Attached files
| file | filename |
|---|---|
| EXCEL - IDEA: XBRL DOCUMENT - MOPALS.COM, INC. | Financial_Report.xls |
| EX-31.1 - CERTIFICATION - MOPALS.COM, INC. | f10q0913ex31i_mopals.htm |
| EX-32.1 - CERTIFICATION - MOPALS.COM, INC. | f10q0913ex32i_mopals.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
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x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934.
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FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2013
or
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o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
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Commission File Number: 333-105778
MOPALS.COM, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE
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05-0554486
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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294 Richmond Street East, Suite 200
Toronto, Ontario, CANADA, M5A 1P5
(Address of principal executive offices)(Zip Code)
(416) 362-4888
(Registrant’s telephone number, including area code)
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 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 o
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 o No x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company filer. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in rule 12b-2 of the Exchange Act.
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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x
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(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes o No x
Indicate the number of shares outstanding of the Registrant’s common stock, as of the latest practicable date.
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Class
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Outstanding at November 19, 2013
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|
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Common Stock, $0.0001 par value
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51,569,993
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MOPALS.COM, INC.
(A DEVELOPMENT STAGE COMPANY)
QUARTERLY REPORT ON FORM 10-Q
September 30, 2013
TABLE OF CONTENTS
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Item 1.
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Financial Statements
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F1-F9 |
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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2
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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5
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Item 4.
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Controls and Procedures
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5
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PART II-- OTHER INFORMATION
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||
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Item 1.
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Legal Proceedings
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6
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Item 1A.
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Risk Factors
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6
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| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 6 |
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Item 3.
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Defaults Upon Senior Securities
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6
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Item 4.
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Mine Safety Disclosures
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6
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Item 5.
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Other Information
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6
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Item 6.
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Exhibits
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7
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SIGNATURES
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8
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PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Basis of Presentation
The accompanying condensed and consolidated financial statements are presented in accordance with U.S. generally accepted accounting principles for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal occurring adjustments) considered necessary in order to make the financial statements not misleading, have been included. Operating results for the three months and nine months ended September 30, 2013 are not necessarily indicative of results that may be expected for the year ending December 31, 2013.
The condensed consolidated interim financial statements of the Company appear elsewhere in this report beginning with the Index to Financial Statements on page F-1 and ending on F-9.
MOPALS.COM, INC. AND SUBSIDIARIES
(A Development Stage Company)
(A Delaware Corporation)
TABLE OF CONTENTS
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Page
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|||
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Condensed Consolidated Balance Sheet
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F-1 | ||
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Condensed Consolidated Statement of Operations
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F-2 | ||
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Condensed Consolidated Statement of Cash Flows
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F-3 | ||
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Notes to the Condensed Consolidated Financial Statements
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F-4 to F-9
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MOPALS.COM, Inc.
(A Development Stage Company)
(A Delaware Corporation)
CONDENSED CONSOLIDATED BALANCE SHEET
(Unaudited)
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September 30,
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December 31,
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|||||||
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2013
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2012
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|||||||
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ASSETS
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||||||||
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Cash
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$ | 38,406 | $ | 175,799 | ||||
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Prepaid & Other Assets
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112,069 | 32,317 | ||||||
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Total Current Assets
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150,475 | 208,116 | ||||||
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Equipment, net (note 5)
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49,709 | 55,322 | ||||||
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Total Assets
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$ | 200,184 | $ | 263,438 | ||||
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LIABILITIES AND STOCKHOLDERS’ DEFICIT
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||||||||
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Accounts Payable & Accrued Liabilities
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22,560 | 20,348 | ||||||
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Share Based Accrual
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14,924 | - | ||||||
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Shares to be Issued
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129 | - | ||||||
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Loans from Shareholder (note 6)
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566,200 | 364,315 | ||||||
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Total Liabilities
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$ | 603,813 | $ | 384,663 | ||||
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Commitments and Contingencies (note 7)
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||||||||
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Capital Stock; par value $0.0001, 100,000,000 shares authorized, 42,920,000 issued & outstanding (Note 8) as of September 30, 2013 and 41,000,000 as of December 31, 2012
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42,920 | 41,000 | ||||||
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Shares Subscribed (Note 9)
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1,770,000 | 2,250,000 | ||||||
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Share Subscriptions Receivable (Note 9)
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(1,770,000 | ) | (2,250,000 | ) | ||||
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Additional Paid In Capital
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469,105 | - | ||||||
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Deficit Accumulated During the Development Stage
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(936,360 | ) | (163,237 | ) | ||||
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Accumulated Other Comprehensive Income
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20,706 | 1,012 | ||||||
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Total Stockholders’ Deficit
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$ | (403,629 | ) | $ | (121,225 | ) | ||
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Total Liabilities and Stockholders’ Deficit
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$ | 200,184 | $ | 263,438 | ||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-1
MOPALS.COM Inc.
(A Development Stage Company)
(A Delaware Corporation)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
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For the Nine
Months Ended
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For the Three
Months Ended
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For the Period
from Inception
August 7, 2012 to
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||||||||||
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September 30, 2013
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September 30, 2013
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September 30, 2013
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||||||||||
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REVENUES
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$ | - | $ | - | $ | - | ||||||
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EXPENSES
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||||||||||||
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Consultants & Contractors
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456,545 | 192,874 | 572,923 | |||||||||
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General & Administrative Expenses
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230,844 | 167,198 | 251,816 | |||||||||
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Occupancy Costs
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74,887 | 24,058 | 99,671 | |||||||||
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Depreciation
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10,846 | 3,426 | 11,950 | |||||||||
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Total Expenses
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$ | 773,122 | 387,556 | 936,360 | ||||||||
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NET (LOSS)
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$ | (773,122 | ) | $ | (387,556 | ) | $ | (936,360 | ) | |||
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Total Other Comprehensive Income
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||||||||||||
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Foreign Currency Translation Adjustment
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19,694 |
(2,439
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) | 20,706 | ||||||||
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Total Comprehensive (Loss)
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$ | (753,429 | ) | $ |
(389,995
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) | $ | (915,654 | ) | |||
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Net (Loss) per share – Basic and Diluted (note 10)
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$ | (0.02 | ) | $ | (0.01 | ) | $ | (0.02 | ) | |||
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Weighted Average Number of Shares Outstanding – Basic and Diluted During the Period
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41,480,000 | 42,920,000 | 41,411,429 | |||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-2
MOPALS.COM Inc.
(A Development Stage Company)
(A Delaware Corporation)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
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For the Period
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||||||||
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For the Nine
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August 7, 2012
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|||||||
| Months Ended |
(inception) to
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|||||||
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September 30, 2013
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Sept 30, 2012
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|||||||
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Cash Flows used in Operating Activities
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||||||||
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Net (Loss)
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$ | (773,122 | ) | (936,360 | ) | |||
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Adjustments to reconcile net (loss) income to net cash from operating activities:
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||||||||
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Depreciation
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10,846 | 11,987 | ||||||
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Increase in Accounts Payable & Accrued Liabilities
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2,212 | 22,561 | ||||||
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Increase in Prepaids & Other Assets
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(79,752 | ) | (112,069 | ) | ||||
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Increase in Share Compensation Accrual
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14,924 | 14,924 | ||||||
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Net Cash Flows used in Operating Activities
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(824,892 | ) | (998,957 | ) | ||||
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Cash Flows from Financing Activities
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||||||||
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Shares Issued
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1,920 | 42,920 | ||||||
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Shares to be issued
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129 | 129 | ||||||
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Additional Paid In Capital Adjustment
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469,105 | 469,105 | ||||||
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Increase in Shareholders’ Loan
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201,885 | 566,200 | ||||||
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Net Cash Flows from Financing Activities
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673,039 | 1,078,354 | ||||||
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Cash Flows used in Investing Activities
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||||||||
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Purchases of Capital Equipment
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(4,421 | ) | (61,543 | ) | ||||
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Net Cash Flows used in Investing Activities
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(4,421 | ) | (61,543 | ) | ||||
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Net Cash Flows
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$ | (156,274 | ) | 17,853 | ||||
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Effects of Exchange Rate on Cash
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18,901 | 20,553 | ||||||
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Cash and Cash Equivalents – Beginning of Period
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175,779 | - | ||||||
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Cash and Cash Equivalents – End of Period
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$ | 38,406 | 38,406 | |||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-3
MOPALS.COM, Inc.
(A Development Stage Company)
(A Delaware Corporation)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2013
| 1. NATURE OF OPERATIONS AND ORGANIZATION |
Nature of Operations
Mopals.com, Inc. (“Mopals” or the “Company”) was incorporated under the laws of Delaware on February 6, 2003 as MagnaData, Inc. In February of 2005, articles of amendment were filed with the State of Delaware changing the name of our company to MortgageBrokers.com Holdings, Inc. and thereafter, operated as a mortgage brokerage in Canada.
Mopals carries out all business through its wholly owned subsidiary, Mopals Canada Inc. Mopals Canada Inc. (formerly IQIC.com Inc.) was incorporated federally in Canada on August 7, 2012.
On March 26, 2013, (the “Closing Date”), Mopals.com, Inc. (f/k/a MortgageBrokers.com Holdings, Inc.) entered into a share exchange agreement (the “Exchange Agreement”) by and among (i) the Company; (ii) MoPals, Inc., a Nevada corporation (“MoPals (Nevada)”); (iii) Alex Haditaghi (“Company Principal Shareholder”); and (iv) the shareholders of MoPals (Nevada) (“MoPals Nevada Shareholders”). Pursuant to the terms of the Exchange Agreement, the Company acquired 100% of the issued and outstanding equity securities of MoPals (Nevada) in exchange for the issuance of 50,000,000 shares of the Company’s common stock, par value $0.001 per share (each a “Share” and collectively, the “Common Stock”)(the “Share Exchange”). Following the Share Exchange, the Company changed its name to MoPals.com, Inc.
Immediately prior to and concurrent with execution of the Share Exchange, the Company entered into a certain Agreement of Sale dated March 26, 2013 (the “Agreement of Sale”) pursuant to which the Company transferred to MortgageBrokers.com Canada Inc., a Canada Corporation, all of the Company’s equity interest in the Company’s mortgage brokerage business and MortgageBrokers.com Canada Inc. agreed to assume any and all liabilities associated with the Company’s mortgage brokers business, including, but not limited to the commitments, liabilities and contingent liabilities, effective immediately prior to closing of the Share Exchange. Pursuant to the Agreement of Sale, the Company’s Principal Shareholder forfeited all rights to any monies owed to the Company Principal Shareholder by the Company associated with a shareholder loan of approximately $25,000 (the “Spin Out and Cancellation.”)
| 2. BASIS OF PRESENTATION |
The Company has not earned any revenues from limited principal operations and accordingly, the Company's activities have been accounted for as those of a "Development Stage Enterprise" as set forth in ASC 915 Accounting and Reporting by Development Stage Enterprises. The disclosures required by ASC 915 include that the Company's financial statements be identified as those of a development stage company, and that the statements of operations, stockholders' deficit and cash flows disclose activity since the date of the Company's inception.
| 3. GOING CONCERN |
These financial statements have been prepared assuming the Company will continue on a going-concern basis. The Company has incurred losses since inception and the ability of the Company to continue as a going-concern depends upon its ability to develop profitable operations and to continue to raise adequate financing. Accumulated Losses from inception to September 30, 2013 total $936,360. In order for the Company to meet its liabilities as they come due and to continue its operations, the Company is solely dependent upon its ability to generate such financing.
F-4
MOPALS.COM, Inc.
(A Development Stage Company)
(A Delaware Corporation)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2013
| 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
The accounting policies of the Company are in accordance with accounting principles generally accepted in the United States of America. Presented below are those policies considered particularly significant:
Basis of Consolidation and Presentation
The accompanying consolidated financial statements include the accounts of the Company, and its wholly-owned subsidiary. All inter-company transactions and balances have been eliminated upon consolidation.
Method of Accounting
The Company maintains its books and prepares its financial statements on the accrual basis of accounting.
Cash and Cash Equivalents
The Company maintains cash and cash equivalents at financial institutions which may exceed federally insured amounts.
Comprehensive Income or Loss
The Company adopted ASC 220-10, which establishes standards for reporting and presentation of comprehensive income and its components in a full set of financial statements. Comprehensive income is presented in the statements of stockholders’ deficit, and consists of net loss and unrealized gains (loss) on available for sale marketable securities; foreign currency translation adjustments and changes in market value of future contracts that qualify as a hedge; and negative equity adjustments recognized in accordance with ASC 715-10. ASU 2011-05 requires the presentation of other comprehensive income to be in a single, continuous statement or in two separate, but consecutive statements. The Company presents in a single, continuous statement.
Earnings (Loss) Per Share
The Company accounts for earnings per share pursuant to ASC 260-10-05, Earnings per Share, which requires disclosure on the financial statements of "basic" and "diluted" earnings (loss) per share. Basic earnings (loss) per share are computed by dividing net income (loss) by the weighted average number of common stock outstanding for the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common stock outstanding plus common stock equivalents (if dilutive) related to stock options and warrants for each period.
There were no dilutive financial instruments for the period from August 7, 2012 (inception) to September 30, 2013.
Financial Instruments
In accordance with ASC 825-10-50, “Disclosures About Fair Value of Financial Instruments" ("SFAS No. 107"), the estimated fair value of financial instruments has been determined by the Company using available market information and valuation methodologies. Considerable judgment is required in estimating fair value. Accordingly, the estimates may not be indicative of the amounts the Company could realize in a current market exchange. As of September 30, 2013, the carrying values of accounts payable and accrued liabilities approximate the fair value attainable because of the short-term maturity of these instruments.
F-5
MOPALS.COM, Inc.
(A Development Stage Company)
(A Delaware Corporation)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2013
| 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
In accordance with ASC 820-10, “Defining Fair Value Measurement”, the Company adopted the standard which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements.
Equipment
Equipment is stated at cost. Depreciation is calculated using the following annual rates and methods based on the estimated useful lives of the assets:
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Computer Hardware
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30% declining
|
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Computer Software
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30% declining
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Furniture and Equipment
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20% declining
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Income Taxes
The Company accounts for income taxes pursuant to ASC 740-10, “Accounting for Income Taxes.” Deferred tax assets and liabilities are recorded for differences between the financial statements and tax basis of the assets and liabilities as well as the loss carry-forward that will result in taxable or deductible amounts in the future based on enacted tax laws and rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known. The accounting estimate that requires management’s most significant judgment is the measurement of accrued liabilities.
Foreign Currency Translation
Mopal’s functional currency is in Canadian Dollars and it maintains its books and records in Canadian Dollars, the Company’s financial statements are converted to U.S. Dollars. The translation method used is the current rate method. Under the current rate method all assets and liabilities are translated at the current rate, stockholders’ equity accounts are translated at historical rates and revenue and expenses are translated at average rates for the reporting period. Due to the fact that itms in the financial statements are being translated at different rates according to their nature, a translation adjustment is created. This translation adjustment has been included in Accumulated Other Comprehensive Income (Loss).
F-6
MOPALS.COM, Inc.
(A Development Stage Company)
(A Delaware Corporation)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2013
| 4. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
The exchange rates used to translate amounts in CAD into USD for the purposes of preparing the financial statements were as follows:
|
September 30,
2013
|
December 31,
2012
|
|||||||
|
Period End CAD-USD exchange rate
|
$
|
0.9706
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$
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1.0051
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||||
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Average period CAD-USD exchange rate
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$
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0.9770
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$
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1.0115
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||||
Recent Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
Interim Financial Statements
The accompanying condensed consolidated interim unaudited financial information has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in 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, although management believes that the disclosures are adequate to make the information presented not misleading. The condensed consolidated interim financial statements should be read in conjunction with the Company's annual consolidated financial statements, notes and accounting policies included in the Company's annual report on form 10K for the year ended December 31, 2012 as filed with the SEC. In the opinion of management, all adjustments, (consisting only of normal recurring adjustments and changes in estimates, where appropriate) necessary to present fairly the financial position of the Company as of September 30, 2013 and the related operating results and cash flows for the interim periods presented, have been made. The results of operations of such interim periods are not necessarily indicative of the results of the full year.
| 5. EQUIPMENT |
The net book value of property, plant & equipment as of September 30, 2013 was as follows:
|
Cost
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Accumulated
Depreciation
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Net Book
Value
|
||||||||||
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Computer hardware
|
20,486
|
3,199
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17,287
|
|||||||||
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Computer Software
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31,351
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6,862
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24,489
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|||||||||
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Furniture & Equipment
|
9,706
|
1,773
|
7,933
|
|||||||||
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Total
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$
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61,543
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$
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11,834
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$
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49,709
|
||||||
Depreciation expense since August 7, 2013 (inception) amounted to $11,834 including depreciation expenses for computer hardware, computer software and furniture and equipment. For the nine months ending September 30, 2013, depreciation expense was $10,846.
F-7
MOPALS.COM, Inc.
(A Development Stage Company)
(A Delaware Corporation)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2013
| 6. ADVANCES FROM SHAREHOLDER |
As of September 30, 2013, the controlling shareholder and Chief Executive Officer of the Company had advanced $566,200 to fund the working capital of the Company. The advances are unsecured, non-interest bearing and due on demand. In comparison, as of December 31, 2012, the controlling shareholder and Chief Executive Officer of the Company had advanced $364,315 to fund the working capital of the Company.
| 7. COMMITMENTS & CONTINGENCIES |
As at September 30, 2013, the Company had agreements to continue leasing office space. The schedule below outlines the expected remaining lease payments over the life of the lease (expires March 31, 2014):
|
2014
|
$
|
49,078
|
||
|
2015
|
$
|
0
|
In the normal course of business, the Company becomes involved in various legal actions seeking compensatory and occasionally punitive damages, including actions brought on behalf of various purported classes of claimants and claims relating to employee and third-parties.
| 8. CAPITAL STOCK |
a) Authorized
100,000,000 shares of common stock with a par value of $0.0001.
b) Issued
41,000,000 shares of our common stock were issued at par value on August 7, 2012 (inception). 1,920,000 shares of common stock were issued against a share subscription at a price of 25 cents per share on December 21, 2012.
| 9. SHARE SUBSCRIPTIONS |
On December 21, 2012, the Company agreed to issue 9,000,000 shares of the Company’s common stock for 25 cents per share to private investors for subscriptions receivable of $2,250,000. On September 30, 2013, the balance of the subscription receivable was $1,770,000.
F-8
MOPALS.COM, Inc.
(A Development Stage Company)
(A Delaware Corporation)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2013
| 10. LOSS PER SHARE |
The Company calculates basic earnings per common share using net income divided by the weighted-average number of common shares outstanding. The Company calculates diluted earnings per common share in the same manner as basic, except we use the weighted-average number of diluted common shares outstanding in the denominator, when the stock options and warrants are not anti-dilutive.
|
|
Nine Months
Ended
September 30,
2013
|
Three Months
Ended
September 30,
2013
|
|||
|
Weighted average number of common shares outstanding
|
41,480,000
|
42,920,000
|
|||
|
Weighted-average number of diluted common shares outstanding
|
41,480,000
|
42,920,000
|
|||
| 11. INCOME TAXES |
The Company accounts for income taxes in accordance with ASC 740-20, (formerly SFAS No. 109). ASC 740-20 prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates. The effects of future changes in tax laws or rates are not anticipated.
Under ASC 740-20 income taxes are recognized for the following: a) amount of tax payable for the current year, and b) deferred tax liabilities and assets for future tax consequences of events that have been recognized differently in the financial statements than for tax purposes.
As of September 30, 2013, the Company did not have any amounts recorded pertaining to uncertain tax positions. The Company files federal and provincial income tax returns in Canada and federal, state and local income tax returns in the U.S., as applicable. The Company may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three to five years from the date of the original notice of assessment in respect of any particular taxation year. In certain circumstances, the U.S. federal statute of limitations can reach beyond the standard three year period. U.S. state statutes of limitations for income tax assessment vary from state to state.
| 12. SUBSEQUENT EVENT |
Subsequent to the quarter end, 960,000 shares of the Company’s common stock were agreed to be issued against the same share subscription at 25 cents per share, but as of the statement date, had not yet been delivered. The Company has received further $250,000 towards subscriptions receivable. The subscription receivable balance is $1,520,000.
F-9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following is management’s discussion and analysis of the consolidated financial condition and results of operations of Mopals.com, Inc. (“Mopals”, the “Company”, “we”, and “our”) for the three and nine month period ended September 30, 2013. The following information should be read in conjunction with the consolidated interim financial statements for the period ended September 30, 2013 and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q (this “Report”).
Overview
Mopals.com, Inc. was incorporated under the laws of Delaware on February 6, 2003 as MagnaData, Inc. In February of 2005, articles of amendment were filed with the State of Delaware changing the name of our company to MortgageBrokers.com Holdings, Inc. and thereafter, operated as a mortgage brokerage in Canada. On March 26, 2013, articles of amendments were filed with the State of Delaware changing the name of our company to Mopals.com, Inc. pursuant to execution of an asset spin out and shareholder loan cancellation agreement and subsequent execution of a share exchange agreement. Pursuant to the terms of the share exchange agreement, the Company acquired 100% of the issued and outstanding equity securities of Mopals Inc. (“Mopals (Nevada)”), a Nevada private corporation, in exchange for the issuance of 50,000,000 shares of the Company’s common stock.
Mopals carries out all business through its wholly owned subsidiary, Mopals Canada Inc. Mopals Canada Inc. (formerly IQIC.com Inc.) was incorporated federally in Canada on August 7, 2012.
Mopals is a development stage internet and mobile based social media brand loyalty company. Mopals is currently beta testing the first version of our web and mobile software application for both the iOS and Android mobile device operating systems. It is our intent that the Mopals technology platform under development will allow consumers to earn incentives for their spending and referral behavior with retail businesses and allow retail businesses to build their customer base and enhance customer experiences through promotional programs. Our consumer incentives are centered around MoCoins (our points based incentive and currency) for a number of online and ‘in-store’ behaviors within a consumer’s social network including rewards for promotional participation; ‘liking’, sharing or reviewing an experience at a business; referring business promotions; creating content driving polls; or referring friends to join the Mopals community. Mopals aims to be a leader in how brands inspire customer loyalty, driving online, brand enhancing behavior and sales. It is our aim that our technology platform will enable businesses to connect with their customers, giving them a cost effective means to encourage and reward brand enhancing behavior. It is our intent that our proprietary platform ‘IQ Engine’ under development will also allow businesses to receive data associated with their consumer’s behavior from which they might target offers and marketing strategies.
Following our product launch, it is Mopal’s plan to earn revenue from business subscriptions to receive ongoing consumer data and as well as from receiving a percentage of promotion-based sales revenue from participating businesses.
In additional to the financial condition and results of operations of the Company, it is management’s belief that growth of our Company will also, in part, be demonstrated through the metrics of MoCoins points sold, the total number of consumers signed up and making use of the Mopals platform and the number of retail businesses who sign on to and offer promotions through the Mopals community.
As of September 30, 2013, the Company had fourteen (14) full-time employees and eighteen (18) independent contractors.
The Company’s corporate offices are located at 294 Richmond Street East, Suite 200, Toronto, Ontario, CANADA, M5A 1P5. Our current contact information for our Ontario office is telephone number: (416) 362-4888. Our internet website can be found under the domain name: www.mopals.com.
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Results of Operations
Three months ended September 30, 2013
Mopals had no reported revenue in our third quarter of 2013.
The Company’s reported operating expenses during the three month period ending September 30, 2013 were $387,556. The primary components that comprise our operating expenses were salaries and consultant/contractor fees, general and administrative expenses and occupancy costs which are explained in detail as follows:
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49.8% of the operating expenses in the reporting period were associated with salaries, contractor expenses and consulting fees.
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43.1% of the operating expenses in the reporting period were associated with general and administrative expenses.
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6.2% of our operating expenses in the reporting period were associated with occupancy costs associated with an office lease.
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Our net loss for the three months ended September 30, 2013 was $387,556.
Nine months ended September 30, 2013
Mopals had no reported revenue in the nine month period ending September 30, 2013.
The Company’s reported operating expenses during the nine month period ending September 30, 2013 were $773,122. The primary components that comprise our operating expenses were salaries and consultant/contractor fees, general and administrative expenses and occupancy costs which are explained in detail as follows:
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59.1% of the operating expenses in the reporting period were associated with salaries, contractor expenses and consulting fees.
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29.9% of the operating expenses in the reporting period were associated with general and administrative expenses.
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9.7% of our operating expenses in the reporting period were associated with occupancy costs associated with an office lease.
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Our net loss for the nine months ended September 30, 2013 was $773,122. For the period August 7, 2012 (inception) through September 30, 2013, our net loss was $936,360.
Liquidity and Capital Resources
At September 30, 2013, we had $38,406 in cash, $112,069 in prepaid expenses and $49,709 in equipment, computer software, computer hardware and furniture for a total of $200,184 in assets. Comparatively as at December 31, 2012, we had $175,799 in cash and $32,317 in prepaid expenses and $55,322 in equipment and furniture for a total of $263,438 in assets.
At September 30, 2013, we had $22,560 in accounts payable and accrued liabilities, $14,924 in accruals for stock-based compensation associated with former discontinued operations, $129 in subscription payables for common stock of the Company and $566,200 in loans payable to the Company’s principal shareholder for a total of $603,813 in liabilities. Comparatively as at December 31, 2012, we had $20,348 in accounts payable and accrued liabilities and $364,315 in loans payable to the Company’s principal shareholder for a total of $384,663 in liabilities.
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Management makes the following comments regarding the most significant factors affecting the Company’s liquidity and capital resources and their measured trends over the reporting period:
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The Company’s cash position decreased by approximately 78.1% over the first nine months of 2013 associated with the following:
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the Company used $824,892 in cash for operating activities over the first nine months of 2013. As a development stage company, Mopals has no revenue yet while it is building its products and services, hires software development, marketing and sales staff and establishes market partners to launch our business; and,
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the Company received $673,039 in cash from financing activities over the first nine months of 2013 as we received funds from our principal shareholder in the amount of $201,885 and received $469,105 from the subscription receivable.
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The Company reported a net cash flow utilization from operating activities for the first nine months of 2013 of $824,892 with a net increase in cash flow from financing activities of $673,039 and a net negative cash flow from the purchase of capital equipment of $4,421 during the same period for an overall net negative cash flow of 156,274 out of the Company during the period.
The Company needs to raise additional capital to fund our development stage Company activities and to position the Company for a market launch of its planned products and services to generate revenue before the existing capital resources are fully utilized.
In the event that the Company runs out of available working capital resources or experiences an unforeseen negative impact to cash flow, our Company will need to rely upon the issuance of common stock and additional capital contributions from shareholders and/or loans from shareholders and third-party lenders to meet its working capital needs. There is no certainty that there will be a market for the Company’s capital stock.
Off-Balance Sheet Arrangements
None.
Critical Accounting Policies
The financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“GAAP”). GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue, and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Going Concern
The Company’s consolidated financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.
For the nine months reporting period ended September 30, 2013, the Company reported a net loss from operations of $773,122 with a net decrease in cash from operating, investing and financing activities of $156,274 during the same period. Since inception to September 30, 2013, the Company reported a net loss from operations of $936,360. Certain conditions noted below raise doubt about the Company’s ability to continue as a going concern.
As a development stage company, the Company’s ability to continue as a going concern is contingent upon its ability to secure additional debt or equity financing. Management’s plan is to secure additional working capital funds through future debt or equity financings. There is no certainty that there will be a market for the Company’s capital stock.
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The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Smaller reporting companies are not required to provide the information required by this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, the Company’s principal executive officer and principal financial officer evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d -15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on their evaluation of the Company’s disclosure controls and procedures, the Company’s principal executive officer and principal financial officer, with the participation of the Company’s management, have concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2013, to ensure that information required to be disclosed by the Company in the reports that we file or submit under the Exchange Act is (a) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) accumulated and communicated to management, including the Company’s principal executive officer and principal financial officer, as appropriate to allow for timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company’s internal controls over financial reporting during the nine month period ending September 30, 2013, or in other factors that could significantly affect these controls, that materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.
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PART II: OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, the Company may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on the Company.
Item 1A. Risk Factors
Smaller reporting companies are not required to provide the information required by this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Mine Safety Disclosures
Note Applicable.
Item 5. Other Information
None.
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Item 6. Exhibits
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Exhibit No.
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Description
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31.1
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Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of Sarbanes Oxley Act of 2002
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32.1+
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Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of 2002
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Schema
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101.CAL
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XBRL Taxonomy Calculation Linkbase
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101.DEF
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XBRL Taxonomy Definition Linkbase
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101.LAB
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XBRL Taxonomy Label Linkbase
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101.PRE
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XBRL Taxonomy Presentation Linkbase
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+ In accordance with SEC Release 33-8238, Exhibits 32.1 is furnished and not filed.
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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, there unto duly authorized.
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MOPALS.COM, INC.
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By:
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/s/ Alex Haditaghi
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Alex Haditaghi
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Chief Executive Officer,
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Chief Financial Officer,
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President, Secretary and Director
(Duly Authorized Officer, Principal Executive Officer and Principal Financial Officer)
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Dated: November 19, 2013
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