ITEM 1. FINANCIAL
STATEMENTS
SaaSMAX, INC.
|
(A Development Stage Company)
|
BALANCE SHEETS
|
|
|
|
|
|
|
|
March 31, 2013
|
|
December 31, 2012
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash
|
$
|
24,341
|
|
$
|
16,375
|
Accounts receivable, net
|
|
2,378
|
|
|
962
|
Other current assets
|
|
5,706
|
|
|
1,123
|
Total current assets
|
|
32,425
|
|
|
18,460
|
|
|
|
|
|
|
Property & equipment, net of accumulated depreciation
|
|
37,370
|
|
|
34,122
|
|
|
|
|
|
|
Total assets
|
$
|
69,795
|
|
$
|
52,582
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable and accrued expenses
|
$
|
59,613
|
|
$
|
17,020
|
Convertible debt, net of debt discount
|
|
73,767
|
|
|
34,727
|
Total current liabilities
|
|
133,380
|
|
|
51,747
|
|
|
|
|
|
|
Total liabilities
|
|
133,380
|
|
|
51,747
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity
|
|
|
|
|
|
Preferred stock, $0.001 par value; 20,000,000 shares authorized; no shares issued and outstanding
|
|
-
|
|
|
-
|
Common stock, $0.001 par value; 100,000,000 shares authorized; 4,429,704 shares issued and outstanding as of March 31, 2013 and December 31, 2012, respectively
|
|
4,430
|
|
|
4,430
|
Additional paid-in capital
|
|
743,091
|
|
|
668,091
|
Deferred option compensation expense
|
|
(5,661)
|
|
|
(8,491)
|
Founders' receivable
|
|
(3,000)
|
|
|
(3,000)
|
Deficit accumulated during development stage
|
|
(802,445)
|
|
|
(660,195)
|
Total stockholders’ equity
|
|
(63,585)
|
|
|
835
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity
|
$
|
69,795
|
|
$
|
52,582
|
|
|
|
|
|
|
See accompanying notes to financial statements
|
|
|
|
|
|
SaaSMAX, INC.
|
(A Development Stage Company)
|
STATEMENTS OF OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
January 19, 2011 (inception) to March 31, 2013
|
|
|
March 31, 2013
|
|
March 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
2,378
|
|
$
|
-
|
|
$
|
6,916
|
|
|
|
|
|
|
|
|
|
|
Costs of services
|
|
1,723
|
|
|
-
|
|
|
3,513
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
655
|
|
|
-
|
|
|
3,403
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
Salaries and professional fees
|
|
64,371
|
|
|
61,224
|
|
|
446,338
|
|
Technology and product development
|
|
17,099
|
|
|
5,000
|
|
|
152,848
|
|
General and administrative
|
|
19,222
|
|
|
18,862
|
|
|
126,912
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
100,692
|
|
|
85,086
|
|
|
726,098
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
(100,037)
|
|
|
(85,086)
|
|
|
(722,695)
|
|
|
|
|
|
|
|
|
|
|
Other expense
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
42,213
|
|
|
-
|
|
|
79,750
|
|
|
|
|
|
|
|
|
|
|
Total other expense
|
|
42,213
|
|
|
-
|
|
|
79,750
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(142,250)
|
|
$
|
(85,086)
|
|
$
|
(802,445)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common
|
|
|
|
|
|
|
|
|
|
shares outstanding - basic and fully diluted
|
|
4,361,258
|
|
|
4,178,220
|
|
|
4,164,039
|
|
|
|
|
|
|
|
|
|
|
Net loss per share - basic and fully diluted
|
$
|
(0.03)
|
|
$
|
(0.02)
|
|
$
|
(0.19)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements
|
|
|
|
|
|
|
SaaSMAX, INC.
|
(A Development Stage Company)
|
STATEMENTS OF CASH FLOWS
|
|
|
|
Three Months Ended March 31,
|
|
January 19, 2011 (inception) to March 31, 2013
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
|
Cash flows from operating activities
|
|
|
|
|
|
|
Net loss
|
|
$
|
(142,250)
|
|
$
|
(85,086)
|
|
$
|
(802,445)
|
Adjustments to reconcile net loss to net cash used in operating activities
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
2,830
|
|
|
19,323
|
|
|
198,760
|
|
Depreciation
|
|
|
4,906
|
|
|
750
|
|
|
11,804
|
|
Impairment of software development costs
|
|
|
-
|
|
|
-
|
|
|
12,014
|
|
Amortization of debt discount
|
|
|
39,040
|
|
|
-
|
|
|
73,767
|
Changes in operating assets and liabilities
|
|
|
|
|
|
|
|
|
-
|
|
Accounts receivable
|
|
|
(1,416)
|
|
|
-
|
|
|
(2,378)
|
|
Other current assets
|
|
|
(4,583)
|
|
|
2,555
|
|
|
(5,706)
|
|
Accounts payable and accrued expenses
|
|
|
42,593
|
|
|
6,988
|
|
|
59,613
|
|
Accounts payable - related parties
|
|
|
-
|
|
|
(3,778)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(58,880)
|
|
|
(59,248)
|
|
|
(454,571)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|
Purchase of capitalized software
|
|
|
(8,154)
|
|
|
(7,330)
|
|
|
(61,188)
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(8,154)
|
|
|
(7,330)
|
|
|
(61,188)
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|
Proceeds from convertible promissory notes
|
|
|
75,000
|
|
|
-
|
|
|
200,000
|
|
Proceeds from issuance of common stock
|
|
|
-
|
|
|
75,000
|
|
|
340,100
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
75,000
|
|
|
75,000
|
|
|
540,100
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash
|
|
|
7,966
|
|
|
8,422
|
|
|
24,341
|
|
|
|
|
|
|
|
|
|
|
|
Cash, beginning of period
|
|
|
16,375
|
|
|
33,158
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Cash, end of period
|
|
$
|
24,341
|
|
$
|
41,580
|
|
$
|
24,341
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
|
|
|
Income taxes paid
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
Interest paid
|
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Supplementary disclosure of noncash financing activities:
|
|
|
|
|
|
|
|
|
|
Beneficial conversion feature on convertible debt
|
|
$
|
75,000
|
|
$
|
-
|
|
$
|
200,000
|
Issuance of common stock for founders' receivable
|
|
|
-
|
|
$
|
3,000
|
|
$
|
3,000
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to financial statements
|
|
|
|
|
|
|
SaaSMAX, INC.
(A Development Stage Company)
Notes to the Financial Statements
(Unaudited)
March 31, 2013
NOTE 1 -
NATURE
OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
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 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. The SaaSMAX Marketplace will also provide 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 will also provide a Solution Provider Directory which
will contain 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.
Basis of presentation
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 three months ended March 31, 2013 are not necessarily indicative of the results that may be expected
for the year ending December 31, 2013. The accompanying unaudited financial statements should be read in conjunction with our audited
financial statements for the year ended December 31, 2012, which are included in our Annual Report on Form 10-K, and the risk factors
contained therein.
Going concern
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, through March 31, 2013, proceeds of $340,100 have been received from the sale of 1,329,691 shares of common stock and
$200,000 was received through the sale of Convertible Notes. Our business plan estimates that we will need to raise additional
capital to fund our operations during 2013 and there can be no assurance that we will be able to raise any or all of the capital
required. We have generated limited revenues since our inception and have incurred a net loss of $142,250 and net cash used in
operating activities of $58,880 during the three months ended March 31, 2013. Accordingly, we will have to obtain additional funding
from the sale of our securities, the continued sale of debt instruments 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.
The accompanying financial statements have
been prepared assuming that the Company will continue as a going concern that contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. However, the ability of the Company to continue as a going concern on a longer-term
basis will be dependent upon the ability to generate sufficient cash flow from operations to meet its obligations on a timely basis,
the ability to successfully raise additional financing, and the ability to ultimately attain profitability.
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 2 –CONVERTIBLE PROMISSORY NOTES
As of March 31, 2013
the Company has entered into eight separate $25,000 Convertible Promissory notes totaling $200,000 (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, beginning July 1, 2013 and ending March 28, 2014. The Holder
of the Convertible Notes may at any time prior to the Maturity Date, convert up to $150,000 of 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 Holder of the Convertible Notes may at any time prior to the Maturity
Date, convert up to $50,000 of the principal amount of the Convertible Notes at a Conversion Price of $0.20 per share. 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. Interest payable as of March 31, 2013 totaled $5,983.
The intrinsic value of the embedded beneficial
conversion feature of the Convertible Notes was determined to be $200,000. The intrinsic value of $200,000 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. As of March 31, 2013, the discount on the Convertible Note totaled $126,233, and for the three months
ended March 31, 2013, interest expense related to such amortization totaled $39,040.
NOTE 3 –STOCK INCENTIVE PLAN
As of March 31, 2013, we have granted options
to purchase a total of 441,805 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 months ended March 31, 2013, the Company recorded
compensation expense related to options granted under the Plan of $2,830.
Stock option activity under the Plan for the
three months ended March 31, 2013 is summarized as follows:
|
|
Shares
|
|
Weighted Average
Exercise Price per
Share
|
|
Weighted Average
Remaining
Contractual Life
(in years)
|
|
Grant Date Fair Value
|
|
Outstanding at December 31, 2012
|
|
441,805
|
|
|
$0.54
|
|
-
|
|
$ 184,401
|
|
|
Options granted
|
|
-
|
|
|
$ -
|
|
-
|
|
-
|
|
|
Options exercised
|
|
-
|
|
|
$ -
|
|
-
|
|
-
|
|
|
Options cancelled/forfeited/ expired
|
|
-
|
|
|
$ -
|
|
-
|
|
-
|
|
|
Outstanding at March 31, 2013
|
|
441,805
|
|
|
$0.54
|
|
2.06
|
|
|
$184,401
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at March 31, 2013
|
|
431,805
|
|
|
$0.53
|
|
2.05
|
|
|
$178,739
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2013, there was $5,661 of unrecognized
compensation cost related to unvested stock options. The Company intends to issue new shares to satisfy share option exercises.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
FORWARD-LOOKING STATEMENTS
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.
Introduction
Overview
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 iPhone's 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 program 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:
|
·
|
Make it easier and more efficient for SaaS App Vendors to promote their SaaS Apps, sell licenses, find new customers, and build
a channel of Solution Providers.
|
|
·
|
Be the first SaaS marketplace that will enable SaaS App Vendors to sell, market, manage and monitor their sales and marketing
efforts in real time across the SaaS Sales Value Chain.
|
|
·
|
Be a valuable, efficient business and educational tool for SaaS Solution Providers, enabling them to thoroughly research each
listed SaaS App and gain access to online demos, technical specifications, peer ratings, support, pricing, commission plans
and much more.
|
|
·
|
Make it easier for Solution Providers to find SaaS Apps for their customers and earn commissions from SaaS App Vendors for
reselling or referring their SaaS Apps to end user customers.
|
|
·
|
Include a Solution Provider Directory which will contain the business profiles of Solution Providers, to enable end user businesses
to identify and do business with Solution Providers, and to enable SaaS App Vendors to network with Solution Providers.
|
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 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.
The Company has entered into several dozen
agreements with ISVs in which the ISV agrees to compensate SaaSMAX for every purchase transaction that is initiated through the
SaaSMAX Marketplace. The Company is responsible for monitoring, aggregating and reporting total transaction volumes completed between
its member Solution Provides and the ISVs, as well as the commissions earned by the Solution Providers. The Company has also entered
into more than one hundred agreements with Solution Providers, who currently are not required to pay fees to SaaSMAX.
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
follow
ing discussion should be read in conjunction with our interim consolidated financial statements and the related notes
that appear elsewhere in this Quarterly Report.
Revenues
SaaSMAX revenues recognized during the three
months ended March 31, 2013 and during the period
from January 19, 2011 (inception)
to March 31, 2013
consist primarily of fees earned from one SaaS App Vendor who sells and promotes its SaaS App through
the SaaSMAX Marketplace. The fees earned by SaaSMAX are derived as a percentage of the revenues earned by the SaaS App Vendor.
We are still a development stage company and do not expect to begin generating significant revenues until we move out of SaaSMAX
Beta and commercially launch the SaaSMAX Marketplace.
Cost of Goods Sold
Costs of services recognized during the three
months ended March 31, 2013 and during the period
from January 19, 2011 (inception)
to March 31, 2013
consist primarily of commissions paid to the Solution Providers related to the SaaS Apps sold through
the SaaSMAX Marketplace.
Salaries and Professional Fees
Salaries and professional
fees for the three months ended March 31, 2013 increased 5% in comparison to the three months ended March 31, 2012. The increase
is primarily a result of costs associated with the marketing of the SaaSMAX Marketplace as well as the development of the business.
Also included are costs incurred for legal and accounting fees resulting from the filing requirements necessary for a public company.
Such costs are expected to continue being a significant part of our operating expenses.
Salaries and professional
fees for the
period
from January 19, 2011 (inception) through March 31, 2013 totaled
approximately $446,000 and consisted primarily of marketing, business development costs, management salaries and legal and accounting
fees as discussed above.
Technology and Product Development
Technology and
product development costs consist of the continued maintenance of and improvements to the SaaSMAX Marketplace. 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 technology and product development as it improves and expands the SaaSMAX Marketplace.
Technology and Product
Development costs for the period from January 19, 2011 (inception) through March 31, 2013 totaled approximately $153,000 and related
primarily to the development and continued improvements of the SaaSMAX Marketplace.
General and Administrative Expenses
General and administrative
expenses for the three months ended March 31, 2013 remained relatively consistent with the three months ended March 31, 2012. The
slight increase results primarily from depreciation expense on the capitalized costs of the SaaSMAX Marketplace.
General and administrative
expenses for the period from January 19, 2011 (inception) through March 31, 2013 totaled approximately $127,000. 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
Other expense for the three months ended March
31, 2013 and the
period
from January 19, 2011 (inception) through March 31, 2013 totaled
$42,413 and related to the interest expense and the amortization of the debt discount on our Convertible Promissory Notes.
Net Loss
During the three months
ended March 31, 2013 and 2012 and the
period
from January 19, 2011 (inception) through
March 31, 2013 the Company incurred a net loss of $142,250,
$85,086
and
$802,445,
respectively, due to the items described above.
Capital Resources and Liquidity
As of March 31, 2013, we
had $24,341 of cash and working capital deficit of approximately $101,000 compared to $16,375 of cash and working capital deficit
of approximately $33,000 as of December 31, 2012.
Net cash used in operating
activities during the three months ended March 31, 2013 and 2012 and the
period
from
January 19, 2011 (inception) through March 31, 2013 totaled
approximately $59,000, $59,000
and $455,000, 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 three months ended March 31, 2013 and 2012 and the
period
from
January 19, 2011 (inception) through March 31, 2013 totaled
approximately $8,000, $7,000
and $61,000, 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 three months ended March 31, 2013 and 2012 and the
period
from January 19, 2011 (inception) through March 31, 2013 totaled
$75,000, $75,000
and $540,100, respectively and resulted primarily from the Company's sale of
common
stock, as well as, $75,000 and $125,000 in the first quarter of 2013 and throughout 2012, respectively, 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. As of March
31, 2013 we have entered into eight separate Convertible Promissory Notes for $25,000 each (total of $200,000 (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 six 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 seventh and eighth Convertible Notes dated February 23, 2013 and March 28, 2013 have a Conversion Price of $0.20.
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.
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.
The Company 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 2013 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, 2012.
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.
Inflation
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,
2012 included in our Annual Report on Form 10-K filed with the SEC.