Rowl, Inc. - FORM 10-Q/A - August 8, 2012

Attached files

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EXCEL - IDEA: XBRL DOCUMENT - Rowl, Inc.	Financial_Report.xls
EX-32.1 - SECTION 906 CERTIFICATION BY THE REGISTRANT?S PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER * - Rowl, Inc.	f10q0312a1ex32i_overnear.htm
EX-31.1 - SECTION 302 CERTIFICATION BY THE REGISTRANT?S PRINCIPAL EXECUTIVE OFFICER * - Rowl, Inc.	f10q0312a1ex31i_overnear.htm
EX-31.2 - SECTION 302 CERTIFICATION BY THE REGISTRANT?S PRINCIPAL FINANCIAL OFFICER * - Rowl, Inc.	f10q0312a1ex31ii_overnear.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

AMENDMENT NO. 1

(Mark One)

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

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

Commission File No. 000-54119

OverNear, Inc.

(Exact name of registrant as specified in it charter)

Nevada		27-3101494
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

9595 Wilshire Blvd., Suite 900

Beverly Hills, CA 90212

(Address of principal executive offices) (Zip Code)

(310) 744-6060

(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 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. o Yes x No

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

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

Large accelerated filer o		Accelerated filer o
Non-accelerated filer o (do not check if a smaller reporting company)		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).

o Yes x No

APPLICABLE ONLY TO CORPORATE ISSUERS:

52,709,403 shares of the issuer’s common stock are issued and outstanding as of July 26, 2012.

OVERNEAR, INC.

Explanatory Note

The purpose of this Amendment No. 1 on Form 10–Q/A to the OverNear, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2012, filed with the Securities and Exchange Commission on July 31, 2012 (the “Form 10-Q”), is to re-file the financial statements. Due to an error during the conversion to EDGAR format, the table included in Note 6 to the financial statements was inadvertently omitted.

No other changes have been made to the Form 10–Q. This Amendment No. 1 speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date and does not modify or update in any way disclosures made in the original Form 10-Q.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

OVERNEAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

	March 31,			December 31,
	2012			2011
	(Unaudited)
ASSETS
Current Assets
Cash	$	325,579		$	181,995
Employee advances		16,500			-
Prepaid expenses		35,400			51,975
Total Current Assets		377,479			233,970
Property and equipment, net		12,456			11,993

Software development in progress		205,345			133,068

Other Assets		3,145			3,145

TOTAL ASSETS	$	598,425		$	382,176

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable	$	270,813		$	265,398
Accrued expenses		184,209			138,359
Current portion of legal settlement payable		75,000			75,000
Total Current Liabilities		530,022			478,757
Long-term portion of legal settlement payable		131,250			150,000
Total Liabilities		661,272			628,757

Commitments

Stockholders' Deficit
Common stock, $0.001 par value; 150,000,000
shares authorized; 50,138,462 and 46,619,962 shares issued and outstanding
at March 31, 2012 and December 31, 2011, respectively		50,138			46,620
Preferred stock, $0.001 par value; 50,000,000 shares authorized, none issued		-			-
Paid-in capital		2,391,570			1,847,339
Accumulated deficit		(2,504,555	)		(2,140,540	)
Total Stockholders' Deficit		(62,847	)		(246,581	)

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	598,425		$	382,176

The accompanying notes are an integral part of these condensed financial statements

OVERNEAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

	Three			Three
	months ended			months ended
	March 31, 2012			March 31, 2011

Sales	$	-		$	-
Cost of Sales		-			-
Gross Profit		-			-

Selling, General and Administrative Expenses		362,414			354,694

Operating Loss		(362,414	)		(354,694	)
Interest Expense		(801	)		(2,864	)

Loss before Income Taxes		(363,215	)		(357,558	)
Provision for Income Taxes		(800	)		(800	)
Net Loss	$	(364,015	)	$	(358,358	)

Loss Per Share-Basic and Diluted	$	(0.01	)	$	(0.01	)

Weighted Average Number of Shares		48,629,643			24,598,431

The accompanying notes are an integral part of these condensed financial statements

OVERNEAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

	Preferred Stock				Common Stock				Paid-in		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit			Total
Balance at January 1, 2012		-	$	-		46,619,962	$	46,620	$	1,847,339	$	(2,140,540	)	$	(246,581	)
Private placement of common stock		-		-		3,420,000		3,420		396,318		-			399,738
Fair value of warrants issued in connection with private placement		-		-		-		-		80,262		-			80,262
Issuance of common stock for consulting services		-		-		58,500		58		11,191		-			11,249
Issuance of common stock in payment of settlement of accounts payable		-		-		40,000		40		3,960		-			4,000
Stock based compensation		-		-		-		-		52,500		-			52,500
Net Loss for the three months ended March 31, 2012		-		-		-		-		-		(364,015	)		(364,015	)
Balance at March 31, 2012		-	$	-		50,138,462	$	50,138	$	2,391,570	$	(2,504,555	)	$	(62,847	)

The accompanying notes are an integral part of these condensed financial statements

OVERNEAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

	Three			Three
	months ended			months ended
	March 31, 2012			March 31, 2011
Cash Flow from Operating Activities:
Net loss	$	(364,015	)	$	(358,358	)
Adjustment to reconcile net loss to
net cash used in operating activities:
Depreciation		1,255			1,080
Amortization of production costs		-			30,954
Issuance of common stock in lieu of officer compensation		-			100,000
Issuance of common stock for consulting services		11,249			-
Stock based compensation		52,500			52,500
(Increase) Decrease in operating assets:
Employee advances		(16,500	)		-
Prepaid expenses		16,575			-
Increase (Decrease) in operating liabilities:
Legal settlement payable		(18,750	)		-
Accounts payable		5,414			(36,810	)
Accrued expenses		49,850			175,843
Net Cash Used in Operating Activities		(262,422	)		(34,791	)

Cash Flow from Investing Activities:
Due to stockholders		-			34,405
Purchase of equipment		(1,717	)		-
Software development in progress		(72,277	)		-
Net Cash (Used in) Provided by Investing Activities		(73,994	)		34,405

Cash Flow from Financing Activities:
Proceeds from private placement of common stock		480,000			-

Net Increase in Cash		143,584			(386	)

Cash Balance at Beginning of Period		181,995			400

Cash Balance at End of Period	$	325,579		$	14

Supplemental Disclosures:
Interest Paid	$	801		$	2,597

Non cash activities during the three months ended March 31, 2012:

The Company issued 40,000 shares of its common stock valued at $4,000 in payment of settlement of accounts payable.

Non cash activities during the three months ended March 31, 2011:

The Company issued 1,226,247 shares of its common stock valued at $46,597 as retainer for professional services.

The Company issued 1,405,332 shares of its common stock valued at $53,402 in payment of settlement of accounts payable.

The Company issued 7,416,987 shares of its common stock valued at $185,425 to its officers in lieu of settlement of deferred compensation.

The accompanying notes are an integral part of these condensed financial statements

OVERNEAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 – NATURE OF OPERATIONS

OverNear, Inc. (“the Company”) was incorporated on July 22, 2010 in the State of Nevada as Awesome Living, Inc. On June 20, 2011, the name of the corporation was changed to be OverNear, Inc. The Company’s headquarters are located in Beverly Hills, California.

The Company is in the process of developing a location-based social networking and mobile advertising platform.

The Company’s predecessor business developed and marketed a proprietary branded fitness DVD series that targets individuals who seek to enrich their physical, spiritual, and mental wellness. Through infomercials and other marketing initiatives, the predecessor launched its products. The Company plans to monetize the fitness DVD series assets by either selling or licensing the intellectual property and associated products. However, the Company is not certain about achieving success in this line of business.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation: The accompanying unaudited interim condensed financial statements and information have been prepared in accordance with accounting principles generally accepted in the United States and in accordance with instructions for Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, these condensed financial statements contain all normal and recurring adjustments considered necessary to present fairly the financial position, results of operations and cash flows for the periods presented. The results for the period of the three months ended March 31, 2012 are not necessarily indicative of the results to be expected for the full year. These condensed financial statements should be read in conjunction with the Company’s audited financial statements for the year ended December 31, 2011 which are included in the Form 10 K filed by the Company on July 19, 2012.

Use of Estimates: The preparation of the accompanying financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that directly affect the results of reported assets, liabilities, revenue, and expenses. Actual results could differ from these estimates.

Revenue Recognition: The Company generally recognizes product revenue when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. There was no revenue during each of the three months ended March 31, 2012 and March 31, 2011.

Inventories: Inventories consist of DVDs and are stated at the lower of cost or market, using the first-in, first-out method. Market is determined by comparison with recent purchases or net receivable value. Management determines the reserve for slow-moving inventory based on historical trends and forecast of sales of the Company’s products, and accordingly recorded a reserve for slow-moving inventory for the full amount of $18,092 at March 31, 2012 and December 31, 2011.

Furniture and Equipment : Furniture and equipment are stated at cost. Depreciation is computed on the straight-line method based on the estimated useful lives of the assets, generally 5 to 7 years. Maintenance and repairs are charged to expense as incurred; major renewals and betterments that extend the useful lives of furniture and equipment are capitalized. When furniture and equipment are sold or retired, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is recognized.

OVERNEAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Software Development Costs : Research and development costs are charged to expense as incurred. However, the costs incurred for the development of computer software that will be sold, leased, or otherwise marketed are capitalized when technological feasibility has been established. These capitalized costs are subject to an ongoing assessment of recoverability based on anticipated future revenues and changes in hardware and software technologies. Amortization of capitalized software development costs begins when the product is available for general release to customers. Amortization is computed as the ratio of current gross revenues for a product to the total of current and anticipated future gross revenues for the product. As of March 31, 2012 and December 31, 2011, the Company had capitalized software development costs of $205,345 and $133,068, respectively, for the development of a location-based social networking and mobile advertising platform to connect people to people and merchants to shoppers. Since the capitalized software is not yet available for general release to customers, no amortization of product development costs was incurred during the three months ended March 31, 2012.

Impairment of Long-lived Assets : The long-lived assets held and used by the Company are reviewed for impairment no less frequently than annually or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In the event that facts and circumstances indicate that the cost of any long-lived assets may be impaired, an evaluation of recoverability is performed. Management has determined that there was no impairment in the value of long-lived assets during the three months ended March 31, 2012.

Intangible Assets : Intangible assets consist of a trademark stated at cost which is amortized on a straight-line basis over its statutory life and is included in other assets in the accompanying condensed financial statements as of March 31, 2012 and December 31, 2011.

Fair Value of Financial Instruments : All financial instruments are carried at amounts that approximate estimated fair value.

Income Taxes : The Company accounts for income taxes in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740 “Income Taxes” (“FASB ASC 740”). Under FASB ASC 740, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial statement reported amounts at each period end, based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The provision for income taxes represents the tax expense for the period, if any, and the change during the period in deferred tax assets and liabilities. At March 31, 2012 and December 31, 2011, the Company has established a full reserve against all deferred tax assets.

FASB ASC 740 also provides criteria for the recognition, measurement, presentation and disclosure of uncertain tax positions. A tax benefit from an uncertain position may be recognized only if it is “more likely than not” that the position is sustainable upon examination by the relevant taxing authority based on its technical merit.

Net Loss Per Share : The Company applies FASB ASC 260, “Earnings per Share.” Basic earnings (loss) per share is computed by dividing earnings (loss) available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings (loss) per share is computed similar to basic earnings (loss) per share except that the denominator is increased to include additional common shares available upon exercise of stock options and warrants using the treasury stock method, except for periods for which no common share equivalents are included because their effect would be anti-dilutive.

OVERNEAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Stock Based Compensation : The Company applies FASB ASC 718, “Stock Compensation,” when recording stock based compensation. The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option valuation model. Generally, all options granted expire ten years from the date of grant. Compensation expense in the amount of $52,500 related to stock option grants was recognized for each of the three months ended March 31, 2012 and 2011.

The Company accounts for stock issued to non-employees in accordance with the provisions of FASB ASC 505-50 “Equity Based Payments to Non-Employees”. FASB ASC 505-50 states that equity instruments that are issued in exchange for the receipt of goods or services should be measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date occurs as of the earlier of (a) the date at which a performance commitment is reached or (b) absent a performance commitment, the date at which the performance necessary to earn the equity instruments is complete (that is, the vesting date).

New Accounting Pronouncements: Management does not believe that any recently issued, but not yet effective, accounting standards, if adopted, will have a material effect on the financial statements.

NOTE 3 – GOING CONCERN

The Company's financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. In the near term, the Company expects operating costs to continue to exceed funds generated from operations. As a result, the Company expects to continue to incur operating losses, and the operations in the near future are expected to continue to use working capital.

Management of the Company is actively seeking financing to continue the development of its location-based mobile platform and to launch the platform. Subsequent to March 31, 2012, the Company was able to raise equity of $527,000 under a private placement of common stock. (Also see Note 15.) The ability of the Company to continue as a going concern is dependent on its ability to meet its financing arrangements and the success of its future operations. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. The report from the Company’s independent registered public accounting firm relating to the year ended December 31, 2011 states that there is substantial doubt about the Company’s ability to continue as a going concern.

NOTE 4 – PREPAID EXPENSES

Prepaid expenses consisted of the following:

	March 31,		December 31,
	2012		2011
	(Unaudited)

Consulting and Professional Fees		33,750		45,375
Rent and Other		1,650		6,600

Total Prepaid Expenses	$	35,400	$	51,975

OVERNEAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 5 – FURNITURE AND EQUIPMENT

Furniture and Equipment consisted of the following:

	March 31,			December 31,
	2012			2011
	(Unaudited)

Furniture and Equipment	$	19,678		$	17,960
Accumulated Depreciation		(7,222	)		(5,967	)

Furniture and Equipment, net	$	12,456		$	11,993

NOTE 6 – ACCRUED EXPENSES

Accrued expenses consisted of the following:

	March 31,		December 31,
	2012		2011
	(Unaudited)

Accrued Salaries and Related Expenses	$	156,404	$	125,801
Accrued Income Tax		3,200		2,400
Accrued Professional Fees		24,605		10,158
Total Accrued Liabilities	$	184,209	$	138,359

NOTE 7 – LEGAL SETTLEMENT PAYABLE

In November 2011, the Company settled a legal dispute for the total amount of $275,000, of which $50,000 was paid on December 15, 2011 with the remainder payable in monthly installments of $6,250 through December 7, 2014.

Total settlement payable, as of March 31, 2012	$	206,250

Current portion of settlement payable		75,000

Settlement payable, net of current portion	$	131,250

The following schedule represents maturities of the settlement payable for the twelve months ending March 31,

2013	$	75,000
2014		75,000
2015		56,250

	$	206,250

OVERNEAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 8 – PROVISION FOR INCOME TAXES

Income taxes (benefit) consisted of the following for the three months end March 31, 2012:

Current:
Federal	$	-
State		800

				$	800
Deferred:
Federal	$	(105,000	)
State		(18,000	)

		(123,000	)
Valuation allowance		123,000
					-

				$	800

Income taxes are disproportionate to income due to net operating loss carryforwards, which are fully reserved. As of the balance sheet date, the Company has federal and state net operating loss carryforwards of approximately $1,900,000 each, which will begin to expire in 2031 and 2032, respectively. The tax benefit of such net operating losses is recorded as an asset to the extent management assesses the utilization of such net operating losses to be more likely than not. Based upon the Company’s short term historical operating performance, the Company has established a valuation allowance for any income tax benefit recorded for its net operating loss carryforwards.

The following is a summary of the significant components of the Company’s net deferred income tax assets and liabilities as of March 31, 2012 and December 31, 2011:

	March 31, 2012			December 31, 2011
	(Unaudited)
Current deferred income tax assets:
Deferred compensation	$	55,000		$	48,000
Other		8,000			8,000
Less valuation allowance		(63,000	)		(56,000	)
Net current deferred tax assets	$	-		$	-
Non-current deferred income tax assets and liabilities:
Net operating loss carryforwards	$	773,000		$	628,000
Accumulated depreciation of
furniture and equipment		(83,000	)		(54,000	)
Less valuation allowance Net non-current deferred tax assets	$	(690,000	)		(574,000	)
	$	-		$	-

The Company has applied the provision of FASB ASC 740, “Income Tax”, which clarifies the accounting for uncertainty in tax positions. FASB ASC 740 requires the recognition of the impact of a tax position in the financial statements if that position is more likely than not of being sustained on a tax return upon examination by the relevant taxing authority, based on the technical merits of the position. At March 31, 2012 and December 31, 2011, the Company had no unrecognized tax benefits.

The Company recognizes interest and penalties related to income tax matters in interest expense and operating expenses, respectively. As of March 31, 2012 and December 31, 2011, the Company has no accrued interest and penalties related to uncertain tax positions.

OVERNEAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 8 – PROVISION FOR INCOME TAXES (continued)

The Company is subject to taxation in the United States of America (“U.S”) and files tax returns in the U.S. federal jurisdiction and California state jurisdiction. The Company currently is not under examination by any tax authority.

The reconciliation between the statutory income tax rate and the effective tax rate is as follows:

Statutory federal income tax rate	(34.0	)%
State taxes	(6.0	)
Stock based compensation	6.0
Valuation reserve for income taxes	34.0

	-	%

NOTE 9 – STOCKHOLDERS’ EQUITY

During the three months ended March 31, 2012, the Company approved: (1) the issuance to an investor in a private placement, in consideration of $250,000, of an aggregate 2,500,000 shares of the Company’s common stock in conjunction with the sale of units consisting of common stock and warrants which had a value of $0.10 per unit, (2) the issuance to investors in a private placement, in consideration of $230,000, of an aggregate 920,000 shares of the Company’s common stock in conjunction with the sale of units consisting of common stock and warrants which had a value of $0.25 per unit, (3) the issuance of warrants to purchase 3,420,000 shares of the Company’s common stock in connection with the private placement, the fair value of which was determined to be $80,262 (see Note 12), (4) the issuance of an aggregate 58,500 shares of the Company’s common stock with a value of $11,249 for consulting services, (5) the issuance of 40,000 shares of the Company’s common stock with a value of $4,000 in payment of settlement of accounts payable.

NOTE 10 – NET LOSS PER SHARE

The following table sets forth the computation of basic and diluted net loss per share:

	For the three months ended
	March 31,
	2012			2011
	(Unaudited)
Numerator:
Net Loss	$	(364,015	)	$	(358,358	)
Denominator:
Weighted Average of Common Shares		48,629,643			24,598,431

Basic and Diluted Net Loss per Share	$	(0.01	)	$	(0.01	)

There were no dilutive securities as of March 31, 2012 and 2011.

There were 28,446,000 and 15,000,000 warrants and stock options excluded from the calculation of diluted net loss per share for the three months ended March 31, 2012 and 2011, respectively, because they were anti-dilutive.

OVERNEAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 11 – 2010 STOCK OPTION PLAN

During 2010, the Board of Directors approved and adopted the 2010 Stock Option, Deferred Stock and Restricted Stock Plan (the “Plan”) to provide for the issuance of non-qualified and/or incentive stock options to employees, officers, directors and consultants and other service providers. The Plan was subsequently amended on various dates. Generally, all options granted expire ten years from the date of grant. It is the policy of the Company to issue new shares for stock options exercised, rather than issue treasury shares. Options generally vest over ten years. There are 25,000,000 shares of common stock reserved for issuance under the Plan.

A summary of the status of stock options issued by the Company as of March 31, 2012 is presented in the following table:

	Number of Shares		Average Price
Outstanding at the beginning of period		15,000,000	$	0.025
Granted/Exercised/Expired/Cancelled		-		N/A
Outstanding at the end of period		15,000,000	$	0.025

Exercisable at the end of period		4,500,000	$	0.025

Shares available for future grant		10,000,000		N/A

The following table sets forth additional information about stock options outstanding at March 31, 2012:

Weighted

Average

Weighted

Range of

Remaining

Average

Exercise

Prices

Options

Outstanding

Contractual

Life

Exercise

Price

Options

Exercisable

$0.025

15,000,000

8.41

0.025

4,500,000

As of March 31, 2012, there was $682,500 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted average period of 3.25 years.

NOTE 12 – STOCK WARRANTS

During the three months ended March 31, 2012, the Company issued stock purchase warrants to investors in private placements for the right to purchase 2,500,000 and 920,000 shares of the Company’s common stock at $0.25 and $0.75 per share, respectively. The warrants vest immediately and have a term of five years from the date the warrants were issued. The warrants were valued at $46,000 and $34,262, respectively using the Black-Scholes option pricing model.

On March 20, 2012, the Company entered into a consulting agreement pursuant to which warrants to purchase 200,000 shares of the Company’s common stock at $0.25 per share were issued. The warrants have a cashless exercise feature and vest as follows: (a) 25,000 shares after six months after the date of the agreement, (b) 100,000 shares after twelve months after the date of the agreement, and (c) 75,000 shares after eighteen months after the date of the agreement. This warrant was valued at $18,840 and will be expensed ratably over the period of the services to be provided.

OVERNEAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 12 – STOCK WARRANTS (continued)

The assumptions used in the Black-Scholes option pricing model are as follows:

	Three months ended
	March 31, 2012
	(Unaudited)
Risk-free interest rate		0.27-1.4	%
Expected dividend yield		0	%
Expected lives	2.5 - 5.6 years
Expected volatility		70	%

Warrants to purchase an aggregate of 13,246,000 shares of the Company’s common stock with exercise prices ranging from $0.01 to $0.75 were outstanding as of March 31, 2012.

NOTE 13 – EMPLOYMENT AGREEMENTS

On August 3, 2010, the Company entered into a 5-year (“Term”) agreement with Bill Glaser for his services as Chief Executive Officer. The agreement was amended on March 15, 2011 to change his title from Chief Executive Officer to President. Per the second amendment to the agreement dated August 8, 2011, Mr. Glaser is compensated with an annual salary of $180,000. Mr. Glaser’s annual salary will increase to $250,000 in the event that either (i) OverNear raises an aggregate $5,000,000 in debt or equity financing after August 8, 2011 or (ii) OverNear recognizes $5,000,000 in cumulative gross revenues. The annual salary will increase to $360,000 in the event that either (i) OverNear raises an aggregate $10,000,000 in debt or equity financing after August 8, 2011 or (ii) OverNear recognizes $10,000,000 in cumulative gross revenues. Mr. Glaser will receive a bonus of 5% of OverNear’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). His agreement also provides for options to purchase 5,000,000 shares of common stock under the 2010 Stock Option, Deferred Stock and Restricted Stock Plan (the “Plan”) at an exercise price of $0.025 per share, of which 500,000 shares became exercisable on December 31, 2010 and the remainder of which will become exercisable on the following schedule: 500,000 shares at the end of each subsequent six month period. The options expire 10 years after grant.

In the event of a change of control of OverNear prior to the one month anniversary of Mr. Glaser’s termination, Mr. Glaser will be due the greater of (i) the remainder of his annual salary during the Term or (ii) $250,000. All unvested stock options will become vested, and any unexercised stock options will be paid out as cash in the amount equal to the difference between the consideration paid to OverNear on a per share basis less the exercise price of the stock option, the value of which is multiplied by the number of options held by Mr. Glaser.

In the event Mr. Glaser’s termination by OverNear is without cause, Mr. Glaser will be paid the lesser of (i) the remainder of his annual salary during the Term and (ii) one year’s salary, and all stock options held by Mr. Glaser under the Plan will immediately vest in full and remain outstanding and exercisable until ten years from the grant date.

On September 13, 2010, the Company entered into a 5-year (“Term”) agreement with Fred E. Tannous for his services as Chief Financial Officer. The agreement was amended on March 15, 2011 to add the additional title of Chief Executive Officer. Per the second amendment to the agreement dated August 8, 2011, Mr. Tannous is compensated with an annual salary of $180,000. Mr. Tannous’ annual salary will increase to $250,000 in the event that either (i) OverNear raises an aggregate $5,000,000 in debt or equity financing after August 8, 2011 or (ii) OverNear recognizes $5,000,000 in cumulative gross revenues. The annual salary will increase to $360,000 in the event that either (i) OverNear raises an aggregate $10,000,000 in debt or equity financing after August 8, 2011 or (ii) OverNear recognizes $10,000,000 in cumulative gross revenues.

OVERNEAR, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 13 – EMPLOYMENT AGREEMENTS (continued)

As a signing bonus, Mr. Tannous was issued shares of OverNear’s common stock valued at $50,000. Mr. Tannous will also receive a bonus of 5% of OverNear’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). His agreement also provides for options to purchase 10,000,000 shares of common stock under the Plan at an exercise price of $0.025 per share, of which 1,000,000 shares became exercisable on December 31, 2010 and the remainder of which will become exercisable on the following schedule: 1,000,000 shares at the end of each subsequent six month period. The options expire 10 years after grant.

In the event of a change of control of OverNear prior to the one month anniversary of Mr. Tannous’ termination, Mr. Tannous will be due the greater of (i) the remainder of his annual salary during the Term or (ii) $250,000. All unvested stock options will become vested, and any unexercised stock options will be paid out as cash in the amount equal to the difference between the consideration paid to OverNear on a per share basis less the exercise price of the stock option, the value of which is multiplied by the number of options held by Mr. Tannous.

In the event of Mr. Tannous’ termination without cause by OverNear, Mr. Tannous will be paid the lesser of (i) the remainder of his annual salary during the Term and (ii) one year’s salary, and all stock options held by Mr. Tannous under the Plan will immediately vest in full and remain outstanding and exercisable until ten years from the grant date.

The following table summarizes the Company's minimum obligations under employment agreements as of March 31, 2012:

Twelve Months Ending March 31,
2013	$	360,000
2014		360,000
2015		360,000
2016		345,000
	$	1,425,000

NOTE 14 – LEASE COMMITMENTS

The Company leases its office from an unrelated party pursuant to a lease agreement expiring on October 31, 2013. The Company, as lessee, advanced six months rental fees of $9,900 to the lessor, of which $1,650 is included in prepaid expense at March 31, 2012. The lessor agreed to waive three months of rental fees to the Company. The Company’s rent expense for the three months ended March 31, 2012 was approximately $7,000.

The following table summarizes the Company's obligation under the lease as of March 31, 2012:

Twelve Months Ending March 31,
2013	$	22,550
2014		13,200
	$	35,750

NOTE 15 – SUBSEQUENT EVENTS

Subsequent to March 31, 2012, the Company raised a total of $527,000 in a private placement of units consisting of common stock and warrants. The Company issued 2,108,000 shares of common stock and warrants to purchase 2,108,000 shares of its common stock in connection with this private placement. The Company also issued an aggregate of 462,941 shares of common stock to its consultants and advisory board members in consideration for consulting services. These shares were valued at $97,548.

Item 6. Exhibits

Exh. No.		Exhibit Description

31.1		Section 302 Certification by the Registrant’s Principal Executive Officer *

31.2		Section 302 Certification by the Registrant’s Principal Financial Officer *

32.1		Section 906 Certification by the Registrant’s Principal Executive Officer and Principal Financial Officer *

101.		The following financial statements from the registrant's Quarterly Report on Form 10-Q for the three months ended March 31, 2012 in XBRL: (i) Condensed Balance Sheets (Unaudited); (ii) Condensed Statements of Operations (Unaudited); (iii) Condensed Statement of Stockholders’ Deficit (Unaudited); (iv) Condensed Statements of Cash Flows (Unaudited); (v) Notes to Unaudited Condensed Financial Statements.*

* Filed herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

	OVERNEAR, INC.
	(Registrant)

Date: August 8, 2012	By:	/s/ Fred E. Tannous
		Fred E. Tannous
		Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial & Accounting Officer)

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