UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
(Mark
One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934. |
FOR
THE QUARTERLY PERIOD ENDED JUNE 30, 2014
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission
File Number: 333-105778
MOPALS.COM,
INC.
(Exact name of registrant as specified in its charter)
DELAWARE |
|
05-0554486 |
(State
or other jurisdiction of
incorporation or organization) |
|
(I.R.S.
Employer
Identification No.) |
109
Atlantic Avenue, Suite 308
Toronto,
Ontario, CANADA, M6K 1X4
(Address
of principal executive offices)(Zip Code)
(416)
362-4888
(Registrant’s telephone number, including area code)
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
☒ 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 filer. See definition 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 |
☒ |
(Do
not check if a smaller reporting company)
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes
☐ No ☒
Indicate
the number of shares outstanding of the Registrant’s common stock, as of the latest practicable date.
Class |
|
Outstanding
at August 6, 2014 |
Common
Stock, $0.0001 par value |
|
51,819,993 |
MOPALS.COM,
INC.
(a
Development Stage Company)
QUARTERLY
REPORT ON FORM 10-Q
June
30, 2014
TABLE
OF CONTENTS
Item
1. |
Financial
Statements |
1 |
Item 2. |
Management’s
Discussion and Analysis of Financial Condition and Results of Operations |
2 |
Item 3. |
Quantitative
and Qualitative Disclosures About Market Risk |
5 |
Item 4. |
Controls
and Procedures |
5 |
|
|
|
PART
II— OTHER INFORMATION |
|
|
|
|
Item 1. |
Legal Proceedings |
6 |
Item 1A. |
Risk Factors |
6 |
Item 2. |
Unregistered
Sales of Equity Securities and Use of Proceeds |
6 |
Item 3. |
Defaults
Upon Senior Securities |
6 |
Item 4. |
Mine Safety
Disclosures |
6 |
Item 5. |
Other Information |
6 |
Item 6. |
Exhibits |
7 |
|
|
|
SIGNATURES |
8 |
PART
I: FINANCIAL INFORMATION
Item
1. Financial Statements
Basis
of Presentation
The
accompanying condensed and consolidated financial statements are presented in accordance with U.S. generally accepted accounting
principles for interim financial information and the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal occurring adjustments) considered necessary in order
to make the financial statements not misleading, have been included. Operating results for the six months ended June 30, 2014
are not necessarily indicative of results that may be expected for the year ending December 31, 2014.
The
condensed consolidated interim financial statements of the Company appear elsewhere in this report beginning with the Index to
Financial Statements on page F-1 and ending on F-14.
MOPALS.COM,
INC. AND SUBSIDIARIES
(A
Development Stage Company)
(A
Delaware Corporation)
TABLE
OF CONTENTS
|
Page |
Condensed Consolidated Balance Sheet as at June 30, 2014 (unaudited) and December 31, 2013the three and six months ended June 30, 2014 (unaudited) |
F-1 |
|
|
Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2014 (unaudited) and the three and six months ended June 30, 2014 (unaudited) |
F-2 |
|
|
Condensed Consolidated Statement of Cash Flows for the six months ended June 30, 2014 (unaudited) and the six months ended June 30, 2014 (unaudited) |
F-3 |
|
|
Statement of Shareholders’ Equity |
F-4 |
|
|
Notes to the Condensed Consolidated Financial Statements (unaudited) |
F-5 to F-14 |
MOPALS.COM,
Inc.
(A
Development Stage Company)
(A
Delaware Corporation)
CONDENSED
CONSOLIDATED BALANCE SHEET
Unaudited
| |
(Unaudited) | | |
| |
| |
June 30, | | |
December 31, | |
| |
2014 | | |
2013 | |
ASSETS | |
| | |
| |
Cash | |
$ | - | | |
$ | 437,650 | |
HST/GST Receivable (note 5) | |
| 181,087 | | |
| 125,688 | |
Rent Deposit (note 5) | |
| 200,000 | | |
| - | |
Prepaid & Other Assets (note 5) | |
| 16,286 | | |
| 30,142 | |
Total Current Assets | |
| 397,373 | | |
| 593,480 | |
| |
| | | |
| | |
Equipment, net (note 6) | |
| 38,272 | | |
| 44,918 | |
Total Assets | |
$ | 435,645 | | |
$ | 638,398 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
Bank Overdraft | |
| 31,147 | | |
| - | |
Accounts Payable & Accrued Liabilities | |
| 256,247 | | |
| 181,129 | |
Share Based Accrual | |
| 14,924 | | |
| 14,924 | |
MoCoins Liability | |
| 17,481 | | |
| 148 | |
Total Current Liabilities | |
| 319,799 | | |
| 196,201 | |
| |
| | | |
| | |
Loans from Shareholder (note 7) | |
| 818,856 | | |
| 652.633 | |
Total Liabilities | |
$ | 1,138,655 | | |
$ | 848,834 | |
Commitments and Contingencies (note 8) | |
| | | |
| | |
| |
| | | |
| | |
Capital Stock; par value $0.0001, 100,000,000 shares authorized, 45,698,993 issued & outstanding as of June 30, 2014 and 45,448,993 as of December 31, 2013 (Note 9) | |
| 4,570 | | |
| 4,545 | |
Shares Subscribed (note 10) | |
| 1,484,795 | | |
| 1,530,250 | |
Share Subscriptions Receivable (note 10) | |
| (1,484,795 | ) | |
| (1,530,250 | ) |
Shares to be issued | |
| 220 | | |
| 200 | |
Additional Paid In Capital | |
| 2,068,071 | | |
| 1,585,192 | |
Deficit Accumulated During the Development Stage | |
| (2,861,092 | ) | |
| (1,854,432 | ) |
Accumulated Other Comprehensive Income | |
| 85,221 | | |
| 54,059 | |
Total Stockholders’ Deficit | |
$ | (703,010 | ) | |
$ | (210,436 | ) |
| |
| | | |
| | |
Total Liabilities and Stockholders’ Deficit | |
$ | 435,645 | | |
$ | 638,398 | |
The
accompanying notes are an integral part of these condensed consolidated financial statements.
MOPALS.COM,
Inc.
(A
Development Stage Company)
(A
Delaware Corporation)
CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS AND COMPREHENSIVE LOSS
Unaudited
| |
For the Three Months Ended | | |
For the Three Months Ended | | |
For the Six Months Ended | | |
For the Six Months Ended | | |
For the Period from Inception August 7, 2012 to | |
| |
June 30, 2014 | | |
June 30, 2013 | | |
June 30, 2014 | | |
June 30, 2013 | | |
June 30, 2014 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
REVENUES | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
EXPENSES | |
| | | |
| | | |
| | | |
| | | |
| | |
Consultants & Contractors | |
| 250,309 | | |
| 131,279 | | |
| 473,454 | | |
| 263,671 | | |
| 1,412,761 | |
General & Administrative Expenses | |
| 76,672 | | |
| 24,714 | | |
| 187,174 | | |
| 63,646 | | |
| 769,170 | |
Occupancy Costs | |
| 41,560 | | |
| 21,387 | | |
| 100,268 | | |
| 50,829 | | |
| 228,982 | |
Share Based Compensation (note 11) | |
| 118,734 | | |
| - | | |
| 237,468 | | |
| - | | |
| 426,665 | |
Depreciation | |
| 5,070 | | |
| 3,536 | | |
| 8,296 | | |
| 7,420 | | |
| 23,514 | |
Total Expenses | |
| 492,345 | | |
| 180,916 | | |
$ | 1,006,660 | | |
| 385,566 | | |
| 2,861,092 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
NET (LOSS) | |
$ | (492,345 | ) | |
$ | (180,916 | ) | |
$ | (1,006,660 | ) | |
$ | (385,566 | ) | |
$ | (2,861,092 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total Other Comprehensive Income | |
| | | |
| | | |
| | | |
| | | |
| | |
Foreign Currency Translation Adjustment | |
| 32,848 | | |
| 22,247 | | |
| 31,163 | | |
| 22,133 | | |
| 85,221 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total Comprehensive (Loss) | |
$ | (459,497 | ) | |
$ | (158,669 | ) | |
$ | (975,497 | ) | |
$ | (363,433 | ) | |
$ | (2,775,871 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Loss per common share (note 12): | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic and Diluted: | |
| | | |
| | | |
| | | |
| | | |
| | |
Net (Loss) per common share | |
$ | (0.01 | ) | |
$ | - | | |
$ | (0.02 | ) | |
$ | (0.01 | ) | |
$ | (0.05 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Weighted Average Number of Shares Outstanding – Basic and Diluted During the Period | |
| 51,739,437 | | |
| 50,676,274 | | |
| 51,739,437 | | |
| 50,676,274 | | |
| 50,850,216 | |
The
accompanying notes are an integral part of these condensed consolidated financial statements.
MOPALS.COM,
Inc.
(A
Development Stage Company)
(A
Delaware Corporation)
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited
| |
| | |
| | |
For the Period | |
| |
For the | | |
For the | | |
August 7, | |
| |
Six Months Ended | | |
Six Months Ended | | |
2012 (inception) to | |
| |
June 30,
2014 | | |
June 30,
2013 | | |
June 30,
2014 | |
Cash Flows used in Operating Activities | |
| | |
| | |
| |
Net (Loss) | |
$ | (1,006,660 | ) | |
| (385,566 | ) | |
| (2,861,092 | ) |
Adjustments to reconcile net (loss) income to net cash from operating activities: | |
| | | |
| | | |
| | |
Depreciation | |
| 8,296 | | |
| 7,420 | | |
| 23,514 | |
Stock-based compensation expense | |
| 237,468 | | |
| - | | |
| 426,665 | |
Expenses paid for with shares | |
| - | | |
| - | | |
| 150,046 | |
Adjust to par value of shares | |
| - | | |
| - | | |
| 36,900 | |
Increase (Decrease) in net assets: | |
| | | |
| | | |
| | |
HST/GST Receivable | |
| (55,399 | ) | |
| - | | |
| (181,087 | ) |
Decrease in Prepaids and Other Assets | |
| 13,856 | | |
| (29,794 | ) | |
| (16,286 | ) |
Bank Overdraft | |
| 31,147 | | |
| - | | |
| 31,147 | |
Increase in Accounts Payable & Accrued Liabilities | |
| 75,118 | | |
| 1,414 | | |
| 256,247 | |
Increase in Share Compensation Accrual | |
| - | | |
| 14,924 | | |
| 14,924 | |
Increase in MoCoins liability | |
| 17,333 | | |
| - | | |
| 17,481 | |
Net Cash Flows used in Operating Activities | |
| (678,841 | ) | |
| (391,602 | ) | |
| (2,101,541 | ) |
| |
| | | |
| | | |
| | |
Cash Flows from Financing Activities | |
| | | |
| | | |
| | |
Shares Issued | |
| 25 | | |
| 129 | | |
| 41,470 | |
Shares to be issued | |
| 20 | | |
| 1,920 | | |
| 220 | |
Additional Paid In Capital Adjustment | |
| 45,435 | | |
| 469,105 | | |
| 1,254,484 | |
Increase in Shareholders’ Loan | |
| 166,223 | | |
| 266,092 | | |
| 818,856 | |
Net Cash Flows from Financing Activities | |
| 211,703 | | |
| 737,246 | | |
| 2,115,030 | |
| |
| | | |
| | | |
| | |
Cash Flows used in Investing Activities | |
| | | |
| | | |
| | |
Purchases of Capital Equipment | |
| (14,942 | ) | |
| (2,678 | ) | |
| (75,071 | ) |
Net Cash Flows used in Investing Activities | |
| (14,942 | ) | |
| (2,678 | ) | |
| (75,071 | ) |
| |
| | | |
| | | |
| | |
Net Cash Flows | |
$ | (482,080 | ) | |
| 342,966 | | |
| (61,582 | ) |
| |
| | | |
| | | |
| | |
Effects of Exchange Rate on Cash | |
| 44,430 | | |
| 23,967 | | |
| 61,582 | |
| |
| | | |
| | | |
| | |
Cash and Cash Equivalents – Beginning of Period | |
| 437,650 | | |
| 175,779 | | |
| - | |
Cash and Cash Equivalents – End of Period | |
$ | - | | |
| 542,712 | | |
| - | |
| |
| | | |
| | | |
| | |
Supplemental Cash Flow Information | |
| | | |
| | | |
| | |
Interest Paid | |
| - | | |
| - | | |
| - | |
Income Tax Paid | |
| - | | |
| - | | |
| - | |
NonCash Activity - Shares Issued for Rent Deposit | |
| 200,000 | | |
| - | | |
| 200,000 | |
The
accompanying notes are an integral part of these financial statements.
MOPALS.COM,
Inc.
(A Development Stage Company)
(A
Delaware Corporation)
STATEMENT
OF SHAREHOLDERS’ EQUITY
Unaudited
| |
Common
Stock | | |
Shares
to | | |
Shares | | |
Share
Subscriptions | | |
Additional
Paid | | |
Accumulated
Deficit during
| | |
Accumulated
Other
Comprehensive
| | |
Total
Shareholders' | |
| |
Shares | | |
Amount | | |
be
Issued | | |
Subscribed | | |
Receivable | | |
In Capital | | |
Development | | |
Income | | |
Deficit | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance,
January 1, 2013 | |
| 41,000,000 | | |
| 41,000 | | |
| - | | |
| 2,250,000 | | |
| (2,250,000 | ) | |
| - | | |
| (163,237 | ) | |
| 1,012 | | |
| (121,225 | ) |
Adjustment
to par value | |
| | | |
| (36,900 | ) | |
| - | | |
| | | |
| | | |
| 36,900 | | |
| | | |
| | | |
| - | |
Adjustment
for opening balance of Mopals | |
| | | |
| | | |
| - | | |
| | | |
| | | |
| (8,946 | ) | |
| | | |
| | | |
| (8,946 | ) |
Issuance
of shares to Mopals Inc. (formerly MBKR) shareholders | |
| 1,294,993 | | |
| 129 | | |
| - | | |
| - | | |
| - | | |
| (129 | ) | |
| - | | |
| - | | |
| - | |
Shares
Subscribed (note 7) | |
| 1,920,000 | | |
| 192 | | |
| - | | |
| (480,000 | ) | |
| - | | |
| 479,808 | | |
| - | | |
| - | | |
| - | |
Share
Subscriptions Receivable (note 7) | |
| - | | |
| - | | |
| - | | |
| - | | |
| 480,000 | | |
| - | | |
| - | | |
| - | | |
| 480,000 | |
Issuance
of common stock | |
| 275,000 | | |
| 28 | | |
| - | | |
| - | | |
| - | | |
| 150,046 | | |
| - | | |
| - | | |
| 150,074 | |
Shares
Subscribed (note 7) | |
| 959,000 | | |
| 96 | | |
| - | | |
| (239,750 | ) | |
| - | | |
| 239,654 | | |
| - | | |
| - | | |
| - | |
Share
Subscriptions Receivable (note 7) | |
| - | | |
| - | | |
| - | | |
| - | | |
| 239,750 | | |
| - | | |
| - | | |
| - | | |
| 239,750 | |
Shares
to be issued (note 7) | |
| - | | |
| - | | |
| 200 | | |
| - | | |
| - | | |
| 498,662 | | |
| - | | |
| - | | |
| 498,862 | |
Issuance
of dirctor common stock options | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 189,197 | | |
| - | | |
| - | | |
| 189,197 | |
Foreign
Currency Translation Adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 53,047 | | |
| 53,047 | |
Net
Loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,691,195 | ) | |
| - | | |
| (1,691,195 | ) |
Balance
December 31, 2013 | |
| 45,448,993 | | |
| 4,545 | | |
| 200 | | |
| 1,530,250 | | |
| (1,530,250 | ) | |
| 1,585,192 | | |
| (1,854,432 | ) | |
| 54,059 | | |
| (210,436 | ) |
| |
Common
Stock | | |
Shares
to | | |
Shares | | |
Share
Subscriptions | | |
Additional
Paid | | |
Accumulated Deficit during
| | |
Accumulated
Other
Comprehensive
| | |
Total
Shareholders' | |
| |
Shares | | |
Amount | | |
be
Issued | | |
Subscribed | | |
Receivable | | |
In Capital | | |
Development | | |
Income | | |
Deficit | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance, January
1, 2013 | |
| 45,448,993 | | |
| 4,545 | | |
| 200 | | |
| 1,530,250 | | |
| (1,530,250 | ) | |
| 1,585,192 | | |
| (1,854,432 | ) | |
| 54,059 | | |
| (210,436 | ) |
Issuance of shares to landlord | |
| 250,000 | | |
| 25 | | |
| - | | |
| - | | |
| - | | |
| 199,975 | | |
| - | | |
| - | | |
| 200,000 | |
Issuance
of dirctor common stock options | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 118,734 | | |
| - | | |
| - | | |
| 118,734 | |
Foreign
Currency Translation Adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1,686 | ) | |
| (1,686 | ) |
Net
Loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (514,315 | ) | |
| - | | |
| (514,315 | ) |
Balance
March 31, 2014 | |
| 45,698,993 | | |
| 4,570 | | |
| 200 | | |
| 1,530,250 | | |
| (1,530,250 | ) | |
| 1,903,902 | | |
| (2,368,747 | ) | |
| 52,373 | | |
| (407,702 | ) |
| |
Common
Stock | | |
Shares
to | | |
Shares | | |
Share
Subscriptions | | |
Additional
Paid | | |
Accumulated
Deficit during
| | |
Accumulated
Other
Comprehensive
| | |
Total
Shareholders' | |
| |
Shares | | |
Amount | | |
be
Issued | | |
Subscribed | | |
Receivable | | |
In Capital | | |
Development | | |
Income | | |
Deficit | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance, March 31, 2014 | |
| 45,698,993 | | |
| 4,570 | | |
| 200 | | |
| 1,530,250 | | |
| (1,530,250 | ) | |
| 1,903,902 | | |
| (2,368,747 | ) | |
| 52,373 | | |
| (407,702 | ) |
Share subscriptions funds received, no
shares issued | |
| - | | |
| - | | |
| 20 | | |
| (45,455 | ) | |
| 45,455 | | |
| 45,435 | | |
| - | | |
| - | | |
| 45,455 | |
Issuance of dirctor common stock options | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 118,734 | | |
| - | | |
| - | | |
| 118,734 | |
Foreign Currency Translation Adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 32,848 | | |
| 32,003848 | |
Net Loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (492,345 | ) | |
| - | | |
| (492,345 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance
June 31, 2014 | |
| 45,698,993 | | |
| 4,570 | | |
| 220 | | |
| 1,484,795 | | |
| (1,484,795 | ) | |
| 2,068,071 | | |
| (2,861,092 | ) | |
| 85,221 | | |
| (703,010 | ) |
The
accompanying notes are an integral part of these financial statements.
MOPALS.COM, Inc.
(A
Development Stage Company)
(A
Delaware Corporation)
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2014
1. |
NATURE
OF OPERATIONS AND ORGANIZATION |
Nature
of Operations
Mopals.com,
Inc. and its subsidiaries were incorporated August 7, 2012 and are organized under the laws of the State of Delaware.
Mopals
operations are presently conducted through the Company’s wholly owned subsidiary, Mopals Inc. (an Ontario, Canada company).
The planned operations of the Company consist of becoming a social media rewards platform in Canada and the United States.
On
March 26, 2013, (the “Closing Date”), MortgageBrokers.com Holdings, Inc. (the “Company”, “we”,
“our”) entered into a share exchange agreement (the “Exchange Agreement”) by and among (i) the Company;
(ii) MoPals, Inc., a Nevada corporation (“MoPals (Nevada)”); (iii) Alex Haditaghi (“Company Principal Shareholder”);
and (iv) the shareholders of MoPals (Nevada) (“MoPals Nevada Shareholders”). Pursuant to the terms of the Exchange
Agreement, the Company acquired 100% of the issued and outstanding equity securities of MoPals (Nevada) in exchange for the issuance
of 50,000,000 shares of the Company’s common stock, par value $0.0001 per share (each a “Share” and collectively,
the “Common Stock”) (the “Share Exchange”). Following the Share Exchange, the Company changed its name
to MoPals.com, Inc.
Immediately
prior to and concurrent with execution of the Share Exchange, the Company entered into a certain Agreement of Sale dated March
26, 2013 (the “Agreement of Sale”) pursuant to which the Company transferred to MortgageBrokers.com Canada Inc., a
Canada Corporation, all of the Company’s equity interest in the Company’s mortgage brokerage business and MortgageBrokers.com
Canada Inc. agreed to assume any and all liabilities associated with the Company’s mortgage brokers business, including,
but not limited to the commitments, liabilities and contingent liabilities, effective immediately prior to closing of the Share
Exchange. Pursuant to the Agreement of Sale, the Company’s Principal Shareholder forfeited all rights to any monies owed
to the Company Principal Shareholder by the Company associated with a shareholder loan of approximately $25,000 (the “Spin
Out and Cancellation.”)
The
Company has not earned any revenues from limited principal operations and accordingly, the Company's activities have been accounted
for as those of a "Development Stage Enterprise" as set forth in ASC 915 Accounting and Reporting by Development
Stage Enterprises. The disclosures required by ASC 915 include that the Company's financial statements be identified as those
of a development stage company, and that the statements of operations, stockholders' deficit and cash flows disclose activity
since the date of the Company's inception.
These
financial statements have been prepared assuming the Company will continue on a going-concern basis. The Company has incurred
losses since inception and the ability of the Company to continue as a going-concern depends upon its ability to develop profitable
operations and to continue to raise adequate financing. Accumulated Losses from inception to June 30, 2014 total $2,861,092. In
order for the Company to meet its liabilities as they come due and to continue its operations, the Company is solely dependent
upon its ability to generate such financing.
MOPALS.COM,
Inc.
(A
Development Stage Company)
(A
Delaware Corporation)
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2014
4. |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES |
The
accounting policies of the Company are in accordance with accounting principles generally accepted in the United States of America.
Presented below are those policies considered particularly significant:
Basis
of Consolidation and Presentation
The
accompanying consolidated financial statements include the accounts of the Company, and its wholly-owned subsidiary. All inter-company
transactions and balances have been eliminated upon consolidation.
Method
of Accounting
The
Company maintains its books and prepares its financial statements on the accrual basis of accounting.
Cash
and Cash Equivalents
The
Company maintains cash and cash equivalents at financial institutions which may exceed federally insured amounts.
Comprehensive
Income or Loss
The
Company adopted ASC 220-10, which establishes standards for reporting and presentation of comprehensive income and its components
in a full set of financial statements. Comprehensive income is presented in the statements of stockholders’ deficit, and
consists of net loss and unrealized gains (loss) on available for sale marketable securities; foreign currency translation adjustments
and changes in market value of future contracts that qualify as a hedge; and negative equity adjustments recognized in accordance
with ASC 715-10. ASU 2011-05 requires the presentation of other comprehensive income to be in a single, continuous statement or
in two separate, but consecutive statements. The Company presents in a single, continuous statement.
Earnings
(Loss) Per Share
The
Company accounts for earnings per share pursuant to ASC 260-10-05, Earnings per Share, which requires disclosure on the
financial statements of "basic" and "diluted" earnings (loss) per share. Basic earnings (loss) per share are
computed by dividing net income (loss) by the weighted average number of common stock outstanding for the period. Diluted earnings
(loss) per share is computed by dividing net income (loss) by the weighted average number of common stock outstanding plus common
stock equivalents (if dilutive) related to stock options and warrants for each period. There were no dilutive financial instruments
during the period ending June 30, 2014.
Financial
Instruments
In
accordance with ASC 825-10-50, “Disclosures About Fair Value of Financial Instruments" ("SFAS No. 107"),
the estimated fair value of financial instruments has been determined by the Company using available market information and valuation
methodologies. Considerable judgment is required in estimating fair value. Accordingly, the estimates may not be indicative of
the amounts the Company could realize in a current market exchange. As of June 30, 2014, the carrying values of accounts payable
and accrued liabilities approximate the fair value attainable because of the short-term maturity of these instruments.
MOPALS.COM,
Inc.
(A
Development Stage Company)
(A
Delaware Corporation)
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2014
4. |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
Financial
Instruments (continued)
In
accordance with ASC 820-10, “Defining Fair Value Measurement”, the Company adopted the standard which defines fair
value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about
fair value measurements.
Equipment
Equipment
is recorded at cost. Depreciation is calculated using the following annual rates and methods based on the estimated useful lives
of the assets:
Computer
Hardware |
30%
declining |
Computer
Software |
30% declining |
Furniture
and Equipment |
20% declining |
Payable
to Loyalty Program Partners
Payable
to loyalty program partners (MoCoins liability) includes amounts owing to these partners for loyalty currency purchased by the
Corporation as a principal or as an agent collected through ecommerce services for retailing, wholesaling and other loyalty currency
services transactions with end users.
Stock-based
Compensation
The
Company maintains a stock-based compensation plan under which incentive stock options to buy common stock may be granted to directors,
officers and employees. Pursuant to ASC 718, the Company recognizes expense for its stock-based compensation based on the fair
value of the awards that are granted. The fair values of stock options are estimated at the date of the grant using the Black-Scholes
option pricing model, that require the input of highly subjective assumptions. Measured compensation cost is recognized ratably
over the vesting period of the related stock-based compensation award. The amount recognized as expense is adjusted to reflect
the number of stock options expected to vest. When exercised, stock options are settled through the issuance of common stock and
are therefore treated as equity awards. The expected volatility of our common stock is estimated based on the historical performance
of the stock.
Income
Taxes
The
Company accounts for income taxes pursuant to ASC 740-10, “Accounting for Income Taxes.” Deferred tax assets
and liabilities are recorded for differences between the financial statements and tax basis of the assets and liabilities as well
as the loss carry-forward that will result in taxable or deductible amounts in the future based on enacted tax laws and rates.
Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income
tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change
in deferred tax assets and liabilities during the period.
MOPALS.COM,
Inc.
(A
Development Stage Company)
(A
Delaware Corporation)
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2014
4. |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles generally accepted in the United States requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. These estimates are reviewed periodically, and, as adjustments
become necessary, they are reported in earnings in the period in which they become known. The accounting estimate that requires
management’s most significant judgment is the measurement of accrued liabilities.
Foreign
Currency Translation
Mopals
functional currency is in Canadian Dollars and it maintains its books and records in Canadian Dollars, the Company’s financial
statements are converted to U.S. Dollars. The translation method used is the current rate method. Under the current rate method
all assets and liabilities are translated at the current rate, stockholders’ equity accounts are translated at historical
rates and revenue and expenses are translated at average rates for the reporting period. Due to the fact that items in the financial
statements are being translated at different rates according to their nature, a translation adjustment is created. This translation
adjustment has been included in Accumulated Other Comprehensive Income (Loss).
The
exchange rates used to translate amounts in CAD into USD for the purposes of preparing the financial statements were as follows:
| |
June 30, 2014 | | |
December 31, 2013 | |
Period End CAD-USD exchange rate | |
$ | 0.9372 | | |
$ | 0.9402 | |
Average period CAD-USD exchange rate | |
$ | 0.9116 | | |
$ | 0.9707 | |
Recent
Accounting Pronouncements
The
Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s
results of operations, financial position or cash flow.
MOPALS.COM,
Inc.
(A
Development Stage Company)
(A
Delaware Corporation)
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2014
4. |
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (continued) |
Interim
Financial Statements
The
accompanying condensed consolidated interim unaudited financial information has been prepared pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted
pursuant to such rules and regulations, although management believes that the disclosures are adequate to make the information
presented not misleading. The condensed consolidated interim financial statements should be read in conjunction with the Company's
annual consolidated financial statements, notes and accounting policies included in the Company's annual report on form 10K for
the year ended December 31, 2013 as filed with the SEC. In the opinion of management, all adjustments, (consisting only of normal
recurring adjustments and changes in estimates, where appropriate) necessary to present fairly the financial position of the Company
as of June 30, 2014 and the related operating results and cash flows for the interim periods presented, have been made. The results
of operations of such interim periods are not necessarily indicative of the results of the full year.
5. |
PREPAID
AND OTHER ASSETS |
| |
June 30, 2014 | | |
December 31, 2013 | |
Harmonized Sales Tax | |
| 181,087 | | |
| 125,688 | |
Rent Deposit | |
| 200,000 | | |
| 10,548 | |
Prepaid & Other Assets | |
| 16,287 | | |
| 19,594 | |
Total | |
$ | 397,374 | | |
$ | 155,830 | |
The
Harmonized Sales Tax (“HST”) is a federal-provincial harmonized sales tax that applies to the supply of most property
and services in Canada. Generally, HST registrants must charge and account for the HST on taxable supplies of property and services
made in Canada. The HST rate in Ontario is 13%. Registrants collect the HST on most of their sales and pay HST on most purchases
they make to operate their businesses. They can claim an input tax credit, to recover the HST paid or payable on the purchases
they use in their commercial activities. The Company generally plans to file HST tax returns quarterly.
MOPALS.COM,
Inc.
(A
Development Stage Company)
(A
Delaware Corporation)
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2014
The
net book value of property, plant & equipment as of June 30, 2014 was as follows:
| |
Cost | | |
Accumulated Depreciation | | |
Net Book Value | |
Computer hardware | |
| 22,007 | | |
| 7,245 | | |
| 14,762 | |
Computer Software | |
| 30,276 | | |
| 13,377 | | |
| 16,899 | |
Furniture & Equipment | |
| 9,503 | | |
| 2,892 | | |
| 6,611 | |
Total | |
$ | 61,786 | | |
$ | 23,514 | | |
$ | 38,272 | |
Depreciation
expense since August 7, 2013 (inception) amounted to $23,514 including depreciation expenses for computer hardware, computer software
and furniture and equipment. For the six months ending June 30, 2014, depreciation expense was $8,296. For the previous year ending
December 31, 2013, depreciation expense was $7,420.
7.
|
ADVANCES
FROM SHAREHOLDER |
As
of June 30, 2014, the controlling shareholder and Chief Executive Officer of the Company had advanced $818,856 to fund the working
capital of the Company. The advances are unsecured, non-interest bearing and due on demand. In comparison, as of December 31,
2013, the controlling shareholder and Chief Executive Officer of the Company had advanced $652,633 to fund the working capital
of the Company.
8.
|
COMMITMENTS
& CONTINGENCIES |
As
of June 30, 2014, the Company had agreements to continue leasing office space. The schedule below outlines the expected remaining
lease payments over the life of the lease (expires April 30, 2018):
2014 | | |
$ | 78,465 | |
2015 | | |
$ | 160,632 | |
2016 | | |
$ | 169,890 | |
2017 | | |
$ | 181,000 | |
2018 | | |
$ | 61,568 | |
In
the normal course of business, the Company becomes involved in various legal actions seeking compensatory and occasionally punitive
damages, including actions brought on behalf of various purported classes of claimants and claims relating to employee and third-parties.
MOPALS.COM,
Inc.
(A
Development Stage Company)
(A
Delaware Corporation)
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2014
a) Authorized
100,000,000
Common Shares with a par value of $0.0001.
b) Issued
41,000,000
Shares were issued at par value on August 7, 2012 (inception). 1,920,000 common shares were issued against a share subscription
at a price of 25 cents per share on July 2, 2013. An additional 959,000 common shares were issued against the same share subscription
at 25 cents per share. The Company issued 275,000 shares in September 2013 to an Ontario numbered corporation for services to
be rendered. On February 10, 2014, 250,000 shares were issued to the landlord as a guarantee for the lease of the premises.
c) Stock Options
In
July, 2013, options were issued to three directors who signed Directors Agreements allowing them to purchase 300,000 shares each
at a strike price of $0.25 per share. These were signed on July 1, July 3, and July 6 respectively. On December 7, 2013, an additional
director was hired with the same option plan. As of June 30, 2014, none of these options had been exercised. These option plans
also contain options that will occur in the second and third years of employment with Mopals, the details of the total options
issued are outlined below:
Year | |
Options | |
Strike Price |
1 | |
1,200,000 | |
$0.25 |
2* | |
1,200,000 | |
$0.35 |
3* | |
1,200,000 | |
$0.40 |
*:
not issued as of June 30, 2014
d)
Shares to be issued
On
December 3, 2013, investors delivered a total of $498,862 to purchase 2,000,000 shares of the company issued at $0.25 per share.
As of June 30, 2014, these shares had not been issued.
On
December 21, 2012, the Company agreed to issue 9,000,000 shares of the Company to private investors for subscriptions receivable
of $2,250,000. On June 30, 2014, the balance of the subscription receivable was $1,484,795.
MOPALS.COM,
Inc.
(A
Development Stage Company)
(A
Delaware Corporation)
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2014
11. |
STOCK-BASED COMPENSATION |
The
Company’s Stock Option Plan is currently being established in order to enable the Company to attract and retain the services
of highly qualified and experienced directors, officers, employees and consultants, and to give such persons an interest in the
success of the Company and its subsidiaries. The options and awards will be granted at the discretion of the Board of Directors.
The fair value of each option granted is estimated at the time of grant using the Black-Scholes option pricing model using the
following assumptions:
July
1, 2013 Option
Fiscal Year ended December 31, 2013 | |
2013 | |
| |
| |
Exercise Price | |
$ | 0.25 | |
Risk-free interest rate | |
| 3.00 | % |
Expected term (years) | |
| 3 | |
Expected volatility | |
| 110.51 | % |
Expected dividend yield | |
| 0 | % |
July
3, 2013 Option
Fiscal Year ended December 31, 2013 | |
2013 | |
| |
| |
Exercise Price | |
$ | 0.25 | |
Risk-free interest rate | |
| 3.00 | % |
Expected term (years) | |
| 3 | |
Expected volatility | |
| 109.65 | % |
Expected dividend yield | |
| 0 | % |
July
6, 2013 Option
Fiscal Year ended December 31, 2013 | |
2013 | |
| |
| |
Exercise Price | |
$ | 0.25 | |
Risk-free interest rate | |
| 3.00 | % |
Expected term (years) | |
| 3 | |
Expected volatility | |
| 109.24 | % |
Expected dividend yield | |
| 0 | % |
MOPALS.COM,
Inc.
(A
Development Stage Company)
(A
Delaware Corporation)
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE
30, 2014
11. |
STOCK-BASED COMPENSATION (continued) |
December
1, 2013 Option
Fiscal Year ended December 31, 2013 | |
2013 | |
| |
| |
Exercise Price | |
$ | 0.25 | |
Risk-free interest rate | |
| 3.00 | % |
Expected term (years) | |
| 3 | |
Expected volatility | |
| 100.69 | % |
Expected dividend yield | |
| 0 | % |
All
the grants vest immediately and expire on the third anniversary of the grant date. The following table summarizes the stock option
activities of the Company:
| | |
Number of Options | |
Outstanding as of December 31, 2013 | | |
1,200,000 | |
| Granted | | |
| - | |
| Exercised | | |
| - | |
| Outstanding as of June 30, 2014 | | |
| 1,200,000 | |
As
of June 30, 2014, the Company had granted a total of 1,200,000 options to purchase common stock to directors, all of which are
currently outstanding and of which, 1,200,000 are vested and exercisable.
The
Company recorded $237,468 in employment expenses for share-based compensation expense for the six months ended June 30, 2014 (2013
- $189,197) with the corresponding credits to Additional Paid-In Capital.
The
Company calculates basic earnings per common share using net income divided by the weighted-average number of common shares outstanding.
The Company calculates diluted earnings per common share in the same manner as basic, except we use the weighted-average number
of diluted common shares outstanding in the denominator, when the stock options and warrants are not anti-dilutive.
| |
Six Months Ended
June 30, 2014 | | |
Six Months Ended
June 30, 2013 | |
Weighted average number of common shares outstanding | |
| 51,739,437 | | |
| 50,676,274 | |
Weighted-average number of diluted common shares outstanding | |
| 51,739,437 | | |
| 50,676,274 | |
MOPALS.COM,
Inc.
(A
Development Stage Company)
(A
Delaware Corporation)
NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2014
The
Company accounts for income taxes in accordance with ASC 740-20, (formerly SFAS No. 109). ASC 740-20 prescribes the use of the
liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial
reporting and tax bases of assets and liabilities and are measured using the enacted tax rates. The effects of future changes
in tax laws or rates are not anticipated.
Under
ASC 740-20 income taxes are recognized for the following: a) amount of tax payable for the current year, and b) deferred tax liabilities
and assets for future tax consequences of events that have been recognized differently in the financial statements than for tax
purposes.
As
of June 30, 2014, the Company did not have any amounts recorded pertaining to uncertain tax positions. The Company files federal
and provincial income tax returns in Canada and federal, state and local income tax returns in the U.S., as applicable. The Company
may be subject to a reassessment of federal and provincial income taxes by Canadian tax authorities for a period of three to five
years from the date of the original notice of assessment in respect of any particular taxation year. In certain circumstances,
the U.S. federal statute of limitations can reach beyond the standard three year period. U.S. state statutes of limitations for
income tax assessment vary from state to state.
A
claim against MortgageBrokers.com Holdings, Inc., the predecessor of Mopals.com, Inc., was settled in January 2014 for an all-inclusive
sum of $48,000. This sum is guaranteed by Alex Haditaghi and MortgageBrokers.com Canada Inc. As of April 15, 2014, $12,000 has
been paid and the settlement agreement has been complied with.
Subsequent
to June 30, 2014, $97,865 was deposited into the company’s accounts relating to shareholder loans, and $50,866 was deposited
into the company’s accounts relating to share subscriptions.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The
following is management’s discussion and analysis of the consolidated financial condition and results of operations of Mopals.com,
Inc. (“Mopals”, the “Company”, “we”, and “our”) for the six month period ended
June 30, 2014. The following information should be read in conjunction with the consolidated interim financial statements for
the period ended June 30, 2014 and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q (this “Report”).
Overview
Mopals.com,
Inc. was incorporated under the laws of Delaware on February 6, 2003 as MagnaData, Inc. In February of 2005, articles of amendment
were filed with the State of Delaware changing the name of our company to MortgageBrokers.com Holdings, Inc. and thereafter, operated
as a mortgage brokerage in Canada. On March 26, 2013, articles of amendments were filed with the State of Delaware changing the
name of our company to Mopals.com, Inc. pursuant to execution of an asset spin out and shareholder loan cancellation agreement
and subsequent execution of a share exchange agreement. Pursuant to the terms of the share exchange agreement, the Company acquired
100% of the issued and outstanding equity securities of Mopals Inc., a Nevada private corporation, in exchange for the issuance
of 50,000,000 shares of the Company’s common stock.
Mopals
carries out all business through its wholly owned subsidiary, Mopals Canada Inc. Mopals Canada Inc. (formerly IQIC.com Inc.) was
incorporated federally in Canada on August 7, 2012.
Mopals
is a development stage internet and mobile based social media brand-loyalty company. Mopals is currently beta testing the first
version of our web and mobile software application for both the iOS and Android mobile device operating systems. It is our intent
that the Mopals technology platform under development will allow consumers to earn incentives for their spending and referral
behavior with retail businesses and allow retail businesses to build their customer base and enhance customer experiences through
promotional programs. Our consumer incentives are centered around MoCoins (our points based incentive and currency) for a number
of online and ‘in-store’ behaviors within a consumer’s social network including rewards for promotional participation;
‘liking’, sharing or reviewing an experience at a business; referring business promotions; creating content driving
polls; or referring friends to join the Mopals community. Mopals aims to be a leader in how brands inspire customer loyalty, driving
online, brand enhancing behavior and sales. It is our aim that our technology platform will enable businesses to connect with
their customers, giving them a cost effective means to encourage and reward brand enhancing behavior. It is our intent that our
proprietary platform ‘IQ Engine’ under development will also allow businesses to receive data associated with their
consumer’s behavior from which they might target offers and marketing strategies.
Following
our product launch, it is Mopal’s plan to earn revenue from business subscriptions to receive ongoing consumer data and
as well as from receiving a percentage of promotion-based sales revenue from participating businesses.
In
additional to the financial condition and results of operations of the Company, it is management’s belief that growth of
our Company will also, in part, be demonstrated through the metrics of MoCoins points sold, the total number of consumers signed
up and making use of the Mopals platform and the number of retail businesses who sign on to and offer promotions through the Mopals
community.
As
of June 30, 2014, our company had eleven (11) full-time employees and five (5) independent contractors.
The
Company’s corporate offices are located at 109 Atlantic Avenue, Suite 308, Toronto, Ontario, CANADA, M6K 1X4. Our current
contact information for our Ontario office is telephone number: (416) 362-4888. Our internet website can be found under the domain
name: www.mopals.com.
Results
of Operations
Three
months ended June 30, 2014
Mopals
had no reported revenue in our first or second quarter of 2014.
The
Company’s reported operating expenses during the three month period ending June 30, 2014 were $492,345. The primary components
that comprise our operating expenses were salaries and consultant/contractor fees, general and administrative expenses and occupancy
costs which are explained in detail as follows:
● |
75.0%
of the operating expenses in the reporting period were associated with salaries, contractor expenses and Consulting fees. |
|
|
● |
15.6%
of the operating expenses in the reporting period were associated with general and administrative expenses. |
|
|
● |
8.4%
of our operating expenses in the reporting period were associated with occupancy costs associated with an office lease. |
Six
months ended June 30, 2014
Mopals
had no reported revenue in our first or second quarter of 2014.
The
Company’s reported operating expenses during the six month period ending June 30, 2014 were $1,006,660. The primary components
that comprise our operating expenses were salaries and consultant/contractor fees, general and administrative expenses and occupancy
costs which are explained in detail as follows:
● |
70.6%
of the operating expenses in the reporting period were associated with salaries, contractor expenses and Consulting fees. |
|
|
● |
18.6%
of the operating expenses in the reporting period were associated with general and administrative expenses. |
|
|
● |
10.0%
of our operating expenses in the reporting period were associated with occupancy costs associated with an office lease. |
Liquidity
and Capital Resources
At
June 30, 2014, we had $nil in cash, $181,087 in harmonized sales tax receivable, $200,000 in rent deposit, $16,286 in prepaid
expenses and other assets, and $38,272 in equipment, computer software, computer hardware and furniture for a total of $435,645
in assets. Comparatively as at December 31, 2013, we had $437,650 in cash, $125,688 in harmonized sales tax receivable and $30,142
in prepaid expenses and other assets, and $44,918 in equipment and furniture for a total of $638,398 in assets.
At
June 30, 2014, we had $31,147 in a bank overdraft, $256,247 in accounts payable and accrued liabilities, $14,924 in accruals for
stock-based compensation associated with former discontinued operations, $17,481 in MoCoins payable and $818,856 in loans payable
to the Company’s principal shareholder for a total of $1,138,655 in liabilities. Comparatively as at December 31, 2013,
we had $181,129 in accounts payable and accrued liabilities, $14,924 in accruals for stock-based compensation associated with
former discontinued operations, $148 in MoCoins payable, and $652,633 in loans payable to the Company’s principal shareholder
for a total of $848,834 in liabilities.
Management
makes the following comments regarding the most significant factors affecting the Company’s liquidity and capital resources
and their measured trends over the reporting period:
● | The
Company’s cash position decreased by over 100% over the first six months of 2013
associated with the following: |
● | the
Company lost $678,841 in cash from operating activities over the first six months of
2014. As a development stage company, Mopals has no revenue yet while it is building
its products and services, hires software development, marketing and sales staff and
establishes market partners to launch our business; and, |
| |
● | the
Company gained $211,703 in cash from financing activities over the first six months of
2014 as we received funds from our principal shareholder in the amount of $166,223. |
The
Company reported a net cash flow loss from operating activities for the first six months of 2014 of $678,841 with a net increase
in cash flow from financing activities of $211,703 and a net negative cash flow from the purchase of capital equipment of $14,942
during the same period for an overall net negative cash flow of $482,080 out of the Company during the period.
The
Company needs to raise additional capital to fund our development stage Company activities and to position the Company for a market
launch of its planned products and services to generate revenue before the existing capital resources are fully utilized.
In
the event that the Company runs out of available working capital resources or experiences an unforeseen negative impact to cash
flow, our Company will need to rely upon the issuance of common stock and additional capital contributions from shareholders and/or
loans from shareholders and third-party lenders to meet its working capital needs. There is no certainty that there will be a
market for the Company’s capital stock and there is no certainty that lenders will find the Company’s financial health
suitable to provide debt financing.
Off-Balance
Sheet Arrangements
None.
Critical
Accounting Policies
The
financial statements and related public financial information are based on the application of accounting principles generally
accepted in the United States (“GAAP”). GAAP requires the use of estimates, assumptions, judgments and subjective
interpretations of accounting principles that have an impact on the assets, liabilities, revenue, and expense amounts reported.
These estimates can also affect supplemental information contained in our external disclosures including information regarding
contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP
and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different
assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.
Going
Concern
The
Company’s consolidated financial statements are presented on a going concern basis, which contemplates the realization of
assets and satisfaction of liabilities in the normal course of business.
For
the six months reporting period ended June 30, 2014, the Company reported a net loss from operations of $1,006,660 with a net
decrease in cash from operating, investing and financing activities of $482,106 during the same period. Since inception to June
30, 2014, the Company reported a net loss from operations of $2,861,092. Certain conditions noted below raise doubt about the
Company’s ability to continue as a going concern.
As
a development stage company, the Company’s ability to continue as a going concern is contingent upon its ability to secure
additional debt or equity financing. Management’s plan is to secure additional working capital funds through future debt
or equity financings. There is no certainty that there will be a market for the Company’s capital stock.
The
consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability
and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the
Company to continue as a going concern.
Item
3. Quantitative and Qualitative Disclosures About Market Risk
Smaller
reporting companies are not required to provide the information required by this item.
Item
4. Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
As
of the end of the period covered by this report, the Company’s principal executive officer and principal financial officer
evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d -15(e)
under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)). Based on their evaluation of the Company’s
disclosure controls and procedures, the Company’s principal executive officer and principal financial officer, with the
participation of the Company’s management, have concluded that the Company’s disclosure controls and procedures were
not effective as of June 30, 2014, to ensure that information required to be disclosed by the Company in the reports that we file
or submit under the Exchange Act is (a) recorded, processed, summarized and reported within the time periods specified in the
SEC’s rules and forms and (b) accumulated and communicated to management, including the Company’s principal executive
officer and principal financial officer, as appropriate to allow for timely decisions regarding required disclosure.
Specifically,
our management identified certain matters involving internal control and our operations that it considered to be material weaknesses.
As defined in the Exchange Act, 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 the registrant’s annual
or interim financial statements will not be prevented or detected on a timely basis. The material weakness identified by our management
as of June 30, 2014, is described below:
| i. | We
did not maintain sufficient personnel with an appropriate level of technical accounting
knowledge, experience and training in the application of GAAP commensurate with our complexity
and our financial accounting and reporting requirements. This control deficiency is pervasive
in nature. Further, there is a reasonable possibility that material misstatements of
the financial statements including disclosures will not be prevented or detected on a
timely basis as a result. |
As
a result of the material weakness identified above, our internal control over financial reporting was not effective as of June
30, 2014.
Changes
in Internal Control Over Financial Reporting
There
have been no changes in the Company’s internal controls over financial reporting during the six month period ending June
30, 2014.
PART
II: OTHER INFORMATION
Item
1. Legal Proceedings
A claim against MortgageBrokers.com
Holdings, Inc., the predecessor of Mopals.com, Inc., was settled in January 2014 for an all-inclusive sum of $48,000. This sum
is guaranteed by Alex Haditaghi and MortgageBrokers.com Canada Inc. As of April 15, 2014, $12,000 has been paid and the settlement
agreement has been complied with.
From time to time, the Company may become
involved in litigation relating to claims arising out of its operations in the normal course of business. Other than as disclosed
above, we are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority
is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be
likely to have a material adverse effect on the Company.
Item 1A. Risk Factors
Smaller reporting companies are not
required to provide the information required by this item.
Item
2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item
3. Defaults Upon Senior Securities
None.
Item
4. Mine Safety Disclosures
Not applicable.
Item
5. Other Information
None.
Item
6. Exhibits
Exhibit
No. |
|
Description |
|
|
|
31.1 |
|
Certification
of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 302 of Sarbanes Oxley Act of 2002 |
|
|
|
32.1+ |
|
Certification
of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of Sarbanes Oxley Act of 2002 |
|
|
|
101.INS |
|
XBRL Instance
Document |
|
|
|
101.SCH
|
|
XBRL Taxonomy
Schema |
|
|
|
101.CAL |
|
XBRL Taxonomy
Calculation Linkbase |
|
|
|
101.DEF |
|
XBRL Taxonomy
Definition Linkbase |
|
|
|
101.LAB |
|
XBRL Taxonomy
Label Linkbase |
|
|
|
101.PRE |
|
XBRL Taxonomy
Presentation Linkbase |
+
In accordance with SEC Release 33-8238, Exhibits 32.1 is furnished and not filed.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, there unto duly authorized.
By: |
/s/
Alex Haditaghi |
|
|
Alex Haditaghi |
|
|
Chief Executive
Officer, |
|
|
Chief Financial
Officer, |
|
|
President,
Secretary and Director
(Duly
Authorized Officer, Principal Executive Officer and Principal Financial Officer) |
Dated:
August 19, 2014
8
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO EXCHANGE ACT RULE 13a-14(a)/15d-14(a)
AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Alex Haditaghi, certify that:
1. |
I have reviewed this Quarterly Report on Form 10-Q of Mopals.com, Inc.; |
|
|
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
|
|
4. |
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have: |
|
|
(a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
(b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals; |
|
|
(c) |
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
(d) |
Disclosed in this report any change in the registrant’s internal control over financing reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
|
|
5. |
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
|
|
(a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
|
|
(b) |
Any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By: |
/s/ Alex Haditaghi |
|
|
|
Alex Haditaghi |
|
|
|
President, Chief Executive Officer, Chief Financial Officer
(Principal Executive Officer and Principal Financial Officer)
|
|
|
|
|
|
|
|
Dated: August 19, 2014
Exhibit 32.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT of 2002
In connection with the Quarterly Report of
Mopals.com, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2014 as filed with the Securities and Exchange
Commission on the date hereof (the “Quarterly Report”), Alex Haditaghi, Chief Executive Officer and Chief Financial
Officer of the Company, certifies, pursuant to 18 U.S.C. section 1350 of the Sarbanes-Oxley Act of 2002, that:
1. |
The Quarterly Report, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
|
2. |
The information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
By: |
/s/ Alex Haditaghi |
|
|
Alex Haditaghi |
|
|
President, Chief Executive Officer, Chief Financial Officer
(Principal Executive Officer and Principal Financial Officer)
|
|
|
|
|
|
Dated: August 19, 2014
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