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2012
2012-09-30
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IMMEDIATEK INC
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<div> <div><!--StartFragment--> <div style="DISPLAY: block; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt; text-align: left; TEXT-INDENT: 0pt"> <font style="DISPLAY: inline; FONT-WEIGHT: bold">Description of Business:</font> Officeware provides online back-up, file storage and other web-based services for individuals, businesses and governmental organizations. Officeware offers three primary services. First, Officeware operates the website FilesAnywhere.com, primarily designed for individuals and small businesses to allow them to establish a self-service account, enabling them to, among other things, store files on Officeware servers, share and collaborate on documents with other people online, and backup their computers to FilesAnywhere cloud storage. Second, for larger business users, Officeware offers three customized products, called the FilesAnywhere Private Site, Dedicated Server, and Enterprise Server. These corporate offerings are designed to meet the specific requirements of each business customer or organization. The Private Site, Dedicated Server, and Enterprise Server products provide flexible cloud storage and unlimited scalability for users, groups and internet applications, along with client-specific branding and web interfaces, customer data interfaces, and tailored security for mixed corporate environments. Third, Officeware also provides specialized information technology services related to the development of web based databases and data storage on a contract basis for clients.</div> <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /> </div> <div style="DISPLAY: block; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt; text-align: left; TEXT-INDENT: 0pt"> Officeware's operations are primarily based in Bedford, Texas and additionally, Officeware has one employee and several consultants performing research and development in India. The cost of the India operations was approximately $44,366 and $221,456 for the three and nine months ended September 30, 2012 and approximately $94,704 and $288,925 for the three and nine months ended September 30, 2011. These costs are included in research and development expenses in Immediatek's consolidated statement of operations.</div> <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /> </div> <!--EndFragment--></div> </div>
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<div> <div><!--StartFragment--> <div style="DISPLAY: block; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt; text-align: left; TEXT-INDENT: 0pt"> <font style="DISPLAY: inline; FONT-WEIGHT: bold">Basis of Presentation:</font> The accompanying unaudited condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and formatted disclosures normally included in financial statements prepared in accordance with Generally Accepted Accounting Principles ("GAAP") have been omitted pursuant to SEC rules and regulations. These condensed consolidated financial statements include the accounts of Immediatek's wholly-owned subsidiaries, Officeware, DiscLive, Inc. and IMKI Ventures, Inc. (collectively, the "Company"). All significant intercompany accounts and transactions have been eliminated in these condensed consolidated financial statements. The Company follows the Financial Accounting Standard Board's Accounting Standards Codification (the "Codification" or "ASC"). The Codification is the single source of authoritative accounting principles applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP.</div> <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /> </div> <div style="DISPLAY: block; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt; text-align: left; TEXT-INDENT: 0pt"> The Company's condensed consolidated balance sheet at September 30, 2012 and condensed consolidated statements of operations for the three and nine months ended September 30, 2012 and 2011 and condensed consolidated statements of cash flows for the nine months ended September 30, 2012 and 2011 are unaudited. Certain accounts have been reclassified to conform to the current period's presentation. In the opinion of management, these financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments necessary for the fair presentation of the Company's financial position, results of operations and cash flows. These adjustments were of a normal, recurring nature. The results of operations for the periods presented in this Quarterly Report on Form 10-Q are not necessarily indicative of the results that may be expected for the entire year. Additional information is contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which was filed with the SEC on March 30, 2012 and should be read in conjunction with this Quarterly Report on Form 10-Q.</div> <!--EndFragment--></div> </div>
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<div> <div><!--StartFragment--> <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /> </div> <div style="DISPLAY: block; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt; text-align: left; TEXT-INDENT: 0pt"> <font style="DISPLAY: inline; FONT-WEIGHT: bold">Description of Business:</font> Officeware provides online back-up, file storage and other web-based services for individuals, businesses and governmental organizations. Officeware offers three primary services. First, Officeware operates the website FilesAnywhere.com, primarily designed for individuals and small businesses to allow them to establish a self-service account, enabling them to, among other things, store files on Officeware servers, share and collaborate on documents with other people online, and backup their computers to FilesAnywhere cloud storage. Second, for larger business users, Officeware offers three customized products, called the FilesAnywhere Private Site, Dedicated Server, and Enterprise Server. These corporate offerings are designed to meet the specific requirements of each business customer or organization. The Private Site, Dedicated Server, and Enterprise Server products provide flexible cloud storage and unlimited scalability for users, groups and internet applications, along with client-specific branding and web interfaces, customer data interfaces, and tailored security for mixed corporate environments. Third, Officeware also provides specialized information technology services related to the development of web based databases and data storage on a contract basis for clients.</div> <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /> </div> <div style="DISPLAY: block; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt; text-align: left; TEXT-INDENT: 0pt"> Officeware's operations are primarily based in Bedford, Texas and additionally, Officeware has one employee and several consultants performing research and development in India. The cost of the India operations was approximately $44,366 and $221,456 for the three and nine months ended September 30, 2012 and approximately $94,704 and $288,925 for the three and nine months ended September 30, 2011. These costs are included in research and development expenses in Immediatek's consolidated statement of operations.</div> <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /> </div> <div style="DISPLAY: block; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt; text-align: left; TEXT-INDENT: 0pt"> <font style="DISPLAY: inline; FONT-WEIGHT: bold">Basis of Presentation:</font> The accompanying unaudited condensed consolidated financial statements of the Company have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Certain information and formatted disclosures normally included in financial statements prepared in accordance with Generally Accepted Accounting Principles ("GAAP") have been omitted pursuant to SEC rules and regulations. These condensed consolidated financial statements include the accounts of Immediatek's wholly-owned subsidiaries, Officeware, DiscLive, Inc. and IMKI Ventures, Inc. (collectively, the "Company"). All significant intercompany accounts and transactions have been eliminated in these condensed consolidated financial statements. The Company follows the Financial Accounting Standard Board's Accounting Standards Codification (the "Codification" or "ASC"). The Codification is the single source of authoritative accounting principles applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP.</div> <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /> </div> <div style="TEXT-INDENT: 0pt; DISPLAY: block"> <div style="DISPLAY: block; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt; text-align: left; TEXT-INDENT: 36pt"> The Company's condensed consolidated balance sheet at September 30, 2012 and condensed consolidated statements of operations for the three and nine months ended September 30, 2012 and 2011 and condensed consolidated statements of cash flows for the nine months ended September 30, 2012 and 2011 are unaudited. Certain accounts have been reclassified to conform to the current period's presentation. In the opinion of management, these financial statements have been prepared on the same basis as the audited consolidated financial statements and include all adjustments necessary for the fair presentation of the Company's financial position, results of operations and cash flows. These adjustments were of a normal, recurring nature. The results of operations for the periods presented in this Quarterly Report on Form 10-Q are not necessarily indicative of the results that may be expected for the entire year. Additional information is contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which was filed with the SEC on March 30, 2012 and should be read in conjunction with this Quarterly Report on Form 10-Q.</div> <br /> </div> <div style="DISPLAY: block; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt; text-align: left; TEXT-INDENT: 0pt"> <font style="DISPLAY: inline; FONT-WEIGHT: bold">Net Loss per Share:</font> Net loss was used in the calculation of both basic and diluted loss per share. The weighted average number of shares of common stock outstanding was the same for calculating both basic and diluted loss per share. Series A and Series B Convertible Preferred Stock convertible into 14,794,999 shares of common stock outstanding at September 30, 2012 and September 30, 2011 were not included in the computation of diluted loss per share, as the effect of their inclusion would be anti-dilutive.</div> <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /> </div> <div style="DISPLAY: block; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt; text-align: left; TEXT-INDENT: 0pt"> <font style="DISPLAY: inline; FONT-WEIGHT: bold">Comprehensive Loss:</font> For all periods presented, comprehensive loss is equal to net loss.</div> <!--EndFragment--></div> </div>
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<div> <div><!--StartFragment--> <div style="DISPLAY: block; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt; text-align: left; TEXT-INDENT: 0pt"> NOTE 2 - RELATED PARTY TRANSACTIONS</div> <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /> </div> <div style="DISPLAY: block; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt; text-align: left; TEXT-INDENT: 0pt"> <font style="FONT-STYLE: italic; DISPLAY: inline; FONT-WEIGHT: bold">Management Services Agreement.</font> <font style="DISPLAY: inline">On December 31, 2009, the Company entered into a Management Services Agreement with Radical Ventures L.L.C., an affiliate of Radical Holdings LP. Pursuant to this Management Services Agreement, personnel of Radical Ventures L.L.C. will provide certain management services to the Company, including, among others, legal, financial, marketing and technology. These services are provided to us at a cost of $3,500 per month; however, the Company will not be required to pay these fees or reimburse expenses and, accordingly, will account for these costs of services and expenses as deemed contributions to the Company. This agreement was extended on March 17, 2011, to be effective as of December 31, 2010.</font></div> <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /> </div> <div style="DISPLAY: block; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt; text-align: left; TEXT-INDENT: 0pt"> This agreement may be terminated upon 30 days' written notice by Radical Ventures L.L.C. for any reason or by the Company for gross negligence. The Company also agreed to indemnify and hold harmless Radical Ventures L.L.C. for its performance of these services, except for gross negligence and willful misconduct. Further, the Company limited Radical Ventures L.L.C.'s maximum aggregate liability for damages under this agreement to the amounts deemed contributed to the Company by virtue of this agreement during twelve months prior to that cause of action.</div> <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /> </div> <div style="DISPLAY: block; FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; MARGIN-LEFT: 0pt; MARGIN-RIGHT: 0pt; text-align: left; TEXT-INDENT: 0pt"> In March 2012, Mark Cuban made a donation of $40,000 to the organization which facilitates the St. Patrick's Day parade held annually in Dallas, Texas. In exchange for the donation, Mr. Cuban asked that FilesAnywhere be, and FilesAnywhere was, recognized as a sponsor of the parade. This donation was deemed to be an equity contribution on behalf of Officeware Corporation paid by Immediatek Inc.'s indirect majority shareholder, Mark Cuban.</div> <!--EndFragment--></div> </div>
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