Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2009
o TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from _________ to _________
Commission File Number: 000-53685
Intelimax Media Inc.
(Name of Small Business Issuer in its charter)
British Columbia |
None | |
(state or other jurisdiction of incorporation or organization) |
(I.R.S. Employer I.D. No.) |
2320 - 555 West Hastings Street
Vancouver, BC, V6B 4N4
(Address of principal executive offices)
(604) 742-1111
Issuer’s telephone number
Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 o No þ
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 definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller
reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ
APPLICABLE ONLY TO CORPORATE ISSUERS
As of February 16, 2010, the registrant had 26,287,567 shares of common stock outstanding.
Table of Contents
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1
The financial statements of Intelimax Media Inc. (the “Company”, "Intelimax", "we", "our", "us"), included herein were prepared, without audit, pursuant to rules and regulations of the Securities and Exchange Commission.
2
INTELIMAX MEDIA INC.
(A Development Stage Company)
Consolidated Financial Statements
(Unaudited)
(Expressed in Canadian dollars)
December 31, 2009
Financial Statement Index
Consolidated Balance Sheets |
F-2 |
Consolidated Statements of Operations |
F-3 |
Consolidated Statements of Cash Flows |
F-4 |
Notes to the Consolidated Financial Statements |
F-5 |
F-1
INTELIMAX MEDIA INC.
(A Development Stage Company)
Consolidated Balance Sheets
(Expressed in Canadian dollars)
December 31,
2009
$
(unaudited) |
March 31,
2009
$ |
|||||||
Assets |
||||||||
Current Assets |
||||||||
Cash |
38,307 | 17,888 | ||||||
Other receivable |
22,281 | 2,695 | ||||||
Prepaid expenses |
13,227 | 10,055 | ||||||
Total Current Assets |
73,815 | 30,638 | ||||||
Equipment (Note 4) |
13,104 | 15,392 | ||||||
Website development costs (Note 4) |
315,177 | 309,370 | ||||||
Total Assets |
402,096 | 355,400 | ||||||
Liabilities and Stockholders’ Equity |
||||||||
Current Liabilities |
||||||||
Accounts payable (Note 9) |
236,912 | 125,161 | ||||||
Accrued liabilities (Note 9) |
51,362 | 37,875 | ||||||
Notes payable (Note 5) |
7,906 | – | ||||||
Due to related party (Note 9) |
12,000 | 12,000 | ||||||
Total Current Liabilities |
308,180 | 175,036 | ||||||
Stockholders’ Equity |
||||||||
Common Stock
Authorized: 150,000,000 shares, par value US$0.00001
25,422,567 shares issued and outstanding (March 31, 2009 - 15,597,157 shares) |
280 | 1,092,823 | ||||||
Additional Paid in Capital |
1,752,079 | – | ||||||
Common stock subscribed |
– | 83,000 | ||||||
Accumulated deficit during the development stage |
(1,658,443 | ) | (995,459 | ) | ||||
Total Stockholders’ Equity |
93,916 | 180,364 | ||||||
Total Liabilities and Stockholders’ Equity |
402,096 | 355,400 |
Nature of Operations and Continuance of Business (Note 1)
Commitments (Note 10)
Subsequent Events (Note 11)
The accompanying notes are an integral part of these consolidated financial statements
F-2
INTELIMAX MEDIA INC.
(A Development Stage Company)
Consolidated Statements of Operations
(Expressed in Canadian dollars)
(unaudited)
For the
Three months
Ended
December 31,
2009
$ |
For the
Three months
Ended
December 31,
2008
$ |
For the
Nine months
Ended
December 31,
2009
$ |
For the
Nine months
Ended
December 31,
2008
$ |
Accumulated from
April 17, 2006
(Date of Inception) to December 31,
2009
$ |
||||||||||||||||
Revenue |
198 | – | 3,911 | – | 9,203 | |||||||||||||||
Expenses |
||||||||||||||||||||
Amortization |
30,364 | 22,631 | 82,767 | 64,566 | 221,420 | |||||||||||||||
Advertising and promotion |
11,047 | 4,749 | 98,253 | 11,818 | 203,406 | |||||||||||||||
Consulting fees |
166,212 | 3,000 | 166,297 | 40,536 | 339,633 | |||||||||||||||
Foreign exchange (gain) loss |
3,137 | (781 | ) | 1,398 | (550 | ) | 433 | |||||||||||||
General and administrative |
47,158 | 17,176 | 80,944 | 48,550 | 252,342 | |||||||||||||||
Management fees (Note 9) |
13,000 | – | 58,500 | 32,500 | 256,500 | |||||||||||||||
Professional fees (Note 9) |
17,087 | 1,500 | 68,788 | 34,412 | 173,851 | |||||||||||||||
Wages and benefits |
82,954 | 52,806 | 148,039 | 60,867 | 259,857 | |||||||||||||||
Total Expenses |
370,959 | 101,081 | 704,986 | 292,699 | 1,707,442 | |||||||||||||||
Operating Loss |
(370,761 | ) | (101,081 | ) | (701,075 | ) | (292,699 | ) | (1,698,239 | ) | ||||||||||
Other Income (Expense) |
||||||||||||||||||||
Impairment loss on goodwill (Note 3) |
– | – | (52,330 | ) | – | (52,330 | ) | |||||||||||||
Gain on forgiveness of debt |
– | – | 12,091 | – | 12,091 | |||||||||||||||
Interest income |
– | 525 | – | 525 | 1,705 | |||||||||||||||
Net Loss Before Income Tax |
(370,761 | ) | (100,556 | ) | (741,314 | ) | (292,174 | ) | (1,736,773 | ) | ||||||||||
Income tax credits |
78,330 | – | 78,330 | – | 78,330 | |||||||||||||||
Net Loss |
(292,431 | ) | (100,556 | ) | (662,984 | ) | (292,174 | ) | (1,658,443 | ) | ||||||||||
Net loss per share, basic and diluted |
(0.01 | ) | (0.01 | ) | (0.03 | ) | (0.02 | ) | ||||||||||||
Weighted average shares outstanding |
24,020,000 | 15,597,000 | 23,908,000 | 15,597,000 |
The accompanying notes are an integral part of these consolidated financial statements
F-3
INTELIMAX MEDIA INC.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Expressed in Canadian dollars)
(unaudited)
For the
Nine months
Ended
December 31,
2009
$ |
For the
Nine months
Ended
December 31,
2008
$ |
Accumulated from
April 17, 2006
(Date of Inception) to December 31,
2009
$ |
||||||||||
Operating activities |
||||||||||||
Net loss for the period |
(662,984 | ) | (292,174 | ) | (1,658,443 | ) | ||||||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||||||
Amortization |
82,767 | 64,567 | 221,420 | |||||||||
Gain on forgiveness of debt |
(12,091 | ) | – | (12,091 | ) | |||||||
Impairment loss on goodwill |
52,330 | – | 52,330 | |||||||||
Issuance of common shares for services |
219,697 | – | 237,697 | |||||||||
Changes in non-cash operating working capital: |
||||||||||||
Other receivable |
(19,573 | ) | 14,939 | (14,129 | ) | |||||||
Prepaid expense |
(3,172 | ) | 13,799 | (13,227 | ) | |||||||
Accounts payable and accrued liabilities |
83,951 | 11,444 | 238,848 | |||||||||
Due to related party |
– | – | 12,000 | |||||||||
Net Cash Used In Operating Activities |
(259,075 | ) | (187,425 | ) | (935,595 | ) | ||||||
Investing Activities |
||||||||||||
Purchase of equipment |
(1,500 | ) | (3,479 | ) | (29,655 | ) | ||||||
Purchase of website development costs |
(84,786 | ) | (143,652 | ) | (520,046 | ) | ||||||
Net Cash Used In Investing Activities |
(86,286 | ) | (147,131 | ) | (549,701 | ) | ||||||
Financing activities |
||||||||||||
Loans payable |
7,906 | – | 7,906 | |||||||||
Cash acquired on acquisition |
34,365 | – | 34,365 | |||||||||
Proceeds from issuance of common shares |
323,509 | – | 1,405,832 | |||||||||
Share issuance costs |
– | – | (7,500 | ) | ||||||||
Shares subscriptions received |
– | 178,476 | 83,000 | |||||||||
Net Cash Provided by Financing Activities |
365,780 | 178,476 | 1,523,603 | |||||||||
Increase (Decrease) in Cash |
20,419 | (156,080 | ) | 38,307 | ||||||||
Cash – Beginning of Period |
17,888 | 166,888 | – | |||||||||
Cash – End of Period |
38,307 | 10,808 | 38,307 |
Non-cash investing and financing activities: |
||||||||||||
Shares issued for share issuance fees |
– | – | 28,800 | |||||||||
Supplemental disclosures: |
||||||||||||
Interest paid |
– | – | – | |||||||||
Income tax paid |
– | – | – |
The accompanying notes are an integral part of these consolidated financial statements
F-4
INTELIMAX MEDIA INC.
(A Development Stage Company)
Notes to the Financial Statements
Nine month period ended December 31, 2009
(Expressed in Canadian dollars)
(Unaudited)
1. Nature of Operations and Continuance of Business
The Company was formed as a result of the merger of Cicero Resources Corp. (“Cicero”) and Intelimax Media Inc. (“Intelimax”) effective May 28, 2009. Cicero was incorporated on October 19, 2007 under the laws of the State of Nevada and Intelimax was incorporated on April 17, 2006 under the laws of the Province of British Columbia.
Intelimax was a private operating company, and Cicero was an inactive shell public company. The merger was accounted for as a “reverse merger” using the purchase method of accounting, with the former shareholders of Intelimax controlling 69% of the issued and outstanding common shares of the Company after the closing of the amalgamation transaction. Accordingly, Intelimax is deemed to be the acquirer for accounting purposes, and a continuation of Intelimax.
The Company is a Development Stage Company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities and is an internet media and advertising company that specializes in the development and
management of industry-specific websites and portals focusing on new media, online games, search, publishing, and media sales.
These consolidated financial statements have been prepared on the going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As at December 31, 2009, the Company has an accumulated deficit of $1,658,443 and a working capital deficit of $234,365. The continued
operations of the Company are dependent on its ability to generate future cash flows from operations or obtain additional financing. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company be unable to continue as a going concern.
2. Significant Accounting Policies
(a) Basis of Presentation and Principles of Consolidation
The consolidated financial statements and the related notes of the Company are prepared in accordance with generally accepted accounting principles in the United States and are expressed in Canadian dollars. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Gamboozle Media Inc.,
and Global Climate Seek Inc. All inter-company accounts and transactions have been eliminated. The Company’s fiscal year-end is March 31.
(b) Use of Estimates
The preparation of these consolidated financial statements in conformity with generally accepted accounting principles 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 consolidated financial
statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the useful life and recoverability of long-lived assets, fair value on share-based payments, and valuation allowances on deferred income tax losses. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis
for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
F-5
INTELIMAX MEDIA INC.
(A Development Stage Company)
Notes to the Financial Statements
Nine month period ended December 31, 2009
(Expressed in Canadian dollars)
(Unaudited)
2. Significant Accounting Policies (continued)
(c) Cash and Cash Equivalents
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.
(d) Interim Financial Statements
These interim unaudited consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash
flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period.
(e) Website Development Costs
Website development costs consist of costs incurred to develop internet web sites to promote, advertise, and earn revenue with respect to the Company’s business operations. Costs are capitalized in accordance with ASC 350-50, Intangible Assets – Goodwill and Other - Web Site
Development Costs, and are amortized at a rate of 30% per annum commencing when the internet web site has been completed subject to a half-year rule in the first year of amortization.
(f) Equipment
Equipment is stated at cost and is amortized at the following rates, subject to a half-year amortization rate in the year of acquisition:
Office Furniture and Equipment |
20% |
Computer Hardware |
30% |
Computer Software |
100% |
(g) Impairment of Long-Lived Assets
In accordance with ASC 360, Property Plant and Equipment, management tests long-lived assets to be held and used for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.
(h) Revenue Recognition
The Company recognizes revenue from online advertising sales in accordance with Securities and Exchange Commission ASC 605, Revenue Recognition. The Company accounts for revenue as a principal using the guidance in ASC 605. Revenue consists of the sale of online advertising and is recognized
only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the product is shipped, and collectibility is reasonably assured.
(i) Income Taxes
Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted ASC 740, Income Taxes as of its inception. Pursuant to ASC 740 the Company is required to compute tax asset benefits for net operating losses carried
forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.
F-6
INTELIMAX MEDIA INC.
(A Development Stage Company)
Notes to the Financial Statements
Nine month period ended December 31, 2009
(Expressed in Canadian dollars)
(Unaudited)
2. Significant Accounting Policies (continued)
(j) Comprehensive Loss
ASC 220, Comprehensive Income establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2009 and March 31, 2009, the Company had no items that affected comprehensive loss.
(k) Stock-Based Compensation
The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair
value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.
(l) Foreign Currency Translation
The Company’s functional currency and its reporting currency is the Canadian dollar and foreign currency transactions are primarily undertaken in United States dollars. The financial statements of the Company are translated to Canadian dollars in accordance with ASC 830, Foreign Currency Translation Matters using
the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income.
(m) Basic and Diluted Net Loss Per Share
The Company computes net loss per share in accordance with ASC 260 Earnings Per Share which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator)
by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their
effect is anti dilutive.
(n) Financial Instruments and Fair Value Measures
The Company’s financial instruments consist principally of cash, other receivables, other assets, accounts payable and accrued liabilities, notes payable, and amounts due to a related party. Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial
Instruments, the fair value of our cash and cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. Management believes that the recorded values of all other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
The Company’s operations are in Canada, which results in exposure to market risks from changes in foreign currency rates. The financial risk is the risk to the Company’s operations that arise from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments
to reduce its exposure to foreign currency risk.
F-7
INTELIMAX MEDIA INC.
(A Development Stage Company)
Notes to the Financial Statements
Nine month period ended December 31, 2009
(Expressed in Canadian dollars)
(Unaudited)
2. Significant Accounting Policies (continued)
(o) Recent Accounting Pronouncements
In June 2009, the FASB issued guidance now codified as ASC 105, Generally Accepted Accounting Principles as the single source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with
U.S. GAAP, aside from those issued by the SEC. ASC 105 does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all authoritative literature related to a particular topic in one place. The adoption of ASC 105 did not have a material impact on the Company’s consolidated financial statements, but did eliminate all references to pre-codification standards.
In May 2009, FASB issued ASC 855, Subsequent Events, which establishes general standards of for the evaluation, recognition and disclosure of events and transactions that occur after the balance sheet date. Although there is new terminology, the standard is based on the same principles as
those that currently exist in the auditing standards. The standard, which includes a new required disclosure of the date through which an entity has evaluated subsequent events, is effective for interim or annual periods ending after June 15, 2009. The adoption of ASC 855 did not have a material effect on the Company’s consolidated financial statements. Refer to Note 11.
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact
on its financial position or results of operations.
3. Amalgamation
The Company was formed as a result of the merger of Cicero Resources Corp. (“Cicero”) and Intelimax Media Inc. (“Intelimax”) effective May 28, 2009. Cicero was incorporated on October 19, 2007 under the laws of the State of Nevada and Intelimax was incorporated on April 17, 2006 under the laws of the Province of British
Columbia. Under the terms of the amalgamation, the Company will have 150,000,000 authorized common shares with a par value of $0.00001 per share, and 20,000,000 authorized preferred shares with a par value of $0.00001 per share.
Pursuant to the amalgamation, each one issued and outstanding share of common stock of Cicero (7,340,410 shares) was exchanged for one common share of the Company and each one issued and outstanding common share of Intelimax (16,009,157 shares) was exchanged for one common share of the Company. Intelimax was a private operating company,
and Cicero was an inactive shell public company. The merger was accounted for as a “reverse merger” using the purchase method of accounting, with the former shareholders of Intelimax controlling 69% of the issued and outstanding common shares of the Company after the closing of the amalgamation. Accordingly, Intelimax was deemed to be the acquirer for accounting purposes.
F-8
INTELIMAX MEDIA INC.
(A Development Stage Company)
Notes to the Financial Statements
Nine month period ended December 31, 2009
(Expressed in Canadian dollars)
(Unaudited)
3. Amalgamation (continued)
The common shares issued to the Cicero shareholders were determined to have a fair value of $33,330. The purchase price was allocated to the following assets and liabilities:
$ | ||||
Purchase price |
||||
7,340,410 common shares |
33,330 | |||
Fair value of Cicero net assets |
||||
Cash and cash equivalents |
34,365 | |||
Accounts receivable |
13 | |||
Accounts payable |
(53,378 | ) | ||
Goodwill |
52,330 | |||
33,330 |
The excess of the purchase consideration over the fair values of Cicero’s assets and liabilities as at May 28, 2009, has been allocated to goodwill. However, as the US Securities and Exchange Commission has ruled that no goodwill can be recognized when the business combination involves a publicly held shell company and a privately
held acquiree, an immediate impairment loss on goodwill of $52,330 has been recorded.
4. Equipment and Website Development Costs
December 31, |
March 31 |
|||||||||||||||
2009 |
2009 |
|||||||||||||||
Accumulated |
Net Carrying |
Net Carrying |
||||||||||||||
Cost |
Amortization |
Value |
Value |
|||||||||||||
$ | $ | $ | $ | |||||||||||||
Computer Hardware |
13,547 | 7,488 | 6,059 | 7,818 | ||||||||||||
Computer Software |
3,915 | 2,839 | 1,076 | 551 | ||||||||||||
Office Furniture |
12,193 | 6,224 | 5,969 | 7,023 | ||||||||||||
29,655 | 16,551 | 13,104 | 15,392 | |||||||||||||
Website Development Costs |
520,046 | 204,869 | 315,177 | 309,370 | ||||||||||||
549,701 | 221,420 | 328,281 | 324,762 |
F-9
INTELIMAX MEDIA INC.
(A Development Stage Company)
Notes to the Financial Statements
Nine month period ended December 31, 2009
(Expressed in Canadian dollars)
(Unaudited)
5. Notes Payable
a) As at December 31, 2009, the Company had a short term note payable of $2,906 owing to a shareholder of the Company. The note is unsecured, due interest at 3.5% per annum, and due on demand.
b) On October 1, 2009, the Company received an advance of $10,000.The loan bears interest at 4% per annum and has no repayment terms. As at December 31, 2009, $5,000 of the loan was repaid.
6. Common Stock
a) During the period ended December 31, 2009, the Company issued 412,000 common shares for proceeds of $103,000, of which $83,000 were from common share subscriptions received prior to March 31, 2009.
b) On December 31, 2009, the Company granted 320,000 common shares with a fair value of $164,797 to various consultants as compensation for services performed for the company.
c) On December 10, 2009, the Company issued 610,000 common shares and 610,000 share purchase warrants for proceeds of $258,879. Each share purchase warrant entitles investor to purchase one common share at an exercise price of US$0.60 per share. These warrants expire
on December 10, 2011. The Company also paid finder’s fee of $24,500 in connection to this share and warrant issuance.
d) On November 20, 2009, the Company issued 68,000 common shares for proceeds of $7,000.
e) On September 9, 2009, the Company issued 500,000 common shares with a fair value of $54,900 pursuant to the consulting agreements described in Notes 9(b) and (c).
f) On August 16, 2009, the Company issued 400,000 common shares for proceeds of $42,880.
g) On August 4, 2009, the Company issued 175,000 common shares for proceeds of $19,250.
h) On May 28, 2009, as part of the merger between Cicero and Intelimax, the Company issued 7,340,410 common shares to shareholders of Cicero and cancelled all issued and outstanding common shares of Cicero.
7. Stock Based Compensation
The Company adopted a Stock Compensation Plan (“Stock Plan”) and Stock Option Plan (“Option Plan”) dated December 11, 2009 under which the Company is authorized to grant up to a total of 1,000,000 shares of common stock and stock options to acquire up to a total of 1,000,000 shares of common stock. The Company will not issue
any stock compensation under the Stock Plan or Option Plan for any services related to investor relations or capital raising activities. At December 31, 2009, the Company had 680,000 shares of common stock available to be issued under the Stock Plan and options to acquire 1,000,000 shares of common stock to be issued under the Option Plan.
8. Share Purchase Warrants
The following table summarizes the continuity of share purchase warrants:
Number of
Warrants |
Weighted Average
Exercise Price
$ |
|||||||
Balance, March 31, 2009 |
785,000 | 0.50 | ||||||
Issued |
1,022,000 | 0.56 | ||||||
Balance, December 31, 2009 (unaudited) |
1,807,000 | 0.53 |
F-10
INTELIMAX MEDIA INC.
(A Development Stage Company)
Notes to the Financial Statements
Nine month period ended December 31, 2009
(Expressed in Canadian dollars)
(Unaudited)
8. Share Purchase Warrants (continued)
As at December 31, 2009, the following share purchase warrants were outstanding:
Number of Warrants |
Exercise Price
$ |
Expiry Date |
610,000 |
0.60 USD |
December 11, 2011 |
610,000 |
9. Related Party Transactions
The Company incurred the following charges with management, officers, and directors of the Company:
December 31,
2009 |
December 31,
2008 |
|||||||
$
(unaudited) |
$
(unaudited) |
|||||||
Management Fees |
58,500 | 32,500 | ||||||
Professional Fees |
10,250 | – | ||||||
68,750 | 32,500 |
As at December 31, 2009, accounts payable and accrued liabilities include $,168,831 (March 31, 2009 - $118,084) owing to management, officers, and directors of the Company. The amounts are unsecured, non-interest bearing, and due on demand.
As at December 31, 2009, the Company owed $12,000 (March 31, 2009 - $12,000) to a director of the Company for general expenditures. The amount owing is unsecured, non-interest bearing, and due on demand.
10. Commitments
a) In August 2008, the Company entered into a Licence Grant and Asset Purchase Agreement (the “Agreement”) with Fireswirl Technologies Inc. (“Fireswirl”), a company registered under the Business Corporations Act of British Columbia. Under
the terms of the Agreement, the Company is obligated for revenue sharing payments and acquisition of assets held by Fireswirl under the following terms:
|
Revenue Sharing Payments |
i. |
10% of the revenues earned from the technology, during the period from inception of the Agreement to a period of the lesser of eighteen months from the inception of the Agreement or when the Company becomes a listed publicly-traded company (the “Initial Revenue Sharing Term”), subject to a maximum revenue sharing payment of $725,000; and |
ii. |
20% of the revenues earned from the technology, during the period from the first day following the Initial Revenue Sharing Term to a maximum revenue sharing payment of $1,100,000 or when the Agreement is cancelled by either party (the “Full Payment Date”), whichever occurs first; |
F-11
INTELIMAX MEDIA INC.
(A Development Stage Company)
Notes to the Financial Statements
Nine month period ended December 31, 2009
(Expressed in Canadian dollars)
(Unaudited)
10. Commitments (continued)
|
Asset Acquisition |
iii. |
the Company will purchase a non-exclusive right to the licences held by Fireswirl, which will be used by Gamboozle Media Inc., a wholly-owned subsidiary of the Company, in exchange for 1,500,000 common shares of the Company, payable at the earlier of when the Company becomes a listed publicly-traded company or the Full Payment Date.
As at December 31, 2009, the Company have not earned revenues that are subject to the revenue-sharing payments and have not acquired the licences. |
b) On September 9, 2009, the Company entered into a consulting agreement. Pursuant to the agreement the consultant will provide investor relations services for nine months in consideration for $12,500 for the first month (paid), $2,500 per month for
the next five months and 250,000 common shares of the Company. Refer to Note 6(e).
c) On September 9, 2009, the Company entered into a consulting agreement. Pursuant to the agreement the consultant will provide investor relations services for nine months in consideration for $12,500 for the first month (paid), $2,500 per month for
the next five months and 250,000 common shares of the Company. Refer to Note 6(e).
d) On December 24, 2009, the Company entered into an internet service agreement. Pursuant to the agreement, the consultant will provide hosting services to the Company for a term of one year in consideration for monthly fee of $1,270.
e) On December 16, 2009, the Company entered into a marketing agreement. Pursuant to the agreement, the consultant will provide marketing and promotional activities on the Company’s products for a term of one year in consideration for an initial setup fee
of $2,500 plus a monthly fee contingent on the results of the marketing and promotional services provided.
11. Subsequent Events
In accordance with ASC 855, Subsequent Events, we have evaluated subsequent events through February 2, 2009, the date of issuance of the unaudited interim consolidated financial statements. During this period, we did not have any material recognizable subsequent events, except as disclosed
below:
a) On February 1, 2010, the Company entered into an agreement for consulting services for US$5,000 per week of which up to 50% can be settled in common shares of the Company at the market rate on the date of settlement. In addition, the Company will
issue 300,000 units where each unit is comprised of one common share of the Company and one share purchase warrants which allows the holder to purchase one additional common share of the Company at $0.60 per share over a twenty-four month period from the date of the agreement.
b) On January 21, 2010, the Company entered into a director agreement with an individual for a term of 12 months. As compensation for director service under the agreement, the Company has agreed to issue 20,000 shares of common stock and to pay $2,500 for every
quarter during which the individual sits on the board of director. This compensation is to be paid within 15 days of the end of each quarter.
c) On January 19, 2010, the Company entered into a consulting agreement for investor relations services for a period of five months from the date of agreement for 200,000 common shares of the Company.
d) On January 11, 2010, the Company entered into an agreement for consulting services for 50,000 common shares of the Company registered under the Stock Plan as disclosed in Note 7. Of
these 25,000 common shares have been issued and 25,000 more will be issued 45 days after the agreement was entered into.
e) On January 5, 2010, the Company issued a total of 320,000 common shares of the Company registered under the Stock Plan as disclosed in Note 7 to various consultants in exchange for services.
F-12
Forward Looking Statements
This quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology including "could", "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate",
"predict", "potential" and the negative of these terms or other comparable terminology. These statements are only predictions. Actual events or results may differ materially.
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report.
Overview
Our principal offices are located at 555 West Hastings Street, Vancouver, British Columbia, V6B 4N4. Our telephone number is (604) 742-1111. Our fiscal year end is March 31. We are an Internet media and advertising company that specializes in the development and management of industry-specific websites and portals focusing on new
media, online games, search, publishing, and media sales.
Liquidity and Capital Resources
At December 31, 2009, we had cash of $38,307 in our bank accounts and working capital deficit of $234,365. Our net loss from inception on April 17, 2006 to December 31, 2009 was $1,658,443. Our net loss was funded mostly through equity financing.
Since April 17, 2006 (date of inception) to December 31, 2009, we raised gross proceeds of $1,405,832 in cash from the sale of our securities, $34,365 from cash acquired on acquisition, $7,906 in loans payable and $83,000 in share subscriptions received. We also incurred a share issuance cost of $7,500. During the nine months ended
December 31, 2009, we raised $323,509 from the sale of our common stock. We also received $34,365 in cash acquired on acquisition and $7,906 in loans payable. In comparison, we did not raise any cash from issuance of common shares during the same period in 2008. We did not have any other financing activities during this period in 2008.
For the nine months ended December 31, 2009, we used net cash of $259,075 in operating activities compared to $187,425 during the same period in 2008. Our cash level increased by $20,419 during the nine months ended December 31, 2009 compared to a decrease of $156,000 during the same period in 2008. The reason for the change in
case position from year to year was a higher amount $156,000 of cash provided by financing activities during the nine months ended December 31, 2009.
For the nine months ended December 31, 2009 we required approximately $28,786 per month to fund our operating expenses compared to $20,825 during the same period in 2008. Cash of $38,307 in our bank accounts as of December 31, 2009, will be sufficient to fund our operations for one month only.
3
We estimate that our expenses over the next 12 months (beginning February 2010) will be approximately $1,047,000 as described in the table below. These estimates may change significantly depending on the nature of our future business activities and our ability to raise capital from shareholders or other sources.
Description |
Target completion date or period |
Estimated expenses
(CAD $) |
Legal and accounting fees |
12 months |
60,000 |
Further development of Gamboozle.com |
January 2010 |
40,000 |
Further development of Climateseek.com |
March 2010 |
25,000 |
Maintenance and refinement of gaming software |
12 months |
150,000 |
Maintenance and refinement of fantasy sports software |
12 months |
50,000 |
Further development of Pay-Per-Click software |
January 2010 |
10,000 |
Development of carbon calculator for Climateseek.com |
April 2010 2009 |
25,000 |
Marketing and advertising |
12 months |
225,000 |
Investor relations and capital raising |
12 months |
72,000 |
Management and operating costs |
12 months |
245,000 |
Salaries and consulting fees |
12 months |
65,000 |
Hardware purchases |
12 months |
30,000 |
General and administrative |
12 months |
50,000 |
Total |
1,047,000 |
At present, our cash requirements for the next twelve months outweigh the funds available to maintain or develop our operations. In order to fully carry out our business plan for the next 12 months, we need additional financing of approximately $1,047,000. We intend to negotiate with our management and consultants to pay parts of salaries
and fees with stock and stock options instead of cash. There can be no assurance we will be successful in our efforts to secure additional equity financing. If we are unable to raise equity or obtain alternative financing, we may be unable to continue operations with respect to the continued development and marketing of our company and our business plan may fail.
If cash flow improves through these efforts, management believes that we can continue to operate. However, no assurance can be given that management's actions will result in profitable operations or improve our liquidity.
4
Results of Operations for the Period From April 17, 2006 (Date of Inception) to December 31, 2009 and for the Three Months Ended December 31, 2009 compared to the Three Months Ended December 31, 2008.
Lack of Revenues
We have had limited operations since our inception on April 17, 2006 to December 31, 2009 and we have generated only nominal revenues of $9,203. We generated $198 in revenues for the three months ended December 31, 2009 compared to no revenues during the same period in 2008. Since our inception to December 31, 2009, we have an
accumulated deficit of $1,658,443 during the development stage. We anticipate that we will incur substantial losses over the next year. Our ability to generate any revenues in the next 12 months remains uncertain.
Expenses
We accumulated total operating expenses of $1,707,442 from the date of our inception to December 31, 2009, including $221,420 in amortization, $203,406 in advertising and promotion, $339,633 in consulting fees, $252,342 in general and administrative expenses, $256,500 in management fees $173,851 in professional fees and $259,857 in wages and benefits.
Total operating expenses for the three months ended December 31, 2009 were $370,959 compared to $101,081 during the same period in 2008. The increase in expenses during the period in 2009 was due mostly to an increase in business activities following our merger on May 28, 2009.
Net Loss
From the time of inception on April 17, 2006 to December 31, 2009 we incurred a net loss of $1,658,443. For the three months ended December 31, 2009 we incurred a net loss of $292,431 compared to $100,556 for the same period in 2008. The increase in net loss was due to an increase in total expenses incurred during the period.
Results of Operations for the Nine Months Ended December 31, 2009 compared to the Nine Months Ended December 31, 2009.
Lack of Revenues
We generated $3,911 in revenues for the nine months ended December 31, 2009 compared to no revenues during the same period in 2008.
5
Expenses
Total operating expenses for the nine months ended December 31, 2009 were $704,986 compared to $292,699 during the same period in 2008. The increase in expenses during the period in 2009 was due mostly to an increase in business activities following our merger on May 28, 2009.
For the nine months ended December 31, 2009, we also incurred an impairment loss of $52,330 relating to goodwill from our acquisition of Cicero Resources Corp.
Net Loss
For the nine months ended December 31, 2009 we incurred a net loss of $662,984 compared to $292,174 for the same period in 2008. The increase in net loss was due to an increase in expenses as well as a $52,330 impairment loss on goodwill.
Inflation
The amounts presented in the financial statements do not provide for the effect of inflation on our operations or financial position. The net operating losses shown would be greater than reported if the effects of inflation were reflected either by charging operations with amounts that represent replacement costs or by using other inflation adjustments.
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 our unaudited consolidated 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.
Use of Estimates
The preparation of these consolidated financial statements in conformity with generally accepted accounting principles 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 consolidated financial statements
and the reported amounts of revenues and expenses during the reporting period. We regularly evaluate estimates and assumptions related to the useful life and recoverability of long-lived assets, fair value on share-based payments, and valuation allowances on deferred income tax losses. We base its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the
carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by we may differ materially and adversely from our estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
Basis of Presentation and Principles of Consolidation
The consolidated financial statements and the related notes are prepared in accordance with generally accepted accounting principles in the United States and are expressed in Canadian dollars. The consolidated financial statements include the accounts of our company and its wholly-owned subsidiaries, Gamboozle Media Inc., and Global Climate
Seek Inc. All inter-company accounts and transactions have been eliminated. Our fiscal year-end is March 31.
6
Basic and Diluted Net Loss Per Share
We compute net loss per share in accordance with ASC 260 Earnings Per Share which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the
weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect
is anti dilutive.
Stock-Based Compensation
Our records stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of
the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued.
Off-Balance Sheet Arrangements
As of December 31, 2009, we had no off-balance sheet transactions that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Not applicable.
Disclosure Controls
We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) for the period covered in this report. Based
upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the "Exchange Act") is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in internal controls
During the period covered by this report, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
7
We are not aware of any legal proceedings contemplated by any governmental authority or any other party against us. None of our directors, officers or affiliates are (i) a party adverse to us in any legal proceedings, or (ii) have an adverse interest to us in any legal proceedings. Management is not aware of any other legal
proceedings that have been threatened against us.
Not applicable.
From October 1, 2009 to December 31, 2009, we made the following previously unreported sales of unregistered securities:
· |
On November 20, 2009, we issued an aggregate of 68,000 shares of common stock to one non-US investors at US $0.10 per share for proceeds of$7,000 (US $6,800). These shares were issued without a prospectus pursuant to exemption found in Regulation S of the Securities Act of 1933, as amended. |
· |
On December 10, 2009, we issued an aggregate of 610,000 shares of common stock to two non-US and one US investors at a price of US $0.40 per share for total proceeds of $258,879 (US $244,000). These shares were issued without a prospectus pursuant to exemption found in Regulation S and Section 4(2) of the Securities Act of 1933, as amended. |
· |
During the period ended December 31, 2009, we issued 412,000 common shares for proceeds of $103,000, of which $83,000 were from common share subscriptions received prior to March 31, 2009. These shares were issued without prospectus pursuant to exemption found in Regulation S of the Securities Act of 1933, as amended. |
The offerings of the common stock pursuant to Rule 903 of Regulation S of the Securities Act were made on the basis that the sale of the common stock was completed in an "offshore transaction", as defined in Rule 902(h) of Regulation S. We did not engage in any directed selling efforts, as defined
in Regulation S, in the United States in connection with the sale of the units. Each investor was not a U.S. person, as defined in Regulation S, and was not acquiring the shares for the account or benefit of a U.S. person.
Our reliance upon the exemption under Section 4(2) of the Securities Act of 1933 was based on the fact that the issuance of these shares did not involve a “public offering.” The offering was not a "public offering" as defined in Section 4(2) due to the insubstantial number of persons
involved in the deal, size of the offering, manner of the offering and number of shares offered. We did not undertake an offering in which we sold a high number of shares to a high number of investors. In addition, the investors had the necessary investment intent as required by Section 4(2) since they agreed to and received a share certificate bearing a legend stating that such shares are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these shares would not be immediately
redistributed into the market and therefore not be part of a "public offering." The investors negotiated the terms of the transactions directly with our executive officers. No general solicitation was used, no commission or other remuneration was paid in connection with these transactions, and no underwriter participated. Based on an analysis of the above factors, these transactions were effected in reliance on the exemption from registration provided in Section 4(2) of the Securities Act for transactions not
involving any public offering.
8
None.
None.
None.
Exhibit No. |
Description |
10.1 |
Director Agreement with Carl Schimdt dated January 21, 2010 (incorporated by reference from our Current Report on Form 8-K filed on January 27, 2010) |
31.1 |
|
31.2 |
|
32.1 |
|
32.2 |
9
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Intelimax Media Inc. | |
(Registrant) | |
Date: February 16, 2010 |
/s/ Chaz Green |
Chaz Green | |
Chief Executive Officer, Director | |
Date: February 16, 2010 |
/s/ Michael Young |
Michael Young | |
President, Chief Financial Officer, Principal Accounting Officer, Director |
10