LevelBlox, Inc. - FORM 10-Q

Attached files

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EX-31 - RULE 13A-14(A) CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER - LevelBlox, Inc.	ex_31-1.htm
EX-31 - RULE 13A-14(A) CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER - LevelBlox, Inc.	ex_31-2.htm
EX-32 - CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 906 - LevelBlox, Inc.	ex_32-2.htm
EX-32 - CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT SECTION 906 - LevelBlox, Inc.	ex_32-1.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q


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

For the quarterly period ended June 30, 2015


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

For the transition period from ____________ to ____________

Commission File Number 333-173028

AlphaPoint Technology, Inc.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)	26-3748249 (IRS Employer Identification No.)

6371 Business Blvd. Suite 200

Sarasota, FL 34240

(Address of principal executive offices) (Zip Code)

(941) 907-8822

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.01 par value

(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 þ 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

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. (Check one):

Large accelerated filer o

Accelerated filer o

Non-accelerated filer o

(Do not check if smaller reporting company)

Smaller reporting company þ

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

As of July 21, 2015, the Company had 58,450,000 shares of Common Stock outstanding.

ALPHAPOINT TECHNOLOGY, INC.

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2015

TABLE OF CONTENTS


	Page

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements	2

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 4. Controls and Procedures	16


PART II – OTHER INFORMATION

Item 1. Legal Proceedings

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

Item 3. Defaults Upon Senior Securities

Item 4. Mine Safety Disclosures

Item 5. Other Information

Item 6. Exhibits	17

Signatures	18

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

AlphaPoint Technology, Inc.

Balance Sheets


	June 30,			December 31,
	2015			2014
	(Unaudited)			(Audited)
Assets

Current assets
Cash and cash equivalents	$	6,212		$	688
Accounts receivable		11,313			11,160
Total current assets	$	17,525		$	11,848

Software development costs, net of accumulated amortization of $240,164 and $230,164, respectively	$	—		$	10,000
Investment in N’Compass		—			4,837,545

Total Assets	$	17,525		$	4,859,393

Liabilities and Stockholders’ Equity

Current liabilities
Accounts payable and accrued expenses	$	120,880		$	81,261
Deferred revenue		14,133			19,461
Related party payables		1,148,428			1,083,518
Total current liabilities	$	1,283,441		$	1,184,240

Long Term liabilities
Stock contingency	$	10,000		$	10,000
Total long term liabilities	$	10,000		$	10,000

Total Liabilities	$	1,293,441		$	1,194,240

Stockholders’ Equity
Common Stock, 500,000,000 shares authorized, $0.01 par value, 58,450,000 and 186,282,453 shares issued and outstanding, respectively	$	584,500		$	1,862,825
Additional paid in capital		328,000			3,887,220
Accumulated Deficit		(2,188,416	)		(2,084,892	)
Total Stockholders’ Equity	$	(1,275,916	)	$	3,665,153

Total Liabilities and Stockholders’ Equity	$	17,525		$	4,859,393

The notes are an integral part of these financial statements.

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AlphaPoint Technology, Inc.

Statements of Operations

(Unaudited)


	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2015			2014			2015			2014

Contract revenue	$	8,196		$	7,638		$	16,640		$	13,809

Operating expenses:
Compensation		11,400			11,400			21.,900			25,800
Professional Fees		48,942			8,936			57,757			11,349
General and Administrative		7,055			18,596			22,014			25,983
Depreciation and Amortization		5,000			11,039			10,000			22,078
Total Operating Expenses		72,397			49,971			111,671			85,210

Net loss from operations		(64,201	)		(42,333	)		(95,031	)		(71,401	)

Other income (expenses)
Interest expenses		(4,490	)		(5,103	)		(8,494	)		(10,046	)
Net loss before income tax	$	(68,691	)	$	(47,436	)	$	(103,525	)	$	(81,447	)
Income tax		—			—			—			—
Net loss	$	(68,691	)	$	(47,436	)	$	(103,525	)	$	(81,447	)

Earnings (loss) per share,
Basic and diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Weighted average shares outstanding primary and dilutive		78,116,531			57,884,066			131,900,691			57,717,956

The notes are an integral part of these financial statements.

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AlphaPoint Technology, Inc.

Statements of Cash Flows

(Unaudited)


	For the Six Months Ended
	June 30,
	2015			2014

Cash Flows from Operating Activities:
Net (loss)	$	(103,525	)	$	(81,447	)
Adjustments to reconcile Net Loss to net cash used by operating activities:
Depreciation and amortization		10,000			22,078
Changes in assets and liabilities:
Aged accounts receivable		(152	)		—
Accounts payable and accrued expenses		39,619	)		6,807
Deferred revenue		(5,328	)		3,899
Net Cash (Used) by Operating Activities	$	(59,386	)	$	(48,663	)

Cash Flows from Financing Activities:
Proceeds from Issuance of Stock		—			40,000
Stock Contingency		—			30,000
Net proceeds (repayment) from stockholder loans		64,910			(12,559	)
Net Cash Provided by Financing Activities	$	64,910		$	57,441

Net Change in Cash		5,524			8,778

Cash at beginning of period		688			1,931

Cash at end of period	$	6,212		$	10,709

The notes are an integral part of these financial statements

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AlphaPoint Technology, Inc.

Notes to the Financial Statements

June 30, 2015

(Unaudited)

1. Nature of Operations and Significant Accounting Policies

Nature of Operations

AlphaPoint Technology, Inc. (the “Company”) was incorporated in the State of Delaware on November 13, 2008. AlphaPoint was founded on the belief that challenges exist in implementing a comprehensive Information Technology Asset Management (“ITAM”) solution within infrastructure that supports the delivery of IT services within an organization. Our solutions focus around a mix of professional service offerings and our proprietary patent-pending software. AssetCentral, is a multi-tier web-based enterprise application that uses a SQL database for storage, on-demand content generation, hyper-linking and Cascading Style Sheets (CSS) to create a highly customizable tool for managing IT assets.

On December 23, 2014, AlphaPoint Technology, Inc. closed the share exchange transaction for the acquisition of all the issued and outstanding shares of N’Compass Solutions, Inc. (‘NSI”) a Minnesota corporation. Since that time issues arose, as a result, the Parties agreed to unwind the transaction and negotiated and finalized the terms of an Unwind Agreement(s). The consolidation of management, positional appointed but not mutually executed, operations, assets, and liabilities did not happen from the time of the equity swap to the unwind time. In December of 2014, the companies agreed to unwind due to a disagreement over the terms of the acquisition. As a result, the consolidation of financial statements did not occur. The investment was originally accounted for via the cost method as the stock price was based on the fair market value on the date of agreement.

On April 14, 2015, the AlphaPoint Technology, Inc. (“AlphaPoint” or the “Company”), N’Compass Solutions, Inc., a Minnesota corporation (“NSI”), and the former shareholders of NSI, Kristin F. Paul, Christopher J. Flaherty, Keith A. Meierhofer, Christopher J. Pinc, Thomas H. Frahm, Thomas J. Muggli and Joshua J. Verhelst (the “NSI Shareholders”), entered into an Unwind Agreement (the “Unwind Agreement”) whereby the parties mutually agreed to unwind (the “Unwind”) the Share Exchange Agreement (“SEA”) dated December 19, 2014 and which was reported on a Form 8-K on December 23, 2014 and an Amended Form 8-K on February 9, 2015.

Pursuant to the Unwind Agreement, all of the NSI Shareholders surrendered all of their shares and rights in the Company and the Company conveyed to NSI Shareholders all of its shares, rights and ownership interest in NSI. As a result of the Unwind, the Company has 127,832,453 fewer shares issued and outstanding and the NSI Shareholders own all the capital stock of NSI. None of the NSI Shareholders or their assigns owns any interest in the Company, its affiliates or its properties. The Capital Stock account was reduced by $1,278,324.53 as a result of the unwind and the Additional Paid In Capital account was reduced by $3,559,220.

Pursuant to the Unwind, Christopher Flaherty and Christopher Pinc, tendered their resignations from the AlphaPoint Board of Directors. On March 13, 2015, Keith Meierhofer tendered his resignation as Vice President of Consulting and Special Projects. At the conclusion of the Unwind, these former AlphaPoint officers and the other NSI Shareholders held no stock in AlphaPoint. Mr. Gary MacLeod was reappointed as President of AlphaPoint. Mr. Macleod will remain as Principal Executive Officer of AlphaPoint. There are no arrangements or understandings between the Mr. MacLeod and any other person pursuant to which Mr. MacLeod was selected to serve as President. Furthermore, there are no family relationships between Mr. MacLeod and any other director or executive officer of the Company.

Basis of Presentation

The accompanying unaudited financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance 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 accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information regarding the Company’s significant accounting policies, refer to the audited consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 filed with the Securities and Exchange Commission on April 15, 2015.

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The Financial Statements and related disclosures have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Financial Statements have been prepared using the accrual basis of accounting in accordance with Generally Accepted Accounting Principles (“GAAP”) of the United States. In the opinion of management, these financial statements include all adjustments necessary in order to make them not misleading.

In the opinion of management, adjustments consisting of normal recurring adjustments necessary for a fair statement of (a) the result of operations for the three and six months ended June 30, 2015 and 2014; (b) the financial position at June 30, 2015; and (c) cash flows for the six months ended June 30, 2015 and 2014, have been made.

Use of Estimates

The Financial Statements have been prepared in conformity with U.S. GAAP, which requires using management’s best estimates and judgments where appropriate. These estimates and judgments affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. The estimates and judgments will also affect the reported amounts for certain revenues and expenses during the reporting period. Actual results could differ materially from these good faith estimates and judgments.

Financial Instruments

The Company’s balance sheet includes certain financial instruments. The carrying amounts of current assets and current liabilities approximate their fair value because of the relatively short period of time between the origination of these instruments and their expected realization.

Financial Accounting Standards Board (FASB) Accounting Standards Codification “Fair Value Measurements and Disclosures” (ASC 820) defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.. ASC 820 also establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:


·	Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities

·	Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

·	Level 3 - Inputs that are both significant to the fair value measurement and unobservable.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2015 and December 31, 2014. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments.

The Company applied ASC 820 for all non-financial assets and liabilities measured at fair value on a non-recurring basis. The adoption of ASC 820 for non-financial assets and liabilities did not have a significant impact on the Company’s financial statements.

As of June 30, 2015 and December 31, 2014 the fair values of the Company’s financial instruments approximate their historical carrying amount.

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less when purchased which are readily convertible to cash.

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Accounts Receivable, Credit

Accounts receivable consist of amounts due for the delivery of AssetCentral sales and service offerings to customers. An allowance for doubtful accounts is considered to be established for any amounts that may not be recoverable, which is based on an analysis of the Company’s customer credit worthiness, and current economic trends. Based on management’s review of accounts receivable, no allowance for doubtful accounts was considered necessary. Receivables are determined to be past due, based on payment terms of original invoices. The Company does not typically charge interest on past due receivables.

Our sales offerings are customer specific, based on the number of assets to be input into our tracking software, based on contract. Generally, our installation projects are short term. Our invoicing and credit terms are standard, with a negotiated amount as a down payment, generally 33-50%, to be received by the installation date, balance payable within 30 days. The significance of our requested down payment is weighted in our revenue recognition considerations, as is our contracts. We do not have a long history of sales and therefore consider creditworthiness of our customer in our revenue recognition (when collections are reasonably assured). We have not experienced any bad debts or allowances on our contracted pricings.

Our projects are of short term duration and are invoiced completely at completion. We base our down payment requests on a customer by customer basis. Our projects have ranged from $20,000 to approximately $55,000. Payment terms are negotiated and agreed by the President. We may extend credit on the full contract, depending on the customer.

Software Development Costs

The Company accounts for software development costs in accordance with several accounting pronouncements, including FASB ASC 730, Research and Development, FASB ASC 350-40, Internal-Use Software, FASB 985-20, Costs of Computer Software to be Sold, Leased, or Marketed and FASB ASC 350-50, Website Development Costs.


·	Costs incurred during the period of planning and design, prior to the period determining technological feasibility, for all software developed for use internal and external, has been charged to operations in the period incurred as research and development costs. Additionally, costs incurred after determination of readiness for market have been expensed as research and development.

·	The Company has capitalized certain costs in the development of our proprietary software (computer software to be sold, leased or licensed) for the period after technological feasibility was determined and prior to our marketing and initial sales;

·	Website development costs have been capitalized, under the same criteria as our marketed software.

Capitalized software costs are stated at cost. The estimated useful life of costs capitalized is evaluated for each specific project and is currently being amortized over three to five years.

Amortization is computed on a straight line basis, which should approximate a per unit method over the total estimated units projected for sale (estimated program life is approximately five years). The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the amortization period or the unamortized balance is warranted. Based upon its most recent analysis, the Company believes that no impairment of the proprietary software existed at June 30, 2015.

Long-lived assets and intangible property:

Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable. When required impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets. The Company did not recognize any impairment losses for any periods presented.

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Share-based payments

Share-based payments to employees, including grants of employee stock options are recognized as compensation expense in the financial statements based on their fair values, in accordance with FASB ASC Topic 718. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period). The Company had no common stock options or common stock equivalents granted or outstanding for all periods presented. The company may issue shares as compensation in future periods for employee services.

The Company may issue restricted stock to consultants for various services. Cost for these transactions will be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is to be measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty’s performance is complete. The company may issue shares as compensation in future periods for services associated with the registration of the common shares.

Revenue recognition

Our revenue is derived from multiple element arrangements, generally software, training, asset tagging and maintenance. We recognize our revenue in accordance with FASB ASC 985-605, which requires establishment of vendor specific objective evidence (VSOE) for our software and our maintenance (post contract service or PCS). We have limited sales history and therefore management has determined that we are unable, at the current time, to statistically support the establishment of VSOE for the fair value for certain elements of our offering arrangements.

Software sales are recorded as receivable and deferred when installed or delivered. As of June 30, 2015 we had not sold our product without a maintenance component, nor had we sold our maintenance as a separate component. The maintenance contract, which does not involve significant production, modification, or customization, is the only undelivered element at the time of installation or delivery. Currently the entire fee (software, services and maintenance) is recognized ratably over the period during which the post contract service support (maintenance period) is expected to be performed. The unrecognized portion for contracts is charged to deferred revenue and will be recognized in future periods, generally one year.

The majority of customer revenue is generated through providing consulting services and equipment resale. Revenue is also generated by providing software-as-a-service (SaaS) and server maintenance. Revenue is generally recognized when:


·	Evidence of an arrangement exists;

·	Delivery has occurred;

·	Fees are fixed or determinable; and

·	Collection is considered probable

The Company invoices consulting services fees either on a time and material basis or on a fixed-price schedule. For time and material contracts, revenue is recognized as work is performed. Revenue is recognized on fixed-price schedules ratably over the life of the project. Equipment resale revenue is recognized when the equipment ships. SaaS and server maintenance revenues are recognized monthly as the services are performed. Deferred revenue represents deposits made for future services

Advertising

The costs of advertising are expensed as incurred. Advertising expense was $0 and $0 for the three months and six months ended June 30, 2015 and $0 and $0 for the three months and six months ended June 30, 2014, respectively. Advertising expenses are included in the Company’s operating expenses.

Research and Development

The Company expenses research and development costs when incurred. Research and development costs include engineering, programmer costs and testing of product and outputs. Indirect costs related to research and developments are allocated based on percentage usage to the research and development. The Company spent $0 and $0 in research and development costs for the three and six months ended June 30, 2015 and $0 and $0 for the three months and six months ended June 30, 2014, respectively.

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Income taxes

Prior to December 31, 2010, the Company reported its earnings under the S-Corporation election and thereby all taxable income is passed-thru to the sole shareholder and is taxed at the shareholder’s ordinary tax rate.

The Company terminated the S-Corporation election as of December 31, 2010. As a result, earnings are taxed to the corporation when earned and are no longer passed through directly to the shareholders. In addition, earnings will be taxed at the corporate tax rate which varies on a graduated basis between 15% and 35%.

The Company accounts for income taxes under FASB Codification Topic 740 which requires use of the liability method. Topic 740 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose, referred to as temporary differences. Deferred tax assets and liabilities at the end of each period are determined using the currently enacted tax rates applied to taxable income in the periods in which the deferred tax assets and liabilities are expected to be settled or realized. A valuation allowance may be applied against the net deferred tax due to the uncertainty of its ultimate realization.

Any deferred tax asset is considered immaterial and has been fully offset by a valuation allowance because at this time the Company believes that it is more likely than not that the future tax benefit will not be realized as the Company has a history of net operating losses. If any issues addressed in the Company’s tax audits are resolved in a manner not consistent with management’s expectations, the Company could be required to adjust its provision for income tax in the period such resolution occurs.

Earnings (loss) per share

Basic earnings (loss) per share calculations are determined by dividing net income (loss) by the weighted average number of shares outstanding during the year. Diluted earnings (loss) per share calculations are determined by dividing net income by the weighted average number of shares plus any potentially dilutive shares. The Company does not have any potentially dilutive instruments and, thus, anti-dilution issues are not applicable.

2. Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has a history of losses, primarily due to its product development stage, resulting in an accumulated deficit. The Company is dependent on financing from its majority shareholder and related parties to meet its current operating obligations. In view of these matters, the Company’s ability to continue as a going concern is dependent upon the Company’s ability to generate revenues from operations and to achieve a level of profitability. The Company intends on financing its future development activities, marketing plan and its working capital needs largely from the sale of public equity securities with some additional funding from other traditional financing sources, including term notes until such time that funds provided by operations are sufficient to fund working capital requirements.

The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

3. Recent Accounting Pronouncements

We have reviewed the FASB issued Accounting Standards Update (“ASU”) accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation’s reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration.

On May 28, 2014, the FASB and the International Accounting Standards Board (IASB) issued ASU 2014-09 – Revenue from Contracts with Customers (Topic 606): The new guidance is to establish the principles to report useful information to users of financial statements about the nature, timing, and uncertainty of revenue from contracts with customers. The proposed ASU, effective date has been deferred which would permit public organizations to apply the new revenue standard to annual reporting periods beginning after December 15, 2017. Nonpublic organizations would be permitted to apply the new revenue standard to annual reporting periods beginning after December 15, 2018.

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4. Software Development Costs

The Company has capitalized certain costs associated with their process in developing software for internal and external use. Software development costs consist of:


	June 30, 2015		December 31, 2014
Software Development costs:
Software: Asset Central	$	157,719	$	157,719
Website development costs		22,445		22,445
Softpay assets		60,000		60,000
Gross Software		240,164		240,164
Accumulated amortization		240,164		230,164
	$	0	$	10,000


Future amortization:
2015		0
	$	0

Amortization for the three months ended June 30, 2015 and 2014 were $5,000 and $11,039, respectively. Amortization for the six months ended June 30, 2015 and 2014 were $10,000 and $22,078, respectively.

5. Income Taxes

The Company has not recognized an income tax benefit for its operating losses generated since termination of their Subchapter S election, based on uncertainties concerning its ability to generate taxable income in future periods. The tax benefit for the periods presented is offset by a valuation allowance established against deferred tax assets arising from operating losses and other temporary differences, the realization of which could not be considered more likely than not. In future periods, tax benefits and related deferred tax assets will be recognized when management considers realization of such amounts to be more likely than not. Per the Internal Revenue Service, tax years open for audit examination are years 2006 through 2014.

6. Related Party Transactions

Loans from Shareholder

In support of the Company’s efforts and cash requirements, it is relying on advances from related parties until such time that the Company can support its operations or attains adequate financing through sales of its equity or traditional debt financing. Amounts represent advances or amounts paid in satisfaction of liabilities. The advances are considered temporary in nature and have not been formalized by a promissory note. Terms of the note have not been defined; however, the Company recognizes the nature of the financing and is accruing interest at the lowest legal interest rate, the Applicable Federal Rate currently 1.46%. Interest is accrued and charged to interest expense.

The following is a summary of the amounts outstanding:


	June 30,		December 31,
	2015		2014
Due to related parties:
Payable to Officer, majority shareholder	$	147,427	$	146,067
Payable to shareholder		719,001		655,451
Payable to affiliate company of shareholder		282,000		282,000
	$	1,148,428	$	1,083,518

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The majority shareholder has pledged his support to fund continuing operations; however there is no written commitment to this effect. The Company is dependent upon the continued support of these parties.

The Company does not have employment contracts with its key employees, including the majority shareholder who is the Principal Executive Officer.

The amounts and terms of the above transactions may not necessarily be indicative of the amounts and terms that would have been incurred had comparable transactions been entered into with independent third parties. The interest accrual for the three months ended June 30, 2015 and June 30, 2014 was $4,490 and $5,103. The interest accrual for the six months ended June 30, 2015 and June 30, 2014 was $8,494 and $10,046.

7. Equity

The total number of shares of capital stock which the Company shall have authority to issue is five hundred million (500,000,000) common shares with a par value of $0.01, of which 58,450,000 have been issued as of June 30, 2015. The Company intends to issue additional shares in an effort to raise capital to fund its operations. Common shareholders will have one vote for each share held.

No holder of shares of stock of any class is entitled, as a matter of right, to subscribe for or purchase or receive any part of any new or additional issue of shares of stock of any class, or of securities convertible into shares of stock of any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of dividend.

On May 5, 2013, a subscription agreement was signed for the purchase of up to 2,500,000 shares at a purchase price of $0.10 per share for an aggregate maximum amount of $250,000. The investments will be made by $10,000 payments on the first day of each month, for the period of up to twenty-four (24) months and the stock will be issued monthly accordingly, in book format. The payments ceased in September 2014 and the Company does not anticipate the payments to resume. The investor has purchased 1,600,000 shares of the 2,500,000 total and the investor has forfeited his right to purchase 1,250,000 Warrants.

During the three months ended June 30, 2015, there were not any shares issued per the subscription agreement signed on May 5, 2013, but there is a stock contingency in the amount of 10,000.

On August 28, 2013 the board passed resolutions to issue 2,025,000 shares at $0.25 a share for providing product support and development for APTI’s AssetCentral data center management software. An additional 75,000 shares were issued for compensation for legal services at $0.25 per share. The total value of the resolutions was $525,000.

There are no preferred shares authorized or outstanding. There have been no warrants or options issued or outstanding.

As of July 21, 2015, the Company had 58,450,000 shares of Common Stock outstanding. Pursuant to the Unwind Agreement, all of the NSI Shareholders surrendered all of their shares and rights in the Company and the Company conveyed to NSI Shareholders all of its shares, rights and ownership interest in NSI. As a result of the Unwind, the Company has 127,832,453 fewer shares issued and outstanding and the NSI Shareholders own all the capital stock of NSI.

8. Commitments

The Company entered into a rental agreement for its office facilities which expired on February 28, 2013 and is currently month to month. The monthly payments of rent are $1,882 plus the costs of utilities and maintenance to the facilities.

Rent expense for both the three months ended June 30, 2015 and 2014 for this facility was $5,646 respectively. Rent expense for both the six months ended June 30, 2015 and 2014 for this facility was $11,292 respectively. There were no other operating or capital leases outstanding, as of June 30, 2015.

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9. Contingencies

Some of the officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities that become available. They may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts.

Litigation

From time to time the Company may become a party to litigation matters involving claims against the Company. Current regulations and reporting requirements require the Company to disclose any legal proceedings that are ongoing and could have a material impact on the financial statements for the period ended June 30, 2015.

On February 25, 2015, the Company accepted service of a Complaint filed by Ladenburg Thalmann & Co. (“Ladenburg”) in the 11^th Judicial Circuit Court, Miami-Dade County, Florida (Case No. 15004012 CA 01). The Complaint alleges counts of Breach of Contract, Quantum Meruit, and Unjust Enrichment, for failure to pay a transaction fee of $100,000 to Ladenburg for the N’compass Solutions, Inc. closing on December 23, 2014. The Company filed an Answer and Affirmative Defenses on March 16, 2015 and Amended Answer and Counterclaim on March 19, 2015 presenting the following affirmative defenses and counterclaims: Estoppel, Failure of Consideration, Waiver, Unclean Hands, and Fraud in the Inducement, and Breach of Contract, Negligent and Fraudulent Misrepresentation and violation of Florida’s Unfair or Deceptive Acts or Practices Act. There are no proceedings in which any of our directors, sole officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.

As of June 30, 2015 the litigation regarding the Landenberg for the N’compass Solutions, Inc. closing, previously mentioned, is ongoing and the outcome remains unknown.

10. Subsequent Events

Management has evaluated subsequent events through August 11, 2015, the date the financial statements were available to be issued and is not aware of any significant events that occurred subsequent to the balance sheet date that would have a material impact on our financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

This section of the prospectus includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: “believe”, “expect”, “estimate”, “anticipate”, “intend”, “project” and similar expressions, or words that, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this prospectus. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

Our financial statements are stated in United States Dollars (USD or US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. All references to “common shares” refer to the common shares in our capital stock.

Overview

We are a company, incorporated in the State of Delaware on November 13, 2008 as a for-profit company, and an established fiscal year of December 31. Our auditor has issued a going concerned opinion. This means there is doubt that we can continue as an on-going business unless we obtain additional capital through the sale of our common shares or other traditional financing, in order to meet our obligations.

From inception through 2009, our business operations consisted of the development of our software product, which included research and development, executing our business and marketing plan, and financing activities, in which to fund the operations. We introduced our software and product offerings in late 2009.

RESULTS OF OPERATIONS

Three months ended June 30, 2015 and 2014

During the three months ended June 30, 2015, we generated revenues in the amount of $8,196, compared to $7,638 for the three months ending June 30, 2014. Our unrecognized revenue, deferred to future periods that our services (based on existing maintenance contracts) extended is $14,133 and $23,259 as of June 30, 2015 and June 30, 2014, respectively.

Operating expenses were $72,397 and $49,971 for the three months ended June 30, 2015 and 2014, respectively. The year-over year increase in operating expenses was primarily due to an increase in legal and accounting expenses from the NSI deal.

Net losses incurred in the periods presented have been primarily due to revenues not reaching the break-even point. The Company incurred net losses of $(68,691) and $(47,436) for the three months ended June 30, 2015 and 2014, respectively.

Six months ended June 30, 2015 and 2014

During the six months ended June 30, 2015, we generated revenues in the amount of $16,640, compared to $13,809 for the six months ending June 30, 2014.

Operating expenses were $111,671 and $85,210 for the six months ended June 30, 2015 and 2014, respectively. Compared to the six month period ending June 30, 2014, professional expenses increased by $46,408 due to costs related to the potential acquisition of N’Compass. The year-over year increase in operating expenses was primarily due to an increase in legal and accounting expenses from the NSI deal.

Net losses incurred in the periods presented have been primarily due to revenues not reaching the break-even point. The Company incurred net losses of $(103,525) and $(81,447) for the six months ended June 30, 2015 and 2014, respectively. The increase in the net losses year-over-year were due to the increase in costs associated with the consolidation and unwind of NSI.

LIQUIDITY AND CAPITAL RESOURCES

As reflected in the audited financial statements, we have an accumulated deficit and have negative net loss from operations.

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Our sales offerings are customer specific, based on contract. Generally, our installation projects are short term. Our invoicing and credit terms are standard, with a negotiated amount as a down payment, generally 33-50%, to be received by the installation date, balance payable within 30 days. The significance of our requested down payment is weighted in our revenue recognition considerations, as is our contracts. We have not experienced any bad debts or allowances on our contracted pricings.

At June 30, 2015, the Company had $6,212 in cash resources to meet current obligations. Management does not consider our current cash position sufficient to sustain our operations. We estimate that our current available cash will satisfy approximately one month of our operating cash flow requirements.

We have depended and continue to depend on monthly cash contributions from our Officer, shareholder, Gary Macleod, to meet any shortfall in meeting our obligations. We expect to generate revenue during the year, minimizing our need for support; however we will require capital to market our product and achieve our operating plan. On May 5, 2013, a subscription agreement was signed for the purchase of up to 2,500,000 shares at a purchase price of $0.10 per share for an aggregate maximum amount of $250,000. The investments will be made by $10,000payments on the first day of each month, for the period of up to twenty-four (24) months and the stock will be issued monthly accordingly, in book format. The payments ceased in September 2014 and the Company does not anticipate the payments to resume. The investor has purchased 1,600,000 shares of the 2,500,000 total and the investor has forfeited his right to purchase 1,250,000 Warrants.

Completion of our plan of operation is subject to attaining adequate revenue. We cannot assure investors that adequate revenues will be generated. Without adequate revenues, we may be unable to proceed with our plan of operations.

In the event we are not successful in reaching our revenue targets, additional funds may be required, and we would then not be able to proceed with our business plan for the development and marketing of our core services. Should this occur, we would likely seek additional financing to support the continued operation of our business. We anticipate that depending on market conditions and our plan of operations, we would incur operating losses in the foreseeable future. We base this expectation, in part, on the fact that we may not be able to generate enough gross profit from our services to cover our operating expenses. Consequently, there is doubt about the Company’s ability to continue to operate as a going concern.

As reflected in the financial statements we have an accumulated deficit from inception of $2,188,416 and have a net loss from operations of $64,201 and $42,333 for the three months ended June 30, 2015 and 2014, respectively. The net loss from operations for the six months ended June 30, 2015 and 2014 was $95,030 and $71,401. This raises doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company’s ability to raise additional capital and execution of its business plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

If the Company is unable to raise the funds partially through stock offerings, the Company will seek alternative financing through means such as borrowings from institutions or private individuals. There can be no assurance that the Company will be able to keep costs from being more than these estimated amounts or that the Company will be able to raise such funds. However, the Company may not be able to obtain additional capital or generate sufficient revenues to fund our operations. If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, the Company may be forced to seek a buyer for our business or another entity with which we could create a joint venture.

Management believes that actions presently being taken to obtain additional funding and execution of its strategic plans provide the opportunity for the Company to continue as a going concern.

Our independent auditor has expressed doubt about our ability to continue as a going concern and believes that our ability is dependent on executing our business plan, raising capital and generating revenues. See Note 2 of our financial statements.

Recent Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE or The NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges are those that address board of directors’ independence, audit committee oversight, and the adoption of a code of ethics. Our Board of Directors consists of seven (7) individuals who advise our principal executive officer and principal financial officer. Our principal executive officer makes decisions on all significant corporate matters such as the approval of terms of the compensation of our executive officers and the oversight of the accounting functions.

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Although the Company has adopted a Code of Ethics and Business Conduct the Company has not yet adopted any of these other corporate governance measures and, since our securities are not yet listed on a national securities exchange, the Company is not required to do so. The Company has not adopted corporate governance measures such as an audit or other independent committees of our board of directors. If we expand our board membership in future periods to include additional independent directors, the Company may seek to establish an audit and other committees of our board of directors. It is possible that if our Board of Directors included independent directors and if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.

RECENT ACCOUNTING PRONOUNCEMENTS

OFF-BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.

MANAGEMENT CONSIDERATION OF ALTERNATIVE BUSINESS STRATEGIES

In order to continue to protect and increase shareholder value management believes that it may, from time to time, consider alternative management strategies to create value for the company or additional revenues. Strategies to be reviewed may include acquisitions, roll-ups, strategic alliances, joint ventures on large projects, and/or mergers.

Management will only consider these options where it believes the result would be to increase shareholder value while continuing the viability of the company.

INFLATION

The effect of inflation on our revenues and operating results has not been significant.

CRITICAL ACCOUNTING POLICIES

Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete listing of these policies is included in the MD&A and Note 1 of the notes to our financial statements for the year ended December 31, 2014. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by management.

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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 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.

SOFTWARE DEVELOPMENT COSTS - The Company accounts for software development costs in accordance with several accounting pronouncements, including FASB ASC 730, Research and Development, FASB ASC 350-40, Internal-Use Software, FASB 985-20, Costs of Computer Software to be Sold, Leased, or Marketed and FASB ASC 350-50, Website Development Costs.


	·	Costs incurred during the period of planning and design, prior to the period determining technological feasibility, for all software developed for use internal and external, has been charged to operations in the period incurred as research and development costs. Additionally, costs incurred after determination of readiness for market have been expensed as research and development.

	·	The Company has capitalized certain costs in the development of our proprietary software (computer software to be sold, leased or licensed) for the period after technological feasibility was determined and prior to our marketing and initial sales;

	·	Website development costs have been capitalized, under the same criteria as our marketed software.

Capitalized software costs are stated at cost. The estimated useful life of costs capitalized is evaluated for each specific project and is currently being amortized over three to five years. Amortization is computed on a straight line basis, which should approximate a per unit method over the total estimated units projected for sale (estimated program life is approximately five years). The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the amortization period or the unamortized balance is warranted. Based upon its most recent analysis, the Company believes that no impairment of the proprietary software existed at June 30, 2015.

REVENUE RECOGNITION – Our revenue is derived from multiple element arrangements, generally software, training, asset tagging and maintenance. We recognize our revenue in accordance with FASB ASC 985-605, which requires establishment of vendor specific objective evidence (VSOE) for our software and our maintenance (post contract service or PCS). We have limited sales history and therefore management has determined that we are unable, at the current time, to statistically support the establishment of VSOE for the fair value for certain elements of our offering arrangements.

Software sales are recorded as receivable when installed or delivered. As of June 30, 2015 we had not sold our product without a maintenance component, nor had we sold our maintenance as a separate component. The maintenance contract, which does not involve significant production, modification, or customization, is the only undelivered element at the time of installation or delivery. Currently, services and maintenance fees are recognized ratably over the period during which the post contract service support (maintenance period) is expected to be performed. The unrecognized portion for contracts is charged to deferred revenue and will be recognized in future periods, generally one year.

RESEARCH AND DEVELOPMENT EXPENSES - The Company expenses research and development costs when incurred. Research and development costs include engineering and testing of product and outputs. Indirect costs related to research and developments are allocated based on percentage usage to the research and development.

EARNINGS (LOSS) PER SHARE - Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted average common shares outstanding for the period. Diluted loss per share is computed giving effect to all potentially dilutive common share equivalents. Potentially dilutive common shares may consist of incremental shares issuable upon the exercise of stock options and warrants and the conversion of notes payable to common stock. In periods in which a net loss has been incurred, all potentially dilutive common share equivalents are considered anti-dilutive and thus are excluded from the calculation. At June 30, 2015 and June 30, 2014 the Company did not have any potentially dilutive common share equivalents.

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed in the Company’s Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to the Company’s management, as appropriate, to allow timely decisions regarding required disclosure.

The Company’s management has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, management has concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were not effective at the reasonable assurance level.

Changes in Internal Controls over Financial Reporting.

Management concluded that there has been no change in our internal control over financial reporting during the period ended June 30, 2015, that has materially affected or is reasonably likely to affect our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 6. EXHIBITS

(b) Exhibits:


31.1	Rule 13a-14(a) Certification of Principal Executive Officer

31.2	Rule 13a-14(a) Certification of Principal Financial Officer

32.1	Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2	Certification of Principal Accounting Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101*	Interactive Data Files of Financial Statements and Notes.

* In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed”.

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SIGNATURE

In accordance with the requirements of the Exchange Act, the Issuer caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	ALPHAPOINT TECHNOLOGY, INC.


	By	/s/ Gary Macleod
		Gary Macleod
		Principal Executive Officer

DATED: August 13, 2015

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Attached files

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