B-Scada, Inc. - FORM 10-Q - September 14, 2010

Attached files

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EX-31.1 - B-Scada, Inc.	ex31-1.htm
EX-32.1 - B-Scada, Inc.	ex32-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended: July 31, 2010

or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from: _____________ to _____________

Commission File Number: 000-1341878

MOBIFORM SOFTWARE, INC.

(Exact name of registrant as specified in its charter)

Delaware		94-3399360
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
Incorporation or organization)

1255 N Vantage Pt. Dr., Suite A
Crystal River, Florida		34429
(Address of principal executive offices)		(Zip Code)

Issuer's telephone number (352) 564-9610

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

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer	¨			Accelerated filer	¨
Non-accelerated filer	¨	(Do not check if a smaller reporting company)		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 þ No

APPLICABLE ONLY TO CORPORATE ISSUERS

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

The number of shares of the issuer’s common equity outstanding as of September 13, 2010 was 24,586,672 shares of common stock, par value $.0001.

Table of Contents

MOBIFORM SOFTWARE, INC.

TABLE OF CONTENTS

		Page

PART I. FINANCIAL INFORMATION

Item 1.	Consolidated Financial Statements	3

	Consolidated Balance Sheets at July 31, 2010 (unaudited) and October 31, 2009	3

	Consolidated Statements of Operations for the three and nine months ended July 31, 2010 and 2009 (unaudited)	4

	Consolidated Statements of Cash Flows for the nine months ended July 31, 2010 and 2009 (unaudited)	5

	Notes to Consolidated Financial Statements (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 4.	Controls and Procedures	23

PART II. OTHER INFORMATION

Item 1A.	Risk Factors	24

Item 2.	Unregistered Sales of Equity Securities	25

Item 6.	Exhibits	26

Signatures		27

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PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

MOBIFORM SOFTWARE, INC.

CONSOLIDATED BALANCE SHEETS

	July 31,			October 31,
	2010			2009
	(Unaudited)
Assets
Current Assets
Cash and Cash Equivalents	$	122,656		$	14,966
Accounts Receivable – Net		77,273			9,920
Prepaid Expenses		3,080			47,801
Total Current Assets		203,009			72,687

Property and Equipment – Net		31,578			32,768

Other Assets
Security Deposits		3,650			3,650

Total Assets	$	238,237		$	109,105

Liabilities and Stockholders’ Deficit
Current Liabilities
Convertible Notes Payable	$	50,000		$	50,000
Notes Payable – Related Party		100,000			50,000
Accounts Payable and Accrued Liabilities		93,394			110,479
Deferred Revenue		185,607			5,833
Common Share Liability		--			29,250
Total Current Liabilities		429,001			245,562

Commitments and Contingencies		--			--

Stockholders’ Deficit
Preferred Stock, $0.0001 Par Value, 5,000,000 Shares
Authorized and Unissued		--			--
Common Stock, $0.0001 Par Value; 100,000,000 Shares
Authorized; Shares Issued and Outstanding, 24,586,672
at July 31, 2010 and 24,410,656 at October 31, 2009		2,459			2,441
Additional Paid in Capital		7,097,811			7,036,413
Accumulated Deficit		(7,291,034	)		(7,175,311	)
Total Stockholders’ Deficit		(190,764	)		(136,457	)

Total Liabilities and Stockholders’ Deficit	$	238,237		$	109,105

See the accompanying notes to consolidated financial statements.

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MOBIFORM SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS [UNAUDITED]

	For the Three Months Ended						For the Nine Months Ended
	July 31,						July 31,
	2010			2009			2010			2009

Revenue	$	137,093		$	19,350		$	655,373		$	67,177

Operating Expenses
Payroll Expenses		145,402			146,356			449,667			448,759
Compensation – Share Based		--			8,659			--			63,336
Consulting Fees – Share Based		11,838			6,326			71,742			6,326
Professional Fees		34,957			30,827			84,821			130,619
Advertising		17,244			3,585			29,808			36,950
Depreciation and Amortization		3,393			4,580			9,927			16,175
Consulting Fees		16,082			13,708			44,797			42,175
Office		2,161			1,594			8,903			12,547
Rent		6,533			8,913			19,775			33,985
Telephone and Communication		3,182			2,715			9,253			8,799
Other		11,499			7,204			33,330			26,505
Total Operating Expenses		252,291			234,467			762,023			826,176

Operating Loss		(115,198	)		(215,117	)		(106,650	)		(758,999	)

Other Income (Expenses)
Interest Income		--			1,034			--			6,246
Interest Expense		(1,008	)		(1,008	)		(3,024	)		(3,485	)
Interest Expense – Related Party		(2,016	)		-			(6,049	)		-
Loss on Sale of Asset					(27,363	)					(27,363	)
Gain from Derecognition of Common Share Liability		-			-			-			400,000
Total Other Income (Expenses)		(3,024	)		(27,337	)		(9,073	)		375,398

Loss Before Income Taxes		(118,222	)		(242,454	)		(115,723	)		(383,601	)

Provision for Income Taxes		--			--			--			--

Net Loss	$	(118,222	)	$	(242,454	)	$	(115,723	)	$	(383,601	)

Net Loss Per Common Share – Basic and Diluted	$	--		$	(0.01	)	$	--		$	(0.02	)

Weighted-Average Common Shares Outstanding – Basic and Diluted		24,586,672			23,760,391			24,528,359			23,709,262

See the accompanying notes to consolidated financial statements.

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MOBIFORM SOFTWARE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS [UNAUDITED]

	For the Nine Months Ended
	July 31,
	2010			2009

Operating Activities
Net Loss	$	(115,723	)	$	(383,601	)
Adjustments to Reconcile Net Loss to Net Cash
Provided by (Used for) Operating Activities:
Depreciation and Amortization		9,927			16,175
Consulting Fees – Share Based		71,742			6,326
Compensation – Share Based		--			63,336
Deferred Revenue		179,774			2,500
Gain from Derecognition of Common Share Liability		--			(400,000	)
Loss on Sale of Asset		--			27,363

Changes in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable		(67,353	)		7,877
Prepaid Expenses		5,144			(3,014	)
Increase (Decrease) in:
Accounts Payable and Accrued Liabilities		(17,084	)		(73,531	)
Net Cash Provided by (Used for) Operating Activities		66,427			(736,569	)

Investing Activities
Acquisition of Property & Equipment		(8,737	)		--
Redemption of Certificate of Deposit		--			504,192
Proceeds from Sale of Asset					85,119
Net Cash (Used for) Provided by Investing Activities		(8,737	)		589,311

Financing Activities
Proceeds from note payable – related party		50,000			--
Net Cash Provided by Financing Activities		50,000			--

Change in Cash and Cash Equivalents		107,690			(147,258	)

Cash and Cash Equivalents – Beginning of Period		14,966			196,512

Cash and Cash Equivalents – End of Period	$	122,656		$	49,254

Supplemental Disclosures of Cash Flow Information
Cash paid during the period for:
Interest	$	--		$	--
Income Taxes	$	--		$	--

Supplemental Disclosures of Non-Cash Investing and Financing Activities:
Debt and Accrued Interest Converted into Common Stock	$	--		$	29,062
Common Stock Issued for Prepaid Consulting Expense	$			$	216,000
Common Stock Issued for Share Liability	$	58,500		$	--

See the accompanying notes to consolidated financial statements.

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MOBIFORM SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [UNAUDITED]

JULY 31, 2010

(1) Nature of Business and Basis of Presentation

Mobiform Software, Inc. (“Mobiform US”), a Delaware corporation, was originally formed under the name Firefly Learning, Inc. in May 2001. In October, 2005, pursuant to an exchange agreement, we acquired all of the issued and outstanding shares of capital stock of Mobiform Software, Ltd. (“Mobiform Canada”), a Canadian corporation, in exchange for 14,299,593 shares of our common stock.

Mobiform US and Mobiform Canada (collectively “Mobiform”, the “Company”, “we” or “us”) are in the business of developing software products for the visualization and monitoring of data in heavy industry. Our HMI (Human Machine Interface) software and SCADA (Supervisory Control and Data Acquisition) products are utilized in petro chemical, electricity distribution, transportation, facilities management and manufacturing industries. Mobiform also licenses portions of its technology for use in the products of smaller software firms and Fortune 500 companies. Our products are marketed and sold globally and offered through a sales channel of system integrators and resellers.

(2) Going Concern

The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have incurred substantial net operating losses and used substantial amounts of cash in our operating activities. Since our inception, we have incurred losses, have an accumulated deficit of approximately $7,300,000 at July 31, 2010, and have experienced negative cash flows from operations. The expansion and development of our business will likely require additional capital. This condition raises substantial doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.

We are restructuring operating costs as we continue to market our products in line with our business plan and may seek to raise additional capital to meet our working capital needs. During the nine months ended July 31, 2010, we have signed significant licensing agreements and continue to implement our strategic business plan. There is no assurance that the income generated from these and future agreements will meet our working capital requirements, or that we will be able to sign significant agreements in the future and there is no assurance that we will be able to obtain additional capital in the amount or on terms acceptable to us.

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MOBIFORM SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [UNAUDITED]

JULY 31, 2010

(3)	Summary of Significant Accounting Policies

Unaudited Interim Statements - The accompanying unaudited interim consolidated financial statements as of July 31, 2010, and for the three and nine months ended July 31, 2010 and 2009 have been prepared in accordance with accounting principles generally accepted for interim financial statement presentation and in accordance with the instructions to Form 10-Q. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statement presentation. In the opinion of management, the financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the consolidated financial position as of July 31, 2010, the consolidated results of operations for the three and nine months ended July 31, 2010 and 2009 and the consolidated cash flows for the nine months ended July 31, 2010 and 2009. The results of operations for the nine months ended July 31, 2010 are not necessarily indicative of the results to be expected for the full year.

Principles of Consolidation - The consolidated financial statements include the accounts of Mobiform Software, Inc. and its wholly-owned Canadian subsidiary, Mobiform Software, Ltd. All material intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect 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 those estimates.

Revenue Recognition - Our revenues are recognized in accordance with FASB ASC Topic 985-605 “Revenue Recognition” for the software industry. Revenue from the sale of software licenses is recognized when standardized software modules are delivered to and accepted by the customer, the license term has begun, the fee is fixed or determinable and collectibility is probable. Revenue from software maintenance contracts and Application Service Provider (“ASP”) services are recognized ratably over the lives of the contracts. Revenue from professional services is recognized when the service is provided.

We enter into revenue arrangements in which a customer may purchase a combination of software, maintenance and support, and professional services (multiple-element arrangements). When vendor-specific objective evidence (“VSOE”) of fair value exists for all elements, we allocate revenue to each element based on the relative fair value of each of the elements. VSOE of fair value is established by the price charged when that element is sold separately. For maintenance and support, VSOE of fair value is established by renewal rates, when they are sold separately. For arrangements where VSOE of fair value exists only for the undelivered elements, we defer the full fair value of the undelivered elements and recognize the difference between the total arrangement fee and the amount deferred for the undelivered items as revenue, assuming all other criteria for revenue recognition have been met.

Subsequent Events – The Company evaluated subsequent events, which are events or transactions that occurred after July 31, 2010 through the issuance of the accompanying consolidated financial statements.

Our other accounting policies are set forth in Note 3 of our audited consolidated financial statements included in the Mobiform Software, Inc. 2009 Form10-K.

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MOBIFORM SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [UNAUDITED]

JULY 31, 2010

(4) New Authoritative Accounting Guidance

In January 2010, the Financial Accounting Standards Board ("FASB") issued, and the Company adopted, Accounting Standards Codification (“ASC”) Update No. 2010-05 “Escrowed Share Arrangements and the Presumption of Compensation” (“ASCU No. 2010-05”). ASCU No. 2010-05 codifies the SEC staff’s views on escrowed share arrangements which historically has been that the release of such shares to certain shareholders based on performance criteria is presumed to be compensatory. When evaluating whether the presumption of compensation has been overcome, the substance of the arrangement should be considered, including whether the transaction was entered into for a reason unrelated to employment, such as to facilitate a financing transaction. In general, in financing transactions the escrowed shares should be reflected as a discount in the allocation of proceeds. In debt financings the discounts are to be amortized using the effective interest method, while discounts on equity financings are not generally amortized. As it relates to future financings, the adoption of this update may have an effect on the Company’s financial statements.

In January 2010, the FASB issued ASC Update No. 2010-06 “Fair Value Measurements and Disclosures (Topic 820): Improving Disclosures about Fair Value Measurements” which updated guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. This update requires new disclosures on significant transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy (including the reasons for these transfers) and the reasons for any transfers in or out of Level 3. This update also requires a reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis. In addition to these new disclosure requirements, this update clarifies certain existing disclosure requirements. For example, this update clarifies that reporting entities are required to provide fair value measurement disclosures for each class of assets and liabilities rather than each major category of assets and liabilities. This update also clarifies the requirement for entities to disclose information about both the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. This update will become effective for the Company with the interim and annual reporting period beginning November 1, 2010, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will become effective for the Company with the interim and annual reporting period beginning November 1, 2011. The Company will not be required to provide the amended disclosures for any previous periods presented for comparative purposes. Other than requiring additional disclosures, adoption of this update will not have a material effect on the Company's financial statements.

Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have an effect on the accompanying consolidated financial statements.

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MOBIFORM SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [UNAUDITED]

JULY 31, 2010

(5) Property and Equipment

Property and equipment consists of the following:

	July 31,			October 31,			Estimated
	2010			2009			Useful Lives
	[Unaudited]

Computer Equipment	$	34,129		$	30,023		5 years
Office Equipment		24,432			24,432		5-7 years
Software		21,566			16,935		3 years
Total		80,127			71,390
Less: Accumulated Depreciation
and Amortization		(48,549	)		(38,622	)
	$	31,578		$	32,768

(6) Stockholders’ Equity

We are authorized to issue 100,000,000 shares of common stock, par value $.0001 per share and 5,000,000 shares of preferred stock, par value $0.0001 per share. In February 2008, we increased the number of authorized shares of common stock from 45,000,000 to 100,000,000 to allow for potential future issuances of our common stock. At July 31, 2010 there were 24,586,672 common shares issued and outstanding. An additional 12,093,134 common shares were reserved for issuance as of July 31, 2010 for outstanding purchase warrants and convertible debt. There are no shares of preferred stock issued and outstanding.

In January 2010, we issued 150,000 shares of our common stock for a share liability of $58,500 incurred for consulting services. In the nine months ended July 31, 2010, $29,250 expense related to this agreement and $42,492 deferred under other consulting agreements were charged to operations as share-based consulting.

Effective February 1, 2010, we issued 26,016 shares of our common stock to two non-related individuals for shares owed them from previous private placement offerings.

At July 31, 2010, we have 4,424,000 outstanding warrants to employees. The fair value of all the warrants issued for services is being charged to operations over the periods the warrants vest. Amortization of the fair values charged to operations as determined by the Black-Scholes pricing model was $63,336 in the nine months ended July 31, 2009. We had no such charge in the nine months ended July 31, 2010. All the warrants have cashless exercise provisions as defined in the warrants.

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MOBIFORM SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [UNAUDITED]

JULY 31, 2010

(6) Stockholders’ Equity (Continued)

We entered into a consulting agreement on February 5, 2010 for financial consulting services (see Note 9). As part of the compensation for services, the consultant was granted a five-year warrant to purchase 300,000 shares of our common stock at the market price per share on the date of issuance, which was $0.09. The warrant vests 25% on the date of issuance and every three months thereafter and has cashless exercise provisions as defined in the warrant. The fair value of the warrant, $5,883, was calculated using the Black-Scholes pricing model with the following assumptions: 0% dividend yield; 0.4% risk free interest rate; 23.81% volatility; 5 year expected life. Share-based expense based on the fair value of the warrant is being charged to operations over the vesting period. The expense recorded in the nine months ended July 31, 2010 was $2,916.

The following table summarizes the warrants and options.

	For the Nine Months Ended				For the Year Ended
	July 31, 2010				October 31, 2009
	(Unaudited)
	Shares		Weighted Average Exercise Price		Shares			Weighted Average Exercise Price

Outstanding at beginning
of period		11,663,750	$	0.68		17,313,750		$	0.73
Granted/Sold		300,000	$	0.09		540,000		$	0.25
Expired/Cancelled		--		--		(6,000,000	)	$	0.75
Forfeited		--		--		(190,000	)	$	1.50
Exercised		--		--		--			--
Outstanding at end of period		11,963,750	$	0.67		11,663,750		$	0.68

The following table summarizes information about stock warrants and options outstanding as of July 31, 2010 [Unaudited]:

		Warrants and Options
		Outstanding						Exercisable
				Weighted-
				Average
				Remaining		Weighted-				Weighted
				Contractual		Average				Average
		Number		Life		Exercise		Number		Exercise
Exercise Price		Outstanding		(in Years)		Price		Exercisable		Price
$	0.09		300,000		4.50	$	0.09		150,000	$	0.09
$	0.20		5,630,000		0.78	$	0.20		5,630,000	$	0.20
$	0.25		540,000		1.08	$	0.25		540,000	$	0.25
$	0.75		2,022,750		1.85	$	0.75		2,022,750	$	0.75
$	1.50		3,471,000		1.42	$	1.50		3,471,000	$	1.50

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MOBIFORM SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [UNAUDITED]

JULY 31, 2010

(6) Stockholders’ Equity (Continued)

The following table summarizes information about stock warrants and options outstanding as of October 31, 2009:

		Warrants and Options
		Outstanding						Exercisable
				Weighted-
				Average
				Remaining		Weighted-				Weighted
				Contractual		Average				Average
		Number		Life		Exercise		Number		Exercise
Exercise Price		Outstanding		(in Years)		Price		Exercisable		Price
$	0.20……………		5,630,000		1.42	$	0.20		5,630,000	$	0.20
$	0.25……………		540,000		1.83	$	0.25		540,000	$	0.25
$	0.75……………		2,022,750		2.63	$	0.75		2,022,750	$	0.75
$	1.50……………		3,471,000		2.17	$	1.50		3,471,000	$	1.50

At July 31, 2010 and October 31, 2009, the weighted-average exercise price of all warrants and options was $0.67 and $0.68, respectively, and the weighted-average remaining contractual life was 1.25 years and 1.87 years, respectively.

(7) Income Taxes

The income tax expense (benefit) differs from the amount computed by applying the United States statutory corporate income tax rate as follows:

	For the Three Months Ended						For the Nine Months Ended
	July 31,							July 31,
	2010			2009				2010			2009
	(Unaudited)			(Unaudited)				(Unaudited)			(Unaudited)

United States Statutory Corporate
Income Tax Rate		34.0	%		34.0	%			34.0	%		34.0	%
Change in Valuation Allowance on
Deferred Tax Assets		(34.0	)%		(34.0	)%			(34.0	)%		(34.0	)%

Income Tax Provision (Benefit)		--	%		--	%			--	%		--	%

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MOBIFORM SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [UNAUDITED]

JULY 31, 2010

(7) Income Taxes

The components of deferred tax assets (liabilities) at July 31, 2010 and October 31, 2009 are as follows:

	July 31,			October 31,
	2010			2009
	[Unaudited]

Deferred Tax Assets – Current
Accrued Vacation Pay	$	5,698		$	6,400
Allowancefor Doubtful Accounts		--			1,850
Valuation Allowance		(5,698	)		(8,250	)
		--			--
Deferred Tax Assets (Liabilities) – Long Term
Net Operating Losses		1,253,450		$	1,230,675
Property and Equipment		(3,762	)		2,470
Equity Instruments		573,448			554,156
Valuation Allowance		(1,823,136	)		(1,787,301	)

Net Deferred Tax Asset	$	--		$	--

We have established a full valuation allowance on our deferred tax asset because of a lack of sufficient positive evidence to support its realization. The valuation allowance increased by approximately $33,000 and $244,000 for the nine months ended July 31, 2010 and the year ended October 31, 2009, respectively.

(8) Related Party Transactions

On November 10, 2009, we executed a promissory note in the amount of $50,000 payable to our CEO. The note, which is due on demand, accrues interest at 8% per annum. The proceeds are to be used for working capital purposes.

Interest expense in the amount of $6,049 has been accrued for these notes in the nine months ended July 31, 2010.

(9) Commitments and Contingencies

Leases

We presently lease office space in the United States, generally on an annual basis. Rental expense for the nine months ended July 31, 2010 and 2009 amounted to approximately $20,000 and $34,000, respectively. In May 2008, our office lease agreement was extended for a one year period through May 2009 at approximately $4,000 per month. Effective June 1, 2009, the agreement was extended for a one year period through May 2010. The terms were revised to a fixed monthly payment of $2,000 plus our share of certain allocated utilities (not to exceed $2,000 per month) as defined in the agreement. Subsequent to May 2010 the lease is effective on a month to month basis under similar terms.

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MOBIFORM SOFTWARE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [UNAUDITED]

JULY 31, 2010

(9) Commitments and Contingencies (Continued)

Consulting Agreement

On February 5, 2010, we entered into an agreement for financial consulting services, which may be terminated by either party upon one month’s notice. The agreement provides compensation of $5,000 per month, accrued until the company has a liquidity event, as described in the agreement. In addition, the consultant was granted a five-year warrant to purchase 300,000 shares of our common stock at $0.09 per share (see Note 6). Effective July 31, 2010 the consultant and the Company agreed to terminate the monthly consulting fee provided by the agreement. All other terms will continue in force, including the vesting schedule of the warrants. Fees accrued through July 31, 2010 will remain payable as provided by the agreement.

Investment Banking Agreement

On April 16, 2010, we entered into an investment banking agreement for advisory services and assistance in securing financing through the offering for sale of convertible debt securities, as defined in the agreement. The term of the agreement commenced upon its execution and will continue for a period of six months from the closing of the offering. The fee for advisory services of $20,000 will be payable upon the closing of the sale of the minimum amount of convertible debt securities of $1,000,000. Compensation related to the offering will be based on the successful closing on the sale of convertible debt securities, as defined in the agreement. Effective June 30, 2010, the Company and investment banker mutually agreed to terminate the agreement.

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

The following discussion of our results of operations should be read together with our consolidated financial statements and the related notes, included elsewhere in this report. The following discussion contains forward-looking statements that reflect our current plans, estimates and beliefs and involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include those discussed below and elsewhere in this prospectus.

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Executive Summary

Since 2003, Mobiform’s experience in Microsoft .NET graphics technology has given us a unique perspective and insight into new data visualization possibilities with emerging technologies.

Mobiform specializes in the compelling visualization of real-time data. Mobiform has produced exceptional data visualization solutions for companies in the petro chemical, electricity distribution, transportation, facilities management and manufacturing industries making use of HMI (Human Machine Interface) and SCADA (Supervisory Control and Data Acquisition) software products. Recognizing that data visualization can be used in multiple vertical markets, Mobiform will be leveraging our technology to expand into other lines of business like digital signage, financial, healthcare and touch-screen solutions.

Mobiform’s in-house expertise and experience has provided us the opportunity to partner with companies from various vertical markets, and assist them to develop custom solutions that meet their specific needs. Our goal is to help our clients transfer their real-time production and operational data into actionable information through graphically-compelling, functional, and intuitive user interfaces.

Products and Services

Our technology team has more than 20 years of experience in software design and development and has designed, built and delivered, over the years, world-class software solutions. In addition to software development, our company also derives income from consulting services and contract development.

Overall Strategic Goals

Mobiform’s intent since inception has been to use this model as a foundation for growing our business. Our plans include developing a ‘Technology Toolbox’ of software development components and design technology that can be used repeatedly as we deliver a variety of software products for consumers and industry in a wide range of verticals. If you can take a piece of technology, hardware, or any manufactured item, and reuse it over and over in different products you can achieve a very high return on investment for your research and development efforts.

This toolbox is a set of software components that can be reused in various software products. The types of software developed in our toolbox include software components for visualizing information, LED displays, gauges, charting and mapping controls. Mobiform calls these our ‘VantagePoint Controls™’. Mobiform has created additional technology for graphics design for our technology toolbox. ‘Aurora’ is a Graphics Design Platform that can be used to provide design capabilities inside of software applications built for Microsoft Windows.

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Product Description

With the Technology Toolbox in place, we can quickly assemble data visualization software products for monitoring real time data. Our initial target market is monitoring and control for heavy industry since this is an area in which the Mobiform team already has expertise. Over time, we plan to expand into financial, drafting, digital signage and eLearning markets all leveraging the same set of core technologies.

Mobiform has assembled its first vertical market application. ‘Status Vision Designer®’ (“Status”) was released in January 2009 as an industrial control and monitoring application for heavy industry and manufacturing.

Status falls into the category of a SCADA (Supervisory Control and Data Acquisition) or HMI (Human Machine Interface) software application.

Status Vision Designer® is a powerful data visualization software package that allows the user to create highly graphical screens and connect the controls on the screens to real-time data. The screens can then be published and viewed by anyone within the company or from the web.

Status has built-in connectivity to real-time OPC (Open Process Control) data and can very easily be extended to bind to other types of data. OPC data is primarily used in the manufacturing and process control industries. The market appeal for Status is its ability to connect to a variety of OPC servers and display real-time data from hundreds of data sources.

Consulting

In addition to sales of pre-designed software products, we generate revenue by consulting with organizations which utilize our expertise in customized solutions and embedding our software into theirs. We also offer WPF (Windows Presentation Foundation) and XAML (Extensible Application Markup Language) training and graphic design services.

We have been involved in WPF and XAML since it was first released in November 2003 at the Microsoft PDC Conference. We were one of the earliest adopters of WPF, displaying its first public alpha product related to this technology in January of 2004.

We assist consulting clients with their WPF applications. From initial consulting services and custom development, to embedding our Aurora software into their solution, we have the expertise and personnel to assist.

Licenses and Joint Ventures

We have licensed our technology to other companies for use in their solutions, and we are in discussions with additional companies that may want to license or joint venture some of our software applications on an exclusive or nonexclusive basis.

In November, 2009, we entered into a three year licensing agreement with GE Fanuc Intelligent Platforms, Inc. (“GE”) to utilize a portion of our proprietary technology. GE has agreed to pay us a per unit royalty, with a minimum of $270,000 per year for the duration of the agreement. In addition we will perform consulting services, on an as needed basis, for which we are compensated separately based upon services provided.

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In November, 2009, we entered into a three year non-exclusive licensing agreement with Johnson Controls, Inc. (“JCI”) to utilize a portion of our proprietary software. JCI has agreed to pay us $240,000, 50% due upon each invoice dated November 16, 2009 and April, 1, 2010, for the three year agreement. JCI has the option to extend the agreement in one year increments upon payment of $120,000 per additional year. In addition the licensing agreement provides for us to perform consulting services, on an as needed basis, for which we are compensated separately based upon services provided.

In addition to several other executed mutual nondisclosure agreements, we entered into an agreement with Capstone Technology for licensing of Aurora and VantagePoint into one of their HMI products and entered into an additional similar agreement with Matrikon Asia Pacific. There is no assurance that any additional licenses or joint ventures will result from our discussions with additional companies.

Revenue Strategy

We are currently generating revenues through licensing of our technology to various software companies, retailing portions of our technology as software development components, and in the near future, retailing our software solutions to specific vertical markets. A smaller portion of our revenue will come from consulting services and custom development.

We are currently selling our products directly over the Internet from our website and through resellers. In the future, we intend to distribute Aurora through retail outlets and OEMs. We will also target potential customers to offer customized applications to meet their industry requirements.

Critical Accounting Policies and Estimates

Our consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). The preparation of the financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. Though we evaluate our estimates and assumptions on an ongoing basis, our actual results may differ from these estimates.

Certain of our accounting policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s subjective judgments are described below to facilitate a better understanding of our business activities. We base our judgments on our experience and assumptions that we believe are reasonable and applicable under the circumstances.

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Equity-Based Compensation - We account for equity based compensation transactions with employees under the provisions of FASB ASC Topic 718, “Compensation, Stock Compensation” (“Topic 718”). Topic 718 requires the recognition of the fair value of equity-based compensation in net income. The fair value of the Company’s equity instruments are estimated using a Black-Scholes option valuation model. This model requires the input of highly subjective assumptions and elections including expected stock price volatility and the estimated life of each award. In addition, the calculation of equity-based compensation costs requires that we estimate the number of awards that will be forfeited during the vesting period. The fair value of equity-based awards granted to employees is amortized over the vesting period of the award and we elected to use the straight-line method for awards granted after the adoption of Topic No. 718.

We account for equity based transactions with non-employees under the provisions of FASB ASC Topic 505-50, “Equity-Based Payments to Non-Employees” (“Topic 505-50”). Topic 505-50 establishes that equity-based payment transactions with non-employees shall be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. When the equity instrument is utilized for measurement the fair value of the equity instrument is estimated using the Black-Scholes option valuation model. In general, we recognize an asset or expense in the same manner as if we were to receive cash for the goods or services instead of paying with or using the equity instrument.

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Results of Operations

The following table sets forth, for the periods indicated, certain items from the consolidated statements of operations. Comparative analysis of ratios of costs and expenses to revenues is not shown in the following narrative discussion as management believes such ratios to be uninformative due to the insignificant levels of revenues in the prior period.

	For the Three Months Ended						For the Nine Months Ended
	July 31,						July 31,
	2010			2009			2010			2009
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)

Revenue	$	137,093		$	19,350		$	655,373		$	67,177

Operating expenses
Compensation costs		145,402			155,015			449,667			512,095
Consulting fees		27,920			20,034			116,539			48,501
Advertising		17,244			3,585			29,808			36,950
Professional fees		34,957			30,827			84,821			130,619

Interest and debt costs		(3,024	)		(1,008	)		(9,073	)		(3,485	)
Gain from Derecognition of
Common Share Liability		--			--			--			400,000
Provision for income taxes		--			--			--			--

Net loss	$	(118,222	)	$	(242,454	)	$	(115,723	)	$	(383,601	)

Net loss per share –
basic and diluted	$	--		$	(0.01	)	$	--		$	(0.02	)

Comparison of the Three Months Ended July 31, 2010 and 2009

Revenues

Our revenues for the three months ended July 31, 2010 amounted to $137,093 compared to the comparative 2009 period of $19,350. Revenues for the period increased by approximately $118,000 primarily resulting from consulting and developmental services revenues. Service revenues include revenues from fees charged for the implementation of our software products and training of customers in the use of such products. We are currently selling our software over the internet and are marketing our products and services to companies which may want to license or joint venture some of our software applications.

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Operating Expenses

Our operating expenses consist primarily of compensation costs, advertising and professional services.

Compensation costs consist of payroll and share based compensation, primarily through the issuance of warrants, to employees. Payroll and share based compensation amounted to $145,402 and $0 respectively, in the three months ended July 31, 2010 compared to $146,356 and $8,659, respectively, in the three months ended July 31, 2009. Share based compensation costs decreased $8,659 (100%) as we now issue warrants to employees on a more selective basis, determined by their qualifications and performance.

Advertising costs have increased to $17,244 in the three months ended July 31, 2010 from $3,585 in the three months ended July 31, 2009, an increase of $13,659 primarily from additional trade show expenses.

Professional fees increased from $30,827 in the three months ended July 31, 2009 to $34,957 in the three months ended July 31, 2010. The increase of $4,130 (14%) is primarily a result of increased legal fees incurred in 2010 for general corporate matters. Consulting fees of $16,082 in the three months ended July 31, 2010 were comparative to the $13,708 of consulting fees in the three months period ended July 31, 2009. Share-based consulting fees have increased to $11,838 in the three months ended July 31, 2010 from $6,326 in the three months ended July 31, 2009, an increase of $5,512 (87%) as we managed our operating capital with non-cash payments.

Interest and Debt Costs

Interest expense increased from $1,008 in the three months ended July 31, 2009 to $3,024 in the three months ended July 31, 2010. The increase of $2,016 was due to the two promissory notes of $50,000 each to our CEO executed in the last quarter of fiscal year 2009 and the first quarter of fiscal 2010, which are both outstanding as of July 31, 2010. Additionally, $50,000 in convertible debentures is outstanding as of July 31, 2010.

Income Taxes

The potential future tax benefits resulting from pre-tax losses have been fully reserved as we are not able to determine if it is more likely than not that we will be able to realize the tax benefits in the future.

Net Loss

Net loss in the three months ended July 31, 2010 totaled $118,222 compared to $242,454 in the three months ended July 31, 2009, a decrease in net loss of $124,232 (51%).

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Comparison of the Nine Months Ended July 31, 2010 and 2009

Revenues

Our revenues for the nine months ended July 31, 2010 amounted to $655,373 compared to the comparative 2009 period of $67,177. Revenues for the year increased by approximately $588,000 primarily resulting from new licensing agreements entered in November 2009. Revenues from these agreements amounted to $410,000 of which $292,000 represents licensing fees and $118,000 relates to consulting, maintenance and support. The balance of the increase is primarily related to service revenues. Service revenues include revenues from fees charged for the implementation of our software products and training of customers in the use of such products. We are currently selling our software over the internet and are marketing our products and services to companies which may want to license or joint venture some of our software applications.

Operating Expenses

Our operating expenses consist primarily of compensation costs, advertising and professional services.

Compensation costs consist of payroll and share based compensation, primarily through the issuance of warrants, to employees. Payroll and share based compensation amounted to $449,667 and $0, respectively, in the nine months ended July 31, 2010 compared to $448,759 and $63,336, respectively, in the nine months ended July 31, 2009. We continue to manage our payroll costs as we implement our strategic plan. Share based compensation costs decreased $63,336 (100%) as we now issue warrants to employees on a more selective basis, determined by their qualifications and performance.

Advertising costs have decreased to $29,808 in the nine months ended July 31, 2010 from $36,950 in the nine months ended July 31, 2009, a decrease of $7,142 (19%). We reduced our advertising budget temporarily as a means of preserving capital as we implement our plan for revenue growth.

Professional fees decreased from $130,619 in the nine months ended July 31, 2009 to $84,821 in the nine months ended July 31, 2010. The decrease of $45,798 (35%) is primarily a result of professional fees incurred in registering our common shares as a public company in 2009. We expect these fees to decrease throughout fiscal 2010. Consulting fees of $44,797 in the nine months ended July 31, 2010 were comparative to the $42,175 of consulting fees in the nine months ended July 31, 2009. Share-based consulting fees increased to $71,742 in the nine months ended July 31, 2010 from $6,326 in the nine months ended July 31, 2009, an increase of $65,416 as we managed our operating capital with non-cash payments.

Interest and Debt Costs

Interest expense increased from $3,485 in the nine months ended July 31, 2009 to $9,073 in the nine months ended July 31, 2010. The increase of $5,588 was primarily due to the two promissory notes of $50,000 each to our CEO executed in the last quarter of fiscal year 2009 and the first quarter of fiscal 2010, which are both outstanding as of July 31, 2010. Additionally, $50,000 in convertible debentures is outstanding as of July 31, 2010.

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Other Income (Expenses)

Other income decreased from $375,398 in the nine months ended July 31, 2009 to an expense of $9,073 in the nine months ended July 31, 2010 primarily due to $400,000 of gain from the derecognition of common share liability in fiscal 2009. We entered into a consulting agreement on January 31, 2007 that either party could cancel upon 10 days notice. As part of the compensation for services, the consultant was to receive an aggregate of 750,000 shares of the Company’s common stock. The consultant earned and was issued 350,000 shares. The issuance of the remaining 400,000 common shares was contingent upon certain actions by us. Since it was our intent that such actions would be fulfilled, we charged operations in 2007 and 2008 for the value of such common shares and had an accrued common share liability at October 31, 2008 of $400,000 for the fair value of the 400,000 shares. During the first quarter of fiscal 2009 we mutually agreed with the consultant to cancel the obligation to issue the 400,000 common shares. As a result, we reduced the accrued common share liability and recorded a gain from the derecognition of common share liability for $400,000 in the first quarter of fiscal 2009.

Income Taxes

Net Loss

Net loss in the nine months ended July 31, 2010 totaled $115,723 compared to a net loss of $383,601 in the nine months ended July 31, 2009, a decrease in net loss of $267,878

Liquidity and Capital Resources

We fund our operations through sales of our products and services and debt and equity financings.

In August 2009, we initiated a private placement offering of equity securities to a limited number of accredited investors. The offering was through the sale of units, with each unit consisting of a warrant to purchase 60,000 shares of our common stock at $0.25 per share. The offering price per unit was $4,800 with a total of 100 units ($480,000) being offered. We sold 9 units in September and October 2009 and received proceeds of $43,200.

On October 16, 2009, we executed a promissory note in the amount of $50,000 with our Chief Executive Officer (“CEO”). The note, which is due on demand, accrues interest at 8% per annum. On November 10, 2009, we executed a promissory note in the amount of $50,000 payable to our CEO. The note, which is due on demand, accrues interest at 8% per annum. The proceeds are being used for working capital purposes.

At July 31, 2010 we had cash and cash equivalents of $123,000 compared to $15,000 at October 31, 2009. The increase of $108,000 is primarily attributable to the cash received from payments on our new licensing agreements and funds borrowed from our CEO.

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Cash Flows

Net cash provided by (used for) operating activities amounted to $66,000 and ($737,000) in the nine months ended July 31, 2010 and 2009, respectively. Net cash from operations increased as a result of the additional cash and revenues generated in the first quarter of fiscal 2010 from our licensing agreements while we managed to reduce operating costs for compensation, advertising and professional fees as discussed above.

In the nine months ended July 31, 2010 we used $9,000 cash for investing activities through the acquisition of property and equipment. In the nine months ended July 31, 2009 we redeemed $504,000 of our certificate of deposit to use for operating cash and received proceeds of $85,000 from the sale of an asset.

Net cash provided by financing activities amounted to $50,000 in the nine months ended July 31, 2010, which was provided by a loan from our CEO. There were no cash financing activities in the nine months ended July 31, 2009.

We do not believe that our cash on hand at July 31, 2010 will be sufficient to fund our operations for at least the next 12 months. We have signed significant licensing agreements in the first quarter of fiscal 2010 and continue to market our products and services in accordance with our strategic business plan. We also may raise additional capital through debt and/or equity financings. There is no assurance that the income generated from these and future agreements will meet our working capital requirements, or that we will be able to sign significant agreements in the future. There is also no assurance that we will be able to obtain additional capital in the amount or on terms acceptable to us.

Contractual Obligations

N/A

Off-Balance Sheet Arrangements

As of July 31, 2010, we had no off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.

Quantitative and Qualitative Disclosure about Market Risk

Interest Rate Risk

N/A

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Recent Accounting Pronouncements

Management does not believe that any other recently issued but not yet effective accounting pronouncements, if adopted, would have an effect on the accompanying consolidated financial statements.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

Our Chief Executive Officer and Chief Financial Officer (the “Certifying Officer”) maintains a system of disclosure controls and procedures that is designed to provide reasonable assurance that information, which is required to be disclosed, is accumulated and communicated to management timely.

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Under the supervision and with the participation of management, the Certifying Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-14(c) under the Exchange Act) at the end of the period covered by this Quarterly Report.

Based upon that evaluation, the Certifying Officer concluded that our disclosure controls and procedures are effective in timely alerting him to material information relative to our company required to be disclosed in our periodic filings with the SEC.

Change in Internal Controls

Our Certifying Officer has indicated that there was no change in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act) that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to affect, such control.

PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

An investment in our shares is speculative and involves a high degree of risk. Therefore, you should not invest in our shares unless you are able to bear a loss of your entire investment. You should carefully consider the following factors as well as those set forth in our annual report on form 10-K and the other information contained herein before deciding to invest in our shares. Factors that could cause actual results to differ from our expectations, statements or projections include the risks and uncertainties relating to our business described above. This report and statements that we may make from time to time may contain forward-looking information. There can be no assurance that actual results will not differ materially from our expectations, statements or projections.

Risk Factors Relating to Our Business

The following are some, but not all, of the Risk Factors disclosed in our annual report on Form 10-K:

We have only recently become cash flow positive. Our limited cash balance will only provide a limited cushion, if our revenues are interrupted. Therefore we are trying to increase our revenues and may try to obtain additional financing.

If our revenue is interrupted, unless we obtain cash from financing, our current assets of $203,009 would be exhausted in 2.6 months at our cash expense rate of $77,000 per month experienced during our last nine months.

We will continue our efforts to maintain and increase sales, and may endeavor to raise additional working capital privately, but there can be no assurance that we will be successful. Our independent auditors have qualified their opinion on our financial statements, expressing substantial doubt whether we can continue as a going concern, in light of the uncertainty of our obtaining additional financing on a timely basis and other factors described in Note 2 to the financial statements in this report.

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If we lose key employees or are unable to attract and retain qualified personnel, our business could suffer.

Our future success will depend on the continued contributions of Ron DeSerranno, our CEO, President and Director, who is responsible for programming decisions, design changes, enhancements and strategies. We have “key person” life insurance in the amount of $500,000 on Mr. DeSerranno. Nevertheless the loss of Mr. DeSerranno would likely have a material adverse effect on our business, financial condition and results of operations. We also rely on a very small complement of highly skilled employees. If one or more of them cease to work for us, it would have serious negative consequences. Our future success and plans for growth also depend upon our ability to expand our Board of Directors and to attract, train and retain personnel in all areas of our business.

We have a limited operating history and limited historical financial information upon which you may evaluate our performance.

You should consider, among other factors, our prospects for success in light of the risks and uncertainties encountered by companies that, like us, are in their early stages of development. We may not successfully address these risks and uncertainties or successfully implement our existing and new products and services. If we fail to do so, it could materially harm our business and impair the value of our Common Stock. Even if we accomplish these objectives, we may not generate positive cash flows or profits that we anticipate in the future.

Unanticipated problems, expenses and delays are frequently encountered in establishing a new business and developing new products and services. These include, but are not limited to, inadequate funding, lack of consumer acceptance, competition, product development, and inadequate sales and marketing. Our failure to meet any of these conditions would have a materially adverse effect upon us and may force us to reduce or curtail operations. No assurance can be given that we can or will ever operate profitably.

We have incurred losses since inception and we may be unable to achieve profitability or maintain positive cash flow.

We have incurred substantial net losses since our inception, and we may be unable to achieve profitability in the future. If we continue to incur losses, we may be unable to implement our business plan described herein, including the following:

increase the number of products we sell

increase our sales and marketing activities, including the number of our sales personnel

acquire additional businesses.

As of July 31, 2010 we had an accumulated deficit of $7,291,034. We may not achieve profitability if our revenues increase more slowly than we expect, and/or if operating expenses exceed our expectations or cannot be adjusted to compensate for lower than expected revenues. If we do achieve profitability, we may be unable to sustain or increase profitability on a quarterly or annual basis. Any of the factors discussed above could cause our stock price to decline.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES

We did not issue any equity securities during the period covered by this report that were not registered under the Securities Act.

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ITEM 6. EXHIBITS

31.1		Certification by the Principal Executive Officer and Principal Financial Officer of Mobiform Software, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rule 13a-14(a)) (furnished herewith).

32.1		Certification by the Principal Executive Officer and Principal Financial Officer of Mobiform Software, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

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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.

Dated: September 14, 2010

	MOBIFORM SOFTWARE, INC.

	By:	/s/ Allen Ronald DeSerranno
		Allen Ronald DeSerranno Chief Executive Officer and Chief Financial Officer

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B-Scada, Inc. - FORM 10-Q - September 14, 2010

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