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 June 30, 2011
Commission File Number: 333-151312
THE CONNECT CORPORATION
(Exact name of registrant as specified in its charter)
Nevada
26-2230717
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
#203, 201 Cree Place, Saskatchewan Canada
S7K 2Z3
(Address of principal executive offices)
(Zip Code)
1-800-609-0775
(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. [X] 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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] 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 the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
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Large accelerated filer
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[ ]
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Accelerated filer
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[ ]
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Non-accelerated filer
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[ ]
(Do not check if a smaller reporting company)
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Smaller reporting company
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[X]
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) [X] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
As of August 22, 2011, there were 55,500,000 common shares issued and outstanding
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PART I – FINANCIAL STATEMENTS
Item 1. Financial Statements
The Connect Corporation
(A Development Stage Company)
Financial Statements (Unaudited)
For the Period from April 27, 2007
(Inception) to June 30, 2011
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The Connect Corporation
(A Development Stage Company)
Index to the Financial Statements (Unaudited)
For the Period from April 27, 2007
(Inception) to June 30, 2011
Balance Sheets (Unaudited) as of June 30, 2011 and December 31, 2010
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Statements of Operations (Unaudited) for the six month periods ended
June 30, 2011 and 2010; and for the three month periods ended June 30, 2011
and 2010; and for the period from April 27, 2007 (Inception) to June 30, 2011
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Statement of Changes in Stockholders’ Equity (Deficit) (Unaudited)
for the period from April 27, 2007 (Inception) to June 30, 2011
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Statements of Cash Flows (Unaudited) for the six month periods ended
June 30, 2011 and 2010; and for the period from April 27, 2007 (Inception)
to June 30, 2011
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Notes to the Unaudited Financial Statements
8-10
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The Connect Corporation
(A Development Stage Company)
Balance Sheets
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June 30, 2011
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December 31, 2010
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(Unaudited)
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ASSETS
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$ -
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$ -
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Total assets
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-
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-
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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Current liabilities:
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Accounts payable
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8,235
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5,699
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Total current liabilities
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8,235
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5,699
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Stockholders' Deficit
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Common stock, par value $0.001, 450,000,000 shares authorized, 55,500,000 shares issued and outstanding
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55,500
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55,500
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Additional paid-in capital
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26,406
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13,045
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Deficit accumulated during the development stage
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(90,141)
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(74,244)
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Total stockholders' deficit
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(8,235)
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(5,699)
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Total liabilities and stockholders' deficit
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$ -
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$ -
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See accompanying notes to the unaudited financial statements.
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The Connect Corporation
(A Development Stage Company)
Statements of Cash Flows (Unaudited)
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For the Six Month Period Ended June 30, 2011
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For the Six Month Period Ended June 30, 2010
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For the Period from April 27, 2007 (Inception) to
June 30, 2011
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Cash flows from operating activities:
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Net loss
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$ (15,897)
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$ (14,188)
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$ (90,141)
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Adjustments to reconcile net loss to net cash used in operating activities:
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Mining expense contributed by related party
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2,500
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Change in operating liabilities:
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Increase (decrease) in accounts payable
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2,536
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(2,289)
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8,235
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Net cash used in operating activities
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(13,361)
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(16,477)
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(79,406)
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Cash flows from investing activities:
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-
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-
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-
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Net cash provided by investing activities
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-
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-
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-
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Cash flows from financing activities:
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Cash received from stock subscriptions receivable
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-
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-
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9,250
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Contributed capital
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13,361
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16,477
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70,156
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Net cash provided by financing activities
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13,361
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16,477
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79,406
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Net increase in cash
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-
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-
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-
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Cash at beginning of period
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-
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-
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-
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Cash at end of period
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$ -
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$ -
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$ -
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Supplemental Disclosures:
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Cash paid for interest
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$ -
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$ -
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$ -
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Cash paid for income taxes
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$ -
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$ -
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$ -
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See accompanying notes to the unaudited financial statements.
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The Connect Corporation
(A Development Stage Company)
Notes to the Unaudited Financial Statements
For the Period from April 27, 2007 (Inception) to June 30, 2011
1)
ORGANIZATION
Formerly known as Adicus Energy Corporation, the Company was incorporated on April 27, 2007 in the State of Nevada. In February, 2009, the Company changed its name to The Connect Corporation The Company’s headquarters are based in the state of Saskatoon, Saskatchewan Canada. The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America, and the Company’s fiscal year end is December 31.
Formerly an exploration stage company that primarily engaged in the acquisition, exploration, and development of resource properties, the Company is currently a development stage company that seeks to identify organizations that have attained critical mass thresholds of members, affiliates, and customers with established electronic communication and delivery systems. The Company provides value added benefits to these organizations that can significantly enhance the financial well being through the cost effective electronic installation of the Net Savings Connection web based savings system. To date, the Company’s activities have been limited to its formation, minimal operations, and the raising of equity capital.
DEVELOPMENT STAGE COMPANY
The Company is considered to be in the development stage as defined in ASC 915 “
Accounting and Reporting by Development Stage Enterprises.
” The Company’s efforts have been devoted primarily to raising capital, borrowing funds and attempting to implement its planned, principal activities.
2)
SIGNIFICANT ACCOUNTING POLICIES
USE OF ESTIMATES
The preparation of the Company’s financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s periodic filings with the Securities and Exchange Commission include, where applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future operations of the Company.
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The Connect Corporation
(A Development Stage Company)
Notes to the Unaudited Financial Statements
For the Period from April 27, 2007 (Inception) to June 30, 2011
2)
SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2009, the FASB established the Accounting Standards Codification (“Codification” or “ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”). Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) issued under authority of federal securities laws are also sources of GAAP for SEC registrants. Existing GAAP was not intended to be changed as a result of the Codification, and accordingly the change did not impact our financial statements. The ASC does change the way the guidance is organized and presented.
Statement of Financial Accounting Standards (“SFAS”) No. 165 (ASC Topic 855), “Subsequent Events,” SFAS No. 166 (ASC Topic 810), “Accounting for Transfers of Financial Assets-an Amendment of FASB Statement No. 140,” SFAS No. 167 (ASC Topic 810), “Amendments to FASB Interpretation No. 46(R),” and SFAS No. 168 (ASC Topic 105), “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles- a replacement of FASB Statement No. 162” were recently issued. SFAS No. 165, 166, 167, and 168 have no current applicability to the Company or their effect on the financial statements would not have been significant.
Accounting Standards Update (“ASU”) ASU No. 2009-05 (ASC Topic 820), which amends Fair Value Measurements and Disclosures – Overall, ASU No. 2009-13 (ASC Topic 605), Multiple Deliverable Revenue Arrangements, ASU No. 2009-14 (ASC Topic 985), Certain Revenue Arrangements that include Software Elements, and various other ASU’s No. 2009-2 through ASU No. 2011-07 which contain technical corrections to existing guidance or affect guidance to specialized industries or entities were recently issued. These updates have no current applicability to the Company or their effect on the financial statements would not have been significant.
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The Connect Corporation
(A Development Stage Company)
Notes to the Unaudited Financial Statements
For the Period from April 27, 2007 (Inception) to June 30, 2011
3)
GOING CONCERN AND LIQUIDITY CONSIDERATIONS
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. As of June 30, 2011, the Company has negative working capital of $8,235 and an accumulated deficit totaling $90,141. The Company intends to fund operations through equity financing arrangements, which may be insufficient to fund its capital expenditures, working capital and other cash requirements for the next twelve months.
The ability of the Company to emerge from the development stage is dependent upon, among other things, obtaining additional financing to continue operations, successfully implement its adopted business plan and realize profitability, as well as recurring operating cash flows. In response to these factors, management intends to raise additional funds through public or private placement offerings, and to expedite to the extent possible the implementation of its adopted business plan.
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
4)
SUBSEQUENT EVENTS
The Company has evaluated its subsequent events from the balance sheet date through the date of this report and determined there are no additional events to disclose.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The Connect Corporation is a Nevada corporation originally incorporated as Adicus Energy Corp. on April 27, 2007. We changed our name on October 16, 2007, to Iron Head Mining Corporation. On March 17, 2009, we filed a Certificate of Amendment changing our name to The Connect Corporation
Our previous business focus was on mineral exploration. In January 2008, we obtained an option to acquire a 100% interest in a mineral claim located in the Smithers Mining Region in the Province of British Columbia, Canada. The option was terminated due to our inability to meet option payment and exploration cost requirements. Since that time, the Company has undergone a revision to its business plan.
Since the adoption of its revised business plan, the Company has continued to focus its efforts on the raising of equity capital for the completion and launch of its web-based membership savings system, which will offer families options to reduce their monthly spending. Through the savings website, members will have access to discounts, sales, and other venues for saving on purchases. Vendors will supply these savings to members and pay Connect Corporation a commission. Products available through the website will include everything from groceries to dining, travel, shopping, banking, and more everyday expenses.
The target customers will be both individuals and large businesses, the latter of which can offer the savings to employees as a fringe benefit. The cost to the employer will be small per employee, but the employee will be entitled to savings from manufacturers, retailers, and other businesses. We will collect fees from both businesses, individuals who sign up for membership, as well as businesses that offer discounts through the website.
As of June 30, 2011, the Company had not generated any revenues. Since inception, the Company had incurred expenses of $90,141, consisting primarily of exploration costs, selling, and general and administrative expenses. For the six month period ended June 30, 2011, the Company had expenses of $15,897, compared to $14,188 for the same period in 2010.
Over the next 12 months, it is expected that we will need approximately $50,000 to meet our expenses. Expenses include legal and accounting fees, salaries and general and administrative expenses. In order to develop its business plan, the Company will be required to raise capital through the sale of equity, the issuance of debt or a combination of both. The failure to raise capital may result in curtailing the development of its business plan, or potentially the failure to continue the Company’s operations.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
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Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial Officer conducted an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures, as defined in Rules 13a-15(e) and Rule 15d-15(e) under the Exchange Act. Based upon his evaluation as of June 30, 2011, he concluded that those disclosure controls and procedures are effective.
Internal Control over Financial Reporting
There have been no changes in the Company's internal control over financial reporting during the quarter ended June 30, 2011, that have materially affected, or are reasonably likely to affect, the Company's internal control over financial reporting.
PART II – OTHER INFORMATION
Item 5. Other Information
On August 4, 2011, the Board of Directors approved an amendment and restatement of the Company’s bylaws, in their entirety. The amended bylaws are attached hereto as Exhibit 3. The amended bylaws primarily reduced the number of shareholders required to approve corporate action by written consent of shareholders to a majority, as permitted pursuant to Nevada law.
Item 6. Exhibits
The following exhibits are incorporated into this Form 10-Q Quarterly Report:
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Exhibit No.
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Description
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3.1
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Amended and Restated Bylaws
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31.1
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Certifications of Chief Financial Officer and Principal Executive Officer Pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
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32.1
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Certification of Chief Financial Officer and Principal Executive Officer under Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
THE CONNECT CORPORATION
Date August22, 2011
/s/ Ken Waters
Ken Waters, Chairman, Principal Financial Officer, Principal Executive Officer
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