Attached files

file filename
EX-32.1 - B-Scada, Inc.ex32-1.htm
EX-31.1 - B-Scada, Inc.ex31-1.htm


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

 
FORM 10-Q
 

 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended: January 31, 2011
   
or
   
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from: _____________ to _____________

Commission File Number: 000-1341878
 
   MOBIFORM SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
 
94-3399360
(State or other jurisdiction of
 
(I.R.S. Employer Identification No.)
Incorporation or organization)
   
     
1255 N Vantage Pt. Dr., Suite A
   
Crystal River, Florida
 
34429
(Address of principal executive offices)
 
(Zip Code)

Issuer's telephone number (352) 564-9610
 
                                                                              
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   x Yes  o No

 Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    o Yes o No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
 
Large accelerated filer
o
   
Accelerated filer
o
Non-accelerated filer 
o
(Do not check if a smaller reporting company)
 
Smaller reporting company
x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    o Yes  x No
 
APPLICABLE ONLY TO CORPORATE ISSUERS
 
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.   
The number of shares of the issuer’s common equity outstanding as of March 9, 2011 was 24,586,672 shares of common stock, par value $.0001.  
 
 
MOBIFORM SOFTWARE, INC.
 
TABLE OF CONTENTS
 
PART I.  FINANCIAL INFORMATION
3
   
3
   
3
   
AT JANUARY 31, 2011 (UNAUDITED) AND OCTOBER 31, 2010
   
4
   
FOR THE THREE MONTHS ENDED JANUARY 31, 2011 AND 2010
4
   
5
   
FOR THE THREE MONTHS ENDED JANUARY 31, 2011 AND 2010
5
   
6
   
13
   
19
   
PART II.  OTHER INFORMATION
19
   
19
   
21
   
21
   
22

 
PART I.  FINANCIAL INFORMATION
 

MOBIFORM SOFTWARE, INC.
BALANCE SHEETS

   
January 31,
   
October 31,
 
   
2011
   
2010
 
   
(Unaudited)
       
Assets
           
Current Assets
           
Cash and Cash Equivalents
  $ 207,916     $ 67,980  
Accounts Receivable – Net
    75,016       73,290  
Prepaid Expenses and Other Current Assets
    19,913       8,093  
Total Current Assets
    302,845       149,363  
                 
Property and Equipment – Net
    25,921       29,405  
                 
Other Assets
               
Security Deposits
    3,650       3,650  
                 
Total Assets
  $ 332,416     $ 182,418  
                 
Liabilities and Stockholders’ Deficiency
               
Current Liabilities
               
Convertible Notes Payable
  $ 50,000     $ 50,000  
Notes Payable – Related Party
    100,000       100,000  
Accounts Payable and Accrued Liabilities
    140,527       130,067  
Deferred Revenue
    129,904       168,404  
Total Current Liabilities
    420,431       448,471  
                 
Commitments and Contingencies
    --       --  
                 
Stockholders’ Deficiency
               
Preferred Stock, $0.0001 Par Value, 5,000,000 Shares
               
Authorized and Unissued
    --       --  
Common Stock, $0.0001 Par Value; 100,000,000 Shares
               
       Authorized; Shares Issued and Outstanding, 24,586,672
               
at January 31, 2011 and October 31, 2010,
    2,459       2,459  
Additional Paid in Capital
    7,100,728       7,099,269  
Accumulated Deficit
    (7,191,202 )     (7,367,781 )
Total Stockholders’ Deficiency
    (88,015 )     (266,053 )
                 
Total Liabilities and Stockholders’ Deficiency
  $ 332,416     $ 182,418  
 
See the accompanying notes to financial statements.
 

MOBIFORM SOFTWARE, INC.
STATEMENTS OF OPERATIONS [UNAUDITED]
   
For the Three Months Ended
 
   
January 31,
 
   
2011
   
2010
 
             
Revenue
  $ 410,532     $ 347,023  
                 
Operating Expenses
               
Payroll Expenses
    156,064       147,024  
Consulting Fees – Share Based
    1,459       43,848  
Professional Fees
    13,728       10,262  
Advertising
    4,054       8,060  
Depreciation and Amortization
    3,484       3,159  
Consulting Fees
    22,413       11,928  
Office
    4,469       3,386  
Rent
    9,389       6,621  
Telephone and Communication
    2,945       3,300  
Other
    12,923       9,981  
Total Operating Expenses
    230,928       247,569  
                 
Operating Income
    179,604       99,454  
                 
Other Income (Expenses)
               
Interest Income
    --       64  
Interest Expense
    (1,008 )     (1,008 )
Interest Expense – Related Party
    (2,017 )     (2,017 )
Total Other Income (Expenses)
    (3,025 )     (2,961 )
                 
Income Before Income Taxes
    176,579       96,493  
                 
Provision for Income Taxes
    --       --  
                 
Net Income
  $ 176,579     $ 96,493  
                 
Net Income  Per Common Share – Basic and Diluted
  $ 0.01     $ --  
                 
Weighted-Average Common Shares Outstanding – Basic and Diluted
    24,586,672       24,413,989  
 
See the accompanying notes to financial statements.
 
 
MOBIFORM SOFTWARE, INC.
STATEMENTS OF CASH FLOWS [UNAUDITED]
 
   
For the Three Months Ended
 
   
January 31,
 
   
2011
   
2010
 
             
Operating Activities
           
Net Income
  $ 176,579     $ 96,493  
Adjustments to Reconcile Net Income to Net Cash
               
Provided by Operating Activities:
               
Depreciation and Amortization
    3,484       3,159  
Consulting Fees – Share Based
    1,459       43,848  
Deferred Revenue
    (38,500 )     84,180  
                 
Changes in Assets and Liabilities:
               
(Increase) Decrease in:
               
Accounts Receivable
    (1,725 )     (140,057 )
Prepaid Expenses and Other Current Assets
    (11,821 )     3,886  
Increase (Decrease) in:
               
Accounts Payable and Accrued Liabilities
    10,460       (29,687 )
Net Cash Provided by Operating Activities
    139,936       61,822  
                 
Investing Activities
               
Acquisition of Equipment
    --       (7,623 )
Net Cash Used for Investing Activities
    --       (7,623 )
                 
Financing Activities
               
Proceeds from note payable – related party
    --       50,000  
Net Cash Provided by Financing Activities
    --       50,000  
                 
Change in Cash and Cash Equivalents
    139,936       104,199  
                 
Cash and Cash Equivalents – Beginning of Period
    67,980       14,966  
                 
Cash and Cash Equivalents – End of Period
  $ 207,916     $ 119,165  
                 
Supplemental Disclosures of Cash Flow Information
               
Cash paid during the year for:
               
Interest
  $ --     $ --  
Income Taxes
  $ --     $ --  
                 
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
               
Common Stock Issued for Share Liability
  $ --     $ 58,500  
 
 See the accompanying notes to financial statements.
 
 
MOBIFORM SOFTWARE, INC.
 
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]
 
JANUARY 31, 2011
 
 
(1)Nature of Business and Basis of Presentation
 
Mobiform Software, Inc, (“Mobiform”, the “Company”, “we” or “”us”,) a Delaware corporation, was originally formed under the name Firefly Learning, Inc. in May 2001. In October, 2005, pursuant to an exchange agreement, we acquired all of the issued and outstanding shares of capital stock of Mobiform Software, Ltd. (“Mobiform Canada”), a Canadian corporation, in exchange for 14,299,593 shares of our common stock.  Effective September 14, 2010, Mobiform Canada was dissolved.
 
Mobiform is in the business of developing software products for the visualization and monitoring of data in heavy industry. Our HMI (Human Machine Interface) software and SCADA (Supervisory Control and Data Acquisition) products are utilized in petro chemical, electricity distribution, transportation, facilities management and manufacturing industries. Mobiform also licenses portions of its technology for use in the products of smaller software firms and Fortune 500 companies. Our products are marketed and sold globally and offered through a sales channel of system integrators and resellers.
 
 
(2)Going Concern
 
The accompanying financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  We have incurred substantial net operating losses and used substantial amounts of cash in our operating activities.  Since our inception, we have incurred losses, have an accumulated deficit of $7,191,202 at January 31, 2011, and have experienced negative cash flows from operations.  The expansion and development of our business will likely require additional capital.  This condition raises substantial doubt about our ability to continue as a going concern.  The accompanying financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.
 
We are presently working to raise additional capital to meet our working capital needs and are restructuring operating costs as we continue to market our products in line with our business plan.  We have signed significant licensing agreements and continue to implement our strategic business plan. There are no assurances, however, that we will be successful in our efforts to raise capital or generate sufficient revenues through our marketing efforts or to reduce operating costs to a level where we will attain profitability.
 
 
MOBIFORM SOFTWARE, INC.
 
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]
 
JANUARY 31, 2011
 
 
(3)Summary of Significant Accounting Policies
 
Unaudited Interim Statements - The accompanying unaudited interim financial statements as of January 31, 2011, and for the three months ended January 31, 2011 and 2010 have been prepared in accordance with accounting principles generally accepted for interim financial statement presentation and in accordance with the instructions to Form 10-Q.  Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation.  In the opinion of management, the financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position as of January 31, 2011 and the results of operations and cash flows for the three months ended January 31, 2011 and 2010.  The results of operations for the three months ended January 31, 2011 are not necessarily indicative of the results to be expected for the full year.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect 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.

Revenue Recognition - Our revenues are recognized in accordance with FASB ASC Topic 985-605 “Revenue Recognition” for the software industry.  Revenue from the sale of software licenses is recognized when standardized software modules are delivered to and accepted by the customer, the license term has begun, the fee is fixed or determinable and collectability is probable.  Revenue from software maintenance contracts and Application Service Provider (“ASP”) services are recognized ratably over the lives of the contracts.  Revenue from professional services is recognized when the service is provided.

We enter into revenue arrangements in which a customer may purchase a combination of software, maintenance and support, and professional services (multiple-element arrangements).  When vendor-specific objective evidence (“VSOE”) of fair value exists for all elements, we allocate revenue to each element based on the relative fair value of each of the elements.  VSOE of fair value is established by the price charged when that element is sold separately.  For maintenance and support, VSOE of fair value is established by renewal rates, when they are sold separately.  For arrangements where VSOE of fair value exists only for the undelivered elements, we defer the full fair value of the undelivered elements and recognize the difference between the total arrangement fee and the amount deferred for the undelivered items as revenue, assuming all other criteria for revenue recognition have been met.

Subsequent EventsThe Company evaluated subsequent events, which are events or transactions that occurred after January 31, 2011 through the issuance of the accompanying financial statements.
 
Our other accounting policies are set forth in Note 3 of our audited financial statements included in the Mobiform Software, Inc. 2010 Form10-K.
 
 
MOBIFORM SOFTWARE, INC.
 
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]
 
JANUARY 31, 2011
 
 
(4)New Authoritative Accounting Guidance
 
In January 2010, the Financial Accounting Standards Board issued Accounting Standards Update 2010-06 (“ASU 2010-06”), “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.” ASU 2010-06 requires reporting entities to make new disclosures about recurring or nonrecurring fair value measurements including significant transfers into and out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and settlements on gross basis in the reconciliation of Level 3 fair value measurements.  ASU 2010-06 is effective for annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures which are effective for annual periods beginning after December 15, 2010.  The adoption of the subsequent provisions of ASU 2010-06 is not expected to have a material impact on the Company’s financial statement disclosures.
 
Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have an effect on the accompanying consolidated financial statements.
 
 
(5)Property and Equipment
 
Property and equipment consists of the following:
 
   
January 31,
   
October 31,
 
Estimated
   
2011
   
2010
 
Useful Lives
   
(Unaudited)
         
               
Computer Equipment
  $ 35,951     $ 35,951  
5 years
Office Equipment
    24,432       24,432  
5-7 years
Software
    21,566       21,566  
3 years
Total
    81,949       81,949    
Less: Accumulated Depreciation
                 
and Amortization
    (56,028 )     (52,544 )  
    $ 25,921     $ 29,405    

 
MOBIFORM SOFTWARE, INC.
 
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]
 
JANUARY 31, 2011
 
 
(6)Stockholders’ Equity
 
We are authorized to issue 100,000,000 shares of common stock, par value $0.0001 per share and 5,000,000 shares of preferred stock, par value $0.0001 per share.  At January 31, 2011 there were 24,586,672 common shares issued and outstanding.  An additional 11,597,100 common shares were reserved for issuance as of January 31, 2011 for outstanding purchase warrants and convertible debt.  There are no shares of preferred stock issued and outstanding.
 
At January 31, 2011, we have 4,424,000 outstanding warrants to employees.  The fair value of all the warrants issued for services is being charged to operations over the periods the warrants vest.  Amortization of the fair values charged to operations is determined by the Black-Scholes pricing model.  We had no such charges in the three months ended January 31, 2011 and 2010.   All the warrants have cashless exercise provisions as defined in the warrants.
 
We entered into a consulting agreement on February 5, 2010 for financial consulting services.  As part of the compensation for services, the consultant was granted a five-year warrant to purchase 300,000 shares of our common stock at the market price per share on the date of issuance, which was $0.09.  The warrant vests 25% on the date of issuance and every three months thereafter and has cashless exercise provisions as defined in the warrant.  The fair value of the warrant, $5,883, was calculated using the Black-Scholes pricing model with the following assumptions: 0% dividend yield; 0.4% risk free interest rate; 23.81% volatility; 5 year expected life.  Share-based expense based on the fair value of the warrant is being charged to operations over the vesting period.  The expense recorded in the three months ended January 31, 2011 was $1,459.
 
In January 2010, we issued 150,000 shares of our common stock for a share liability of $58,500 incurred for consulting services. In the three months ended January 31, 2010, $29,250 expense related to this agreement and $14,598 deferred under another consulting agreement were charged to operations as share-based consulting.
 
The following table summarizes the warrants and options.
 
   
For the Three Months Ended
   
For the Year Ended
 
   
January 31, 2011
(Unaudited)
   
October 31, 2010
 
 
   
Shares
   
Weighted Average Exercise Price
   
Shares
   
Weighted Average Exercise Price
 
                         
Outstanding at beginning
                       
of period
    11,463,750     $ 0.69       11,663,750     $ 0.68  
Granted/Sold
    --       --       300,000     $ 0.09  
Expired/Cancelled
    --       --       (500,000 )   $ 0.20  
Forfeited
    --       --       --       --  
Exercised
    --       --       --       --  
Outstanding at end of period
    11,463,750     $ 0.69       11,463,750     $ 0.69  
 
 
MOBIFORM SOFTWARE, INC.
 
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]
 
JANUARY 31, 2011
 
 
 
(6)Stockholders’ Equity
 
The following table summarizes information about stock warrants outstanding as of January 31, 2011 [Unaudited]:
 
     
Warrants
 
     
Outstanding
   
Exercisable
 
           
Weighted-
                   
           
Average
                   
           
Remaining
   
Weighted-
         
Weighted
 
           
Contractual
   
Average
         
Average
 
     
Number
   
Life
   
Exercise
   
Number
   
Exercise
 
Exercise Price
   
Outstanding
   
(in Years)
   
Price
   
Exercisable
   
Price
 
$ 0.09       300,000       4.00     $ 0.09       300,000     $ 0.09  
$ 0.20       5,130,000       0.28     $ 0.20       5,130,000     $ 0.20  
$ 0.25       540,000       0.58     $ 0.25       540,000     $ 0.25  
$ 0.75       2,022,750       1.35     $ 0.75       2,022,750     $ 0.75  
$ 1.50       3,471,000       0.92     $ 1.50       3,471,000     $ 1.50  
 
The following table summarizes information about stock warrants outstanding as of October 31, 2010:
 
     
Warrants
 
     
Outstanding
   
Exercisable
 
           
Weighted-
                   
           
Average
                   
           
Remaining
   
Weighted-
         
Weighted
 
           
Contractual
   
Average
         
Average
 
     
Number
   
Life
   
Exercise
   
Number
   
Exercise
 
Exercise Price
   
Outstanding
   
(in Years)
   
Price
   
Exercisable
   
Price
 
$ 0.09       300,000       4.25     $ 0.09       225,000     $ 0.09  
$ 0.20       5,130,000       0.56     $ 0.20       5,130,000     $ 0.20  
$ 0.25       540,000       0.83     $ 0.25       540,000     $ 0.25  
$ 0.75       2,022,750       1.60     $ 0.75       2,022,750     $ 0.75  
$ 1.50       3,471,000       1.17     $ 1.50       3,471,000     $ 1.50  
 
At January 31, 2011 and October 31, 2010 the weighted-average exercise price of all warrants was $0.69 and the weighted-average remaining contractual life was 0.79 and 1.04 years, respectively.
 
 
MOBIFORM SOFTWARE, INC.
 
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]
 
JANUARY 31, 2011
 
 
(7)Income Taxes
 
The income tax expense (benefit) differs from the amount computed by applying the United States statutory corporate income tax rate as follows:
 
   
For the Three Months Ended
 
   
January 31,
 
   
2011
   
2010
 
   
[Unaudited]
   
[Unaudited]
 
             
United States Statutory Corporate
           
  Income Tax Rate
    34.0 %     34.0 %
Change in Valuation Allowance on
               
  Deferred Tax Assets
    (34.0 )%     (34.0 )%
                 
Income Tax Provision
    -- %     -- %
 
The components of deferred tax assets (liabilities) at January 31, 2011 and October 31, 2010 are as follows:
 
   
January 31,
   
October 31,
 
   
2011
   
2010
 
   
[Unaudited]
       
             
Deferred Tax Assets – Current
           
Accrued Vacation Pay
  $ 8,178     $ 6,689  
Valuation Allowance
    (8,178 )     (6,689 )
      --       --  
Deferred Tax Assets (Liabilities) – Long Term
               
Net Operating Losses
    1,216,206     $ 1,278,058  
Property and Equipment
    (3,932 )     (3,762 )
Equity Instruments
    574,440       573,944  
Valuation Allowance
    (1,786,714 )     (1,848,240 )
                 
Net Deferred Tax Asset
  $ --     $ --  
 
We have established a full valuation allowance on our deferred tax asset because of a lack of sufficient positive evidence to support its realization.  The valuation allowance (decreased) increased by approximately $(60,000) and $59,000 in the three months ended January 31, 2011 and the year ended October 31, 2010, respectively.
 
 
MOBIFORM SOFTWARE, INC.
 
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]
 
JANUARY 31, 2011
 
 
(8)Related Party Transactions
 
On October 16, 2009, we executed a promissory note in the amount of $50,000 with our Chief Executive Officer (“CEO”). The note, which is due on demand, accrues interest at 8% per annum.  The proceeds are to be used for working capital purposes.
 
On November 10, 2009, we executed a promissory note in the amount of $50,000 payable to our CEO.  The note, which is due on demand, accrues interest at 8% per annum.  The proceeds are to be used for working capital purposes.
 
Interest expense in the amount of $2,017 has been accrued for these notes in each of the three months ended January 31, 2011 and 2010.
 
 
(9)Commitments and Contingencies
 
Leases
 
We presently lease office space in Crystal River, Florida, on a month to month basis.  In May 2008, our office lease agreement was extended for a one year period through May 2009 at approximately $4,000 per month. Effective June 1, 2009, the agreement was extended for a one year period through May 2010. The terms were revised to a fixed monthly payment of $2,000 plus our share of certain allocated utilities (not to exceed $2,000 per month) as defined in the agreement.  Subsequent to May 2010, the lease is effective monthly under similar terms.  Rental expense for the three months ended January 31, 2011 and 2010 amounted to approximately $9,000 and $7,000, respectively.
 
 
ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The following discussion of our results of operations should be read together with our financial statements and the related notes, included elsewhere in this report. The following discussion contains forward-looking statements that reflect our current plans, estimates and beliefs and involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this quarterly report on Form 10-Q.
 
Executive Summary
 
Since 2003, our experience in Microsoft .NET graphics technology has given us a unique perspective and insight into new data visualization possibilities with emerging technologies.
 
We specialize in the compelling visualization of real-time data. Mobiform has produced exceptional data visualization solutions for manufacturing, power & utilities, automation, and other fields of business making use of HMI (Human Machine Interface) and SCADA (Supervisory Control and Data Acquisition) software products. Recognizing that data visualization can be used in multiple vertical markets, we will be leveraging our technology to expand into other lines of business like digital signage, financial, healthcare and touch-screen solutions.
 
Our in-house expertise and experience has provided us the opportunity to partner with companies from various vertical markets, and assist them in developing custom solutions that meet their specific needs. Our goal is to help our clients transfer their real-time production and operational data into actionable information through graphically-compelling, functional, and intuitive user interfaces.
 
Products and Services
 
Our technology team has more than 20 years of experience in software design and development and has designed, built and delivered, over the years, world-class software solutions. In addition to software development, we also derive income from consulting services and contract development.
 
Overall Strategic Goals
 
Our intent since inception has been to use this model as a foundation for growing our business. Our plans include developing a ‘Technology Toolbox’ of software development components and design technology that can be used repeatedly as we deliver a variety of software products for consumers and industry in a wide range of verticals. If you can take a piece of technology, hardware, or any manufactured item, and reuse it over and over in different products you can achieve a very high return on investment for your research and development efforts.
 
This toolbox is a set of software components that can be reused in various software products. The types of software developed in our toolbox include software components for visualizing information, LED displays, gauges, charting and mapping controls. We call these our ‘VantagePoint Controls™’. Mobiform has created additional technology for graphics design for its Technology Toolbox. ‘Aurora’ is a Graphics Design Platform that can be used to provide design capabilities inside of software applications built for Microsoft Windows.
 
Product Description
 
With the Technology Toolbox in place, we can quickly assemble data visualization software products for monitoring real time data. Our initial target market is monitoring and control for heavy industry since this is an area in which our team already has expertise. Over time, we plan to expand into financial, drafting, digital signage and eLearning markets all leveraging the same set of core technologies.
 
 
We have assembled our first vertical market application. ‘Status Vision Designer®’ (“Status”) was released in January 2009 as an industrial control and monitoring application for heavy industry and manufacturing.
 
Status falls into the category of a SCADA (Supervisory Control and Data Acquisition) or HMI (Human Machine Interface) software application.
 
Status Vision Designer® is a powerful data visualization software package that allows the user to create highly graphical screens and connect the controls on the screens to real-time data. The screens can then be published and viewed by anyone within the company or from the web.
 
Status has built-in connectivity to real-time OPC (Open Process Control) data and can very easily be extended to bind to other types of data. OPC data is primarily used in the manufacturing and process control industries. The market appeal for Status is its ability to connect to a variety of OPC servers and display real-time data from hundreds of data sources.
 
Consulting
 
In addition to sales of pre-designed software products, we generate revenue by consulting with organizations which utilize our expertise in customized solutions and embedding our software into theirs. We also offer WPF (Windows Presentation Foundation) and XAML (Extensible Application Markup Language) training and graphic design services.
 
We have been involved in WPF and XAML since it was first released in November 2003 at the Microsoft PDC Conference.  We were one of the earliest adopters of WPF, displaying its first public alpha product related to this technology in January of 2004.
 
We assist consulting clients with their WPF applications.  From initial consulting services and custom development, to embedding our Aurora software into their solution, we have the expertise and personnel to assist. 
 
Licenses and Joint Ventures
 
We have licensed our technology to other companies for use in their solutions, and we are in discussions with additional companies that may want to license or joint venture some of our software applications on an exclusive or nonexclusive basis.
 
In November 2009, we entered into a three year licensing agreement with the industrial controls subsidiary of a $170+ billion multinational corporation (“Licensee 1”) to utilize a portion of our proprietary technology. Licensee 1 has agreed to pay us a per unit royalty, with a minimum of $270,000 per year for the duration of the agreement. In addition we will perform consulting services, on an as needed basis, for which we will be compensated separately based upon services provided.
 
In November 2009, we entered into a three year non-exclusive licensing agreement with a Fortune 500 company (“Licensee 2”) to utilize a portion of our proprietary software.  Licensee 2 has agreed to pay us $240,000, $120,000 of which was paid on November 16, 2009 with the balance being paid on April 1, 2010.  Licensee 2 has the option to extend the agreement in one year increments upon payment of $120,000 per additional year. In addition the licensing agreement provides for us to perform consulting services, on an as needed basis, for which we will be compensated separately based upon services provided.
 
In addition to several other executed mutual nondisclosure agreements we entered into an agreement with Capstone Technology for licensing of Aurora and VantagePoint into one of their HMI products and entered into an additional similar agreement with Matrikon Asia Pacific. There is no assurance that any additional licenses or joint ventures will result from our discussions with additional companies.
 
 
Revenue Strategy
 
We are currently generating revenues through the licensing of our technology to different software companies, retailing portions of our technology as software development components, and in the near future, retailing our software solutions to specific vertical markets. We anticipate, in the future, a smaller portion of our revenue will come from consulting services and custom development.
 
We are currently selling our products directly over the Internet from our website and through resellers. In the future, we intend to distribute Aurora through retail outlets and OEMs. We will also target potential customers to offer customized applications to meet their industry requirements.
 
Critical Accounting Policies and Estimates
 
Our financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The preparation of the financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. Though we evaluate our estimates and assumptions on an ongoing basis, our actual results may differ from these estimates.
 
Certain of our accounting policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s subjective judgments are described below to facilitate a better understanding of our business activities. We base our judgments on our experience and assumptions that we believe are reasonable and applicable under the circumstances.
 
Revenue Recognition - Our revenues are recognized in accordance with FASB ASC Topic 985-605 “Revenue Recognition” for the software industry.  Revenue from the sale of software licenses is recognized when standardized software modules are delivered to and accepted by the customer, the license term has begun, the fee is fixed or determinable and collectability is probable.  Revenue from software maintenance contracts and Application Service Provider (“ASP”) services are recognized ratably over the lives of the contracts.  Revenue from professional services is recognized when the service is provided.
 
We enter into revenue arrangements in which a customer may purchase a combination of software, maintenance and support, and professional services (multiple-element arrangements).  When vendor-specific objective evidence (“VSOE”) of fair value exists for all elements, we allocate revenue to each element based on the relative fair value of each of the elements.  VSOE of fair value is established by the price charged when that element is sold separately.  For maintenance and support, VSOE of fair value is established by renewal rates, when they are sold separately.  For arrangements where VSOE of fair value exists only for the undelivered elements, we defer the full fair value of the undelivered elements and recognize the difference between the total arrangement fee and the amount deferred for the undelivered items as revenue, assuming all other criteria for revenue recognition have been met.
 
Equity-Based CompensationWe account for equity based compensation transactions with employees under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic No. 718, “Compensation, Stock Compensation” (“Topic No. 718”). Topic No. 718 requires the recognition of the fair value of equity-based compensation in net earnings. The fair value of common stock issued for compensation is measured at the market price on date of grant. The fair value of our equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. This model requires the input of highly subjective assumptions and elections including expected stock price volatility and the estimated life of each award. In addition, the calculation of equity-based compensation costs requires that we estimate the number of awards that will be forfeited during the vesting period. The fair value of equity-based awards granted to employees is amortized over the vesting period of the award and we elected to use the straight-line method for awards granted after the adoption of Topic No. 718.

We account for equity based transactions with non-employees under the provisions of ASC Topic No. 505-50, “Equity-Based Payments to Non-Employees” (“Topic No. 505-50”). Topic No. 505-50 establishes that equity-based payment transactions with non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. When the equity instrument is utilized for measurement the fair value of (i) common stock issued for payments to non-employees is measured at the market price on the date of grant; (ii) equity instruments, other than common stock, is estimated using the Black-Scholes option valuation model. In general, we recognize an asset or expense in the same manner as if it is to receive cash for the goods or services instead of paying with or using the equity instrument.
 

Results of Operations
 
The following table sets forth, for the periods indicated, certain items from the statements of operations along with a comparative analysis of ratios of costs and expenses to revenues.
 
   
For the three months ended January 31,
 
   
2011
   
2010
 
   
(Unaudited)
   
(Unaudited)
 
         
% of
         
% of
 
   
Amounts
   
Revenues
   
Amounts
   
Revenues
 
                         
Revenues
  $ 410,532       100 %   $ 347,023       100 %
                                 
Operating expenses:
                               
Compensation costs
  $ 156,064       38 %   $ 147,024       42 %
Consulting fees
  $ 23,872       6 %   $ 55,776       16 %
Advertising
  $ 4,054       1 %   $ 8,060       2 %
Professional fees
  $ 13,728       3 %   $ 10,262       3 %
                                 
Interest and debt costs
  $ 3,025       1 %   $ 3,025       1 %
                                 
Net Income
  $ 176,579       43 %   $ 96,493       28 %
                                 
Net income per share – basic and
                               
   diluted
  $ 0.01             $ --          
 
Comparison of the Three Months Ended January 31, 2011 and 2010
 
Revenues
 
Our revenues for the three months ended January 31, 2011 amounted to $410,532 compared to the comparative 2010 period of $347,023. Revenues for the year increased by approximately $64,000 (18%). The increase is primarily related to licensing of our software and service revenues. Service revenues include revenues from fees charged for the implementation of our software products and training of customers in the use of such products. We are currently selling our software over the internet and are marketing our products and services to companies that may want to license or joint venture some of our software applications.
 
 
Operating Expenses
 
Our operating expenses consist primarily of compensation costs, advertising and professional services.
 
Compensation costs consist of payroll and related expenses.  Payroll expenses amounted to $156,064 in the three months ended January 31, 2011 compared to $147,024 in the three months ended January 31, 2010. Payroll expenses increased $9,040, but as a percentage of revenues decreased from 42% to 38% as we continue to manage our payroll costs as we implement our strategic plan.
 
Advertising costs have decreased to $4,054 in the three months ended January 31, 2011 from $8,060 in the three months ended January 31, 2010, a decrease of $4,006 (50%) primarily from reductions in trade show expense. We temporarily reduced our advertising budget as a means of preserving capital as we implement our plan for revenue growth.
 
Professional fees in the three months ended January 31, 2011 of $13,728 are comparative to the three months ended January 31, 2010 of $10,262. Professional fees in both periods are 3% of revenues.  Consulting fees as a percentage of revenues decreased from 16% in the three months ended January 31, 2010 to 6% in the three months ended January 31, 2011. Share based consulting fees decreased from $43,848 in the three months ended January 31, 2010 to $1,459 in the three months ended January 31, 2011 as certain consulting agreements entered into in fiscal 2010 were not renewed.
 
Interest and Debt Costs
 
Interest expense remained the same at $3,025 in the three months ended January 31, 2010 and the three months ended January 31, 2011. Interest expense is incurred on the two promissory notes of $50,000 each with our CEO executed in the last quarter of fiscal year 2009 and the first quarter of fiscal 2010 and $50,000 on outstanding convertible debentures.
 
Income Taxes
 
The expected tax benefits resulting from pre-tax losses have been fully reserved as we are not able to determine if it is more likely than not that we will be able to realize the tax benefits in the future.
 
Net Income
 
Net income in the three months ended January 31, 2011 totaled $176,579 (43% of revenues) compared to $96,493 in the three months ended January 31, 2010 (28% of revenues), an increase of $80,086 (83%). As discussed above, we continue to implement our plan for revenue growth as we strive to manage operating costs.
 
Liquidity and Capital Resources
 
We fund our operations through sales of our products and services and debt and equity financings.
 
At January 31, 2011 we had cash and cash equivalents of $208,000 compared to $68,000 at October 31, 2010. The increase of $140,000 is primarily attributable to the cash received from payments on our licensing agreements.
 
Our accounts receivable ($75,000) and accounts payable and accrued liabilities ($140,000) at January 31, 2011 are comparative with the balances at October 31, 2010, $73,000 and $130,000, respectively.
 
 
Cash Flows
 
Net cash provided by operating activities amounted to $140,000 and $62,000 in the three months ended January 31, 2011 and 2010, respectively. Net cash from operations increased as a result of the additional cash and revenues generated in the first quarter of fiscal 2011 from our licensing agreements and service revenues while we managed to maintain operating costs for compensation, advertising and professional fees as discussed above.
 
In the three months ended January 31, 2010 we used $8,000 in cash for investing activities for the acquisition of equipment. No such expenditures were made in the three months ended January 31, 2011.
 
In the first quarter of fiscal 2010, cash was provided for financing activities by a loan from our CEO in the amount of $50,000. There were no cash financing activities in the first quarter of fiscal 2011.
 
We do not believe that our cash on hand at January 31, 2011 will be sufficient to fund our operations for at least the next 12 months. We have signed significant licensing agreements and continue to market our products and services in accordance with our strategic business plan. We are also looking to raise additional capital through debt and/or equity financings. There is no assurance that the income generated from these and future agreements will meet our working capital requirements, or that we will be able to sign significant agreements in the future. There is also no assurance that we will be able to obtain additional capital in the amount or on terms acceptable to us.
 
Contractual Obligations
 
N/A
 
Off-Balance Sheet Arrangements
 
As of January 31, 2011, we had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.
 
Quantitative and Qualitative Disclosure about Market Risk
 
Interest Rate Risk
 
N/A
 
Recent Accounting Pronouncements
 
In January 2010, the Financial Accounting Standards Board issued Accounting Standards Update 2010-06 (“ASU 2010-06”), “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements.” ASU 2010-06 requires reporting entities to make new disclosures about recurring or nonrecurring fair value measurements including significant transfers into and out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and settlements on gross basis in the reconciliation of Level 3 fair value measurements.  ASU 2010-06 is effective for annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures which are effective for annual periods beginning after December 15, 2010.  The adoption of the subsequent provisions of ASU 2010-06 is not expected to have a material impact on the Company’s financial statement disclosures.

Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have an effect on the accompanying financial statements.
 
 
ITEM 4.  CONTROLS AND  PROCEDURES
 
Evaluation of disclosure controls and procedures
 
Our Chief Executive Officer and Chief Financial Officer (the “Certifying Officer”) maintains a system of disclosure controls and procedures that is designed to provide reasonable assurance that information, which is required to be disclosed, is accumulated and communicated to management timely.
 
Under the supervision and with the participation of management, the Certifying Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-14(c) under the Exchange Act) at the end of the period covered by this Quarterly Report.

Based upon that evaluation, the Certifying Officer concluded that our disclosure controls and procedures are effective in timely alerting him to material information relative to our company required to be disclosed in our periodic filings with the SEC.

Change in Internal Controls
 
Our Certifying Officer has indicated that there was no change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act) that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to affect,  such control.
 
PART II.  OTHER INFORMATION
 
ITEM 1A. RISK FACTORS
 
An investment in our shares is speculative and involves a high degree of risk. Therefore, you should not invest in our shares unless you are able to bear a loss of your entire investment. You should carefully consider the following factors as well as those set forth in our annual report on form 10-K for the year ended October 31, 2010 and the other information contained herein before deciding to invest in our shares. Factors that could cause actual results to differ from our expectations, statements or projections include the risks and uncertainties relating to our business described above. The fact that some of the risk factors may be the same or similar to our past filings means only that the risks are present in multiple periods. We believe that many of the risks detailed here and in our other SEC filings are part of doing business in our industry and will likely be present in all periods reported. The fact that certain risks are endemic to our industry does not lessen the significance of the risk. We urge you to carefully consider the following discussion of risks as well as other information regarding our common stock.  This report and statements that we may make from time to time may contain forward-looking information. There can be no assurance that actual results will not differ materially from our expectations, statements or projections.
 
Risk Factors Relating to Our Business
 
We have only recently become cash flow positive.  Our limited cash balance will only provide a limited cushion, if our revenues are interrupted. Therefore we are trying to increase our revenues and  may try to obtain additional financing.
 
If our revenue is interrupted, unless we obtain cash from financing, our current operating assets of $302,845net of our accounts payable and accrued liabilities of $140,527 ($162,318)would be exhausted in 2.1 months at our cash expense rate of $77,000 per month experienced during our last three months.
 
We will continue our efforts to maintain and increase sales, and may endeavor to raise additional working capital privately, but there can be no assurance that we will be successful.  Our independent auditors have qualified their opinion on our financial statements, expressing substantial doubt whether we can continue as a going concern, in light of the uncertainty of our obtaining additional financing on a timely basis and other factors described in Note 2 to the financial statements in this report.
 

If we lose key employees or are unable to attract and retain qualified personnel, our business could suffer.
 
Our future success will depend on the continued contributions of Ronald DeSerranno, our CEO, President and Director, who is responsible for programming decisions, design changes, enhancements and strategies. We have “key person” life insurance in the amount of $500,000 on Mr. DeSerranno. Nevertheless the loss of Mr. DeSerranno would likely have a material adverse effect on our business, financial condition and results of operations. We also rely on a very small complement of highly skilled employees. If one or more of them cease to work for us, it could have serious negative consequences. Our future success and plans for growth also depend upon our ability to expand our Board of Directors and to attract, train and retain personnel in all areas of our business.
 
We have a limited operating history and limited historical financial information upon which you may evaluate our performance.
 
You should consider, among other factors, our prospects for success in light of the risks and uncertainties encountered by companies that, like us, are in their early stages of development. We may not successfully address these risks and uncertainties or successfully implement our existing and new products and services. If we fail to do so, it could materially harm our business and impair the value of our Common Stock. Even if we accomplish these objectives, we may not generate positive cash flows or profits that we anticipate in the future.
 
Unanticipated problems, expenses and delays are frequently encountered in establishing a new business and developing new products and services. These include, but are not limited to, inadequate funding, lack of consumer acceptance, competition, product development, and inadequate sales and marketing. Our failure to meet any of these conditions would have a materially adverse effect upon us and may force us to reduce or curtail operations. No assurance can be given that we can or will ever operate profitably.
 
While we achieved profitability during the quarter ended January 31, 2011, we have historically incurred losses since inception and we may be unable to achieve profitability or maintain positive cash flow.
 
While we achieved profitability for the quarter ended January 31, 2011, we cannot be certain that we will realize sufficient revenues to continue profitability on a quarterly basis. Historically, we have incurred substantial net losses since our inception, and we may be unable to achieve profitability in the future. If we continue to incur losses, we may be unable to implement our business plan described herein, including the following:
 
 
increase the number of products we sell

 
increase our sales and marketing activities, including the number of our sales personnel

 
acquire additional businesses.
 
As of January 31, 2011 we had an accumulated deficit of $7,191,202. We may not achieve profitability if our revenues increase more slowly than we expect, and/or if operating expenses exceed our expectations or cannot be adjusted to compensate for lower than expected revenues. If we do achieve profitability, we may be unable to sustain or increase profitability on a quarterly or annual basis. Any of the factors discussed above could cause our stock price to decline.
 
Our products have a long sales cycle, which increases the cost of completing sales and renders completion of sales less predictable.
 
Due to the expense, broad functionality, and company-wide deployment of our products, the period between our initial contact with a potential customer and the purchase of our products and services is often long. To successfully sell our products and services, we generally must educate our potential customers regarding the use and benefits of our products and services. We may commit a substantial amount of time and resources to potential customers without assurance that any sales will be completed or revenues generated. Many of our potential customers are large enterprises that generally take longer to make significant business decisions. Our typical sales cycle has been approximately six to 12 months, making it difficult to predict the quarter in which we may recognize revenue. The delay or failure to complete sales in a particular quarter could reduce our revenues in that quarter. If our sales cycle were to unexpectedly lengthen in general or for one or more large orders, it would adversely affect the timing of our revenues and could harm our ability to meet our forecasts for a given quarter.
 
 
Fluctuations in our quarterly results could cause our stock price to experience significant fluctuations or declines.
 
Our operating results have varied significantly in the past and will likely fluctuate significantly in the future. If revenues fall below our expectations in a particular quarter, we will likely not be able to reduce our spending rapidly in response to the shortfall and our quarterly operating results are likely to be adversely affected. In addition, we anticipate that we will continue to experience long sales cycles. Further, we are not always able to predict the form that a particular customer transaction will ultimately take. Therefore, the timing of future customer contracts as well as the ultimate form of those contracts could be difficult to predict, making it difficult to predict revenues between quarters.
 
Other factors that could affect our quarterly operating results include:
 
The demand for our products and professional services and our efficiency in rendering our professional services;
 
The size and complexity of our license transactions and potential delays in recognizing revenue from license transactions;
 
The amount and timing of our operating expenses and capital expenditures;
 
Due to these and other factors, we believe that quarter-to-quarter comparisons of our revenues and operating results are not necessarily meaningful and should not be relied upon as indicators of future performance. It is possible that in some future quarter our operating results may be below the expectations of public market analysts or investors, which could cause the market price of our common stock to fall.
 
If our efforts to attract new customers or to sell additional solutions to our existing customers are not successful, our revenue growth will be adversely affected.
 
To increase our revenue, we must continually add new customers and sell additional solutions to existing customers. If our existing and prospective customers do not perceive our solutions to be of sufficiently high value and quality, we may not be able to attract new customers or to increase sales to existing customers. Our ability to attract new customers and to sell new solutions to existing customers will depend in large part on the success of our sales and marketing efforts. However, our existing and prospective customers may not be familiar with some of our solutions, or may have traditionally used other products and services for some of their requirements. Our existing and prospective customers may develop their own solutions to address their requirements or purchase competitive product offerings
 
ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES
 
We did not issue any equity securities during the period covered by this report that were not registered under the Securities Act.
 
 
 
 
SIGNATURES
 
 
Pursuant to the requirements 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.
 
 
 
MOBIFORM SOFTWARE, INC.
     
Dated: March 14, 2011
By: 
/s/   Allen Ronald DeSerranno                            
   
Allen Ronald DeSerranno
Chief Executive Officer
and Chief Financial Officer