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EX-32.1 - SECTION 1350 CERTIFICATIONS - Gamzio Mobile, Inc.ex321.htm
EX-31.2 - RULE 13A-14(D)/15D-14(D) CERTIFICATION (PRINCIPAL FINANCIAL OFFICER) - Gamzio Mobile, Inc.ex312.htm
EX-31.1 - RULE 13A-14(A)/15D-14(A) CERTIFICATION (PRINCIPAL EXECUTIVE OFFICER) - Gamzio Mobile, Inc.ex311.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 quarter period ended December 31, 2012

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

 
For the transition period form                                                       to
   
 
Commission File number       000-53502

Marine Drive Mobile Corp.
(Exact name of registrant as specified in its charter)

Nevada                                
             68-0676667              .
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

123 West NYE Ln., Ste. 129,Carson City, NV 89706
(Address of principal executive offices)

(415) 839-1055
(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
 
Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definition of “large accelerated filer”, “accelerated filer” and “small reporting company” Rule 12b-2 of the Exchange Act.
 
 Large accelerated filer [ ]  Accelerated filer [ ]
   
 Non-accelerated filer [ ] (Do not check if a small reporting company)  Small 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]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 after the distribution of securities subsequent to the distribution of securities under a plan confirmed by a court.  Yes [   ]   No   [  ]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
February 19, 2013: 45,820,000 common shares

 
 

 
TABLE OF CONTENTS
   
Page Number
PART I.
FINANCIAL INFORMATION
 
     
ITEM 1.
Financial Statements (unaudited)
3
     
 
Condensed Consolidated Balance Sheets as at December 31, 2012 and September 30, 2012
4
     
 
Condensed Consolidated Statement of Operations
For the three months ended December 31, 2012 and 2011 and for the period January 18, 2007 (Date of Inception) to December 31, 2012
 
5
     
 
Condensed Consolidated Statement of Cash Flows
For the three months ended December 31, 2012 and 2011 and for the period January 18, 2007 (Date of  Inception) to December 31, 2012
 
6
     
 
Notes to the Financial Statements
7 to 12
     
ITEM 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
13
     
ITEM 3.
Quantitative and Qualitative Disclosures about Market Risk
16
     
ITEM 4.
Controls and Procedures
16
     
PART II.
OTHER INFORMATION
 
     
ITEM 1.
Legal Proceedings
17
     
ITEM 1A.
Risk Factors
17
     
ITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds
17
     
ITEM 3.
Defaults Upon Senior Securities
17
     
ITEM 4.
Mine Safety Disclosures
17
     
ITEM 5.
Other Information
17
     
ITEM 6.
Exhibits
18
     
 
SIGNATURES
19
     
 
 
2

 

PART I – FINANCIAL INFORMATION
 
ITEM 1.   FINANCIAL STATEMENTS
 
The accompanying balance sheets of Marine Drive Mobile Corp., formerly Sona Resources, Inc., (development  stage company) (the “Company”) at December 31, 2012 (with comparative figures as at September 30, 2012) and the statement of operations for the three months ended December 31, 2012 and 2011 and for the period from January 18, 2007 (date of inception) to December 31, 2012 and the statement of cash flows for the three months ended December 31, 2012 and 2011 and for the period from January 18, 2007 (date of inception) to December 31, 2012 have been prepared by the Company’s management in conformity with accounting principles generally accepted in the United States of America.  In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature.

Operating results for the three months ended December 31, 2012 are not necessarily indicative of the results that can be expected for the year ending September 30, 2013.
 
3

 
MARINE DRIVE MOBILE CORP.
 (Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
 
   
Dec. 31,
2012
(Unaudited)
   
Sept. 30,
2012
 
ASSETS
           
             
CURRENT ASSETS
           
      Cash
  $ 142,323     $ 83,276  
      Prepaid expenses
    2,000       -  
Total Current Assets
    144,323       83,276  
                 
PROPERTY AND EQUIPMENT
               
      Furniture and equipment,
      net of accumulated depreciation of  $4,326 and $2,833 respectively
    13,586       14,656  
      Computer equipment,
      net of accumulated depreciation of $3,297 and $2,118 respectively
    10,859       12,038  
      Computer software, net of accumulated amortization of  $61,223 and $18,828 respectively
    418,493       460,888  
                          Total Property and Equipment
    442,938       487,582  
                 
                           Total Assets
  $ 587,261     $ 570,858  
                 
                 
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
               
                 
CURRENT LIABILITIES
               
                 
      Accounts payable and accrued expenses
  $ 81,192     $ 70,786  
      Advances from related parties
    27,523       27,523  
      Convertible note payable
    1,600,092       1,392,162  
Total Current Liabilities
    1,708,807       1,490,471  
                 
STOCKHOLDERS’ DEFICIENCY
               
                 
Common stock
               
      250,000,000 shares authorized, at $0.001 par value;
               
      45,820,000 and  39,220,000 shares issued and  outstanding, respectively
    45,820       39,220  
      Additional paid-in capital
    2,529,376       1,959,180  
      Deficit accumulated during the exploration stage
    (137,569 )     (137,569 )
      Deficit accumulated during the development stage
    (3,559,173 )     (2,780,444 )
Total Stockholders’ Deficiency
    (1,121,546 )     (919,613 )
                 
Total Liabilities and Stockholders’ Deficiency
  $ 587,261     $ 570,858  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 
4

 
MARINE DRIVE MOBILE CORP.
 (Development Stage Company)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For three months ended December 31, 2012 and 2011 and for the period January 18, 2007 (date of inception) to December 31, 2012

(Unaudited)
   
 
 
Three months ended December 31
   
 
From January 18, 2007 (date of inception) to December 31,
 
   
2012
   
2011
   
 2012
 
                   
REVENUES
  $ -     $ -     $ -  
                         
EXPENSES
                       
     Impairment loss on goodwill
    -       -       461,608  
     Impairment loss on website
    -       -       7,500  
    General and administrative expense
    369,784       128,963       1,241,604  
    Marketing expense
    15,551       44,320       255,831  
                  Total expenses
    385,335       173,283       1,966,543  
                         
OTHER (INCOME) EXPENSE:
                       
   Interest Expense
    393,394       -       1,592,630  
                  Total other expense
    393,394       -       1,592,630  
                         
NET LOSS FROM CONTINUING OPERATIONS
  $ (778,729 )   $ (173,283 )   $ (3,559,173 )
                         
DISCONTINUED OPERATIONS
                       
   Change from exploration stage to development stage
    -       -       (137,569 )
                         
NET LOSS
  $ (778,729 )   $ (173,283 )   $ (3,696,742 )
                         
NET LOSS PER COMMON SHARE
                       
      Basic and diluted
  $ (0.02 )   $ (0.00 )        
                         
WEIGHTED AVERAGE OUTSTANDING SHARES
                       
       Basic and diluted
    40,872,174       38,198,261          

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
 
 
5

 
MARINE DRIVE MOBILE CORP.
 (Development Stage Company)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the three months ended December 31, 2012 and 2011 and for the period January 18, 2007 (date of inception) to December 31, 2012
(Unaudited)
   
Three months
ended
December 31, 2012
   
Three months
ended
December 31, 2011
   
From January 18, 2007 (date of inception) to December 31, 2012
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Net loss
  $ (778,729 )   $ (173,283 )   $ (3,696,742 )
Adjustments to reconcile net loss to net cash used in operating activities:
                       
    Impairment loss on mineral claim–discontinued operations
    -       -       5,000  
    Capital contributions–expenses paid by Officers–discontinued operations
    -       -       49,400  
    Stock based compensation
    8,436       -       44,786  
    Stock issued for services
    198,000               198,000  
    Impairment loss on Goodwill
    -       -       461,608  
    Impairment loss on Website
    -       -       7,500  
    Debt discount amortization
    370,360       -       1,523,876  
    Depreciation and amortization
    45,067       1,250       71,346  
Changes in operating assets and liabilities:
                       
    Prepaid expenses
    (2,000 )             (2,000 )
    Changes in accounts payable–discontinued operations
    -       -       20,917  
    Changes in accounts payable and accrued expenses
    10,406       (37,564 )     60,194  
Net Cash Used in Operations Activities
    (148,460 )     (209,597 )     (1,256,115 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                       
     Acquisition of mineral claim–discontinued operations
    -       -       (5,000 )
     Acquisition of assets
    (423 )     (15,881 )     (211,784 )
Net Cash Used in Investing Activities
    (423 )     (15,881 )     (216,784 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES
                       
     Proceeds from issuance of common Stock–discontinued operations
    -       -       32,276  
     Proceeds from advances by related parties–discontinued operations
    -       -       27,523  
     Proceeds from notes payable
    207,930       259,578       1,555,423  
Net Cash Provided by Financing Activities
    207,930       259,578       1,615,222  
                         
Net Increase in Cash
    59,047       34,100       142,323  
Cash at Beginning of Period
    83,276       17,392       -  
CASH AT END OF PERIOD
  $ 142,323     $ 51,492     $ 142,323  
                         
SUPPLEMENTAL CASH DISCLOSURES
                       
     Cash paid for income taxes
  $ -     $ -     $ -  
      Cash paid for interest
  $ -     $ -     $ -  
                         
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
                       
      Stock issued for acquisition of MDTI
  $ -     $ -     $ 5,000  
      Stock issued for acquisition of ILAD
  $ -     $ -     $ 390,000  
      Stock issued for advances in acquisition of MDTI
  $ -     $ -     $ 44,669  
      Debt acquired in acquisition of ILAD
  $ -     $ -     $ 80  
      Warrants issued for the acquisition of ILAD
  $ -     $ -     $ 31,859  
      Website costs acquired in acquisition of ILAD
  $ -     $ -     $ 10,000  
      Stock issued for software purchase
  $ -     $ -     $ 300,000  
      Stock issued for services
  $ 198,000     $ -     $ 198,000  
 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

 
6

 
MARINE DRIVE MOBILE CORP.
 (Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012
(Unaudited)

1.           ORGANIZATION AND BASIS OF PRESENTATION

Organization

The Company, Marine Drive Mobile Corp., was incorporated under the laws of the State of Nevada on January 18, 2007, under the name “Sona Resources, Inc.”, with the authorized capital stock of 250,000,000 shares at $0.001 par value.  On July 6, 2011 the Company changed its name to “Marine Drive Mobile Corp.”.

The Company was originally organized for the purpose of acquiring and developing mineral properties.  The Company was not able to establish the existence of a commercially minable ore deposit and in June of 2011 began to shift its business focus to opportunities in the mobile commerce (“m-Commerce”) industry. Effective July 6, 2011 the Company amended its Articles of Incorporation to change its name to Marine Drive Mobile Corp, (MDM) and on September 12, 2011, the Company finalized the acquisition of Marine Drive Technologies, Inc. (MDT) and became a Development Stage company at that time.

On October 3, 2011 the Company completed the acquisition of the outstanding membership interests of I Like A Deal, LLC, a Nevada limited liability company (“ILAD”), pursuant to the terms of the Membership Interests Purchase Agreement, dated August 26, 2011 (the “Purchase Agreement”), between the Company, ILAD and ILAD’s members (the “Selling Members”).  ILAD runs an integrated website that allows users to find the “best of the best” deals locally and nationally on a daily basis including automotive, active life, education, food, fitness, hotel, restaurants, shopping, among others, by selling coupons for discounted products and services.

Basis of Presentation

The interim financial statements for the three months ended December 31, 2012 and 2011 are unaudited. These financial statements are prepared in accordance with the requirements for unaudited interim periods, and consequently do not include all disclosures required to be made in conformity with accounting principles generally accepted in the United States of America.

The results of operations for the interim periods are not necessarily indicative of the results for the full year. In management’s opinion all adjustments necessary for a fair presentation of the Company’s financial statements are reflected in the interim periods included, and are of a normal recurring nature. These interim financial statements should be read in conjunction with the financial statements included in our annual report on Form 10-K for the year ended September 30, 2012, filed with the SEC.

2.           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Methods

The Company recognizes income and expenses based on the accrual method of accounting.

Principles of Consolidation

The consolidated financial statements include the accounts of Marine Drive Mobile Corp, Marine Drive Technologies, Inc., and I Like A Deal, LLC. All significant intercompany balances and transactions have been eliminated in consolidation.
 
7

 
MARINE DRIVE MOBILE CORP.
 (Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012
(Unaudited)

Dividend Policy

The Company has not yet adopted a policy regarding payment of dividends.

Basic and Diluted Net Income (loss) Per Share

Basic net income (loss) per share amounts are computed based on the weighted average number of shares actually outstanding.   Diluted net income (loss) per share amounts are computed using the weighted average number of common and common equivalent shares outstanding as if shares had been issued on the exercise of the common share rights unless the exercise becomes antidilutive and then the basic and diluted per share amounts are the same.

Evaluation of Long-Lived Assets

The Company periodically reviews its long term assets and makes adjustments, if the carrying value exceeds fair value.

Furniture and Equipment

The Company purchased office furniture and equipment during the three months ended December 31, 2012, for $423. Furniture and equipment is depreciated on a straight line basis over 3 years. Total depreciation expense for the three months ended December 31, 2012 was $1,493.

Computer Equipment

Computer equipment is depreciated on a straight line basis over 3 years. Total depreciation expense for the three months ended December 31, 2012 was $1,179.

Computer Software

Computer software on the balance sheet represents costs incurred to develop software for our websites. We account for internally developed software costs in accordance with ASC 350-40. The computer software costs have an estimated useful life of 3 years. Total amortization expense for the three months ended December 31, 2012 was $42,395.

Income Taxes

The Company utilizes the liability method of accounting for income taxes.  Under the liability method deferred tax assets and liabilities are determined based on differences between financial reporting and the tax bases of the assets and liabilities and are measured using the enacted tax rates and laws that will be in effect, when the differences are expected to be reversed.   An allowance against deferred tax assets is recorded, when it is more likely than not, that such tax benefits will not be realized.
 
8

 

MARINE DRIVE MOBILE CORP.
 (Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012
(Unaudited)
Foreign Currency

The books of the Company are maintained in United States dollars and this is the Company’s functional and reporting currency. Translations denominated in other than the United States dollar are translated as follows with the related transaction gains and losses being recorded in the Statement of Operations:

(i) Monetary items are recorded at the rate of exchange prevailing as at the balance sheet date;
 
(ii) Non-Monetary items including equity are recorded at the historical rate of exchange; and
 
(iii) Revenues and expenses are recorded at the period average in which the transaction occurred.

Revenue Recognition

The Company earns revenue through consulting fees and from transaction fees it charges customers. Consulting fees are recorded in revenue when the service is completed. Transaction fees are recorded in revenue when a customer completes a purchase on the Company’s website and the related transaction fee is charged to the customer’s credit card. No revenue has been recognized to date.

Advertising and Market Development

The company expenses advertising and market development costs as incurred.

Financial Instruments

The carrying amounts of financial instruments are considered by management to be their fair value due to their short term maturities.

Estimates and Assumptions

Management uses estimates and assumptions in preparing financial statements in accordance with general accepted accounting principles.  Those estimates and assumptions affect the reported amounts of the assets and liabilities, the disclosure of contingent assets and liabilities, and the reported revenues and expenses.   Actual results could vary from the estimates that were assumed in preparing these financial statements.

Statement of Cash Flows

For the purposes of the statement of cash flows, the Company considers all highly liquid investments with a maturity of three months or less to be cash equivalents.

Recent Accounting Pronouncements

ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment, is applicable to fiscal years beginning after December 15, 2011. Early application is permitted. The Company is currently assessing the impact this standard will have on its financial statements.

The Company does not expect the adoption of any other recent accounting pronouncements will have a material impact on its financial statements.

3.           SIGNIFICANT TRANSACTIONS WITH RELATED PARTIES

Officers-directors and their families have acquired 35% of the common stock issued, have made no interest, demand advances to the Company of $27,523, and have made contributions to capital of $49,400 in the form of expenses paid for the Company.
 
9

 
MARINE DRIVE MOBILE CORP.
 (Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012
(Unaudited)

4.           DISCONTINUED OPERATIONS

As a result of the acquisition of MDT on September 12, 2011, the Company changed its business focus from mining (exploration stage) to e-commerce applications (development stage). Accordingly, the Company has reported discontinued operations on its statement of operations, classified as follows:

 
Three months ended
December 31, 2012
Three months ended
December 31, 2011
From January 18, 2007 (date of inception) to December 31, 2012
General and administrative
$                     -
$                     -
$       127,569
Impairment on mineral claim acquisition
-
-
5,000
Exploration costs
-
-
5,000
    Total Discontinued Operations
$                     -
$                     -
$      137,569
       
5.           NOTE PAYABLE

On January 20, 2012, the Company entered into a Line of Credit Agreement with Quarry Bay Capital LLC for advances of up to $1,000,000 that are payable on demand, bearing simple interest of 6% per annum, and are convertible into common stock of the Company at $.25 for every dollar of debt outstanding. All previous advances from a third party were converted to a note payable under this line of credit agreement. Per ASC 470-50-40-10b, as this amendment added a substantive conversion feature, we have determined debt extinguishment accounting rules apply. However, as there was no difference between the reacquisition price and the net carrying amount of the old debt, no gain or loss was recorded.

On July 20, 2012 the Company completed an additional Line of Credit agreement with Quarry Bay Capital LLC for advances up to $1,000,000 payable on demand, bearing interest of 6% per annum and a provision allowing the lender to convert the debt into common shares of the Company, at $.25 per share. In addition, the lender shall be granted cashless warrants to buy the same number of shares as those converted, on the January 20, 2012 agreement and this agreement, at an exercise price of $0.25 per share. Per ASC 470-50-40-10a, we have determined that the fair value of the embedded conversion option has increased by more than 10% due to the addition of warrants to the agreement. Therefore, debt extinguishment account rules apply. Accordingly, the new debt instrument was initially recorded at fair value; however, as there was no difference between the reacquisition price and the net carrying amount of the old debt, no gain or loss was recorded. Additionally, the Company recorded a discount on debt in the amount of $90,116, which was fully amortized to interest expense on July 20, 2012 (due to these being demand notes).

On August 16, 2012, the Company entered into an amendment agreement, which reduced the conversion price on all debt issued under the first two line of credit agreements (and all subsequent debt) to $0.10 per share, and also reduced the exercise price of all warrants to be issued, to $0.15 per share. Per ASC 470-50-40-10a, we have determined that the fair value of the embedded conversion option has increased by more than 10% due to the decrease in conversion and exercise prices. Therefore, debt extinguishment account rules apply. Accordingly, the new debt instrument was initially recorded at fair value; however, as there was no difference between the reacquisition price and the net carrying amount of the old debt, no gain or loss was recorded. Additionally, the Company recorded a discount on debt in the amount of $2,557, which was fully amortized to interest expense on August 16, 2012 (due to these being demand notes).
 
10

 
MARINE DRIVE MOBILE CORP.
 (Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012
(Unaudited)

On October 19, 2012, the Company entered into an amendment agreement, which reduced the conversion price on all debt issued under the first two line of credit agreements (and all subsequent debt) to $0.05 per share, and also reduced the exercise price of all warrants to be issued, to $0.10 per share. Per ASC 470-50-40-10a, we have determined that the fair value of the embedded conversion option has increased by more than 10% due to the decrease in conversion and exercise prices. Therefore, debt extinguishment accounting rules apply. Accordingly, the new debt instrument was initially recorded at fair value; however, as there was no difference between the reacquisition price and the net carrying amount of the old debt, no gain or loss was recorded. Additionally, the Company recorded a discount on debt in the amount of $370,360, which was fully amortized to interest expense on October 19, 2012 (due to these being demand notes).

During the three months ended December 31, 2012 and 201, the Company received cash advances from a third party under these line of credit agreements in the amount of $207,930. As of December 31, 2012, the total amount due under these line of credit agreements was $1,600,092, with accrued interest of $68,373.

On December 31, 2012, a total of 32,001,840 warrants were issuable under the above line of credit agreements and amendment, with a fair value on that date of $701,441.

On November 22, 2012, the Company received a conversion request from Quarry Bay to convert $1,000,000 of debt into 20,000,000 shares of common stock.

6.         CAPITAL STOCK

On August 31, 2007, Company completed a private placement consisting of 80,000,000 common shares sold to directors and officers for a total consideration of $2,000.  On September 30, 2007, the Company completed a private placement of 24,220,000 common shares for a total consideration of $30,276.

On September 12, 2011, a shareholder and, as of the Closing Date of the MDT acquisition, a former officer and a director, surrendered 72,000,000 shares of the Company’s common stock to the Company. These shares were canceled.

On September 12, 2011, the Company issued 5,000,000 common shares to acquire all of the issued and outstanding shares of MDT. These shares were valued at $.001, per share, which was the closing trading price of the Company’s common stock on that date.

On October 3, 2011, the Company completed the purchase of ILAD and issued 1,000,000 common shares to the members of ILAD. These shares were valued at $.39, per share, which was the closing trading price of the Company’s common stock on that date.

On December 8, 2011, the Board of Directors of the Company adopted a 2011 Equity Incentive Plan (the “Plan”) and reserved 10,000,000 shares of the Company’s common stock for issuance thereunder to employees, consultants and other service providers of the Company. As of December 31, 2012 no options have been granted under the plan.

On July 1, 2012, the Company entered into an agreement to acquire a mobile software application to integrate into its current online platform. As part of the agreement, the Company was to issue 1,000,000 common shares valued at $300,000 (estimated cost of the mobile software application). These shares were issued on December 17, 2012.
 
11

 
MARINE DRIVE MOBILE CORP.
 (Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2012
(Unaudited)


On December 17, 2012 the Company issued 6,600,000 to various individuals to recognize services provide to the Company. These shares were valued at $.03, per share, which was the closing trading price of the Company’s common stock on the date of issue.

7.          STOCK BASED COMPENSATION

During the year ended September 30, 2011 the Company granted the Officers of the Company 12,000,000 stock options as part their Management contracts (4,000,000 options were forfeited during the year ended September 30, 2011). The options were granted September 12, 2011, have an exercise price of $.25, a term of ten years, with 1,500,000 options vesting on September 12, 2012 and 10,500,000 options vesting 1/7 every quarter thereafter. The Company valued these options using the Black-Scholes model and the following assumptions:  expected term of 10 years; risk-free interest rate of .55%; dividend rate of 0%; and implied volatility of 165%. This resulted in $36,500 and $0 in stock based compensation expense during the years ended September 30, 2012 and 2011, respectively. Upon exercise, the Company expects to issue shares from its currently authorized common shares.

During the year ended September 30, 2012 the Company granted 100,000 warrants to the owners of ILAD as part of the purchase agreement (see Note 5).  The warrants were granted on October 3, 2011, have an exercise price of $0.23 if exercised in the first year or $0.39 if exercised after that and a term of 2 years. The Company valued the warrants using the Black-Scholes model and the following assumptions:  expected term of 2 years; risk-free interest rate of .55%; dividend rate of 0%; and implied volatility of 165%. The calculated fair value of $31,925 was included in the purchase price allocation.

Unrecognized stock option compensation expense of $48,883 at December 31, 2012, will be recorded over the next 2 years.

Common Stock options and warrants

There were no stock options or warrants issued, forfeited, or canceled during the three months ended December 31, 2012. Total stock options and warrants outstanding at December 31, 2012 were 8,100,000, with a weighted average exercise price of $0.27, weighted average remaining term of 6.9 years, and aggregate intrinsic value of $0. There were 2,000,000 total options and warrants exercisable at December 31, 2012.

8.          GOING CONCERN

The Company will need additional working capital to service its debt and for its planned activity, which raises substantial doubt about its ability to continue as a going concern.   Continuation of the Company as a going concern is dependent upon obtaining additional working capital and the management of the Company has developed a strategy, which it believes will accomplish this objective through additional equity funding, and long term financing, which will enable the Company to operate for the coming year.

9.          SUBSEQUENT EVENTS

The Company has evaluated subsequent events through February 19, 2013, with no reportable events through this date.

 
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ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
 
This Form 10-Q contains statements that constitute forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. The words “expect,” “estimate,” “anticipate,” “predict,” “believe,” and similar expressions and variations thereof are intended to identify forward-looking statements. Such forward-looking statements include statements regarding, among other things, (a) our projected sales and profitability, (b) our growth strategies, including the potential results of any acquisition or similar transaction, (c) anticipated trends in our industry, (d) our future financing plans, (e) our anticipated needs for working capital, and (f) the benefits related to ownership of our common stock. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements for the reasons, among others, described within the various sections of this Form 10-Q, specifically the section entitled “Risk Factors”.   In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this Form 10-Q will in fact occur as projected. We undertake no obligation to release publicly any updated information about forward-looking statements to reflect events or circumstances occurring after the date of this Form 10-Q or to reflect the occurrence of unanticipated events.
 
The risks described below are the ones we believe are most important for you to consider. These risks are not the only ones that we face. If events anticipated by any of the following risks actually occur, our business, operating results or financial condition could suffer and the future price of our common stock could decline.
 
The following discussion should be read in conjunction with the information contained in the financial statements of Marine Drive Mobile Corp. (“we”, “us”, “our”, or the Company) and the notes which form an integral part of the financial statements which are attached hereto.
 
The financial statements mentioned above have been prepared in conformity with accounting principles generally accepted in the United States of America and are stated in United States dollars.
 
Background
 
We were incorporated under the laws of the State of Nevada on January 18, 2007, under the name “Sona Resources, Inc.”, with authorized capital stock of 250,000,000 shares at $0.001 par value.  We were organized for the purpose of acquiring and developing mineral properties.  We were not able to establish the existence of a commercially minable ore deposit and in June of 2011 we shifted our business focus to opportunities in the mobile commerce (“m-Commerce”) industry.  Mobile Commerce also known as M-Commerce or mCommerce, is the ability to conduct commerce using a mobile device, such as a mobile phone, a Personal Digital Assistant (PDA), a smartphone, or other emerging mobile equipment.
 
On June 6, 2011, we entered into the Exchange Agreement to acquire Marine Drive Technologies Inc. (the “Exchange Transaction”), a corporation organized under the laws of Canada (“MDT”), a developer of scalable m-Commerce applications and services, and on July 6, 2011, we changed our name to “Marine Drive Mobile Corp.”  On August 26, 2011, we entered into a Membership Interests Purchase Agreement for the acquisition of the outstanding membership interests of I Like A Deal, LLC (“ILAD”), a developer of group buying web based software (the “ILAD Transaction”).  On September 12, 2011 we closed the Exchange Agreement with MDT and on October 3, 2011 we closed the Membership Interests Purchase Agreement with ILAD.
 
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Our Business
 
Marine Drive Mobile has developed a proprietary technology platform designed to provide merchants with a new method of marketing to existing and loyal customers.  We generate revenue primarily through transaction fees associated with the use of our deal management software (“DMS”).   The deal management software provides companies of all sizes the ability to create their own electronic discount offers (coupons), make those offers available to targeted customer groups, and send them out through their own distribution channels.

We generate revenues by collecting a small transaction fee for the use of the DMS.  Consumers purchase “deal offers” from Marine Drive for $1, locking in the merchant’s future discounted deal. When the purchased deal offer is redeemed, the consumer then pays the merchant directly for full cost of the deal.  The platform is provided at no cost to the merchant, with the merchant’s customer paying Marine Drive a $1 fee for the right to the merchant’s deal at a future time.

Our DMS was officially introduced to the golf industry in January 2012 at the PGA Merchandise Show through the website eTeeoff.com, an easy-to-use platform to connect golf merchants to consumers. During this quarter, we signed a Joint Venture Agreement with TapIn Solutions, LLC to make eTeeoff and the Marine Drive DMS available to their network of 3,400 golf courses and 450 product distributors across the country.

As part of the agreement, our software was fully integrated into TapIn’s web based platform at the end of June 2012, and we are now commencing to introduce the DMS to approximately 150 of TapIn golf courses throughout the U.S.  This represents the first phase of our Joint Venture, which will be completed by September with the goal ultimately to integrate into TapIn’s entire network.

We intend to use our experience with TapIn to build a strong structure to introduce our DMS to additional m-Commerce marketing platforms aimed at other lifestyle verticals and retail sectors.  These new markets will be identified and pursued based on the strength and connection to a strong and cohesive customer profile.  Our goal is to expand our offerings by integrating additional features into our DMS, including mobile applications to integrate electronic coupon applications to the mobile platform, as well as social media tools and applications. 
 
Our current and future operations are focused on continuing to carry out our business plan through the marketing and continued development of our Deal Management Software, its first client TapIn, new applications of the software, and the continued evaluation of potential strategic acquisitions and/or partnerships.

Critical Accounting Policies
 
Our discussion and analysis of our financial condition and results of operations, including the discussion on liquidity and capital resources, is based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management re-evaluates its estimates and judgments.
 
The going concern basis of presentation assumes we will continue in operation throughout the next fiscal year and into the foreseeable future and will be able to realize our assets and discharge our liabilities and commitments in the normal course of business.  Certain conditions, discussed below, currently exists which raise substantial doubt upon the validity of this assumption.  The financial statements do not include any adjustments that might result from the outcome of the uncertainty.
 
The potential acquisition strategies we are considering are dependent upon our ability to obtain third party financing in the form of debt and/or equity.  Such financings may not be available or may not be available on reasonable terms.  As of December 31, 2012, we have not generated revenues, and have experienced negative cash flow from minimal exploration activities.
 
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Results of Operations – Since inception to December 31, 2012
 
For the three months ended December 31, 2012, we incurred a net loss of $778,729 from continuing operations compared to a net loss of $173,283 for the three months ended December 31, 2011.

General and administration expenses for the three months ended December 31, 2012, amounted to $369,784 compared to $128,963 for December 31, 2011. The increase is due primarily to an increase in stock compensation expense of $198,000,  and amortization expense of $45,066, partially offset by minor decreases in other general and administrative expenses.
 
Sales and Marketing expenses for the three months ended December 31, 2012 amounted to $15,551 compared to $44,320 for December 31, 2011 reflecting the reduction in use of outside services to promote our online presence.

Interest expense for the three months ended December 31, 2012 amounted to $393,394 compared to $0 for December 31, 2011.  This expense reflects debt discount amortization and interest accrued on the note payable which didn’t begin until January 20, 2012.

As of December 31, 2012, we had accumulated loss since inception of $3,696,742 being $3,559,173 from continuing operations and $137,569 from discontinued operations. We have not generated any revenue from operations since inception. 

Cash and Cash Equivalents
 
As of December 31, 2012, we had cash of $142,323 as compared to $83,276 as of September 30, 2012.  We anticipate that a substantial amount of cash will be used as working capital and to execute our strategy and business plan.  As such, we further anticipate that we will have to raise additional capital of approximately $1.5 million to fund our operational and research and development needs over the next twelve months.
 
Liquidity and Capital Resources

As of December 31, 2012, we had cash of $142,323 and working capital deficiency of $1,564,484.  During the three month period ended December 31, 2012, we funded our operations from advances and loans from a third party.
 
For the three month period ended December 31, 2012, we used net cash of $148,460 in operations.

In order to execute on our business strategy, we will require additional working capital, commensurate with our operational needs.  Our current cash requirements are significant due to the planned development and expansion of our business.  Accordingly, we expect to continue to use debt and equity financing to fund operations for the next twelve months.  In addition to the Line of Credit, we are currently seeking further financing and we believe that will provide sufficient working capital to fund our operations for at least the next twelve months. Changes in our operating plans, increased expenses, acquisitions, or other events, may cause us to seek additional equity or debt financing in the future. There are no assurances that we will be able to raise the required working capital on favorable terms, or that such working capital will be available on any terms when needed.

Capital Requirements
 
There is very limited historical financial information about us upon which to base an evaluation of our performance.  We are a development stage corporation and have not generated any revenues from operations.  We cannot guarantee we will be successful in our business operations.  Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources.
 
Our existing capital resources will not be sufficient to meet our current obligations and operating requirements or our aggressive growth and acquisition plans.  Therefore, we will need to rely on the Line of Credit and/or raise additional capital in the next 12 months.  We will consider debt or equity offerings or institutional borrowing as potential means of financing, however, there are no assurances that we will be successful or that we will obtain terms that are favorable to us.  Over the next twelve months, management estimates that we will require approximately $1.5 million to fund our operational and research and development needs.
 
We have no assurance that financing will be available to us, or if available, on terms acceptable to us.  If financing is not available to us, or on satisfactory terms, we may be unable to continue, develop or expand our operations.  Additional equity financing could also result in additional dilution to our existing shareholders.
 
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Off-Balance Sheet Arrangements
 
There are no off-balance sheet arrangements.
 
ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
 
At this time this is not applicable.
 
ITEM 4.        CONTROLS AND PROCEDURES
 
Our management has evaluated the effectiveness of our disclosure controls and procedures as required by the Exchange Act Rule 13a-15(d) as at December 31, 2012 (the “Evaluation Date”).  Upon completion of their evaluation, our management has concluded the disclosure controls and procedures were not effective as of the Evaluation Date as a result of material weaknesses in internal controls over financial reporting.
 
Under Rule 13a-15(e)/15d-15(e); Regulation S-K, Item 307, the SEC states that “disclosure controls and procedures” have the following characteristics:
 
designed to ensure disclosure of information that is required to be disclosed in the reports that are filed or submitted under the Exchange Act;
 
recorded, processed, summarized and reported with the time period required by the SEC’s rules and forms; and
 
accumulated and communicated to management to allow them to make timely decisions about the required disclosures.
 
Even though management’s assessment that our internal controls over financial reporting are not effective and there are certain material weaknesses as indicated below, management believes that our financial statements contained in our Quarterly Report on Form 10-Q for the three months ended December 31, 2012 fairly present our financial condition, results of operations and cash flows in all material respects.
 
Changes in Internal Controls Over Financial Reporting
 
There were no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2012 that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
 
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PART II – OTHER INFORMATION
 
ITEM 1.        LEGAL PROCEEDINGS
 
There are no legal proceedings to which we are a party, nor to the best of management’s knowledge are any material legal proceedings contemplated.
 
ITEM 1A.     RISK  FACTORS
 
None.
 
ITEM 2.        UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
None.
 
ITEM 3.        DEFAULTS UPON SENIOR SECURITIES
 
None.
 
ITEM 4.        MINE SAFETY DISCLOSURES
 
None.
 
ITEM 5.        OTHER INFORMATION
 
None.
 
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ITEM 6.        EXHIBITS

The following exhibits are included as part of this report by reference:
     
2.1
 
Share Exchange Agreement, dated June 6, 2011 (incorporated by reference from registrant’s Current Report on Form 8-K filed on June 9, 2011)
     
3.1
 
Certificate of Incorporation (incorporated by reference from registrant’s Registration Statement on Form SB-2 filed on January 31, 2008, Registration No. 333-148959)
     
3.2
 
Articles of Incorporation (incorporated by reference from registrant’s Registration Statement on Form SB-2 filed on January 31, 2008, Registration No. 333-148959 and Current Report on Form 8-K filed on December 31, 2011)
     
3.3
 
By-laws (incorporated by reference from registrant’s Registration Statement on Form SB-2 filed on January 31, 2008, Registration No. 333-148959)
     
4
 
Specimen Stock Certificate (incorporated by reference from registrant’s Registration Statement on Form SB-2 filed on January 31, 2008, Registration No. 333-148959)
     
10.1
 
Line of Credit agreement (incorporated by reference from registrant’s Quarterly Report on Form 10-Q filed on February 14, 2012)
     
10.2
 
Line of Credit agreement dated July 23, 2012
     
10.3
 
Amendment to Line of Credit Agreements dated August 16, 2012
     
10.4
 
Memorandum of Agreement with Pay2Gate LLC
     
31.1
 
Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer)*
     
31.2
 
Rule 13a-14(d)/15d-14(d) Certification (Principal Financial Officer)*
     
32.1
 
Section 1350 Certifications*
 
*Filed herewith.
 
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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.

 
MARINE DRIVE MOBILE CORP.
 
     (Registrant)
   
Date:    February 19, 2013
/s/ COLIN MACDONALD 
 
Colin MacDonald
 
Chief Executive Officer and President
 
(Principal Executive Officer)
   
Date:    February 19, 2013
/s/ MONIKA SAGAR 
 
Monika Sagar
 
Chief Financial Officer, Chief Accounting
Officer, Secretary and Director
 
(Principal Financial Officer and Principal Accounting Officer)
 
 
 
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