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 SEPTEMBER 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 November 19, 2014 |
Common
Stock, $0.0001 par value |
|
51,819,993 |
MOPALS.COM,
INC.
(a
Development Stage Company)
QUARTERLY
REPORT ON FORM 10-Q
September
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 three months and nine months ended
September 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 September 30, 2014 (unaudited) and December 31, 2013 (audited) |
F-1 |
|
|
Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2014 and September
30, 2013 and the period from inception August 7, 2014 to September 30, 2014 (unaudited) |
F-2 |
|
|
Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2014 and September 30,
2013 and the period from inception August 7, 2014 to September 30, 2014 (unaudited) |
F-3 |
|
|
Statement of Shareholders’
Equity from inception August 7, 2014 to September 30, 2014 (unaudited) |
F-4 |
|
|
Notes to the Condensed
Consolidated Financial Statements (unaudited) |
F-5
to F-15 |
MOPALS.COM,
Inc.
(A
Development Stage Company)
(A
Delaware Corporation)
CONDENSED
CONSOLIDATED BALANCE SHEET
Unaudited
| |
(Unaudited) | | |
| |
| |
September 30, | | |
December 31, | |
| |
2014 | | |
2013 | |
ASSETS | |
| | |
| |
Cash | |
$ | 24,694 | | |
$ | 437,650 | |
HST/GST Receivable (note 5) | |
| 178,254 | | |
| 125,688 | |
Other Receivable (note 5) | |
| 50,000 | | |
| - | |
Rent Deposit (note 5) | |
| 200,000 | | |
| - | |
Prepaid & Other Assets (note 5) | |
| 77,551 | | |
| 30,142 | |
Total Current Assets | |
| 530,499 | | |
| 593,480 | |
| |
| | | |
| | |
Property & Equipment, net (note 6) | |
| 33,859 | | |
| 44,918 | |
Total Assets | |
$ | 564,358 | | |
$ | 638,398 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |
| | | |
| | |
| |
| | | |
| | |
Accounts Payable & Accrued Liabilities | |
| 273,296 | | |
| 181,129 | |
Share Based Accrual | |
| 14,924 | | |
| 14,924 | |
MoCoins Liability | |
| 23,942 | | |
| 148 | |
Loans from Shareholder (note 7) | |
| 874,285 | | |
| 652,633 | |
Total Liabilities | |
$ | 1,186,447 | | |
$ | 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 September 30, 2014 and 45,448,993 as of December 31, 2013 (Note 9) | |
| 4,570 | | |
| 4,545 | |
Shares Subscribed (note 10) | |
| 1,392,605 | | |
| 1,530,250 | |
Share Subscriptions Receivable (note 10) | |
| (1,392,605 | ) | |
| (1,530,250 | ) |
Shares to be issued | |
| 257 | | |
| 200 | |
Additional Paid In Capital | |
| 2,299,144 | | |
| 1,585,192 | |
Deficit Accumulated During the Development Stage | |
| (3,067,243 | ) | |
| (1,854,432 | ) |
Accumulated Other Comprehensive Income | |
| 141,183 | | |
| 54,059 | |
Total Stockholders’ Deficit | |
$ | (622,089 | ) | |
$ | (210,436 | ) |
| |
| | | |
| | |
Total Liabilities and Stockholders’ Deficit | |
$ | 564,358 | | |
$ | 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 Nine Months Ended | | |
For the Nine Months Ended | | |
For the Period from Inception August 7, 2012 to | |
| |
September 30, 2014 | | |
September 30, 2013 | | |
September 30, 2014 | | |
September 30, 2013 | | |
September 30, 2014 | |
| |
| | |
| | |
| | |
| | |
| |
REVENUES | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
EXPENSES | |
| | | |
| | | |
| | | |
| | | |
| | |
Consultants & Contractors | |
| 194,109 | | |
| 192,874 | | |
| 667,563 | | |
| 456,545 | | |
| 1,606,870 | |
General & Administrative Expenses | |
| 18,294 | | |
| 167,198 | | |
| 205,468 | | |
| 230,844 | | |
| 787,464 | |
Occupancy Costs | |
| 2,675 | | |
| 24,058 | | |
| 102,943 | | |
| 74,887 | | |
| 231,657 | |
Share Based Compensation (note 11) | |
| 138,920 | | |
| - | | |
| 376,388 | | |
| - | | |
| 565,585 | |
Depreciation | |
| 2,153 | | |
| 3,426 | | |
| 10,449 | | |
| 10,846 | | |
| 25,667 | |
Total Expenses | |
| 356,151 | | |
| 387,556 | | |
$ | 1,362,811 | | |
| 773,122 | | |
| 3,217,243 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
OPERATING (LOSS) | |
$ | (356,151 | ) | |
$ | (387,556 | ) | |
$ | (1,362,811 | ) | |
$ | (773,122 | ) | |
$ | (3,217,243 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Other Income (note 5 ) | |
| 150,000 | | |
| - | | |
| 150,000 | | |
| - | | |
| 150,000 | |
NET LOSS | |
| (206,151 | ) | |
| (387,556 | ) | |
| (1,212,811 | ) | |
| (773,122 | ) | |
| (3,067,243 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Foreign Currency Translation Adjustment | |
| 55,962 | | |
| (2,439 | ) | |
| 87,124 | | |
| 19,694 | | |
| 141,183 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Total Comprehensive (Loss) | |
$ | (150,189 | ) | |
$ | (389,995 | ) | |
$ | (1,125,687 | ) | |
$ | (753,428 | ) | |
$ | (2,926,060 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Loss per common share (note 12): | |
| | | |
| | | |
| | | |
| | | |
| | |
Basic and Diluted: | |
| | | |
| | | |
| | | |
| | | |
| | |
Net (Loss) per common share | |
$ | (0.00 | ) | |
$ | (0.01 | ) | |
$ | (0.02 | ) | |
$ | (0.02 | ) | |
$ | (0.06 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Weighted Average Number of Shares Outstanding - Basic and Diluted During the Period | |
| 51,782,370 | | |
| 51,295,007 | | |
| 51,782,370 | | |
| 51,295,007 | | |
| 51,043,899 | |
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, | |
| |
Nine Months Ended | | |
Nine Months Ended | | |
2012 (inception) to | |
| |
September 30, 2014 | | |
September 30, 2013 | | |
September 30, 2014 | |
Cash Flows used in Operating Activities | |
| | |
| | |
| |
Net (Loss) | |
$ | (1,212,811 | ) | |
$ | (773,122 | ) | |
$ | (3,067,243 | ) |
Adjustments to reconcile net (loss) income to net cash from operating activities: | |
| | | |
| | | |
| | |
Depreciation | |
| 10,449 | | |
| 10,846 | | |
| 25,667 | |
Stock-based compensation expense | |
| 376,388 | | |
| - | | |
| 565,585 | |
Expenses paid for with shares | |
| - | | |
| - | | |
| 150,046 | |
Adjust to par value of shares | |
| - | | |
| - | | |
| 36,900 | |
Increase (Decrease) in net assets: | |
| | | |
| | | |
| | |
HST/GST Receivable | |
| (52,566 | ) | |
| (79,752 | ) | |
| (178,254 | ) |
Decrease in Prepaids and Other Assets | |
| (47,409 | ) | |
| - | | |
| (77,551 | ) |
Increase in Other Receivables | |
| (50,000 | ) | |
| 2,212 | | |
| (50,000 | ) |
Increase in Accounts Payable & Accrued Liabilities | |
| 92,167 | | |
| - | | |
| 273,296 | |
Increase in Share Compensation Accrual | |
| - | | |
| 14,924 | | |
| 14,924 | |
Increase in MoCoins liability | |
| 23,794 | | |
| - | | |
| 23,942 | |
Net Cash Flows used in Operating Activities | |
| (859,988 | ) | |
| (824,892 | ) | |
| (2,282,688 | ) |
| |
| | | |
| | | |
| | |
Cash Flows used in Investing Activities | |
| | | |
| | | |
| | |
Purchases of Capital Equipment | |
| (16,693 | ) | |
| (4,421 | ) | |
| (58,006 | ) |
Net Cash Flows used in Investing Activities | |
| (16,693 | ) | |
| (4,421 | ) | |
| (58,006 | ) |
| |
| | | |
| | | |
| | |
Cash Flows from Financing Activities | |
| | | |
| | | |
| | |
Shares Issued | |
| 0 | | |
| 129 | | |
| 4,570 | |
Share Subscriptions Fund Received | |
| 137,645 | | |
| 471,025 | | |
| 1,392,329 | |
Increase in Shareholders’ Loan | |
| 221,652 | | |
| 201,885 | | |
| 874,285 | |
Net Cash Flows from Financing Activities | |
| 359,297 | | |
| 673,039 | | |
| 2,271,184 | |
| |
| | | |
| | | |
| | |
| |
| | | |
| | | |
| | |
Net Cash Flows | |
$ | (517,384 | ) | |
$ | (156,274 | ) | |
$ | (69,510 | ) |
| |
| | | |
| | | |
| | |
Effects of Exchange Rate on Cash | |
| 104,428 | | |
| 18,901 | | |
| 94,204 | |
| |
| | | |
| | | |
| | |
Cash and Cash Equivalents - Beginning of Period | |
| 437,650 | | |
| 175,779 | | |
| - | |
Cash and Cash Equivalents - End of Period | |
$ | 24,694 | | |
$ | 38,406 | | |
$ | 24,694 | |
| |
| | | |
| | | |
| | |
Supplemental Cash Flow Information | |
| | | |
| | | |
| | |
Interest Paid | |
| - | | |
| - | | |
| - | |
Income Tax Paid | |
| - | | |
| - | | |
| - | |
Non Cash 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 be | | |
Shares | | |
Share
Subscriptions | | |
Additional
Paid In | | |
Accumulated
Deficit during | | |
Accumulated
Other Comprehensive | | |
Total
Shareholders' | |
| |
Shares | | |
Amount | | |
Issued | | |
Subscribed | | |
Receivable | | |
Capital | | |
Development | | |
Income | | |
Deficit | |
Balance, August 7, 2012 (date of inception) | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Issuance of
common stock | |
| 41,000,000 | | |
$ | 41,000 | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | 0 | | |
$ | - | | |
$ | - | | |
$ | 41,000 | |
Shares Subscribed (note
10) | |
| 9,000,000 | | |
| 9,000 | | |
| | | |
| 2,250,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 2,259,000 | |
Share
Subscriptions Receivable (note 10) | |
| (9,000,000 | ) | |
| (9,000 | ) | |
| | | |
| - | | |
| (2,250,000 | ) | |
| - | | |
| - | | |
| - | | |
| (2,259,000 | ) |
Foreign
Currency Translation Adjustment | |
| - | | |
| - | | |
| | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,012 | | |
| 1,012 | |
Net
Accumulated Deficit | |
| - | | |
| - | | |
| | | |
| - | | |
| - | | |
| - | | |
| (163,237 | ) | |
| - | | |
| (163,237 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance
December 31, 2012 | |
| 41,000,000 | | |
$ | 41,000 | | |
$ | - | | |
$ | 2,250,000 | | |
$ | (2,250,000 | ) | |
$ | 0 | | |
$ | (163,237 | ) | |
$ | 1,012 | | |
$ | (121,225 | ) |
| |
Common
Stock | | |
Shares
to be | | |
Shares | | |
Share
Subscriptions | | |
Additional
Paid In | | |
Accumulated
Deficit during | | |
Accumulated
Other Comprehensive | | |
Total
Shareholders' | |
| |
Shares | | |
Amount | | |
Issued | | |
Subscribed | | |
Receivable | | |
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
10) | |
| 1,920,000 | | |
| 192 | | |
| - | | |
| (480,000 | ) | |
| - | | |
| 479,808 | | |
| - | | |
| - | | |
| - | |
Share
Subscriptions Receivable (note 10) | |
| - | | |
| - | | |
| - | | |
| - | | |
| 480,000 | | |
| - | | |
| - | | |
| - | | |
| 480,000 | |
Issuance
of common stock | |
| 275,000 | | |
| 28 | | |
| - | | |
| - | | |
| - | | |
| 150,046 | | |
| - | | |
| - | | |
| 150,074 | |
Shares Subscribed (note
10) | |
| 959,000 | | |
| 96 | | |
| - | | |
| (239,750 | ) | |
| - | | |
| 239,654 | | |
| - | | |
| - | | |
| - | |
Share
Subscriptions Receivable (note 10) | |
| - | | |
| - | | |
| - | | |
| - | | |
| 239,750 | | |
| - | | |
| - | | |
| - | | |
| 239,750 | |
Shares
to be issued (note 10) | |
| - | | |
| - | | |
| 200 | | |
| - | | |
| - | | |
| 498,662 | | |
| - | | |
| - | | |
| 498,862 | |
Issuance
of director 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 be | | |
Shares | | |
Share
Subscriptions | | |
Additional
Paid In | | |
Accumulated
Deficit during | | |
Accumulated
Other Comprehensive | | |
Total
Shareholders' | |
| |
Shares | | |
Amount | | |
Issued | | |
Subscribed | | |
Receivable | | |
Capital | | |
Development | | |
Income | | |
Deficit | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance, January 1, 2014 | |
| 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 director 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 | | |
$ | (407,703 | ) |
| |
Common
Stock | | |
Shares
to be | | |
Shares | | |
Share
Subscriptions | | |
Additional
Paid In | | |
Accumulated
Deficit during | | |
Accumulated
Other Comprehensive | | |
Total
Shareholders' | |
| |
Shares | | |
Amount | | |
Issued | | |
Subscribed | | |
Receivable | | |
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 | | |
$ | (407,703 | ) |
Share
subscriptions funds received, no shares issued | |
| - | | |
| - | | |
| 20 | | |
| (45,455 | ) | |
| 45,455 | | |
| 45,435 | | |
| - | | |
| - | | |
| 45,455 | |
Issuance
of director options | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 118,734 | | |
| - | | |
| - | | |
| 118,734 | |
Foreign
Currency Translation Adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 32,848 | | |
| 32,003848 | |
Net
Loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (492,345 | ) | |
| - | | |
| (492,345 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance
June 30, 2014 | |
| 45,698,993 | | |
$ | 4,570 | | |
$ | 220 | | |
$ | 1,484,795 | | |
$ | (1,484,795 | ) | |
$ | 2,068,071 | | |
$ | (2,861,092 | ) | |
$ | 85,221 | | |
$ | (703,010 | ) |
| |
Common
Stock | | |
Shares
to be | | |
Shares | | |
Share
Subscriptions | | |
Additional
Paid In | | |
Accumulated
Deficit during | | |
Accumulated
Other Comprehensive | | |
Total
Shareholders' | |
| |
Shares | | |
Amount | | |
Issued | | |
Subscribed | | |
Receivable | | |
Capital | | |
Development | | |
Income | | |
Deficit | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Balance, June 30, 2014 | |
| 45,698,993 | | |
$ | 4,570 | | |
$ | 220 | | |
$ | 1,484,795 | | |
$ | (1,484,795 | ) | |
$ | 2,068,071 | | |
$ | (2,861,092 | ) | |
$ | 85,221 | | |
$ | (703,010 | ) |
Share
subscriptions funds received, no shares issued | |
| - | | |
| - | | |
| 37 | | |
| (92,190 | ) | |
| 92,190 | | |
| 92,153 | | |
| - | | |
| - | | |
| 92,190 | |
Issuance
of director options | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 138,920 | | |
| - | | |
| - | | |
| 138,920 | |
Foreign
Currency Translation Adjustment | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 55,962 | | |
| 55,962 | |
Net
Loss | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (206,151 | ) | |
| - | | |
| (206,151 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance
September 30, 2014 | |
| 45,698,993 | | |
$ | 4,570 | | |
$ | 257 | | |
$ | 1,392,605 | | |
$ | (1,392,605 | ) | |
$ | 2,299,144 | | |
$ | (3,067,243 | ) | |
$ | 141,183 | | |
$ | (622,089 | ) |
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
SEPTEMBER
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 Canada Inc. (a Canadian Federal Corporation). The planned operations
of the Company consist of becoming a social media rewards platform in the United States and Canada.
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 September 30, 2014 total $3,067,243. 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
SEPTEMBER
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 September 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 September 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
SEPTEMBER
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.
Property and Equipment
Property and 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
Company 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
SEPTEMBER 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:
| |
September 30,
2014 | | |
December 31,
2013 | |
Period End CAD-USD exchange rate | |
$ | 0.8922 | | |
$ | 0.9402 | |
Average period CAD-USD exchange rate | |
$ | 0.9139 | | |
$ | 0.9707 | |
Recent
Accounting Pronouncements
On August 27, 2014, the FASB issued
a new financial accounting standard on going concern, Update 2014-15, Presentation of Financial Statements – Going Concern
(Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The standard
provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an organizations
ability to continue as a going concern. The amendments in this Update apply to all companies. They become effective in the annual
period ending after December 15, 2016, with early application permitted. The Company is currently evaluating the impact of this
accounting standard.
All other recent pronouncements issued
by the FASB or other authoritative standards groups with future effective dates are either not applicable or are not expected to
be significant to the condensed consolidated financial statements of the Company.
MOPALS.COM,
Inc.
(A Development Stage Company)
(A Delaware Corporation)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 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 September 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 |
| |
September
30, 2014 | | |
December 31,
2013 | |
Harmonized Sales Tax | |
| 178,254 | | |
| 125,688 | |
Rent Deposit | |
| 200,000 | | |
| 10,548 | |
Other Receivable | |
| 50,000 | | |
| - | |
Prepaid & Other Assets | |
| 77,551 | | |
| 19,594 | |
Total | |
$ | 505,805 | | |
$ | 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.
250,000 of the Company’s common
shares valued at $200,000 were issued to the landlord as guarantee for the lease of the Company’s premises. The shares will
be returned to the Company at the end of the lease term.
Other receivables relates to the sale of
the Company’s stock symbol for $150,000. The outstanding funds have since been collected.
MOPALS.COM, Inc.
(A Development Stage Company)
(A Delaware Corporation)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 30, 2014
6. |
PROPERTY AND EQUIPMENT |
The net book value of property & equipment
as of September 30, 2014 and December 31, 2013 was as follows:
| |
Cost | | |
Accumulated Depreciation | | |
September
30, 2014 Net Book Value | | |
December
31, 2013 Net Book Value | |
Computer hardware | |
| 20,660 | | |
| 7,697 | | |
| 12,963 | | |
| 16,021 | |
Computer Software | |
| 28,424 | | |
| 13,483 | | |
| 14,941 | | |
| 21,590 | |
Furniture & Equipment | |
| 8,922 | | |
| 2,967 | | |
| 5,955 | | |
| 7,307 | |
Total | |
$ | 58,006 | | |
$ | 24,147 | | |
$ | 33,859 | | |
$ | 44,918 | |
Depreciation expense since August 7, 2013
(inception) amounted to $25,667 including depreciation expenses for computer hardware, computer software and furniture and
equipment. For the nine months ending September 30, 2014 and 2013, depreciation expense was $10,449 and $10,846, respectively.
For the previous year ending December 31, 2013, depreciation expense was $10,846.
7. |
LOANS FROM SHAREHOLDER |
As of September 30, 2014, the controlling
shareholder and Chief Executive Officer of the Company had advanced $874,285 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 September 30, 2014, the Company has 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 (remainder) | | |
$ | 39,233 | |
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
SEPTEMBER 30, 2014
a) Authorized
100,000,000 Common Shares with a par value
of $0.0001.
b) 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 September 30, 2014, none of these options had been exercised. These option plans also contain options
that will be granted 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
September 30, 2014
c) Shares to be issued
As of September 30, 2014, investors
delivered a total of $137,645 (December 31, 2013- $498,862) to purchase 2,570,000 (December 31, 2013- 2,000,000) shares of the
company issued at $0.25 per share. As of September 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 September 30, 2014, the
balance of the subscription receivable was $1,392,605.
MOPALS.COM, Inc.
(A Development Stage Company)
(A Delaware Corporation)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 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
SEPTEMBER 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 | % |
July 1, 2014 Option
Fiscal Year ended December 31, 2014 | |
2014 | |
| |
| |
Exercise Price | |
$ | 0.35 | |
Risk-free interest rate | |
| 3.00 | % |
Expected term (years) | |
| 3 | |
Expected volatility | |
| 340 | % |
Expected dividend yield | |
| 0 | % |
July 3, 2014 Option
Fiscal Year ended December 31, 2014 | |
2014 | |
| |
| |
Exercise Price | |
$ | 0.35 | |
Risk-free interest rate | |
| 3.00 | % |
Expected term (years) | |
| 3 | |
Expected volatility | |
| 340 | % |
Expected dividend yield | |
| 0 | % |
July 6, 2014 Option
Fiscal Year ended December 31, 2014 | |
2014 | |
| |
| |
Exercise Price | |
$ | 0.35 | |
Risk-free interest rate | |
| 3.00 | % |
Expected term (years) | |
| 3 | |
Expected volatility | |
| 340 | % |
Expected dividend yield | |
| 0 | % |
All of the grants immediately
begin vesting and expire on the third anniversary of the grant date. They are being expensed evenly over the year in which they
are vesting. The following table summarizes the stock option activities of the Company:
| |
Number of Options | |
Outstanding as of December 31, 2013 | |
| 1,200,000 | |
Granted | |
| 900,000 | |
Exercised | |
| - | |
Outstanding as of September 30, 2014 | |
| 2,100,000 | |
As of September 30, 2014,
the Company had granted a total of 2,100,000 options to purchase common stock to directors, all of which are currently outstanding
and of which, 1,200,000 are fully vested and exercisable. No options have been exercised.
The Company recorded $376,388 in employment
expenses for share-based compensation expense for the nine months ended September 30, 2014 (nine months ended September 30, 2013
- $ 0) 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.
Share Reconciliation | |
| | |
| | |
| |
| |
2014 | | |
2013 | | |
2012 | |
| |
| | | |
| | | |
| | |
Opening Balance- January 1 | |
| 51,569,993 | | |
| 50,000,000 | | |
| - | |
| |
| | | |
| | | |
| | |
Shares Issued in Period | |
| 250,000 | | |
| 275,000 | | |
| 41,000,000 | |
| |
| | | |
| | | |
| | |
Shares Issued to MBKR Shareholders | |
| - | | |
| 1,294,993 | | |
| - | |
| |
| | | |
| | | |
| | |
Shares Subscription Issued | |
| - | | |
| - | | |
| 9,000,000 | |
| |
| | | |
| | | |
| | |
Closing Balance: | |
| 51,819,993 | | |
| 51,569,993 | | |
| 50,000,000 | |
Balance Sheet
Shares Outstanding | | |
| 45,698,993 | |
Unissued Share Subscriptions | | |
| 6.121.000 | |
| | |
| 51,819,993 | |
| | |
| | |
| |
Nine Months Ended September 30, 2014 | | |
Nine Months Ended September 30, 2013 | |
Weighted average number of common shares outstanding | |
| 51,782,370 | | |
| 51,295,007 | |
Weighted-average number of diluted common shares outstanding | |
| 51,782,370 | | |
| 51,295,007 | |
Included in the common shares outstanding
are shares to be issued and shares subscribed.
MOPALS.COM, Inc.
(A Development Stage Company)
(A Delaware Corporation)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
SEPTEMBER 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 September 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.
Subsequent to September 30, 2014, $75,000
was deposited into the company’s accounts relating to shareholder loans, and $92,190 was deposited into the company’s
accounts relating to share subscription receivables and $100,000 was deposited into the company’s account relating to changing
our Ticker symbol.
On
October 9, 2014, Mopals.com, Inc. (the “Company” or “MoPals”), executed a private placement engagement
agreement (the “Engagement Agreement”) with Amarok Financial, LCC (“Amarok”) and Cabrillo Broker, LLC (“Cabrillo,"
and together with Amarok, collectively, the “Advisor”), collectively, to undertake a private placement of common shares
for gross proceeds of up to US $15 million (the "Offering"). The Offering will be made on a best-efforts, fully-marketed
basis. Upon the first closing of any transaction, as defined in the Engagement Agreement, pursuant to the Offering, the Advisor
will receive a fee (the “Transaction Fee”) equal to 7% of the aggregate amount of all equity and equity-linked securities
placed or committed, with 5% to be paid in cash, and 2% to be paid in restricted stock to be valued at the Offering price offered
to investors.
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 three and nine month periods ended September 30, 2014.
The following information should be read in conjunction with the consolidated interim financial statements for the period ended
September 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 has launched 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. Using a unique digital currency, MoCoins™, members can be rewarded for making a purchase at
participating retailers, buying and referring offers, creating and completing polls, liking brands, uploading photos, writing
reviews, and inviting friends. Through MoPals™, social media influencers monetize their following. Similarly, retailers
who use the MoPals™ platform have a means to engage and convert their current social media following to brand
ambassadors who foster word-of-mouth advertising. Our members can earn reward incentives (MoCoins) 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 ‘Big Data IQ Engine’ under development will also allow
businesses to receive Big Data insights and analytics associated with their consumer’s behavior from which they can use
to provide targeted offers and marketing strategies.
Following our product launch, it is
Mopal’s plan to earn revenue from business subscriptions and transactions fees to receive ongoing consumer data and as well
as from receiving a percentage of promotion-based sales revenue from participating businesses couponing engine.
In addition 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 September 30, 2014, our company
had fourteen (14) full-time employees and two (2) 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 September 30, 2014
and 2013
Mopals had no reported revenue in the
third quarter of 2014 or 2013.
The Company’s reported operating expenses during the three month period ended September 30,
2014 were $356,151. Comparatively, the Company’s reported operating expenses during the three month period ended September
30, 2013 were $387,556. The primary components that comprise our operating expenses during the three months ended September 30,
2014 reporting period were salaries and consultant/contractor fees, general and administrative expenses and occupancy costs which
are explained in detail as follows:
● |
54.5% of the operating expenses in the reporting period were associated with salaries, contractor expenses
and Consulting fees (2013 – 49.8%). |
|
|
● |
39.01% of the operating expenses in the reporting period were associated with stock-based compensation (2013 – 0%). |
|
|
● |
5.14% of the operating expenses in the
reporting period were associated with general and administrative expenses (2013 – 43.1%). |
|
|
● |
0.8% of our operating expenses in the
reporting period were associated with occupancy costs associated with an office lease (2013 – 6.2%). |
Nine months ended September 30, 2014
and 2013
Mopals had no reported revenue in the nine
months ended September 30, 2014 and 2013.
The Company’s reported operating
expenses during the nine month period ended September 30, 2014 were $1,362,811. Comparatively, the Company’s reported operating
expenses during the nine month period ended September 30, 2013 were $773,122. The primary components that comprise our operating
expenses during the nine months ended September 30, 2014 reporting period were salaries and consultant/contractor fees, general
and administrative expenses and occupancy costs which are explained in detail as follows:
● |
49.0% of the operating expenses in the reporting period were associated with salaries, contractor expenses and Consulting fees (2013 – 59%). |
|
|
● |
27.7% of the operating expenses in the reporting period were
associated with stock-based compensation (2013 – 0%). |
|
|
● |
15.1% of the operating expenses in the
reporting period were associated with general and administrative expenses (2013 – 29.9%). |
|
|
● |
7.6% of our operating expenses in the reporting period were associated with occupancy costs associated with an office lease (2013 - 9.7%). |
Liquidity and Capital Resources
At September 30, 2014, we had $24,694 in cash,
$178,254 in harmonized sales tax receivable, $200,000 in rent deposit, $77,551 in prepaid expenses and other assets, $50,000 in
other receivables and $33,859 in equipment, computer software, computer hardware and furniture for a total of $564,358 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, computer hardware, computer software and furniture for a total of $638,398
in assets.
At September 30, 2014, we had $273,296 in accounts
payable and accrued liabilities, $14,924 in accruals for stock-based compensation associated with former discontinued operations,
$23,942 in MoCoins payable and $874,285 in loans payable to the Company’s principal shareholder for a total of $1,186,447
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 94.4% over the first nine months of 2014 associated with the following:
● |
the Company used $859,988 in cash from operating activities over the first nine 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 $359,297 in cash from financing activities over the first nine months of 2014 as we received funds from our principal shareholder in the amount of $221,652 and share subscriptions received of $137,645. |
The Company reported a net cash flow loss from
operating activities for the first nine months of 2014 of $859,988 with a net increase in cash flow from financing activities of
$359,297 and a net negative cash flow from the purchase of capital equipment of $16,693 during the same period for an overall net
negative cash flow of $517,384 out of the Company during the nine month 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
or 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 nine months reporting period ended
September 30, 2014, the Company reported a net loss from operations of $1,212,811 with a net decrease in cash from operating, investing
and financing activities of $517,384 during the same period. Since inception to September 30, 2014, the Company reported a net
loss from operations of $3,067,243. 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 September 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 September 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 September 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 three month period ending September 30, 2014.
PART II: OTHER INFORMATION
Item 1. Legal Proceedings
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 |
* Filed herewith.
+ 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.
|
MOPALS.COM, INC. |
|
|
|
Dated: November 19, 2014 |
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) |
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. |
Dated: November 19, 2014 |
By: |
/s/ Alex Haditaghi |
|
|
Alex Haditaghi |
|
|
|
President,
Chief Executive Officer, Chief Financial Officer
(Principal Executive Officer and Principal Financial Officer) |
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. |
Dated: November 19, 2014 |
By: |
/s/ Alex Haditaghi |
|
|
Alex Haditaghi |
|
|
|
President,
Chief Executive Officer, Chief Financial Officer
(Principal Executive Officer and Principal Financial Officer) |
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