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EX-32.1 - CERTIFICATION - B-Scada, Inc.mobs_ex32.htm


 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended: April 30, 2012

 

 

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: 000-1341878

 

MOBIFORM SOFTWARE, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

94-3399360

(State or other jurisdiction of

 

(I.R.S. Employer Identification No.)

Incorporation or organization)

 

 

 

 

 

1255 N Vantage Pt. Dr., Suite A

 

 

Crystal River, Florida

 

34429

(Address of principal executive offices)

 

(Zip Code)


Issuer's telephone number (352) 564-9610


N/A

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes  [  ] 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). [X] Yes  [  ] No


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.


Large accelerated filer

[  ]

  

 

Accelerated filer

[  ]

Non-accelerated filer

[  ]

(Do not check if a smaller reporting company)

 

Smaller reporting company

[X]

 

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

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.

   

The number of shares of the issuer’s common equity outstanding as of June 4, 2012 was 24,586,672 shares of common stock, par value $.0001.



 



 

MOBIFORM SOFTWARE, INC.

 

TABLE OF CONTENTS

 

PART I.  FINANCIAL INFORMATION

3

 

 

ITEM 1.  FINANCIAL STATEMENTS

3

 

 

BALANCE SHEETS

3

 

 

     AT APRIL 30, 2012 (UNAUDITED) AND OCTOBER 31, 2011

3

 

 

STATEMENTS OF OPERATIONS (UNAUDITED]

4

 

 

     FOR THE THREE MONTH AND SIX MONTH PERIODS  ENDED APRIL 30, 2012 AND 2011

4

 

 

STATEMENTS OF CASH FLOWS (UNAUDITED]

5

 

 

     FOR THE SIX  MONTHS ENDED APRIL 30, 2012 AND 2011

5

 

 

NOTES TO FINANCIAL STATEMENTS (UNAUDITED]

6

 

 

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

11

 

 

ITEM 4.  CONTROLS AND PROCEDURES

17

 

 

PART II.  OTHER INFORMATION

18

 

 

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES

18

 

 

ITEM 6.  EXHIBITS

18

 

 

SIGNATURES

19








2



 

PART I.  FINANCIAL INFORMATION

 

ITEM 1.  FINANCIAL STATEMENTS


MOBIFORM SOFTWARE, INC.


BALANCE SHEETS


 

 

April 30,

 

October 31,

 

 

2012

 

2011

 

 

(Unaudited)

 

 

Assets

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

     Cash and Cash Equivalents

 

$

248,504

 

$

13,958

     Accounts Receivable - Net

 

 

98,829

 

 

59,674

     Accrued Revenue

 

 

--

 

 

174,350

     Prepaid Expenses and Other Current Assets

 

 

778

 

 

1,835

          Total Current Assets

 

 

348,111

 

 

249,817

 

 

 

 

 

 

 

Property and Equipment - Net

 

 

13,368

 

 

15,542

 

 

 

 

 

 

 

Other Assets

 

 

 

 

 

 

     Security Deposits

 

 

3,650

 

 

3,650

 

 

 

 

 

 

 

          Total Assets

 

$

365,129

 

$

269,009

 

 

 

 

 

 

 

Liabilities and Stockholders’ Deficiency

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

     Convertible Notes Payable

 

$

50,000

 

$

50,000

     Notes Payable - Related Party

 

 

164,173

 

 

210,000

     Accounts Payable and Accrued Liabilities

 

 

118,340

 

 

145,728

     Deferred Revenue

 

 

208,590

 

 

86,199

          Total Current Liabilities

 

 

541,103

 

 

491,927

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

--

 

 

--

 

 

 

 

 

 

 

Stockholders’ Deficiency

 

 

 

 

 

 

     Preferred Stock, $0.0001 Par Value, 5,000,000 Shares

 

 

 

 

 

 

          Authorized and Unissued

 

 

--

 

 

--

     Common Stock, $0.0001 Par Value; 100,000,000 Shares

 

 

 

 

 

 

          Authorized; Shares Issued and Outstanding, 24,586,672

 

 

 

 

 

 

          at April 30, 2012 and October 31, 2011

 

 

2,459

 

 

2,459

     Additional Paid in Capital

 

 

7,100,728

 

 

7,100,728

     Accumulated Deficit

 

 

(7,279,161)

 

 

(7,326,105)

          Total Stockholders’ Deficiency

 

 

(175,974)

 

 

(222,918)

 

 

 

 

 

 

 

          Total Liabilities and Stockholders’ Deficiency

 

$

365,129

 

$

269,009




See the accompanying notes to financial statements.





3



MOBIFORM SOFTWARE, INC.


STATEMENTS OF OPERATIONS [UNAUDITED]




 

For the Three Months Ended

 

For the Six Months Ended

 

April 30,

 

April 30,

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

 

Revenue

$

197,508

 

$

101,389

 

$

479,129

 

$

511,921

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

  Payroll Expenses

 

164,215

 

 

177,131

 

 

330,633

 

 

333,195

  Consulting Fees - Share Based

 

--

 

 

--

 

 

--

 

 

1,459

  Professional Fees

 

11,308

 

 

35,934

 

 

26,898

 

 

49,662

  Advertising

 

5,348

 

 

25,607

 

 

8,619

 

 

29,661

  Depreciation and Amortization

 

3,319

 

 

3,485

 

 

6,595

 

 

6,969

  Consulting Fees

 

1,070

 

 

1,765

 

 

1,720

 

 

24,178

  Office

 

1,082

 

 

7,429

 

 

3,431

 

 

11,898

  Rent

 

9,085

 

 

10,054

 

 

18,286

 

 

19,443

  Telephone and Communication

 

2,724

 

 

2,579

 

 

3,783

 

 

5,524

  Other

 

9,723

 

 

7,553

 

 

22,658

 

 

20,476

     Total Operating Expenses

 

207,874

 

 

271,537

 

 

422,623

 

 

502,465

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

(10,366)

 

 

(170,148)

 

 

56,506

 

 

9,456

 

 

 

 

 

 

 

 

 

 

 

 

Other Expenses

 

 

 

 

 

 

 

 

 

 

 

  Interest Expense

 

(1,008)

 

 

(1,008)

 

 

(2,017)

 

 

(2,017)

  Interest Expense - Related Party

 

(3,311)

 

 

(2,016)

 

 

(7,545)

 

 

(4,032)

     Total Other Expenses

 

(4,319)

 

 

(3,024)

 

 

(9,562)

 

 

(6,049)

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) Before Income Taxes

 

(14,685)

 

 

(173,172)

 

 

46,944

 

 

3,407

 

 

 

 

 

 

 

 

 

 

 

 

Provision for Income Taxes

 

--

 

 

--

 

 

--

 

 

--

 

 

 

 

 

 

 

 

 

 

 

 

     Net Income (Loss)

$

(14,685)

 

$

(173,172)

 

$

46,944

 

$

3,407

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) Per Common Share - Basic and Diluted

$

--

 

$

(0.01)

 

$

--

 

$

--

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-Average Common Shares Outstanding - Basic and Diluted

 

24,586,672

 

 

24,586,672

 

 

24,586,672

 

 

24,586,672


See the accompanying notes to financial statements.




4






MOBIFORM SOFTWARE, INC.


STATEMENTS OF CASH FLOWS [UNAUDITED]



 

For the Six Months Ended

 

April 30,

 

2012

 

2011

 

 

 

 

Operating Activities

 

 

 

  Net Income

$

46,944

 

$

3,407

  Adjustments to Reconcile Net Income to Net Cash

 

 

 

 

 

     Provided by (Used for) Operating Activities:

 

 

 

 

 

       Depreciation and Amortization

 

6,595

 

 

6,969

       Consulting Fees - Share Based

 

--

 

 

1,459

       Deferred Revenue

 

122,391

 

 

(55,703)

 

 

 

 

 

 

  Changes in Assets and Liabilities:

 

 

 

 

 

     (Increase) Decrease in:

 

 

 

 

 

       Accounts Receivable

 

(39,155)

 

 

(1,453)

       Accrued Revenue

 

174,350

 

 

--

       Prepaid Expenses and Other Current Assets

 

1,057

 

 

4,887

     Increase (Decrease) in:

 

 

 

 

 

       Accounts Payable and Accrued Liabilities

 

(27,388)

 

 

(18,558)

         Net Cash Provided by (Used for) Operating Activities

 

284,794

 

 

(58,992)

 

 

 

 

 

 

Investing Activities

 

 

 

 

 

  Acquisition of Property & Equipment

 

(4,421)

 

 

--

         Net Cash Used for Investing Activities

 

(4,421)

 

 

--

 

 

 

 

 

 

Financing Activities

 

 

 

 

 

  Payment of note payable - related party

 

(45,827)

 

 

--

         Net Cash Used for Financing Activities

 

(45,827)

 

 

--

 

 

 

 

 

 

Change in Cash and Cash Equivalents

 

234,546

 

 

(58,992)

 

 

 

 

 

 

Cash and Cash Equivalents - Beginning of Period

 

13,958

 

 

67,980

 

 

 

 

 

 

Cash and Cash Equivalents - End of Period

$

248,504

 

$

8,988

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information

 

 

 

 

 

  Cash paid during the period for:

 

 

 

 

 

     Interest

$

9,173

 

$

--

     Income Taxes

$

--

 

$

--




See the accompanying notes to financial statements.




5






MOBIFORM SOFTWARE, INC.

NOTES TO FINANCIAL STATEMENTS [UNAUDITED]

APRIL 30, 2012



(1)  Nature of Business and Basis of Presentation


Mobiform Software, Inc, (“Mobiform”, the “Company”, “we” or “us”), a Delaware corporation, was originally formed under the name Firefly Learning, Inc. in May 2001. In October, 2005, pursuant to an exchange agreement, we acquired all of the issued and outstanding shares of capital stock of Mobiform Software, Ltd. (“Mobiform Canada”), a Canadian corporation, in exchange for 14,299,593 shares of our common stock. Effective September 14, 2010, Mobiform Canada was dissolved.


Mobiform is in the business of developing software products for the visualization and monitoring of data in heavy industry. Our HMI (Human Machine Interface) software and SCADA (Supervisory Control and Data Acquisition) products are utilized in petro chemical, electricity distribution, transportation, facilities management and manufacturing industries. Mobiform also licenses portions of its technology for use in the products of smaller software firms and Fortune 500 companies. Our products are marketed and sold globally and offered through a sales channel of system integrators and resellers.


(2)  Alleviation of Going Concern


We have incurred substantial net operating losses and used substantial amounts of cash in our operating activities since our inception. The expansion and development of our business has been funded primarily through a combination of private equity and debt and notes from our Chief Executive Officer. As of April 30, 2012, we have approximately $249,000 in cash and cash equivalents. We have signed significant licensing and services agreements with Fortune 500 companies and others and for the six month period ended April 30, 2012 we have generated $285,000 in cash from operations. We believe that, as a result of this, we currently have sufficient cash and revenue commitments to finance our operations over the next twelve month period. There is no assurance that the income generated from these and future agreements will meet our working capital requirements subsequent to the next twelve months, and if not, we will likely require additional capital. We continue to market our products and services in accordance with our strategic business plan.  We are also looking to raise additional capital to meet our future working capital needs. There are no assurances, however, that we will be successful in our efforts to raise capital or generate sufficient revenues through our marketing efforts.


(3)  Summary of Significant Accounting Policies


Unaudited Interim Statements - The accompanying unaudited interim financial statements as of April 30, 2012, and for the three and six months ended April 30, 2012 and 2011 have been prepared in accordance with accounting principles generally accepted for interim financial statement presentation and in accordance with the instructions to Form 10-Q.  Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation.  In the opinion of management, the financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position as of April 30, 2012, the results of operations for the three and six months ended April 30, 2012 and 2011 and the cash flows for the six months ended April 30, 2012 and 2011.  The results of operations for the six months ended April 30, 2012 are not necessarily indicative of the results to be expected for the full year.


Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.


Revenue Recognition - Our revenues are recognized in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 985-605 “Revenue Recognition” for the software industry.  Revenue from the sale of software licenses is recognized when standardized software modules are delivered to and accepted by the customer, the license term has begun, the fee is fixed or determinable and collectibility is probable.  Revenue from software maintenance contracts and Application Service Provider (“ASP”) services are recognized ratably over the lives of the contracts.  Revenue from professional services is recognized when the service is provided.



6





MOBIFORM SOFTWARE, INC.

NOTES TO FINANCIAL STATEMENTS [UNAUDITED]

APRIL 30, 2012



(3)  Summary of Significant Accounting Policies (continued)


We enter into revenue arrangements in which a customer may purchase a combination of software, maintenance and support, and professional services (multiple-element arrangements).  When vendor-specific objective evidence (“VSOE”) of fair value exists for all elements, we allocate revenue to each element based on the relative fair value of each of the elements.  VSOE of fair value is established by the price charged when that element is sold separately.  For maintenance and support, VSOE of fair value is established by renewal rates, when they are sold separately.  For arrangements where VSOE of fair value exists only for the undelivered elements, we defer the full fair value of the undelivered elements and recognize the difference between the total arrangement fee and the amount deferred for the undelivered items as revenue, assuming all other criteria for revenue recognition have been met.


Subsequent Events - The Company evaluated subsequent events, which are events or transactions that occurred after April 30, 2012 through the issuance of the accompanying financial statements.


Our other accounting policies are set forth in Note 3 of our audited financial statements included in the Mobiform Software, Inc. 2011 Form10-K.


(4)  New Authoritative Accounting Guidance


On May 12, 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-04.  The ASU is the result of joint efforts by the FASB and the International Accounting Standards Board (“IASB”) to develop a single, converged fair value framework.  Thus, there are few differences between the ASU and its international counterpart, IFRS 13.  This ASU is largely consistent with existing fair value measurement principles in U.S. GAAP; however it expands ASC 820’s existing disclosure requirements for fair value measurements and makes other amendments. The ASU is effective for interim and annual periods beginning after December 15, 2011.  The Company does not expect the provisions of ASU 2011-04 to have a material effect on the financial position, results of operations or cash flows of the Company.


On June 16, 2011, the FASB issued ASU 2011-05, which revises the manner in which entities present comprehensive income in their financial statements.  The new guidance removes the presentation options in ASC 220 and requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements.  The ASU does not change the items that must be reported in other comprehensive income.  The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011.  The Company does not expect the provisions of ASU 2011-05 to have a material effect on the financial position, results of operations or cash flows of the Company.


Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have an effect on the accompanying consolidated financial statements.


(5)  Property and Equipment


Property and equipment consists of the following:


 

April 30,

 

October 31,

 

Estimated

 

2012

 

2011

 

Useful Lives

 

[Unaudited]

 

 

 

 

 

 

 

 

 

 

Computer Equipment

$

40,372

 

$

35,951

 

5 years

Office Equipment

 

24,432

 

 

24,432

 

5-7 years

Software

 

21,566

 

 

21,566

 

3 years

Total

 

86,370

 

 

81,949

 

 

Less: Accumulated Depreciation

 

 

 

 

 

 

 

     and Amortization

 

(73,002)

 

 

(66,407)

 

 

 

$

13,368

 

$

15,542

 

 




7






MOBIFORM SOFTWARE, INC.

NOTES TO FINANCIAL STATEMENTS [UNAUDITED]

APRIL 30, 2012



(6)  Stockholders’ Equity


We are authorized to issue 100,000,000 shares of common stock, par value $0.0001 per share and 5,000,000 shares of preferred stock, par value $0.0001 per share.  At April 30, 2012 there were 24,586,672 common shares issued and outstanding.  An additional 547,366 common shares were reserved for issuance as of April 30, 2012 for outstanding purchase warrants and convertible debt.  There are no shares of preferred stock issued and outstanding.


As of April 30, 2012, we have 104,000 outstanding warrants to employees.  The fair value of all the warrants issued for services is being charged to operations over the periods the warrants vest.  Amortization of the fair values charged to operations is determined by the Black-Scholes pricing model.  We had no such charges in the six months ended April 30, 2012 and 2011. All the warrants have cashless exercise provisions as defined in the warrants.


We entered into a consulting agreement on February 5, 2010 for financial consulting services.  As part of the compensation for services, the consultant was granted a five-year warrant to purchase 300,000 shares of our common stock at the market price per share on the date of issuance, which was $0.09.  The warrant vests 25% on the date of issuance and every three months thereafter and has cashless exercise provisions as defined in the warrant.  The fair value of the warrant, $5,833, was calculated using the Black-Scholes pricing model with the following assumptions: 0% dividend yield; 0.4% risk free interest rate; 23.81% volatility; 5 year expected life.  Share-based expense based on the fair value of the warrant is being charged to operations over the vesting period.  The expense recorded in the six months ended April 30, 2012 and 2011 was $0 and $1,459, respectively.


The following table summarizes the warrants and options.


 

 

For the Six Months Ended

For the Year Ended

 

 

April 30, 2012

(Unaudited)

October 31, 2011

 

 

Shares

Weighted

Average Exercise

Price

Shares

Weighted

Average Exercise

Price

 

 

 

 

 

 

Outstanding at beginning

 

 

 

 

 

     of period

 

5,793,750

$  1.17

11,463,750

$  0.69

     Granted/Sold

 

--

--

--

--

     Expired/Cancelled

 

(5,389,750)

$  1.23

(5,670,000)

$  0.20

     Forfeited

 

--

--

--

--

     Exercised

 

--

--

--

--

Outstanding at end of period

 

404,000

$  0.26

5,793,750

$  1.17


The following table summarizes information about stock warrants outstanding as of April 30, 2012 [Unaudited]:


 

Warrants

 

Outstanding

 

Exercisable

 

 

Weighted-

 

 

 

 

 

 

Average

 

 

 

 

 

 

Remaining

Weighted

 

 

Weighted

 

 

Contractual

Average

 

 

Average

 

Number

Life

Exercise

 

Number

Exercise

Exercise Price

Outstanding

(in Years)

Price

 

Exercisable

Price

$0.09

 300,000

2.75

$0.09

 

 300,000

$0.09

$0.75

 104,000

0.08

$0.75

 

 104,000

$0.75





8





MOBIFORM SOFTWARE, INC.

NOTES TO FINANCIAL STATEMENTS [UNAUDITED]

APRIL 30, 2012


(6)  Stockholders’ Equity (continued)


The following table summarizes information about stock warrants outstanding as of October 31, 2011:


 

Warrants

 

Outstanding

 

Exercisable

 

 

Weighted-

 

 

 

 

 

 

Average

 

 

 

 

 

 

Remaining

Weighted

 

 

Weighted

 

 

Contractual

Average

 

 

Average

 

Number

Life

Exercise

 

Number

Exercise

Exercise Price

Outstanding

(in Years)

Price

 

Exercisable

Price

$0.09

 300,000

3.25

$0.09

 

 300,000

$0.09

$0.75

 2,022,750

0.38

$0.75

 

 2,022,750

$0.75

$1.50

 3,471,000

0.17

$1.50

 

 3,471,000

$1.50


At April 30, 2012 and October 31, 2011, the weighted-average exercise price of all warrants was $0.26 and $1.17, respectively, and the weighted-average remaining contractual life was 2.06 and 0.40 years, respectively.


(7)  Income Taxes


The income tax expense (benefit) differs from the amount computed by applying the United States statutory corporate income tax rate as follows:


 

For the Six Months Ended

 

 

April 30,

 

 

2012

 

2011

 

 

[Unaudited]

 

[Unaudited]

 

 

 

 

 

 

United States Statutory Corporate

 

 

 

 

  Income Tax Rate

34.0%

 

34.0%

 

Change in Valuation Allowance on

 

 

 

 

  Deferred Tax Assets

(34.0)%

 

(34.0)%

 

 

 

 

 

 

  Income Tax Provision

--%

 

--%

 


The components of deferred tax assets (liabilities) at April 30, 2012 and October 31, 2011 are as follows:


 

April 30,

 

October 31,

 

 

2012

 

2011

 

 

[Unaudited]

 

 

 

 

 

 

 

 

Deferred Tax Assets - Current

 

 

 

 

 

 

  Accrued Vacation Pay

$

8,734

 

$

7,599

 

  Valuation Allowance

 

(8,734)

 

 

(7,599)

 

 

 

--

 

 

--

 

Deferred Tax Assets (Liabilities) - Long Term

 

 

 

 

 

 

  Net Operating Losses

 

1,168,975

 

 

1,262,414

 

  Property and Equipment

 

(1,697)

 

 

(3,694)

 

  Equity Instruments

 

37,330

 

 

574,440

 

  Valuation Allowance

 

(1,204,608)

 

 

(1,833,160)

 

 

 

 

 

 

 

 

    Net Deferred Tax Asset

$

--

 

$

--

 




9






MOBIFORM SOFTWARE, INC.

NOTES TO FINANCIAL STATEMENTS [UNAUDITED]

APRIL 30, 2012



(7)  Income Taxes (continued)


We have established a full valuation allowance on our deferred tax asset because of a lack of sufficient positive evidence to support its realization.  The valuation allowance decreased by approximately $(627,000) and $(14,000) in the six months ended April 30, 2012 and the year ended October 31, 2011, respectively.


(8)  Related Party Transactions


On January 25, 2012, we paid $45,000 to our Chief Executive Officer (“CEO”) for partial payment of promissory notes and accrued interest owed him.  The payment included principal in the amount of $35,827 and accrued interest of $9,173.


On February 6, 2012, we paid $10,000 to our Chief Executive Officer (“CEO”) for partial payment of promissory notes owed him.  The payment included principal in the amount of $10,000.


As of April 30, 2012 and October 31, 2011, the promissory note balance due our CEO is $164,173 and $210,000, respectively, and the related accrued interest is $17,057 and $18,684, respectively.

 

Interest expense in the amount of $7,545 and $4,032 has been accrued for these notes in the six months ended April 30, 2012 and 2011, respectively.


(9)  Commitments and Contingencies


Leases


We presently lease office space in Crystal River, Florida, on a month to month basis. The terms are a fixed monthly payment of $2,000 plus our share of certain allocated utilities (not to exceed $2,000 per month) as defined in the agreement. Rental expense, including allocated utilities, for the six months ended April 30, 2012 and 2011 amounted to approximately $18,000 and $19,000, respectively.
























10






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


The following discussion of our results of operations should be read together with our financial statements and the related notes, included elsewhere in this report. The following discussion contains forward-looking statements that reflect our current plans, estimates and beliefs and involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this quarterly report on Form 10-Q.


Executive Summary


Since 2003, our experience in Microsoft .NET graphics technology has given us a unique perspective and insight into new data visualization possibilities with emerging technologies.


We specialize in the compelling visualization of real-time data. Mobiform has produced exceptional data visualization solutions for manufacturing, power & utilities, automation, and other fields of business making use of HMI (Human Machine Interface) and SCADA (Supervisory Control and Data Acquisition) software products.


Our in-house expertise and experience has provided us the opportunity to partner with companies from various vertical markets, and assist them in developing custom solutions that meet their specific needs. Our goal is to help our clients transfer their real-time production and operational data into actionable information through graphically-compelling, functional, and intuitive user interfaces.


Products and Services


Our technology team has more than 20 years of experience in software design and development and has designed, built and delivered, over the years, world-class software solutions. In addition to software development, we also derive income from consulting services and contract development.


Overall Strategic Goals


Our intent since inception has been to use this model as a foundation for growing our business. Our plans include developing a ‘Technology Toolbox’ of software development components and design technology that can be used repeatedly as we deliver a variety of software products for consumers and industry in a wide range of verticals. If you can take a piece of technology, hardware, or any manufactured item, and reuse it over and over in different products you can achieve a very high return on investment for your research and development efforts.


This toolbox is a set of software components that can be reused in various software products. The types of software developed in our toolbox include software components for visualizing information, LED displays, gauges, charting and mapping controls. We call these our ‘VantagePoint Controls™’. Mobiform has created additional technology for graphics design for its Technology Toolbox. ‘Aurora’ is a Graphics Design Platform that can be used to provide design capabilities inside of software applications built for Microsoft Windows.


Product Description


With the Technology Toolbox in place, we can quickly assemble data visualization software products for monitoring real time data. Our target market is monitoring and control for heavy industry since this is an area in which our team already has expertise.


We have assembled our first vertical market application. ‘Status Vision Designer®’ (“Status”) was released in January 2009 as an industrial control and monitoring application for heavy industry and manufacturing.


Status falls into the category of a SCADA (Supervisory Control and Data Acquisition) or HMI (Human Machine Interface) software application.


Status Vision Designer® is a powerful data visualization software package that allows the user to create highly graphical screens and connect the controls on the screens to real-time data. The screens can then be published and viewed by anyone within the company or from the web.


The Status Designer is built using Aurora, a powerful graphics design package developed by Mobiform. Aurora is used as the foundation for numerous software products of major Fortune 500 companies.



11






Status has built-in connectivity to real-time OPC (Open Process Control) data and can very easily be extended to bind to other types of data. OPC data is primarily used in the manufacturing and process control industries. The market appeal for Status is its ability to connect to a variety of OPC servers and display real-time data from hundreds of data sources.


We have attracted a number of resellers and system integrators that are now promoting and using ‘Status’ in commercial settings. During the year ended October 31, 2011 we have materially increased our international reseller network.  We believe that this will result in greater sales and distribution of our software through retail outlets and to original equipment manufacturers (“OEM”s). We are also targeting potential customers to offer customized applications to meet their industry requirements.   Status is now being used to monitor the 4th largest subway system in the world in Seoul, South Korea. It is monitoring HVAC performance in pharmaceutical manufacturing facilities in China, and is used in various monitoring applications in numerous verticals in the United States.


Consulting


In addition to sales of pre-designed software products, we generate revenue by consulting with organizations which utilize our expertise in customized solutions and embedding our software into theirs. We also offer training and graphic design services. Mobiform's graphic designers provide screen design expertise. We have also been tasked to create customized .NET and Silverlight controls for use in the Status Designer, and produce 3D models of equipment and machinery for use in mimics.


We assist consulting clients with their applications.  From initial consulting services and custom development, to embedding our Aurora software into their solution, we have the expertise and personnel to assist.  


Status was designed from the ground up to be extensible. Numerous companies have written custom data sources or asked Mobiform to create custom data sources to provide their real time data into Status.


Technology Licensing  


In addition to selling our own software products, we also license the technology we have developed to other software companies. Long-term licenses to multinational automation software companies are a major part of our business.  The lead time for our engineers to work with theirs in developing successful integration of our software with their future products is fairly long-from nine months to two years - but the result is a multiyear high revenue license which provides substantial revenue to us for years to come.  We have a number of agreements in place and are currently in discussions with additional companies in the oil and gas, oil service, electric power generation and mining industries.


The products developed using Mobiform technology includes industrial automation solutions, medical applications for use in hospitals, smart grid, HVAC and line of business applications. The relationships established through licensing are very strategic and may lead to acquisitions to prevent competitive companies from having the same strategic benefits.


Development Services and Support


Mobiform has been recognized as a leading edge software development firm. We are often asked to provide software development services, graphics design and consulting as part of the technology licensing agreements we sign with our customers.


Our go-to-market strategy is simple: For Stage 1, following in the footsteps of Corel, Adobe and Macromedia, our goal is to put in place a set of core technologies that we can leverage to create a variety of software applications for different vertical markets. We have made some of these components available to other software companies as either retail software development components or as toolkits that can be used to embed our technology into their solutions. We have offered free downloads of our components and toolkits to prospective customers. With thousands of downloads of our products globally, we believe we are well on our way to achieving brand-name recognition. We will continue in our efforts to generate incremental revenue by working with global industry leaders in selling consulting services and licensing our technology.

 

Now that we are equipped with the technology infrastructure developed during Stage 1, we find that developing highly interactive and powerful software is simplified.  In Stage 2 we are moving our business focus from technology development to product development.   We are in discussions with major companies engaged in offshore drilling platforms, mining, electric power generation and heavy industry automation, among others.  With a powerful set of software components in our tool belt, we believe we are able to build software products more rapidly and at a lower total cost of ownership to the consumer.  Products are created through two different scenarios, (i) in-house creation of our own consumer products; and (ii) integration into third party products.  Both scenarios should result in additional income producing licenses to or sales of, our technologies and products.




12






The third part of our strategy is a feedback loop. By providing a limited amount of consulting services, Mobiform is able to identify potential software products and components that are needed by industry, and produce those products for market. These components will feed our technology base and the relationships developed from the consulting will provide potential sales channels and additional licensing and OEM agreements to us.


Revenue Strategy


We are currently generating revenues through the licensing of our technology to different software companies, retailing portions of our technology as software development components, and in the near future, retailing our software solutions to specific vertical markets. We anticipate, in the future, a smaller portion of our revenue will come from consulting services and custom development.


We are currently selling our products directly over the Internet from our website and through resellers. In the future, we intend to distribute Aurora through retail outlets and OEMs. We will also target potential customers to offer customized applications to meet their industry requirements.


Critical Accounting Policies and Estimates


Our financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The preparation of the financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. Though we evaluate our estimates and assumptions on an ongoing basis, our actual results may differ from these estimates.


Certain of our accounting policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s subjective judgments are described below to facilitate a better understanding of our business activities. We base our judgments on our experience and assumptions that we believe are reasonable and applicable under the circumstances.


Revenue Recognition - Our revenues are recognized in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 985-605 “Revenue Recognition” for the software industry.  Revenue from the sale of software licenses is recognized when standardized software modules are delivered to and accepted by the customer, the license term has begun, the fee is fixed or determinable and collectability is probable.  Revenue from software maintenance contracts and Application Service Provider (“ASP”) services are recognized ratably over the lives of the contracts.  Revenue from professional services is recognized when the service is provided.


We enter into revenue arrangements in which a customer may purchase a combination of software, maintenance and support, and professional services (multiple-element arrangements).  When vendor-specific objective evidence (“VSOE”) of fair value exists for all elements, we allocate revenue to each element based on the relative fair value of each of the elements.  VSOE of fair value is established by the price charged when that element is sold separately.  For maintenance and support, VSOE of fair value is established by renewal rates, when they are sold separately.  For arrangements where VSOE of fair value exists only for the undelivered elements, we defer the full fair value of the undelivered elements and recognize the difference between the total arrangement fee and the amount deferred for the undelivered items as revenue, assuming all other criteria for revenue recognition have been met.


Results of Operations


The following tables set forth, for the periods indicated, certain items from the statements of operations along with a comparative analysis of ratios of costs and expenses to revenues.





13






Comparison of the Three Months Ended April 30, 2012 and 2011


 

For the three months ended April 30,

 

2012

 

2011

 

(Unaudited)

 

(Unaudited)

 

 

 

% of

 

 

 

% of

 

Amounts

 

Revenues

 

Amounts

 

Revenues

 

 

 

 

 

 

 

 

Revenues

$

197,508

 

 100%

 

$

101,389

 

 100%

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

  Compensation costs

$

164,215

 

 83%

 

$

177,131

 

 175%

  Consulting fees

$

1,070

 

 1%

 

$

1,765

 

 2%

  Advertising

$

5,348

 

 3%

 

$

25,607

 

 25%

  Professional fees

$

11,308

 

 6%

 

$

35,934

 

 35%

 

 

 

 

 

 

 

 

 

 

Interest and debt costs

$

4,319

 

 2%

 

$

3,024

 

 3%

 

 

 

 

 

 

 

 

 

 

Net Loss

$

(14,685)

 

 (7)%

 

$

(173,172)

 

 (171)%

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic and

 

 

 

 

 

 

 

 

 

   diluted

$

--

 

 

 

$

(0.01)

 

 


Revenues


Our revenues for the three months ended April 30, 2012 amounted to $197,508 compared to the comparative 2011 period of $101,389.  Revenues for the period increased by $96,119 (95%). The increase was a result of revenue increases in license and royalty fees ($29,000), maintenance and support fees ($22,000) and developmental services revenues ($45,000).  Developmental services revenues include revenues from fees charged for the implementation of our software products and training of customers in the use of such products. We are currently selling our software over the internet and are marketing our products and services to companies that may want to license or joint venture some of our software applications.


Operating Expenses


Our operating expenses consist primarily of compensation costs, advertising and professional services.


Compensation costs consist of payroll and related expenses.  Payroll expenses amounted to $164,215 in the three months ended April 30, 2012 compared to $177,131 in the three months ended April 30, 2011. Payroll expenses decreased $12,916 (7%) as we continue to manage our payroll costs as we implement our strategic plan.


Advertising costs decreased to $5,348 in the three months ended April 30, 2012 from $25,607 in the three months ended April 30, 2011, a decrease of $20,259, or approximately 79%, primarily from decreases in trade show expense.


Professional fees decreased to $11,308 in the three months ended April 30, 2012 from $35,934 in the three months ended April 30, 2011, a decrease of $24,626 (69%), as we internally assumed some of the functions related to our required filings as a public company.  Consulting fees of $1,070 in the three months ended April 30, 2012 are comparative with $1,765 in the three months ended April 30, 2011.


Interest and Debt Costs


Interest expense increased from $3,024 in the three months ended April 30, 2011 to $4,319 in the three months ended April 30, 2012. Interest expense is incurred on the promissory notes totaling $164,173 with our CEO and $50,000 in outstanding convertible debentures.

 

Net Loss


Net loss in the three months ended April 30, 2012 totaled $14,685 (7% of revenues) compared to $173,172 (171% of revenues) in the three months ended April 30, 2011 a decrease of $158,487 (92%), as discussed in the above components.



14





Comparison of the Six Months Ended April 30, 2012 and 2011


 

For the six months ended April 30,

 

2012

 

2011

 

(Unaudited)

 

(Unaudited)

 

 

 

% of

 

 

 

% of

 

Amounts

 

Revenues

 

Amounts

 

Revenues

 

 

 

 

 

 

 

 

Revenues

$

479,129

 

 100%

 

$

511,921

 

100%

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

  Compensation costs

$

330,633

 

 69%

 

$

333,195

 

65%

  Consulting fees

$

1,720

 

 0%

 

$

25,637

 

5%

  Advertising

$

8,619

 

 2%

 

$

29,661

 

6%

  Professional fees

$

26,898

 

 6%

 

$

49,662

 

10%

 

 

 

 

 

 

 

 

 

 

Interest and debt costs

$

9,562

 

 2%

 

$

6,049

 

1%

 

 

 

 

 

 

 

 

 

 

Net income

$

46,944

 

 10%

 

$

3,407

 

1%

 

 

 

 

 

 

 

 

 

 

Net income per share - basic and

 

 

 

 

 

 

 

 

 

   diluted

$

--

 

 

 

$

--

 

 


Revenues


Our revenues for the six months ended April 30, 2012 amounted to $479,129 compared to the comparative 2011 period of $511,921. Revenues for the period decreased by $32,792 (6%) primarily resulting from declines in license and royalty fees ($148,000), offset by increases in maintenance and support fees ($42,000) and consulting and developmental services revenue ($73,000).  Developmental services revenues include revenues from fees charged for the implementation of our software products and training of customers in the use of such products. We are currently selling our software over the internet and are marketing our products and services to companies which may want to license or joint venture some of our software applications.


Operating Expenses


Our operating expenses consist primarily of compensation costs, advertising and professional services.


Compensation costs consist of payroll and related expenses. Payroll expenses amounted to $330,633 in the six months ended April 30, 2012 compared to $333,195 in the six months ended April 30, 2011. Payroll expenses are comparable as we continued to implement our strategic plan while we tried to maintain our payroll costs.  


Advertising costs have decreased from $29,661 in the six months ended April 30, 2011 to $8,619 in the six months ended April 30, 2012, a decrease of $21,042 (71%) primarily from decreases in trade show expenses.


Professional fees decreased to $26,898 in the six months ended April 30, 2012 from $49,662 in the six months ended April 30, 2011, a decrease of $22,764 (46%), as we internally assumed some of the functions related to our required filings as a public company.


Consulting fees decreased from $25,637 in the six months ended April 30, 2011 to $1,720 in the six months ended April 30, 2012 as certain consulting agreements entered into in fiscal 2011 were not renewed.


Interest and Debt Costs


Interest expense increased from $6,049 in the six months ended April 30, 2011 to $9,562 in the six months ended April 30, 2012. Interest expense is incurred on the promissory notes totaling $164,173 with our CEO and $50,000 in outstanding convertible debentures.


Income Taxes


The potential future tax benefits resulting from pre-tax losses have been fully reserved as we are not able to determine if it is more likely than not that we will be able to realize the tax benefits in the future.



15






Net Income


Net income in the six months ended April 30, 2012 totaled $46,944 (10% of revenues) compared to $3,407 (1% of revenues) in the six months ended April 30, 2011 an increase of $43,537 (1,278%), as discussed in the above components.


Liquidity and Capital Resources


We fund our operations through sales of our products and services and debt and equity financings.


At April 30, 2012 we had cash and cash equivalents of $249,000 compared to $14,000 at October 31, 2011. The increase of $235,000 is primarily attributable to the cash received from payments on our licensing agreements.


Cash Flows


Net cash provided by (used for) operating activities amounted to $285,000 and ($59,000) in the six months ended April 30, 2012 and 2011, respectively. Net cash from operations increased as a result of the additional cash generated in the second quarter of fiscal 2012 from our licensing agreements and services revenues while we managed to maintain operating costs for compensation, advertising and professional fees as discussed above.


In fiscal 2012, cash was used for investing activities for the acquisition of property and equipment in the amount of $4,421.


In fiscal 2012, cash was used for financing activities for loan repayments to our CEO in the amount of $45,827.


We believe that our cash on hand at April 30, 2012 will be sufficient to fund our operations for at least the next 12 months. We have signed significant licensing agreements and continue to market our products and services in accordance with our strategic business plan. We are also looking to raise additional capital through debt and/or equity financings. There is no assurance that the income generated from these and future agreements will meet our working capital requirements, or that we will be able to sign significant agreements in the future. There is also no assurance that we will be able to obtain additional capital in the amount or on terms acceptable to us.  


Contractual Obligations


N/A


Off-Balance Sheet Arrangements


As of April 30, 2012, we had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.


Quantitative and Qualitative Disclosure about Market Risk

Interest Rate Risk


N/A


Recent Accounting Pronouncements


On May 12, 2011, the FASB issued Accounting Standards Update (“ASU”) 2011-04.  The ASU is the result of joint efforts by the FASB and the International Accounting Standards Board (“IASB”) to develop a single, converged fair value framework.  Thus, there are few differences between the ASU and its international counterpart, IFRS 13.  This ASU is largely consistent with existing fair value measurement principles in U.S. GAAP; however it expands ASC 820’s existing disclosure requirements for fair value measurements and makes other amendments. The ASU is effective for interim and annual periods beginning after December 15, 2011.  The Company does not expect the provisions of ASU 2011-04 to have a material effect on the financial position, results of operations or cash flows of the Company.


On June 16, 2011, the FASB issued ASU 2011-05, which revises the manner in which entities present comprehensive income in their financial statements.  The new guidance removes the presentation options in ASC 220 and requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements.  The ASU does not change the items that must be reported in other comprehensive income.  The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011.  The



16





Company does not expect the provisions of ASU 2011-05 to have a material effect on the financial position, results of operations or cash flows of the Company.


Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have an effect on the accompanying financial statements.



ITEM 4.  CONTROLS AND PROCEDURES

 

(a)  Evaluation of disclosure controls and procedures

 

The Company’s management, with the participation of the Company’s principal executive officer (“CEO”) and principal financial officer (“CFO”), evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report.  Based on this evaluation, the CEO and CFO concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective to ensure that information that is required to be disclosed by the Company in the reports it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.


(b) Management’s Assessment of Internal Control over Financial Reporting


Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a15(f) and 15d15(f) under the Exchange Act.  Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements.  Also, projections of any evaluation of effectiveness to future periods are subject to the risk that internal controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


Furthermore, smaller reporting companies face additional limitations.  Smaller reporting companies employ fewer individuals and may find it difficult to properly segregate duties.  Often, one or two individuals control every aspect of the Company’s operation and are in a position to override any system of internal control.  Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.


Management has assessed the effectiveness of our internal control over financial reporting as of April 30, 2012.  In making this assessment, management used the criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  The objective of this assessment is to determine whether our internal control over financial reporting was effective as of April 30, 2012.  Based on our assessment utilizing the criteria issued by COSO, management has concluded that our internal control over financial reporting was not effective as of April 30, 2012.  Management’s assessment identified the following material weaknesses:


·

As of April 30, 2012, there was a lack of accounting personnel with the requisite knowledge of Generally Accepted Accounting Principles (GAAP) in the U.S. and financial reporting requirements of the Securities and Exchange Commission.

·

As of April 30, 2012, there were insufficient written policies and procedures to insure the correct application of accounting and financial reporting with respect to the current requirements of GAAP and SEC disclosure requirements.

·

As of April 30, 2012, there was a lack of segregation of duties, in that we only had one person performing all accounting-related duties.

·

As of April 30, 2012, there were no independent directors and no independent audit committee.


Notwithstanding the existence of these material weaknesses in our internal control over financial reporting, our management believes that the financial statements included in its reports fairly present in all material respects the Company’s financial condition, results of operations and cash flows for the periods presented.  We continue to evaluate the effectiveness of internal controls and procedures on an on-going basis.  We plan to further address these issues once cash flows from operations improve to a level where we are able to hire additional personnel in financial reporting.


During the most recently completed fiscal quarter, there has been no change in our internal control over financial reporting that has materially affected or is reasonably likely to materially affect, our internal control over financial reporting. 

 

 

17





PART II.  OTHER INFORMATION

 

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES

 

We did not issue any equity securities during the period covered by this report that were not registered under the Securities Act.

 

ITEM 6.  EXHIBITS

 

 

 

31.1 Certification by the Principal Executive Officer and Principal Financial Officer of Mobiform Software, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a)) (furnished herewith).

 

 

 

 

 

32.1 Certification by the Principal Executive Officer and Principal Financial Officer of Mobiform Software, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

 

101.INS

 

XBRL Instance Document

 

 

 

101.SCH

 

XBRL Taxonomy Extension Schema Document

 

 

 

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

 

 

 

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document

 

 

 

101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document

 

 

 

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

















18





 

SIGNATURES

 

 

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

 

 

  

MOBIFORM SOFTWARE, INC.

  

  

  

Dated:, June 6, 2012

By:

/s/   Allen Ronald DeSerranno                            

  

  

Allen Ronald DeSerranno

Principal Executive Officer

and Principal Financial Officer






























19