Attached files
| file | filename |
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| EXCEL - IDEA: XBRL DOCUMENT - Face Up Entertainment Group, Inc. | Financial_Report.xls |
| EX-31.1 - CERTIFICATION - Face Up Entertainment Group, Inc. | gfgi_ex311.htm |
| EX-32.1 - CERTIFICATION - Face Up Entertainment Group, Inc. | gfgi_ex321.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C 20549
FORM 10-Q /A
(Amendment No. 1)
(Amendment No. 1)
x QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED June 30, 2011
COMMISSION FILE NUMBER: 333-164651
GAME FACE GAMING, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
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Florida
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27-1551007
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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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20 East Sunrise Highway
Valley Stream, New York 11581
(Address of Principal Executive Offices)
(516) 303-8100
(Issuer's Telephone Number, Including Area Code)
_________________
(Former address, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T ( 232.405 of this chapter) during the preceding 12 months ( or for such shorter period that the registrant was required to submit and post such files) Yes ¨ No x .
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company.
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Large accelerated filer
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Accelerated filer
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o |
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Non- accelerated filer
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o |
Small reporting company
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x |
Indicate by a check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of August10, 2011, 55,675,000 shares of common stock, $.001 par value per share, of the issuer were outstanding.
Transitional Small Business Disclosure Format (check one): Yes ¨ No x
Explanatory Statement
This Amendment No. 1 to the Quarterly Report on Form 10-Q (“Amended Form 10-Q”) of Game Face Gaming, Inc. amends our Quarterly Report on Form 10-Q for the period ended June 30, 2011, filed with the Securities and Exchange Commission on August 15, 2011 (the “Original Form 10-Q”). This Amended Form 10-Q is being filed to correct errors in the Original Form 10-Q and is meant to restate the Original Form 10-Q in its entirety.
The Company has attached to this Amended Form 10-Q updated certifications executed as of the date of this Amended Form 10-Q by the President and Chief Executive Officer as required by Sections 302 and 906 of the Sarbanes Oxley Act of 2002. These updated certifications are attached as Exhibits 31.1 and 32.1 to this Amended Form 10-Q.
1
GAME FACE GAMING, INC.
INDEX
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Page
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PART I.
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FINANCIAL INFORMATION
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Item 1.
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Financial Statements (Unaudited)
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Condensed Balance Sheets
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3 | |||
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Condensed Statements of Operations
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4 | |||
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Condensed Statements of Cash Flows
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5 | |||
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Notes to Interim Condensed Financial Statements
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6 | |||
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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12 | |||
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Item 4.
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Controls and Procedures
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14 | |||
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PART II.
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OTHER INFORMATION
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14 | |||
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Item 1.
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Legal Proceedings
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14 | |||
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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14 | |||
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Item 3.
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Defaults Upon Senior Securities
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15 | |||
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Item 4.
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Submission of Matters to a Vote of Security Holders
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15 | |||
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Item 5.
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Other Information
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15 | |||
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Item 6.
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Exhibits
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15 | |||
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Signatures
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16 | |||
2
Game Face Gaming, Inc.
(f/k/a Intake Communications, Inc)
(A Development Stage Company)
Balance Sheets
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ASSETS
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June 30,
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December 31,
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2011
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2010
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Unaudited
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Audited
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CURRENT ASSETS
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Cash and cash equivalents
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$ | 6,130 | 584 | ||||||
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Prepaid Insurance
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1,311 | - | |||||||
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Total current assets
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$ | 7,441 | 584 | ||||||
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NON-CURRENT ASSETS
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Net Fixed Assets, (Net of $786 of Accumulated Depreciation)
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8,641 | ||||||||
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Intangible Assets
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100,000 | - | |||||||
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Total non-current assets
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108,641 | ||||||||
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TOTAL ASSETS
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$ | 116,082 | 584 | ||||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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LIABILITIES AND EQUITY
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LIABILITIES
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Current Liabilities
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Accrued Expenses
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6,667 | 0 | |||||||
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Bridge Loans
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195,000 | - | |||||||
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Payroll Liabilities
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4,168 | - | |||||||
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Accounts payable
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$ | 2,500 | 3,000 | ||||||
| Loan from Officer | 3,000 | ||||||||
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Total Current Liabilities
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208,335 | 6,000 | |||||||
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TOTAL LIABILITIES
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$ | 208,335 | $ | 6,000 | |||||
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STOCKHOLDERS' EQUITY (DEFICIT)
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Capital Stock
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Authorized:
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250,000,000 common shares, $0.0001 par value
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55,675,000 and 9,000,000 shares issued and outstanding at
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June 30, 2011 and December 31, 2010, respectively
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$ | 3,794 | $ | 1,020 | |||||
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Additional paid in capital
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139,536 | 19,980 | |||||||
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Deficit accumulated during the development stage
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(235,583 | ) | (26,416 | ) | |||||
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Total Stockholders' Equity (Deficit)
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(92,253 | ) | 5,416 | ||||||
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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$ | 116,082 | $ | 584 | |||||
3
Game Face Gaming, Inc.
(f/k/a Intake Communications, Inc)
(A Development Stage Company)
Statements of Operations
| For the Period | ||||||||||||||||||||
| December 24, | ||||||||||||||||||||
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Three Months
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Three Months
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Six Months
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Six Months
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2009
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Ended
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Ended
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Ended
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Ended
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(Inception) to
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June 30,
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June 30,
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June 30,
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June 30,
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June 30,
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2011
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2010
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2011
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2010
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2011
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REVENUES
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White Label Solutions Contract
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- | 105,000 | 105,000 | |||||||||||||||||
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Cancellation of Debt Income
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- | 2,416 | 2,416 | |||||||||||||||||
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Interest Income
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$ | 1 | $ | - | $ | 1 | - | 2 | ||||||||||||
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TOTAL REVENUES
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1 | 107,417 | 107,418 | |||||||||||||||||
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EXPENSES
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Advertising Expense
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2,400 | 2,400 | 2,400 | |||||||||||||||||
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Affiliate Expense
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100 | 100 | 100 | |||||||||||||||||
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Bank Service Charges
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261 | 411 | 633 | |||||||||||||||||
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Filing Fee
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150 | |||||||||||||||||||
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Organizational Expense
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227 | |||||||||||||||||||
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SEC Filing Fee
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1,822 | |||||||||||||||||||
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Transfer Agent Fee
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2,030 | |||||||||||||||||||
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Sponsporships
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25,000 | 25,000 | 25,000 | |||||||||||||||||
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Consulting Services
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66,859 | 86,659 | 86,659 | |||||||||||||||||
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Interest Expense
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3,500 | 4,667 | 4,667 | |||||||||||||||||
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Insurance Expense
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262 | 262 | 262 | |||||||||||||||||
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Miscellaneous
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2,806 | 30 | 3,145 | 410 | 3,147 | |||||||||||||||
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Depreciation Expense
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786 | 786 | 786 | |||||||||||||||||
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Hosting Expense
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3,646 | 3,646 | 3,646 | |||||||||||||||||
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Office Expense
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865 | 865 | 865 | |||||||||||||||||
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Payroll Expenses
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33,411 | 46,080 | 46,080 | |||||||||||||||||
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Payroll Taxes
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17,506 | 19,031 | 19,031 | |||||||||||||||||
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Promotions/Trade Show Expense
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19,946 | 40,591 | 40,591 | |||||||||||||||||
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Software Development
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7,590 | 39,090 | 39,090 | |||||||||||||||||
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Software Expense
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140 | 7,735 | 7,735 | |||||||||||||||||
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Telephone Expense
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730 | 903 | 903 | |||||||||||||||||
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Professional Fees
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14,862 | 1,205 | 35,213 | 5,898 | 57,178 | |||||||||||||||
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200,670
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1,23 5 | 316,584 | 6,308 | 343,002 | ||||||||||||||||
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Loss Before Income Taxes
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(200,670
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) | $ | (1,23 5 | ) | $ | (209,167 | ) | (6,308 | ) | (235,58 4 | ) | ||||||||
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Provision for Income Taxes
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- | - | - | - | - | |||||||||||||||
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Net Loss
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(200,669
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) | $ | (1,23 5 | ) | $ | (209,167 | ) | (6,308 | ) | (235,58 4 | ) | ||||||||
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PER SHARE DATA:
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Basic and diluted loss per common share
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(0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | (0.00 | ) | ||||||||||
| Weighted Average Common shares outstanding | 50,990,385 | 123,001,294 | 120,683,329 | 120,683,329 | ||||||||||||||||
4
Game Face Gaming, Inc.
(f/k/a Intake Communications, Inc)
(A Development Stage Company)
Statements of Cash Flows
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For the Period
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from Inception
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December 24,
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For the Six Months Ended
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2009 to
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June 30,
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June 30,
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June 30,
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2011
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2010
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2011
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OPERATING ACTIVITIES
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Net Income (Loss)
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$ | (209,167 | ) | (6,308 | ) | (235,582 | ) | |||||
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Depreciation
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786 | 786 | ||||||||||
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Common stock issued for Services
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22,330 | 22,330 | ||||||||||
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Changes in Operating Assets and Liabilities:
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Increase (decrease) in
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Accounts payable and accrued liabilities
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10,335 | (3,179 | ) | 13,335 | ||||||||
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Prepaid Insurance
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(1,311 | ) | (1,312 | ) | ||||||||
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Net cash used in operating activities
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(177,027 | ) | (9,487 | ) | (200,443 | ) | ||||||
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FINANCING ACTIVITIES
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Common stock issued for cash
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- | 15,000 | 21,000 | |||||||||
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Notes Payable
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195,000 | 195,000 | ||||||||||
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Loan from officer
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$ | (3,000 | ) | - | - | |||||||
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Net cash provided by financing activities
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192,000 | 15,000 | 216,000 | |||||||||
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INVESTMENT ACTIVITIES
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Computer Hardware Purchased for cash
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$ | (9,427 | ) | (9,427 | ) | |||||||
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Net cash provided by investment activities
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(9,427 | ) | (9,427 | ) | ||||||||
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INCREASE IN CASH AND CASH EQUIVALENTS
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5,546 | 5,513 | 6,130 | |||||||||
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CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
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584 | 6,000 | - | |||||||||
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CASH AND CASH EQUIVALENTS AT END OF PERIOD
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$ | 6,130 | 11,513 | 6,130 | ||||||||
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Supplemental Cash Flow Disclosures:
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Cash paid for:
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Interest expense
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$ | - | - | - | ||||||||
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Income taxes
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$ | - | - | - | ||||||||
There were a $100,000 of intangible assets purchased from Lemberg Consulting. On February 22, 2011
Since this was a non-cash transaction, it was not recorded in the Cash Flow statement prepared by the management.
5
GAME FACE GAMING, INC.
(F/K/A INTAKE COMMUNICATIONS, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(JUNE 30, 2011)
UNAUDITED
NOTE 1. GENERAL ORGANIZATION AND BUSINESS
Game Face Gaming, Inc. (f/k/a Intake Communications, Inc.) the Company is developing the internet’s first Reality Gaming Social Network. We seek to penetrate the market in the business of operating a non-wagering Internet gaming company. Our Internet Gaming platform incorporates proprietary technologies that will provide users with streaming video, audio and messaging capabilities enhancing both the users experience and the gaming experience.
Game Face Gaming’s proprietary platform will be used in creating a vast global gaming network consisting of games from every region of the globe, supporting native languages as well as cross language functionality. Once these games make their way onto our platform they will be accessible on almost all devices currently used to access the internet. In addition to popular and well known games that are already being played on line by tens of millions of people around the world, the Company plans to launch its own in- house developed games..
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES
Accounting Basis
These financial statements are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.
Cash and Cash Equivalents
Cash equivalents include all highly liquid investments with an original maturity of three months or less when purchased.
Earnings (Loss) per Share
The Company adopted FASB ASC 260, Earnings per Share. Basic earnings (loss) per share is calculated by dividing the Company's net income available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share is calculated by dividing the Company's net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity. There were no diluted or potentially diluted shares outstanding for all periods presented.
6
GAME FACE GAMING, INC.
(F/K/A INTAKE COMMUNICATIONS, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(JUNE 30, 2011)
UNAUDITED
Dividends
The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during the period shown, and none are contemplated in the near future.
Income Taxes
The Company adopted FASB ASC 740, Income Taxes, at its inception. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets, including tax loss and credit carry forwards, and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. No deferred tax assets or liabilities were recognized as of June 30, 2011.
Advertising
The Company expenses advertising as incurred. Since inception, the advertising dollars spent have been $2,400.
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 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
The company has adopted the following revenue recognition guidelines.
Sale of subscriptions
Revenue from sale of subscriptions is recognized when the following conditions are satisfied:
* The user properly registered with the website of the Company, and provided the Company with a valid proof of identity and address. Furthermore the Company had set up a valid user account for the user;
* The amount of revenue can be measured reliably;
* The costs incurred or to be incurred in respect of the transaction can be measured reliably.
7
GAME FACE GAMING, INC.
(F/K/A INTAKE COMMUNICATIONS, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(JUNE 30, 2011)
UNAUDITED
Whitelabel Solution income
Revenue from sale of Whitelabel Solutions is recognized when the following conditions are met:
* The contract for the solutions clearly specifies the price and payment options with the transfer of ownership; * The Company is reasonably expected to complete the project in the time frame that the contract sets forth;
* As the milestones set forth in the contract are met, the Company will recognize revenue as set forth in the contract; * As set forth in the contract the amount of revenue can be measured reliably;
* There is a reasonable belief that buyer is expected to pay the whole amount as the milestones are met.
Property
The Company does not own any real estate or other properties. The Company’s office is located at 20 East Sunrise Highway, Suite 202, Valley Stream, NY 11581. Our contact number is 516-303-8100.
Property and Equipment
Property and equipment is stated at cost. Depreciation and amortization expense is computed using principally accelerated methods over the estimated useful life of the related assets ranging from 3 to 7 years. When assets are sold or retired, their costs and accumulated depreciation are eliminated from the accounts and any gain or loss resulting from their disposal is included in the statement of operations.
The Company recognizes an impairment loss on property and equipment when evidence, such as the sum of expected future cash flows (undiscounted and without interest charges), indicates that future operations will not produce sufficient revenue to cover the related future costs, including depreciation, and when the carrying amount of the asset cannot be realized through sale. Measurement of the impairment loss is based on the fair value of the assets.
Impairment of Long-Lived Assets
The Company assesses long-lived assets, such as property and equipment and intangible assets subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be fully recoverable. Recoverability of asset groups to be held and used in measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of an asset group exceeds the fair value of the asset group. The Company evaluated its long-lived assets and no impairment charges were recorded for any of the periods presented.
NOTE 3. INCOME TAXES:
The Company provides for income taxes under the provisions of FASB ASC 740, Income Taxes. FASB ASC Topic 740 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently.
ASC Topic 718 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company's opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset.
8
GAME FACE GAMING, INC.
(F/K/A INTAKE COMMUNICATIONS, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(JUNE 30, 2011)
UNAUDITED
The components of the Company's income tax expenses at June 30, 2011 are as follows:
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Year Ended December 31, 2010
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Deferred Tax Asset
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$
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32,413
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Valuation Allowance
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$
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(32,413
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)
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Current Taxes Payable
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-
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Income Tax Expense
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-
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At June 30, 2011, the Company had estimated net loss carry forwards of approximately $32,000 which expires through its tax year ending 2030. Utilization of these net operating loss card forwards may be limited in accordance with IRCD Section 3.82 in the event of certain shifts in ownership.
NOTE 4. STOCKHOLDERS' EQUITY
Common Stock
On December 24, 2009, the Company issued 117,000,000 of its $0.0001 par value common stock at $0.001 per share for $6,000 cash and $3,000 in a subscription receivable to the founder of the Company. The issuance of the shares was made to the sole officer and director of the Company and an individual who is a sophisticated and accredited investor, therefore, the issuance was exempt from registration of the Securities Act of 1933 by reason of Section 4 (2) of that Act.
On May 26, 2010 the Company issued 15,600,000 shares of common stock to investors in accordance with Form S-1 for cash in the amount of $12,000.
On February 22, 2011 the Company issued 22,666,667 shares at $0.0001 par value to Lemberg Consulting for their intellectual property and pending patents.
On June 23, 2011 the Company issued 5,075,000 shares at $0.0001 par value and $0.0044 face value to various “founding fathers” of the company for services rendered to the company in lieu of cash.
There are 250,000,000 Common Shares at $0.0001 par value authorized with 55,675,000 shares issued and outstanding at June 30, 2011.
On January 6, 2011, the Board of Directors and majority shareholder of the Company approved an amendment to the Company’s Articles of Incorporation (the “Amendment”) to (i) affect a 13 for 1 forward stock split of the Company’s issued and outstanding common stock in the form of a dividend. Accordingly there were 10,200,000 pre-split common shares and following the forward split there were 132,600,000 common shares issued and outstanding. All share amounts, including those stated above, have been adjusted to reflect the forward split. On February 10, 2011, Ron Warren, the principal shareholder and sole officer and director of the Company cancelled 104,666,667 of his own shares, and on February 22, 2011 the Company issued an additional 22,666,667 shares in an intangible asset purchase.
9
GAME FACE GAMING, INC.
(F/K/A INTAKE COMMUNICATIONS, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(JUNE 30, 2011)
UNAUDITED
NOTE 5. GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the period December 24, 2009 (date of inception) through June 30, 2011 the Company has had a net loss of $235,583. As of June 30, 2010, the Company has not emerged from the development stage. In view of these matters, recoverability of any asset amounts shown in the accompanying financial statements is dependent upon the Company's ability to begin operations and to achieve a level of profitability. Since inception, the Company has financed its activities from the sale of equity securities, and obtaining loans. The Company intends on financing its future development activities and its working capital needs largely from loans and the sale of public equity securities with some additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations, if ever, are sufficient to fund working capital requirements.
NOTE 6. THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS
The company has adopted all recently issued accounting pronouncements. The Adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
NOTE 7. CONCENTRATIONS OF RISKS
Cash Balances
The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (FDIC). Our cash balance at June 30, 2011 was below the FDIC insurance threshold.
NOTE 8. CONVERTIBLE NOTES PAYABLE
In connection with certain Bridge notes offered by the Company in the first quarter of 2011, subscribers have the right anytime after 60 days of their issuance, to convert all or a part of their Notes into common stock. Every dollar may be converted at the greater of $0.25/share or 50% of the average closing price of the shares as quoted on the OTCBB. As of August 2, 2011, the Company’s shares are not yet quoted on the OTCBB and none of the Note holders have elected to convert their shares into common stock. Were each holder to convert their loans into shares at the lowest possible price of $0.25, the Company would be required to issue a total of 780,000 shares of common stock.
10
GAME FACE GAMING, INC.
(F/K/A INTAKE COMMUNICATIONS, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(JUNE 30, 2011)
UNAUDITED
NOTE 9. INTANGIBLE ASSETS
On February 22, 2011, the Company, acquired from Lemberg Consulting an intangible asset worth $100,000 in a non-cash transaction for 22,666,667 shares of the Company. The company purchased future contracts and pending patents for a gaming system that incorporates voice and video into the gaming experience.
NOTE 10. SUBSEQUENT EVENTS
We evaluated subsequent events through the date and time our financial statements were issued.
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GAME FACE GAMING, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and accompanying notes and the other financial information appearing elsewhere in this report and reports included herein by reference. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. For this purpose, any statements contained in this Report that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking information includes statements relating to future actions, prospective products, future performance or results of current or anticipated products, sales and marketing efforts, costs and expenses, interest rates, outcome of contingencies, financial condition, results of operations, liquidity, business strategies, cost savings, objectives of management, and other matters. You can identify forward-looking statements by those that are not historical in nature, particularly those that use terminology such as “may,” “will,” “should,” “expects,” “anticipates,” “contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,” “potential,” or “continue” or the negative of these similar terms. The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking information to encourage companies to provide prospective information about themselves without fear of litigation so long as that information is identified as forward-looking and is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those projected in the information.
These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that we cannot predict. In evaluating these forward-looking statements, you should consider various factors, including the following: (a) those risks and uncertainties related to general economic conditions, (b) whether we are able to manage our planned growth efficiently and operate profitable operations, (c) whether we are able to generate sufficient revenues or obtain financing to sustain and grow our operations, and (d) whether we are able to successfully fulfill our primary requirements for cash, which are explained below under “Liquidity and Capital Resources”. We assume no obligation to update forward-looking statements, except as otherwise required under the applicable federal securities laws.
Plan of Operation
We are in the business of operating a reality gaming social network. We plan to offer a non wagering internet gaming website by incorporating proprietary technologies that will provide players with streaming video, audio and messaging capabilities. We believe that these enhancements will dramatically enhance the players’ online gaming experiences. These games include poker, chess, backgammon and others. Our initial offering Management is not aware of any online games sites which offer players the ability to see one another and speak live during game play.
Results of Operations
Comparison of Six Months Ended June 30, 2011 and 2010:
Revenues
During the six months ended June 30, 2011 we had revenues from whitepaper solutions equaling $105,000 and $2,416 from cancellation of debt. For the six months ended June 30, 2010, we did not generate any revenues.
Selling, general and administrative expenses
Our selling, general and administrative expenses for the six months ended June 30, 2011 increased by $202,859 or 3,316%, to $209,167, as compared to selling, general and administrative expenses for the six months ended June 30, 2010 of $6,308. These expenses are comprised mainly of consulting services ($86,659), payroll expense ($46,080), sponsorships ($25,000), software development ($39,090), and promotion expenses ($40,589).
Net loss
As a result of the foregoing, for the six months ended June 30, 2011, net loss was $209,167 as compared to a net loss for the three months ended June 30, 2010 of $6,308.
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Comparison of Three Months Ended June 30, 2011 and 2010:
Revenues
During the three months ended June 30, 2011 and the three months ended June 30, 2010, we did not generate any revenues.
Selling, general and administrative expenses Our selling, general and administrative expenses for the three months ended June 30, 2011 increased by $199,434 or 16,248%, to $200,669, as compared to selling, general and administrative expenses for the three months ended June 30, 2010 of $1,235. These expenses are comprised mainly of consulting services ($66,859), payroll expense ($33,411), sponsorships ($25,000) and promotion expenses ($19,946).
Net loss
As a result of the foregoing, for the three months ended June 30, 2011, net loss was $200,669 as compared to a net loss for the three months ended June 30, 2010 of $1,235.
LIQUIDITY AND CAPITAL RESOURCES
On June 30, 2011, our working capital deficiency was ($200,894 ), compared to a working capital deficiency of $11,113 on June 30, 2010. We had a stockholders’ deficiency of $5,416 at December 31, 2010. The increase in working capital and stockholders' deficiency was due to continued and ongoing start-up expenses, the build out of our platform and software development expenses. We expect our working capital deficiency to increase until we launch our product and generate sufficient revenues.
We will require additional capital to develop and expand our gaming platform from beta testing to a full launch. We estimate that within the next 12 months we will need approximately $1,000,000 to make our site live, market the site to obtain members and generate revenues from members.
Current cash on hand is insufficient for all of the Company’s commitments for the next 12 months. We anticipate that the additional funding that we require will be in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our convertible debentures to fund additional development and expansion of our gaming platform from beta testing to a full launch. Although we are offering up to $300,000 of convertible notes, there is no assurance we will be successful in selling all such notes. We sold $20,000 of such debt during this quarter. We believe that any other debt financing will not be an alternative source of fund to make our site live, market the site to obtain members and generate revenues from members. The risky nature of this enterprise and lack of tangible assets places debt financing beyond the credit-worthiness required by most banks or typical investors of corporate debt until such time as we are able to generate revenues. We do not have any arrangements in place for any future equity financing.
We cannot be certain that the required additional financing will be available or available on terms favorable to us. If additional funds are raised by the issuance of our equity securities, such as through the issuance and exercise of warrants, then existing stockholders will experience dilution of their ownership interest. If additional funds are raised by the issuance of debt or other equity instruments, we may be subject to certain limitations in our operations, and issuance of such securities may have rights senior to those of the then existing holders of common stock. If adequate funds are not available or not available on acceptable terms, we may be unable to fund expansion, develop or enhance services or respond to competitive pressures.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make certain estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the related disclosures of contingent assets and liabilities as of the date of the financial statements and during the applicable periods. We base these estimates on historical experience and on other factors that we believe are reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions and could have a material impact on our financial statements.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our financial condition, results of operations or liquidity.
ITEM 4. CONTROLS AND PROCEDURES
A. EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES:
Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Securities Exchange Act of 1934 (the "Exchange Act") is recorded, processed, summarized and reported, within the time period specified in the SEC'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 reports filed under the Exchange Act are accumulated and communicated to management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") , as appropriate, to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with participation of our management, including our CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon and as of the date of that evaluation, the CEO and CFO concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act are recorded, processed, summarized and reported as and when required.
B. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING:
There were no changes in our internal controls over financial reporting during the most recent fiscal quarter that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On June 23, 2011, the Company issued shares of common stock to the following persons in consideration for consulting services provided or to be provided by such persons to the Company: BSF II, 500,000 shares; Bonnie Leinhos 50,000 shares; Xstream Assets, LLC 2,000,000 shares; Nalesta Consulting Inc. 2,500,000 shares; and Steve Morgan 25,000 shares. These securities were issued in reliance on the exemption under Section 4(2) of the Act; the recipients are accredited investors; are not affiliates of the Company and had access to all of the information which would be required to be included in a registration statement and the transaction did not involve a public offering.
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
(a) Exhibits:
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31.1
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Rule 13a-14(a)/15d-14(a) Certification (CEO)
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32.1
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Section 1350 Certification (CEO)
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SIGNATURES
In accordance with the requirements of Section 13 or 15(d) of the Securities Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Date: August 1 6 , 2011
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By:
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/s/ Felix Elinson
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Name: Felix Elinson
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Title: President and Chief Executive Officer
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(Principal Executive, Financial and Accounting Officer)
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