Stock, Inc.
     (3) For purposes of control, Gabor Sandor Aes, is the control person for Penny King Holdings Corporation.
     (4) For purposes of control, Darrel Uselton, is the control person for National Capital Merchants Group, Ltd.


                                       26


Shares Eligible For Future Sale

         As of the date of the filing Fonecash,  Inc. has 19,900,000 outstanding
shares of Common Stock. The remaining approximately  12,624,270 shares of common
stock which are not being  registered  hereby,  are  "restricted  securities" as
defined under Rule 144, substantially all of which are available for sale in the
public market,  subject to the provisions of Rule 144 under the Securities  Act,
or pursuant to this Registration  Statement.  None of the restricted  securities
will be eligible for resale until July 2002.

         In general,  under Rule 144 as currently in effect, a person or persons
whose shares are aggregated,  including an Affiliate, who has beneficially owned
Restricted  Shares  for at  least  one year is  entitled  to  sell,  within  any
three-month period, a number of such shares that does not exceed the greater of:

         (i)  One percent of the outstanding shares of Common Stock; or
         (ii) The average  weekly  trading volume in the Common Stock during the
four  calendar  weeks  preceding  the date on which notice of such sale is filed
with the Securities and Exchange Commission.

         Sales  under  Rule 144 are  also  subject  to  certain  manner  of sale
provisions and notice  requirements  and to the  availability  of current public
information about Fonecash,  Inc. In addition,  a person who is not an Affiliate
and has not been an  Affiliate  for at least three  months prior to the sale and
who has beneficially  owned Restricted  Shares for at least two years may resell
such shares without regard to the requirements described above.  Fonecash,  Inc.
is unable to estimate the number of Restricted  Shares that  ultimately  will be
sold under Rule 144  because  the  number of shares  will  depend in part on the
market price for the Common Stock, the personal circumstances of the sellers and
other  factors.  See "Risk  Factors--Shares  Eligible for Future Sale" and "Risk
Factors--Possible Volatility of Stock Price."


                            DESCRIPTION OF SECURITIES

         The following is a summary description of our capital stock and certain
provisions of our certificate of incorporation and by-laws, copies of which have
been  incorporated  by  reference as exhibits to the  registration  statement of
which this prospectus forms a part.

General

         Our authorized  capital stock  consists of 20,000,000  shares of common
stock, par value $.0001 per share.

Common Stock

         The holders of the common stock are entitled to one vote for each share
held  of  record  on all  matters  submitted  to a  vote  of  stockholders.  Our
certificate of  incorporation  and by-laws do not provide for cumulative  voting
rights in the election of directors.  Accordingly,  holders of a majority of the

                                       27


shares of common stock  entitled to vote in any election of directors  may elect
all of the directors standing for election. Holders of common stock are entitled
to receive  ratably such  dividends as may be declared by the Board out of funds
legally  available  therefore.  In the event of our  liquidation or dissolution,
holders of common  stock are entitled to share  ratably in the assets  remaining
after  payment  of  liabilities.  Holders of common  stock  have no  preemptive,
conversion or redemption  rights.  All of the outstanding shares of common stock
are fully-paid and non-assessable.

Preferred Stock

The Company is authorized to issue  5,000,000  shares of no par value  preferred
stock. No shares were issued and outstanding as of December 17, 2000. Each share
of preferred  stock is entitled to dividends when, and if, declared by the Board
of Directors.  There are currently no voting, conversion and liquidation rights,
nor redemption or sinking fund provisions for the preferred stock.


                              PLAN OF DISTRIBUTION

         The shares may be sold or distributed  from time to time by the selling
stockholders or by pledgees, donees or transferees of, or successors in interest
to, the  selling  stockholders,  directly to one or more  purchasers  (including
pledgees)  or through  brokers,  dealers or  underwriters  who may act solely as
agents or may acquire shares as principals,  at market prices  prevailing at the
time of sale, at prices related to such prevailing  market prices, at negotiated
prices or at fixed prices,  which may be changed. The distribution of the shares
may be effected in one or more of the following methods:

o        ordinary brokers transactions, which may include long or short sales, o
         transactions  involving  cross or block  trades  on any  securities  or
         market where our common stock is trading,
o        purchases by brokers,  dealers or  underwriters as principal and resale
         by such purchasers for their own accounts pursuant to this prospectus,
o        "at the market" to or through market makers or into an existing  market
         for the common stock,
o        in other  ways not  involving  market  makers  or  established  trading
         markets, including direct sales to purchasers or sales effected through
         agents,
o        through  transactions in options,  swaps or other derivatives  (whether
         exchange listed or otherwise), or
o        any  combination  of the foregoing,  or by any other legally  available
         means.

         Brokers,   dealers,   underwriters  or  agents   participating  in  the
distribution  of the shares may receive  compensation  in the form of discounts,
concessions or commissions from the selling  stockholders  and/or the purchasers
of shares for whom such broker-dealers may act as agent or to whom they may sell
as principal,  or both (which compensation as to a particular  broker-dealer may
be in  excess  of  customary  commissions).  The  selling  stockholders  and any
broker-dealers acting in connection with the sale of the shares hereunder may be
deemed to be underwriters  within the meaning of Section 2(11) of the Securities
Act of 1933,  and any  commissions  received by them and any profit  realized by
them  on  the  resale  of  shares  as  principals  may  be  deemed  underwriting
compensation under the Securities Act of 1933. Neither the selling  stockholders
nor we can  presently  estimate the amount of such  compensation.  We know of no
existing   arrangements   between  the  selling   stockholders   and  any  other
stockholder,  broker,  dealer,  underwriter  or  agent  relating  to the sale or
distribution of the shares. Because the selling stockholders may be deemed to be
"underwriters"  within the  meaning of Section  2(11) of the  Securities  Act of

                                       28


1933,  the  selling  stockholders  will be  subject to the  prospectus  delivery
requirements of the Securities Act of 1933. Each selling stockholder has advised
us that the stockholder has not yet entered into any agreements,  understandings
or arrangements  with any underwriters or  broker-dealers  regarding the sale of
the shares.

At the  time a  particular  offer  is made by or on the  behalf  of the  selling
security holders, a prospectus, including any necessary supplement thereto, will
be  distributed  which will set forth the number of shares of common stock,  and
the  terms of the  offering,  including  the name or names of any  underwriters,
dealers,  or agents,  the purchase price paid by any  underwriter for the shares
purchased from the selling  security  holders,  any discounts,  commissions  and
other items  constituting  compensation from the selling security  holders,  any
discounts,  commissions, or concessions allowed, re-allowed, or paid to dealers,
and the proposed selling price to the public.

         We will not  receive any  proceeds  from the sale of  3,265,700  common
shares pursuant to this prospectus.  We may, however,  receive up to $251,925.00
in proceeds  from the exercise by certain  selling  stockholders  of warrants to
purchase up to an aggregate of 1,007,000  shares of our common stock. The resale
of the common stock  underlying  these warrants is included in the  registration
statement  of which this  prospectus  forms a part.  We have  agreed to bear the
expenses of the registration of the shares, including legal and accounting fees.

         We   have    informed   the   selling    stockholders    that   certain
anti-manipulative  rules contained in Regulation M under the Securities Exchange
Act of 1934 may  apply  to their  sales in the  market  and have  furnished  the
selling  stockholders  with a copy of such rules and have  informed  them of the
need for delivery of copies of this prospectus.

         The selling stockholders may also use Rule 144 under the Securities Act
of 1933 to sell  the  shares  if they  meet  the  criteria  and  conform  to the
requirements of such rule.

                                LEGAL PROCEEDINGS

Fonecash,  Inc. has been served with a Summons and Complaint from Fleet National
Bank in an  action  commendted  in the  Supreme  Court of the State of New York,
County of New York entitled,  Fleet National Bank V.  Fonecash,  Inc.  Jean-Paul
                              --------------------------------------------------
Charboneau, Individually and Jiann-Shong Wu, Individually. The action is for the
---------------------------------------------------------
failure to pay the  monthly  payments  of a Line of Credit  with Fleet  National
Bank.  The Company  believes tha the action was brought in the wrong venue,  and
has made a demand for the venue to be changed to the County of Weschester. It is
still waiting for a response to that demand.  The Company  intends to defend the
action  and  believes  that  it will be  resolved  in a  manner  that  does  not
materially impact the Company.


CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BYLAWS

Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers and controlling persons
of the small business issuer pursuant to the foregoing provisions, or otherwise,
the small business issuer has been advised that in the opinion of the Securities
and  Exchange  Commission  such  indemnification  is  against  public  policy as
expressed in the Act and is, therefore, unenforceable. The Company's Certificate
of  Incorporation  provides  that no director of the Company shall be personally
liable to the Company or its  stockholders  for  monetary  damages for breach of
fiduciary  duty as a director  except as limited by Delaware  law. The Company's
Bylaws provide that the Company shall indemnify to the full extent authorized by
law each of its directors and officers against  expenses  incurred in connection
with any proceeding  arising by reason of the fact that such person is or was an
agent of the corporation.

Insofar as indemnification  for liabilities may be invoked to disclaim liability
for  damages  arising  under the  Securities  Act of 1933,  as  amended,  or the
Securities  Act of  1934,  (collectively,  the  "Acts")  as  amended,  it is the

                                       29


position of the Securities and Exchange Commission that such  indemnification is
against public policy as expressed in the Acts and are therefore, unenforceable.


DELAWARE  ANTI-TAKEOVER  LAW AND OUR  CERTIFICATE  OF  INCORPORATION  AND BY-LAW
PROVISIONS

         Provisions of Delaware law and our  Certificate  of  Incorporation  and
By-Laws  could make more  difficult  our  acquisition  by a third  party and the
removal of our incumbent  officers and directors.  These provisions,  summarized
below,  are expected to discourage  coercive  takeover  practices and inadequate
takeover bids and to encourage persons seeking to acquire control of the Company
to first negotiate with us. We believe that the benefits of increased protection
of our ability to negotiate  with  proponent  of an  unfriendly  or  unsolicited
acquisition  proposal  outweigh the disadvantages of discouraging such proposals
because, among other things, negotiation could result in an improvement of their
terms.

         We are subject to Section 203 of the Delaware General  Corporation Law,
which  regulates  corporate  acquisitions.  In general,  Section 203 prohibits a
publicly held  Delaware  corporation  from engaging in a "business  combination"
with an "interested  stockholder" for a period of three years following the date
the person became an interested stockholder, unless:

                           The Board of Directors  approved the  transaction  in
                  which such stockholder became an interested  stockholder prior
                  to the date the interested stockholder attained such status;
                           Upon consummation of the transaction that resulted in
                  the stockholder's  becoming an interested  stockholder,  he or
                  she owned at least 85% of the voting stock of the  corporation
                  outstanding at the time the transaction  commenced,  excluding
                  shares owned by persons who are directors  and also  officers;
                  or
                           On  or   subsequent   to  such   date  the   business
                  combination   is  approved  by  the  Board  of  Directors  and
                  authorized at an annual or special meeting of stockholders.

         A "business  combination"  generally includes a merger,  asset or stock
sale, or other  transaction  resulting in a financial  benefit to the interested
stockholder.  In general, an "interested  stockholder" is a person who, together
with  affiliates  and  associates,  owns,  or within  three  years  prior to the
determination  of  interested  stockholder  status,  did own, 15% or more of the
corporation's voting stock.


                       WHERE YOU CAN FIND MORE INFORMATION

         Upon  effectiveness  of this  registration  statement we will  commence
filing reports,  proxy statements and other  information with the Securities and
Exchange Commission.  You may read and copy any report, proxy statement or other
information  we file with the  Commission  at the Public  Reference  Room at 450
Fifth Street,  N.W.,  Washington,  D.C. 20549. You may obtain information on the
operation  of  the  Public   Reference   Room  by  calling  the   Commission  at
1-800-SEC-0330. In addition, we will file electronic versions of these documents
on the Commission's  Electronic Data Gathering Analysis and Retrieval, or EDGAR,
System. The Commission maintains a website at  http://www.sec.gov  that contains
reports, proxy statements and other information filed with the Commission.


                                       30


We  have filed a  registration  statement  on Form SB-2 with the  Commission  to
register  shares of our  common  stock  issued and  issuable  upon  exercise  of
warrants to be sold by the selling stockholders. This prospectus is part of that
registration  statement and, as permitted by the  Commission's  rules,  does not
contain all of the  information  set forth in the  registration  statement.  For
further  information  with respect to us, or our common stock,  you may refer to
the  registration  statement and to the exhibits and schedules  filed as part of
the registration statement.  You can review a copy of the registration statement
and its exhibits and schedules at the public  reference  room  maintained by the
Commission,  and on the  Commission's  web site, as described  above. You should
note that statements  contained in this prospectus that refer to the contents of
any contract or other document are not necessarily complete. Such statements are
qualified by reference to the copy of such contract or other  document  filed as
an exhibit to the registration statement.

                                 TRANSFER AGENT

         The Company's  transfer agent is Manhattan  Transfer  Registrar Co., 58
Dorchester Road, Lake Ronkonkoma, New York 11779, (516) 585-7341.


                      INTEREST OF NAMED EXPERTS AND COUNSEL

         None of the experts  named  herein was or is a  promoter,  underwriter,
voting  trustee,  director,  officer or employee of  Fonecash,  Inc.  except for
Michael S. Krome, P.C.,  attorney for Fonecash,  Inc., who received Common Stock
and  Warrants as his legal fees,  as  detailed in this  registration  statement.
Further,  none of the  experts was hired on a  contingent  basis and none of the
other  experts  named  herein  will  receive a direct or  indirect  interest  in
Fonecash, Inc., other than Mr. Krome.

                                  LEGAL MATTERS

         The validity of the shares of common stock  offered in this  prospectus
has been passed upon for us by Michael S. Krome, P.C., 8 Teak Court, Lake Grove,
New York 11755, (631) 737-8381.

                                     EXPERTS

         Our audited  financial  statements  as of  December  31, 2000 have been
included in this  prospectus and in the  registration  statement  filed with the
Securities  and  Exchange  Commission  in  reliance  upon the  report of Stewart
Benjamin,  independent certified public accountant, upon his authority as expert
in accounting and auditing.  Stewart H. Benjamin,  CPA's report on the financial
statements can be found at the end of this  prospectus  and in the  registration
statement.


                                       31




                               STEWART H. BENJAMIN
                       CERTIFIED PUBLIC ACCOUNTANT, P. C.
                              27 SHELTER HILL ROAD
                               PLAINVIEW, NY 11803
                            TELEPHONE: (516) 933-9781
                            FACSIMILE: (516) 827-1203



                          INDEPENDENT AUDITOR'S REPORT
                          ----------------------------

To the Board of Directors and Stockholders
FoneCash, Inc.
New York, New York

I have audited the accompanying balance sheets of FoneCash,  Inc. (a development
stage  company) as of December 31, 2000 and  December 31, 1999,  and the related
statements  of  operations,  stockholders'  equity and cash flows,  for the year
ended  December  31,  2000 and  1999,  and for the  period  from  August 7, 1997
(inception),  to  December  31,  2000,  in  accordance  with the  statements  on
Standards for Accounting and Review Service, issued by the American Institute of
Certified  Public  Accountants.  All  information  included  in these  financial
statements  is the  representation  of  the  management  of  FoneCash,  Inc.  My
responsibility  is to express an opinion on these financial  statements based on
my audits.

I conducted my audits in accordance with generally accepted auditing  standards.
Those standards  require that I plan and perform the audits to obtain reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
I believe that my audits provide a reasonable basis for my opinion.

In my opinion, the financial statements referred to above present fairly, in all
material respects,  the financial position of FoneCash,  Inc. as of December 31,
2000 and 1999, and the results of its operations and cash flows for the year and
period then ended and from August 7, 1997  (inception)  to December 31, 2000, in
conformity with generally accepted accounting principles.

/s/ Stewart H. Benjamin
Certified Public Accountant, P.C.

Plainview, New York
February 13,  2001





                                       32






                                      FONECASH, INC
                              (A Development Stage Company)
                                      Balance Sheets

                                          ASSETS
                                          ------
                                                              September 30    December 30
                                                                  2000           1999
                                                                       
Current assets:
   Cash                                                       $    15,572    $   208,702
   Inventory  (Note 1)                                             80,054         45,143
   Prepaid expenses (Note 4)                                       25,000         25,000
                                                              -----------    -----------
                                                                  120,626        278,845
                                                              -----------    -----------

Property and equipment, net  (Note 5)                              59,425         83,333
                                                              -----------    -----------

Other assets:
   Organization costs, net (Note 1)                                   136            190
   Patent rights, net (Note 6)                                        325          4,000
   Cash surrender value of life insurance (Note 8)                   --           17,732
   Deposits                                                           250            250
                                                              -----------    -----------
                                                                    3,636         22,172
                                                              -----------    -----------
                                                              $   183,687    $   384,350
                                                              ===========    ===========

                           LIABILITIES AND STOCKHOLDERS' EQUITY
                           ------------------------------------


Current liabilities:

   Accounts payable                                           $     8,184    $     9,790
   Due to an officer/stockholder (Note 10)
                                                                   20,829         26,586
   Note payable (Note 9)
                                                                   42,492          7,500
                                                              -----------    -----------
                                                                  71,5045         43,876
                                                              -----------    -----------

Stockholders' equity(deficit): (Note 2)
   Preferred stock; $.0001 par value; authorized -
   5,000,000 shares; issued - none                                   --             --
   Common stock; $.0001 par value; authorized -
   20,000,000 shares; issued and outstanding -
   3,836,338 shares                                                   386            383
Additional paid-in capital                                      1,313,319      1,282,072
Treasury stock, 500 shares at cost                                 (1,500)          --
Deficit accumulated during the development stage               (1,200,023)      (941,981)
                                                              -----------    -----------
          Total stockholders' equity                              112,182        340,474
                                                              -----------    -----------
                                                              $   183,687    $   384,350
                                                              ===========    ===========


                  See accompanying notes and accountant's review report


                                       33





                                        FONECASH, INC.
                                 (A Development Stage Company)
                                   Statements of Operations


                                                                                   Aug.7,1997
                                                       Nine           Nine        (Inception)
                                                   Months Ended   Months Ended        to
                                                   September 30,  September 30,  September 30,
                                                       2000           1999           2000
                                                    -----------    -----------    -----------
                                                                        
Cost and expenses
   Depreciation                                     $    33,696    $     6,250    $    75,363
   Amortization                                             804            805          1,982
   Research and development, related party               24,090           --          376,996
   Officer's compensation                                33,529           --          108,529
   Impairment of investment in related party               --             --           50,000
   General and administrative                           170,487        282,748        592,333
                                                    -----------    -----------    -----------
                                                        262,606        289,803      1,205,203
                                                    -----------    -----------    -----------
Other Income (expenses)
   Interest income                                        4,564          3,382          5,180
                                                    -----------    -----------    -----------
Net loss                                            $  (258,042)   $  (286,421)   $(1,200,023)
                                                    ===========    ===========    ===========
Primary and diluted loss per common share           $      (.07)   $      (.06)          (.40)
                                                    ===========    ===========    ===========
Weighted average common shares outstanding            3,839,116      2,797,484      2,992,660
                                                    ===========    ===========    ===========











             See accompanying notes and accountant's review report.


                                       34








                                                           FONECASH, INC.
                                                    (A Development Stage Company)
                                            Statements of Change in Stockholders' Equity
                                            --------------------------------------------
                                   For the Period August 7,1997 (Inception) to September 30, 2000


                                                                                                                        Deficit
                                                                           Additional          Treasury Stock         Accumulated
                                                Common       Stock          Paid-In      --------------------------       from
                                                 Share       Amount         Capital         Share         Amount       Inception
                                              -----------   -----------   -----------    -----------    -----------  -------------
                                                                                                   
Balances, August 7,1997 (Inception)                                        $                             $            $

   Common stock issued for services
   and costs advanced, valued at $.0001         2,000,000           200          --                                           --
   per share
   Common stock issued for services
      Valued at $.15 per share                    200,000            20        29,980
   Net loss for the period                           --            --            --                                       (61,404)
                                              -----------   -----------   -----------    -----------    -----------  -------------
Balances, December 31,1997                      2,200,000           220        29,980                                     (61,404)

   Sale of common stock                           204,500            20        84,965                                         --
   Net Loss                                          --            --            --                                       (95,211)
                                              -----------   -----------   -----------    -----------    -----------  -------------
Balances, December 31,1998                      2,404,500           240       114,945                                    (156,615)
   Sale of common stock                         1,098,505           110       837,160                                         --
   Services contributed by the president of
        The Company                                  --            --          60,000                                         --
   Common stock issued for services
       Valued at $.81 per share                   333,333            33       269,967
   Net loss                                                        --            --                                      (785,366)
                                              -----------   -----------   -----------    -----------    -----------  -------------
   Balances, December 31, 1999                  3,836,338           383     1,282,072                                    (941,981)
      Sale of common stock                         25,000             3        31,247                                         --
     Purchases of treasury stock
                                                                                                500         (1,500)
      Net Loss for the period                                                                                            (258,042)
                                              -----------   -----------   -----------    -----------    -----------  -------------
                                              -----------   -----------   -----------    -----------    -----------  -------------
Balances, September 30, 2000                    3,861,338           386     1,313,319           500    $    (1,500)   $(1,200,023)
                                              ===========   ===========   ===========    ===========    ===========  ==============






                                       See accompanying notes and accountant's review report.


                                       35





                                                    FONECASH, INC
                                            (A Development Stage Company)
                                               Statements of Cash Flow



                                                                            Nine           Nine        Aug. 7,1997
                                                                        Months Ended    Months Ended  (Inception) to
                                                                        September 30    September 30  September 30
                                                                             2000          1999            2000
                                                                         -----------    -----------    -----------
                                                                                              
Cash flows from operating activities
   Net loss                                                              $  (258,042)   $  (286,421)    (1,200,023)
   Adjustments to reconcile net loss to net
     cash used in operating activities:
     Depreciation                                                             33,696          6,250         75,363
     Amortization                                                                804            805          1,982
     Cash surrender value of life insurance                                   17,732        (12,297)          --
     Common stock issued for services                                           --             --          360,200
     Changes in assets and liabilities:
       (Increase) in inventory                                               (34,911)       (15,789)       (80,054)
       (Increase) in prepaid expenses                                           --          (25,000)       (25,000)
       (Increase) in utility deposit                                            --             (250)          (250)
       Increase (decrease) in accounts payable                                (1,606)         5,562          8,184
       Increase (decrease) in amounts due to an
             officer/stockholder                                              (5,757)       (13,074)        20,926
       Increase (decrease) in short-term loans                                  --           (5,000)          --
                                                                         -----------    -----------    -----------
       Net cash used in operating activities                                (248,084)      (345,214)      (838,769)
                                                                         -----------    -----------    -----------
Cash flows from investing activities:
   Organization costs                                                           --             --             (368)
   Purchase of property and equipment                                         (9,788)       (25,000)      (134,788)
   Acquisition of patent rights                                                 --           (5,000)        (5,000)
   Increase in notes receivable                                                 --          (40,382)          --
   Investment in related company                                                --          (50,000)          --
   Deposit                                                                      --         (271,400)          --
                                                                         -----------    -----------    -----------
       Net cash used in investing activities                                  (9,788)      (391,782)      (140,156)
                                                                         -----------    -----------    -----------
Cash flow from financing activities:
   Proceeds from short-term debt                                              42,500           --           50,000
   Repayment of short term debt                                               (7,508)          --           (7,508)
   Purchase of treasury stock                                                 (1,500)          --           (1,500)
   Proceeds from sale of common stock                                        (31,250)       727,757        953,505
                                                                         -----------    -----------    -----------
       Net cash provided by financing activities                              64,742        727,757        994,497
                                                                         -----------    -----------    -----------
Net increase (decrease) in cash                                             (193,130)        (9,239)        15,572
Cash at beginning of year                                                    208,702          9,628           --
                                                                         -----------    -----------    -----------
Cash at end of period                                                    $    15,572    $       389    $    15,572
                                                                         ===========    ===========    ===========
Supplemental disclosure of noncash investing and financing activities:
   Services contributed by the president of the Company                  $      --      $      --      $    60,000
   Common stock issued for research and development costs                $      --      $      --      $   270,000
   Common stock issued for services and costs advanced                   $      --      $      --      $       200
                                                                         ===========    ===========    ===========

                               See accompanying notes and accountant's review report.




                                       36


                                 FONECASH, INC.
                          (A Development Stage Company)

                          Notes to Financial Statements

Note 1 - Summary of Significant Accounting Policies

Description of Business and Basis of Presentation

The financial  statements  presented are those of FoneCash,  Inc., a development
stage company (the "Company").  The Company was  incorporated  under the laws of
the State of Delaware on August 7, 1997.  The Company has acquired the rights to
market a  patented  electronic  terminal  that is used by retail  merchants  and
in-home  salespersons when payment is made with a credit or debit card. Revenues
will be generated  from sales of the terminals and from  transaction  charges to
banks.  No revenues  have been earned as of September 30, 2000,  but  management
anticipates  sales to  commence  in  December  2000 after  real-time  trials are
performed with a select group of merchants and in-home salespersons.

These  financial  statements  have been  prepared in accordance  with  generally
accepted accounting principles for interim financial information. In the opinion
of management,  such interim statements  reflect all adjustments  (consisting of
normal recurring  accruals)  necessary to present fairly the financial  position
and the results of operations and cash flows for the interim periods  presented.
The  results  of  operations  for  these  interim  periods  are not  necessarily
indicative of the results to be expected for the full year.

           Use of Estimates in the Preparation of Financial Statements

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the  reporting  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported  amounts of revenue and expenses during the period.  Actual results
could differ from those estimates.

                                    Inventory

Inventory is stated at the lower of cost or market,  with cost  determined  on a
first-in,  first-out basis and market based on the lower of replacement  cost or
realizable value.

Property and equipment and depreciation

Property  and  equipment  are stated at cost.  Depreciation  for both  financial
reporting  and income tax purposes is computed  using the  straight-line  method
over the estimated  lives of the assets.  Maintenance and repairs are charged to
expense when  incurred.  When  property and  equipment  are retired or otherwise
disposed of, the related cost and accumulated  depreciation are removed from the
respective accounts and any gain or loss is credited or charged to income.


                                       37


Intangible Assets

Intangible  assets consist of organization  costs and patent rights.  Intangible
assets are  amortized  on a  straight-line  basis over five years.  Amortization
expense for the nine months ended September 30, 2000 was $804.

Fair Value of Financial Instruments

The fair value of the Company's receivables due from an  officer/stockholder  is
not  practicable  to estimate due to the related party nature of the  underlying
transactions and the indefinite payment terms.

Income Taxes

Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases.  Deferred tax assets and liabilities are measured using enacted tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences  are  expected  to reverse.  The effect on  deferred  tax assets and
liabilities  of a  change  in  tax  rates  is  recognized  in the  statement  of
operations in the period that includes the enactment date.

Loss Per Common Share

Loss per common  share is  computed  by  dividing  the net loss by the  weighted
average shares outstanding during the period.

Note 2 - Stockholders' Equity

Common Stock

Since the date of inception,  the Company has issued  3,861,338 shares of common
stock,  which  includes  2,000,000  shares  that  were  issued to  officers  and
directors of the Company for services and costs  advanced,  valued at $.0001 per
share,  200,000  shares that were valued at $.15 per share,  and 333,333  shares
that  were  valued  at $.81 per  share.  In 1999 the  president  of the  Company
contributed  services to the  Company  valued at $60,000,  as  reflected  in the
statements of stockholders'  equity and statements of operations (in addition to
$31,000 received in cash).

Treasury Stock

On August 7, 2000,  the  Company  purchased  500 shares of its common  stock for
$1,500.

Dividends  may be paid  on  outstanding  shares  as  declared  by the  Board  of
Directors from time to time. Each share of common stock is entitled to one vote.

                                       38


Preferred Stock

No shares of the Company's no par value  preferred stock have been issued or are
outstanding. Dividends, voting rights and other terms, rights and preferences of
the preferred shares have not been designated but may be designated by the Board
of Directors from time to time.

Note 3 - Income Taxes

There is no  provision  for income  taxes  since the Company  has  incurred  net
operating  losses.  At September 30, 2000,  the Company has net  operating  loss
carry  forwards of  $1,138,757,  which may be available to offset future taxable
income  through  2020.  A deferred  tax asset has not been  recorded for the net
operating loss carryforwards due to uncertainties as to the ultimate realization
of the deferred tax asset.

Note 4 - Prepaid Expenses

Prepaid expenses  consists of a payment of $25,000 on April 29,1999 for the cost
of printing brochures containing product and company  information.  The printing
costs will be charged to income as the brochures are  distributed.  No brochures
have been distributed as of September 30, 2000.

Note 5-- Property and Equipment

Property and equipment  consist  entirely of a production mold purchased  during
the year ended December 31, 1999 for $125,000.  The Company purchased additional
molds in the amount of $9,788  during the nine months ended  September 30, 2000.
The molds have an estimated useful life of 3 years and are depreciated using the
straight-line method. Depreciation expense was $33,696 for the nine months ended
September 30, 2000.

Note 6-- Patent Rights

On November 1, 1997 the Company entered into a license  agreement with Thomas J.
Ulrich. Under this agreement the Company will acquire an exclusive license under
the licensor's  patent rights for U.S.  patent number  4,803,719,  pertaining to
telephone line powered  applications,  for the primary  purpose of utilizing the
licensor's  invention  through  sales of products and  services.  The Company is
required to make payments of $30,000 for a non-refundable  license execution fee
based upon  capital  funding,  and for  royalties  based upon gross sales of all
licensed  products  sold.  As of September  30, 2000 a license  execution fee of
$5,000 was  capitalized  and is being  amortized  over the remaining life of the
patent of 5 years.  The balance of the license  execution  fee of $25,000 is due
upon  funding  of an  Initial  Public  Offering  or  other  financing  exceeding
$500,000.  The agreement also provides for a royalty of 3% of the gross sales of
all licensed  products and an annual  minimum fee of $10,000 in 2000 and $20,000
for each year  thereafter.  In addition,  minimum sales revenues of $500,000 for
the  year  2000 to a total  of $2  million  in sales  after  the  year  2003 and
thereafter were agreed to.


                                       39


Note 7 - Long -Lived Assets

The Company accounts for long-lived  assets in accordance with the provisions of
Statement of Financial  Accounting  Standards (SFAS) No. 121, Accounting for the
Impairment of  Long-lived  Assets and for  Long-lived  Assets to be Disposed Of.
This  statement  requires  that  long-lived  assets  and  certain   identifiable
intangibles   be  reviewed  for  impairment   whenever   events  or  changes  in
circumstance  indicate  that  the  carrying  amount  of  an  asset  may  not  be
recoverable.  Recoverability  of  assets  to be held and used is  measured  by a
comparison of the carrying  amount of an asset to future net cash flows expected
to be generated by an asset.  If such assets are considered to be impaired,  the
impairment  to be  recognized  is measured  by the amount by which the  carrying
amount of the assets  exceeds the fair value of the of the assets.  Assets to be
disposed of are  reported at the lower of carry  amount or fair value less costs
to sell.

Note 8-- Cash Surrender Value of Life Insurance

The  variable  universal  life  insurance  policy  carried  on the  life  of the
president  of the Company has a cash value of $0 on September  30,  2000.  There
were no borrowings against the cash surrender value.

Note 9--- Note Payable

The  Company  has a bank line of credit  with Fleet  Bank,  N.A.  that  provides
short-term borrowings up to $50,000.  Interest on advances is payable monthly at
two and three  quarters of one  percent  (2.75%)  over the prime rate.  The note
payable to the bank is  uncollateralized  and is  personally  guaranteed  by the
officers of the  Company.  There is an  outstanding  balance on the bank line of
credit of $42,492 as of September 30, 2000

Note 10 - Related Party Transactions

The Company was  indebted to an  officer/stockholder  for  expenses  advanced on
behalf of the Company, in the amount of $20,829 at September 30, 2000. There are
no specific terms for repayment.

In 1999 the president of the Company contributed  services to the Company valued
at  $60,000,  as  reflected  in  the  statements  of  stockholders'  equity  and
statements of operations (in addition to $31,000 received in cash).

The  Company  leases its  executive  offices  and  storage  facilities  from the
president of the Company under a month-to-month  operating lease.  Rent expenses
was $15,973 for the nine months ended  September 30, 2000,  $17,373 for the year
ended December 31, 1999, and $32,485 for the periods prior to 1999.

The Company  utilizes  Advance Data Information  Corporation  ("ADI"),  a Taiwan
corporation owned by a director/shareholder  of the Company, as its research and
development laboratory. Research and development expenses under this arrangement
totaling  $24,090  charged to operations  during the nine months ended September
30, 2000.


                                       40


The  Company  purchased   1,000,000  shares   representing  an  8%  interest  in
Tradeandswap.com,  Inc.  ("Trade and Swap") for  $50,000.  A  consultant  of the
Company   is  a   shareholder   and   principal   officer  of  Trade  and  Swap.
Tradeandswap.com,  Inc. is a privately-held  corporation that facilitates barter
and trade swaps for individuals  and businesses over a proprietary  Internet web
site.  The  investment  in Trade  and Swap is  carried  at cost,  as there is no
readily available market for these shares. If an other-than-temporary impairment
resulting from a decline in fair value in the investment  shall be considered to
have occurred,  the cost basis shall be written down to fair value as a new cost
basis and the  amount of the  write-down  shall be  included  in  earnings  as a
realized loss.  During the year ended December 31, 1999, the Company has written
its  investment  in Trade and Swap down to zero since no future  benefit  can be
determined as Trade and Swap  operates in a volatile  industry and has no proven
record of success. An impairment loss $50,000 has been reported in the Statement
of Operations.

Note 11 Consulting Agreements

On February 4, 1998 the Company  entered into a consulting  agreement  with East
Coast  Entertainment,  Inc.  ("ECE")  requiring  payments of $50,000 per year in
monthly  installments  once the Company  attains gross revenues of  $300,000.ECE
will be assigned administrative duties including, but not limited to, publicity,
advertising,  public relations,  investors  relations  programs,  news releases,
hiring  of all  necessary  outside  contractors  for any  specialized  projects,
printing and  development of the Company's  annual  reports,  preparation of any
design,  print or art work,  camera  ready  art,  distribution  of  reports  and
corporate releases to State and Federal securities agencies.  ECE is entitled to
$100,000 annually once the Company achieves  $500,000 in gross revenues.  ECE is
entitled to  participate  in the  Company's  stock option plans and group health
plans  pursuant  to the same terms that apply to all senior key  executives  and
other employees of the Company. The agreement is renewable annually for a period
of ten years.  No expenses have been recognized  under this  arrangement for the
nine months ended September 30, 2000.

The  Company  entered  into  another  consulting  agreement  with  Advance  Data
Information  Corporation  ("ADI"),  a  Taiwan  corporation  owned  by Dr.  Wu, a
director/stockholder  of the Company,  in which ADI will act as the research and
development  laboratory  for the  Company.  The  Company  shall  have  exclusive
ownership  rights to any and all products that are developed as a result of this
agreement.  The Company has issued  200,000 shares of its common stock to Dr. Wu
in August  1997,  valued at $.15 per  share,  and  333,333  shares in June 1999,
valued at $.81 per share for services rendered.

Note 12-Contract for Deployment and Installation Services

Pursuant to a letter of intent dated June 5, 1999 between the Company and Fusion
Capital Corp. ("Fusion"), a Florida corporation,  the Company agreed to purchase
a majority of the common stock of Fusion.  The Company  simultaneously  issued a
loan to Fusion of $37,000 to be granted in 10  installments  of $3,700 from June
14, 1999 through August 16, 1999. Ten separate  promissory  notes of $3,700 were

                                       41


executed, each providing for interest at a rate of 6%, and each of the ten notes
payable within 12 months from the date of issuance with the first payment due on
June 14,  2000.  The balance due on the notes of $37,990 as of December 31, 1999
includes accrued interest of $990.  Discussions of the proposed acquisition have
commenced, but no definitive terms have been agreed upon.

When the notes were first issued in June,1999, payment of principal and interest
on the  notes  was due six  months  later  with  the  first  note  due  December
14,1999.Re-negotaition of the payment dates took place in November 1999, and the
Company  agreed in  December  1999 to extend the due date of the  principal  and
interest on these notes for 12 months with the first note due on June 14,  2000.
Therefore,  for the period ending March 31, 2000, no payment of the principal or
interest  had been made.  The terms of this  receivable  were  extended  but nor
written down.

In April 2000, the Company entered into  negotiations with Fusion for deployment
and  installation  services for the 500 terminals  which the Company planned for
its trials with  merchants  in order to prove its revenue  concept.  The Company
requested Fusion to estimate the cost for the deployment and installation of 500
terminals. Fusion replied that it would undertake these services in exchange for
converting the principal and interest on the promissory note and that would be a
fixed cost contract. Since the Company has made its own estimate for the cost of
these services to $72.50, the Company agreed to convert the notes from a loan to
an advance  pursuant to a contract for  Deployment  and  Installation  which was
signed on May 1,  2000.  By  converting  the note  payable  to cover the cost of
deployment  and  installation,  the cost per unit was  $74.00  (which  amount is
included in general and administrative expenses in the Statement of Operations.)
The  Company,  however,  elected  to write  off the  interest  of $990  that had
accumulated at the period ending December 31, 1999

Note 13 - Planned Acquisition

On June 19,  2000,  the Company  signed a letter of intent to acquire 50% of the
stock of Fonecash.com  Ltd.  ("FoneCash  Hong Kong"),  a newly created Hong Kong
company.  Under the terms of the letter of intent, in exchange for its ownership
interest,  the Company will grant to FoneCash Hong Kong, an exclusive license in
the Company's  proprietary  technology,  referred to as the "FoneCash Terminal".
The  transaction  is subject  to  carious  terms and  condition,  including  the
execution of a definitive acquisition  agreement,  complete of due diligence and
shareholder approval.




                                       42






                                        FONECASH, INC
                                (A Development Stage Company)
                                        Balance Sheets


                                            ASSETS
                                            ------
                                                                  September 30   December 31
                                                                      2001           2000
                                                                          
Current assets:
   Cash                                                           $     2,298    $     1,822
    Accounts receivable                                                15,660           --
   Inventory                                                          201,476         35,000
   Prepaid expenses                                                    25,000         25,000
                                                                  -----------    -----------
                                                                      244,434         61,822
                                                                  -----------    -----------

Property and equipment, net                                            67,010        103,700
                                                                  -----------    -----------

Other assets:
   Patent rights, net                                                   2,500          3,000
   Other                                                                   80            116
                                                                  -----------    -----------
                                                                        2,580          3,116
                                                                  -----------    -----------
                                                                  $   314,024    $   168,638
                                                                  ===========    ===========

                        LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                        ----------------------------------------------

Current liabilities:
   Accounts payable                                               $   168,263    $    83,513
   Due to an officer/stockholder                                      140,391            683
   Note payable                                                       122,951        122,953
                                                                      431,605        207,149

Stockholders' equity(deficit): (Note 2)
   Preferred stock; $.0001 par value; authorized -
   5,000,000 shares; issued - none                                       --             --
   Common stock; $.0001 par value; authorized -
   20,000,000 shares; issued and outstanding -
   6,651,372 shares in 2001 and 5,951,372 in 2000                         904            595
Additional paid-in capital                                          2,647,434      1,801,743
Treasury stock, 500 shares at cost                                     (1,500)        (1,500)
Deficit accumulated during the development stage                   (2,764,419)    (1,839,349)
                                                                  -----------    -----------
          Total stockholders' equity                                 (117,581)       (38,511)
                                                                  -----------    -----------
                                                                  $   314,024    $   168,638
                                                                  ===========    ============
See accompanying notes and accountant's review report


                                       43





                                      FONECASH, INC.
                              (A Development Stage Company)
                                 Statements of Operation

                                                 Nine            Nine        Aug 7 1997
                                              Months Ended   Months Ended  (Inception) to
                                              September 30,  September 30,  September 30,
                                                  2001            2000          2001
                                               -----------    -----------    -----------
                                                                    
Revenue:
    Sales                                      $    15,660           --      $    15,660
    Cost of sales                                    8,524           --            8,524
                                               -----------    -----------    -----------
        Gross profit                                 7,136           --            7,136
Interest Income                                          7          4,154          5,200
                                               -----------    -----------    -----------
        Total revenue                                7,143          4,154         12,336
                                               -----------    -----------    -----------

                                               -----------    -----------    -----------
Cost and expenses
   Depreciation                                $    36,690    $    22,464    $   153,615
   Amortization                                        537            536          2,789
   Research and development, related party           9,700         24,090        383,756
   Officer's compensation                            1,200         28,129        271,429
   Impairment of investment in related party                                      50,000
   Impairment of investment in subsidiaries        450,000                       450,000
   General and administrative                      434,086        115,734      1,465,166
                                               -----------    -----------    -----------
                                                   932,213        190,953      2,776,755
                                               -----------    -----------    -----------

Net loss                                       $  (925,070)   $  (186,799)   $(2,764,419)
                                               ===========    ===========    ===========
Basic and diluted loss per common share        $      (.13)   $      (.05)   $      (.70)
                                               ===========    ===========    ===========
Weighted average common shares outstanding     $ 6,919,720    $ 3,836,338    $ 3,953,276
                                               ===========    ===========    ===========




                  See accompanying notes and accountant's review report


                                       44






                                      FONECASH, INC.
                              (A Development Stage Company)

                     Statements of Change in Stockholders' Equity
              For the period August 7,1997 (Inception) to September 30, 2001


                                                                                                                           Deficit
                                                                             Additional          Treasury Stock          Accumulated
                                                 Common          Stock         Paid-In      --------------------------       from
                                                  Share          Amount        Capital         Share         Amount       Inception
                                               -----------    -----------    -----------    -----------    -----------   -----------
                                                                                                   
Balances, August 7,1997 (Inception)                                                                 $    $
   Common stock issued for services
   And costs advanced, valued at $.0001
   Per share                                     2,000,000            200           --                                         --
   Common stock issued for services
      Valued at $.15 per share                     200,000             20         29,980
   Net loss for the period                            --             --             --                                      (61,404)
                                               -----------    -----------    -----------    -----------    -----------    ----------
Balances, December 31,1997                       2,200,000            220         29,980                                    (61,404)

   Sale of common stock ($.4156 per share)         204,500             20         84,965                                       --
   Net Loss                                           --             --             --                                      (95,211)
                                               -----------    -----------    -----------    -----------    -----------    ----------
Balances, December 31,1998                       2,404,500            240        114,945                                   (156,615)
   Sale of common stock($.7622 per share)        1,098,505            110        837,160                                       --
   Capital contributed for services                   --             --           60,000                                       --
   Common stock issued for services
       Valued at $.81 per share                    333,333             33        269,967
   Net loss                                                          --             --                                     (785,366)
                                               -----------    -----------    -----------    -----------    -----------    ----------
   Balances, December 31, 1999                   3,836,338            383      1,282,072                                   (941,981)
     Sale of common stock ($1.25 per share)         25,000              3         31,247
     Common stock issued for services
       valued at $.5312 per share                  623,367             62        331,071
     Purchase of treasury stock                                                                    500         (1,500)
      Net Loss for the period                                                                                              (897,368)
                                               -----------    -----------    -----------    -----------    -----------    ----------
Balances, December 31,2000                       5,951,372            595      1,801,743           500         (1,500)   (1,839,349)
                                               -----------    -----------    -----------    -----------    -----------    ----------
     Common stock issued for services
       valued at $.38 per share                    700,000             70        265,930
                                               -----------    -----------    -----------    -----------    -----------    ----------
     Sale of common stock($.035 per share)         287,976             29          9,971
                                               -----------    -----------    -----------    -----------    -----------    ----------
     Common stock issued for services,
       valued at $.10 per share                  1,200,000            120        119,880
                                               -----------    -----------    -----------    -----------    -----------    ----------
     Common stock issued in acquisition
       of subsidiaries, valued at $.50/share       900,000             90        449,910
                                               -----------    -----------    -----------    -----------    -----------    ----------
     Net loss for the period                                                                                               (925,070)
                                               -----------    -----------    -----------    -----------    -----------    ----------
Balances, September 30, 2001                     9,039,348    $       904    $ 2,647,434           500     $   (1,500)  $(2,764,419)
                                               ===========    ===========    ===========    ===========    ===========  ============

                  See accompanying notes and accountant's review report.


                                       45






                                            FONECASH, INC
                                    (A Development Stage Company)
                                       Statements of Cash Flow




                                                              Nine           Nine       Aug. 7,1997
                                                          Months Ended   Months Ended  (Inception) to
                                                          September 30,  September 30,  September 30,
                                                              2001            2000           2001
                                                           -----------    -----------    -----------
                                                                                
Cash flows from operating activities
   Net loss                                                $  (925,070)   $  (186,799)   $(2,764,419)
   Adjustments to reconcile net loss to net
     cash used in operating activities:
     Depreciation                                               36,690         22,464        153,615
     Amortization                                                  537            536          2,789
     Cash surrender value of life insurance                       --            6,838           --
     Common stock issued for services                          386,000           --        1,234,833
      Common stock issued in acquisition of subsidiaries       450,000           --          450,000
     Changes in assets and liabilities:
       (Increase in accounts receivable                        (15,660)          --          (15,660)
       (Increase) in inventory                                (166,476)       (28,311)      (201,476)
       (Increase) in prepaid expenses                             --                         (25,000)
       Increase (decrease) in accounts payable                  84,750         (1,306)       168,263
                                                           -----------    -----------    -----------
       Net cash used in operating activities                  (149,229)      (186,578)      (997,055)
                                                           -----------    -----------    -----------
Cash flows from investing activities:
   Organization costs                                             --             --             (368)
   Purchase of property and equipment                             --           (9,788)      (220,625)
   Acquisition of patent rights                                   --             --           (5,000)
                                                           -----------    -----------    -----------
       Net cash used in investing activities                      --           (9,788)      (225,993)
                                                           -----------    -----------    -----------
Cash flow from financing activities:
   Proceeds from short-term debt                                15,972         42,500        163,146
   Repayment of short term debt                                (15,974)        (4,956)       (40,196)
   Increase (decrease) in amounts due to
             officer/stockholder                               139.707         (5,660)       140,391
    Purchase of treasury stock                                    --             --           (1,500)
   Proceeds from sale of common stock                           10,000           --          963,505
                                                           -----------    -----------    -----------
       Net cash provided by financing activities               149,705         31,884      1,225,346
                                                           -----------    -----------    -----------
Net increase (decrease) in cash                                    476       (164,482)         2,298
Cash at beginning of  period                                     1,822        208.702           --
                                                           -----------    -----------    -----------
Cash at end of period                                      $     2,298    $    44,220    $     2,298
                                                           ===========    ===========    ===========


                       See accompanying notes and accountant's review report.



                                       46





                         FONECASH, INC AND SUBSIDIARIES
                          (A Development Stage Company)
                                   Form 1OQSB
                        Quarter Ended September 30, 2001
                   Notes to Consolidated Financial Statements


Note 1 -- Condensed Consolidated Financial Statements

Basis of Presentation
---------------------

The accompanying interim unaudited consolidated financial statements include the
accounts of FoneCash,  Inc. and its subsidiaries which are hereafter referred to
as (the  "Company").  All  intercompany  accounts  and  transactions  have  been
eliminated in  consolidation.  These financial  statements have been prepared in
accordance with accounting  principles  generally  accepted in the United States
for interim  financial  information and with the  instructions to Form 10-QSB of
Regulation  S-B.  Accordingly,  they do not include all of the  information  and
footnotes  required by accounting  principles  generally  accepted in the United
States for complete  financial  statements.  In the opinion of management,  such
interim  statements  reflect all  adjustments  (consisting  of normal  recurring
accruals)  necessary to present fairly the financial position and the results of
operations  and cash flows for the  interim  periods  presented.  The results of
operations  for these  interim  periods are not  necessarily  indicative  of the
results to be expected for the year ending  December 31, 2001.  These  financial
statements should be read in conjunction with the audited  financial  statements
and footnotes included in the Company's report on Form 10-KSB for the year ended
December 31, 2000.

Note 2 -- Business Combination

On  April  10,  2001,  pursuant  to  an  agreement  with  Richwoodland   Profits
Corporation  ("RPC") and Universal Venture Limited "UVL"), each a British Virgin
Island holding company, the Company has acquired all of the voting stock of four
foreign  companies that were  wholly-owned  by RPC and UVL in return for 900,000
shares of common stock of the Company,  valued at $.50 per share.  The companies
acquired  are  start-up  companies  that have no assets,  liabilities,  revenue,
expenses and results of  operations.  The  investment  in the companies has been
reported entirely as goodwill, as there is no value in the companies.

The four acquired companies are Universal  Information  Technology,  (Hong Kong)
Limited,  a company  which has  developed  a video  compression  technology  for
Internet and wireless  app1ications  Firstech  Ventures (Hong Kong)  Limited,  a
company that locates engineering services for

                                       47



                         FONECASH, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                                   Form 1OQSB
                        Quarter Ended September 30, 2001
                   Notes to Consolidated Financial Statements

environmental projects in China, especially land fill projects,  waste water and
waste oil treatment facilities, and waste liner projects, Tech Unity Technology,
(Hong Kong) Limited,  which engages in gathering  information and research about
business  opportunities  in China for  dissemination  among U.S. and  Australian
bidders, and Fonecash.com (Hong Kong) Limited, a company engaged in the wireless
processing of credit and debit cards for the mobile merchants.

In July 2001,  the FASB issued  Statement No. 141,  Business  Combinations,  and
Statement No. 142, Goodwill and Other Intangible Assets.  Statement 141 requires
that the purchase  method of  accounting  be used for all business  combinations
initiated  or  completed  after  June 30,  2001.  Statement  141 also  specifies
criteria intangible assets acquired in a purchase business combination must meet
to be recognized and reported  apart from goodwill.  The Company has adopted the
provisions of Statement 141 in reporting the business combination.

Statement 142 will require that goodwill and intangible  assets with  indefinite
useful lives no longer be amortized,  but instead tested for impairment at least
annually.  Statement 142 will also require that intangible  assets with definite
useful lives be amortized over their respective  estimated useful lives to their
estimated  residual  values,  and reviewed for  impairment  in  accordance  with
Statement  121,  Accounting  for the  Impairment  of  Long-Lived  Assets and for
Long-Lived Assets to be Disposed Of Furthermore, any goodwill and any intangible
asset  determined  to have an  indefinite  useful  life that are  acquired  in a
purchase  business  combination  completed  after  June  30,  2001  will  not be
amortized,  but will continue to be evaluated for impairment in accordance  with
the appropriate pre-Statement 142 accounting literature. The Company has adopted
the provisions of Statement 142 and has written the goodwill associated with the
business  combination  down to zero, as no future benefit can be determined.  An
impairment loss of $450,000 has been reflected in the consolidated statements of
operations.

Note 2 -- Stockholders' Equity (Deficit)

Common Stock
------------

Since  December 3 1, 2000,  the  Company has issued  1,900,000  shares of common
stock for consulting services,  of which 700,000 shares were valued at $0.38 per
share and  1,200,000  were valued at $0.10 per share.  The Company has also sold
287,976  shares of common  stock at $0.035 per  share.  The  Company  has issued
900,000 of

                                       48


                         FONECASH, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                                   Form 1OQSB
                        Quarter Ended September 30, 2001
                   Notes to Consolidated Financial Statements


common stock  valued at $0.50 per share in exchange for four foreign  companies,
as previously discussed.

Stock Options
-------------

At June 30,  2001 the Company has  granted  800,000  shares of common  stock for
issuance in compensation  for business  services to Reginald Clarke at the price
of $0.50 per share.

Loss Per Common Share
---------------------

Loss per common  share is  computed  by  dividing  the net loss by the  weighted
average shares outstanding during the period.

*********************************_______________********************************

                                       49






                                 FONECASH, INC.

                                7,275,730 Shares
                                  Common Stock


                                   PROSPECTUS


You should rely only on the  information  contained in this  document or that we
have  referred  you to.  We have  not  authorized  anyone  to  provide  you with
information  that is different.  This  prospectus is not an offer to sell common
stock and is not  soliciting an offer to buy common stock in any state where the
offer or sale is not permitted.

Until  ______________,  2001,  all  dealers  that effect  transactions  in these
securities,  whether or not  participating  in the offering,  may be required to
deliver a prospectus.  This is in addition to the dealers' obligation to deliver
a  prospectus  when  acting as  underwriters  and with  respect to their  unsold
allotments or subscriptions.








                               December     , 2001

--------------------------------------------------------------------------------



                                       50



PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24. Indemnification of Directors, Officers, Employees and Agents.

The  Registrant's  certificate  of  incorporation  limits the  liability  of the
Registrant's directors to the maximum extent permitted by Delaware law. Delaware
law provides that a director of a corporation will not be personally  liable for
monetary damages for breach of that individual's  fiduciary duties as a director
except for liability for (1) a breach of the  director's  duty of loyalty to the
corporation  or its  stockholders,  (2) any act or omission not in good faith or
that  involves  intentional  misconduct  or a knowing  violation of the law, (3)
unlawful payments of dividends or unlawful stock repurchases or redemptions,  or
(4) any  transaction  from  which the  director  derived  an  improper  personal
benefit.

This limitation of liability does not apply to liabilities arising under federal
securities laws and does not affect the availability of equitable  remedies such
as injunctive relief or rescission.

The Delaware  General  Corporation Law provides that a corporation may indemnify
directors and officers,  as well as other  employees  and  individuals,  against
attorneys'  fees and  other  expenses,  judgments,  fines  and  amounts  paid in
settlement  actually and reasonably  incurred by such person in connection  with
any threatened, pending or completed actions, suits or proceedings in which such
person was or is a party or is  threatened  to be made a party by reason of such
person  being or  having  been a  director,  officer,  employee  or agent of the
corporation.  The Delaware  General  Corporation  Law provides  that this is not
exclusive of other rights to which those seeking indemnification may be entitled
under any bylaw,  agreement,  vote of stockholders or disinterested directors or
otherwise.

The  Registrant's  certificate  of  incorporation  and bylaws  provide  that the
Registrant  is required to indemnify  its  directors and officers to the maximum
extent permitted by law. The Registrant's  bylaws also require the Registrant to
advance  expenses  incurred  by an officer or director  in  connection  with the
defense  of any  action or  proceeding  arising  out of that  party's  status or
service as a director or officer of the  Registrant  or as a director,  officer,
employee  benefit  plan  or  other  enterprise,   if  serving  as  such  at  the
Registrant's  request.  The  Registrant's  bylaws also permit the  Registrant to
secure insurance on behalf of any director or officer for any liability  arising
out of his or her actions in a representative  capacity.  The Registrant intends
to enter into  indemnification  agreements  with its  directors  and some of its
officers  containing  provisions  that  (1)  indemnify,  to the  maximum  extent
permitted by Florida law, those directors and officers against  liabilities that
may arise by reason of their status or service as  directors or officers  except
liabilities arising from willful misconduct of a culpable nature, (2) to advance
their expenses  incurred as a result of any proceeding  against them as to which
they could be indemnified,  and (3) to obtain directors' and officers' liability
insurance if maintained for other directors or officers.

                                       51


Item 25. Other Expenses of Issuance and Distribution.

         The  following  table sets forth the  expenses in  connection  with the
issuance and distribution of the securities being  registered  hereby.  All such
expenses  will be borne by the  registrant;  none shall be borne by any  selling
stockholders.

Securities and Exchange
Commission registration fee                 $    134.46
Legal fees and expenses                     $  4,000.00
Accounting fees and expenses                $  2,000.00
Miscellaneous (1)                           $  5,000.00
                                            -----------
         Total                              $ 11,134.46
-------------------------------
(1) Estimated.

Item 26. Recent Sales of Unregistered Securities.

On December  17,  2001,  Fonecash  issued  1,312,500  shares of common stock and
1,312,500  warrants to Penny King Holding  Corporation,  as its compensation for
financial advisory services.

On December  17,  2001,  Fonecash  issued  1,312,500  shares of common stock and
1,312,500  warrants to National Capital  Merchants Group,  Ltd., as compensation
for financial advisory services.


On December 17, 2001,  Fonecash issued 250,000 shares of common stock to Michael
S.  Krome,  P.C.,  as part of his  compensation  to  prepare  this  registration
statement

On December 17, 2001,  Fonecash  issued 100,000 shares of common stock to Joseph
B. LaRocco, as his compensation for preparing finance documents.

On December 14, 2001,  Fonecash  issued  62,530 shares of common stock to Ken G.
Upton, as his compensation for preparing an investment relations web site.

On December 12, 2001,  Fonecash  issued 500,000 shares of common stock to Action
Stock,  Inc, as partial  compensation  for  investor  relations  activities  and
promotion of the company.

On December 5, 2001,  Fonecash issued 100,000 shares of common stock to Sharline
Gordon, as her compensation for preparing finance documents.

On November 21, 2001,  Fonecash  issued  200,000 shares of common stock to Julie
Thompson, as her compensation for preparing investor address lists.

On November 27, 2001, Fonecash issued 100,000 shares of common stock to James E.
Czekner, as part of his compensation for software programming.

On  November  12,  2001,  Fonecash  issued  320,000  shares of  common  stock to
Charlotte B. Given, as part of her compensation for radio interviews.


                                       52


On  November  1,  2001,  Fonecash  Issued  493,200  shares  of  common  stock to
Stockgroup  Information  Systems,  Inc,, as  compensation  for preparation of an
investors' web site.

         Fonecash,  Inc.  relied  upon  Section  4(2) of the Act and Rule 506 of
Regulation D for these  transactions  regarding the issuance of its unregistered
securities. In each instance, such reliance was based upon the fact that (i) the
issuance  of the shares did not  involve a public  offering,  (ii) there were no
more than 35 investors (excluding "accredited  investors"),  (iii) each investor
who  was  not  an  accredited  investor  either  alone  or  with  his  purchaser
representative(s)  has such  knowledge and  experience in financial and business
matters that he is capable of evaluating the merits and risks of the prospective
investment,  or the issuer reasonably  believes  immediately prior to making any
sale that such  purchaser  comes  within this  description,  (iv) the offers and
sales were made in compliance  with Rules 501 and 502, (v) the  securities  were
subject  to Rule 144  limitation  on resale  and (vi) each of the  parties  is a
sophisticated purchaser and had full access to the information on Fonecash, Inc.
necessary to make an informed investment decision by virtue of the due diligence
conducted  by  the  purchaser  or  available  to  the  purchaser  prior  to  the
transaction.

         Neither  the  offer  nor  the  sale  of  any  of  the   securities  was
accomplished by the  publication of any  advertisement.  Each investor  received
copies of disclosure documents.


Item 27. Exhibits and Financial Statement Schedules.

(a)      Exhibits:

     The following exhibits are filed as part of this registration statement:

   Exhibit           Description
   -------            -----------
   3.1 (1)           Articles of Incorporation of Fonecash, Inc.
   3.2 (1)           By-laws of Fonecash, Inc.
   4.1 (2)           Financial Consulting Services Agreement between the Company
                     and Penny King Holdings, Corporation.
   5.1 (2)           Opinion of Michael S. Krome, P.C.
   23.1 (2)          Consent of Stewart H. Benjamin, CPA, Independent Auditor
   23.2 (2)          Consent of Michael S. Krome, P.C. (included in Exhibit 5.1)
-----------

(1)      Previously  filed with the Form 10SB12G  filed with the  Commission  on
         December 30, 1999.
(2)      Filed herewith


                                       53


Item 28. Undertakings.

(A)      The undersigned Registrant hereby undertakes:

         (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to:

                  (i) Include any prospectus required by Section 10(a)(3) of the
         Securities Act of 1933;
                  (ii)  Reflect  in the  prospectus  any facts or events  which,
         individually  or  together,   representa   fundamental  change  in  the
         information set forth in the registration statement; and
                  (iii)  Include any  material  information  with respect to the
         plan of  distribution  not  previously  disclosed  in the  registration
         statement  or  any  material   change  to  such   information   in  the
         registration statement

         (2) That,  for the  purpose  of  determining  any  liability  under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering  therein,  and the  offering of such  securities  at that time shall be
deemed to be the initial bona fide offering thereof.

         (3) To remove from registration by means of a post-effective  amendment
any of the securities being registered which remain unsold at the termination of
the offering.

(B) Undertaking Required by Regulation S-B, Item 512(e).

         Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be  permitted  to  directors,  officers or  controlling  persons
pursuant to the foregoing  provisions,  or otherwise,  the  Registrant  has been
advised  that in the opinion of the  Securities  and  Exchange  Commission  such
indemnification  is against  public policy as expressed in the Securities Act of
1933  and  is,  therefore,   unenforceable.  In  the  event  that  a  claim  for
indemnification  against  such  liabilities  (other  than  the  payment  by  the
Registrant of expenses  incurred or paid by a director,  officer or  controlling
person of the  Registrant  in the  successful  defense  of any  action,  suit or
proceeding)  is  asserted by such  director,  officer or  controlling  person in
connection with the securities being registered,  the Registrant will, unless in
the  opinion of its  counsel  that the matter  has been  settled by  controlling
precedent,  submit to a court of appropriate  jurisdiction  the question whether
such  indemnification  by it is  against  public  policy  as  expressed  in  the
Securities  Act of 1933 and will be governed by the final  adjudication  of such
issue.


                                       54


                                   SIGNATURES

         Pursuant  to the  requirements  of the  Securities  Act  of  1933,  the
registrant  has duly  caused  this  registration  statement  to be signed on its
behalf by the  undersigned,  thereunto duly  authorized,  in the Village of Lake
Grove, State of New York, on the 20th day of December, 2001.



                                 FONECASH, INC.

                                 By: /s/ Daniel E. Charboneau
                                 -----------------------------------------------
                                 Chief Executive Officer, President and Director



                                POWER OF ATTORNEY

The undersigned  directors and officers of Fonecash,  Inc. hereby constitute and
appoint Daniel E. Charboneau,  with full power to act without the other and with
full  power  of   substitution   and   re-substitution,   our  true  and  lawful
attorneys-in-fact  with  full  power to  execute  in our name and  behalf in the
capacities  indicated  below any and all  amendments  (including  post-effective
amendments  and amendments  thereto) to this  registration  statement  under the
Securities Act of 1933 and to file the same, with all exhibits thereto and other
documents in connection  therewith,  with the Securities and Exchange Commission
and  hereby  ratify  and  confirm  each  and  every  act  and  thing  that  such
attorneys-in-fact, or any them, or their substitutes, shall lawfully do or cause
to be done by virtue thereof.

Pursuant to the  requirements of the Securities Act of 1933,  this  registration
statement has been signed by the following  persons in the capacities and on the
dates indicated.

Signature                           Title                            Date
------------                         -----                           ----
/s/ Daniel E. Charboneau   President and Director             December 17, 2001
------------------------

/s/ Michael  Wong          Chief Financial Officer,           December 17, 2001
------------------------   Director
Michael  Wong

/s/ David  Cheung          V.P. and Director                  December 17, 2001
------------------------
David  Cheung

/s/ Daniel S. MacDonald    Director                           December 17, 2001
------------------------
Daniel S. MacDonald

/s/ John Jiann-Shong Wu    Director                           December 17, 2001
------------------------
John Jiann-Shong Wu



                                       55