SupportSave Solutions Inc - FORM 10-Q - January 14, 2011

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EX-32.1 - EXHIBIT 32.1 - SupportSave Solutions Incex32_1.htm
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EX-31.1 - EXHIBIT 31.1 - SupportSave Solutions Incex31_1.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

[X]
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
   
 
For the quarterly period ended November 30, 2010
   
[  ]
Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
   
 
For the transition period from  __________ to __________
   
 
Commission File Number: 333-143901

SupportSave Solutions, Inc.
(Exact name of Registrant as specified in its charter)

Nevada
98-0534639
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)

11132 Ventura Blvd, Ste #420, Studio City, CA 91604
(Address of principal executive offices)

(925) 304-4400
(Registrant’s telephone number)
 
_______________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)
 
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 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 (§ 229.405 of this chapter) during the preceeding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [  ] No [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

[ ] Large accelerated filer Accelerated filer
[ ] Non-accelerated filer
[X] 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   [X] No

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 15,186,031 common shares as of November 30, 2010.
 
 
 
 
PART I - FINANCIAL INFORMATION

Item 1.     Financial Statements



These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended November 30, 2010 are not necessarily indicative of the results that can be expected for the full year.
 
 
3
SUPPORTSAVE SOLUTIONS, INC.
(A NEVADA CORPORATION)
 
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 2010 (UNAUDITED) AND MAY 31, 2010 (DERIVED FROM AUDITED)

ASSETS        
 
November 30, 2010
(unaudited)
    
May 31, 2010
(derived from audited)
CURRENT ASSETS
        
Cash and cash equivalents
 $ 996,289     $ 1,588,056
Investment in marketable securities
   260       610
Accounts receivable - trade
   220,278       170,249
Accounts receivable - other
   -0-       15,441
Note receivable - Florida office building
   210,000       210,000
Accrued interest receivable
   6,871       3,541
Prepaid expenses
   1,234       -0-
             
TOTAL CURRENT ASSETS
   1,434,932       1,987,897
             
PROPERTY AND EQUIPMENT
            
Furniture and equipment
   336,787       320,417
Construction in progress
   380,747       -0-
Less accumulated depreciation
   (147,999 )     (118,694)
             
NET PROPERTY AND EQUIPMENT
   569,535       201,723
             
OTHER ASSETS
            
Security deposits
   66,396       64,208
Note receivable - related party
   100,000       50,000
Deferred tax asset
   158,000       -0-
             
TOTAL OTHER ASSETS
   324,396       114,208
             
  $ 2,328,863     $ 2,303,828
 
SUPPORTSAVE SOLUTIONS, INC.
(A NEVADA CORPORATION)
 
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 2010 (UNAUDITED) AND MAY 31, 2010 (DERIVED FROM AUDITED)
 
LIABILITIES AND STOCKHOLDERS' EQUITY        
 
November 30, 2010
(unaudited)
    
May 31, 2010
(derived from audited)
CURRENT LIABILITIES
        
Accounts payable - trade
 $ 31,595     $ 50,986
Accrued expenses
   6,800       39,185
Payroll tax withholdings
   6,500       12,062
Accrued wages
   49,535       62,621
Deferred income taxes
   97,000       97,000
Loan payable - officer
   800       800
             
TOTAL CURRENT LIABILITIES
   192,230       262,654
             
STOCKHOLDERS' EQUITY
            
Common stock, $.00001 par value, 100,000,000 shares authorized, 15,186,031 and 14,503,531 shares issued and outstanding at November 30 and May 31, 2010, respectively
   151       145
Additional paid-in-capital
   2,355,519       1,958,084
Treasury stock
   (3,029 )     (3,029)
Cumulative translation adjustment
   (51,187 )     (43,818)
Unrealized loss on investments
   (19,753 )     (19,403)
Retained earnings (deficit)
   (145,068 )     149,194
             
STOCKHOLDERS' EQUITY
   2,136,633       2,041,173
             
  $ 2,328,863     $ 2,303,827
 
 
F-2
SUPPORTSAVE SOLUTIONS, INC.
 
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 2010 AND 2009 (UNAUDITED)
 
 
2010
    
2009
REVENUE
        
Sales
 $ 750,424     $ 851,056
Less returns and allowances
   (3,780 )     (3,091)
             
TOTAL REVENUE
   746,644       847,965
             
EXPENSES
            
Wages and benefits
   706,098       237,085
Rent
   28,177       19,768
Telephone, internet and utilities
   52,340       29,356
Commissions
   37,124       71,793
Selling, general & administrative
   115,110       99,924
             
TOTAL EXPENSES
   938,849       457,926
             
OPERATING INCOME (LOSS)
   (192,205 )     390,039
             
OTHER INCOME (EXPENSE)
            
Interest income
   5,622       3,093
Other income
   204       -0-
Gains/(losses) from currency hedging contracts
   -0-       9,444
Gains/(losses) on sales of assets
   -0-       (3,152)
             
TOTAL OTHER INCOME (EXPENSE)
   5,826       9,385
             
NET INCOME (LOSS) BEFORE PROVISION FOR FEDERAL INCOME TAX BENEFIT
   (186,379 )     399,424
             
PROVISION FOR FEDERAL INCOME TAX (BENEFIT)
   (65,000 )     140,000
             
NET INCOME (LOSS)
 $ (121,379 )   $ 259,424
             
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC AND DILUTED
   15,068,531       13,255,198
             
NET INCOME (LOSS) PER SHARE:
BASIC AND DILUTED
 $ (0.01 )   $ 0.02
 
SUPPORTSAVE SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2010 AND 2009 (UNAUDITED)
 
 
2010
    
2009
REVENUE
        
Sales
 $ 1,323,011     $ 1,447,860
Less returns and allowances
   (9,714 )     (8,202)
             
TOTAL REVENUE
   1,313,297       1,439,658
             
EXPENSES
            
Wages and benefits
   1,387,048       459,118
Rent
   55,211       47,461
Telephone, internet and utilities
   77,590       65,239
Commissions
   54,034       119,545
Selling, general & administrative
   203,309       212,623
             
TOTAL EXPENSES
   1,777,192       903,986
             
OPERATING INCOME (LOSS)
   (463,895 )     535,672
             
OTHER INCOME (EXPENSE)
            
Interest income
   11,428       6,973
Other income
   204       125
Gains on sales of investments
   -0-       24,395
Gains/(losses) from currency hedging contracts
   -0-       26,881
Gains/(losses) on sales of assets
   -0-       (3,152)
             
TOTAL OTHER INCOME (EXPENSE)
   11,632       55,222
             
NET INCOME BEFORE PROVISION FOR FEDERAL INCOME TAX BENEFIT
   (452,263 )     590,894
             
PROVISION FOR FEDERAL INCOME TAX (BENEFIT)
   (158,000 )     204,000
             
NET INCOME (LOSS)
 $ (294,263 )   $ 386,894
             
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
   14,952,308       13,255,198
             
NET INCOME (LOSS) PER SHARE
 $ (0.02 )   $ 0.03
 
 
F-4
SUPPORTSAVE SOLUTIONS, INC.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2010 AND YEAR ENDED MAY 31, 2010 (UNAUDITED)
 
 
Common Stock
  
Additional
Paid-in
  
Treasury
    
Cumulative
Translation
    
Unrealized
Gain (loss)
    
Retained
Earnings
    
Stockholders'
 
Shares
  
Amount
  
Capital
  
Stock
    
Adjustment
    
on Investments
    
(Deficit)
    
Equity
                                       
Balance, May 31, 2009
   13,255,198   $ 132   $ 1,143,291   $ (64,207 )   $ (21,958 )   $ -0-     $ (124,860 )   $ 932,398
                                                       
Purchase of treasury stock
   -0-     -0-     -0-     (9,017 )     -0-       -0-       -0-       (9,017)
                                                       
Private placement of common stock
   875,000     9     524,992     -0-       -0-       -0-       -0-       525,001
                                                       
Sale of treasury stock
   -0-     -0-     9,805     70,195       -0-       -0-       -0-       80,000
                                                       
Issuance of common stock
   373,333     4     279,996     -0-       -0-       -0-       -0-       280,000
                                                       
Net income and translation adjustment
   -0-     -0-     -0-     -0-       (21,860 )     (19,403 )     274,055       232,792
                                                       
Balance, May 31, 2010
   14,503,531     145     1,958,084     (3,029 )     (43,818 )     (19,403 )     149,195       2,041,174
                                                       
Issuance of common stock
   682,500     6     397,435     -0-       -0-       -0-       -0-       397,441
                                                       
Net (loss) and translation adjustment
   -0-     -0-     -0-     -0-       (7,369 )     (350 )     (294,263 )     (301,982)
                                                       
Balance, November 30, 2010
   15,186,031   $ 151   $ 2,355,519   $ (3,029 )   $ (51,187 )   $ (19,753 )   $ (145,068 )   $ 2,136,633
 
 
F-5
SUPPORTSAVE SOLUTIONS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2010 AND 2009 (UNAUDITED)
 
 
2010
    
2009
CASH FLOWS FROM OPERATING ACTIVITIES:
        
Net income (loss)
 $ (294,263 )   $ 386,894
Adjustments to reconcile net income to net cash provided by operating activities:
            
Depreciation
   29,305       27,257
Stock based compensation expense
   397,442       -0-
(Gain) loss on sale of property
   -0-       3,152
Changes in:
            
Accounts receivable - trade
   (50,029 )     (129,407)
Accounts receivable - other
   15,441       6,200
Accrued interest receivable
   (3,330 )     (2,450)
Prepaid expenses
   (1,234 )     -0-
Deferred tax asset
   (158,000 )     50,000
Accounts payable
   (19,393 )     384
Accrued wages
   (13,086 )     10,376
Accrued federal income tax
   -0-       154,000
Deferred revenue
   -0-       3,092
Payroll tax withholdings payable
   (5,562 )     1,077
Accrued expenses
   (32,385 )     -0-
             
TOTAL ADJUSTMENTS
   159,169       123,681
             
NET CASH PROVIDED BY (USED BY) OPERATING ACTIVITIES
   (135,094 )     510,575
             
CASH FLOWS FROM INVESTING ACTIVITIES:
            
Purchases of property and equipment
   (397,115 )     (99,905)
Sale of property and equipment
   -0-       15,000
Security deposit
   (2,188 )     (4,000)
Change in investment of marketable securities
   -0-       78,050
Increase in note receivable - related party
   (50,000 )     -0-
Currency translation adjustment
   (7,370 )     (8,336)
             
NET CASH PROVIDED BY (USED BY) INVESTING ACTIVITIES
   (456,673 )     (19,191)
             
CASH FLOWS FROM FINANCING ACTIVITIES:
            
Private placement of common stock
   -0-       80,000
Purchase and sale of treasury stock
   -0-       (9,017)
Investment in closely held company
   -0-       (16,500)
Net borrowings on note payable
   -0-       28,923
Proceeds from loan payable to officer
   -0-       800
             
NET CASH PROVIDED BY (USED BY) FINANCING ACTIVITIES
   -0-       84,206
             
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
   (591,767 )     575,590
             
CASH AND CASH EQUIVALENTS - BEGINNING
   1,588,056       474,626
             
CASH AND CASH EQUIVALENTS - ENDING
 $ 996,289     $ 1,050,216
             
SUPPLEMENTAL CASH FLOW INFORMATION:
            
Cash paid for interest
 $ -0-     $ 241
SUPPLEMENTAL NONCASH TRANSACTIONS:
            
Conversion of warrants to common stock
 $ -0-     $ -0-
 
SUPPORTSAVE SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 2010

1.  
NATURE OF BUSINESS
 
SupportSave Solutions, Inc. was incorporated in Nevada on May 2, 2007, and provides offshore business process outsourcing, or BPO, services from an outsourcing center through its wholly-owned subsidiary of the same name, which was incorporated in the Philippines on October 17, 2006 and operates in the Philippines.  Both the parent and its subsidiary are hereinafter referred to as "the Company".

2.  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in U.S. dollars.  The Company uses the accrual basis of accounting and has adopted a May 31 year end.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted.  We believe that the disclosures are adequate to make the financial information presented not misleading.  These condensed financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended May 31, 2010.  All adjustments were of a normal recurring nature unless otherwise disclosed.  In the opinion of management, all adjustments necessary for a fair statement of the results of operations for the interim period have been included.  The results of operations for such interim periods are not necessarily indicative of the results for the full year.

Principles of Consolidation

The consolidated financial statements of the Company include the accounts of the parent company and its wholly-owned Philippines subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents

SupportSave considers all highly liquid investments with maturities of 3 months or less to be cash equivalents.

Property and Equipment

Property and equipment are recorded at cost.  Depreciation is provided by straight-line and accelerated methods, over the estimated useful lives of the assets, ranging from 39 years for real estate (building) and 5 to 7 years for furniture and equipment.  Normal expenditures for repairs and maintenance are charged to operations as incurred.
SUPPORTSAVE SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 2010

2.  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Deferred Revenue

Deferred revenue represents advances received on services to be rendered for the period subsequent to November 30, 2010 and May 31, 2010.  Deferred revenue was $0 and $0 as of November 30, 2010 and May 31, 2010, respectively.

Income Taxes

The Company uses an asset and liability approach to financial accounting and reporting for income taxes.  The difference between the financial statements and tax bases of assets and liabilities is determined annually.  Deferred income tax assets and liabilities are computed for those differences that have future tax consequences using the currently enacted tax laws and rates that apply to the periods in which they are expected to affect taxable income.  Valuation allowances are established, if necessary, to reduce the deferred tax assets to the amount that will more likely than not be realized.  Income tax expense is the current tax payable or refundable for the period, plus or minus the net change in the deferred tax assets and liabilities.

Revenue Recognition

The Company recognizes revenue when products are fully delivered or services have been provided and collection is reasonably assured.

Foreign Currency Translation

The functional currency of the Company is the United States Dollar.  The financial statements of the Company’s Philippine operations are translated to U.S. dollars using the period exchange rates as to assets and liabilities and average exchange rates as to revenues and expenses.  Capital accounts are translated at their historical exchange rates when the capital transaction occurs.  Net gains and losses resulting from foreign exchange translations are included in the Statement of Operations and Changes in Stockholders’ Equity as Other comprehensive income (loss).

Currency Hedging Contract Transactions

The Company's operating expenses consist primarily of salaries, payroll taxes and employee benefit costs paid to the professionals that the Company employs in the Philippines.  Since employee related costs are paid in the local currency, the Company is exposed to the risk of foreign currency fluctuations.  In an effort to try to minimize the downside risk of fluctuating currency rates, the Company has entered into foreign exchange forward contracts.  Any gains or losses from the settled and outstanding forward contracts are recorded as Other income/expense in the Statement of Operations.

SUPPORTSAVE SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 2010

2.  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Advertising Costs

The Company follows the policy of expensing advertising costs as they are incurred.  Advertising expenses for the six months ended November 30, 2010 and 2009 were $33,615 and $65,306, respectively.

Impairment of Long-Lived Assets

The Company reviews its major assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  If an asset is considered impaired, then impairment will be recognized in an amount determined by the excess of the carrying amount of the asset over its fair value.

Financial Instruments

The carrying amounts of financial instruments are considered by management to be their estimated fair values due to their short-term maturities.  Securities that are publicly traded are valued at their fair market value based as of the balance sheet date presented.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures.  Accordingly, actual results could differ from those estimates.

Treasury Stock

Treasury stock purchases are accounted for under the cost method whereby the entire cost of the acquired stock in recorded as treasury stock.  Gains and losses on the subsequent reissuance of shares are credited or charged to capital in excess of par value using the average-cost method.

Basic Income per Share

Basic loss per share has been calculated based on the weighted average number of shares of common stock outstanding during the period.
 
SUPPORTSAVE SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 2010

2.  
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Stock-Based Compensation

Stock-based compensation is accounted for at fair value in accordance with SFAS No. 123 and 123 (R) (ASC 718).  To date, the Company has not adopted a stock option plan and has not granted any stock options.  During the six months ended November 30, 2010 and the year ended May 31, 2010, the Company issued 682,500 and 373,333 shares of common stock to employees, respectively.  See Note 8.

Recent Accounting Pronouncements

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.

3.  
NOTES RECEIVABLE - BUILDING

On May 11, 2009, the Company sold its office building for $260,000 on a note receivable.  The Company received $50,000 down and the remainder is payable in 23 month interest only installments of $1,225 beginning June 11, 2009, with a balloon payment of the remaining principal and all accrued interest due May 11, 2011.  The note will bear interest at 7% per annum and is secured by the real property.

4.  
NOTE RECEIVABLE - RELATED PARTY

During the year ended May 31, 2010, the Company loaned $50,000 to a related party to fund an investment in a film project.  The loan is due on June 14, 2011, and at that time, a total balloon payment of $55,000 is due that will satisfy the principal and accrued interest.

On June 2, 2010, the Company loaned an additional $50,000 to a related party.  The loan is due eighteen (18) months from the date of issuance and a balloon payment of $55,000, consisting of principal and interest, will be due at that time.

5.  
MARKETABLE SECURITIES

Marketable securities are shown on the balance sheet.  The first-in, first-out (FIFO) method is used to determine the cost of each security at the time of sale.  We consider our investment portfolio and marketable equity investments available-for-sale.  Accordingly, these investments are recorded at fair market value.  As of November 30, 2010 and May 31, 2010, unrealized losses of $19,753 and $19,403, respectively, have been recorded.
 
SUPPORTSAVE SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 2010

5.  
MARKETABLE SECURITIES (CONTINUED)

Cost and market value of marketable equity securities at November 30, 2010 and May 31, 2010 are as follows:
 
  Cost  
Gross
Unrealized
Gains/(Losses)
  
Market
Value
           
November 30, 2010:
  Equities/options
 $ 20,013   $ (19,753)   $ 260
                 
May 31, 2010:
  Equities/options
 $ 20,013   $ (19,403)   $ 610
 
6.  
INVESTMENTS

During the year ended May 31, 2010, the Company invested in a company, Affordacars, LLC, in the amount of $16,500.  As of May 31, 2010, the Affordacars, LLC is insolvent and the investment has been written off in full.

7.  
ACCRUED EXPENSES

Accrued expenses consisted of the following as of November 30, 2010 and May 31, 2010:
 
                                  
November 30,
2010
  
May 31,
2010
Accrued professional fees
 $ 6,800   $ 12,015
Accrued foreign taxes
   -0-     25,985
Accrued miscellaneous
   -0-     1,185
           
Total accrued expenses
 $ 6,800   $ 39,185
 
8.  
COMMON STOCK

The Company issued shares at various times to employees for services rendered.  During the six months ended November 30, 2010 and the year ended May 31, 2010, 682,500 and 373,333 shares were issued to employees for a total value of $397,442 and $280,000, respectively.  The shares were valued at the market price on the grant date.

On January 1, 2010, the Company sold 875,000 shares of its common stock in a private offering at $0.60 per share for a total cash value of $525,000.
 
SUPPORTSAVE SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 2010

8.  
COMMON STOCK (CONTINUED)

The Company purchased back 266,769 shares of treasury stock for a total cost of $64,207 during the year ended May 31, 2009.  The Company purchased an additional 20,500 shares for a total cost of $9,017 during the year ended May 31, 2010.  On August 21, 2009, the Company sold 275,387 shares of this treasury stock for $80,000 through a subscription agreement in a private placement.  The proceeds and cost of these shares have been accounted for in additional paid in capital.  The remaining 11,882 shares continue to be held as treasury stock, as a reduction to shareholders’ equity.

The Company issued 682,500 shares of common stock as compensation during the six months ended November 30, 2010.  The shares were valued at $397,442, which was the fair market value as of the grant dates.

As of November 30, 2010, the Company has 15,186,031 shares of common stock issued and outstanding.

9.  
OPERATING LEASE

The Company operates out of a leased facility in Cebu, Philippines.  The lease began on December 1, 2007, and is for 5 years at the rate of approximately $3,500 per month.  Additional space has recently been added at an additional $1,720 per month.  On August 15, 2010, the Company signed a lease in Los Angeles for approximately $1,200 per month for a term of twelve months.

In March 2010, the Company signed a new lease for a facility in Cebu, Philippines.  The lease begins on July 30, 2010, and is for 5 years at the rate of approximately $10,650 per month.  The lease contains a rent-free fit-out period from March 30 to July 29, 2010.  The lease also contains an option for additional 5 years upon mutual agreement of the parties.  The Company anticipates moving to their new facility during the current fiscal year.

Minimum annual rents for all leases for the next five years are as follows:
 
Twelve Months Ended
November 30,
  
Amount
     
2011
   $ 208,066
2012
     199,714
2013
     144,253
2014
     151,648
2015
     104,450
       
    $ 808,131
 
SUPPORTSAVE SOLUTIONS, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOVEMBER 30, 2010

10.  
INCOME TAXES

The provision for Federal income taxes consists of the following at November 30:
 
 
2010
 
2009 
       
Current expense
 $ -0-   $ 204,000
Deferred (benefit) expense
   (158,000)     -0-
           
  $ (158,000)   $ 204,000

The cumulative tax effect at the expected rate of 35% of significant items comprising our deferred tax asset is as follows at November 30, 2010:
 
 
November 30,
2010
   
Deferred tax asset (liability) attributable to:
  
Net operation loss carryover
 $ 158,000
Less: valuation allowance
   -0-
     
Net deferred tax asset (liability)
 $ 158,000

11.  
CONCENTRATION OF CREDIT RISK

The Company maintains cash balances at three financial institutions.  At November 30, 2010, the Company’s cash and cash equivalents exceeded federally insured limits by $558,300.  Of the total cash and cash equivalents, $8,564 is invested in a broker/dealer money market account.

12.  
SALES TO MAJOR CUSTOMER

Sales to one customer amounted to 33% and 14% of net sales in the six months ended November 30, 2010 and 2009, respectively.

13.  
SUBSEQUENT EVENTS

On December 20, 2010, the Company moved its Philippine operations to a new facility as described in Note 9.  The Company has not completely moved from the old facility, retaining a few workers there.

Management has evaluated subsequent events through January 12, 2011, the date which the financial statements were issued, and has determined it does not have any material subsequent events to disclose.
 
 
Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.   These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions.  We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions.  Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain.  Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.  We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.  Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Overview

We provide offshore business process outsourcing, or “BPO,” services which we deliver primarily to U.S.-based clients from our facilities in the Philippines. BPO services involves contracting with an external organization to take primary responsibility for providing a business process or function, such as customer management, transcription and captioning, processing services, human resources, procurement, logistics support, finance and accounting, engineering, facilities management, information technology and training. These customer care services and solutions are provided by our skilled customer service representatives to small and mid-sized companies in the healthcare, communication, business services, financial services, publishing, and travel and entertainment industries.
 

Our long-term vision is to make SupportSave into one of the fastest growing BPO companies in the Philippines, building real value for shareholders, employees and clients. In January 2010 we embarked on a plan to transform SupportSave from a fast growing small company to one that will eventually compete against the largest players in the Philippines BPO industry. We knew it was going to involve a significant investment of our existing capital reserves and resources as we recruited the right management team and built the proper infrastructure to accomplish this goal. As we proceed with our growth plan, we anticipate higher costs related to the compensation of our new management team and the build out and migration to our new 550 seat operation center in the Cybergate building in Cebu, Philippines. The new management team’s stock-based compensation awards are scheduled to continue through the end of the calendar year, significantly increasing our salary and compensation expense in the near-term. In addition, our new facility was opened in early December 2010 and we experienced higher costs as we migrated and provided new equipment to the facility. We believe the new management team and larger, more modern facility will position us to pursue new business contracts that are much larger than the typical and traditionally smaller BPO contracts we now have. Consequently, we anticipate the increased expenses associated with the management team and facility will impair our profitability in the near-term and mid-term, but we also anticipate significant improvement in both overall revenues and profits in the long-term as these new contracts are secured and ramp up.
 
The new facility houses our corporate offices, data center, recruiting facility, health clinic, cafeteria, sleeping quarters and other facilities associated with a large BPO operation. We believe the new center will dramatically improve the working conditions for our employees, strengthen our physical and IT security, improve our power availability, deliver more reliable bandwidth and provide us an excellent foundation upon which we can grow. In addition to improving our ability to recruit new talent, the new center houses training facilities capable of training approximately 50 employees simultaneously, or 150 employees per day. This will allow us to ramp up new programs much faster than before. In general, the larger client contracts we're currently pursuing require a larger, more robust and secure infrastructure and our new Cybergate facility provides it.

We are also working on our IT infrastructure across the board in conjunction with our move to Cybergate. Starting at the individual user level, we have started to cycle out some of the older and unsupported hardware we use and replace it with newer and more reliable models. We believe this will help our clients’ applications to run more consistently and speed up our ability to accomplish various BPO tasks. We are building a much more robust LAN and WAN too. To help us, we have contracted with PLDT, the Philippines largest communications company, to make our network one of the best in the Philippines.

We believe our new management and sales team is gaining traction in the marketplace. Joseph Duryea, Blayne Shell and Prateek Hastir joined SupportSave early in 2010 to reinforce our management team. This team has many contacts in the BPO industry and that’s raising the awareness of SupportSave in the marketplace. Although they represent a significant investment for SupportSave, we are confident that their knowledge, experience and contacts will expose SupportSave to many more business opportunities in 2011 and beyond.
 

Results of Operations for the three and six months ended November 30, 2010 and 2009

To become more profitable and competitive, we have to attract more clients, sell our services and generate more revenues.

Our revenue reported for the three months ended November 30, 2010 was $750,424, compared with $851,056 for the three months ended November 30, 2009.  Our revenue reported for the six months ended November 30, 2010 was $1,323,011, compared with $1,447,860 for the six months ended November 30, 2009.  Our revenue generated for all periods was attributable to the sale of our BPO services. The slight decrease in revenues for the three and six months ended November 30, 2010 from the same periods in 2009 is attributable to some seasonality from our larger clients and no sales revenue from the ezforexhost.com project, which was sold during the year.

Returns and allowances are refunds for services not provided.  Returns and allowances for the three months ended November 30, 2010 amounted to $3,780, compared with $3,091 for the same period ended November 30, 2009.  Returns and allowances for the six months ended November 30, 2010 amounted to $9,714, compared with $8,202 for the same period ended November 30, 2009.  We experienced more returns and allowances in the three and six months ended November 30, 2010 compared with the same period 2009 as a result of some infrastructure issues related to our current facility.

Our revenue less returns and allowances is our total revenue.  Total revenue for the three months ended November 30, 2010 was $746,644, compared with $847,965 for the same period ended November 30, 2009.  Total revenue for the six months ended November 30, 2010 was $1,313,297, compared with $1,439,658 for the same period ended November 30, 2009.

Our operating expenses for the three months ended November 30, 2010 was $938,849, compared with $457,926 for the same period ended November 30, 2009.  The increase in our operating expenses for the three months ended November 30, 2010 compared with November 30, 2009 is mainly attributable to an increase in wages and benefits, which amounted to $706,098 in 2010 compared with $237,085 in 2009.

Our operating expenses for the six months ended November 30, 2010 was $1,777,192, compared with $903,986 for the same period ended November 30, 2009.  The increase in our operating expenses for the six months ended November 30, 2010 compared with November 30, 2009 is mainly attributable to an increase in wages and benefits, which amounted to $1,387,048 in 2010 compared with $459,118 in 2009.

As demonstrated above and going forward, we will experience higher costs related to the compensation of our new management team and the build out and migration to our new 550 seat operation center in the Cybergate building in Cebu, Philippines.  The new management team’s stock-based compensation awards are scheduled to continue through the end of the fiscal year, significantly increasing our salary and compensation expense in the near-term. In addition, our new facility was opened in early December 2010 and we experienced higher costs as we migrate to the facility.   We believe the new management team and larger, more modern facility will position us to pursue new business contracts that are much larger than the typical and traditionally smaller BPO contracts we now have. Consequently, we anticipate the increased expense associated with the management team and facility will impair our profitability in the near-term and mid-term, but we also anticipate significant improvement in both overall revenues and profits in the long-term as these new contracts are secured and ramp up.
 

We had other income of $5,826 for the three months ended November 30, 2010, compared with other income of $9,385 for the three months ended November 30, 2009. The decrease in other income is mainly attributable to gains from currency hedging contracts of $9,444 for the three months ended November 30, 2009 that were not realized at all in the three months ended November 30, 2010.

We had other income of $11,632 for the six months ended November 30, 2010, compared with other income of $55,222 for the six months ended November 30, 2009. The decrease in other income is mainly attributable to gains on the sale of investments in the amount of $24,395 and gains from currency hedging contracts of $26,881 for the six months ended November 30, 2009 that were not realized at all in the six months ended November 30, 2010.

We had a net loss of $121,379 for the three months ended November 30, 2010, compared with net income of $259,424 for the three months ended November 30, 2009. We had a net loss of $294,263 for the six months ended November 30, 2010, compared with net income of $386,894 for the six months ended November 30, 2009.

Liquidity and Capital Resources

As at November 30, 2010, we had $1,434,932 in current assets and $192,230 in current liabilities. On November 30, 2010, we had working capital of $1,242,702.

Operating activities used $135,094 in cash for the six months ended November 30, 2010. Our net loss of $294,263, along with deferred tax asset of $158,000 and accrued expenses of $32,385 were the primary components of our negative operating cash flow, offset by mainly stock-based compensation of $397,442. Cash flows used by investing activities during the six months ended November 30, 2010 was $456,673 mainly as a result of $397,115 in the purchase of property and equipment and $50,000 in increases in a related party note receivable. We did not have any cash flows as a result of financing activities during the six months ended November 30, 2010.

Currently, our primary source of liquidity is cash flows provided by our operations. We will not require additional capital to execute our plan, unless we expand into additional facilities or grow through the acquisition of complementary businesses. Our current cash flows from operations are sufficient to meet our working capital requirements over the next 12 months.

Off Balance Sheet Arrangements

As of November 30, 2010, there were no off balance sheet arrangements.
 
Item 3.     Quantitative and Qualitative Disclosures About Market Risk

A smaller reporting company is not required to provide the information required by this Item.
 

Item 4T.     Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of November 30, 2010.  This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, Christopher Johns.  Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of November 30, 2010, our disclosure controls and procedures are effective.  There have been no changes in our internal controls over financial reporting during the quarter ended November 30, 2010.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level.  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 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 internal 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, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

 
PART II – OTHER INFORMATION

Item 1.     Legal Proceedings

Aside from the following, we are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

On or about January 6, 2011, a complaint was filed against us in the United States Bankruptcy Court for the District of Arizona (Case No. 2:10-bk-01885) by Joseph Charles Loomis (the “Debtor”).  The Debtor is the subject of a Chapter 11 bankruptcy case. The complaint seeks recovery of alleged preferential payments in the amount of approximately $500,000. We intend to answer and vigorously contest the allegation.

Item 1A:  Risk Factors

A smaller reporting company is not required to provide the information required by this Item.

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

None

Item 3.     Defaults upon Senior Securities

None

Item 4.     (Removed and Reserved)

Item 5.     Other Information

None

Item 6.      Exhibits

 
 
SIGNATURES

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

 
SupportSave Solutions, Inc.
   
Date:
January 13, 2011
   
 
By:       /s/ Christopher Johns                                                                 
             Christopher Johns
Title:    Chief Executive Officer and Director
 

SupportSave Solutions Inc Reports

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