WBWB WU BA Superior Products Holding Group Inc (CE)

Consolidated Balance Sheets

The accompanying notes to financial statements are an integral part of these financial statements

3

RARUS TECHNOLOGIES INC. AND SUBSIDIARY

(A Development Stage Company)

The accompanying notes to financial statements are an integral part of these financial statements

4

RARUS TECHNOLOGIES INC. AND SUBSIDIARY

(A Development Stage Company)

The accompanying notes to financial statements are an integral part of these financial statements

5

RARUS TECHNOLOGIES INC. AND SUBSIDIARY

(A Development Stage Company)

The accompanying notes to financial statements are an integral part of these financial statements

6

RARUS TECHNOLOGIES INC. AND SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial statements

Note 1 – Operations

Organization and Description of Business

Rarus Technologies Inc. was incorporated in the State of Nevada on June 23, 2010 under the name HotelPlace, Inc. On June 24, 2011, the Company changed its name to Rarus Minerals Inc.; and on January 26, 2012 the Company changed its name to Rarus Technologies Inc. On May 8, 2012, the Company changed from an exploration enterprise to a Social Media website enterprise and incorporated in the State of Nevada a wholly - owned subsidiary named Zngle, Inc. to act as the operations center for its new Social Media business. Since inception the Company and its subsidiary (collectively 'Rarus', 'We', the 'Registrant', or the 'Company') has not been involved in any bankruptcy, receivership or similar proceedings; nor has it been involved in any merger arrangements. The consolidated financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States and our fiscal year end is June 30th.

Rarus trades on the OTCQB under the symbol RARS.

Development Stage Activities

The Company is classified under generally accepted accounting principles ('GAAP') as being a Development Stage Company. Development Stage activities occurred from inception on June 23, 2010 to June 24, 2011; and from June 24, 2011 to May 8, 2012 the Company conducted exploration activities which classified it within the sub - category of being an Exploration Stage Company. From May 8, 2012 the Company has again been classified as a Development Stage Company. To date the Company has not realized revenues from any of its operations.

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies

This summary of significant accounting policies is presented to assist in understanding the Company's financial statements. The financial statements reflect the following significant accounting policies:

Basis of Presentation

The financial statements and notes are representations of the Company’s management, who are responsible for their integrity and objectivity. These accounting policies conform to generally accepted accounting principles in the United States of America and have been consistently applied in the preparation of the financial statements, which are stated in U.S. Dollars.

This summary of significant accounting policies is presented to assist in understanding Rarus Technologies Inc.’s financial statements. The financial statements reflect the following significant accounting policies:

Development Stage Company

As an Development Stage enterprise, the Company discloses the deficit accumulated during the Development Stage and the cumulative statements of operations and cash flows from inception to the current balance sheet date.

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RARUS TECHNOLOGIES INC. AND SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial statements

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)

Consolidation of Financial Statements

These financial statements include the accounts of the Company and its wholly - owned subsidiary Zngle, Inc. on a consolidated basis. All inter - company accounts have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America 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 and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

Basic and Diluted Net Loss per Share

Diluted loss per share is calculated using the treasury method which requires the calculation of diluted loss per share by assuming that any outstanding stock options with an average market price that exceeds the average exercise prices of the options for the year, are exercised and the assumed proceeds are used to repurchase shares of the Company at the average market price of the common shares for the year. An incremental per share effect is then calculated for each option. The denominator of the diluted loss per share formula is the number common shares outstanding at balance sheet date plus the incremental shares assumed to be issued from treasury for option exercises, less the number of shares assumed to be repurchased, weighted by the period they are assumed to be outstanding. This dilution calculation did not affect current results because as of December 31, 2012, the Company has not adopted a stock option plan and there are no warrants, or other common stock equivalents outstanding.

Estimated Fair Value of Financial Instruments

ASC 820, "Fair Value Measurements" , requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. It establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument's categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. It prioritizes the inputs into three levels that may be used to measure fair value:

Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.

Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model - derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.

8

RARUS TECHNOLOGIES INC. AND SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial statements

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)

Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.

The Company's financial  instruments consist principally of cash equivalents, accounts payable, loans payable, and amounts due to related parties. Pursuant to ASC 820, the fair value of our cash equivalents is determined based on "Level 1" inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. Amounts in each Level include:

It is management’s opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

Income Taxes

The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns using the liability method. Under this method, deferred tax liabilities and assets are determined based on the temporary differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted rates in effect in the years during which the differences are expected to reverse and upon the possible realization of net operating loss carry - forwards. Additionally, the Company has not recognized any amount for a tax position taken or expected to be taken on its tax return, or for any interest or penalties.

Valuation of Long-Lived Assets

The Company periodically analyzes its long - lived assets for potential impairment, assessing the appropriateness of lives and recoverability of un - depreciated balances through measurement of undiscounted operation cash flows on a basis consistent with accounting principles generally accepted in the United States of America.

Start-up Costs

The Company expenses the cost of start - up activities, including organizational costs, as those costs are incurred.

9

RARUS TECHNOLOGIES INC. AND SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial statements

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)

Foreign Currency

The books of the Company are maintained in United States dollars and this is the Company’s functional and reporting currency. Transactions denominated in other than the United States dollar are translated as follows with the related transaction gains and losses being recorded in the Statements of Operations:

(i)

Monetary items are recorded at the rate of exchange prevailing as at the balance sheet date;

(ii)

Non - Monetary items including equity are recorded at the historical rate of exchange; and

(iii)

Revenues and expenses are recorded at the period average in which the transaction occurred.

During the respective three and six month periods ended December 31, 2012 and December 31, 2011, the Company was not involved in any transactions which required translation of foreign currencies.

Cash and Cash Equivalents

The Company considers cash and cash equivalents to consist of cash on hand, cash on deposit with its attorney, and demand deposits in banks with an initial maturity of 90 days or less. As of December 31, 2012, the Company held $4,474 in cash and zero in cash equivalents.

Stock-based Compensation

The Company follows ASC 718 - 10, Stock Compensation , which addresses the accounting for transactions in which an entity exchanges its equity instruments for goods or services, with a primary focus on transactions in which an entity obtains employee services in share-based payment transactions. ASC 718 - 10 requires measurement of the cost of employee services received in exchange for an award of equity instruments based on the grant - date fair value of the award (with limited exceptions). Incremental compensation costs arising from subsequent modifications of awards after the grant date must be recognized. The Company has not adopted a stock option plan and has not granted any stock options; nor has it made any awards of stock, or stock equivalents.

Risks and Uncertainties

The Company is subject to substantial business risks and uncertainties inherent in starting a new business. There is no assurance that the Company will be able to generate sufficient revenues or obtain sufficient funds necessary for launching a new business venture.

Reclassifications

Certain prior period amounts have been reclassified to conform to current period presentation.

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RARUS TECHNOLOGIES INC. AND SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial statements

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)

Recent Accounting Pronouncements

In August 2012, the Financial Accounting Standards Board ('FASB') issued Accounting Standards Update ('ASU') 2012 - 03, "Technical Amendments and Corrections to SEC Sections Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 114, Technical Amendments Pursuant to SEC Release No. 33 - 9250, and Corrections Related to FASB Accounting Standards Update 2010 - 22." This Update clarifies certain technical issues included in a previous Securities and Exchange Commission ('SEC') Staff Accounting Bulletin and related FASB Update. The Company has adopted ASU 2012 - 03 and the adoption of ASU 2012 - 03 is not expected to have a material impact on our financial position or results of operations.

In July 2012, FASB issued ASU 2012 - 02, "Testing Indefinite - Lived Intangible Assets for Impairment" to address the recurring cost and complexity of performing a quantitative impairment test for indefinite - lived intangible assets other than goodwill, especially when the facts and circumstances indicated a low likelihood of impairment. The objective of the amendments in this Update is to reduce the cost and complexity of performing an impairment test for indefinite - lived intangible assets by simplifying how an entity tests those assets for impairment and to improve consistency in impairment testing guidance among long - lived asset categories. The amendments permit an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite - lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350 - 30, Intangibles—Goodwill and Other—General Intangibles Other than Goodwill. The more - likely - than - not threshold is defined as having a likelihood of more than 50 percent. The Company has adopted ASU 2012 - 03 and the adoption of ASU 2012 - 02 is not expected to have a material impact on our financial position or results of operations.

In December 2011, FASB issued ASU 2011 - 12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011 - 05. This update defers the requirement to present items that are reclassified from accumulated other comprehensive income to net income in both the statement of income where net income is presented and the statement where other comprehensive income is presented. The Company has adopted ASU 2011 - 12 and the adoption of ASU 2011 - 12 is not expected to have a material impact on our financial position or results of operations.

In December 2011, FASB issued ASU No. 2011 - 11 “Balance Sheet: Disclosures about Offsetting Assets and Liabilities.” This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company is currently evaluating the impact, if any, that the adoption of this pronouncement may have on its results of operations or financial position.

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RARUS TECHNOLOGIES INC. AND SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial statements

Note 2 – Basis of Presentation and Summary of Significant Accounting Policies (continued)

Other

The Company consists of one reportable business segment.

Advertising is expensed as incurred.

We did not have any off - balance sheet arrangements as of December 31, 2012 or June 30, 2012.

Note 3– Going Concern

Generally accepted accounting principles in the United States of America contemplate the continuation of the Company as a going concern. However, the Company recorded net losses of $33,069 and $91,197, respectively, for the three and six month period ended December 31, 2012 and has accumulated net losses totaling $720,510 since inception. The Company also has limited business operations, which raises substantial doubt about the Company’s ability to continue as a going concern. The continuation of the Company is dependent upon the continuing financial support of investors and stockholders of the Company. As of December 31, 2012, we projected the Company would need additional cash resources to operate during the upcoming 12 months. The Company intends to attempt to acquire additional operating capital through private equity offerings to the public and existing investors to fund its business plan. However, there is no assurance that equity or debt offerings will be successful in raising sufficient funds to assure the eventual profitability of the Company. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue in existence.

Note 4 –  Share Capital

On June 17, 2011, the Company implemented a Board authorized increase to the Company's authorized share capital. Under the Company's original Articles of Incorporation it was authorized to issue 100,000,000 shares of common stock, par value $0.001 and 1,000,000 shares of preferred stock, par value $0.001. On June 17, 2011, the Company filed a Certificate of Amendment to its Articles of Incorporation (the “Amendment”) with the Secretary of State of Nevada. As a result of the Amendment, the Company increased the authorized number of shares to seven hundred fifty million (750,000,000) shares, par value $0.001; and created a class of one hundred million (100,000,000) shares of preferred stock, par value $0.001, for which the Board of Directors may fix and determine the designations, rights, preferences or other variations.

As authorized by the Board and approved by the Financial Industry Regulatory Authority ('FINRA'), on June 24, 2011 the Company implemented a 50 - for - 1 forward split of its issued and outstanding common shares whereby every one (1) old share of common stock was exchanged for fifty (50) new shares of the Company's common stock. This increased the issued and outstanding shares of common stock from 8,500,000 prior to the forward split to 425,000,000 following the forward split. The forward split shares were authorized to be payable upon surrender of certificates to the Company's transfer agent.

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RARUS TECHNOLOGIES INC. AND SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial statements

Note 4 –  Share Capital (continued)

All references to stock issued and stock outstanding have been retroactively adjusted as if the stock split had taken place on June 23, 2010 (inception).

On June 24, 2010, the Company issued 325,000,000 shares (as adjusted for the 50 - for - 1 forward split) of its common stock to its incorporator, chief executive officer and president for organization costs/services and issued an additional 15,000,000 shares (as adjusted for the 50 - for - 1 forward split) to its sole outside director for services. These services were valued at $6,500 and $300, respectively based on a share price of $0.0002 (as adjusted for the 50 - for - 1 forward split).

On June 24, 2010 following its formation, the Company issued 300,000,000 (as adjusted for the 50 - for - 1 forward split) shares of our common stock to an unaffiliated entity, as consideration for the purchase of 12 websites and/or domain names, based on a price of $0.0002 per share (as adjusted for the 50 - for - 1 forward split). This entity had paid $6,000 to outside consultants to develop the various websites and the third party acquisition cost for the websites and/or domain names, was therefore used to value the transaction at $6,000.

On February 23, 2011, the Company issued 100,000,000 shares (as adjusted for the 50 - for - 1 forward split) of its common stock to nineteen (19) accredited investors who purchased their shares under a registration statement filed on Form S - 1 with the Securities Exchange Commission ('SEC'). The nineteen (19) individual investors paid $0.0002 (as adjusted for the 50 - for - 1 forward split) per share or a total of combined investment of $20,000.

On May 2, 2011 the Company's sole outside director submitted 15,000,000 shares he held (as adjusted for the 50 - for - 1 forward split) for cancellation.

On June 23, 2011 the Company's president submitted 300,000,000 shares he held (as adjusted for the 50 - for - 1 forward split) for cancellation.

On July 12, 2011, the Company issued 9,750,000 restricted shares of our common stock to the vendors of the Pilot Peak Property. These shares issued based on a fair value estimate price of $0.0005 per share for total deemed consideration of $4,875. This valuation was based on the closet comparable transaction which was a private control shares transaction on May 11, 2011 which was valued at $0.0005 per share. At the prior year - end date of December 31, 2011, these shares had not yet been issued and $4,875 relating to this expense was included in accrued liabilities on our December 31, 2011 Balance Sheet.  

On December 13, 2011, the Company issued 1,500,000 restricted shares of our common stock to the vendors of the Eagleville Property. These shares were cancelled on January 20, 2012 and due to the proximity of this event to the December 31, 2011 period end, the effect of this cancellation was included in the period ended December 31, 2011.This cancellation was accounted for by rolling back the $750 mineral property payment attributed to the shares issuance and as such there were no changes to common share and additional paid - in - capital totals arising from the issuance and cancellation.

On June 6, 2012 the Company completed a private placement offering of its common stock which raised aggregate cash proceeds of US$20,000. This offering was comprised of 133,333 restricted common shares at $0.15 per share and 133,333 restricted common shares were issued. These shares were issued pursuant to Regulation S of the Securities Act of 1933, as amended (“Reg. S”) and the Company did not engage in any general solicitation or advertising regarding this offering.

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RARUS TECHNOLOGIES INC. AND SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial statements

Note 4 –  Share Capital (continued)

On June 8, 2012 the Company completed a private placement offering of its common stock which raised aggregate cash proceeds of US$500,000. This offering was comprised of 5,000,000 restricted common shares at $0.10 per share and 5,000,000 restricted common shares were issued. These shares were issued pursuant to Regulation S of the Securities Act of 1933, as amended (“Reg. S”) and the Company did not engage in any general solicitation or advertising regarding this offering.

On June 11, 2012 the Company completed a private placement offering of its common stock which raised aggregate cash proceeds of US$80,000. This offering was comprised of 533,333 restricted common shares at $0.15 per share and 533,333 restricted common shares were issued. These shares were issued pursuant to Regulation S of the Securities Act of 1933, as amended (“Reg. S”) and the Company did not engage in any general solicitation or advertising regarding this offering. The consideration paid for this private placement was comprised of $80,000 which was recorded in the Company's March 31, 2012 quarter - end Balance Sheet as Shares Subscribed But Unissued.

At December 31, 2012, there were 440,416,666 shares of our common stock issued and outstanding and no preferred stock issued and outstanding.

Note 5 – Software Acquisition and Software Impairment Charges

On May 8, 2012 (the "Effective Date") the Company entered into a software property, technical information and trademark license agreement (the "License Agreement") with ThinkCorp AG, (the "Licensor"). Under the License Agreement, the Company acquired software properties and software property applications to a Internet Social Media technology business concept called “Zngle”.

The License Agreement provides the Company with the rights to technical information including all unpublished research and development information, the formulation of proprietary products, method, software inventions, know - how, trade secrets, and technical data that are needed to support the Zngle business concept, including a worldwide exclusive license to the “Zngle” trademark and all of its likenesses and to certain software, source code, technical information, trademarks, and domain names which were developed and/or owned by ThinkCorp AG (the "License"). The term of the License, to the extent of the ­worldwide Licensed Territory, is 500 years beginning from the Effective Date. In exchange for the License, the Company has agreed to make the following scheduled payments to Licensor:

Additionally, the Company has also agreed to pay ThinkCorp AG a five percent (5%) royalty on all net sales derived from the use of the software properties, technical information and trademarks within the agreed territory.

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RARUS TECHNOLOGIES INC. AND SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial statements

Note 5 – Software Acquisition and Software Impairment Charges (continued)

The License Agreement is cancellable on 60 days notice by either party without any penalties, with the provision that all pro-rata royalties up to and including cancellation date would be paid to Licensor.

On June 5, 2012, the Company paid $350,000 to the Licensor as an installment toward its first payment commitment of $2,000,000 due May 8, 2013. At June 30, 2012, the Company did an assessment of whether this payment would meet the characteristics required to record it as an asset at year - end and determined that an impairment charge of $350,000 should be reflected as of June 30, 2012 because the Company could not substantiate that there would be a future economic benefit arising from this payment. There were no payments made regarding the License Agreement during the three and six month periods ended December 31, 2012.

Note 6 – Loans

On August 23, 2011, the Company issued a Promissory Note ('Note One') to an unrelated corporation (which also loaned the funds for Note Two, Note Three and Note Four described below; hereinafter defined as the 'Lender') in the amount of $34,000 to evidence a loan the Company received on May 3, 2011. Note One accrues simple interest of 10% per annum and is due upon ten days written from the Lender. Interest on this loan of $958 and $1,916 respectively accrued during the three and six month periods ended December 31, 2012 and this loan has accrued total interest of $5,930 since advance on May 3, 2011. Including accrued interest, the total balance owing on Note One was $39,930 at December 31, 2012.

On August 23, 2011, the Company issued a second Promissory Note ('Note Two') to the Lender in the amount of $39,965 to evidence a loan the Company received on August 2, 2011. Note Two accrues simple interest of 10% per annum and is due upon ten days written from the Lender. Interest on this loan of $1,100 and $2,200 respectively accrued during the three and six month periods ended December 31, 2012 and this loan has accrued total interest of $5,857 since advance on August 2, 2011. Including accrued interest, the total balance owing on Note Two was $45,822 at December 31, 2012.

On August 23, 2011, the Company issued a third Promissory Note (the “Note Three”) to the Lender in the amount of $24,965 to evidence a loan the Company received on August 23, 2011. Note Three accrues simple interest of 10% per annum and is due upon ten days written from the Lender. Interest on this loan of $683 and $1,366 respectively accrued during the three and six month periods ended December 31, 2012 and this loan has accrued total interest of $3,507 since advance on August 23, 2011. Including accrued interest, the total balance owing on Note Three was $28,472 at December 31, 2012.

On August 29, 2011, the Company issued a fourth Promissory Note (the “Note Four”) to the Lender in the amount of $9,992 to evidence a loan the Company received on August 26, 2011. Note Four accrues simple interest of 10% per annum and is due upon ten days written from the Lender. Interest on this loan of $273 and $546 respectively accrued during the three and six month periods ended December 31, 2012 and this loan has accrued total interest of $1,395 since advance on August 26, 2011. The total balance owing on Note Four was $11,387 at December 31, 2012.

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RARUS TECHNOLOGIES INC. AND SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial statements

Note 7 – Advances and loans from stockholders

On May 11, 2011, the Company received a stockholder advance from its CEO which arose when he contributed $18,500 in expenses he had personally incurred for mineral property staking. This advance is unsecured and carries no interest rate or repayment terms. To conform with GAAP, imputed interest (at 8% per annum) was calculated on the outstanding balance and imputed interest of $373 and $746 respectively for the three and six month periods ended December 31, 2012 was recorded in these financial statements.

Note 8 – Discontinued Operation

On May 8, 2012, the Company incorporated a wholly owned subsidiary named Zngle, Inc. to act as its operations center for a Social Media enterprise and all activities in its former mining business were terminated and are treated as a Discontinued Operation in these financial statements.

The components of discontinued operations summarized on the Statement of Operations arising from the closure of our previous business on May 8, 2012 are as follows:

NOTES:

⁽¹⁾ As required by generally accepted accounting principles ('GAAP'), impairments were charged against the Company's previous investments in mineral properties during the relevant financial periods. During the twelve month period ended December 31, 2012 the Company affirmed past and current impairment charges totaling $37,875 relating to the Pilot Peak Property and charged an impairment of $15,000 against the Eagleville Property, bringing total mineral property impairments recorded in the discontinued operation to $52,875.

⁽²⁾ The Gain from Debt Cancellation arose on May 11, 2011 when two former officers of the company assumed liability for $49,500 of accrued expenses of the Company, which included $42,500 owed to legal counsel, which had been recorded as a deferred offering expense; and $7,000 owed to a former director, which had been recorded as an accrued expense owing. On December 31, 2011, these two officers, who had on May 11, 2011 resigned from the Company, forgave the full amount of these loans owed to them by the Company and this event eliminated $49,500 of liabilities owed by the Company and produced a non - cash gain of $49,500.

⁽³⁾ The Impairment loss – website/domains arose on July 22, 2011 when the Company sold its former website and all rights it held to certain domain names. Due to this transaction, an impairment loss on the website/domain names assets was entered for the year ended December 31, 2011. The net impairment loss was based on the recorded asset value of the websites/domain names of $6,000, less accumulated amortization of $(2,000), less forgiveness of an account payable for hosting fees of $275, resulting in a net impairment loss of: $(3,725).

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RARUS TECHNOLOGIES INC. AND SUBSIDIARY

(A Development Stage Company)

Notes to Consolidated Financial statements

Since the date of our inception to December 31, 2012, we have raised $620,000 though offerings of our common shares; $108,922 from loans; and $18,500 from shareholder advances. As of December 31, 2012 we had cash on hand of $4,474 and a prepaid expense balance of $2,908.

Subsequent to the period ended December 31, 2012, on January 16, 2013, the Company received deposit of $19,900 related to a private placement sale of 4,975,000 shares of its common stock to an unrelated party at $0.004 per share. These shares will be issued pursuant to Regulation S of the Securities Act of 1933, as amended (“Reg. S”) and the Company did not engage in any general solicitation or advertising regarding this offering.

Purchases of Significant Equipment

We currently do not have plans to purchase any significant equipment over the next twelve months.

Personnel

As of December 31, 2012, we had one employee (our CEO) and used contracted services to perform product development, marketing, legal services and our bookkeeping. We anticipate a substantial increase in our employee base over the next 12 month period as we hire staff to carry out our business plan. Additions of staff are expected to take place once we have raised further financial resources through stock offerings. Until such time as we have adequate resources to fulfill these plans, we will continue to utilize contracted service providers.  

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.

38

Material Events and Uncertainties

Our operating results are difficult to forecast. Our prospects should be evaluated in light of the risks, expenses and difficulties commonly encountered by comparable early stage companies in Social Media markets. The continuation of our business is dependent upon obtaining further financing, a successful program of product development, and, finally, achieving a profitable level of operations. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. There are no assurances that we will be able to obtain further funds required for our continued operations. We will pursue various financing alternatives to meet our immediate and long - term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will be unable to conduct our operations as planned, and we will not be able to meet our other obligations as they become due. In such event, we will be forced to scale down or perhaps even cease our operations.

Critical Accounting Policies

The Company’s financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use if estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

Our significant accounting policies are summarized in Note 2 of our financial statements. While all these significant accounting policies impact its financial condition and results of operations, the Company views certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on the Company’s financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

EXCHANGE RATE FLUCTUATION RISK

Our reporting currency is United States Dollars (“USD”) and our transactions are primarily conducted in USD. Foreign currency rate fluctuations may have an impact on the Company’s financial reporting. Any such fluctuations may have positive or negative impacts on the results of operations of the Company. We have not entered into derivative contracts either to hedge existing risk or for speculative purposes.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's Exchange Act reports is recorded, processed, summarized and reported within the time communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure based closely on the definition of "disclosure controls and procedures" in Rule 13a - 15(e). The Company's disclosure controls and procedures are designed to provide a reasonable level of assurance of reaching the Company's desired disclosure control objectives. In designing periods specified in the SEC's rules and forms, and that such information is accumulated and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost - benefit relationship of possible controls and procedures. The Company's certifying officer has concluded that the Company's disclosure controls and procedures are not effective in reaching that level of assurance.

At the end of the period being reported upon, the Company carried out an evaluation, under the supervision and with the participation of the Company's management, including the Company's Chief Executive Officer and the Company's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective.

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Management's Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Section 13a - 15(f) of the Securities Exchange Act of 1934, as amended). Internal control over financial reporting is a process designed by, or under the supervision of, the Company's CFO to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external reporting purposes in conformity with U.S. generally accepted accounting principles and include those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

As of December 31, 2012, management conducted an assessment of the effectiveness of the Company's internal control over financial reporting based on the framework established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on the criteria established by COSO management concluded that the Company's internal control over financial reporting was not effective as of December 31, 2012, as a result of the identification of the material weaknesses described below.

A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

Specifically, management identified the following control weaknesses:

(1) The Company has not properly segregated duties as one or two individuals initiate, authorize, and complete all transactions. The Company has not implemented measures that would prevent the individuals from overriding the internal control system. The Company does not believe that this control weakness has resulted in deficient financial reporting because the Chief Financial Officer is aware of his responsibilities under the SEC's reporting requirements and personally certifies the financial reports;

(2) The Company has installed accounting software that does not prevent erroneous or unauthorized changes to previous reporting periods and does not provide an adequate audit trail of entries made in the accounting software.

Accordingly, while the Company has identified certain material weaknesses in its system of internal control over financial reporting, it believes that it has taken reasonable steps to ascertain that the financial information contained in this report is in accordance with generally accepted accounting principles. Management has determined that current resources would be appropriately applied elsewhere and when resources permit, they will alleviate material weaknesses through various steps.

Remediation Plan

We have identified that additional staff will be required to properly segment the accounting duties of the Company. However, we do not currently have resources to fulfill this part of our plan and will be addressing this matter once sufficient resources are available.

Changes in Internal Control over Financial Reporting

During the most recent quarter of the Company’s fiscal year ended December 31, 2012, no material changes were made to the Company’s internal control over financial reporting

Limitations on the Effectiveness of Controls

The Company has confidence in its revised regime of internal controls and procedures. Nevertheless, the Company’s management (including the Chief Executive Officer and Chief Financial Officer) believes that a control system, no matter how well designed and operated can provide only reasonable assurance and cannot provide absolute assurance that the objectives of the internal control system are met, and no evaluation of internal controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. Further, the design of an internal control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitation in all internal control systems, no evaluation of controls can provide absolute assurance that all control issuers and instances of fraud, if any, within the Company have been detected.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There is no litigation pending or threatened by or against us.

ITEM 1A.   RISK FACTORS

The following risk factors should be considered in connection with an evaluation of the business of our business:

In addition to other information in this current report, the following risk factors should be carefully considered in evaluating our business because such factors may have a significant impact on our business, operating results, liquidity and financial condition.  As a result of the risk factors set forth below, actual results could differ materially from those projected in any forward - looking statements. Additional risks and uncertainties not presently known to us, or that we currently consider to be immaterial, may also impact our business, operating results, liquidity and financial condition.  If any such risks occur, our business, operating results, liquidity and financial condition could be materially affected in an adverse manner. Under such circumstances, the trading price of our securities could decline, and you may lose all or part of your investment.

Risks Related To Our Business and Industry

We have a limited operating history on which to base an evaluation of our business and prospects.

The Company has a limited operating history upon which an evaluation of the Company and its current business and its prospects can be based, each of which must be considered in light of the risks, expenses and problems frequently encountered by all companies in the early stages of development, and particularly by such companies entering new and rapidly developing  markets such as Social Media. Such risks include: without limitation, the inability of the Company to attract or retain users, the inability of the Company to generate significant advertising revenues or other service revenues from its corporate clients, a new and relatively unproven business model, the Company's ability to anticipate and adapt to a developing market, any potential failure of the Company's network infrastructure to efficiently handle user traffic, changes in laws that adversely affect the Company's business, the ability of the Company to manage effectively its rapidly expanding operations, including the amount and timing of capital  expenditures  and other costs relating to the expansion of the Company's operations, the  introduction and development of different or more extensive mobile phone App features by direct and indirect competitors of the Company, including those with greater financial, technical and marketing resources, the inability of the Company to maintain and increase levels of user traffic through its App and website, the inability of the Company to attract, retain and motivate qualified personnel and general economic conditions. To address these risks, the Company must, among other things, attract and retain users, retain its user base and attract a significant number of new advertising customers, respond to competitive developments, develop and extend its brand, attract, retain and motivate qualified personnel and continue to develop and upgrade its technologies and commercialize its services incorporating such technologies. There can be no assurance that the Company will be successful in addressing such risks, and any failure to do so could have a material adverse effect on the Company's business, results of operations and financial condition.

We have been in the business of developing a Social Media enterprise since May 8, 2012 (the date of acquisition of the Software License) and to date we have only launched beta versions of our Social Media platform. As a result, we have a limited operating history and have never had any revenues from our operations. In addition, our operating history has been restricted to our prior, now terminated, operations which primarily included the acquisition and exploration of our mineral properties and this does not provide a meaningful basis for an evaluation of the prospects for our new Social Media business venture. We have no way to evaluate the likelihood of whether we will succeed in developing a profitable Social Media platform or that we will be able to effectively operate such an enterprise if our launch is successful. We anticipate that we will continue to incur operating costs without realizing any revenues during the period when we are developing our enterprise. We therefore expect to continue to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from our Social Media platform that we will not be able to earn profits or continue operations. At this early stage of our operation, we also expect to face the risks, uncertainties, expenses and difficulties frequently encountered by companies at the start up stage of their business development. We cannot be sure that we will be successful in addressing these risks and uncertainties and our failure to do so could have a materially adverse effect on our financial condition. There is no history upon which to base any assumption as to the likelihood that we will prove successful and we can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations.

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The Company is exposed to substantial risk due to its dependence on a key third-party relationship.

The Company is, and will continue to be, significantly dependent on ThinkCorp AG ("Licensor") during the term of its License Agreement. If the Company does not fulfill its payment commitments to Licensor, which total $22 million prior to May 8, 2017, Licensor may cease to provide the Zngle platform and the Company's business would cease. Additionally, the Company faces the risk that Licensor will not manage its own business in an effective manner, or become financial insolvent, either of which would have material negative impacts on the operations and outlook of the Company.   

The Social Media industry is highly competitive and there is no assurance that we will be successful in executing our business strategy and we may be required to reduce or cease operations.

The Social Media industry is a new and growing industry which is highly competitive. The market for users and mobile phone advertising is new and rapidly evolving, and competition for users and advertisers is intense and is expected to increase significantly. Barriers to entry are relatively insubstantial and the Company may face competitive pressures from many additional companies located around the world. We compete with other Social Media platforms for users and advertisers. In identifying and developing opportunities in the Social Media industry, we compete with many companies possessing substantially greater financial resources, staff and technical facilities. This competition could adversely affect our ability to acquire users and advertisers in the future and there can be no assurance that we will acquire sufficient users and advertisers to produce profitability.

The Company believes that the principal competitive factors for companies seeking to create Social Media platforms are critical mass, App functionality, brand  recognition, user affinity and loyalty, broad demographic focus and open access for users. In the future, mobile phone Apps may be developed or acquired by companies currently operating other technology or media enterprises. These are expected to include Facebook, LinkedIn, CitySearch, and/or Yelp and could also include: search  engines, news content sites, commercial online service providers (such as Amazon.com), Internet service  providers ("ISPs") and other entities, certain of which may have more resources than the Company. As the Company competes for users and advertisers with other content providers and with millions of websites operated by companies, government and educational institutions, individuals, and others, if it does not create products and services which effectively compete for user attention it will not succeed.

The Company believes that the principal competitive factors in attracting advertisers include: the amount of traffic to the Zngle App, brand recognition, effective delivery of coupons, high quality customer service to advertisers, the demographics of the Company's users, the Company's ability to offer targeted  audiences and the overall cost effectiveness of the advertising medium offered by the Company. The Company believes that the number of mobile phone App providers relying on phone based advertising  revenue, as well as the number of advertisers and the number of users, will increase substantially in the future. Accordingly, the Company will likely face increased  competition, resulting in increased pricing pressures on its advertising  rates, which could have a material adverse effect on the Company's revenues.

Many of the Company's existing and potential competitors, including Facebook, LinkedIn, CitySearch, Yelp, and YouTube have longer operating histories in the Social Media industry, greater name recognition, larger user bases and significantly greater financial, technical and marketing resources than the Company. Such competitors may be able to undertake more extensive  marketing  campaigns for their brands and services, adopt more aggressive advertising pricing policies and make more attractive offers to advertisers, potential employees, distribution partners, e - commerce companies, and third - party content  providers. Furthermore, the Company's existing and potential competitors may develop mobile phone Apps that are equal or superior in quality to, or that achieve greater market acceptance than, Zngle. There  can be no assurance that the Company will be able to compete successfully against its current, or future,  competitors or, that competition will not have a material adverse effect on the Company's  business, results of operations and financial condition.

The fact that we have not earned any operating revenues since our incorporation raises substantial doubt about our ability to continue as a going concern.

We have not generated any revenue from operations since our incorporation and we anticipate that we will continue to incur operating expenses without revenues unless and until we are able to monetize our Social Media platform and build our operations into in a commercially viable enterprise. At December 31, 2012, we had cash in the amount of $4,474 and a net working capital deficiency of $136,729. We incurred a net loss of $91,197 for the six month period ended December 31, 2012 and a net loss of $720,510 since inception on June 23, 2010. We may have to raise additional funds to meet our currently budgeted operating requirements for the next 12 months. As we cannot assure a lender that we will be able to successfully explore and develop our mineral properties, we will probably find it difficult to raise debt financing from traditional lending sources. We have traditionally raised our operating capital from sales of equity securities and shareholder loans, but there can be no assurance that we will continue to be able to do so. If we cannot raise the money that we need to continue developing our Social Media platform, we may be forced to delay, scale back, or eliminate our development activities. If any of these were to occur, there is a substantial risk that our business would fail.

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These circumstances have lead our current and former independent registered public accounting firms, in their reports included in this Form 10 - Q, to comment about our company’s ability to continue as a going concern. Management has plans to seek additional capital through private placements and/or public offerings of its capital stock and debt offerings. These conditions raise substantial doubt about our company’s ability to continue as a going concern. Although there are no assurances that management’s plans will be realized, management believes that our company will be able to continue operations in the future. Our consolidated financial statements do not include any adjustments relating to the recoverability and potential classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event our company cannot continue in existence. We continue to experience net operating losses.

We are exposed to substantial risk due to the terms of demand notes owed to a third party.  

We have a substantial debt owing to a third party corporation who under the terms of these notes payable may call any, or all, of the notes owing on 10 days notice. Such event(s) could have a material negative effect on our cash - flow and operational plans.

Because we have an unproven business model and operate in a developing market where there is unproven acceptance of the company's services this raises substantial doubt about our ability to succeed.

The Company's business model is new and relatively unproven. The model depends upon the Company's  ability to generate multiple revenue streams by leveraging the user base of its mobile phone App. To be successful, the Company must, among other things, develop and market products and services that achieve broad market acceptance by its users, advertisers and other potential clients. There can be no assurance that any such enterprise, will achieve broad market acceptance. Accordingly, no assurance can be given that the Company's business model will be successful or that it can sustain revenue growth or be profitable.

The market for the Company's products and services is new, rapidly developing and characterized by an increasing  number of market entrants. As is typical of any new and rapidly evolving market, demand and market  acceptance for recently introduced  products and services are subject to a high level of uncertainty and risk. Moreover, because this market is new and rapidly evolving, it is difficult to predict its future growth rate, if any, and its ultimate  size. If the market fails to develop, develops more slowly than expected or becomes  saturated with competitors, or if the Company's products and services do not achieve or sustain market acceptance, the Company's business, results of operations and financial

condition would be materially and adversely affected.

Brand identity is critical to the Company and there are substantial risks associated with brand development.

The Company believes that establishing and maintaining brand identity is a critical aspect of efforts to attract and expand its user base, mobile phone Internet traffic and advertising and commerce relationships. Furthermore,  the Company believes that the importance of brand recognition will increase as low barriers to entry encourage the proliferation of Social Media Apps and websites. In order to attract and retain users,   advertisers and other clients, and in response to competitive pressures, the Company intends to increase its financial commitment to the creation and maintenance of brand loyalty among these groups. The Company plans to accomplish this, although not exclusively, through advertising campaigns in several forms of media, including online media, print, television, and other marketing and promotional efforts. If the Company does not generate a corresponding increase in revenue as a result of its branding efforts or otherwise fails to promote its brand successfully, or if the Company incurs excessive expenses in an attempt to promote and maintain its brand, the Company's business, results of operations and financial  condition would be materially and adversely affected.

Promotion and enhancement of the Zngle brand will also depend, in part, on the Company's success in providing a high - quality App experience. Such success cannot be assured. If users, advertisers and commerce vendors do not perceive the Zngle App experience to be of high  quality, or if the Company  introduces new services or enters into new business ventures that are not favorably received by such parties,  the value of the Company's  brand could be diluted. Such brand dilution could decrease the attractiveness of Zngle to such parties, and could materially and adversely affect the Company's business,  results of operations  and financial condition.

The Company's business model has significant reliance on advertising revenues and the short-term nature of advertising contracts increase risks to the Company's revenue stream.

The Company expects to derive a significant portion of its revenues from the sale of advertisements on its App, and expects to continue to do so for the foreseeable future. The Company's business model therefore is highly dependent on the amount of user traffic to the App, which has a direct effect on the  Company's advertising revenues. The Company is in the early stages of implementing its advertising  sales programs which, if not successful, could  materially and adversely affect the Company's  business, results of operations and financial condition.

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Many of the Company's potential advertising customers may have limited experience with mobile phone based App advertising and may not yet have not devoted a significant portion of their advertising expenditures to mobile phone based App advertising and may not believe that mobile phone based App advertising to be effective relative to traditional  advertising media. There can be no assurance that the Company's will be successful in recruiting sufficient advertisers and, due to the short term nature of advertising contracts, whether these advertisers can be retained. If advertisers cannot be recruited and retainer, this could have a material adverse effect on the Company's business, results of operations and financial condition.

The Company will need to effectively manage its advertising and coupon delivery business or there could be a significant negative impact on revenue.

The process of managing advertising within the projected large, high - traffic mobile phone App/website enterprise which the Company is seeking to develop, is an increasingly important and complex task. If the Company does not manage this task in an efficient and appropriate manner, its financial performance may be impaired. Also to the extent that the Company encounters system failures or material difficulties in the operation of its systems, the Company could be unable to deliver banner advertisements and coupons through its site. Any extended failure of, or material difficulties encountered in connection with, the Company's advertising management system may expose the Company to "make good" obligations with its advertisers, which, by displacing saleable advertising inventory, among other consequences, would reduce revenues and could have a material adverse effect on the Company's business, results of operations and financial condition.

The Company's ability to generate significant advertising revenues will depend, in part, on its ability to create new advertising programs without diluting the perceived value of its existing programs. The  Company's ability to generate advertising revenues will depend also, in part, on: advertisers' desire to reach the specific user base created by Zngle; the development by the Company of a sufficiently large base of users; the effective development of App content that provides user demographic characteristics that will be attractive to advertisers, and government regulation. The adoption of mobile phone based App advertising, particularly by those advertisers that have historically relied upon traditional advertising media, requires the acceptance of a new way of conducting business and exchanging information. There can be no assurance that the market for mobile phone based App advertising will continue to emerge or become sustainable. If the market develops more slowly than expected, the Company's business, results of  operations and financial condition could be materially and adversely affected.

There is intense competition for advertisers and the failure to recruit advertisers is a significant risk.

The sale of Internet and mobile phone based App advertising is subject to intense competition that has resulted in a wide variety of pricing models, rate quotes and advertising services. This makes it difficult to project  future levels of advertising revenues and rates. It is also difficult to predict which pricing models will achieve broad acceptance among advertisers. Any failure of the Company's advertising model to achieve broad market acceptance, would have a material adverse effect on the Company's business, results of operations and financial condition.

The mobile phone App industry is characterized by rapid technological change, which poses potential risks to the Company.

The market for mobile phone App products and services is characterized by rapid technological  developments, evolving industry standards and customer demands, and frequent new product   introductions and enhancements. These market characteristics are exacerbated by the emerging nature of the market and the fact that many companies are expected to introduce new mobile phone App products and services in the near future. The Company's future success will depend in significant part on its ability to continually improve the performance, features and  reliability of its mobile phone App in response to  both evolving demands of the marketplace and competitive product and service offerings, and there can be no assurance that the Company will be successful in doing so, which could adversely  affect the Company's business, results of operations and financial condition.

The Company must appropriately manage growth or it will not be successful.

The Company's planned growth is expected to place a significant strain on its managerial, operational and financial resources. To manage its potential growth, the Company must continue to implement and improve its sales, operational and financial systems and must expand, train and manage an employee base which is expected to grow rapidly. The Company's President does not have prior experience in the operation of a Social Media enterprise and the Company has yet to fill several key senior management posts. There can be no assurance that the Company will be able to effectively manage an expansion of its operations, that the Company's systems, procedures or controls will be adequate to support the Company's operations, or that Company management will be able to achieve the rapid execution necessary to fully exploit the market opportunity for the Company's products and services. Any inability to manage growth effectively could have a material adverse effect on the Company's business, results of operations and financial condition.

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To remain competitive the Company needs to continuously enhance and develop the Zngle App.

To remain competitive, the Company must continue to enhance and improve the responsiveness,  functionality and features of Zngle and develop new products and services. There is the potential risk that enhancements of, or improvements to, Zngle may contain undetected programming errors that require significant design modifications, resulting in a loss of customer confidence and user support and a decrease in the value of the Company's brand name recognition.

The Company plans to develop and introduce new features and functions, such as increased capabilities for user personalization and interactivity. This will require the development or licensing of increasingly complex technologies. There can be no assurance that the Company will be successful in developing or introducing such features and functions or that such features and functions will achieve market acceptance or enhance the Company's brand name recognition. Any failure of the Company to effectively develop and introduce new features and functions, or the failure of such new features and functions to achieve  market acceptance, could have a material adverse effect on the Company's business, results of operations and financial condition.

If mobile phone service providers began offering "Filter" software to their subscribers, this could have a material negative impact on the Company's advertising sales.

"Filter" software programs that limit or remove advertising from an Internet user's desktop are available to consumers. If such programs targeted at mobile phone based Apps began to be offered by mobile phone providers and became widespread in use, this could have a material adverse effect upon the viability of advertising on the Zngle App and the Company's business, results of operations and financial condition could suffer.

The Company's operations are subject to the risks of capacity constraints and systems failures.

A key element of the Company's strategy is to generate a high volume of user traffic. The Company's  ability to attract advertisers and to achieve market acceptance of its products and services, and its   reputation, depend significantly upon the performance of the Company and its network infrastructure (including servers, hardware and software). Any system failure that causes interruption or slower  response time of the Company's products and services could result in less traffic for the Zngle App and, if  sustained or repeated, could reduce the attractiveness of the Company's products and services to advertisers and users. A large increase in the volume of user traffic could strain the capacity of the Company's technical infrastructure, which could lead to slower response time or system failures, and could adversely affect the delivery of ad impressions for advertisers and thus negatively impact the Company's advertising revenues.  

In addition, as the number of users of Zngle increase, there can be no assurance that the Company and its technical infrastructure will be able to grow accordingly, and the Company faces risks related to its ability to scale up to its expected user levels while maintaining superior  performance. Any failure of the Company's servers and networking systems to handle current or higher volumes of traffic would have a material adverse effect on the Company's  business, results of operations and financial condition.

The Company faces risks related to third party services and uncontrollable events.

The Company is dependent upon third parties, such as cell phone companies, to provide potential users with online services necessary for access to Zngle. Any disruption in phone and/or Internet access provided by third parties could have a material adverse effect on the  Company's business, results of operations and financial  condition.

The Company's operations are also dependent in part upon its ability to protect its operating systems against damage from human error, fire, floods, power loss, telecommunications failures, break - ins and similar events. The Company does not presently have redundant, multiple - site capacity in the event of any such occurrence. The Company's servers are also vulnerable to computer  viruses, break - ins and similar disruptions from unauthorized tampering with the Company's computer  systems. The  occurrence of any of these events could result in the interruption, delay or cessation of service, which could have a material adverse effect on the Company's business, results of operations and financial condition. In addition, the Company's reputation  and the Zngle brand could be materially and adversely affected.

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The Company's infrastructure, products and services, and confidential user information face security risks.

Malicious programmers ("hackers") may attempt to penetrate the Company's network security. The Company expects that such attempts could result in hackers misappropriating proprietary Company or user information or cause interruptions in the Company's products and services and the Company may be required to expend significant capital and resources to protect against or to alleviate problems caused by such parties. Additionally, the Company may not have timely remedies against a hacker attacks which penetrate its network security. Such purposeful security breaches could have a material adverse effect on the Company's business, results of operations and financial condition.

In offering certain payment services for some products and services, the Company could also become  increasingly reliant on encryption and authentication technology licensed from third parties to provide the security and authentication necessary to effect secure transmission of confidential information, such as customer credit card numbers. Advances in computer capabilities, discoveries in the field of cryptography and other discoveries, events, or developments could lead to a compromise or breach of the algorithms  that the Company's licensed encryption and authentication technology used to protect such confidential information. If such a compromise or breach of the Company's licensed encryption authentication technology occurs, it could have a material adverse effect on the Company's business, results of operations and financial condition. The Company may also be required to expend significant  capital and resources and engage the services of third parties to protect against the threat of such security, encryption  and authentication technology breaches or to alleviate problems caused by such breaches. Concerns over the security of mobile phone Internet transactions and the privacy of users may also inhibit the growth of the mobile phones as a means of conducting commercial transactions.

The Company faces risk due to its reliance on intellectual property which may be copied or stolen.

The Company regards substantial elements of its mobile phone App and underlying technology as   proprietary and hopes to protect them by relying on intellectual property laws, including trademark,  service mark, copyright and trade secret laws and restrictions on disclosure and transferring title and other methods. The Company also plans to enter into confidentiality agreements with its employees and consultants and in connection with its technology and generally seeks to control access to and distribution of its technology, documentation and other proprietary information. Despite these precautions, it may be  possible for a third party to copy or otherwise obtain and use the Company's proprietary information without authorization or to develop similar technology  independently. Legal standards relating to the validity, enforceability and scope of protection of certain proprietary rights in mobile phone Internet - related businesses are uncertain and still evolving, and no assurance can be given as to the future viability or value of any of the Company's proprietary rights. There can be no assurance that the steps taken by the Company, or Licensor, will prevent misappropriation or infringement of its proprietary information,  which could have a material adverse effect on the Company's business, results of operations and financial condition.

Litigation may be necessary in the future to enforce the Company's  intellectual property  rights, to protect the Company's trade secrets or to determine the validity and scope of the proprietary  rights of others.  Such litigation might result in substantial costs and diversion of resources and management attention. Furthermore, there can be no assurance that the Company's business activities will not infringe upon the proprietary rights of others, or that other parties will not assert infringement claims against the Company,  including claims that by directly or indirectly providing hyperlink text links to Web sites operated by third parties. Moreover, from time to time, the Company may be subject to claims of alleged  infringement by the Company of the trademarks, service marks and other intellectual property rights of third parties. Such claims and any resultant litigation, should it occur, might subject the Company to significant liability for damages, might result in invalidation of the Company's proprietary rights and,  even if not meritorious, could result in substantial costs and diversion of resources and management  attention and could have a material adverse effect on the Company's business, results of operations and financial condition.

The Company currently licenses from third parties certain technologies incorporated into Zngle. As the Company continues to introduce new services that incorporate new technologies, it may be required to license additional technology from others. There can be no assurance that these third - party technology licenses will continue to be available to the Company on commercially reasonable terms, if at all.  Additionally, there can be no assurance that the third party from which the Company currently licenses its technology will be able to defend their proprietary rights successfully against claims of infringement. As a result, any inability of the Company to obtain any of these technology licenses could result in delays or  reductions in the introduction of new services or could adversely affect the performance of its existing  services until equivalent technology can be identified, licensed and integrated.

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Government regulation, taxes and legal uncertainties associated with the Internet present risks to the Company.

A number of legislative and regulatory proposals under consideration by federal, state, provincial, local and foreign governmental organizations may lead to laws or regulations concerning various aspects of the Internet, including, but not limited to, online content, user privacy, taxation, access charges, liability for third - party activities and jurisdiction. Additionally, it is uncertain as to how existing laws will be applied by the judiciary to the Internet. The adoption of new laws or the  application of existing laws may negatively impact demand for the Company's services, increase the Company's cost of doing business or otherwise have a material adverse effect on the Company's business, results of operations and financial condition.

There can be no assurance that the United States, or foreign nations will not enact legislation or seek to  enforce existing laws prohibiting or restricting certain content from the Internet. Prohibition and restriction of Internet content could expose the Company to liability, and/or require substantial modification of Zngle and thereby have a material adverse effect on the Company's business, results of operations and financial condition.

Internet user privacy has become an issue both in the United States and worldwide. The Company cannot predict the exact form of the regulations that the Federal Trade Commission ('FTC') may  adopt.  There can be no assurance that the United  States, or foreign nations will not adopt additional legislation purporting to protect such privacy. Any such action could affect the way in which the Company is allowed to conduct its business, especially those aspects that involve the collection or use of personal  information, and could have a material  adverse  effect on the Company's business, results of operations and financial condition.

The tax treatment of the Internet and e - commerce  is currently  unsettled. A number of proposals have been made at the federal, state and local level and by certain foreign governments that could impose taxes on the sale of goods and services and certain other Internet activities. There can be no assurance that future laws will not impose taxes or other regulations on commerce over mobile phones and/or the Internet, which could substantially impair the growth of e - commerce and as a result have a material  adverse effect on the Company's  business, results of operations and financial condition.

The Company faces risks associated with potential liability for information retrieved from, or  transmitted  over the Internet, and regarding liability for products sold over the Internet.

Because materials may be downloaded from mobile phone Internet services operated or facilitated by the Company, or by the companies with which the Company has relationships, and such materials may be subsequently distributed to others, there is a potential that claims will be made against the Company  for defamation, negligence, copyright or trademark infringement or other theories based on the nature and content of such  materials. Such claims have been brought against online  services in the past and such claims could be material in the future. The Company could also be exposed to liability with respect to  third - party information that may be accessible through the Company's phone App or website, or through content and materials that may be posted by users. Such claims might include, among others, that, by directly or indirectly providing hyperlink text links to Web sites operated by third parties or by  providing  discussion forums for users, the Company is liable for copyright or trademark infringement or other  wrongful actions by such third parties through such websites. It is also possible that, if any third - party content  information  provided on the Company's App contains errors, third parties could make claims against the Company for losses incurred in reliance on such information.

The Company may also be exposed to potential legal risks, such as liabilities or claims resulting from  users receiving unsolicited e - mail ("spamming"), or from lost or misdirected messages, illegal, or fraudulent use of its App or interruptions or delays occurring with information transmitted between users via its App.

We currently rely on certain key individuals and the loss of one of these key individuals could have an adverse effect on the Company.

Our success depends to a substantial degree upon certain a key member of our management. This individual is a significant factor in the our growth and success. The loss of the service of this sole officer and director could have a material adverse effect on our company. Additionally, we do not anticipate having key man insurance in place in respect of our directors and senior officers in the foreseeable future.

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Risks Associated with Our Common Stock

Trading on the OTCQB over-the-counter market may be volatile and sporadic, which could depress the market price of our common stock and make it difficult for our stockholders to resell their shares.

Our common stock is quoted on the OTCQB over - the - counter market. Trading in stock quoted on the OTCQB is often thin and characterized by wide fluctuations in trading prices, due to many factors that may have little to do with our operations or business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating performance. Moreover, the OTCQB is not a stock exchange, and trading of securities on the OTCQB is often more sporadic than the trading of securities listed on a quotation system like NASDAQ, or a stock exchange like Amex. Accordingly, shareholders may have difficulty reselling any of their shares.

Our stock is a penny stock. Trading of our stock may be restricted by the SEC’s penny stock regulations and FINRA’s sales practice requirements, which may limit a stockholder’s ability to buy and sell our stock.

Our stock is a penny stock. The Securities and Exchange Commission has adopted Rule 15g - 9 which generally defines “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker - dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker - dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker - dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker - dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker - dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker - dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker - dealers to trade our securities. We believe that the penny stock rules discourage investor interest in, and limit the marketability of, our common stock.

In addition to the “penny stock” rules promulgated by the Securities and Exchange Commission, the Financial Industry Regulatory Authority has adopted rules that require that in recommending an investment to a customer, a broker - dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non - institutional customers, broker - dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the Financial Industry Regulatory Authority believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker - dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock.

Control by management creates potential risks for minority shareholders.

In the aggregate, ownership of, and by, Company management of 73.4% of the Company's issued and outstanding  shares of common stock provide management with effective control of the corporation. Such control, eliminates the possibility for minority shareholders to vote in a new board of directors and management.

Future possible issuances of additional shares may dilute current shareholder's ownership percentages in the Company.

The Company's Articles of  Incorporation, authorizes the issuance of additional shares of common stock. No information is currently available and no prediction can be made as to the timing or amount of future  sales of such  shares or the  effect, if any, that future sales of shares, or the availability of shares for future sale, will have on the market price of the Company's common stock prevailing from time to time. Sales of substantial amounts of common stock, or the perception that such sales could occur, could materially adversely affect prevailing market prices for our shares and the ability of the Company to raise equity capital in the future.

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Risks Related To Other Factors

There is the potential of negative impact on the Company due to general economic conditions.

Purchases of new mobile phones and computers are typically discretionary decisions for consumers and may be particularly affected by adverse trends in the general economy. The success of the Company's  operations depends to a significant extent upon a number of factors relating to discretionary consumer spending, including economic conditions (and perceptions of such conditions by consumers) affecting  disposable consumer income such as employment, wages and salaries, business conditions, interest rates,  availability of credit and taxation, for the economy as a whole and in regional and local markets where the Company expects to operate. There can be no assurance that consumer spending will not be adversely affected by general economic conditions, which could negatively impact the Company's results of operations or financial condition. Any significant deterioration in general economic conditions or increases in interest rates may inhibit consumers' purchases of new mobile phones and cause a material adverse effect on the Company's revenues and profitability. In addition, the Company's business strategy relies on advertising by and agreements with coupon providers. Any significant deterioration in general economic  conditions that adversely affected these companies could also have a material adverse effect on the Company's business, results of operations and financial condition.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The Company has no senior securities outstanding.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

(a) During the quarter there was no information which would have been required to be filed via a report on Form 8 - K which was not filed as such.

(b) During the quarter there were no material changes to the procedures by which security holders may recommend nominees to the registrant’s board of directors.

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ITEM 6. EXHIBITS