Attached files
EXHIBIT 99.2
SYNCPOINTE, LLC
BALANCE SHEETS
June 30, 2010 and December 31, 2009
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June 30, 2010
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December 31, 2009
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(Unaudited)
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ASSETS
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CURRENT ASSETS
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Cash and cash equivalents
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$ | - | $ | 10,635 | ||||
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Total current assets
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- | 10,635 | ||||||
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PROPERTY AND EQUIPMENT
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Software
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80,500 | 44,000 | ||||||
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Office equipment
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16,151 | 16,151 | ||||||
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Total property and equipment
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96,651 | 60,151 | ||||||
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Less accumulated depreciation
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4,214 | 2,814 | ||||||
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Net property and equipment
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92,437 | 57,337 | ||||||
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Total assets
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$ | 92,437 | $ | 67,972 | ||||
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LIABILITIES AND MEMBERS' EQUITY (DEFICIT)
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CURRENT LIABILITIES
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Accounts payable
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$ | 390,261 | $ | 426,321 | ||||
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Accrued liabilities
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245,069 | 133,686 | ||||||
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Current portion of notes payable
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1,854,360 | 1,639,185 | ||||||
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Total current liabilities
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2,489,690 | 2,199,192 | ||||||
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NONCURRENT PORTION OF NOTES PAYABLE
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500,000 | 500,000 | ||||||
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Total liabilities
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2,989,690 | 2,699,192 | ||||||
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MEMBERS' EQUITY (DEFICIT)
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Contributed capital
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66,024 | 57,264 | ||||||
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Accumulated deficit
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(2,963,277 | ) | (2,688,484 | ) | ||||
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Total members' equity (deficit)
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(2,897,253 | ) | (2,631,220 | ) | ||||
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Total liabilities and members' equity (deficit)
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$ | 92,437 | $ | 67,972 | ||||
The accompanying notes are an integral part of these unaudited financial statements.
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SYNCPOINTE, LLC
STATEMENTS OF OPERATIONS (UNAUDITED)
Six Months Ended June 30, 2010 and 2009
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Six Months Ended
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June 30, 2010
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June 30, 2009
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REVENUES
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$ | - | $ | - | ||||
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OPERATING EXPENSES
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Software research and development
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- | 289,826 | ||||||
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Compensation, consulting and related expenses
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157,500 | 340,318 | ||||||
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General and administrative expenses
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27,237 | 151,094 | ||||||
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Depreciation
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1,400 | 1,223 | ||||||
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Total operating expenses
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186,137 | 782,461 | ||||||
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Operating loss
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(186,137 | ) | (782,461 | ) | ||||
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OTHER INCOME (EXPENSE)
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Interest expense
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(88,656 | ) | (40,317 | ) | ||||
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Other income, net
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- | 54 | ||||||
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Other income (expense), net
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(88,656 | ) | (40,263 | ) | ||||
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NET LOSS
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$ | (274,793 | ) | $ | (822,724 | ) | ||
The accompanying notes are an integral part of these unaudited financial statements.
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SYNCPOINTE, LLC
STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended June 30, 2010 and 2009
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Six Months Ended
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June 30, 2010
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June 30, 2009
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CASH FLOWS FROM OPERATING ACTIVITIES
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Net (loss)
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$ | (274,793 | ) | $ | (822,724 | ) | ||
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Adjustments to reconcile net loss to net cash used
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in operating activities:
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Depreciation
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1,400 | 1,223 | ||||||
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Expenses paid by member
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8,760 | 24,525 | ||||||
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Change in operating assets and liabilities:
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Accounts payable
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(36,060 | ) | 39,391 | |||||
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Accrued liabilities
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177,500 | 20,000 | ||||||
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Net cash provided by operating activities
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(123,193 | ) | (737,585 | ) | ||||
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CASH FLOWS FROM INVESTING ACTIVITIES
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Purchase of property and equipment
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(36,500 | ) | (7,780 | ) | ||||
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Net cash used by investing activities
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(36,500 | ) | (7,780 | ) | ||||
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CASH FLOWS FROM FINANCING ACTIVITIES
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Proceeds from notes payable
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149,058 | 645,317 | ||||||
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Net cash used by financing activities
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149,058 | 645,317 | ||||||
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Net change in cash
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(10,635 | ) | (100,048 | ) | ||||
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Cash and cash equivalents, beginning of period
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10,635 | 187,055 | ||||||
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Cash and cash equivalents, end of period
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$ | 0 | $ | 87,007 | ||||
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
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Cash paid during the year for interest and taxes
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$ | - | $ | - | ||||
The accompanying notes are an integral part of these unaudited financial statements.
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SYNCPOINTE, LLC
NOTES TO UNAUDITED FINANCIAL STATEMENTS
For the Six Months Ended June 30, 2009 and 2008
1. SIGNIFICANT ACCOUNTING POLICIES
Description of business: Syncpointe, LLC (the “Company”) is a software developer focused on the development of mobile device management software. The Company is located in Columbia, Missouri. The Company’s products are geared toward global enterprise, government, and consumer markets.
Use of estimates: Management uses estimates and assumptions in preparing these financial statements in accordance with U.S. generally accepted accounting principles. Significant estimates included in these financial statements include the depreciable lives of property and equipment. Actual results could vary from the estimates that were used.
Cash and cash equlvalents: Cash includes certain interest-bearing bank accounts. Periodically, the Company maintains cash on deposit at financial institutions in excess of amounts insured by the U.S. Federal Deposit Insurance Corporation (FDIC). For purposes of reporting cash flows, the Company considers all cash on hand, in banks, including amounts in bank overdraft positions, certificates of deposit and other highly liquid debt instruments with a maturity of three months or less at the date of purchase, to be cash and cash equivalents.
Software: Costs incurred internally in creating a computer software product are charged to expense when incurred as research and development until technological feasibility has been established for the product. Technological feasibility is established upon completion of a detail program design or, in its absence, completion of a working model. Thereafter, all software production costs are capitalized and subsequently reported at the lower of unamortized cost or net realizable value. Capitalized costs are amortized based on current and future revenue for each product with an annual minimum equal to the straight-line amortization over the remaining estimated economic life of the product. As of June 30, 2010 this software has yet to be placed into service.
Property and equipment: Equipment is carried at cost. Depreciation is computed on the straight-line method based on the estimated useful lives of the related assets, ranging from 5 to 7 years.
Patent rights: The Company acquired patent rights in 2008 from an affiliate of the members in return for $1,000,000 of notes payable to or on behalf of the affiliate, and recognized this cost as software research and development expense due to no estimated fair value of the patent at the date of acquisition.
Advertising: The Company follows the policy of charging the costs of advertising to expense as incurred. Such expenses totaled $0 and $27,342 for the six months ended June 30, 2010 and 2009, respectively.
Management fees: The Company follows the policy of charging the costs of management fees to expense as incurred. Such expenses totaled $0 and $41,920 for the six months ended June 30, 2010 and 2009, respectively, and were paid to an affiliate of a member.
Income taxes: The Company is a Limited Liability Company (LLC) for federal and state income tax purposes. As such, the LLC is not subject to federal income taxes and the income, deductions, credits and other tax attributes of the LLC flow directly to the members of the LLC. The Company also does not anticipate any significant state tax implication for the year ending December 31, 2009. Therefore, no provision is made for federal and state income taxes in the Company’s financial statements.
The LLC has adopted the provisions of FASB ASC 740-10, “Accounting for Uncertain Income Tax Positions”. Management of the LLC believes that the LLC will not have a material impact of the uncertain tax positions on its financial statements for the year ending December 31, 2009. The LLC is in compliance with the filing of the 2008 federal income tax return and applicable state tax returns. As of December 31, 2009, tax years 2008 through 2009 remain open for Internal Revenue Service (“IRS”) audit. The LLC has received no notice of audit from the IRS for any of the open tax years.
Research and development expenses: In accordance with ASC Topic 730 formerly, SFAS No. 2, Accounting for Research and Development Costs the Company accounts for research and development expenditures, including payments to collaborative research partners as research and development expenses. Accordingly, all research and development costs are charged to expense as incurred.
Revenue recognition: The company has had minimal revenue to date. It is the Company’s policy that revenues are recognized pursuant to the provisions of FASB ASC 605 “Revenue Recognition”, when persuasive evidence of an arrangement exists, delivery has occurred (or service has been performed), the sales price is fixed and determinable and collectability is reasonably assured.
Legal costs and contingencies: In the normal course of business, the Company incurs costs to hire and retain external legal counsel to advise it on regulatory, litigation and other matters. The Company expenses these costs as the related services are received.
If a loss is considered probable and the amount can be reasonably estimated, the Company recognizes an expense for the estimated loss. If the Company has the potential to recover a portion of the estimated loss from a third party, the Company makes a separate assessment of recoverability and reduces the estimated loss if recovery is also deemed probable.
Accounting standards updates: In June 2009, the FASB issued Statement No. 168 (an update of ASC 105), “The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162 (FAS 168)”. The Codification became the source of authoritative Generally Accepted Accounting Principle (“GAAP”) recognized by the FASB to be applied by nongovernmental entities. Rules and interpretive releases of the Securities Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. On the effective date of SFAS 168, the Codification superseded all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification became non-authoritative. SFAS 168 was effective for financial statements issued for interim and annual periods ending after September 15, 2009. The adoption of SFAS 168 did not affect the Company’s financial position, results of operations, or cash flows.
In February 2010, the FASB issued ASU 2010-09, "Subsequent Events (Topic 855) - Amendments to Certain Recognition and Disclosure Requirements". ASU 2010-09 requires an entity that is an SEC filer to evaluate subsequent events through the date that the financial statements are issued and removes the requirements that an SEC filer disclose the date through which subsequent events have been evaluated. ASC 2010-09 was effective upon issuance and has been adopted by the Company.
Other ASUs effective after December 31, 2009 are not expected to have a significant effect on the Company’s financial position or results of operations.
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2. GOING CONCERN
The accompanying financial statements have been prepared on a going concern basis, which assumes that the Company will realize its assets and discharge its liabilities in the normal course of business. As reflected in the accompanying financial statements, the Company has an accumulated deficit of $2,963,277, and a members’ deficit of $2,897,253 at June 30, 2010.
The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. Management’s plan includes obtaining additional funds by equity financing; however, there is no assurance of additional funding being available. These circumstances raise significant doubt about the Company’s ability to continue as a going concern.
The accompanying financial statements do not include any adjustments that might arise as a result of this uncertainty.
Notes payable consist of the following at June 30, 2010 and December 31, 2009:
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June 30,
2010
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December 31,
2009
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Note payable to member, secured by all assets of the Company,
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bearing interest at 8.0%, principal and interest payments due
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in full on December 31, 2010.
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$ | 624,626 | $ | 567,352 | ||||
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Note payable to member, secured by all assets of the Company,
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bearing interest at 8.0%, principal and interest payments due
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in full on December 31, 2010.
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629,289 | 571,833 | ||||||
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Note payable to Abundance Partners LP, secured by all assets
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of the Company, bearing interest at 6.0%, principal and interest
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payments due in full on October 1, 2010.
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100,445 | - | ||||||
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Note payable to affiliates of a member, unsecured, bearing interest
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at 8.0%, principal and interest payments due in full on
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December 31, 2010. Assumed in connection with patent acquisition.
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500,000 | 500,000 | ||||||
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Note payable to an affiliate of a member, unsecured, non-interest
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bearing, annual payments beginning February 15, 2011 equal to 10%
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of Syncpointe revenues each preceding calendar year
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500,000 | 500,000 | ||||||
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Total notes payable
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2,354,360 | 2,139,185 | ||||||
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Less current portion
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1,854,360 | 1,639,185 | ||||||
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Noncurrent portion of notes payable
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$ | 500,000 | $ | 500,000 | ||||
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4. OPERATING LEASE COMMITMENTS
The Company leased office facilities under operating lease agreements, the last of which expired March 31, 2010. Lease payments under these agreements totaled $13,190 and $14,445 for the six months ended June 30, 2010 and 2009, respectively. Total rent expense under all agreements was $14,835 and $15,123 for the six months ended June 30, 2010 and 2009, respectively.
5. SUBSEQUENT EVENTS
Events that have occurred subsequent to June 30, 2010 have been evaluated through November 5, 2010, which represents the date the Company’s financial statements were approved by management and were available to be issued.
On August 21, 2010, the members of the Company executed a Membership Interest Purchase Agreement with Quamtel, Inc. (the "Purchaser"), entered into and effective August 18, 2010. All outstanding membership interests of the Company were acquired in exchange for 1,000,000 shares of the Purchaser's unregistered common stock.
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