0001214659-12-005042.txt : 20121114 0001214659-12-005042.hdr.sgml : 20121114 20121114125740 ACCESSION NUMBER: 0001214659-12-005042 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 11 CONFORMED PERIOD OF REPORT: 20120930 FILED AS OF DATE: 20121114 DATE AS OF CHANGE: 20121114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMMEDIATEK INC CENTRAL INDEX KEY: 0001084182 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 860881193 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-26073 FILM NUMBER: 121202682 BUSINESS ADDRESS: STREET 1: 3301 AIRPORT FREEWAY, SUITE 200 CITY: BEFORD STATE: TX ZIP: 76021 BUSINESS PHONE: 888-661-6565 MAIL ADDRESS: STREET 1: 3301 AIRPORT FREEWAY, SUITE 200 CITY: BEFORD STATE: TX ZIP: 76021 FORMER COMPANY: FORMER CONFORMED NAME: MODERNGROOVE ENTERTAINMENT INC DATE OF NAME CHANGE: 20001219 FORMER COMPANY: FORMER CONFORMED NAME: BARRINGTON LABORATORIES INC DATE OF NAME CHANGE: 19990430 10-Q 1 f11512010q.htm FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2012 f11512010q.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

 
þ
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2012                                     
 
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _______________to  _______________

 Commission file number:   000-26073                                                                
 
IMMEDIATEK, INC.
(Exact name of registrant as specified in its charter)
 
 
Nevada 86-0881193
(State or other jurisdiction of incorporation or
organization)
(IRS Employer Identification No.)
 
    3301 Airport Freeway, Suite 200
    Bedford, Texas 
76021
   (Address of principal executive offices)      (Zip code)
 
(888) 661-6565
(Issuer’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 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 þ 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 þ 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.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer o Accelerated filer o
   
Non-accelerated filer o (Do not check if a smaller reporting company)       Smaller reporting company þ
                                
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)   Yes o No þ

As of November 2, 2012, the issuer had 15,865,641 shares of common stock outstanding.
 


 
 

 
 
IMMEDIATEK, INC.


 
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Unless the context otherwise indicates, all references in this Quarterly Report on Form 10-Q to the “Company,” “Immediatek,” “Officeware,” “DiscLive,” “IMKI Ventures,” “we,” “us,” “our” or “ours” or similar words are to Immediatek, Inc. and its direct, wholly-owned subsidiaries, Officeware Corporation, DiscLive, Inc. or IMKI Ventures, Inc.  Accordingly, there are no separate financial statements for Officeware Corporation, DiscLive, Inc. or IMKI Ventures, Inc.


This Quarterly Report on Form 10-Q contains registered trademarks and service marks owned or licensed by entities and persons other than us.


Market and industry data and other statistical information and forecasts used throughout this Quarterly Report on Form 10-Q are based on independent industry publications, government publications and reports by market research firms or other published independent sources.  Some data also is based on our good faith estimates, which are derived from our review of internal surveys, as well as independent sources.  Forecasts are particularly likely to be inaccurate, especially over long periods of time.


This Quarterly Report on Form 10-Q and the materials incorporated by reference into this Quarterly Report on Form 10-Q include “forward-looking statements” intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995.  These forward-looking statements generally can be identified as such because the context of the statement includes words such as “may,” “estimate,” “intend,” “plan,” “believe,” “expect,” “anticipate,” “will,” “should” or other similar expressions.  Similarly, statements in this Quarterly Report on Form 10-Q that describe our objectives, plans or goals also are forward-looking statements.  These statements include those made on matters such as our financial condition, litigation, accounting matters, our business, our efforts to grow our business and increase efficiencies, our efforts to use our resources judiciously, our efforts to implement new financial software, our liquidity and sources of funding and our capital expenditures.  All forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.  The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this report.  We assume no obligation to update any forward-looking statements.  Certain factors that could cause actual results to differ include, among others:

 
·
our inability to continue as a going concern;
 
 
·
our history of losses, which may continue;
 
 
·
our inability to utilize the funds received in a manner that is accretive;
 
 
·
our inability to generate sufficient funds from operating activities to fund operations;
 
 
·
difficulties in developing and marketing new products;
 
 
·
our inability to prevent or minimize interruptions in our service and interruptions to customer data access, and any related impact on our reputation;
 
 
·
our inability to retain existing recurring customers and attract new recurring customers;
 
 
·
our inability to execute our growth and acquisition strategy;
 
 
 
·
our dependence on third-party contractors, platforms, software, websites, and technologies used in the creation and maintenance of the FilesAnywhere service; and
 
 
·
general economic conditions, including among others, continuing high unemployment.
 
For a discussion of these and other risks and uncertainties that could cause actual results to differ materially from those contained in our forward-looking statements, please refer to “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which was filed with the Securities and Exchange Commission, or SEC, on March 30, 2012.

In addition, these forward-looking statements are necessarily dependent upon assumptions and estimates that may prove to be incorrect.  Accordingly, while we believe that the plans, intentions and expectations reflected in these forward-looking statements are reasonable, we cannot assure you that these plans, intentions or expectations will be achieved.  The forward-looking statements included in this report, and all subsequent written and oral forward-looking statements attributable to us or persons acting on our behalf, are expressly qualified in their entirety by the risk factors and cautionary statements discussed in our filings under the Securities Act of 1933 and the Securities Exchange Act of 1934.  We undertake no obligation to update any forward-looking statements to reflect future events or circumstances.
 
 
 
 
 
 
 



Immediatek, Inc.
 
 
             
             
   
September 30,
   
December 31,
 
   
2012
   
2011
 
             
Current assets:
           
Cash
  $ 857,957     $ 1,212,742  
Accounts receivable, net
    242,294       185,496  
Prepaid expenses and other current assets
    96,558       46,609  
Total current assets
    1,196,809       1,444,847  
                 
Fixed assets, net
    652,474       522,805  
Intangible assets, net
    1,073,907       1,264,854  
Goodwill
    766,532       766,532  
Other assets
    24,929       8,648  
                 
Total assets
  $ 3,714,651     $ 4,007,686  
                 
Current liabilities:
               
Accounts payable
  $ 180,528     $ 58,856  
Accrued liabilities
    189,747       187,329  
Deferred revenue
    855,387       759,330  
Current portion of capital lease obligations
    -       14,456  
Total liabilities
    1,225,662       1,019,971  
                 
Commitments and contingencies
               
Series A convertible preferred stock (conditionally redeemable); $0.001 par value
               
4,392,286 authorized, issued and outstanding; redemption/liquidation
               
preference of $3,000,000
    3,000,000       3,000,000  
Series B convertible preferred stock (conditionally redeemable); $0.001 par value
               
69,726 authorized, issued and outstanding; redemption/liquidation
               
preference of $500,000
    500,000       500,000  
Stockholders' deficit:
               
Common stock, $0.001 par value, 500,000,000 shares authorized, 15,865,641
               
and 535,321 shares issued and outstanding
    15,865       15,865  
Additional paid in capital
    5,303,272       5,231,772  
Accumulated deficit
    (6,330,148 )     (5,759,922 )
Total stockholders' deficit
    (1,011,011 )     (512,285 )
                 
Total liabilities, preferred stock and stockholders' deficit
  $ 3,714,651     $ 4,007,686  

See accompanying notes to unaudited consolidated financial statements
 
 
Immediatek, Inc.
 
 
                         
   
For the Three Months Ended
September 30,
   
For the Nine Months Ended
September 30,
 
   
2012
   
2011
   
2012
   
2011
 
                         
Revenues
  $ 830,358     $ 790,051     $ 2,425,202     $ 2,294,022  
Cost of revenues
    (316,116 )     (268,010 )     (877,264 )     (745,050 )
Gross margin
    514,242       522,041       1,547,938       1,548,972  
Expenses:
                               
Research and development
    242,847       293,563       717,126       737,869  
Sales and marketing
    151,972       108,676       425,287       282,810  
General and administrative
    205,044       209,148       656,771       653,907  
Non-cash consulting expense-related party
    10,500       10,500       71,500       31,500  
Depreciation and amortization
    82,210       92,338       248,484       256,591  
Total expenses
    692,573       714,225       2,119,168       1,962,677  
Net operating loss
    (178,331 )     (192,184 )     (571,230 )     (413,705 )
Other income (expense):
                               
Other income
    -       24       -       24  
Interest income
    407       629       1,624       1,190  
Interest expense
    (76 )     (1,637 )     (560 )     (3,762 )
Total other income (expense)
    331       (984 )     1,064       (2,548 )
Net loss
  $ (178,000 )   $ (193,168 )   $ (570,166 )   $ (416,253 )
Weighted average number of common shares
                               
outstanding - basic and fully diluted
    15,865,641       15,865,641       15,865,641       15,865,641  
Basic and diluted loss per common share
                               
attributable to common stockholders
  $ (0.01 )   $ (0.01 )   $ (0.04 )   $ (0.03 )
 
See accompanying notes to unaudited consolidated financial statements
 
 
Immediatek, Inc.
 
 
             
   
For the Nine Months Ended September 30,
 
   
2012
   
2011
 
             
Cash flows from operating activities
           
Net loss
  $ (570,166 )   $ (416,253 )
Adjustments to reconcile net loss to net cash provided
               
by (used in) operating activities:
               
Depreciation and amortization
    336,339       364,515  
Non-cash consulting fees - related party
    71,500       31,500  
Adjustments to reconcile net loss to net cash
  provided by (used in) operating activities:
               
Accounts receivable
    (56,798 )     (51,700 )
Prepaid expenses and other assets
    (66,230 )     44,915  
Accounts payable
    121,612       (62,011 )
Accrued liabilities
    2,418       49,544  
Deferred revenue
    96,057       149,464  
Net cash provided by (used in) operating activities
    (65,268 )     109,974  
                 
Cash flows from investing activities
               
Purchase of fixed assets
    (275,061 )     (207,042 )
Net cash used in investing activities
    (275,061 )     (207,042 )
                 
Cash flows from financing activities
               
Payments on capital leases
    (14,456 )     (41,280 )
Net cash used in financing activities
    (14,456 )     (41,280 )
                 
Net change in cash
    (354,785 )     (138,348 )
Cash at the beginning of the period
    1,212,742       1,592,684  
Cash at the end of the period
  $ 857,957     $ 1,454,336  
                 
                 
Supplemental disclosures:
               
Interest paid
  $ 560     $ 3,762  

See accompanying notes to unaudited consolidated financial statements
 
 

Description of Business:  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. 

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.

Basis of Presentation:  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.

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.

Net Loss per Share:  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.

Comprehensive Loss:  For all periods presented, comprehensive loss is equal to net loss.
 
 
NOTE 2 – RELATED PARTY TRANSACTIONS

Management Services Agreement.  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.

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.

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.

 
 
 
 
 


Overview
 
The following Management’s Discussion and Analysis, or MD&A, is intended to aid the reader in understanding us, our operations and our present business environment.  MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the notes accompanying those financial statements, which are included in this Quarterly Report on Form 10-Q.  MD&A includes the following sections:
 
 
·
Our Business – a general description of our business, our objectives, our areas of focus and the challenges and risks of our business.
 
 
·
Critical Accounting Policies and Estimates – a discussion of accounting policies that require critical judgments and estimates.
 
 
·
Operations Review – an analysis of our consolidated results of operations for the periods presented in this Quarterly Report on Form 10-Q.
 
 
·
Liquidity, Capital Resources and Financial Position – an analysis of our cash flows and debt and contractual obligations; and an overview of our financial condition.
 
Our Business
 
General
 
Immediatek is a Nevada corporation.  Our principal executive offices are located at 3301 Airport Freeway, Suite 200, Bedford, Texas 76021, and our telephone number is (888) 661-6565.  On April 1, 2010, Immediatek acquired Officeware by merger.  As a result of such merger, Immediatek became the sole shareholder of Officeware and Officeware shareholders received 12,264,256 shares of Immediatek common stock for all of the outstanding shares of stock of Officeware.  Radical Investments LP, an affiliate of Radical Holdings LP, owned 24.6% of the Officeware common stock.  Radical Holdings LP owns the Company’s Series A and Series B preferred stock.  In addition, in connection with the merger Immediatek issued and sold, and Radical Holdings LP, Darin Divinia, Dawn Divinia, Robert Hart, Kimberly Hart and Martin Woodall collectively purchased, 3,066,064 shares of Immediatek common stock for an aggregate purchase price of $1.0 million, or approximately $0.33 per share.  Due to the merger, it was determined that the Company ceased to be in the development stage as of April 1, 2010.

Currently, the Company primarily operates in one business segment: e-commerce.  Our services and products are primarily offered through Officeware.  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.
 
Officeware’s operations are primarily based in Bedford, Texas and additionally, Officeware has one employee and several consultants performing research and development in India.
 

 
As a result of services provided to larger business users, our business can depend on one or a few major customers which could potentially expose the Company to concentration of credit risk.  Our revenue and receivables are comprised principally of amounts due from customers throughout the United States.

History of Operating Losses
 
The following tables present our net loss and cash provided by or used in operating activities for the periods indicated.
 
 
   
For the Three Months Ended September 30,
 
   
2012
   
2011
 
   
(unaudited)
   
(unaudited)
 
Net loss
  $ ( 178,000 )   $ (193,168 )
Net cash  used in operating activities
  $ (20,435 )   $ (207,571 )
 
   
For the Nine Months Ended September 30,
 
    2012     2011  
   
(unaudited)
   
(unaudited)
 
Net loss
  $ ( 570,166 )   $ (416,253 )
Net cash provided by (used in) operating activities
  $ (65,268 )   $ 109,974  


Our existence and operations are dependent upon our ability to generate sufficient funds from operations to fund operating activities.

We funded our operations during the three and nine months ended September 30, 2012, primarily from the income generated by Officeware and the sale of 3,066,064 shares of Company common stock for an aggregate purchase price of $1.0 million on April 1, 2010.  Management estimates that the Company will generate sufficient funds from operations to fund future operating activities, though the Company anticipates that any funds generated would be reinvested into the Company through our increased investment in infrastructure, marketing, sales operations, and research and development.
 
Our Objectives and Areas of Focus
 
Officeware – Increase Users.  We are focused on increasing the number of users of the various online back-up, file storage and other web-based services for individuals, businesses and governmental organizations offered through Officeware.  We may pursue aggressive advertising campaigns or other promotions primarily aimed at new users.  Additionally, we are focusing on efficiently integrating the Officeware business with our business.
 
Acquisitions.  In addition to the Officeware acquisition which was consummated on April 1, 2010, we may identify and pursue additional potential acquisition candidates to support our strategy of growing and diversifying our business through selective acquisitions. No assurances can be given, however, that we will be successful in identifying any potential targets and, when identified, consummating their acquisition.
 
Challenges and Risks
 
Operating in this area provides unique opportunities; however, challenges and risks accompany those opportunities. Our management has identified the following material challenges and risks that will require substantive attention from our management (see “Liquidity and Capital Resources and Financial Position—Liquidity” beginning on page 14).
 
Utilizing Funds on Hand in a Manner that is Accretive. If we do not manage our assets aggressively and apply available capital judiciously, we may not generate sufficient cash from our operating activities to fund our operations going forward, which would require us to seek additional funding in the future.
 
 
Growing Users. In order to be successful with the products and services offered through Officeware, we will be required to attract new customers and deepen the current customer relationships which we currently have.  Our largest clients require customized solutions, which in turn requires us to anticipate their needs.
 
Competition. There are companies in this industry that have far more financial resources and a larger market share than us. In order to compete with these companies, we will be required to be innovative and create more attractive functions and features.
 
Additionally, see “Risk Factors” 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.
 
Challenges and risks, including those described above, if not properly addressed or managed, may have a material adverse effect on our business. Our management, however, is endeavoring to properly manage and address these challenges and risks.
 

Critical Accounting Policies and Estimates
 
Our condensed consolidated financial statements are prepared in accordance with GAAP in the United States of America, which requires management to make estimates, judgments and assumptions with respect to the amounts reported in the condensed consolidated financial statements and in the notes accompanying those financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles, however, have been condensed or omitted pursuant to the rules and regulations promulgated by the SEC. We believe that the most critical accounting policies and estimates relate to the following:
 
 
·
Convertible Securities.  From time to time, we have issued, and in the future may issue, convertible securities with beneficial conversion features. We account for these convertible securities in accordance with ASC Topic 470, Beneficial Conversion Feature.
 
 
·
Revenue Recognition.  Officeware generates revenue primarily from monthly fees for the services and products that it offers.  While revenues for Officeware’s FilesAnywhere.com product are often received in advance of providing the applicable service, the Company defers recognizing such revenues until the service has been performed.  Revenues for Officeware’s custom products for large enterprises are often received after such services are provided.  The Company recognizes such revenues when service has been provided and collection is reasonably assured.
 
While our estimates and assumptions are based upon our knowledge of current events and actions we may undertake in the future, actual results may ultimately differ from those estimates and assumptions.
 
 
Operations Review
 
The Three Months Ended September 30, 2012 Compared to
the Three Months Ended September 30, 2011


   
For the Three Months Ended September  30,
   
2012 vs. 2011
 
   
2012
   
2011
   
Fav/(Unfav)
Variance
   
% Variance
 
                         
Revenues
  $ 830,358     $ 790,051     $ 40,307       5.10 %
Cost of revenues
    (316,116 )     (268,010 )     (48,106 )     (17.95 %)
Gross margin
    514,242       522,041       (7,799 )     (1.49 %)
Expenses:
                               
Research and development
    242,847       293,563       50,716       17.28 %
Sales and marketing
    151,972       108,676       (43,296 )     (39.84 %)
General and administrative
    205,044       209,148       4,104       1.96 %
Non-cash consulting expense-related party
    10,500       10,500       -       -  
Depreciation and amortization
    82,210       92,338       10,128       10.97 %
Total expenses
    692,573       714,225       21,652       3.03 %
Net operating loss
    (178,331 )     (192,184 )     13,853       7.21 %
Other income (expense):
                               
Other income
    -       24       (24 )     (100.00 %)
Interest income
    407       629       (222 )     (35.29 %)
Interest expense
    (76 )     (1,637 )     1,561       95.36 %
Net loss
  $ (178,000 )   $ (193,168 )   $ 15,168       7.85 %
Weighted average number of common shares
                               
outstanding - basic and fully diluted
    15,865,641       15,865,641       -       -  
Basic and diluted loss per common share
                               
attributable to common stockholders
  $ (0.01 )   $ (0.01 )     -       -  

 
The Nine Months Ended September 30, 2012 Compared to
the Nine Months Ended September 30, 2011


                         
   
For the Nine Months Ended September 30,
   
2012 vs. 2011
 
   
2012
   
2011
   
Fav/(Unfav) Variance
   
% Variance
 
                         
Revenues
  $ 2,425,202     $ 2,294,022     $ 131,180       5.72 %
Cost of revenues
    (877,264 )     (745,050 )     (132,214 )     (17.75 %)
Gross margin
    1,547,938       1,548,972       (1,034 )     (0.07 %)
Expenses:
                               
Research and development
    717,126       737,869       20,743       2.81 %
Sales and marketing
    425,287       282,810       (142,477 )     (50.38 %)
General and administrative
    656,771       653,907       (2,864 )     (0.44 %)
Non-cash consulting expense-related party
    71,500       31,500       (40,000 )    
(126.98
 %)
Depreciation and amortization
    248,484       256,591       8,107       3.16 %
Total expenses
    2,119,168       1,962,677       (156,491 )     (7.97 %)
Net operating loss
    (571,230 )     (413,705 )     (157,525 )     (38.08 %)
Other income (expense):
                               
Other income
    -       24       (24 )     (100.00 %)
Interest income
    1,624       1,190       434       36.47 %
Interest expense
    (560 )     (3,762 )     3,202       85.11 %
Net loss
  $ (570,166 )   $ (416,253 )   $ (153,913 )     (36.98 %)
Weighted average number of common shares
                               
outstanding - basic and fully diluted
    15,865,641       15,865,641       -       -  
Basic and diluted loss per common share
                               
attributable to common stockholders
  $ (0.04 )   $ (0.03 )   $ (0.01 )     (100.00 %)
 
Revenues and Cost of Revenues

Revenues and Cost of Revenues.  Revenues have increased for the three and nine month periods ended September 30, 2012 compared to the three and nine month period ended September 30, 2011 as we continue to attract users and rollout enhancements to our product offering.  We are actively working on additions and improvements to our FilesAnywhere product that we expect to result in increased users and, consequently, increased sales.  No assurances, however, can be given that we will be able to attract a significant number of additional users or sales.  Demand for our online storage solutions is sensitive to price. Many factors, including our advertising, customer acquisition and technology costs, and our current and future competitors’ pricing and marketing strategies, can significantly affect our pricing strategies. Certain of our competitors offer, or may in the future offer, lower-priced or free products or services that compete with our solutions.  There can be no assurance that we will not be forced to engage in price-cutting initiatives, or to increase our advertising and other expenses to attract and retain customers in response to competitive pressures, either of which could have a material adverse effect on our revenue and operating results.
 
Cost of revenues also increased as we are still developing the base infrastructure and service support for our customers in order to efficiently scale our business.  We are actively working to establish a business model which is able to more efficiently translate growth in revenues directly into growth in profit margins.
 
 
Research and Development.  Research and development expenses decreased for the three and nine month period ended September 30, 2012, as compared to the three and nine month period ended September 30, 2011 due to the payment of recruiting fees paid in 2011.  These recruiting fees were for the hiring of two key positions on our R&D team. We also had a reduction in the labor costs associated with R&D due to the loss of two employees late in 2011, and therefore are seeing the associated payroll expense savings in 2012.
 
Sales and Marketing.  Sales and Marketing expenses increased compared to the same three and nine month periods last year as we have added increased staffing to that function.  While we anticipate that we will continue to grow our sales and marketing function, our challenge will be to ensure that these additions result in increases to our revenues.  No assurances can be given that these additions will create an increase in revenue.

General and Administrative Expense.  General and administrative expense did not have a material change on either a quarter or a nine month comparative basis.

Non-Cash Consulting Expense – Related Party. Non-cash consulting expense – related party increased in the nine months ended September 30, 2012 verses 2011 due to a donation of $40,000 from Mark Cuban 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.
 
Depreciation and Amortization.  Depreciation and Amortization expense did not have a material change on either a three month or nine month comparison basis.
 
Liquidity and Capital Resources and Financial Position

General
 
On April 1, 2010, we closed the merger with Officeware and stock sale described in “Note 3 – Merger with Officeware Corporation” and “Note 4 – Issuance of Common Stock” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2012.

We funded our operations during the three and nine months ended September 30, 2012, primarily from the income generated by Officeware and the sale of 3,066,064 shares of Company common stock for an aggregate purchase price of $1.0 million on April 1, 2010  As of September 30, 2012, we had $857,957 in cash, which management anticipates will sustain our operations.  Management anticipates that the operating cash flows of the Company will be positive for the fiscal year ending December 31, 2012.  However, no assurances can be given that we will ever achieve profitability.  If we need to seek additional funds, our ability to obtain financing will depend, among other things, on our development efforts, business plans, operating performance and condition of the capital markets at the time we seek financing.  No assurances can be given that additional financing will be available to us on favorable terms when required, or at all.  If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of our common stock, and our stockholders may experience dilution.
 
Our goal is to grow the products and services offered through Officeware, which we expect will generate sufficient revenue to support our operations.  No assurances, however, can be given that these lines of business will generate sufficient operating funds to support our operating activities.  In addition, we are exploring whether other companies may have interest in utilizing our technology to deliver their content and allow for interactivity with their customers or users across these various platforms.

We may also pursue various acquisition targets that could provide us with operating funds to support our activities. In the event that we acquire a target, depending on the nature of that target, we may require additional funds to consummate the acquisition or support our operations going forward. No assurances, however, can be given that we will be able to identify a potential target, consummate the acquisition of the target and, if consummated, integrate the target company and realize funds from operations.
 
 
Operating Activities.  Cash used in operations was $65,268 for the nine months ended September 30, 2012, as compared to cash provided by operations in the amount of $109,974 for the nine months ended September 30, 2011. The significant change in cash used in operations from the prior period was primarily attributed to a larger net loss and an increase in accounts receivable.  Other factors attributing to the cash used in operations were the significant increase in deferred revenue that occurred in 2011 that did not occur in 2012.  There was also an increase in prepaid assets due to the purchase of annual maintenance agreements.

Investing Activities.  Cash used in investing activities was $275,061 for the nine months ended September 30, 2012, as compared to cash used for investing activities of $207,042 for the nine months ended September 30, 2011.   The increase was primarily a result of the investment of cash in computer and other hardware.  As we move forward with the addition of new products and system enhancements to become more competitive in the market place we will continue to experience a sustained level of capital expenditures.
 
Financing Activities.  Cash used in financing activities was $14,456 for the nine months ended September 30, 2012, as compared to cash used for financing activities of $41,280 for the nine months ended September 30, 2011.   The decrease was primarily the result of the payoff of two capital leases during 2011.  The remaining capital lease was paid in full in September 2012.
 
Liquidity

We believe that the funds received from the issuance of common stock, the cash received in the merger with Officeware, and funds generated by the operation of Officeware will provide us with the necessary funds to operate our business.  While we are also undertaking various plans and measures that we believe will increase funds generated from operating activities, no assurances can be given that those plans and measures will be successful.
 

Not Applicable.


Evaluation of Disclosure Controls and Procedures
 
Our chief executive officer and president (our Principal Executive Officer) and our chief financial officer (our Principal Financial Officer) are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act) for us.  Based on the evaluation of our disclosure controls and procedures (as defined in the Rules 13a-15(e) and 15d-15(e) under the Exchange Act) required by Exchange Act Rules 13a-15(b) or 15d-15(b), our principal executive officer and our principal financial officer have concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Changes in internal controls. While our new Chief Financial Officer performed an evaluation of our internal controls in conjunction with his orientation at the Company and made some non-material modifications, there were no changes in our internal controls over financial reporting as defined in Exchange Act Rule 13a-15(f) that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.  Although, we are currently reviewing all our internal controls and making improvements that will become effective in the fourth quarter of 2012, though such improvements may ultimately be non-material modifications.
 
 

 
The Company is involved from time to time in claims, proceedings and litigation.  Please refer to “Item 3.  Legal Proceedings” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which was filed with the Securities and Exchange Commission, or SEC, on March 30, 2012.
 
From time to time we may become subject to additional proceedings, lawsuits and other claims in the ordinary course of business, including proceedings related to our services, applications and other matters.  Such matters are subject to many uncertainties, and outcomes are not predictable with assurance.
 

The following exhibits are filed in accordance with the provisions of Item 601 of Regulation S-K.

Exhibit
Number
 
 
Description of Exhibit
3.1
 
Amended and Restated Articles of Incorporation of the Registrant, dated as of June 2, 2006 and filed with the Secretary of State of the State of Nevada on June 5, 2006 (filed as Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-QSB for quarter ended March 31, 2006 (filed on June 26, 2006) and incorporated herein by reference).
     
3.2
 
Bylaws of the Registrant (filed as Exhibit 3.2 to the Registrant’s Annual Report on Form 10-KSB for year ended December 31, 2005 (filed on May 11, 2006) and incorporated herein by reference).
     
4.1
 
Form of common stock certificate of the Registrant (filed as Exhibit 4.1 to the Registrant’s Annual Report on Form 10-KSB for year ended December 31, 2005 (filed on May 11, 2006) and incorporated herein by reference).
     
4.2
 
Amended and Restated Certificate of Designation, Rights and Preferences of Series A Convertible Preferred Stock of the Registrant, dated as of October 13, 2009 and filed with the Secretary of State of the State of Nevada on October 15, 2009 (filed as Exhibit 4.1 to the Registrant’s Form 8-K (filed on October 19, 2009) and incorporated herein by reference).
     
4.3
 
Form of stock certificate for Series A Convertible Preferred Stock (filed as Exhibit 4.8 to the Registrant’s Quarterly Report on Form 10-QSB for quarter ended March 31, 2006 (filed on June 26, 2006) and incorporated herein by reference).
     
4.4
 
Amended and Restated Certificate of Designation, Rights and Preferences of Series B Convertible Preferred Stock of the Registrant, dated as of October 13, 2009 and filed with the Secretary of State of the State of Nevada on October 15, 2009 (filed as Exhibit 4.2 to the Registrant’s Form 8-K (filed on October 19, 2009) and incorporated herein by reference).
     
4.5
 
Form of stock certificate for Series B Convertible Preferred Stock (filed as Exhibit 4.5 to the Registrant’s Annual Report on Form 10-K for year ended December 31, 2008 (filed on March 31, 2009) and incorporated herein by reference).
     
31.1**
 
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
 
     
31.2**
 
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
     
32.1**
 
Certification Required by 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).
     
32.2**
 
Certification Required by 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).
     
101**
 
XBRL data files of Financial Statements and Notes contained in this Quarterly Report on Form 10-Q
                                 
**           Indicates document filed herewith.  In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 to this Quarterly Report on Form 10-Q/A shall be deemed “furnished” and not “filed”.
 


In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
 Date:  November 14, 2012
IMMEDIATEK, INC.,
a Nevada corporation
 
       
       
 
By:
  /s/ TIMOTHY M. RICE
 
 
Name: 
Timothy M. Rice
 
 
Title:  
Chief Executive Officer
 
   
(On behalf of the Registrant and as Principal
Executive Officer)
 
 
Date:  November 14, 2012


 
By:
  /s/ TIMOTHY MCCRORY
 
 
Name:
Timothy McCrory
 
 
Title:  
Chief Financial Officer
 
   
(On behalf of the Registrant and as Principal
Financial Officer)
 
 
 
 
 
 
 
 
INDEX TO EXHIBITS
Exhibit
Number
 
 
Description of Exhibit
3.1
 
Amended and Restated Articles of Incorporation of the Registrant, dated as of June 2, 2006 and filed with the Secretary of State of the State of Nevada on June 5, 2006 (filed as Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-QSB for quarter ended March 31, 2006 (filed on June 26, 2006) and incorporated herein by reference).
     
3.2
 
Bylaws of the Registrant (filed as Exhibit 3.2 to the Registrant’s Annual Report on Form 10-KSB for year ended December 31, 2005 (filed on May 11, 2006) and incorporated herein by reference).
     
4.1
 
Form of common stock certificate of the Registrant (filed as Exhibit 4.1 to the Registrant’s Annual Report on Form 10-KSB for year ended December 31, 2005 (filed on May 11, 2006) and incorporated herein by reference).
     
4.2
 
Amended and Restated Certificate of Designation, Rights and Preferences of Series A Convertible Preferred Stock of the Registrant, dated as of October 13, 2009 and filed with the Secretary of State of the State of Nevada on October 15, 2009 (filed as Exhibit 4.1 to the Registrant’s Form 8-K (filed on October 19, 2009) and incorporated herein by reference).
     
4.3
 
Form of stock certificate for Series A Convertible Preferred Stock (filed as Exhibit 4.8 to the Registrant’s Quarterly Report on Form 10-QSB for quarter ended March 31, 2006 (filed on June 26, 2006) and incorporated herein by reference).
     
4.4
 
Amended and Restated Certificate of Designation, Rights and Preferences of Series B Convertible Preferred Stock of the Registrant, dated as of October 13, 2009 and filed with the Secretary of State of the State of Nevada on October 15, 2009 (filed as Exhibit 4.2 to the Registrant’s Form 8-K (filed on October 19, 2009) and incorporated herein by reference).
     
4.5
 
Form of stock certificate for Series B Convertible Preferred Stock (filed as Exhibit 4.5 to the Registrant’s Annual Report on Form 10-K for year ended December 31, 2008 (filed on March 31, 2009) and incorporated herein by reference).
     
31.1**
 
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
 
     
31.2**
 
Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
 
     
32.1**
 
Certification Required by 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).
 
     
32.2**
 
Certification Required by 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).
     
101**
  XBRL data files of Financial Statements and Notes contained in this Quarterly Report on Form 10-Q
                                 
**           Indicates document filed herewith.  In accordance with Regulation S-T, the XBRL-formatted interactive data files that comprise Exhibit 101 to this Quarterly Report on Form 10-Q/A shall be deemed “furnished” and not “filed”.
 
 
 

 
EX-31.1 2 ex31_1.htm EXHIBIT 31.1 Unassociated Document
Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
 
I, Timothy M. Rice, certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q of Immediatek, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)      Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)      Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)      Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a)      All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b)      Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 Dated: November 14, 2012
 
  /s/ TIMOTHY M. RICE
 
 
Timothy M. Rice
 
Chief Executive Officer and President
(Principal Executive Officer)
 
 
 

 
EX-31.2 3 ex31_2.htm EXHIBIT 31.2 Unassociated Document
Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
 
I, Timothy McCrory, certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q of Immediatek, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)      Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)      Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)      Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)      Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
 
(a)      All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
 
(b)      Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
 
 Dated: November 14, 2012
 
    /s/ TIMOTHY MCCRORY
 
 
Timothy McCrory
 
Chief Financial Officer
(Principal Financial Officer)
 
 
 

 
EX-32.1 4 ex32_1.htm EXHIBIT 32.1 ex32_1.htm
Exhibit 32.1
 

 
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
Required by 18 U.S.C. Section 1350
(as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
 
In connection with the Quarterly Report of Immediatek, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Timothy M. Rice, as Principal Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
 
1.
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
 
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
 
 
Date: November 14, 2012
 
/s/ TIMOTHY M. RICE
   
Timothy M. Rice
   
Chief Executive Officer and President (Principal
Executive Officer)
 
 
 
 
 

 
EX-32.2 5 ex32_2.htm EXHIBIT 32.2 ex32_2.htm
Exhibit 32.2
 

 
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
Required by 18 U.S.C. Section 1350
(as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
 
In connection with the Quarterly Report of Immediatek, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Timothy McCrory, as Principal Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
 
1.
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
 
2.
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 
 
 
 
 Date: November 14, 2011
 
/s/ TIMOTHY MCCRORY
   
Timothy McCrory
   
Chief Financial Officer
(Principal Financial Officer)
     
 

 
 
 

 
EX-101.INS 6 imki-20120930.xml EXHIBIT 101.INS false --12-31 Q3 2012 2012-09-30 10-Q 0001084182 15865641 Smaller Reporting Company IMMEDIATEK INC <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <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&#39;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&#39;s consolidated statement of operations.</div> <div style="TEXT-INDENT: 0pt; DISPLAY: block"><br /> </div> <!--EndFragment--></div> </div> P30D 180528 58856 242294 185496 189747 187329 5303272 5231772 14794999 14794999 3714651 4007686 1196809 1444847 <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <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&#39;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&#39;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&#39;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&#39;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&#39;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&#39;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> 14456 857957 1212742 1454336 1592684 -354785 -138348 0.001 0.001 500000000 500000000 15865641 535321 15865641 535321 15865 15865 <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <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">Comprehensive Loss:</font> For all periods presented, comprehensive loss is equal to net loss.</div> <!--EndFragment--></div> </div> 316116 268010 877264 745050 3500 692573 714225 2119168 1962677 10500 10500 71500 31500 855387 759330 336339 364515 -0.01 -0.01 -0.04 -0.03 <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <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">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> <!--EndFragment--></div> </div> 205044 209148 656771 653907 766532 766532 514242 522041 1547938 1548972 121612 -62011 56798 51700 2418 49544 96057 149464 66230 -44915 1073907 1264854 76 1637 560 3762 407 629 1624 1190 560 3762 1225662 1019971 3714651 4007686 -14456 -41280 -275061 -207042 -65268 109974 -178000 -193168 -570166 -416253 331 -984 1064 -2548 44366 94704 221456 288925 -178331 -192184 -571230 -413705 <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <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&#39;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&#39;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&#39;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&#39;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&#39;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&#39;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&#39;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&#39;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> 24929 8648 82210 92338 248484 256591 24 24 275061 207042 0.001 0.001 0.001 0.001 4392286 4392286 69726 69726 4392286 4392286 69726 69726 4392286 4392286 69726 69726 3000000 3000000 500000 500000 96558 46609 40000 652474 522805 <!--DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd" --> <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&#39; 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.&#39;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&#39;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. 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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)
3 Months Ended 9 Months Ended
Sep. 30, 2012
Sep. 30, 2011
Sep. 30, 2012
Sep. 30, 2011
Convertible preferred stock excluded from the computation of diluted loss per share     14,794,999 14,794,999
India
       
Cost of operations $ 44,366 $ 94,704 $ 221,456 $ 288,925
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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
9 Months Ended
Sep. 30, 2012
DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]  
Description of Business
Description of Business: 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.

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.

Basis of Presentation
Basis of Presentation: 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.

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.
Net Loss per Share
Net Loss per Share: 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.

Comprehensive Loss
Comprehensive Loss: For all periods presented, comprehensive loss is equal to net loss.
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Condensed Consolidated Balance Sheet (USD $)
Sep. 30, 2012
Dec. 31, 2011
Current assets:    
Cash $ 857,957 $ 1,212,742
Accounts receivable, net 242,294 185,496
Prepaid expenses and other current assets 96,558 46,609
Total current assets 1,196,809 1,444,847
Fixed assets, net 652,474 522,805
Intangibles assets, net 1,073,907 1,264,854
Goodwill 766,532 766,532
Other assets 24,929 8,648
Total Assets 3,714,651 4,007,686
Current liabilities:    
Accounts payable 180,528 58,856
Accrued liabilities 189,747 187,329
Deferred revenue 855,387 759,330
Current portion of long-term lease obligations    14,456
Total liabilities 1,225,662 1,019,971
Commitments and contingencies      
Stockholder's deficit:    
Common stock, $0.001 par value, 500,000,000 shares authorized, 15,865,641 and 535,321 shares issued and outstanding 15,865 15,865
Additional paid in capital 5,303,272 5,231,772
Accumulated deficit (6,330,148) (5,759,922)
Total stockholder's deficit (1,011,011) (512,285)
Total liabilities, preferred stock and stockholders' deficit 3,714,651 4,007,686
Series A Convertible Preferred Stock [Member]
   
Preferred stock:    
Convertible preferred stock 3,000,000 3,000,000
Series B Convertible Preferred Stock [Member]
   
Preferred stock:    
Convertible preferred stock $ 500,000 $ 500,000