Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No __
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X ] No [_]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes __ No X
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 4,429,704 common shares issued and outstanding as of November 18, 2012.
On November 19, 2012, Registrant filed a Form 10Q for the nine months ended September 30, 2012 (the “9/30/12 10Q Report”). The 9/30/12 10Q Report was not “Reviewed” by our accountant and such information should have been disclosed on the Financials Statements filed as part of the 9/30/12 10Q Report. Subsequently, the 9/30/12 10Q Report has been reviewed by Registrant’s new public accounting firm and no changes or amendments were made to the 9/30/12 10Q Report as a result of the Review.
For the quarter ended September 30, 2012
ITEM 1. FINANCIAL STATEMENTS
(A Development Stage Company)
Notes to the Financial Statements
September 30, 2012
NOTE 1 - ORGANIZATION AND PLAN OF OPERATIONS
SaaSMAX, Inc. (“SaaSMAX” or the “Company”) was incorporated on January 19, 2011 under the laws of the State of Nevada with its principal place of business in San Diego, California. SaaSMAX is a development stage company that is developing and launching an online global business-to-business marketplace for software-as-a-service (“SaaS”) providers, resellers and users, with the goal to improve the sales value chain in this rapidly growing sector.
The Company’s mission is to become a channel program for SaaS, by facilitating, improving and increasing the Sales Value Chain for SaaS Applications (“SaaS Apps”). Our plan is to develop and launch the SaaSMAX Marketplace, which is intended to be a "B2B" or business to business solution to be implemented between SaaS Independent Software Vendors (“ISVs”) and SaaS Solution Providers, that enables SaaS App Vendors to market, promote and manage the sales and distribution of their SaaS App to participants in the Sales Value Chain and to business users around the world. The SaaSMAX Marketplace also provides easy-to-use tools for SaaS Resellers and Solution Providers to, among other things, thoroughly research each listed SaaS App, including online demos, technical specifications, ratings, support, pricing, and commission plans. The SaaSMAX Marketplace also provides a Solution Provider Directory which contains the business profiles of Solution Providers, which will enable businesses to network with Solution Providers, and will enable Solution Providers to generate new business leads.
Presently in Beta, the Company is entering into agreements with ISVs in which the ISV agrees to compensate SaaSMAX for every purchase transaction that is initiated through the SaaSMAX Online Marketplace or a private labeled version thereof. The Company is responsible for monitoring, aggregating and reporting total transaction volumes completed between its member Solution Providers and the ISVs, as well as the commissions earned by the Solution Providers.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
The accompanying unaudited financial statements of SaaSMAX have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and applicable regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of financial position and results of operations have been included. Our operating results for the nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. The accompanying unaudited financial statements should be read in conjunction with our audited financial statements for the period ended December 31, 2011, which are included in our Annual Report on Form 10-K, and the risk factors contained therein.
No assurance can be given that a large market for the SaaSMAX product will develop, or that a critical mass of customers will be willing to pay for the SaaSMAX product. Since inception, proceeds of $340,100 were received from the sale of 1,329,691 shares of common stock, of which $140,000 was received from the sale of 329,191 shares of common stock during the nine months ended September 30, 2012. Our business plan estimates that we will need to raise additional capital to fund our operations during the remainder of 2012 and there can be no assurance that we will be able to raise any or all of the capital required. We have generated minimal revenues since our inception, have incurred a net loss of $319,029 during the nine months ended September 30, 2012, have net cash used in operating activities of $190,783 for the nine months ended September 30, 2012 and have an accumulated deficit of $501,050 at September 30, 2012. Accordingly, we will have to obtain additional funding from the sale of our securities or from strategic transactions in order to fund our current level of operations and there can be no assurance that we will be able to raise any or all of the capital required. If the Company is unable to generate sufficient cash flow from operations and/or continue to obtain financing to meet its working capital requirements, it may have to curtail its business sharply or cease business altogether.
Development Stage Company
The Company complies with the Accounting Standards Codification No. 915 “Development Stage Entities” and Securities and Exchange Commission Act Guide 7 for its characterization of the Company as development stage.
Recent Accounting Pronouncements
Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements.
NOTE 3 – STOCKHOLDERS’ EQUITY
Pursuant to a Private Placement Memorandum (the “Private Offering”) dated April 5, 2012, the Company offered for sale 818,816 units (“Units”) at a purchase price of $1.84 per Unit. Each Unit consists of: i) two shares of common stock, and ii) one redeemable warrant (the “Warrant[s]”) entitling the holder to purchase one share of common stock (the “Warrant Shares”), at an exercise price of $1.84, for a period of 24 months. The terms of the Warrants provide that the Company may redeem some or all of the Warrants at any time provided: (a) the Company files a registration statement with the SEC to register the Warrant Shares; (b) the registration statement is declared “effective’ by the SEC; and (c) the Company gives Notice of Redemption to the Warrant holders 30 days prior to the date of the Redemption Date, which the Company may do at any time after the average closing bid price for the shares of common stock on the principal market on which the shares of common stock may be traded, for any 20 consecutive trading days, has equaled or exceeded $2.76 per share. The Private Offering was terminated on May 10, 2012. The Company had sold 21,739 Units resulting in proceeds of $40,000.
On April 5, 2012, the Company entered into a securities purchase agreement with a single accredited investor for the sale of 71,428 shares of common stock at $0.35 per share, resulting in total proceeds of $25,000. The Company concurrently entered into a registration rights agreement with the investor providing piggy-back registration rights to the investor should the Company propose to register any of its securities under the Securities Act of 1933 in connection with the public offering of such securities solely for cash (other than a registration on Form S-4, Form S-8, or any successor or similar forms).
During January 2012, the Company entered into a stock purchase agreement with a shareholder in which the Company received proceeds totaling $75,000 for the issuance of 214,286 shares of common stock ($0.35 per share). The stock purchase agreement includes an anti-dilution clause whereby should the Company sell additional shares of common stock and receive a minimum of $500,000 (a “First Funding”) then said shareholder shall have the right to purchase an amount of shares of common stock of the Company, up to a maximum amount of common shares of the Company that would maintain the shareholder’s 4.97% ownership at a price of $0.35 per share, or the purchase price paid by the purchasers of the First Funding. After a First Funding, should the Company sell additional shares of its common stock and receive a minimum of $500,000, (a “Subsequent Funding”) said shareholder shall have the right to purchase an amount of common shares of the Company up to the shareholder’s then percentage ownership at the price equal to the price that the Company sold its common shares in the Subsequent Funding. The foregoing shares were issued in reliance upon an exemption from the registration requirements pursuant to Section 4(2) of the Securities Act of 1933, as amended.
NOTE 4 –CONVERTIBLE PROMISSORY NOTES
On July 1, August 15, and September 26, 2012, the Company entered into three separate Convertible Promissory notes in the principal amounts of $25,000, $25,000 and $25,000, respectively (the “Convertible Note(s)”) with a shareholder of the Company (the “Holder”). The Convertible Notes bear interest at 8% per annum and are due in full one year following the date entered into. The Holder of the Convertible Notes may at any time prior to the Maturity Date, convert the principal amount of the Convertible Notes into shares of common stock of the Company on the basis of one share of such stock for each $0.35 (the “Conversion Price”) in unpaid principal and accrued interest. The Company may at any time compel the conversion of the Convertible Note or any such portion into shares of common stock at the Conversion Price. The Conversion Price will be reduced upon the issuance of additional shares of commons stock, options or convertible securities (the “Additional Shares of Common Stock”) with consideration per share less than the applicable Conversion Price in effect on the date of, and immediately prior to the Additional Shares of Common Stock.
The intrinsic value of the embedded beneficial conversion feature of the Convertible Notes was determined to be $75,000. The intrinsic value of $75,000 was charged to the note discount and credited to Additional Paid in Capital. The note discount is amortized over the term of the Convertible Notes and charged to interest expense.
NOTE 5 –STOCK INCENTIVE PLAN
As of September 30, 2012, we have granted options to purchase a total of 324,005 shares of common stock under the 2011 Stock Incentive Plan (the “Plan”). The options were granted to advisors and consultants for services rendered at a price equal to the fair market value of the common stock at the time services were rendered.
The Company recognizes option expense ratably over the vesting periods. For the three and nine months ended September 30, 2012, the Company recorded compensation expense related to options granted under the Plan of approximately $81,000 and $111,000, respectively.
The fair value of option grants was estimated using the Black-Scholes option pricing model with the following assumptions:
Nine Months Ended
September 30, 2012
Expected dividend yield 0.00
Risk-free interest rate 0.69%
Expected volatility 100.00%
Expected life (in years) 3
Stock option activity under the Plan for the nine months ended September 30, 2012 is summarized as follows:
As of September 30, 2012, there was $1,158 of unrecognized compensation cost related to unvested stock options. The Company intends to issue new shares to satisfy share option exercises.
NOTE 6 – CONTINGENCIES
From time to time, we may be involved in routine legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate amount of liability, if any, for any claims of any type (either alone or in the aggregate) may materially and adversely affect our financial condition, results of operations and liquidity. In addition, the ultimate outcome of any litigation is uncertain. Any outcome, whether favorable or unfavorable, may materially and adversely affect us due to legal costs and expenses, diversion of management attention and other factors. We expense legal costs in the period incurred. We cannot assure you that additional contingencies of a legal nature or contingencies having legal aspects will not be asserted against us in the future, and these matters could relate to prior, current or future transactions or events. Except as described below, we are not currently a party to any material litigation.
The Company’s former chief technical consultant has made a claim against the Company, asserting claims to an unspecified amount of shares of the Company’s common stock. Prior to making the claim, the consultant made unauthorized deletions of software code thereby causing the Company to engage new consultants to reconfigure the Company’s software. We are currently assessing the amount of financial damage that the consultant’s acts have caused and intends to pursue its own claims against the consultant, including but not limited to claims for Conversion, Intentional Interference with Contract and Prospective Business Advantage, Breach of Fiduciary Duty, Negligence, Incompetence, Failure to Disclose Conflicts of Interest and Self-Dealing, Fraud, Deceit, and violation of the Computer Fraud Act. The Company believes that the consultant’s claims have no merit, and that it will be successful on its own claims.
NOTE 7 – SUBSEQUENT EVENTS
On October 1, 2012, the Company granted 73,900 options (valued at $41,983) to various consultants with exercise prices of $0.92 per option. Included with the options granted are 15,000 options (valued at $8,522) that were issued to Stanley Moskowitz, the father of the Company’s CEO, for legal services. All options granted vested immediately.
On October 26, 2012, the Company entered into a fourth convertible promissory note for $25,000 with the Holder of the Convertible Notes under the same terms as described in Note 4.
This Quarterly Report on Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 of Part I of this report include forward-looking statements. These forward looking statements are based on our management’s current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "proposed," "intended," or "continue" or the negative of these terms or other comparable terminology. You should read statements that contain these words carefully, because they discuss our expectations about our future operating results or our future financial condition or state other "forward-looking" information. Many factors could cause our actual results to differ materially from those projected in these forward-looking statements, including but not limited to: variability of our revenues and financial performance; risks associated with product development and technological changes; the acceptance our products in the marketplace by existing and potential future customers; general economic conditions. You should be aware that the occurrence of any of the events described in this Quarterly Report could substantially harm our business, results of operations and financial condition, and that upon the occurrence of any of these events, the trading price of our securities could decline. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, growth rates, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this Quarterly Report to conform these statements to actual results.
SaaSMAX, Inc. is a Nevada Corporation incorporated January 19, 2011, with its principal place of business in San Diego, California. SaaSMAX is a development stage company that is developing and launching an online business-to-business marketplace (the "SaaSMAX Marketplace") and channel management tools for the rapidly growing software-as-a-service ("SaaS") market.
Software-as-a-Service, sometimes referred to as "on-demand software," is a software delivery model in which software is delivered over the Internet through a web browser. With SaaS Applications ("SaaS Apps"), software and data is hosted on virtual servers (often referred to as "cloud-based" or "cloud computing"). Cloud computing fundamentally changes the way business software applications are developed and deployed. SaaS App developers no longer need to create and manage their own infrastructure of servers, storage, network devices, operating system software and development tools in order to create a business application. Instead, the entire software infrastructure is managed by third parties who specialize in infrastructure management, and developers use a remote management connection/console to access the development environment. SaaS App users can gain access to a multitude of business applications via an Internet browser or mobile device, and are able to take advantage of a robust, secure, scalable and highly available application at a relatively low cost, without the cost and complexity of managing the application.
While practically every Internet service (such as a Web search engine or web-based Email) is driven by some underlying software, the terms "SaaS" or "SaaS Apps" are often used in the context of business software. Independent Software Vendors ("ISVs" or "App Vendors") of SaaS Apps or traditional software applications develop and sell software apps that run on one or more operating system platforms. The companies that make the operating platforms encourage and lend support to ISVs, often with special "business partner" programs. Some ISVs focus on a particular operating platform like Apple iPhones’ iOS for which there are tens of thousands of ISV applications. Other ISVs specialize in a particular application area, such as customer relationship management or business intelligence, for example, and integrate with multiple platforms.
The Company intends to become a sales distribution channel for SaaS, by offering a Marketplace for SaaS Apps and by facilitating, improving and increasing the Sales Value Chain for SaaS ISVs. The "Sales Value Chain" refers to the value-adding activities and the participants that are involved in selling a software product to an end-user. For example, a software application is typically developed and sold by an ISV. That ISV may offer to sell licenses for its software application directly to an end user, or it may contract with a wholesaler, distributor or retailer (collectively referred to herein as "Reseller") which then markets and resells that software application to end users. Moreover, when software applications require customization or user training before they are employed by the end user, ISV's will seek to partner with independent VARs, service providers, solution providers, systems integrators or other types of consultants (collectively referred to herein as "Solution Providers") who will provide those services to the end users.
With SaaS Apps, there is no physical delivery of a software product. Instead, a SaaS App is available and ready-to-use when it is accessed on-line. As a result of this non-physical, direct-to-end-customer deployment method, there is no product that can be accounted for physically. This may lead to a situation where a Solution Provider in the Sales Value Chain is ignored during a sales transaction and, in such a case, may not be compensated by the SaaS App Vendor for referring the end-user.
In traditional software sales, the Solution Provider usually has a pre-existing relationship with the end-user and is therefore the trusted advisor to the end-user for most software purchases. For SaaS App Vendors, we believe that the Sales Value Chain must also incorporate the Solution Providers for software purchases. We believe that when completed and implemented, the SaaSMAX Marketplace will provide SaaS App Vendors with the tools to track sales and manage reseller programs for each Solution Provider interested in their SaaS App.
Our SaaSMAX Marketplace is intended to be a "B2B" or "business to business" solution to be implemented between SaaS App Vendors and SaaS Solution Providers, which will enable SaaS App Vendors to market, promote and manage the sales and distribution of their SaaS App to participants in the Sales Value Chain and to business users around the world.
SaaSMAX management believes that the SaaSMAX Marketplace will:
In late 2011 the SaaSMAX Marketplace entered into its beta test-phase ("SaaSMAX Beta,"). During the Beta phase, our primary focus has been and will continue to be to recruit several dozen SaaS Apps Vendors and several dozen Solution Providers to use our service. During SaaSMAX Beta we have been and will continue to: i) study the use of our service; ii) adjust the business pricing model; iii) add features and functionality; iv) plan and prepare marketing campaigns; v) adjust our standard service agreement to meet the expressed needs and wants of participating SaaS App Vendors and Solution Providers. Once management is satisfied with the results of SaaSMAX Beta, we will commercially launch SaaSMAX. We intend to continually develop new features and functionality for the SaaSMAX Marketplace into the foreseeable future, and have identified several additional potential product opportunities that stem from what we have learned to date.
Results of Operations
The following discussion should be read in conjunction with our interim consolidated financial statements and the related notes that appear elsewhere in this Quarterly Report.
Revenues and Cost of Goods Sold
During the three months ended September 30, 2012 SaaSMAX began recognizing minimal revenues and corresponding cost of goods sold resulting from marketing services provided to App Vendors as well as management fees earned from App Vendors through SaaSMAX Solution Providers. We are still a development stage company and do not expect to begin generating substantial revenues until 2013.
Salaries and Professional Fees
Salaries and professional fees for the three months and nine months ended September 30, 2012 increased approximately 530% and 532%, respectively when compared to the previous periods in 2011. The increases are primarily attributable to the marketing of the SaaSMAX Marketplace as well as business development services. As the development of the SaaSMAX Marketplace was substantially completed in October 2011, the Company has begun focusing its attention on the marketing and promotion of the product. Such costs totaled approximately $78,000 and $150,000 during the three and nine months ended September 30, 2012, respectively. Additionally, during February 2012, the Company’s Chief Executive Officer, Dina Moskowitz, began receiving a salary for her services thus increasing the amounts expensed for salaries and professional fees when comparing the 2012 period to 2011.
Salaries and professional fees for the period from January 19, 2011 (inception) through September 30, 2012 totaled approximately $314,000 and consisted primarily of marketing, business development costs and management salaries discussed above, as well as, legal and accounting fees incurred as a result of the Registration Statement on Form S-1 initially filed with the SEC during May 2011. The registration statement was declared effective on October 14, 2011 and accordingly, costs incurred for legal and accounting fees are expected to decrease, however, as a result of the filing requirements necessary as a public company, such costs are expected to continue being a significant part of our operating expenses.
Research and Development
Research and development costs have decreased 29% and 62% during the three and nine months ended September 30, 2012 in comparison to the 2011 periods. Such costs in 2011 related to the development of the SaaSMAX Marketplace. Once technological feasibility of the product was established in October 2011, we began capitalizing the majority of the costs related to the continued development of the product that are expected to be recovered against future revenues. Costs incurred in 2012 relate to research and development of improved functions within the SaaSMAX Marketplace. The Company expects to continue to incur expenses related to research and product development as it improves and expands the SaaSMAX Marketplace.
Research and Development costs for the period from January 19, 2011 (inception) through September 30, 2012 totaled approximately $91,000 and related primarily to the development of the SaaSMAX Marketplace.
General and Administrative Expenses
General and administrative expenses for the three and nine months ended September 30, 2012 increased 69% and 144%, respectively when compared to the previous periods in 2011. The increases primarily result from costs incurred to become DTC eligible during 2012, as well as, increases in depreciation and travel and entertainment.
General and administrative expenses for the period from January 19, 2011 (inception) through September 30, 2012 totaled approximately $88,000. Such costs relate primarily to corporate costs associated with the Registration Statement on Form S-1 initially filed with the SEC during May 2011 as well as costs incurred to become DTC eligible during 2012 totaling approximately $22,000. Also included are costs related to travel, trade show, automotive, internet services and general office expenses.
Other expense for the three and nine months ended September 30, 2012 and the period from January 19, 2011 (inception) through September 30, 2012 totaled $10,537, respectively and related to primarily to the amortization of the debt discount on our convertible promissory notes.
During the three and nine months ended September 30, 2012 and the period from January 19, 2011 (inception) through September 30, 2012 the Company incurred a net loss of $153,521, $319,029 and $501,050, respectively, due to the operating expenses described above.
Capital Resources and Liquidity
As of September 30, 2012, we had $37,397 of cash and working capital deficit of approximately $13,000 compared to $33,158 of cash and working capital of approximately $23,000 as of December 31, 2011.
Net cash used in operating activities during the nine months ended September 30, 2012 and 2011 and the period from January 19, 2011 (inception) through September 30, 2012 totaled approximately $191,000, $114,000 and $337,000, respectively and is primarily attributable to the payment of development, legal, accounting, advertising, management salaries and corporate fees which are offset by stock based compensation expense.
Net cash used in investing activities during the nine months ended September 30, 2012 and 2011 and the period from January 19, 2011 (inception) through September 30, 2012 totaled approximately $20,000, $1,400 and $41,000, respectively and resulted from the purchase of capitalized software and the capitalization of the SaaSMAX marketplace upon reaching technological feasibility.
Net cash provided by financing activities during the nine months ended September 30, 2012 and 2011 and the period from January 19, 2011 (inception) through September 30, 2012 totaled $215,000, $200,100 and $415,100, respectively and resulted primarily from the Company's sale of common stock. Additionally, $75,000 was received throughout the third quarter of 2012 in the form of convertible promissory notes.
We currently rely on cash flows from financing activities to fund our capital expenditures and to support our working capital requirements. On July 1, August 15, September 26, and October 26, 2012 we entered into four separate Convertible Promissory Notes for $25,000 each (total of $100,000 (the “Convertible Note(s)”) with a shareholder of the Company (the “Holder”). The Convertible Notes bear interest at 8% per annum and are due and payable on the one year anniversary date of each Convertible Note. The Holder of the Convertible Notes may at any time prior to the Maturity Date, convert the principal amount of the Convertible Note into shares of common stock of the Company on the basis of one share of such stock for each $0.35 (the “Conversion Price”) in unpaid principal and accrued interest. The Company may at any time compel the conversion of the Convertible Note or any such portion into shares of common stock at the Conversion Price. The Conversion Price will be reduced upon the issuance of additional shares of commons stock, options or convertible securities (the “Additional Shares of Common Stock”) with consideration per share less than the applicable Conversion Price in effect on the date of, and immediately prior to the Additional Shares of Common Stock.
During January 2012 proceeds of $75,000 were received from the sale of 214,286 shares of common stock. On April 5, 2012, pursuant to a Private Placement Memorandum (the “Private Offering”), the Company offered for sale 818,816 units (“Units”) at a purchase price of $1.84 per Unit. Each Unit consists of: i) two shares of common stock, and ii) one redeemable warrant (the “Warrant[s]”) entitling the holder to purchase one share of common stock (the “Warrant Shares”), at an exercise price of $1.84, for a period of 24 months. The Private Offering was terminated on May 10, 2012. The Company had sold 21,739 Units pursuant to the Private Offering resulting in proceeds of $40,000. Additionally, on April 5, 2012, proceeds of $25,000 were received from the sale of 71,428 shares of common stock to an independent accredited investor at $0.35 per share. During 2011, proceeds of $200,100 were received from the sale of 1,000,500 shares of common stock.
We will need to secure additional financing in the future to continue to develop the product, attract customers, and start generating revenues. Our business plans estimate that we will need to raise additional capital to fund our operations during 2012 and there can be no assurance that we will be able to raise any or all of the capital. We began generating a nominal amount of revenue during the third quarter of 2012. However, there can be no assurance that we will be able to generate revenue sufficient to sustain or grow the operations. Please see the section entitled “Risk Factors” included in our Annual Report on Form 10-K for the period ended December 31, 2011.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
We do not believe our business and operations have been materially affected by inflation.
Critical Accounting Policies and Estimates
There are no material changes to the critical accounting policies and estimates described in the audited financial statements for the period ended December 31, 2011 included in our Annual Report on Form 10-K filed with the SEC.
As a “smaller reporting company”, we are not required to provide the information under this Item 3.
Evaluation of Disclosure Controls and Procedures
Based upon an evaluation of the effectiveness of our disclosure controls and procedures performed by our Chief Executive Officer as of the end of the period covered by this report, our Chief Executive Officer, concluded that our disclosure controls and procedures have not been effective as a result of a weakness in the design of internal control over financial reporting identified below.
We identified material weaknesses in our internal control over financial reporting primarily attributable to (i) lack of segregation of incompatible duties; and (ii) insufficient Board of Directors representation. These weaknesses are due to our inadequate staffing during the period covered by this report and our lack of working capital to hire additional staff. Management has retained an outside, independent financial consultant to record and review all financial data, as well as prepare our financial reports, in order to mitigate this weakness. Although management will periodically re-evaluate this situation, at this point it considers that the risk associated with such lack of segregation of duties and the potential benefits of adding employees to segregate such duties are not cost justified. We intend to hire additional accounting personnel to assist with financial reporting as soon as our finances will allow.
As used herein, “disclosure controls and procedures” mean controls and other procedures of our company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Controls Over Financial Reporting
There have been no changes in our internal controls over financial reporting that occurred during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
As a “smaller reporting company”, we are not required to provide disclosure under this Item 1A.
During the nine months ended September 30, 2012, the Company has entered into securities purchase agreements with four independent accredited investors for the sale of a total of 329,192 shares of common stock, resulting in total proceeds of $140,000. Proceeds of the sales are being used for the continued development of the SaaSMAX Marketplace. The foregoing shares were sold in reliance upon an exemption from the registration requirements pursuant to Section 4(2) of the Securities Act of 1933, as amended.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.