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EX-31.1 - EXHIBIT 31-1 - Sonant Systems, Inc.ex31-1.htm
EX-31.2 - EXHIBIT 31-2 - Sonant Systems, Inc.ex31-2.htm
EX-32.1 - EXHIBIT 32-1 - Sonant Systems, Inc.ex32-1.htm
EX-32.2 - EXHIBIT 32-2 - Sonant Systems, Inc.ex32-2.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2013

 

or

 

[  ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE TRANSITION FROM ______ TO ______.

 

Commission File Number: 000-54418

  

 

  

NETWORKING PARTNERS, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   45-0921541
(State or other Jurisdiction of
Incorporation or Organization)
  (I.R.S. Employer
Identification No.)
     

857 Sarno Road

Melbourne, Florida

  32935
(Address of principal executive offices)   (Zip code)

 

Registrant’s telephone number: (321) 984-8858

 

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 period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [  ] No [X]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [  ] Smaller reporting company [X]

 

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

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS

DURING THE PRECEDING FIVE YEARS

 

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

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of August 25, 2014, there were 15,445,484 outstanding shares of the Registrant’s Common Stock, $.001 par value.

 

 

 

 
 

 

INDEX

 

    Page
     
PART I – FINANCIAL INFORMATION    
     
Item 1. Financial Statements.   F-1
     
Consolidated Balance Sheets at September 30, 2013 (unaudited) and December 31, 2012   F-1
     
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2013 and 2012 and for the Period November 2, 2010 (inception) through September 30, 2013 (unaudited)   F-2
     
Consolidated Statements of Stockholders’ Equity (Deficit) for the Nine Months Ended September 30, 2013 and for the Period November 2, 2010 (inception) through September 30, 2013 (unaudited)   F-3
     
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2013 and 2012 and for the Period November 2, 2010 (inception) through September 30, 2013 (unaudited)   F-4
     
Notes to Consolidated Financial Statements – September 30, 2013 (unaudited)   F-5
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Plan of Development Stage Activities   3
     
Item 3. Quantitative and Qualitative Disclosures about Market Risk   5
     
Item 4. Controls and Procedures   5
     
PART II – OTHER INFORMATION    
     
Item 1. Legal Proceedings.   7
     
Item 1.A. Risk Factors   7
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds   7
     
Item 3. Defaults Upon Senior Securities   7
     
Item 4. Mine Safety Disclosures.   7
     
Item 5. Other Information.   7
     
Item 6. Exhibits   7
     
SIGNATURES   8

 

2
 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

  

NETWORKING PARTNERS, INC.

(A Development Stage Company)

Consolidated Balance Sheets

 

   September 30, 2013   December 31, 2012 
   (unaudited)     
ASSETS          
Current Assets          
Due from related-party  $-   $5,300 
           
Total Current Assets   -    5,300 
           
Total Assets  $-   $5,300 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)          
           
Current Liabilities          
Accounts payable  $52,589   $43,118 
Due to related-party   3,119    3,155 
Advances payable   36,160    - 
Notes payable   40,000    40,000 
Accrued interest   8,073    5,073 
           
Total Liabilities   139,941    91,346 
           
Commitments and Contingencies (See Note 9)          
           
Stockholders’ Equity (Deficit)          
Common stock: 95,000,000 shares authorized; $0.001 par value, 15,445,484 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively   15,445    15,445 
Preferred stock: 5,000,000 shares authorized; $0.001 par value, no shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively   -    - 
Additional paid In capital   3,791,874    3,791,874 
Deficit accumulated during the development stage   (3,947,260)   (3,893,365)
           
Total Stockholders’ Equity (Deficit)   (139,941)   (86,046)
           
Total Liabilities and Stockholders’ Equity (Deficit)  $-   $5,300 

 

See accompanying unaudited notes to the unaudited consolidated financial statements

 

F-1
 

  

NETWORKING PARTNERS, INC.

(A Development Stage Company)

Consolidated Statements of Operations

(unaudited)

 

                   For the Period 
                   from 
                   November 2, 2010 
   For the Three Months Ended   For the Nine Months Ended   (inception) 
   September 30,   September 30,   through 
   2013   2012   2013   2012   September 30, 2013 
               (As Restated)     
Revenues  $-   $-   $-   $-   $1,812 
                          
Cost of Sales   -    -    -    -    239 
                          
Gross Profit   -    -    -    -    1,573 
                          
Operating Expenses                         
General and Administrative   -    -    35,000    -    102,847 
Impairment of Web Sites   -    -    -    3,731,183    3,731,183 
Professional Services   2,500    2,500    15,895    11,348    103,539 
                          
Total Operating Expenses   2,500    2,500    50,895    3,742,531    3,935,996 
                          
Other Expenses                         
Interest Expense   (1,000)   (1,000)   (3,000)   (3,000)   (11,264)
                          
Total Other Expenses   (1,000)   (1,000)   (3,000)   (3,000)   (11,264)
                          
Net Loss  $(3,500)  $(3,500)  $(53,895)  $(3,745,531)  $(3,947,260)
                          
Basic and Diluted Loss per Share  $(0.00)  $(0.00)  $(0.00)  $(0.24)  $(0.26)
                       
Basic and Diluted Weighted Average Number of Shares Outstanding   15,445,484    15,445,484    15,445,484    15,445,484    14,898,203 

 

See accompanying unaudited notes to the unaudited consolidated financial statements

  

F-2
 

 

NETWORKING PARTNERS, INC.

(A Development Stage Company)

Consolidated Statement of Changes in Stockholders’ Equity (Deficit)

For the Nine Months Ended September 30, 2013 and for the Period from November 2, 2010 (inception) to September 30, 2013

(unaudited)

 

               Deficit     
               Accumulated     
       Additional   during the   Total 
   Common Stock   Paid-in   Development   Stockholders’ 
   Shares   Amount   Capital   Stage   Equity (Deficit) 
                     
Balance at inception November 2, 2010   -   $-   $-   $-   $- 
                          
Common stock subscribed   7,556,327    7,556    -    -    7,556 
                         
Net loss for the period from November 2, 2010 (inception) through December 31, 2010   -    -    -    (3,500)   (3,500)
                          
Balance December 31, 2010   7,556,327    7,556    -    (3,500)   4,056 
                          
Common stock issued for asset acquisition   7,260,000    7,260    3,622,740    -    3,630,000 
                          
Common stock issued for debt conversions   629,157    629    169,134    -    169,763 
                          
Net loss for the year ended December 31, 2011   -    -    -    (140,834)   (140,834)
                          
Balance December 31, 2011   15,445,484    15,445    3,791,874    (144,334)   3,662,985 
                          
Net loss for the year ended December 31, 2012   -    -    -    (3,749,031)   (3,749,031)
                          
Balance December 31, 2012   15,445,484    15,445    3,791,874    (3,893,365)   (86,046)
                          
Net loss for the nine months ended September 30, 2013   -    -    -    (53,895)   (53,895)
                          
Balance September 30, 2013   15,445,484   $15,445   $3,791,874   $(3,947,260)  $(139,941)

 

See accompanying unaudited notes to the unaudited consolidated financial statements

 

F-3
 

 

NETWORKING PARTNERS, INC.

(A Development Stage Company)

Consolidated Statements of Cash Flows

(unaudited)

 

           For the Period 
           from 
           November 2, 2010 
   For the Nine Months Ended   (inception) 
   September 30,   through 
   2013   2012   September 30, 2013 
       (As Restated)     
CASH FLOWS FROM OPERATING ACTIVITIES:               
Net loss  $(53,895)  $(3,745,531)  $(3,947,260)
Adjustments to reconcile net loss to net cash used in operating activities:               
Intangible asset impairment   -    3,731,183    3,731,183 
Changes in operating assets and operating liabilities:               
Accounts payable   9,470    11,348    67,589 
Accrued interest   3,000    3,000    11,231 
Net Cash Used In Operating Activities   (41,425)   -    (137,257)
                
CASH FLOWS FROM INVESTING ACTIVITIES:               
Intangible asset - Koiniclub.com (Beta v2)   -    -    (101,183)
Net Cash Used In Investing Activities   -    -    (101,183)
                
CASH FLOWS FROM FINANCING ACTIVITIES:               
Stock subscriptions   -    -    7,556 
Proceeds from advances payable   36,160    -    36,160 
Proceeds from related parties   5,265    -    3,119 
Proceeds from notes payable   -    -    191,605 
Net Cash Provided By Financing Activities   41,425    -    238,440 
                
NET CHANGE IN CASH   -    -    - 
                
CASH AT BEGINNING OF PERIOD   -    -    - 
                
CASH AT END OF PERIOD  $-   $-   $- 
                
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:               
                
Cash paid for interest  $-   $-   $3,190 
Cash paid for taxes  $-   $-   $- 
                
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:               
                
Common stock issued in asset acquisition  $-   $-   $3,630,000 
Common stock issued upon conversion of notes payable and accrued interest  $-   $-   $154,763 
Common stock issued upon conversion of accounts payable  $-   $-   $15,000 

 

See accompanying unaudited notes to the unaudited consolidated financial statements

 

F-4
 

 

NETWORKING PARTNERS, INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(unaudited)

 

NOTE 1 - ORGANIZATION, BUSINESS AND OPERATIONS

 

Networking Partners, Inc. (the “Company”) was organized under the laws of the State of Nevada on November 2, 2010. The Company’s business is based on developing tools and technology in connection with the acquisition of the same, and partnering with compatible businesses for in-house developed projects aimed at developing networking systems.

 

On November 5, 2010, the Company created a wholly owned foreign subsidiary named Koini, Inc., (“Koini”), a Canadian corporation located on Prince Edward Island, Canada. Koini was setup as a special purpose company to manage and continually develop koini.com and koiniclub.com, two fully functional social networking web-sites purchased from a third party on December 21, 2010. The websites were purchased by the Company to have Koini run and manage. Koini.com and “koiniclub.com’s” target market was to be young people between the ages of 7 and 13. The functionality of the websites was to be comparable to the combination of Facebook, Twitter and Myspace’s networking applications. The websites’ customizable profiles and pages provided a Myspace feel and the functionality of its “Friending” and “Groups” provided a Facebook feel.

 

On August 20, 2011 the board of directors decided to change the legal name of Koini Inc. (Canada) to Networking Partners Canada Inc.

 

During 2012, management impaired the cost of the websites due to the inability of raising capital and the lack of revenue. The Company ceased operations in the Canadian subsidiary named Koini, Inc., in 2013. (See Note 6)

 

Management has been actively pursuing, and has accelerated its efforts, to evaluate emerging technologies and acquire complimentary operational assets in emerging markets, with a primary focus on technology and technology delivery, marketing and marketing solutions, on which to base the Company’s future business activities. Management is seeking to acquire assets and technology with high potential for immediate growth which will generate revenue and have complimentary and synergistic business models to further the Company’s Plan of Operations, in exchange for the Company’s securities. The Company has not realized any revenues as of yet from its plan of operations.

 

NOTE 2 - BASIS OF PRESENTATION

 

The accompanying unaudited financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (all of which are of a normal recurring nature) considered necessary for a fair presentation have been included. Operating results for the three months and nine months ended September 30, 2013 are not indicative of the results that may be expected for the year ending December 31, 2013 or for any other future period. These unaudited consolidated financial statements and the unaudited notes thereto should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the Securities and Exchange Commission on July 14, 2014 (our “10-K”).

 

The Company is in the development stage as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities. As such, the Company is presented as in the development stage from November 2, 2010 through September 30, 2013. During the development stage the Company was primarily engaged in the development of social media platforms. The initial focus of the Company’s research and development efforts was the generation of products and services for web-sites geared toward the children’s market. The production and marketing of the Company’s web-sites and its ongoing research and development activities will be subject to extensive review by the Company’s management and Board of Directors. The Company’s success will depend in part on its ability to generate advertising sales. There can be no assurance of the Company’s successful efforts. However, there is no assurance that such financing will be consummated or obtained in sufficient amounts necessary to meet the Company’s financial needs.

 

F-5
 

 

NETWORKING PARTNERS, INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(unaudited)

 

NOTE 2 - BASIS OF PRESENTATION (continued)

 

There was no revenue for the nine months ended September 30, 2013 and for the year ended December 31, 2012. The accompanying consolidated financial statements for the nine months ended September 30, 2013 have been prepared assuming the Company will continue as a going concern. (See Note 3)

 

NOTE 3 - GOING CONCERN

 

The accompanying financial statements have been prepared on a going concern basis, which assumes the Company will realize its assets and discharge its liabilities in the normal course of business. As reflected in the accompanying unaudited consolidated financial statements, the Company had an accumulated deficit of $3,947,260 at September 30, 2013. For the nine months ended September 30, 2013 the Company had a net loss and cash used in operations of $53,895 and $41,425, respectively. The Company had a working capital deficiency of $139,941 at September 30, 2013.

 

The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

 

During the fiscal year 2014, management intends to raise additional debt and/or equity financing to fund future operations and to acquire assets and technology with high potential for immediate growth which will generate revenue and provide additional working capital. However, there is no assurance that such financing will be consummated or obtained in sufficient amounts necessary to meet the Company’s financial needs.

 

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Principles of Consolidation - The consolidated financial statements include the accounts of Networking Partners, Inc. and its wholly-owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

Management’s Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates in the accompany consolidated financial statements include the valuation of intangible assets, valuation of equity based instruments issued for other than cash and the valuation allowance on deferred tax assets.

 

Cash and Cash Equivalents - For purposes of the Statement of Cash Flows, the Company considers liquid investments with an original maturity of three months or less to be cash equivalents.

 

F-6
 

 

NETWORKING PARTNERS, INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(unaudited)

 

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

Impairment of Long-Lived Assets - The Company evaluates the recoverability of its fixed assets and other long-lived assets in accordance with section 360-10 of the FASB Accounting Standards Codification for disclosures about Impairment or Disposal of Long-Lived Assets. Disclosure requires recognition of impairment of long-lived assets in the event the net book value of such assets exceeds its expected cash flows. If so, it is considered to be impaired and is written down to fair value, which is determined based on either discounted future cash flows or appraised values. During the year ended December 31, 2012, the Company identified and recorded impairment charges in connection with its assessment of its intangible assets, consisting of web sites. The Company recognized an impairment charge of $3,731,183, the initially recorded value of the web sites. The asset impairment charge was primarily due to no future revenue projections associated with its websites based upon 2012’s full year results which produced no revenue from the web sites.

 

Stock-Based Compensation - The Company has accounted for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASC 505-50 “Equity-Based Payments to Non-Employees”.

 

Net Income per Common Share - Net loss per common share is computed pursuant to section 260-10 of the FASB Accounting Standards Codification. Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. There were no potentially dilutive shares outstanding as of September 30, 2013.

 

Fair Value for Financial Assets and Financial Liabilities - We measure our financial assets and liabilities in accordance with United States generally accepted accounting principles. For certain of our financial instruments, including cash and cash equivalents, accounts payable and accrued and other liabilities, the carrying amounts approximate fair value due to their short maturities. Amounts recorded for notes payable, also approximate fair value because current interest rates available to us for debt with similar terms and maturities are substantially the same.

 

The Company follows 825-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

 

Level 1: Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
   
Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
   
Level 3: Pricing inputs that are generally observable inputs and not corroborated by market data.

 

F-7
 

 

NETWORKING PARTNERS, INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(unaudited)

 

NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

 

The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis,

consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at September 30, 2013, nor gains or losses are reported in the statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the nine months ended September 30, 2013.

 

Segment Reporting - In June, 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 131,“Disclosures about Segments of an Enterprises and Related Information”. This Statement requires companies to report information about operating segments in interim and annual financial statements. It also requires segment disclosures about products and services, geographic areas, and major customers. The Company determined that it did not have any separately reportable operating segments as of September 30, 2013.

 

Recent Accounting Pronouncements

 

Financial Accounting Standards Board, Accounting Standard Updates which are not effective until after September 30, 2013 are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.

 

NOTE 5 - DUE FROM RELATED PARTY

 

The amount due from related party, who was a principal stockholder, consisted of the following at September 30, 2013 and December 31, 2012, respectively.

 

   September 30, 2013   December 31, 2012 
           
Anne’s Diary Inc.  $-    $ 5, 300 

 

As of December 31, 2012, the Company held a receivable from a Canadian entity, Anne’s Diary Inc., in the amount of $5,300 in relation to the purchase of the social networking websites. During 2013, this receivable was assigned by Anne’s Diary to Enzo Taddei, the Company’s sole officer and director, and is netted in the Due to Officer amount of $3,119 as presented in the Company’s unaudited consolidated financial statements for the nine months ended September 30, 2013. (See Note 7)

 

NOTE 6 - INTANGIBLE ASSET

 

On December 21, 2010, the Company acquired two web-sites, koini.com and koiniclub.com, from a Canadian entity, Anne’s Diary Inc., via a stock subscription agreement. The agreement stated that the Company must amend its Articles of Incorporation to increase authorized common stock to enable the distribution of the appropriate amount of shares to Anne’s Diary Inc., in an amount equal 49% of issued and outstanding, immediately following the approved Certificate of Amendment in the State of Nevada, no later than 180 days of the transaction. On April 12, 2011, the Company issued 7,260,000 common shares to Anne´s Diary, Inc. consummating the purchase of the social networking websites as per agreement.

 

F-8
 

 

NETWORKING PARTNERS, INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(unaudited)

 

NOTE 6 - INTANGIBLE ASSET (continued)

 

The websites were valued at $3,630,000 using various methods including adherence to Emerging Issues Task Force 002 (EITF-002), the market value approach, and the income approach utilizing a capitalization rate calculated from the Ibbotson’s build-up method applied to projected future cash flows. The participants also considered FAS 157’s definition of fair value which is the amount at which the asset could be bought or sold in a current transaction between willing parties, or transferred to an equivalent party.

 

Intangible assets are carried at cost and amortized over their estimated useful lives, generally on a straight-line basis. The Company reviews identifiable amortizable intangible assets to be held and used for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Determination of recoverability is based on the lowest level of identifiable estimated undiscounted cash flows resulting from use of the asset and its eventual disposition. Measurement of any impairment loss is based on the excess of the carrying value of the asset over its fair value.

 

During the year ended December 31, 2012, the Company identified and recorded impairment charges in connection with its assessment of its intangible assets, consisting of web sites. The Company recognized an impairment charge of $3,731,183, the initially recorded value of the web sites along with $101,183 of additional capitalized costs recorded in 2011. The asset impairment charge was primarily due to no future revenue projections associated with its websites based upon 2012’s full year results which produced no revenue from the web sites.

  

NOTE 7 - DEBT

 

Due to related party - consisted of the following at September 30, 2013 and December 31, 2012,

 

   September 30, 2013   December 31, 2012 
           
Due to officer  $3,119   $3,155 

 

Due to related party represents non-interest bearing advances to the Company from our former President, Pino G. Baldassarre during 2011. During 2013, this liability was assigned by the former president to Enzo Taddei, the Company’s sole officer and director.

 

Advances payable - consisted of the following at September 30, 2013 and December 31, 2012,

 

   September 30, 2013   December 31, 2012 
           
Advances payable  $36,160   $- 

 

Advances payable represents non-interest bearing advances to the Company during 2013, from a non-affiliated third party individual, utilized for payments to service providers.

 

F-9
 

  

NETWORKING PARTNERS, INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(unaudited)

 

NOTE 7 - DEBT (continued)

 

Notes Payable and Accrued interest - consisted of the following at September 30, 2013 and December 31, 2012,

 

   September 30, 2013   December 31, 2012 
           
Notes payable  $40,000   $40,000 
           
Accrued interest  $8,073   $5,073 

 

During September and October of 2011 the Company executed Promissory Notes with three unaffiliated individuals for an aggregate amount of $40,000 loaned to the Company for working capital purposes. Each Promissory Note bears interest at the rate of 10% and has a term of eighteen months. To date, the three note holders have verbally agreed to renew and extend the Promissory Notes each month until the Company has the available funds to repay the principal and interest: a $5,000 note was issued September 1, 2011 and was initially due February 28, 2013; a $15,000 note was issued September 1, 2011 and was initially due March 18, 2013; and a $20,000 note was issued October 11, 2011 and was initially due April 10, 2013. The Promissory Notes are presented on the Company’s financial statements in the amount of $40,000. Accrued interest relating to the Notes was $8,073 and $5,073 for the nine months ended September 30, 2013 and for the year ended December 31, 2012, respectively.

 

The Company received various advances and issued promissory notes in 2011 that were converted to equity. See Note 8 for a detailed discussion on debt conversions to equity.

 

NOTE 8 - STOCKHOLDERS DEFICIT

 

A) Common Stock

 

The company’s amended Articles of Incorporation authorize the issuance of 95,000,000 common shares at $0.001 par value per share.

 

Unregistered Sales and Issuance of Equity Securities

 

The Company had 15,445,484 issued and outstanding common stock shares as of September 30, 2013. No shares of common stock were issued during the nine months ended September 30, 2013 or fiscal 2012. Details of the issued and outstanding common stock shares issued in 2010 and 2011 are presented below:

 

   Amount of Shares 
Description  Issued and
Outstanding
 
     
Stock issued to private offering subscribers   7,556,327 
Stock issued for acquisition of assets   7,260,000 
Stock issued for conversion of debt   629,157 
Total common stock shares issued and outstanding   15,445,484 

 

F-10
 

 

NETWORKING PARTNERS, INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(unaudited)

 

NOTE 8 - STOCKHOLDERS DEFICIT (continued)

 

From November 2, 2010, to November 20, 2010, we received subscriptions for an aggregate of 7,556,327 restricted shares of our common stock from thirteen (13) investors who were not citizens or residents of the United States (including 500,000 shares to our Chief Financial Officer, Enzo Taddei) and one (1) U.S resident, our former President, Pino G. Baldassarre. The consideration for such issuances was $0.001 per share or $7,556, which is the par value of our common stock. Certificates for these 7,556,327 shares were actually issued on April 27, 2011, when the Company received payment in full for these 7,556,327 shares on April 27, 2011.

 

On December 21, 2010, we entered into a Websites Purchase Agreement with Anne’s Diary, Inc., pursuant to which we acquired our www.koini.com and www.koiniclub.com web sites in exchange for 7,260,000 shares of our common stock valued at $0.50 per share based on the factors discussed above in Note 6. We issued the 7,260,000 shares to Anne’s Diary, Inc. on April 12, 2011. (See Note 6)

 

During 2011 the Company received advances totaling of $79,921 from Anne´s Diary, Inc. On September 30, 2011 the Company issued 319,684 common restricted shares to Anne´s Diary, Inc. as a conversion of $79,921 of debt valued at $0.25 per share. The original convertible promissory note was convertible at $0.05. There was no beneficial conversion feature values associated with the note modification at the note dates as the conversion price was greater than the fair market value of the stock as evidenced by prior cash sales of common stock. However, with the changing of the conversion rate, this modification qualified as a debt extinguishment in accordance with ASC 470-50-40. There was no beneficial conversion feature values associated with the note modification at the note dates as the conversion price was greater than the fair market value of the stock as evidenced by prior cash sales of common stock and shares issued for the value of services in the following month. Furthermore, there was no gain or losses on the extinguishment.

 

On September 30, 2011, the Company issued 249,473 common restricted shares to Hatton Wireless Limited (A United Kingdom based limited company). The shares were issued as a conversion of $74,841 of debt valued at $0.30 per share. The debt obligation initially arose from a working capital loan of up to $200,000. This loan was subsequently modified in May 2011 into a convertible promissory note convertible at $0.30 or if lower, the lesser of 60% of the then market value of the common stock. The Company evaluated ASC 815 “Derivatives and Hedging” and determined that the conversion features do not cause bifurcation and treatment of the embedded conversion option as a derivative liability as the shares were not readily convertible to cash, since the shares do not trade on the public markets. However, the modification qualified as a debt extinguishment in accordance with ASC 470-50-40. There was no beneficial conversion feature values associated with the note modification at the note dates as the conversion price was greater than the fair market value of the stock as evidenced by prior cash sales of common stock and shares issued for the value of services in the following month. Furthermore, there was no gain or losses on the extinguishment.

 

On November 17, 2011, the Company issued 60,000 common restricted shares to the owner of Hatton Wireless Limited (A United Kingdom based limited company). The shares were issued as a conversion of $15,000 of debt valued at $0.25 per share based on the valuation of the services provided.

 

B) Preferred Stock

 

The company’s Articles of Incorporation authorize the issuance of 5,000,000 preferred shares at $0.001 par value per share. The Board of Directors has the power to designate the rights and preferences of the preferred stock and issue the preferred stock in one or more series.

 

No preferred shares have been issued since inception through September 30, 2013 (See Note 11).

 

F-11
 

 

NETWORKING PARTNERS, INC.

(A Development Stage Company)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2013

(unaudited)

 

NOTE 9 - COMMITMENTS AND CONTINGENCIES

 

Legal Matters

 

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of September 30, 2013, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.

 

NOTE 10 - RELATED PARTY TRANSACTIONS

 

Since inception, the Company has conducted transactions with officers. See Note 7 for details of these transactions.

 

NOTE 11 - SUBSEQUENT EVENTS

 

On April 22, 2014, Networking Partners, Inc. (“Company”) entered into a definitive Asset Purchase Agreement with Mr. Chad Steinhart (“Steinhart”), pursuant to which the Company would acquire certain assets from Mr. Steinhart. The closing of the asset acquisition is anticipated to occur prior to July 31, 2014.

 

The assets to be acquired include, among other things, a proprietary integration code for web development and software for voice over internet protocol (“VoIP”) integration. This works together to form a total solution resulting in an internet telephony service provider (“ITSP”) platform that allows hosted private branch exchange (“PBX”) in the cloud and other telecom features. This platform integrates several types of telecommunications carrier grade class 4 and class 5 soft-witches from an open source framework by Digium, Inc. to licensed software and equipment and infrastructure providers, Telinta, Inc. and PortaOne, Inc. This allows the convergence around a carrier grade billing platform including soft-switches as media applications for voice and video calls, conferencing, interactive voice response (“IVR”) applications and unified messaging applications integrated into one simple web portal. This integration is being purchased and allows the end using businesses that pay for service to have a robust PBX phone system including phone lines hooked to the Cloud. The integrations include the code, infrastructure and equipment allowing the soft-switches and web development to operate in a simple interface that uses the technology just mentioned and hosts the integration portal on the domains www.SonantTelecon.com and www.SonantTelecom.net. This Agreement includes all the code, web development integrations and an infrastructure to facilitate being an ITSP. It also includes all of Steinhart’s vendor relationships and the lists of businesses that have utilized the technology on a test basis or are currently using the technology on a trial basis and are willing to enter into formal agreements to continue using the technology which will generate monthly residual revenues to the owner.

 

The purchase consideration to be paid at the closing shall be 625,000 shares of Series “A” Convertible Preferred Stock. Each share of Series “A” Convertible Preferred Stock shall have 100 votes per share and shall be convertible into 100 shares of the Company’s common stock, such conversion right shall be exercisable on or after the second anniversary of the closing of the asset acquisition.

 

NOTE 12 - RESTATEMENT

 

Subsequent to the issuance of the Company’s September 30, 2012 consolidated financial statements, management determined that several adjustments should be made to the Consolidated Statement of Operations and to the Statement of cash Flow for the nine months ended September 30, 2012 for the consolidated financial statements to be fairly stated. The net loss was increased by $3,735,031 reflecting an increase in impairment expense $3,731,183 and in professional expense of $3,848. The net cash flows did not change, but the components of the cash used in operating activities, reflects the above expense charges. Net loss per share increased to $0.24 from $0.

 

F-12
 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Plan of Development Stage Activities.

 

Cautionary Forward - Looking Statement

 

The following discussion and analysis of the results of operations and financial condition of Networking Partners, Inc. should be read in conjunction with the unaudited financial statements, and the related notes. References to “we,” “our,” or “us” in this section refers to the Company and its subsidiaries. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions.. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

 

Certain matters discussed herein may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties include, but are not limited to, the following:

 

  the volatile and competitive nature of our industry,
     
  the uncertainties surrounding the rapidly evolving markets in which we compete,
     
  the uncertainties surrounding technological change of the industry,
     
  our dependence on its intellectual property rights,
     
  the success of marketing efforts by third parties,
     
  the changing demands of customers and
     
  the arrangements with present and future customers and third parties.

 

Should one or more of these risks or uncertainties materialize or should any of the underlying assumptions prove incorrect, actual results of current and future operations may vary materially from those anticipated.

 

Overview

 

On November 5, 2010, the Company created a wholly owned foreign subsidiary named Koini, Inc., (“Koini”), a Canadian corporation located on Prince Edward Island, Canada. Koini was setup as a special purpose company to manage and continually develop koini.com and koiniclub.com, two fully functional social networking web-sites purchased from a third party on December 21, 2010. The websites were purchased by the Company to have Koini run and manage. Koini.com and “koiniclub.com’s” target market was to be young people between the ages of 7 and 13. The functionality of the websites was to be comparable to the combination of Facebook, Twitter and Myspace’s networking applications. The websites’ customizable profiles and pages provided a Myspace feel and the functionality of its “Friending” and “Groups” provided a Facebook feel.

 

On August 20, 2011 the board of directors decided to change the legal name of Koini Inc. (Canada) to Networking Partners Canada Inc.

 

During 2012, management impaired the cost of the websites due to the inability of raising capital and the lack of revenue. The Company ceased operations in the Canadian subsidiary named Koini, Inc., in 2013.

 

Management has been actively pursuing, and has accelerated its efforts, to evaluate emerging technologies and acquire complimentary operational assets in emerging markets, with a primary focus on technology and technology delivery, marketing and marketing solutions, on which to base the Company’s future business activities. Management is seeking to acquire assets and technology with high potential for immediate growth which will generate revenue and have complimentary and synergistic business models to further the Company’s Plan of Operations, in exchange for the Company’s securities. The Company has not realized any revenues as of yet from its plan of operations.

 

3
 

 

Business Development

 

We are a development stage corporation and have recently started our business operations, and have generated minimal revenues.

 

The accompanying financial statements have been prepared on a going concern basis, which assumes the Company will realize its assets and discharge its liabilities in the normal course of business. As reflected in the accompanying financial statements, the Company had an accumulated deficit of $3,947,260 at September 30, 2013. There was no revenue for the three month period ended September 30, 2013 and the Company had a working capital deficiency of $139,941 at September 30, 2013.

 

The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. The accompanying financial statements do not include any adjustments that might arise as a result of this uncertainty. Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. It is our belief that if we become current with our regulatory filings and raise a sufficient amount of capital, such monies will last twelve months and will allow us to fully implement our business plan.

 

Results and comparison of the three month periods ended September 30, 2013 and 2012:

 

The Company had no revenue for the three month periods ended September 30, 2013 and 2012.

 

Operating expenses were $2,500 and $2,500 for the three month periods ended September 30, 2013 and 2012, respectively. Operating expenses consisted of $2,500 of legal and auditing professional services for both three month periods ended September 30, 2013 and 2012.

 

The Company incurred interest expense of $1,000 in the three month periods ended September 30, 2013 and 2012.

 

The Company had net losses of $3,500 and $3,500 for the three month periods ended September 30, 2013 and 2012, respectively.

 

Based on 15,445,484 weighted average shares outstanding for the three months ended September 30, 2013 and 2012, the loss per share was $0.00.

 

Results and comparison of the nine month periods ended September 30, 2013 and 2012:

 

The Company had no revenue for the nine month periods ended September 30, 2013 and 2012.

 

Operating expenses were $50,895 and $3,742,531 for the nine month periods ended September 30, 2013 and 2012, respectively. Operating expenses for the nine month period ended September 30, 2013 consisted of $50,895 of legal, auditing and accounting professional services and general and administration expenses. Operating expenses for the nine month period ended September 30, 2012 consisted of $11,348 of legal, auditing and accounting professional services and $3,731,183 as an impairment charge relating to our web sites.

 

The Company incurred interest expense of $3,000 in each of the nine month periods ended September 30, 2013 and 2012.

 

The Company had net losses of $53,895 and $3,745,531 for the nine month periods ended September 30, 2013 and 2012, respectively.

 

Based on 15,445,484 weighted average shares outstanding for the nine months ended September 30, 2013 and 2012, the loss per share was $0 and $0.24, respectively.

 

4
 

 

Liquidity and Capital Reserves:

 

For the nine month period ended September 30, 2013, we had no income and our operating expenses of $53,895 consisted primarily of legal, auditing and accounting professional services and general and administration expenses.

 

As of September 30, 2013, the Company had no cash and a working capital deficit of $139,941.

 

The Company withdrew its offering to raise additional capital in the amount of $2,500,000 on September 25, 2013 and the Company’s intention is to seek additional capital through other means that we are currently investigating. The Company is currently paying for certain operating expenses with funds that are paid directly to service providers on behalf of the Company by the Company’s sole officer and director. During the three month period ended September 30, 2013, the sole officer and director advanced funds in the aggregate amount of $5,265. The advanced funds are recorded on the Company’s books as Due to related party. Depending upon market conditions, the Company may not be successful in raising sufficient additional capital for it to achieve its business objectives. In such event, the business, prospects, financial condition, and results of operations could be materially adversely affected.

 

The Company’s address for correspondence is 857 Sarno Road, Melbourne, Florida 32935.

 

There is no guarantee that the Company will be successful in its attempt to raise capital sufficient to meet its cash requirements for the next twelve months. If the Company is not successful in its effort to raise sufficient capital to meet its cash requirements, the business will fail and the Company will cease to do business.

 

Item 3. Quantitative and Qualitative Disclosure about Market Risk.

 

Not applicable.

 

Item 4. Controls and Procedures.

 

(a)Evaluation of disclosure controls and procedures.

 

Our management carried out an evaluation, with the participation of our Principal Executive Officer and Principal Financial Officer, required by Rule 13a-15 of the Securities Exchange Act of 1934 (the “Exchange Act”) of the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act. Based on their evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were ineffective as of the end of the period covered by this report to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified under SEC rules and forms and is accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure. These controls were ineffective due to material weaknesses in our internal control over financial reporting discussed below.

 

Our management, our Chief Executive Officer, is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes policies and procedures that:

 

  (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;
     
  (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and
     
  (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use or disposition of our assets that could have a material effect on our financial statements.

 

5
 

 

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design safeguards to reduce, though not eliminate, this risk.

 

Our management used the framework set forth in the report entitled, “Internal Control — Integrated Framework” published by the Committee of Sponsoring Organizations of the Treadway Commission, known as COSO, to evaluate the effectiveness of our internal control over financial reporting. Based on this assessment, our management concluded that our internal control over financial reporting was not effective at September 30, 2013 due to the existence of material weaknesses in our internal controls.

 

A material weakness is a control deficiency, or a combination of control deficiencies, that results in a more than remote likelihood that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

 

As of September 30, 2013, our management had identified the following material weaknesses which still exist through the date of this report:

 

As of September 30, 2013 and as of the date of this report, we did not maintain effective controls over the control environment. Specifically, the Board of Directors does not currently have a director who qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K. Also, because of the size of the Company’s administrative staff, controls related to the segregation of certain duties have not been developed and the Company has not been able to adhere to them. Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness. Additionally, we have identified a material weakness relating to our lack of expertise in accounting for equity based transactions.

 

We are actively seeking to remediate these material weaknesses in the following manner:

 

  (1) We are currently seeking additional, independent directors to join our board of directors. The addition of such board members would provide us with independent directors who would be monitoring the actions of our top management. Our efforts to do so have been hindered substantially by the fact that we do not have a directors and officers insurance policy in place. Because such policies are very expensive, we believe it is in our best interest to forego the purchase of such a policy and instead focus the use of our financial resources on our development and growth.

 

Notwithstanding the existence of these material weaknesses in internal controls, we believe that our consolidated financial statements fairly present, in all material respects, our consolidated balance sheets at September 30, 2013 and our consolidated statements of operations, stockholders’ deficit and cash flows for the nine months ended September 30, 2013 in conformity with GAAP.

 

(b)Changes in Internal Control over Financial Reporting

 

During the nine months ended September 30, 2013, we did not make any changes in our internal controls over financial reporting.

 

6
 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

The Company is not aware of any threatened or pending litigation against the Company.

 

Item 1A. Risk Factors.

 

Not applicable.

 

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

 

Not applicable.

 

Item 3. Defaults upon Senior Securities.

 

None.

 

Item 4. Mine Safety Disclosures.

 

Not applicable.

 

Item 5. Other Information.

 

None.

  

Item 6. Exhibits.

 

See Exhibit Index below for exhibits required by Item 601 of regulation S-K.

 

EXHIBIT INDEX

 

List of Exhibits attached or incorporated by reference pursuant to Item 601 of Regulation S-K:

 

Exhibit   Description
     

31.1*

 

Certification under Section 302 of Sarbanes-Oxley Act of 2002

31.2*   Certification under Section 302 of Sarbanes-Oxley Act of 2002
32.1*   Certification under Section 906 of Sarbanes-Oxley Act of 2002
32.2*   Certification under Section 906 of Sarbanes-Oxley Act of 2002
     
101*   Interactive Data Files pursuant to Rule 405 of Regulation S-T

 

* Filed herewith.

 

7
 

 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

    NETWORKING PARTNERS, INC.
     
Date: August 27, 2014   /s/ Enzo Taddei
    Enzo Taddei
    Chief Executive Officer
    (Principal Executive Officer)
    Chief Financial Officer
    (Principal Accounting and Financial Officer)

 

8