Engage Mobility, Inc - FORM 10-Q

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EX-32.2 - CERTIFICATION - Engage Mobility, Inc	f10q0913ex32ii_engagemobilit.htm
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the Quarterly Period Ended September 30, 2013

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

Commission File Number: 333-169802

Engage Mobility, Inc.

(Exact name of registrant as specified in its charter)

Florida		45-4632256
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2295 S. Hiawassee Rd., Suite 414

Orlando, FL 32835[Missing Graphic Reference]

(Address of principal executive offices)(Zip Code)

(407) 329-7404

(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 periods 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 o

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 o

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

(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of November 18, 2013, the registrant had 20,261,950 shares of its common stock outstanding.

Engage Mobility, Inc.

(A Development Stage Company)

Quarterly Period on Form 10-Q

September 30, 2013

TABLE OF CONTENTS

		Page
Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	15
Item 4.	Controls and Procedures	15

PART II-- OTHER INFORMATION

Item 1.	Legal Proceedings	16
Item 1A.	Risk Factors	16
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item 3.	Defaults Upon Senior Securities	16
Item 4.	Mine Safety Disclosures	16
Item 5.	Other Information	16
Item 6.	Exhibits	16

SIGNATURES		17

PART I: FINANCIAL INFORMATION

Item 1. Financial Statements

ENGAGE MOBILITY, INC.

(a development stage company)

BALANCE SHEETS

As of September 30, 2013, and June 30, 2013

	September 30,			June 30,
	2013			2013
ASSETS	(unaudited)
CURRENT ASSETS
Cash	$	37,739		$	-
Accounts receivable		48,935			8,500
Prepaid expenses		89,833			-
Total Current Assets		176,507			8,500

PROPERTY AND EQUIPMENT, net		4,137			2,958

OTHER ASSETS
Intangible asset		48,000			24,000

TOTAL ASSETS	$	228,644		$	35,458

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	33,975		$	21,940
Due to bank		-			14,282
Total Current Liabilities		33,975			36,222

LONG TERM LIABILITIES
Note payable		620,000			280,000

Total liabilities		653,975			316,222

STOCKHOLDERS' DEFICIT

Common Stock - No Par Value;
Authorized: 100,000,000
Issued and Outstanding: 20,261,950 and 20,126,500		346,916			166,500
Paid in capital		4,000			4,000
Deferred revenue		(91,667	)		-
Deficit accumulated during the development stage		(684,580	)		(451,264	)
Total stockholders' deficit		(425,331	)		(280,764	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	228,644		$	35,458

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

ENGAGE MOBILITY, INC.

(a development stage company)

STATEMENTS OF OPERATIONS

Three Months Ended September 30, 2013 and 2012, and

Inception (December 28, 2011) through September 30, 2013
(Unaudited)

	Three Months			Three Months			Inception
	Ended			Ended			through
	September 30,			September 30,			September 30,
	2013			2012			2013

REVENUE	$	40,435		$	2,939		$	66,669

COST OF SALES		9,000			2,676			15,626

GROSS PROFIT		31,435			263			51,043

OPERATING EXPENSES:
GENERAL AND ADMINISTRATIVE EXPENSES		236,083			47,027			696,667

OPERATING LOSS		(204,648	)		(46,764	)		(645,624	)

INTEREST EXPENSE		28,668			748			38,956

LOSS BEFORE INCOME TAXES		(233,316	)		(47,512	)		(684,580	)

INCOME TAXES		-			-			-

NET LOSS	$	(233,316	)	$	(47,512	)	$	(684,580	)

Net Loss Per Common Share, basic & diluted	$	(0.01	)	$	(0.00	)

Weighted Average Common Shares Outstanding, basic & diluted		20,182,418			20,126,500

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

ENGAGE MOBILITY, INC.
(a development stage company)
STATEMENTS OF CASH FLOWS
Three Month Ended September 30, 2013 and 2012 and
Inception (December 28, 2011) through September 30, 2013

	Three Months			Three Months			Inception
	Ended			Ended			through
	September 30,			September 30,			September 30,
	2013			2012			2013
CASH FLOWS FROM OPERATING ACTIVITIES

Net cash (used in) operating activities	$	(343,216	)	$	(49,963	)	$	(775,597	)

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of intangible		(24,000	)		-			(48,000	)
Purchase of property and equipment		(1,179	)		-			(5,580	)
Net cash (used in) investing activities		(25,179	)		-			(53,580	)


CASH FLOWS FROM FINANCING ACTIVITIES

Due to bank		(14,282	)		-			-
Note payable		340,000			5,000			620,000
Common shares issued for cash, net		80,416			-			246,916

Net cash provided by financing activities		406,134			5,000			866,916

Net increase (decrease) in cash		37,739			(44,963	)		37,739
Cash - beginning balance		-			158,591			-

CASH ENDING BALANCE	$	37,739		$	113,628		$	37,739

Cash paid for:
Interest	$	4,668		$	-		$	9,943
Income taxes	$	-		$	-		$	-

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

ENGAGE MOBIITY, INC.

(a development stage company)

NOTES TO FINANCIAL STATEMENTS (Unaudited)

SEPTEMBER 30, 2013

NOTE 1 NATURE OF OPERATIONS

Engage Mobility, Inc. (the “Company”), is a development stage company incorporated on December 28, 2011 under the laws of the State of Florida as MarketKast Incorporated. On March 22, 2013, the Company changed its name to Engage Mobility, Inc. The Company intends to function as a provider of online video production, distribution, syndication and marketing services for business owners.

We are a development stage company and to date, we have received no material revenues from our operations. Initial operations have included organization, target market identification, marketing plans, and capital formation. A substantial portion of the Company’s activities has involved developing a business plan and establishing contacts and visibility in the marketplace.

The Company has adopted its fiscal year end to be June 30.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles (GAAP) for interim financial information and Rule 8.03 of Regulation SX. They do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included.

The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements of the Company as of June 30, 2013, and for the period from inception through June 30, 2013, including notes thereto.

NOTE 2 SUMMARY OF ACCOUNTING POLICIES

Basis of Presentation

The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Development Stage Company

The Company is a development stage company and is still devoting substantially all of its efforts on establishing the business, and therefore its planned principal operations have not commenced. Losses accumulated since inception, have been considered part of the Company’s development stage activities.

Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents. Bank overdrafts are presented in the financial statements under the caption “Due to Bank”.

Use of Estimates

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

Revenue Recognition

In general, the Company records revenue when persuasive evidence of an arrangement exists, services have been rendered or product delivery has occurred, the sales price to the customer is fixed or determinable, and collectability is reasonably assured. The following policies reflect specific criteria for the various revenues streams of the Company:

Revenue is recognized at the time the product is delivered or the service is performed. Where the Company has entered into a revenue sharing agreement with a third party, the Company will record its’ proportionate share of the revenue.

Deferred revenue is recorded for amounts received in advance of the time at which services are performed and included in revenue at the completion of the related services.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable are reported at their outstanding unpaid principal balances reduced by an allowance for doubtful accounts. The Company estimates doubtful accounts based on historical bad debts, factors related to specific customers' ability to pay and current economic trends. The Company writes off accounts receivable against the allowance when a balance is determined to be uncollectible.

Intangible Assets and Long Lived Assets

The Company makes reviews for the impairment of long-lived assets and certain identifiable intangibles whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount.

During January 2013 the Company entered into a licensing and development agreement with a third party to develop and integrate a mobile communication platform for a fee aggregating $73,000 of which $48,000 was paid through September 30, 2013, when performance benchmarks were reached. The final payment is due when the platform is complete. In addition to the development fee the Company will pay a monthly license fee based on the number of users. Amortization for the intangible asset will begin upon completion of the platform.

Property and Equipment

Depreciation of office and production equipment is provided for by the straight-line method over the estimated useful lives of the related assets. Equipment is currently being depreciated over a period of 5 years.

Fair value of financial instruments

The Company’s short-term financial instruments consist of cash and cash equivalents and accrued expenses. The carrying amounts of the financial instruments approximate fair value because of their short-term maturities. The Company does not hold or issue financial instruments for trading purposes nor does it hold or issue interest rate or leveraged derivative financial instruments. The carrying value of the Company’s long-term debt approximates fair value based on the terms and conditions at which the Company could obtain similar financing.

Income Taxes

Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.

All tax periods from inception remain open to examination by taxing authorities.

Stock-Based Compensation

The Company records the cost resulting from all share-based transactions in the financial statements. The Company applies a fair-value-based measurement in accounting for share-based payment transactions with employees and when the company acquires goods or services from non-employees in share-based payment transactions.

Net Income (Loss) Per Common Share

Basic earnings (loss) per share are calculated by dividing net income (loss) by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and dilutive common stock equivalents outstanding. During periods in which the Company incurs losses common stock equivalents, if any, are not considered, as their effect would be anti dilutive.

Recent Pronouncements

The Company does not believe that other recently issued accounting pronouncements will have a material impact on its financial statements.

NOTE 3 GOING CONCERN

While the Company is attempting to execute its development strategy, the Company’s cash position may not be sufficient to support the Company’s daily operations without significant financing. While the Company believes in the viability of its strategy to produce sales volume and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate sufficient revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern.

NOTE 4 ACCRUED EXPENSES

Accounts payable and accrued expenses consist of accruals from normal operations of the business. As of September 30, 2013 and 2012 the balances are $33,975 and $21,940.

NOTE 5 NOTE PAYABLE

During March 2012 the Company borrowed $15,000 pursuant to a note bearing interest at 10% per annum, payable interest only until March 1, 2015, when the principal balance is due.

During the year ended June 30, 2013, the Company borrowed an aggregate of $265,000 pursuant to notes bearing interest at 10% per annum and due 48 months from the dates of the notes, payable interest only until the due dates during the year ended June 30, 2017, when the principal is due.

During the period ended September 30, 2013, the Company borrowed $90,000 pursuant to notes bearing interest at 10% per annum and due 48 months from the dates of the notes, payable interest only until the due dates during August and September 2017, when the principal is due. In addition, the Company borrowed $250,000 pursuant to 36 month 10% loans from private investors. The $250,000 loans are secured by all of the Company’s assets and are convertible by the investors into the Company's current registered offering with $200,000 being convertible into the offering at a 20% discount to the offering price and $50,000 being convertible at a 50% discount to the offering price. In addition, the $250,000 debt includes warrants to purchase $250,000 in common shares for a three year period at a price equal to 125% of the share price of the offering.

NOTE 6 STOCKHOLDERS’ EQUITY

Common Stock includes 100,000,000 shares authorized at no par value.

During December 2011, the Company issued 20,000,000 shares of common stock for cash at $0.0025 per share for a total value of $50,000 to its founders.

From March through June 2012, the Company issued 126,500 shares of common stock for cash at $1.00 per share or a value of $126,500. The Company incurred $10,000 in costs associated with the private offering which have been charged against the proceeds of the offering.

During the period ended September 30, 2013, the Company issued 80,500 shares of common stock for cash aggregating $80,416. In addition, the Company issued 54,950 shares of common stock for services to be performed in the future. The shares were valued at the trading price of the shares on the date it was agreed that they would be issued of $100,000. The value of the shares will be amortized over the period the services are to be performed of 12 months. During the period ended September 30, 2013, $8,333 was charged to operations related to these shares.

During the period ended June 30, 2012, affiliates contributed services with a fair value of $4,000 to the Company which has been charged to operations during the period.

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

The following is management’s discussion and analysis of the consolidated financial condition and results of operations of Engage Mobility, Inc. (“Engage Mobility”, the “Company”, “we”, and “our”) for the three and nine month period ended September 30, 2013. The following information should be read in conjunction with the consolidated interim financial statements for the period ended September 30, 2013 and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q (this “Report”).

Overview

We were incorporated, under the name MarketKast, Inc., under the laws of the State of Florida on December 28, 2011 and we are a development stage company. On March 22, 2013, we filed Articles of Amendment to our Articles of Incorporation (the “Amendment”) to change our name from “MarketKast, Incorporated” to “Engage Mobility, Inc.” The Amendment was effective as of March 22, 2013. In connection with the name change, our trading symbol was changed from “MRKK” to “ENGA,” effective April 4, 2013.

We function as a provider of mobile and digital video marketing products and services. Through the sale of our Mobile Engagement System, we enable business owners to engage with new and existing customers with a turnkey mobile marketing solution. The Mobile Engagement System integrates an augmented reality browser and content with our proprietary cloud based mobile video delivery system, a mobile customer relationship manager and our Dynamic Data platform to create a full solution for business to market their products in the mobile environment. The Mobile Engagement System is sold to businesses under a “user based” model – so that the business pays us a monthly user fee based on the number of “engaged” users in their database at any given time.

In addition to this core product offering, we will offer to our clients additional products and services in order to assisting in growing their business, including our TargetKast and NewsKast products. Our TargetKast product is a proprietary product that offers our clients the opportunity to “push" video content to a targeted group of potential viewers based on certain selection criteria established by the client. Once the criteria is established by the client, their content will be delivered to a group of targeted viewers derived from our database of over 40,000,000 potential viewers. We also offer our video press release service, NewsKast, to companies who desire to couple video content within their news and information releases. NewsKast is a video news release service, which includes both conventional wire news release as well as additional distribution of news in video form through the various video sharing sites, or through our own NewsKast Video channel.

Recent Developments

In January 2013, we entered into a Technology License Agreement with Total Communicator Solutions, Inc. pursuant to which we are licensed, on a perpetual term, to use certain mobile augmented reality technology. We intend to integrate that technology into a mobile marketing system and launch that system during the first fiscal quarter of 2014.

In September 2013, we completed initial development and launch of our Mobile Engagement System. In conjunction therewith we launched our Engage Mobility mobile application as a free download in the Apple iTunes® and Google Play® stores. We have begun marketing and selling the system to clients as of September 2013.

In the period from inception (December 28, 2011) through September 30, 2013, we generated $66,669 in revenue and incurred net losses aggregating $684,580. As of September 30, 2013, we had total current assets of $176,507 and total current liabilities of $33,975.

Plan of Operation

We are a development stage company. Our activities have been primarily limited to business formation, strategic development, marketing, website and product development, negotiations with third party sales and channel partners, and capital raising activities. We have developed and begun to launch our initial suite of products including the Mobile Engagement System, as well as our Pay Per View, Pay Per Call, TargetKast and NewsKast digital video marketing products. However, we have only made nominal sales of these products to date. We are in the process of developing marketing initiatives to sell our products. We do not expect to begin realizing consistent revenue until 2014. As of September 30, 2013, we have taken the following steps to implement our business plan:

We entered into a Technology License Agreement for with Total Communicator Solutions, Inc. pursuant to which we licensed, on a perpetual term, certain mobile augmented reality technology. We have begun the development of Engage Mobile Augmented Reality (AR) browser, mobile application and back end Mobile Customer Relationship Manager (MCRM), with the goal of launching our Mobile AR Marketing system in 2014.

2.	We finished and launched our websites www.engagemobility.com and www.engagenow.com, and created our e-commerce platform to facilitate online sales of our products and services. We also created and published a number of marketing and informational videos regarding our products and services.

We created our branded YouTube channels www.youtube.com/marketkast and www.youtube.com/newskast and published our own marketing and informational videos on those channels in September 2012. We began to use our Video Search Engine Optimization (VSEO) process to drive traffic and viewership to our branded channels, resulting in over 80,000 view on our YouTube/MarketKast channel in the first ten days following its launch, and over 90,000 views on our YouTube/NewsKast channel in the first three days following launch, which we consider a successful market test of our VSEO process.

We launched our NewsKast video press release product in 2012. NewsKast is a video news release service, which includes both conventional wire news release as well as additional distribution of news in video form through the various video sharing sites, or through our own NewsKast Video channel. We can either use the client’s video content or assist the client in creating a video content about the news. As of September 30, 2013, we have only made nominal sales of our NewsKast product.

We developed and began the launch of our Performance Based Marketing System during the fourth quarter of 2012. Performance Based Marketing System allows our clients to utilize our services on a performance only basis. Within this system we have begun to launch three primary products, Pay Per Call, Pay Per View and TargetKast. Through Pay Per Call we assist our clients in setting up a branded video channel on either YouTube or Vimeo, and we use our marketing efforts and methodology to drive inbound telephone calls from potential customers for our client. We are then paid a fee based on the number, length and type of inbound calls that we generate. Our Pay Per View product is similar to our Pay Per Call product with the exception that we are paid a fee by our client each time their video content is viewed. Our TargetKast product involves us “pushing” video content on behalf of our clients to a targeted audience that is selected from our database of over 40 million potential viewers based on selection criteria determined by our clients, such as geographic, demographic or lifestyle traits. We have only achieved nominal sales of these products as of September 30, 2013.

We expect to launch a full roll out in the U.S. of our Mobile Engagement System. We expect to market the Mobile Engagement System through direct marketing via the internet, through trade shows and seminars, through the hiring of both national and local sales personnel, through channel partners, independent reps and telesales. Subject to availability of capital, we intend to implement all of these sales initiatives during the first half of 2014. This will involve hiring a national sales manager, a number of local sales managers and local sales representatives in up to 50 local markets, five to 15 telesales people, as well as associated staffs. The cost of marketing our Mobile Engagement System is estimated to be between $50,000 and $250,000 per month, but will be scaled in if and when capital is available.

We expect to continue to market our MarketKast suite of products as up-sales to our mobile AR marketing system. We plan to market these products through the same sales personnel and plans as listed above, and offer MarketKast as follow-on or add-on products and services. The costs associated with marketing MarketKast products and services are expected to be included within the marketing budget outlined in 1 above.

We have a current burn rate, as of September 30, 2013, of approximately $30,000 to $50,000 per month. It includes office rental expenses, payroll, insurance, marketing, travel, telephone, internet and other office expenses, legal and accounting expenses and other miscellaneous expenses including filing fees, transfer agent fees and other costs of being public.

Therefore, if we do not experience any income or obtain additional financing, we could expect to run out of capital sometime between November 2013 and January 2014. For this reason, if we do not experience any income in the first half of fiscal 2014, we will need to raise additional capital of between $50,000 and $60,000 per month, in order to continue our business. In addition, in order to fully implement our business plan, we will need to raise an additional $1,000,000 to $5,000,000 of capital for the purpose of initiating and ramping up marketing and sales efforts, hiring of sales personnel and for general working capital. This additional $1,000,000 to $5,000,000 of financing will need to be raised between October 2013 and January 2014 in order to effectively implement our business plan. It is not necessary that we receive such a capital infusion at any one time; we could implement our plan through the raising of at least $500,000 per quarter in the quarter 2 and quarter 3 of fiscal 2014. However, there is no assurance that we will be able to raise any capital in the future, or that capital will be available on terms acceptable to us.

Results of Operations

Comparison of the three months ended September 30, 2013 and 2012

Revenues

Since inception, our activities have been primarily limited to business formation, strategic development, marketing, website and product development, negotiations with third party sales and channel partners, and capital raising activities. We have conducted minimal operations during the three months ended September 30, 2013, and we have generated $40,435, as compared to $3,000 for the three months ended September 30, 2012.

Operating Expenses

During the three months ended September 30, 2013, we incurred general and administrative expenses of $236,083, and during the three months ended September 30, 2012 we incurred general and administrative expenses of $47,027. These general and administrative expenses consist of rent, insurance, professional fees, travel, employee compensation and other miscellaneous items.

Net Income and Loss

We had net loss of $233,316 for the three months ended September 30, 2013, compared to $47,512 for the period ended September 30, 2012. Our auditor has expressed doubt as to whether we will be able to continue to operate as a “going concern” due to the fact that the Company has had no material revenues since inception and will need to raise capital to further its operations.

Liquidity and Capital Resources

As of September 30, 2013, we had $37,739 of cash. Our primary uses of cash were for development and testing of products, marketing expenses, employee compensation, and general and administrative expenses. We have historically financed our operations through sale of common stock to our founders, private equity offering, and debt from third party lenders. The following trends are reasonably likely to result in a material decrease in our liquidity in both near and long term:

● An increase in working capital requirements;

● Addition of administrative and sales personnel as the business grows;

● Increases in advertising, public relations and sales promotions as we commence operations;

● Development of new customers and market initiation, and

● Increased cost of being a public company due to governmental compliance activities.

The following summarizes the key components of the Company’s cash flows for the three months ended September 30, 2013:

Cash flows used in operating activities	$	(343,216	)
Cash flows from investing activities	$	(25,179	)
Cash flows from financing activities	$	406,134
Net (increase) in cash and cash equivalents	$	(37,739	)

Cash flows used in investing activities consisted of the acquisition of intangibles of $24,000 and the acquisition of property and equipment of $1,179.

Cash flows provided by financing activities consisted of the proceeds from notes payable of $340,000 and a repayment of a bank overdraft of $14,282 and proceeds from common stock issuances of $80,416.

We have a current burn rate, as of September 2013, of approximately $30,000 to $50,000 per month. It includes office rental expenses, payroll, consulting fees, insurance, marketing, travel, telephone, internet and other office expenses, legal and accounting expenses and other miscellaneous expenses including filing fees, transfer agent fees and other costs of being public.

Therefore, if we do not experience any income or obtain additional financing, we could expect to run out of capital sometime between October 2013 and December 2013. For this reason, if we do not experience any income in the first half of fiscal 2014, we will need to raise additional capital of between $30,000 and $50,000 per month, in order to continue our business. In addition, in order to fully implement our business plan, we will need to raise an additional $1,000,000 to $10,000,000 of capital for the purpose of initiating and ramping up marketing and sales efforts, hiring of sales personnel and for general working capital. This additional $1,000,000 to $10,000,000 of financing will need to be raised in fiscal 2014 in order to effectively implement our business plan. However, there is no assurance that we will be able to raise any capital in the future, or that capital will be available on terms acceptable to us.

Off-Balance Sheet Arrangements

We do not have any 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, sales or expenses, results of operations, liquidity or capital expenditures.

Critical Accounting Policies

Use of Estimates

Loss Per Share

Income Taxes

All tax periods from inception remain open to examination by taxing authorities.

Fair Value of Financial Instruments

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in the accompanying financial statements, the Company had a deficit accumulated during the development stage of $451,264 and has no significant revenue generating operations. We have a current burn rate, as of September 2013, of approximately $30,000 to $50,000 per month. It includes office rental expenses, payroll, consulting fees, insurance, marketing, travel, telephone, internet and other office expenses, legal and accounting expenses and other miscellaneous expenses including filing fees, transfer agent fees and other costs of being public. Therefore, if we do not experience any income or obtain additional financing, we could expect to run out of capital sometime before December 2013. For this reason, if we do not experience any income in the first half of fiscal 2014, we will need to raise additional capital of between $30,000 and $50,000 per month, in order to continue our business. These conditions raise substantial doubt about its ability to continue as a going concern.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Smaller reporting companies are not required to provide the information required by this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s President, Chief Financial Officer, Secretary, Treasurer and Director, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in the reports that the Company 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, and that such information is accumulated and communicated to the Company’s management, including the Company’s CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure for the reasons discussed below.

Management's Annual Report on Internal Control Over Financial Reporting.

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our internal control system was designed to, in general, provide reasonable assurance to the Company’s management and board regarding the preparation and fair presentation of published financial statements, but because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of the Company’s internal control over financial reporting as of September 30, 2013. The framework used by management in making that assessment was the criteria set forth in the document entitled “ Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our President and Chief Financial Officer have determined and concluded that, as of September 30, 2013, the Company’s internal control over financial reporting were not effective.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control our financial reporting as of September 30, 2013, the Company determined that the following items constituted a material weakness:

●	The Company does not have an independent audit committee in place, which would provide oversight of the Company’s officers, operations and financial reporting function;

●	The Company’s accounting department, which consists of a limited number of personnel, does not provide adequate segregation of duties; and

●	The Company does not have effective controls over period end financial disclosure and reporting processes.

Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our board of directors. Management plans to take action and implementing improvements to our controls and procedures when our financial position permits.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to the permanent exemption of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal controls over financial reporting during the three month period ending September 30, 2013, or in other factors that could significantly affect these controls, that materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II: OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company may become involved in litigation relating to claims arising out of its operations in the normal course of business. We are not involved in any pending legal proceeding or litigation and, to the best of our knowledge, no governmental authority is contemplating any proceeding to which we are a party or to which any of our properties is subject, which would reasonably be likely to have a material adverse effect on the Company.

Item 1A. Risk Factors

Smaller reporting companies are not required to provide the information required by this item.

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

During the period ended September 30, 2013, the Company issued 80,500 shares of common stock for cash aggregating $80,416.

Also During the period ended September 30, 2013, the Company issued 54,950 shares of common stock for services to be performed in the future. The shares were valued at the trading price of the shares on the date it was agreed that they would be issued of $100,000.

The above issuances of shares are exempt from registration, pursuant to Section 4(2) of the Securities Act. These securities qualified for exemption under Section 4(2) of the Securities Act since the issuance securities by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of securities offered. We did not undertake an offering in which we sold a high number of securities to a high number of investors. In addition, these stockholders had the necessary investment intent as required by Section 4(2) since they agreed to and received share certificates bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these securities would not be immediately redistributed into the market and therefore not be part of a “public offering.” Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.

Item 3. Defaults Upon Senior Securities

Not Applicable.

Item 4. Mine Safety Disclosures

Note Applicable.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.		Description

31.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of Sarbanes Oxley Act of 2002
31.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of Sarbanes Oxley Act of 2002
32.1+		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of 2002
32.2+		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of 2002
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Schema
101.CAL		XBRL Taxonomy Calculation Linkbase
101.DEF		XBRL Taxonomy Definition Linkbase
101.LAB		XBRL Taxonomy Label Linkbase
101.PRE		XBRL Taxonomy Presentation Linkbase

+ In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are furnished and not filed.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

Engage Mobility, Inc.

By:	/s/ James S. Byrd, Jr.
	James S. Byrd, Jr.
	Chief Executive Officer,
	(Duly Authorized and Principal Executive Officer)

Dated: November 19, 2013

Attached files

Engage Mobility, Inc Reports

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