SuperDirectories Inc. - FORM 10-Q

Attached files

file	filename
EX-31.1 - EXHIBIT 31.1/31.2 - SuperDirectories Inc.	exhibit311.htm
EX-32.1 - EXHIBIT 32.1 /32.2 - SuperDirectories Inc.	exhibit3211.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
	WASHINGTON, D.C. 20549

	FORM 10 – Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended June 30, 2010

	or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ________________

Commission file number 000-51533

SuperDirectories, Inc.
(Exact name of small business issuer as specified in its charter)

Delaware		14-1817301
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

5337 Route 374, Merrill, New York 12955
(Address of principal executive offices)

(518) 425-0320
(Registrant’s telephone number, including area code)

Indicate by check mark whether the issuer (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, and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large accelerated filer 	Accelerated filer 	Non-accelerated filer 	Smaller reporting company x
		(Do not check if a smaller
		reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of July 27, 2010 there were 158,876,407 shares of the issuer’s common stock, par value $0.01, issued and outstanding.

SUPERDIRECTORIES, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2010

TABLE OF CONTENTS

		PAGE

	PART I - FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14

Item 4T.	Controls and Procedures	15

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	15

Item 1A.	Risk Factors	15

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15

Item 3.	Defaults Upon Senior Securities	15

Item 4.	(Removed and Reserved)	15

Item 5.	Other Information	15

Item 6.	Exhibits	15

	SIGNATURES

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS		PAGE

Balance Sheets as of June 30, 2010 and September 30, 2009 (Unaudited)		4

Statements of Operations for the three and nine months ended
June 30, 2010 and 2009 and for the period from
November 15, 1999 (Inception) through June 30, 2010 (Unaudited)		5

Statement of Changes in Stockholders' Equity (Deficit) for the period
from November 15, 1999 (Inception) through June 30, 2010 (Unaudited)		6

Statements of Cash Flows for the nine months ended June 30, 2010
and 2009 and for the period from November 15, 1999
(Inception)through June 30, 2010 (Unaudited)		7

Notes to Financial Statements (Unaudited)		8

SuperDirectories, Inc.
(A Development Stage Company)
Balance Sheets
(Unaudited)

	As of			As of
	June 30,			September 30,
	2010			2009
ASSETS

Current assets
Cash and cash equivalents	$	11,806		$	391,798
Total current assets		11,806			391,798

Property and equipment
Office equipment		124,222			124,222
Less: Accumulated depreciation		(97,781	)		(84,387	)
Total property and equipment		26,441			39,835

Trade name, net		1,432			1,595

TOTAL ASSETS	$	39,679		$	433,228

LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities
Accrued expenses	$	-		$	24,000
Accounts payable		-			5,578
Advances from officer		166,709			186,709
Total current liabilities		166,709			216,287

Stockholders' equity (deficit)
Capital stock, par value $0.01 per share, 200,000,000
shares authorized, 158,876,407 and 158,821,157 shares issued
and outstanding as of June 30, 2010 and
September 30, 2009		1,588,764			1,588,211
Additional paid-in capital		5,414,449			5,351,702
Deficit accumulated during the development stage		(7,130,243	)		(6,722,972	)
Total stockholders' equity (deficit)		(127,030	)		216,941

TOTAL LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)	$	39,679		$	433,228

The accompanying notes are an integral part of these financial statements

SuperDirectories, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)

													November 15, 1999
													(Inception)
	Three Months Ended						Nine Months Ended						through
	June 30,						June 30,						June 30,
	2010			2009			2010			2009			2010

Revenues	$	-		$	-		$	-		$	-		$	-

Expenses
General and administrative expenses		70,086			45.365			193,321			152,896			5,776,605
Software costs		40,101			67,584			201,661			194,638			1,085,774
Depreciation and amortization		4,319			6,822			13,557			13,287			99,607
Impairment loss		-			-			-			-			243,903

Total operating expenses		114,506			119,771			408,539			360,821			7,205,889

Other income
Other income		-			-			-			-			125
Interest income		2			3,036			1,268			13,251			75,521
Total other income		2			3,036			1,268			13,251			75,646

Income tax expense		-			-			-			-			-

Net loss	$	(114,504	)	$	(116,735	)	$	(407,271	)	$	(347,570	)	$	(7,130,243	)

Loss per common share - Basic
and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Weighted average commons shares
outstanding - Basic and diluted		158,851,610			158,821,157			158,832,495			158,817,443

The accompanying notes are an integral part of these financial statements

SuperDirectories, Inc.
(A Development Stage Company)
Statements of Changes in Stockholders' Equity (Deficit)
For the period from November 15, 1999 (Inception) through June 30, 2010 (Unaudited)

																Deficit
																Accumulated
							Additional			Common			Common			During the			Total
	Common Stock						Paid-in			Stock			Stock			Development			Stockholders'
	Shares			Amount			Capital			Options			Subscriptions			Stage			Equity

Balance, November 15, 1999 (inception)		-		$	-		$	-		$	-		$	-		$	-		$	-

Issuance of common stock		140,500,000			1,405,000			(1,000,000	)		-			-			-			405,000

Net loss		-			-			-			-			-			(128,347	)		(128,347	)

Balance at September 30, 2000		140,500,000			1,405,000			(1,000,000	)		-			-			(128,347	)		276,653

Issuance of common stock		46,500			465			46,035			-			-			-			46,500

Net loss		-			-			-			-			-			(109,493	)		(109,493	)

Balance at September 30, 2001		140,546,500			1,405,465			(953,965	)		-			-			(237,840	)		213,660

Issuance of common stock		3,228,299			32,283			132,932			-			-			-			165,215

Net loss		-			-			-			-			-			(121,664	)		(121,664	)

Balance at September 30, 2002		143,774,799			1,437,748			(821,033	)		-			-			(359,504	)		257,211

Issuance of common stock		507,408			5,074			20,296			-			-			-			25,370

Net loss		-			-			-			-			-			(51,503	)		(51,503	)

Balance at September 30, 2003		144,282,207			1,442,822			(800,737	)		-			-			(411,007	)		231,078

Issuance of common stock		7,934,119			79,341			271,361			-			-			-			350,702

Net loss		-			-			-			-			-			(109,209	)		(109,209	)

Balance at September 30, 2004		152,216,326			1,522,163			(529,376	)		-			-			(520,216	)		472,571

Issuance of common stock		4,656,036			46,561			504,104			-			-			-			550,665

Stock-based compensation expensed
Options valued at $.492 per share		-			-			-			1,247,220			-			-			1,247,220
Options valued at $.49 per share		-			-			-			1,242,150			-			-			1,242,150

Exercise of stock options		2,484,300			24,843			1,217,307			(1,242,150	)		-			-			-

Net loss		-			-			-			-			-			(2,783,739	)		(2,783,739	)

Balance at September 30, 2005		159,356,662			1,593,567			1,192,035			1,247,220			-			(3,303,955	)		728,867

Issuance of common stock		595,674			5,957			589,718			-			-			-			595,674

Stock-based compensation expensed
Options valued at $.492 per share		-			-			-			1,247,220			-			-			1,247,220

Exercise of stock options		4,968,600			49,686			2,444,754			(2,494,440	)		-			-			-

Stock subscription received		-			-			-			-			4,040			-			4,040

Net loss		-			-			-			-			-			(1,868,183	)		(1,868,183	)

Balance at September 30, 2006		164,920,936			1,649,209			4,226,507			-			4,040			(5,172,138	)		707,618

Issuance of common stock		500,280			5,003			495,277			-			-			-			500,280

Stock subscriptions		-			-			-			-			(4,040	)		-			(4,040	)

Net loss		-			-			-			-			-			(512,791	)		(512,791	)

Balance at September 30, 2007		165,421,216			1,654,212			4,721,784			-			-			(5,684,929	)		691,067

Issuance of common stock		717,899			7,179			710,720			-			-			-			717,899

Retired common stock		(7,347,669	)		(73,477	)		(110,215	)		-			-			-			(183,692	)

Net loss		-			-			-			-			-			(509,637	)		(509,637	)

Balance at September 30, 2008		158,791,446			1,587,914			5,322,289			-			-			(6,194,566	)		715,637

Issuance of common stock		29,711			297			29,413			-			-			-			29,710

Net loss		-			-			-			-			-			(528,406	)		(528,406	)

Balance at September 30, 2009		158,821,157			1,588,211			5,351,702			-			-			(6,722,972	)		216,941

Issuance of common stock		55,250			553			62,747			-			-			-			63,300

Net loss		-			-			-			-			-			(407,271	)		(407,271	)

Balance at June 30, 2010		158,876,407		$	1,588,764		$	5,414,449		$	-		$	-		$	(7,130,243	)	$	(127,030	)

The accompanying notes are an integral part of these financial statements

SuperDirectories, Inc.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
							November 15,
							1999
							(Inception)
	Nine Months Ended						through
	June 30,						June 30,
	2010			2009			2010

Cash Flows from Operating Activities
Net loss	$	(407,271	)	$	(347,570	)	$	(7,130,243	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Non-cash stock compensation expense		-			-			3,736,570
Depreciation and amortization		13,557			13,287			99,607
Impairment loss		-			-			243,903
Changes in operating assets and liabilities
Prepaid expenses and other current assets		-			(11	)		-
Accounts payable		(5,578	)		(16,275	)		18,422
Accrued expense		(24,000	)		(39,233	)		(18,423	)
Net Cash Used in Operating Activities		(423,292	)		(389,802	)		(3,050,164	)

Cash Flows from Investing Activities
Purchase of fixed assets		-			(44,636	)		(368,126	)
Trade name		-			-			(3,257	)
Net Cash Used in Investing Activities		-			(44,636	)		(371,383	)

Cash Flows From Financing Activities
Issuance of common stock		63,300			29,711			3,450,336
Retirement of common stock		-			-			(183,692	)
Repayments of advances from officer		(100,000	)		-			(100,000	)
Advances from officer		80,000			69,708			266,709
Net Cash Provided by Financing Activities		43,300			99,419			3,433,353

Net Increase (Decrease) in Cash and Cash Equivalents		(379,992	)		(335,019	)		11,806

Cash and Cash Equivalents at Beginning of Period		391,798			750,242			-

Cash and Cash Equivalents at End of Period	$	11,806		$	415,223		$	11,806

Supplemental Disclosures of Cash Flow Information:

Cash paid for interest	$	-		$	-		$	-

Cash paid for income taxes	$	-		$	-		$	-

Non-Cash Investing and Financing Activities:
None

The accompanying notes are an integral part of these financial statements

SUPERDIRECTORIES, INC.

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

Note 1 – Basis of presentation:

SuperDirectories, Inc. is a corporation organized under the State of Delaware General Corporation Law. The Corporation was created on November 15, 1999 under the name LukeSmart, Inc. and was renamed SuperDirectories, Inc. on July 9, 2002. The Company is currently developing a searchable directory of selected contents from the Internet.

The accompanying unaudited financial statements of SuperDirectories, Inc. have been prepared in accordance with generally accepted accounting principles used in the United States of America and with the instructions to Form 10-Q. Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation (consisting of normal recurring adjustments) have been included. Operating results for the three-month and nine-month periods ended June 30, 2010 are not necessarily indicative of the results that may be expected for the fiscal year ending September 30, 2010. For further information, refer to the financial statements and footnotes thereto included in the Company’s Report on Form 10-K for the year ended September 30, 2009.

Note 2 – Summary of significant accounting policies:

A summary of the significant accounting policies consistently applied in the preparation of the accompanying financial statements follows.

Development Stage Activities

The Company was incorporated in the state of Delaware on November 15, 1999. Activities to date have been directed at developing a searchable directory of selected contents from the Internet and raising capital through the issuance of the Company’s capital stock.

Cash and Cash Equivalents

The Company considers all unrestricted highly liquid investments with an initial maturity of three months or less to be cash equivalents.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist of cash. Cash balances at June 30, 2010 did not exceed FDIC insurance protection levels, however, periodically, cash balances may exceed FDIC insurance protection levels; subjecting the Company to risk related to the uninsured balance. The Company’s deposits are held at large established bank institutions and management believes that the risk of loss associated with any uninsured balances is remote.

Property and Equipment

Property and equipment are stated at cost when purchased. Depreciation of property and equipment is computed using the straight-line method based on the estimated useful lives of the assets. The useful life of office equipment is from 3 to 5 years. Upon retirement or disposal of an asset, the cost and accumulated depreciation are eliminated from the accounts and the resulting gain or loss is included in the determination of net income (loss). Depreciation expense was $13,394 and $13,124 for the nine months ended June 30, 2010 and 2009, respectively.

Trade name is carried at cost less accumulated amortization. Intangible assets with finite lives are generally amortized on a straight-line basis over the economic lives of the respective assets, generally two to fifteen years. Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. Measurement of any impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use is based on the amount the carrying value exceeds the fair value of the asset. The Company recorded amortization expense of $163 and $163 for the nine-month periods ended June 30, 2010 and 2009, respectively.

Income taxes

Income taxes are recorded in accordance with ASC No. 740, Income Taxes (“ASC 740”) which requires an asset and liability approach for accounting for income taxes. Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of taxes currently due plus deferred taxes relating primarily to differences between the financial and tax basis of the balance sheet elements. The deferred tax assets represent the future return consequences of differences which will be deductible when the assets or liabilities are recovered or settled. Conversely, a deferred tax liability is required when the basis differences will yield a future taxable amount when the asset or liability is settled.

Software Costs

Software costs are expensed as incurred and consist primarily of subcontractor payments and related expenses for enhancements to and maintenance of the Company’s network and the classification and organization of listings. The Company also incurs development costs for database development and website development. Development costs are capitalized. To date, these development costs have been impaired and classified as software costs until management expects such costs can generate revenues in the future.

Earnings (Loss) per Share of Common Stock

Earnings (loss) per share are computed by dividing net income (loss) by weighted average common shares outstanding for the period. Basic earnings per share are computed using an unadjusted weighted average number of shares of common stock. Diluted earnings per share are compiled using the weighted average number of shares of common stock, outstanding during the period plus an adjustment for the dilutive effect of securities convertible into common stock. The Company has no dilutive securities.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 reporting period. Actual results could differ from those estimates.

Recently Issued Accounting Pronouncements

In June 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Codification (“ASC”) 105, “Generally Accepted Accounting Principles” (formerly Statement of Financial Accounting Standards (“FASB”) No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles”). ASC 105 establishes the FASB ASC as the single source of authoritative nongovernmental U.S. GAAP. The standard is effective for interim and annual periods ending after September 15, 2009. The Company adopted the provisions of the standard on September 30, 2009, which did not have a material impact on its financial statements.

In May 2009, the FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”). SFAS 165, which is incorporated in FASB ASC Topic No. 855, “Subsequent Events” (“ASC 855”), establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. In particular, this Statement sets forth: (1) the period after the balance sheet date during which management of a reporting entity should evaluate events or transactions that may occur for potential recognition or disclosure in the financial statements; (2) the circumstances under which an entity should recognize events or transactions occurring after the balance sheet date in its financial statements; and (3) the disclosures that an entity should make about events or transactions that occurred after the balance sheet date. In accordance with ASC 855, an entity should apply the requirements to interim or annual financial periods ending after June 15, 2009. The Company adopted ASC 855 effective June 30, 2009 and the adoption did not have a material impact on its financial statements.

In October 2009, the FASB issued ASU 2009-13, “Multiple-Deliverable Revenue Arrangements — a consensus of the FASB Emerging Issues Task Force,” to provide amendments to the criteria in Subtopic 609-24 of the Codification for separating consideration into multiple-deliverable revenue arrangements. ASU 2009-13 establishes a selling price hierarchy for determining the selling price of each specific deliverable, which includes vendor-specific objective evidence (“VSOE”) if available, third party evidence if VSOE is not available or estimated selling price if neither VSOE nor third party evidence is available. ASU 2009-13 also eliminates the residual method for allocating revenue between the elements of an arrangement and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the arrangement proportionally to each deliverable on the basis of each deliverable’s selling price. This update expands the disclosure requirements regarding a vendor’s multiple-deliverable revenue arrangements. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. The Company does not anticipate that this pronouncement will have a material impact on its results of operations or financial position.

In October 2009, the FASB issued ASU 2009-14, “Certain Revenue Arrangements That Include Software Elements — a consensus of the FASB Emerging Issues Task Force.” This Update removes tangible products containing software components and non-software components that function together to deliver the tangible product’s essential functionality from the scope of the software revenue guidance in Subtopic 985-605 of the Codification. Additionally, ASU 2009-14 provides guidance on how a vendor should allocate arrangement consideration to deliverables in an arrangement that includes both tangible products and software that is not essential to the product’s functionality. ASU 2009-14 requires the same expanded disclosures that are included within ASU 2009-13. ASU 2009-14 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. A company is required to adopt the amendments in both ASU 2009-13 and ASU 2009-14 in the same period using the same transition method. The Company does not anticipate that this pronouncement will have a material impact on its results of operations or financial position

There were various other accounting standards and interpretations issued in 2010, none of which are expected to have a material impact on the Company’s financial position, operations or cash flows.

Reclassifications

Certain amounts in the financial statements of the prior periods have been reclassified to conform to the current presentation for comparative purposes.

Subsequent Events

The Company evaluated all subsequent events from June 30, 2010 through the date of the issuance of the financial statements.

Note 3 – Going concern:

During the nine months ended June 30, 2010, SuperDirectories, Inc. has not generated any revenue and therefore has been unable to generate cash flows sufficient to support its operations and has been dependent on advances from its officer. In addition to negative cash flow from operations, SuperDirectories, Inc. has experienced recurring net losses, and has an accumulated deficit of approximately $7.1 million.

These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if SuperDirectories, Inc. is unable to continue as a going concern.

Note 4 – Related party transactions:

SuperDirectories, Inc. receives services and rents its administrative offices from Aqua Nature of USA, Inc., a company of which the majority stockholder is the majority stockholder of SuperDirectories, Inc. Services and rentals from related parties of $36,000 and $36,000 for each of the nine months ended June 30, 2010 and 2009, respectively, are included in general and administrative expenses.

During the nine months ended June 30, 2010, the Company repaid $100,000 to its President and majority shareholder for prior advances provided to the Company to fund its current operations, and received $80,000 of additional advances. As of June 30, 2010, the amount due to the President and majority shareholder was $166,709. The advance to the Company is unsecured, non-interest bearing and is payable upon demand.

Note 5 – Capital stock:

On November 9, 2009, the Company entered into a subscription agreement with a third party investor and sold 3,000 shares of its common stock at a price of $1.20 per share for an aggregate of $3,600. The shares were issued in February 2010.

On February 16, 2010, the Company sold 5,000 shares of its common stock to a third party investor for $5,000, or $1.00 per share.

On March 23, 2010, the Company sold 10,000 shares of its common stock to a third party investor for $10,000, or $1.00 per share. The shares were issued in April 2010.

On April 30, 2010, the Company sold 10,000 shares of its common stock to a third party investor for $12,000, or $1.20 per share.

On May 9, 2010, the Company sold 6,000 shares of its common stock to a third party investor for $7,200, or $1.20 per share.

On May 11, 2010, the Company sold 1,500 shares of its common stock to a third party investor for $1,800, or $1.20 per share.

On May 14, 2010, the Company sold 3,000 shares of its common stock to a third party investor for $3,600, or $1.20 per share.

On May 27, 2010, the Company sold 3,000 shares of its common stock to a third party investor for $3,600, or $1.20 per share.

On May 31, 2010, the Company sold 3,000 shares of its common stock to a third party investor for $3,600, or $1.20 per share.

On June 17, 2010, the Company sold 10,750 shares of its common stock to a third party investor for $12,900, or $1.20 per share.

Note 6 – Income taxes:

The net deferred tax benefits in the accompanying balance sheets include the following components:

	June 30, 2010	September 30, 2009
Deferred tax assets	$ 2,992,769	$ 2,815,993
Less: valuation allowance	(2,992,769)	(2,815,993)
Net deferred tax benefits	$ -	$ -

Deferred taxes relate primarily to unused net operating loss carry-forwards of approximately $7.1 million, tax-effected at rates of 34% for federal taxes and 8% for state taxes. Due to the uncertainty regarding the level of future earnings, the Company has recorded a valuation allowance to reflect the estimated amount of deferred tax assets that may not be realized. Net operating loss carry-forwards begin to expire in 2019.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This section of the report includes a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

Although we believe the expectations reflected in these forward-looking statements are reasonable, such expectations cannot guarantee future results, levels of activity, performance or achievements.

All forward-looking statements included in this report and all subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements speak only as of the date made, other than as required by law, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Plan of Operation

The following discussion of our plan of operation for the next 12 months should be read in conjunction with our financial statements and notes thereto, and the other financial data included elsewhere in this quarterly report and the annual report filed with the SEC on Form 10-K. We are including this Plan of Operation in recognition of the fact that we are a development stage company and have yet to achieve operating revenues.

Our plan of operation for the next twelve months is dependent upon our raising additional capital. At the present time, we have approximately $11,806 in cash available and believe we can satisfy our capital requirements for the 12 months ending June 30, 2011 from existing cash and sales of our common stock. No assurance can be given however, that we will be able to sell shares of our common stock. During the 12 months ending June 30, 2011, we will continue to engage consultants to perform “human” editing services, expanding the quality and size of our searchable directory. As expansion occurs, and as increased user activity places greater demand on the system, more hardware (servers and routers) will be added to manage the increased volume of data stored in the database and presented by the online directory. Except for one or more servers and routers as may be occasioned by large demand for our directory, we do not expect to purchase any significant equipment or make any other capital expenditure.

We have been successful in financing our operational and developmental activities to date by selling shares of our common stock and from advances from our President and majority shareholder. While we have no assurance that we will be able to continue that success, our current available cash balance is approximately $11,806 and we expect that we will be able to raise sufficient capital to continue development until income producing business operations are commenced. We have no plans for other business activities if we are unable to raise required funds. We believe we will need to raise additional capital of approximately $420,000 in order to continue operations for the twelve month period ending June 30, 2011 at planned levels of activity. Our activities to date have been limited to building our database and those activities will continue. The information available through our directory comes from ever changing and growing sources. Therefore, our task of adding to our database will be continuous and ongoing.

We have recently experienced delays in meeting certain target dates related to our business operations. The delays were principally caused by our need to synchronize the capabilities of our existing servers and to install fiber optic lines in our Gatineau, Quebec facilities. We do not presently anticipate any such further delays.

We believe that on or about November 2010, we will have a sufficient database to make our website marketable. We currently have 28 directory editors who work on a contract basis, research subjects for our directory, create new categories and add websites to our directory. Our average cost per directory consultant is approximately $1,200 per month. We are currently conducting a training program for our editors to help us to reach the desired efficiency of each editor being able to add approximately 1,800 new links per day into our database.

We currently have five servers in operation – two in Watertown, New York at facilities operated by Westelcom, two in Gatineau, Quebec, and one installed at facilities operated by MCI in Montreal, Quebec. We plan to install a sixth server at a Westelcom facility in Plattsburgh, New York during January 2011.

In October 2010, we intend to start building an administrative staff that will be needed to manage our business as we prepare to move from a developmental to operational mode. In this regard, we plan to add approximately six administrative personnel and expect to begin to incur related payroll costs of approximately $15,000 per month.

By October 2010, we anticipate that we will have sufficiently developed our database to the point where we can offer a product that will be receptive to potential customers. At that time, although we will continue to add to our database, we intend to start adding marketing personnel to develop and implement a plan to bring our product into the marketplace. We plan to add 2 marketing personnel per month beginning in October 2010 until we reach a total of 10 at an approximate monthly payroll cost of $2,750 per such employee.

We expect that our marketing team will be fully assembled by March 2011. At that point, much of the effort of our marketing team will be directed to developing a national marketing effort and formulating a plan and cost projection to carry it out. Our national marketing effort is not expected to commence until after November 2010. The feasibility of our national marketing plan will be dependent on our ability to raise additional capital and we have no assurances that this can be accomplished. However, it is not vital to our operations and we will implement it only when and if we have sufficient funds. We have no present plans for any other business.

Following is a summary of our expected expenditures for the twelve months ending June 30, 2011:

										12 Months
		July		October		January		April		Ending
		Through September		Through December		Through March		Through June		June 30, 2011

Directory Consultants	$	20,000	$	20,000	$	60,000	$	60,000	$	160,000
Professional services		6,000		6,000		6,000		6,000		24,000
Adm. Personnel		5,000		5,000		5,000		5,000		20,000
Marketing personnel		-		-		25,000		50,000		75,000
Product development		15,000		15,000		15,000		15,000		60,000
Rental expense		12,000		12,000		12,000		12,000		48,000
Travel expense		4,000		4,000		4,000		4,000		16,000
Automobile expense		2,000		2,000		2,000		2,000		8,000
Telephone expense		1,200		1,200		1,200		1,200		4,800
Office supplies		900		900		900		900		3,600
Bank fees		75		75		75		75		300
	$	66,175	$	66,175	$	131,175	$	156,175	$	419,700

Funding for our planned operations over the twelve months ended June 30, 2011 is expected to consist of cash currently on hand of approximately $11,806 and sales of securities of approximately $420,000. If we are able to successfully develop and market our directory, we expect to generate revenue from several different sources, but no assurances can be given that this will prove to be the case.

A major portion of our anticipated revenues is expected to come from Pay Per Click fees which we expect will commence on or before November 30, 2010. We are presently generating 245,000 clicks per month and we have no agreements in place at this time to convert clicks to dollars. Our rate structure will be a flat $0.25 per click compared to an average of $0.92 per click for Google and Yahoo, the most measurable in our industry who generate more than 2,000,000 clicks per day. We expect to increase our monthly click rate as rapidly as our financing will permit us to conduct our marketing activities.

Banners will be sold on an annual basis, starting as soon as possible after October 2010 when we will attempt to convert all present (trial basis) free-banner sites to paid sites. The program has not commenced, no transactions have been recorded and no sums raised or fees received.

We intend to introduce a fixed “price per click” (as opposed to the highest bid strategy employed by all known competitors) which we expect to yield a following dedicated to true content matching rather than a ranking based on price. This plan will be modified to offer discounts to sites producing the highest click ratings. We believe this strategy is not yet in wide use and will require a series of modifications to test and prove the concept. In the opinion of management, the bidding concept for key words is not the proper, customer-centric way to determine the priority order of websites to be shown in search results. We believe that showing the most frequently accessed sites at the top of the results list produces a more practical result for users/searchers.

Results of Operations

We are a development stage company. We have relied on funds raised through sales of our common stock and from loans from officers to fund our operations. For the period from November 15, 1999 (inception) to June 30, 2010, we had no operating revenues and incurred net operating losses of $7,130,243. For the three months ended June 30, 2010 and 2009, we incurred net operating losses of $114,504 and $116,735, respectively. For the nine months ended June 30, 2010 and 2009, we incurred net operating losses of $407,271 and $347,570, respectively. Our net operating losses consisted principally of product development costs and legal and accounting fees primarily incurred in connection with ongoing SEC filing requirements.

Liquidity and Capital Resources

Our cash at June 30, 2010 and September 30, 2009, was $11,806 and $391,798, respectively. We will need to raise additional funds to finance our proposed operations during the next 12 months. No assurance can be given that funding will be available to us, on reasonable terms, if at all.

Net cash used in operating activities in the nine months ended June 30, 2010 and June 30, 2009 was $423,292 and $389,802, respectively. Net cash used in operating activities from inception through June 30, 2010 was $3,050,164. Net cash provided by financing activities for the nine months ended June 30, 2010 and from inception through June 30, 2010 was $43,300 and $3,433,353, respectively.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.

Development Stage Activities

Revenue Recognition

In October 2009, the FASB issued ASU 2009-13, “Multiple-Deliverable Revenue Arrangements — a consensus of the FASB Emerging Issues Task Force,” to provide amendments to the criteria in Subtopic 609-24 of the Codification for separating consideration into multiple-deliverable revenue arrangements. ASU 2009-13 establishes a selling price hierarchy for determining the selling price of each specific deliverable, which includes vendor-specific objective evidence (“VSOE”) if available, third party evidence if VSOE is not available or estimated selling price if neither VSOE nor third party evidence is available. ASU 2009-13 also eliminates the residual method for allocating revenue between the elements of an arrangement and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the arrangement proportionally to each deliverable on the basis of each deliverable’s selling price. This update expands the disclosure requirements regarding a vendor’s multiple-deliverable revenue arrangements. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. We do not anticipate that this pronouncement will have a material impact on our results of operations or financial position.

In October 2009, the FASB issued ASU 2009-14, “Certain Revenue Arrangements That Include Software Elements — a consensus of the FASB Emerging Issues Task Force.” This Update removes tangible products containing software components and nonsoftware components that function together to deliver the tangible product’s essential functionality from the scope of the software revenue guidance in Subtopic 985-605 of the Codification. Additionally, ASU 2009-14 provides guidance on how a vendor should allocate arrangement consideration to deliverables in an arrangement that includes both tangible products and software that is not essential to the product’s functionality. ASU 2009-14 requires the same expanded disclosures that are included within ASU 2009-13. ASU 2009-14 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. A company is required to adopt the amendments in both ASU 2009-13 and ASU 2009-14 in the same period using the same transition method. We do not anticipate that this pronouncement will have a material impact on our results of operations or financial position

Use of Estimates

The preparation of financial statements requires us to make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and disclosures of contingent assets and liabilities as of the date of the financial statements. On an ongoing basis, we evaluate our estimates, including those related to reserves; impairment of website development cost, value of our stock issued to consultants for services and deferred taxes. We base our estimates on assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions; however, we believe that our estimates, including those for the above-described items are reasonable.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4T. CONTROLS AND PROCEDURES

Evaluation of Our Disclosure Controls

Under the supervision and with the participation of our senior management, including our chief executive officer and our chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report (the “Evaluation Date”). Based on this evaluation, our chief executive officer and chief financial officer concluded as of the Evaluation Date that our disclosure controls and procedures were effective such that the information relating to us, required to be disclosed in our Securities and Exchange Commission (“SEC”) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Limitations on Effectiveness of Controls and Procedures

Our management does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a 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 limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls 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. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2010 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In the ordinary course of our business, we may from time to time become subject to routine litigation or administrative proceedings which are incidental to our business. We are not a party to nor are we aware of any existing, pending or threatened lawsuits or other legal actions involving us.

ITEM 1A. RISK FACTORS

Not applicable.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On March 23, 2010, we entered into a subscription agreement with a non-affiliate and sold 10,000 shares of its common stock at a price of $1.00 per share for an aggregate of $10,000. The shares were issued in April 2010.

On April 30, 2010, we sold an aggregate of 10,000 shares of our common stock to two non-affiliates for $12,000 or $1.20 per share.

On May 9, 2010 and May 11, 2010, we sold an aggregate of 7,500 shares of our common stock to three non-affiliates for $9,000 or $1.20 per share.

On May 14, 2010 we sold an aggregate of 3,000 shares to a non-affiliate for $3,600 or $1.20 per share.

On May 27, 2010 we sold an aggregate of 3,000 shares of our common stock to a non-affiliate for $3,600 or $1.20 per share.

On May 31, 2010 we sold an aggregate of 3,000 shares of our common stock to a non-affiliate for $3,600 or $1.20 per share.

On June 17, 2010 we sold an aggregate of 10,750 shares of our common stock to three non-affiliates at a price of $12,900 or $1.20 per share.

All of the foregoing issuances, except for the May 14, 2010 issuance, were made in reliance on Regulation S under the Securities Act of 1933, as amended. The May 14, 2010 issuance was made in reliance on Section 4(2) of the Securities Act of 1933, as amended.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. (REMOVED AND RESERVED)

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

In reviewing the agreements included as exhibits to this Form 10-Q, they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about the Company or the other parties to the agreements. The agreements may contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the parties to the applicable agreement and:

•

should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

•

have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

•

may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

•

were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Form 10-Q and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.

The following exhibits are included as part of this report:

Exhibit No. Description

31.1 / 31.2

Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Executive and Financial Officer

32.1 / 32.2

Rule 1350 Certification of Chief Executive and Financial Officer

SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: July 27, 2010 SuperDirectories, Inc.

By: /s/ Luke Lalonde

Luke Lalonde, President, Principal Executive Officer, Treasurer and Principal Financial Officer

SuperDirectories Inc. - FORM 10-Q - July 27, 2010

Attached files

SuperDirectories Inc. Reports