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EXCEL - IDEA: XBRL DOCUMENT - Ambient Water Corp | Financial_Report.xls |
EX-31 - CERTIFICATION - Ambient Water Corp | ex311.htm |
EX-32 - CERTIFICATION - Ambient Water Corp | ex321.htm |
EX-31 - CERTIFICATION - Ambient Water Corp | ex312.htm |
EX-32 - CERTIFICATION - Ambient Water Corp | ex322.htm |
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period ended September 30, 2011
OR
[ ] 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: 333-141927
MIP SOLUTIONS, INC.
(Exact name of registrant as specified in its charter)
NEVADA |
| 20-4047619 |
(State or other jurisdiction of incorporation) |
| (IRS Employer Identification No.) |
3941 Park Dr #20-196 El Dorado Hills, Ca |
| 95762 |
(Address of principal executive offices) |
| (Zip Code) |
(916) 293-6337
(Issuer's telephone number, including area code)
Indicate by check mark 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 at least the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ X ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer, and smaller reporting company in Rule 12b-2 of the Exchange:
Large accelerated filer [ ] | Accelerated filer [ ] |
Non-accelerated filer [ ] | Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act.)
Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: At November 21, 2011, 24,794,115 shares of the Companys common stock were issued and outstanding.
1
MIP SOLUTIONS, INC.
FORM 10-Q
For the Quarter Ended September 30, 2011
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
DEFAULTS UPON SENIOR SECURITIES
2
PART I - FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
MIP SOLUTIONS, INC. |
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(A Development Stage Company) |
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BALANCE SHEETS |
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| September 30, |
| December 31, |
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|
|
| 2011 |
| 2010 |
|
|
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|
| (unaudited) |
|
|
ASSETS |
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| |
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| CURRENT ASSETS |
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| ||
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| Cash |
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| $ | 18,164 | $ | - |
|
| Prepaid expenses |
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| - |
| 18 | |
|
| Note receivable |
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| 228,768 |
| - | |
|
|
| Total Current Assets |
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| 246,932 |
| 18 |
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|
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| PROPERTY AND EQUIPMENT, NET OF DEPRECIATION |
|
| 205 |
| 328 | ||
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| TOTAL ASSETS |
| $ | 247,137 | $ | 346 | ||
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LIABILITIES AND STOCKHOLDERS' (DEFICIT) |
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| CURRENT LIABILITIES |
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| ||
|
| Accounts payable |
| $ | 47,436 | $ | 57,829 | |
|
| Accrued interest |
|
| 2,933 |
| 3,404 | |
|
| Note payable |
|
| 196,481 |
| 28,414 | |
|
| Common stock to be issued |
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| 184,045 |
| 59,045 | |
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| Total Current Liabilities |
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| 430,895 |
| 148,692 |
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| COMMITMENTS AND CONTINGENCIES |
|
| - |
| - | ||
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| STOCKHOLDERS' (DEFICIT) |
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| ||
| Common stock, $0.001 par value; 500,000,000 shares |
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| ||
| authorized, 20,419,115 shares issued and outstanding |
|
| 20,420 |
| 20,420 | ||
| Additional paid-in capital |
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| 2,978,625 |
| 2,974,125 | ||
| Deficit accumulated during the development stage |
|
| (3,182,803) |
| (3,142,891) | ||
|
| Total Stockholders' Deficit |
|
| (183,758) |
| (148,346) | |
|
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|
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| TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) |
| $ | 247,137 | $ | 346 |
The accompanying notes are an integral part of these financial statements.
3
MIP SOLUTIONS, INC. |
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| ||
(A Development Stage Company) |
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STATEMENTS OF OPERATIONS |
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| From |
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|
| Three Months Ended |
| Nine Months Ended |
| December 19, 2005 | ||||
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|
| September 30, |
| September 30, |
| September 30, |
| September 30, |
| (Inception) to |
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|
|
| 2011 |
| 2010 |
| 2011 |
| 2010 |
| September 30, 2011 |
|
|
|
| (unaudited) |
| (unaudited) |
| (unaudited) |
| (unaudited) |
| (unaudited) |
REVENUES | $ | - | $ | - | $ | - | $ | - | $ | - | ||
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|
OPERATING EXPENSES |
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| Consulting |
| - |
| - |
| - |
| 33,800 |
| 1,260,275 | |
| Depreciation and amortization |
| 13 |
| 84 |
| 121 |
| 250 |
| 57,428 | |
| General and administrative |
| 712 |
| 1,884 |
| 1,230 |
| 4,615 |
| 198,615 | |
| Professional fees |
| 10,680 |
| 4,761 |
| 25,030 |
| 34,897 |
| 445,678 | |
| Research and development |
| - |
| - |
| - |
| - |
| 186,468 | |
| Officers and directors fees |
| - |
| 30,000 |
| - |
| 90,000 |
| 658,575 | |
| Option fee |
| - |
| - |
| - |
| - |
| 5,000 | |
| Travel and meals |
| - |
| - |
| - |
| 888 |
| 46,372 | |
| Royalty expense |
| - |
| - |
| - |
| 30,000 |
| 100,000 | |
| Lease termination expense |
| - |
| - |
| - |
| - |
| 178,687 | |
| Buyout provision payable |
| - |
| - |
| - |
| 18,750 |
| 37,500 | |
|
| TOTAL OPERATING EXPENSES |
| 11,405 |
| 36,729 |
| 26,381 |
| 213,200 |
| 3,174,598 |
|
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LOSS FROM OPERATIONS |
| (11,405) |
| (36,729) |
| (26,381) |
| (213,200) |
| (3,174,598) | ||
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OTHER INCOME (EXPENSE) |
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| Other income |
| - |
| - |
| - |
| - |
| 192 | |
| Interest expense |
| (439) |
| (811) |
| (194) |
| (30,477) |
| (106,990) | |
| Financing expense |
| - |
| - |
| (13,337) |
| - |
| (13,337) | |
| Forgiveness of debt |
| - |
| - |
| - |
| - |
| (7,619) | |
| Loss on impairment of assets |
| - |
| - |
| - |
| - |
| (125,731) | |
| Forgiveness of debt |
| - |
| 93,633 |
| - |
| 93,633 |
| 245,280 | |
|
| TOTAL OTHER INCOME |
| (439) |
| 92,822 |
| (13,531) |
| 63,156 |
| (8,205) |
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LOSS BEFORE TAXES |
| (11,844) |
| 56,093 |
| (39,912) |
| (150,044) |
| (3,182,803) | ||
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INCOME TAX EXPENSE |
| - |
| - |
| - |
| - |
| - | ||
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NET LOSS | $ | (11,844) | $ | 56,093 | $ | (39,912) | $ | (150,044) | $ | (3,182,803) | ||
NET LOSS PER COMMON SHARE, |
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| BASIC AND DILUTED | $ | nil | $ | nil | $ | nil | $ | (0.01) |
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WEIGHTED AVERAGE NUMBER OF |
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| COMMON STOCK SHARES |
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| OUTSTANDING, BASIC AND DILUTED |
| 20,419,115 |
| 13,923,775 |
| 20,419,115 |
| 13,369,961 |
|
|
The accompanying notes are an integral part of these financial statements.
4
MIP SOLUTIONS, INC. |
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(A Development Stage Company) |
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STATEMENTS OF CASH FLOWS |
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| From |
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| Nine Months Ended |
| December 19, 2005 | ||
|
| September 30, |
| September 30, |
| (Inception) to |
|
| 2011 |
| 2010 |
| September 30, 2011 |
|
| (unaudited) |
| (unaudited) |
| (unaudited) |
CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net loss | $ | (39,912) | $ | (150,044) | $ | (3,182,803) |
Adjustments to reconcile net loss to net cash provided (used) by operating activities: |
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Depreciation and amortization |
| 121 |
| 250 |
| 57,428 |
Loss on disposition of assets |
| - |
| - |
| 7,619 |
Loss on impairment of assets |
| - |
| - |
| 125,731 |
Common stock and warrants issued for services |
| - |
| 28,800 |
| 1,139,504 |
Interest expense for beneficial conversion feature |
| - |
| - |
| 1,087 |
Common stock issued for payables |
| - |
| 200 |
| 164,605 |
Forgiveness of debt |
| - |
| (93,633) |
| (245,280) |
Financing expense |
| 4,500 |
| 28,000 |
| 4,500 |
Decrease (increase) in: |
| - |
|
|
| - |
Prepaid expenses |
| 18 |
| - |
| - |
Increase (decrease) in: |
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License fee payable |
| - |
| - |
| (80,000) |
Accounts payable |
| (10,391) |
| 10,105 |
| 288,661 |
Accrued expense |
| - |
| - |
| 45,000 |
Accrued interest |
| (471) |
| 2,049 |
| 31,925 |
Accrued payroll |
| - |
| 90,000 |
| 413,622 |
Related party payable |
| - |
| - |
| 44,009 |
Buyout provision payable |
| - |
| 18,750 |
| - |
Royalty payable |
| - |
| 30,000 |
| 80,000 |
Debt discount |
| - |
| - |
| 11,956 |
Common stock to be issued |
| - |
| - |
| 41,045 |
Net cash provided (used) by operating activities |
| (46,135) |
| (35,523) |
| (1,051,391) |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Purchase of equipment |
| - |
| - |
| (20,755) |
Purchase of license |
| - |
| - |
| (65,000) |
Increase in notes receivable |
| (228,768) |
|
|
| (228,768) |
Purchase of patents |
| - |
| - |
| (29,972) |
Sale of asset |
| - |
| - |
| 9,960 |
Net cash provided (used) by investing activities |
| (228,768) |
| - |
| (334,535) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Common stock and warrants for cash, net of fees |
| - |
| - |
| 787,676 |
Warrants issued for financing expense |
| - |
| - |
| 15,549 |
Common stock to be issued |
| 125,000 |
| - |
| 125,000 |
Proceeds from note payable |
| 168,067 |
| 35,523 |
| 526,218 |
Repayment of note payable |
| - |
| - |
| (50,353) |
Net cash provided by financing activities |
| 293,067 |
| 35,523 |
| 1,404,090 |
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Net increase (decrease) in cash and cash equivalents |
| 18,164 |
| - |
| 18,164 |
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Cash, beginning of period |
| - |
| - |
| - |
Cash, end of period | $ | 18,164 | $ | - | $ | 18,164 |
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SUPPLEMENTAL CASH FLOW INFORMATION: |
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Interest paid | $ | - | $ | - | $ | - |
Income taxes paid | $ | - | $ | - | $ | - |
NON-CASH TRANSACTIONS: |
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Equipment issued for accounts payable | $ | - | $ | - | $ | 7,372 |
Issuance of warrant with note payable | $ | 4,500 | $ | - | $ | 4,500 |
Common stock issued for license | $ | - | $ | - | $ | 550 |
Common stock issued for patent | $ | - | $ | - | $ | 1,122 |
Common stock issued for note payable & accrued interest | $ | - | $ | 74,819 | $ | 329,800 |
Common stock issued for asset | $ | - | $ | - | $ | 60,200 |
Common stock issued for officers & directors fees | $ | - | $ | - | $ | 413,389 |
Common stock issued for accounts payable | $ | - | $ | - | $ | 34,480 |
Common stock issued for accrued expense | $ | - | $ | - | $ | 45,000 |
Common stock issued for related party payable | $ | - | $ | 28,009 | $ | 28,009 |
The accompanying notes are an integral part of these financial statements.
5
MIP SOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED NOTES TO THE INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
NOTE 1 BASIS OF PRESENTATION
MIP Solutions, Inc (the Company), was incorporated on December 19, 2005 in the State of Nevada, and has been in the development stage since its formation.
The principal business of the Company had been the development of Molecularly Imprinted Polymers (MIPs) for various commercial applications relating to the removal of targeted molecules from water. In late 2009, The Company began exploring other business opportunities and is concentrating substantially all its efforts to raising capital and pursuing other opportunities.
The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles in the United States of America for complete financial statements. These unaudited interim financial statements should be read in conjunction with the Companys audited financial statements for the year ended December 31, 2010. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented. Operating results for the three and nine month periods ended September 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.
The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Companys financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions and could have a material effect on the reported amounts of the Companys financial position and results of operations.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES
This summary of significant accounting policies of MIP Solutions, Inc. is presented to assist in understanding the Companys financial statements. The financial statements and notes are representations of the Companys management, which is responsible for their integrity and objectivity. These accounting policies conform to accounting principles generally accepted in the United States of America, and have been consistently applied in the preparation of the financial statements.
Recent Accounting Pronouncements
Management does not believe any recently issued, but not yet effective, accounting pronouncements, if adopted, would have a material effect on the accompanying interim financial statements.
Income Taxes
Income taxes are provided based upon the liability method of accounting pursuant to ASC 740-10-25 Income Taxes Recognition. Under this approach, deferred income taxes are recorded to reflect the tax consequences in future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end. A valuation allowance is recorded against deferred tax assets if management does not believe the Company has met the more likely than not standard imposed by ASC 740-10-25-5.
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes.
6
MIP SOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED NOTES TO THE INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
Significant components of the deferred tax assets for the periods ended September 30, 2011 and December 31, 2010 are as follows:
| September 30, |
| December 31, |
2011 | 2010 | ||
Net operating loss carryforward | $ 3,026,000 |
| $ 3,018,000 |
|
|
|
|
Deferred tax asset | $ 1,028,800 |
| $ 1,026,200 |
Deferred tax asset valuation allowance | (1,028,800) |
| (1,026,200) |
Net deferred tax asset | $ - |
| $ - |
At September 30, 2011, the Company has net operating loss carryforwards of approximately $3,026,000 which expire in the years 2026-2031. The change in the allowance account from December 31, 2010 to September 30, 2011 was $2,600.
Use of Estimates
The preparation of financial statements in accordance with generally accepted accounting principles in the United States of America require the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Companys financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions and could have a material effect on the reported amounts of the Companys financial position and results of operations.
Going Concern
As shown in the accompanying financial statements, the Company had negative working capital and an accumulated deficit of $3,169,466 as of September 30, 2011. These factors raise substantial doubt about the Companys ability to continue as a going concern. However, the Company is currently pursuing other opportunities that, if successful, will mitigate these factors. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event the company cannot continue in existence.
During the period ending December 31, 2010 management began converting portions of its outstanding debt for equity as the company continues to work toward compliance with the Share Exchange Agreement of the 8-K filed June 10, 2010 with the SEC. The Company is relying on the consummation of the Share Exchange Agreement to continue as a going concern. Otherwise, the company would need to raise an estimated $100,000 to continue operations for another 12 months while management reorganizes and looks to alternate opportunities to enhance shareholder value. Effective June 8, 2011, the Share Exchange Agreement was terminated, however, subsequent to period end, the Share Exchange Agreement was amended and reinstated.
7
MIP SOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED NOTES TO THE INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets. The useful lives of property, plant and equipment for purposes of computing depreciation are five to forty years. The following is a summary of property, equipment, and accumulated depreciation:
|
|
| September 30, 2011 |
| December 31, 2010 |
Office equipment |
|
| $ 1,779 |
| $ 1,779 |
Total assets |
|
| 1,779 |
| 1,779 |
Less accumulated depreciation |
|
| (1,574) |
| (1,451) |
|
|
| $ 205 |
| $ 328 |
Depreciation and amortization expense for the nine month period ended September 30, 2011 and 2010 was $121 and $250, respectively. The Company evaluates the recoverability of property and equipment when events and circumstances indicate that such assets might be impaired. The Company determines impairment by comparing the undiscounted future cash flows estimated to be generated by these assets to their respective carrying amounts. Maintenance and repairs are expensed as incurred. Replacements and betterments are capitalized. The cost and related reserves of assets sold or retired are removed from the accounts, and any resulting gain or loss is reflected in results of operations.
NOTE 4 COMMON STOCK AND WARRANTS
Common Stock
The Company is authorized to issue 50,000,000 shares of common stock. All shares have equal voting rights, are non-assessable and have one vote per share. Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company.
During the period ended September 30, 2011, the Company did not issue any stock. During the three months ended September 30, 2011, the Companys Board of Directors approved an offer to sell up to 12,500,000 shares of common stock at a price of $0.04 per share for total consideration of $500,000 in a private placement offering under Section 4(2) and Rule 506 of Regulation D of the Securities Exchange Act. Each share sold will include a stock purchase warrant which is exercisable at $0.06 per share. The Company sold 3,125,000 shares of common stock for proceeds of $125,000 under this offering. These shares were sold during the three months ended September 30, 2011, however, the shares have not yet been issued.
NOTE 5 COMMITMENTS
Under the terms of the license agreement with The Johns Hopkins University, the Company will be held responsible to pay JHU/APL fees and/or royalties when they achieve certain milestones, related to annual net sales and total funds raised from external investors. On August 2, 2010 the Company entered into a Mutual Termination Agreement with JHU/APL.
NOTE 6 - NOTES PAYABLE
On March 5, 2009 the Company issued a $40,000 Promissory Note with annual interest of 7% and a conversion price of $0.05 per share to a consultant. This note is secured by all assets of the company. This note was converted into common stock on March 22, 2010; the accrued interest is still outstanding.
8
MIP SOLUTIONS, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED NOTES TO THE INTERIM FINANCIAL STATEMENTS
SEPTEMBER 30, 2011
The Company signed a loan agreement with JHU/APL on July 1, 2008 to satisfy the cash requirements of Amendment #3 to the License Agreement between the Company and JHU/APL dated December 26, 2007. Under the terms of the loan agreement the Company will make monthly payments as follows:
July 31, 2008 | $10,000 |
August 31, 2008 | $ 5,000 |
September 30, 2008 | $ 5,000 |
October 31, 2008 | $ 5,000 |
November 30, 3008 | $ 5,000 |
December 31, 2008 | $ 5,000 |
January 31, 2009 | $ 5,000 |
February 28, 2009 | $ 5,000 |
March 31, 2009 | $ 5,000 |
April 30, 2009 | $ 3,929.18 |
The last payment consists of a $2,500 penalty fee and 8% per annum interest.
The Company has not made payments on this note since October 2008, On August 2, 2010 the Company entered into a Mutual Termination Agreement with JHU/APL. Under the terms of the agreement the Company will pay $20,000 and 600,000 shares of restricted common stock to JHU/APL as settlement of all amounts owed to JHU/APL, within 20 days of a proposed reverse takeover by AWG, as settlement for $131,633 of debt.
On September 29, 2011, the Company entered into a promissory note agreement with the Coghlan Family Corporation of $150,000. The note bears interest at 12% per annum and is due March 29, 2012. The note is secured by Series A preferred stock. The Company will be required to authorize and designate a Series A preferred stock. In connection with the promissory note, the Company issued a detachable warrant to purchase 150,000 shares of common stock to the Coghlan Family Corporation. The warrant is exercisable for a five year term at $0.06 per share. The warrant was valued at $4,500 and is recorded as debt discount to be amortized over the 6 month life of the promissory note.
NOTE 7 CONVERTIBLE DEBT
In March, 2010 the Company issued a convertible promissory note in the amount of $28,000, bearing no interest and is convertible into shares of the Companys common stock at a rate of one share for each $0.14 of principal outstanding. The conversion feature of the note resulted in a beneficial conversion amount of $28,000. The value of the beneficial conversion was expensed in the first quarter of 2010.
NOTE 8 NOTES RECEIVABLE
On September 29, 2011, the Company executed notes receivable for $175,583. The notes do not bear interest, are unsecured and due on March 29, 2012. Imputed interest of $4,500 has been recognized on the notes as a discount.
NOTE 9 - SUBSEQUENT EVENTS
Subsequent to period end, the Companys Board of Directors approved an additional offer to sell up to 1,250,000 shares of common stock at a price of $0.04 per share for total consideration of $50,000 in a private placement offering under Section 4(2) and Rule 506 of Regulation D of the Securities Exchange Act. Each share sold will include a stock purchase warrant which is exercisable at $0.06 per share.
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Executive Overview
Currently the Company lacks the necessary funds to proceed with its business operations over the next twelve months. As of September 30, 2011 the Company had approximately $18,200 in available cash. The Company must raise additional capital through a Private Placement Offering of equity or debt securities or merge with another Company or it will have to cease operations.
The License Agreement with JHU/APL was in default on December 31, 2009 and the Company was notified verbally on April 13, 2010 that the License Agreement was terminated for non-performance.
As reported on FORM 8-K filed on August 18, 2009 our MIP technology proved to be less than commercially viable. As a result all efforts to pursue this technology have been placed on hold. In addition to pursuing opportunities related to our MIP Technology, the Company will pursue merger opportunities.
On August 10, 2010, the board of directors of MIP Solutions, Inc. (MIPS) approved and ratified by consent resolution a Mutual Termination Agreement (the Termination Agreement), between MIPS and Johns Hopkins University acting through its Applied Physics Laboratory (JHU). The Termination agreement concerns the termination of a License dated January 23, 2006 to exploit certain molecular imprinting technology granted to MIPS by JHU and all other agreements and understandings between them (collectively, the License), resulting in all of MIPS rights in and to the intellectual property that was the subject of the License reverting back to JHU at no cost to JHU.
In accordance with the provisions of the Mutual Termination Agreement, MIPS has agreed to pay JHU the sum of $20,000 within a period of 20 days following the completion of a proposed reverse-takeover of MIPS by AWG International Inc., a corporation formed under the laws of the State of Nevada; and issue to JHU 600,000 restricted shares of MIPS common stock within a period of 20 days following the proposed reverse takeover (the Condition Precedent).
Subject to the performance by MIPS of the Condition Precedent, the License will be terminated, with each party having no recourse against the other therefore; and JHU and MIPS will release and forever discharge each other and their respective present and former officers, directors, shareholders, employees, representatives, agents, attorneys, executors, administrators, heirs, assigns and successors in interest from all past, present and future claims, demands, obligations, and causes of action of any nature whatsoever, whether in tort (including, without limitation, acts of active negligence), contract or any other theory of recovery in law or equity, whether for compensatory or punitive damages, equitable relief or otherwise, and whether now known or unknown, suspected or unsuspected, which are based upon or arise out of or in connection with the terminated agreements.
There is no material relationship between MIPS or its affiliates and JHU other than in respect of the License and the Termination Agreement.
We continue to seek additional capital to fund our general and administrative expenses.
We have reentered negotiations with AWG International with a view to enter into a new agreement to acquire AWG International, Inc. as an operating subsidiary. We have not executed any definitive agreement. Our proposed acquisition was initially disclosed in a Current Report filed on Form 8-K on September 10, 2010. This original agreement was terminated earlier this year.
Results of Operations for the Quarter Ended September 30, 2011 and September 30, 2010
Net Sales
The Company is a development stage company and has no revenue.
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Net Loss
The Company had a net loss of $11,844 for the quarter ended September 30, 2011 compared to a net income of $56,093 for the quarter ended September 30, 2010. The decrease was primarily due to a reduction in payroll and the termination of our ongoing commitment to The Johns Hopkins University; and the 2010 gain on forgiveness of debt not recurring.
Operating Expenses
The Company incurred total operating expenses of $11,405 for the quarter ended September 30, 2011 compared to total operating expenses of $36,729 for the quarter ended September 30, 2010.
Professional fees increased $5,919 from $4,761 to $10,680 primarily as a result of the increase in corporate activity and restructuring.
Interest Expense
The Company recorded a decrease in interest expense of $372 from interest of $439 in for the quarter ending September 30, 2011 compared to $811 in September 30, 2010.
The Company has no off-balance sheet arrangements.
Results of Operations for the Nine Months Ended September 30, 2011 and September 30, 2010
Net Sales
The Company is a development stage company and has no revenue.
Net Loss
The Company had a net loss of $26,575 for the nine months ended September 30, 2011 compared to a net loss of $150,044 for the nine months ended September 30, 2010. The decrease was primarily due to a reduction in payroll and the termination of our ongoing commitment to The Johns Hopkins University.
Operating Expenses
The Company incurred total operating expenses of $26,381 for the nine months ended September 30, 2011 compared to total operating expenses of $213,200 for the nine months ended September 30, 2010.
Consulting expenses decreased $33,800 from $33,800 to $0 primarily due to the lack of need for consultants.
Professional fees decreased $20,787 from $34,897 to $25,030 primarily as a result of the reduction in corporate activity.
The Companys general and administrative expenses decreased $3,387 from $4,615 for the nine months ended September 30, 2010 to $1,228 for the nine months ended September 30, 2011. The decrease resulted principally from a lack of operations during the restructuring period.
Interest Expense
The Company recorded a decrease in interest expense of $30,283 from interest of $194 for the nine months ending September 30, 2011 compared to $30,477 for the nine interest months ended September 30, 2010. This decrease in interest was primarily due to the conversion of debt to equity owed to various different creditors.
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The Company has no off-balance sheet arrangements.
Liquidity and Capital Resources
At September 30, 2011, the Company had $18,164 of cash, total current assets of $246,932, total current liabilities of $430,895 and total stockholders' deficit of $183,758 compared to $18 of total current assets, current liabilities of $148,692 and total stockholders' deficit of $148,346 at December 31, 2010.
The Companys unaudited financial statements for the quarter ended September 30, 2011 contain a going concern qualification. As discussed in Note 2 of the Notes to Financial Statements, the Company has incurred losses and has not demonstrated the ability to generate cash flows from operations to satisfy its liabilities and sustain operations. Because of these conditions, our independent auditors have raised substantial doubt about our ability to continue as a going concern.
The Company experienced negative cash flow used in operations during the nine months ended September 30, 2011 of $46,135 compared to negative cash flow used in operations for the nine months ended September 30, 2010 of $35,523.
To date, the Company has met its working capital needs through funds received from shareholder loans. Until operations become profitable, the Company must continue to sell equity or incur debt.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not required for smaller reporting companies.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of and Report on Internal Control over Financial Reporting
The Company carried out, under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and the Companys Chief Financial Officer, an evaluation of the effectiveness of the design and operation of the Companys disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commissions rules and forms and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.
Based on their evaluation, the Companys Chief Executive Officer and its Chief Financial Officer concluded that, as of September 30, 2011, the Companys disclosure controls and procedures were not effective.
Changes in Internal Control over Financial Reporting
There have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the period ended September 30, 2011, that materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting. There has been no progress towards remediating our previously disclosed material weaknesses due to lack of funding.
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PART II
ITEM 1.
LEGAL PROCEEDINGS
None.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4.
REMOVED AND RESERVED
ITEM 5.
OTHER INFORMATION
None.
ITEM 6.
EXHIBITS
Exhibit 31.1 Certification required by Rule 13a-14(a) or Rule 15d-14(a)
Exhibit 32.1 Certification required by Rule 13a-14(b) or Rule 15d-14(b) and section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350
101*
The following financial information from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2011 formatted in Extensible Business Reporting Language (XBRL): (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Cash Flows, and (v) Notes to Financial Statements
_____________________
*
In accordance with Rule 406T of Regulation S-T, the XBRL information in Exhibit 101 to this quarterly report on Form 10-Q shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: November 21, 2011
MIP Solutions, Inc.
(Registrant)
/s/ Gary McDonald /s/ Jeffrey Lamberson
By:________________________________
________________________________
Gary McDonald
Jeffrey Lamberson
Chief Executive Officer
President, Chief Financial Officer
Principal Accounting Officer
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