UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON,  D.C. 20549

  

FORM 10 – Q

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF 1934

 

 

For the quarterly period ended March 31, 2011

 

Commission File Number 000-51533

 

SuperDirectories, Inc.

(Name of small business issuer specified in its charter)

a Wyoming corporation

 

Incorporated in Delaware on October 1, 1999.	14-1817301
Jurisdiction of incorporation and domicile	I.R.S. Employer ID Number
changed to Wyoming on August 25, 2010.

  

5337 Route 374, Merrill, New York 12955

(Address of principal executive offices) (Zip Code)

 

Issuer's telephone number, including area code (518) 425-0320

 

 

Indicate by a 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 £ No S

 

Indicate by a check mark whether the registrant has submitted 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-K (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 S

 

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. (Check One):

 

Large accelerated filer £	Accelerated filer £	Non-accelerated filer  £	Smaller reporting company S
		(Do not check if a smaller
		reporting company)

  

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

  

 

As of March 31, 2011 there were 2,902,558,879 shares of the issuer’s common stock, par value $0.00000001, issued and outstanding.

 

As of April 13, 2012, there are 2,903,247,174 shares of common stock, par value $0.00000001 per share, issued and outstanding.

 

 

  

SuperDirectories, Inc.

(A Development Stage Company)

Consolidated Balance Sheets

(Unaudited)

 

		March 31, 2011				September 30, 2010
ASSETS
Current assets
Cash and cash equivalents		$	14,317			$	8,346
Total current assets			14,317				8,346
Property and equipment							-
Office equipment			127,658				126,882
Less: Accumulated depreciation			(109,722	)			(101,465	)
Total property and equipment			17,936				25,417
Trade name, net			1,269				1,377
TOTAL ASSETS		$	33,522			$	35,140
LIABILITIES & STOCKHOLDERS' DEFICIT
Current liabilities
Accrued expenses		$	10,000			$	20,000
Accounts payable			6,385				5,267
Accounts payable - related party			4,000				-
Advances from officer			340,709				245,708
Total current liabilities			361,094				270,975
Commitments and contingencies			-				-
Stockholders' deficit
Series A preferred stock, par value $0.00000001 per share, 10,000,000
shares authorized, 1 share issued  and outstanding			-				-
Series B preferred stock, par value $0.00000001 per share, 90,000,000
shares authorized, 12,253,840 and 12,000,000 shares issued  and outstanding
as of March 31, 2011 and September 30, 2010, respectively			-				-
Series C preferred stock, par value $0.00000001 per share, 20,000,000
shares authorized, -0- shares issued  and outstanding			-				-
Common stock, par value $0.00000001 per share, 49,880,000,000
shares authorized, 2,902,558,879 and 2,558,879 shares issued and
outstanding as of March 31, 2011 and September 30, 2010, respectively			29				-
Additional paid-in capital			8,186,801				8,116,482
Deficit accumulated during the development stage			(8,514,402	)			(8,352,317	)
Total stockholders' deficit			(327,572	)			(235,835	)
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT		$	33,522			$	35,140

 

See accompanying notes to unaudited consolidated financial statements.

 

 

SuperDirectories, Inc.

(A Development Stage Company)

Consolidated Statements of Operations

(Unaudited)

 

																		November 15, 1999
																		(Inception)
		Three Months Ended								Six Months Ended								through
		March 31,								March 31,								March 31,
		2011				2010				2011				2010				2011
Revenues		$	-			$	-			$	-			$	-			$	-
Expenses
General and administrative expenses			41,630				70,298				82,965				123,237				7,037,992
Software costs			34,644				72,612				70,757				161,559				1,196,446
Depreciation and amortization			4,137				4,447				8,365				9,238				111,711
Impairment loss			-				-				-								243,903
Total operating expenses			80,411				147,357				162,087				294,034				8,590,052
Other income
Other income			-				-				-				-				125
Interest income			1				53				2				1,234				75,525
Total other income			1				53				2				1,234				75,650
Income tax expense			-				-				-				-				-
Net loss		$	(80,410	)		$	(147,304	)		$	(162,085	)		$	(292,800	)		$	(8,514,402	)
Loss per common share - Basic
and diluted		$	(0.00	)		$	(0.93	)		$	(0.00	)		$	(1.84	)
Weighted average commons shares
outstanding - Basic and diluted			2,067,003,323				158,825				1,023,438,000				158,823

 

See accompanying notes to unaudited consolidated financial statements.

 

 

SuperDirectories, Inc.

(A Development Stage Company)

Consolidated Statements of Cash Flows

(Unaudited)

 

										November 15, 1999
		Six Months Ended								(Inception)
		March 31,								through
		2011				2010				March 31, 2011
Cash Flows from Operating Activities
Net loss		$	(162,085	)		$	(292,800	)		$	(8,514,402	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock-based compensation expense			4,716				-				4,850,955
Depreciation and amortization			8,365				9,238				111,711
Impairment loss			-				-				243,903
Changes in operating assets and liabilities:
Accounts payable			1,118				(4,397	)			6,384
Accounts payable - related party			4,000				-				4,000
Accrued expense			(10,000	)			(24,000	)			10,000
Net Cash Used in Operating Activities			(153,886	)			(311,959	)			(3,287,449	)
Cash Flows from Investing Activities
Purchase of fixed assets			(776	)			-				(371,562	)
Trade name			-				-				(3,257	)
Net Cash Used in Investing Activities			(776	)			-				(374,819	)
Cash Flows From Financing Activities
Proceeds from sale of common stock			65,632				8,600				3,519,568
Retirement of common stock			-				-				(183,692	)
Repayments of advances from officer			-				(100,000	)			(100,000	)
Advances from officer			95,001				30,000				440,709
Net Cash Provided by (Used in) Financing Activities			160,633				(61,400	)			3,676,585
Net Increase (Decrease) in Cash and Cash Equivalents			5,971				(373,359	)			14,317
Cash and Cash Equivalents at Beginning of Period			8,346				391,798				-
Cash and Cash Equivalents at End of Period		$	14,317			$	18,439			$	14,317
Supplemental Disclosures of Cash Flow Information:
Cash paid for interest		$	-			$	-
Cash paid for income taxes		$	-			$	-
Non-cash Financing Transaction
Conversion of Series B Preferred Stock to Common Stock		$	29			$	0

 

See accompanying notes to unaudited consolidated financial statements.

 

 

SuperDirectories, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

(Unaudited)

 

 

Note 1 – Description of business and basis of presentation:

 

SuperDirectories, Inc. (“we”, “our”, the “Company”) is a corporation originally organized under the State of Delaware General Corporation Law. The Corporation was created on November 15, 1999 under the name LukeSmart, Inc. and was renamed SuperDirectories, Inc. on July 9, 2002. On August 19, 2010, the Company amended its Articles of Incorporation and transferred its registered address to the state of Wyoming.

 

The accompanying unaudited consolidated financial statements of SuperDirectories, Inc. have been prepared in accordance with generally accepted accounting principles used in the United States of America and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s most recent Annual Financial Statements filed with the SEC on Form 10-K.  Accordingly, they do not include all information and footnotes required by generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments considered necessary for a fair presentation (consisting of normal recurring adjustments) have been included. Operating results for the six months ended March 31, 2011 are not necessarily indicative of the results that may be expected for the fiscal year ended September 30, 2011.  

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles 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. Actual results could differ from those estimates.

 

Note 2 – Going concern:

 

During the six months ended March 31, 2011, SuperDirectories, Inc. has not generated any revenue and therefore has been unable to generate cash flows sufficient to support its operations and has been dependent on advances from its officer. In addition to negative cash flow from operations, SuperDirectories, Inc. has experienced recurring net losses, and has a working capital deficit of approximately $347,000 as of March 31, 2011.

 

These factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if SuperDirectories, Inc. is unable to continue as a going concern. Management believes that actions presently being taken to obtain additional equity funding and implement its strategic plans provide the opportunity for the Company to continue as a going concern.

 

Note 3 – Related party transactions:

 

SuperDirectories, Inc. receives services and rents its administrative offices from Aqua Nature of USA, Inc., a company controlled by the majority shareholder of SuperDirectories, Inc. Services and rentals from related parties of $24,000 for each of the six months ended March 31, 2011 and 2010, are included in general and administrative expenses.

 

During the six months ended March 31, 2011 and 2010, the Company’s President and majority shareholder advanced $95,001 and $30,000, respectively, to the Company to fund its current operations. During the six months ended March 31, 2010, the Company made repayments of $100,000 for such advances. As of March 31, 2011, the amount due to the President and majority shareholder was $340,709.  The advances to the Company are unsecured, non-interest bearing and are payable upon demand.

 

  

Note 4 – Shareholders’ equity:

 

Common stock split

 

On December 22, 2010, the Company recorded a 1-for-1,000 reverse split of its common stock. The reverse split does not affect the number of common shares authorized for issuance.  All share and per share information has been retroactively adjusted to reflect the reverse stock split in the financial statements and in the notes to financial statements for all periods presented, to reflect the reverse stock split as if it occurred at inception.

 

Common stock sales

 

During the six months ended March 31, 2011 the Company received total proceeds from refunds for sales of excess stock given to a consultant for services rendered totaling $65,632.

 

Conversion of Series B preferred stock to common stock

 

In January 2011, holders of 1,160 shares of the Company’s Series B preferred stock converted their respective Series B preferred stock into 2.9 billion common shares, in accordance with the conversion privileges provided for in the Company’s Bylaws. As a result of this conversion, additional paid-in capital was decreased by the total par value of the corresponding common shares issued at the date of conversion.

 

Stock issuances for services

 

The Company entered into financial advisory and consulting agreements with various consultants mostly for one-year terms with effective dates starting in November 2010, in exchange for a total of 255,000 shares of its Series B preferred stock. The agreements were executed and the Series B preferred stock were issued in January 2011. Accordingly, the estimated value of the Series B preferred stock of $4,716 was recognized in the accompanying consolidated statements of operations during the three and six months ended March 31, 2011 under general and administrative expenses.

 

 

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

 

Forward-Looking Statements.

 

This section of the report includes a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934 that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

 

Although we believe the expectations reflected in these forward-looking statements are reasonable, such expectations cannot guarantee future results, levels of activity, performance or other achievements.

 

All forward-looking statements included in this report and all subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. The forward-looking statements speak only as of the date made, other than as required by law, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Presentation of Data.

 

This 10-Q is filed for the quarter ended March 31, 2011 (the second quarter of our year-ended September 30, 2011 [FY2011]), but is being filed in April, 2012 during the Fiscal Year ending September 30, 2012 (FY2012).

 

Results of Operations – Q2 FY2011.

 

For the six months ended March 31, 2011, we incurred a net operating loss of $162,085, as compared with a net operating loss of $292,082 for the same period last year. This is due to lower operating costs at all levels.

 

For the period from November 15, 1999 (inception) to March 31, 2011, we had no operating revenues and incurred net operating losses of $8,514,402. For the second quarter ended March 31, 2011, we incurred a net operating loss of $80,410, as compared with a net operating loss of $147,304 for the same period last year, and a net operating loss of $81,675 for our prior quarter ended December 31, 2010.

 

In prior periods, our net operating losses consisted principally of product development costs and legal and accounting fees primarily incurred in connection with ongoing SEC filing requirements (through August of 2010), as well as OTC Disclosure reporting requirements (since August of 2010).

 

Liquidity and Capital Resources – Q2 FY2011.

 

Our cash at March 31, 2011 was $14,317. We will need to raise additional funds to finance our proposed operations during the next 12 months. No assurance can be given that funding will be available to us, on reasonable terms, if at all.

 

Net cash used in operating activities in the six months ended March 31, 2011 was $153,886. Net cash used in operating activities from inception through March 31, 2011 was $3,287,449. Net cash used in financing activities for the six months ended March 31, 2010 was $61,400, and for the six months ended March 31, 2011 was $160,633, and from inception through March 31, 2011 was $3,676,585.

 

  

As indicated above, there was a big jump in net cash provided by financing activities from the six months ended March 31, 2010, versus the six months ended March 31, 2011. The large increase was due to the repayment of $100,000 worth of advances from Luke LaLonde during the first six months of FY2010, whereas, for the same period in FY 2011, the Company received proceeds of $65,632 from the sale of common stock and additional cash advances from Luke LaLonde of $95,001.

 

Plan of Operation – FY2012.

 

The following discussion of our plan of operation for the next 12 months and our discussion of our liquidity and capital resources should be read in conjunction with our financial statements and notes thereto, and the other financial data included elsewhere in this annual report. We are including this Plan of Operation in recognition of the fact that we are a development stage company and have yet to achieve operating revenues.

 

Our plan of operation for the next twelve months is dependent upon our raising additional capital. As of September 30, 2011 – the latest period for which we have audited financial data – we had approximately $49,576 in cash available and believe we can satisfy our basic capital requirements for the fiscal year ending September 30, 2012 from private placement of our common stock and loans from management. No assurance can be given however, that we will be able to sell shares of our common stock, and no member of our management is under any obligation to loan money to us. During the fiscal year ending September 30, 2012, we will continue to engage consultants to perform “human” editing services, expanding the quality and size of our searchable directory. As expansion occurs, and as increased user activity places greater demand on the system, more hardware (servers and routers) will be added to manage the increased volume of data stored in the database and presented by the online directory. Except for one or more servers and routers as may be occasioned by large demand for our directory, we do not expect to purchase any significant equipment or make any other capital expenditure. Our major expenditures, should we be successful in raising sufficient capital, will be in human resources as we describe below.

 

We have been successful in financing our operational and developmental activities to date by selling shares of our common stock and from advances from our President. However, we have no assurance that we will be able to continue in this way, and our current available cash balance of $49,576 as of September 30, 2011 is insufficient to continue development, and will require a significant stock offering and/or continued advances from our President in order to have sufficient capital to continue development until income producing business operations are commenced. We have no plans for other business activities if we are unable to raise required funds. We believe we will need to raise additional capital of approximately $420,000 in order to continue operations for the fiscal year ending September 30, 2012 as well as fully implement our entire business and marketing strategy at all planned levels of activity. Our activities to date have been limited to building our database. The information available through our directory comes from ever changing and growing sources.

 

We have recently experienced delays in meeting certain target dates related to our business operations. The delays were principally caused by our need to synchronize the capabilities of our existing servers and to install fiber optic lines in our Gatineau, Quebec facilities. Also, in January of 2012, our sole full-time employee, officer and director, Luke LaLonde, had an illness which incapacitated him for several weeks, through March 2012. However, we do not presently anticipate any further delays.

 

We believe that on or about September 2012, we will have a sufficient database to make our website marketable. We currently have 9 directory editors who work on a contract basis, research subjects for our directory, create new categories and add websites to our directory. Our average cost per directory consultant is approximately $1,200 per month. We are currently conducting a training program for our editors to help us to reach the desired efficiency of each editor being able to add approximately 1,800 new links per day into our database.

 

We currently have five servers in operation – two in Watertown, New York at facilities operated by Westelcom, two in Gatineau, Quebec, and one at facilities operated by MCI in Montreal. We plan to install a sixth server at a Westelcom facility in Plattsburgh, New York during September 2012.

 

 

In October 2012, we intend to start building an administrative staff that will be needed to manage our business as we prepare to move from a developmental to operational mode. In this regard, we plan to add approximately six administrative personnel and expect to begin to incur related payroll costs of approximately $15,000 per month.

 

By October 2012, we anticipate that we will have sufficiently developed our database to the point where we can offer a product that will be receptive to potential customers. At that time, although we will continue to add to our database, we intend to start adding marketing personnel to develop and implement a plan to bring our product into the marketplace. We plan to add 2 marketing personnel per month beginning in October 2012 until we reach a total of 10 at an approximate monthly payroll cost of $2,750 per such employee.

 

We expect that our marketing team will be fully assembled by September 2012. At that point, much of the effort of our marketing team will be directed to developing a national marketing effort and formulating a plan and cost projection to carry it out. Our national marketing effort is not expected to commence until after November 2012. The feasibility of our national marketing plan will be dependent on our ability to raise additional capital and we have no assurances that this can be accomplished. However, it is not vital to our operations and we will implement it only when and if we have sufficient funds. We have no present plans for any other business.

 

A major portion of our anticipated revenues is expected to come from Pay Per Click fees which we expect will commence on or before September 30, 2012. We are presently generating 245,000 clicks per month and we have no agreements in place at this time to convert clicks to cash. Our rate structure will be a flat $0.25 per click compared to an average of $0.92 per click for Google and Yahoo, the most measurable in our industry who generate more than 2,000,000 clicks per day. We expect to increase our monthly click rate as our marketing activities increase.

 

Banners will be sold on an annual basis, starting as soon as possible after October 2012 when we will attempt to convert all present (trial basis) free-banner sites to paid sites. The program has not commenced, no transactions have been recorded and no sums raised or fees received.

 

We intend to introduce a fixed “price per click” (as opposed to the highest bid strategy employed by all known competitors) which we expect to yield a following dedicated to true content matching rather than a ranking based on price. This plan will be modified to offer discounts to sites producing the highest click ratings. We believe this strategy is not yet in wide use and will require a series of modifications to test and prove the concept. In the opinion of management, the bidding concept for key words is not the proper, customer-centric way to determine the priority order of websites to be shown in search results. We believe that showing the most frequently accessed sites at the top of the results list produces a more practical result for users/searchers.

 

Off-Balance Sheet Arrangements.

 

We have no off-balance sheet arrangements.

 

Critical Accounting Policies.

 

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our financial statements.

 

Development Stage Activities

 

The Company was incorporated in the state of Delaware on November 15, 1999, and re-domiciled in the state of Wyoming on August 25, 2010. Activities to date have been directed at developing a searchable directory of selected contents from the Internet and raising capital through the issuance of the Company’s capital stock.

 

  

Stock-Based Compensation

 

The Company measures and recognizes compensation expense for all share-based payment awards made to employees, consultants and directors based on their grant-date estimated fair values over the period in which the share-based awards are expected to vest.

 

Use of Estimates

 

The preparation of financial statements requires us to make assumptions, estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and disclosures of contingent assets and liabilities as of the date of the financial statements. On an ongoing basis, we evaluate our estimates, including those related to reserves; impairment of website development cost, value of our stock issued to consultants for services and deferred taxes. We base our estimates on assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions; however, we believe that our estimates, including those for the above-described items are reasonable.

 

CONTROLS AND PROCEDURES

 

Evaluation of Our Disclosure Controls.

 

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934 as amended (Exchange Act), as of March 31, 2011.  Based on this evaluation, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and that our disclosure and controls are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures.

 

Changes in Internal Control Over Financial Reporting.

 

There have been no changes in our internal control over financial reporting that occurred during the quarter ended March 31, 2011 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

 

LEGAL PROCEEDINGS

 

In the ordinary course of our business, we may from time to time become subject to routine litigation or administrative proceedings which are incidental to our business. We are not a party to nor are we aware of any existing, pending or threatened lawsuits or other legal actions involving us.

 

 

OTHER INFORMATION

 

Effective January 23, 2011, we conducted a reverse split of the issued and outstanding common shares at a ratio of 1 new share for 1,000 old shares.

 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

  

EXHIBITS

 

The following exhibits are included as part of this report:

 

Exhibit No.		Description
31.1 / 31.2		Rule 13(a)-14(a)/15(d)-14(a) Certification of Principal Executive and Financial Officer
32.1 / 32.2		Rule 1350 Certification of Chief Executive and Financial Officer

 

 

 

SIGNATURES

 

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

 

Date:  April 16, 2012

Super Directories, Inc.

 

 

By:  /s/ Luke Lalonde  

Luke Lalonde, President, Principal Executive Officer, Treasurer and Principal Financial Officer