Attached files
| file | filename |
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| EX-32.2 - EXHIBIT 32.2 - SANTEON GROUP, INC. | exh32-2_0310.htm |
| EX-32.1 - EXHIBIT 32.1 - SANTEON GROUP, INC. | exh32-1_0310.htm |
| EX-31.1 - EXHIBIT 31.1 - SANTEON GROUP, INC. | exh31-1_0310.htm |
| EX-31.2 - EXHIBIT 31.2 - SANTEON GROUP, INC. | exh31-2_0310.htm |
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Form 10-Q
(Mark one)
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[ X ]
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2010
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OR
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[ ]
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Commission File No. 33-19961
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ubroadcast, inc.
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(Exact name of registrant as specified in its charter)
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Delaware
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01-0623010
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(State or Other Jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification Number)
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1666 Garnet Avenue, Suite 312, San Diego, California 92109
(Address of principal executive offices, including zip code)
(866) 352-6975
(Issuer’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
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Large accelerated filer [ ]
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Accelerated filer [ ]
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Non-accelerated filer [ ] (Do not check if a smaller reporting company)
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Smaller reporting company [ X ]
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [ X ]
As of May 20, 2010, there were 184,741,174 shares of the issuer’s common stock outstanding.
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ubroadcast, inc.
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INDEX
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Page
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6
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2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
UBROADCAST, INC.
CONSOLIDATED BALANCE SHEETS
March 31, 2010 and December 31, 2009
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3/31/2010
(unaudited)
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12/31/2009
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Current Assets
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Cash
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$ | 1,097 | $ | 4,240 | ||||
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Accounts Receivable
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5,380 | - | ||||||
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Total Current Assets
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6,477 | 4,240 | ||||||
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Non Current Assets
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Equipment, net of Depreciation
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2,064 | 2,300 | ||||||
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Software, net of Amortization
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537,218 | 308,339 | ||||||
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Total Non Current Assets
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539,282 | 310,639 | ||||||
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TOTAL ASSETS
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$ | 545,759 | $ | 314,879 | ||||
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Current Liabilities
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Accounts Payable
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110,978 | 102,122 | ||||||
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Notes Payable
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30,400 | 30,400 | ||||||
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Notes Payable, Related Parties
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3,364 | 192,533 | ||||||
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Total Current Liabilities
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144,742 | 325,055 | ||||||
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Total Liabilities
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144,742 | 325,055 | ||||||
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Capital/Owners' Equity
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Preferred stock, $.001 par value; 50,000,000 shares authorized, -0- and -0- shares inssued and outstanding
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- | - | ||||||
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Common Stock, Par Value $.001; 700,000,000 Shares Authorized; 184,741,174 and 149,428,053 Shares Issued and Outstanding
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184,741 | 149,428 | ||||||
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Additional Paid in Capital
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3,603,434 | 2,897,610 | ||||||
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Retained Earnings (Deficit)
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(3,254,991 | ) | (2,929,214 | ) | ||||
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Subscription Agreement
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(128,000 | ) | (128,000 | ) | ||||
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Treasury Stock
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(4,167 | ) | - | |||||
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Total Equity
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401,017 | (10,176 | ) | |||||
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TOTAL LIABILITIES & EQUITY
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$ | 545,759 | $ | 314,879 | ||||
The accompanying notes are an integral part of these statements
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UBROADCAST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Monthes Ended March 31, 2010 and 2009
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Three Months Ended March 31
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2010
(unaudited)
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2009
(unaudited)
Restated
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Revenues
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$ | 159,686 | $ | 49 | ||||
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Operating Expense
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Compensation Expense
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178,750 | 449,000 | ||||||
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General & Administrative
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206,655 | 47,665 | ||||||
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Depreciation & Amortization
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48,381 | 47,383 | ||||||
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Professional & Consulting Fees
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51,677 | 16,000 | ||||||
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Total Operating Expense
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485,463 | 560,048 | ||||||
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Net Income (loss)
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(325,777 | ) | (559,999 | ) | ||||
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Net loss charged to common shareholders
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(325,777 | ) | (559,999 | ) | ||||
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Net loss applicable to common shareholders
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Basic and diluted
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$ | (0.00 | ) | $ | (0.01 | ) | ||
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Weighted Average number of shares outstanding
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Shares Outstanding
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184,741,174 | 85,003,575 | ||||||
The accompanying notes are an integral part of these statements
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UBROADCAST, INC.
STATEMENT OF STOCKHOLDER (DEFICIT) EQUITY
For the Three Months Ended March 31, 2010
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Common Stock
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Additional
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Subscription
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Treasury
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Accumulated
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Shares
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Amount
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Paid In Capital
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Receivable
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Stock
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Deficit
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Total
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Balance, December 31, 2009
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149,428,053 | $ | 149,428 | $ | 2,897,610 | $ | (128,000 | ) | $ | - | $ | (2,929,214 | ) | $ | (10,176 | ) | ||||||||||||
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Stock Issued in Acquisition
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10,000,000 | $ | 10,000 | $ | 260,000 | $ | - | $ | - | $ | 270,000 | |||||||||||||||||
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Stock Issued for consulting services
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900,000 | $ | 900 | $ | 15,500 | $ | - | $ | - | $ | 16,400 | |||||||||||||||||
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Stock Issued for cash
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4,500,000 | $ | 4,500 | $ | 50,500 | $ | - | $ | - | $ | 55,000 | |||||||||||||||||
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Treasury Stock
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- | $ | - | $ | - | $ | - | $ | (4,167 | ) | $ | - | $ | (4,167 | ) | |||||||||||||
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Stock Issued in payment of salary or bonus
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8,135,705 | $ | 8,136 | $ | 170,614 | $ | - | $ | - | $ | 178,750 | |||||||||||||||||
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Stock Issued in Repayment of Loans & Expenses
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11,777,416 | $ | 11,777 | $ | 209,210 | $ | - | $ | - | $ | 220,987 | |||||||||||||||||
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Net Loss
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$ | (325,777 | ) | $ | (325,777 | ) | ||||||||||||||||||||||
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Balance, March 31 , 2010
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184,741,174 | $ | 184,741 | $ | 3,603,434 | $ | (128,000 | ) | $ | (4,167 | ) | $ | (3,254,991 | ) | $ | 401,017 | ||||||||||||
The accompanying notes are an integral part of these statements
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UBROADCAST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Period Ended March 31, 2010 and 2009
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Cash Flows from Operating Activities
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2010
(unaudited)
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2009
(Unaudited)
Restated
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Net Loss
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$ | (325,777 | ) | $ | (559,999 | ) | ||
| Adjustments to Reconcile Net Loss to cash used in operating activities | ||||||||
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Depreciation
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48,381 | 47,383 | ||||||
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Stock Issued for Service, Salary, & Bonus
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195,150 | 108,000 | ||||||
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Stock issued for Finder Fees
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- | |||||||
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Stock Issued for Expense Reimbursment
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32,118 | - | ||||||
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Changes in Assets & Liabilities
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Accrued Expenses
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- | |||||||
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Accounts Payable
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8,857 | 373,884 | ||||||
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Accounts Receivable
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(5,680 | ) | - | |||||
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Cash Flows Used in Operating Activities
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(46,951 | ) | (30,732 | ) | ||||
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Cash Flows From Investing Activities
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Purchase of software
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(7,025 | ) | (17,324 | ) | ||||
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Purchase of Equipment
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- | - | ||||||
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Cash Flows Used in Investing Activities
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(7,025 | ) | (17,324 | ) | ||||
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Cash Flows From Financing Activities
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Proceeds from notes Payable
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- | 11,753 | ||||||
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Repayments of notes payable
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Repurchase of Treasury Stock
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(4,167 | ) | ||||||
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Sale of Common Stock, net
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55,000 | 34,010 | ||||||
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Cash Flows Provided by Financing Activities
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50,833 | 45,763 | ||||||
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Net Increase (Decrease) in cash
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(3,143 | ) | (2,293 | ) | ||||
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Cash, beginning of period
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4,240 | (140 | ) | |||||
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Cash, end of period
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$ | 1,097 | $ | (2,433 | ) | |||
The accompanying notes are an integral part of these statements
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UBROADCAST, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2010
Note 1. Basis of Presentation
The accompanying unaudited interim financial statements of ubroadcast, inc. (the “Company”) have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with (A) the audited financial statements and notes thereto contained in the audited financial statements of ubroadcast, Inc., a Nevada corporation (“UBI”), included in the Company’s Current Report on Form 8-K, date of event: January 26, 2009, and (B) the audited financial statements and notes thereto contained in the audited financial statements of the Company included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim are not necessarily indicative of the results to be expected for the full year.
Note 2. Going Concern
The Company has incurred losses totaling $3,254,991 through March 31, 2010, and had a working capital deficit at March 31, 2010. Because of these conditions, the Company will require additional working capital to continue operations and develop its business. The Company intends to raise additional working capital either through private placements, public offerings and/or bank financing.
There are no assurances that the Company will be able to achieve a level of revenues adequate to generate sufficient cash flow from operations or obtain additional financing through private placements, public offerings and/or bank financing necessary to support the Company’s working capital requirements. To the extent that funds generated from any private placements, public offerings and/or bank financing are insufficient, the Company will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the Company. If adequate working capital is not available, the Company may not continue its operations or execute its business plan.
These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 3. Acquisition of iVu Media
In February 2010, we acquired iVu Media Corp., an Alexandria, Virginia-based software company that developed and owns a state-of-the-art Video Content Management (VCM) system. iVu Media’s VCM works in tandem with a High Definition Playback technology, an Internet broadcasting platform that has attracted Fortune 500 clients, including Sony, Ford and Honda, Fox Sports and many leading international broadcasting firms. This acquisition was made entirely with shares of the Company’s common stock. The Company issued 10,000,000 shares of common stock in payment of this acquisition, which shares were valued at $270,000, which was primarily for properietary software.
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Note 4. Capital Stock
Stock Issued for Salary and Retention Bonus
In January 2010, the Company issued 2,739,130 shares of common stock in payment of all accrued salary of one of the Company’s officers of $63,000. In the three months ending March 31, 2010, the Company issued a cumulative 5,146,575 shares of common stock to three of the Company’s officers pursuant to employment agreements, which shares were valued at a cumulative $112,500.
Stock Issued for Cash
During the three months ended March 31, 2010, the Company issued a total of 4,500,000 shares of common stock for cash in the total amount of $55,000.
Stock Issued for Services
During the three months ended March 31, 2010, the Company issued a total of 900,000 shares of common stock in payment of consulting services, which shares were valued at $16,400.
Stock Issued for Repayment of Loans and Advances
In January 2010, the Company issued 1,284,710 shares of common stock in payment of advances to two of the Company’s officers, which were valued at $32,118. In February 2010, the Company issued 9,751,595 shares of common stock in payment of loans to three of the Company’s officers, which were valued at $175,529. In March 2010, the Company issued 741,111 shares of common stock in payment of a loan to one of the Company’s officers, which was valued at $13,340.
Note 5. Employment Agreements
In March 2010, the Company entered into an employment agreement with one of its officers, pursuant to which will be paid a monthly salary of $5,000. This officer was issued 250,000 shares of Company common stock as an employment bonus on the date of hire.
Note 6. Restatements
March 31, 2009 balances were restated to be consistent with the annual audit presentation. The quarterly net loss was increased by $87,713.
Note 7. Subsequent Events
In April 2010, we acquired X2A Consulting, LLC, an Alexandria, Virginia-based software consultancy company. X2A’s clients include Booz Allen Hamilton, Vodafone and employees of Microsoft, IBM, Siemens, Raytheon and Unisys and numerous other Fortune 1000 and medium-sized businesses. For 2009, X2A had revenues of approximately of $235,000. This acquisition was made entirely with shares of the Company’s common stock. The Company issued 10,000,000 shares of common stock, valued at $270,000, in payment of this acquisition, which was primarily for proprietary software.
In March 2009, the Company signed a letter of intent and on May 12, 2010 entered into a definitive agreement to merge with Alexandria, VA-based Santeon, Inc., a privately-held, profitable developer of Business Process Management Software and Solutions. Santeon’s clients include several state and local governments such as the State of Maryland, federal governments such as the Department of Defense as well as numerous private sector customers such as Sage Software, DHL and many dozens of Healthcare organizations. For 2009, Santeon had revenues of approximately $4,000,000. This merger with Santeon will be made with 80,000,000 shares of ubroadcast common stock valued at $1,440,000. As of the date of this filing, the Company had not issued or exchanged the stock as outlined in the agreement.
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On May 24, 2010, we filed the Certificate of Amendment of the Certificate of Incorporation to amend our Certificate of Incorporation to change our corporate name from ubroadcast, inc. to Santeon Group, Inc. The amendment was effective on May 24, 2010.
The filing of the Certificate of Amendment is in accordance with resolutions duly adopted by our Board of Directors and the holders of a majority of our outstanding Common Stock wherein the amendment was approved.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Background
On January 26, 2009, pursuant to an agreement and plan of merger, the Company acquired 100% of the common stock of ubroadcast, Inc., a Nevada corporation (“UBI”), in a combination that has been accounted for as a reverse-acquisition, by issuing a total of 80,000,000 shares of our common stock. In addition, the Company issued 500,000 shares of our common stock in payment of a finder’s fee in connection with the UBI acquisition.
Critical Accounting Policies
While we believe that the factors considered provide a meaningful basis for the accounting policies applied in the preparation of the condensed consolidated financial statements, we cannot guarantee that our estimates and assumptions will be accurate. If such estimates and assumptions prove to be inaccurate, we may be required to make adjustments to these estimates in future periods.
Revenue Recognition. We charged our customers service fees for internet access and recognized the revenue in the month the services are provided.
Litigation and Tax Assessments. Should we become involved in lawsuits, we intend to assess the likelihood of any adverse judgments or outcomes of any of these matters as well as the potential range of probable losses. A determination of the amount of accrual required, if any, for these contingencies will be made after careful analysis of each matter. The required accrual may change from time to time, due to new developments in any matter or changes in approach (such as a change in settlement strategy) in dealing with these matters.
Additionally, in the future, we may become engaged in various tax audits by federal and state governmental authorities incidental to our business activities. We anticipate that we will record reserves for any estimated probable losses for any such proceeding.
Stock-Based Compensation. We account for stock-based compensation based on the provisions of Statement of Financial Accounting Standards No. 123. In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment, (FAS-123R). This statement replaces FAS-123, Accounting for Stock-Based Compensation, supercedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FAS-95, Statement of Cash Flows. FAS-123R requires companies to apply a fair-value-based measurement method in accounting for share-based payment transactions with employees and to record compensation cost for all stock awards granted after the required effective date and for awards modified, repurchased or cancelled after that date. The scope of FAS-123R encompasses a wide range of share-based compensation arrangements, including share options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans.
Newly issued accounting standards. Effective July 1, 2009, the FASB established the Accounting Standards Codification as the primary source of authoritative GAAP recognized by the FASB to be applied to non-governmental entities. Although the establishment of the ASC did not change current GAAP, it did change the way we refer to GAAP throughout this document to reflect the updated referencing convention.
On January 1, 2009, we adopted ASC 160, “Non-controlling Interests in Consolidated Financial Statements—an amendment of ARB No. 51,” (ASC 160). ASC 160 amends Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to establish accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. This standard defines a non-controlling interest, previously called a minority interest, as the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. ASC 160 requires, among other items, that a non-controlling interest be included in the consolidated statement of financial position within equity separate from the parent’s equity; consolidated net income to be reported at amounts inclusive of both the parent’s and non-
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controlling interest’s shares and, separately, the amounts of consolidated net income attributable to the parent and non-controlling interest all on the consolidated statement of operations; and if a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary be measured at fair value and a gain or loss be recognized in net income based on such fair value. The presentation and disclosure requirements of ASC 160 were applied retrospectively.
In April 2009, the FASB issued ASC 141(R)-1, “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies” ASC 141(R)-1). This pronouncement amends ASC 141-R to clarify the initial and subsequent recognition, subsequent accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. ASC 141(R)-1 requires that assets acquired and liabilities assumed in a business combination that arise from contingencies be recognized at fair value, as determined in accordance with ASC 157, if the acquisition-date fair value can be reasonably estimated. If the acquisition-date fair value of an asset or liability cannot be reasonably estimated, the asset or liability would be measured at the amount that would be recognized in accordance with FASB Statement No. 5, “Accounting for Contingencies” (ASC 5), and FASB Interpretation No. 14, “Reasonable Estimation of the Amount of a Loss.” ASC 141(R)-1 became effective for the Registrants as of January 1, 2009. As the provisions of ASC 141(R)-1 are applied prospectively to business combinations with an acquisition date on or after the guidance became effective, the impact on our financials cannot be determined until the transactions occur.
In April 2009, the FASB issued ASC 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (ASC 157-4), which provides additional guidance for applying the provisions of ASC 157. ASC 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants under current market conditions. This ASC requires an evaluation of whether there has been a significant decrease in the volume and level of activity for the asset or liability in relation to normal market activity for the asset or liability. If there has, transactions or quoted prices may not be indicative of fair value and a significant adjustment may need to be made to those prices to estimate fair value. Additionally, an entity must consider whether the observed transaction was orderly (that is, not distressed or forced). If the transaction was orderly, the obtained price can be considered a relevant observable input for determining fair value. If the transaction is not orderly, other valuation techniques must be used when estimating fair value. ASC 157-4 must be applied prospectively for interim periods ending after June 15, 2009. The application of this standard will not have a material impact on our financial statements.
In April 2009, the FASB issued ASC 107-1 and Accounting Principles Board (APB) No. 28-1, “Interim Disclosures about Fair Value of Financial Instruments,” which amends ASC 107, “Disclosures About Fair Value of Financial Instruments,” (ASC 107) and APB Opinion No. 28, “Interim Financial Reporting,” respectively, to require disclosures about fair value of financial instruments in interim financial statements, in addition to the annual financial statements as already required by ASC 107. ASC 107-1 and APB No. 28-1 will be required for interim periods ending after June 15, 2009. As ASC 107-1 and APB No. 28-1 provides only disclosure requirements; the application of this standard will not have a material impact on our financial statements.
In April 2009, the FASB issued ASC 115-2 and ASC 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” (ASC 115-2 and ASC No. 124-2), which amends ASC 115, “Accounting for Certain Investments in Debt and Equity Securities” and ASC 124, “Accounting for Certain Investments Held by Not-for-Profit Organizations”. This standard establishes a different other-than-temporary impairment indicator for debt securities than previously prescribed. If it is more likely than not that an impaired security will be sold before the recovery of its cost basis, either due to the investor’s intent to sell or because it will be required to sell the security, the entire impairment is recognized in earnings. Otherwise, only the portion of the impaired debt security related to estimated credit losses is recognized in earnings, while the remainder of the impairment is recorded in other comprehensive income and recognized over the remaining life of the debt security. In addition, the standard expands the presentation and disclosure requirements for other than-temporary-impairments for both debt and equity securities. ASC
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115-2 and ASC 124-2 must be applied prospectively for interim periods ending after June 15, 2009. The application of this standard will not have a material impact on our financial statements.
On May 28, 2009, the FASB issued ASC 855, Subsequent Events. Although ASC 855 does not significantly change current practice surrounding the disclosure of subsequent events, it provides guidance on management's assessment of subsequent events and the requirement to disclose the date through which subsequent events have been evaluated. ASC 855 became effective on June 30, 2009. We have evaluated subsequent events through April 12, 2010, the date our consolidated financial statements were available to be issued for this Annual Report on Form 10-K for the year ended December 31, 2009.
Results of Operations
First Quarter 2010 vs. First Quarter 2009.
Revenues. During the First Quarter 2010, we generated a total of $159,686 in revenues from our operations. Nearly all of the current period’s revenues were derived from the BriteVoice Segment’s activities. For the remainder of 2010, we expect that our BriteVoice Segment will generate a significant majority of our revenues. However, we expect our Broadcasting Segment to generate increasing revenues on a month-by-month basis for the remainder of 2010.
Expenses. Our overall operating expenses during the First Quarter 2010 were $485,463 compared to $519,718 for the First Quarter 2009. Our non-cash operating expenses, which include stock issued for services, finder’s fees, accrued salaries and bonuses, totalled approximately $195,150 for the First Quarter 2010 compared to $295,750 for the First Quarter 2009. We issued a total of 9,035,705 shares of our common stock for services during the First Quarter 2010, which shares were valued for financial reporting purposes at $195,150 in the aggregate. Until we obtain operating capital, it can be expected that we will issue additional shares of our common stock to third-parties in payment of services rendered on our behalf.
Financial Condition
We have incurred losses from inception of $3,254,991 through March 31, 2010 and we have negative working capital at March 31, 2010. During the first three months of 2010, we obtained cash in the amount of $55,000 from private sales of our common stock. All of the funds obtained and the costs advanced on our behalf were applied to operating costs, including professional fees, and to software services associated with the redesign of our ubroadcast.com web site.
Our redesigned ubroadcast.com was launched and we have begun to generate revenues from subscriptions to our Internet Broadcasting services and from web site advertising. At March 30, 2010, we had a working capital deficit and we remain substantially illiquid. We are seeking capital with which to complete our business objectives and we cannot assure you that we will be successful in this regard.
Our Capital Needs
We believe that we will be able to sustain our current level of operations for the next twelve months. We anticipate our capital needs will be met through the sale of shares for cash, loans from certain officers, exercise of certain outstanding warrants and issuance of shares for services. However, to achieve our complete business objectives, we must obtain at least $1,000,000. To date, we have not received a commitment for capital in any amount and we cannot assure you that we will be able to obtain any capital. Should we fail to obtain such financing, our plan of business would likely be unsuccessful and we may be forced to cease operations.
Capital Expenditures
During the three months ended March 31, 2010, we expended $7,025 on software services. During the three month ended March 31, 2009, we expended $17,324 on software services.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
Item 4T. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934 (“the Exchange Act”), that are designed to provide reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management as appropriate to allow timely decisions regarding disclosure. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on his evaluation as of the end of the period covered by this Annual Report on Form 10-K, our President and one of our Executive Vice Presidents, who also serves as our principal financial and accounting officer, has concluded that our disclosure controls and procedures were effective.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act. Our management assessed the effectiveness of our internal control over financial reporting as of September 30, 2008, using the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based upon this assessment, our management concluded that, as of March 31, 2010, our internal control over financial reporting was not effective. Due to our lack of capital, our management determined that our control environment, risk assessment functions, control activities, information and communication functions and monitoring systems were not effective.
There was no change in our internal control over financial reporting during the quarter ended March 31, 2010 that has materially affected, or is reasonably likely to materially affect, our company’s internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
We are not currently involved in any legal proceedings.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the three months ended March 31, 2010, we issued unregistered securities, as follows:
1. (a) Securities Sold. 4,000,000 units of securities; (b) Underwriter or Other Purchasers. Such securities were issued to Michael Irwin; (c) Consideration. Such securities were issued for $50,000; and (d) Exemption from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company. Each unit includes one share of common stock and one warrant to purchase an additional share of common stock for a period of ninety days.
2. (a) Securities Sold. 1,284,710 shares of common stock were issued; (b) Underwriter or Other Purchasers. Such shares of common stock were issued to John L. Castiglione (614,174 shares) and Jason Sunstein (670,536 shares); (c) Consideration. Such shares of common stock were issued in repayment of cash expenses advanced in the total amount of $31,117; and (d) Exemption from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company.
3. (a) Securities Sold. 500,000 shares of common stock were issued; (b) Underwriter or Other Purchasers. Such shares of common stock were issued to Douglas Hay; (c) Consideration. Such shares of common stock were issued pursuant to a consulting agreement and were valued at $10,000; and (d) Exemption from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company. In addition, Douglas Hay was issued common stock purchase warrants, as follows: 500,000 with an exercise price of $.02 per share until February 2013; and 500,000 with an exercise price of $.05 per share until February 2013.
4. (a) Securities Sold. 1,630,434 shares of common stock were issued; (b) Underwriter or Other Purchasers. Such shares of common stock were issued to John L. Castiglione (543,478 shares), Jason Sunstein (543,478 shares) and David Loflin (543,478 shares); (c) Consideration. Such shares of common stock were issued for salaries in the total amount of $37,500; and (d) Exemption from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company.
5. (a) Securities Sold. 9,751,595 shares of common stock were issued; (b) Underwriter or Other Purchasers. Such shares of common stock were issued to John L. Castiglione (4,439,585 shares), Jason Sunstein (4,973,121 shares) and David Loflin (338,889 shares); (c) Consideration. Such shares of common stock were issued in repayment of loans in the total amount of $175,528; and (d) Exemption from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company.
6. (a) Securities Sold. 10,000,000 shares of common stock were issued; (b) Underwriter or Other Purchasers. Such shares of common stock were issued to Peter Rusy (8,000,000 shares) and Ashraf M. Rofail
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(2,000,000 shares); (c) Consideration. Such shares of common stock were issued in the acquisition of iVu Media Corp., pursuant to a plan and agreement of reorganization; and (d) Exemption from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company.
7. (a) Securities Sold. 1,811,595 shares of common stock were issued; (b) Underwriter or Other Purchasers. Such shares of common stock were issued to John L. Castiglione (603,865 shares), Jason Sunstein (603,865 shares) and David Loflin (603,865 shares); (c) Consideration. Such shares of common stock were issued for salaries in the total amount of $37,500; and (d) Exemption from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company.
8. (a) Securities Sold. 1,704,546 shares of common stock were issued; (b) Underwriter or Other Purchasers. Such shares of common stock were issued to John L. Castiglione (568,182 shares), Jason Sunstein (568,182 shares) and David Loflin (568,182 shares); (c) Consideration. Such shares of common stock were issued for salaries in the total amount of $37,500; and (d) Exemption from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company.
9. (a) Securities Sold. 400,000 shares of common stock were issued; (b) Underwriter or Other Purchasers. Such shares of common stock were issued to Jennifer Acuri (200,000) and Ford Austin (200,000); (c) Consideration. Such shares of common stock were issued pursuant to a consulting agreement and were valued at $6,400; and (d) Exemption from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company.
10 (a) Securities Sold. 500,000 shares of common stock were issued; (b) Underwriter or Other Purchasers. Such shares of common stock were issued to Paul Goldman; (c) Consideration. Such shares of common stock were included in a like number of units of securities issued for $5,000 in cash; and (d) Exemption from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company.
11 (a) Securities Sold. 250,000 shares of common stock were issued; (b) Underwriter or Other Purchasers. Such shares of common stock were issued to Marc Lord; (c) Consideration. Such shares of common stock were issued pursuant to an employment agreement and were valued at $3,250; and (d) Exemption from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company.
12. (a) Securities Sold. 741,111 shares of common stock were issued; (b) Underwriter or Other Purchasers. Such shares of common stock were issued to David Loflin; (c) Consideration. Such shares of common stock were issued in repayment of cash expenses advanced in the total amount of $13,340; and (d) Exemption from Registration Claimed. These securities are exempt from registration under the Securities Act of 1933, as amended, pursuant to the provisions of Section 4(2) thereof and Rule 506 thereunder, as a transaction not involving a public offering. This purchaser was a sophisticated investor capable of evaluating an investment in our company.
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Subsequent to March 31, 2010, we have issued unregistered securities, as follows:
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1.
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No shares issued.
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Item 3. Defaults upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to our shareholders, during the three months ended March 31, 2010.
Item 5. Other Information.
None.
Item 6. Exhibits.
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Exhibit No.
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Description
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31.1 *
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Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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31.2 *
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Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.1 *
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Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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32.1 *
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Certification of Principal Financial and Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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* filed herewith.
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In accordance with the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
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Date: June 4, 2010.
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UBROADCAST, INC.
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By: /s/ MARC LORD
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Marc Lord, Chief Financial Officer
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