REGO PAYMENT ARCHITECTURES, INC. - Quarter Report: 2009 March (Form 10-Q)
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
10-Q
(Mark
One)
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x
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QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the
period ended March 31, 2009
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o
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For the
transition period from______ to _______
Commission
File Number 000-51523
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MOGGLE,
INC.
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(Exact
name of registrant as specified in its
charter)
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Delaware
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35-2327649
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(State
or other jurisdiction of
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IRS
Employer
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incorporation
or organization)
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Identification
No.)
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#111
Presidential Boulevard
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Suite
212
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Bala
Cynwyd, PA 19004
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(Address
of principal executive offices) (Zip
Code)
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(215)
463-4099
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(Registrant's
telephone number, including area
code)
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(Former
name, former address and former fiscal year,
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if
changed since last report)
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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 o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated
filer, or a non-accelerated filer. See definition of "accelerated filer and
large accelerated filer" in Rule 12b-2 of the Exchange Act:
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Large
Accelerated Filer o
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Accelerated
Filer o
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Non-accelerated
Filer o
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Smaller
reporting company x
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Indicate
by check mark whether the registrant is a shell company (as defined in
Rule
12b-2 of the Exchange
Act): Yes o No x
The
number of shares of the registrant's Common Stock, no par value, outstanding as
of March 31, 2009 was 36,288,276 shares.
1
C O N T E N T S
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Page
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Part
I. FINANCIAL INFORMATION
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3
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17
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27
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27
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Part
II. OTHER INFORMATION
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28
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28
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28
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28
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28
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28
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29
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Item 1.
Financial Statements
Moggle,
Inc.
(A
Development Stage Company)
Financial
Statements
March 31,
2009
Moggle,
Inc.
(A
Development Stage Company)
CONTENTS
Moggle,
Inc.
(A
Development Stage Company)
Balance
Sheet
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March
31, 2009
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December
31, 2008
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|||||||
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(Unaudited)
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(Audited)
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|||||||
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ASSETS
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||||||||
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CURRENT
ASSETS
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||||||||
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Cash
and cash equivalents
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$ | 396,948 | $ | 128,359 | ||||
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TOTAL
CURRENT ASSETS
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396,948 | 128,359 | ||||||
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PROPERTY
AND EQUIPMENT
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||||||||
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Computer
equipment
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5,582 | 5,582 | ||||||
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Less: accumulated
depreciation
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977 | 698 | ||||||
| 4,605 | 4,884 | |||||||
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OTHER
ASSETS
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||||||||
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Deposit
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2,667 | - | ||||||
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TOTAL
ASSETS
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$ | 404,220 | $ | 133,243 | ||||
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LIABILITIES
AND STOCKHOLDERS' EQUITY
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||||||||
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CURRENT
LIABILITIES
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||||||||
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Accounts
payable and accrued expenses
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$ | 36,575 | $ | - | ||||
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TOTAL
CURRENT LIABILITIES
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36,575 | - | ||||||
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STOCKHOLDERS'
EQUITY
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||||||||
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Preferred
stock, $.0001 par value; 2,000,000 shares authorized;
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||||||||
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none
issued and outstanding at March 31, 2009
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- | - | ||||||
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Common
stock, $ .0001 par value; 150,000,000 shares authorized;
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||||||||
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36,288,276
and 35,288,276 shares issued and outstanding
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||||||||
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at
March 31, 2009 and December 31, 2008
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3,629 | 3,529 | ||||||
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Common
stock subscribed
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400,000 | - | ||||||
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Additional
paid in capital
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1,165,176 | 1,113,600 | ||||||
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Deficit
accumulated during the development stage
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(1,201,160 | ) | (983,886 | ) | ||||
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STOCKHOLDERS'
EQUITY
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367,645 | 133,243 | ||||||
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TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
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$ | 404,220 | $ | 133,243 | ||||
See
accompanying notes to financial statements.
Moggle,
Inc.
(A
Development Stage Company)
Statements
of Operations
For the
Three Months Ended March 31, 2009 and
For the
Period February 11, 2008 (Date of Inception) to March 31, 2008
And For
the Period February 11, 2008 (Date of Inception) to March 31, 2009
(Unaudited)
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Three
Months
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From
Inception
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|||||||||||
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Cumulative
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Ended
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February
11, 2008
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||||||||||
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Since
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March
31,
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to
March 31,
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||||||||||
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Inception
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2009
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2008
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||||||||||
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SALES
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$ | - | $ | - | $ | - | ||||||
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OPERATING
EXPENSES
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||||||||||||
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General
and administrative
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80,103 | 21,184 | 7,263 | |||||||||
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Consulting
(a)
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192,860 | 49,266 | 81,603 | |||||||||
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Payroll
(b)
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404,292 | - | 8,825 | |||||||||
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Professional
fees
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254,746 | 63,814 | 16,666 | |||||||||
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Research
and development
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10,699 | - | - | |||||||||
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Travel
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259,288 | 83,449 | 26,190 | |||||||||
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Total
operating expenses
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1,201,988 | 217,713 | 140,547 | |||||||||
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OTHER
INCOME
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||||||||||||
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Interest
income
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828 | 439 | - | |||||||||
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NET
LOSS
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$ | (1,201,160 | ) | $ | (217,274 | ) | $ | (140,547 | ) | |||
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BASIC
AND DILUTED NET LOSS PER
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||||||||||||
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COMMON
SHARE
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$ | (0.01 | ) | $ | (0.01 | ) | ||||||
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BASIC
AND DILUTED WEIGHTED AVERAGE
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||||||||||||
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COMMON
SHARES OUTSTANDING
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35,954,943 | 19,076,250 | ||||||||||
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(a)
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–
includes share-based compensation of $108,777 cumulative, and $11,676 for
the three months ended March 31, 2009 and $74,103 for the period from
February 11, 2008 (Date of Inception) to March 31,
2008
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(b)
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–
includes share-based compensation of $404,292 cumulative and $8,825 for
the period from February 11, 2008 (Date of Inception) to March 31,
2008
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See
accompanying notes to financial statements.
Moggle,
Inc.
(A
Development Stage Company)
Statement
of Changes in Stockholders’ Equity
For the
Period February 11, 2008 (Date of Inception) to March 31, 2009
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Deficit
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||||||||||||||||||||||||
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Common
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Accumulated
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|||||||||||||||||||||||
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Stock
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Common
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Additional
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During
the
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|||||||||||||||||||||
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Number
of
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Stock
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Paid-In
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Development
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|||||||||||||||||||||
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Shares
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Amount
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Subscribed
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Capital
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Stage
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Total
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|||||||||||||||||||
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Issuance
of initial 19,000,000 shares on February 11, 2008
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19,000,000 | $ | 1,900 | $ | - | $ | 17,100 | $ | - | $ | 19,000 | |||||||||||||
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Issuance
of shares of common stock
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13,788,276 | 1,379 | - | 483,681 | - | 485,060 | ||||||||||||||||||
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Exercise
of options
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2,250,000 | 225 | - | 89,775 | - | 90,000 | ||||||||||||||||||
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Exercise
of warrants
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250,000 | 25 | - | 9,975 | - | 10,000 | ||||||||||||||||||
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Fair
value of employee stock option grants
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- | - | - | 404,292 | - | 404,292 | ||||||||||||||||||
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Fair
value of non-employee stock option/warrant grants
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- | - | - | 108,777 | - | 108,777 | ||||||||||||||||||
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Net
loss
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- | - | - | - | (983,886 | ) | (983,886 | ) | ||||||||||||||||
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Balance,
December 31, 2008
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35,288,276 | 3,529 | - | 1,113,600 | (983,886 | ) | 133,243 | |||||||||||||||||
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Exercise
of warrants
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1,000,000 | 100 | - | 39,900 | 40,000 | |||||||||||||||||||
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Common
stock subscribed
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- | - | 400,000 | - | - | 400,000 | ||||||||||||||||||
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Fair
value of non-employee stock option/warrant grants
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- | - | - | 11,676 | - | 11,676 | ||||||||||||||||||
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Net
loss
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(217,274 | ) | (217,274 | ) | ||||||||||||||||||||
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Balance,
March 31, 2009 (Unaudited)
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36,288,276 | $ | 3,629 | $ | 400,000 | $ | 1,165,176 | $ | (1,201,160 | ) | $ | 367,645 | ||||||||||||
See accompanying notes to financial statements.
Moggle,
Inc.
(A
Development Stage Company)
Statements
of Cash Flows
For the
Three Months Ended March 31, 2009 and
For the
Period February 11, 2008 (Date of Inception) to March 31, 2008
And For
the Period February 11, 2008 (Inception) to March 31, 2009
(UNAUDITED)
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Three
Months
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From
Inception
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|||||||||||
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Cumulative
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Ended
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February
11, 2008
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||||||||||
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Since
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March
31,
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March
31,
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||||||||||
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Inception
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2009
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2008
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||||||||||
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CASH
FLOWS FROM OPERATING ACTIVITIES
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||||||||||||
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Net
loss
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$ | (1,201,160 | ) | $ | (217,274 | ) | $ | (140,547 | ) | |||
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Adjustments
to reconcile net loss to net cash
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||||||||||||
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used
in operating activities
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||||||||||||
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Fair
value of options issued in exchange for services
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524,745 | 11,676 | 82,928 | |||||||||
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Depreciation
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977 | 279 | - | |||||||||
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Increase
in assets
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||||||||||||
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Prepaid
expenses
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- | - | (33,334 | ) | ||||||||
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Deposits
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(2,667 | ) | (2,667 | ) | - | |||||||
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Increase
in liabilities
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||||||||||||
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Accounts
payable
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36,575 | 36,575 | 4,131 | |||||||||
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Net
cash used in operating activities
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(641,530 | ) | (171,411 | ) | (86,822 | ) | ||||||
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CASH
FLOWS FROM INVESTING ACTIVITIES
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||||||||||||
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Puchase
of equipment
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(5,582 | ) | - | - | ||||||||
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Net
cash used in investing activities
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(5,582 | ) | - | - | ||||||||
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CASH
FLOWS FROM FINANCING ACTIVITIES
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||||||||||||
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Proceeds
from issuance of common stock
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504,060 | - | 234,000 | |||||||||
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Proceeds
from common stock subscribed
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400,000 | 400,000 | - | |||||||||
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Proceeds
from exercise of options
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90,000 | - | - | |||||||||
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Proceeds
from exercise of warrants
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50,000 | 40,000 | - | |||||||||
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Net
cash provided by financing activities
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1,044,060 | 440,000 | 234,000 | |||||||||
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NET
INCREASE IN CASH AND
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||||||||||||
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CASH
EQUIVALENTS
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396,948 | 268,589 | 147,178 | |||||||||
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CASH
AND CASH EQUIVALENTS - BEGINNING OF PERIOD
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- | 128,359 | - | |||||||||
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CASH
AND CASH EQUIVALENTS - END OF PERIOD
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$ | 396,948 | $ | 396,948 | $ | 147,178 | ||||||
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SUPPLEMENTAL
DISCLOSURE OF NON-CASH
|
||||||||||||
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INVESTING
AND FINANCING ACTIVITIES:
|
||||||||||||
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Common
stock subscribed
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$ | - | $ | - | $ | 35,000 | ||||||
See
accompanying notes to financial statements.
Moggle,
Inc.
(A
Development Stage Company)
Notes to
Financial Statements
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of the
Business
The
Company is a development stage enterprise incorporated in the state of Delaware
on February 11, 2008. Since inception, substantially all of the
efforts of the Company have been developing technologies for multiplayer online
role playing games. The Company is in the development stage of
raising capital, financial planning, establishing sources of supply, and
acquiring property and equipment. The Company anticipates
establishing global markets for its technologies.
Basis of
Presentation
The
accompanying unaudited financial statements have been prepared in accordance
with U.S. generally accepted accounting principles for interim financial
information and with the instructions for Form 10-Q and Rule 8-03 of Regulation
S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three
months ended March 31, 2009 are not necessarily indicative of the results that
may be expected for the year ended December 31, 2009.
The
financial statements are presented in accordance with Statement of Financial
Accounting Standard (“SFAS”) No. 7, “Accounting and Reporting by Development
Stage Enterprises.”
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
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 these
estimates.
Comprehensive
Income
The
Company follows SFAS No. 130, “Reporting Comprehensive
Income.” Comprehensive income is a more inclusive financial reporting
methodology that includes disclosure of certain financial information that
historically has not been recognized in the calculation of net
income. Since the Company has no items of other comprehensive income,
comprehensive income (loss) is equal to net income (loss).
Fair Value of Financial
Instruments
The
Company’s financial instruments consist of cash and accounts
payable. The carrying value of cash and accounts payable approximate
fair value, because of their short maturity.
Concentration of Credit Risk
Involving Cash
The
Company has deposits with a financial institution which at times exceed Federal
Depository Insurance coverage of $250,000.
Cash and Cash
Equivalents
For
purposes of reporting cash flows, the Company considers all cash accounts, which
are not subject to withdrawal restrictions or penalties, and certificates of
deposit and commercial paper with original maturities of 90 days or less to be
cash or cash equivalents.
Moggle,
Inc.
(A
Development Stage Company)
Notes to
Financial Statements
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue
Recognition
In
accordance with Securities and Exchange Commission (“SEC”) Staff Accounting
Bulletin (“SAB”) No. 104, Revenue Recognition, the
Company will recognize revenue when (i) persuasive evidence of a customer or
distributor arrangement exists or acceptance occurs, (ii) a retailer,
distributor or wholesaler receives the goods, (iii) the price is fixed or
determinable, and (iv) collectibility of the sales revenues is reasonably
assured. Subject to these criteria, the Company will generally recognize revenue
from the sale of role playing games when shipped.
Income
Taxes
The
Company follows SFAS No. 109, “Accounting for Income Taxes,” which requires an
asset and liability approach to financial accounting and reporting for income
taxes. Deferred income tax assets and liabilities are computed
annually for temporary differences between the financial statements and tax
bases of assets and liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable
income. Valuation allowances are established when necessary to reduce
deferred tax assets to the amount expected to be realized. Income tax
expense is the tax payable or refundable for the period plus or minus the change
during the period in deferred tax assets and liabilities.
Loss Per
Share
The
Company follows SFAS No. 128, “Earnings Per Share” resulting in the presentation
of basic and diluted earnings per share. Because the Company reported
a net loss for the three months ended March 31, 2009 and for the period from
February 11, 2008 (inception) to December 31, 2008, common stock equivalents,
including stock options and warrants were anti-dilutive; therefore, the amounts
reported for basic and dilutive loss per share were the same.
Start-up
Costs
In
accordance with Statement of Position 98-5, Reporting on the Costs of Start-up
Activities, start-up costs are expensed as incurred.
Research
and Development Costs
Research
and development costs are expensed when incurred.
Recently Issued
Pronouncements
In May
2008, the FASB issued FSP APB 14-1, Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement), which clarifies the accounting for convertible debt
instruments that may be settled in cash upon conversion, including partial cash
settlement. FSP APB 14-1 specifies that an issuer of such instruments should
separately account for the liability and equity components of the instruments in
a manner that reflects the issuer’s non-convertible debt borrowing rate when
interest costs are recognized in subsequent periods. FSP APB 14-1 is effective
for the Company’s fiscal year beginning January 1, 2009, and retrospective
application is required for all periods presented.
FSP APB
14-1 is currently not applicable to the Company.
Moggle,
Inc.
(A
Development Stage Company)
Notes to
Financial Statements
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
In June
2008, the FASB issued EITF Issue No. 07-5, Determining Whether an Instrument
(or Embedded Feature) is Indexed to an Entity’s Own Stock (“EITF Issue
No. 07-5”), which is effective for financial statements for fiscal years
beginning after December 15, 2008, and interim periods within those fiscal
years. The Issue addresses the determination of whether an instrument (or an
embedded feature) is indexed to an entity’s own stock, which is the first part
of the scope exception in Paragraph 11(a) of SFAS No. 133 for the purpose of
determining whether the instrument is classified as an equity instrument or
accounted for as a derivative instrument which would be recognized either as an
asset or liability and measured at fair value. The guidance shall be applied to
outstanding instruments as of the beginning of the fiscal year in which this
Issue is initially applied. Any debt discount that was recognized when the
conversion option was initially bifurcated from the convertible debt instrument
shall continue to be amortized. The cumulative effect of the change in
accounting principles shall be recognized as an adjustment to the opening
balance of retained earnings. The adoption of EITF Issue No. 07-05
did not have a material impact on the Company’s financial
statements.
In June
2008, the FASB issued FASB Staff Position (FSP) Emerging Issues Task Force
(EITF) 03-6-1, Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities. FSP EITF 03-6-1 addresses whether instruments
granted in share-based payment transactions are participating securities prior
to vesting and, therefore, need to be included in the earnings allocation in
computing earnings per share under the two-class method as described in SFAS No.
128, Earnings Per
Share. Under the guidance of FSP EITF 03-6-1, unvested share-based
payment awards that contain non-forfeitable rights to dividends or dividend
equivalents (whether paid or unpaid) are participating securities and must be
included in the computation of earnings per share pursuant to the two-class
method. All prior period earnings per share information must be adjusted
retrospectively. The Company adopted FSP EITF 03-6-1 as of January 1,
2009. The Company did not issue any share-based awards that would
qualify as participating securities for the three months ended March 31,
2009.
In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS
No. 157 establishes a framework for measuring fair value and expands disclosures
about fair value measurements. The changes to current practice resulting from
the application of this statement relate to the definition of fair value, the
methods used to measure fair value, and the expanded disclosures about fair
value measurements. SFAS No. 157 is effective for fiscal years beginning after
November 15, 2007. In February 2008, the FASB issued FSP No. SFAS No. 157-2,
Effective Date of FASB
Statement No. 157, which provides a one-year deferral of the effective
date of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities,
except those that are recognized or disclosed in the financial statements at
fair value at least annually. The Company adopted this statement for financial
assets and financial liabilities and nonfinancial assets and nonfinancial
liabilities disclosed or recognized at fair value on a recurring basis (at least
annually) as of January 1, 2008. The Company adopted the statement for
nonfinancial assets and nonfinancial liabilities on January 1, 2009. The
adoption of this statement in each period did not have a material impact on its
financial statements.
Recently Issued Accounting
Pronouncements Not Yet Adopted
In April
2009, the FASB issued FASB Staff Position No. 107-1 (“FSP FAS 107-1”) and APB
28-1 (“APB 28-1”), which amends FASB Statement No. 107, Disclosures about Fair Value of
Financial Instruments and APB Opinion No. 28, Interim Financial Reporting,
to require disclosures about the fair value of financial instruments for interim
reporting periods. FSP FAS 107-1 and APB 28-1 will be effective for interim
reporting periods ending after June 15, 2009. The adoption of this staff
position will not have a material impact on the Company’s financial
statements.
In April
2009, the FASB issued FASB Staff Position No. 157-4 (“FSP FAS 157-4”), which
provides additional guidance in accordance with FASB No. 157, Fair Value Measurements, when
the volume and level of activity for the asset or liability has significantly
decreased. FSP FAS 157-4 shall be effective for interim and annual reporting
periods ending after June 15, 2009. The Company is currently evaluating the
potential impact the adoption of this staff position will have on its financial
statements.
Moggle,
Inc.
(A
Development Stage Company)
Notes to
Financial Statements
NOTE
1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
In April
2009, the FASB issued FASB Staff Position No. 115-2 (“FSP FAS 115-2”) and FASB
Staff Position No. 124-2 (“FSP FAS 124-2”), which amends the
other-than-temporary impairment guidance for debt and equity securities. FSP FAS
115-2 and FSP FAS 124-2 shall be effective for interim and annual reporting
periods ending after June 15, 2009. The Company is currently evaluating the
potential impact the adoption of this staff position will have on its financial
statements.
Reclassifications
Certain
amounts in the 2008 financial statements have been reclassified in order for
them to be in conformity with the 2009 presentation.
NOTE
2 – GOING CONCERN
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. The Company has incurred
significant losses and experienced negative cash flow from operations during the
development stage. These conditions raise substantial doubt about the
Company’s ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
The
Company is in the development stage at March 31, 2009. Successful
completion of the Company’s development program and, ultimately the attainment
of profitable operations is dependent upon future events, including obtaining
adequate financing to fulfill its development activities and achieving a level
of sales adequate to support the Company’s cost structure. However,
there can be no assurances that the Company will be able to secure additional
equity investment or achieve an adequate sales level.
NOTE
3 – INCOME TAXES
Income
tax expense was $0 for the three months ended March 31, 2009 and for the period
from February 11, 2008 (inception) to March 31, 2008.
As of
January 1, 2009, we had no unrecognized tax benefits, and accordingly, we have
not recognized interest or penalties during 2009 related to unrecognized tax
benefits. There has been no change in unrecognized tax benefits
during the three months ended March 31, 2009, and there was no accrual for
uncertain tax positions as of March 31, 2009.
There is
no income tax benefit for the losses for the three months ended March 31, 2009
and for the period from February 11, 2008 (inception) to March 31, 2008, since
management has determined that the realization of the net deferred tax asset is
not assured and has created a valuation allowance for the entire amount of such
benefits.
NOTE
4 – COMMON STOCK
In
February 2008, the Company issued 19,000,000 founders shares at $.001 per share
or $19,000.
In
February 2008, the Company commenced a private placement of up to 7 million
units at a price of $.035 per unit to accredited investors. One unit
consists of one share of the Company’s common stock and two
warrants. Each warrant entitles the holder to purchase one additional
share of common stock at a price of $.04 per share and is exercisable for a
three year period. From February through June 2008, 7,142,858 units
were sold, raising $250,000 in proceeds and resulting in 14,285,716 warrants
being issued.
On May 8,
2008, 500,000 options were exercised, which raised proceeds
$20,000. During the three months ended September 30, 2008, 1,750,000
options were exercised, which raised proceeds of $70,000.
Moggle,
Inc.
(A
Development Stage Company)
Notes to
Financial Statements
NOTE
4 – COMMON STOCK (Continued)
On May
27, 2008, the Company commenced a private placement of up to 6 million units at
a price of $.035 per unit to accredited investors. One unit consists
of one share of the Company’s common stock and one warrant. Ten of these
warrants entitle the holder to purchase one additional share of common stock at
a price of $.75 per share and is exercisable for a three year
period. During the three months ended June 30, 2008, 6,142,858 units
were sold with warrants at a price of $.75 per share, raising $215,000 in
proceeds and resulting in 614,286 warrants being issued. During the
three months ended September 30, 2008 500,000 units were sold with warrants at a
price of $.75, raising $17,500 and resulting in 50,000 warrants being
issued.
On May
31, 2008, the Form D, Notice
of Sale of securities Pursuant to Regulation D, Section 4(6) and/or Uniform Limited Offering
Exemption, was amended to resolve over subscriptions in the private
placements.
During
the three months ended September 30, 2008, the Company sold 2,560 shares, which
raised $2,560. The Company filed a registration statement to register
2,560 shares of the Company, which became effective on September 3,
2008.
During
the three months ended September 30, 2008, 250,000 warrants were exercised,
which raised proceeds of $10,000.
During
the three months ended March 31, 2009, 1 million warrants were exercised, which
raised proceeds of $40,000.
On March
26, 2009, the Company received $400,000 for a subscription agreement to purchase
400,000 shares of the Company’s restricted common stock. The
subscription agreement was executed on April 7, 2009.
NOTE
5 – STOCK OPTIONS AND WARRANTS
During
2008, the Board of Directors (“Board”) of the Company adopted an Equity
Incentive Plan (“Plan”). Under the Plan, the Company is authorized to
grant options to purchase up to 25,000,000 shares of common stock to any
officer, other employee or director of, or any consultant or other independent
contractor who provides services to the Company. The Plan is intended
to permit stock options granted to employees under the Plan to qualify as
incentive stock options under Section 422 of the Internal Revenue Code of 1986,
as amended (“Incentive Stock Options”). All options granted under the
Plan, which are not intended to qualify as Incentive Stock Options are deemed to
be non-qualified options (“Non-Statutory Stock Options”). As of March
31, 2009, 12,250,000 options have been issued and are unexercised, and
10,500,000 options that are available to be issued under the Plan. Of
the 12,250,000 options that have been issued and are unexercised, 4,250,000
options were granted to employees and 8,000,000 options were granted to non
employees.
The Plan
is administered by the Board, which determines the persons to whom awards will
be granted, the number of awards to be granted and the specific terms of each
grant, including the vesting thereof, subject to the terms of the
Plan.
In
connection with Incentive Stock Options, the exercise price of each option may
not be less than 100% of the fair market value of the common stock on the date
of the grant (or 110% of the fair market value in the case of a grantee holding
more than 10% of the outstanding stock of the Company).
The
Company uses the Black-Scholes option pricing model to calculate the grant-date
fair value of the options, with the following assumptions: no dividend yield,
expected volatility of 51.8%, risk free interest rate of between 2.5% and 3.7%
and expected option life of 5 years. For the three months ended March
31, 2009 and for the period from February 11, 2008 (Date of Inception) through
March 31, 2008, the Company expensed $0 and $8,825 relative to employee options
granted. As of March 31, 2009, there was no unrecognized compensation
expense related to non-vested market-based share awards.
Moggle,
Inc.
(A
Development Stage Company)
Notes to
Financial Statements
NOTE
5 – STOCK OPTIONS AND WARRANTS (Continued)
During
2008, the Company issued the Secretary of the Company 500,000 options, which
were valued at $8,825 and expensed immediately. The Company uses the
Black-Scholes option pricing model to calculate the grant-date fair value of the
options, with the following assumptions: no dividend yield, expected volatility
of 51.8%, risk free interest rate of 2.5% and expected option life of 5
years. The options expire five years from the date of
issuance.
During
2008, the Company entered into an employment agreement with its President and
Chief Executive Officer, whereby, the President and Chief Executive
Officer was issued 1,000,000 options, which were valued at $71,871 and expensed
immediately. The Company uses the Black-Scholes option pricing model
to calculate the grant-date fair value of the options, with the following
assumptions: no dividend yield, expected volatility of 51.8%, risk free interest
rate of 3.3% and expected option life of 5 years. The options expire
five years from the date of issuance.
During
2008, the Company entered into an employment agreement with its Director of
Corporate Development whereby, the Director of Corporate Development was issued
2,750,000 options, which were valued at $197,645 and expensed
immediately. The Company uses the Black-Scholes option pricing model
to calculate the grant-date fair value of the options, with the following
assumptions: no dividend yield, expected volatility of 51.8%, risk free interest
rate of 3.3% and expected option life of 5 years. The options expire
five years from the date of issuance.
During
2008, the Company entered into an agreement with a member of the Company’s Board
of Directors whereby, the member of the Board of Directors was issued 1,250,000
options, which were valued at $89,838 and expensed immediately. The
Company uses the Black-Scholes option pricing model to calculate the grant-date
fair value of the options, with the following assumptions: no dividend yield,
expected volatility of 51.8%, risk free interest rate of 3.3% and expected
option life of 5 years. The options expire five years from the date
of issuance.
On June
23, 2008, 500,000 options were issued to a member of the Board of Directors,
which were valued at $36,113 and expensed immediately. The Company
uses the Black-Scholes option pricing model to calculate the grant-date fair
value of the options, with the following assumptions: no dividend yield,
expected volatility of 51.8%, risk free interest rate of 3.7% and expected
option life of 5 years. The options expire five years from the date
of issuance.
A summary
of incentive stock option transactions for employees since December 31, 2008 is
as follows:
|
Weighted
Average
|
||||||||||||
|
Option
|
Exercise
|
Exercise
|
||||||||||
|
Shares
|
Price
|
Price
|
||||||||||
|
Outstanding,
December 31, 2008
|
4,250,000 | $ | 0.04 | $ | 0.04 | |||||||
|
Granted
|
- | - | - | |||||||||
|
Exercised
|
(1,000,000 | ) | 0.04 | 0.04 | ||||||||
|
Expired
|
- | - | - | |||||||||
|
Outstanding,
March 31, 2009
|
3,250,000 | $ | 0.04 | $ | 0.04 | |||||||
|
Exercisable,
March 31, 2009
|
3,250,000 | $ | 0.04 | $ | 0.04 | |||||||
|
Weighted
Average Remaining Life,
|
||||||||||||
|
Exercisable,
March 31, 2009 (years)
|
4.1 | |||||||||||
Moggle,
Inc.
(A
Development Stage Company)
Notes to
Financial Statements
NOTE
5 – STOCK OPTIONS AND WARRANTS (Continued)
The
Company issued 14,950,002 warrants as part of the units included in the private
placements, which expire three years from the date of issuance.
The
Company issued non-statutory stock options to non-employees. The
Company uses the Black-Scholes option pricing model to calculate the grant-date
fair value of the options, with the following assumptions: no dividend yield,
expected volatility of 51.8%, risk free interest rate between 2.5% and 3.7%, and
expected option life of 5 years. The options expire five years from
the date of issuance. Options granted under the agreements are
expensed when the related service or product is provided. For the
three months ended March 31, 2009 and for the period from February 11, 2008
(Date of Inception) to March 31, 2008, the Company expensed $11,676 and $74,103
relative to 8,500,000 non-employee options granted. As of
March 31, 2009, there was $26,466 of unrecognized expense related to
options of non-employees which will be recognized over the terms of the
agreements through October 2009.
The
following table summarizes non-employee stock option/warrant activity of the
Company since December 31, 2008:
|
Weighted
Average
|
||||||||||||
|
Option/Warrant
|
Exercise
|
Exercise
|
||||||||||
|
Shares
|
Price
|
Price
|
||||||||||
|
Outstanding,
December 31, 2008
|
22,700,002 | $ | 0.04 to $.75 | $ | 0.04 to $.75 | |||||||
|
Granted
|
- | - | - | |||||||||
|
Exercised
|
- | - | - | |||||||||
|
Expired
|
- | - | - | |||||||||
|
Outstanding,
March 31, 2009
|
22,700,002 | $ | 0.04 to $.75 | $ | 0.07 | |||||||
|
Exercisable,
March 31, 2009
|
22,700,002 | $ | 0.04 to $.75 | $ | 0.07 | |||||||
|
Weighted
Average Remaining Life,
|
||||||||||||
|
Exercisable,
March 31, 2009 (years)
|
2.7 | |||||||||||
NOTE
6 – OPERATING LEASES
For the
three months ended March 31, 2009 and for the period from February 11, 2008
(inception) through March 31, 2008 total rent expense under leases amounted to
$1,434 and $0. At March 31, 2009, the Company was obligated under
various non-cancelable operating lease arrangements for offices as
follows:
|
2009
|
$ | 21,336 | ||
|
2010
|
32,000 | |||
|
2011
|
10,664 | |||
| $ | 64,000 |
Moggle,
Inc.
(A
Development Stage Company)
Notes to
Financial Statements
NOTE
7 – RELATED PARTY TRANSACTIONS
From
inception, the Company has utilized offices leased by affiliates of certain of
the Company’s board members without charge.
During
the three months ended March 31, 2009 and for the period from February 11, 2008
(inception) to March 31, 2008, a director of the Company advanced expenses on
behalf of the Company in connection with research of the Company’s business
plans and the implementation of the Company’s business
plans. Expenses totaling $31,164 were incurred and reimbursed during
the three months ended March 31, 2009. Expenses totaling $23,520 were
incurred during the period from February 11, 2008 (inception) and March 31,
2008, of which $18,418 were reimbursed prior to March 31, 2008 and $5,102 were
reimbursed subsequent to March 31, 2008.
Item
2. Management's Discussion and Analysis or Plan
of Operation.
Overview
We were
incorporated in Delaware in February 2008. We are a development stage company
and have had limited business operations. For the period from inception through
March 31, 2009, we have concentrated our efforts on developing a
business plan which is designed to allow us to create our massive multiplayer
online gaming platform (the “Platform”) and massive multiplayer online games
(“MMOG(s)”) for use on our Platform. Those activities included, but were not
limited to, securing initial capital in order to fund the development of a
demonstration model for portions of the Platform and working capital, securing a
board of directors, management personnel and consultants who we believe will
assist us in developing the Platform and meet our business goals, conducting
market research regarding the MMOG industry and our Platform and planned MMOGs,
and other pre-marketing activities.
Results
of Operations
Comparison
of the Three Month Period Ended March 31, 2009 and the Period From February 11,
2008 (inception) through March 31, 2008
The
following information should be considered together with our financial
statements for such period and the accompanying notes thereto.
Net
Loss for the Three Months Ended March 31, 2009 and for the Period from February
11, 2008 (inception) through March 31, 2008 :
We
incurred a net loss of $217,274 on zero net revenue for the three months ended
March 31, 2009 and a net loss of $140,547 on zero net revenue for the period
from February 11, 2008 (inception) through March 31, 2008, an increase of
$76,727. The following is a summary of the components of such
loss:
|
Three
Months
|
From
Inception
|
|||||||
|
Ended
|
February
11, 2008
|
|||||||
|
March
31,
|
to
March 31,
|
|||||||
|
2009
|
2008
|
|||||||
|
Sales
|
$ | - | $ | - | ||||
|
General
and Administrative Expense
|
21,184 | 7,263 | ||||||
|
Consulting
|
49,266 | 81,603 | ||||||
|
Payroll
|
- | 8,825 | ||||||
|
Professional
Fees
|
63,814 | 16,666 | ||||||
|
Travel
|
83,449 | 26,190 | ||||||
|
Net
Loss
|
$ | (217,274 | ) | $ | (140,547 | ) | ||
|
Basic
and Diluted Net Loss Per Share
|
$ | (0.01 | ) | $ | (0.01 | ) | ||
|
Basic
and Diluted Weighted Average Outstanding
|
||||||||
|
Shares
|
35,954,943 | 19,076,250 | ||||||
|
Compensation
Expense of Stock Options
|
$ | 11,676.00 | $ | 82,928.00 | ||||
Lack of Revenue:
As is common with a company in the development stage, the Company had
no revenue for the three months ended March 31, 2009 or for the period from
February 11, 2008 (inception) through March 31, 2008. During such time we
devoted our efforts to formalizing our business plan and raising initial capital
to commence our operations.
Expenses:
The following amounts represent the most significant
components of expenses for the three months ended March 31, 2009 and for the
period from February 11, 2008 (inception) through March 31, 2008:
a) General
and Administrative expenses: For the three months ended March 31, 2009 general
and administrative expenses was $21,184 as compared to $7,263 for the period
from inception through March 31, 2008, an increase of
$13,921. The increase primarily results from filing fees related to
the filing of Form S-1 in the first quarter of 2009 amounting to $12,254 and $0
for the period from February 11, 2008 (inception) to March 31,
2008.
b)
Consulting expense: During the three months ended March 31, 2009, consulting
fees decreased to $49,266 from $81,603, a decrease of $32,337. This resulted
from share-based compensation for the three months ended March 31, 2009
decreasing to $11,676 from $74,103, a decrease of $62,427, and an increase in
fees paid to corporate financial advisors in connection with
the Company’ s operational and capital needs.
c) Payroll
Expenses: During the three months ended March 31, 2009, payroll expenses
decreased to $0 from $8,825 for the period from inception through March 31,
2008, a decrease of $8,825. This resulted from no share-based
compensation being issued to employees during the three months ended March 31,
2009.
d)
Professional Fees: For the three months ended March 31, 2009, professional
increased to $63,814 from $16,666 for the period from inception through March
31, 2008, an increase of $47,148. The increase primarily
resulted from professional fees related to the filing of Form S-1 in the first
quarter of 2009.
e)
Travel: During the three months ended March 31, 2009, travel expenses increased
to $83,449 from $26,190 for the period from inception through March 31, 2008, an
increase of $57,259. The increase primarily resulted from efforts by
the Company to enter into relationships with entities designed to assist the
Company in its efforts to further develop the Platform and MMOGs and raise
additional funding.
Liquidity
and Capital Resources
We had
cash on hand of approximately $396,948 as of March 31, 2009 as compared to $
147,148 as of March 31, 2008. Since we have not realized any
revenues, these funds were generated through the sale of our common stock and
the exercise of warrants and options. Since our inception, we have
been operating the Company in a minimalistic manner due to limited cash
resources. Rather than fully implementing our business plan, we have utilized
funds to research and develop our business plan and begin creating a
demonstration model showing a small portion of what our Platform will be
designed to accomplish. We have not paid any salaries to management and have
utilized offshore programmers on a work for hire
basis to assist in developing the demonstration model. The Company’s
existing cash on hand will not be sufficient for the Company to complete its
current business plans. Continuation of the Company as a going concern is
dependent upon obtaining the additional working capital necessary to develop our
Platform and MMOGs. Management’s principal strategy to accomplish that task is
through the future sale of equity in the Company. The Company
initially intended to rely on proceeds from the public sale of 12,000,000 shares
of its common stock at a price of $1.00 per share pursuant to the Registration
Statement, which was originally filed in July 2008, to raise the required
working capital. However the Company raised only $2,560 under the Registration
Statement through the sale of 2,560 shares of common stock. In
October 2008, the Company withdrew the remaining 11,997,440 shares of common
stock from registration under the Registration Statement. The Company now
intends to primarily rely on the possible sale of equity in private
unregistered transactions with institutional and accredited investors outside of
the United States in order to raise the working capital needed to fund its plans
as well as the possible exercise of outstanding options and warrants. There is
no assurance that the Company will raise sufficient capital in order to meet its
goals of completing the development of the Platform and the Company’s MMOGs, and
implementing a sales and marketing effort to introduce the Platform, the
Company’s MMOGs and game development services to the online gaming
industry.
Even if
we are successful in raising sufficient capital in order to complete
the development of the Platform and the Company’s MMOGs, our ability to continue
in business as a viable going concern can only be achieved when our
revenues reach a level that sustains our business operations. If we
are successful in raising a minimum of $10,000,000 by June 30, 2009, we project
that our Platform and MMOG’s will not be ready for full scale introduction to
the marketplace until between 2010 and 2011. Accordingly we do not project that
significant revenue will be developed until 2010 at the earliest. While it is
impossible to predict the amount of revenues, if any, that we may receive from
our Platform, MMOGs and game development services, we presently believe , based
solely on our internal projections, that we will generate revenues sufficient to
fund our planned business operations if the Platform and MMOGs are actually
developed in accordance with our plans. However there can be no assurance that
our belief will be realized. There can be no assurance that we will raise
sufficient proceeds, or any proceeds, for us to implement fully our proposed
business plan to aggressively develop, complete, and market the Platform, our
MMOGs and our game development services. Moreover there can be no
assurance that even if our Platform and MMOGs are developed, that we will
generate revenues sufficient to fund our operations. In either such
situation, we may not be able to continue our operations and our business might
fail, and you may lose your entire investment. Based on our current
projections, we believe that should we raise a minimum of
$10,000,000, of which there can be no assurance, such proceeds will
be sufficient for us to continue our planned operations throughout
2010.
During
the remaining months of 2009, our ability to execute on our current plan of
operations is dependent on raising proceeds from the private sale of equity
capital. In the event that we are unsuccessful in these efforts we will utilize
our cash to attempt to complete a limited demonstration model of our Platform.
We will not be able to attempt the commercial development of the Platform
or MMOGs. In such event we will attempt to seek out alternative forms
of financing and/or attempt to enter into joint ventures or partnerships in
order to raise sufficient funds to attempt to execute on our business plans to
develop the Platform and multiple MMOGs.
In the
event that we are successful in selling less than $1,000,000 in equity capital
we will change our plan to focus on the development of one or possibly two
MMOGs, instead of attempting to develop the Platform. We will significantly
reduce our hiring plans by seeking to hire only a small number of key
individuals and rely significantly on outsourced foreign labor. We believe
that such proceeds will allow us to continue operations through 2009
and we will be required to generate revenues in excess of cash expenses in 2010
in order to continue operations. We will attempt to raise additional funds in
2010 in the event that our cash flow requirements are not satisfied by revenues.
We also will look to raise additional funds in order to allow us to
commence development of the Platform.
In the
event that we are successful in selling between $1,000,000 and $5,000,000 in
equity capital, we will scale back our current hiring plans in 2009 and
2010 but will proceed as planned with the development of a Platform. As a result
of reduced funding a smaller number of games will be attempted to be produced
and marketing will be delayed. It is anticipated that this lower level of
funding will allow the Company to operate, based on its current plan of
operations, through 2009 without the need to generate revenues or seek out
additional funding. However we anticipate that due to the reduction of net
proceeds available to us in such event,we will experience
a delay in introduction of the Platform until 2011 or possibly
2012. Therefore at such time additional funding will be needed if revenues from
MMOGs are not sufficient to meet our cash flow needs and marketing
plans.
The
foregoing use of proceeds and project implementation projections were
prepared by us in good faith based upon assumptions that we believe to be
reasonable. No assurance can be given, however, regarding the attainability of
the projections or the reliability of the assumptions on which they are based.
The projections are subject to the uncertainties inherent in any attempt to
predict the results of our operations, especially where new products and
services are involved. Certain of the assumptions used will inevitably not
materialize and unanticipated events will occur. Therefore, the actual results
of operations are likely to vary from the projections and such variations may be
material and adverse to the Company. Therefore the projections are included
solely to give prospective investors information concerning the Company’s
estimates of future operating results based on our assumptions and no assurance
can be given that such results will be achieved. The Company reserves the right
to conduct its business in a manner different from that set forth in the
assumptions as changing circumstances may require. Moreover due to
changes in technology, new product announcements, competitive pressures, system
design and/or other specifications we may be required to change the current
plans for our Platform and MMOGs. Therefore, we cannot provide any assurances
that the Platform and MMOGs can be completed within our projections. In case of
budget over-runs and additional expansions, we may choose to finance such
capital expenditures through the issuance of additional equity or debt
securities, by obtaining a credit facility or by some other financing mechanism.
If we choose to seek financing for such expenditures, we cannot provide any
assurances that such financing will be available on terms reasonably acceptable
to us or at all..
The
following summarizes our cash flows during the three months ended March 31, 2009
and for the period from February 11, 2008 (inception) through March 31,
2008:
Cash
flows from Operating Activities:
|
Three
Months
|
From
Inception
|
|||||||
|
Ended
|
February
11, 2008
|
|||||||
|
March
31,
|
to
March 31,
|
|||||||
|
2009
|
2008
|
|||||||
|
Net
Loss
|
$ | (217,274 | ) | $ | (140,547 | ) | ||
|
Adjustments
used to reconcile net loss to cash used
|
||||||||
|
in
Operating Activities:
|
||||||||
|
Compensation
expense of stock and stock options
|
11,676 | 82,928 | ||||||
|
Prepaid
Expenses
|
- | (33,334 | ) | |||||
|
Accounts
Payable
|
36,575 | 4,131 | ||||||
|
Net
Cash used in Operating Activities
|
(171,411 | ) | (86,822 | ) | ||||
|
Cash
flows from Financing Activities
|
||||||||
|
Proceeds
from issuance of Common Stock
|
- | 234,000 | ||||||
|
Common
Stock Subscribed
|
400,000 | - | ||||||
|
Proceeds
from exercise of options and warrants
|
40,000 | - | ||||||
|
Net
cash provided from Financing Activities
|
440,000 | 234,000 | ||||||
|
Net
increase in cash and cash equivalents
|
$ | 396,948 | $ | 147,178 | ||||
On
March 3, 2008, the Company adopted an equity incentive plan which authorized the
issuance of stock options to officers, directors employees and
consultants of the Company. The total number of shares of common stock reserved
for issuance under the plan is 25,000,000 shares subject to adjustment in the
event of stock split, dividend, recapitalization or other similar capital
change. At March 31, 2009 options to purchase 11,250,000 shares of common
stock were outstanding under the 2008 plan.
The Plan
is administered by the Board of Director’s, which selects the eligible persons
to whom options are awarded, determines the number of shares subject to each
option, the exercise price and the period during which options are exercisable.
Each option granted under the Plan is evidenced by a written agreement by the
Company and the grantee. Grants may be issued to employees (including officers)
and directors of the Company as well as to certain consultants and
advisors.
The
exercise price for options granted under the plan is required to be no less than
the fair market value of the common stock on the date the option is granted,
except that options granted to 10% stockholders, are required to have an
exercise price of not less than 110% of the fair market value of the Common
Stock at the date of grant. Incentive stock options granted have a maximum term
of ten years.
For the
three months ended March 31, 2009 no options to purchase were granted. For the
period from February 11, 2008 (inception) through March 31, 2008, 8,750,000
options to purchase were granted. The Black Scholes option pricing
model was used to calculate the fair value of the options granted. During the
three months ended March 31, 2009 and for the period from inception through
March 31,2008 the Company recognized compensation expense of $11,676 and $82,928
related to the stock options. The following assumptions were used in the fair
value calculations:
Risk
free rate – 2.5% to 3.7%
Expected term – 5 years
Expected volatility of stock – 51.8%
Expected dividend yield – 0%.
The
following table summarizes the information with respect to options to purchase
11,250,000 shares of Common Stock which are currently outstanding and
exercisable under the Company’s equity incentive plan:
|
Exercise
Price
|
Options
Outstanding
|
Remaining
Life
|
||
|
$0.04
|
11,000,000
|
Four
(4) years
|
||
|
$0.75
|
250,000
|
Four
(4) years
|
Related
Party Transactions
From
inception through March 31, 2009, the Company has utilized offices leased by
affiliates of certain of the Company’s board members without charge. There are
no commitments for any operating or capital leases for executive or corporate
offices.
During
the three months ended March 31, 2009 and for the period from February 11, 2008
(inception) to March 31, 2008, Peter Pelullo anemployee of the
Company advanced expenses on behalf of the Company in connection with research
of the Company’s business plans and the implementation of the Company’s business
plans totaling $31,164 and $23,520. The Company has reimbursed
Mr. Pelullo for these expenses.
3D
Financial Corp Limited (“3D”), the Company’s largest shareholder is owned by
Alfredo Villa, the Company’s President, Chief Executive Officer and
Director and Peter Pelullo, the Company’s .director of corporate development..
3D purchased 19,000,000 shares of the Company’s common stock for $19,000 as the
Company’s initial founder. Messrs. Pelullo and Villa also each
individually purchased for $70,000, 2,000,000 shares of
Common Stock and warrants to purchase an additional 2,100,000 shares of Common
Stock.
During
the three months ended March 31, 2009, Mr. Pelullo exercised options to purchase
1,000,000 shares for a total of $40,000. Previously officers and directors of
the Company exercised an aggregate of 0 warrants and_1,750,000 options
generating aggregate proceeds of $70,000 for the Company.
Contractual
Obligations
The
Company entered into an employment agreement with Alfredo Villa, its President
and Chief Executive Officer. The agreement expires in 2011. The agreement calls
for a base salary of $200,000 per year payable at such time when the Company
receives a minimum in $5,000,000 in equity investments.
The
Company has also entered into an employment agreement with Ernest Cimadamore,
its Secretary and Chief Financial Officer. The agreement expires in 2011. The
agreement calls for a base salary of $75,000 per year payable at such time when
the Company receives a minimum in $5,000,000 in equity investments.
In
addition the Company has entered into an employment agreement with Peter
Pelullo, its director of Corporate Development. The agreement expires in 2011.
The agreement calls for a base salary of $180,000 per year payable at such time
when the Company receives a minimum in $5,000,000 in equity
investments.
The
Company has also entered into a number of consulting agreements pursuant to
which the Company has issued an aggregate of 14,500,000 options. Under such
consulting agreements the Company is not obligated to make any monetary
payments, other than for reimbursement of expenses, to such consultants. Two of
such agreementsare with Jo Webber the Chairman of the Board of
Directors of the Company and Pradeep Itycheria, a director of the
Company..
Additional
terms regarding the foregoing agreements with the Company’s officers and
directors is set forth in the Executive and Director Compensation section
of the Company’s Annual Report on Form 10K for the year ended
December 31, 2008.
The
Company entered into an operating lease for office space with a term of 2
years. At March 31, 2009, the Company was obligated under various
non-cancelable operating lease arrangements for offices as follows:
|
2009
|
$ | 21,336 | ||
|
2010
|
32,000 | |||
|
2011
|
10,664 | |||
| $ | 64,000 |
Off-Balance
Sheet Arrangements
We
have no significant off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures that is material to stockholders.
Critical
Accounting Policies
Our
financial statements are impacted by the accounting policies used and the
estimates and assumptions made by management during their preparation. A
complete summary of these policies is included in note 2 of the notes to our
financial statements. We have identified below the accounting policies that are
of particular importance in the presentation of our financial position, results
of operations and cash flows and which require the application of significant
judgment by management.
Stock-based
Compensation
We
have adopted the fair value recognition provisions of Statement of Financial
Accounting Standard 123(R) “ Share-Based Payment” (“SFAS
123(R)”). In addition, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 107 “ Share-Based Payment ” (“SAB
107”) in March, 2005, which provides supplemental SFAS 123(R) application
guidance based on the views of the SEC. Under SFAS 123(R), compensation
cost recognized includes compensation cost for all share-based payments granted
beginning January 1, 2006, based on the grant date fair value estimated in
accordance with the provisions of SFAS 123(R).
We
have used Black-Scholes option-pricing model to estimate the
option fair values. The option-pricing model requires a number of assumptions,
of which the most significant are, expected stock price volatility, the expected
pre-vesting forfeiture rate and the expected option term (the amount of time
from the grant date until the options are exercised or expire).
Compensation
expense for unvested options granted to non-employees in previous periods is
being amortized over the vesting period of the options.
Recently
Issued Accounting Pronouncements:
In May
2008, the FASB issued FSP APB 14-1, Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement), which clarifies the accounting for convertible debt
instruments that may be settled in cash upon conversion, including partial cash
settlement. FSP APB 14-1 specifies that an issuer of such instruments should
separately account for the liability and equity components of the instruments in
a manner that reflects the issuer’s non-convertible debt borrowing rate when
interest costs are recognized in subsequent periods. FSP APB 14-1 is effective
for the Company’s fiscal year beginning January 1, 2009, and retrospective
application is required for all periods presented.
FSP APB
14-1 is currently not applicable to the Company.
In June
2008, the FASB issued EITF Issue No. 07-5, Determining Whether an Instrument
(or Embedded Feature) is Indexed to an Entity’s Own Stock (“EITF Issue
No. 07-5”), which is effective for financial statements for fiscal years
beginning after December 15, 2008, and interim periods within those fiscal
years. The Issue addresses the determination of whether an instrument (or an
embedded feature) is indexed to an entity’s own stock, which is the first part
of the scope exception in Paragraph 11(a) of SFAS No. 133 for the purpose of
determining whether the instrument is classified as an equity instrument or
accounted for as a derivative instrument which would be recognized either as an
asset or liability and measured at fair value. The guidance shall be applied to
outstanding instruments as of the beginning of the fiscal year in which this
Issue is initially applied. Any debt discount that was recognized when the
conversion option was initially bifurcated from the convertible debt instrument
shall continue to be amortized. The cumulative effect of the change in
accounting principles shall be recognized as an adjustment to the opening
balance of retained earnings. The adoption of EITF Issue No. 07-05
did not have a material impact on the Company’s financial
statements.
In June
2008, the FASB issued FASB Staff Position (FSP) Emerging Issues Task Force
(EITF) 03-6-1, Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities. FSP EITF 03-6-1 addresses whether instruments
granted in share-based payment transactions are participating securities prior
to vesting and, therefore, need to be included in the earnings allocation in
computing earnings per share under the two-class method as described in SFAS No.
128, Earnings Per
Share. Under the guidance of FSP EITF 03-6-1, unvested share-based
payment awards that contain non-forfeitable rights to dividends or dividend
equivalents (whether paid or unpaid) are participating securities and must be
included in the computation of earnings per share pursuant to the two-class
method. All prior period earnings per share information must be adjusted
retrospectively. The Company adopted FSP EITF 03-6-1 as of January 1,
2009. The Company did not issue any share-based awards that would
qualify as participating securities for the three months ended March 31,
2009.
In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS
No. 157 establishes a framework for measuring fair value and expands disclosures
about fair value measurements. The changes to current practice resulting from
the application of this statement relate to the definition of fair value, the
methods used to measure fair value, and the expanded disclosures about fair
value measurements. SFAS No. 157 is effective for fiscal years beginning after
November 15, 2007. In February 2008, the FASB issued FSP No. SFAS No. 157-2,
Effective Date of FASB
Statement No. 157, which provides a one-year deferral of the effective
date of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities,
except those that are recognized or disclosed in the financial statements at
fair value at least annually. The Company adopted this statement for financial
assets and financial liabilities and nonfinancial assets and nonfinancial
liabilities disclosed or recognized at fair value on a recurring basis (at least
annually) as of January 1, 2008. The Company adopted the statement for
nonfinancial assets and nonfinancial liabilities on January 1, 2009. The
adoption of this statement in each period did not have a material impact on its
financial statements.
Recently Issued Accounting
Pronouncements Not Yet Adopted
In April
2009, the FASB issued FASB Staff Position No. 107-1 (“FSP FAS 107-1”) and APB
28-1 (“APB 28-1”), which amends FASB Statement No. 107, Disclosures about Fair Value of
Financial Instruments and APB Opinion No. 28, Interim Financial Reporting,
to require disclosures about the fair value of financial instruments for interim
reporting periods. FSP FAS 107-1 and APB 28-1 will be effective for interim
reporting periods ending after June 15, 2009. The adoption of this staff
position will not have a material impact on the Company’s financial
statements.
In April
2009, the FASB issued FASB Staff Position No. 157-4 (“FSP FAS 157-4”), which
provides additional guidance in accordance with FASB No. 157, Fair Value Measurements, when
the volume and level of activity for the asset or liability has significantly
decreased. FSP FAS 157-4 shall be effective for interim and annual reporting
periods ending after June 15, 2009. The Company is currently evaluating the
potential impact the adoption of this staff position will have on its financial
statements.
In April
2009, the FASB issued FASB Staff Position No. 115-2 (“FSP FAS 115-2”) and FASB
Staff Position No. 124-2 (“FSP FAS 124-2”), which amends the
other-than-temporary impairment guidance for debt and equity securities. FSP FAS
115-2 and FSP FAS 124-2 shall be effective for interim and annual reporting
periods ending after June 15, 2009. The Company is currently evaluating the
potential impact the adoption of this staff position will have on its financial
statements.
Income
Taxes:
Income
tax expense was $0 for the three months ended March 31, 2009 and for the period
from February 11, 2008 (inception) to March 31, 2008.
As of
January 1, 2009, we had no unrecognized tax benefits, and accordingly, we have
not recognized interest or penalties during 2009 related to unrecognized tax
benefits. There has been no change in unrecognized tax benefits
during the three months ended March 31, 2009, and there was no accrual for
uncertain tax positions as of March 31, 2009.
There is
no income tax benefit for the losses for the three months ended March 31, 2009
and for the period from February 11, 2008 (inception) to March 31, 2008, since
management has determined that the realization of the net deferred tax asset is
not assured and has created a valuation allowance for the entire amount of such
benefits.
Item 3.
Quantitative and Qualitative Disclosures About Market
Risk.
We are a
smaller reporting company as defined by Rule 12b-2 of the
Securities
Exchange
Act of 1934 and are not required to provide the information under
this
item.
Item 4.
Controls and procedures
The
Company has not generated any revenues as of the date of this Report and has
concentrated its efforts on raising capital necessary to attempt to fulfill its
business plans. During the period from inception through March 31, 2009, the
Company’s financial information was maintained by its Chief Financial Officer
Ernest Cimadamore and over seen by the Company’s Chief Executive Officer Alfredo
Villa. Due to the limited activities of the Company during such period, the
Company believes that it maintained disclosure controls and procedures that were
designed to ensure that information required to be disclosed in the Company's
Exchange Act reports is recorded, processed, summarized and reported within the
time periods specified in the SEC's rules and forms, and that such information
was accumulated and communicated to the Company's management, including its
Chief Executive Officer and Chief Financial Officer, as appropriate, to allow
timely decisions regarding required disclosure based closely on the definition
of "disclosure controls and procedures" in Rule 13a-15(e). The Company's
disclosure controls and procedures were designed to provide a reasonable level
of assurance of reaching the Company's desired disclosure control objectives. In
designing and evaluating the disclosure controls and procedures, management
recognized that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management necessarily was required to apply its judgment in
evaluating the cost-benefit relationship of possible controls and procedures.
Management has concluded that the disclosure controls and procedures are
effective with respect to the financial information presented in this
Report.
However
in light of the Company’s plans to increase its activities and expand its
operations in order to attempt to implement its business plans the
Company carried out an evaluation of the effectiveness of the design and
operation of our "disclosure controls and procedures" (as defined in Rules
13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”)) under the supervision and with the participation of our
management, including Alfredo Villa, our president and principal executive
officer. Based upon that evaluation, Mr. Villa concluded that our disclosure
controls and procedures will not be effective as our
operations increase based on material weaknesses identified by management
consisting of the limited number of persons who are involved in the control
process. The Company, with the assistance of its accountants, intend to develop
disclosure controls and procedures which will be effective and allow the Company
to meets its obligations under applicable securities laws.
There
have been no changes in the Company's internal controls or in other factors
that have materially affected or are reasonably likely to materially
affect
the internal controls subsequent to the date the Company completed its
evaluation.
PART
II
OTHER
INFORMATION
Item
1. Legal Proceedings.
We are
not a party to any pending legal proceedings, nor are we
aware of any governmental authority contemplating any legal proceeding against
us.
Item
2. Unregistered Sales of Equity Securities and
Use of Proceeds.
During
the quarter ended March 31, 2009, the Company issued 1,000,000 unregistered
restricted shares of its common stock to one person upon the exercise of
previously issued warrants. The Company received an aggregate of $40,000 in
proceeds from such warrant exercise, which proceeds were utilized by the Company
for working capital purposes.
During
the quarter ended March 31, 2009, the Company received a subscription for the
purchase of 400,000 unregistered restricted shares of common stock at a price of
$1.00 per share from one non U.S person. In April 2009, the Company accepted the
subscription. The shares will be issued in reliance upon Regulation S
promulgated under the Securities Act of 1933 as amended (the “Act”) and/ or
other applicable exemptions from the registration provisions of the Act. After
the payment of applicable fees, the Company realized net proceeds of $348,000
from such sale and such proceeds were added to the general working capital of
the Company.
With
respect to the unregistered sales made, the Company relied on Regulation S
promulgated under the Act, Section 4(2) of the Act and/or other applicable
exemptions under the Act. No advertising or general solicitation was employed in
offering the securities. The securities were issued to sophisticated, accredited
investors, one of whom was existing security holder of the Company, and each
purchaser was provided with all of the current public information available on
the Company.
Item
3. Defaults Upon Senior
Securities. None.
Item
4. Submission of Matters to a Vote of Security
Holders. None
Item
5. Other Information. None
Item
6. Exhibits
|
Exhibit
|
Identification
of Exhibit
|
|
No.
|
|
|
31.1
|
Rule
13a-14(a) Certification of Alfredo Villa, President and Principal
Executive Officer
|
|
31.2
|
Rule
13a-14(a) Certification of Ernest Cimadamore, Secretary and Principal
Financial Officer
|
|
32.1
|
Certification
Pursuant to 18 U.S.C. Section 1350 of Alfredo Villa.
|
|
32.2
|
Certification
Pursuant to 18 U.S.C. Section 1350 of Ernest
Cimadamore.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Moggle
Inc.
DATE:
May 13, 2009
|
By:
|
/s/ Alfredo Villa |
|
|
Alfredo
Villa, President
|
||
|
and
Principal
Executive Financial Officer
|
||
|
By:
|
/s/ Ernest Cimadamore |
|
|
Ernest
Cimadamore, Secretary,
|
||
|
and
Principal
Financial Officer
|
||
29