FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549
(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, 2013
OR
[ ] 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 000-54504
SaaSMAX, Inc.
(Exact name of registrant as specified in its charter)
Nevada		27-4636847
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
7770 Regents Road, Suite 113-129 San Diego, CA 92122
(Address of principal executive offices)      (Zip Code)
(858) 518-0447
(Registrant’s telephone number, including area code)
(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. 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 that the registrant was required to submit and post such files). 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. (Check one):

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 4,429,704 common shares issued and outstanding as of May 8, 2013.

 

SaaSMAX, Inc.

For the quarter ended March 31, 2013

FORM 10-Q

 

PART I. FINANCIAL INFORMATION			Page No.
Item 1.	Financial Statements:		3
		Balance Sheets at March 31, 2013 (unaudited) and December 31, 2012	3
		Statements of Operations for the three months ended March 31, 2013 and 2012 and the period from January 19, 2011 (inception) to March 31, 2013 (unaudited)	4
		Statements of Cash Flows for the three months ended March 31, 2013 and 2012 and the period from January 19, 2011 (inception) to March 31, 2013 (unaudited)	5
		Notes to Financial Statements (unaudited)	6
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		14
Item 4.	Controls and Procedures		14
PART II. OTHER INFORMATION			14
Item 1.	Legal Proceedings		14
Item 1A.	Risk Factors		14
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		14
Item 3.	Defaults Upon Senior Securities		15
Item 4.	Mine Safety Disclosures		15
Item 5.	Other Information		15
Item 6.	Exhibits		15
	Signatures		15

 

PART I

 

ITEM 1. FINANCIAL STATEMENTS

SaaSMAX, INC.
(A Development Stage Company)
BALANCE SHEETS
	March 31, 2013			December 31, 2012
ASSETS
Current assets:
Cash	$	24,341		$	16,375
Accounts receivable, net		2,378			962
Other current assets		5,706			1,123
Total current assets		32,425			18,460
Property & equipment, net of accumulated depreciation		37,370			34,122
Total assets	$	69,795		$	52,582
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses	$	59,613		$	17,020
Convertible debt, net of debt discount		73,767			34,727
Total current liabilities		133,380			51,747
Total liabilities		133,380			51,747
Commitments and contingencies
Stockholders’ equity
Preferred stock, $0.001 par value; 20,000,000 shares authorized; no shares issued and outstanding		-			-
Common stock, $0.001 par value; 100,000,000 shares authorized; 4,429,704 shares issued and outstanding as of March 31, 2013 and December 31, 2012, respectively		4,430			4,430
Additional paid-in capital		743,091			668,091
Deferred option compensation expense		(5,661)			(8,491)
Founders' receivable		(3,000)			(3,000)
Deficit accumulated during development stage		(802,445)			(660,195)
Total stockholders’ equity		(63,585)			835
Total liabilities and stockholders’ equity	$	69,795		$	52,582
See accompanying notes to financial statements

 

SaaSMAX, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
		Three Months Ended						January 19, 2011 (inception) to March 31, 2013
		March 31, 2013			March 31, 2012
Revenues		$	2,378		$	-		$	6,916
Costs of services			1,723			-			3,513
Gross profit			655			-			3,403
Operating expenses
	Salaries and professional fees		64,371			61,224			446,338
	Technology and product development		17,099			5,000			152,848
	General and administrative		19,222			18,862			126,912
Total operating expenses			100,692			85,086			726,098
Loss from operations			(100,037)			(85,086)			(722,695)
Other expense
	Interest expense		42,213			-			79,750
Total other expense			42,213			-			79,750
Net loss		$	(142,250)		$	(85,086)		$	(802,445)
Weighted average number of common
	shares outstanding - basic and fully diluted		4,361,258			4,178,220			4,164,039
Net loss per share - basic and fully diluted		$	(0.03)		$	(0.02)		$	(0.19)
See accompanying notes to financial statements

 

SaaSMAX, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
			Three Months Ended March 31,						January 19, 2011 (inception) to March 31, 2013
			2013			2012
Cash flows from operating activities
Net loss			$	(142,250)		$	(85,086)		$	(802,445)
Adjustments to reconcile net loss to net cash used in operating activities
	Stock based compensation			2,830			19,323			198,760
	Depreciation			4,906			750			11,804
	Impairment of software development costs			-			-			12,014
	Amortization of debt discount			39,040			-			73,767
Changes in operating assets and liabilities										-
	Accounts receivable			(1,416)			-			(2,378)
	Other current assets			(4,583)			2,555			(5,706)
	Accounts payable and accrued expenses			42,593			6,988			59,613
	Accounts payable - related parties			-			(3,778)			-
Net cash used in operating activities				(58,880)			(59,248)			(454,571)
Cash flows from investing activities
	Purchase of capitalized software			(8,154)			(7,330)			(61,188)
Net cash used in investing activities				(8,154)			(7,330)			(61,188)
Cash flows from financing activities
	Proceeds from convertible promissory notes			75,000			-			200,000
	Proceeds from issuance of common stock			-			75,000			340,100
Net cash provided by financing activities				75,000			75,000			540,100
Net increase in cash				7,966			8,422			24,341
Cash, beginning of period				16,375			33,158			-
Cash, end of period			$	24,341		$	41,580		$	24,341
Supplemental disclosure of cash flow information:
Income taxes paid			$	-		$	-		$	-
Interest paid			$	-		$	-		$	-
Supplementary disclosure of  noncash financing activities:
Beneficial conversion feature on convertible debt			$	75,000		$	-		$	200,000
Issuance of common stock for founders' receivable				-		$	3,000		$	3,000
See accompanying notes to financial statements

 

 

 

SaaSMAX, INC.

(A Development Stage Company)

Notes to the Financial Statements

(Unaudited)

March 31, 2013

 

NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

 

SaaSMAX, Inc. (“SaaSMAX” or the “Company”) was incorporated on January 19, 2011 under the laws of the State of Nevada with its principal place of business in San Diego, California. SaaSMAX is a development stage company that is developing and launching an online global business-to-business marketplace for software-as-a-service (“SaaS”) providers, resellers and users, with the goal to improve the sales value chain in this rapidly growing sector.

 

The Company’s mission is to become a channel program for SaaS, by facilitating, improving and increasing the Sales Value Chain for SaaS Applications (“SaaS Apps”). Our plan is to develop and launch the SaaSMAX Marketplace, which is intended to be a "B2B" or business to business solution to be implemented between SaaS Independent Software Vendors (“ISVs”) and SaaS Solution Providers, that will enable SaaS App Vendors to market, promote and manage the sales and distribution of their SaaS App to participants in the Sales Value Chain and to business users around the world. The SaaSMAX Marketplace will also provide easy-to-use tools for SaaS Resellers and Solution Providers to, among other things, thoroughly research each listed SaaS App, including online demos, technical specifications, ratings, support, pricing, and commission plans. The SaaSMAX Marketplace will also provide a Solution Provider Directory which will contain the business profiles of Solution Providers, which will enable businesses to network with Solution Providers, and will enable Solution Providers to generate new business leads.

 

Presently in Beta, the Company is entering into agreements with ISVs in which the ISV agrees to compensate SaaSMAX for every purchase transaction that is initiated through the SaaSMAX Online Marketplace or a private labeled version thereof. The Company is responsible for monitoring, aggregating and reporting total transaction volumes completed between its member Solution Providers and the ISVs, as well as the commissions earned by the Solution Providers.

 

Basis of presentation

The accompanying unaudited financial statements of SaaSMAX have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and applicable regulations of the U.S. Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been omitted pursuant to such rules and regulations. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of financial position and results of operations have been included. Our operating results for the three months ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. The accompanying unaudited financial statements should be read in conjunction with our audited financial statements for the year ended December 31, 2012, which are included in our Annual Report on Form 10-K, and the risk factors contained therein.

 

Going concern

No assurance can be given that a large market for the SaaSMAX product will develop, or that a critical mass of customers will be willing to pay for the SaaSMAX product. Since inception, through March 31, 2013, proceeds of $340,100 have been received from the sale of 1,329,691 shares of common stock and $200,000 was received through the sale of Convertible Notes. Our business plan estimates that we will need to raise additional capital to fund our operations during 2013 and there can be no assurance that we will be able to raise any or all of the capital required. We have generated limited revenues since our inception and have incurred a net loss of $142,250 and net cash used in operating activities of $58,880 during the three months ended March 31, 2013. Accordingly, we will have to obtain additional funding from the sale of our securities, the continued sale of debt instruments or from strategic transactions in order to fund our current level of operations and there can be no assurance that we will be able to raise any or all of the capital required. If the Company is unable to generate sufficient cash flow from operations and/or continue to obtain financing to meet its working capital requirements, it may have to curtail its business sharply or cease business altogether.

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern that contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. However, the ability of the Company to continue as a going concern on a longer-term basis will be dependent upon the ability to generate sufficient cash flow from operations to meet its obligations on a timely basis, the ability to successfully raise additional financing, and the ability to ultimately attain profitability.

 

Development Stage Company

The Company complies with the Accounting Standards Codification No. 915 “Development Stage Entities” and Securities and Exchange Commission Act Guide 7 for its characterization of the Company as development stage.

 

Recent Accounting Pronouncements

Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

 

NOTE 2 –CONVERTIBLE PROMISSORY NOTES

 

As of March 31, 2013 the Company has entered into eight separate $25,000 Convertible Promissory notes totaling $200,000 (the “Convertible Note(s)”) with a shareholder of the Company (the “Holder”). The Convertible Notes bear interest at 8% per annum and are due and payable on the one year anniversary date of each Convertible Note, beginning July 1, 2013 and ending March 28, 2014. The Holder of the Convertible Notes may at any time prior to the Maturity Date, convert up to $150,000 of the principal amount of the Convertible Notes into shares of common stock of the Company on the basis of one share of such stock for each $0.35 (the “Conversion Price”) in unpaid principal and accrued interest. The Holder of the Convertible Notes may at any time prior to the Maturity Date, convert up to $50,000 of the principal amount of the Convertible Notes at a Conversion Price of $0.20 per share. The Company may at any time compel the conversion of the Convertible Note or any such portion into shares of common stock at the Conversion Price. Interest payable as of March 31, 2013 totaled $5,983.

 

The intrinsic value of the embedded beneficial conversion feature of the Convertible Notes was determined to be $200,000. The intrinsic value of $200,000 was charged to the note discount and credited to Additional Paid in Capital. The note discount is amortized over the term of the Convertible Notes and charged to interest expense. As of March 31, 2013, the discount on the Convertible Note totaled $126,233, and for the three months ended March 31, 2013, interest expense related to such amortization totaled $39,040.

 

NOTE 3 –STOCK INCENTIVE PLAN

 

As of March 31, 2013, we have granted options to purchase a total of 441,805 shares of common stock under the 2011 Stock Incentive Plan (the “Plan”). The options were granted to advisors and consultants for services rendered at a price equal to the fair market value of the common stock at the time services were rendered.

 

The Company recognizes option expense ratably over the vesting periods. For the three months ended March 31, 2013, the Company recorded compensation expense related to options granted under the Plan of $2,830.  

 

Stock option activity under the Plan for the three months ended March 31, 2013 is summarized as follows:

 

		Shares		Weighted Average Exercise Price per Share				Weighted Average Remaining Contractual Life (in years)					Grant Date Fair Value
Outstanding at December 31, 2012		441,805			$0.54				-			$  184,401
Options granted		-			$      -				-			-
Options exercised		-			$      -				-			-
Options cancelled/forfeited/ expired		-			$      -				-			-
Outstanding at March 31, 2013		441,805			$0.54				2.06					$184,401
Exercisable at March 31, 2013		431,805				$0.53			2.05					$178,739

 

As of March 31, 2013, there was $5,661 of unrecognized compensation cost related to unvested stock options. The Company intends to issue new shares to satisfy share option exercises.

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION

 

FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q, including "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 of Part I of this report include forward-looking statements. These forward looking statements are based on our management’s current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "expects," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "proposed," "intended," or "continue" or the negative of these terms or other comparable terminology. You should read statements that contain these words carefully, because they discuss our expectations about our future operating results or our future financial condition or state other "forward-looking" information. Many factors could cause our actual results to differ materially from those projected in these forward-looking statements, including but not limited to: variability of our revenues and financial performance; risks associated with product development and technological changes; the acceptance our products in the marketplace by existing and potential future customers; general economic conditions. You should be aware that the occurrence of any of the events described in this Quarterly Report could substantially harm our business, results of operations and financial condition, and that upon the occurrence of any of these events, the trading price of our securities could decline. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, growth rates, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this Quarterly Report to conform these statements to actual results.

Introduction

Overview

 

SaaSMAX, Inc. is a Nevada Corporation incorporated January 19, 2011, with its principal place of business in San Diego, California. SaaSMAX is a development stage company that is developing and launching an online business-to-business marketplace (the "SaaSMAX Marketplace") and channel management tools for the rapidly growing software-as-a-service ("SaaS") market.   

 

Software-as-a-Service, sometimes referred to as "on-demand software," is a software delivery model in which software is delivered over the Internet through a web browser.  With SaaS Applications ("SaaS Apps"), software and data is hosted on virtual servers (often referred to as "cloud-based" or "cloud computing").  Cloud computing fundamentally changes the way business software applications are developed and deployed.  SaaS App developers no longer need to create and manage their own infrastructure of servers, storage, network devices, operating system software and development tools in order to create a business application.  Instead, the entire software infrastructure is managed by third parties who specialize in infrastructure management, and developers use a remote management connection/console to access the development environment.  SaaS App users can gain access to a multitude of business applications via an Internet browser or mobile device, and are able to take advantage of a robust, secure, scalable and highly available application at a relatively low cost, without the cost and complexity of managing the application.

 

While practically every Internet service (such as a Web search engine or web-based Email) is driven by some underlying software, the terms "SaaS" or "SaaS Apps" are often used in the context of business software.   Independent Software Vendors ("ISVs" or "App Vendors") of SaaS Apps or traditional software applications develop and sell software apps that run on one or more operating system platforms.  The companies that make the operating platforms encourage and lend support to ISVs, often with special "business partner" programs.  Some ISVs focus on a particular operating platform like Apple iPhone's iOS for which there are tens of thousands of ISV applications. Other ISVs specialize in a particular application area, such as customer relationship management or business intelligence, for example, and integrate with multiple platforms.

 

The Company intends to become a sales distribution channel program for SaaS, by offering a Marketplace for SaaS Apps and by facilitating, improving and increasing the Sales Value Chain for SaaS ISVs.  The "Sales Value Chain" refers to the value-adding activities and the participants that are involved in selling a software product to an end-user.   For example, a software application is typically developed and sold by an ISV. That ISV may offer to sell licenses for its software application directly to an end user, or it may contract with a wholesaler, distributor or retailer (collectively referred to herein as "Reseller") which then markets and resells that software application to end users.  Moreover, when software applications require customization or user training before they are employed by the end user, ISV's will seek to partner with  independent VARs, service providers, solution providers, systems integrators or other types of consultants (collectively referred to herein as "Solution Providers") who will provide those services to the end users.

 

With SaaS Apps, there is no physical delivery of a software product.  Instead, a SaaS App is available and ready-to-use when it is accessed on-line. As a result of this non-physical, direct-to-end-customer deployment method, there is no product that can be accounted for physically.  This may lead to a situation where a Solution Provider in the Sales Value Chain is ignored during a sales transaction and, in such a case, may not be compensated by the SaaS App Vendor for referring the end-user.  

 

In traditional software sales, the Solution Provider usually has a pre-existing relationship with the end-user and is therefore the trusted advisor to the end-user for most software purchases. For SaaS App Vendors, we believe that the Sales Value Chain must also incorporate the Solution Providers for software purchases. We believe that when completed and implemented, the SaaSMAX Marketplace will provide SaaS App Vendors with the tools to track sales and manage reseller programs for each Solution Provider interested in their SaaS App.

 

Our SaaSMAX Marketplace is intended to be a "B2B" or "business to business" solution to be implemented between SaaS App Vendors and SaaS Solution Providers, which will enable SaaS App Vendors to market, promote and manage the sales and distribution of their SaaS App to participants in the Sales Value Chain and to business users around the world.

 

SaaSMAX management believes that the SaaSMAX Marketplace will:

 

·

Make it easier and more efficient for SaaS App Vendors to promote their SaaS Apps, sell licenses, find new customers, and build a channel of Solution Providers.

 

·

Be the first SaaS marketplace that will enable SaaS App Vendors to sell, market, manage and monitor their sales and marketing efforts in real time across the SaaS Sales Value Chain.

 

·

Be a valuable, efficient business and educational tool for SaaS Solution Providers, enabling them to thoroughly research each listed SaaS App and gain access to  online demos, technical specifications, peer ratings, support, pricing, commission plans and much more.

 

·

Make it easier for Solution Providers to find SaaS Apps for their customers and earn commissions from SaaS App Vendors for reselling or referring their SaaS Apps to end user customers.

 

·

Include a Solution Provider Directory which will contain the business profiles of Solution Providers, to enable end user businesses to identify and do business with Solution Providers, and to enable SaaS App Vendors to network with Solution Providers.

 

In late 2011 the SaaSMAX Marketplace entered into its beta test-phase ("SaaSMAX Beta,").   During the Beta phase, our primary focus has been and will continue to be to recruit several dozen SaaS Apps Vendors and several dozen Solution Providers to use our service.  During SaaSMAX Beta we have and will continue to: i) study the use of our service; ii) adjust the business pricing model ; iii) add features and functionality ; iv) plan and prepare marketing campaigns; v) adjust our standard service agreement to meet the expressed needs and wants of participating SaaS App Vendors and Solution Providers.

 

The Company has entered into several dozen agreements with ISVs in which the ISV agrees to compensate SaaSMAX for every purchase transaction that is initiated through the SaaSMAX Marketplace. The Company is responsible for monitoring, aggregating and reporting total transaction volumes completed between its member Solution Provides and the ISVs, as well as the commissions earned by the Solution Providers. The Company has also entered into more than one hundred agreements with Solution Providers, who currently are not required to pay fees to SaaSMAX.

 

Once management is satisfied with the results of SaaSMAX Beta, we will commercially launch SaaSMAX.  We intend to continually develop new features and functionality for the SaaSMAX Marketplace into the foreseeable future, and have identified several additional potential product opportunities that stem from what we have learned to date.

 

Results of Operations

The following discussion should be read in conjunction with our interim consolidated financial statements and the related notes that appear elsewhere in this Quarterly Report.

 

Revenues

SaaSMAX revenues recognized during the three months ended March 31, 2013 and during the period from January 19, 2011 (inception) to March 31, 2013 consist primarily of fees earned from one SaaS App Vendor who sells and promotes its SaaS App through the SaaSMAX Marketplace. The fees earned by SaaSMAX are derived as a percentage of the revenues earned by the SaaS App Vendor. We are still a development stage company and do not expect to begin generating significant revenues until we move out of SaaSMAX Beta and commercially launch the SaaSMAX Marketplace.

 

Cost of Goods Sold

Costs of services recognized during the three months ended March 31, 2013 and during the period from January 19, 2011 (inception) to March 31, 2013 consist primarily of commissions paid to the Solution Providers related to the SaaS Apps sold through the SaaSMAX Marketplace.

 

Salaries and Professional Fees

Salaries and professional fees for the three months ended March 31, 2013 increased 5% in comparison to the three months ended March 31, 2012. The increase is primarily a result of costs associated with the marketing of the SaaSMAX Marketplace as well as the development of the business. Also included are costs incurred for legal and accounting fees resulting from the filing requirements necessary for a public company. Such costs are expected to continue being a significant part of our operating expenses.

 

Salaries and professional fees for the period from January 19, 2011 (inception) through March 31, 2013 totaled approximately $446,000 and consisted primarily of marketing, business development costs, management salaries and legal and accounting fees as discussed above.

 

Technology and Product Development

  Technology and product development costs consist of the continued maintenance of and improvements to the SaaSMAX Marketplace. Costs incurred in 2012 relate to research and development of improved functions within the SaaSMAX Marketplace. The Company expects to continue to incur expenses related to technology and product development as it improves and expands the SaaSMAX Marketplace.

 

Technology and Product Development costs for the period from January 19, 2011 (inception) through March 31, 2013 totaled approximately $153,000 and related primarily to the development and continued improvements of the SaaSMAX Marketplace.

 

General and Administrative Expenses

General and administrative expenses for the three months ended March 31, 2013 remained relatively consistent with the three months ended March 31, 2012. The slight increase results primarily from depreciation expense on the capitalized costs of the SaaSMAX Marketplace.

 

General and administrative expenses for the period from January 19, 2011 (inception) through March 31, 2013 totaled approximately $127,000. Such costs relate primarily to corporate costs associated with the Registration Statement on Form S-1 initially filed with the SEC during May 2011 as well as costs incurred to become DTC eligible during 2012 totaling approximately $22,000. Also included are costs related to travel, trade show, automotive, internet services and general office expenses.

 

Other Expense

Other expense for the three months ended March 31, 2013 and the period from January 19, 2011 (inception) through March 31, 2013 totaled $42,413 and related to the interest expense and the amortization of the debt discount on our Convertible Promissory Notes.

 

Net Loss

During the three months ended March 31, 2013 and 2012 and the period from January 19, 2011 (inception) through March 31, 2013 the Company incurred a net loss of $142,250, $85,086 and $802,445, respectively, due to the items described above.  

 

Capital Resources and Liquidity

 

As of March 31, 2013, we had $24,341 of cash and working capital deficit of approximately $101,000 compared to $16,375 of cash and working capital deficit of approximately $33,000 as of December 31, 2012.

 

Net cash used in operating activities during the three months ended March 31, 2013 and 2012 and the period from January 19, 2011 (inception) through March 31, 2013 totaled approximately $59,000, $59,000 and $455,000, respectively and is primarily attributable to the payment of development, legal, accounting, advertising, management salaries and corporate fees which are offset by stock based compensation expense.  

 

Net cash used in investing activities during the three months ended March 31, 2013 and 2012 and the period from January 19, 2011 (inception) through March 31, 2013 totaled approximately $8,000, $7,000 and $61,000, respectively and resulted from the purchase of capitalized software and the capitalization of the SaaSMAX marketplace upon reaching technological feasibility.

 

Net cash provided by financing activities during the three months ended March 31, 2013 and 2012 and the period from January 19, 2011 (inception) through March 31, 2013 totaled $75,000, $75,000 and $540,100, respectively and resulted primarily from the Company's sale of common stock, as well as, $75,000 and $125,000 in the first quarter of 2013 and throughout 2012, respectively, in the form of convertible promissory notes.

 

We currently rely on cash flows from financing activities to fund our capital expenditures and to support our working capital requirements. As of March 31, 2013 we have entered into eight separate Convertible Promissory Notes for $25,000 each (total of $200,000 (the “Convertible Note(s)”) with a shareholder of the Company (the “Holder”). The Convertible Notes bear interest at 8% per annum and are due and payable on the one year anniversary date of each Convertible Note. The Holder of the Convertible Notes may at any time prior to the Maturity Date, convert the principal amount of six of the Convertible Note into shares of common stock of the Company on the basis of one share of such stock for each $0.35 (the “Conversion Price”) in unpaid principal and accrued interest. The seventh and eighth Convertible Notes dated February 23, 2013 and March 28, 2013 have a Conversion Price of $0.20. The Company may at any time compel the conversion of the Convertible Note or any such portion into shares of common stock at the Conversion Price.

 

During January 2012 proceeds of $75,000 were received from the sale of 214,286 shares of common stock. On April 5, 2012, pursuant to a Private Placement Memorandum (the “Private Offering”), the Company offered for sale 818,816 units (“Units”) at a purchase price of $1.84 per Unit. Each Unit consists of: i) two shares of common stock, and ii) one redeemable warrant (the “Warrant[s]”) entitling the holder to purchase one share of common stock (the “Warrant Shares”), at an exercise price of $1.84, for a period of 24 months. The Private Offering was terminated on May 10, 2012. The Company had sold 21,739 Units pursuant to the Private Offering resulting in proceeds of $40,000. Additionally, on April 5, 2012, proceeds of $25,000 were received from the sale of 71,428 shares of common stock to an independent accredited investor at $0.35 per share. During 2011, proceeds of $200,100 were received from the sale of 1,000,500 shares of common stock.

 

The Company will need to secure additional financing in the future to continue to develop the product, attract customers, and start generating revenues. Our business plans estimate that we will need to raise additional capital to fund our operations during 2013 and there can be no assurance that we will be able to raise any or all of the capital. We began generating a nominal amount of revenue during the third quarter of 2012. However, there can be no assurance that we will be able to generate revenue sufficient to sustain or grow the operations. Please see the section entitled “Risk Factors” included in our Annual Report on Form 10-K for the period ended December 31, 2012.

Off-Balance Sheet Arrangements

 

There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Inflation

We do not believe our business and operations have been materially affected by inflation.

 

Critical Accounting Policies and Estimates

 

There are no material changes to the critical accounting policies and estimates described in the audited financial statements for the period ended December 31, 2012 included in our Annual Report on Form 10-K filed with the SEC.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

As a “smaller reporting company”, we are not required to provide the information under this Item 3.

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of Disclosure Controls and Procedures

Based upon an evaluation of the effectiveness of our disclosure controls and procedures performed by our Chief Executive Officer as of the end of the period covered by this report, our Chief Executive Officer, concluded that our disclosure controls and procedures have not been effective as a result of a weakness in the design of internal control over financial reporting identified below.

We identified material weaknesses in our internal control over financial reporting primarily attributable to (i) lack of segregation of incompatible duties; and (ii) insufficient Board of Directors representation. These weaknesses are due to our inadequate staffing during the period covered by this report and our lack of working capital to hire additional staff.  Management has retained an outside, independent financial consultant to record and review all financial data, as well as prepare our financial reports, in order to mitigate this weakness. Although management will periodically re-evaluate this situation, at this point it considers that the risk associated with such lack of segregation of duties and the potential benefits of adding employees to segregate such duties are not cost justified.  We intend to hire additional accounting personnel to assist with financial reporting as soon as our finances will allow. 

As used herein, “disclosure controls and procedures” mean controls and other procedures of our company that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls Over Financial Reporting

There have been no changes in our internal controls over financial reporting that occurred during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

 

None.

ITEM 1A. RISK FACTORS.

As a “smaller reporting company”, we are not required to provide disclosure under this Item 1A.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINING SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

 

None

ITEM 6. EXHIBITS.

 

Exhibits

31.1		Certification of Principal Executive Officer/Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
32.1		Certification of Principal Executive Officer/Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema
101.CAL*		XBRL Taxonomy Extension Calculation
101.DEF*		XBRL Taxonomy Extension Definition
101.LAB*		XBRL Taxonomy Extension Label
101.PRE*		XBRL Taxonomy Extension Presentation

*

Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability under those sections.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

 

 

	SAASMAX, INC.
Date:  May 8, 2013   By:	/s/ DINA M. MOSKOWITZ Dina M. Moskowitz Chief Executive Officer and Chief Financial Officer (Principal Executive Officer and Principal Financial Officer)