10-Q 1 f10q063017_10q.htm FORM 10Q QUARTERLY REPORT Form 10Q Quarterly Report

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT of 1934

For the quarterly period ended: June 30, 2017

or

 

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

 

Commission file Number: 000-55286

 

MOMS ONLINE, INC.

(Exact name of registrant as specified in its Charter)

 

Nevada

46-3856798

(State or other Jurisdiction of Incorporation or organization)

(I.R.S. Employer Identification No.)

 

9350 Wilshire Boulevard, Suite 203

Beverly Hills, California 90212

(Address of Principal Executive Offices)

 

(310) 819-4637

(Registrant’s Telephone Number, including area code)

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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. (1) Yes [X] No [   ]

 

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

 

The Company has no corporate Web site.

 

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

 

Large accelerated filer

[   ]

Accelerated filer

[   ]

Non-accelerated filer

[   ] (Do not check if a smaller reporting company)

Smaller reporting company

[X]

Emerging Growth Company

[X]

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

 

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [   ] No [X].

 

Applicable Only to Registrants Involved in Bankruptcy Proceedings During the Preceding Five Years

 

Not applicable.

 

Outstanding Shares

 

At August 8, 2017 there were 4,765,674 shares of the Registrant's Common Stock.


1


MOMS ONLINE, INC.

TABLE OF CONTENTS

 

 

 

PAGE

PART I. FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements

3

 

 

Unaudited Balance Sheets, as of June 30, 2017 and December 31, 2016

3

 

 

Unaudited Statements of Operations, for the Three and Six Month Periods Ended June 30, 2017 and 2016

4

 

 

Unaudited Statements of Cash Flows, for the Six Month Periods Ended June 30, 2017 and 2016

5

 

 

Notes to Unaudited Financial Statements

6

 

 

Item 2. Management's Discussion and Analysis of Financial Condition or Plan of Operation

8

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risks

8

 

 

Item 4. Controls and Procedures

9

 

 

PART II. OTHER INFORMATION

9

 

 

SIGNATURES

11


2


PART I FINANCIAL INFORMATION

 

ITEM 1 FINANCIAL STATEMENTS

 

 

MOMS ONLINE, INC.

 

BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

2017

 

 

December 31,

2016

 

 

 

 

 

 

(UNAUDITED)

 

 

 

ASSETS

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

Cash

 

 

$

23,081

 

$

115,648

 

Total current assets

 

 

23,081

 

 

115,648

 

 

 

 

 

 

 

 

 

 

 

Moms Corner website

 

 

86,486

 

 

86,486

 

Less:  Accumulated amortization

 

(72,072)

 

 

(57,657)

 

Moms Corner website, net

 

 

14,414

 

 

28,829

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

 

$

37,495

 

$

144,477

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' (DEFICIT)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Accounts payable

 

$

17,064

 

$

3,059

 

Due to related parties

 

 

96,658

 

 

86,033

 

Due to parent

 

 

 

168,949

 

 

161,888

 

Total current liabilities

 

 

282,671

 

 

250,980

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' (DEFICIT)

 

 

 

 

 

 

 

Common stock ($.001 par value) 75,000,000 shares authorized,

 

 

 

 

 

 

  4,765,674 and 4,755,674 shares issued and outstanding at June 30, 2017

 

 

 

 

 

 

  and December 31, 2016, respectively

 

4,765

 

 

4,755

 

Additional paid-in capital

 

 

946,892

 

 

909,402

 

Accumulated deficit

 

 

(1,196,833)

 

 

(1,020,660)

 

Total Stockholders' (Deficit)

 

 

(245,176)

 

 

(106,503)

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)

$

37,495

 

$

144,477

 

 

 

 

 

 

 

 

 

 

 

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


3


MOMS ONLINE, INC.

STATEMENTS OF OPERATIONS

(UNAUDITED)

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2017

 

2016

 

2017

 

2016

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

Platform lease

$

12,500

$

12,500

$

25,000

$

25,000

 

Website maintenance

 

17,076

 

25,802

 

37,881

 

43,284

 

Legal and professional

 

18,904

 

20,478

 

35,476

 

38,896

 

Selling, general and administrative

 

27,872

 

53,559

 

63,289

 

68,689

 

Amortization expense

 

7,207

 

7,207

 

14,414

 

14,414

 

Total operating expenses

 

83,559

 

119,546

 

176,060

 

190,283

 

 

 

 

 

 

 

 

 

 

LOSS FROM OPERATIONS

 

(83,559)

 

(119,546)

 

(176,060)

 

(190,283)

 

 

 

 

 

 

 

 

 

 

OTHER (EXPENSE)

 

 

 

 

 

 

 

 

 

Interest expense

 

(72)

 

(249)

 

(113)

 

(720)

 

Total other (expense)

 

(72)

 

(249)

 

(113)

 

(720)

 

 

 

 

 

 

 

 

 

 

NET LOSS

$

(83,631)

$

(119,795)

$

(176,173)

$

(191,003)

 

 

 

 

 

 

 

 

 

 

Basic and diluted loss per common share

$

(0.02)

$

(0.03)

$

(0.04)

$

(0.04)

 

 

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding - basic and diluted

 

4,760,674

 

4,538,670

 

4,759,431

 

4,486,960

 

 

 

 

 

 

 

 

 

 

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


4


MOMS ONLINE, INC.

STATEMENTS OF CASH FLOWS

(UNAUDITED)

 

 

 

 

 

 

 

For the Six Months Ended

 

 

June 30,

 

 

2017

 

2016

 

 

 

 

 

Cash flows from operating activities:

 

(176,173)

 

(191,003)

Net loss

 

 

 

 

Adjustments to reconcile net loss to net cash  

 

 

 

 

used in operating activities:

 

 

 

 

  Deferred stock compensation

 

27,500

 

7,494

  Stock compensation

 

10,000

 

23,438

  Expenses paid (on behalf of) related party

 

-

 

(8,772)

  Amortization expense

 

14,414

 

14,414

Changes in operating assets and liabilities:

 

 

 

 

  Accounts payable

 

14,006

 

(12,312)

  Due to related parties

 

10,625

 

30,425

Net cash used in operating activities

 

(99,628)

 

(136,316)

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 Common stock sold for cash

 

-

 

187,150

  Expenses paid back to related party

 

7,061

 

-

 Advances from related party

 

-

 

21,204

Net cash provided by financing activities

 

7,061

 

208,354

 

 

 

 

 

Net increase in cash and cash equivalents

 

(92,567)

 

72,038

Cash, beginning of period

 

115,648

 

2,984

Cash, end of period

$

23,081

$

75,022

 

 

 

 

 

Cash paid during the year for:

 

 

 

 

      Interest

$

-

$

249

      Income taxes

$

-

$

-

 

 

 

 

 

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


5


MOMS ONLINE, INC.

NOTES TO UNAUDITED FINANCIAL STATEMENTS

June 30, 2017

 

NOTE 1: BASIS OF PRESENTATION

 

Basis of Presentation

 

The unaudited interim financial statements of Moms Online, Inc. (the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information in accordance with Securities and Exchange Commission (SEC) Regulation S-X rule 8-03. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, the unaudited interim financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position and the results of operations and cash flows for the interim periods presented herein. The financial data and other information disclosed in these notes to the interim financial statements related to the period are unaudited. The results for the six month periods ended June 30, 2017 are not necessarily indicative of the results to be expected for any subsequent quarters or for the entire year ending December 31, 2017. These financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2016.

 

NOTE 2: GOING CONCERN AND CONTINGENCIES

 

Going Concern

 

As shown in the accompanying financial statements, we have incurred losses in each year since inception and have a working capital deficit of $259,590, and an accumulated deficit of $1,196,833 as of June 30, 2017. These conditions raise substantial doubt as to our ability to continue as a going concern.

 

In response to these conditions, we may raise additional capital through the sale of equity securities, through an offering of debt securities or through borrowings from financial institutions or individuals. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

 

Repayment of investment from Sister Corp

 

There is an informal agreement between Social Quotient, Inc. (“SQI”), the company’s affiliate (sister corp.) and the Company that calls for the company to give recognition to SQI for the equity contributed to the company “from inception to the future date in which the company might be engaged in a merger or change in control”. The amount of consideration contingently due from the company was $95,224 at June 30, 2017 and December 31, 2016. This contingent liability amount can be satisfied in cash (minimum), or currently $.02 per share; debt; or equity conversion in the event of a merger or transaction in which there is a change in Control.

 

NOTE 3: RELATED PARTY TRANSACTIONS AND RELATIONSHIPS

 

All directors of the company are related parties. IceLounge Media, Inc. “ILMI” funded 100% of the development of the Momscorner.com website prior to December 31, 2013. ILMI spun off the website to the Company. All amounts due to related parties were converted to stock in 2013 by prior agreement. The stock fair value was determined to be $0.5168 per share, based on the fair values of the website and the anticipated public filing.

 

During the six months ended June 30, 2017, the Company paid back to ILMI, $7,061. During the six months ended June 30, 2016, ILMI paid certain net expenses for and on behalf of the Company of $21,204, which were accounted for as amounts due to parent and are due on demand. As of June 30, 2017 and December 31, 2016, the outstanding amounts due to parent were $168,949 and $161,888, respectively.

 

 

In addition, Social Quotient Inc. paid $0 and $6,228 of expenses, respectively, for and in behalf of the Company, for the six months ended June 30, 2017 and 2016, which were accounted for as paid in capital. The Company re-paid SQI $0 and $15,000, during the six months ended June 30, 2017 and 2016, respectively.

 

On June 6, 2016 the Board of Directors of IMLI agreed to transfer from its own holdings of the company’s common stock, 25,000 shares to a company shareholder because he was the first to invest in all three of the IMLI family of companies.


6


The Company licenses its technology platform from ILMI, under an Agreement which calls for an automatic 12 month renewal each year on October 1, and a monthly lease payment of $4,167. The company accrued $25,000 for platform lease expense for each of the six month periods ended June 30, 2017 and 2016.

 

WB Capital, a related party with common principal ownership, provides Merger & Acquisition and project management services to the Company as a consultant. There is no written agreement governing the relationship. The Company accrued $2,500 a month for these services. Due to the Company’s lack of available cash, the amounts were not paid during either of the six months ended June 30, 2017 or 2016. The Company owed WB Capital $75,000 as of June 30, 2017.

 

Scott E. Lybbert, prior CFO, provided accounting and reporting services to the Company as a consultant. There was no written agreement governing the relationship. For the six months ended June 30, 2016, the Company accrued $8,625, for Lybbert’s services (no amounts were accrued for the six months ended June 30, 2017). During the six months ended June 30, 2017, the Company paid back $5,500. Mr. Lybbert passed away in February 2017. As of June 30, 2017, $17,083 was owed to Mr. Lybbert’s estate.

 

The company paid a former financial consultant, who began working for the company at the end of the first quarter of 2016 and is appointed to the Board of Directors on May 26, 2017. The company had accrued invoices from this consultant in the amount of $13,200 for the year ended December 31, 2016, of which $9,750 has been paid, leaving a balance payable of $3,450 as of June 30, 2017.

 

NOTE 4: WEBSITE AND INTANGIBLE ASSETS

 

Since inception, most of the Company’s resources have been focused on creating its business model and related website. Certain costs incurred in development of our website were capitalized with a total of $17,831 allocated to our website development in 2013. In 2014, the Company enhanced its website with mobile-enabled features and functionality. Consequently, $68,655 additional costs were capitalized to the website in 2014. No additional amounts have been capitalized since 2014. The Company began amortizing its capitalized website costs of $86,486 on January 1, 2015, over its estimated useful life of three years. The Company recognized amortization expense of $14,414 and $14,414, for the six months ended June 30, 2017 and 2016, respectively.

 

NOTE 5: EQUITY

 

Common stock

 

The authorized capital stock of the Company consists of 75,000,000 shares of Common stock, par value $.001 per share, of which 4,765,674 were outstanding as of June 30, 2017.

 

The holders of Common Stock are entitled to one vote per share on each matter submitted to a vote at any meeting of shareholders. Shares of Common Stock do not carry cumulative voting rights and, therefore, a majority of the shares of outstanding Common Stock will be able to elect the entire board of directors and, if they do so, minority shareholders would not be able to elect any persons to the board of directors. Moms Online’s bylaws provide that a majority of the issued and outstanding shares of Moms Online constitutes a quorum for shareholders’ meetings.

 

Shareholders of Moms Online have no preemptive rights to acquire additional shares of Common Stock or other securities. The Common Stock is not subject to redemption and carries no subscription or conversion rights. In the event of liquidation of Moms Online, the shares of Common Stock are entitled to share equally in corporate assets after satisfaction of all liabilities.

 

Holders of Common Stock are entitled to receive such dividends, as the board of directors may from time to time declare out of funds legally available for the payment of dividends. Moms Online seeks growth and expansion of its business through the reinvestment of profits, if any, and does not anticipate that we will pay dividends in the foreseeable future.

 

During the six months ended June 30, 2017, the company recognized $12,500 of deferred stock compensation to recognize two quarters of a four year stock compensation agreement calling for the payment of 100,000 shares. These shares have not been issued yet due to a yet unfulfilled vesting clause, and are accounted for as a deferred compensation component of paid in capital. The company also recognized $10,000 of deferred stock compensation to recognize two quarters of a two year stock compensation agreement calling for the payment of 40,000 shares. These shares have not been issued yet due to a yet unfulfilled vesting clause, and are accounted for as a deferred compensation component of paid in capital. The company also recognized $5,000 of deferred stock compensation to recognize two quarters of a two year stock compensation agreement calling for the payment of 20,000 shares. These shares have not been issued yet due to a yet unfulfilled vesting clause, and are accounted for as a deferred compensation component of paid in capital.

 

As of June, 2017, the Company issued an aggregate of 10, 000 restricted shares to a third party contractor, for services. The Company recorded professional fees expense of $10,000 for these shares. The related agreement specifies 40,000 shares will be issued over a two year period, upon completion of certain milestones.


7


 

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS

 

The following discussion should be read in conjunction with the Consolidated Financial Statements and notes thereto. See "ITEM 1 FINANCIAL STATEMENTS".

 

Management's Discussion and Analysis:

 

Certain statements in this Report constitute “forward-looking statements.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause such a difference include, among others, uncertainties relating to general economic and business conditions; industry trends; changes in demand for our products and services; uncertainties relating to customer plans and commitments and the timing of orders received from customers; announcements or changes in our pricing policies or that of our competitors; unanticipated delays in the development, market acceptance or installation of our products and services; changes in government regulations; availability of management and other key personnel; availability, terms and deployment of capital; relationships with third-party equipment suppliers; and worldwide political stability and economic growth. The words “believe,” “expect,” “anticipate,” “intend” and “plan” and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made

 

Results of Operations

 

Net loss for the three months ended June 30, 2017 decreased $36,164, or 30% over the $119,795 net loss for the three months ended Jun 30, 2016 due primarily to a decrease in selling, general and administrative costs of $25,687 or 48%.

 

Net loss for the six months ended June 30, 2017 decreased $14,830, or 8% over the $191,003 net loss for the six months ended Jun 30, 2016 due primarily to a decrease in selling, general and administrative costs of $5,400 or 8%.

 

Liquidity and Capital Resources:

 

At its current level of operations, the Company will need to raise additional capital during the next fiscal year. The Company has a relatively moderate amount of cash and had depended upon ILMI (its parent company) and Social Quotient (its sister company) for funding in the past. It is management’s intent to continue to have the Company break away from its dependencies and to be self-sufficient.

 

CURRENT PLAN OF OPERATIONS

 

The Company plans to sell stock to raise sufficient capital to begin marketing the website, grow its user base and website traffic in order to begin generating revenues. Additional personnel will be added and managed as they become affordable. The company will also pursue potential merger or acquisition candidates as they may present themselves

 

Management encourages its shareholders to communicate directly with the Company for its typical investor relations, including address changes and for general corporate information by calling or writing to the Company at its administrative offices or by posting a message to Management also encourages shareholders to keep their address current with the Company.

 

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

 

This annual report includes forward looking statements which involve risks and uncertainties. Such statements can be identified by the use of forward-looking language such as "will likely result", "may", "are expected to", "is anticipated", "estimate", "believes", "projected", or similar words. All statements, other than statements of historical fact included in this section, are forward-looking statements. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The Company's actual results could differ materially from those anticipated in any such forward-looking statements as a result of various risks, including, without limitation, the dependence on a single line of business; the failure to close proposed financing; rapid technological change; inability to attract and retain key personnel; the potential for significant fluctuations in operating results; the loss of a major customer; and the potential volatility of the Company's common stock.

 

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

The company operates minimally and has no meaningful assets subject to market risk. Therefore, this item is not applicable given the company’s current operations.


8


ITEM 4: CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)), and management necessarily applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management’s control objectives. You should note that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. Based upon the foregoing evaluation, our Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures over financial reporting were not effective. Our management identified the following material weaknesses in our internal control over financial reporting, which are indicative of many small companies with small staff:

 

We do not yet have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act as of June 30, 2017. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

 

We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, the segregation of all conflicting duties has not always been possible or economically feasible. To the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have sufficient segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

 

Management will seek to provide sufficient resources toward the proper mitigation of these material control weaknesses.

 

Internal Control Over Financial Reporting

 

There were no changes in internal control over financial reporting that occurred during the second quarter of 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II OTHER INFORMATION

 

ITEM 1 Legal Proceedings

 

In the normal course of business, there may be various legal actions and proceedings pending which seek damages against the Company. As of June 30, 2017, there were no claims asserted or threatened against the Company.

 

ITEM 1A. Risk Factors

 

This item is not required of smaller reporting companies.

 

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

ITEM 3 Defaults on Senior Securities

 

None; not applicable.

 

ITEM 4 Mine Safety Disclosures

 

None; not applicable.

 

ITEM 5 Other Information.

 

None.


9


ITEM 6 Exhibits

 

Exhibits

 

 

 

31.1

302 Certification

 

 

31.2

302 Certification

 

 

32.1

Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, Section 906 of the Sarbanes-Oxley Act of 2002

 

 

32 .2

Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, Section 906 of the Sarbanes-Oxley Act of 2002


10


SIGNATURES

 

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: August 10, 2017

 

MOMS ONLINE, INC.

(Registrant)

 

By /s/ Calvin Wong             

Principal Financial Officer


11