UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the Quarterly Period Ended March 31. 2012

 

¨	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: 000-53559

 

Wikifamilies, Inc.

(Name of small business issuer specified in its charter)

 

Nevada		80-0214025
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)
13520 Oriental St.
Rockville, MD		20853
(Address of principal executive offices)		(Zip Code)
	(909) 708-3708
	(Registrant’s telephone number including area code)

 

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

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that registrant was required to submit and post such files). Yes ¨ No x

 

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

 

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

 

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

 

As of May 9, 2012, the issuer had 47,922,075 shares of common stock (“Common Stock”) outstanding.

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

The accompanying financial statements of Wikifamilies, Inc. ( the “Company”, “Wikifamilies, Inc.”, “we” or “us”) have been prepared in accordance with generally accepted accounting principles for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission (“Commission”). While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto, which are included in the Company’s Annual Report on Form 10-K, as amended, previously filed with the Commission.

 

 

Wikifamilies, Inc.

(A Development Stage Company)

Unaudited Consolidated Balance Sheets

 

		March 31, 2012				December 31, 2011
ASSETS
Current Assets
Cash		$	35,669			$	24,256
Inventory, net of reserves			-				-
Total Current Assets			35,669				24,256
Non-Current Assets
Notes receivable			155,000				155,000
Investments			123,632				123,632
Prepaid expenses			99,489				120,708
Fixed asset, net			16,537				17,377
Intangible assets, net of impairment			359,162				290,448
Total Non-Current Assets			753,821				707,165
TOTAL ASSETS			789,490				731,421
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable			237,300				171,802
Notes payable to related parties			70,160				17,681
Notes payable			-				-
Total Liabilities			307,461				189,483
Stockholders' Equity
Common stock, $.001 par value, 100,000,000 shares authorized,
48,022,075 shares issued and outstanding			48,022				47,672
Paid in capital			1,066,301				954,151
Other comprehensive income			46,074				20,952
Net income/(loss) accumulated during development stage			(678,368	)			(480,837	)
Total Stockholders Equity			482,028				541,938
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	789,490			$	731,421

  

See notes to consolidated financial statements

  

 

Wikifamilies, Inc.

(A Development Stage Company)

Unaudited Consolidated Statements of Operations

  

		Three Months Ended March 31, 2012				From February 15, 2011 (Wikfamilies SA Inception) to March 31, 2012
Revenue		$	-			$	-
Cost of goods sold			-				-
Gross profit/(loss)			-				-
Operating expenses
General and administrative			114,018				325,122
Legal and accounting			69,174				212,521
Marketing			14,731				14,731
Total expenses			197,923				552,374
Ordinary loss			(197,923	)			(552,374	)
Other expense			392				(105,364	)
Loss from continuing operations			(197,531	)			(657,738	)
Loss from discontinued operations			-				(20,630	)
Net loss		$	(197,531	)		$	(678,368	)
Net loss per share
Loss from continuing operations		$	(0.00	)		$	(0.02	)
Loss from discontinued operations			-				(0.00	)
Loss per share		$	(0.00	)		$	(0.02	)
Weighted average common shares			47,818,814				39,979,122

  

See notes to consolidated financial statements

 

Statements of Comprehensive Income (Loss)

 

		Three Months Ended March 31, 2012				From February 15, 2011 (Wikfamilies SA Inception) to March 31, 2012
Net loss		$	(197,531	)		$	(678,368	)
Gain/(loss) on foreign currency conversion			25,122				46,074
Unrealized losses on available-for-sale securities			-				-
Total comprehensive loss		$	(172,410	)		$	(632,295	)

 

See notes to consolidated financial statements

 

 

Wikifamilies, Inc.

(A Development Stage Company)

Unaudited Consolidated Statements of Cash Flows

  

		For the Three Months Ended March 31, 2012				From February 15, 2011 (Wikfamilies SA Inception) to December 31, 2011
Cash flows from operating activities
Net income/(loss)		$	(197,531	)		$	(678,368	)
Non-cash transactions to reconcile cash used in operations
Depreciation and amortization		$	840			$	23,640
Asset impairment			-				22,065
Stock issued for services			87,500				87,500
Disposal of assets, Allianex business			-				89,318
Cash used in operations
Other receivable			-				(35,708	)
Accounts payable			65,499				233,383
Prepaid expenses			21,219				36,219
Total cash from operations			(22,473	)			(221,951	)
Cash flows from investing activities
Cash advanced to Wikifamilies SA prior to closing			-				75,000
Purchase of intangible assets			(68,714	)			(354,162	)
Purchase of fixed assets			-				(23,169	)
Total cash used in investing activites			(68,714	)			(302,331	)
Cash from financing activities
Stock sales			25,000				467,284
Notes payable			52,479				46,333
Total cash from financing activities			77,479				513,617
Effect if foreign currency exchange rate			25,122				46,073
INCREASE (DECREASE) IN CASH			11,414				35,408
BEGINNING CASH			24,256				261
ENDING CASH		$	35,669			$	35,669
Supplemental disclosure of cash flow information:
Interest paid		$	19			$	5,627
Income taxes paid		$	-			$	-
Supplemental disclosure of non-cash investing activities:
Common stock issued in acquisition, in shares			-				31,500,000
Common stock issued for services, in shares			250,000

 

See notes to consolidated financial statements

 

 

Wikifamilies, Inc.

(A Development Stage Company)

Notes to Unaudited Consolidated Financial Statements

For the period ended March 31, 2012

 

NOTE 1:   HISTORY OF OPERATIONS

 

Wikifamilies, Inc. (“Wikifamilies, Inc.” or the “Company”) was incorporated on June 27, 2008 in the State of Nevada as Kensington Leasing, Ltd.  

 

The Company’s initial business plan was to specialize in leasing equipment to a select clientele. Because it took longer than anticipated to launch the Company’s leasing business, the Company elected to investigate additional lines of business.  The leasing business generated minimal revenues since inception and has been discontinued.

 

On June 4, 2010, the Company, through its newly formed wholly-owned subsidiary Allianex Corp., purchased substantially all of the assets of Allianex, LLC (the “Allianex acquisition”). The Company’s primary business after the Allianex acquisition until the acquisition of Wikifamilies SA, as discussed below, was the production, marketing and distribution of a retail line of prepaid stored value cards for the purchase of technology support and security services for electronic devices. Allianex Corp. generated nominal revenues since the acquisition and the assets were disposed of on December 22, 2011.

 

On May 20, 2011, the Company acquired all of the outstanding equity securities of Wikifamilies SA (the “Wikifamilies acquisition”), making Wikifamilies SA a wholly owned subsidiary of Kensington Leasing, Ltd. For accounting purposes, the Wikifamilies acquisition is treated as a reverse acquisition with Wikifamilies SA treated as the acquirer and Kensington Leasing, Ltd. as the acquired party. As a result, the business and financial information included in the report is the business and financial information of Wikifamilies SA prior to May 20, 2011 and the combined entity after May 20, 2011.

 

The Company’s current primary business is the operations of Wikifamilies SA. Wikifamilies SA is a pre-revenue development stage Swiss company formed in February 2011 to design, develop and operate an Internet-based social media website, Wikifamilies.com, with a unique emphasis on families and new technologies. This web-based platform is intended to enhance the ability of families to communicate and share family history and events while providing a secure location to transact family-related business matters. Wikifamilies SA launched the website for beta testing in September of 2011 and launched the website for full scale use on March 30, 2012.

 

On October 27, 2011, the Company changed its name to Wikifamilies, Inc. through a short-form merger with its newly formed wholly owned subsidiary of the same name.

 

Unless the context otherwise requires, references to the “Company” mean the Company and its consolidated subsidiaries, Allianex Corp. and Wikifamilies SA. In the context of Common Stock, notes and other securities, references to the “Company” mean Wikifamilies, Inc. unless otherwise stated.

 

NOTE 2:   CONTINUED EXISTENCE

 

The Company has not generated any significant revenue since inception and has funded its operations primarily through the issuance of equity. Accordingly, the Company’s ability to accomplish its business strategy and to ultimately achieve profitable operations is dependent upon its ability to obtain additional debt or equity financing.

 

These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

 

 

As described above, the Company’s primary business is the development, design and operation of an internet based social media website. There can be no assurance that the Company will be successful in its endeavors.

 

NOTE 3:   SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Wikifamilies, Inc. and its 100% wholly owned subsidiary, Wikifamilies SA.  All intercompany balances and transactions have been eliminated in consolidation.  The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America.

 

Revenue Recognition

Revenue is recognized net of indirect taxes, rebates and trade discounts and consists primarily of the sale of products, and services rendered.

 

Revenue is recognized in accordance with Accounting Standards Codification Topic No. 605-10-S99 “Revenue Recognition” (ASC 605-10-S99) when the following criteria are met:

 

·

evidence of an arrangement exists;

·

delivery has occurred or services have been rendered and the significant risks and rewards of ownership have been transferred to the purchaser;

·

transaction costs can be reliably measured;

·

the selling price is fixed or determinable; and

·

collectability is reasonably assured.

 

Inventory

Inventory, which consist primarily of purchased parts and supplies, are stated at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method.

 

The Company evaluates the need to record adjustments for impairment of inventory.

 

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation and impairment. Land is not depreciated. Repairs and maintenance are charged to operations as incurred.

 

Property and equipment is depreciated on a straight-line basis over its expected useful life. The depreciation methods, and estimated remaining useful lives are reviewed at least annually. The expected useful lives are as follows:

 

Furniture and fixtures	7 years
IT equipment	5 years
Computer software	3 years

 

Upon classification of property and equipment as held for sale it is reviewed for impairment. The impairment charged to the income statement is the excess of the carrying value of the property and equipment over its expected fair value less costs to sell.

 

Estimates

The presentation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

 

Fair Value of Financial Instruments

The carrying amounts for the Company’s cash, investments, accounts payable, accrued liabilities and current portion of long term debt approximate fair value due to the short-term maturity of these instruments.

 

 

Other Comprehensive Income

We follow Accounting Standards Codification Topic No. 220, "Comprehensive Income" (ASC 220). This statement establishes standards for reporting comprehensive income and its components in financial statements. Comprehensive income, as defined, includes all changes in equity (net assets) during a period from transactions and other events and circumstances from non-owner sources. Examples of items to be included in comprehensive income, which are excluded from net income, include unrealized gains and losses on available-for-sale securities.

 

Income Taxes

Accounting Standards Codification Topic No. 740 “Income Taxes” (ASC 740) requires the asset and liability method of accounting be used for income taxes. Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

Earnings (Loss) Per Share

Per Accounting Standards Codification Topic 260 “Earnings Per Share” (ASC 260), basic EPS is determined using net income divided by the weighted average shares outstanding during the period. Diluted EPS is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential shares of Common Stock were issued.

 

Basic EPS is determined using net income divided by the weighted average shares outstanding during the period. Diluted EPS is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued.

 

NOTE 4: WIKIFAMILIES ACQUISITION

 

On March 23, 2011, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with Wikifamilies SA, a corporation organized under the laws of Switzerland, and the shareholders of Wikifamilies SA, Malcolm Hutchinson, Robert Coleridge, Rigosa Finance Limited, and TC Holdings LLC (collectively, the “Wikifamilies SA Shareholders”). Pursuant to the Exchange Agreement, on May 20, 2011, the Company purchased all of the outstanding securities of Wikifamilies SA from the Wikifamilies SA Shareholders in exchange for an aggregate amount of 31,500,000 shares of Common Stock of the Company, valued at approximately $.24 per share, (“Wikifamilies, Inc. Shares”), which at closing represented approximately 67.99% of the Company’s outstanding Common Stock.

 

The Company’s current primary business is the operations of Wikifamilies SA. Wikifamilies SA is a pre-revenue development stage Swiss company formed in February 2011 to design, develop and operate an Internet-based social media website, Wikifamilies.com, with a unique emphasis on families and new technologies. This web-based platform is intended to enhance the ability of families to communicate and share family history and events while providing a secure location to transact family-related business matters. Wikifamilies SA launched the website for beta testing in September of 2011 and launched the website for full scale use on March 30, 2012.

 

As a result of the Wikifamilies acquisition, Wikifamilies SA became a wholly owned subsidiary of Kensington Leasing, Ltd. For accounting purposes, the merger was treated as a reverse acquisition with Wikifamilies SA treated as the acquirer and Kensington Leasing, Ltd. as the acquired party. As a result, the business and financial information included in the report is the business and financial information of Wikifamilies SA prior to May 20, 2011 and the combined entity after May 20, 2011.

 

 

NOTE 5: NOTES RECEIVABLE

 

On July 15, 2010, the Company entered into a Loan and Security Agreement and Note with JP09 & Associates to provide operating capital for the JP09 & Associates while the Company investigated a possible acquisition of JP09 & Associates, which did not occur. The Loan and Security Agreement and Note were personally guaranteed by the JP09 & Associates’ president, and was secured by its intellectual property. The principal amount of the Note was $155,000 payable in 12 months with 10% interest due at maturity. The Company has not yet been paid for this Note and a demand letter for payment of all principal, interest and penalties has been sent to JP09 & Associates. JP09 & Associates has requested the ability to repay this note over time and we are presently negotiating with JP09 & Associates for repayment and with multiple sources to potentially purchase the note from us.

 

Notes receivable at March 31, 2012 consisted of the following:

 

Terms		March 31, 2012
Loan and Security Agreement and Note with JP09 & Associates and John Pena for $155,000 dated July 15, 2010 at 10% interest for one year, principal and interest due and payable at maturity.			155,000
Total Notes Receivable at March 31, 212		$	155,000

 

NOTE 6: INVESTMENTS

 

Investments presently consist of funds invested in debt securities held to maturity. Investments are recorded at their amortized cost basis in accordance with Accounting Standards Codification 320 “Investments – Debt and Equity Securities” (ASC 320).

 

WealthMakers, Ltd. managed a brokerage account for the Company from May 2010 through November 2010. In November 2010, the Company agreed to allow WealthMakers to liquidate the brokerage account to purchase restricted shares in private placements. This investment was reclassified from an investment held for sale to an investment held to maturity at this time. The Company is entitled to a % of the shares purchased after 12 months. The Company elected to record an impairment charge at December 31, 2011 by $22,065 to adjust the fair value of shares held.

 

NOTE 7: PREPAID EXPENSES

 

Prepaid expenses consist of $14,489 in paid in advance payroll taxes paid to the Swiss government in advance of salaries paid and $85,000 paid in advance to a vendor to provide software design and marketing services not yet provided at March 31, 2012. This vendor began providing services to the Company during the three months ended June 30, 2011.

 

NOTE 8: FIXED ASSETS

 

The Company acquired fixed assets with a fair value of $21,994 in the Wikifamilies acquisition in May 2011. See Note 5: WIKIFAMILIES ACQUISITION. The fixed assets are being amortized over their remaining useful lives averaging 55 months. Depreciation expense for the three months ended March 31, 2012 was $840.

 

Asset Classification		March 31, 2012
Computer Equipment		$	23,169
			23,169
Less Accumulated Depreciation			(6,632	)
Net Book Value		$	16,537

 

 

NOTE 9:  INTANGIBLES

 

On November 29, 2009, Angelique de Maison gifted the domain name sendaprayer.com to the Company. The domain name sendaprayer.com is deemed to have an indefinite life and no amortization has been recorded. The asset was recorded at $5,000, the cost paid by the giftor which was deemed to be fair value.

 

In accordance with Accounting Standards Codification Topic 985-20 “Costs of Software to be Sold, Leased or Marketed” (ASC 985-20), the Company is capitalizing development costs incurred after the technological feasibility of our Wikifamilies.com product had been established and will continue to capitalize these costs, as incurred, until the product is available for general release to customers. $285,448 in development costs have been capitalized as of December 31, 2011. Amortization of these development costs will begin in April 2012 after the product was released for sale on March 30, 2012.

 

Intangible Assets		March 31, 2012
Sendaprayer.com - Indefinite life, no amortization			5,000
Total Non Amortizing Assets			5,000
Wikifamilies Development Costs - 5 year life			354,162
Total Wikifamilies Amortizable Assets			354,162
Net Intangible Assets at December 31, 2011		$	359,162

 

Estimated Remaining Intangible Amortization				March 31, 2012
	2012				53,124
	2013				70,832
	2014				70,832
	2015				70,832
	2016				70,832
	2017				17,708
	Total Amortization			$	354,162

 

NOTE 10:  RELATED PARTY TRANSACTIONS

 

Common Stock Issuances

 

On June 27, 2008, the Company issued 800,000 shares of Common Stock to Angelique de Maison, Chief Executive Officer and Chair of the Board at the time, for setup costs and the Company’s business plan in an amount of $5,000.

 

On March 31, 2010, the Company issued 6,000,000 shares of its Common Stock to Ms. de Maison at the price of $0.08 per share, for a total of $480,000 in cash.  

 

March 23, 2011, the Company entered into a Stock Purchase Agreement with Ms. de Maison pursuant to which the Company agreed to issue, and Ms. de Maison agreed to purchase, shares of Common Stock of the Company, in certain installments. Pursuant to the Stock Purchase Agreement, Ms. de Maison purchased 300,000 shares of Common Stock at a purchase price of $.25 per share upon execution of the Stock Purchase Agreement and 600,000 shares of Common Stock at a purchase price of $.25 per share upon closing of the Wikifamilies acquisition on May 20, 2011. In addition, the Company has agreed to issue, and Ms. de Maison has agreed to purchase, subject to certain conditions, up to $100,000 of shares of Common Stock per month, at a purchase price of $.25, for a period of 18 months, as requested by the Company. If certain budgetary projections are not met, the purchase price for future monthly installments will be reduced to $.20 per share of Common Stock and additional shares of Common Stock will be issued in order to retroactively adjust the purchase price for any previously purchased shares. As a condition to each installment, the Company must be solvent and in the same line of business as of the date of the Closing, there must not have been any material breach of the Exchange Agreement by the former Wikifamilies shareholders, and the Company must not have become subject to any material contingent liability. Furthermore, Ms. de Maison may terminate her obligations upon the occurrence of certain events, including her removal from the Board of Directors, the Company undergoing a change in control (as defined in the Stock Purchase Agreement), the Company failing to meet the agreed upon projected budget by a specified amount, or the Company becoming subject to bankruptcy proceedings or a material contingent liability.

 

  

Ms. de Maison has invested a total of $185,737 in monthly installments under this agreement to date for the purchase of 742,947 shares purchased as of December 31, 2011. Ms. de Maison resigned her position as Director of the Company in August 2011 and presently has no obligation to purchase any additional shares under this agreement.

 

On February 7, 2012 the Board of Directors of the Company elected to issue equity awards to directors Thomas Hudson and Stephen Brown. 150,000 restricted shares of Common Stock were issued to Mr. Hudson and 100,000 shares of Common Stock were issued to Mr. Brown. Market value on the day of the grants was $0.35 per share. The value of these shares at the market price was recorded as compensation expense.

 

Capital Contribution

 

On November 29, 2009, Ms. de Maison gifted the URL “sendaprayer.com” to the Company. This asset has been recorded at the cost incurred by Ms. de Maison.

 

Loans from Malcolm Hutchinson

 

In November and December of 2011, Mr. Hutchinson loaned the Company a total of $37,016 for working capital needs. These loans were provided at no interest, with no set terms of repayment. These loans were offset by $55,420 which had not yet been received as of March 31,2012 for 100,000 shares that Wikifamilies SA, our subsidiary in Switzerland, sold of its stock for 100,000 Swiss Francs or $110,456 at its inception in February 2011.

 

Loans from Thomas Hudson

 

On February 14, 2012, Director Thomas Hudson loaned the Company a total of $50,000 for working capital needs. The loan is due on June 30, 2012. Should the Company, at its sole discretion, decide that it is not in a financial position to repay said funds in currency, both parties mutually agree that said amount repayable may be converted into common shares of the Company calculated at a rate per share of twenty five cents per share or at eighty percent (80%) of the previous week’s averaged closing price, whichever is the lesser. If the Company does not repay the loan in cash, as a penalty it shall provide Lender with one hundred thousand (100,000) warrants enabling him to purchase one hundred thousand (100,000) shares of Common Stock at a redemption price of twenty five cents ($.25) per share. Redemption of such warrants in entirety or in part is at the sole discretion of Lender. By way of interest on such loan, Lender shall be provided with two hundred thousand (200,000) warrants enabling him to purchase two hundred thousand (200,000) shares of Common Stock at a redemption price of twenty cents ($.20) per share being a total of forty thousand dollars ($40,000). Redemption of such warrants in entirety or in part is at the sole discretion of Lender. The warrants shall remain valid for a period of three years from the date of this Agreement, after which they shall become null and void.

 

Loans from Angelique de Maison

 

During the year ended December 31, 2009, Ms. de Maison loaned the Company a total of $14,250 for operating expenses at an interest rate of 10% per year, and an additional $5,000 for additional start-up costs at no interest. These loans were applied to the purchase of Common Stock (including $327 in accrued interest) on December 1, 2010 as discussed below.

 

 

On March 31, 2010, Ms. de Maison agreed to purchase from the Company, subject to certain conditions, upon the Company’s demand at any time on or prior to June 30, 2011, a note in the amount $520,000. During the year ended December 31, 2010, a total of $300,273.24 was borrowed pursuant to this note. The note was unsecured, not convertible and bore interest at the rate of 10% per annum, payable quarterly, and was due and payable on June 30, 2012. As discussed below, the outstanding balance on the note was cancelled on December 1, 2010.

 

From November 2011 through March 2011, Ms. de Maison loaned the Company a total of $38,565 for working capital needs. These loans were provided at no interest, with no set terms of repayment.

 

Merriman Option

 

On April 9, 2010, the Company entered into an Option Purchase Agreement with Merrimen Investments, Inc. (“Merrimen”) pursuant to which the Company sold to Merrimen for $200,000 an option to purchase up to 24,000,000 shares of its Common Stock. The option had an exercise price of $0.08 per share, was to expire on April 8, 2011, and could be exercised on or after October 1, 2010. Under the Option Purchase Agreement, Merrimen received demand registration rights and piggyback registration rights with respect to the shares it may acquire upon exercise of the option. Zirk Engelbrecht, who may be considered a related party to Ms. de Maison under the rules of the Securities Exchange Act of 1934, as amended, is the sole officer, director and shareholder of Merrimen. Mr. Engelbrecht and Merrimen disclaim beneficial ownership of any securities of the Company beneficially owned by Ms. de Maison, and Ms. de Maison disclaims beneficial ownership of any securities beneficially owned by Merrimen or Mr. Engelbrecht.

 

On November 9, 2010, Merrimen elected to exercise part of its option granted pursuant to the Option Purchase Agreement to purchase 2,500,000 shares of the Company’s Common Stock.  The exercise price for the shares of Common Stock was $.08 per share, for an aggregate exercise price of $200,000. 

 

On December 1, 2010, Ms. de Maison purchased from Merrimen the option granted pursuant to the Option Purchase Agreement dated April 9, 2010 and applied the $319,850.21 of outstanding principal and interest due under the loans described above as payment of the exercise price under the option for the purchase of 3,998,128 shares of the Company’s Common Stock. In addition, Ms. de Maison agreed to cancel the unexercised portion of the option.

 

NOTE 11:  COMMON STOCK

 

On June 27, 2008, the Company issued 800,000 shares of Common Stock to Angelique de Maison, Chief Executive Officer and Chair of the Board at the time, for setup costs and the Company’s business plan in an amount of $5,000. See Note 10: RELATED PARTY TRANSACTIONS.

 

In January and February 2009, 513,000 shares of Common Stock were sold to investors at a purchase price of $0.025 per share, for a total of $12,825 in cash. See Note 14: FORWARD SPLIT.

 

On March 31, 2010, the Company issued 6,000,000 shares of its Common Stock to Ms. de Maison at the price of $0.08 per share, for a total of $480,000 in cash. See Note 12: RELATED PARTY TRANSACTIONS.

 

On April 9, 2010, the Company entered into an Option Purchase Agreement with Merrimen pursuant to which the Company sold to Merrimen for $200,000 an option to purchase up to 24,000,000 shares of its Common Stock. The Company issued 6,498,128 shares of Common Stock upon exercise of this option in November and December 2010. See Note 12: RELATED PARTY TRANSACTIONS.

 

On June 4, 2010, in connection with the Allianex acquisition, the Company issued 575,000 shares of our Common Stock. See Note 4: ALLIANEX ACQUISITION.

 

On December 28, 2010, the Company issued 143,000 shares of our Common Stock to Lenco Mobile Inc. to settle Lenco’s assertion that it had earned and was due shares from the Company and Kenneth Rotman in connection with the acquisition of the assets of Allianex, LLC. These shares of Common Stock were issued at a value of approximately $.08 per share.

 

 

Pursuant to the Stock Purchase Agreement, dated March 23, 2011, Ms. de Maison purchased 300,000 shares of Common Stock at a purchase price of $.25 per share upon execution of the Stock Purchase Agreement and an additional 600,000 shares of Common Stock at a purchase price of $.25 per share on May 20 2011 upon closing of the transactions contemplated in the Stock Purchase Agreement. On September 1, 2011, the Company issued an additional 742,947 shares of Common Stock to Angelique de Maison at a purchase price of $.25 per share for monthly installment payments in accordance with this Stock Purchase Agreement. See NOTE 12: RELATED PARTY TRANSACTIONS.

 

On May 20, 2011 the Company issued 31,500,000 shares of Common Stock to the shareholders of Wikifamilies SA upon closing of the Exchange Agreement with Wikifamilies SA as described in NOTE 5: WIKIFAMLIES ACQUISITION.

 

On January 10, 2012 Kirkland Trading SA purchased 100,000 shares of Common Stock for $.25 per share for a total of $25,000.

 

On February 7, 2012 the Company issued 150,000 restricted shares of Common Stock to Mr. Hudson and 100,000 shares of Common Stock to Mr. Brown. See NOTE 12: RELATED PARTY TRANSACTIONS.

 

NOTE 12:  FORWARD SPLIT

 

Effective May 1, 2009, the Company effected a 40-1 forward split of its common share capital.

 

NOTE 13:  NEW ACCOUNTING PRONOUNCEMENTS

 

In January 2010, FASB issued ASU No. 2010-06 – Improving Disclosures about Fair Value Measurements. This update provides amendments to Subtopic 820-10 that requires new disclosure as follows: 1) Transfers in and out of Levels 1 and 2. A reporting entity should disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. 2) Activity in Level 3 fair value measurements. In the reconciliation for fair value measurements using significant unobservable inputs (Level 3), a reporting entity should present separately information about purchases, sales, issuances, and settlements (that is, on a gross basis rather than as one net number). This update provides amendments to Subtopic 820-10 that clarifies existing disclosures as follows: 1) Level of disaggregation. A reporting entity should provide fair value measurement disclosures for each class of assets and liabilities. A class is often a subset of assets or liabilities within a line item in the statement of financial position. A reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities. 2) Disclosures about inputs and valuation techniques. A reporting entity should provide disclosures about the valuation techniques and inputs used to measure fair value for both recurring and nonrecurring fair value measurements. Those disclosures are required for fair value measurements that fall in either Level 2 or Level 3. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company is currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

 

ASU 2010-28, Intangibles – Goodwill and Other (Topic 350) - When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts - a consensus of the FASB Emerging Issues Task Force This ASU modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. For public entities, the amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. The Company is currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

 

 

ASU 2010-29, Business Combinations (Topic 805) - Disclosure of Supplementary Pro Forma Information for Business Combinations - a consensus of the FASB Emerging Issues Task Force This ASU specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The ASU also expands the supplemental pro forma disclosures under ASC Topic 805. The amendments are effective prospectively for business combinations for which the acquisition date is on or after December 15, 2010. The Company is currently evaluating the impact of this ASU; however, we do not expect the adoption of this ASU to have a material impact on our consolidated financial statements.

 

NOTE 14:  SUBSEQUENT EVENTS   

 

In accordance with Accounting Standards Codification Topic No. 855 “Subsequent Events” (ASC 855), the Company has evaluated subsequent events through the time between the end of the reporting period and the time this Quarterly Report on Form 10-Q for the period ended December 31, 2011 was filed and has found no events to report.

 

 

Item 2:  Management’s Discussion and Analysis or Plan of Operation

 

References in the Report to the “Company”, “we”, “us” or “our” refer to Wikifamilies, Inc., a Nevada corporation, and its consolidated subsidiaries, Allianex Corp. and Wikifamilies SA. In the context of Common Stock, notes and other securities, references to the “Company” mean Wikifamilies, Inc. unless otherwise stated. The following discussion of our financial condition and results of operations should be read in conjunction with the financial statements and related notes to the financial statements included elsewhere in this filing as well as with Management’s Discussion and Analysis or Plan of Operation contained in the Company’s Annual Report on Form 10-K for the period ended December 31, 2011 filed with the Securities and Exchange Commission.

 

Forward Looking Statements

 

This discussion and the accompanying financial statements (including the notes thereto) may contain “forward-looking statements” that relate to future events or our future financial performance, which are made pursuant to the safe harbor provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The forward- looking statements are based on the Company’s current expectations and beliefs concerning future developments and their potential effects on the Company. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks and other factors include, among others, those contained in the Company’s Annual Report on Form 10-K for the period ended December 31, 2011. For a more detailed discussion of risks and uncertainties, see the Company’s public filings made with the Commission. The Company undertakes no obligation to publicly update any forward-looking statements.

 

History

 

The Company was incorporated in Nevada on June 27, 2008 as Kensington Leasing, Ltd.  Prior to the acquisition of the assets of Allianex, LLC on June 4, 2010, we only had cash and other nominal assets and nominal operations, which made us a “shell” corporation as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended.  With the acquisition of the assets of Allianex, LLC, we ceased to be a “shell” corporation.

 

The Company’s initial business plan was to specialize in leasing equipment to a select clientele. Because it took longer than anticipated to launch the Company’s leasing business, the Company elected to investigate additional lines of business.  The leasing business has generated minimal revenues since inception and has been discontinued.

 

On June 4, 2010, the Company, through its newly formed wholly-owned subsidiary Allianex Corp., purchased substantially all of the assets of Allianex, LLC (the “Allianex acquisition”). The Company’s primary business after the Allianex acquisition until the acquisition of Wikifamilies SA, as discussed below, was the production, marketing and distribution of a retail line of prepaid stored value cards for the purchase of technology support and security services for electronic devices. Allianex Corp. has generated only nominal revenues since the acquisition. On December 22, 2011 the Company signed a Settlement and Releases Agreement with Kenneth Rotman among others, wherein Mr. Rotman agreed to release any and all claims against the Company, including claims for unpaid wages he believed he was entitled to receive, in exchange for the assets and business of Allianex Corp.

 

On May 20, 2011, the Company acquired all of the outstanding equity securities of Wikifamilies SA (the “Wikifamilies acquisition”), making Wikifamilies SA a wholly owned subsidiary of Kensington Leasing, Ltd. For accounting purposes, the Wikifamilies acquisition is treated as a reverse acquisition with Wikifamilies SA treated as the acquirer and Kensington Leasing, Ltd. as the acquired party. As a result, the business and financial information included in the report is the business and financial information of Wikifamilies SA prior to May 20, 2011 and the combined entity after May 20, 2011.

 

 

The Company’s current primary business is the operations of Wikifamilies SA. Wikifamilies SA is a pre-revenue development stage Swiss company formed in February 2011 to design, develop and operate an Internet-based social media website, Wikifamilies.com, with a unique emphasis security for families, trusted groups and professionals incorporating significant new technologies. This web-based platform is intended to enhance the ability of families, trusted groups and professionals to communicate and share family history and events while providing a secure location to transact family-related business matters. Further it provides professionals such as lawyers, accountants, brokers and others a secure and private environment to exchange business information. Wikifamilies SA launched the website for beta testing in September of 2011 and launched the website for full scale use on March 30, 2012. Its professional version will be released in Q3 2012.

 

On October 27, 2011, the Company changed its name to Wikifamilies, Inc. through a short-form merger with its newly formed wholly owned subsidiary of the same name.

 

No Comparable Information

 

There is no relevant comparable historic financial information for the current quarter ended March 31, 2012 and the quarter ended March 31, 2011, as Wikifamilies SA’s operations did not begin until February 2011. Therefore, limited information is provided in our Results of Operations section below.

 

Results of Operations

 

Unless otherwise noted, the business and financial information included in the report is the business and financial information of Wikifamilies SA prior to May 20, 2011 and the combined entity after May 20, 2011.

 

Revenues

 

There were no revenues generated during the three months ended March 31, 2012.

 

We expect revenues from our Wikifamilies SA segment to begin after Wikifamilies.com is launched, which occurred on March 30, 2012.

 

General and Administrative

 

For the three months ended March 31, 2012, general and administration expenses were $114,018. The expenses were incurred in connection with salaries, payroll taxes, travel, office expenses and utilities.

 

We expect general and administrative expenses for the balance of the year ending December 31, 2012 to trend upward as we continue to incur additional expenses necessary to grow our business.

 

Legal and Accounting

 

For the three months ended March 31, 2012, legal and accounting expenses were $69,174. These expenses include corporate legal, accounting, shareholder and SEC filing expenses incurred in connection with our status as a public reporting company.

 

We expect legal and accounting expenses for the balance of the year ending December 31, 2012 to trend marginally upward as we continue to incur additional expenses necessary to grow our business and as a result of our being a public reporting company.

 

Other Income/Expense

 

For the three months ended March 31, 2012 interest income was $392. Interest was earned on funds deposited in our bank accounts.

 

Net Income/Loss

 

For the three months ended March 31, 2012, net loss was $197,531. Net loss resulted from incurring operational expenses without generating revenue.

 

  

Liquidity and Capital Resources

 

At March 31, 2012, our principal sources of liquidity included cash and cash equivalents of $35,669. At March 31, 2012, we had a working capital deficit of $271,792. Working capital was primarily generated through cash received in stock sales to Kirkland Trading SA and loans from Malcolm Hutchinson, our Chief Executive Officer, Thomas Hudson our Director, and Angelique de Maison, the former Chairman of our Board of Directors.

 

For the three months ended March 31, 2012, we used $22,473 in cash from operations which was derived from net loss of $197,531, decreased by non-cash adjustments of $88,340, and decreased by changes in operating assets and liabilities of $86,718.

 

Investment activities consumed $68,714 during the three months ended March 31, 2012 which was derived from the purchase of $68,714 in capitalized research costs. As of March 31, 2012, we did not have any significant commitments for capital expenditures.

 

Financing activities provided $77,479 during the three months ended March 31, 2012, which was derived mainly from an increase of $52,479 in a related party note payable and stock sales of $25,000.

 

If we do not generate sufficient cash flow from operations to support our business, we intend to rely on additional financing transactions to secure the capital necessary to fund continued operations. Any future sale of debt or equity may be pursuant to a private placement or a public offering. We do not have any arrangements in place for the sale of additional equity or debt securities at this time. There can be no assurances that any future financing will be made available to us, or made available on terms that are favorable to the Company or our current stockholders.

 

Item 3: Quantitative and Qualitative Disclosures About Market Risk

 

Not Applicable.

 

Item 4: Controls and Procedures

 

As required by Rule 13a-15 under the Exchange Act, the Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures as of March 31, 2012. In designing and evaluating the Company’s disclosure controls and procedures, the Company recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, the Company’s management was required to apply its reasonable judgment. Based upon the required evaluation, the Chief Executive Officer and Chief Financial Officer concluded that as of March 31, 2012, the Company’s system of controls and procedures are not effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. The Company’s management intends to address the material weaknesses in its disclosure controls and procedures as soon as possible.

 

The acquisition of Wikifamilies SA and the integration of that business with the Company has materially affected or is reasonably likely to materially affect our internal control over financial reporting during the quarter ended March 31, 2012.

 

 

PART II – OTHER INFORMATION

 

Item 1. Legal Proceedings

 

None.

 

Item 1A. Risk Factors

 

Not applicable.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

On January 10, 2012 Kirkland Trading SA purchased 100,000 shares of Common Stock for $.25 per share for a total of $25,000. These shares were sold in reliance upon the provisions of Section 4(2) of the Securities Act of 1933, as amended and Rule 506 of Regulation D promulgated by the U.S. Securities and Exchange Commission under the Securities Act.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. (Removed and Reserved)

 

Item 5. Other Information

 

On February 2, 2012 the full Board of Directors of the Company elected Thomas Hudson of Tonka Bay Minnesota, US as Chairman and Member of the Board of Directors. Additionally the Board elected Steve Brown of London UK as Member of the Board of Directors.

 

Mr. Hudson’s wealth of experience and knowledge in the corporate technology arena, having held the positions of Vice President and General Manager at IBM; Senior Vice President at McGraw Hill Companies and Board Membership of CGSY, CNT, McData Corp, Lawson Software, Ciprico, Plat Software, Incentra Solutions; all publicly traded companies, led to the decision that he be elected as a Director and Chairman of the Board.

 

Mr. Brown is a Partner and Board Member of Buro Happold and the firm’s Managing Director for Middle East, Asia Pacific, India and Africa. Additionally he was Regional Director for Masterplanning of the London Olympics. Mr. Brown’s extensive experience and extensive networks of contacts in the Middle East and Asia led to the decision that he be elected as a Director.

 

On March 1, 2012 the full Board of Directors of the Company elected William Hogan as a Member of the Board of Directors.

 

Dr. Hogan has held prominent roles in both corporate and academia. His experience includes executing corporate turnarounds; product development; technology transfers; quality control and operational management for such firms as Honeywell, Inc., Medtronic, Inc., and Communications Holdings, Inc. Dr. Hogan also has served as a member, director and/or chairman of several Governance, Finance and Audit Committees including a $2 billion insurance company, the American Express Trust Fund, The Bayer Company, and many others. This extensive experience led to the decision that he be elected as a Director and Chairman of the Audit Committee.

 

Item 6. Exhibits

 

Exhibit No.		Description
31.1		Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a)
31.2		Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a)
32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350

 

 

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.

 

Date: May 21, 2012		WIKIFAMILIES, INC.
		/s/	Trisha Malone
			Trisha Malone
			Chief Financial Officer