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EX-32.1 - ITRACKR SYSTEMS INC | v211321_ex32-1.htm |
EX-23.1 - ITRACKR SYSTEMS INC | v211321_ex23-1.htm |
EX-31.1 - ITRACKR SYSTEMS INC | v211321_ex31-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
x
|
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the fiscal year ended December 31, 2010
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: 000-52810
ITRACKR
SYSTEMS, INC.
(Exact
name of small business issuer as specified in its charter)
Florida
(State
or other jurisdiction of incorporation or
organization)
|
05-0597678
(I.R.S.
Employer
Identification
No.)
|
433
Plaza Road, Ste 275
Boca Raton, FL
33432
(Address
of principal executive offices)
(561)
213-4458
(Registrant's
telephone number, including area code)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes o No x
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 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 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 if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the
best of registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. 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 o
|
Accelerated
filer o
|
|
Non-accelerated
filer o
|
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 Act). Yes o No x
There
were 20,319,997 shares of common stock outstanding as of February 11,
2011. The registrant’s common stock is not traded or listed on any
exchange.
Documents
Incorporated by Reference: None.
EXPLANATORY
NOTE
On
January 12, 2010, the Company closed a share exchange transaction (the “Share
Exchange”) pursuant to which it (i) became the 100% parent of iTrackr, Inc., a
Florida corporation (“iTrackr”), (ii) assumed the operations of iTrackr, and
(iii) changed its name from Must Haves, Inc. to iTrackr Systems, Inc. The
Company reported the closing of the Share Exchange in the Current Report on Form
8-K filed with the Securities and Exchange Commission on January 19, 2010. This
Quarterly Report on Form 10-Q contains information regarding the Company and
iTrackr, Inc., as indicated herein.
ITRACKR
SYSTEMS, INC.
TABLE
OF CONTENTS TO ANNUAL REPORT ON FORM 10-K
FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2010
ITEM
|
PAGE
|
||||
PART
I
|
|||||
Item
1
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Business
|
1 | |||
Item
1A
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Risk
Factors
|
10 | |||
Item
1B
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Unresolved
Staff Comments
|
18 | |||
Item
2
|
Properties
|
18 | |||
Item
3
|
Legal
Proceedings
|
18 | |||
Item
4
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(Removed
and Reserved)
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18 | |||
PART
II
|
|||||
Item
5
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
18 | |||
Item
6
|
Selected
Financial Data
|
22 | |||
Item
7
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
23 | |||
Item
7A
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Quantitative
and Qualitative Disclosures About Market Risk
|
29 | |||
Item
8
|
Financial
Statements and Supplementary Data
|
30 | |||
Item
9
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
51 | |||
Item
9A
|
Controls
and Procedures
|
51 | |||
Item
9B
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Other
Information
|
53 | |||
PART
III
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|||||
Item
10
|
Directors,
Executive Officers and Corporate Governance
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53 | |||
Item
11
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Executive
Compensation
|
56 | |||
Item
12
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
60 | |||
Item
13
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Certain
Relationships and Related Transactions, and Director
Independence
|
61 | |||
Item
14
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Principal
Accounting Fees and Services
|
61 | |||
PART
IV
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|||||
Item
15
|
Exhibits,
Financial Statement Schedules
|
62 | |||
SIGNATURES
|
63 |
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The
information contained in this Annual Report on Form 10-K, including in the
documents incorporated by reference into this Annual Report on Form 10-K,
includes some statements that are not purely historical and that are
“forward-looking statements.” Such forward-looking statements include, but are
not limited to, statements regarding the Company and its management’s
expectations, hopes, beliefs, intentions or strategies regarding the future,
including its financial condition and results of operations. In addition, any
statements that refer to projections, forecasts or other characterizations of
future events or circumstances, including any underlying assumptions, are
forward-looking statements. The words “anticipates,” “believes,” “continue,”
“could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,”
“potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” and
similar expressions, or the negatives of such terms, may identify
forward-looking statements, but the absence of these words does not mean that a
statement is not forward-looking.
The
forward-looking statements contained in this Annual Report on Form 10-K are
based on current expectations and beliefs concerning future developments and the
potential effects on the parties and the transaction. There can be no assurance
that future developments actually affecting the Company will be those
anticipated. These forward-looking statements involve a number of risks,
uncertainties (some of which are beyond the parties’ control) or other
assumptions that may cause actual results or performance to be materially
different from those expressed or implied by these forward-looking statements,
including the following:
·
|
our
ability to maintain and increase revenues and sales of our
products;
|
·
|
our
ability to develop and market new
products;
|
·
|
competitive
nature of our industry;
|
·
|
market
acceptance of our products;
|
·
|
our
reliance on intellectual property, some of which is owned by third
parties;
|
·
|
our
strategic investments and
acquisitions;
|
·
|
continued
maintenance of certificates, permits and licenses required to conduct
business;
|
·
|
vulnerability
of our business to general economic downturn;
and
|
·
|
the
other factors referenced in this prospecuts, including, without
limitation, under the sections entitled “Risk Factors,” “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,”
and “Business.”
|
These
risks and uncertainties, along with others, are also described below under the
heading “Risk Factors.” Should one or more of these risks or uncertainties
materialize, or should any of the parties’ assumptions prove incorrect, actual
results may vary in material respects from those projected in these
forward-looking statements. The Company undertakes no obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under applicable
securities laws.
PART I
ITEM
1. BUSINESS.
Overview
We are an
emerging ecommerce software and services company. In 2006, we began development
of an online search application for retailers and consumers and launched
www.itrackr.com, a social networking website designed to enable consumers the
ability to search for products and services at brick-and-mortar retail stores on
location-based, and inventory-available basis, within their geographic
communities.
In 2009,
iTrackr purchased online customer support software technology from Chatstat for
approximately $95,000. The chat technology enables us to provide
retailers with a support and sales tool for agents with the goal of increasing
transactional business. We serve customers primarily in North America
in a variety of industries with a particular emphasis on ecommerce
markets.
Corporate
Information
We were
incorporated in the State of Wyoming on May 10, 2006 to develop, market and
commercialize a product and inventory search application through a social
networking site designed to leverage the best of Internet and mobile
technologies.
On
November 27, 2007 we adopted Articles of Merger to merger iTrackr, the Wyoming
corporation with and into iTrackr, Inc., a Florida corporation.
On
December 10, 2009, Must Haves, Inc., iTrackr Acquisition, Inc. (“Merger
Sub”) and iTrackr, Inc., a Florida corporation (“iTrackr”), entered into an
Agreement and Plan of Merger (the “Agreement”), which closed January 12, 2010.
On the Closing Date, iTrackr was merged with and into Merger Sub, which is the
surviving corporation and became a wholly-owned subsidiary of the
Registrant.
For the
year ended December 31, 2010 and 2009, the Company had a net loss of $981,805
and $856,942, respectively. As a result, our auditor has issued an
uncertainty paragraph about our ability to continue as a going concern in their
2010 and 2009 audit report stating the Company has suffered recurring losses and
has yet to generate an internal cash flow that raises substantial doubt about
our ability to continue as a going concern.
Our
principal executive offices are located at 433 Plaza Road, Ste 275 Boca Raton,
FL 33432, and our telephone number is (561) 962-4111. Our website address is
http://www.itrackr.com.
Information on or accessed through our website is not incorporated into this
prospectus and is not a part of this prospectus.
With
respect to this discussion, the terms “we”, “our”, “iTrackr” and the “Company”
refer to iTrackr Systems, Inc., and its wholly-owned subsidiary, iTrackr,
Inc..
Chat
and Online Customer Support
Industry
Consumer
migration to the Internet is driving a dramatic shift in the way consumers buy
products and services from companies. As more and more content,
social media sites and web applications become ubiquitous, consumers are
spending an increasing amount of time online. In 2010, consumers will
spend 40-50% of their media time on the Internet. Most analysts
predict usage of offline media, including television, radio and print, will
continue to decline. There is a major paradigm shift taking place in
e-Commerce. According to Forrester Research 58% of consumers start their Product
Research on the web and companies have eight (8) seconds to hook a visitor
through their landing page. Product and service sales through
e-retail channels are expected to grow at a compounded growth 10% annually
through 2013. E-Commerce is the third fastest growing industry behind
Voice over Internet Phone (VoIP) and Search Engines (IBIS World). In
the world where consumers are spending a huge proportion of their time online,
companies are looking at ways to provide live help and interaction when visitors
are online. Interactive live chat is increasingly becoming a way for
companies to interact with their online visitors, answer their questions and
build trust thus enabling them to sell products and services.
1
As the
supply of page views and online content grows faster with a lot of information
online, consumers are getting increasingly frustrated as they seek answers to
simple questions. Consumers have to browse through a number of online
pages, self help and FAQ’s to find answers to their questions which on many
occasions does not provide the information consumers are
seeking. Satisfaction for researching retail products online and
buying them over the phone is only 44-53%, with the younger age group being most
dissatisfied at 44%. According to Forrester Research 57% of US Online
consumers say they are likely to abandon an online purchase if they cannot find
quick answers to their questions. 25-32% of online consumers abandon
their shopping carts (eMarketer). The most compelling statistic comes
from a research conducted by Internet Retailer which concluded that 10-15% of
Consumers who browse online will complete a sale if engaged in a text chat
versus 2% for those who do not engage in a chat.
Companies
doing business online are paying attention to this shift in consumer behavior
and the increasing demand for live interaction online by deploying “Click2Chat”
and “Click2Call” solutions to provide live help while visitors are
online. Most of these companies are providing the live interaction
(Chat) as an afterthought and primarily to provide customer service or technical
support. A few online companies are actively using this as an
additional channel to generate new sales besides the Online and Call Center
channels.
Similarly
in the area of generating leads though online websites very few lead generation
companies with presence online are generating qualified leads in various
verticals such as education, payday loans, financial services, insurance etc.,
using live interaction on their websites. Most online lead generation
companies today have online visitors fill out a lead form which is subsequently
sent to automated lead verifiers for scrubbing followed by low cost call centers
from offshore locations further cleansing the data. A click2chat
solution with live agents for online lead generators would result in cost
savings for generating qualified leads online while saving time on the three
step process for getting good quality leads.
Our
Strategy
Our
mission is to change these fundamentals. Our solutions will help
companies doing business in the online world by increasing their sales thus
contributing to their top line revenue and maximize their marketing dollars
spent online. In the online lead generation space our solutions will
provide companies with qualified leads in a very efficient and cost effective
manner. Our unique value proposition of providing an end-to-end solution for
live online interaction with a hosted chat platform combined with a unique sales
process and highly trained sales agents will change the way companies sell
products and services online. Our solutions will fill a meaningful
gap in the online sales and online lead generation market by bridging the gap
between visitor traffic and successful business outcomes. Our
business solutions deliver measurable return on investment by enabling clients
to:
|
·
|
Increase
conversion rates and reduce abandonment by selectively engaging website
visitors;
|
|
·
|
Accelerate
the sales cycle, drive repeat business and increase average order
values;
|
|
·
|
Increase
customer satisfaction, retention and loyalty while reducing service
costs;
|
|
·
|
Harness
the knowledge of subject-matter experts by allowing consumers to engage
with major online brands;
|
|
·
|
Refine
and improve performance by understanding which initiatives deliver the
highest rate; and
|
|
·
|
Lower
operating costs in the call center by deflecting costly phone and email
interactions.
|
2
Competition
The
markets for online engagement technology and online consumer services are
intensely competitive and characterized by aggressive marketing, evolving
industry standards, rapid technology developments, and frequent new product
introductions.
Our
business solutions compete directly with companies focused on technology that
facilitates real-time sales, email management, searchable knowledgebase
applications and customer service interaction. These markets remain fairly
saturated with small companies that compete on price and features. iTrackr faces
competition from online interaction solution providers, including
software-as-a-service (SaaS) providers such as LivePerson, Art Technology Group,
Instant Service, RightNow Technologies and TouchCommerce. We face potential
competition from Web analytics and online marketing service providers, such as
Omniture. The most significant barriers to entry in this market are knowledge
of:
|
·
|
Online
consumer purchasing habits;
|
|
·
|
Methodologies
to correctly engage customers;
|
|
·
|
Metrics
proving return on investment; and
|
|
·
|
Technology
innovation opportunities.
|
iTrackr
also faces potential competition from larger enterprise software companies such
as Oracle and SAP. In addition, established technology and/or consumer-oriented
companies such as Microsoft, Yahoo and Google may leverage their existing
relationships and capabilities to offer online engagement solutions that
facilitate real-time assistance and live advice.
Finally,
iTrackr competes with in-house online engagement solutions, as well as, to a
lesser extent, traditional offline customer service solutions, such as telephone
call centers.
iTrackr
believes that competition will increase as our current competitors increase the
sophistication of their offerings and as new participants enter the market.
Compared to iTrackr, some of our larger current and potential competitors
have:
|
·
|
Stronger
brand recognition;
|
|
·
|
A
wider range of products and services;
and
|
|
·
|
Greater
financial, marketing and research and development
resources. Additionally, some competitors may enter into
strategic or commercial relationships with larger, more established and
better-financed companies, enabling them
to:
|
|
·
|
Undertake
more extensive marketing campaigns;
|
|
·
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Adopt
more aggressive pricing policies;
and
|
|
·
|
Make
more attractive offers to businesses to induce them to use their products
or services.
|
Agreements
iTrackr
has entered into an agreement with Saveology and RespondQ which presently
represents 100% of our current business. Key terms and conditions of
these contracts are:
|
·
|
iTrackr
Systems will license certain hosted “Click2Chat software as a service” and
provide all other services, data import/export, monitoring, support,
backup and recovery, change management. technology upgrades, and training
necessary for productive use of such software (the
"Services"),
|
|
·
|
the
Services are offered on a non-exclusive
basis
|
3
|
·
|
iTrackr
shall not enter into any subcontracts for the performance of the Services,
or assign or transfer any of its rights or obligations under this
Agreement, without prior written consent and any attempt to do so shall be
void and without further effect. Consent to iTrackr's right to
subcontract any of the Services shall not relieve iTrackr of any of its
duties or obligations under this Agreement, and iTrackr shall indemnify
and hold the parties harmless from any payment required to be paid to any
such subcontractors.
|
|
·
|
The
parties may, upon written notice, request increases or decreases to the
scope of the Services
|
|
·
|
The
initial term of the agreement is 12 months and following the initial term,
the agreement will automatically renew for successive one-year terms
(each, a "Renewal Term") until such time as the parties provide iTrackr
with written notice of termination.
|
Social
Networking and Online Retail Search
Industry
Social
technologies continue to grow substantially. Forrester Research
reports that three out of four Americans use social
technology. Nielsen reports that 2/3rd of the
global internet population visits social networks and that social sites are the
fourth most popular online activity ahead of personal email. Facebook
estimates to have 500 million active users, of whom half log in on any
given day, and of which more than 200 million active users access through
mobile devices.
By the
year 2013, 43% of global mobile internet users (607.5 million people worldwide)
will be accessing social networks from their mobile devices, according to
eMarketer, which characterizes mobile and social as still-emerging channels that
are each helping drive the adoption of the other. In the US, mobile
social networkers will total 56.2 million by 2013, and will account for
nearly half (45%) of the mobile internet user population.
Social
networking has dramatically reshaped the Internet landscape and is now
generating more than $1 billion annually. Industry giants such as
Microsoft and Google continue to court these social networking sites with the
intention toward establishing the mechanism for monetizing advertising
content.
Mobile
data services (e.g. text messaging, ringtones, wallpaper) have become a hundred
billion dollar business worldwide. ABI Research estimates that
between 2008 and 2014, the total market for mobile messaging will grow at a CAGR
(Compound Annual Growth Rate) of nearly 8 percent, increasing from $132 billion
in 2008 to $208 billion by 2014.
Products
and Services
The
iTrackr community brand has created one of the first mobile shopping communities
which is fully integrated with the online and mobile world. Our
community bridges cyberspace and the mobile space with the real world for the
benefit of our users, retailers and merchants. iTrackr is recognized
nationally for locating hard to find products and major media organizations such
as U.S. News and World Report, The Wall Street Journal and CNET have consulted
with us for reference retail statistics.
Our
current product line consists of our online customer support application,
“TrackiT!”, “PriceiT!”, Groups, Calendar and status update messaging for mobile
and Internet.
TrackiT,
PriceiT and iTrackr Community Applications
These
products are based on a “pull/push” model where the consumers tell us what
products they are interested in via the Retail “TrackiT!” button and iTrackr
pulls the information from the retailers’ inventory and pushes it to the
consumer. The consumer establishes their messaging preferences of
site only, mobile text messaging and/or email. The main product is
the “TrackiT!” function which allows consumers to search local stores’ inventory
for products like the Wii Console, Guitar Hero video game as well as a host of
other products.
4
Our
products are focused on creating value by and to the consumer, the retailer and
the marketing firm. The success of our business is predicated on our
ability to effectively achieve and maximize value on each of these
fronts.
Our
business and technology was created first and foremost with the individual
consumer, and the consumer’s “interests” in mind. More than ever,
consumers are challenged with issues of time and convenience in fulfilling their
purchases. This factor has been one of the primary catalysts for the
growth of online shopping which addresses both of these constraints
directly. But the fact is that online commerce remains less than 5%
of total retail, according to the Q1 2010 Census Bureau of the Department of
Commerce Report and is forecast to only reach about 8% of total retail by 2014,
according to Forrester Research. Tracking and utilizing the expressed
interests of our users allows us to maintain our relevance to the consumer and
to provide information that keeps them engaged with our Community.
The vast
majority of consumers are committed to fulfilling their shopping purchases at
brick-and-mortar locations. This creates another significant
inconvenience, or “pain”, for the consumer – namely, the need to find the
product they are looking for in stock and in their area now. We
believe that the best solution, or resolution, for the consumer’s need is to
help them mitigate and eliminate altogether the hassle of locating stores that
have the products they want in stock and to provide them with an opportunity to
secure that in-stock product with an immediate purchase. We leverage
the power and ubiquitous nature of the Internet and mobile marketplace to
provide this intelligence to the consumer in an on-demand, real-time
capability. We simplify the process in a turnkey fashion and with
immediate resolution.
The value
proposition that we offer to the retailer is equally compelling. We
drive purchases to the retailer. Our presence and content will
greatly influence where our users fulfill their transactions. Our
powerful e-commerce driven, social networking platform cost-effectively pushes
consumers that are ready to purchase to retail locations. Retailer’s
can market incentives and promotions on a local and even store-by-store basis to
our consumers. That is the essence of social
merchandising. iTrackr can provide layers of intelligence to
retailers that can be parsed all-the-way down to the zip-code
layer. The implications to the retailer range well beyond target
marketing and extend directly to inventory management, fulfillment and
settlement in the consumer supply chain.
Substantiating
“return-on-investment remains the biggest challenge for marketing firms catering
to online advertisers. Much of the problem online advertiser’s face
is related to the measurement tools currently available and the data which is
ultimately produced from those tools. Additionally, it is also
difficult to determine the quality of placement and the impact of advertising
amongst the online audience at a particular destination.
The
primary advantage that we offer marketing firms is the assurance that the ads
and promotional campaigns launched within the iTrackr Community are both highly
targeted and are being sought by the confirmed consumers that are at our site
first and foremost for retail interests. This is a significant
advantage and a key differentiator from other platforms. We believe
that marketing firms can more effectively demonstrate ROI to their clients on
our platform, and we can provide them with the statistics to prove
it.
We are
working with our commercial partners to provide inventory and service tracking
functions within the branded image of their existing online
presence. This is the fundamental building block of social
merchandising. From these services, our Retail partners will extend
product and service fulfillment messaging with derivative sales offerings,
associated mobile advertising and mobile couponing. iTrackr
subscribers will benefit from brand affinity offerings through our Retailers’
partners.
Transaction
Fulfillment
Consumers
can complete the process of searching for products and services by securing them
with a “BuyiT!” purchase when they locate what they want. Goods and
services can be secured when they become available, and the consumer will know
that their products will be waiting for them when they go to pick them
up.
5
Group
Messaging
Consumers
can communicate or forward received messages to any of their groups, regardless
of which devices they are using, where each member receives messages according
to their individual profiles and permissions that they have
established. Retailers can leverage this group messaging
functionality to push special offers and incentives to relevant groups,
notifying them of brick-and-mortar locations where they can locate products and
take advantage of special offers.
MyiTrackr
Dashboard
When a
community member signs in, their home page is also their personal
dashboard. Whether from the web or from the mobile device, the
MyiTrackr Personal Dashboard is the interface to the world of iTrackr
services. From a user’s personal dashboard they can personalize and
configure their view of the iTrackr community. From here they can set
up their communications settings, their group affiliations and their personal
preferences. Community members can research subscriber submitted
opinions of products and services, or they may wish to submit reviews of their
own. The MyiTrackr Personal Dashboard is the member’s one-stop for
personalization of the iTrackr Community experience.
iTrackr
Trackit Reports
iTrackr’s
TrackiT Reports provide commercial subscribers with invaluable data provided by
the iTrackr consumer. We have unique insight into the purchasing
trends of groups of consumers by product. When a community member
stops tracking a product, we glean specific information about the retail
experience, and while we never release specific user information, we can
aggregate very specific information about consumer behavior. As our
membership grows many consumer trends can be noted and
quantified. iTrackr TrackiT Reports are the only place where that
data can be found.
Our
Strategy
iTrackr
Technologies has built a community-driven website at www.itrackr.com where
consumers can create user-generated content focused on feedback and
recommendations about popular products. What is truly unique about
our website is that the users all have something in common; they are confirmed
consumers. They have found www.itrackr.com
because they are looking for one item or another in their local shopping area
for immediate purchase.
In
addition to our web presence we are working with retailers to extend iTrackr’s
fulfillment tracking applications to their branded web sites. Our
mobile suite of applications are also extensible with our commercial partners’
look and feel, giving them an iTrackr enabled mobile presence under their
existing corporate brand. We will augment our offering with
transaction settlement capabilities to complement our existing capabilities and
provide our partners with a complete fulfillment solution.
Our
objective is to reach critical mass as quickly as possible in order to establish
the iTrackr Community as viable and attractive to marketing firms and online and
mobile advertisers. We will achieve critical mass when revenue from
our Community presence approaches our current cost of operations. We
intend to leverage our suite of applications over wired and mobile devices in
order to achieve the broadest possible uptake and the greatest potential market
penetration.
We have
employed a “freemium” model to maximize consumer uptake for our social shopping
tools. In other words, we offer product tracking and notification, as
well as the consumer social network capabilities to our users and members
without a charge. We believe this will provide us with the most
efficient path to establishing critical mass and validation of our
offering. We believe that as traffic and usage increases on our
network we will be able to generate revenues through sales of marketing and
advertising campaigns, usage fees for premium content and services and
subscriptions.
We
believe that our user base will be driven by the content that we propagate to
our iTrackr database, the number of consumers that will employ mobile data
applications, and more generally mirror the broader online consumer
demographic. Our strategy is to populate our database initially with
the most sought after, or the “hottest” consumer products, demand for which is
generated by the community members themselves. This category of
products is, by nature, more difficult to locate in-store due to the fact that
demand is higher. These will be the products which will highlight the
value of our offering to the consumer, and create the largest viral “buzz”
amongst all consumers. Around the holidays, these hot items are
typically new releases of consumer electronics, games and communications
devices, but can be any consumer good or service for which supply is constrained
regionally or nationally.
6
Over
time, other factors will contribute to the products available for tracking on
our network, including consumer user-generation of product tracking requests as
well as our development of partnerships and affiliation with retail and
marketing firms.
We have
developed the iTrackr platform to scale on a distributed basis, where consumers
have the capability to add products for tracking, as well as for reviews and
commentary to propagate within our community. We are seeking to maximize the
relevance of the tracking services, while increasing the likelihood of longer
and more frequent site visits. This increases the attractiveness of
our site as a merchandising destination for online advertisers and marketing
firms.
Our plan
for 2010 is to grow by promoting our mobile networking tools and retail search
capabilities to community and affinity groups that will benefit the most from
mobile social networking. These groups include retailers, students,
affinity groups and mobile device manufacturers. By soliciting
participation from retail sponsors, we will provide free services to our target
communities.
Viral
Promotion Strategy
iTrackr
has been lauded on websites and in the media with no direct marketing
expenditures or outlays on our behalf. For example, U.S.
News & World Report mentioned the iTrackr service on December 6,
2007, within the context of “Tracking the Elusive Wii”. Almost
immediately after we made our application available on the world wide web,
mention of our service and positive reviews appeared on Google searches for the
term iTrackr. We will continue to promote our community virally, and
will expand our blog presence for the foreseeable future.
Consumer
Reach Strategy
Today
most consumers utilizing iTrackr do so for products that can be found and
purchased at their local store. Our new product offerings will allow
consumers to form private communities and to exchange group messages or discuss
things within groups of their making. By offering these features, we
extend the consumers ability to seek fulfillment for services as well as
goods. These services include event ticketing such as movie tickets,
concerts or sporting events, and they will also include packages combining
events with merchandise and entertainment. iTrackr’s messaging and
community products will offer consumer’s the ability to organize the events in a
one step process including the purchase of the service via the
Internet. This can occur from any Internet or mobile
device.
Retailer
Promotion Strategy
We intend
to solicit commercial participation from big box consumer electronics and
pharmaceutical retailers, but our service is not limited to any particular set
of retail categories. Consider the following examples:
Pharmaceutical Retailer: we
provide the retailer with the ability to notify customers via text message or
email that their prescription has been filled and is available for
pickup. With these highly-qualified messages, we can extend the
retailers the ability to offer special coupons or exclusive promotional
opportunities. By combining our service with an exclusive marketing
opportunity, we will drive derivative sales from the subsequent store visit by
the consumer.
Electronic Retailer: our
utilities give retailers the ability to notify their customers that a product at
a particular location has become available, and iTrackr will facilitate the
transaction. In addition, the retailer can drive additional sales by
offering additional incentives or bundles when the customer visits the store to
purchase the originally tracked item. We have identified several
major retailers with whom we have engaged or intend to engage. These
include Best Buy, Target, Radio Shack, Circuit City and
Costco. Additionally, other retail areas will be pursued as
commercial adoption grows. These secondary retailers include book
stores such as Barnes & Noble and manufacturing retailers such as
Apple.
7
Mobile
Supply Chain Distribution
Making
iTrackr an integral part of the mobile technology supply chain is one of our
ultimate, long-term goals. Strategically placing the iTrackr
Community button on mobile devices gives us one of the strongest opportunities
to extend our community brand. Placement on the deck of PDA’s and
cell phones will give us a true advantage in the
marketplace. Developing relationships with manufacturers and service
providers will allow us to pursue this goal, and having service providers as
commercial partners will only further strengthen our offerings to potential
subscribers. Even one partner in this arena greatly expands our reach
and brand presence to a broad consumer group. Those consumers will
drive new communities to the iTrackr offering and further expand mobile social
networking in today’s wireless world.
Competition
While our
business concept is unique, our revenue streams come from intensely competitive
markets. Our users can find, buy, sell and pay for similar items and
services through a variety of competing channels. These include, but
are not limited to, online and offline retailers, distributors, liquidators,
import and export companies, catalog and mail-order companies, classifieds,
directories, search engines, products of search engines, virtually all online
and offline commerce participants (consumer-to-consumer, business-to-consumer
and business-to-business), online and offline shopping channels and
networks. As our product offerings continue to broaden into new
categories of items and new commerce formats, we expect our competition to
continue to broaden to include other online and offline channels for those new
offerings.
Whether
it is driving product sales to traditional businesses or providing targeted
marketing opportunities for derivative sales to a retailer’s consumer, iTrackr
is in the business of social merchandizing. Other social networking
ventures, such as MySpace and Facebook have seen tremendous growth over the last
five years in terms of the user community.
Facebook
has garnered more than 500 million users worldwide and Twitter reportedly
has more than 190 million users. These numbers are impressive
for building social networking destinations, but the business behind these
offerings still relies on revenue primarily derived from online
advertising. According to comScore, total ad impressions delivered on
U.S. publisher sites in September 2010 was 417.2 billion up 26% versus a year
ago, while Facebook led all online publishers with 297 billion ad impressions in
the third quarter of 2010. iTrackr competes with these and other
larger and more established social networking sites for users, but we believe we
are well positioned to excel at per subscriber revenue generation given our
multi-channel approach to revenue generation. The major difference
between iTrackr and sites like Facebook or Twitter is that they offer blogs and
pictures, and we focus on consumers and merchandising.
Other
competitors include social shopping sites. Groupon launched in 2008
pools buyers for local business discounts for daily pre determined
deals. Hearst Corporation acquired Kaboodle for an estimated $40
million. Kaboodle is one of the new social shopping sites started in
the last few years. They had managed to grow their site to
2.2 million unique visitors by June 2007, prior to being
purchased. Several social shopping sites focus on a specific
community segment. Stylehive is vying to become a destination for
women’s fashion. Crowdstorm is focusing exclusively on online
shopping. All of these sites are looking to establish a niche
community with retail extensions. Very few offerings have direct
queries of existing retailers, and none have in-stock checking or sell through
capabilities with existing retailers. iTrackr does complete
point-of-sale transactions, and provides sell through capabilities to our
commercial partners.
A key
differentiator of our offering is our focus on mobile social networking and
merchandizing. Most mobile offerings only tie into existing sites
like MySpace. An example of this is the mobile offering from
Earthlink and SK Telecom called Helio. This is a premium service
requiring a specific device and running as much as $135 per
month. While Helio is going after the premium content consumer, the
remainder of the mobile marketplace is unserved. iTrackr will change
that with our mobile community. A wide variety of mobile devices work
with our community utilities, and the service does not come with a premium price
tag.
8
We are a
commerce facilitator. With other eCommerce sites, when you buy a product, you
have to wait for fulfillment which often takes weeks. Our service is
designed for consumers that want products today. Our consumers want
to know where they can find a product, if it is available and what is the best
price for the product. This is our service offering, and this is what
both differentiates us from eCommerce stores and what enables us to serve as a
partner to brick and mortar retailers.
Another
key differentiator of our service from others, is that we proactively notify
consumers when products or services that they are looking for become available
and from where. We are not a retailer, so we do not compete directly
with other retailers. Rather, we support them. iTrackr
identifies groups of people who are looking for a product or service, and we
provide opportunities for our commercial partners to fulfill their
need. We identify further opportunities for retailers to take
advantage of derivative sales opportunities when the right mix of consumer
interest, product availability and pending purchase come together.
Competitive
Strengths
Experienced
management team
Our
senior management team has extensive business and industry experience, including
an understanding of changing market trends, consumer needs and technologies,
which gives us the ability to capitalize on the opportunities resulting from
these market changes. Our Chief Executive Officer, John Rizzo, has
over 16 years of experience in developing technology businesses.
Other members of our senior management team also have significant experience
with respect to key aspects of our operations, including research and
development, product design, and sales and marketing.
Early
market mover
We were
the first to market in the “Buy-Online, Pick-Up-In-Store” category, which we
believe has enabled us to build strong brand value.
Open
Source Technology
We have
developed the iTrackr platform based on an “Opensource Architecture” much the
same way as Facebook, Google, Yahoo, Youtube and other fast growing internet
companies. This architecture enables us to quickly to scale our
infrastructure to adapt to a rapidly growing user/customer base and to integrate
with retailers API as most source code is readily available.
Mobility
We are
the only company in the space that relies heavily on mobile
computing. We are the only company using SMS to enable the end
user for increased mobility. We estimate that 25% of all
messages sent through the iTrackr platform are SMS. We are also
developing mobile and GPS-enabled applications to continue to dominate in this
space.
Research
and Development
Companies
such as us are under pressure for customers to respond more quickly with new
designs and product innovations to support rapidly changing consumer tastes and
regulatory requirements. We believe that the engineering and
technical expertise of our management and key personnel, together with our
emphasis on continuing research and development, allows us to efficiently and
timely identify and bring new, innovative products to market for our customers
using the latest technologies, materials and processes. We believe
that continued research and development activities are critical to maintaining
our offering of technologically-advanced products to serve a broader array of
our customers.
9
We focus
our product design efforts on both improving our existing products and
developing new products. In an effort to enhance our product
quality, reduce costs and keep up with emerging product trends, we work with our
key customers to identify emerging product trends and implement new solutions
intended to meet the current and future needs of the markets we
serve.
We are a
technology company, and approximately 45% of our costs are related to research
and development. We anticipate that research and development costs
will continue to be a material component of our overall business expenditures
for the foreseeable future.
Intellectual
Property
We do not
own, either legally or beneficially, any patents or trademarks.
Some of
our products are also designed to include software or other intellectual
property licensed from third parties. While it may be necessary in
the future to seek or renew licenses relating to various aspects of our products
and business methods, based on past experience and industry practice we believe
that such licenses generally could be obtained on commercially reasonable
terms. However, there is no guarantee that such licenses could be
obtained at all. Because of technological changes in the portable
electronics industry, current extensive patent coverage and the rapid rate of
issuance of new patents, it is possible certain components of our products may
unknowingly infringe existing patents or intellectual property rights of
others.
Government
Regulation
There are
an increasing number of laws and regulations pertaining to the Internet and
e-commerce over the Internet. Other laws or regulations may be
adopted with respect to online content regulation, user privacy, pricing,
restrictions on email solicitations, taxation and quality of products and
services. Any new legislation or regulation, or the application or
interpretation of existing laws, may decrease the growth in the use of the
Internet, which could in turn decrease the demand for our service, increase our
cost of doing business or otherwise have a material adverse effect on our
prospects and revenues.
Employees
At
December 31, 2010 we had 2 full-time employees. There are no collective
bargaining contracts covering any of our employees. We believe our
relationship with our employees is satisfactory.
ITEM
1A. RISK FACTORS.
You
should carefully consider the risks described below before making a decision to
buy our common stock. If any of the following risks actually occurs, our
business, financial condition and results of operations could be
harmed. In that case, the trading price of our common stock could
decline and you might lose all or part of your investment in our common
stock. You should also refer to the other information set forth in
this 10-K, including our financial statements and the related
notes.
Risks
Related to Our Business
Because
there is doubt about our ability to continue as a going concern, an investor may
lose all of his investment in our company.
Our
auditor’s report for the year ending December 31, 2010 financial statements
expresses an opinion that substantial doubt exists as to whether we can continue
as an ongoing business. Since our sole officer and director may be
reluctant or unable to loan or advance additional capital to the Company, we
believe that if we do not raise additional capital, we may be required to
suspend or cease the implementation of our business plans.
iTrackr
has a history of losses and may not be able to generate sufficient net revenue
from its business in the future to achieve or sustain
profitability.
iTrackr
has incurred losses since inception. To date, iTrackr’s revenues have largely
come from click through referral fees and call center service revenue from
ChatTracker. iTrackr’s primary expenses relate to personnel, website development
and maintenance, professional and stock based compensation and significantly
exceed revenues. iTrackr’s consolidated financial statements have
been prepared assuming that iTrackr will continue as a going
concern. Successful transition to profitable operations is dependent
upon obtaining a level of sales adequate to support the Company’s cost
structure. The Company has suffered recurring losses resulting in a
stockholders’ deficit of approximately $4,074,259 and a working capital
deficiency of $958,093 as of December 31, 2010. Historically, the
Company has been able to finance operations from the capital obtained through
the issuance of convertible debt. Management intends to continue to
finance the operations of the Company through future cash flows from operations
and future financings. However, iTrackr’s expenses are expected to
increase as it incurs additional costs of becoming publicly traded, and
increasing operational infrastructure, and there is no assurance that iTrackr
will be able to obtain sufficient financing (or financing on acceptable terms)
or earn sufficient revenues to generate positive cash flow and attain
profitability.
10
iTrackr’s
cash on hand and anticipated near term sales may be insufficient to fund
operations for the next 12 months.
As of
December 31, 2010 our cash balance was $9,051. We believe that
approximately $15,000 to $20,000 per month or $180,000 to $300,000 will be
required to cover our minimum cash outflows for the next 12
months. Our current cash balance and anticipated near term sales may
be insufficient meet this requirement. As a result our management
continues to work diligently to secure additional sales and either debt or
equity based financing for which we are currently in discussions. In
the short term, as a result of our S-1/A registration statement being declared
effective, we hope to receive commitments from certain warrant holders that they
intend to exercise their warrants. The cash to be realized upon
exercise of these warrants is expected to be approximately
$550,000. In the event no outside funding is achieved Mr. Rizzo, our
CEO will continue to provide personal funds as needed to fund our required
minimum cash outflows. During 2010, Mr. Rizzo has loaned the Company
$41,500. Mr. Rizzo is an accredited investor and has committed
to fund up to an additional $250,000.
If
iTrackr is unable to fund its operations and capital expenditures, iTrackr may
not be able to continue to develop and market its products and services which
would have a material adverse effect on its business.
iTrackr
has experienced significant negative cash flow since its
inception. In order to fund iTrackr’s operations and capital
expenditures, iTrackr may be required to incur borrowings or raise capital
through the sale of debt or equity securities. The Company’s ability
to borrow or access the capital markets for future offerings may be limited by
its financial condition at the time of any such offering as well as by adverse
market conditions resulting from, among other things, general economic
conditions and contingencies and uncertainties that are beyond our
control. iTrackr’s failure to obtain the funds for necessary future
capital expenditures would limit its ability to develop and market its services
and could have a material adverse effect on our business, results of operations
and financial condition.
iTrackr
is dependent upon key personnel whose loss may adversely impact iTrackr’s
business.
iTrackr
depends on the expertise, experience and continued services of its senior
management employees, especially John Rizzo, its founder, Chairman, Chief
Executive Officer and Chief Financial Officer, and Ramesh Anand, its Chief
Operating Officer. Both Mr. Rizzo and Mr. Anand have acquired
specialized knowledge and skills with respect to iTrackr and its operations and
most decisions concerning the business of iTrackr will be made or significantly
influenced by them. iTrackr does not maintain life insurance with respect to Mr.
Anand and Rizzo. The loss of Mr. Anand and Rizzo or other senior
management employees, or an inability to attract or retain other key
individuals, could materially adversely affect the Company. The
Company seeks to compensate and incentivize its key executives, as well as other
employees, through competitive salaries and bonus plans, but there can be no
assurance that these programs will allow iTrackr to retain key or hire new
employees. As a result, if Mr. Anand and Rizzo were to leave iTrackr,
the Company could face substantial difficulty in hiring qualified successors and
could experience a loss in productivity while any such successors obtain the
necessary training and experience. In January, 2010, iTrackr entered
into an ongoing employment agreement with Mr. Anand, and extended its existing
employment agreement with Mr. Rizzo through May 2011. There can be no
assurance that a successor employment agreement will be entered into with Mr.
Anand and Rizzo or that the terms of their employment agreements will be
sufficient to retain Mr. Anand and Rizzo.
iTrackr’s
management systems and personnel may not be sufficient to effectively manage its
growth.
iTrackr’s
growth strategy involves expanding its customer based amongst online retailers
with high transaction websites, increasing agent-hours for its customer support
software and increasing consumer demand for its product search
applications. Achieving iTrackr’s growth strategy is critical in
order for its business to achieve economies of scale and to achieve
profitability. Any condition that would deny, limit or delay its
ability to manage and support existing accounts, as well as market to new
customers in the future will constrain iTrackr’s ability to
grow. There can be no assurance that iTrackr will be able to
successfully expand its business in its highly competitive environment, and if
iTrackr fails to do so, its business could be harmed.
11
Expansion
of iTrackr’s business will also strain its existing management resources and
operational, financial and management information systems to the point that they
may no longer be adequate to support its operations, requiring iTrackr to make
significant expenditures in these areas. There can be no assurance
that iTrackr will be able to develop such additional systems or procedures to
accommodate its future expansion on a timely basis, and the failure to do so
could harm its business.
If
we are not competitive in the market for online sales, marketing and customer
service solutions, or online consumer services our business could be
harmed.
The
market for online sales, marketing and customer service technology is intensely
competitive and characterized by aggressive marketing, evolving industry
standards, rapid technology developments and frequent new product
introductions. Established or new entities may enter the market in
the near future, including those that provide solutions for real-time
interaction online, or online consumer services related to real-time
advice.
We
compete directly with companies focused on technology that facilitates real-time
sales, conversion of online shoppers to buyers, email management, searchable
knowledgebase applications, and customer service interaction. These
markets remain fairly saturated with small companies that compete on price and
features. We face significant competition from online interaction
solution providers, including SaaS providers such as LivePerson, Art Technology
Group, Instant Service, RightNow Technologies and TouchCommerce. We
face potential competition from Web analytics and online marketing service
providers, such as Omniture. The most significant barriers to entry
in this market are knowledge of:
|
·
|
Online
consumer purchasing habits;
|
|
·
|
Methodologies
to efficiently engage customers and
consumers;
|
|
·
|
Metrics
proving return on investment; and
|
|
·
|
Technology
innovation opportunities.
|
Furthermore,
many of our competitors offer a broader range of customer relationship
management products and services than we currently offer. We may be
disadvantaged and our business may be harmed if companies doing business online
choose real-time sales, marketing and customer service solutions from such
providers.
We also
face potential competition from larger enterprise software companies such as
Oracle and SAP. In addition, established technology companies such as
Microsoft, Yahoo and Google may leverage their existing relationships and
capabilities to offer real-time sales, marketing and customer service
applications or consumer services similar to our consumer
offerings.
Finally,
we compete with clients and potential clients that choose to provide a real-time
sales, marketing and customer service solution in-house as well as, to a lesser
extent, traditional offline customer service solutions, such as telephone call
centers.
We
believe that competition will increase as our current competitors increase the
sophistication of their offerings and as new participants enter the
market. As compared to our company, some of our larger current and
potential competitors have:
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·
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Greater
brand recognition;
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·
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More
diversified lines of products and services;
and
|
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·
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Significantly
greater financial, marketing and research and development
resources.
|
Additionally,
some competitors may enter into strategic or commercial relationships with
larger, more established and better-financed companies. These
competitors may be able to:
|
·
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Undertake
to make more extensive marketing
campaigns;
|
|
·
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Adopt
more aggressive pricing policies
and
|
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·
|
Make
more attractive offers to business or individuals to induce them to use
their products or services.
|
Any
change in the general market acceptance of the real-time sales, marketing and
customer service solution business model or in online, real-time consumer advice
services may harm our competitive position. Such changes may allow
our competitors additional time to improve their service or product offerings,
and would also provide time for new competitors to develop real-time sales,
marketing, customer service and Web analytics applications or competitive
consumer service offerings and solicit prospective clients within our target
markets. Increased competition could result in pricing pressures,
reduced operating margins and loss of market share.
12
We
are dependent on technology systems and third-party content that are beyond our
control.
The
success of our services depends in part on our clients’ online services as well
as the Internet connections of visitors to websites, both of which are outside
of our control. As a result, it may be difficult to identify the
source of problems if they occur. In the past, we have experienced
problems related to connectivity which has resulted in slower than normal
response times to Internet user chat requests and messages and interruptions in
service. Our services rely both on the Internet and on our
connectivity vendors for data transmission. Therefore, even when
connectivity problems are not caused by our services, our clients or Internet
users may attribute the problem to us. This could diminish our brand
and harm our business, divert the attention of our technical personnel from our
product development efforts or cause significant client relations
problems.
In
addition, we rely in part on third-party service providers and other third
parties for Internet connectivity and network infrastructure hosting, security
and maintenance. These providers may experience problems that result
in slower than normal response times and/or interruptions in
service. If we are unable to continue utilizing the third-party
services that support our Web hosting and infrastructure or if our services
experience interruptions or delays due to third party providers, our business
could be harmed.
Our
business service also depends on third parties for hardware and software and our
consumer services depend on third parties for content, which products and
content could contain defects or inaccurate information. Problems
arising from our use of such hardware or software or third party content could
require us to incur significant costs or divert the attention of our technical
or other personnel from our product development efforts or to manage issues
related to content. To the extent any such problems require us to
replace such hardware or software, we may not be able to do so on acceptable
terms, if at all.
Our
agreement with Saveology and RespondQ are material contracts, and presently
represent 100% of our current business. Our business would be
materially and negatively impacted if either service agreement were terminated.
(See “Agreements” in Business section above).
Our
services are subject to payment-related risks.
For
certain payment methods, including credit and debit cards, we pay interchange
and other fees, which may increase over time and raise our operating costs and
lower our profit margins. We rely on third parties to provide payment
processing services, including the processing of credit cards, debit cards and
it could disrupt our business if these companies become unwilling or unable to
provide these services to us. We are also subject to payment card
association operating rules, certification requirements and rules governing
electronic funds transfers, which could change or be reinterpreted to make it
difficult or impossible for us to comply. If we fail to comply with
these rules or requirements, we may be subject to fines and higher transaction
fees and lose our ability to accept credit and debit card payments from our
customers or facilitate other types of online payments, and our business and
operating results could be adversely affected.
Through
our consumer-facing platform, we facilitate online transactions between
individual service providers who provide online advice and information to
consumers. In connection with these services, we accept payments
using a variety of methods, such as credit card, debit card and
PayPal. These payments are subject to “chargebacks” when consumers
dispute payments they have made to us. Chargebacks can occur whether
or not services were properly provided. Susceptibility to chargebacks
puts a portion of our revenue at risk. We take measures to manage our
risk relative to chargebacks and to recoup properly charged fees, however, if we
are unable to successfully manage this risk our business and operating results
could be adversely affected. As we offer new payment options to our
users, we may be subject to additional regulations, compliance requirements, and
fraud.
We are
also subject to a number of other laws and regulations relating to money
laundering, international money transfers, privacy and information security and
electronic fund transfers. If we were found to be in violation of
applicable laws or regulations, we could be subject to civil and criminal
penalties or forced to cease our payments services business.
We
may be liable if third parties misappropriate personal information belonging to
our clients’ Internet users.
We
maintain dialogue transcripts of the text-based chats and email interactions
between our clients and internet users and store on our server’s information
supplied voluntarily by these Internet users in surveys. We provide
this information to our clients to allow them to perform internet user analyses
and monitor the effectiveness of our services. Some of the information we
collect may include personal information, such as contact and demographic
information. If third parties were able to penetrate our network security or
otherwise misappropriate personal information relating to our clients’ Internet
users or the text of customer service inquiries, we could be subject to
liability. We could be subject to negligence claims or claims for misuse of
personal information. These claims could result in litigation, which could have
a material adverse effect on our business, results of operations and financial
condition. We may incur significant costs to protect against the threat of
security breaches or to alleviate problems caused by such breaches.
13
The need
to physically secure and securely transmit confidential information online has
been a significant barrier to electronic commerce and online
communications. Any well-publicized compromise of security could
deter people from using online services such as the ones we offer, or from using
them to conduct transactions, which involve transmitting confidential
information. Because our success depends on the general acceptance of
our services and electronic commerce, we may incur significant costs to protect
against the threat of security breaches or to alleviate problems caused by these
breaches.
Our
products and services may infringe upon intellectual property rights of third
parties and any infringement could require us to incur substantial costs and may
distract our management.
We are
subject to the risk of claims alleging infringement of third-party proprietary
rights. Substantial litigation regarding intellectual property rights
exists in the software industry. In the ordinary course of our
business, our services may be increasingly subject to third-party infringement
claims as the number of competitors in our industry segment grows and the
functionality of services in different industry segments
overlaps. Some of our competitors in the market for real-time sales,
marketing and customer service solutions or other third parties may have filed
or may intend to file patent applications covering aspects of their
technology. Any claims alleging infringement of third-party
intellectual property rights could require us to spend significant amounts in
litigation (even if the claim is invalid), distract management from other tasks
of operating our business, pay substantial damage awards, prevent us from
selling our products, delay delivery of the iTrackr services, develop
non-infringing software, technology, business processes, systems or other
intellectual property (none of which might be successful), or limit our ability
to use the intellectual property that is the subject of any of these claims,
unless we enter into license agreements with the third parties (which may be
costly, unavailable on commercially reasonable terms, or not available at
all). Therefore, such claims could have a material adverse effect on
our business, results of operations and financial condition.
Technological
or other defects could disrupt or negatively impact our services, which could
harm our business and reputation.
We face
risks related to the technological capabilities of our services. We
expect the number of interactions between our clients’ operators and internet
users over our system to increase significantly as we expand our client
base. Our network hardware and software may not be able to
accommodate this additional volume. Additionally, we must continually
upgrade our software to improve the features and functionality of our services
in order to be competitive in our markets. If future versions of our
software contain undetected errors, our business could be harmed. If
third-party content is flawed, our business could be harmed. As a
result of major software upgrades at iTrackr, our client sites have, from time
to time, experienced slower than normal response times and interruptions in
service. If we experience system failures or degraded response times,
our reputation and brand could be harmed. We may also experience
technical problems in the process of installing and initiating the iTrackr
services on new Web hosting services. These problems, if not
remedied, could harm our business.
Our
services also depend on complex software which may contain defects, particularly
when we introduce new versions onto our servers. We may not discover
software defects that affect our new or current services or enhancements until
after they are deployed. It is possible that, despite testing by us,
defects may occur in the software. These defects could result in:
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Damage
to our reputation;
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Lost
sales;
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Delays
or loss of market acceptance of our products;
and
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Unexpected
expenses and diversion of resources to remedy
errors.
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Our
promotion and marketing of our websites may not result in generation of
significant revenue which may cause our business to fail.
We
believe that successful marketing, development and promotion of our websites are
crucial to our success in attracting business. If our marketing and
promotion is not successful in developing strong public recognition of our
websites, then we may not be able to earn significant revenues and our business
may fail.
Unauthorized
disclosure of sensitive or confidential client and customer data, whether
through breach of our computer systems or otherwise, could expose us to
protracted and costly litigation and cause us to lose clients which may result
in our going out of business and for you to lose your investment.
We may be
required to collect and store sensitive data in connection with our services,
including names, addresses, social security numbers, credit card account
numbers, checking and savings account numbers and payment history records, such
as account closures and returned checks. If any person, including any
of our employees, penetrates our network security or otherwise misappropriates
sensitive data, we could be subject to liability for breaching contractual
confidentiality provisions and/or privacy laws, which would devastate our
business, and may result in the loss of your investment.
14
Competition
in the social networking, online marketing and e-commerce industry is intense
and our competitors have greater financial resources and development
capabilities than we have, and we may not have the resources necessary to
successfully compete with them.
Our
business plan involves providing consumers with online real-time product and
inventory information, retailers with access to targeted consumer demand for
their products and marketing firms with targeted content for their campaigns.
These business areas are highly competitive. There are numerous
companies that compete in these markets, most of whom have greater financial
resources and more expertise in this business than we do. Our ability
to develop our business will depend on our ability to successfully market our
services in this highly competitive environment. We cannot guarantee
that we will be able to do so successfully.
Our
services may become obsolete and unmarketable if we are unable to respond
adequately to rapidly changing technology and customer demands.
Our
services may quickly become obsolete and unmarketable. Our future
success will depend on our ability to adapt to technological advances,
anticipate customer demands, develop new products and enhance our current
products on a timely and cost-effective basis. We may be unsuccessful
in responding to technological developments and changing customer
needs. In addition, our applications and services offerings may
become obsolete due to the adoption of new technologies or
standards.
We may
experience technical or other difficulties that could delay or prevent the
development, introduction or marketing of new products or enhanced versions of
existing products. Also, we may not be able to adapt new or enhanced
services to emerging industry standards, and our new products may not be
favorably received by our target market.
The
loss of our executive officers or directors, could adversely affect our
business.
Our
success depends largely upon the efforts, abilities, and decision-making of our
executive officers and directors. The loss of any of these individual
would have an adverse effect on our business prospects. We do not
currently maintain “key-man” life insurance and there is no contract in place
assuring the services our executive officers and directors for any length of
time. In the event that we should lose our sole officer or directors
and we are unable to find suitable replacements, we may not be able to develop
our business.
Our
Controls and Procedures may not prevent misstatements.
The
Company has limited segregation of duties amongst its employees with respect to
the Company’s preparation and review of the Company’s financial statements due
to the limited number of employees, which is a material weakness in internal
controls, and if the Company fails to maintain an effective system of internal
controls, it may not be able to accurately report its financial results or
prevent fraud. As a result, current and potential stockholders could
lose confidence in the Company’s financial reporting which could harm the
trading price of the Company’s stock.
Management
has found it necessary to limit the Company’s administrative staffing in order
to conserve cash, until the Company’s level of business activity
increases. As a result, there is limited segregation of duties
amongst the employees, and the Company and its independent public accounting
firm have identified this as a material weakness in the Company’s internal
controls. The Company intends to remedy this material weakness by
hiring additional employees and reallocating duties, including responsibilities
for financial reporting, among the employees as soon as there are sufficient
resources available. However, until such time, this material weakness
will continue to exist.
Our
Financial Statements for the year ended December 31, 2009 and the quarterly
periods ended March 31, 2010 and June 30, 2010 were Restated as a Result of a
Re-Audit by our New Independent Accountant Which was Necessitated Due to
Revocation of our Former Auditor’s Public Company Accounting Oversight Board
(“PCAOB”) Registration.
Management
received notification that our former auditor’s PCAOB registration had been
revoked as of August 12, 2010 pursuant to PCAOB Release No.
105-2010-007. As a result, the Company engaged a new auditor,
Bedinger and Company, effective August 25, 2010 and had our financial statements
for the years ending December 31, 2008 and 2009 re-audited and our financial
statements for the quarterly periods ending March 31, 2010 and June 30, 2010
re-reviewed. Our auditors discovered material misstatements in our
financial statements that required the Company to restate our financial
statements for the year ending December 31, 2009 and the quarterly periods ended
March 31, 2010 and June 30, 2010. As a result Management concluded
that our disclosure controls and procedures were not effective during the
aforementioned periods. In addition, management recognizes that our
new auditor may also not discover potential misstatements due to our currently
assessed ineffective controls which are due to our lack of segregation of duties
discussed above.
15
Risks
Related to Our Common Stock
There
will be a substantial number of shares of iTrackr’s common stock available for
sale in the future that may be dilutive to its current stockholders and may
cause a decrease in the market price of its common stock.
As of
December 31, 2010, the Company had 20,319,997 shares of
common stock outstanding, 45,000,000 shares of common stock available for future
issuance under its 2007 Long-Term Stock Incentive Plan and warrants and options
to purchase 7,610,333 shares of common stock. The 19,629,893 shares of common
stock outstanding and underlying certain options and warrants registered
pursuant to our S-1/A Registration Statement are freely tradable upon the
effectiveness of our Registration Statement declared effective on February 10,
2011 by the Securities and Exchange Commission without restriction or further
registration under the Securities Act, unless the shares are purchased by
“affiliates” as that term is defined in Rule 144 under the Securities Act. Any
shares purchased by an affiliate may not be resold except pursuant to an
effective registration statement or an applicable exemption from registration,
including an exemption under Rule 144 of the Securities Act. These restricted
securities may be sold in the public market only if they are registered or if
they qualify for an exemption from registration under Rule 144 or Rule 701 under
the Securities Act.
Future
sales or issuances of the Company’s common stock or securities convertible into
common stock, the perception such sales or issuances may occur or the
availability for sale in the public market of substantial amounts of our common
stock could adversely affect the prevailing market price of our common stock and
could impair our ability to raise capital through future sales of equity
securities at a time and price that we deem appropriate.
Our
common stock is considered “a penny stock” and may be difficult to
sell.
The SEC
has adopted regulations which generally define “penny stock” to be an equity
security that has a market price of less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to specific
exemptions. Presently, our common stock is considered a “penny stock”
according to SEC rules. This designation requires any broker or
dealer selling these securities to disclose certain information concerning the
transaction, obtain a written agreement from the purchaser and determine that
the purchaser is reasonably suitable to purchase the
securities. These rules may restrict the ability of brokers or
dealers to sell our common stock and may affect the ability of investors to sell
their shares. In addition, when and if our common stock trades on the
OTC Bulletin Board, investors may find it difficult to obtain accurate
quotations for our common stock and may experience a lack of buyers to purchase
such stock or a lack of market makers to support the stock price.
iTrackr
may be unable to receive a listing of its securities on NASDAQ or another
national securities exchange, and this may make it more difficult for its
stockholders to sell their securities.
We intend
that shares of iTrackr’s common stock will be traded in the over-the-counter
market and quoted on the OTCBB. The Company’s common stock and units
are not currently eligible for inclusion in The NASDAQ Stock
Market. If the Company is unable to receive a listing or approval of
trading of securities on NASDAQ or another national securities exchange, then it
may be more difficult for stockholders to sell their securities.
One
stockholder owns a majority of our common stock and may act, or prevent certain
types of corporate actions, to the detriment of other stockholders.
John
Rizzo owns 5,250,000 common shares, holds options to acquire 2,000,000 options
at an average exercise price of $0.325 per share until July 1, 2017, has
accrued salary and health insurance of $687,500 and $207,691 in related party
debt owed to him by iTrackr Systems, Inc. as of December 31,
2010. Accordingly, Mr. Rizzo beneficially owns approximately
32.5% of our issued and outstanding common stock. Accordingly,
Mr. Rizzo may exercise significant influence over all matters requiring
stockholder approval, including the election of a majority of the directors and
the determination of significant corporate actions. This
concentration could also have the effect of delaying or preventing a change in
control that could otherwise be beneficial to our stockholders.
If
we issue additional shares of common stock in the future this may result in
dilution to our existing stockholders.
On
October 26, 2009, we simultaneously completed a 4-1 reverse split of our
common stock and amended our articles of incorporation to authorize the issuance
of 110,000,000 shares of stock consisting of 100,000,000 shares of common stock
and 10,000,000 shares of preferred stock. Our board of directors has
the authority to issue additional shares of common stock up to the authorized
capital stated in the articles of incorporation. Our board of
directors may choose to issue some or all of such shares to provide additional
financing in the future. The issuance of any such shares may result
in a reduction of the book value or market price of the outstanding shares of
our common stock. It will also cause a reduction in the proportionate
ownership and voting power of all other stockholders.
16
There
is currently no market for trading our common stock, and when such a market does
develop, the trading price of our common stock may be volatile, with the result
that an investor may not be able to sell any shares acquired at a price equal to
or greater than the price paid by the investor.
Our
common shares are currently not quoted for trading. We intend to have
our common shares quoted on the OTC Bulletin Board. Companies quoted
on the OTC Bulletin Board have traditionally experienced extreme price and
volume fluctuations. In addition, our stock price may be adversely
affected by factors that are unrelated or disproportionate to our operating
performance. Market fluctuations, as well as general economic,
political and market conditions such as recessions, interest rates or
international currency fluctuations may adversely affect the market price of our
common stock. In addition, to date, there has been no trading volume
for our shares on the over-the-counter markets. As a result of this
potential volatility and potential lack of a trading market, an investor may not
be able to sell any of our common stock that they acquire that a price equal or
greater than the price paid by the investor.
The
trading price of iTrackr’s common stock is likely to be volatile, and you might
not be able to sell your shares at or above the public offering
price.
The
trading price of iTrackr’s common stock is likely to be subject to wide
fluctuations. Factors, in addition to those outlined elsewhere in
this 10-K, that may affect the trading price of the Company’s common stock
include:
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Actual
or anticipated variations in the Company’s operating
results;
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Announcements
of technological innovations, new products or product enhancements,
strategic alliances or significant agreements by the Company or its
competitors;
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Changes
in recommendations by any securities analysts that elect to follow the
Company’s common stock;
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The
financial projections the Company may provide to the public, any changes
in these projections or its failure to meet these
projections;
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The
loss of a key customer;
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The
loss of a key supplier;
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The
loss of key personnel;
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Lawsuits
filed against the Company;
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Changes
in operating performance and stock market valuations of other companies
that sell similar products and
services;
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Price
and volume fluctuations in the overall stock
market;
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Market
conditions in our industry, the industries of our customers and the
economy as a whole; and
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Other
events or factors, including those resulting from war, incidents of
terrorism or responses to these
events.
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If
securities analysts do not publish research or reports about iTrackr’s business
or if they downgrade its stock, the price of its stock could
decline.
The
research and reports that industry or financial analysts publish about iTrackr
or its business will likely have an effect on the trading price of its common
stock. If an industry analyst decides not to cover the Company, or if
an industry analyst decides to cease covering the Company at some point in the
future, the Company could lose visibility in the market, which in turn could
cause its stock price to decline. If an industry analyst downgrades
iTrackr’s stock, its stock price would likely decline rapidly in
response.
17
The
concentration of iTrackr’s capital stock ownership with insiders will likely
limit your ability to influence corporate matters.
iTrackr’s
insiders, (its executive officers, directors, current five percent or greater
stockholders and affiliated entities) together beneficially own approximately
73.1% of our outstanding common stock. As a result, these
stockholders, acting together, will have significant influence over all matters
that require approval by the Company’s stockholders, including the election of
directors and approval of significant corporate
transactions. Corporate action might be taken even if other
stockholders, including those who purchased shares in this offering, oppose
them. This concentration of ownership might also have the effect of
delaying or preventing a change of control that other stockholders may view as
beneficial.
The
Company does not expect to pay any cash dividends for the foreseeable
future.
The
Company does not anticipate that it will pay any cash dividends to holders of
its common stock in the foreseeable future. Accordingly, investors
must rely on sales of their common stock after price appreciation, which may
never occur, as the only way to realize any future gains on their
investment. Investors seeking cash dividends in the foreseeable
future should not purchase the Company’s common stock.
ITEM
1B. UNRESOLVED STAFF COMMENTS.
Not
applicable.
ITEM
2. PROPERTIES.
We
entered into a lease agreement with Regus in February 2009, where the initial
term was for a three month period through April 2009. According to
the terms of the lease agreement, the lease extends automatically for successive
periods equal to the initial term but no less than 3 months (or such other
renewal term that has been agreed between Regus and us) until brought to an end
by us or Regus.
Our lease
is for a property located at 433 Plaza Road, Ste 275, Boca Raton Florida for a
fee of $800 per month.
We
believe our facilities are currently suitable and adequate for our current
needs.
ITEM
3. LEGAL PROCEEDINGS.
There are
not any material pending legal proceedings to which the Company is a party or as
to which any of its property is subject, and no such proceedings are known to
the Company to be threatened or contemplated against it.
ITEM
4. (REMOVED AND RESERVED)
PART II
ITEM
5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market
Information
There has
never been a public trading market for our common stock and our shares of common
stock are not currently listed or quoted for trading on any national securities
exchange or national quotation system. We intend to apply for our
shares to be traded on the over-the-counter bulletin board
(“OTCBB”).
18
If and
when our common stock is quoted for trading, the price of our common stock will
likely fluctuate in the future. The stock market in general has
experienced extreme stock price fluctuations in the past few
years. In some cases, these fluctuations have been unrelated to the
operating performance of the affected companies. Many companies have
experienced dramatic volatility in the market prices of their common
stock. We believe that a number of factors, both within and outside
our control, could cause the price of our common stock to fluctuate, perhaps
substantially. Factors such as the following could have a significant
adverse impact on the market price of our common stock:
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Our
ability to obtain additional financing and, if available, the terms and
conditions of the financing;
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Our
financial position and results of operations;
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Concern
as to, or other evidence of, the reliability and efficiency of our
proposed products and services to our competitors’ products and
services;
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Announcements
of innovations or new products or services by us or our
competitors;
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Federal
and state governmental regulatory actions and the impact of such
requirements on our business;
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The
development of litigation against us;
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Period-to-period
fluctuations in our operating results;
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Changes
in estimates of our performance by any securities
analysts;
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The
issuance of new equity securities pursuant to a future offering or
acquisition;
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Changes
in interest rates;
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The
issuance of new equity securities pursuant to a future offering or
acquisition;
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Changes
in interest rates;
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Competitive
developments, including announcements by competitors of new products or
services or significant contracts, acquisitions, strategic partnerships,
joint ventures or capital commitments;
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Investor
perceptions of our Company; and
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General
economic and other national
conditions.
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Holders
As of
December 31, 2010, we had 102 stockholders of record of 20,319,997 shares of our
common stock.
Dividends
We do not
expect to declare or pay any cash dividends on our common stock in the
foreseeable future, and we currently intend to retain future earnings, if any,
to finance the expansion of our business. The decision whether to pay
cash dividends on our common stock will be made by our board of directors, in
their discretion, and will depend on our financial condition, operating results,
capital requirements and other factors that the board of directors considers
significant. We did not pay cash dividends in the years ended
December 31, 2010 and 2009.
Transfer
Agent
The
transfer agent and registrar for our common stock is Manhattan Transfer
Registrar Company. Their address is 57 Eastwood Road, Miller Place,
NY 11764 and its telephone number at that location is 631-928-6171.
Equity
Compensation Plans
Information
regarding our equity compensation plans may be found in “Financial Statements
and Supplementary Data” in Part II, Item 8 of this Form 10-K.
Recent
Sales of Unregistered Securities
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On
June 30, 2010, the Company issued 101,000 shares of common stock to
ChatStat in exchange for the settlement of $32,000 owing from the purchase
of their chat software technology.
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On
June 30, 2010, the Company issued 100,000 shares of common stock to Chris
Maggiore in exchange for services value at $30,000 (See “Selling
Stockholders” Footnote 114 above).
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On
June 5, 2010, the Company issued 125,000 shares of common stock to Mihir
Sevak, Chief Technology Officer of iTrackr in exchange for services value
at $37,500.
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On
March 11, 2010, the Company issued 360,000 shares of common stock valued
at $108,000 as a result of a legal settlement with Marc Falcone a former
business development consultant to the Company. Said shares
were distributed to Marc Falcone (240,000 shares), Alan Frank (108,000
shares) and Alexander Palamarchuk (12,000 shares) (See “Selling
Stockholders” Footnote 69-71 above). The Company relied on
Section 4(2) of the Securities Act.
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On
March 15, 2010, the Company received $50,000 in exchange for the issuance
of 166,666 shares of common stock to Chris Maggiore. In
addition, on June 3, 2010, Mr. Maggiore exercised a warrant to purchase an
additional 166,666 shares of common stock in exchange for
$50,000. Mr. Maggiore provides business advisory services to
the Company (See “Selling Stockholders” Footnote 114
above). The Company relied on Section 4(2) of the Securities
Act.
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On
February 16, 2010, the Company converted $42,466.48 of shareholder loans
to 119,999 shares of common stock which were distributed to Maplehurst
Investment Group (36,260 shares), American Capital Ventures, Inc. (56,402
shares) and Jason Lyons (28,670 shares) (See “Selling Stockholders”
Footnote 72-74 above). The Company relied on Section 4(2) of
the Securities Act.
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19
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On
February 5, 2010, the Company sold a warrant to an accredited investor for
$50,000. Under the terms of the warrant, the investor has the right to
purchase up to 1,000,000 shares of the Company’s common stock at an
exercise price of $0.40 per share (See “Selling Stockholders” Footnote 75
and 100 above). The Company relied on Section 4(2) of the
Securities Act.
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During
December, 2009, the Company converted $29,944 of shareholder loans due to
Stella Gostfrand, founder and former CEO of Must Haves, Inc. to 59,888
shares of common stock (See “Selling Stockholders” Footnote 65
above). The Company relied on Section 4(2) of the Securities
Act.
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On
October 31, 2009, Delivery Technology Solutions (formerly Inflot
Holdings Corp.) converted $270,000 of convertible debt principle and
interest into 1,386,322 shares of common stock (See “Selling Stockholders”
Footnote 98 and 110 above). The Company relied on Section 4(2)
of the Securities Act.
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On
October 31, 2009, Ted Cooper converted $559,302 of convertible debt
principle and interest into 1,118,603 shares of common stock (See “Selling
Stockholders” Footnote 88 and 112 above). The Company relied on
Section 4(2) of the Securities Act.
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On
October 31, 2009, Robert Gleckman converted $110,825 of convertible
debt principle and interest into 221,649 shares of common stock (See
“Selling Stockholders” Footnote 87 and 112 above). The Company
relied on Section 4(2) of the Securities Act.
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On
October 31, 2009, The Borg Trust converted $55,844 of convertible
debt principle and interest into 111,688 shares of common stock (See
“Selling Stockholders” Footnote 86 and 112 above). The Company
relied on Section 4(2) of the Securities
Act.
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On
October 31, 2009, Robert Klinek & Susan Pack converted
$57,139 of convertible debt principle and interest into 114,277 shares of
common stock (See “Selling Stockholders” Footnote 85 and 112
above). The Company relied on Section 4(2) of the Securities
Act.
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On
October 31, 2009, The Winston Family Trust converted $34,631 of
convertible debt principle and interest into 69,261 shares of common stock
(See “Selling Stockholders” Footnote 84 and 112 above). The
Company relied on Section 4(2) of the Securities
Act.
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On
October 31, 2009, Dominick & Judy Aprile converted $28,879
of convertible debt principle and interest into 57,758 shares of common
stock (See “Selling Stockholders” Footnote 83 and 112
above). The Company relied on Section 4(2) of the Securities
Act.
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On
October 31, 2009, Charlie Bonafede converted $5,683 of convertible
debt principle and interest into 11,366 shares of common stock (See
“Selling Stockholders” Footnote 82 and 112 above). The Company
relied on Section 4(2) of the Securities
Act.
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On
October 31, 2009, Dawn Maywood converted $5,781 of convertible debt
principle and interest into 11,562 shares of common stock (See “Selling
Stockholders” Footnote 81 and 112 above). The Company relied on
Section 4(2) of the Securities Act.
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On
October 31, 2009, Sam Maywood converted $5,781 of convertible debt
principle and interest into 11,562 shares of common stock (See “Selling
Stockholders” Footnote 80 and 112 above). The Company relied on
Section 4(2) of the Securities Act.
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On
October 31, 2009, Dr. Michael Gelbar converted $116,666 of
convertible debt principle and interest into 233,332 shares of common
stock (See “Selling Stockholders” Footnote 79 and 112
above). The Company relied on Section 4(2) of the Securities
Act.
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On
October 31, 2009, Patricia Scarpella converted $87,510 of convertible
debt principle and interest into 175,019 shares of common stock (See
“Selling Stockholders” Footnote 78 and 112 above). The Company
relied on Section 4(2) of the Securities
Act.
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On
October 31, 2009, Shirley Harnick converted $58,347 of convertible
debt principle and interest into 116,693 shares of common stock (See
“Selling Stockholders” Footnote 77 and 112 above). The Company
relied on Section 4(2) of the Securities Act.
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On
October 31, 2009, Michael Nielsen converted $41,083 of convertible
debt principle and interest into 82,165 shares of common stock (See
“Selling Stockholders” Footnote 76 and 112 above). The Company
relied on Section 4(2) of the Securities
Act.
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On
May 5, 2008, Mark MacDougal received 100,000 shares of common stock
as an employee bonus valued at $50,000 (See “Selling Stockholders”
Footnote 15 above). The Company relied on Section 4(2) of the
Securities Act.
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On
May 5, 2008, Justin Van Winkle received 100,000 shares of common
stock as an employee bonus valued at $50,000 (See “Selling Stockholders”
Footnote 13 above). The Company relied on Section 4(2) of the
Securities Act.
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On
February 20, 2008, Steve Danzo earned 14,025 shares of common stock
in exchange for services valued at $7,013 (See “Selling Stockholders”
Footnote 92 above). The Company relied on Section 4(2) of the
Securities Act.
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On
August 21, 2007, Red Rock Strategies Ltd. converted $55,313.70 of
convertible debt principle and interest into 2,765,685 shares of common
stock at an exercise price of $0.02 per share (See “Selling Stockholders”
Footnote 107 above). The Company relied on Section 4(2) of the
Securities Act.
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On
August 21, 2007, New Link Ltd. Corp converted two notes totaling
$211,403.29 of convertible debt principle and interest into 3,385,280
shares of common stock. Note 1 total principle and interest was
$156,193 and converted into 624,773 shares of common stock at an exercise
price of $0.25 per share (See “Selling Stockholders” Footnote 109
above). Note 2 total principle and interest was $55,210 and
converted into 2,760,507 shares of common stock at an exercise price of
$0.02 per share (See “Selling Stockholders” Footnote 107
above). The Company relied on Section 4(2) of the Securities
Act.
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On
August 21, 2007, Landmark, Inc. converted $26,069.86 of convertible
debt principle and interest into 104,279 shares of common stock at an
exercise price of $0.25 per share (See “Selling Stockholders” Footnote
109 above) The Company relied on Section 4(2) of the Securities
Act.
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On
August 21, 2007, Beatrice Anne Rizzo, wife of John Rizzo, CEO and
Chairman of iTrackr Systems, Inc. converted $98,516.85 of convertible debt
principle and interest into 985,169 shares of common
stock.
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On
July 1, 2007 (See “Selling Stockholders” Footnote 11 and
108 above) The Company relied on Section 4(2) of the Securities
Act.
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Jarem
Archer, founder of iTrackr, Inc. received 750,000 shares of common stock
on July 1, 2007 in lieu of salary valued at $37,500 (See “Selling
Stockholders” Footnote 1 above) The Company relied on Section 4(2) of the
Securities Act.
|
|
·
|
On
July 1, 2007, John Rizzo received 5,000,000 shares of common stock in
lieu of salary valued at $250,000 (See “Selling Stockholders” Footnote
2 above) The Company relied on Section 4(2) of the Securities
Act.
|
|
·
|
On
October 26, 2006, The John Rizzo Family Trust received 250,000 shares
of founder’s common stock at no value; Jarem Archer received 250,000
shares of founder’s common stock at no value; the Christopher Smith Family
Trust received 200,000 shares of founder’s common stock at no value; and
Alejandro Sintas received 100,000 shares of founder’s common stock at no
value.
|
All funds
received from the sale of our shares were used for working capital
purposes.
All
shares bear a legend restricting their disposition.
The
foregoing securities may not be offered or sold in the United States unless
registered under the Act, or pursuant to an exemption from
registration.
The
shares were issued in reliance upon an exemption from registration pursuant to
Section 4(2) of the Securities Act. Each investor took his securities
for investment purposes without a view to distribution and had access to
information concerning us and our business prospects, as required by the
Securities Act. In addition, there was no general solicitation or
advertising for the purchase of our shares. Our securities were sold
only to an accredited investor and a limited number of sophisticated investors,
as defined in the Securities Act with whom we had a direct personal preexisting
relationship, and after a thorough discussion. Finally, our stock
transfer agent has been instructed not to transfer any of such shares, unless
such shares are registered for resale or there is an exemption with respect to
their transfer.
21
Each
purchaser was provided with access to our filings with the SEC, including the
following:
· Our
annual report to stockholders for the most recent fiscal year, the definitive
proxy statement filed in connection with that annual report, and, if requested
by the purchaser in writing, a copy of our most recent Form 10-K under the
Exchange Act.
· The
information contained in an annual report on Form 10-K under the Exchange
Act.
· The
information contained in any reports or documents required to be filed by
iTrackr Systems under sections 13(a), 14(a), 14(c), and 15(d) of the Exchange
Act since the distribution or filing of the reports specified
above.
· A brief
description of the securities being offered, the use of the proceeds from the
offering, and any material changes in iTrackr Systems’ affairs that are not
disclosed in the documents furnished.
Additional
Information
Copies of
our annual reports, quarterly reports, current reports, and any amendments to
those reports, are available free of charge on the internet at
www.sec.gov. All statements made in any of our filings, including all
forward-looking statements, are made as of the date of the document in which the
statement is included, and we do not assume or undertake any obligation to
update any of those statements or documents unless we are required to do so by
law.
ITEM
6. SELECTED FINANCIAL DATA.
A
registrant that qualifies as a smaller reporting company, as defined by
§229.10(f)(1), is not required to provide the information required by this
Item.
22
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Forward-Looking
Statements
The
following discussion of our financial condition and results of operations should
be read in conjunction with our financial statements and the related notes, and
the other financial information included in this prospectus.
This
prospectus contains forward-looking statements. The words
“anticipated,” “believe,” “expect, “plan,” “intend,” “seek,” “estimate,”
“project,” “could,” “may,” and similar expressions are intended to identify
forward-looking statements. These statements include, among others,
information regarding future operations, future capital expenditures, and future
net cash flow. Such statements reflect our management’s current views
with respect to future events and financial performance and involve risks and
uncertainties, including, without limitation, general economic and business
conditions, changes in foreign, political, social, and economic conditions,
regulatory initiatives and compliance with governmental regulations, the ability
to achieve further market penetration and additional customers, and various
other matters, many of which are beyond our control. Should one or
more of these risks or uncertainties occur, or should underlying assumptions
prove to be incorrect, actual results may vary materially and adversely from
those anticipated, believed, estimated or otherwise
indicated. Consequently, all of the forward-looking statements made
in this prospectus are qualified by these cautionary statements and there can be
no assurance of the actual results or developments.
The
following discussion and analysis of the results of operations and financial
condition of the Company on a consolidated basis for the years ended
December 31, 2010 and 2009 and should be read in conjunction with iTrackr’s
consolidated financial statements, and the notes to those consolidated financial
statements that are included elsewhere in this Prospectus. Our
discussion includes forward-looking statements based upon current expectations
that involve risks and uncertainties, such as our plans, objectives,
expectations and intentions. Actual results and the timing of events
could differ materially from those anticipated in these forward-looking
statements as a result of a number of factors, including those set forth under
the Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and
Business sections in this Prospectus. We use words such as
“anticipate,” “estimate,” “project,” “continuing,” “ongoing,” “expect,”
“believe,” “intend,” “may,” “will,” “should,” “could,” and similar expression to
identify forward-looking statements.
Recent
Events
On
February 1, 2010, Must Haves, Inc. amended its articles of incorporation with
the State of Florida, changing its name to iTrackr Systems, Inc.
On
December 10, 2009, Must Haves, Inc., iTrackr Acquisition, Inc. (“Merger
Sub”) and iTrackr, Inc., a Florida corporation (“iTrackr”), entered into an
Agreement and Plan of Merger (the “Agreement”), which closed January 12, 2010.
On the Closing Date, iTrackr was merged with and into Merger Sub, which is the
surviving corporation and became a wholly-owned subsidiary of the
Registrant.
At the
closing of the Merger, subject to and pursuant to the terms and conditions of
the Agreement, each outstanding share of Purchaser common stock was converted
into one share of common stock of the Registrant. Upon consummation of the
Merger, the shareholders of the Purchaser received an aggregate of 17,875,695
shares of Registrant common stock and thus owned 93.5% of Must Have’s common
stock. Must Haves also assumed 6,555,000 options and warrants of iTrackr, which
are exercisable at prices from $0.01 to $0.40.
In
addition, pursuant to the Plan of Merger Agreement, on January 12, 2010 Stella
Gostfrand submitted her resignation as an officer and director of the Company,
and also on January 12, 2010 Michael Uhl, Dave Baesler and John Rizzo were
appointed to serve as members of the board of directors of the Company, all of
which will be effective following the expiration of the ten day period following
the mailing of the information statement required by Rule 14f-1 under the
Exchange Act. Upon the consummation of the Reverse Merger on January 12, 2010
Ramesh Anand was appointed to serve as Chief Operating of the Company, and Mr.
Rizzo was appointed to serve as Chief Executive Officer and Chief Financial
Officer of the Company.
Overview
iTrackr
Systems, Inc. (“iTrackr”, the “Company”, “we”, “us” or “our”) was formed in May
2006 to develop, market and commercialize a product and inventory search
application through a social networking site designed to leverage the best of
Internet and Mobile technologies. We have taken the best of several
burgeoning markets, including eCommerce, social networking and mobile content,
and developed what we believe is a powerful platform that drives value to
consumers, retailers and advertising and marketing firms.
iTrackr
Systems intends to introduce and commercialize Internet and Mobile social
merchandizing technology platforms to retailers and
consumers. “Social merchandizing” applies the variety of traditional
marketing practices to promote products and services to a community of
individuals via social networking technologies. iTrackr is similar to
MySpace and Facebook; however, our members’ interests are not in diary or event
blogging, but in the timely location of products and services which can be
acquired and consumed on a local level.
iTrackr
Systems’ technology enables consumers to search and track merchandise, letting
the consumer know which retail locations in a local zip code are stocking the
queried merchandise, as well as the comparative prices. In addition,
if the item is not in stock, the consumer can request that iTrackr Systems
notify them via mobile text message or email when the item is delivered to a
local retailer and where that retailer is located.
23
In 2009,
iTrackr purchased online customers support software technology from Chatstat for
approximately $95,000. iTrackr has subsequently launched its customer
support chat software (“ChatTrackr”) which facilitates real-time customer
support and expert advice, and paid transactions.
iTrackr
generates revenues primarily through the licensing of its ChatTrackr to
Saveology and RespondQ. These customers use our application service provider
(“ASP”) system, outsourcing our chat applications for a monthly fee-per-agent,
or license fee and in certain cases, an annual enterprise fee.
In
addition, we offer customers a hosted ChatTrackr solution, enabling them to
download our software on their website, where agents download a fee-based
desktop application, while we manage the service on our network for an
additional fee. Examples of websites we manage include
www.buycomcast.com and www.buytimewarner.com. We also bill customers
for maintenance and upgrades to our service.
Our plans
to grow our customer support business is to position ChatTrackr as a sales tool
for online retailers, increasing fees through customer additions, traffic and
through the number of agents using ChatTrackr. We intend to expand
our product search business by offering this service to existing ChatTrackr
customers as a means of driving further traffic to their own websites and
transactional volume. Our target markets include all ecommerce
businesses, financial services, healthcare and automotive.
Our
primary sources of operating funds have been historically through the issuance
of debt and equity. For the year ended December 31, 2010 we raised
$50,000 from the sale of a warrant, $100,000 from the sale of common stock and
$139,500 in debt. For the year ended December 31, 2009, we raised
$333,312 in debt. To finance our growth strategy, we may continue to
actively pursue additional funds through equity financing, including the sale of
additional shares of common and preferred stock, asset sales, accelerated
payments of maintenance and management fees, debt financing, or a combination
thereof.
At
December 31, 2010, iTrackr Systems had assets of $118,091, including cash on
hand of $9,051 and accounts receivable of $45,168. For the years
ended December 31, 2010 the Company had revenue of $106,409, and net losses of
$981,805, of which $483,459 was related to stock compensation
expense. iTrackr has incurred losses since inception and may not be
able to generate sufficient net revenue from its business in the future to
achieve or sustain profitability. The Company believes that its cash
on hand is insufficient to continue operations. The Company currently
receives approximately $16,000 to $23,000 per month in sales
revenue. The Company currently needs approximately $15,000 to $20,000
per month to fund our minimum cash outflows and $43,300 to $53,300 per month to
maintain and expand our sales and operations. The difference between
the required minimum cash outflows of $15,000 to$20,000 per month and $43,300 to
$53,300 per month primarily represents the salaries of 4 to 8 additional sales
and administrative personnel, whom we intend to gradually hire as our cash flow
increases. Thus, the Company will need approximately $180,000 to
$300,000 to continue through September 30, 2011. In order to meet our
cash needs, management is working to secure additional sales and debt and equity
financing. In the event no outside funding is achieved or sales
remain flat Mr. Rizzo, our CEO will continue to provide personal
funds as needed to fund our required minimum cash outflows. During
2010, Mr. Rizzo loaned the Company $41,500. Mr. Rizzo is an
accredited investor and has committed to fund up to and additional
$250,000. However, the Company does not expect to need the full
commitment amount primarily as a result of increasing sales.
Critical
Accounting Policies
The
preparation of financial statements and related disclosures in conformity with
accounting principles generally accepted in the United States requires us to
make judgments, assumptions and estimates that affect the amounts reported. Note
A of Notes to Financial Statements describes the significant accounting policies
used in the preparation of the financial statements. Certain of these
significant accounting policies are considered to be critical accounting
policies, as defined below.
A
critical accounting policy is defined as one that is both material to the
presentation of our financial statements and requires management to make
difficult, subjective or complex judgments that could have a material effect on
our financial condition and results of operations. Specifically, critical
accounting estimates have the following attributes:
·
|
We
are required to make assumptions about matters that are highly uncertain
at the time of the estimate; and
|
|
·
|
Different
estimates we could reasonably have used, or changes in the estimate that
are reasonably likely to occur, would have a material effect on our
financial condition or results of
operations.
|
24
Estimates
and assumptions about future events and their effects cannot be determined with
certainty. We base our estimates on historical experience and on
various other assumptions believed to be applicable and reasonable under the
circumstances. These estimates may change as new events occur, as
additional information is obtained and as our operating environment
changes. These changes have historically been minor and have been
included in the consolidated financial statements as soon as they became known.
Based on a critical assessment of our accounting policies and the underlying
judgments and uncertainties affecting the application of those policies,
management believes that our financial statements are fairly stated in
accordance with accounting principles generally accepted in the United States,
and present a meaningful presentation of our financial condition and results of
operations.
In
preparing our financial statements to conform to accounting principles generally
accepted in the United States, we make estimates and assumptions that affect the
amounts reported in our financial statements and accompanying
notes. These estimates include useful lives for fixed assets for
depreciation calculations and assumptions for valuing options and warrants.
Actual results could differ from these estimates.
Stock-Based
Compensation
The
Company accounts for all compensation related to stock, options and warrants
using a fair value based method whereby compensation cost is measured at the
grant date based on the value of the award and is recognized over the service
period, which is usually the vesting period. We use the Black-Scholes
pricing model to calculate the fair value of options and warrants issued to both
employees and non-employees.
In
calculating this fair value, there are certain assumptions that we use
consisting of:
|
1)
|
The
expected life of the option. No incentive stock options have
been granted to date. In the event the Company issues employee
options, we will base our determination of expected life on the guidance
in ASC 718-10-55-29 to 34. The Company utilizes the contract
term of each non qualified option except in the event that the option is
not transferrable in which case we apply the aforementioned guidance in
determining the expected term.
|
|
2)
|
Risk-free
interest rate. We use the treasury bill rate that most closely
aligns with the duration of the
derivative.
|
|
3)
|
Dividend
yield. Until a dividend is offered this input will always be
zero.
|
|
4)
|
Volatility. We
use the Dow Jones Internet Composite Index (Ticker: FDN) from inception of
the index to the date of grant.
|
|
5)
|
Forfeiture
rate. To date this rate has been
zero.
|
|
6)
|
Stock
price (see discussion below).
|
The use
of a different estimate for any one of these components could have a material
impact on the amount of calculated compensation expense.
We
periodically issue common stock as compensation. Pursuant to ASC
505-50-30-6 issuances are valued using the market price of the stock or value of
the services rendered on the date of the related agreement, whichever is more
readily determinable. To date, common stock granted and issued for
services has been issued free of obligation to the recipient and for no
consideration. The shares are valued at the price non-employees are
willing to accept as payment in lieu of cash, which, historically, has been the
price per share of recent sales of unregistered securities or value of debt
converted to common stock.
25
Long-lived
Assets
Long-lived
assets, comprised of equipment, and identifiable intangible assets, are
evaluated for impairment whenever events or changes in circumstances indicate
that the carrying value may not be recoverable. Factors that may
cause an impairment review include significant changes in technology that make
current computer-related assets that we use in our operations obsolete or less
useful and significant changes in the way we use these assets in our
operations. When evaluating long-lived assets for potential
impairment, we first compare the carrying value of the asset to the asset’s
estimated future cash flows (undiscounted and without interest
charges). If the estimated future cash flows are less than the
carrying value of the asset, we calculate an impairment loss. The
impairment loss calculation compares the carrying value of the asset to the
asset’s estimated fair value, which may be based on estimated future cash flows
(discounted and with interest charges). We recognize an impairment
loss if the amount of the asset’s carrying value exceeds the asset’s estimated
fair value. If we recognize an impairment loss, the adjusted carrying
amount of the asset becomes its new cost basis. The new cost basis
will be depreciated (amortized) over the remaining useful life of that
asset. Using the impairment evaluation methodology described herein,
there have been no long-lived asset impairment charges for each of the last two
years.
Our
impairment loss calculations contain uncertainties because they require
management to make assumptions and to apply judgment to estimate future cash
flows and asset fair values, including forecasting useful lives of the assets
and selecting the discount rate that reflects the risk inherent in future cash
flows.
We have
not made any material changes in our impairment loss assessment methodology
during the past two fiscal years. We do not believe there is a
reasonable likelihood that there will be a material change in the estimates or
assumptions we use to calculate long-lived asset impairment
losses. However, if actual results are not consistent with our
estimates and assumptions used in estimating future cash flows and asset fair
values, we may be exposed to losses that could be material.
Goodwill
Goodwill
is no longer amortized, but evaluated for impairment annually, or immediately if
conditions indicate that impairment could exist. Goodwill represents
the excess of the purchase price over the fair value of current financial
assets, property and equipment, and separately reportable intangible
assets. The tangible assets, intangible assets, and goodwill acquired
are then assigned to reporting units. Goodwill is then tested for
impairment at least annually for each reporting unit. Step one of the
goodwill impairment test involves comparing the fair value of the reporting unit
to its carrying value. If the fair value exceeds the carrying value, no
further testing is required. If the carrying value exceeds the fair value,
a step two test must be performed. Step two includes estimating the fair
value of all tangible and intangible assets for the reporting
unit. The fair value of goodwill is then estimated by subtracting the
fair value of tangible and intangible assets from the fair value of the
reporting unit total assets determined in step one. The goodwill
impairment is the excess of the recorded goodwill over the estimated fair value
of goodwill.
We
acknowledge the uncertainty surrounding the key assumptions that drive the
estimated fair value. Any material negative change in the fundamental
outlook of our business, our industry or the capital market environment could
cause the reporting unit to fail step one. Accordingly, we will be
monitoring events and circumstances each quarter (prior to the annual testing
date) to determine whether an additional goodwill impairment test should be
performed.
Income
Taxes
Provisions
for income taxes are based on taxes payable or refundable for the current period
and deferred taxes on temporary differences between the amount of taxable income
and pretax financial income and between the tax bases of assets and liabilities
and their reported amounts in the financial statements. Deferred tax assets and
liabilities are included in the financial statements at currently enacted income
tax rates applicable to the period in which the deferred tax assets and
liabilities are expected to be realized or settled.
When
accounting for Uncertainty in Income Taxes, first, the tax position is evaluated
to determine the likelihood that it will be sustained upon external examination.
If the tax position is deemed “more-likely-than-not” to be sustained, the tax
position is then assessed to determine the amount of benefit to recognize in the
financial statements. The amount of the benefit that may be
recognized is the largest amount that has a greater than 50 percent
likelihood of being realized upon ultimate settlement. As changes in
tax laws or rates are enacted, deferred tax assets and liabilities are adjusted
through the provision for income taxes. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. The Company underwent a change of control for income tax
purposes on October 8, 2003 according to Section 381 of the Internal
Revenue Code. The Company’s utilization of U.S. Federal net operating
losses will be limited in accordance to Section 381 rules. As
changes in tax laws or rates are enacted, deferred tax assets and liabilities
are adjusted through the provision for income taxes. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized.
26
RESULTS
OF OPERATIONS
Results
of Operations
Year
Ended December 31, 2010 Compared With the Year Ended December 31,
2009
Revenues
Revenues
for the year ended December 31, 2010 were $106,409 compared to revenues of
$7,493 for the year ended December 31, 2009. The increase in revenue
is primarily due to the purchase of ChatStat and resulting sales of live chat
software which began in our fourth quarter of 2009. Of the $106,409
in 2010 sales, $229 relates to click through referral fees and $106,180 to sales
related to ChatTrackr. Two customers, Saveology and RespondQ,
accounted for 53% and 47%, respectively of our ChatTrackr related
sales. These results compare to 2009 where $1,707 related to click
through referral fees and $5,786 to sales related to ChatTrackr made to
Saveology.
During
the year ended December 31, 2010, Saveology and RespondQ were our only
ChatTrackr customers. Both customers’ contracts are identical except
for the payment terms where the Company bills Saveology monthly on net 30 day
payment terms at the rate of $0.75 per chat hour and RespondQ pays a flat
$12,700 per month on net 30 day payment terms with an initial fee of $25,000 due
90 days from the agreement date. The Saveology agreement was entered
into on September 1, 2009 and the Respond Q agreement was entered into on
November 1, 2010. Under both agreements, the Company provides
Click2Chat (i.e., ChatTrackr) software as a service. The initial
contract term is 12 months and renews for successive 12 month periods unless
terminated by the Company. Services that are voluntarily terminated
are payable to the Company through the then current 12 month
term. both contracts are currently in force.
Operating
Expenses
Total
operating expenses for the year ended December 31, 2010 were $1,101,073 or 80%
higher compared to $610,973 for the year ended December 31, 2009. The
$490,100 increase in operating expenses is primarily the result of a $451,790
increase in non-cash stock compensation expense recorded as a result of warrant
issuances and stock paid for services and $122,860 increase in professional
services offset by a $87,636 decrease in personnel costs. Excluding
stock compensation costs incurred during both 2010 and 2009, the Company
incurred operating expenses of $617,614 and $579,304 during 2010 and 2009,
respectively, representing a $38,310, or 7% increase in operating expenses
during 2010 compared to 2009.
Other
Income and Expense
Total
other income and expense was income of $12,859 for the year ended December 31,
2010 compared to expense of $253,462 for the year ended December 31,
2009. The $266,321, decrease was due to a decrease of 1) $74,149 in
interest expense as our debt balance during 2010 decreased compared to 2009
where we converted $1,437,467 of principle accrued interest into 3,721,257
shares of stock in October of 2009; 2) $25,000 accrued for the settlement of a
legal claim by a former consultant; and 3) $138,000 write-off of a worthless
strategic investment recognized in 2009 and not 2010 offset by a gain recognized
as a result of the Company writing off $29,172 of liabilities assumed in the
merger with Must Haves, Inc..
27
Net
Loss
Our net loss was $981,805
for the year ended December 31, 2010, compared to a loss of $856,942 for the
year ended December 31, 2009. The $124,863 or 15% increase in net
loss in 2010 compared to 2009 was primarily due to increases in professional
fees, stock compensation expense offset by decreases in personnel costs and
other income and expense. Excluding stock compensation costs incurred
during both 2010 and 2009, the Company’s net loss for 2010 was $498,346 compared
to $825,273 during 2009 representing an improvement of $326,927, or 40% during
2010 compared to 2009.
Liquidity
and Capital Resources
From
inception to December 31, 2010, we have incurred an accumulated deficit of
$4,074,259. This loss has been incurred through a combination of
stock compensation of $1,154,316, professional fees and expenses supporting our
plans to develop our website and brand our services as well as continued
operating losses. Since inception, we have financed our operations
primarily through debt and equity financing. However, we cannot
provide assurance that management will be successful in acquiring such sources
of capital in the future. During the year ended December 31, 2010 we
had a net increase in cash of $5,827. Total cash resources as of
December 31, 2010 was $9,051 compared with $3,223 at December 31,
2009.
Our
accounts payable and accrued expense balance as of December 31, 2010 was
approximately $763,500 and includes $687,500 due to our CEO for unpaid salary
and benefits and $76,000 of accounts payable and accrued
liabilities. As of December 31, 2010, we have $45,168 of accounts
receivable and cash of $9,051. Between accounts receivable and cash
on hand we have enough to fund approximately ten to thirteen weeks of required
minimum cash outflows (See discussion below).
Our
available working capital and capital requirements will depend upon numerous
factors, including the sale of live chat services, the timing and cost of
expanding into new markets, the cost of developing competitive technologies, the
resources that we devote to developing new products and commercializing
capabilities, the status of our competitors, our ability to establish
collaborative arrangements with other organizations, and our ability to attract
and retain key employees. We believe that approximately $43,300 to $53,300
per month or $520,000 to $640,000 will be required to maintain and expand our
sales and operations and cover our operating and public company administrative
expenses for the next 12 months. These costs are comprised of wages,
professional fees, communications (i.e., cell phone and internet service)
internet hosting and supplies. In addition to covering our operating
expenses, we may require additional cash resources due to changing business
conditions or other future developments, including any acquisitions we may
decide to pursue. At present, the Company does not have any proposed business
combination, agreements, the consummation of which is probable.
The
Company currently receives approximately $16,000 to $23,000 per quarter in sales
revenue compared to $15,000 to$20,000 per month in required minimum cash
outflows. Due to our limited operating history, we cannot estimate
the level of future sales and may not generate enough cash to cover our required
minimum cash outflows. With the acquisition of RespondQ in November
2010 as a new customer combined with Saveology, we are in a much better position
to fund our required minimum cash outflows. However, in order to
expand our sales efforts we will gradually need approximately $43,300 to $53,300
per month. The difference between the required minimum cash outflows
of $15,000 to$20,000 per month and $43,300 to $53,300 per month primarily
represents the salaries of 4 to 8 additional sales and administrative personnel,
whom we intend to gradually hire as our cash flow increases. In order
to meet this increase our management continues to work diligently to secure
either debt or equity based financing for which we are currently in
discussions. In the event no outside funding is achieved or sales
remain flat Mr. Rizzo, our CEO will continue to provide personal funds as needed
to fund our required minimum cash outflows. During 2010, Mr. Rizzo
loaned the Company $41,500. Mr. Rizzo is an accredited investor
and has committed to fund up to an additional $250,000. However, the
Company does not expect to need the full commitment amount primarily as a result
of increasing sales.
Net cash
used by operating activities was $258,768 for the year ended December 31, 2010
as compared to $414,379 for the year ended December 31, 2009.
28
Net cash
provided by investing activities was $95 for the year ended December 31, 2010 as
compared to cash used of $98,854 for the year ended December 31,
2009.
Net cash
provided by financing activities was $264,500 for the year ended December 31,
2010 as compared to $333,312 for the year ended December 31, 2009.
31,
2008.
During
the year ended December 31, 2010, iTrackr Systems, Inc.:
|
·
|
Received
$50,000 in exchange for the issuance of 166,666 shares of restricted
common stock.
|
|
·
|
Received
$50,000 upon the exercise of warrants to purchase 166,666 shares of
restricted common stock.
|
|
·
|
Received
$50,000 in exchange for a warrant to purchase 1,000,000 shares of common
stock.
|
|
·
|
Converted
$42,000 of principle and $466 of accrued interest into 121,332 shares of
restricted common stock.
|
|
·
|
Received
gross proceeds of $139,500 from promissory
notes.
|
|
·
|
Issued
360,000 shares of restricted common stock valued at $108,000 to settle a
legal dispute with Marc Falcone.
|
|
·
|
Issued
101,000 shares of restricted common stock to settle accounts payable
valued at $32,000.
|
|
·
|
Issued
350,000 shares of restricted common stock in exchange for services valued
at 105,000.
|
During
the year ended December 31, 2009, iTrackr, Inc.:
|
·
|
Issued
150,000 shares of restricted common stock in exchange for services valued
at $75,000.
|
|
·
|
Converted
$1,300,000 of principle and $137,467 of accrued interest into 3,721,257
shares of restricted common stock.
|
|
·
|
Received
gross proceeds of $333,312 from promissory
notes.
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Off-Balance
Sheet Arrangements
We have
no off-balance sheet transactions.
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
Impact
of Inflation
General
inflation in the economy has driven the operating expenses of many businesses
higher, and, accordingly we have experienced increased salaries and higher
prices for supplies, goods and services. We continuously seek methods of
reducing costs and streamlining operations while maximizing efficiency through
improved internal operating procedures and controls. While we are subject to
inflation as described above, our management believes that inflation currently
does not have a material effect on our operating results. However, inflation may
become a factor in the future.
29
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Index
to Consolidated Financial Statements
Page
|
||||
Report
of Independent Registered Public Accountant
|
31 | |||
Consolidated
Balance Sheets as of December 31, 2010 and December 31,
2009
|
32 | |||
Consolidated
Statements of Operations for the Years Ended December 31, 2010 and
2009
|
33 | |||
Consolidated
Statements of Stockholders Equity for the Years Ended December 31, 2010
and 2009
|
34 | |||
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2010 and
2009
|
35 | |||
Notes
to Financial Statements
|
36-50 |
30
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
Board of
Directors
iTrackr
Systems, Inc.
(formerly
Must Haves, Inc.)
We have
audited the accompanying balance sheets of iTrackr Systems, Inc. (formerly Must
Haves, Inc.) (the “Company”), as of December 31, 2010 and 2009 and the related
statements of operations, stockholders’ equity, and cash flows for the years
ended December 31, 2010 and 2009. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our
audits
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our
opinion, based on our audits, the financial statements referred to above present
fairly, in all material respects, the financial position of iTrackr Systems,
Inc. as of December 31, 2010 and 2009 and the related statements of operations,
stockholders’ equity, and cash flows for the years ended December 31, 2010 and
2009, in conformity with accounting principles generally accepted in the United
States of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. However, the Company has suffered recurring
losses from operations that raises substantial doubt about its ability to
continue as a going concern. Management plans in regards to these matters are
described in Note A. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.
/s/
Bedinger & Company
Certified
Public Accountants
Concord,
California
February
7, 2011
31
iTrackr
Systems, Inc.
(formerly
Must Haves, Inc.)
Balance
Sheets
December
31,
|
||||||||
2010
|
2009
|
|||||||
Assets
|
||||||||
Current
Assets
|
||||||||
Cash
|
$ | 9,051 | $ | 3,223 | ||||
Accounts
receivable (Note B)
|
45,168 | 5,786 | ||||||
Total
Current Assets
|
54,219 | 9,009 | ||||||
Fixed
assets (Note C)
|
206,211 | 206,211 | ||||||
Accumulated
depreciation
|
(142,339 | ) | (106,856 | ) | ||||
Net
fixed assets
|
63,872 | 99,355 | ||||||
Total
Assets
|
$ | 118,091 | $ | 108,364 | ||||
Liabilities
and Stockholders' Deficit
|
||||||||
Current
Liabilities
|
||||||||
Accounts
payable & accrued expenses (Note D)
|
$ | 763,500 | $ | 524,879 | ||||
Promissory
notes (Note E)
|
56,000 | 25,000 | ||||||
Promissory
notes - related party (Note E)
|
192,812 | 151,312 | ||||||
Total
Current Liabilities
|
1,012,312 | 701,191 | ||||||
Total
Liabilities
|
1,012,312 | 701,191 | ||||||
Stockholders' Deficit
(Note F)
|
||||||||
Common
stock, no par value, 100,000,000 shares authorized; issued and outstanding
20,319,997 and 13,990,413 at December 31, 2010 and December 31, 2009,
respectively.
|
3,142,538 | 980,148 | ||||||
Common
stock payable
|
37,500 | 1,451,979 | ||||||
Deficit
accumulated during the development stage
|
(4,074,259 | ) | (3,024,954 | ) | ||||
Total
Stockholders' Deficit
|
(894,221 | ) | (592,827 | ) | ||||
Total
Liabilities and Stockholders' Deficit
|
$ | 118,091 | $ | 108,364 |
The
accompanying notes are an integral part of these financial
statements
32
iTrackr
Systems, Inc.
(formerly
Must Haves, Inc.)
Statements
of Operations
For the
Years Ended December 31, 2010 and 2009
Year
Ended
|
||||||||
December
31,
|
||||||||
2010
|
2009
|
|||||||
Revenue
|
$ | 106,409 | $ | 7,493 | ||||
Operating
Expenses
|
||||||||
Personnel
|
303,348 | 390,984 | ||||||
Professional
fees
|
207,205 | 84,345 | ||||||
Stock
compensation
|
483,459 | 31,669 | ||||||
Travel
and entertainment
|
300 | - | ||||||
Communications
|
7,569 | 9,089 | ||||||
Marketing
|
- | 4,796 | ||||||
Website
|
45,576 | 41,286 | ||||||
Depreciation
|
35,482 | 33,508 | ||||||
General
|
18,134 | 15,296 | ||||||
Total
operating expenses
|
1,101,073 | 610,973 | ||||||
Loss
from operations
|
(994,664 | ) | (603,480 | ) | ||||
Other Income and
(Expense)
|
||||||||
Interest
expense
|
(16,313 | ) | (90,462 | ) | ||||
Other
expense
|
- | (163,000 | ) | |||||
Other
income
|
29,172 | - | ||||||
Total
other income and (expense)
|
12,859 | (253,462 | ) | |||||
NET
LOSS
|
$ | (981,805 | ) | $ | (856,942 | ) | ||
Net
loss per common share basic and diluted
|
$ | (0.05 | ) | $ | (0.06 | ) | ||
Weighted
average common shares outstanding
|
||||||||
basic
and diluted
|
20,036,477 | 14,632,513 | ||||||
The
average shares listed below were not included in the computation of
diluted losses per
share because to do so would have been antidilutive for the periods
presented:
|
||||||||
Warrants
|
2,636,362 | 1,050,000 | ||||||
Stock
options
|
5,505,000 | 5,255,000 | ||||||
Convertible
promissory notes
|
- | 3,242 |
The
accompanying notes are an integral part of these financial
statements
33
iTrackr
Systems, Inc.
(formerly
Must Haves, Inc.)
Statement
of Stockholders' Equity (Deficit)
For the
Years Ended December 31, 2010 and 2009
Common
Stock
|
Total
|
|||||||||||||||||||
Number
of
|
Accumulated
|
Stockholders'
|
||||||||||||||||||
Shares
|
Amount
|
Payable
|
(Deficit)
|
(Deficit)
|
||||||||||||||||
BALANCES
December 31, 2008
|
13,990,413 | $ | 955,979 | $ | 7,013 | $ | (2,168,012 | ) | $ | (1,205,020 | ) | |||||||||
Stock
to be issued for conversion of debt
|
1,437,466 | 1,437,466 | ||||||||||||||||||
Stock
issued for services
|
75,000 | 75,000 | ||||||||||||||||||
Stock
options expense
|
24,169 | 24,169 | ||||||||||||||||||
Net
loss
|
$ | (924,442 | ) | (924,442 | ) | |||||||||||||||
BALANCES
December 31, 2009
|
13,990,413 | $ | 980,148 | $ | 1,519,479 | $ | (3,092,454 | ) | $ | (592,827 | ) | |||||||||
Stock
issued for conversion of debt
|
3,842,589 | 1,486,946 | (1,444,479 | ) | 42,467 | |||||||||||||||
Stock
issued for legal settlement
|
360,000 | 108,000 | 108,000 | |||||||||||||||||
Stock
issued for cash
|
333,332 | 100,000 | 100,000 | |||||||||||||||||
Stock
issued for services
|
389,025 | 142,500 | (37,500 | ) | 105,000 | |||||||||||||||
Stock
issued for accounts payable
|
101,000 | 32,000 | 32,000 | |||||||||||||||||
Fair
market value of warrants issued
|
320,459 | 320,459 | ||||||||||||||||||
Shares
issued in merger
|
1,303,638 | (27,515 | ) | (27,515 | ) | |||||||||||||||
Net
loss
|
(981,805 | ) | (981,805 | ) | ||||||||||||||||
BALANCES
December 31, 2010
|
20,319,997 | $ | 3,142,538 | $ | 37,500 | $ | (4,074,259 | ) | $ | (894,221 | ) |
The
accompanying notes are an integral part of these financial
statements
34
iTrackr
Systems, Inc.
(formerly
Must Haves, Inc.)
Statements
of Cash Flows
For the
Years Ended December 31, 2010 and 2009
Year
Ended
|
|||||||||
December
31,
|
|||||||||
2010
|
2009
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||||
Net
loss
|
$ | (981,805 | ) | $ | (924,442 | ) | |||
Adjustments
to reconcile net loss to
net cash provided (used) by operating activities:
|
|||||||||
Depreciation
|
35,482 | 33,508 | |||||||
Asset
impairment
|
- | 138,000 | |||||||
Compensation
expense on fair market value of options issued
|
- | 24,169 | |||||||
Compensation
expense on fair value of warrants issued
|
270,459 | - | |||||||
Stock
compensation expense
|
213,000 | 75,000 | |||||||
Common
stock issued for accrued interest
|
466 | 137,467 | |||||||
Common
stock issued for accounts payable
|
32,000 | - | |||||||
Changes
in operating accounts:
|
|||||||||
Accounts
receivable
|
(39,382 | ) | (5,786 | ) | |||||
Other
current assets
|
1,562 | - | |||||||
Accounts
payable and accrued expenses
|
209,450 | 107,705 | |||||||
CASH
(USED) BY OPERATING ACTIVITIES
|
(258,768 | ) | (414,379 | ) | |||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||||
Cash
acquired in merger
|
95 | - | |||||||
Acquisition
of furniture and equipment
|
- | (98,854 | ) | ||||||
CASH
PROVIDED (USED) BY INVESTING ACTIVITIES
|
95 | (98,854 | ) | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||||
Proceeds
from the issuance of stock warrants
|
50,000 | - | |||||||
Issuance
of common stock for cash
|
100,000 | - | |||||||
Repayment
of promissory notes
|
(25,000 | ) | - | ||||||
Repayment
of related party notes
|
- | - | |||||||
Proceeds
from promissory notes
|
98,000 | 292,000 | |||||||
Proceeds
from related party notes
|
41,500 | 41,312 | |||||||
CASH
PROVIDED BY FINANCING ACTIVITIES
|
264,500 | 333,312 | |||||||
NET
INCREASE (DECREASE) IN CASH
|
5,827 | (179,921 | ) | ||||||
CASH,
beginning of period
|
3,223 | 183,144 | |||||||
CASH,
end of period
|
$ | 9,051 | $ | 3,223 | |||||
NON-CASH
OPERATING ACTIVITIES:
|
|||||||||
Value
of Common Stock issued in exchange for services
|
$ | 213,000 | $ | 75,000 | |||||
Value
of Common Stock issued for accrued interest
|
$ | 466 | $ | 137,467 | |||||
Value
of Common Stock issued for debt principle
|
$ | 42,000 | $ | 1,300,000 | |||||
Value
of Common Stock issued for accounts payable
|
$ | 32,000 | $ | - | |||||
Value
of warrants issued
|
$ | 270,459 | $ | - |
The
accompanying notes are an integral part of these financial
statements
35
iTrackr
Systems, Inc.
(Formerly
Must Haves, Inc.)
Notes
to Financial Statements
For
the Years Ended December 31, 2010 and 2009
Note A-Organization and
Summary Of Significant Accounting Policies
Organization
iTrackr,
Inc. (the “Company” or “iTrackr”) was formed on May 10, 2006 to develop, market
and commercialize a product and inventory search application through a social
networking site designed to leverage the best of Internet and Mobile
technologies. iTrackr has taken several markets, including eCommerce,
social networking and mobile content, and developed a platform that drives value
to consumers, retailers and advertising and marketing firms.
In 2009,
iTrackr purchased online customer support software technology from ChatStat for
approximately $95,000. iTrackr has launched its customer support chat
software which facilitates real-time customer support, expert advice, and paid
transactions.
On
January 12, 2010, the Company closed a share exchange transaction pursuant to
which it (i) became the 100% parent of iTrackr, Inc., a Florida corporation
(“iTrackr”), (ii) assumed the operations of iTrackr, and (iii) changed its name
from Must Haves, Inc. to iTrackr Systems, Inc. iTrackr, Inc. was
deemed to be the acquirer in the reverse merger. Consequently, the
assets and liabilities and the historical operations of iTrackr, Inc. prior to
the Merger are reflected in the financial statements and have been recorded at
the historical cost basis of iTrackr, Inc. Our financial statements,
after completion of the Merger, include the assets and liabilities of both Must
Haves, Inc. and iTrackr, Inc. We accounted for the merger under
recapitalization accounting whereby the equity of the acquiring enterprise
(iTrackr, Inc.) is presented as the equity of the combined enterprise and the
capital stock account of the acquiring enterprise is adjusted to reflect the par
value of the outstanding stock of the legal acquirer (Must Haves, Inc.) after
giving effect to the number of shares issued in the business combination
(1,303,638 shares). Shares retained by the legal acquirer (Must
Haves, Inc. 1,303,638 shares) are reflected as an issuance as of the reverse
merger date (January 12, 2010) for the historical amount of the net assets of
the acquired entity which is in this case is a net liability of
$27,515.
During
2010 we completed the development of our Chat software and TrackiT, PriceiT and
iTrackr community applications thereby leaving the Development Stage and
focusing increasing attention on sales.
Going
Concern
The
accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America, which
contemplate continuation of the Company as a going concern. In the
course of funding development activities and sales initiatives, the Company has
sustained operating losses and has an accumulated deficit of $4,074,259 and
$3,024,954 at December 31, 2010 and December 31, 2009,
respectively. In addition, the Company has negative working capital
of $958,093 and $692,182 at December 31, 2010 and 2009,
respectively.
The
Company has and will continue to use significant capital to commercialize its
products. These factors raise substantial doubt about the ability of
the Company to continue as a going concern. In this regard,
management is proposing to raise any necessary additional funds not provided by
operations through loans or through additional sales of their common
stock. There is no assurance that the Company will be successful in
raising this additional capital or in achieving profitable
operations. The financial statements do not include any adjustments
relating to the recoverability and classification of recorded asset amounts or
amounts and classification of liabilities that might result from this
uncertainty.
Accounting
estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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.
36
iTrackr
Systems, Inc.
(Formerly
Must Haves, Inc.)
Notes
to Financial Statements
For
the Years Ended December 31, 2010 and 2009
Note A-Organization and
Summary Of Significant Accounting Policies
Cash and cash
equivalents
For
purposes of the statement of cash flows, the Company considers all highly liquid
debt instruments purchased with an original maturity of three months or less to
be cash equivalents. Cash and cash equivalents may at times exceed
federally insured limits. To minimize this risk, the Company places
its cash and cash equivalents with high credit quality
institutions.
Accounts
Receivable
Accounts
receivable are reported at the customers' outstanding balances. The
Company does not have a history of significant bad debt and has not recorded any
allowance for doubtful accounts. Interest is not accrued on overdue
accounts receivable. The Company evaluates receivables on a regular
basis for potential reserve.
Fixed
assets
Fixed
assets are stated at cost. Major renewals and improvements are
charged to the asset accounts while replacements, maintenance and repairs, which
do not improve or extend the lives of the respective assets, are
expensed. At the time fixed assets are retired or otherwise disposed
of, the asset and related accumulated depreciation accounts are relieved of the
applicable amounts. Gains or losses from retirements or sales are
credited or charged to income.
Depreciation
of fixed assets is provided on the straight-line method over the estimated
useful lives of the assets. The estimated useful lives
used are 3 years for computer equipment, office equipment and
software. Accelerated methods of depreciation of fixed assets are
used for income tax purposes.
Revenue recognition
policy
Revenue for our services is
recognized when all of the following criteria are satisfied: (i) persuasive
evidence of an arrangement exists; (ii) the price is fixed or determinable;
(iii) collectibility is reasonably assured; and (iv) services have
been performed.
Deferred Revenue: Revenue is deferred
for any undelivered elements and is recognized upon product delivery or when the
service has been performed.
Sales and marketing
costs
Sales and marketing expenses include
advertising expenses, seminar expenses, commissions and personnel expenses for
sales and marketing. Marketing and advertising costs to promote the
Company's products and services are expensed in the period
incurred. For the year ended December 31, 2010 and 2009, the Company
incurred no marketing and advertising expense.
Fair Value of Financial
Instruments
The
Company’s financial instruments include cash and accounts receivable. The
carrying amount of these financial instruments has been estimated by management
to approximate fair value.
“Disclosures
about Fair Value of Financial Instruments,” requires disclosures of information
regarding the fair value of certain financial instruments for which it is
practicable to estimate the value. For purpose of this disclosure, the fair
value of a financial instrument is the amount at which the instrument could be
exchanged in a current transaction between willing parties, other than in a
forced sale of liquidation.
The
company accounts for certain assets and liabilities at fair value. The hierarchy
below lists three levels of fair value based on the extent to which inputs used
in measuring fair value are observable in the market. We categorize each of
our fair value measurements in one of these three levels based on the lowest
level input that is significant to the fair value measurement in its entirety.
These levels are:
Level 1 —
inputs are based upon unadjusted quoted prices for identical instruments traded
in active markets. We have no Level 1 instruments as of December 31,
2010.
37
iTrackr
Systems, Inc.
(Formerly
Must Haves, Inc.)
Notes
to Financial Statements
For
the Years Ended December 31, 2010 and 2009
Note A-Organization and
Summary Of Significant Accounting Policies
Fair Value of Financial
Instruments (Continued)
Level 2 —
inputs are based upon quoted prices for similar instruments in active markets,
quoted prices for identical or similar instruments in markets that are not
active, and model-based valuation techniques (e.g. the Black-Scholes model) for
which all significant inputs are observable in the market or can be corroborated
by observable market data for substantially the full term of the assets or
liabilities. Where applicable, these models project future cash flows and
discount the future amounts to a present value using market-based observable
inputs including interest rate curves, foreign exchange rates, and forward and
spot prices for currencies and commodities. We have no Level 2 instruments as of
December 31, 2010.
Level 3 —
inputs are generally unobservable and typically reflect management’s estimates
of assumptions that market participants would use in pricing the asset or
liability. The fair values are therefore determined using model-based
techniques, including option pricing models and discounted cash flow models. We
have no Level 3 instruments as of December 31, 2010.
Research and
Development
Expenses
related to present and future products are expensed as incurred.
Income
Taxes
The Company accounts for income taxes
under the asset and liability method, which requires the recognition of deferred
tax assets and liabilities for the expected future tax consequences of events
that have been included in the financial statements. Under this
method, deferred tax assets and liabilities are determined based on differences
between financial statements and tax basis of assets and liabilities using
enacted tax rates in effect for the year in which the differences are expected
to reverse. The effect of a change in tax rates on deferred tax
assets and liabilities is recognized in income in the period that includes the
enactment date.
The Company records net deferred tax
assets to the extent the Company believes these assets will more likely than not
be realized. In making such determination, the Company considers all
available positive and negative evidence, including future reversals of existing
taxable temporary differences, projected future taxable income, tax planning
strategies and recent financial operations. A valuation allowance is
established against deferred tax assets that do not meet the criteria for
recognition. In the event the Company were to determine that it would
be able to realize deferred income tax assets in the future in excess of their
net recorded amount, we would make an adjustment to the valuation allowance
which would reduce the provision for income taxes.
The Company follows the accounting
guidance which provides that a tax benefit from an uncertain tax position may be
recognized when it is more likely than not that the position will be sustained
upon examination, including resolutions of any related appeals or litigation
processes, based on the technical merits. Income tax provisions must
meet a more-likely-than-not recognition threshold at the effective date to be
recognized initially and in subsequent periods. Also included is
guidance on measurement, derecognition, classification, interest and penalties,
accounting in interim periods, disclosure and transition.
The Company reports both basic and
diluted earnings (loss) per share. Basic loss per share is calculated
using the weighted average number of common shares outstanding in the
period. Diluted loss per share includes potentially dilutive
securities such as outstanding options and warrants, using the “treasury stock”
method and convertible securities using the “if-converted” method.
Impairment of Long-Lived
Assets
Accounting
for the Impairment or Disposal of Long-Lived Assets requires that long-lived
assets be reviewed for impairment whenever events or changes in circumstances
indicate that the historical cost-carrying value of an asset may not be
recovered. The Company assesses recoverability of the carrying value
of an asset by estimating the fair value of the asset. If the fair
value is less than the carrying value of the asset, an impairment loss is
recorded equal to the difference between the asset's carrying value and fair
value. The Company has never recognized an impairment
charge.
38
iTrackr
Systems, Inc.
(Formerly
Must Haves, Inc.)
Notes
to Financial Statements
For
the Years Ended December 31, 2010 and 2009
Note A-Organization and
Summary Of Significant Accounting Policies
Stock-Based
Compensation
The
Company accounts for all compensation related to stock, options or warrants
using a fair value based method whereby compensation cost is measured at the
grant date based on the value of the award and is recognized over the service
period, which is usually the vesting period. We use the Black-Scholes
pricing model to calculate the fair value of options and warrants issued to both
employees and non-employees. In calculating this fair value, there
are certain assumptions that we use consisting of the expected life of the
option, risk-free interest rate, dividend yield, volatility and forfeiture
rate. The use of a different estimate for any one of these components
could have a material impact on the amount of calculated compensation
expense.
We
periodically issue common stock as compensation. Pursuant to ASC
505-50-30-6 issuances are valued using the market price of the stock or value of
the services rendered on the date of the related agreement, whichever is more
readily determinable. To date, common stock granted and issued for
services has been issued free of obligation to the recipient and for no
consideration. The shares are valued at the price non-employees are
willing to accept as payment in lieu of cash, which, historically, has been the
price per share of recent sales of unregistered securities or value of debt
converted to common stock.
Recent Accounting
Pronouncements
On July
1, 2009, the FASB officially launched the FASB ASC 105 - Generally Accepted
Accounting Principles, which established the FASB Accounting Standards
Codification (“the Codification”), as the single official source of
authoritative, nongovernmental, U.S. GAAP, in addition to guidance issued by the
Securities and Exchange Commission. The Codification is designed to
simplify U.S. GAAP into a single, topically ordered structure. All
guidance contained in the Codification carries an equal level of
authority. The Codification is effective for interim and annual
periods ending after September 15, 2009. Accordingly, the Company
refers to the Codification in respect of the appropriate accounting standards
throughout this document as “FASB ASC”. Implementation of the
Codification did not have any impact on the Company’s consolidated financial
statements.
On June
30, 2009, the FASB issued Accounting Standard Update (ASU) No. 2009-01 (Topic
105) – Generally Accepted Accounting Principles – amendments based on –
Statement of Financial Accounting Standards No. 168 –The FASB Accounting and
Standards Codification and the Hierarchy of Generally Accepted Accounting
Principles. Beginning with this Statement the FASB will no longer
issue new standards in the form of Statements, FASB Staff Positions, or Emerging
Issues Task Force Abstracts. Instead, it will issue Accounting
Standard Updates. This ASU includes FASB Statement No. 168 in its
entirety. While ASU’s will not be considered authoritative in their
own right, they will serve to update the Codification, provide the bases for
conclusions and changes in the Codification, and provide background information
about the guidance. The Codification modifies the GAAP hierarchy to
include only two levels of GAAP: authoritative and
nonauthoritative. ASU No. 2009-01 is effective for financial
statements issued for the interim and annual periods ending after September 15,
2009. The Company adopted this statement no significant financial
impact.
In August
2009, the FASB issued ASU No. 2009-05 – Fair Value Measurements and Disclosures
(Topic 820) – Measuring Liabilities at Fair Value. This ASU clarifies
the fair market value measurement of liabilities. In circumstances
where a quoted price in an active market for the identical liability is not
available, a reporting entity is required to measure fair value using one or
more of the following techniques: a technique that uses quoted price of the
identical or a similar liability or liabilities when traded as an asset or
assets, or another valuation technique that is consistent with the principles of
Topic 820 such as an income or market approach. ASU No. 2009-05 was
effective upon issuance and it did not result in any significant financial
impact on the Company upon adoption.
In
September 2009, the FASB issued ASU No. 2009-12 – Fair Value Measurements and
Disclosures (Topic 820) – Investments in Certain Entities That Calculate Net
Asset Value per Share (or its equivalent). This ASU permits use of a
practical expedient, with appropriate disclosures, when measuring the fair value
of an alternative investment that does not have a readily determinable fair
value. ASU No. 2009-12 is effective for interim and annual
periods
39
iTrackr
Systems, Inc.
(Formerly
Must Haves, Inc.)
Notes
to Financial Statements
For
the Years Ended December 31, 2010 and 2009
Note A-Organization and
Summary Of Significant Accounting Policies
Recent Accounting
Pronouncements (Continued)
ending
after December 15, 2009, with early application permitted. Since the
Company does not currently have any such investments, this statement had no
impact on its financial statements.
In
February 2010, the FASB issued ASU No. 2010-09, “Subsequent Events (Topic 855);
Amendments to Certain Recognition and Disclosure Requirements.” This
Statement addresses accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued or available to be
issued. FASB ASC 855 requires disclosure of the date through which an
entity has evaluated subsequent events and the basis for that date, the date
issued or date available to be issued. The Company adopted this
Statement in the second quarter of 2009. As a result the date through
which the Company has evaluated subsequent events and the basis for that date
have been disclosed in Note K, Subsequent Events.
In April
2009, the FASB issued an update to FASB ASC 820, “Fair Value Measurements and
Disclosures,” related to providing guidance on when the volume and level of
activity for the asset or liability have significantly decreased and identifying
transactions that are not orderly. The update clarifies the
methodology to be used to determine fair value when there is no active market or
where the price inputs being used represent distressed sales. The
update also reaffirms the objective of fair value measurement, as stated in FASB
ASC 820, which is to reflect how much an asset would be sold in and orderly
transaction, and the need to use judgment to determine if a formerly active
market has become inactive, as well as to determine fair values when markets
have become inactive. The Company adopted this Statement in the
second quarter of 2009 without significant financial impact.
In April
2009, the FASB ASC 320, “Investments – Debt and Equity,” amends current
other-than-temporary guidance for debt securities through increased consistency
in the timing of impairment recognition and enhanced disclosures related to
credit and noncredit components impaired debt securities that are not expected
to be sold. Also, the Statement increases disclosures for both debt
and equity securities regarding expected cash flows, securities with unrealized
losses, and credit losses. The Company adopted this Statement in the
second quarter of 2009 without significant impact to our financial
statements.
In April
2009, the FASB issued an update to FASB ASC 825, “Financial Instruments,” to
require interim disclosures about the fair value of financial
instruments.” This update enhances consistency in financial reporting
by increasing the frequency of fair value disclosures of those assets and
liabilities falling within the scope of FASB ASC 825. The Company adopted this
update in the second quarter of 2009 without significant impact to the financial
statements.
In April
2009, the FASB issued an update to FASB ASC 805, “Business Combinations,” that
clarifies and amends FASB ASC 805, as it applies to all assets acquired and
liabilities assumed in a business combination that arise from
contingencies. This update addresses initial recognition and
measurement issues, subsequent measurement and accounting, and disclosures
regarding these assets and liabilities arising from contingencies in a business
combination. The Company adopted this Statement in the second quarter
of 2009 without significant impact to the financial statements.
In
November 2008, EITF issued new guidance under FASB ASC 350, “Intangibles –
Goodwill and Other on accounting for defensive intangible
assets.” The new guidance applies to all acquired intangible assets
in which the acquirer does not intend to actively use the asset but intends to
hold (lock up) the asset to prevent its competitors from obtaining or using the
asset (a defensive asset). This guidance was adopted by the Company
in January 2009 without impact to the financial statements.
40
iTrackr
Systems, Inc.
(Formerly
Must Haves, Inc.)
Notes
to Financial Statements
For
the Years Ended December 31, 2010 and 2009
Note A-Organization and
Summary Of Significant Accounting Policies
Concentrations of credit
risk
The
Company performs ongoing credit evaluations of its customers. At
December 31, 2010, two customers accounted for 100% (70% and 30%) of accounts
receivable. At December 31, 2009, one customer accounted for 100% of
accounts receivable.
During
the year ended December 31, 2010, two customers accounted for 100% (53% and 47%)
of revenue. During the year ended December 31, 2009, two customers
accounted for 90% (77% and 13%) of revenue.
NOTE B – ACCOUNTS
RECEIVABLE
The
accounts receivable balance of $45,168 and $5,786 as of December 31, 2010 and
2009, respectively, is reported at the gross amount without an
allowance. The Company has not experienced any bad debts to
date. However, we periodically review accounts receivable for
collectibility and will create an allowance for bad debts if our analysis so
warrants.
NOTE C – FIXED
ASSETS
Fixed
assets consisted of the following:
December
31,
|
||||||||
2010
|
2009
|
|||||||
Computers
and office equipment
|
78,974 | 78,974 | ||||||
Software
|
$ | 127,237 | $ | 127,237 | ||||
Total
fixed assets
|
206,211 | 206,211 | ||||||
Accumulated
depreciation
|
(142,339 | ) | (106,856 | ) | ||||
Fixed
assets, net
|
$ | 63,872 | $ | 99,355 |
During
the years ended December 31, 2010 and 2009, the Company recognized $35,482 and
$33,508, respectively in depreciation expense.
NOTE D – ACCOUNTS PAYABLE
AND ACCRUED EXPENSES
Accounts
payable and accrued expenses at December 31, 2010 consisted of $687,500 due to
John Rizzo, CEO for unpaid salary and health insurance, $48,397 of professional
services, $15,949 of accrued interest and $11,654 of trade
payables.
Accounts
payable and accrued expenses at December 31, 2009 consisted of $425,500 due to
John Rizzo, CEO for unpaid salary and health insurance, $25,000 of accrued legal
settlements, $15,126 of professional services, $102 of accrued interest, $40,000
remaining due to ChatStat for our technology purchase and $19,151 of trade
payables.
41
iTrackr
Systems, Inc.
(Formerly
Must Haves, Inc.)
Notes
to Financial Statements
For
the Years Ended December 31, 2010 and 2009
NOTE E –
NOTES
Promissory Notes –
3rd Party
December
31,
|
December
31,
|
|||||||
2010
|
2009
|
|||||||
Note
payable bears interest at 9% per year, Matured March 14, 2010 converted to
stock upon default at a conversion price of $0.35.
|
$ | - | $ | 12,500 | ||||
Note
payable bears interest at 9% per year, Matured March 14,
2010 Converted to stock upon default at a conversion price of
$0.35.
|
- | 12,500 | ||||||
Note
payable bears interest at 9% per year, Matures July 31, 2011 and is
convertible into shares of common stock upon default at a conversion price
of $0.25 per share.
|
25,000 | |||||||
Note
payable bears interest at 8% per year, Matures March 31, 2011 and is
convertible into shares of common stock upon default at a conversion price
of $0.25 per share.
|
25,000 | |||||||
Note
payable bears interest at 8% per year, Matures December 31, 2011 and is
convertible into shares of common stock upon default at a conversion price
of $0.25 per share.
|
6,000 | |||||||
Totals
|
56,000 | 25,000 |
During
the year ended December 31, 2010, the Company 1) received $17,000 in exchange
for two convertible notes that were also converted along with the $25,102 of
notes outstanding on December 31, 2009, 2) received a short term loan totaling
$25,000 that was repaid seven days later, and 3) received $56,000 in exchange
for promissory notes that accrue interest at eight (8%) and nine (9%) per annum
(see table above). In total, during the year ended December 31, 2010,
the Company received $98,000 of notes, repaid $25,000 and converted $42,466,
including $42,000 of principle and $466 of accrued interest into 121,332 shares
of common stock.
During
the year ended December 31, 2009, the Company received $292,000 of convertible
promissory notes from third parties. The Company converted $1,300,000
of principle and $137,467 of accrued interest into 3,721,257 shares of
restricted common stock. As of December 31, 2009, the Company had
outstanding $25,102 related to 3rd party
notes, including $25,000 of principle and $102 of accrued interest.
Promissory Notes - Related
Party
December
31,
|
December
31,
|
|||||||
2010
|
2009
|
|||||||
Note
payable convertible into common stock (conversion price 50% below the
previous 10 day average closing price) upon default, bears interest
at 9% per year, Matured December 31, 2010
|
$ | 192,812 | $ | 151,312 |
During
the year ended December 31, 2010, the Company received $41,500 from Bluewater
Advisors as described in the table above. Interest expense during the
year ended December 31, 2010 was $14,879.
During
the year ended December 31, 2009, the Company received $25,000 from Bluewater
Advisors and issued a new note for $151,312 or $135,000 of principle and $16,312
of accrued interest.
Accrued
Interest
During
the year ended December 31, 2010 and 2009, the Company recognized $16,313 and
$90,462, respectively related to all our outstanding notes payable.
42
iTrackr
Systems, Inc.
(Formerly
Must Haves, Inc.)
Notes
to Financial Statements
For
the Years Ended December 31, 2010 and 2009
NOTE F – STOCKHOLDERS
EQUITY
Preferred
Stock
The
Company has authorized 10,000,000 shares of no par value preferred stock
available for issuance. No shares of preferred stock have been issued
as of December 31, 2010.
Common
Stock
The Company has authorized 100,000,000
shares of no par value common stock available for
issuance. 20,319,997 shares have been issued as of December 31,
2010.
Stock Issued for Debt
Repayment
During
the year ended December 31, 2010, the Company converted $42,000 of principle and
$466 of accrued interest into 121,332 shares of restricted common
stock.
During
the year ended December 31, 2009, the Company converted $1,300,000 of principle
and $137,467 of accrued interest into 3,721,257 shares of restricted common
stock which were issued on April 28, 2010.
Stock Issued for
Cash
During
the year ended December 31, 2010, the Company 1) received $50,000 as a direct
purchase and issued 166,666 shares of restricted common stock, and 2) received
$50,000 upon the exercise of warrants to purchase 166,666 shares of restricted
common stock.
Stock Issued for
Services
During
the year ended December 31, 2010, the Company finalized a legal settlement with
Marc Falcone whereby in exchange for $108,000 or $0.30 per share we issued
360,000 shares of restricted common stock.
During
the year ended December 31, 2010, the Company:
1) Issued
100,000 shares of restricted common stock for services valued at $30,000 or
$0.30 per share. The shares were issued for services to be provided
through the end of 2010.
2) Issued
125,000 shares valued at $37,500, or $0.30 per share. The shares were
issued for services performed during the quarter and have been fully
expensed.
3) Is
obligated to issue 125,000 shares which are valued at $37,500, or $0.30 per
share and included in common stock payable.
During
the year ended December 31, 2009, the Company agreed to issue 150,000 shares of
restricted common stock in exchange for professional services rendered in 2009
and valued at $75,000. As of December 31, 2009 the stock had not been
issued and is recorded in the equity portion of our balance sheet as common
stock payable. The shares were issued on April 28, 2010.
Stock issued for Accounts
Payable
During
the year ended December 31, 2010, the Company issued 101,000 shares of
restricted common stock at $0.32 per share to settle $32,000 of the balance
owing ChatStat for the purchase of their Chat software.
Stock Options (See footnote
I)
During
the year ended December 31, 2010, no option activity occurred.
During
the year ended December 31, 2009, the Company canceled 1 million options due to
termination.
43
iTrackr
Systems, Inc.
(Formerly
Must Haves, Inc.)
Notes
to Financial Statements
For
the Years Ended December 31, 2010 and
2009
NOTE G -
COMMITMENTS
The
Company has no commitments as of December 31, 2010.
NOTE H –
WARRANTS
At
December 31, 2010, the Company had 2,105,333 Warrants outstanding entitling the
holder thereof the right to purchase one share of common stock for each warrant
held as follows:
Exercise
|
|||||||||
Issuance
|
Number
of
|
Price
Per
|
Expiration
|
||||||
Date
|
Warrants
|
Warrant
|
Date
|
||||||
1/19/2010
|
36,000 | $ | 0.75 |
1/19/15
|
|||||
1/19/2010
|
56,000 | $ | 0.75 |
1/19/15
|
|||||
2/1/2010
|
13,333 | $ | 0.75 |
2/1/15
|
|||||
2/5/2010
|
1,000,000 | $ | 0.40 |
12/31/15
|
|||||
3/1/2010
|
1,000,000 | $ | 0.10 |
10/31/11
|
|||||
Total
|
2,105,333 |
During
the year ended December 31, 2010, the Company:
|
·
|
Issued
2,271,999 warrants to purchase one share of common stock for each warrant
issued.
|
|
·
|
Received
$50,000 upon the exercise of a warrant and issued 166,666 shares of
restricted common stock.
|
|
·
|
Received
$50,000 upon the sale of a warrant to an accredited
investor.
|
|
·
|
Canceled
two warrants totaling 800,000 shares as a result of
expiration.
|
All the
warrants issued through December 31, 2010 are classified as equity on our
balance sheet as they require physical settlement, contain no performance
contingencies, have a fixed exercise price and are exercisable by the holder at
any time through the expiration date of the warrant. Each warrants
fair value was calculated on the date of grant using the Black-Scholes Option
Pricing Model using the following inputs: volatility; 250% based on the Dow
Jones Internet Composite Index, risk free interest rate; 3.71%, spot price;
$0.15, and the exercise price attributable to that warrant. The fair
value of the warrants issued was $320,459 offset by the $50,000 warrant sale
resulting in $270,459 of net stock compensation expense.
During
the year ended December 31, 2009, the Company canceled 250,000 warrants issued
to Marc Falcone as a result of the settlement agreement dated February 16,
2010. No warrants were issued or exercised in 2009.
NOTE I – 2007 LONG-TERM
EQUITY INCENTIVE PLAN
In June
2007 the Board of Directors of the Company adopted the 2007 Long-Term Equity
Incentive Plan. The purpose of this Plan is to attract and retain directors,
officers and other employees of iTrackr, Inc. and its Subsidiaries and to
provide to such persons incentives and rewards for performance.
The
Company may issue each of the following under this Plan: Incentive Option,
Nonqualified Option, Stock Appreciation Right, Restricted Stock Award or
Performance Stock Award. The Plan was ratified at the 2007
shareholder’s meeting (the "Effective Date"). No Incentive Option,
Nonqualified Option, Stock Appreciation Right, Restricted Stock Award or
Performance Stock Award shall be granted pursuant to the Plan ten years after
the Effective Date. The total number of shares available under the
Plan is Fifteen Million (15,000,000). No Plan participant will be
granted the right, in the aggregate, for more than Two Million
(2,000,000) Common Shares during any calendar year.
During
the year ended December 31, 2010, the Company made one grant of 250,000 fully
vested common stock options. The options value was nominal as
calculated on the date of grant using the Black-Scholes Option Pricing Model
using the following inputs: volatility; 38% based on the Dow Jones Internet
Composite Index, risk free interest rate; 3.28%, spot price; $0.20, expected
term; 1.5 years and exercise price; $0.25.
44
iTrackr
Systems, Inc.
(Formerly
Must Haves, Inc.)
Notes
to Financial Statements
For
the Years Ended December 31, 2010 and 2009
NOTE I – 2007 LONG-TERM
EQUITY INCENTIVE PLAN (Continued)
During
the year ended December 31, 2009 1 million options were canceled due termination
of the people to whom they were granted and their failure to exercise according
to the terms of the option grant.
The
following table summarizes the Company's stock option activity for the years
ended December 31, 2010 and 2009:
December
31,
|
||||||||||||||||
2010
|
2009
|
|||||||||||||||
Shares
|
Weighted
Average Exercise Price
|
Shares
|
Weighted
Average Exercise Price
|
|||||||||||||
Outstanding
at beginning of year
|
5,255,000 | $ | 0.18 | 6,255,000 | $ | 0.23 | ||||||||||
Granted
|
250,000 | 0.25 | - | - | ||||||||||||
Canceled
|
- | - | (1,000,000 | ) | (50.00 | ) | ||||||||||
Exercised
|
- | - | - | - | ||||||||||||
Outstanding
at end of quarter
|
5,505,000 | $ | 0.18 | 5,255,000 | $ | 0.18 | ||||||||||
Options
exerciseable at December 31
|
5,505,000 | 5,255,000 |
The
following table summarizes information about the Company's stock options
outstanding at December 31, 2010:
Options
Outstanding
|
Options
Exercisable
|
|||||||||||||||||||||
Range
of
Exercise
Prices
|
Number
Outstanding
At
December 31,
2010
|
Weighted
Average
Contractural
Life
(years)
|
Weighted
Average
Exercise
Price
|
Number
Outstanding
|
Weighted
Average
Exercise
Price
|
|||||||||||||||||
$ | 0.40 | 1,000,000 | - | $ | 0.40 | 1,000,000 | $ | 0.07 | ||||||||||||||
0.25 | 1,250,000 | - | 0.25 | 1,250,000 | 0.06 | |||||||||||||||||
0.10 | 2,375,000 | - | 0.10 | 2,375,000 | 0.04 | |||||||||||||||||
0.05 | 880,000 | - | 0.05 | 880,000 | 0.01 | |||||||||||||||||
Total
|
5,505,000 | - | $ | 0.18 | 5,505,000 | $ | 0.18 |
45
iTrackr
Systems, Inc.
(Formerly
Must Haves, Inc.)
Notes
to Financial Statements
For
the Years Ended December 31, 2010 and
2009
The
following table summarizes information about the Company's stock options
outstanding at December 31, 2009:
Options
Outstanding
|
Options
Exercisable
|
||||||||||||||||||||||
Range
of
Exercise
Prices
|
Number
Outstanding
At
December 31,
2009
|
Weighted
Average
Contractural
Life
(years)
|
Weighted
Average
Exercise
Price
|
Number
Outstanding
|
Weighted
Average
Exercise
Price
|
||||||||||||||||||
$ | 0.40 | 1,000,000 | - | $ | 0.40 | 1,000,000 | $ | 0.08 | |||||||||||||||
0.25 | 1,000,000 | - | 0.25 | 1,000,000 | 0.05 | ||||||||||||||||||
0.10 | 2,375,000 | - | 0.10 | 2,375,000 | 0.05 | ||||||||||||||||||
0.05 | 880,000 | - | 0.05 | 880,000 | 0.01 | ||||||||||||||||||
Total
|
5,255,000 | - | $ | 0.18 | 5,255,000 | $ | 0.18 |
NOTE I – 2007 LONG-TERM
EQUITY INCENTIVE PLAN (Continued)
The
Company measures the fair market value of stock options granted using the
Black-Scholes Option Pricing Model on the date of grant and recognizes related
compensation expense ratably over the options vesting period for all future
grants.
During
the year ended December 31, 2010 and 2009, the Company recognized $0 and
$24,169, respectively, of compensation expense related to stock
options. From inception to date, the Company has recognized $178,844
of compensation expense related to stock options.
NOTE J –
MERGER
On
December 10, 2009, Must Haves, Inc., iTrackr Acquisition, Inc. and iTrackr,
Inc. entered into an Agreement and Plan of Merger which closed January 12,
2010. On the Closing Date, iTrackr was merged with and into iTrackr
Acquisition, Inc. which is the surviving corporation and became a wholly-owned
subsidiary of Must Haves, Inc. In accordance with the merger
agreement, iTrackr’s stockholder’s received restricted common stock at the rate
of 1:1 share for each of their 17,875,695 shares issued and outstanding in
exchange for 100 percent of the outstanding capital stock of
iTrackr. In total 19,169,333 shares are outstanding following the
closing of the merger.
The
Merger was accounted for as a “reverse merger,” as the stockholders of iTrackr,
Inc. owned a majority of the outstanding shares of Must Haves, Inc. common stock
immediately following the Merger. iTrackr, Inc. was deemed to be the
acquirer in the reverse merger. Consequently, the assets and
liabilities and the historical operations of iTrackr, Inc. prior to the Merger
are reflected in the financial statements and have been recorded at the
historical cost basis of iTrackr, Inc. Our financial statements,
after completion of the Merger, include the assets and liabilities of both Must
Haves, Inc. and iTrackr, Inc. We accounted for the merger under
recapitalization accounting whereby the equity of the acquiring enterprise
(iTrackr, Inc.) is presented as the equity of the combined enterprise and the
capital stock account of the acquiring enterprise is adjusted to reflect the par
value of the outstanding stock of the legal acquirer (Must Haves, Inc.) after
giving effect to the number of shares issued in the business combination
(1,303,638 shares). Shares retained by the legal acquirer (Must
Haves, Inc. 1,303,638 shares) are reflected as an issuance as of the reverse
merger date (January 12, 2010) for the historical amount of the net assets of
the acquired entity which is in this case is a net liability of
$27,515.
The
following unaudited financial information has been developed by application of
pro forma adjustments to the historical financial statements of iTrackr, Inc.
appearing elsewhere in this Current Report. The unaudited pro forma
information gives effect to the Merger which has been assumed to have occurred
on January 1, 2008 for purposes of the statement of
operations. The Company evaluated the existence of intangible assets
that should be recognized in business combinations, pursuant to ASC
805-20-25-4. No intangible assets were identified.
The
unaudited pro forma financial information is presented for informational
purposes only and does not purport to represent what the results of operations
or financial position of iTrackr Systems, Inc. would have been had the
transactions described above actually occurred on the dates indicated, nor do
they purport to project the financial condition of iTrackr Systems, Inc. for any
future period or as of any future date. The unaudited pro forma
financial information should be read in conjunction with the iTrackr Systems,
Inc. financial statements and notes thereto included elsewhere in this Current
Report.
46
iTrackr
Systems, Inc.
(Formerly
Must Haves, Inc.)
Notes
to Financial Statements
For
the Years Ended December 31, 2010 and 2009
The
summarized balance sheet of Must Haves, Inc. on January 12, 2010 was as
follows:
Cash
|
$ | 95 | ||
Other
current assets
|
1,562 | |||
$ | 1,657 | |||
Current
liabilities
|
$ | 29,172 | ||
Total
stockholders’ equity
|
(27,515 | ) | ||
$ | 1,657 |
47
iTrackr
Systems, Inc.
(Formerly
Must Haves, Inc.)
Notes
to Financial Statements
For
the Years Ended December 31, 2010 and 2009
NOTE J – MERGER
(Continued)
The
condensed pro forma results of operations for the years ended December 31, 2009
and 2008 are as follows:
iTrackr
Systems, Inc.
Unaudited
Pro Forma Statements of Operations
For the
Year ended December 31, 2009 and 2008
Year
Ended
|
Year
Ended
|
|||||||||||||||||||||||
December
31, 2009
|
December
31, 2008
|
|||||||||||||||||||||||
Must
|
Must
|
|||||||||||||||||||||||
iTrackr,
Inc.
|
Haves,
Inc.
|
iTrackr,
Inc.
|
Haves,
Inc.
|
|||||||||||||||||||||
Actual
|
Actual
|
Pro
Forma
|
Actual
|
Actual
|
Pro
Forma
|
|||||||||||||||||||
REVENUES
|
||||||||||||||||||||||||
Sales
|
$ | 7,493 | $ | 130 | $ | 7,623 | $ | 4,419 | $ | 3,757 | $ | 8,176 | ||||||||||||
Cost
of revenue
|
- | - | - | - | 1,018 | 1,018 | ||||||||||||||||||
Gross
profit
|
7,493 | 130 | 7,623 | 4,419 | 2,739 | 7,158 | ||||||||||||||||||
OPERATING
EXPENSES
|
610,973 | 31,997 | 642,970 | 1,274,718 | 51,765 | 1,326,483 | ||||||||||||||||||
Income
(loss) from operations
|
(603,480 | ) | (31,867 | ) | (635,347 | ) | (1,270,299 | ) | (49,026 | ) | (1,319,325 | ) | ||||||||||||
OTHER
INCOME AND EXPENSES
|
||||||||||||||||||||||||
Interest
expense
|
(90,462 | ) | (2,312 | ) | (92,774 | ) | (58,574 | ) | (2,335 | ) | (60,909 | ) | ||||||||||||
Other
expense
|
(163,000 | ) | - | (163,000 | ) | - | - | - | ||||||||||||||||
Total
other income and expenses
|
(253,462 | ) | (2,312 | ) | (255,774 | ) | (58,574 | ) | (2,335 | ) | (60,909 | ) | ||||||||||||
NET
INCOME (LOSS)
|
$ | (856,942 | ) | $ | (34,179 | ) | $ | (891,121 | ) | $ | (1,328,873 | ) | $ | (51,361 | ) | $ | (1,380,234 | ) | ||||||
Weighted
average shares outstanding
|
||||||||||||||||||||||||
Basic
and diluted
|
14,632,513 | 14,632,513 | 13,934,023 | 13,934,023 | ||||||||||||||||||||
Shares
to be issued for acquisition
|
1,303,638 | 1,303,638 |
1)
|
1,303,638 | 1,303,638 | |||||||||||||||||||
Total
Weighted average common shares outstanding
|
15,936,151 | 15,237,661 | ||||||||||||||||||||||
Net
(loss) per common share (basic and diluted)
|
$ | (0.06 | ) | $ | (0.09 | ) |
1)
Represents Must Haves, Inc. pre merger shares outstanding.
48
iTrackr
Systems, Inc.
(Formerly
Must Haves, Inc.)
Notes
to Financial Statements
For
the Years Ended December 31, 2010 and 2009
NOTE J – MERGER
(Continued)
The
condensed pro forma balance sheet as of December 31, 2009 is as
follows:
iTrackr
Systems, Inc.
Unaudited
Pro Forma Balance Sheet
As of
December 31, 2009
Must
|
|||||||||||||||||
iTrackr,
Inc.
|
Haves,
Inc.
|
Merger
|
|||||||||||||||
Actual
|
Actual
|
Adjustments
|
Pro
Forma
|
||||||||||||||
ASSETS
|
|||||||||||||||||
CURRENT
ASSETS
|
|||||||||||||||||
Cash
|
$ | 3,223 | $ | 95 | $ | - | $ | 3,318 | |||||||||
Accounts
receivable, net
|
5,786 | 1,562 | - | 7,348 | |||||||||||||
TOTAL
CURRENT ASSETS
|
9,009 | 1,657 | - | 10,666 | |||||||||||||
Fixed
assets
|
|||||||||||||||||
Cost
|
206,211 | - | - | 206,211 | |||||||||||||
Accumulated
Depreciation
|
(106,856 | ) | - | - | (106,856 | ) | |||||||||||
Net
|
99,355 | - | - | 99,355 | |||||||||||||
TOTAL
ASSETS
|
$ | 108,364 | $ | 1,657 | $ | - | $ | 110,021 | |||||||||
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
|
|||||||||||||||||
CURRENT
LIABILITIES
|
|||||||||||||||||
Accounts
payable and accrued expenses
|
$ | 524,777 | $ | 29,172 | $ | - | $ | 553,949 | |||||||||
Accrued
interest payable
|
102 | - | - | 102 | |||||||||||||
Convertible
promissory notes
|
25,000 | - | - | 25,000 | |||||||||||||
Shareholder
loans
|
151,312 | - | - | 151,312 | |||||||||||||
TOTAL
CURRENT LIABILITIES
|
701,191 | 29,172 | - | 730,363 | |||||||||||||
COMMITMENT
|
- | - | - | - | |||||||||||||
STOCKHOLDERS' EQUITY
(DEFICIT)
|
|||||||||||||||||
Common
stock payable
|
1,451,979 | - | - | 1,451,979 | |||||||||||||
Common
stock
|
980,148 | 189,416 | (189,416 | ) | 980,148 | ||||||||||||
Common
stock issued in reverse merger
|
- | - | (27,515 | )1) | (27,515 | ) | |||||||||||
Accumulated
earnings (deficit)
|
(3,024,954 | ) | (216,931 | ) | 216,931 | (3,024,954 | ) | ||||||||||
TOTAL
STOCKHOLDERS' EQUITY (DEFICIT)
|
(592,827 | ) | (27,515 | ) | - | (620,342 | ) | ||||||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
|
$ | 108,364 | $ | 1,657 | $ | - | $ | 110,021 |
1)
|
Due
to the nominal assets and operations of Must Haves, Inc. we have accounted
for the merger under recapitalization accounting whereby the equity of the
acquiring enterprise (iTrackr, Inc.) should be presented as the equity of
the combined enterprise. However, the capital stock account of
the acquiring enterprise is adjusted to reflect the par value of the
outstanding stock of the legal acquirer (Must Haves, Inc.) after giving
effect to the number of shares issued in the business combination
(1,303,638 shares). Shares retained by the legal acquirer (Must
Haves, Inc. 1,303,638 shares) are reflected as an issuance as of the
reverse merger date (January 12, 2010) for the historical amount of the
net assets of the acquired entity which is in this case is a net liability
of $27,515.
|
49
iTrackr
Systems, Inc.
(Formerly
Must Haves, Inc.)
Notes
to Financial Statements
For
the Years Ended December 31, 2010 and 2009
NOTE K - INCOME
TAXES
For
the year ended December 31, 2010, the Company incurred net operating losses and,
accordingly, no provision for income taxes has been recorded. In
addition, no benefit for income taxes has been recorded due to the uncertainty
of the realization of any tax assets. At December 31, 2010 and 2009,
the Company had approximately $2,755,000 and $2,250,000, respectively of
accumulated federal net operating losses. The net operating loss
carryforwards, if not utilized, will begin to expire in 2026. The
components of the Company’s deferred tax asset are as follows:
As
of December 31,
|
||||||||
2009
|
2008
|
|||||||
Deferred
tax assets:
|
||||||||
Net
operating loss carryforwards
|
$ | 2,249,354 | $ | 1,535,924 | ||||
Total
deferred tax assets
|
2,249,354 | 1,535,924 | ||||||
Net
deferred tax assets before valuation allowance
|
2,249,354 | 1,535,924 | ||||||
Less:
Valuation allowance
|
(2,249,354 | ) | (1,535,924 | ) | ||||
Net
deferred tax assets
|
$ | - | $ | - |
For
financial reporting purposes, the Company has incurred a loss since its
inception. Based on the available objective evidence, management
believes it is more likely than not that the net deferred tax assets will not be
fully realizable. Accordingly, the Company provided for a full
valuation allowance against its net deferred tax assets at December 31,
2010.
A reconciliation between the amounts of
income tax benefit determined by applying the applicable U.S. and State
statutory income tax rate to pre-tax loss is as follows:
Year
Ended December 31,
|
||||||||
2010
|
2009
|
|||||||
Federal
and statutory rate
|
15 | % | 15 | % | ||||
Change
in valuation allowance on deferred tax assets
|
$ | 505,000 | $ | 713,000 |
NOTE L – LEGAL
PROCEEDINGS
As of
December 31, 2009, the Company was party to a lawsuit brought by Marc
Falcone. In this action, Mr. Falcone asserted numerous claims against
certain defendants arising out of his former service to iTrackr, Inc. as a
contracted consultant. The Company asserted numerous defenses and
affirmative defenses, including, but not limited to, the fact that Falcone
failed to fulfill his obligations under the agreement. On February
16, 2010, the Company and Mr. Falcone executed a settlement agreement without
either side admitting fault. The terms of the settlement agreement
call for the payment of $25,000 and the issuance of 360,000 shares of common
stock in exchange for a full release of all claims. As of December
31, 2010, the Company has paid all monies and issued all stock related to this
settlement.
NOTE M – SUBSEQUENT
EVENTS
Pursuant
to FASB Accounting Standards Codification 855, Subsequent Events, Including ASC
855-10-S99-2, the Company evaluated subsequent events through February 11,
2011.
50
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Effective
August 25, 2010, the client-auditor relationship between iTrackr Systems,
Inc. and Traci J. Anderson, CPA (the "Former Auditor") was terminated upon
the dismissal of the Former Auditor as the Company’s independent registered
accounting firm. Effective August 25, 2010, the Company engaged
Bedinger and Company ("Bedinger") as its principal independent public accountant
to audit the Company's financial statements for the year ending December 31,
2009 and 2008. The decision to change accountants was recommended and
approved by the Company's Board of Directors, effective August 25, 2010, and was
necessitated as a result of the revocation of the registration of the Former
Auditors by the Public Company Accounting Oversight Board (“PCAOB”) because of
deficiencies in the conduct of certain of its audits and
procedures.
See our
8-K filed on August 27, 2010 pursuant to item 4.01; Changes in Registrant’s
Certifying Accountant, and 8-K/A filed on September 21, 2010 pursuant to Item
4.02; Non-Reliance on Previously Issued Financial Statements or a Related Audit
Report or Completed Interim Review.
ITEM
9A. CONTROLS AND PROCEDURES.
Evaluation
of Disclosure Controls and Procedures
As of
December 31, 2010, under the direction of the Chief Executive Officer and Chief
Financial Officer, the Company evaluated the effectiveness of the design and
operation of our disclosure controls and procedures, as defined in Rule 13a —
15(e) under the Securities Exchange Act of 1934, as amended. Based on
the evaluation of these controls and procedures required by paragraph (b) of
Sec. 240.13a-15 or 240.15d-15 the disclosure controls and procedures have been
found to be ineffective.
The
Company maintains a set of disclosure controls and procedures designed to ensure
that information required to be disclosed by us in our reports filed under the
securities Exchange Act, is recorded, processed, summarized, and reported within
the time periods specified by the SEC’s rules and forms. Disclosure
controls are also designed with the objective of ensuring that this information
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.
Evaluation
of Internal Control Over Financial Reporting
Management
conducted an evaluation of the effectiveness of the Company’s internal control
over financial reporting as of December 31, 2010. In making this
assessment, management used the criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission, or COSO. The COSO framework summarizes each of the
components of a company’s internal control system, including (i) the
control environment, (ii) risk assessment, (iii) control activities,
(iv) information and communication, and (v) monitoring. In
management’s assessment of the effectiveness of internal control over financial
reporting (as defined in Exchange Act Rule 13a-15(f)) as required by Exchange
Act Rule 13a-15(c), our management concluded as of the end of the fiscal year
covered by this Annual Report on Form 10-K, due to a lack of segregation of
duties that our internal control over financial reporting has not been
effective. However, at this time, our resources and size prevent us
from being able to employ sufficient resources to enable us to have adequate
segregation of duties within our internal control system. Management
will periodically reevaluate this situation. If the volume of
business increases and sufficient capital is secured, it is the Company’s
intention to further increase staffing to mitigate the current lack of
segregation of duties within the general, administrative and financial
functions.
Our Board
of Directors were advised by Bedinger and Company, our independent registered
public accounting firm, that during their performance of audit procedures for
the year ended December 31, 2010 and 2009, they have identified a material
weakness as defined in Public Accounting Oversight Board Standard No. 5 in our
internal control over financial reporting. Our auditors have
identified the following material weaknesses in our internal control over
financial reporting as of December 31, 2010:
51
A
material weakness in the Company’s internal control over financial reporting
exists in that there is limited segregation of duties amongst the Company’s
employees with respect to the Company’s preparation and review of the Company’s
financial statements. This material weakness is a result of the
Company’s limited number of employees. This material weakness may
affect management’s ability to effectively review and analyze elements of the
financial statement closing process and prepare financial statements in
accordance with U.S. GAAP.
This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by our
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit us to provide only management’s report in
this prospectus.
Changes
in Internal Controls
Management
of the Company has evaluated, with the participation of the Chief Executive
Officer of the Company, any change in the Company’s internal control over
financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act) that occurred during the fiscal year ended December 31,
2010. There was no change in the Company’s internal control over
financial reporting identified in that evaluation that has materially affected,
or is reasonably likely to materially affect, the Company’s internal control
over financial reporting, other than what has been reported above.
Limitations
on the Effectiveness of Controls and Other Matters
Management
is responsible for establishing and maintaining adequate internal control over
financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange
Act of 1934, as amended). Internal control over financial reporting
is designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting
principles. Because of its inherent limitations, internal control
over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. 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 the realities that
judgments in decision-making can be faulty, and that breakdowns can occur
because of simple error or mistake. Additionally, controls may 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, a control 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.
Risk
Factor Related to Controls and Procedures
The
Company has limited segregation of duties amongst its employees with respect to
the Company’s preparation and review of the Company’s financial statements due
to the limited number of employees, which is a material weakness in internal
controls, and if the Company fails to maintain an effective system of internal
controls, it may not be able to accurately report its financial results or
prevent fraud. As a result, current and potential stockholders could
lose confidence in the Company’s financial reporting which could harm the
trading price of the Company’s stock.
52
Management
has found it necessary to limit the Company’s administrative staffing in order
to conserve cash until the Company’s level of business activity
increases. As a result, there is limited segregation of duties
amongst the employees. The Company and its independent public
accounting firm have identified this as a material weakness in the Company’s
internal controls. The Company intends to remedy this material
weakness by hiring additional employees and reallocating duties, including
responsibilities for financial reporting, among the employees as soon as there
are sufficient resources available. However, until such time, this
material weakness will continue to exist.
ITEM
9B. OTHER INFORMATION.
During the fourth quarter of 2010,
Mihir Sevak, Chief Technology Officer left the Company to pursue other
opportunities. His employment contract contained an “at will” clause
allowing either party to terminate the relationship without
cause.
PART III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE.
The
following table sets forth the names, age and position of the executive officers
and directors of iTrackr Systems, Inc. Directors are elected at
annual meeting of shareholders and serve for one year or until their successors
are elected and qualify. Officers are elected by the Board of
Directors and their terms of office are, except to the extent governed by
employment contract, at the discretion of the Board of Directors of
Directors.
Name
|
Age
|
Position
|
Term
|
|||
John
Rizzo
|
48
|
Chairman
of the Board and Chief Executive Officer
|
January
12, 2010 thru Present
|
|||
Ramesh
Anand
|
46
|
Chief
Operating Officer
|
January
12, 2009 thru Present
|
|||
Dave
Baesler
|
63
|
Director
|
January
12, 2009 thru Present
|
|||
Michael
Uhl
|
47
|
Director
|
January
12, 2009 thru Present
|
Ramesh Anand has served as
iTrackr’s interim CEO since January, 2010. Mr. Anand currently also serves
as VP of Global Sales and Marketing for Advanced Contact Solutions, since April,
2009. Prior to that, Mr. Anand served as Head of Sales, North America for
HTMT Global Solutions, Ltd for the period of 2006 through 2008, and as Head of
Sales of Hero ITES from 2005 through 2006. He has also served as VP Sales and
Business Development at IBM Daksh Business Process Services, Director of Global
Outsourcing of Ocwen Financial Corporation, and Founded Global E-Connect.
Mr. Anand has a Master of Management Studies from Birla Institute of
Technology and Science.
Michael Uhl was first elected
to the Board of Directors in March, 2007. Mr. Uhl is regional VP of
HelmsBriscoe. He previously served as Executive VP of Sales and Marketing at
Caesar’s Entertainment, wherein he directed convention and travel industry sales
for Bally’s Paris, Flamingo, Caesar’s Palace and the Las Vegas Hilton.
Mr. Uhl has also held Director of Sales positions with Walt Disney World
Swan & Dolphin and New York Hilton & Towers. Mr. Uhl
holds a BBA from Hofstra University.
David Baesler was first
elected to the Board of Directors in November, 2007. Mr. Baesler is VP of
Sales for the Wireless Division of Kyocera Sanyo. In addition to Kyocera Sanyo,
Mr. Baesler has held executive positions at several leading consumer
electronics companies, including Executive VP of Brother International; Group VP
of Toshiba North America’s Consumer Products Division; Senior VP of Pioneer
Corporation’s Video Division; and VP of Sales for Pioneer Electronics.
Mr. Baesler served as an officer in the US Army and holds a degree in
mathematics and economics from North Dakota State University.
John Rizzo is the founder of
iTrackr. Mr. Rizzo has more than a decade experience in the capital markets
as well as maintaining key roles with start-up and early stage businesses. He
has been integral in the completion of several successful transactions,
including sale of a business to MasterCard and in Siebel Systems’ 1996 Initial
Public Offering.
Except as
noted above, the above persons do not hold any other directorships in any
company with a class of securities registered pursuant to Section 12 of the
Exchange Act or subject to the requirements of Section 15(d) of the Exchange
Act.
53
The
Board of Directors and Committees
Our board
consists of three directors. Although we are not required, a majority
of the directors are “independent” as defined under and required by applicable
securities laws. At each annual meeting our stockholders elect our
full Board of Directors and our directors serve until their successors are
elected or appointed, unless their office is vacated
earlier. Directors may be removed at any time for cause by the
affirmative vote of the holders of a majority of the voting power then entitled
to vote.
Board
Leadership
Our Board of Directors has adopted a
Charter of the Lead Independent Director, providing that in circumstances where
the Chairman of the Board of Directors is not independent, our Board considers
it to be useful and appropriate to designate a Lead Independent Director to
coordinate activities of the other independent directors and to perform such
other duties and responsibilities as our Board may determine from time to
time. Because John Rizzo is our Chief Executive Officer, as well as
Chairman of the Board, we have designated a Lead Independent
Director. Michael Uhl currently serves as the Lead Independent
Director.
The Lead Independent Director (if so
designated) is responsible for coordinating the activities of the independent
directors. The designation of a Lead Independent Director is intended
to facilitate communication between the independent directors and the
Chairman/Chief Executive Officer and not to diminish the ability of any other
independent director to communication directly with the Chairman/Chief Executive
Officer at any time. Our Board of Directors believes that this
leadership structure is best for the Company at the current time, as it
appropriately balances the need for the Chief Executive Officer to run the
Company on a day-to-day basis with significant involvement and authority vested
in an outside independent director member – the Lead Independent
Director. The roles of our Lead Independent Director are fundamental
to our decision to maintain the combination of the Chief Executive Officer and
Chairman of the Board positions. Under our Charter of the Lead
Independent Director, our Lead Independent Director must be
independent. The specific responsibilities of the Lead Independent
Director include the following:
|
·
|
In
consultation with other independent directors, consult with the Chairman
as to an appropriate schedule of Board meetings, seeking to ensure that
the independent directors can perform their duties responsibly without
interfering with ongoing Company
operations;
|
|
·
|
Consult
with the Chairman regarding the information and agendas of the meetings of
the Board of Directors;
|
|
·
|
Advise
the Chairman as to the quality, quantity, and timeliness of information
submitted by management that is necessary or appropriate for the
independent directors to effectively and responsibly perform their
duties;
|
|
·
|
Call
meetings and prepare agendas for the independent directors, as
appropriate;
|
|
·
|
Serve
as the Chairman of, and prepare the agenda for the executive sessions of
the independent directors and its non-employee
directors;
|
|
·
|
Service
as the principal liaison between independent directors and the Chairman
and senior management;
|
|
·
|
Chair
the meetings of the Board of Directors when the Chairman is not present;
and
|
|
·
|
Respond
directly to stockholder and other stakeholder questions and comments that
are directed to the Lead Independent Director or to the independent
directors as a group, with such consultation with the Chairman and the
other directors as the Lead Independent Director may deem
appropriate.
|
54
Director
Qualifications
Each of
our directors brings to our Board extensive management and leadership experience
gained through their service in senior positions of diverse
businesses. In these roles, they have taken hands-on, day-to-day
responsibility for strategy and operations, including management of capital,
risk and business cycles. In the biographies of each of the directors
provided above, we describe specific individual qualifications and skills of our
directors that contribute to the overall effectiveness of our Board of
Directors.
In
addition to the information presented above regarding each director’s specific
experience, qualifications, attributes and skills that led our Board of
Directors to the conclusion that he or she should serve as a director, we also
believe that all of our directors have a reputation for integrity, honesty and
adherence to high ethical standards. They each have demonstrated
business acumen and an ability to exercise sound judgment, as well as a
commitment of service to our company and our Board.
While we
do not have a formal diversity policy, our Board of Directors believes it’s
important for our Board to have diversity of knowledge base, professional
experience and skills, and takes age, gender and ethnic background into account
when considering director nominees. As part of its annual
self-evaluation, our Board will assess whether it properly considered diversity
in identifying director nominees.
Risk
Management
Our Board
of Directors is responsible for reviewing and assessing business enterprise risk
and other major risks facing the Company, and evaluating management’s approach
to addressing such risks. At each quarterly meeting, our Board
reviews all key risks facing the Company, management’s plans for addressing
these risks and the Company’s risk management practices overall. To
assist the Board in this oversight role, our Board of Directors seeks to have
one or more directors with experience managing enterprise risk.
Our
management is responsible for day-to-day risk management and regularly reports
on risks to our Board of Directors. Our management is also
responsible to fulfill primary monitoring and testing functions for company-wide
policies and procedures. Our Board of Directors is responsible to
manage the oversight of the risk management strategy for our ongoing
business. This oversight includes identifying, evaluating, and
addressing potential risks that may exist at the enterprise, strategic,
financial, operational, and compliance and reporting levels.
We
believe the division of risk management responsibilities described above is an
effective approach for addressing the risks facing our company and the
leadership structure of our Board of Directors supports this
approach.
Compensation
Risk Management
In
setting each element of executive compensation, our Board of Directors is also
mindful of the level of risk-taking that any element may promote. Our
Board of Directors believes it is important to incentivize our executive
officers to achieve annual Company and individual objectives, but balance
promotion of such short-term interests with incentives that promote building
long-term stockholder value. Our Board of Directors believes the
amount of long-term equity incentives included in our compensation packages
mitigates the potential for excessive risk taking. All of our named
executive officers’ equity awards vest over a period of time, rather than upon
achievement of specific performance objectives, and our Board of Directors has
historically granted additional equity awards annually, which incentivizes these
officers to continue to focus on our long-term interest.
Our Board
of Directors has conducted an internal assessment of our compensation policies
and practice in response to current public and regulatory concern about the link
between incentive compensation and excessive risk taking by
corporations. We concluded that our program does not motivate
excessive risk-taking and any risks involved in compensation are not reasonably
likely to have a material adverse effect on the company. Included in
the analysis were such factors as the behaviors being induced by our fixed
compensation system, the absence of any incentive awards, the oversight of our
Board of Directors in the operation of our incentive plans and the high level of
Board involvement in approving material investments and capital
expenditures.
55
Board
Composition
iTrackr
did not pay any director compensation during the years ended December 31, 2010
or 2009. The Company may begin to compensate its directors at some
time in the future.
Board
Committees and Independence
We are
not required to have any independent members of the Board of
Directors. The board of directors has determined that (i) Mr. Rizzo
has a relationship which, in the opinion of the board of directors, would
interfere with the exercise of independent judgment in carrying out the
responsibilities of a director and is not an “independent director” as defined
in the Marketplace Rules of The NASDAQ Stock Market. As we do not
have any board committees, the board as a whole carries out the functions of
audit, nominating and compensation committees, and such “independent director”
determination has been made pursuant to the committee independence
standards.
Our board
of directors has determined that it currently has two members who
qualify as “independent” as the term is used in Item 407 of Regulation S-K
as promulgated by the SEC and as that term is defined under NASDAQ Rule
4200(a)(15). The independent directors are Michael Uhl and David
Baesler.
Section
16(a) Beneficial Ownership Reporting Compliance
Section 16(a)
of the Exchange Act requires the Company’s directors and officers, and persons
who beneficially own more than 10% of a registered class of the Company’s equity
securities, to file reports of beneficial ownership and changes in beneficial
ownership of the Company’s securities with the SEC on Forms 3, 4 and
5. Officers, directors and greater than 10% stockholders are required
by SEC regulation to furnish the Company with copies of all Section 16(a)
forms they file. To the Company’s knowledge, all Section 16(a)
filing requirements applicable to its officers, directors and beneficial owners
holding greater than ten percent of the Company’s Common Stock have been
complied with during the period ended December 31, 2009.
Code
of Business Conduct and Ethics
Our board
of directors has adopted a code of ethics, which applies to all our directors,
officers and employees. Our code of ethics is intended to comply with
the requirements of Item 406 of Regulation S-K. A copy of our code of
ethics will be posted on our corporate website at www.itrackr.com. We
will provide our code of ethics in print without charge to any stockholder who
makes a written request to: Secretary, iTrackr Systems, Inc., 433
Plaza Road, Ste 275 Boca Raton, FL 33432. Any waivers of
the application and any amendments to our code of ethics must be made by our
board of directors and will be disclosed promptly on our corporate
website.
ITEM
11. EXECUTIVE COMPENSATION.
The
primary goals of iTrackr’s board of directors with respect to executive
compensation are to attract and retain the most talented and dedicated
executives possible, to tie annual and long-term cash and stock incentives to
achievement of specified performance objectives, and to align executives’
incentives with stockholder value creation.
To
achieve these goals, the Board of Directors recommends executive compensation
packages to that are generally based on a mix of salary, discretionary bonus and
equity awards. Although the Board of Directors has not adopted any
formal guidelines for allocating total compensation between equity compensation
and cash compensation, the Company intends to implement and maintain
compensation plans that tie a substantial portion of its executives’ overall
compensation to achievement of corporate goals and value-creating milestones
such as the development of the Company’s products, the establishment and
maintenance of key strategic relationships, reaching sales and marketing targets
and the growth of its customer base as well as its financial and operational
performance, as measured by metrics such as revenues and
profitability.
The Board
of Directors performs reviews based on surveys of executive compensation paid by
peer companies in the customer support and Internet services industry, as well
as reviews other industries of similar age and size, as it sees fit, in
connection with the establishment of cash and equity compensation and related
policies.
56
Elements
of Compensation
The Board
of Directors evaluates individual executive performance with a goal of setting
compensation at levels the Board believes are comparable with executives in
other companies of similar size and stage of development operating in the
industry and are competitive and further the Company’s objectives of motivating
achievement of its short and long term financial performance goals and strategic
objectives, rewarding superior performance and aligning the interests of its
executives and shareholders. The compensation received by the
Company’s executive officers consists of the following elements:
|
·
|
Base
salary;
|
|
·
|
Discretionary
annual bonus;
|
|
·
|
Equity-based
long-term incentives, including stock appreciation rights and
performance-based restricted stock;
and
|
|
·
|
Options.
|
Base
Salary
Base
salaries are reviewed annually, and adjusted from time to time taking into
account individual responsibilities, performance and experience.
The
primary considerations the Board undertook when establishing Mr. Rizzo’s salary
were the amount of responsibilities that he has been accountable for, in
addition to the fact that he founded the company. These
responsibilities include: business development, oversight of operations,
Chairman of the Board, financing and capitalization initiatives and sales and
marketing. Essentially, Mr. Rizzo has performed all of these tasks since the
inception of the business, enabling the company to maintain a reduced
headcount.
Annual
Incentive Compensation
In
addition to base salaries, the Board of Directors has the authority to award
discretionary annual bonuses to the Company’s executive officers. The
annual incentive bonuses are intended to compensate officers for achieving
corporate goals and for achieving what the committee believes to be
value-creating milestones.
Long-Term
Equity Incentive Plan
In June
2007 the Board of Directors of the Company adopted the 2007 Long-Term Equity
Incentive Plan. The purpose of this Plan is to attract and retain
directors, officers and other employees of the Company and its Subsidiary and to
provide to such persons incentives and rewards for performance.
The
Company may issue each of the following under this Plan: Incentive Option,
Nonqualified Option, Stock Appreciation Right, Restricted Stock Award or
Performance Stock Award. The Plan was ratified at the 2007
shareholder’s meeting (the "Effective Date"). No Incentive Option,
Nonqualified Option, Stock Appreciation Right, Restricted Stock Award or
Performance Stock Award shall be granted pursuant to the Plan ten years after
the Effective Date. The total number of shares available under the
Plan is Fifteen Million (15,000,000). No Plan participant will be
granted the right, in the aggregate, for more than Two Million
(2,000,000) Common Shares during any calendar year.
57
Summary
Compensation Tables
The
following table sets forth, for the last three fiscal years, the compensation
earned for services rendered in all capacities by our chief executive officer,
chief financial officer and the other highest-paid executive officers serving as
such at the end of 2010 whose compensation for that fiscal year was in excess of
$100,000. No other executive officer of iTrackr Systems, Inc.
received compensation in excess of $100,000 during fiscal year
2010.
Name
and Principal Position (a)
|
Fiscal
Year (b)
|
Salary
($)(c)
|
Bonus
($)(d)
|
Stock Awards
($) (e)
|
Option Awards
($) (f)
|
Non-Equity
Incentive Plan
Compensation
($) (g)
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($) (h)
|
All Other
Compensation
($) (i)
|
Total
($) (j)
|
|||||||||||||||||||||||||
John
Rizzo,
|
2010
|
250,000 | (2) | 12,000 | (3) | 262,000 | ||||||||||||||||||||||||||||
Chairman
and
|
2009
|
179,500 | (2) | - | 179,500 | |||||||||||||||||||||||||||||
CEO
|
2008
|
300,000 | (2) | - | - | - | - | - | 36,000 | (3) | 336,000 | |||||||||||||||||||||||
Stella
Gostfrand
|
2010
|
- | - | - | - | - | - | - | - | |||||||||||||||||||||||||
Former
Sole Officer
|
2009
|
- | - | - | - | - | - | - | - | |||||||||||||||||||||||||
And
Director (1)
|
2008
|
- | - | - | - | - | - | - | - |
(1)
|
Stella
Gostfrand submitted her resignation as an officer and director, effective
following the expiration of the ten day period following the mailing of
the information statement required by Rule 14f-1 under the Exchange
Act.
|
(2)
|
All
of Mr. Rizzo’s 2010 and 2008 salary was accrued. During 2009,
$89,500 of Salary was accrued and $90,000 related to Mr. Rizzo’s 2009
salary was paid in cash in 2009.
|
(3)
|
Accrued
reimbursement of unpaid health insurance and
rent.
|
Long-Term
Compensation- 2007 Long-Term Incentive Plan (“the Plan”)
The
purpose of the Plan is to further and promote the interests of iTrackr and its
stockholders by enabling iTrackr to attract, retain and motivate employees,
non-employee directors and consultants or those who will become employees,
non-employee directors or consultants, and to align the interests of those
individuals and iTrackr’s stockholders.
Notwithstanding
anything elsewhere in the Plan to the contrary, but subject as well to the other
limitations contained in this Section 3 and subject to adjustment as
provided in Section 13 of the Plan:
(i)
|
The aggregate number of Common
Shares actually issued or transferred by the Company upon the exercise of
Nonqualified Stock Options or Incentive Stock Options (after taking into
account forfeitures and cancellations) shall not exceed Fifteen Million
(15,000,000) Common Shares.
|
(ii)
|
The
aggregate number of Common Shares issued as Restricted Stock and
Restricted Stock Units (after taking into account any forfeitures and
cancellations) shall not exceed Fifteen Million (15,000,000) Common
Shares.
|
(iii)
|
The
aggregate number of Common Shares issued as Performance Shares and
Performance Units and other awards under Section 10 of this Plan
(after taking into account any forfeitures and cancellations) shall not
exceed Fifteen Million (15,000,000) Common
Shares.
|
58
Equity
Compensation Plan Information
Number of
securities
to be issued upon
exercise of
outstanding
options,
warrants and
rights
|
Weighted – average
exercise
price of
outstanding options,
warrants and
rights
|
Expiration
Date
|
Number
of options and warrants that have not vested
|
Number of
securities
remaining
available
for future
issuances
under equity
compensation plans
(excluding
securities
reflected in
column (a))
|
||||||||||||||
(a)
|
(b)
|
(c)
|
||||||||||||||||
John
Rizzo, Chairman and CEO
|
1) | 1,000,000 | $ | 0.25 |
07/01/2017
|
- | ||||||||||||
1,000,000 | $ | 0.40 |
07/01/2017
|
- | ||||||||||||||
Ramesh
Anand, COO
|
1) | 250,000 | $ | 0.25 |
01/05/2020
|
- | ||||||||||||
Other
Options
|
2,375,000 | $ | 0.10 |
07/01/2017
|
- | |||||||||||||
880,000 | $ | 0.05 |
07/01/2017
|
- | ||||||||||||||
Warrants
|
105,333 | $ | 0.75 |
02/01/2015
|
- | |||||||||||||
1,000,000 | $ | 0.40 |
12/31/2015
|
- | ||||||||||||||
1,000,000 | $ | 0.10 |
10/31/2011
|
- | ||||||||||||||
Totals
|
7,610,333 | $ | 0.21 |
37,389,667
|
(1)
|
Includes
only stock options. Total options outstanding as of December
31, 2010 was 5,505,000
|
Employment
Agreements
The
information provided below, including the share numbers and dollar amounts, is
after giving effect to the Reverse Merger and the change in control which will
become effective following the expiration of the ten day period following the
mailing of the information statement required by Rule 14f-1 under the
Exchange Act.
Ramesh
Anand
Under the
terms of Mr. Anand’s contract, entered into in January, 2010, in lieu of
cash payment for compensation, he received an option to purchase Two Hundred and
Fifty Thousand (250,000) fully vested shares of the Company’s common stock
at an exercise price of $0.25 and a life of five
years. Mr. Anand is entitled to four (4) weeks of paid
vacation in each twelve (12) month period during Executive’s employment
hereunder which shall accrue on a monthly basis during Executives employment
hereunder. At the discretion of the Board and in accordance with
Company policy, Mr. Anand is eligible to participate in benefits under any
employee benefit plan or arrangement made available by the Company now or in the
future to its executives and its employees. As Chief Operating
Officer, Mr. Anand’s performance shall be reviewed by the Board on a
periodic basis (not less than once each fiscal year) and the Board may, in its
sole discretion, award such bonuses to Mr. Anand as shall be appropriate or
desirable based on Mr. Anand’s performance.
John
Rizzo
Under the
terms of Mr. Rizzo’s contract, entered into in January, 2007, which held an
initial term of 3 years, and has been extended by the Company’s board of
Directors through May 2011, Mr. Rizzo is to be paid a base annual salary at
the rate of $250,000 dollars per year. Mr. Rizzo is entitled to
Twelve (12) weeks vacation during each year of employment. And
his family shall be eligible to participate in the Company’s paid health
plan. However, if Mr. Rizzo so chooses, he can maintain his own
family health plan and the Company will subsidize that plan in the amount of
$1,000 per month.
Director
Compensation
The
Company did not and does not currently have an established policy to provide
compensation to members of its board of directors for their services in that
capacity. The Company intends to develop such a policy in the near
future.
59
Compensation
Committee Interlocks and Insider Participation
The
Company does not have a separate compensation committee. During the
fiscal year ended December 31, 2009, the sole officer and director of the
Company, Stella Gostfrand was individually responsible for deliberations of the
board concerning executive compensation.
Director
Compensation
The
Company did not and does not currently have an established policy to provide
compensation to members of its board of directors for their services in that
capacity. The Company intends to develop such a policy in the near
future.
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS.
As of
December 31, 2010, we have authorized 100,000,000 shares of common stock,
no par value, of which 20,319,997 shares were
issued and outstanding and 10,000,000 shares of preferred stock, no par value,
of which no shares are issued and outstanding. The following table
sets forth certain information regarding beneficial ownership of our common
stock as of December 31, 2010, by (i) each person known by us to be the
beneficial ownership of more than 5 percent of the outstanding common stock,
(ii) each director, (iii) each executive officer, and (iv) all executive
officers and directors as a group. The number of shares beneficially
owned is determined under the rules promulgated by the SEC, and the information
is not necessarily indicative of beneficial ownership for any other
purpose. Under those rules, beneficial ownership includes any shares
as to which the individual has sole or shared voting power or investment power
and also any shares which the individual has the right to acquire within 60 days
of the date hereof, through the exercise or conversion of any stock option,
convertible security, warrant or other right. Those shares, however,
are not deemed outstanding for the purpose of computing the percentage ownership
of any other person. Including those shares in the tables does not,
however, constitute an admission that the named stockholder is a direct or
indirect beneficial owner of those shares. Unless otherwise
indicated, each person or entity named in the table has sole voting power and
investment power (or shares that power with that person's spouse) with respect
to all shares of capital stock listed as owned by that person or
entity. Unless otherwise indicated, the address of each of the
following persons is 433 Plaza Road, Ste 275 Boca Raton, FL
33432.
Name
and address of the beneficial owner(1)
|
Number
of Shares Beneficially Owned(2)
|
Percent of
common stock
|
||||||
Ramesh
Anand (3)
16301
Via Venetia East
Delray
Beach, FL 33484
|
250,000 | 1.22 | % | |||||
John
Rizzo (4)
17597
Circle Pond Ct.
Boca
Raton FL 33496
|
7,250,000 | 32.48 | % | |||||
Michael
Uhl (5)
301
Great Gable Drive
Las
Vegas, NV 89123
|
375,000 | 1.81 | % | |||||
David
Baesler (6)
500
Morris Avenue Suite 301
Springfield,
NJ 07081
|
450,000 | 2.17 | % | |||||
Directors
and officers as a group
|
8,325,000 | 35.58 | % | |||||
Vicksburg
(7)
|
2,000,000 | 8.96 | % | |||||
William
Archer
1047
Coral Club Drive
Coral
Springs, FL 33071
|
1,061,760 | 5.23 | % | |||||
Ted
Cooper
PO
Box 320956
Los
Gatos, CA 95032
|
1,118,603 | 5.50 | % | |||||
Delivery
Technology Solutions
433
Plaza Real, Ste. 275
Boca
Raton, FL 33432
|
1,386,322 | 6.82 | % | |||||
Stella
Gostfrand
1507
Presidential Way
North
Miami Beach, FL 33179
|
1,022,388 | 5.03 | % | |||||
Jan
Moran
1047
Coral Club Drive
Coral
Springs, FL 33071
|
1,061,760 | 5.23 | % | |||||
Mark
Moran
1047
Coral Club Drive
Coral
Springs, FL 33071
|
1,061,760 | 5.23 | % | |||||
Trans
Atlantic Corporation
Baiko
Daskalov 33
Provdiv
|
1,515,685 | 7.46 | % | |||||
5%
owners as a group
|
10,228,278 | 45.8 | % | |||||
Directors,
officers and 5% shareholders as a group
|
18,553,278 | 73.1 | % |
1)
|
Beneficial
Ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities. Each of the beneficial owners listed above has
direct ownership of and sole voting power and investment power with
respect to the shares of Company common stock and except as indicated the
address of each beneficial owner is 433 Plaza Road, Ste
275 Boca Raton, FL 33432.
|
(2)
|
Shares
of common stock beneficially owned and the respective percentages of
beneficial ownership of common stock assumes the exercise of all options,
warrants and other securities convertible into common stock beneficially
owned by such person or entity currently exercisable or exercisable within
60 days of December 31, 2010. Shares issuable pursuant to the exercise of
stock options and warrants exercisable within 60 days are deemed
outstanding and held by the holder of such options or warrants for
computing the percentage of outstanding common stock beneficially owned by
such person, but are not deemed outstanding for computing the percentage
of outstanding common stock beneficially owned by any other
person.
|
(3)
|
Including
250,000 shares of common stock underlying the Options.
|
(4)
|
Including
2,000,000 shares of common stock underlying the
Options.
|
(5)
|
Including
375,000 shares of common stock underlying the Options.
|
(6)
|
Including
450,000 shares of common stock underlying the Options.
|
(7)
|
Including
2,000,000 shares of common stock underlying the
Options.
|
Based
upon a review of the forms furnished to iTrackr and written representations from
its executive officers and directors, the Company believes that during fiscal
2010 all Section 16(a) filing requirements applicable to its executive officers,
directors and beneficial owners of more than ten percent of its common stock
were complied with.
60
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
During
the year ended December 31, 2010 AND 2009, the Company received $41,500 and
$150,750, respectfully from Bluewater Advisors, a company owned by John Rizzo,
CEO, in exchange for convertible promissory notes.
ITEM
14. PRINCIPAL ACCOUNTING FEES AND SERVICES.
Bedinger
and Company (“Bedinger”) served as the Company’s independent auditor for the
years ended December 31, 2010 and 2009. The following is a
summary of the fees billed to the Company by Bedinger for professional services
rendered during the years ended December 31, 2010 and 2009,
respectively:
December 31,
|
||||||||
2010
|
2009
|
|||||||
Audit
fees
|
$ | 21,500 | $ | 8,560 | ||||
Audit
related fees
|
$ | 0 | $ | 0 | ||||
Tax
fees
|
$ | 0 | $ | 0 | ||||
All
other fees
|
$ | 0 | $ | 0 | ||||
Total
|
$ | 21,500 | $ | 8,560 |
Pre-Approval
Policy
The Board
of Directors pre-approves all auditing services and permitted non-audit
services, if any, including tax services, to be performed for us by our
independent auditor, subject to the de minimis exceptions for
non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which
are approved by the Board of Directors prior to the completion of the
audit. The scope of the pre-approval shall include pre-approval of
all fees and terms of engagement. The Board of Directors may form and
delegate authority to subcommittees consisting of one or more members when
appropriate, including the authority to grant pre-approvals of audit and
permitted non-audit services, provided that decisions of such subcommittee to
grant pre-approvals shall be presented to the Board of Directors at its next
scheduled meeting.
61
PART IV
ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
Exhibit No.
|
Description
|
|
3.1
|
Restated
Articles of Incorporation of iTrackr Systems,
Inc. (Incorporated by reference from Exhibit 3.1 to the Form
S-1/A Registration Statement filed with the Securities and Exchange
Commission on January 21, 2011).
|
|
3.2
|
By-laws
of iTrackr Systems, Inc. (Incorporated by reference from
Exhibit 3.2 to the Form S-1/A Registration Statement filed with the
Securities and Exchange Commission on January 21,
2011).
|
|
10.1
|
Agreement
and Plan of Merger. Previously filed as Exhibit 2.1 with Form 8-K on
December 16, 2009, Commission File No. 000-21810; incorporated herein by
reference.
|
|
10.2
|
Form
of 2010 Employment Agreement entered into with John Rizzo (incorporated by
reference from Exhibit 10.1 to the Current Report on Form 8-K filed with
the Securities and Exchange Commission on January 19,
2010).
|
|
10.3
|
Form
of 2010 Employment Agreement entered into with Ramesh Anand (incorporated
by reference from Exhibit 10.3 to the Current Report on Form 8-K filed
with the Securities and Exchange Commission on January 19,
2010).
|
|
10.4
|
Form
of Stock Option Plan (incorporated by reference from Exhibit 10.7 to the
current Report on Form 8-K filed with the Securities and Exchange
Commission on January 19, 2010).
|
|
10.5
|
Saveology
Contract. (Incorporated by reference from Exhibit 10.5 to the
Form S-1/A Registration Statement filed with the Securities and Exchange
Commission on August 17, 2010).
|
|
10.6
|
Bluewater
note pursuant to Item 601(b)(10)(i) and (ii)(A) of Regulation
S-K. (Incorporated by reference from Exhibit 10.6 to the Form
S-1/A Registration Statement filed with the Securities and Exchange
Commission on August 17, 2010).
|
|
10.7
|
Respond
Q, LLC Contract. (Incorporated by reference from Exhibit 10.7
to the Form S-1/A Registration Statement filed with the Securities and
Exchange Commission on December 21, 2010).
|
|
14
|
Code
of Ethics. Previously filed as Exhibit 14.1 with Form 10-K, on March 31,
2008, incorporated herein by reference.
|
|
23.1
|
Consent
of Auditor
|
|
31.1
|
Certification
of Principle Executive Officer and Principal Financial Officer Pursuant to
Section
|
|
302
of the Sarbanes-Oxley Act of 2002
|
||
32.1
|
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
62
SIGNATURES
Pursuant
to the requirements of Section 13 or Section 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ITRACKR
SYSTEMS, INC.
(Registrant)
|
|||
February
11, 2011
|
By:
|
/s/ John Rizzo | |
Chief
Executive Officer and Chairman of the Board
|
|||
(Principal
Executive Officer)
|
|||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE
|
TITLE
|
DATE
|
||
/s/
John Rizzo
|
Chief
Executive Officer and Chairman of the
|
February
11, 2011
|
||
John
Rizzo
|
Board
(Principal Executive Officer and Principal
|
|
||
Financial
Officer)
|
|
|||
/s/
David Baesler
|
Director
|
February
11, 2011
|
||
David
Baesler
|
|
|||
|
||||
/s/
Michael Uhl
|
Director
|
February
11, 2011
|
||
Michael
Uhl
|
63