Thwapr, Inc. - FORM 10-Q

Attached files

file	filename
EX-31.1 - CERTIFICATION OF CEO PURSUANT TO SECTION 302 - Thwapr, Inc.	v222743_ex31-1.htm
EX-31.2 - CERTIFICATION OF CFO PURSUANT TO SECTION 302 - Thwapr, Inc.	v222743_ex31-2.htm
EX-32.1 - CERTIFICATION OF CEO PURSUANT TO SECTION 906 - Thwapr, Inc.	v222743_ex32-1.htm
EX-32.2 - CERTIFICATION OF CFO PURSUANT TO SECTION 906 - Thwapr, Inc.	v222743_ex32-2.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 March 31, 2011

¨	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: 000-53640

__________________________

THWAPR, INC.

(Exact name of registrant as specified in its charter)

Nevada		26-1359430
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

95 Morton Street, Ground Floor, New York, NY

New York, New York 10001

(Address of principal executive offices)

(212) 268-0220

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ 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. See definitions of “larger accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company x

(Do not check if a smaller reporting company)

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

The number of shares outstanding of the registrant’s common stock at May 17, 2010 was 53,619,129.

INDEX

		Page
		Number

PART I - FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS	2
	Balance Sheet as at March 31, 2011 (unaudited) and December 31, 2010 (audited)	4
	Statement of Operations for the three months periods ended March 31, 2011 and 2010 and for the period March 14, 2007 (Date of Inception) to March 31, 2011 (unaudited)	5
	Statement of Stockholders’ Equity (Deficit) for the period March 14, 2007 (Date of Inception) to March 31, 2011 (unaudited)	6
	Statement of Cash Flows for the three month periods ended March 31, 2011 and 2010 and for the period March 14, 2007 (Date of Inception) to March 31, 2011 (unaudited)	7
	Notes to the Financial Statements	8
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	17
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS	19
ITEM 4.	CONTROLS AND PROCEDURES	20

PART II - OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS	20
ITEM 1A.	RISK FACTORS	20
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	26
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	26
ITEM 4.	REMOVED AND RESERVED	26
ITEM 5.	OTHER INFORMATION	26
ITEM 6.	EXHIBITS	26

SIGNATURES		28

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The accompanying balance sheets of Thwapr, Inc. at March 31, 2011 (with comparative figures as at December 31, 2010) and the statement of operations for the three months ended March 31, 2011 and 2010 and for the period from March 14, 2007 (date of inception) to March 31, 2011, the statement of shareholders’ equity (deficit) for the period from March 14, 2007 (date of inception) to March 31, 2011, and the statement of cash flows for the three months ended March 31, 2011 and 2010 and for the period from March 14, 2007 (date of inception) to March 31, 2011 have been prepared by the Company’s management in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position, have been included and all such adjustments are of a normal recurring nature.

Operating results for the quarter ended March 31, 2011 are not necessarily indicative of the results that can be expected for the year ending December 31, 2011. These financial statements should be read in conjunction with the financial statements and notes for the years ended December 31, 2010 and 2009, included in Form 10-K filed with the Securities and Exchange Commission on April 15, 2011.

THWAPR, INC.

CONTENTS

		PAGE

BALANCE SHEETS		4

STATEMENTS OF OPERATIONS		5

STATEMENT OF STOCKHOLDERS' DEFICIT		6

STATEMENTS OF CASH FLOWS		7

NOTES TO FINANCIAL STATEMENTS		8-16

THWAPR, INC.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

	(Unaudited)
	March 31,			December 31,
	2011			2010
ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	40,571		$	5,637
Accounts Receivable, net of allowance for doubtful accounts of $0 at March 31, 2011 and December 31, 2010		2,500			1,992
Prepaid Expenses		26,383			21,782

TOTAL CURRENT ASSETS		69,454			29,411

PROPERTY AND EQUIPMENT, NET		21,713			25,240

TOTAL ASSETS	$	91,167		$	54,651

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	332,555		$	309,270
Convertible notes due to stockholders		361,421			80,479
Amount payable to stockholders		351,322			206,526
TOTAL CURRENT LIABILITIES		1,045,298			596,275

LONG-TERM LIABILITIES
Convertible note, less discount of $18,542 and $19,792 at March 31, 2011 and December 31, 2010, respectively		6,458			5,208
Derivative liability		25,007			30,605
TOTAL LONG-TERM LIABILITIES		31,465			35,813

COMMITMENTS AND CONTINGENCIES, Note 5

STOCKHOLDERS' DEFICIT:
Convertible Preferred, $.0001 par value; 50,000,000 shares authorized; 46,961,636 and -0- shares issued and outstanding		4,706			4,706
Common stock, $.0003 par value; 300,000,000 shares authorized; 53,619,129 shares issued and outstanding at March 31, 2011		2,368			1,983
Additional paid-in capital		17,919,397			15,918,546
Deficit accumulated during the development stage		(18,912,067	)		(16,502,673	)
TOTAL STOCKHOLDERS' DEFICIT		(985,596	)		(577,438	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	91,167		$	54,651

THWAPR, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS (Unaudited)

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 AND THE PERIOD FROM

MARCH 14, 2007 (DATE OF INCEPTION) THROUGH MARCH 31, 2011

							March 14, 2007
	For the Three Months Ended						(Date of Inception)
	March 31,						through
	2011			2010			March 31, 2011

REVENUE	$	508		$	-		$	5,000
COST OF SALES		47,977			-			64,248

GROSS LOSS		(47,469	)		-			(59,248	)

OPERATING EXPENSES:
Product Development		1,027,674			306,756			8,944,347
General and Administrative Expenses		1,335,156			588,437			9,889,697
								-
TOTAL OPERATING EXPENSES		2,362,830			895,193			18,834,044
								-
LOSS FROM OPERATIONS		(2,410,299	)		(895,193	)		(18,893,292	)
								-
OTHER INCOME (EXPENSES)
Interest Income		-			-			188
Change in Derivative Liability		5,598			-			1,793
Interest Expense		(4,693	)		(1,250	)		(15,967	)
Other Expense		-			-			(4,789	)
TOTAL OTHER INCOME (EXPENSE)		905			(1,250	)		(18,775	)

NET LOSS	$	(2,409,394	)	$	(896,443	)	$	(18,912,067	)

Basic and diluted (loss) per share	$	(0.05	)	$	(0.00	)

Weighted average shares		52,602,277			428,393,743

THWAPR, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)

FOR THE PERIOD MARCH 14, 2007 (DATE OF INCEPTION)

THROUGH MARCH 31, 2011

													Additional
	Convertible Preferred Stock						Common Stock						Paid in			Accumulated
	Shares			Amount			Shares			Amount			Capital			Deficit			Total
BALANCE, MARCH 14, 2007 (Date of Inception)		-		$	-			-		$	-		$	-		$	-		$	-
Issuance of stock to founders		-			-			12,857,136			429			(429	)		-			-
Issuance of stock for cash ($.023 per share)		-			-			30,000,000			1,000			770,676			-			771,676
Net loss		-			-			-			-			-			(454,014	)		(454,014	)
																				-
BALANCE, DECEMBER 31, 2007		-			-			42,857,136			1,429			770,247			(454,014	)		317,662
Issuance for cash, ($0.33 per share)		-			-			1,350,000			45			448,755			-			448,800
Net loss		-			-			-			-			-			(891,552	)		(891,552	)
																				-
BALANCE, DECEMBER 31, 2008		-			-			44,207,136			1,474			1,219,002			(1,345,566	)		(125,090	)
Issuance for cash ($0.33 per share)		-			-			2,980,500			99			993,401			-			993,500
Conversion of common stock to preferred stock		15,729,212			1,573			(47,187,636	)		(1,573	)		-			-			-
Issuance for cash ($0.41 per share)		-			-			2,133,600			71			869,489			-			869,560
Amortization of warrants		-			-			-			-			612,298			-			612,298
Net loss		-			-			-			-			-			(2,475,330	)		(2,475,330	)
																				-
BALANCE, DECEMBER 31, 2009		15,729,212			1,573			2,133,600			71			3,694,190			(3,820,896	)		(125,062	)

Issuance for cash ($0.42 per share)								1,207,200			40			495,460						495,500
Conversion of preferred stock to common		(15,729,212	)		(1,573	)		424,688,724			14,156			(12,583	)		-			-
Shares added due to reverse merger		-			-			43,829,262			1,461			(1,461	)		-			-
Issuance for cash ($0.42 per share)		-			-			750,000			75			312,425			-			312,500
Issuance for cash ($0.73 per share)		-			-			684,933			68			469,932			-			470,000
Issuance for cash ($0.83 per share)		-			-			910,800			92			731,369			-			731,461
Conversion of common stock to preferred		47,061,636			4,706			(423,554,724	)		(14,118	)		9,412			-			-
Amortization of warrants		-			-			-			-			7,113,192			-			7,113,192
Amortization of preferred stock issuance		-			-			-			-			2,468,749			-			2,468,749
Stocks issued for services		-			-			1,386,000			138			637,861			-			637,999
Net Loss		-			-			-			-			-			(12,681,777	)		(12,681,777	)

BALANCE, DECEMBER 31, 2010		47,061,636		$	4,706			52,035,795		$	1,983		$	15,918,546		$	(16,502,673	)	$	(577,438	)

Issuance for cash ($0.06 per share)		-			-			833,334			280			49,920			-			50,200
Amortization of warrants		-			-			-			-			385,045			-			385,045
Amortization of preferred stock issuance for services		-			-			-			-			953,332			-			953,332
Common stock issued for services		-			-			750,000			105			551,895			-			552,000
Amortization of common stock issuance for services														60,659						60,659
Preferred stock forfeited		(100,000	)		-			-			-			-			-			-
Net Loss		-			-			-			-			-			(2,409,394	)		(2,409,394	)

BALANCE, MARCH 31, 2011		46,961,636		$	4,706			53,619,129		$	2,368		$	17,919,397		$	(18,912,067	)	$	(985,596	)

The above shares of common stock reflect a 3-for-1 stock split in February 2011.

THWAPR, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS (Unaudited)

FOR THE THREE MONTHS ENDED MARCH 31, 2011 AND 2010 AND THE PERIOD FROM

MARCH 14, 2007 (DATE OF INCEPTION) THROUGH MARCH 31, 2011

							March 14, 2007
	For the Three Months Ended						(Date of Inception)
	March 31,						through
	2011			2010			March 31, 2011

CASH FLOW FROM OPERATING ACTIVITIES
Net loss	$	(2,409,394	)	$	(896,443	)	$	(18,912,067	)
Adjustments to reconcile net loss to net cash used in operating activities:

Stock based compensation		1,951,036			255,108			12,783,275
Amortization of note discount		1,250			1,250			6,458
Change in Derivative Liability		(5,598	)		-			(1,793	)
Depreciation Expense		3,527			2,857			21,678
Loss on Disposal of Fixed Assets		-						4,789
(Increase) decrease in:
Accounts Receivable		(508	)		-			(2,500	)
Prepaid Expense		(4,602	)		(14,543	)		(26,383	)
Increase (decrease) in:
Accounts payable and accrued expenses		26,728			80,490			340,777
Accounts payable to stockholders		144,795			60,584			351,322

NET CASH USED IN OPERATING ACTIVITIES		(292,766	)		(510,697	)		(5,434,444	)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		-			-			(48,181	)
NET CASH USED IN INVESTING ACTIVITIES		-			-			(48,181	)

CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from convertible notes		-			-			25,000
Proceeds from convertible notes due to stockholders		277,500			-			355,000
Proceeds from sale of common stock, net		50,200			495,500			5,143,196

NET CASH PROVIDED BY FINANCING ACTIVITIES		327,700			495,500			5,523,196

NET INCREASE (DECREASE) IN CASH		34,934			(15,197	)		40,571

CASH AT BEGINNING OF THE PERIOD		5,637			23,820			-

CASH AT END OF PERIOD	$	40,571		$	8,623		$	40,571

SUPPLEMENTARY DISCLOSURE:
Income taxes paid in cash	$	-		$	174		$	2,660

Notes to Financial Statements

1. ORGANIZATION AND BASIS OF PRESENTATION

Organization and Nature of Operations

Thwapr, Inc. (“Thwapr” or the “Company”) is a Nevada corporation which has developed a mobile video sharing platform that solves the problem of sending quality video content to and from mobile devices. Thwapr’s systems, applications and software allow users and brands to share pictures and video to mobile phone users regardless of device, platform or carrier. Additionally, Thwapr expects to enable users to easily capture and share pictures and videos on their phones with other mobile and desktop users and into social networks. Thwapr plans to derive revenues from banner and video advertising on its mobile and desktop websites and from mobile media messaging fees from brand sponsors. Thwapr also plans to sell premium services to users and brands via subscriptions and other fees. In December 2009, Thwapr launched a public beta test of its service. Thwapr may license its technologies to third parties as part of providing its service. Thwapr launched its service in late 2010 but to date has not generated any meaningful revenues and does not anticipate such revenues until such time that a significant number of brands and users have signed up for and are using the service. This service was launched under the name of Thwapr, a trademark it owns. On February 8, 2011 Thwapr release a mobile video sharing app through Apple’s iTunes store.

The technology underlying Thwapr’s product is complex and as such, a significant amount of development expense has gone into the creation of the Thwapr service infrastructure. To minimize start-up costs, Thwapr uses only consultants for its activities at this time and has no full-time employees and owns no real estate. For its development and other operations, Thwapr employs independent contractors on a part-time and full-time basis. Thwapr expects to convert most of these independent contractors to employees over time as funding becomes available.

Thwapr’s business is subject to several significant risks, any of which could materially adversely affect its business, operating results, financial condition and the actual outcome of matters as to which it makes forward-looking statements.

Development Stage Activities

Since inception the Company has not conducted any significant revenue producing business operations. All of the operating results and cash flows reported in the accompanying financial statements from March 14, 2007 through March 31, 2011 are considered to be those related to the development stage activities and represent the 'cumulative from inception' amounts required to be reported pursuant to Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915-205 (formerly Statements of Financial Accounting Standards (“SFAS”) No. 7, “Development Stage Enterprises”). The Company is focusing its efforts in two areas during the development stage. First, the Company has devoted a substantial time and resources to software development related to the service it provides. Second, the Company has spent significant time and resources testing the software against a variety of cell phone models, platforms and carriers.

Recent Events

On March 29, 2010 the Company, then named Seaospa, Inc., entered into a Share Exchange Agreement (the “Exchange Agreement”) with Thwapr, Inc., a Delaware Corporation (“Thwapr Delaware”), to acquire all of the stock of Thwapr Delaware. Thwapr Delaware was incorporated on March 14, 2007 under the name Mobile Video Development, Inc. As a further condition to the closing of the Exchange Transaction, the Company undertook a recapitalization whereby each share of the Seaospa’s common stock was exchanged for three shares of the Company’s common stock, with the same rights, privileges, and obligations (the “Stock Split”). Subsequent to the Stock Split, the authorized capital stock of Seaospa was 300,000,000 shares of common stock and 50,000,000 shares of preferred stock.

At the closing of the Exchange Agreement, the Company issued 142,676,508 shares of its common stock and warrants to acquire 12,181,363 shares of its common stock to the Thwapr Stockholders in exchange for 100% of the issued and outstanding capital stock of Thwapr. Immediately prior to the Exchange Transaction, the Company had 14,609,754 shares of common stock issued and outstanding, subsequent to the Stock Split described below. Immediately after the Exchange Transaction, the Company had 157,286,262 shares of common stock issued and outstanding, of which 141,562,908 cannot be sold or traded (i) until June 9, 2012, if Thwapr has 10,000,000 registered users on such date, or (ii) upon a change of control of Thwapr. Additionally, of the warrants outstanding, 10,950,003 shares of the underlying securities cannot be sold or traded (i) until June 9, 2012, if Thwapr has 10,000,000 registered users on such date, or (ii) upon a change of control of Thwapr. (All of these number of shares do not reflect the 3 for 1 stock split of February 2011).

As a condition to closing the Exchange Agreement and as more fully described, Mr. Yakov Terner resigned as President, Treasurer, and Director of the Company, and Mr. Yossi Benitah resigned as Secretary and Director of the Company. Effective March 22, 2010, Messrs. Bruce Goldstein, Maurizio Vecchione, and Barry Hall, the current directors of Thwapr, were appointed to the Company’s board of directors. At the closing of the Exchange Transaction, Mr. Goldstein was appointed President and Chief Executive Officer, Maurizio Vecchione was appointed as Chairman of the Board, and Mr. Hall was appointed Chief Financial Officer, Treasurer, and Secretary. Other key members of the management team include Mr. Eric Hoffert as Integrated Chief Technology Officer, Mr. Duncan Kennedy as Chief Operating Officer, and Mr. Leigh Newsome as Vice President of User Experience, each of whom were appointed as of the Closing Date. Subsequently, both Mr. Vecchione and Mr. Kennedy resigned from their positions.

Going Concern

The Company has sustained operating losses since its inception and has negative working capital and an accumulated deficit. The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets, liabilities and commitments in the normal course of business. The accompanying financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company’s ability to continue as a going concern and the appropriateness of using the going concern basis is dependent upon, among other things, additional cash infusions. Management is seeking investors which will allow the Company to pursue the development of its software and business model. However, there can be no assurance that the Company will be able to raise sufficient capital to fully implement its business model, which could force the Company to curtail its operation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Cash and Cash Equivalents

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

Accounts Receivable

The Company maintains an allowance for doubtful accounts for estimated losses that may arise if any of its customers are unable to make required payments. Management specifically analyzes the age of customer balances, historical bad debt experience, customer credit-worthiness, and changes in customer payment terms when making estimates of the collectability of the Company's trade accounts receivable balances. If the Company determines that the financial conditions of any of its customers have deteriorated, whether due to customer specific or general economic issues, increases in the allowance may be made. Accounts receivable are written off when all collection attempts have failed.

Revenue Recognition

Revenue currently consists of fees for usage of our technology and one time consulting services. Our contracts for the usage of our technology are typically usage-based or in some case on a flat fee for monthly services. We recognize revenue when the service has been rendered.

Use of Estimates

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

Fair Value Measurements

The Company measures its financial assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., exit price) in an orderly transaction between market participants at the measurement date. Additionally, the Company is required to provide disclosure and categorize assets and liabilities measured at fair value into one of three different levels depending on the assumptions (i.e., inputs) used in the valuation. Level 1 provides the most reliable measure of fair value while Level 3 generally requires significant management judgment. Financial assets and liabilities are classified in their entirety based on the lowest level of input significant to the fair value measurement. The fair value hierarchy is defined as follows:

Level 1 – quoted prices in active markets for identical assets or liabilities,

Level 2 – other significant observable inputs for the assets or liabilities through corroboration with market data at the measurement date,

Level 3 – significant unobservable inputs that reflect management’s best estimate of what market participants would use to price the assets or liabilities at the measurement date.

The following table summarizes fair value measurements by level at March 31, 2011 for assets and liabilities measured at fair value on a recurring basis:

	Level I		Level II		Level III
Cash and cash equivalents	$	40,571	$	-	$	-
Derivative liability (conversion feature and warrants)	$	-	$	-	$	25,007

The following table summarizes fair value measurements by level at December 31, 2010 for assets and liabilities measured at fair value on a recurring basis:

	Level I		Level II		Level III
Cash and cash equivalents	$	5,637	$	-	$	-
Derivative liability (conversion feature and warrants)	$	-	$	-	$	30,605

The following table sets forth a summary of changes in the fair value of the Company’s level 3 assets (conversion feature and warrants) for the three months ended March 31, 2011.

	Level 3 Liabilities
	Derivative Liability
Balance as of December 31, 2010		$	30,605
Changes in value of Derivative Liability			(5,598	)
Balance as of March 31, 2011		$	25,007

The carrying amount of certain financial instruments, including cash and cash equivalents and accounts payable and accrued expenses, approximates fair value due to the relatively short maturity of such instruments.

The Company used the Black-Scholes option pricing model for estimating the fair value of the note conversion feature and the warrants with the following assumptions: expected life of 3.75 years; risk-free interest rate of 2.24%; dividend yield of 0%; and expected volatility of 200%.

Product Development

Product development costs are expensed as incurred. These costs primarily include the costs associated with the development and testing of video and picture sharing technology. During the three months ended March 31, 2011 and 2010, product development costs amounted to $1,027,674 and $306,756, respectively.

Income Taxes

The Company accounts for income taxes under the liability method in accordance with FASB ASC 740-10. Under this standard, deferred income tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using the enacted tax rates expected to be in effect for the year in which the differences are expected to reverse. Deferred income tax assets are reduced by a valuation allowance when the Company is unable to make the determination that it is more likely than not that some portion or all of the deferred income tax asset will be realized.

Earnings (Loss) per Share

The Company utilizes FASB ASC 260. Basic earnings per share is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Common equivalent shares are excluded from the computation if their effect is anti-dilutive.

Recently Issued Accounting Pronouncements

In January 2010, the FASB issued Accounting Standards Update ASU No. 2010-06, “Fair Value Measurements and Disclosures (Topic 820) – Improving Disclosures about Fair Value Measurements”. This guidance requires new disclosures related to recurring and nonrecurring fair value measurements. The guidance requires disclosure of transfers of assets and liabilities between Level 1 and Level 2 of the fair value measurement hierarchy, including the reasons and the timing of the transfers and information on purchases, sales, issuance, and settlements on a gross basis in the reconciliation of the assets and liabilities measured under Level 3 of the fair value measurement hierarchy. The adoption of this guidance is effective for interim and annual reporting periods beginning after December 15, 2009. We have adopted this guidance in the financial statements presented herein, which did not have a material impact on our financial position or results of operations.

In October 2009, the FASB issued guidance under the Multiple Element Revenue Arrangements topic of the Codification which requires separation of the consideration received in such arrangements by establishing a selling price hierarchy for determining the selling price of a deliverable, which will be based on available information in the following order: vendor-specific objective evidence, third-party evidence, or estimated selling price. It also eliminates the residual method of allocation, requires that the consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the arrangement to each deliverable on the basis of each deliverable’s selling price, and requires that a vendor determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis. These changes became effective for us on January 1, 2011, but did not have a material impact on our financial position or results of operations.

3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

	March 31,			December 31,
	2011			2010
Computer equipment	$	37,815		$	37,815
Furniture and fixtures	$	3,138		$	3,138
Leasehold improvements		668			668
		41,621			41,621
Accumulated depreciation		(19,908	)		(16,381	)
Property and equipment, net	$	21,713		$	25,240

Depreciation expense for the three months ended March 31, 2011 and 2011 was $3,527 and $2,857, respectively.

4.	RELATED PARTY TRANSACTIONS

Payment for Consulting Services

Certain stockholders of the Company have provided and provide general management and technology services to the Company as Chairman, CEO, CFO, CTO and Vice President Product. Amounts paid to these stockholders were in lieu of salaries and represented compensation for services rendered as executives and directors of the Company. During the three months ended March 31, 2011 and 2010 the amounts incurred to these stockholders were $165,000 and $120,000, respectively with $162,750 of the amount incurred during the three month ended March 31, 2011 remaining unpaid at March 31, 2011.

5. COMMITMENTS AND CONTINGENCIES

Lease Commitments

The company leases a west coast satillite office in South Pasadena, California, which expire on June 30, 2011. Monthly rent is $595.

Cash Deposits

The Company maintains its cash at a financial institution. The account is insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000. On October 3, 2008, the FDIC temporarily increased its coverage from $100,000 to $250,000 per depositor through December 31, 2013. The Company’s cash account, at times, may exceed federally insured limits.

6. INCOME TAXES

The Company has adopted FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109” codified in FASB ASC 740-10. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with FASB Statement 109, "Accounting for Income Taxes" codified in FASB ASC 740-10, and prescribes a recognition threshold of more likely than not and a measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In making this assessment, a company must determine whether it is more likely than not that a tax position will be sustained upon examination, based solely on the technical merits of the position and must assume that the tax position will be examined by taxing authorities. The Company is subject to examination for all years it has filed income tax returns. The Company’s net operating loss carryforwards are subject to IRS examination until they are fully utilized and such tax years are closed. The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the provision for income taxes. The Company’s review of prior year tax positions using the criteria and provisions presented in FIN 48 did not result in a material impact on the Company’s financial position or results of operations.

At March 31, 2011, the Company has net operating loss carryforwards available for federal tax purposes, which expire from 2027 to 2030. The amount of net operating losses which may be utilized in future years may be subject to significant annual limitations should an ownership change occur. The Company also has operating loss carryforwards available for California income tax purposes, which expire through 2030. The amounts of operating loss carryforwards are not determined.

At March 31, 2011 and December 31, 2010, total deferred income tax asset consist principally of net operating loss carryforwards in amounts still to be determined. For financial reporting purposes, a valuation allowance has been recognized in an amount equal to such deferred income tax asset due to the uncertainty surrounding its ultimate realization.

At December 31, 2010, the Company files income tax returns with the Internal Revenue Service (“IRS”) and the states of New York and California and City of New York. For jurisdictions in which tax filings are made, the Company is subject to income tax examination for all fiscal years since inception. Our review of prior year tax positions using the criteria and provisions presented by the FASB did not result in a material impact on the Company’s financial position or results of operations.

7.	CONVERTIBLE NOTES DUE TO STOCKHOLDERS

On April 8, April 15 and April 20, 2010, the Company issued three separate notes of $20,000 to a stockholder. On December 30, 2010 the Company issued a note to another stockholder for $17,500. The notes bear interest at 7% per annum and are convertible to common stock at the sole discretion of the note holder at a conversion price of $1.25 per share (pre 3-for-1 stock split of February 2011). The notes along with accrued interest are fully due and payable one year from the date of issue.

During the three months ended March 31, 2011, the Company issued six separate notes totaling $277,500 to a stockholder. The notes bear interest at 7% per annum. The terms of conversion are still being negotiated. A loan discount may be recorded for the value of the conversion feature when both parties agree on the conversion terms. The notes along with accrued interest are fully due and payable one year from the date of issue in either restricted shares of common stock at a price mutually agreeable to both parties at the time of conversion on cash.

8.	CONVERTIBLE PROMISSORY NOTES

On November 2, 2009, the Board of Directors of the Company authorized the issuance of convertible notes bearing simple interest at 5% which mature in 5 years, convertible on the same conditions as the next major equity financing of the Company in excess of $2.0 million (the “Notes”). Additionally, each investor in the notes will be issued, upon conversion of the Notes, warrants in an amount of 10% of the number of shares obtained during the conversion and such warrants would be price at the price stock upon conversion. Also, upon reorganization, consolidation or merger, the Company, at its sole discretion, may convert the principal amount of the Notes and all accrued and unpaid interest, into securities or cash, as the case may be, at a price of $1.25 per share (pre 3-for-1 stock split of February 2011). As of March 31, 2011 and December 31, 2010 the Company had issued Notes aggregating $25,000, a discount amounting to 18,542 at March 31, 2011 is being amortized over the term of the note.

9.	STOCKHOLDERS’ EQUITY

Between January 27, 2009 and June 11, 2009, the Company sold an aggregate of 993,500 shares of common stock to the Company’s largest stockholder. Each share was sold at a price of $1.00 per share (pre 3-for-1 stock split of February 2011). These shares were converted to Series A preferred stock on July 29, 2009.

Between July 31, 2009 and December 16, 2009, the Company sold an aggregate of 711,200 shares of common stock in private placements with institutional and accredited investors. Each share of common stock was priced at $1.25 per share, and as an added incentive, for every 10 shares purchased, a five-year warrant to purchase one share at a price per share of $1.25 was added. In total, the Company issued to these investors 71,120 warrants along such terms described above (these numbers are pre 3-for-1 stock split of February 2011).

On July 20, 2010, the Company entered into another Exchange Offer Agreement with Thwapr’s five largest stockholders including the founders of the Company. Pursuant to this agreement Thwapr issued 47,061,636 shares of Series A preferred stock in exchange for 141,184,908 shares of common stock (pre 3-for-1 stock split of February 2011) which was retired. This preferred stock will automatically convert into common stock at a ratio of 3 (subsequently 6.5) shares of Common Stock for each share of preferred upon the occurrence of either of the following events:

(a)

the two year anniversary of the Offering, or

(b)

a change of control in the Company.

On February 4, 2011, the company effected a 3-for-1 forward stock split. As a result of the split the number of the Company’s issued and outstanding common stock increase to 52,335,795, from 17,445,265.

On March 24, 2011 the Board of Directors authorized the Company to offer for sale up to 100,000,000 shares of restricted common stock to raise up to $6,000,000 through an investment banking relationship. As of March 31, 2011, 833,334 shares were sold under this offering. On April 9, 2011 this relationship was terminated.

Preferred Stock

The Company is authorized to issue preferred stock. The board of directors has the authority to fix and determine the designations, rights, qualification, preferences, limitations and terms of the preferred stock. Each share of preferred stock issued and outstanding were convertible into 9 shares of common stock upon the occurrence of either of the following events: (1) two year anniversary of the Offering and when the Company obtain at least 10,000,000 registered users, or (2) a change in control of the Company. (See subsequent event note).

On February 28, 2011 all of the preferred shareholders signed an agreement whereby they accepted a modification in the conversion ratio of the preferred to common from 9-for-1 to 6.5-for-1 in exchange for removing the restriction that such shares could not be converted until the Company obtained at least 10,000,000 active registered users. On March 24, 2011 this modification was ratified by the Board of Directors of the Company. The effect of this modification was to reduce the amount of the common shares that that would be issued upon conversion to 305,250,634.

Warrant Agreements

On March 1, 2009, the Company issued warrants to consultants to purchase 70,000 shares at $1.00 per share.

On April 15, 2009 and May 11, 2009 the Company issued warrants to consultants, vendors and advisors to purchase a total of 1,170,000 at $1.00 per share ($0.333 adjusted for the stock split). Such warrants vest over a period of 18 months with one-third of the warrants vesting at the end of each six month period from the date of issuance.

On November 2, 2009 all of the warrants described above were converted to warrants for Series A preferred shares described in Note 1. The shares of Series A preferred stock shall automatically convert into shares of common stock at a ratio of nine shares of common stock for each share of Series A preferred Stock upon the occurrence of either of the following events:

(a)

the three year anniversary of the Offering if the Company has obtained at least 10,000,000 active registered users, or

(b)

a change of control in the Company.

In preparation for a reverse merger into a public shell, on February 19, 2010 the Company converted all of the warrants for Series A preferred shares into 9 shares of common stock with such stock underlying the warrants being restricted from sale until the prior conditions for conversion to common from preferred are met.

In addition to the warrants described above, the Company issued more warrants to Directors and Consultants to the Company. On February 16, 2010 the Company issued 3,000,000 warrants with and exercise price of $0.42 per share to a consultant to the Company. Such warrants vest quarter over a period of three years. On March 5, 2010 the Company issued 360,000 warrants with an exercise price of $0.42 per warrant to consultants to the Company. Such warrants vest quarterly over one year. On May 19, 2010 the Company issued 7,896,000 warrants to members of the Board of Directors and consultants to the Company with an exercise price of $0.42 per warrant. Such warrants vest quarterly over three years. On November 12, 2010 the Company issued 420,000 with an exercise price of $1.78 per warrant to members of the Board of Directors. Such warrants vest quarterly over one year. On January 4, 2011, the Company issued 1,110,000 warrants with an exercise price of $0.32 per share to members of the Board of Directors. Such warrants vest quarterly over one year. All warrants issued to members of the Board of Directors were done in accordance with the Company’s Board Compensation Plan.

On September 27, 2010, the Company issued 1,666,666 shares of its convertible preferred stock to consultants to the Company in exchange for 1,047,916 of previously issued warrants to purchase the Company’s common stock issued in March 2009. The preferred shares were previously returned to the Company by the former Chairman of the Company on August 15, 2010. One-fourth of the preferred shares vested to the consultants upon issuance. The remaining three-quarters of the shares vest to the consultants quarterly over the next three quarters so long as the consultants remain associated with the Company.

For the three month ended March 31, 2010, compensation expense related to the issuance of these shares was $953,332

The Company used the Black-Scholes option pricing model for estimating the fair value of the warrants with the following assumptions:

Risk Free Interest Rate:		1.35% - 2.37	%
Expected Life:	4 – 5 years
Expected Volatility:		200	%
Dividend Yield:		0	%

The following table summarizes the changes in warrants outstanding and the related prices for the shares of the Company’s common stock issued to employees and non-employees of the Company for the three months ended March 31, 2011. These warrants were granted in lieu of cash compensation for services performed or as part of fundraising related to the sale of the Company’s common stock.

	Number of Common Shares		Average Exercise Price
Outstanding at December 31, 2010		36,678,840	$	0.36
Granted		1,110,000	$	0.32
Exercised		-		0
Outstanding at March 31, 2011		37,788,840	$	0.36
Exercisable at March 31, 2011		32,808,837	$	0.35

Awards Outstanding							Awards Exercisable
Exercise Price		Quantity		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Exercise Price		Quantity		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price
$	0.33		29,885,010	8.00 years	$	0.33	$	0.33		29,885,010	8.00 years	$	0.33
$	0.42		6,373,830	4.07 years	$	0.42	$	0.42		2,818,827	3.97 years	$	0.42
$	1.78		420,000	4.67 years	$	1.78	$	1.78		105,000	4.67 years	$	1.78
$	0.32		1,110,000	4.83 years	$	0.32		N/A		-	N/A		N/A

Warrants to purchase 1,890,000 shares of stock at $0.33 per share have no maturity date.

Compensation expense related to outstanding warrants for the three months ended March 31, 2011 and 2010 were $385,045 and $255,108, respectively.

10. SUBSEQUENT EVENTS

Subsequent to March 31, 2011, the Company issued four separate notes totaling $250,000 to two stockholders. The notes bear interest at 7% per annum and are convertible to restricted common stock at the sole discretion any of the note holders. The notes along with accrued interest are fully due and payable one year from the date of issue.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the information contained in our financial statements and the notes thereto, which form an integral part of the financial statements, which are attached hereto.

The financial statements mentioned above have been prepared in conformity with accounting principles generally accepted in the United States of America and are stated in United States dollars.

Our Form 10-Q includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words such as: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this Form 10-Q. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

Overview

Thwapr, Inc. (“Thwapr,” the “Company,” “we,” “us,” or “our”) is a technology company that develops systems, applications and software that allow users and brands to share pictures and video to mobile phone users regardless of device, platform or carrier. Our technology and products enable users to easily capture and share pictures and videos on their phones with other mobile and desktop users and into social networks. We have not generated significant revenue to date. However, we plan to derive revenues from banner and video advertising on our mobile and desktop websites and from mobile media messaging fees from brand sponsors and to sell premium services to users and brands via subscriptions and other fees.

Background and Corporate History

We were formed as Seaospa, Inc. in Nevada on December 2, 2007 for the purpose of being engaged in the marketing of skin care, hair care and body treatment products. We did not have operations prior to the share exchange agreement.

On March 29, 2010, we closed a voluntary share exchange transaction (the “Exchange Transaction”) with Thwapr, Inc., a Delaware corporation (“Thwapr DE”), pursuant to a Share Exchange Agreement by and among us, certain of our significant stockholders, Thwapr DE and the stockholders of Thwapr DE (the “Thwapr DE Stockholders”), and we conducted a 3-for-1 forward stock split of all of our outstanding and authorized shares of common stock (the “Stock Split”). As a result of the Exchange Transaction, the Thwapr DE Stockholders acquired approximately 90% of our issued and outstanding common stock, Thwapr DE became our wholly-owned subsidiary, and we acquired the business and operations of Thwapr DE.

At the closing of the Exchange Transaction, we issued 142,676,508 shares of our common stock and warrants to acquire 12,181,363 shares of our common stock to the Thwapr DE Stockholders in exchange for 100% of the issued and outstanding capital stock of Thwapr DE. Immediately prior to the Exchange Transaction, we had 14,609,754 shares of common stock issued and outstanding, subsequent to the Stock Split. Immediately after the Exchange Transaction, we had 157,286,262 shares of common stock issued and outstanding, of which 141,562,908 cannot be sold or traded (i) until June 9, 2012, if we have 10,000,000 registered users on such date, or (ii) upon a change of control. Additionally, of the warrants outstanding, 10,950,003 shares of the underlying securities cannot be sold or traded (i) until June 9, 2012, if we have 10,000,000 registered users on such date, or (ii) upon a change of control.

On April 21, 2010, we changed our name to “Thwapr, Inc.” from “Seaospa, Inc.” by amending our Articles of Incorporation and merging our wholly-owned subsidiary, Thwapr DE into us, with us surviving.

We recently launched our service but we do not anticipate generating any meaningful revenues until such time that a significant number of users and brands have signed up for and are using our service. While during the remainder of 2011, we expect to continue to enhance our service offering with an emphasis on allowing brands and content providers to use Thwapr to promulgate rich media to their customers, beginning in the third fiscal quarter of 2011 we plan to actively market and sale our product offering to our target market in order to generate meaningful revenues

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with United States generally accepted accounting principles requires management of our company to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

Our discussion and analysis of our financial condition and results of operations, including the discussion on liquidity and capital resources, are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we re-evaluate our estimates and judgments. We believe certain critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements. A description of our significant accounting policies is set forth in the notes to our audited financial statements for the year ended December 31, 2010, included in our Current Report on Form 10-K, as filed with the SEC on April 15, 2011. As of, and for the three months ended March 31, 2011, there have been no material changes or updates to our critical accounting policies.

Results of Operations

The following discussion of the financial condition, results of operations, cash flows and changes in our financial position should be read in conjunction with our audited financial statements and notes thereto for the fiscal year ended December 31, 2010 included in our Current Report on Form 10-K filed on April 15, 2011.

Comparison of Three Month Periods Ended March 31, 2011 and March 31, 2010

The following table sets forth the results of our operations for the periods indicated:

	Three months ended March 31,
	2011			2010
Sales	$	508		$	—
Gross loss		(47,469	)		—
Operating expenses:
Product Development		1,027,674			306,756
General and Administrative		1,335,156			588,437

Loss from operations		(2,410,299	)		(896,193	)
Net loss	$	(2,409,394	)	$	(896,443	)

Sales and Gross Profit

Sales for the three months ended March 31, 2011 and 2010 were $508 and $0, respectively. Gross loss for the three months ended March 31, 2011 was $47,469. As there were no sales for the three months ended March 31, 2010.

Product Development Expenses

Product Development Expenses for the three months ended March 31, 2011 increased by 235.0% from $306,756 for the same period in 2010 to $1,027,674 in 2011. The increase was mainly due to non-cash compensation expense partially offset by a decrease in the amounts paid to independent contractors.

General and Administrative Expense

General and Administrative expenses for the three months ended March 31, 2011 increased by 164.9% from $588,437 for the same period in 2010 to $1,335,156 in 2011. The primary reasons for the increase was due to increase in non-cash compensation expense. This increase was partially offset by a decrease professional fees, fees paid to outside consultants and payments to senior management.

Taxes for the three months ended March 31, 2011 and 2010 amounted to $0 and $0, respectively.

Loss from Operations

We had a loss from operation of $2,410,299 for the three months ended March 31, 2011, compared to an operating loss of $895,193 for three months ended March 31, 2010.

Net Loss

Net loss for the three months ended March 31, 2011 was $2,409,394, an increase of $1,513,251, or 168.8% from $896,443 for the same period in 2010. This increase in net loss was primarily attributable to the increases in the operating expenses and gross loss described above. Also included in the loss was interest expense of $4,693 and $1,250 for the three months end March 31, 2011 and 2010, respectively.

Liquidity and Capital Resources

As of March 31, 2011, we had cash and cash equivalents of $40,571 and current liabilities of $799,208. Our cash needs are primarily for working capital to support our ongoing operations. We presently finance our operations through the private placement of equity and debt securities. In order to continue with the launch of our products and services, support the growth of our customer base, increase revenue and expand operations we require additional capital. We do not believe our existing capital resources are sufficient to meet our current obligations and operating requirements, and to meet our aggressive growth plan objectives additional capital will be required over the next 12 months. We will consider debt or equity offerings or institutional borrowing as potential means of financing these marketing objectives, however, there are no assurances that we will be successful in securing the required funding or that we will obtain terms that are favorable to us.

Net cash used in operating activities for the three months ended March 31, 2011 was $292,766 compared with net cash used in operating activities of $510,697 for the same period in 2010. Net cash used in operating activities for the three months ended March 31, 2011 was primarily due to net loss of $2,409,394 partially offset by non-cash items not affecting cash flows of $1,950,215, an increase of $144,795 in amounts payable to shareholders and an increase of $26,728 of accrued liabilities. Net cash used in operating activities for the three months ended March 31, 2010 was mainly due to net loss of $896,443 partially offset by non-cash items not affecting cash flows of $259,215, and a $80,490 increase in liabilities.

Net cash provided by financing activities was $327,700 for the three months ended March 31, 2011, compared with $495,500 net cash provided by financing activities for the same period in 2010. Cash provided by financing activities during the three months ended March 31, 2011 and 2010 resulted from the proceeds from sales of our common stock and from the issuance of notes to stockholders.

Off-Balance Sheet Arrangements

We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

We do not use derivative financial instruments in our investment portfolio and have no foreign exchange contracts. Our financial instruments consist of cash, accounts payable, accrued expenses, debt and derivative liability. The objective of our policies is to mitigate potential income statement, cash flow and fair value exposures resulting from possible future adverse fluctuations in rates. We evaluate our exposure to market risk by assessing the anticipated near-term and long-term fluctuations in interest rates and foreign exchange rates. This evaluation includes the review of leading market indicators, discussions with financial analysts and investment bankers regarding current and future economic conditions and the review of market projections as to expected future rates.

We did not experience any material changes in interest rate exposures during 2010 and 2011, to date. Hence, the effect of the fluctuations of the interest rates is considered minimal to our business operations. Based upon economic conditions and leading market indicators at March 31, 2011, we do not foresee a significant adverse change in interest rates in the near future and do not use interest rate derivatives to manage exposure to interest rate changes.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.

It is management's responsibility to establish and maintain adequate internal control over all financial reporting pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (the "Exchange Act"). Our management, including our chief executive officer and our chief financial officer, have reviewed and evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2011. Following this review and evaluation, management collectively determined that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to management, including our chief executive officer, and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no significant changes in the Company's internal controls over financial reporting or in other factors that could significantly affect these internal controls subsequent to the date of their most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

None.

ITEM 1A.

RISK FACTORS

You should carefully consider the risks described below together with all of the other information included in this Form 10-Q and our other filings with the Securities and Exchange Commission before making an investment decision with regard to our securities. The statements contained in or incorporated into this Form 10-Q that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following events described in these risk factors actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

General Risk Factors

The following risk and uncertainties may have a material adverse effect on our business, financial condition or results of operation. Investors should carefully consider the risks described below before making an investment decision. The risks described below are not the only ones we face. Additional risks not presently known to us or that we currently believe are immaterial may also significantly impair our business operations. Our business could be harmed by any of these risks. If any of the following events occur, the trading price of our common stock could decline and investors may lose all or part of their investment.

Cautionary Statement Regarding Forward-Looking Statements

This Strategic Plan of the Company, (the “Plan”) contains forward-looking statements relating to events anticipated to happen in the future. We base these forward-looking statements on the beliefs of our management, as well as assumptions made by and information currently available to our management. Forward-looking statements also may be included in other written and oral statements made or released by us. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. The words "believe," "anticipate," "intend," "expect," "estimate," "project" and similar expressions are intended to identify forward-looking statements. Forward-looking statements describe our expectations today of what we believe is most likely to occur or may be reasonably achievable in the future, but they do not predict or assure any future occurrence and may turn out to be wrong. Forward-looking statements are subject to both known and unknown risks and uncertainties and are affected by inaccurate assumptions that we might have made or may make in the future. Consequently, we cannot guarantee any forward-looking statement. Actual future results may vary materially. We do not undertake any obligation to update publicly any forward-looking statements to reflect new information or future events or occurrences. These statements reflect our current views with respect to future events and are subject to risks and uncertainties about us, including, among other things:

Our ability to market our products successfully to subscribers and content owners;

Our ability to retain initial approvals and obtain final approvals to design products for major US carriers of our products;

The possibility of unforeseen capital expenditures and other upfront investments required to deploy our technologies or to implement our business initiatives;

Our ability to access markets and finance product development and operation;

Consumer acceptance of our price plans and bundled offerings, if any;

Additions or departures of key personnel;

Competition, including the introduction of new products or services by our competitors;

Existing and future laws or regulations affecting our business and our ability to comply with these laws or regulations;

Our reliance on the systems and provisioning processes of third party vendors;

Technological innovations;

The outcome of legal and regulatory proceedings;

General economic and business conditions, both nationally and in the regions in which we operate; and

Other factors described in this document, including those described in more detail below.

We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this document.

Risks Relating to Our Business and Industry

We are a development stage company with a limited operating history on which to evaluate our business or base an investment decision.

Our business prospects are difficult to predict because of our limited operating history, early stage of development, unproven business strategy and unproven product. We are a development stage company that has yet to generate any revenue. Since our inception on March 14, 2007, it has been our business plan to design, develop, manufacture and distribute our Thwapr service. Thwapr has only been introduced in selected test markets and there is no guarantee that our product will be able to generate any significant revenues. As a development stage company, we face numerous risks and uncertainties in the competitive markets. In particular, we have not proven that we can:

develop our product offering in a manner that enables us to be profitable and meet our customers’ requirements;

develop and maintain relationships with key customers and strategic partners that will be necessary to optimize the market value of our products and services;

raise sufficient capital in the public and/or private markets; or

respond effectively to competitive pressures.

If we are unable to accomplish these goals, our business is unlikely to succeed and you should consider our prospects in light of these risks, challenges and uncertainties.

We have no significant revenues and have incurred and expect to continue to incur substantial losses.

Since inception through March 31, 2011, we have not generated any significant revenues. We have generated significant operating losses since our formation and expect to incur substantial losses and negative operating cash flows for the foreseeable future. For the three months ended March 31, 2011, our net loss was $2,409,394 and our accumulated deficit, excluding non-cash charges, was $6,097,660. We anticipate that our existing cash and cash equivalents will not be sufficient to fund our short term business needs and we will need to generate revenue or receive additional investment in the Company to continue operations. In addition, our business operations may prove more expensive than we currently anticipate and we may incur significant additional costs and expenses. We expect that capital outlays and operating expenditures will continue to increase as we attempt to expand our infrastructure and development activities and we will require significant additional capital in order to implement our business plan and continue our operations. It is uncertain when or if we will generate revenues from product sales or the licensing of our technology.

Our auditors have expressed uncertainty as to our ability to continue as a going concern.

Primarily as a result of our recurring losses and our lack of liquidity, we received a report from our independent auditors that includes an explanatory paragraph describing the substantial uncertainty as to our ability to continue as a going concern as of our fiscal year ended December 31, 2010.

If we are unable to establish sales and marketing capabilities we may not be able to generate sales and product revenue.

We do not currently have a dedicated full-time sales manager to monitor the sales, marketing and distribution of our services. Monitoring of these functions are currently overseen by executive management. Our strategy is to enter into agreements or other arrangements with carriers to market our products and services. We need to develop and maintain strategic relationships with these entities in order for them to market our products and services to their end users. We expect to face severe competition in this effort to establish strategic relationships from other companies vying for the same type of relationships with carriers. Some of these competitors may have a competitive advantage over us in obtaining agreements with carriers due to their size, reputation, relative financial stability or longer operating history. If we are unable to establish such relationships on terms that are favorable to us, or at all, we may not be able to penetrate the market on a scale required to become viable or profitable.

If we fail to raise additional capital, our ability to implement our business model and strategy could be compromised.

We have limited capital resources and operations. To date, our operations have been funded entirely from the proceeds from equity and debt financings. We expect to require substantial additional capital in the near future to develop and market new products, services and technologies. We currently do not have commitments for financing to meet our expected needs and we may not be able to obtain additional financing on terms acceptable to us, or at all. Even if we obtain financing for our near term operations and product development, we expect that we will require additional capital beyond the near term. If we are unable to raise capital when needed, our business, financial condition and results of operations would be materially adversely affected, and we could be forced to reduce or discontinue our operations.

If we borrow money to expand our business, the likelihood that investors may lose some or all of their investment may increase.

We anticipate that we may incur debt for financing our growth. Our ability to borrow funds will depend upon a number of factors, including the condition of the financial markets. If we receive debt financing, it will have priority in any liquidation over the claims of holders of our stockholders, which could increase the risk of loss of your investment in our common stock. In addition, our payment obligations with respect to any indebtedness could divert funds away from operations, marketing and product development efforts.

Our products and services are based on new and unproved technologies and are subject to the risks of failure inherent in the development of new products and services.

Because our products and services are and will be based on new technologies, they are subject to risks of failure that are particular to new technologies, including the possibility that:

our new approaches will not result in any products or services that gain market acceptance;

our products and services may unfavorably interact with other types of commonly used applications and services, thus restricting the circumstances in which they may be used;

proprietary rights of third parties may preclude us from marketing a new product or service; or

third parties may market superior or more cost-effective products or services.

As a result, our activities may not result in any commercially viable products or services, which would harm our sales, revenue and financial condition.

We may face intense competition and expect competition to increase in the future, which could prohibit us from developing a customer base and generating revenue.

There are many companies who will compete directly with our planned products and services. These companies may already have an established market in our industry. Most of these companies have significantly greater financial and other resources than us and have been developing their products and services longer than we have been developing ours. Additionally, there are not significant barriers to entry in our industry and new companies may be created that will compete with us and other, more established companies who do not now directly compete with us, may choose to enter our markets and compete with us in the future.

Our business depends upon our ability to keep pace with the latest technological changes, and our failure to do so could make us less competitive in our industry.

The market for our products and services is characterized by rapid change and technological change, frequent new product innovations, changes in customer requirements and expectations and evolving industry standards. Products using new technologies or emerging industry standards could make our products and services less attractive. Furthermore, our competitors may have access to technology and strategic relationships not available to us, which may enable them to produce products of greater interest to consumers or at a more competitive cost. In addition, our competitors may have greater financial resources, greater experience in critical areas such as development, testing, marketing and sales, and proprietary rights that prevent us from developing certain technology without compensating them. Failure to respond in a timely and cost-effective way to technological developments in our markets may result in serious harm to our business and operating results. As a result, our success will depend, in part, on our ability to develop and market product and service offerings that respond in a timely manner to the technological advances available to our customers, evolving industry standards and changing preferences.

If our services developed for mobile devices do not gain widespread adoption by the devices’ users, we will not generate sales or substantial revenue and our financial condition will be adversely affected.

The commercial success of our future products and services will be dependent on their acceptance by potential customers. Our services are developed for mobile devices and may not be compelling to users due to a number of reasons, including, among others, competitors’ services, service failures, or our inability to adequately market our services. If we are unable to attract mobile device users to our services, we may be unsuccessful in attracting both advertisers and premium service subscribers to these services, which could have a material adverse impact on our financial condition and operating results.

Our services may experience quality problems from time to time that can result in decreased sales and operating margin.

We expect to provide a highly complex service that may contain defects in design and manufacture that may not enable our service to operate on all devices for which they are intended. There can be no assurance we will be able to detect and fix all defects in the products or services we provide. Failure to do so could result in lost revenue, harm to our reputation, and other expenses, and could have a material adverse impact on our financial condition and operating results.

Major network failures could have an adverse effect on our business.

Major equipment failures, natural disasters, including severe weather, terrorist acts, acts of war, cyber attacks or other breaches of network or information technology security that affect third-party networks, transport facilities, communications switches, routers, microwave links, cell sites or other third-party equipment on which we rely, could cause major network failures and/or unusually high network traffic demands that could have a material adverse effect on our operations or our ability to provide service to our customers. These events could disrupt our operations, require significant resources to resolve, result in a loss of customers or impair our ability to attract new customers, which in turn could have a material adverse effect on our business, results of operations and financial condition.

If we experience significant service interruptions, which could require significant resources to resolve, it could result in a loss of customers or impair our ability to attract new customers, which in turn could have a material adverse effect on our business, results of operations and financial condition.

In addition, with the growth of wireless data services, enterprise data interfaces and Internet-based or Internet Protocol-enabled applications, wireless networks and devices are exposed to a greater degree to third-party data or applications over which we have less direct control. As a result, the network infrastructure and information systems on which we rely, as well as our customers’ wireless devices, may be subject to a wider array of potential security risks, including viruses and other types of computer-based attacks, which could cause lapses in our service or adversely affect the ability of our customers to access our service. Such lapses could have a material adverse effect on our business and our results of operations.

Concerns about health risks associated with wireless equipment may reduce the demand for our services.

Portable communications devices have been alleged to pose health risks, including cancer, due to radio frequency emissions from these devices. The actual or perceived risk of mobile communications devices could adversely affect us through a reduction in mobile communication devise users, thereby reducing potential users of our services.

If we are not able to adequately protect our intellectual property, we may not be able to compete effectively.

Our ability to compete depends in part upon the strength of our proprietary rights in our technologies, brands and content. We expect to rely on a combination of U.S. and foreign patents, copyrights, trademark, trade secret laws and license agreements to establish and protect our intellectual property and proprietary rights. We have filed for certain patents on our core technology, however, to date no patents have been issued and there is no certainty that we will ever be issued patents protecting our intellectual property. The efforts we have taken and expect to take to protect our intellectual property and proprietary rights may not be sufficient or effective at stopping unauthorized use of our intellectual property and proprietary rights. In addition, effective trademark, patent, copyright and trade secret protection may not be available or cost-effective in every country in which our services are made available. There may be instances where we are not able to fully protect or utilize our intellectual property in a manner that maximizes competitive advantage. If we are unable to protect our intellectual property and proprietary rights from unauthorized use, the value of our products may be reduced, which could negatively impact our business. Our inability to obtain appropriate protections for our intellectual property may also allow competitors to enter our markets and produce or sell the same or similar products. In addition, protecting our intellectual property and other proprietary rights is expensive and diverts critical managerial resources. If we are otherwise unable to protect our intellectual property and proprietary rights, our business and financial results could be adversely affected.

If we are forced to resort to legal proceedings to enforce our intellectual property rights, the proceedings could be burdensome and expensive. In addition, our proprietary rights could be at risk if we are unsuccessful in, or cannot afford to pursue, those proceedings. In addition, the possibility of extensive delays in the patent issuance process could effectively reduce the term during which a marketed product is protected by patents.

We may also need to obtain licenses to patents or other proprietary rights from third parties. We may not be able to obtain the licenses required under any patents or proprietary rights or they may not be available on acceptable terms. If we do not obtain required licenses, we may encounter delays in product development or find that the development, manufacture or sale of products requiring licenses could be foreclosed. We may, from time to time, support and collaborate in research conducted by universities and governmental research organizations. We may not be able to acquire exclusive rights to the inventions or technical information derived from these collaborations, and disputes may arise over rights in derivative or related research programs conducted by us or our collaborators.

A dispute concerning the infringement or misappropriation of our intellectual property or proprietary rights or the intellectual property or proprietary rights of others could be time consuming and costly and an unfavorable outcome could harm our business.

There is significant litigation in the telecommunications technology field regarding patents and other intellectual property rights. Other companies with greater financial and other resources than us have gone out of business from costs related to patent litigation and from losing a patent litigation. We may be exposed to future litigation by third parties based on claims that our technologies or activities infringe the intellectual property rights of others. Although we try to avoid infringement, there is the risk that we will use a patented technology owned or licensed by another person or entity and be sued for patent infringement or infringement of another party’s intellectual property or proprietary rights. If we or our products are found to infringe the intellectual property or proprietary rights of others, we may have to pay significant damages or be prevented from making, using, selling, or offering for sale or importing such products or services or from practicing methods that employ such intellectual property or proprietary rights.

Confidentiality agreements with employees and others may not adequately prevent disclosure of our trade secrets and other proprietary information.

Our success depends upon the skills, knowledge and experience of our technical personnel, our consultants and advisors as well as our licensors and contractors. Because we operate in a highly competitive field, we rely almost wholly on trade secrets to protect our proprietary technology and processes. However, trade secrets are difficult to protect. We enter into confidentiality and intellectual property assignment agreements with our corporate partners, employees, consultants, outside scientific collaborators, developers and other advisors. These agreements generally require that the receiving party keep confidential and not disclose to third parties confidential information developed by us during the course of the receiving party’s relationship with us. These agreements also generally provide that inventions conceived by the receiving party in the course of rendering services to us will be our exclusive property. However, these agreements may be breached and may not effectively assign intellectual property rights to us. Our trade secrets also could be independently discovered by competitors, in which case we would not be able to prevent use of such trade secrets by our competitors. The enforcement of a claim alleging that a party illegally obtained and was using our trade secrets could be difficult, expensive and time consuming and the outcome would be unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets. The failure to obtain or maintain meaningful trade secret protection could adversely affect our competitive position.

Adverse changes in general economic or political conditions in any of the countries in which we do business or intend to launch our products could adversely affect our operating results.

If we grow our business to customers located in the United States as well as customers located outside of the United States as we intend, we expect to become subject to the risks arising from adverse changes in both domestic and global economic and political conditions. For example, the direction and relative strength of the United States and international economies remains uncertain due to softness in the housing markets, difficulties in the financial services sector and credit markets and continuing geopolitical uncertainties. If economic growth in the United States and other countries continue to slow, the demand for our customer’s products could decline, which would then decrease demand for our products. Furthermore, if economic conditions in the countries into which our customers sell their products continue to deteriorate, some of our customers may decide to postpone or delay certain development programs, which would then delay their need to purchase our products. This could result in a reduction in sales of our service or in a reduction in the growth of our service revenues. Any of these events would likely harm investors view of our business, our results of operations and financial condition.

Our business depends substantially on the continuing efforts of our executive officers and our ability to maintain a skilled labor force and our business may be severely disrupted if we lose their services.

Our future success depends substantially on the continued services of our executive officers. We do not maintain key man life insurance on any of our executive officers and directors. If one or more of our executive officers are unable or unwilling to continue in their present positions, we may not be able to replace them readily, if at all. Therefore, our business may be severely disrupted, and we may incur additional expenses to recruit and retain new officers. In addition, if any of our executives joins a competitor or forms a competing company, we may lose some of our customers.

If we are unable to attract, train and retain technical and financial personnel, our business may be materially and adversely affected.

Our future success depends, to a significant extent, on our ability to attract, train and retain technical and financial personnel. Recruiting and retaining capable personnel, particularly those with expertise in our chosen industries, are vital to our success. There is substantial competition for qualified technical and financial personnel, and there can be no assurance that we will be able to attract or retain our technical and financial personnel. If we are unable to attract and retain qualified employees, our business may be materially and adversely affected.

Litigation may adversely affect our business, financial condition and results of operations.

From time to time in the normal course of our business operations, we may become subject to litigation that may result in liability material to our financial statements as a whole or may negatively affect our operating results if changes to our business operation are required. The cost to defend such litigation may be significant and may require a diversion of our resources. There also may be adverse publicity associated with litigation that could negatively affect customer perception of our business, regardless of whether the allegations are valid or whether we are ultimately found liable. As a result, litigation may adversely affect our business, financial condition and results of operations.

Corporate insiders or their affiliates may be able to exercise significant control matters requiring a vote of our stockholders and their interests may differ from the interests of our other stockholders.

On a fully diluted basis Directors and officers collectively own approximately 14.5% of our issued and outstanding common stock. In addition, one stockholder owned approximately 61.6% of our issued and outstanding common stock. As a result, these officers and directors and stockholder are able to exercise significant control over matters requiring approval by our stockholders. Matters that require the approval of our stockholders include the election of directors and the approval of mergers or other business combination transactions. Certain transactions are effectively not possible without the approval of these officers and directors and stockholder by virtue of their control over a majority of our outstanding shares, including, proxy contests, tender offers, open market purchase programs or other transactions that can give our stockholders the opportunity to realize a premium over the then-prevailing market prices for their shares of our common stock.

We incur significant increased costs as a public company and our management will be required to devote substantial time to new compliance initiatives.

As a public company, we incur significant legal, accounting and other expenses that we would not incur if we were a private company. SEC rules and regulations impose heightened requirements on public companies, including requiring changes in corporate governance practices. Our management and other personnel devote a substantial amount of time to these compliance initiatives. We may also need to hire additional finance and administrative personnel to support our compliance requirements. Moreover, these rules and regulations will increase our legal and financial costs and make some activities more time-consuming.

We are required to maintain effective internal controls over financial reporting and disclosure controls and procedures pursuant to the Sarbanes-Oxley Act. Our compliance with Section 404 of the Sarbanes-Oxley Act may require that we incur substantial accounting expense and expend significant management effort.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

During the quarter ended March 31, 2011, we issued a total of 833,334 shares of common stock at a sales price of $0.06 per share, for net proceeds of $50,000. We issued the shares in reliance on Section 506 of Regulation D and/or Regulation S of the Securities Act, and comparable exemptions for sales to "accredited" investors under state securities laws. The Company used the proceeds from these sales of common stock for general corporate purposes.

ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

REMOVED AND RESERVED

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

Exhibit Number		Description

31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Principal Financial Officer and Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Principal Financial Officer and Principal Accounting Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

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

	THWAPR, INC.

Date: May 17, 2011	/s/ Bruce Goldstein
	Name: Bruce Goldstein
	Title: President and Chief Executive Officer
	(Principal Executive Officer)

Date: May 17, 2011	/s/ Barry Hall
	Name: Barry Hall
	Title: Chief Financial Officer
	(Principal Financial Officer and Principal Accounting Officer)

Attached files

Thwapr, Inc. Reports

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