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EX-31.1 - EXHIBIT 31.1 - Demand Pooling, Inc.demand0301form10q3exh31_1.htm
EX-31.2 - EXHIBIT 31.2 - Demand Pooling, Inc.demand0301form10q3exh31_2.htm
EX-32.1 - EXHIBIT 32.1 - Demand Pooling, Inc.demand0301form10q3exh32_1.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

☑ 

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

For the quarterly period ended September 30, 2015.

  or 
☐  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 000-53394

 

Demand Pooling, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)
26-2517798
(I.R.S. Employer Identification No.)
12720 Hillcrest Road, Suite 750
Dallas TX

(Address of principal executive offices)
75230
(Zip Code)
(972) 388-1973
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter 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 ☑

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

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

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☑

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class of common stock Outstanding as of March 2, 2016
Par value $0.0001 per share 31,187,585

   

 

DEMAND POOLING, INC.
A Development Stage Company

- INDEX -

     Page(s) 
  PART I — FINANCIAL INFORMATION:    
Item 1. Financial Statements (unaudited):  3 
  Balance Sheets as of September 30, 2015 and December 31, 2014  4 
  Statements of Operations for the three and nine months ended September 30, 2015 and September 30, 2014  5 
  Statements of Cash Flows for the nine months ended September 30, 2015 and September 30, 2014  6 
  Notes to Financial Statements  7 
       
      
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations  11 
Item 3. Quantitative and Qualitative Disclosures About Market Risk  12 
Item 4. Controls and Procedures  13 
       
  PART II — OTHER INFORMATION:    
Item 1. Legal Proceedings  14 
Item 1A Risk Factors  14 
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds  14 
Item 3. Defaults Upon Senior Securities  14 
Item 4. Mine Safety Disclosures  14 
Item 5. Other Information  14 
Item 6. Exhibits  14 
Signatures    15 
   

 

DEMAND POOLING, INC.
FINANCIAL INFORMATION
BALANCE SHEETS

(Unaudited)

 

   September 30,
2015
  December 31,
2014
    
ASSETS      
       
CURRENT ASSETS:      
Cash  $91   $27 
TOTAL CURRENT ASSETS  $91   $27 
           
           
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY          
           
           
CURRENT LIABILITIES          
Accrued expenses  $47,197   $73,710 
Shareholder advances   45,008    45,479 
TOTAL CURRENT LIABILITIES AND TOTAL LIABILITIES  $92,205   $119,189 
           
           
STOCKHOLDERS’ DEFICIENCY          
Preferred stock, $.0001 par value; 10,000,000 shares authorized; none issued and outstanding  $0   $0 
Common stock, $.0001 par value; 100,000,000 shares authorized; 31,187,585 issued and outstanding at September 30, 2015 and December 31, 2014, respectively   3,119    3,119 
Additional paid-in capital   86,294    86,294 
Accumulated deficit   (178,714)   (205,762)
Stock subscription receivable   (2,813)   (2,813)
TOTAL STOCKHOLDERS’ DEFICIENCY  $(92,114)  $(119,162)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY  $91   $27 

 4 

 

DEMAND POOLING, INC.

STATEMENTS OF OPERATIONS
(Unaudited)

   Three Months Ended  Nine Months Ended
  

September 30,

2015

  

September 30,

2014

  

September 30,

2015

  

September 30,

2014

 
Revenue  $0   $0   $0   $0 
                     
                     
Operating Expenses                    
General and Administrative   6,061    486    6,911    585 
Other Income:                    
Forgiveness of debt   0    0    33,959    0 
Net Operating Expenses   6,061    486    6,911    585 
Net Income (Loss)   (6,061)   (486)   27,048    (585)
Basic income (loss) per share – Basic and Diluted   0    0    0    0 
Weighted average number of common shares outstanding   31,187,585    31,187,585    31,187,585    31,187,585 

 5 

 

DEMAND POOLING, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)

   Nine Months
Ended
September 30,
2015
    Nine Months
Ended
September 30,
2014
 
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net Income (loss)  $27,048   $(585)

(Decrease) in accrued expenses

   (26,984)   (1,673)
Net cash provided by (usedin) operating activities  $64   $(2,258)
CASH FLOWS FROM FINANCING ACTIVITIES:          
Shareholder Advances   0    2,300 
Net cash provided by financing activities   0    2,300 
NET INCREASE IN CASH   64    42 
Cash at beginning of period   27    21 
CASH AT END OF PERIOD  $91   $63 

 6 

 

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a) Basis of Presentation:

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC). Accordingly, these condensed consolidated financial statements do not include all of the information and footnotes required for audited annual financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary to make the condensed financial statements not misleading have been included. The balance sheet at December 31, 2014, has been derived from the Company’s audited consolidated financial statements as of that date.

The unaudited condensed financial statements included herein should be read in conjunction with the audited financial statements and the notes thereto that are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, that was filed with the SEC on February 26, 2016. The results of operations for the nine months ended September 30, 2015, are not necessarily indicative of the results to be expected for the full year, or any other period.

(b) Going Concern

We have incurred net losses of approximately $92,114 since inception through September 30, 2015. At September 30, 2015 we had approximately $91 in cash and $0 other assets and our total liabilities were $92,205. The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2014 contains an explanatory paragraph regarding our ability to continue as a going concern based upon recurring operating losses and our need to obtain additional financing to sustain operations. Our ability to continue as a going concern is dependent upon our ability to obtain the necessary financing to meet our obligations and repay our liabilities when they become due and to generate sufficient revenues from our operations to pay our operating expenses.

We may seek to raise additional funds through public or private sale of our equity or debt securities, or borrowing funds from private or institutional lenders. In additions to obtaining necessary financing, the Company intends to implement a plan for charging for the use of its platform. To date, the Company has only granted “beta” access to the platform, and no fees have been charged.

There are no assurances that we will continue as a going concern and the Company’s financial statements do not include any adjustments that might result from the outcome of this uncertainty.

(c) Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

(d) Income Taxes:

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

(e) Loss per Common Share:

Basic loss per share is calculated using the weighted-average number of common shares outstanding during each reporting period. Diluted loss per share includes potentially dilutive securities such as outstanding options and warrants, using various methods such as the treasury stock or modified treasury stock method in the determination of dilutive shares outstanding during each reporting period. The Company does not have any potentially dilutive instruments for this reporting period.

 7 

 

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CON’T):

(f) Fair Value of Financial Instruments:

We adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements. The estimated fair value of certain financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The carrying amounts of our short and long term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuances of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk 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, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:

Level 1 — quoted prices in active markets for identical assets or liabilities

Level 2 — quoted prices for similar assets and liabilities in active markets or inputs that are observable

Level 3 — inputs that are unobservable (for example cash flow modeling inputs based on assumptions)

NOTE 2 - CAPITAL STOCK:

The total number of shares of capital stock which the Company has authority to issue is one hundred ten million (110,000,000). These shares are divided into two classes with 100,000,000 shares designated as common stock at $.0001 par value (the “Common Stock”) and 10,000,000 shares designated as preferred stock at $.0001 par value (the “Preferred Stock”). The Preferred stock of the Company shall be issued by the Board of Directors of the Company in one or more classes or one or more series within any class and such classes or series shall have such voting powers, full or limited, or no voting powers, and such designations, preferences, limitations or restrictions as the Board of Directors of the Company may determine, from time to time.

Holders of shares of Common stock shall be entitled to cast one vote for each share held at all stockholders’ meetings for all purposes, including the election of directors. The Common Stock does not have cumulative voting rights. No holder of shares of stock of any class shall be 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.

As of September 30, 2015, the Company has no shares of Preferred Stock outstanding and 31,187,585 shares of Common Stock issued and outstanding.

NOTE 3 - INCOME TAXES:

We use the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.

ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.

The federal net operating loss carryforwards expire in the tax years 2029 and 2030. Federal tax laws impose significant restrictions on the utilization of net operating loss carryforwards and research and development credits in the event of a change in ownership of the Company, as defined by the Internal Revenue Code Section 382. The Company’s net operating loss carryforwards and research and development credits may be subject to the above limitations. The relevant FASB standard resulted in no adjustments to the Company’s liability for unrecognized tax benefits. As of both the date of adoption and as of December 31, 2010 there were no unrecognizable tax benefits. Accordingly, a tabular reconciliation from beginning to ending periods is not provided. The Company will classify any future interest and penalties as a component of income tax expense if incurred. To date, there have been no interest or penalties charged or accrued in relation to unrecognized tax benefits. The Company is subject to federal and state examinations for the year 2009 forward. There are no tax examinations currently in progress.

 8 

 

NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS:

From time to time new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and case flows when implemented.

NOTE 5- MATERIAL CONTRACTS:

Effective as of April 2, 2010, (a) Richard K. Aland (“Purchaser”) agreed to acquire 23,907,138 shares of the Company’s common stock par value $0.0001 for a price of $0.0001 per share and (b) Donald Kelly agreed to acquire 4,218,907 shares of the common stock par value $0.0001 (collectively, the “Shares”) for a price of $0.0001 per share. At the same time, Accelerated Venture Partners, LLC agreed to tender 1,979,760 of its 5,000,000 shares of the Company’s common stock par value $0.0001 for cancellation. This transaction was consummated on April 2, 2010.

On April 15, 2010, the Company entered into a Licensing Agreement (“Licensing Agreement”) with Demand Pooling Global Services, LLC (“Licensor”), a related party, pursuant to which the Company was granted a, non-transferrable license for certain territories (an exclusive license for North America and a non-exclusive license for all markets outside of North America) for certain intellectual property developed by Licensor, principally comprising a business concept and related technology which has, as its core product, the aggregation of demand for high-ticket capital equipment and selected commodities to facilitate cooperative purchases of similar products by a significant number of large end-users (the “Technology”). The Technology would also permit and facilitate pooled financing for such purchases in a manner which permits greater financial flexibility for the end-users. Finally, the Technology permits and facilitates the disposal of older equipment and commodities by end-users in order to improve the cost recovery on disposal of surplus or dated equipment and commodities.

Except for the rights granted under the License Agreement, Licensor retains all rights, title and interest to the Technology and any improvements thereto—although the License includes the Company’s right to utilize such improvements.

The term of the License commences the date of execution of the Licensing Agreement (“Execution Date”) and continues for a term of twenty (20) years, ending on the twentieth anniversary of the Execution Date. In addition to other requirements, the continuation of the license is conditioned on the Company generating net revenues in excess of expenses in the normal course of operations or the funding by the Company of a minimum of $10,000,000 for “qualifying research, development and commercialization expenses” in accordance with the following schedule:

(a) a minimum of US$1,000,000 during the period commencing upon the Execution Date and ending on the first anniversary of the Execution Date; or

(b) a minimum of US$4,000,000 during the period commencing upon the Execution Date and ending on the second anniversary of the Execution Date; or

(c) a minimum of US$10,000,000 during the period commencing upon the Execution Date and ending on the third anniversary of the Execution Date

The Licensing Agreement also calls for royalties payable by the Company to the Licensor of ten percent (10%) of all gross revenues resulting from the use of the Technology by the Company and twenty-five percent (25%) of all royalties and fees received from third party sublicensees.

The license is also terminatable upon the occurrence of certain events of default specified in the Licensing Agreement.

The ownership of the intellectual property necessary for development and modification of the electronic platform resides with the Licensor and becomes a part of the exclusive North American and non-exclusive worldwide (outside North America) License,

On June 30, 2013, the Company amended its Licensing Agreement by deleting Article 3 — Research, Development and Commercialization Funding Requirements, and Article 4 — Licensee’s Commercialization Obligations, in their entirety.

The Amendment to the Licensing Agreement eliminated the condition of the Company to generate net revenues in excess of expenses in the normal course of business operations or the funding by the Company of a minimum of $10,000,000. As a result of deleting Article 3, the Company no longer has an obligation to fund the research, development and commercialization of the Technology required in Article 4 of the Licensing Agreement.

On April 29, 2010, the Company entered into a Consulting Services Agreement with Accelerated Venture Partners LLC (“AVP”), a company controlled by Timothy J. Neher. The agreement requires AVP to provide the Company with certain advisory services that include reviewing the Company’s business plan, identifying and introducing prospective financial and business partners, and providing general business advice regarding the Company’s operations and business strategy in consideration of (a) an option granted by the company to AVP to purchase 3,235,971 shares of the company’s common stock at a price of $0.0001 per share (the “AVP Option”). The AVP Option was immediately exercised by the holder, subject to a repurchase option (“Repurchase Option”) granted to the Company to repurchase the shares at a price of $0.0001 per share upon the occurrence of certain events of default.

 9 

 

While the actual Consulting Services Agreement is dated April 29, 2010, the terms of the Agreement were previously agreed and the Agreement was part and parcel of the stock sale which was consummated on April 2, 2010. In fact, the terms of the entire transaction had been the subject of an oral agreement between the parties which was confirmed by the parties in the 4th quarter of 2009. The transaction which was finalized on April 2, 2010 therefore had three components—(1) Sale of 28,126,045 shares to Messrs. Aland and Kelly at a price of $0.0001 per share, (2) AVP’s agreement to reduce his holdings in the Company from 5,000,000 shares to 3,020,240 shares and the option for AVP to acquire 3,235,971 shares at the same $0.0001 per share price. At the time these transactions took place, the Company was a shell with no business (and minimal value), therefore the Company valued all shares issued at the time at par value ($0.0001).

On February 22, 2011, the Company received a letter from AVP giving notice of its termination of the Consulting Services Agreement (“Termination Letter”). The Company believes that AVP failed to perform the agreed services under the Consulting Services Agreement. Since AVP did not meet the milestones required in the Consulting Services Agreement, the Company does not believe that it is obligated to pay any amounts to AVP under the terms of the Consulting Services Agreement. The Company exercised the Repurchase Option with respect to the 3,235,971 shares of Company Common Stock which was issued to AVP under the Consulting Services Agreement at a price of $0.0001 per share. The Company’s management believes that the termination of the Consulting Services Agreement will have no impact whatsoever on its plan of operation, principally because AVP was not actively involved in the Company’s operations prior to such termination.

NOTE 6 - SHAREHOLDER ADVANCES:

Richard Aland an officer, director and shareholder, other shareholders of the Company and Demand Pooling Global Services, LLC have advanced to the Company a total of $45,008, which is payable on demand and non-interest bearing. Such advances consist of $10,962 from Demand Pooling Global Services, LLC; $2,723 from Richard Aland; and $31,323 from other shareholders.

NOTE 7 – ACCRUED EXPENSES:

Accrued Expenses consist of legal fees incurred in connection with the Company’s regulatory filings with the SEC, banking fees, accounting, transfer agent and filing fees.

NOTE 8 - RELATED PARTY TRANSACTIONS:

Richard Aland and other shareholders advanced to the Company an aggregate of $34,046 (see Note 6 Shareholder Advances).

NOTE 9 – SUBSEQUENT EVENT

On February 25, 2016, the Company borrowed $25,000 pursuant to a Secured Promissory Note (“Note”) from an investor (“Lender”) which is payable upon the earlier to occur of (a) the date on which a proposed Transaction (as defined in the Note) closes; (b) May 31, 2016; and (c) the date on which the Note is accelerated in accordance with its terms; provided, however, that if the Transaction does not close due to a failure by the Lender to perform its material obligations under such Transaction documents, the Maturity Date will be December 31, 2016. Richard K. Aland, the Company’s CEO, has pledged his shares to secure the payment and performance under the Note.

 10 

 

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

Plan of Operations

From inception (April 29, 2008), Accelerated Acquisitions V, Inc. was organized as a vehicle to investigate and, if such investigation warrants, acquire a target company or business seeking the perceived advantages of being a publicly held corporation.

On April 29, 2008, the Registrant sold 5,000,000 shares of Common Stock to Accelerated Venture Partners, LLC for an aggregate investment of $4,000.00. These shares were issued immediately following the incorporation of the Company and were “founder’s shares”. There were no written or oral agreements between the parties relevant to the purchase of the founder’s shares and the purchaser became the sole shareholder of the Company (which at the time was a “shell” corporation. The Registrant sold these shares of Common Stock under the exemption from registration provided by Section 4(2) of the Securities Act.

On March 22, 2010 Richard K. Aland (“Purchaser”) agreed to acquire 23,907,138 shares of the Company’s common stock par value $0.0001 for a price of $0.0001 per share and Donald Kelly agreed to acquire 4,218,907 shares of the common stock par value $0.0001 for a price of $0.0001 per share at the same time, Accelerated Venture Partners, LLC agreed to tender 1,979,760 of its 5,000,000 shares of the Company’s common stock par value $0.0001 for cancellation. The entire transaction was consummated on April 2, 2010.

The transaction was the subject of an oral agreement between the parties which designated the applicable share amounts and share price and was one integrated transaction. There was no specific consideration allocated to any of its elements; i.e. there was no specific consideration for the tender of shares apart from the overall consideration paid by Messrs. Aland and Kelly for their concurrent purchase of their interest in the Company. By letter dated March 25, 2010, AVP tendered 1,979,760 shares of its stock to the Company for cancellation.

Messrs. Aland and Kelly subsequently made gifts of 136,000 and 110,000 shares, respectively, to an aggregate of ten donees. All gifted shares were donated prior to April 2, 2010.

Following these transactions, Mr. Aland owned 69.12% and Mr. Kelly owned 11.94% of the Company’s 34,391,506 issued and outstanding shares of common stock par value $0.0001 and the interest of Accelerated Venture Partners, LLC was reduced to approximately 9.69% of the total issued and outstanding shares. Simultaneously with the share purchase, Timothy Neher resigned from the Company’s Board of Directors and Messrs. Aland and Kelly were simultaneously appointed to the Company’s Board of Directors. Such action represents a change of control of the Company. Mr. Kelly resigned as an Officer and Director of the Company in May 2012.

Prior to the purchase of the shares, the Purchasers were not affiliated with the Company. However, the Purchasers will be deemed affiliates of the Company after the share purchase as a result of their stock ownership interest in the Company. The purchase of the shares by the Purchasers was completed pursuant to written Subscription Agreements with the Company. The purchase was not subject to any other terms and conditions other than the sale of the shares in exchange for the cash payment.

On April 15, 2010, the Company entered into a Licensing Agreement (“Licensing Agreement”) with Demand Pooling Global Services, LLC (“Licensor”), a related party, pursuant to which the Company was granted a, non-transferrable license for certain territories (an exclusive license for North America and a non-exclusive license for all markets outside of North America) for certain intellectual property developed by Licensor, principally comprising a business concept and related technology which has, as its core product, the aggregation of demand for high-ticket capital equipment and selected commodities to facilitate cooperative purchases of similar products by a significant number of large end-users (the “Technology”). The Technology would also permit and facilitate pooled financing for such purchases in a manner which permits greater financial flexibility for the end-users. Finally, the Technology permits and facilitates the disposal of older equipment and commodities by end-users in order to improve the cost recovery on disposal of surplus or dated equipment and commodities. The License also provides for the use of a datacenter through a third-party provider. The senior manager of both firms is the same, Richard Aland.

On June 30, 2013, the Company amended its Licensing Agreement by deleting Article 3 — Research, Development and Commercialization Funding Requirements, and Article 4 — Licensee’s Commercialization Obligations, in their entirety, The Amendment to the Licensing Agreement eliminated the condition of the Company to generate net revenues in excess of expenses in the normal course of business operations or the funding by the Company of a minimum of $10,000,000. As a result of deleting Article 3, the Company no longer has an obligation to fund the research, development and commercialization of the Technology required in Article 4 of the Licensing Agreement.

Except for the rights granted under the License Agreement, Licensor retains all rights, title and interest to the Technology and any improvements thereto—although the License includes the Company’s right to utilize such improvements.

The ownership of the intellectual property necessary for development and modification of the electronic platform resides with the Licensor and becomes a part of the exclusive North American and non-exclusive worldwide (outside North America) License.

 11 

 

In order to implement and operate a pool, the Company does not currently need additional hardware or software beyond that which it has licensed from the Licensor and infrastructure that it leases on an oral month-to-month basis from Databank, LLC. The server capacity is not currently stressed and one standby server provides redundancy for the platform application. The Company does not anticipate a number of user accesses (“hits” to its system) that would be typical for consumer-oriented applications that might achieve accesses of hundreds of thousands or even millions of hits during a 24-hour period. It is likely that the Company’s website would only achieve hundreds of hits or thousands of hits during a 24 hour period, which does not stress the capacity of the existing servers. To double the capacity, the Company could convert its redundant server to an application server or add additional servers, as needed for new products. The current cost of new servers, configured as believed to be necessary for the Company’s foreseeable needs, is approximately $4,000-$5,000 each and it is anticipated that new servers, if needed, will be purchased and owned by the Company or leased from the server manufacturers.

No authorizations are needed to launch, implement and operate pooled transactions. The Company determines when pools are to be launched and how potential users are to be addressed. Currently, its marketing approach is through a direct email campaign based upon contacts which the Company has identified. Most of these contacts, which now number fewer than 10,000 out of the estimated 87,000 state and local government entities, have been obtained by the Company investigating state and local government websites (cities, counties, states, airports, transit agencies, school and hospital districts and higher education facilities) and trade organization websites. The Company intends to continue and to expand its email notification activities and, if funding becomes available and/or net revenue generation is sufficient, to investigate the affordability of implementing advertising and public relations campaigns.

The Licensing Agreement calls for royalties payable by the Company to the Licensor of ten percent (10%) of all gross revenues resulting from the use of the Technology by the Company and twenty-five percent (25%) of all royalties and fees received from third party sublicensees.

The license is terminable upon the occurrence of certain events of default specified in the License Agreement.

Results of Operations

Three Months Ended September 30, 2015 Compared to Three Months Ended September 30, 2014

Net Loss for three months ended September 30, 2015 increased to $6,061 compared to a net loss of $486 for the three months ended September 30, 2014.

General and administrative expenses for three months ended September 30, 2015 increased by $5,575 compared to the three months ended September 30, 2015.

The above mentioned factors resulted in a net loss for the three months ended September 30, 2015 of $6,061 compared to a net loss of $486 for the three months ended September 30, 2014.

Nine Months Ended September 30, 2015 Compared to Nine Months Ended September 30, 2014

Forgiveness of debt resulted in Other Income of $33,959 for the nine months ended September 30, 2015 compared to $0 for the comparable period in 2014.

Net Income for nine months ended September 30, 2015 increased to $27,048 compared to a net loss of $585 for the nine months ended September 30, 2014. The increase in net income was primarily due to a reversal of legal fees previously incurred.

General and administrative expenses for the nine months ended September 30, 2015 increased by $6,326 compared to the nine months ended September 30, 2014.

The above mentioned factors resulted in a net income for the nine months ended September 30, 2015 of $27,048 compared to a net loss of $585 for the nine months ended September 30, 2014.

Liquidity and Capital Resources

As of September 30, 2015, the Company had cash on hand of $91 and total current liabilities of $92,205.

The Company’s net losses to date are primarily attributable to pre-launch salaries and costs of general business model implementation. The Company believes that these results will not be characteristic of the Company’s operating results once it launches pooled purchases. The Company’s future success is therefore very dependent upon its ability to achieve profitable operations and generate cash from operating activities.

We may seek to raise additional funds through public or private sale of our equity or debt securities, or borrowing funds from private or institutional lenders. If we raise additional funds through the issuance of debt securities, these securities would have rights that are senior to holders of our common stock and could contain covenants that restrict our operations. Any additional equity financing would likely be substantially dilutive to our stockholders. In addition, if we raise additional funds through the sale of equity securities, new investors could have rights superior to our existing stockholders.

If we are unable to raise sufficient additional funds when needed, we would be required to further reduce operating expenses by, among other things, curtailing significantly or delaying or eliminating part or all of our operations.

Our ability to obtain additional financing is dependent on the state of the debt and/or equity market, and such markets’ reception of us and our offering terms. In addition, our ability to obtain financing may be dependent on the status of our operating activities, which cannot be predicted. There is no assurance that capital in any form will be available to us, and if available, that it will be on terms and conditions that are acceptable.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a “Smaller Reporting Company” as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The information contained in this section covers management's evaluation of our disclosure controls and procedures and our assessment of our internal control over financial reporting for the periods since our last audited periodic report for the year ended December 31, 2014.

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer/Chief Financial Officer of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this report. Based upon that evaluation, our Chief Executive Officer/Chief Financial Officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed by us under the Exchange Act is recorded, processed, summarized and reported within the required time Periods and is accumulated and communicated to our management, including our Chief Executive Officer/Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our Chief Executive Officer/Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Due to the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management's Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer/Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of the fiscal year ended December 31, 2014. In making this assessment, we utilized the criteria set forth in Internal Control—Integrated Framework and the Internal Control over Financial Reporting — Guidance for Smaller Public Companies both issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). A material weakness is a deficiency or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Based on the evaluation, we concluded that our disclosure controls and procedures were not effective and we have identified the following material weaknesses. These material weaknesses affected our ability to make our periodic SEC compliance filings within the prescribed time periods.

Due to a lack of adequate systems, processes, and resources with sufficient GAAP knowledge, experience, and training, we did not maintain effective controls over day-to-day accounting and financial reporting obligations as well as the period-end financial close and reporting processes as of December 31, 2014. Due to the actual and potential effect on financial statement balances and disclosures and the importance of the financial closing and reporting processes, we concluded that, in the aggregate, these deficiencies constituted a material weakness in our internal control over financial reporting. The specific deficiencies contributing to the material weakness were as follows:

a)Inadequate segregation of duties. In various accounting processes, applications and systems we did not design, establish and maintain procedures and controls to adequately segregate job responsibilities for initiating, authorizing and recording transactions, nor were there adequate mitigating or monitoring controls in place.
b)Inadequate policies and procedures. We did not design, establish and maintain effective GAAP compliant financial accounting policies and procedures.
c)Inadequate personnel. We had a lack of experienced personnel with relevant accounting experience, due in part to our limited financial resources.

Due to the existence of the material weakness in our internal control over financial reporting that have been identified as of December 31, 2014 believe that our internal control over financial reporting was also ineffective as of September 30, 2015.

Changes in Internal Control over Financial Reporting

No changes in the Company’s internal control over financial reporting have come to management’s attention during the Company’s last fiscal quarter that have materially affected, or are likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

To the best knowledge of the Company’s management, the Company is not a party to any legal proceeding or litigation.

Item 1A. Risk Factors.

There have been no material changes to our Risk Factors disclosed in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2014.

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

None

Item 3. Defaults Upon Senior Securities.

None

Item 4. Mine Safety Disclosures

None

Item 5. Other Information.

None.

Item 6. Exhibits.

Exhibit No. Description
31.1  Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of  2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.
31.2  Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.
32.1  Certification of the Company’s Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
101.INS   XBRL Instance Document
101.SCH  XBRL Taxonomy Extension Scheme
101.CAL   XBRL Taxonomy Extension Calculation Linkbase
101.DEF   XBRL Taxonomy Extension Definition Linkbase
101.LAB   XBRL Taxonomy Extension Label Linkbase
101.PRE  XBRL Taxonomy Presentation Linkbase

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SIGNATURES

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

Dated: March 2, 2016

DEMAND POOLING, INC. 
   
By: /s/ Richard K. Aland                                 
  Richard K. Aland
  Chairman and Chief Executive Officer and Chief Financial Officer

 

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