chatAND, Inc. - FORM 10-Q - August 14, 2013

chatAND, Inc. - FORM 10-Q - August 14, 2013

Attached files

Attached files

chatAND, Inc. Reports

file	filename
EX-31.2 - EXHIBIT 31.2 - chatAND, Inc.	chat_ex312.htm
EX-32.3 - EXHIBIT 32.2 - chatAND, Inc.	chat_ex322.htm
EX-31.1 - EXHIBIT 31.1 - chatAND, Inc.	chat_ex311.htm
EX-32.1 - EXHIBIT 32.1 - chatAND, Inc.	chat_ex321.htm
EXCEL - IDEA: XBRL DOCUMENT - chatAND, Inc.	Financial_Report.xls

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For Quarter Ended: June 30, 2013

Commission File Number: 000-54587

chatAND, Inc.

(Exact name of registrant as specified in its charter)

Nevada		27-2761655
(State or Jurisdiction of Incorporation or Organization)		(IRS Employer ID No)

5940 South Rainbow Blvd

Las Vegas, NV 89118

(Address of principal executive office) (Zip code)

(212) 245-1444

(Issuer’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods as the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ 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 definitions of “large accelerated filer,” accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company þ

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

The number of shares outstanding of registrant’s common stock, par value $.00001 per share, as of July 31, 2013, was 12,500,001 shares.

chatAND, Inc. and Subsidiary

(Development Stage Companies)

Table of Contents

		Page No.

Part I	Financial Information (unaudited)	3

Item 1:	Condensed Consolidated Financial Statements	3
	▪ Balance Sheets as of June 30, 2013 and December 31, 2012		3
	▪ Statements of Operations for the Three and Six Months ended June 30, 2013 and 2012 and the period from inception (May 14, 2010) through June 30, 2013		4
	▪ Statement of Stockholders' Deficit for the period from Inception (May 14, 2010) through June 30, 2013		5
	▪ Statements of Cash Flows for the six months ended June 30, 2013 and 2012 and the period from inception (May 14, 2010) through June 30, 2013		6
	▪ Notes to financial statements		7
Item 2:	Management's Discussion and Analysis of Financial Condition and Results of Operations		13
Item 3:	Quantitative and Qualitative Disclosure about Market Risk		18
Item 4:	Controls and Procedures		18

Part II	Other Information		19

Item 1:	Legal Proceedings		19
Item 1A:	Risk Factors		19
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds		19
Item 3:	Defaults Upon Senior Securities		19
Item 4:	Submission of Matters to a Vote of Security Holders		19
Item 5:	Other Information		19
Item 6:	Exhibits		20

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PART I: FINANCIAL INFORMATION

ITEM 1: CONDENSED FINANCIAL STATEMENTS

chatAND, Inc. and Subsidiary
(Development Stage Companies)
Consolidated Balance Sheets
June 30, 2013 (Unaudited) and December 31, 2012

	2013			2012
ASSETS
Current assets:
Cash and cash equivalents	$	2,480		$	-
TOTAL CURRENT ASSETS		2,480			-
Property and equipment, net		6,574			7,610
Other intangible assets - intellectual property		9,841			9,841
TOTAL ASSETS	$	18,895		$	17,451

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	209,784		$	176,800
Accrued expenses		178,699			152,764
Advances from stockholders and employees		114,103			51,495
Note payable		75,000			75,000
Senior convertible debentures		850,000			850,000
TOTAL LIABILITIES		1,427,586			1,306,059

Commitments and contingencies (Note 7)

Stockholders' deficit:
Preferred stock: $0.00001 par value; 100,000,000 shares
authorized; no shares issued and outstanding		-			-
Common stock: $0.00001 par value; 500,000,000 shares
authorized; 17,750,001 shares issued (Note 5) ; and
12,750,001 shares outstanding at June 30, 2013 and
December 31, 2012		128			128
Additional paid in capital		375,252			375,252
Accumulated deficit		(1,784,071	)		(1,663,988	)
TOTAL STOCKHOLDERS' DEFICIT		(1,408,691	)		(1,288,608	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	18,895		$	17,451

See accompanying notes to condensed consolidated financial statements.

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chatAND, Inc. and Subsidiary

(Development Stage Companies)

Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2013 and 2012 and the period from

Inception (May 14, 2010) through June 30, 2013

(Unaudited)

													From
													Inception
	Three Months Ended						Six Months Ended						(May 14, 2010)
	June 30,						June 30,						to June 30,
	2013			2012			2013			2012			2013
Revenue:
Total revenue	$	-		$	-		$	-		$	-		$	-
Total revenue		-			-			-			-			-
Costs and expenses:
General and administrative expense		45,279			183,234			64,591			371,405			993,655
Research and development expense		31,486			48,226			31,486			124,012			345,072
Non-cash compensation for officers		-			-			-			-			162,177
Total expenses		76,765			231,460			96,077			495,417			1,500,904
Loss from operations		(76,765	)		(231,460	)		(96,077	)		(495,417	)		(1,500,904	)
Other income (expense)
Interest income		-			16			-			171			1,045
Interest expense		(12,729	)		(49,151	)		(24,006	)		(114,117	)		(284,212	)
Total other income (expense)		(12,729	)		(49,135	)		(24,006	)		(113,946	)		(283,167	)
Net loss	$	(89,494	)	$	(280,595	)	$	(120,083	)	$	(609,363	)	$	(1,784,071	)

Net loss per share, basic and diluted	$	(0.01	)	$	(0.02	)	$	(0.01	)	$	(0.05	)
Weighted average shares outstanding		12,750,001			12,750,001			12,750,001			12,750,001

See accompanying notes to condensed consolidated financial statements.

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chatAND, Inc. and Subsidiary

(Development Stage Companies)

Consolidated Statement of Stockholders' Deficit

For the period from inception (May 14, 2010) through June 30, 2013

(Unaudited)

														Deficit
														Accumulated
											Additional			During the
		Preferred Stock				Common Stock					Paid-in			Development
	Date	Shares		Par Value		Shares		Par Value			Capital			Stage			Total

Balance at May 14, 2010			-	$	-		-	$	-		$	-		$	-		$	-
Common stock issued for:			-		-		-		-
Cash	6/11/2010		-		-		15		49,995			-			-			49,995
Intellectual property	6/11/2010		-		-		70		233,310			(221,877	)		-			11,433
Net loss			-		-		-		-			-			(45,594	)		(45,594	)
Amendment to Articles of
Incorporation	6/3/2011		-		-		10,837,415		(283,197	)		283,197			-			-
Balance, December 31, 2010			-		-		10,837,500		108			61,320			(45,594	)		15,834
Common stock issued for
services by officers	6/1/2011		-		-		1,912,501		20			49,975			-			49,995
Detachable warrants issued
with convertible debentures	6/17/2011		-		-		-		-			151,775			-			151,775
Warrants issued for services
by officers	6/17/2011		-		-		-		-			112,182			-			112,182
Net loss			-		-		-		-			-			(755,604	)		(755,604	)
Balance, December 31, 2011			-		-		12,750,001		128			375,252			(801,198	)		(425,818	)
Net loss			-		-		-		-			-			(862,790	)		(862,790	)
Balance, December 31, 2012			-		-		12,750,001		128			375,252			(1,663,988	)		(1,288,608	)
Net loss			-		-		-		-			-			(120,083	)		(120,083	)
Balance, June 30, 2013			-	$	-		12,750,001	$	128		$	375,252		$	(1,784,071	)	$	(1,408,691	)

See accompanying notes to condensed consolidated financial statements.

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							From
							Inception
	Six Months Ended						(May 14, 2010)
	June 30,						to June 30,
	2013			2012			2013
Cash flows from operating activities:
Net loss	$	(120,083	)	$	(609,363	)	$	(1,784,071	)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization		1,036			920			3,795
Amortization of warrant cost		-			69,563			151,775
Common stock and warrants issued to officers for compensation		-			-			162,177
Impairment of capitalized Research and development cost		-			-			11,433
Changes in operating assets and liabilities:
Prepaid expenses		-			11,665			-
Accounts payable		32,984			31,036			209,784
Accrued expenses		25,935			49,072			178,699
Net cash used by operating activities		(60,128	)		(447,107	)		(1,066,408	)

Cash flows from investing activities:
Purchase of intellectual property		-			-			(9,841	)
Purchase of furniture and equipment		-			(2,308	)		(10,369	)
Net cash used by investing activities		-			(2,308	)		(20,210	)

Cash flows from financing activities:
Proceeds from senior convertible debentures		-			-			850,000
Proceeds from note payable		-			75,000			75,000
Loans from stockholders and employees		62,608			-			114,103
Sale of common stock		-			-			49,995
Net cash provided by financing activities		62,608			75,000			1,089,098
Net increase (decrease) in cash and cash equivalents		2,480			(374,415	)		2,480
Cash and cash equivalents, beginning of period		-			391,676			-
Cash and cash equivalents, end of period	$	2,480		$	17,261		$	2,480

Supplemental cash flow information
Cash paid for interest and income taxes
Interest	$	-		$	8,500		$	8,500
Income taxes		-			-			-

Non-cash investing and financing activities:
Common stock issued for research and development cost	$	-		$	-		$	11,433

See accompanying notes to condensed consolidated financial statements.

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chatAND, Inc. and Subsidiary

(development stage companies)

Notes to Condensed Consolidated Financial Statements

NOTE 1:

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation and Organization

The financial statements include the accounts of chatAND, Inc. (“chatAND”), a Nevada corporation organized on May 14, 2010 and its wholly owned subsidiary CHATAND TECH, LLC (“TECH”), a limited liability company organized in Nevada on May 13, 2011, (collectively referred to herein as “Chat&” or the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation.

Effective June 3, 2011, the Board of Directors approved a 127,500 for 1 forward split of the authorized, issued and outstanding common stock of the Company and a decrease in the par value per share from $3,333 to $0.00001. An amendment to the Company’s certificate of incorporation reflecting these changes was filed in Nevada on June 3, 2011. All share references have been restated to give effect to the forward split as if it happened prior to the periods presented.

The consolidated financial statements included in this report have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting and include all adjustments (consisting only of normal recurring adjustments) that are, in the opinion of management, necessary for a fair presentation. These consolidated financial statements have not been audited.

Certain information and footnote disclosure normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations for interim reporting. The Company believes that the disclosures contained herein are adequate to make the information presented not misleading. However, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report for the period ended December 31, 2012, which is included in the Company’s Form 10-K.

Nature of business

Chat& is a technology company that intends to provide online assistance, engagement and conversion solutions that allow for real-time assistance. The technology will provide a platform that connects businesses, their sales associates and customer service representatives with website visitors and online shoppers seeking assistance with their purchases. The Chat& software is a 100% hosted no download software-as-a-service ("SaaS") application that allows the live sales and support staff of a business to connect directly with customers in a 1 to 1 real-time session. Utilizing Video-Chat and Co-Browsing, Chat& aims to redefine the online shopping experience by virtually recreating all of the benefits of a live showroom environment within a website.

Going Concern

The Company has not established sources of revenue sufficient to fund the development of business, projected operating expenses and commitments for the next twelve months. The Company incurred a loss of $1,784,071 during the period from inception (May 14, 2010) through June 30, 2013. The loss includes $162,177 in non-cash compensation and $151,775 in amortization of warrant cost.

The Company completed funding of $850,000 in secured convertible debentures in June 2011. The debentures were due June 17, 2012. The due date of the secured convertible debentures was extended until December 15, 2012 and are now past due. (Note 3) The Company borrowed $75,000 from an unrelated individual on June 11, 2012 with interest at 5% per annum. The note was due March 31, 2013 and has been extended until October 1, 2013. (Note 4) The Company attempted to raise a minimum of $3,000,000 with a Form S-1 Registration; however, the offering terminated in January 2013 without any sales of securities. The Company is seeking alternative financing sources. There can be no assurance that the Company will be successful in raising the funds or in obtaining enough customers to provide sufficient revenue to complete its business plan and achieve profitable operations or that the funds received will be sufficient to achieve the Company's goals.

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These conditions raise substantial doubt about the Company's ability to continue as a going concern. The accompanying statements have been prepared assuming that the Company will continue as a going concern. These financial statements do not reflect any adjustments that might result from the outcome of these uncertainties.

Recent accounting pronouncements

The Company has evaluated all recent accounting pronouncements through August 9, 2013, as issued by the Financial Accounting Standards Board ("FASB") in the form of Accounting Standards Updates ("ASU") and find none that would have a material impact on the financial statements of the Company. Management does not believe any of these accounting pronouncements has had or will have a material impact on the Company’s financial position or operating results.

NOTE 2:

INTELLECTUAL PROPERTY

The Company is currently developing software that it expects will provide online assistance, engagement and conversion solutions that allow for real-time assistance. The technology provides a platform that connects businesses, their sales associates and customer service representatives with website visitors and online shoppers seeking assistance with their purchases. The Chat& software is a 100% hosted no download software-as-a-service ("SaaS") application that allows the live sales and support staff of a business to connect directly with customers in a 1 to 1 real-time session. Utilizing Video-Chat and Co-Browsing, Chat& aims to redefine the online shopping experience by virtually recreating all of the benefits of a live showroom environment within a website. The intellectual property will be amortized over its estimated useful life when the Company commences operations. The Company has completed initial development of its software but has suspended additional development until funding is available.

The Company acquired its initial intellectual property in the form of research and development cost from its principal shareholders during 2010 for 8,925,000 shares of its common stock, which was valued at $11,443. The acquired research and development cost was expensed upon completion of the acquisition. At both June 30, 2013 and December 31, 2012, the Company had paid cash in the total amount of $9,841 for additional software development.

The Company has assigned all of its intellectual property rights to its wholly owned subsidiary, TECH. TECH’s sole activity and assets are the ownership of our intellectual property. The Securities Purchase Agreement with the Senior Secured Note Holders provides that in the event the holders of the Senior Secured Notes declare a default for the reasons below, Messrs. Lebor and Rosenberg shall have the right to acquire up to 60% of the interest in TECH in exchange for cancellation by the Company of the shares issued to Messrs. Lebor and Rosenberg:

●	The Company’s product is not functional by June 30, 2012 (the Company’s product was functional as of June 30, 2012);

●	The Company has not sold at least 150 licenses by June 30, 2012 (None have been sold as of June 30, 2013);

●	The Registration Statement was not declared effective by May 15, 2012, or as extended by a majority of the Senior Secured Note Holders (the Registration Statement was declared effective on May 14, 2012); or

●	The issuance of any securities or incurrence of any debt without the prior written consent of the Senior Secured Note Holders. The Company obtained consent for the new debt issued.

Accordingly, because the Company did not meet certain of these performance goals, it is possible that Messrs. Lebor and Rosenberg may disassociate themselves from the Company, but will retain a 60% interest in the technology of the Company. At such time, the Company may no longer have control of the technology.

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NOTE 3:

SENIOR CONVERTIBLE DEBENTURES

The Company issued $850,000 in Senior Secured Debentures ("Debentures") on June 17, 2011. The Debentures: are convertible into shares of the Company's common stock at a conversion price of $0.10 per share; mature on June 17, 2012; bear interest at the rate of 5% per annum, payable quarterly in arrears (the Company has the option to pay interest in common stock at the then prevailing conversion price); are secured by a stock pledge by stockholders in the Company (other than the Investors) of all of their holdings in the Company; and limitation on additional indebtedness. At June 30, 2013, the accrued interest of $86,310 is unpaid. The due date of the Debentures was extended to December 15, 2012 and the Debentures are currently past due.

Events of default include: 1) the product not being functional within 12 months of the issue date of the Debentures; 2) the Company has not sold at least 150 licenses within 12 months of the issue date of the Debentures; 3) the Registration Statement was not declared effective by May 15, 2012 4) the issuance of any securities or incurrence of any debt without the prior written consent of the Debenture Holders; and 5) other customary events of default. The Registration Statement was not filed within 45 days of closing and the Company obtained a waiver from the Investors. The Company received forbearance until December 15, 2012 from the investors with respect to the foregoing events of default. The debentures are currently past due. The investors have not exercised their rights.

The Debenture Holders were also issued Warrants to acquire a total of 4,250,000 shares of the Company's common stock at an exercise price of $0.15 per share for a five year term. The warrant expiration was extended two years until June 17, 2018. See Note 5 and 7.

The Debentures and the Warrants have standard anti-dilution protection for stock splits and other corporate matters.

The Debentures are convertible at $0.10 per share which exceeded the value of the stock on the date issued. Accordingly, there was no value assigned to a beneficial conversion feature. The Company utilized the Black Scholes valuation model to value the warrants sold with the Debentures. (See Note 5 for assumptions). The following summarizes the activity with the Debentures and warrants.

Proceeds from issue of Debentures and warrants	$	850,000
Assigned to warrants		151,775
Balance assigned to Debentures		698,225
Amortization of amount assigned to warrants (included
in interest expense)		151,775
Balance of Debentures at June 30, 2013	$	850,000

The Company amortized the discount associated with the warrants over the life of the debentures. Interest expense includes amortization of $69,563 and $82,212 in the years ended December 31, 2012 and 2011 respectively. The discount is fully amortized at June 30, 2013 and December 31, 2012.

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NOTE 4:

NOTE PAYABLE

On June 11, 2012, the Company entered into and funded an unsecured loan with an unrelated individual for $75,000 with interest at 5% per annum, which was payable at the maturity date of March 31, 2013. At June 30, 2013, accrued interest of $3,929 is unpaid. The note was extended until October 1, 2013.

NOTE 5:

STOCKHOLDERS’ EQUITY

Preferred Stock - The Company is authorized to issue up to 100,000,000 shares of preferred stock with a par value of $0.00001. At June 30, 2013 and December 31, 2012 there were no shares issued and outstanding.

Common Stock - The Company is authorized to issue up to 500,000,000 shares of common stock with a par value of $0.00001. At June 30, 2013 and December 31, 2012 there were 17,750,001 shares issued and 12,750,001 shares outstanding. (See escrow shares below).

Common Stock Issued for Services - On June 1, 2011, the Company issued 956,250 shares of its common stock to each of its two principal officers for services rendered. The shares were valued at $49,995.

Changes in Capital – Effective June 3, 2011, the Board of Directors approved a 127,500 for 1 forward split of the authorized, issued and outstanding common stock of the Company and a decrease in the par value per share from $3,333 to $0.00001. The amendment to the Company’s articles of incorporation reflecting these changes was filed in Nevada on June 3, 2011. All share references have been restated to give effect to the forward split.

On June 3, 2011, pursuant to shareholder approval, the Company amended its Articles of Incorporation and increased its authorized common stock, par value $0.00001, to 500,000,000 shares and authorized 100,000,000 shares of preferred stock par value $0.00001.

Warrants - As a part of the Debenture issuance, warrants to acquire 4,250,000 shares of common stock were issued to the Debenture Investors and warrants to acquire 4,250,000 shares of common stock were issued to the existing shareholders. All of the warrants are exercisable at $0.15 per share. The total of 8,500,000 warrants includes 3,612,500 issued to employee shareholders, 4,250,000 issued to the Debenture Investors and 637,500 issued to non-employee shareholders. The 4,250,000 warrants issued to the non-employee and employee shareholders were cancelled in November 2012.

The fair value of each group of warrants on the date issued was estimated using the Black-Scholes valuation model. The following assumptions were used for the warrants granted in June 2011. In November 2012, the term of the warrants owned by the Investors in the Debentures was extended from five to seven years.

Expected term	5 years
Expected average volatility	75%
Expected dividend yield	0%
Risk-free interest rate	3.50%

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The following table summarizes the valuation of the warrants.

	Warrants		Value

Warrants issued with Debentures to Investors		4,250,000	$	131,978
Warrants issued to non-employee shareholders		637,500		19,797
Total attributed to warrants issued with debt		4,887,500		151,775
Warrants issued to employee shareholders		3,612,500		112,182
		8,500,000	$	263,957

The $151,775 was initially recorded as a credit to additional paid in capital and a reduction (discount) of the Debentures. As of June 30, 2013 and December 31, 2012, $151,775 had been amortized to interest expense and credited back to the Debenture account. The $112,182 was recorded as a credit to additional paid in capital and expensed in non-cash compensation for officers in June 2011.

Escrow shares – In connection with the Debenture issuance, the Company issued 5,000,000 shares of its common stock to the principal shareholders of the Company in escrow. The shares may be released from escrow to the principal shareholders (or their designees) in accordance with a release schedule. The schedule provides that 3,300,000 shares will be released upon the Company reaching $1,000,000 in audited revenues over any consecutive 12 month period with the remaining shares released when the Company reaches $3,000,000 in audited revenues over any consecutive 12 month period. If either of the revenue goals has not been reached by June 30, 2016, the remaining shares will be cancelled. The escrow shares were issued solely in connection with the Debenture issuance, and accordingly, while disclosed as issued they are not considered outstanding and no accounting has yet been made. The accounting for the escrow shares will be completed when the shares are released from escrow.

NOTE 6:

RELATED PARTY TRANSACTIONS

During the period from inception (May 14, 2010) to December 31, 2010, the Company issued 4,462,500 shares to two of its directors who are its principal shareholders in exchange for the intellectual property described in Note 2. The intellectual property was valued at the cost of the research and development costs expended by the shareholders.

On June 1, 2011, the Company issued 956,250 shares of its common stock to each of its two principal officers for services rendered. The shares were valued at $49,995.

On June 17, 2011, the Company issued warrants to acquire 3,825,000 shares of the Company's common stock for a five year term at $0.15 per share to its two principal officers and shareholders. The warrants were valued at $112,182 and recorded as officers’ compensation. In November 2012, these warrants were cancelled.

At June 30, 2013 and December 31, 2012, accrued expenses include accrued payroll for Michael Lebor of $46,093 and David Rosenberg of $22,614. Advances from shareholders and employees consists of the following at June 30, 2013 and December 31, 2012.

	June 30,		December 31,
	2013		2012
David Rosenberg, President	$	4,200	$	4,200
Employee		49,028		32,295
Other stockholders		60,875		15,000
	$	114,103	$	51,495

At June 30, 2013 and December 31, 2012, federal and state payroll taxes in the total amount of $22,621 and $21,734, respectively, had not been paid to the appropriate taxing authority, the majority of which is trust fund taxes, which could become the personal responsibility of the responsible officer or employee.

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Employment agreements (Accrual discontinued September 30, 2012)

On June 17, 2011, the Company and Michael Lebor entered into an employment agreement with an initial term ending June 30, 2014. Mr. Lebor was employed as Chief Executive Officer and Secretary for the Company. The agreement provides for a base salary of $150,000 per annum, eligibility for an annual incentive bonus of 15% of base salary and discretionary bonuses as approved by the board of directors, health and life insurance and telephone and car allowances. The agreement also provides non-compete provisions, restrictive covenants and other provisions typical of executive employment agreements.

On June 17, 2011, the Company and David Rosenberg entered into an employment agreement with an initial term ending June 30, 2014. Mr. Rosenberg was employed as President for the Company. The agreement provides for a base salary of $150,000 per annum, eligibility for an annual incentive bonus of 15% of base salary and discretionary bonuses as approved by the board of directors, health and life insurance and telephone and car allowances. The agreement also provides non-compete provisions, restrictive covenants and other provisions typical of executive employment agreements.

Compensation for both employment agreements has been discontinued due to a lack of funds.

NOTE 7:

COMMITMENTS AND CONTINGENCIES

Office lease

The Company executed a lease agreement for office space with the term commencing July 15, 2011 and ending July 31, 2012 at a monthly rate of $3,250, including utilities and other occupancy costs. The office lease continued beyond July 31, 2012 on a month-to-month basis under the same terms until December 31, 2012 when the Company moved to temporary space which it occupied on a month-to-month basis with a rental of $600 per month through March 2013. Temporary office space for the Company’s operations is currently provided by the Company’s officers. The Company’s mailing address is 5940 South Rainbow Blvd, Las Vegas, Nevada 89118. Rent expense for the six months ended June 30, 2013 and 2012 amounted to $0 and $19,500, respectively.

Form S-1

The Company filed a Registration Statement on Form S-1 (“S-1”) with the SEC which was declared effective May 14, 2012. The Company offering under Form S-1 terminated in January 2013. The Selling Shareholders (Debenture Investors) portion of the S-1 is still effective for 8,500,000 shares of common stock and warrants to acquire 4,250,000 shares of common stock.

Litigation

A creditor of the Company filed an action in the District Court, Denver County, Colorado on April 17, 2013, to collect $29,486 plus a bi-weekly finance fee of 10%, which they claim they are owed. The Company is vigorously defending this action, but has accrued the full amount of the claim.

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ITEM 2:

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes appearing elsewhere in this Form 10-Q. This discussion and analysis may contain forward-looking statements based on assumptions about our future business. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth elsewhere in this Form 10-Q.

Management's Analysis of Business

The discussion and analysis of our financial condition and results of operations are based upon our financial statements, which are prepared in conformity with accounting principles generally accepted in the United States of America. As such, we are required to make certain estimates, judgments and assumptions that management believes are reasonable based upon the information available. We base these estimates on our historical experience, future expectations and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for our judgments that may not be readily apparent from other sources. These estimates and assumptions affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. These estimates and assumptions relate to estimates of the carrying amount of intangibles, stock based-compensation, valuation allowances for deferred income taxes, accounts receivable, the expected term of a client relationship, accruals and other factors. We evaluate these estimates on an ongoing basis. Actual results could differ from those estimates under different assumptions or conditions, and any differences could be material.

Chat& is a technology company that expects to provide online assistance, engagement and conversion solutions that allow for real-time assistance. The technology provides a platform that connects a business, its sales associates and customer service representatives with website visitors and online shoppers seeking assistance with their purchases.

On June 17, 2011, the Company issued $850,000 in Senior Secured Debentures to provide the initial funding needed to market and develop the business.

The Company is considered a development stage company because it has limited resources and has not established operations to generate sufficient capital to complete its business plan.

JOBS Act

In April 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are electing to delay such adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for other companies. Additionally, we are in the process of evaluating the benefits of relying on other exemptions and reduced reporting requirements provided by the JOBS Act to Emerging Growth Companies.

Subject to certain conditions set forth in the JOBS Act, as an emerging growth company, we intend to rely on certain of these exemptions, including without limitation, not providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404 and not complying with any requirement that may be adopted regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis). These exemptions will apply for a period of five years following the completion of our initial public offering although if the market value of our common stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an emerging growth company as of the following December 31.

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Results of Operation

The Company did not receive any appreciable funding until June 2011; accordingly the majority of the expenses incurred for general and administrative expense did not commence until that time. In July 2012, the Company had exhausted the majority of its funds and has incurred only minimal expenses since that date.

Three months ended June 30, 2013 compared to three months ended June 30, 2012

Following is a summary of expenses for the three months ended June 30, 2013 and 2012.

	2013		2012

General and administrative expense	$	45,279	$	183,234
Research and development expense		31,486		48,226
	$	76,765	$	231,460

General and administrative expenses are summarized as follows:

	2013		2012

Payroll	$	-	$	93,810
Professional fees		34,635		34,883
Rent		-		9,750
Insurance		6,187		12,479
Other		4,457		32,312
	$	45,279	$	183,234

These costs are expected to increase in the future if additional funding becomes available and additional employees are hired. The Company has had reduced funding since July 2012, resulting in payroll not being paid since July 2012 and a reduction in other costs until funding becomes available.

Research and development cost primarily consists of payroll, technology costs, and other software development costs. Additional development has been suspended since July 2012, pending additional funding. The 2013 balance is a result of a settlement reached with a vendor which is the subject of the lawsuit discussed in Note 7.

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Other income (expense) consists of the following for three months ended June 30, 2013 and 2012.

	2013			2012

Interest expense	$	(12,729	)	$	(49,151	)
Interest income		-			16
	$	(12,729	)	$	(49,135	)

Interest expense for the three months ended June 30, 2013 includes an accrual of $10,596 for the accrued interest on the Debentures, $935 in accrued interest on the $75,000 loan and $1,198 on vendor debt. Interest expense in 2012 includes $31,619 in amortization of the discount of the Debentures, $6,771 in amortization of prepaid loan fees, $194 accrued interest on the $75,000 loan and $10,567 for the accrued interest on the Debentures.

Interest income includes the interest earned on cash deposits.

Six months ended June 30, 2013 compared to six months ended June 30, 2012

Following is a summary of expenses for the six months ended June 30, 2013 and 2012.

	2013		2012

General and administrative expense	$	64,591	$	371,405
Research and development expense		31,486		124,012
	$	96,077	$	495,417

General and administrative expenses are summarized as follows:

	2013		2012

Payroll	$	-	$	175,541
Professional fees		47,049		102,702
Rent		-		19,500
Insurance		12,374		22,280
Other		5,168		51,382
	$	64,591	$	371,405

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Other income (expense) consists of the following for six months ended June 30, 2013 and 2012

	2013			2012

Interest expense	$	(24,006	)	$	(114,117	)
Interest income		-			171
	$	(24,006	)	$	(113,946	)

Interest expense for the six months ended June 30, 2013 includes an accrual of $20,959 for the accrued interest on the Debentures, $1,849 in accrued interest on the $75,000 loan and $1,198 on vendor debt. Interest expense in 2012 includes $69,563 in amortization of the discount of the Debentures, $14,896 in amortization of prepaid loan fees, $20,964 for the accrued interest on the Debentures, $194 in accrued interest on the $75,000 loan and $8,500 which represents the amount paid to the Debenture holders to extend the required effectiveness date of the Registration Statement to May 15, 2012.

Interest income includes the interest earned on cash deposits.

Liquidity and Capital Resources and Going Concern

Historical information:

At June 30, 2013 and December 31, 2012, the Company had current assets of $2,480 and $0; current liabilities of $1,427,586 and $1,306,059; and a working capital deficit of $1,425,106 and $1,306,059, respectively.

During June 2011, the Company issued its 5% Senior Secured Notes with a face value of $850,000 and received proceeds of $817,500, net of legal fees of $32,500. (Note 3) On June 11, 2012, the Company entered into interim financing and funded an unsecured loan with an unrelated individual for $75,000 with interest at 5% per annum, payable at the maturity date of March 31, 2013. This note was extended until October 1, 2013. (Note 4) By June 30, 2013, the Company had made only nominal expenditures for capital assets and has suspended additional development costs until funds become available.

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Evaluation of the amounts and certainty of cash flows:

The Company received advances of $51,495 from stockholders and employees during the six months ended December 31, 2012 and received an additional $62,608 during the six months ended June 30, 2013. The Company’s continued existence is dependent upon its stockholders and employee’s ability to continue funding minimum requirements until additional financing can be found.

Cash requirements and capital expenditures:

We originally budgeted $58,000 per month for operating costs and $5,000 per month for software development costs until sales commenced. The Company has suspended development costs until funding is available.

Discussion and analysis of known trends and uncertainties:

The Company does not expect that it can develop any limited business with the debt funding already received. Minimum additional capital of $3,000,000 would allow the Company to more quickly expand its advertising and marketing efforts and build out the technology and thus develop revenues.

In July 2012, the officers of the Company discontinued payment of all salaries, and the Company has deferred software development costs and limited professional services to attempt to maintain some level of operations until a minimum funding can occur.

The Company has assigned all of its intellectual property rights to its wholly owned subsidiary, TECH. TECH’s sole activity and asset are the ownership of the Company’s intellectual property. The Securities Purchase Agreement with the Senior Secured Note Holders provides that in the event the holders of the Senior Secured Notes declare a default for any of the reasons listed in Note 2, Messrs. Lebor and Rosenberg shall have the right to acquire up to 60% of the interest in TECH in exchange for cancellation by the Company of the shares issued to Messrs. Lebor and Rosenberg.

Accordingly, in the event that the Company does not meet any of these performance goals, it is possible that Messrs. Lebor and Rosenberg may disassociate themselves from the Company and retain a 60% interest in the technology of the Company. In such event, it is unclear as to whether the Company will be able to continue its operations.

The holders of the Company’s Senior Secured Debentures agreed to forbear from enforcing any of their rights under the Debenture agreements prior to December 15, 2012. The Debentures are currently past due.

Expected changes in the mix and relative cost of capital resources:

The Company’s anticipated Public Offering was unsuccessful and the Company believes it probably cannot develop its business plan at a slower pace and in a smaller size to develop sufficient revenue to become profitable. The Company will continue to seek other forms of financing to meet its objectives. This would include convincing the debt holders to convert their debt to allow full use of funds that become available.

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What balance sheet, income or cash flow items should be considered in assessing liquidity:

At June 30, 2013, we had very limited cash and no liquidity. The Company will require additional interim financing before it will be able to complete the minimum funding

Other prospective sources for and uses of cash:

The Company was unable to obtain the minimum funding from its Offering. The Company obtained an unsecured loan in the amount of $75,000 in interim funding. In addition, stockholders and employees loaned the Company $51,495 during the last six months of 2012 and $62,608 during the first six months of 2013. The Company has substantially eliminated its current operating costs and discontinued development costs until some funding is available.

Going Concern:

If the above events do not occur or the Company is unable to develop its business model, substantial doubt about the Company's ability to continue as a going concern exists.

ITEM 3:

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4:

CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Under the PCAOB standards, a control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit the attention by those responsible for oversight of the company's financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely basis.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), as of June 30, 2013. Our management has determined that, as of June 30, 2013, the Company's disclosure controls and procedures are effective.

Changes in internal control over financial reporting

There have been no significant changes in internal controls or in other factors that could significantly affect these controls during the quarter ended June 30, 2013, including any corrective actions with regard to significant deficiencies and material weaknesses.

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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

None.

ITEM 3:

DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4:

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5:

OTHER INFORMATION

Not applicable.

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ITEM 6:

EXHIBITS

The following exhibits are filed with this report on Form 10-Q.

Exhibit 31.1	Certification pursuant to 18 U.S.C. Section 1350 Section 302 of the Sarbanes-Oxley Act of 2002 – Chief Executive Officer

Exhibit 31.2	Certification pursuant to 18 U.S.C. Section 1350 Section 302 of the Sarbanes-Oxley Act of 2002 – Chief Financial Officer

Exhibit 32.1	Certification pursuant to 18 U.S.C. Section 1350 Section 906 of the Sarbanes-Oxley Act of 2002 – Chief Executive Officer

Exhibit 32.2	Certification pursuant to 18 U.S.C. Section 1350 Section 906 of the Sarbanes-Oxley Act of 2002 – Chief Financial Officer

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SIGNATURE

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.

	chatAND, Inc.

Date: August 12, 2013	By:	/s/ Michael Lebor
		Michael Lebor
		Chief Executive Officer


Date: August 12, 2013	By:	/s/ Steven Berger
		Steven Berger
		Chief Financial Officer

chatAND, Inc. and Subsidiary

(Development Stage Companies)

Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2013 and 2012 and the period

From Inception (May 14, 2010) through June 30, 2013

(Unaudited)