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Panbela Therapeutics, Inc. - Quarter Report: 2014 September (Form 10-Q)

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2014

 

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

 

For the transition period from ___________ to ___________

 

Commission File Number 000-55242

 

Cimarron Software, Inc.

(Exact name of registrant as specified in its charter)

 

Utah

 

87-0543922

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

10 W. Broadway, Ste. 700

Salt Lake City, UT 84101

(Address of principal executive offices, including zip code)

 

(801) 532-3080

(Registrant’s telephone number, including area code)

 

30 E. Broadway, Ste. 204

Salt Lake City, UT 84111

(Former name, former address and former fiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x 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 x No ¨ 

  

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

 

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

x

 

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

 

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

 

As of November 10, 2014, the issuer had 1,450,322 outstanding shares of common stock, no par value.

 

 

 

CIMARRON SOFTWARE INC.

FORM 10-Q

For the Quarterly Period Ended September 30, 2014

INDEX

 

  Page  
   

PART I – FINANCIAL INFORMATION

   

Item 1

Financial Statements (unaudited)

3

 

Condensed Balance Sheets

   

3

 

Condensed Statements of Operations

   

4

 

Condensed Statements of Cash Flows

   

5

 

Notes to Condensed Financial Statements

   

6

 

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

   

8

 

Item 3

Quantitative and Qualitative Disclosures About Market Risk

   

11

 

Item 4

Controls and Procedures

   

11

 
       

PART II – OTHER INFORMATION

       

Item 1

Legal Proceedings

   

12

 

Item 6

Exhibits

   

13

 

Signatures

   

14

 

 

 
2

 

PART I – FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

CIMARRON SOFTWARE, INC.
CONDENSED BALANCE SHEETS
SEPTEMBER 30, 2014 AND DECEMBER 31, 2013
(UNAUDITED)

 

    9/30/2014     12/31/2013  
ASSETS          
Current Assets        
Cash and Cash Equivalents   $ 131,611     $ 58,822  
Accounts Receivable     17,360       14,800  
Accounts Receivable- Related Party     129,002       314,403  
Note Receivable - Related Party Short Term     -       44,500  
Prepaid Expenses     1,256       318  
Total Current Assets     279,229       432,843  
               
Note Receivable - Related Party Long Term     -       80,220  
Security Deposit     3,033       -  
Property and Equipment, Net     15,248       19,198  
Total Assets   $ 297,510     $ 532,261  
               
LIABILITIES AND STOCKHOLDERS' DEFICIT                
Current Liabilities                
Accounts Payable   $ 3,365     $ 3,995  
Accrued Expenses     62,829       51,420  
Notes Payable - Related Party     567,472       567,472  
Deferred Revenue     28,447       33,041  
Lease Payable-Short Term     7,809       7,767  
Total Current Liabilities     669,922       663,695  
               
Non Current Liabilities                
Lease Payable-Long Term     3,581       6,458  
               
Total Liabilities     673,503       670,153  
               
Stockholders' Deficit                
Preferred Stock, no par value,                
500,000 shares Series A and 200,000 shares Series B authorized.                
200,119 shares Series A issued and outstanding                
as of September 30, 2014 and                
and December 31, 2013, respectively     200,119       200,119  
Common Stock, no par value,                
10,000,000 shares authorized.                
1,450,322 shares issued and outstanding as of                
September 30, 2014 and                
and December 31, 2013, respectively     86,033       86,033  
Paid in Capital     13,483,429       13,457,948  
Accumulated Deficit   (14,145,574 )   (13,881,992 )
Total Stockholders' Deficit   (375,993 )   (137,892 )
Total Liabilities and Stockholders' Deficit   $ 297,510     $ 532,261  

 

See accompanying notes to condensed financial statements

 

 
3

 

CIMARRON SOFTWARE, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)

 

    For the Three Months Ended
September 30,
  For the Nine Months Ended
September 30,
 
  2014     2013     2014     2013  
                               
Service Revenue   $ 34,799     $ 42,549     $ 111,194     $ 263,584  
Service Revenue - Related Party     256,579       203,491       732,657       405,492  
Total Service Revenue     291,378       246,040       843,851       669,076  
                               
Cost of Services     16,686       157,511       202,250       496,117  
Cost of Services - Related Party     124,821       72,647       334,976       160,664  
Total Cost of Services     141,507       230,158       537,226       656,781  
                               
Gross Profit     149,871       15,882       306,625       12,295  
                               
General and Administrative Costs     197,838       39,207       410,140       96,464  
Professional Fees-Related Party     30,000       15,868       90,527       47,507  
Professional Fees     9,410       15,071       46,766       47,899  
                               
Loss from Operations   (87,377 )   (54,264 )   (240,808 )   (179,575 )
                               
Interest Expense   (8,896 )   (8,910 )   (26,655 )   (26,954 )
Interest Income     567       5,179       4,002       14,855  
Other Income     -       -       -       -  
Loss from Continuing Operations                                
Before Income Taxes   (95,706 )   (57,995 )   (263,461 )   (191,674 )
                               
Income Tax     -       220       121       220  
                               
Net Loss   $ (95,706 )   $ (58,215 )   $ (263,582 )   $ (191,894 )
                               
Net Loss per Common Share - Basic and Diluted   $ (0.07 )   $ (0.04 )   $ (0.18 )   $ (0.13 )
                               
Weighted Average Shares Outstanding - Basic and Diluted     1,450,322       1,450,322       1,450,322       1,450,322  

 

See accompanying notes to condensed financial statements

 

 
4

 

CIMARRON SOFTWARE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNDAUDITED)

 

    For the Nine Months Ended
September 30,
 
    2014     2013  
Cash Flows from Operating Activities:        
Net Loss   $ (263,582 )   $ (191,894 )
Adjustments to Reconcile Net Loss to Net Cash From Operating Activites:                
Depreciation Expense     7,336       6,130  
Contributed Services     -       80,300  
Stock Compensation     -       150  
Imputed Interest on Related Party Notes Payable     25,481       25,581  
Changes in:                
Accounts Receivable   (2,560 )     55,822  
Accounts Receivable - Related Party     185,401     (127,624 )
Prepaid Expense   (938 )   (565 )
Security Deposit   (3,033 )     -  
Accounts Payable   (629 )   (14,191 )
Accrued Expenses     11,409       8,837  
Deferred Revenue   (4,594 )     19,609  
Net Cash From Operating Actvities   (45,709 )   (137,845 )
               
Cash Flows from Investing Activities:                
Purchase of Equipment   (3,387 )   (3,500 )
Note Receivable - Related Party     124,720       140,146  
Net Cash From Investing Activities     121,333       136,646  
               
Cash Flows from Financing Activities:                
Repayment of Lease Payable   (2,835 )   (5,088 )
Issuance of Notes Payable - Related Parties     -       3,500  
Repayment of Notes Payable - Related Party     -     (4,400 )
Net Cash From Financing Activities   (2,835 )   (5,988 )
               
Net Increase (Decrease) in Cash and Cash Equivalents     72,789     (7,187 )
               
Cash and Cash Equivalents, Beginning of Period     58,822       110,938  
               
Cash and Cash Equivalents, End of Period   $ 131,611     $ 103,751  
               
Supplemental Disclosures of Cash Flow Information:                
Cash paid during the period for:                
Interest   $ 1,175     $ 1,373  
Income Taxes  

$

-    

$

-  
               
Non-cash Investing and Financing activities:                
Capital Contributions Made in Lieu of Payment for Services Rendered by Related Party  

$

-     $ 31,800  
Capital Contributions Made in Lieu of Payment for Services Rendered by an Officer of the Company  

$

-     $ 48,500  

 

See accompanying notes to condensed financial statements

 

 
5

 

CIMARRON SOFTWARE, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

 

Note 1 – Organization and Summary of Significant Accounting Policies

 

The Company and Nature of Business

 

Cimarron Software, Inc., (the Company) was incorporated under the laws of the State of Utah on February 9, 1995, and is primarily a developer and distributor of customized computer software for use in medical research.

 

Basis of Presentation

 

The condensed interim financial information of the Company as of September 30, 2014 and for the three and nine month periods ended September 30, 2014 and 2013 is unaudited, and the balance sheet as of December 31, 2013 is derived from audited financial statements. The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles for interim financial statements. Accordingly, they omit or condense footnotes and certain other information normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles. In the opinion of management, all adjustments that are necessary for a fair presentation of the financial information for the interim periods reported have been made. All such adjustments are of a normal recurring nature. The results of operations for the three and nine months ended September 30, 2014 are not necessarily indicative of the results that can be expected for the entire year ending December 31, 2014. The unaudited financial statements should be read in conjunction with the Company’s annual financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. In particular, the Company’s significant accounting policies were presented as Note 2 to the consolidated financial statements in that Annual Report.

 

Recent Accounting Pronouncements

 

In September 2014, the FASB issued Accounting Standards Update (ASU) ASU 606 which superceded and relaced ASC 605-25, Revenue Recognition: Multiple-Element Arrangements, and most of ASC 985-605, Software: Revenue Recognition, which applies to all software and SaaS arrangements. Although public companies are required to apply the new guidance to all reporting periods beginning on or after December 15, 2016 (all other entities in the following year), the Company has not yet adopted the new standard.

 

Note 2 – Related Party Transactions

 

Notes Payable – Related Party consists of balances due to original founders David Fuhrman and Robert Sargent, for additional services performed on behalf of the Company. As of September 30, 2014 and December 31, 2013, the Company has related party notes payable totaling $567,472 and $567,472, respectively.

 

Interest expenses on the related party notes payable accrues at a rate of six percent per annum and was $26,655 for the nine month period ended September 30, 2014 and $26,954 for the nine month period ended September 30, 2013. The interest on the related party notes was recorded as an increase to equity, since the interest amounts are not expected to be paid out, but are being contributed to the Company by primary shareholders.

 

A customer of the Company, Data in Motion LLC, is also a related party. This entity is majority owned by the majority shareholder and Chairman of the Company and a relative of the Chairman, though no financial support is provided by the Company to this entity. The Company recorded revenues from this related party of $732,657 (approximately 87% of total revenue) for the nine months ended September 30, 2014, and $405,492 (approximately 61% of total revenue) for the nine months ended September 30, 2013. In addition, the Company had related party accounts receivable for consulting services provided to this entity amounting to $129,002 and $314,403 as of September 30, 2014 and December 31, 2013, respectively.

 

 
6

  

The Company also had a related party note receivable for consulting services provided to this entity valued at $0 and $124,720 as of September 30, 2014 and December 31, 2013, respectively. The note bore interest at 6% per annum. The term of note was six years with a maturity date of January 1, 2019. The remaining amount of the note was collected in full during the three months ended September 30, 2014. The Company recorded $4,002 and $14,855 of interest income related to this note for the nine months ending September 30, 2014 and 2013, respectively.

 

In 2010 the Company entered into an agreement with an entity which is owned by a relative of the president of the Company to provide financial management consulting services. The agreement states that for each hour of services billed to the Company, the associated fee shall be contributed to the Company. In 2014, the Company began paying for these services and is no longer accounting for them as contributions. For the nine months ending September 30, 2014 and 2013, the Company recognized contributions of $0 and $29,300, respectively, which were recorded as contributed services and recorded to paid in capital. Additionally, the Company recognized services contributed by the president of the Company in the amount of $0 and $51,000 for a total of $0 and $80,300 of contributed services for the three and nine months ending September 30, 2014 and 2013, respectively.

 

Note 3 – Capital Stock

 

The Company is authorized to issue 500,000 shares of Series A preferred stock with no par value and 200,000 shares of Series B preferred stock with no par value. As of September 30, 2014 and December 31, 2013 there were 200,119 shares of Series A preferred stock issued and outstanding and no shares of Series B preferred stock issued or outstanding.

 

The Company has neither declared nor paid dividends during the periods ended September 30, 2014 and December 31, 2013.

 

Note 4 – Fair Value of Financial Instruments

 

The fair value of the Company’s cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and note payables approximate the carrying amount due to the short duration of these accounts.

 

Note 5 – Loss per Share

 

Basic loss per common share is based on the net loss divided by weighted average number of common shares outstanding. Diluted income or loss per share is computed using weighted average number of common shares plus dilutive common share equivalents outstanding during the period using the treasury stock method. As the Company has a net loss for the period ended September 30, 2014, any potentially dilutive shares are anti-dilutive and are thus not included into the earnings per share calculation. The Company had 466,766 common stock equivalents outstanding as of September 30, 2014 and 2013. These shares were excluded from the computation of diluted earnings per share as they are anti-dilutive.

 

Note 6 – Going Concern

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. As of September 30, 2014 and December 31, 2013, the Company had an accumulated deficit of $14,145,574 and $13,881,992, respectively. In addition, the Company had a net loss for the nine months ended September 30, 2014 of $263,582. These conditions raise substantial doubt about the Company's ability to continue as a going concern.

 

In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financing requirements on a continuing basis, to maintain or replace present financing, to acquire additional capital from investors, and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

 

The Company intends to continue to serve its customers as a developer and distributor of customized computer software used in computer research. The Company intends to focus on raising additional capital and finding additional avenues to distribute its software. To the extent that any such financing involves the sale of our equity, our current stockholders could be substantially diluted. There is no assurance that we will be successful in achieving any or all of these objectives.

 

Note 7 – Subsequent Events

 

There have been no subsequent events that have a material impact on the Company.

 

 
7

  

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

 

For the Three and Nine-month Periods Ended September 30, 2014 and 2013

 

The following tables set forth key components of our results of operations for the periods indicated, both in dollars and as a percentage of sales revenue for the periods indicated in dollars.

 

    Three Months   Nine Months  
    2014     %     2013     %     2014     %     2013     %  

Revenue

 

$

291,378

   

100

   

$

246,040

   

100

   

$

843,851

   

100

   

$

669,076

   

100

 

Cost of Services

   

141,507

     

49

     

230,158

     

94

     

537,226

     

64

     

656,781

     

98

 

Gross Profit

   

149,871

     

51

     

15,882

     

6

     

306,625

     

36

     

12,295

   

(0.8

)

Operating Expenses

   

237,248

     

81.4

     

70,146

     

28.5

     

547,433

     

64.9

     

191,870

     

28.7

 

Operating Loss

 

(87,377

)

 

(30.0

)

 

(54,264

)

 

(22.1

)

 

(240,808

)

 

(28.5

)

 

(179,575

)

 

(26.8

)

Loss

 

$

(95,706

)

 

(32.8

)

 

$

(58,215

)

 

(23.7

)

 

$

(263,582

)

 

(31.2

)

 

$

(191,894

)

 

(28.7

)

 

Revenues consist of non-technology integration consulting services, technology integration consulting services, product maintenance, and travel and expenses billed to the customer. Revenues increased for the three and nine months ended September 30, 2014, compared to the same period in the prior year due to the Company increasing its provision of services with its related party, Data in Motion LLC, and a decrease in non-related party revenue resulting from the Company losing a customer in early 2013. For the three and nine months ended September 30, 2014, as compared to the same periods in 2013, Cost of Services decreased and gross profit increased as a result of a decrease in payroll costs attributable to services, and Operating Expenses increased as a result of increasing payroll costs and general expenses due to the Company increasing its marketing efforts.

 

The following tables set forth key components of our balance sheets as of September 30, 2014 and December 31, 2013, both in dollars.

 

    2014     2013  

Current Assets

 

$

279,229

   

$

432,843

 

Note Receivable-Related Party Long-Term

   

-

     

80,220

 

Property and Equipment

   

15,248

     

19,198

 

Total Assets

   

297,510

     

532,261

 

Current Liabilities

   

669,922

     

663,695

 

Non-Current Liabilities

   

3,581

     

6,458

 

Total Liabilities

   

673,503

     

670,153

 

Stockholder’s Deficit

 

(375,933

)

 

(137,892

)

Total Liabilities and Deficit

 

$

297,510

   

$

532,261

 

 

 
8

 

As of September 30, 2014, current assets decreased $153,614 from December 31, 2013, due to decreases in accounts receivable from the related party, Data in Motion LLC, of $185,401 and a decrease in a short-term notes receivable from related parties of $44,500, which was partially offset by an increase in non-related party accounts receivable of $2,560, an increase in cash of $72,789, and an increase in prepaid expenses of $938. Non-current assets decreased due to a decrease in the long-term portion of notes receivable from related parties by $80,220, as well as depreciation expense recorded for the nine months ended September 30, 2014. As of September 30, 2014, current liabilities increased by $6,227 from December 31, 2013, due to an increase in lease payable and accrued expenses partially offset by a decrease in and deferred revenue and accounts payable.

 

At September 30, 2014, the Company had cash funds of $131,611.

 

The Company’s practice has been to record Haxton Management, LLC consulting fees as well as some payroll expense for the Company’s president as contributed services. For the nine months ended September 30, 2014 and 2013, the Company recognized $0 and $80,300 in capital contributions made in lieu of payment for services, respectively.

 

Liquidity and Capital Resources

 

The Company has been and is currently operating with a relatively low level of cash and liquidity and that could lead to difficulty if not favorably resolved. The Company desires to improve this situation through additional equity and debt investments in the Company and cash generated from higher revenues.

 

The Company anticipates that its cash needs for the next twelve months for working capital and capital expenditures will be approximately $120,000. As of September 30, 2014, the Company has $131,611 in cash and believes its current cash and cash flow from operations will only be sufficient to meet anticipated cash needs for the next twelve months for working capital and capital expenditures. The Company will require additional cash resources due to possible changed business conditions or other future developments. The Company may seek to sell additional equity or debt securities. The sale of convertible debt securities or additional equity securities could result in additional dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity.

 

The Company’s ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including: investors’ perception of, and demand for, securities of web hosting and related service companies; conditions of the U.S. and other capital markets in which we may seek to raise funds; future results of operations, financial condition and cash flow. Therefore, the Company’s management cannot assure that financing will be available in amounts or on terms acceptable to the Company, or if at all. Any failure by the Company’s management to raise additional funds on terms favorable to the Company could have a material adverse effect on the Company’s liquidity and financial condition.

 

In the event we are not successful in reaching our sustained revenue targets, we anticipate that depending on market conditions and our plan of operations, we may incur operating losses. We base this expectation, in part, on the fact that we may not be able to generate enough gross profit to cover our operating expenses. Consequently, there remains the possibility that the Company may not continue to operate as a going concern in the long term. We are subject to many factors which could detrimentally affect us. Many of these risk factors are outside management’s control, including demand for our products and services, our ability to hire and retain talented and skilled employees and service providers, as well as other factors.

 

Subsequent Events

 

There have been no subsequent events that have a material impact on the Company.

 

Emerging Growth Company

 

We are an “emerging growth company” under the federal securities laws and are subject to reduced public company reporting requirements. In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.

 

 
9

  

Critical Accounting Policies

 

Our financial statements 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.

 

Our significant accounting policies are summarized in Note 2 of our financial statements included in The Company’s Annual Report on Form 10-K for the year ended December 31, 2013. While all these significant accounting policies impact our financial condition and results of operations, we view certain of these policies as critical. Policies determined to be critical are those policies that have the most significant impact on our financial statements and require management to use a greater degree of judgment and estimates. Actual results may differ from those estimates. Our management believes that given current facts and circumstances, it is unlikely that applying any other reasonable judgments or estimate methodologies would cause an effect on our results of operations, financial position or liquidity for the periods presented in this report.

 

Revenue Recognition

 

Revenues from contracts for non-technology integration consulting services with fees based on time and materials are recognized as the services are performed and amounts are earned in accordance with the Securities and Exchange Commission (the “SEC”) Staff Accounting Bulletin (“SAB”) No. 101, “Revenue Recognition in Financial Statements” (“SAB 101”), as amended by SAB No. 104, “Revenue Recognition” (“SAB 104”). The Company considers amounts to be earned once evidence of an arrangement has been obtained, services are delivered, fees are fixed or determinable, and collectability is reasonably assured. In such contracts, the Company’s efforts, measured by time incurred, typically represent the contractual milestones or output measure, which is the contractual earnings pattern. For non-technology integration consulting contracts with fixed fees, the Company recognizes revenues as amounts become billable in accordance with contract terms, are consistent with the services delivered, and are earned.

 

Revenues from contracts for technology integration consulting services where the Company designs/redesigns, builds and implements new or enhanced systems applications and related processes for its clients are recognized on the percentage-of-completion method, which involves calculating the percentage of services provided during the reporting period compared to the total estimated services to be provided over the duration of the contract. This method is followed where reasonably dependable estimates of revenues and costs can be made. Estimates of total contract revenues and costs are continuously monitored during the term of the contract, and recorded revenues and costs are subject to revision as the contract progresses. Such revisions may result in increases or decreases to revenues and income and are reflected in the financial statements in the periods in which they are first identified. If the Company’s estimates indicate that a contract loss will occur, a loss provision is recorded in the period in which the loss first becomes probable and reasonably estimable. Contract losses are determined to be the amount by which the estimated direct and indirect costs of the contract exceed the estimated total revenues that will be generated by the contract and are included in cost of services and classified as accrued expenses. There were no contracts in which a loss is probable or reasonably estimable at September 30, 2014 and December 31, 2013.

 

Revenues for contracts with multiple elements are allocated based on the lesser of the element’s relative fair value or the amount that is not contingent on future delivery of another element. If the amount of non-contingent revenues allocated to a delivered element accounted for under the percentage-of-completion method of accounting is less than the costs to deliver such services, then such costs are deferred and recognized in future periods when the revenues become non-contingent. Fair value is determined based on the prices charged when each element is sold separately. Elements qualify for separation when the services have value on a stand-alone basis, fair value of the separate elements exists and, in arrangements that include a general right of refund relative to the delivered element, performance of the undelivered element is considered probable and substantially in the Company’s control. While determining fair value and identifying separate elements require judgment, generally fair value and the separate elements are readily identifiable as the Company also sells those elements unaccompanied by other elements.

 

 
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Revenues include billings for travel and other out-of-pocket expenses prior to reimbursements to the employee by the Company.

 

The Company reports revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions.

 

Off Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Recent Accounting Pronouncements

 

From time to time, new accounting pronouncements are issued by FASB that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.

 

In September 2014, the FASB issued Accounting Standards Update (ASU) ASU 606 which superceded and relaced ASC 605-25, Revenue Recognition: Multiple-Element Arrangements, and most of ASC 985-605, Software: Revenue Recognition, which applies to all software and SaaS arrangements. Although public companies are required to apply the new guidance to all reporting periods beginning on or after December 15, 2016 (all other entities in the following year), the Company has not yet adopted the new standard.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As the Company is a “smaller reporting company,” this item is not applicable.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit to the Securities and Exchange Commission under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the Securities and Exchange Commission’s rules and forms, and that information is accumulated and communicated to our management, including our principal executive and principal financial officer (whom we refer to in this periodic report as our Certifying Officer), as appropriate to allow timely decisions regarding required disclosure. The Company’s Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the quarter ended September 30, 2014 covered by this Form 10-Q. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer has concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective as required under Rules 13a-15(e) and 15d-15(e) under the Exchange Act.

 

Management’s Report on Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 
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PART II – OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of September 30, 2014, there were no pending or threatened lawsuits.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

None.

 

ITEM 5. OTHER INFORMATION

 

None.

 

 
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ITEM 6. EXHIBITS

 

Number

 

Description

     

3.1

 

Articles of Incorporation (incorporated by reference to our Form S-1 Registration Statement filed on May 14, 2012)

     

3.2

 

Bylaws (incorporated by reference to our Form S-1 Registration Statement filed on May 14, 2012)

     

3.3

 

Articles of Restatement (incorporated by reference to our Form S-1 Registration Statement filed on May 14, 2012)

     

3.4

 

Articles of Amendment (incorporated by reference to our Form S-1 Registration Statement filed on May 14, 2012)

     

31.1

 

Certification of Principal Executive Officer required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

     

31.2

 

Certification of Principal Financial Officer required by Rule 13a-14(1) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

     

32.1

 

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63

     

32.2

 

Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63

     

99.1

 

Non-Negotiable Promissory Note (incorporated by reference to our Form S-1/A Registration Statement filed on September 13, 2012)

     

99.1

 

Services Agreement (incorporated by reference to our Form S-1/A Registration Statement filed on October 9, 2012)

     

101.INS

 

XBRL Instance Document

     

101.SCH

 

XBRL Taxonomy Extension Schema Document

     

101.CAL

 

XBRL Taxonomy Extension Calculation Linkbase Document

     

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document

     

101.LAB

 

XBRL Taxonomy Extension Label Linkbase Document

     

101.PRE

 

XBRL Taxonomy Extension Presentation Linkbase Document

 

 
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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

 

Cimarron Software, Inc.

     

Date: November 13, 2014

By:

/s/ David Fuhrman

 
   

David Fuhrman

   

Chief Executive Officer

   

Chief Financial Officer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

Date: November 13, 2014

By:

/s/ David Fuhrman

 
 

David Fuhrman

Chief Executive Officer

Chief Financial Officer, and Director

   

Date: November 13, 2014

By:

/s/ Rob Sargent

 
 

Rob Sargent

Director

 

 

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