Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. On an on-going basis, management evaluates these estimates and assumptions, including but not limited to those related to revenue recognition and the impairment of long-lived assets, goodwill and other intangible assets. Management bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The Company recognizes revenue on arrangements in accordance with Securities and Exchange Commission Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements’ and No. 104, “Revenue Recognition”. In all cases, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.
Product sales and shipping revenues, net of promotional discounts, rebates, and return allowances, are recorded when the products are shipped and title passes to customers. Retail sales to customers are made pursuant to a sales contract that provides for transfer of both title and risk of loss upon our delivery to the carrier. Return allowances, which reduce product revenue, are estimated using historical experience. Revenue from product sales and services rendered is recorded net of sales taxes. Amounts received in advance for subscription services, are deferred and recognized as revenue over the subscription term.
The most important metric by which we judge the Company’s performance now and in the near term is top line sales growth. Our current commitment to develop and deliver quality products means that, for the near future, bottom line profitability will be a poor indicator of our success.
Since investors and advances from related parties are certain to be the primary, near term source of liquidity to support our development and marketing efforts, our liquidity will be driven by our ability to attract repeat investments from current shareholders and to find new ones. This in turn may be materially impacted by the general investment climate.
Our primary marketing challenge for the coming 12 months is to achieve market awareness through our web portals currently under development and anticipated to be completed for beta testing in the fourth quarter of 2012. Additionally, management is seeking new acquisitions to complement existing products and developing future sources of revenue.
Our primary marketing challenge for the coming 12 months is to achieve market awareness through our various web portals currently under development and anticipated to be completed for beta testing in the latter part of 2012.
As our revenues commence, we plan to invest in marketing and sales by increasing the number of direct sales throughout our web portal to build brand awareness. We expect that in the future, marketing and sales expenses will increase in absolute dollars commencing in the fourth quarter of 2012 when our websites should be completed with its beta testing and is available for customers. We do not expect our revenues to increase significantly until 2013 unless management can acquire and/or develop other sources of business revenues.
General and Administrative Expenses
We expect that general and administrative expenses associated with executive compensation will increase in the future. Although our current president, chief financial officer and sole director have foregone full salary payments during the initial stages of the business, anticipated to commence revenues in the fourth quarter of 2012. In addition, we believe in the latter part of the 2012 fiscal year that the compensation packages required to attract the senior executives the Company requires to execute against its business plan will increase our total general and administrative expenses.
Summary of Consolidated Condensed Results of Operations
Any measurement and comparison of revenues and expenses from continuing operations should not be considered necessarily indicative or interpolated as the trend to forecast our future revenues and results of operations.
Results for the Three (3) Months Ended June 30, 2012 and 2011
Revenues. The Company’s revenues for the three (3) months ended June 30, 2012 and 2011 were $0. From inception through June 30, 2012, the company had $0 revenues.
Legal and Accounting Expenses. Legal and Accounting expenses for the three (3) months ended June 30, 2012 were $1,600 as compared to $900 for the three (3) months ended June 30, 2011. The increase in expense of $700 relates to the normalization of the development stage of operating expenses and the reporting requirements as mandated by the Securities and Exchange Commission.
General and Administrative Expenses. General and administrative expenses for the three (3) months ended June 30, 2012 were $3,400 compared to $1,000 for the three (3) months ended June 30, 2011. These are the normal and recurring expenses that we anticipate occurring on a quarterly basis.
Net Loss. Net loss for the three (3) months ended June 30, 2012 was ($5,000) compared to ($2,000) for the three (3) months ended June 30, 2011. The increase in loss of ($3,000) relates to the normalization of the development stage of operating expenses and the reporting requirements as mandated by the Securities and Exchange Commission.
Results for the Six (6) Months Ended June 30, 2012 and 2011
Revenues. The Company’s revenues for the six (6) months ended June 30, 2012 and 2011 were $0. From inception through June 30, 2012, the company had $0 revenues.
Legal and Accounting Expenses. Legal and Accounting expenses for the six (6) months ended June 30, 2012 were $3,100 as compared to $1,400 for the six (6) months ended June 30, 2011. The increase in expense of $1,700 relates to the normalization of the development stage of operating expenses and the reporting requirements as mandated by the Securities and Exchange Commission.
Consulting Fees. Consulting fee expenses for the six (6) months ended June 30, 2012 were $45,000 as compared to $0 for the six (6) months ended June 30, 2011. The increase in expense of $45,000 was a direct result of the Company’s review of its business plan, objectives and the pre-planning associated with the development of our websites and the expansion potential with various business alternatives.
General and Administrative Expenses. General and administrative expenses for the six (6) months ended June 30, 2012 were $6,350 compared to $1,500 for the six (6) months ended June 30, 2011. These are the normal and recurring expenses that we anticipate occurring on a quarterly basis.
Net Loss. Net loss for the six (6) months ended June 30, 2012 was ($54,450) compared to ($3,000) for the six (6) months ended June 30, 2011. The increase in loss of ($51,450) was a direct result of the Company’s utilization of consultants during six (6) months ended June 30, 2012 in evaluating and analyzing the company’s’ business plan and potential future endeavors.
Impact of Inflation
We believe that the rate of inflation has had negligible effect on our operations. We believe we can absorb most, if not all, increased non-controlled operating costs by increasing sales prices, when producing revenue and by operating our Company in the most efficient manner possible.
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Liquidity and Capital Resources
The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and implement its business plan. Since its inception, the Company has been funded by its related parties and through its initial public offering.
As of June 30, 2012 and December 31, 2011, total current assets were $0.
As of June 30, 2012, total current liabilities were $54,450, which consisted of $30,000 of Note payable, $5,000 of accounts payable, $11,500 of accrued expenses and $7,950 of loans from related parties. As of December 31, 2011, total current liabilities were $45,000, which consisted of $30,000 of accounts payable for development of our web portals, $10,000 of accrued expenses and $5,000 of loans from related parties. We had net working capital deficit of ($54,450) as of June 30, 2012, compared to net working deficit capital of ($45,000) at December 31, 2011.
During the six (6) months ended June 30, 2012, operating activities used cash of $32,950 and used cash of $76,950 from inception through June 30, 2012. Cash flows from financing activities consist primarily of cash generated through the company’s initial public offering, loans and conversion of debt to equity from related parties from September 17, 2007 (inception) through June 30, 2012.
We entered into an agreement with a third party independent contractor to produce and develop our initial five (5) web portals for a total of $30,000. The independent contractor is revising the web portals whereby the company is anticipating the review and beta testing to commence fourth quarter of 2012. This obligation ($30,000) was transferred to the adult daughter of our sole officer and director and on April 30, 2012, a Note was entered into by the Company. We are redesigning our web portals with anticipated beta-testing in the latter part of 2012.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements or any anticipate entering into any off-balance arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Recent Accounting Pronouncements
The company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable for a smaller reporting company.
Item 4. Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that the information required to be disclosed in the reports that we file under the Securities Exchange Act of 1934 are recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our President, who also serves as our principal financial and accounting officer, as appropriate, to allow timely decisions regarding required disclosures.
In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving the desired control objectives, and in reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
As required by SEC Rule 13a-15(b), we carried out an evaluation, under the supervision and with the participation of our President, who also serves as our principal financial and accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of our first fiscal quarter covered by this report. Based on the foregoing, our President concluded that our disclosure controls and procedures were effective at the reasonable assurance level.
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There has been no change in our internal controls over financial reporting during our first fiscal quarter ending June 30, 2012 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
PART II OTHER INFORMATION
Item 1. Legal Proceeding.
Item 1A. Risk Factors.
There have been no material changes from the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer
Rule 13a-14(a)/15d-14(a) Certification of Principal Accounting and Financial Officer
Section 1350 Certification of Principal Executive Officer and Principal Accounting and Financial Officer
XBRL data files of Financial Statements and Notes contained in this Quarterly Report on Form 10-Q
* In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”
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.
WELLESLEY CAPITAL MANAGEMENT CORP.
DATE: July 31, 2012
/s/ Steven Adelstein
President, Principal Executive Officer and
Principal Accounting and Financial Officer
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