UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarter ended June 30, 2012

 

THRIVE WORLD WIDE, INC.

 

Commission File Number: 333-127597

 

Nevada	20-2725030
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
647 Main Street, Suite 500, Lake Geneva, WI	53147
(Address of principal executive offices)	(Zip Code)

 

(855) 899-2929

(Issuer's telephone number)

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x    No ¨

 

Indicate by check mark whether the registrant 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.

 

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 ¨   No x

 

As of August 16, 2012, there were 310,131,068 outstanding shares of the registrant's common stock, $.001 par value per share.

 

 

THRIVE WORLD WIDE, INC.

FORM 10-Q

TABLE OF CONTENTS

 

		PAGE
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of June 30, 2012 (Unaudited)  and September 30, 2011	1
	Consolidated Statements of Operations (Unaudited) For the Three and Nine Months Ended June 30, 2012 and 2011	2
	Consolidated Statement of Stockholders' Equity (Unaudited) For the Nine Months Ended June 30, 2012	3
	Consolidated Statements of Cash Flows (Unaudited) For the  Nine Months Ended June 30, 2012	4
	Notes to Consolidated Financial Statements (Unaudited)	5
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	14
Item 4.	Controls and Procedures	14
Item 4(T).	Controls and Procedures	14
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	14
Item 1A.	Risk Factors	14
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Mine Safety Disclosures	16
Item 5.	Other Information	16
Item 6.	Exhibits	16
Signatures		17

 

 

Item 1. Financial Statements.

 

Thrive World Wide, Inc.

Balance Sheets

 

		June 30,				September 30,
		2012				2011
		(Unaudited)				(Audited)
ASSETS
Current Assets
Cash		$	63			$	19,318
Prepaid expenses and other current assets (Note B)			-				51,750
Total Current Assets			63				71,068
Equipment, net of $8,464 of accumulated depreciation			3,787				6,847
Other assets			-				1,200
Total Assets		$	3,850			$	79,115
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable (Note C)		$	355,318			$	350,940
Accrued interest (Note C and D)			143,594				129,113
Accrued compensation (Note C)			63,333				35,000
Shareholder promissory notes (Note D)			1,100,137				1,175,306
Bank line of credit (Note E)			95,636				95,636
Total Current Liabilities			1,758,018				1,785,995
Total Liabilities			1,758,018				1,785,995
Stockholders' Deficit (Note F)
Preferred stock, par value $.001, 10,000,000 shares authorized; 3,666,663 and none issued and outstanding at June 30, 2012 and September 30, 2011, respectively.			3,667				-
Common stock, par value $.001, 1,000,000,000 shares authorized; 310,131,068 and 116,753,468 issued and outstanding at June 30, 2012 and September 30, 2011, respectively.			310,131				116,754
Additional paid-in capital			1,856,648				1,740,515
Accumulated deficit			(3,924,614	)			(3,564,149	)
Total Stockholders' Deficit			(1,754,168	)			(1,706,880	)
Total Liabilities and Stockholders' Deficit		$	3,850			$	79,115

 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

 

 

Thrive World Wide, Inc.

Statements of Operations (Unaudited)

For the Three and Nine Months Ended June 30, 2012 and 2011

 

		Three Months Ended								Nine Months Ended
		June 30,								June 30,
		2012				2011				2012				2011
Revenue		$	-			$	-			$	97			$	-
Cost of sales			16,200				-				27,200				-
Gross profit			(16,200	)			-				(27,103	)			-
Operating expense
General and administrative			42,825				131,907				202,295				260,935
Sales and marketing			-				2,500				51,290				2,500
Depreciation & amortization			1,020				1,020				3,060				3,060
Total operating expenses			43,845				135,427				256,645				266,495
Loss from operations			(60,045	)			(135,427	)			(283,748	)			(266,495	)
Other income (expense)
Interest expense			(24,106	)			(21,506	)			(76,717	)			(66,668	)
Total other expense			(24,106	)			(21,506	)			(76,717	)			(66,668	)
Net loss		$	(84,151	)		$	(156,933	)		$	(360,465	)		$	(333,163	)
Net loss per common share - basic and diluted		$	(0.00	)		$	(0.00	)		$	(0.00	)		$	(0.01	)
Weighted average number of common shares outstanding - basic and diluted			301,645,041				56,248,536				184,516,832				47,600,320
The average shares listed below were not included in the computation of diluted losses per share because to do so would have been antidilutive for the periods presented:
Warrants			-				1,148,626				446,027				1,148,626
Convertible promissory notes			1,282,000,427				1,055,201,959				1,257,675,623				1,000,525,521

 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

 

 

Thrive World Wide, Inc.

Statement of Stockholders' Deficit (Unaudited)

For the Niine Months Ended June 30, 2012

 

		Preferred Stock								Common Stock								Additional								Total
		Number of								Number of								Paid-in				Accumulated				Stockholders'
		Shares				Amount				Shares				Amount				Capital				Deficit				Deficit
BALANCES September 30, 2011			-			$	-				116,753,468			$	116,754			$	1,740,515			$	(3,564,149	)		$	(1,706,880	)
Preferred stock issued for cash, net of finder's fee of $4,500			3,666,663				3,667												46,833								50,500
Shares issued for accrued interest											62,235,600				62,235												62,235
Shares issued for debt principle											141,142,000				141,142				-								141,142
Shars issued in settlement of accounts payable											5,000,000				5,000				14,000								19,000
Shares issued at par returned											(25,000,000	)			(25,000	)			25,000								-
Shares issued for services											10,000,000				10,000				27,000								37,000
Fair value of warrants issued with preferred stock																			3,300								3,300
Net loss																							(360,465	)			(360,465	)
BALANCES March 31, 2012			3,666,663			$	3,667				310,131,068			$	310,131			$	1,856,648			$	(3,924,614	)		$	(1,754,168	)

 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

 

 

Thrive World Wide, Inc.

Statements of Cash Flows (Unaudited)

For the Nine Months Ended June 30, 2012 and 2011

 

		Nine Months Ended
		June 30,
		2012				2011
Cash flows from operating activities
Net loss		$	(360,465	)		$	(333,163	)
Adjustments to reconcile net income/loss
to net cash (used in) provided by operating activities:
Depreciation & amortization			3,060				3,060
Common stock issued for accrued interest			62,236				25,400
Common stock issued for accounts payable			19,000				52,000
Common stock issued for services			37,000				48,000
Stock compensation expense on warrants issued			3,300				-
Changes in operating assets and liabilities:
Other current assets			51,750				(2,500	)
Other assets			1,200				-
Accounts payable			4,378				19,418
Accrued interest			14,481				39,769
Accrued compensation			28,333				(5,000	)
Net cash used in operating activities			(135,727	)			(153,016	)
Cash flows from investing activities
Acquisition of furniture and equipment			-				-
Net cash used in investing activities			-				-
Cash flows from financing activities
Proceeds from the sale of preferred stock, net of finder's fee of $4,500			50,500				-
Proceeds from shareholder notes			65,972				155,177
Net cash provided by financing activities			116,472				155,177
Increase (decrease) in cash			(19,255	)			2,161
Cash at beginning of period			19,318				1
Cash at end of period		$	63			$	2,162
Supplemental disclosure of cash flow information:
Taxes paid in cash		$	-			$	-
Interest paid in cash		$	-			$	1,500
Supplemental disclosure of non-cash transactions:
Common stock issued as compensation		$	37,000			$	48,000
Common stock issued for shareholder notes accrued interest		$	62,236			$	25,400
Common stock issued for shareholder notes principle		$	141,142			$	-
Common stock issued for accounts payable		$	19,000			$	-

 

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS

 

 

THRIVE WORLD WIDE, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE AND NINE MONTHS ENDED JUNE 30, 2012 AND 2011

 

NOTE A – ORGNIZATION AND GOING CONCERN

 

Basis of Presentation

The unaudited financial statements of Thrive World Wide, Inc. as of June 30, 2012 and for the three and nine months ended June 30, 2012 and 2011 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the disclosures required by accounting principles generally accepted in the United States for annual financial statements and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended September 30, 2011 as filed with the Securities and Exchange Commission as part of our Form 10-K filed on January 24, 2012. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the interim financial information have been included. The results of operations for any interim period are not necessarily indicative of the results of operations for the entire year.

 

Organization

The Company was incorporated in Nevada on April 8, 2005 as Z Yachts, Inc., a full-service boat brokerage company.

 

On July 26, 2008, the Company exited the boat brokerage business and changed its name to Boveran Diagnostics, Inc. in order to pursue the development of cancer detection technologies. The Company’s board of directors then abandoned those operations in order to establish a business model of creating, marketing and licensing new media technologies.

 

On May 18, 2009, the Company entered into a Binding Letter of Intent to acquire 100% of the stock of STB Telemedia to further the business of creating, marketing and licensing new media technologies. On July 16, 2009, the Company entered into a subsequent binding letter of intent with STB Telemedia, Inc., to operate a joint venture for a period which would allow each Company's management to become acquainted, determine the fit and focus of operations and to provide sufficient time to conduct due diligence of the other party. Shortly thereafter, we elected to terminate the merger with STB Telemedia, Inc. due to poor performance.

 

On June 21, 2010, the Company entered into an Asset Acquisition Agreement with Jarish, Inc. pursuant to which the Company agreed to acquire from Jarish, Inc. all assets exclusive to Mycitypoint.com, Pointcredtis.com and Pointscredits.com. This asset acquisition was intended to enhance the ability of Thrive World Wide, Inc. to offer additional specialty services through an electronic media venue.   The Company believed that it would be able to provide a unique end-to-end vertical solution that would accommodate content creation and distribution to a broad segment of the market via the Internet. However, the Company was compelled to terminate this transaction due to material misrepresentations made by Jarish, Inc. As a result, the Company elected to pursue our own business.

 

During our fourth quarter ended September 30, 2010, the Company developed DailyHotDeal.com, ("DHD") a locally focused group buying site. DHD went live in San Diego in August 2011 in beta mode. During the quarter ended June 30, 2012, the Company decided to halt the marketing and operation of the DHD business as a result of limited success primarily resulting from the high level of competition and the Company's inability to adequately fund expansion.

 

On April 13, 2012 The Company changed its management team. Bruce T. Dugan was appointed Chief Executive Officer and a member of the Company's Board of Directors, and James Stearrett was appointed Chief Financial Officer and Treasurer. Mr. Dugan and Mr. Stearrett replaced Wendy Borow Johnson, who resigned as CEO, President, Treasurer, and Board member.

 

On May 30, 2012 The Company entered into a Letter of Intent to acquire Intech Creative LLC, a developer of proprietary software products and subscription-based online and mobile services. The Company intends to change its strategic plan from that of developing products as a “fast-follower,” to that of a speculative new products “first-to-market” innovator, as well as a solid provider of technology development and web-related services to clients worldwide.

 

 

THRIVE WORLD WIDE, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE AND NINE MONTHS ENDED JUNE 30, 2012 AND 2011

 

NOTE A – ORGNIZATION AND GOING CONCERN (Continued)

 

Going Concern

Recent operating results give rise to concerns about the Company's ability to generate cash flow from operations sufficient to sustain ongoing viability. As of June 30, 2012, we had an accumulated deficit of $3,924,614 and negative working capital of $1,757,955. Net loss for the three and nine months ended June 30, 2012 and year ended September 30, 2011 was $84,151, $360,465 and $469,964, respectively. As a result, these conditions raise substantial doubt concerning the Company’s ability to continue as a going concern. Management has plans to raise additional capital through sales of its common stock and financial loans. The financial statements do not include any adjustments that might be necessary if Thrive World Wide, Inc. is unable to continue as a going concern.

 

NOTE B - PREPAID EXPENSES AND OTHER CURRENT ASSETS

 

Prepaid expenses and other current assets consists of amounts paid to a production company for the production of customer commercials that we air as part of the DailyHotDeals.com business. The Company produced commercials for certain customers to air on DailyHotDeal.com as part of the promotion of that merchant and resulting deals that are purchased by the public. The Company accounts for these commercials pursuant to ASC 720-35, Other Expenses: Advertising Costs, and has elected to defer the costs of advertising until the advertising takes place to more appropriately match our costs of commercial production to the revenue related to each commercial. These costs are then recorded as cost of sales. As of June 30, 2012, we had no unaired commercials.

 

NOTE C – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

 

Accounts payable and accrued expenses as of June 30, 2012 and September 30, 2011 consists of the following:

 

		June 30,				September 30,
		2012				2011
Professional fees		$	258,811			$	245,756
Non-trade payables			96,507				105,184
Due to former CEO for accrued wages			63,333				35,000
Accrued interest			143,594				129,113
Total		$	562,245			$	515,053

 

NOTE D – SHAREHOLDER PROMISSORY NOTES

 

The stockholders have advanced money to Thrive World Wide, Inc. on an as-needed basis.  At September 30, 2011 and June 30, 2012, stockholder loans consisted of the following:

 

1.

($546,747) On January 2, 2009, we revised and re-issued certain promissory notes in the face amount of $173,257 and $55,000 to Collette Eck Szczesny and Marilyn Eck, respectively.  These notes represent amounts due and in default from December 31, 2007 and on which no interest or principal has been paid by the Company in over three (3) years.  In consideration of the lenders’ Agreement to extend these notes, the Company agreed to cause the notes to be revised and re-issued as convertible debentures which would pay 7.5% interest and be convertible by lenders at the conversion price equal to the par value of our common stock (at present $0.001 per share).  The Notes contain a provision limiting the conversion thereof by any party to not more that 4.99% ownership of the stock of the Company at any time after taking into account all of the holdings of the converting party.  The lenders have agreed that they will enter into such lock-up and/or leak-out agreements as may be required by any successor management and/or entity which may acquire control of the Company in a change of control transaction. On June 1, 2009, the notes were assigned to Horowitz Consulting Group, LLC (“Horowitz”) and the principals thereof have agreed to limit the conversion right under the notes based on the fact that the Company did not at the time have sufficient authorized shares to allow for the conversion of the note beyond 26,000,000 shares and the fact that the Company will need to issue shares in order to raise other operating capital as set forth herein. Per ASC 470-20-25-12, no portion of the proceeds from this note are attributable to the conversion feature as the conversion can be made at the option of the holder at a specified price and only upon default, the conversion price does not decrease, the debt was originally sold at the face amount, the interest rate is lower than the Company would pay for non-convertible debt and the conversion price was greater than the perceived market value of the stock.  In addition, the restrictions on the conversion and the limits on the authorized shares prevent the holders from fully exercising the conversion.  The perceived market value of the stock was less than par value due to the highly illiquid nature of the stock and the Company's lack of revenue generating activities as of the date of the issuance of these debentures.

 

 

THRIVE WORLD WIDE, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE AND NINE MONTHS ENDED JUNE 30, 2012 AND 2011

 

NOTE D – SHAREHOLDER PROMISSORY NOTES (Continued)

 

The total principle amount due this stockholder as of June 30, 2012 and September 30, 2011 was $546,747 and $638,354, respectively. As of June 30, 2012 and September 30, 2011, $10,426 and $28,618, respectively of accrued interest was due under this note. During the nine months ended June 30, 2012, Horowitz advanced the Company $30,973 and converted $177,289 of accrued interest in exchange for 177,288,800 shares at par value.

 

Interest expense in the amount of $10,426 and $8,517 has been recorded for the three months ended June 30, 2012 and 2011, respectively. Interest expense in the amount of $36,518 and $22,108 has been recorded for the nine months ended June 30, 2012 and 2011, respectively.

 

2.

($489,263) The second loan is from a former director and officer. At one time three original officers had three separate loans. All of these notes were combined and signed over to one party in exchange for the complete independent absorption of the Company’s 1st Banking Center line of credit that was guaranteed by the other two parties. The notes assumed by this stockholder totaled $200,947 including accrued interest. During the twelve months ended September 30, 2009 this stockholder also personally assumed the outstanding debt and interest on the 1st Banking Center line of credit held by the Company.  The total amount assumed on the line of credit was $124,953 with interest of $3,264 also assumed. Additionally, this stockholder assumed $11,141 of credit card liability, converted payables due him in the amount of $34,939 and personally paid bills incurred by the Company in the amount of $47,813. A convertible promissory note was executed on August 17, 2009 for $478,451 bearing interest at 7.5% (with no interest accruing until October 1, 2009) and maturing on February 15, 2011. In addition, this note is convertible at any time at the conversion price equal to the par value of our common stock (at present $0.001 per share).  The note contains a provision limiting the conversion thereof by any party to not more that 4.99% ownership of the stock of the Company at any time after taking into account all of the holdings of the converting party. On December 8, 2010, the Stockholder assigned this note and all amounts due thereunder in equal parts to two outside parties. The note was not modified. Per ASC 470-20-25-12, no portion of the proceeds from this note are attributable to the conversion feature as the conversion can be made at the option of the holder at a specified price and only upon default, the conversion price does not decrease, the debt was originally sold at the face amount, the interest rate is lower than the Company would pay for non-convertible debt and the conversion price was greater than the perceived market value of the stock.  In addition, the restrictions on the conversion and the limits on the authorized shares prevent the holders from fully exercising the conversion.  The perceived market value of the stock was less than par value due to the highly illiquid nature of the stock and the Company's lack of revenue generating activities as of the date of the issuance of these debentures.

 

The total principle amount due under this note as of June 30, 2012 and September 30, 2011 was $489,263 and $489,263, respectively. As of June 30, 2012 and September 30, 2011, $97,899 and $71,655, respectively of accrued interest was due under this note. During the nine months ended June 30, 2012, the Company converted $5,589 of accrued interest in exchange for 5,588,800 shares at par value. Interest expense in the amount of $10,765 and $10,088 has been recorded for the three months ended June 30, 2012 and 2011, respectively. Interest expense in the amount of $31,833 and $35,928 has been recorded for the nine months ended June 30, 2012 and 2011, respectively.

 

3.

($64,128) On February 15, 2010, we issued a convertible promissory note in the face amount of $949 to Search4.com. The note provides for additional infusions of capital, bears interest at 7.5%, is due on demand, is convertible into common stock at the par value of our common stock (at present $0.001 per share), and matures on February 5, 2013 in the event the full balance owing has not been paid. The Note contains a provision limiting the conversion thereof to not more that 4.99% ownership of the stock of the Company at any time after taking into account all of the holdings of the converting party.  The lender has agreed that they will enter into such lock-up and/or leak-out agreements as may be required by any successor management and/or entity which may acquire control of the Company in a change of control transaction. There was no beneficial conversion feature associated with these securities as per FASB ASC 470-20-25.  The conversion can be made at the option of the holder, the conversion price was greater than the perceived market value of the stock due to the highly illiquid nature of the stock and the Company's lack of revenue generating activities as of the date of the issuance, the debt was originally sold at the face amount, the interest rate is lower than the Company would pay for non-convertible debt and the conversion price does not decrease.  As per FASB ASC 470-20-25-12, no portion of the proceeds from issuance shall be accounted for as attributable to the conversion feature.  In addition, the restrictions on the conversion and the limits on the authorized shares prevent the holders from fully exercising the conversion.

 

 

THRIVE WORLD WIDE, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE AND NINE MONTHS ENDED JUNE 30, 2012 AND 2011

 

NOTE D – SHAREHOLDER PROMISSORY NOTES (Continued)

 

The total principle amount due under this note as of June 30, 2012 and September 30, 2011 was $64,128. As of June 30, 2012 and September 30, 2011, $1,067 and $203, respectively of accrued interest was due under this note. During the nine months ended June 30, 2012, the Company converted $20,500 of principle and accrued interest in exchange for 20,500,000 shares at par value. Interest expense in the amount of $1,067 and $1,053 has been recorded for the three months ended June 30, 2012 and 2011, respectively. Interest expense in the amount of $2,802 and $3,087 has been recorded for the nine months ended June 30, 2012 and 2011, respectively.

 

NOTE E – BANK LINE OF CREDIT

 

Our Bank line of credit consists of a $100,000 revolving line of credit with Bank of America with a balance of $95,636 and an interest rate of 7.75% secured by the personal guarantees of former officers. This line of credit is in default and in collection as of June 30, 2012. As of June 30, 2012, the total due is $129,838, including $95,636 of principle and $34,202 of accrued interest. During the three months ended June 30, 2012 and 2011, the Company recognized $1,848 and $1,848, respectively in interest expense. During the nine months ended June 30, 2012 and 2011, the Company recognized approximately $5,545 and $5,545, respectively in interest expense.

 

NOTE F – CAPITAL STOCK

 

Common Stock

The Company has authorized 1,000,000,000 shares of $.001 par value common stock with 310,131,068 shares outstanding as of June 30, 2012.

 

During the year ended September 30, 2011, the Company issued common stock as follows:

1.

5,200,000 shares in exchange for vendor liabilities of $52,000.

2.

54,800,000 shares for services valued at $48,000.

3.

25,400,000 shares upon the conversion of notes payable resulting in a $25,400 reduction of accrued interest related to the shareholder notes above.

4.

(7,591,657) shares returned to treasury and canceled valued at par, $.001 per share.

5.

On September 27, 2011, the Company issued 50,000,000 shares, including 25,000,000 to Jason Eck and 25,000,000 to Wendy Borow-Johnson. The restricted shares contain various performance clauses. The restriction can be lifted at the Boards discretion. The stock is "earned" in and "all or nothing" manner meaning only the full 25,000,000 shares can have their restriction lifted or none at all for each individual. The Board also has the option of repurchasing the shares for a total of $1.00. Based on the foregoing the Company assigned no value to this issuance by increasing Common Stock by $50,000 and reducing Additional Paid-In Capital by $50,000.

 

During the nine months ended June 30, 2012, the Company issued (received) common stock as follows:

1.

203,377,600 shares upon the conversion of notes payable resulting in a $203,378 reduction of shareholder's notes payable and related accrued interest of $141,142 and $62,236, respectively.

2.

5,000,000 shares were issued in settlement of $19,000 of outstanding accounts payable due to a vendor.

3.

10,000,000 shares for services valued at $37,000.

4.

(25,000,000) originally issued to Jason Eck were purchased by the Company for $0.50 (See Item #5 above).

 

 

THRIVE WORLD WIDE, INC.

NOTES TO FINANCIAL STATEMENTS (Unaudited)

THREE AND NINE MONTHS ENDED JUNE 30, 2012 AND 2011

 

NOTE F – CAPITAL STOCK (Continued)

 

Preferred Stock

The Company has authorized 10,000,000 shares of $.001 par value preferred stock with 3,666,663 shares outstanding as of June 30, 2012.

 

During the nine months ended June 30, 2012, a Horowitz purchased 3,666,663 shares of preferred stock at a purchase price of $0.015 per share resulting in gross proceeds of $55,000. From the gross proceeds, Mr. Horowitz was paid a $4,500 finder's fee resulting in net proceeds to the Company of $50,500. As part of the purchase of preferred stock, Mr. Horowitz received 550,000 Warrants to purchase 550,000 shares of restricted common stock at a strike price of $0.015 and expiring on November 21, 2015 or five years from the date of purchase.

 

Warrants

At June 30, 2012, the Company had 550,000 Warrants outstanding entitling the holder thereof the right to purchase one share of common stock for each warrant held. As described above on November 21, 2011, the Company issued warrants to purchase 550,000 shares of restricted common stock pursuant to the purchase of preferred stock. The warrants are classified as equity on our balance sheet as they require physical settlement, contain no performance contingencies, have a fixed exercise price and are exercisable by the holder at any time through the expiration date of the warrant. Each warrants fair value was calculated on the date of grant using the Black-Scholes Option Pricing Model using the following inputs: volatility, 570%; risk free interest rate, 0.92%; spot price, $0.006, and exercise price, $0.006. The fair value of the warrants issued and recognized in the financial statements above was $3,300.

 

NOTE G – SUBSEQUENT EVENTS

 

Pursuant to FASB Accounting Standards Codification 855, Subsequent Events, including ASC 855-10-S99-2, the Company evaluated subsequent events through the date these financial statements were issued.

 

 

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

 

This quarterly report contains forward-looking statements including statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words “expects,” “anticipates,” “intends,” “believes” or similar language. These forward-looking statements involve risks, uncertainties and other factors. All forward-looking statements included in this quarterly report are based on information available to us on the date hereof and speak only as of the date hereof. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. The factors discussed elsewhere in this quarterly report are among those factors that in some cases have affected our results and could cause the actual results to differ materially from those projected in the forward-looking statements.

 

Overview

 

The Company was incorporated in Nevada on April 8, 2005 as Z Yachts, Inc., a full-service boat brokerage company.

 

On July 26, 2008, the Company exited the boat brokerage business and changed its name to Boveran Diagnostics, Inc. in order to pursue the development of cancer detection technologies. The Company’s board of directors then abandoned those operations in order to establish a business model of creating, marketing and licensing new media technologies.

 

On May 18, 2009, the Company entered into a Binding Letter of Intent to acquire 100% of the stock of STB Telemedia to further the business of creating, marketing and licensing new media technologies. On July 16, 2009, the Company entered into a subsequent binding letter of intent with STB Telemedia, Inc., to operate a joint venture for a period which would allow each Company's management to become acquainted, determine the fit and focus of operations and to provide sufficient time to conduct due diligence of the other party. Shortly thereafter, we elected to terminate the merger with STB Telemedia, Inc. due to poor performance.

 

On June 21, 2010, the Company entered into an Asset Acquisition Agreement with Jarish, Inc. pursuant to which the Company agreed to acquire from Jarish, Inc. all assets exclusive to Mycitypoint.com, Pointcredtis.com and Pointscredits.com. This asset acquisition was intended to enhance the ability of Thrive World Wide, Inc. to offer additional specialty services through an electronic media venue.   The Company believed that it would be able to provide a unique end-to-end vertical solution that would accommodate content creation and distribution to a broad segment of the market via the Internet. However, the Company was compelled to terminate this transaction due to material misrepresentations made by Jarish, Inc. As a result, the Company elected to pursue our own business.

 

During our fourth quarter ended September 30, 2010, the Company developed DailyHotDeal.com, ("DHD") a locally focused group buying site. DHD went live in San Diego in August 2011 in beta mode. During the quarter ended June 30, 2012, the Company decided to halt the marketing and operation of the DHD business as a result of limited success primarily resulting from the high level of competition and the Company's inability to adequately fund expansion.

 

On April 13, 2012 The Company changed its management team. Bruce T. Dugan was appointed Chief Executive Officer and a member of the Company's Board of Directors, and James Stearrett was appointed Chief Financial Officer and Treasurer. Mr. Dugan and Mr. Stearrett replaced Wendy Borow Johnson, who resigned as CEO, President, Treasurer, and Board member.

 

On May 30, 2012 The Company entered into a Letter of Intent to acquire Intech Creative LLC, a developer of proprietary software products and subscription-based online and mobile services. The Company intends to change its strategic plan from that of developing products as a “fast-follower,” to that of a speculative new products “first-to-market” innovator, as well as a solid provider of technology development and web-related services to clients worldwide.

 

 

Critical Accounting Policies

 

The preparation of financial statements in conformity with generally accepted accounting principles of the United States, or U.S. GAAP, requires estimates and assumptions that affect the reported amounts and classifications of assets and liabilities, revenues and expenses, and the related disclosures of contingent liabilities in the consolidated financial statements and accompanying notes. The SEC has defined a company's critical accounting policies as the ones that are most important to the portrayal of the company's financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the following critical accounting policies and estimates addressed below. We also have other key accounting policies, which involve the use of estimates, judgments, and assumptions that are significant to understanding our results. See "Note A - Organization and Summary of Significant Accounting Policies" to the Notes of our Financial Statements for further information. Although we believe that our estimates, assumptions, and judgments are reasonable, they are based upon information available at the time. Actual results may differ significantly from these estimates under different assumptions, judgments, or conditions.

 

Revenue Recognition

 

We recognize revenue from Deals when the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the selling price is fixed or determinable; and collectability is reasonably assured. These criteria are met when the number of customers who purchase the daily deal exceeds the predetermined threshold, the Deal has been electronically delivered to the purchaser and a listing of Deals sold has been made available to the merchant. At that time, our obligations to the merchant, for which we are serving as an agent, are substantially complete. Our remaining obligations, which are limited to remitting payment to the merchant and continuing to make available on our website the listing of Deals previously provided to the merchant, are inconsequential or perfunctory. We record as revenue the net amount we retain from the sale of Deals after paying an agreed upon percentage of the purchase price to the featured merchant excluding any applicable taxes. Revenue is recorded on a net basis because we are acting as an agent of the merchant in the transaction.

 

Income Taxes

 

We recognize deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered.  We provide a valuation allowance for deferred tax assets for which we do not consider realization of such assets to be more likely than not.  During fiscal 2011 and 2010, we incurred net losses and, therefore, had no tax liability.  The net deferred tax asset generated by the loss carry-forward has been fully reserved for.

 

Stock-Based Compensation

 

The Company accounts for all compensation related to stock, options or warrants using a fair value based method whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. Stock issued for compensation is valued using the market price of the stock on the date of the related agreement. We use the Black-Scholes pricing model to calculate the fair value of options and warrants issued to both employees and non-employees. In calculating this fair value, there are certain assumptions that we use consisting of the expected life of the option, risk-free interest rate, dividend yield, volatility and forfeiture rate. The use of a different estimate for any one of these components could have a material impact on the amount of calculated compensation expense.

 

 

Results of Operations

 

Three and Nine Months Ended June 30, 2012 Compared With the Three and Nine Months Ended June 30, 2011.

 

A summary of our operating expense and other income and expense for the three months ended June 30, 2012 and 2011 follows:

 

		Three months Ended June 30,
		2012				2011				$ Change
Revenue		$	-			$	-			$	-
Cost of Sales			16,200				-				16,200
Gross profit			(16,200	)			-				(16,200	)
Operating expense
General and administrative			42,825				83,907				(41,082	)
Sales and marketing			-				2,500				(2,500	)
Depreciation & amortization			1,020				1,020				-
Stock compensation			-				48,000				(48,000	)
Total operating expenses			43,845				135,427				(91,582	)
Loss from operations			(60,045	)			(135,427	)			75,382
Other income (expense)
Interest expense			(24,106	)			(21,506	)			(2,600	)
Total other expense			(24,106	)			(21,506	)			(2,600	)
Net loss		$	(84,151	)		$	(156,933	)		$	72,782

 

A summary of our operating expense and other income and expense for the nine months ended June 30, 2012 and 2011 follows:

 

		Nine months Ended June 30,
		2012				2011				$ Change
Revenue		$	97			$	-			$	97
Cost of Sales			27,200				-				27,200
Gross profit			(27,103	)			-				(27,103	)
Operating expense
General and administrative			161,995				212,935				(50,940	)
Sales and marketing			51,290				2,500				48,790
Depreciation & amortization			3,060				3,060				-
Stock compensation			40,300				48,000				(7,700	)
Total operating expenses			256,645				266,495				(9,850	)
Loss from operations			(283,748	)			(266,495	)			(17,253	)
Other income (expense)
Interest expense			(76,717	)			(66,668	)			(10,049	)
Total other expense			(76,717	)			(66,668	)			(10,049	)
Net loss		$	(360,465	)		$	(333,163	)		$	(27,302	)

 

 

Gross Profit We had revenue from the sale of a single deal during the nine months ended June 30, 2012 despite the release of many commercials which cost approximately $440 each. Due to the start-up nature of the DailyHotDeal business we anticipated that not all deal presentations will reach the critical mass necessary for the deal to be confirmed and the resulting sale recognized. However, we expected far better results than what has been achieved.

 

Operating Expenses. General and administrative expenses declined during the three and nine months ended June 30, 21012 primarily due to decreases in personnel and professional costs as a result of reducing activities related to DailyHotDeals.com. Sales and marketing expenses for the nine months ended June 30, 2012 increased over the prior year due to the 2012 period containing costs related to DailyHotDeals.com which we began promoting more heavily in the foruth quarter of 2011 and first half of 2012.

 

Other Income and Expense. Interest expense for the three and nine months ended June 30, 2012 was higher than the prior year period due to higher average loan balances maintained on our shareholder promissory notes as these shareholders have continued to finance the Company's operations.

 

Financial Condition

 

The Company has suffered recurring losses from operations that raises substantial doubt about our ability to continue as a going concern. From inception to June 30, 2012, we have incurred an accumulated deficit of $3,924,614. This loss has been incurred through a combination of stock compensation, professional fees and expenses supporting our plans to develop new business as well as continued operating losses. As of June 30, 2012, we had outstanding current liabilities of $1,758,018 compared to $1,785,995 as of September 30, 2011. Total cash resources as of June 30, 2012 were $63 compared with $19,318 at September 30, 2011. Thus, our current liquidity is insufficient to meet our expenses for the next 12 months.

 

Net cash used by operating activities was $135,727 and $153,016 for the nine months ended June 30, 2012 and 2011, respectively.

 

Net cash used by investing activities was $0 and $0 for the nine months ended June 30, 2012 and 2011, respectively.

 

Net cash provided by financing activities was $116,472 and $155,177 for the nine months ended June 30, 2012 and 2011, respectively.

 

The Company’s Liquidity Plan

 

Since inception, we have financed our operations primarily through equity sales of our common stock and various loans and notes payable. Management is currently in the process of seeking additional equity financing with potential investors. However, we cannot provide assurance that management will be successful in acquiring such sources of capital in the future. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

The Company's need to raise additional equity or debt financing and the Company's ability to generate cash flow from operations will depend on its future performance and the Company's ability to successfully implement business and growth strategies. The Company's performance will also be affected by prevailing economic conditions. Many of these factors are beyond the Company's control. If future cash flows and capital resources are insufficient to meet the Company's commitments, the Company may be forced to reduce or delay activities and capital expenditures or obtain additional equity capital. In the event that the Company is unable to do so, the Company may be left without sufficient liquidity.

 

 

Plan of Operations of Operations

 

The Company intends to change its strategic plan from that of developing products as a “fast-follower,” to that of a speculative new products “first-to-market” innovator, as well as a solid provider of technology development and web-related services to clients worldwide. As a result, the Company intends to cease allocating resources DailyHotDeal.com business.

 

To achieve the goal of speculative new products “first-to-market” innovator, the Company has identified — and been in negotiations with — four strategic acquisition targets, and believe we can close on all four if we are able to successfully renegotiate our current debt structure.

 

The two operating tech-related service companies [providing software and web development services, and online marketing services to third-party clients] that the Company intends to acquire would provide the Company with immediate operating revenues from an existing client base — plus a self-sustaining staff, while the second two acquisition targets [that develop proprietary software products and subscription services] will provide high-growth shareholder value potential.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

Inflation

 

Although our operations are influenced by general economic conditions, we do not believe inflation had a material effect on the results of operations during the nine months ended June 30, 2012. However, there can be no assurance our business will not be affected by inflation in the future.

 

Item 4. Controls and Procedures.

 

Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this quarterly report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the date of this report, our disclosure controls and procedures were effective such that the information required to be disclosed in our United States Securities and Exchange Commission (the “SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

 

Internal Control over Financial Reporting

 

During the period covered by this report, the Company hired an experienced financial reporting professional as CFO thereby increasing the number of personnel involved in the Company’s preparation and review of the Company’s financial statements and is reasonably likely to materially affect internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

Not applicable.

 

Item 1a. Risk Factors.

 

Not applicable.

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

Unregistered Sales of Equity Securities During the Fiscal Year Ended September 30, 2009

On January 1, 2009, the Company’s board of directors agreed that certain debt holders of the Company were holding debt of the Company for such a prolonged period of time, with very little, if any prospect for the repayment thereof and therefore, agreed that such debt would be convertible to equity as of January 2, 2009 and thereafter.  We have claimed an exemption from registration afforded by Section 4(2) of the Securities Act because of the limited number of persons involved in each transaction, our previous relationship with the recipients, the access of such person to information about us that would have been available in a public offering and the absence of any public solicitation or advertising.  Also, the recipients took the securities for investment and not resale and we took appropriate measures to restrict transfer.

 

Unregistered Sales of Equity Securities During the Fiscal Year Ended September 30, 2010:

·

On February 5, 2010, we sold 1,148,625 shares of common stock to accredited investors under Section 4(2) at a per share price of $0.20 resulting in gross proceeds of $229,725 of which $70,725 was paid as a finder’s fee netting $159,000 to the Company.

·

On February 5, 2010, we issued 200,000 shares of common stock to Andrew Schenker, our CEO, for services rendered. The stock was issued free and clear of any future performance and was valued at $5,600 or $0.028 per share which represents a 30% discount to the market price of our common stock on the date of issuance which discount was intended to compensate for the restriction on said shares.

·

During the year ended September 30, 2010, two of our shareholders converted $11,230 of debt into 11,230,000 shares of common stock pursuant to the terms of their note.

 

Unregistered Sales of Equity Securities During the Fiscal Year Ended September 30, 2011:

·

During the year ended September 30, 2011, three of our shareholders converted $25,400 of accrued interest on notes payable into 25,400,000 shares of common stock pursuant to the terms of their note.

·

On May 28, 2011, we issued 2,000,000 shares of restricted common stock to Wendy Borow-Johnson, our CEO for services rendered. The stock was issued free and clear of any future performance and was valued at $20,000 or $0.010 per share.

·

On May 28, 2011, we issued 3,000,000 shares of restricted common stock to Andrew Schenker, our former CEO as payment against an accrued compensation balance of $55,000. The stock was issued free and clear of any future performance and was valued at $30,000 or $0.010 per share.

·

On May 28, 2011, we issued 5,000,000 shares of restricted common stock to our outside corporate attorney as payment against an accounts payable balance of $22,000 and additional compensation of $28,000. The stock was issued free and clear of any future performance and was valued at $50,000 or $0.010 per share.

·

On September 27, 2011, we issued 25,000,000 shares of restricted common stock to Wendy Borow-Johnson, our CEO. The restricted shares contain various performance clauses. The restriction can be lifted at the Boards discretion. The stock is "earned" in and "all or nothing" manner meaning only the full 25,000,000 shares can have their restriction lifted or none at all. The Board also has the option of repurchasing the shares for a total of $0.50. Based on the foregoing the Company assigned no value to this issuance by increasing Common Stock by $25,000 and reducing Additional Paid-In Capital by $25,000.

·

On September 27, 2011, we issued 25,000,000 shares of restricted common stock to Jason Eck, Consultant. The restricted shares contain various performance clauses. The restriction can be lifted at the Boards discretion. The stock is "earned" in and "all or nothing" manner meaning only the full 25,000,000 shares can have their restriction lifted or none at all. The Board also has the option of repurchasing the shares for a total of $0.50. Based on the foregoing the Company assigned no value to this issuance by increasing Common Stock by $25,000 and reducing Additional Paid-In Capital by $25,000.

 

Unregistered Sales of Equity Securities During the Six Months Ended March 31, 2012:

·

On October 14, 2011 and October 18, 2011, two of our shareholders converted $5,589 each or a total of $11,178 of accrued interest on notes payable into 11,177,600 shares of common stock pursuant to the terms of their note.

·

On January 12, 2012, one of our shareholder's converted $10,000 of their promissory note into 10,000,000 shares of restricted common stock pursuant to the terms of their note.

·

On January 24, 2012, 5,000,000 shares were issued for services valued at $18,000.

·

On February 21, 2012, 10,000,000 shares were issued for services valued at $38,000.

·

On April 4, 2012, 182,200,000 shares were issued upon the conversion of shareholder notes payable.

 

 

All funds received from the sale of our shares were used for working capital purposes.

 

The shares were issued in reliance upon an exemption from registration pursuant to Section 4(2) of the Securities Act or Rule 506 of Regulation D promulgated under the Securities Act. Each investor took his securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the purchase of our shares. Our securities were sold only to an accredited investor, as defined in the Securities Act with whom we had a direct personal preexisting relationship, and after a thorough discussion. Finally, our stock transfer agent has been instructed not to transfer any of such shares, unless such shares are registered for resale or there is an exemption with respect to their transfer.

 

Each purchaser was provided with access to our filings with the SEC, including the following:

 

·

Our annual report to stockholders for the most recent fiscal year, the definitive proxy statement filed in connection with that annual report, and, if requested by the purchaser in writing, a copy of our most recent Form 10-K under the Exchange Act.

 

·

The information contained in an annual report on Form 10-K under the Exchange Act.

 

	·	The information contained in any reports or documents required to be filed by Thrive World Wide, Inc. under sections 13(a), 14(a), 14(c), and 15(d) of the Exchange Act since the distribution or filing of the reports specified above.

·

A brief description of the securities being offered, the use of the proceeds from the offering, and any material changes in Thrive World Wide, Inc.’ affairs that are not disclosed in the documents furnished.

 

Item 3. Defaults Upon Senior Securities.

 

In December 2008 Bank of America called the outstanding line of credit for immediate payment.  Per diem interest is being accrued daily in the amount of $20 for each day payment is late subsequent to December 12, 2008. 

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

Not applicable.

 

Item 6. Exhibits.

 

Exhibit No.		Identification of Exhibit
31.1*		Certification of Bruce Dugan, Director and Chief Executive Officer (Principle Executive Officer) of Thrive World Wide, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of James Stearrett, Chief Financial Officer and Treasurer (Principle Financial Officer and Principle Accounting Officer) of Thrive World Wide, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §302 of the Sarbanes-Oxley Act of 2002.
32.1*		Certification of Bruce Dugan, Director and Chief Executive Officer (Principle Executive Officer) of Thrive World Wide, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of James Stearrett, Chief Financial Officer and Treasurer (Principle Financial Officer and Principle Accounting Officer) of Thrive World Wide, Inc., pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002.

 

* Filed Herewith

 

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	THRIVE WORLD WIDE, INC.
Date: August 16, 2012.
	By	/s/ Bruce Dugan
	Bruce Dugan, Director and Chief Executive Officer
	(Principal Executive Officer)
	By	/s/ James Stearrett
	James Stearrett, Chief Financial Officer and Treasurer (Principal Financial Officer, and Principal Accounting Officer)