Attached files
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 June 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: 333-159300
CELLDONATE INC.
(Exact name of registrant as specified in its charter)
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Nevada
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None
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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228 Hamilton Avenue
Palo Alto, California 94301
(Address of principal executive offices, including zip code)
(650) 701-3325
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§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 þ No o
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 the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o No o
APPLICABLE ONLY TO CORPORATE ISSUERS
As of August 15, 2011 the registrant’s outstanding common stock consisted of 22,910,000 shares.
Table of Contents
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1
The unaudited interim financial statements of Celldonate Inc. (“we”, “our”, “us”) follow. All currency references in this report are to U.S. dollars unless otherwise noted.
CELLDONATE INC.
(A Development Stage Company)
June 30, 2011
Financial Statements
(Unaudited – Expressed in US dollars)
2
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CELLDONATE INC.
(A Development Stage Company)
Balance Sheets
(Unaudited – Expressed in US dollars)
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June 30,
2011
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March 31,
2011
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Assets
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||||||||
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Current
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||||||||
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Cash
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$ | 965 | $ | 1,115 | ||||
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Other receivable
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1,080 | 1,080 | ||||||
| $ | 2,045 | $ | 2,195 | |||||
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Liabilities
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Current
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Accounts payable
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$ | 21,150 | $ | 23,115 | ||||
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Accrued liabilities (note 5)
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11,500 | 6,000 | ||||||
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Due to related parties (note 7)
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197,145 | 183,738 | ||||||
| 229,795 | 212,853 | |||||||
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Stockholders’ Deficiency
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Common Stock (note 6)
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Authorized:
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100,000,000 common shares, $0.001 par value
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400,000 common shares, without par value
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Issued and outstanding:
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22,910,000 common shares, $0.001 par value
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22,910 | 22,910 | ||||||
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Additional Paid-in Capital
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35,290 | 35,290 | ||||||
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Deficit Accumulated During the Development Stage
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(285,950 | ) | (268,858 | ) | ||||
| (227,750 | ) | (210,658 | ) | |||||
| $ | 2,045 | $ | 2,195 | |||||
Nature of operations and going concern (note 1)
See accompanying notes to financial statements.
F-1
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CELLDONATE INC.
(A Development Stage Company)
Statements of Operations
(Unaudited – Expressed in US dollars)
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For the
Three Months
Ended
June 30,
2011
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For the
Three Months
Ended
June 30,
2010
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Period from
August 15,
2006
(inception) to
June 30,
2011
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Expenses
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Accounting and legal
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$ | 10,550 | $ | 12,831 | $ | 169,258 | ||||||
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Licenses and fees
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6,199 | 5,082 | 45,146 | |||||||||
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Office
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193 | - | 5,650 | |||||||||
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Bank charges
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150 | 150 | 1,640 | |||||||||
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Consulting and development fees
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- | - | 63,728 | |||||||||
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Amortization
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- | - | 528 | |||||||||
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Net Loss and Comprehensive Loss for Period
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$ | (17,092 | ) | $ | (18,063 | ) | $ | (285,950 | ) | |||
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Basic and diluted loss per share
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$ | (0.01 | ) | $ | (0.01 | ) | ||||||
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Weighted average number of common shares outstanding
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22,910,000 | 22,910,000 | ||||||||||
See accompanying notes to financial statements.
F-2
| CELLDONATE INC.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited – Expressed in US dollars)
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For the
Three Months
Ended
June 30,
2011
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For the
Three Months
Ended
June 30,
2010
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Period from
August 15,
2006
(inception) to
June 30,
2011
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Cash Flow from Operating Activities
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Net loss for the period
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$ | (17,092 | ) | $ | (18,063 | ) | $ | (285,950 | ) | |||
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Amortization of equipment
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- | - | 528 | |||||||||
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Shares issued for services
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- | - | 1,150 | |||||||||
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Changes in assets and liabilities
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Other receivable
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- | - | (1,080 | ) | ||||||||
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Accounts payable
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(1,965 | ) | 5,304 | 21,150 | ||||||||
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Accrued liabilities
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5,500 | (3,500 | ) | 11,500 | ||||||||
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Cash Used in Operating Activities
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(13,557 | ) | (16,259 | ) | (252,702 | ) | ||||||
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Cash Flow from Investing Activity
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Purchase of equipment
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- | - | (528 | ) | ||||||||
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Cash Flow from Financing Activities
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Net proceeds from issuance of common stock
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- | - | 57,050 | |||||||||
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Advances from related parties
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13,407 | 16,109 | 197,145 | |||||||||
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Cash Provided by Financing Activities
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13,407 | 16,109 | 254,195 | |||||||||
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Increase (Decrease) in Cash
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(150 | ) | (150 | ) | 965 | |||||||
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Cash, Beginning of Period
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1,115 | 2,398 | - | |||||||||
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Cash, End of Period
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$ | 965 | $ | 2,248 | $ | 965 | ||||||
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Supplemental Information
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Stock dividend issued for no consideration
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$ | - | $ | - | $ | 20,619 | ||||||
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Shares issued for services
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$ | - | $ | - | $ | 1,150 | ||||||
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Tax paid
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$ | - | $ | - | $ | - | ||||||
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Interest paid
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$ | - | $ | - | $ | - | ||||||
See accompanying notes to financial statements.
F-3
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CELLDONATE INC.
(A Development Stage Company)
Statements of Stockholders’ Deficiency
(Unaudited – Expressed in US dollars)
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Shares of
Common Stock
Issued
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Common Stock
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Share
Subscriptions
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Additional
Paid-in
Capital
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Deficit
Accumulated
During the
Development
Stage
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Total
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Balance, August 15, 2006 (inception)
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- | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
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Shares issued to founders for services
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11,500,000 | 1,150 | - | - | - | 1,150 | ||||||||||||||||||
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Shares issued for cash
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1,600,000 | 160 | - | 7,840 | - | 8,000 | ||||||||||||||||||
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Net loss for period
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- | - | - | - | (55,294 | ) | (55,294 | ) | ||||||||||||||||
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Balance, March 31, 2007
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13,100,000 | 1,310 | - | 7,840 | (55,294 | ) | (46,144 | ) | ||||||||||||||||
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Shares issued for cash
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1,140,000 | 114 | - | 5,586 | - | 5,700 | ||||||||||||||||||
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Share subscriptions received
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- | - | 43,350 | - | - | 43,350 | ||||||||||||||||||
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Net loss for year
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- | - | - | - | (37,962 | ) | (37,962 | ) | ||||||||||||||||
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Balance, March 31, 2008
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14,240,000 | 1,424 | 43,350 | 13,426 | (93,256 | ) | (35,056 | ) | ||||||||||||||||
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Shares issued
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8,670,000 | 867 | (43,350 | ) | 42,483 | - | - | |||||||||||||||||
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Net loss for year
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- | - | - | - | (52,476 | ) | (52,476 | ) | ||||||||||||||||
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Balance, March 31, 2009
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22,910,000 | 2,291 | - | 55,909 | (145,732 | ) | (87,532 | ) | ||||||||||||||||
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Net loss for year
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- | - | - | - | (63,204 | ) | (63,204 | ) | ||||||||||||||||
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Balance, March 31, 2010
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22,910,000 | 2,291 | - | 55,909 | (208,936 | ) | (150,736 | ) | ||||||||||||||||
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Stock dividend (note 6(a))
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- | 20,619 | - | (20,619 | ) | - | - | |||||||||||||||||
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Net loss for year
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- | - | - | - | (59,922 | ) | (59,922 | ) | ||||||||||||||||
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Balance March 31, 2011
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22,910,000 | $ | 22,910 | - | 35,290 | (268,858 | ) | (210,658 | ) | |||||||||||||||
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Net loss for period
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- | - | - | - | (17,092 | ) | (17,092 | ) | ||||||||||||||||
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Balance, June 30, 2011
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22,910,000 | $ | 22,910 | $ | - | $ | 35,290 | $ | (285,950 | ) | $ | (227,750 | ) | |||||||||||
See accompanying notes to financial statements.
F-4
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CELLDONATE INC.
(A Development Stage Company)
Notes to Financial Statements
Three months ended June 30, 2011
(Unaudited – Expressed in US dollars)
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1. Nature of Operations and Going Concern
CELLDONATE INC. (the “Company”) was incorporated under Chapter 78 of the Nevada Revised Statutes of the State of Nevada on August 15, 2006, and has its head office in Palo Alto, California. The Company is a development stage company in the business of developing and commercializing entertainment-based mobile solutions for charity fundraising businesses. The Company has only recently begun operations and will be required to raise additional financing to complete the development of its anticipated products and to market them to customers. The Company has not generated any sales revenue since inception.
The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and discharge of liabilities in the normal course of business. Several adverse conditions cast substantial doubt on the validity of this assumption. The Company has incurred losses since inception and has an accumulated deficit of $285,950 as of June 30, 2011, has limited resources and no source of operating cash flows.
The Company’s continuance as a going concern is dependent on the success of the efforts of its directors and principal stockholders in providing financial support in the short-term, raising additional equity or debt financing either from its own resources or from third parties, and achieving profitable operations. In the event that such resources are not secured, the assets may not be realized or liabilities discharged at their carrying amounts, and the difference from the carrying amounts reported in these financial statements could be material.
The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of the assets or the amounts and classifications of the liabilities that may result from the inability of the Company to continue as a going concern.
2. Significant Accounting Policies
(a) Basis of presentation
These financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (US GAAP). The Company’s functional and reporting currency is the US dollar.
These unaudited financial statements reflect all adjustments (all of which are normal and recurring in nature) that, in the opinion of management, are necessary for fair presentation of the interim financial information. The results of operations for the interim period presented are not necessarily indicative of the results to be expected for any subsequent quarter or for the entire year ending March 31, 2012. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with US GAAP have been condensed or omitted. These unaudited interim financial statements and notes included herein have been prepared on a basis consistent with and should be read in conjunction with the Company’s audited financial statements and notes for the year ended March 31, 2011, as filed in its Form 10-K.
F-5
| CELLDONATE INC.
(A Development Stage Company)
Notes to Financial Statements
Three months ended June 30, 2011
(Unaudited – Expressed in US dollars)
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2. Significant Accounting Policies (continued)
(b) Use of estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to accounts payable and accrued liabilities, the fair value of warrants attached to common shares issued and the recoverability of income tax assets. While management believes the estimates used are reasonable, actual results could differ from those estimates and could impact future results of operations and cash flows.
(c) Basic and diluted loss per share
Basic loss per share is computed using the weighted average number of common shares outstanding. Diluted earnings per share includes additional dilution from common stock equivalents, such as stock issuable pursuant to the exercise of stock options and warrants. However, the calculation of diluted loss per share excludes the effects of various conversions and exercise of options and warrants that would be anti-dilutive.
(d) Foreign currency translation
Transactions in currencies other than the US dollar are translated into US dollars at the exchange rate in effect at the balance sheet date for monetary assets and liabilities, and at historical exchange rates for non-monetary assets and liabilities. Expenses are translated at the average rates for the period, except amortization, which is translated on the same basis as the related assets. Resulting translation gains or losses are reflected in net loss.
(e) Research and development
Research and development expenditures are charged to operations as incurred.
(f) Equipment
Equipment is stated at cost. Amortization is provided on a straight-line basis over their estimated useful lives of three years.
The Company periodically evaluates the recoverability of its in-use equipment based on expected undiscounted future cash flows and recognizes impairments, if any, when the undiscounted future cash flows are expected to be less than the carrying value of the asset as a current charge to operations.
F-6
| CELLDONATE INC.
(A Development Stage Company)
Notes to Financial Statements
Three months ended June 30, 2011
(Unaudited – Expressed in US dollars)
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2. Significant Accounting Policies (continued)
(g) Financial instruments
All financial instruments are classified as one of the following: held-to-maturity, loans and receivables, held-for-trading, available-for-sale or other financial liabilities. Financial assets and liabilities held-for-trading are measured at fair value with gains and losses recognized in net income. Financial assets held-to-maturity, loans and receivables, and other financial liabilities are measured at amortized cost using the effective interest method. Available-for-sale instruments are measured at fair value with unrealized gains and losses recognized in other comprehensive income and reported in shareholders’ equity.
A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The Company prioritizes the inputs into three levels that may be used to measure fair value:
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a) Level 1 –
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Applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
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b) Level 2 –
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Applies to assets or liabilities for which there are inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly, such as quoted prices for similar assets or liabilities in active markets, or indirectly, such as quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions.
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c) Level 3 –
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Applies to assets or liabilities for which there are unobservable market data.
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Transaction costs that are directly attributable to the acquisition or issue of financial instruments that are classified as held-to-maturity, loans and receivables, or other financial liabilities are included in the initial carrying value of such instruments and amortized using the effective interest method. Transaction costs classified as held-for-trading are expensed when incurred, while those classified as available-for-sale are included in the initial carrying value.
(h) Income taxes
The Company uses the asset and liability approach in its method of accounting for income taxes that requires the recognition of deferred tax liabilities and assets for expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. The Company recognizes the effect of uncertain tax positions where it is more likely than not based on technical merits that the position could be sustained where the tax benefit has a greater than 50% likelihood of being realized upon settlement. A valuation allowance against deferred tax assets is recorded if based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
F-7
| CELLDONATE INC.
(A Development Stage Company)
Notes to Financial Statements
Three months ended June 30, 2011
(Unaudited – Expressed in US dollars)
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2. Significant Accounting Policies (continued)
(i) Recent accounting guidance not yet adopted
The Company has reviewed recently issued accounting pronouncements and plans to adopt those that are applicable to it. The Company does not expect the adoption of these pronouncements to have a material impact on its financial position, results of operations or cash flows.
3. Equipment
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Cost
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Accumulated
Amortization
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Net Book
Value
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At June 30, 2011
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$ | 528 | $ | 528 | $ | - | ||||||
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At March 31, 2011
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$ | 528 | $ | 528 | $ | - | ||||||
4. Financial Instruments
The Company has designated its cash as held-for-trading and accounts payable and amounts due to related parties as other financial liabilities.
(i) Fair value
The fair values of the Company’s cash and accounts payable approximate their carrying values due to the short-term maturity of these instruments. The fair value of amounts due to related parties cannot be determined as there is no external market for such instruments.
(ii) Credit risk
Credit risk is the risk of potential loss to the Company if the counterparty to a financial instrument fails to meet its contractual obligations. The Company’s financial asset that is exposed to credit risk is cash, which is minimized to the extent that it is placed with a major financial institution. Concentration of credit risk exists with respect to the Company’s cash as all amounts are held at a single major American financial institution.
(iii) Translation risk
This risk is considered minimal as the Company does not incur any significant transactions in currencies other than US dollars.
(iv) Interest rate risk
The Company is not exposed to significant interest rate risk due to the short-term maturity of its monetary current assets and liabilities.
F-8
| CELLDONATE INC.
(A Development Stage Company)
Notes to Financial Statements
Three months ended June 30, 2011
(Unaudited – Expressed in US dollars)
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4. Financial Instruments (continued)
(v) Liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty in satisfying its financial obligations as they become due. The Company manages its liquidity risk by forecasting cash flows from operations and anticipated investing and financing activities. At June 30, 2011, the Company had accounts payable of $21,150 (March 31, 2011 - $23,115) which are due within 30 days or less.
5. Accrued Liabilities
As at June 30, 2011, accrued liabilities consist of accrued accounting and legal fees of $11,500 (March 31, 2011 - $6,000).
6. Common Stock
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(a)
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In October 2010, the Company declared a stock dividend of nine shares of the Company’s common stock on each one issued and outstanding share of common stock. This dividend increased the number of issued and outstanding common shares from 2,291,000 to 22,910,000. The stock dividend is in substance a stock split and the effects have been reflected in the accompanying financial statements from inception, except as otherwise disclosed.
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(b)
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The Company issued common stock as follows:
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●
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During the period ended March 31, 2007, 11,500,000 common shares with a par value of $0.001 were issued for a total value of $1,150 for services rendered by founders of the Company and 1,600,000 common shares with a par value of $0.001 were issued for gross proceeds of $8,000.
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●
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During the year ended March 31, 2008, 1,140,000 common shares with par value of $0.001 were issued pursuant to private placements for gross proceeds of $5,700.
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●
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During the year ended March 31, 2009, 8,670,000 units, each unit consisting of one share of common stock and one-half of one warrant to purchase one share of common stock at an exercise price of $0.15 on or before September 28, 2009 were issued for gross proceeds of $43,350. The Company received these share subscription proceeds before March 31, 2008.
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(c)
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During the year ended March 31, 2009, the Company issued 433,500 warrants (pre stock split) to purchase common shares at a price of $0.15 per share. These warrants expired unexercised on September 28, 2009. As at March 31, 2011, no warrants to purchase common shares were outstanding.
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F-9
| CELLDONATE INC.
(A Development Stage Company)
Notes to Financial Statements
Three months ended June 30, 2011
(Unaudited – Expressed in US dollars)
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7. Related Party Transactions
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(a)
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Due to related parties as at June 30, 2011 includes the following:
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(i)
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$186,306 (March 31, 2011 - $172,899) due to a company under common control.
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(ii)
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$7,851 (March 31, 2011 - $7,851) due to a company controlled by a shareholder of the Company for payment of legal services made on behalf of the Company.
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(iii)
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$2,988 (March 31, 2011 - $2,988) due to directors of the Company for advances made to the Company.
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(b)
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The Company entered into an agreement with a company under common control for the facilitation of its business and technology development dated August 15, 2006, as amended May 8, 2009. The agreement requires the Company to pay a monthly fee of $1,500 for services provided by the related party and to reimburse the related party for expenses incurred on its behalf. The monthly fee can be waived at the discretion of the related party. Pursuant to this agreement, for the three months ended June 30, 2011, the Company incurred charges of $nil (three months ended June 30, 2010 - $nil; period from August 15, 2006 to June 30, 2011 - $63,728), which has been expensed as consulting and development fees. In addition, for the three months ended June 30, 2011, the Company was charged fees of $5,000 (three months ended June 30, 2010 - $5,000; period from August 15, 2006 to June 30, 2011 - $33,600) by the related party for administrative costs related to the Company’s filing of its regulatory documents.
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Related party transactions are recorded at the exchange amount, representing the amount agreed upon by the parties, are non-interest bearing and have no specific terms of repayment.
8. Segmented Information
The Company operates primarily in one business segment being development of mobile technology with substantially all of its assets and operations located in Canada.
F-10
Forward Looking Statements
This quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions.
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report. Except as required by applicable law, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
Our unaudited financial statements are expressed in US dollars and are prepared in accordance with generally accepted accounting principles in the United States. They reflect all adjustments (all of which are normal and recurring in nature) that, in the opinion of management, are necessary for fair presentation of our interim financial information. The results of operations for the interim periods presented are not necessarily indicative of the results to be expected for any subsequent quarter or for our fiscal year ending March 31, 2012. Our unaudited financial statements and notes included therein have been prepared on a basis consistent with and should be read in conjunction with our audited financial statements and notes for the year ended March 31, 2011, as filed in our annual report on Form 10-K.
The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report.
Business Overview
We are a development stage company in the business of creating and marketing entertainment-based mobile applications designed to generate donation revenue for charitable and non-profit organizations. We are developing and intend to promote programs and software solutions that assist charitable or philanthropic organizations, provide an alternative to conventional forms of fundraising and permit individuals to play fun, interactive games on their mobile devices and receive prizes or information for doing so. In addition, we are planning to acquire companies that operate in the on-line and mobile deal and performance based advertising space. However, there can be no assurance that we will acquire any such companies.
We are currently completing the development of a suite of applications aimed at individuals with Internet-enabled mobile devices known as the Celldonate mobile games suite. This suite includes a number of games of chance as well as skills-based games which individuals will be able to play to earn points towards redeeming prizes from participating retailers and service providers. So far, we have not yet entered into any commitments or agreements related to the sale or marketing of the Celldonate mobile games suite, although we plan to concentrate our efforts on doing so in Canada and the United States. Such agreements will determine the specific manner in which we are able to generate revenues from our business.
We have designed the Celldonate mobile games suite so that individuals will have to purchase a charity donations game card that allows them to download the suite to their mobile device of choice in order to play the games. Each game card will come with an initial allocation of reward points, and after these points are exhausted individuals we will be required to make charitable donations through the mobile device on which the card is registered in order to earn more reward points. This will allow such individuals to play more games and give them more opportunities to win prizes.
We have only recently begun operations, and we have not yet entered into any commitments or agreements to sell or market the Celldonate mobile games suite or our charity donations games cards. We have not generated any revenues from our business activities, and we do not expect to generate revenues for the foreseeable future. Since our inception, we have incurred operational losses, and we have been issued a going concern opinion by our auditors. We have also accumulated net losses since our inception and incurred a net loss for the most recent audited and interim periods. To finance our operations, we have completed several rounds of financing and raised $57,050 through private placements of our common stock.
3
Results of Operations
During the three months ended June 30, 2011 we incurred a net loss of $17,092, compared to a net loss of $18,063 during the same period in the prior year (“fiscal 2010”). Our net loss from our inception on August 15, 2006 to June 30, 2011 was $285,950. Our net loss per share for the three months ended June 30, 2011 was $0.01, as was our net loss per share during the same period in fiscal 2010.
During the three months ended June 30, 2011 we incurred total expenses of $17,092, compared to total expenses of $18,063 during the same period in fiscal 2010. From our inception on August 15, 2006 to June 30, 2011 we incurred total expenses of $285,950.
Our total expenses during the three months ended June 30, 2011 consisted of $10,550 in accounting and legal fees, $6,199 in licenses and fees, $193 in office expenses and $150 in bank charges. During the same period in fiscal 2010 our total expenses consisted of $12,831 in accounting and legal fees, $5,082 in licenses and fees and $150 in bank charges. The decrease in our expenses for the three months ended June 30, 2011 was primarily due to a decrease in our accounting and legal fees for the period.
Our total expenses from our inception on August 15, 2006 to June 30, 2011 consisted of consisted of $169,258 in accounting and legal fees, $45,146 in licenses and fees, $5,650 in office expenses, $1,640 in bank charges, $63,728 in consulting and development fees and $528 in amortization.
Liquidity and Capital Resources
We have limited operational history. From our inception on August 15, 2006 to June 30, 2011 we did not generate any revenues. As of June 30, 2011 we had $965 in cash, $2,045 in total assets, $229,795 in total liabilities and a working capital deficit of $227,750. As of June 30, 2011 we had an accumulated deficit of $285,950. We are dependent on funds raised through equity financing and related parties. Our cumulative net loss of $285,950 from our inception on August 15, 2006 to June 30, 2011 was funded by equity financing and advances from related parties. We anticipate that we will incur substantial losses for the foreseeable future and our ability to generate any revenues in the next 12 months continues to be uncertain.
During the three months ended June 30, 2011 we spent $13,557 in cash on operating activities, compared to $16,259 during the same period in fiscal 2010. The decrease in cash used on operating activities for the three months ended June 30, 2011 was primarily due to fluctuations in our accounts payable and accrued liabilities balances.
We did not engage in any investing activities during three months ended June 30, 2011 or the same period in fiscal 2010.
During the three months ended June 30, 2011 we received $13,407 in cash from financing activities, compared to receiving $16,109 in cash during the same period in fiscal 2010. The decrease in our receipts from financing activities for the three months ended June 30, 2011 was entirely due to a decrease in advances from related parties.
From our inception on August 15, 2006 to June 30, 2011 we spent $252,702 in cash on operating activities and $528 on investing activities, and we received $254,195 in cash from financing activities, including $197,145 in advances from related parties and $57,050 in proceeds from the issuance of our common stock.
During the three months ended June 30, 2011 our monthly cash requirements to fund our operating activities, including advances from related parties, was approximately $4,519, compared to approximately $5,420 during the same period in fiscal 2010. In the absence of the continued sale of our common stock or advances from related parties, our cash of $965 as of June 30, 2011 is sufficient to cover our current monthly burn rate for less than one month. Until we are able to complete private and/or public financing as described below, we anticipate that we will rely on advances from related parties to proceed with our plan of operations.
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For the next 12 months (beginning August 2011) we intend to:
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enter into strategic partnerships with various retailers, service providers and charitable and non-profit organizations regarding the sale, distribution and redemption of our charity donations game cards and reward points;
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complete the testing of the Celldonate mobile games suite on new mobile devices as required;
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retain two business development consultants on a part-time basis to provide us with technical services regarding our operations and planned activities;
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complete private and/or public financing to cover the costs of marketing the initial version of the Celldonate mobile games suite as well as any other proprietary mobile applications we may create.
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Currently, we only own the copyright in the Celldonate mobile games suite, in a number of proprietary mobile applications associated with the suite and in a variety of Internet domain names. We expect to require approximately $570,000 to continue our planned operations over the next 12 months.
Upon securing appropriate financing, our planned expenditures for the next 12 months (beginning August 2011) are summarized as follows:
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Description
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Potential Completion Date
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Estimated Expenses
($)
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Enter into strategic partnerships with retailers, service providers and charitable and non-profit organizations
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12 months
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115,000
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Complete the testing of our applications as required
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12 months
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15,000
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Retain two business development consultants on a part-time basis
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12 months
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60,000
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Professional fees (legal, accounting and auditing fees)
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12 months
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80,000
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Business and technology development expenses
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12 months
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180,000
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Marketing expenses
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12 months
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100,000
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Other general and administrative expenses
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12 months
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20,000
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Total
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570,000
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In addition, we plan to acquire companies that operate in the on-line and mobile deal and performance based advertising space. However, there can be no assurance that we will acquire any such companies.
Our general and administrative expenses for the year will consist primarily of transfer agent fees, investor relations expenses and general office expenses. The professional fees are related to our regulatory filings throughout the year.
Based on our planned expenditures, we will require additional funds of approximately $569,000 (a total of $570,000 less our cash of approximately $1,000 as of June 30, 2011) to proceed with our business plan over the next 12 months. If we secure less than the full amount of financing that we require, we will not be able to carry out our complete business plan and we will be forced to proceed with a scaled back business plan based on our available financial resources.
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Future Financings
We have not generated any revenues, have achieved losses since our inception, and rely upon the sale of our securities and advances from related parties to fund our operations. We anticipate that we will incur substantial losses for the foreseeable future, and we are dependent upon obtaining outside financing to carry out our operations. Our financial statements for the three months ended June 30, 2011 have been prepared on a going concern basis and do not include any adjustments that might result from the outcome of this uncertainty.
We will require approximately $570,000 over the next 12 months in order to enable us to proceed with our plan of operations, including paying our ongoing expenses. These cash requirements are in excess of our current cash and working capital resources. Accordingly, we intend to raise the balance of our cash requirements for the next 12 months (approximately $569,000) from private placements, advances from related parties or possibly a registered public offering (either self-underwritten or through a broker-dealer). If we are unsuccessful in raising enough money through such efforts, we may review other financing possibilities such as bank loans. At this time we do not have a commitment from any broker-dealer to provide us with financing, and there is no guarantee that any financing will be available to us or if available, on terms that will be acceptable to us.
If we are unable to obtain the necessary additional financing, then we plan to reduce the amounts that we spend on our operations, including our accounting and legal fees, so as not to exceed the amount of capital resources that are available to us. If we do not secure additional financing our current cash reserves and working capital will be not be sufficient to enable us to sustain our operations for the next 12 months, even if we do decide to scale back our operations.
Off-Balance Sheet Arrangements
We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Critical Accounting Policies
Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in Note 2 of the notes to our financial statements. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by our management.
Foreign Currency Translation
Our financial statements are presented in United States dollars. Transactions in currencies other than the US dollar are translated into US dollars at the exchange rate in effect at the balance sheet date for monetary assets and liabilities, and at historical exchange rates for non-monetary assets and liabilities. Expenses are translated at the average rates for the period, excluding amortization, which is translated on the same basis as the related assets. Resulting translation gains or losses are reflected in net loss.
Research and Development
Research and development expenditures are charged to operations as incurred.
Recent Accounting Guidance Not Yet Adopted
We have reviewed recently issued accounting pronouncements and plan to adopt those that are applicable to us. We do not expect the adoption of these pronouncements to have a material impact on our financial position, results of operations or cash flows.
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Inflation
The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.
Not applicable.
Disclosure Controls
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) designed to provide reasonable assurance the information required to be reported in our Exchange Act filings is recorded, processed, summarized and reported within the time periods specified and pursuant to the SEC’s rules and forms, including controls and procedures designed to ensure that this information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
As of the end of the period covered by this report, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective to ensure that information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
Changes in Internal Control
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act) during the three months ended June 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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We are not aware of any legal proceedings to which we are a party or of which our property is the subject. None of our directors, officers, affiliates, any owner of record or beneficially of more than 5% of our voting securities, or any associate of any such director, officer, affiliate or security holder are (i) a party adverse to us in any legal proceedings, or (ii) have a material interest adverse to us in any legal proceedings. We are not aware of any other legal proceedings that have been threatened against us.
None.
None.
On June 29, 2011, Jon Sofield resigned as our President, Chief Executive Officer, Secretary and director, and we appointed Michael Palethorpe, our Chief Financial Officer, Principal Accounting Officer, Treasurer and director, to fill the resulting officer vacancies. On July 2, 2011, Mr. Palethorpe resigned as our President, Chief Executive Officer and Secretary, and we appointed Jon Diamond to fill the resulting vacancies. Also on July 2, 2011, we appointed Mr. Diamond as our director.
Neither Mr. Sofield’s nor Mr. Palethorpe’s resignation resulted from any disagreement with us regarding our operations, policies, practices or otherwise.
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Exhibit Number
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Exhibit Description
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Date: August 15, 2011
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Celldonate Inc.
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By:
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/s/ Jon Diamond
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Jon Diamond
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President, Chief Executive Officer, Secretary, Director
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