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EX-32.1 - B-Scada, Inc.ex32-1.htm
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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: April 30, 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 June 8, 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 APRIL 30, 2011 (UNAUDITED) AND OCTOBER 31, 2010
   
4
   
FOR THE THREE AND SIX MONTHS ENDED APRIL 30, 2011 AND 2010
4
   
5
   
FOR THE SIX MONTHS ENDED APRIL 30, 2011 AND 2010
5
   
6
   
13
   
ITEM 4.  CONTROLS AND PROCEDURES
20
   
PART II. OTHER INFORMATION   
21
   
ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES
21
   
ITEM 6.  EXHIBITS 21 
   
SIGNATURES 22 

 
PART I.  FINANCIAL INFORMATION
 
MOBIFORM SOFTWARE, INC.
 
BALANCE SHEETS

   
April 30,
   
October 31,
 
   
2011
   
2010
 
   
(Unaudited)
       
Assets
           
Current Assets
           
Cash and Cash Equivalents
  $ 8,988     $ 67,980  
Accounts Receivable
    74,743       73,290  
Prepaid Expenses and Other Current Assets
    3,206       8,093  
Total Current Assets
    86,937       149,363  
                 
Property and Equipment – Net
    22,436       29,405  
                 
Other Assets
               
Security Deposits
    3,650       3,650  
                 
Total Assets
  $ 113,023     $ 182,418  
                 
Liabilities and Stockholders’ Deficit
               
Current Liabilities
               
Convertible Notes Payable
  $ 50,000     $ 50,000  
Notes Payable – Related Party
    100,000       100,000  
Accounts Payable and Accrued Liabilities
    111,509       130,067  
Deferred Revenue
    112,701       168,404  
Total Current Liabilities
    374,210       448,471  
                 
Commitments and Contingencies
    --       --  
                 
Stockholders’ Deficit
               
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 April 30, 2011 and  October 31, 2010
    2,459       2,459  
Additional Paid in Capital
    7,100,728       7,099,269  
Accumulated Deficit
    (7,364,374 )     (7,367,781 )
Total Stockholders’ Deficit
    (261,187 )     (266,053 )
                 
Total Liabilities and Stockholders’ Deficit
  $ 113,023     $ 182,418  
 
See the accompanying notes to financial statements.
 
 
MOBIFORM SOFTWARE, INC.
 
STATEMENTS OF OPERATIONS [UNAUDITED]
 
   
For the Three Months Ended
   
For the Six Months Ended
 
   
April 30,
   
April 30,
 
   
2011
   
2010
   
2011
   
2010
 
                         
Revenue
  $ 101,389     $ 171,257     $ 511,921     $ 518,280  
                                 
Operating Expenses
                               
Payroll Expenses
    177,131       157,241       333,195       304,265  
Consulting Fees – Share Based
    --       16,056       1,459       59,904  
Professional Fees
    35,934       39,602       49,662       49,864  
Advertising
    25,607       4,504       29,661       12,564  
Depreciation and Amortization
    3,485       3,375       6,969       6,534  
Consulting Fees
    1,765       16,787       24,178       28,715  
Office
    7,429       3,356       11,898       6,742  
Rent
    10,054       6,621       19,443       13,242  
Telephone and Communication
    2,579       2,771       5,524       6,071  
Other
    7,553       11,914       20,476       21,831  
Total Operating Expenses
    271,537       262,227       502,465       509,732  
                                 
Operating Income (Loss)
    (170,148 )     (90,970 )     9,456       8,548  
                                 
Other  Expenses
                               
Interest Expense
    (1,008 )     (1,008 )     (2,017 )     (2,017 )
Interest Expense – Related Party
    (2,016 )     (2,016 )     (4,032 )     (4,032 )
Total Other  Expenses
    (3,024 )     (3,024 )     (6,049 )     (6,049 )
                                 
Income (Loss) Before Income Taxes
    (173,172 )     (93,994 )     3,407       2,499  
                                 
Provision for Income Taxes
    --       --       --       --  
                                 
Net Income (Loss)
  $ (173,172 )   $ (93,994 )   $ 3,407     $ 2,499  
                                 
Net Income (Loss) Per Common Share – Basic and Diluted
  $ (0.01 )   $ --     $ --     $ --  
                                 
Weighted-Average Common Shares Outstanding – Basic and Diluted
    24,586,672       24,573,305       24,586,672       24,498,719  
 
See the accompanying notes to financial statements.
 
 
MOBIFORM SOFTWARE, INC.
 
STATEMENTS OF CASH FLOWS [UNAUDITED]

   
For the Six Months Ended
 
   
April 30,
 
   
2011
   
2010
 
             
Operating Activities
           
Net Income
  $ 3,407     $ 2,499  
Adjustments to Reconcile Net Income to Net Cash
               
Provided by (Used for) Operating Activities:
               
Depreciation and Amortization
    6,969       6,534  
Consulting Fees – Share Based
    1,459       59,904  
Deferred Revenue
    (55,703 )     186,977  
                 
Changes in Assets and Liabilities:
               
(Increase) Decrease in:
               
Accounts Receivable
    (1,453 )     (208,637 )
Prepaid Expenses and Other Current Assets
    4,887       (1,508 )
Increase (Decrease) in:
               
Accounts Payable and Accrued Liabilities
    (18,558 )     (30,248 )
Net Cash Provided by (Used for) Operating Activities
    (58,992 )     15,521  
                 
Investing Activities
               
Acquisition of Property & Equipment
    --       (8,737 )
Net Cash Used for Investing Activities
    --       (8,737 )
                 
Financing Activities
               
Proceeds from note payable – related party
    --       50,000  
Net Cash Provided by Financing Activities
    --       50,000  
                 
Change in Cash and Cash Equivalents
    (58,992 )     56,784  
                 
Cash and Cash Equivalents – Beginning of Period
    67,980       14,966  
                 
Cash and Cash Equivalents – End of Period
  $ 8,988     $ 71,750  
                 
Supplemental Disclosures of Cash Flow Information
               
Cash paid during the period 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]
APRIL 30, 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 $7,364,374 at April 30, 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]
APRIL 30, 2011

(3)           Summary of Significant Accounting Policies

Unaudited Interim Statements - The accompanying unaudited interim financial statements as of April 30, 2011, and for the three and six months ended April 30, 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 April 30, 2011, the results of operations for the three and six months ended April 30, 2011 and 2010 and the cash flows for the six months ended April 30, 2011 and 2010.  The results of operations for the six months ended April 30, 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 April 30, 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]
APRIL 30, 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 financial statements.
 
(5)           Property and Equipment

Property and equipment consists of the following:

   
April 30,
   
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
    (59,513 )     (52,544 )  
    $ 22,436     $ 29,405    

(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 April 30, 2011 there were 24,586,672 common shares issued and outstanding.  An additional 6,519,116 common shares were reserved for issuance as of April 30, 2011 for outstanding purchase warrants and convertible debt.  There are no shares of preferred stock issued and outstanding.

At April 30, 2011, we have 154,000 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 six months ended April 30, 2011 and 2010.   All the warrants have cashless exercise provisions as defined in the warrants.
 
 
MOBIFORM SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]
APRIL 30, 2011

(6)           Stockholders’ Equity (Continued)

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 six months ended April 30, 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 six months ended April 30, 2010, $29,250 expense related to this agreement and $30,654 deferred under another consulting agreement were charged to operations as share-based consulting.

The following table summarizes the warrants and options.

   
For the Six Months Ended
   
For the Year Ended
 
   
April 30, 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
    (5,080,000 )   $ 0.20       (500,000 )   $ 0.20  
Forfeited
    --       --       --       --  
Exercised
    --       --       --       --  
Outstanding at end of period
    6,383,750     $ 1.08       11,463,750     $ 0.69  

The following table summarizes information about stock warrants and options outstanding as of April 30, 2011 [Unaudited]:
 
     
Warrants and Options
 
     
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       3.75     $ 0.09       300,000     $ 0.09  
$ 0.20……………       50,000       0.42     $ 0.20       50,000     $ 0.20  
$ 0.25……………       540,000       0.33     $ 0.25       540,000     $ 0.25  
$ 0.75……………       2,022,750       1.10     $ 0.75       2,022,750     $ 0.75  
$ 1.50……………       3,471,000       0.67     $ 1.50       3,471,000     $ 1.50  
 
 
MOBIFORM SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]
APRIL 30, 2011

(6)           Stockholders’ Equity (Continued)

The following table summarizes information about stock warrants and options outstanding as of October 31, 2010:
 
     
Warrants and Options
 
 
   
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 April 30, 2011 and October 31, 2010, the weighted-average exercise price of all warrants was $1.08 and $0.69 and the weighted-average remaining contractual life was 0.92 and 1.04 years, respectively.

(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
 
For the Six Months Ended
 
   
April 30,
   
April 30,
 
   
2011
   
2010
   
2011
   
2010
 
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
   
(Unaudited)
 
                         
United States Statutory Corporate
                       
  Income Tax Rate
    (34.0 )%     (34.0 )%     34.0 %     34.0 %
Change in Valuation Allowance on
                               
  Deferred Tax Assets
    34.0 %     34.0 %     (34.0 )%     (34.0 )%
                                 
Income Tax Provision (Benefit)
    -- %     -- %     -- %     -- %
 
 
MOBIFORM SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]
APRIL 30, 2011

(7)           Income Taxes

The components of deferred tax assets (liabilities) at April 30, 2011 and October 31, 2010 are as follows:

   
April 30,
   
October 31,
 
   
2011
   
2010
 
   
[Unaudited]
       
             
Deferred Tax Assets – Current
           
Accrued Vacation Pay
  $ 7,389     $ 6,689  
Valuation Allowance
    (7,389 )     (6,689 )
      --       --  
Deferred Tax Assets (Liabilities) – Long Term
               
Net Operating Losses
    1,275,856     $ 1,278,058  
Property and Equipment
    (3,915 )     (3,762 )
Equity Instruments
    574,440       573,944  
Valuation Allowance
    (1,846,381 )     (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 ($1,000) and $59,000 for the six months ended April 30, 2011 and the year ended October 31, 2010, respectively.

(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 were 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 were used for working capital purposes.

Interest expense in the amount of $4,032 has been accrued for these notes in each of the six months ended April 30, 2011 and 2010.
 
 
MOBIFORM SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS [UNAUDITED]
APRIL 30, 2011

(9)           Commitments and Contingencies

Leases

We presently lease office space in Crystal River, Florida generally 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.  Rent expense for the six months ended April 30, 2011 and 2010 amounted to approximately $20,000 and $13,000, respectively.

(10)         Subsequent Event

On May 3, 2011, we borrowed $50,000 from our CEO and executed a promissory note payable to him in such principal amount. The note, which is due on demand, accrues interest at 8% per annum.  The loan proceeds are being used for working capital purposes.

 
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.  Per the terms of the agreement, Licensee 2 will 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 tables set 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.
 
 
Comparison of the Three Months Ended April 30, 2011 and 2010
 
   
For the three months ended April 30,
 
   
2011
   
2010
 
   
(Unaudited)
   
(Unaudited)
 
         
% of
         
% of
 
   
Amounts
   
Revenues
   
Amounts
   
Revenues
 
                         
Revenues
  $ 101,389       100 %   $ 171,257       100 %
                                 
Operating expenses:
                               
Compensation costs
  $ 177,131       175 %   $ 157,241       92 %
Consulting fees
  $ 1,765       2 %   $ 32,843       19 %
Advertising
  $ 25,607       25 %   $ 4,504       3 %
Professional fees
  $ 35,934       35 %   $ 39,602       23 %
                                 
Interest and debt costs
  $ 3,024       3 %   $ 3,024       2 %
                                 
Net Loss
  $ (173,172 )     (171 )%   $ (93,994 )     (55 )%
                                 
Net loss per share – basic and diluted
  $ (0.01 )           $ --          

Revenues
 
Our revenues for the three months ended April 30, 2011 amounted to $101,389 compared to revenues of $171,257 for the three months ended April 30, 2010. The approximately $70,000, or 40% decrease in revenues in the 2011 period primarily resulted from declines in consulting and developmental services 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 which 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 $177,131 in the three months ended April 30, 2011 compared to $157,241 in the three months ended April 30, 2010, an increase of $19,890, or approximately 13%, as we continued to implement our strategic plan.
 
 
Advertising costs increased to $25,607 in the three months ended April 30, 2011 from $4,504 in the three months ended April 30, 2010, an increase of $21,103, or approximately 469%, primarily from increases in trade show expense. We believe it is necessary that we market our products in order to accomplish our plan for revenue growth and we therefore increased our participation in trade shows.
 
Professional fees in the three months ended April 30, 2011 of $35,934 are comparable to the $39,602 of fees we incurred in the three months ended April 30, 2010..
 
Consulting fees decreased from $16,787 in the three months ended April 30, 2010 to $1,765 in the three months period ended April 30, 2011 and share based consulting fees decreased from $16,056 in the three months ended April 30, 2010 to $-0- in the three months ended April 30, 2011 as certain consulting agreements entered into in fiscal 2010 were not renewed.
 
Interest and Debt Costs
 
Interest expense remained the same at $3,024 in the three months ended April 30, 2011 and 2010. 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 potential future 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 Loss
 
Net loss in the three months ended April 30, 2011 totaled $173,172 compared to $93,994 in the three months ended April 30, 2010, an increase in net loss of $79,178, or approximately 84%.
 
Comparison of the Six Months Ended April 30, 2011 and 2010
 
   
For the six months ended April 30,
 
   
2011
   
2010
 
   
(Unaudited)
   
(Unaudited)
 
         
% of
         
% of
 
   
Amounts
   
Revenues
   
Amounts
   
Revenues
 
                         
Revenues
  $ 511,921       100 %   $ 518,280       100 %
                                 
Operating expenses:
                               
Compensation costs
  $ 333,195       65 %   $ 304,265       59 %
Consulting fees
  $ 25,637       5 %   $ 88,619       17 %
Advertising
  $ 29,661       6 %   $ 12,564       2 %
Professional fees
  $ 49,662       10 %   $ 49,864       10 %
                                 
Interest and debt costs
  $ 6,049       1 %   $ 6,049       1 %
                                 
Net Income
  $ 3,407       1 %   $ 2,499       -- %
                                 
Net income per share – basic and diluted
  $ --             $ --          
 
 
Revenues
 
Our revenues for the six months ended April 30, 2011 amounted to $511,921 compared to revenues of $518,280 for the six months ended April 30, 2010. The $6,359, or approximately 1% decrease in revenues in the six months ended April 30, 2011 resulted primarily from declines in consulting and developmental services revenue.  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 which 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 $333,195 in the six months ended April 30, 2011 compared to $304,265 in the six months ended April 30, 2010, an increase of $28,930, or approximately 10%, as we continued to implement our strategic plan while we tried to maintain our payroll costs.
 
Advertising costs increased to $29,661 in the six months ended April 30, 2011 from $12,564 in the six months ended April 30, 2010, an increase of $17,097, or approximately 136%, primarily from increases in trade show expenses. We believe it is necessary that we market our products in order to accomplish our plan for revenue growth and we therefore increased our participation in trade shows.
 
Professional fees of $49,864 in the six months ended April 30, 2010 were comparable to the $49,662 in professional fees we incurred in the six months ended April 30, 2011.
 
Consulting fees decreased from $28,715 in the six months ended April 30, 2010 to $24,178 in the six months ended April 30, 2011 and share based consulting fees decreased from $59,904 in the six months ended April 30, 2010 to $1,459 in the six months ended April 30, 2011 as certain consulting agreements entered into in fiscal 2010 were not renewed.
 
Interest and Debt Costs
 
Interest expense remained the same at $6,049 in the six months ended April 30, 2011 and 2010. 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 potential future 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 six months ended April 30, 2011 of $3,407 is comparable to the net income of $2,499 in the six months ended April 30, 2010.
 
 
Liquidity and Capital Resources
 
We fund our operations through sales of our products and services and debt and equity financings.
 
At April 30, 2011 we had cash and cash equivalents of $9,000 compared to $68,000 at October 31, 2010. The decrease of $59,000 is attributable to our operating losses.
 
Our accounts receivable ($75,000) and accounts payable and accrued liabilities ($112,000) at April 30, 2011 are comparable with the balances at October 31, 2010, $73,000 and $130,000, respectively.

On May 3, 2011, we borrowed $50,000 from our CEO and executed a promissory note payable to him in such principal amount. The note, which is due on demand, accrues interest at 8% per annum.  The loan proceeds are being used for working capital purposes.

Cash Flows
 
Net cash provided by (used for) operating activities amounted to ($60,000) and $16,000 in the six months ended April 30, 2011 and 2010, respectively. Net cash from operations decreased as a result of operating costs for compensation, advertising and professional fees which were incurred while we implemented our overall strategic business plan.
 
In the six months ended April 30, 2010 we used $9,000 cash in investing activities for the acquisition of equipment. There were no cash investing activities in the six months ended April 30, 2011.
 
In the six months ended April 30, 2010, cash was provided by financing activities by a loan from our CEO in the amount of $50,000. There were no cash provided by financing activities in the six months ended April 30, 2011.

We do not believe that our cash on hand at April 30, 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 April 30, 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
 
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

Disclosure controls and procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed or submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the Company’s reports filed under the Exchange Act is accumulated and communicated to management, including  our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.
 
Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, management carried out an evaluation, under the supervision and with the participation of Allen Ronald DeSerranno, who is both our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

Limitations on Effectiveness of Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our Company have been detected.  These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.  Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.  Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
 

Changes in Internal Controls over Financial Reporting

In connection with the evaluation of our internal controls, our Chief Executive Officer and Chief Financial Officer has determined that during the period covered by this quarterly report, there have been no changes to our internal controls over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
 
 
PART II. OTHER INFORMATION
 

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.
 
 
 
 
 
 
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: June 10, 2011
By: 
/s/   Allen Ronald DeSerranno                            
   
Allen Ronald DeSerranno
Chief Executive Officer
and Chief Financial Officer