UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
Amendment No. 1
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. |
For the Quarterly Period Ended March 31,
2014
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission File Number: 333-182856
Engage Mobility, Inc.
(Exact name of registrant as specified in its
charter)
Florida |
|
45-4632256 |
(State or other jurisdiction of
incorporation or organization) |
|
(I.R.S. Employer
Identification No.) |
140 Walnut St.
Kansas City, MO 64106
(Address of principal
executive offices)(Zip Code)
(888) 888-3642
(Registrant’s telephone number, including
area code)
2295 S. Hiawassee Rd., Suite 414
Orlando, FL 32835
(Former name, former address and former fiscal
year, if changed since last report)
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 periods 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 o
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 o
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition
of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in rule 12b-2
of the Exchange Act.
Large accelerated filer |
o |
Accelerated filer |
o |
Non-accelerated filer |
o |
Smaller reporting company |
x |
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
As of October 14, 2014, the registrant
had 21,772,567 shares of its common stock outstanding.
EXPLANATORY NOTE
The purpose of this Amendment No. 1
(this “Amendment”) to the Quarterly Report of Engage Mobility, Inc. (the “Company”) on Form 10-Q for the
quarterly period ended March 31, 2014 (the “Form 10-Q”), filed with the Securities and Exchange Commission on May
20, 2014 (the “Original Filing Date”), is to make certain changes to the disclosures in the financial statements set
forth therein. The Company determined that $450,000 previously recognized as revenue should have been recorded as a
liability. The adjustment to correct this resulted in the recording of a liability $450,000 at March 31, 2014, and a reduction
of revenue and increase in the net loss for the nine months ended March 31, 2014, of $450,000.
This Amendment speaks as of the Original
Filing Date, does not reflect events that may have occurred subsequent to the Original Filing Date, and does not modify or update
in any way disclosures made in the Form 10-Q. No other changes have been made to the Form 10-Q.
Pursuant to Rule 12b-15 under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), the certifications required pursuant to the rules promulgated under the
Exchange Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, which were included as exhibits to the Form
10-Q, have been amended, restated and re-executed as of the date of this Amendment No. 1 and are included as Exhibits 31.1 and
32.1 hereto.
TABLE OF CONTENTS
|
|
Page |
Item 1. |
Financial Statements |
3 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
11 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
14 |
Item 4. |
Controls and Procedures |
14 |
|
|
|
PART II-- OTHER INFORMATION |
|
|
|
|
Item 1. |
Legal Proceedings |
15 |
Item 1A. |
Risk Factors |
15 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
15 |
Item 3. |
Defaults Upon Senior Securities |
15 |
Item 4. |
Mine Safety Disclosures |
15 |
Item 5. |
Other Information |
16 |
Item 6. |
Exhibits |
16 |
|
|
|
SIGNATURES |
17 |
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
ENGAGE MOBILITY, INC.
BALANCE SHEETS
As of March 31, 2014, and June 30, 2013
| |
March 31, | | |
June 30, | |
| |
2014 | | |
2013 | |
| |
(Unaudited) | | |
| |
ASSETS | |
(RESTATED) | |
| | |
| |
| | | |
| | |
CURRENT ASSETS | |
| | | |
| | |
Cash | |
$ | 108,478 | | |
$ | - | |
Accounts receivable | |
| 9,535 | | |
| 8,500 | |
Prepaid
expenses | |
| 43,909 | | |
| - | |
Total
Current Assets | |
| 161,922 | | |
| 8,500 | |
| |
| | | |
| | |
PROPERTY
AND EQUIPMENT, net | |
| 7,459 | | |
| 2,958 | |
| |
| | | |
| | |
OTHER ASSETS | |
| | | |
| | |
Intangible
asset, net | |
| 88,531 | | |
| 24,000 | |
| |
| | | |
| | |
TOTAL
ASSETS | |
$ | 257,912 | | |
$ | 35,458 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) | |
| | | |
| | |
| |
| | | |
| | |
CURRENT LIABILITIES | |
| | | |
| | |
A ccounts payable and accrued
expenses | |
$ | 67,014 | | |
$ | 21,940 | |
O THER
CURRENT LIABILITIES | |
| 450,000 | | |
| - | |
Due
to bank | |
| - | | |
| 14,282 | |
Total
Current Liabilities | |
$ | 517,014 | | |
| 36,222 | |
| |
| | | |
| | |
LONG TERM LIABILITIES | |
| | | |
| | |
Convertible notes payable | |
| 1,638 | | |
| - | |
Notes
payable | |
| 320,000 | | |
| 280,000 | |
| |
| | | |
| | |
STOCKHOLDERS' EQUITY (DEFICIT) | |
| | | |
| | |
| |
| | | |
| | |
Common Stock - No Par Value; | |
| | | |
| | |
Authorized: 100,000,000 | |
| | | |
| | |
Issued and Outstanding:
21,447,247 and 20,126,500 | |
| 1,622,125 | | |
| 166,500 | |
Paid in capital | |
| 2,826,033 | | |
| 4,000 | |
Deferred Compensation | |
| (41,669 | ) | |
| - | |
Accumulated
deficit | |
| (4,987,229 | ) | |
| (451,264 | ) |
Total
stockholders' equity (deficit) | |
| (580,740 | ) | |
| (280,764 | ) |
| |
| | | |
| | |
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |
$ | 257,912 | | |
$ | 35,458 | |
The accompanying
notes are an integral part of these financial statements.
ENGAGE MOBILITY,
INC.
UNAUDITED
STATEMENTS OF OPERATIONS
Three Months
and Nine Months Ended March 31, 2014 and 2013
| |
Three Months | | |
Three Months | | |
Nine Months | | |
Nine Months | |
| |
Ended | | |
Ended | | |
Ended | | |
Ended | |
| |
March 31, | | |
March 31, | | |
March 31, | | |
March 31, | |
| |
2014 | | |
2013 | | |
2014 | | |
2013 | |
| |
(RESTATED) | | |
| | | |
(RESTATED) | | |
| | |
REVENUE | |
$ | 10,135 | | |
$ | 6,245 | | |
$ | 76,790 | | |
$ | 10,234 | |
| |
| | | |
| | | |
| | | |
| | |
OPERATING EXPENSES: | |
| | | |
| | | |
| | | |
| | |
COSTS
REALTED TO REVENUE | |
| - | | |
| 5,000 | | |
| 13,100 | | |
| 9,176 | |
GENERAL
AND ADMINISTRATIVE EXPENSES | |
| 2,627,071 | | |
| 99,570 | | |
| 3,570,005 | | |
| 216,739 | |
| |
| | | |
| | | |
| | | |
| | |
TOTAL
OPERATING EXPENSES | |
| 2,627,071 | | |
| 104,570 | | |
| 3,583,105 | | |
| 225,915 | |
| |
| | | |
| | | |
| | | |
| | |
OPERATING LOSS | |
| (2,616,936 | ) | |
| (98,325 | ) | |
| (3,506,315 | ) | |
| (215,681 | ) |
| |
| | | |
| | | |
| | | |
| | |
INTEREST
EXPENSE | |
| 891,139 | | |
| 3,755 | | |
| 1,029,650 | | |
| 5,249 | |
| |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
LOSS BEFORE INCOME TAXES | |
| (3,508,075 | ) | |
| (102,080 | ) | |
| (4,535,965 | ) | |
| (220,930 | ) |
| |
| | | |
| | | |
| | | |
| | |
INCOME
TAXES | |
| - | | |
| - | | |
| - | | |
| - | |
| |
| | | |
| | | |
| | | |
| | |
NET
LOSS | |
$ | (3,508,075 | ) | |
$ | (102,080 | ) | |
$ | (4,535,965 | ) | |
$ | (220,930 | ) |
| |
| | | |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | | |
| | |
Net
Loss Per Common Share, basic & diluted | |
$ | (0.17 | ) | |
$ | (0.01 | ) | |
$ | (0.22 | ) | |
$ | (0.01 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted Average
Common Shares Outstanding, basic & diluted | |
| 21,103,042 | | |
| 20,126,500 | | |
| 20,525,017 | | |
| 20,040,000 | |
The accompanying
notes are an integral part of these financial statements.
ENGAGE
MOBILITY, INC.
UNAUDITED
STATEMENTS OF CASH FLOWS
Nine Months
Ended March 31, 2014 and 2013
| |
Nine Months | | |
Nine Months | |
| |
Ended | | |
Ended | |
| |
March 31, | | |
March 31, | |
| |
2014 | | |
2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |
(RESTATED) | | |
| |
| |
| | |
| |
Net
cash (used in) operating activities | |
$ | (829,464 | ) | |
$ | (206,233 | ) |
| |
| | | |
| | |
CASH
FLOWS FROM INVESTING ACTIVITIES | |
| | | |
| | |
| |
| | | |
| | |
Acquisition of intangible | |
| (50,000 | ) | |
| (24,000 | ) |
Purchase
of property and equipment | |
| (9,911 | ) | |
| - | |
Net
cash (used in) investing activities | |
| (59,911 | ) | |
| (24,000 | ) |
| |
| | | |
| | |
CASH
FLOWS FROM FINANCING ACTIVITIES | |
| | | |
| | |
| |
| | | |
| | |
Due to bank | |
| (14,282 | ) | |
| - | |
Notes payable | |
| 375,000 | | |
| 165,000 | |
Repayment of notes payable | |
| (85,000 | ) | |
| - | |
Common
shares issued for cash, net | |
| 722,135 | | |
| - | |
| |
| | | |
| | |
Net
cash provided by financing activities | |
| 997,853 | | |
| 165,000 | |
| |
| | | |
| | |
Net increase (decrease)
in cash | |
| 108,478 | | |
| (65,233 | ) |
Cash
- beginning balance | |
| - | | |
| 153,591 | |
| |
| | | |
| | |
CASH
ENDING BALANCE | |
$ | 108,478 | | |
$ | 88,358 | |
| |
| | | |
| | |
Cash paid for: | |
| | | |
| | |
Interest | |
$ | - | | |
$ | - | |
Income
taxes | |
$ | - | | |
$ | - | |
The accompanying
notes are an integral part of these financial statements.
ENGAGE MOBIITY,
INC.
NOTES TO FINANCIAL
STATEMENTS
March 31, 2014
NOTE 1
NATURE OF OPERATIONS |
Engage Mobility,
Inc. (the “Company”), was incorporated on December 28, 2011 under the laws of the State of Florida as MarketKast
Incorporated. On March 22, 2013, the Company changed its name to Engage Mobility, Inc.
Prior to the
quarter ended December 31, 2013, the Company was a development stage company. During the quarter ended December 31, 2013, the
Company commenced its principal planned operations and emerged from the development stage. The Company functions as a provider
of mobile technology, marketing and data solutions for business.
The Company
has adopted its fiscal year end to be June 30.
The accompanying
unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles (GAAP)
for interim financial information and Rule 8.03 of Regulation S-X. They do not include all of the information and footnotes required
by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring
adjustments) considered necessary for a fair presentation have been included.
The results
of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. For
further information, refer to the financial statements of the Company as of June 30, 2013, and for the period from inception through
June 30, 2013, including notes thereto included in our Form 10-K.
NOTE 2
SUMMARY OF ACCOUNTING POLICIES |
Basis of Presentation
The Company’s
financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America
(“U.S. GAAP”).
Cash Equivalents
The Company
considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
Bank overdrafts are presented in the financial statements under the caption “Due to Bank”.
Use of Estimates
The preparation
of financial statements in conformity with accounting principles generally accepted in the United States requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements as well as the reported amount of revenues and expenses during the reporting
period. Actual results could differ from these estimates.
Revenue Recognition
In general,
the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery
has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following
reflects specific criteria for the various revenues streams of the Company:
Revenue is recognized
at the time the product is delivered or the service is performed. Where the Company has entered into a revenue sharing agreement
with a third party, the Company will record its’ proportionate share of the revenue.
Deferred revenue
is recorded for amounts received in advance of the time at which services are performed and included in revenue at the completion
of the related services.
Accounts Receivable
and Allowance for Doubtful Accounts
Accounts receivable
are reported at their outstanding unpaid principal balances reduced by an allowance for doubtful accounts, if any. The Company
estimates doubtful accounts based on historical bad debts, factors related to specific customers' ability to pay and current economic
trends. The Company writes off accounts receivable against the allowance when a balance is determined to be uncollectible.
Intangible Assets
and Long Lived Assets
The Company
reviews its long-lived assets and certain identifiable finite lived intangibles for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when estimated undiscounted
future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying amount.
During January
2013, the Company entered into a licensing and development agreement with a third party to develop and integrate a mobile communication
platform for a fee aggregating $73,000. The Company terminated its arrangement with this developer for which an aggregate of $48,000
had been paid and instead acquired a basic mobile platform from a third party at a cost of $50,000 which has been paid at March
31, 2014. The Company will use its internal development team to complete its own proprietary mobile platform. The new platform
will replace the original platform which will be phased out during 2014. Amortization for the old platform will commence
in 2014 for a ten month period at which time it will be fully amortized and amortization of the new platform will begin upon completion
of the platform.
Property and
Equipment
Depreciation
of office and production equipment is recognized by the straight-line method over the 5 year estimated useful lives of the related
assets.
Fair value of
financial instruments
The Company’s
short-term financial instruments consist of cash and cash equivalents, accounts receivable, and accounts payable and accrued expenses.
The carrying amounts of the financial instruments approximate fair value because of their short-term maturities. The
Company does not hold or issue financial instruments for trading purposes nor does it hold or issue interest rate or leveraged
derivative financial instruments. The carrying value of the Company’s long-term debt approximates fair value based on the
terms and conditions at which the Company could obtain similar financing.
Income Taxes
Deferred tax
assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and
liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled.
Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence
suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation
allowance is recognized to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes
in such valuation allowance are included in the provision for deferred income taxes in the period of change.
All tax periods
from inception remain open to examination by taxing authorities.
Stock-Based
Compensation
The Company
records the cost resulting from all share-based transactions in the financial statements. The Company applies a
fair-value-based measurement in accounting for share-based payment transactions with employees and when the company acquires
goods or services from non-employees in share-based payment transactions.
Net Income (Loss)
Per Common Share
Basic earnings
(loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the
period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common
shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses, common stock equivalents,
if any, are not considered, as their effect would be anti dilutive.
Recent Pronouncements
The Company
does not believe that any recently issued accounting pronouncements will have a material impact on its financial statements.
The accompanying
financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity
of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected
in the accompanying financial statements, the Company had an accumulated deficit of $4,987,229 at March 31, 2014, and has incurred
losses for all periods presented. These conditions raise substantial doubt about the Company’s ability to continue as a
going concern.
The Company’s
cash position and operations may not be sufficient to support the Company’s daily operations without significant financing. The
Company believes in the viability of its strategy to produce sales volume and in its ability to raise additional funds; however
there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon
the Company’s ability to further implement its business plan and generate sufficient revenues. The financial
statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management
believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity
for the Company to continue as a going concern.
As of June 30,
2013, the Company had borrowed an aggregate of $280,000 pursuant to non-convertible promissory notes, bearing interest at 10%
per annum. Interest is payable monthly and the principal, together with any unpaid interest, is due 48 months from
the dates of the notes. During the nine month period ended March 31, 2014, the Company borrowed an additional $125,000
pursuant to non-convertible promissory notes with similar terms. In addition, the Company repaid $85,000 of the previously issued
notes.
The notes are
due as follows:
Year ending June 30, 2017 |
|
$ |
320,000 |
|
|
$ |
280,000 |
|
NOTE 5 CONVERTIBLE NOTES
PAYABLE |
During the six
month period ended December 31, 2013, the Company issued $250,000 of 10% convertible promissory notes to certain private investors.
The convertible notes mature after three years, at which time all outstanding principal and accrued interest is due. The
notes are convertible at any time by the investors into the Company's current registered offering (see Note 6) with $200,000 being
convertible into the offering at a 20% discount to the offering price of $1.60 per share, or $1.28 per share, and $50,000 being
convertible at a 50% discount to the offering price, or $0.80 per share. In addition to the interest due, the Company has agreed
to issue 125,000 warrants to the lenders at an exercise price of 125% of the share price of the proposed offering or $2.00 per
share. These convertible notes are secured by all of the Company’s assets.
The warrants
are exercisable at $2.00 per share and expire after three years. The aggregate fair value of the warrants was estimated at $157,584,
using a binomial option pricing model and the following assumptions:
Volatility 154%
- Dividend rate 0% - Interest rate 0.77% - Term 3 years
In addition,
the Company recognized a beneficial conversion feature related to the convertible notes of $90,444, which was credited to additional
paid-in capital. Interest on the notes is being recognized using the effective yield method over the three year life
of the notes.
During February
2014 the holder of the $200,000 convertible note agreed to convert the note into 200,000 shares of the Company’s common
stock (see Note 6). This note holder also agreed to purchase an additional 100,000 shares of the Company’s common stock
for $100,000 in cash. The Company granted the note holder an option to purchase 200,000 common shares at $1.50 per share and 200,000
shares at $2.00 per share for a three year period.
Convertible
notes payable consist of the following at March 31, 2014:
Notes payable | |
$ | 50,000 | |
Beneficial conversion feature
and unamortized warrants | |
| (48,362 | ) |
| |
$ | 1,638 | |
Charges to operations
related to the warrants and beneficial conversion feature during the period ended March 31, 2014, were $42,082.
NOTE 6
STOCKHOLDERS’ EQUITY (DEFICIT) |
Common stock
The Company
is authorized to issue 100,000,000 shares of no par value Common Stock. At March 31, 2014, 21,447,247 shares were issued
and outstanding.
During the period
ended March 31, 2014, the Company issued common shares as follows:
The Company
issued 1,030,650 shares of common stock for $775,605 of which $722,135 has been received and $53,470 has been recorded as a receivable
for common stock. The $53,470 has been recorded as a reduction in common stock.
The Company
issued 35,147 shares of common stock for services. These shares were valued at the trading price of the Company’s common
shares on the date it was agreed the shares would be issued of $100,490 which has been charged to operations during the period.
The Company
issued 200,000 shares of common stock for the conversion of a $200,000 note. The shares were valued at their trading price on
the conversion date of $533,000. The value of the shares in excess of the note of $333,000 has been charged to operations during
the period.
The Company
issued 54,950 common shares for services to be performed over a one year period, which were valued at their estimated fair value
of $100,000 based on the trading price of the Company’s common shares. The value of these shares has been recorded as deferred
compensation and is being amortized over the one year period during which the related services will be received. At March 31,
2014 $41,669 of deferred compensation remains to be amortized (see Note 7).
On July 31,
2013, the Company’s registration statement on Form S-1 became effective. The Company is offering for sale a maximum of 6,250,000
shares of its no par value common stock at a price of $1.60 per share. As of March 31, 2014, no shares had been sold pursuant
to the offering.
Stock options
Two employees
were granted an aggregate of 614,000 five year options (see Note 7) which vested immediately as to 114,000 options and as to 125,000
options per year over the next 4 years. The options are exercisable at $2.50 per share for 114,000 options, $3.00 per share for
125,000 options, $3.50 per share for 125,000 options, $3.75 for 125,000 options and $4.00 for 125,000 options. The aggregate grant
date fair value of the options was approximately $1,419,000, of which $339,376 has been charged to operations during the period
ended March 31, 2014. The balance of the fair value of the options will be charged to operations over the vesting period. The
options were valued using the Black-Scholes option pricing model with the following assumptions:
Volatility 154%
- Dividend rate 0% - Interest rate 1.36% - 1.66% - Term 5 years
In conjunction
with the conversion of the $200,000 note described above the Company issued an aggregate of 400,000 three year options exercisable
200,000 options at $1.50 per share and 200,000 options at $2.00 per share.
The aggregate
grant date fair value of the options was approximately $580,600 has been charged to operations during the period ended March 31,
2014. The options were valued using the Black-Scholes option pricing model with the following assumptions:
Volatility 108%
- Dividend rate 0% - Interest rate 0.86% - 1.66% - Term 3 years
The Company
issued 1,000,000 five year options exercisable at $1.00 per share for services.
The aggregate
grant date fair value of the options was approximately $1,654,000 has been charged to operations during the period ended March
31, 2014. The options were valued using the Black-Scholes option pricing model with the following assumptions:
Volatility 108%
- Dividend rate 0% - Interest rate 0.86% - 1.66% - Term 3 years
NOTE 7 COMMITMENTS
AND CONTINGENCIES
During the period
ended March 31, 2014, the Company entered into a consulting agreement for a one year period. The Company advanced $103,000 in
cash and issued 54,950 shares of common stock for these services, which shares were valued at their estimated fair value of $100,000.
The total consideration paid of $203,000 is being amortized over the one year period of the agreement commencing in September
2013. The unamortized balance of $85,577 is included in prepaid expenses for the cash payment ($43,908) and deferred compensation
for the share payment ($41,669).
During the period
ended March 31, 2014, the Company entered into employment contracts with two employees, with no set duration, for aggregate compensation
of $260,000 per year. The employees were granted an aggregate of 614,000 five year options which vested immediately as to 114,000
options and as to 125,000 options per year over the next 4 years. The options are exercisable at $2.50 per share for 114,000 options,
$3.00 per share for 125,000 options, $3.50 per share for 125,000 options, $3.75 for 125,000 options and $4.00 for 125,000 options
(see Note 6).
On March 12,
2014, the Company filed a lawsuit in Florida against IRTH Communications, LLC for breach of contract and fraud, seeking return
of $110,500 paid to IRTH and seeking cancellation of 54,950 shares of common stock issued to IRTH for services. The Company has
alleged that IRTH defrauded the Company in order to receive the money and shares, and did not perform the agreed services. This
case is still pending.
In response,
on March 19, 2014, IRTH filed a lawsuit in California against the Company arising out of the same contract and transactions, seeking
$73,000 in alleged damages for breach of contract and seeking the lifting of restrictions on said 54,950 shares. The Company has
filed a Motion to Dismiss this case based on the prior Florida action. This case is still pending.
NOTE 8 CORRECTION
OF AN ERROR
The Company has determined that $450,000 previously recognized
as revenue should have been recorded as a liability. The adjustment to correct this resulted the recording of a liability of $450,000
at March 31, 2014, and a reduction of revenue for the three and nine months ended March 31, 2014, of $150,000 and $450,000 and
an increase in the net loss for the three and nine months ended March 31, 2014, of $150,000 ($0.01 per share) and $450,000 ($0.02
per share).
Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operations
The following
is management’s discussion and analysis of the consolidated financial condition and results of operations of Engage Mobility,
Inc. (“Engage Mobility”, the “Company”, “we”, and “our”) for the three and nine
month period ended March 31, 2014 and 2013. The following information should be read in conjunction with the consolidated
interim financial statements for the period ended March 31, 2014 and notes thereto appearing elsewhere in this Quarterly Report
on Form 10-Q (this “Report”).
Overview
We were incorporated,
under the name MarketKast, Inc., under the laws of the State of Florida on December 28, 2011. On March 22, 2013, we filed Articles
of Amendment to our Articles of Incorporation (the “Amendment”) to change our name from “MarketKast, Incorporated”
to “Engage Mobility, Inc.” The Amendment was effective as of March 22, 2013. In connection with the name change, our
trading symbol was changed from “MRKK” to “ENGA,” effective April 4, 2013.
We function
as a provider of mobile technology, marketing and data solutions for business. Through the sale of our Mobile Engagement
System, we enable business owners to engage with new and existing customers with a turnkey mobile marketing solution. The Mobile
Engagement System integrates an augmented reality browser and content with our proprietary cloud based mobile video delivery system,
a mobile customer relationship manager and our Dynamic Data platform to create a full solution for business to market their products
in the mobile environment. The Mobile Engagement System is sold to businesses under a “user based” model – so
that the business pays us a monthly user fee based on the number of “engaged” users in their database at any given
time.
In addition
to this core product offering, we will offer to our clients additional products and services in order to assist in growing their
business, including mobile optimization of websites, as well as additional mobile marketing, customer acquisition services and
mobile data services.
Recent Developments
In September
2013, we completed initial development and launch of version 1.0 of our Mobile Engagement System. In conjunction therewith we
launched our Engage Mobility mobile application as a free download in the Apple iTunes® and Google Play® stores. We began
initial marketing and sales efforts for version 1.0 of the system to clients in September 2013.
In October,
2013 we entered into a Memorandum of Understanding with certain parties to develop and launch a Chinese version of our Mobile
Engagement System in China in 2014. In February, 2014 we entered into the final Joint Venture agreement and delivered the initial
platform to our partners in China in March 2014.
In April, 2014
we completed development of version 2.0 of our Mobile Engagement System, which was developed internally by our own development
team, and which includes our new product immersion , a street view augmented reality platform that allows users to locate
businesses in their geographical area who are on the Engage system. We have filed a provisional patent application seeking patent
protection for version 2.0 of our Mobile Engagement System.
In May 2014,
we commenced our marketing and sales efforts for our new Mobile Engagement System. We have only experienced nominal initial revenue,
and we do not expect to experience consistent revenue until fiscal 2015.
Plan of Operation
Until May 2014,
our efforts have been primarily limited to business formation, strategic development, marketing, website and product development,
negotiations with third party sales and channel partners, and capital raising activities. We have developed and begun to launch
our newest suite of products including version 2.0 of the Mobile Engagement System as of May 2014. We are in the process
of developing and implementing sales and marketing initiatives to sell our products. Although we have experienced some initial
revenue, mainly in the form of initial development fees, we do not expect to begin realizing consistent revenue until fiscal 2015.
As of March
31, 2014, we have taken the following steps to implement our business plan:
In September
2013, we completed initial development and launch of version 1.0 of our Mobile Engagement System. In conjunction therewith we
launched our Engage Mobility mobile application as a free download in the Apple iTunes® and Google Play® stores. We began
initial marketing and sales efforts for version 1.0 of the system to clients in September 2013.
In October,
2013 we entered into a Memorandum of Understanding with certain parties to develop and launch a Chinese version of our Mobile
Engagement System in China in 2014. In February, 2014 we entered into the final Joint Venture agreement and delivered the initial
platform to our partners in China in March 2014.
In April, 2014
we completed development of version 2.0 of our Mobile Engagement System, which was developed internally by our own development
team, and which includes our new product immersion , a street view augmented reality platform that allows users to locate
businesses in their geographical area who are on the Engage system. We have filed a provisional patent application seeking patent
protection for version 2.0 of our Mobile Engagement System.
In May 2014,
we commenced our marketing and sales efforts for our new Mobile Engagement System. We have only experienced nominal initial revenue,
and we do not expect to experience consistent revenue until fiscal 2015.
During the next
12 months, subject to availability of capital, we expect to:
Launch a full
roll out in the U.S. of our Mobile Engagement System. We expect to market the Mobile Engagement System through direct marketing
via the internet, through trade shows and seminars, through the hiring of both national and local sales personnel, through channel
partners, independent reps and telesales. Subject to availability of capital, we intend to implement all of these sales initiatives
during the 4th quarter of 2014 or the first quarter of 2015. This will involve hiring a national sales manager, a number of local
sales managers and local sales representatives, five to 15 telesales people, as well as associated staffs. The cost of marketing
our Mobile Engagement System is estimated to be between $30,000 and $250,000 per month, but will be scaled in if and when capital
is available.
We have a current
burn rate, as of March 31, 2014, of approximately $100,000 to $150,000 per month. It includes office rental expenses, payroll,
insurance, marketing, travel, telephone, internet and other office expenses, legal and accounting expenses and other miscellaneous
expenses including filing fees, transfer agent fees and other costs of being public.
Therefore, if
we do not experience any income or obtain additional financing, we could expect to run out of capital sometime between July 2014
and August 2014. For this reason, if we do not experience any income in the first half of fiscal 2015, we will need to raise additional
capital of between $100,000 and $150,000 per month, in order to continue our business. In addition, in order to fully
implement our business plan, we will need to raise an additional $1,000,000 to $5,000,000 of capital for the purpose of initiating
and ramping up marketing and sales efforts, hiring of sales personnel and for general working capital. This additional $1,000,000
to $5,000,000 of financing will need to be raised between May 2014 and August 2014 in order to effectively implement our business
plan. It is not necessary that we receive such a capital infusion at any one time; we could implement our plan through
the raising of at least $500,000 per quarter beginning May 2014. However, there is no assurance that we will be able to raise
any capital in the future, or that capital will be available on terms acceptable to us.
Results of
Operations
Comparison
of the three and nine months ended March 31, 2014 and 2013
Revenues
Since inception,
our activities have been primarily limited to business formation, strategic development, marketing, website and product development,
negotiations with third party sales and channel partners, and capital raising activities. During the three months ended March
31, 2014, we generated revenue of $10,135, as compared to $6,245 for the three months ended March 31, 2013. Our revenues
for the nine months ended March 31, 2014 were $76,790, compared to $10,234, for the nine months ended March 31, 2013. Our revenue
was derived primarily from development fees.
Operating
Expenses
During the three
months ended March 31, 2014, we incurred general and administrative expenses of $2,627,071, and during the three months ended
March 31, 2013, we incurred general and administrative expenses of $99,570. Our general and administrative expenses
for the nine months ended March 31, 2014 were $3,570,005, compared to $216,739, for the nine months ended March 31, 2013.These
operating expenses consist of rent, insurance, professional fees, travel, employee compensation and other miscellaneous
items. The increase in the periods resulted principally from stock based compensation and from increased operating expenses associated
with ramping up sales and marketing initiatives and hiring of our own internal development teams. During the three and nine months
ended March 31, 2014, the Company recorded stock based compensation charges of $1,852,748 and $2,152,201.
Interest
expense
Interest expense
was $891,139 and $1,029,650for the three and nine months ended March 31, 2014, as compared to $3,755 and $5,249 for the three
and nine months ended March 31, 2013. The primary causes of the increase were the amortization of warrants and the beneficial
conversion feature related to certain notes payable and an increase in outstanding debt.
Net Income
and Loss
We had net
loss of $3,508,075 for the three months ended March 31, 2014, compared to $102,080 for the three months ended March 31, 2013.
We had net loss of $4,535,965 for the nine months ended March 31, 2014, compared to $220,930 for the nine months ended March 31,
2013.
Liquidity
and Capital Resources
As of March
31, 2014, we had $108,478 of cash. Our primary uses of cash were for development and testing of products, marketing. Our
primary uses of cash were for development and testing of products, marketing expenses, employee compensation, and general and
administrative expenses. We have historically financed our operations through sale of common stock to our founders, private equity
offerings, and debt from third party lenders. The following trends are reasonably likely to result in a material decrease in our
liquidity in both near and long term:
|
● |
An increase in working capital requirements; |
|
● |
Addition of administrative and sales personnel as the business grows; |
|
● |
Increases in advertising, public relations and sales promotions as we
commence operations; |
|
● |
Development of new customers and market initiation, and |
|
● |
Increased cost of being a public company due to governmental compliance
activities. |
The following
summarizes the key components of the Company’s cash flows for the nine months ended March 31, 2014:
Cash flows used in operating activities | |
$ | (829,464 | ) |
Cash flows from investing activities | |
$ | (59,911 | ) |
Cash flows from financing activities | |
$ | 997,853 | |
Net (increase) in cash and cash equivalents | |
$ | 108,478 | |
Cash flows used
in investing activities consisted of the acquisition of intangibles of $50,000 and the acquisition of property and equipment of
$9,911.
Cash flows provided
by financing activities consisted of the proceeds from notes payable of $375,000 the repayment of debt of $85,000 a repayment
of a bank overdraft of $14,282 and proceeds from common stock issuances of $722,135.
We have a current
burn rate, as of March 31, 2014, of approximately $100,000 to $150,000 per month. It includes office rental expenses, payroll,
insurance, marketing, travel, telephone, internet and other office expenses, legal and accounting expenses and other miscellaneous
expenses including filing fees, transfer agent fees and other costs of being public.
Therefore, if
we do not experience any income or obtain additional financing, we could expect to run out of capital sometime between July 2014
and August 2014. For this reason, if we do not experience any income in the first half of fiscal 2015, we will need to raise additional
capital of between $100,000 and $150,000 per month, in order to continue our business. In addition, in order to fully
implement our business plan, we will need to raise an additional $1,000,000 to $5,000,000 of capital for the purpose of initiating
and ramping up marketing and sales efforts, hiring of sales personnel and for general working capital. This additional $1,000,000
to $5,000,000 of financing will need to be raised between May 2014 and August 2014 in order to effectively implement our business
plan. It is not necessary that we receive such a capital infusion at any one time; we could implement our plan through
the raising of at least $500,000 per quarter beginning May 2014. However, there is no assurance that we will be able to raise
any capital in the future, or that capital will be available on terms acceptable to us.
Off-Balance
Sheet Arrangements
We do not have
any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, sales or expenses, results of operations, liquidity or capital expenditures.
Critical
Accounting Policies
Use of Estimates
The preparation
of financial statements in conformity with accounting principles generally accepted in the United States requires management to
make estimates and assumptions that affect certain reported amounts and disclosures. Actual results could differ from those estimates.
Loss Per
Share
Basic earnings
(loss) per share are calculated by dividing net income (loss) by the weighted average number of common shares outstanding for
the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common
shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses common stock equivalents,
if any, are not considered, as their effect would be anti dilutive.
Income Taxes
Deferred tax
assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and
liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled.
Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence
suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation
allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes
in such valuation allowance are included in the provision for deferred income taxes in the period of change.
All tax periods
from inception remain open to examination by taxing authorities.
Fair Value
of Financial Instruments
The Company’s
short-term financial instruments consist of cash and cash equivalents, accounts payable, accounts receivable and accrued expenses.
The carrying amounts of the financial instruments approximate fair value because of their short-term maturities. The Company does
not hold or issue financial instruments for trading purposes nor does it hold or issue interest rate or leveraged derivative financial
instruments. The carrying value of the Company’s long-term debt approximates fair value based on the terms and conditions
at which the Company could obtain similar financing.
Going Concern
The accompanying
financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity
of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected
in the accompanying financial statements, the Company had an accumulated deficit of $4,987,229 and as net
loss of $4,535,965 during the period ended March 31, 2014. We have a current burn rate, as of March 31, 2014, of approximately
$80,000 to $100,000 per month. It includes office rental expenses, payroll, consulting fees, insurance, marketing, travel, telephone,
internet and other office expenses, legal and accounting expenses and other miscellaneous expenses including filing fees, transfer
agent fees and other costs of being public. Therefore, if we do not experience any income or obtain additional financing, we could
expect to run out of capital sometime before May 2014. For this reason, if we do not experience any income in the first half of
fiscal 2014, we will need to raise additional capital of between $80,000 and $100,000 per month, in order to continue our business.
These conditions raise substantial doubt about its ability to continue as a going concern.
The Company’s
cash position may not be sufficient to support the Company’s daily operations without significant financing. While
the Company believes in the viability of its strategy to produce sales volume and in its ability to raise additional funds, there
can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the
Company’s ability to further implement its business plan and generate sufficient revenues. The financial statements
do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management
believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity
for the Company to continue as a going concern.
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Smaller reporting
companies are not required to provide the information required by this item.
Item 4.
Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
Pursuant to
Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation,
with the participation of the Company’s management, including the Company’s President, Chief Financial Officer, Secretary,
Treasurer and Director, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule
13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s
CEO and CFO concluded that the Company’s disclosure controls and procedures were not effective to ensure that information
required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, is recorded,
processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information
is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate,
to allow timely decisions regarding required disclosure for the reasons discussed below.
Management believes
that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy
the lack of a functioning audit committee and a lack of a majority of outside directors on our board of directors. In addition,
the Company currently has limited accounting personnel. Management plans to take action and implementing improvements to our controls
and procedures when our financial position permits.
Changes in
Internal Control Over Financial Reporting
There have been
no changes in the Company’s internal controls over financial reporting during the three month period ending March 31,
2014, or in other factors that could significantly affect these controls, that materially affected, or are reasonably likely to
materially affect, the Company’s internal controls over financial reporting.
PART II: OTHER
INFORMATION
Item 1. Legal
Proceedings
From time to
time, the Company may become involved in litigation relating to claims arising out of its operations in the normal course of business.
To the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any
of our properties is subject, which would reasonably be likely to have a material adverse effect on the Company.
On March 12,
2014, the Company filed a lawsuit in Florida against IRTH Communications, LLC for breach of contract and fraud, seeking return
of $110,500 paid to IRTH and seeking cancellation of 54,950 shares of common stock issued to IRTH for services. The Company has
alleged that IRTH defrauded the Company in order to receive the money and shares, and did not perform the agreed services. This
case is still pending.
In response,
on March 19, 2014, IRTH filed a lawsuit in California against the Company arising out of the same contract and transactions, seeking
$73,000 in alleged damages for breach of contract and seeking the lifting of restrictions on said 54,950 shares. The Company has
filed a Motion to Dismiss this case based on the prior Florida action. This case is still pending.
Item 1A.
Risk Factors
Smaller reporting
companies are not required to provide the information required by this item.
Item 2. Unregistered
Sales of Equity Securities and Use of Proceeds
During the period
ended March 31, 2014, the Company issued common shares as follows:
The Company
issued 1,030,650 shares of common stock for $775,605 of which $722,135 has been received and $53,470 has been recorded as a receivable
for common stock. The $53,470 has been recorded as a reduction in common stock.
The Company
issued 35,147 shares of common stock for services. These shares were valued at the trading price of the Company’s common
shares on the date it was agreed the shares would be issued of $100,490 which has been charged to operations during the period.
The Company
issued 200,000 shares of common stock for the conversion of a $200,000 note. The shares were valued at their trading price on
the conversion date of $533,000. The value of the shares in excess of the note of $333,000 has been charged to operations during
the period.
The Company
issued 54,950 common shares for services to be performed over a one year period, which were valued at their estimated fair value
of $100,000 based on the trading price of the Company’s common shares.
The above issuances
of shares are exempt from registration, pursuant to Section 4(2) of the Securities Act. These securities qualified
for exemption under Section 4(2) of the Securities Act since the issuance securities by us did not involve a public offering.
The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved
in the deal, size of the offering, manner of the offering and number of securities offered. We did not undertake an offering in
which we sold a high number of securities to a high number of investors. In addition, these stockholders had the necessary investment
intent as required by Section 4(2) since they agreed to and received share certificates bearing a legend stating that such securities
are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these securities would not be immediately
redistributed into the market and therefore not be part of a “public offering.” Based on an analysis of the above
factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
Exhibit No. |
|
Description |
|
|
|
31.1 |
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of Sarbanes Oxley Act of 2002 |
|
|
|
32.1+ |
|
Certification of Principal Executive Officer and Principal
Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of 2002 |
101.INS |
|
XBRL Instance Document |
101.SCH |
|
XBRL Taxonomy Schema |
101.CAL |
|
XBRL Taxonomy Calculation Linkbase |
101.DEF |
|
XBRL Taxonomy Definition Linkbase |
101.LAB |
|
XBRL Taxonomy Label Linkbase |
101.PRE |
|
XBRL Taxonomy Presentation Linkbase |
+ In accordance with SEC Release
33-8238, Exhibits 32.1 and 32.2 are furnished and not filed.
SIGNATURES
Pursuant to
the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, there unto duly authorized.
/s/ Douglas S. Hackett |
Name:
Douglas S. Hackett
Position: President,
Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer
(Duly Authorized,
Principal Executive Officer and Principal Financial Officer) |
Dated: October 23, 2014
17
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Douglas S. Hackett, certify that:
1. I have reviewed this
quarterly report on Form 10-Q of Engage Mobility, Inc.;
2. Based on my knowledge,
this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge,
the financial statements, and other financial information included in this quarterly report, fairly present in all material respects
the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly
report;
4. The registrant’s
other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:
|
a) |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; |
|
|
|
|
b) |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
c) |
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; |
|
|
|
|
d) |
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an quarterly report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; |
5. The registrant’s
other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing
the equivalent function):
|
a) |
all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
|
|
b) |
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting. |
Date: October 23, 2014 |
By: |
/s/ Douglas S. Hackett |
|
|
Douglas S. Hackett
President, Chief Executive Officer, Chief Financial Officer, Secretary
and Treasurer (Principal Executive Officer and Principal Financial Officer)
|
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of
Engage Mobility, Inc., (the “Company”) on Form 10-Q for the period ended March 31, 2014 as filed with the Securities
and Exchange Commission on the date hereof (the “Report”), Douglas S. Hackett, President, Chief Executive Officer,
Chief Financial Officer, Secretary and Treasurer of the Company, certify, pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley
Act of 2002, that:
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
|
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: October 23, 2014 |
By: |
/s/ Douglas S. Hackett |
|
|
Douglas S. Hackett
President, Chief Executive Officer, Chief Financial Officer, Secretary
and Treasurer (Principal Executive Officer and Principal Financial Officer) |
A signed original of this written statement
required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed
form within the electronic version of this written statement has been provided to the Company and will be retained by the Company
and furnished to the Securities and Exchange Commission or its staff upon request.
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