UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended September 30, 2012 | |
| 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: 333-172685
CHARLIE GPS INC.
(Exact name of registrant as specified in its charter)
|
Nevada (State or other jurisdiction of incorporation or organization) |
27-4387595 (I.R.S. Employer Identification No.) |
| c/o Gottbetter & Partners, LLP | |
| 400 Madison Avenue, 12th Fl., new York, NY 10022 | 07031 |
| (Address of principal executive offices) | (Zip Code) |
(212) 400-6900
(Registrant’s telephone number, including area code)
101 Ridge Road, North Arlington, NJ 07031
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ¨ | Accelerated filer¨ |
Non-accelerated filer ¨ (Do not check if a smaller reporting company) |
Smaller reporting company x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ or No x
There were 10,400,000 shares of the registrant’s common stock, $0.001 par value, outstanding as of November 7, 2012.
TABLE OF CONTENTS
| PART I. FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements (Unaudited) | |
| Balance Sheets | 3 | |
| Statements of Operations | 4 | |
| Statements of Cash Flows | 5 | |
| Notes to Financial Statements | 6 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 15 |
| Item 4. | Controls and Procedures | 15 |
| PART II. OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 16 |
| Item 1A. | Risk Factors | 16 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 16 |
| Item 3. | Defaults Upon Senior Securities | 16 |
| Item 4. | Mine Safety Disclosures | 16 |
| Item 5. | Other Information | 16 |
| Item 6. | Exhibits | 16 |
| Signatures | 17 | |
| 2 |
CHARLIE GPS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
| September 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| ASSETS | (Unaudited) | |||||||
| Current assets: | ||||||||
| Cash | $ | - | $ | 4,532 | ||||
| Prepaid expenses | - | 5,507 | ||||||
| Inventory | 1,258 | 1,258 | ||||||
| Total current assets | 1,258 | 11,297 | ||||||
| Total assets | $ | 1,258 | $ | 11,297 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 104,726 | $ | 100 | ||||
| Notes payable, related party | - | 1,141 | ||||||
| Total current liabilities | 104,726 | 1,241 | ||||||
| Stockholders' equity (deficit): | ||||||||
| Common stock, $0.001 par value, 75,000,000 shares | ||||||||
| authorized, 10,400,000 shares issued and outstanding | 10,400 | 10,400 | ||||||
| Additional Paid in Capital | 29,241 | 23,250 | ||||||
| (Deficit) accumulated during development stage | (143,109 | ) | (23,594 | ) | ||||
| Total stockholders' equity (deficit) | (103,468 | ) | 10,056 | |||||
| Total liabilities and stockholders' equity (deficit) | $ | 1,258 | $ | 11,297 | ||||
See accompanying notes to financial statements.
| 3 |
CHARLIE GPS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
(Unaudited)
| For the Three | For the Nine | |||||||||||||||||||
| Months Ended | Months Ended | November 29, 2010 | ||||||||||||||||||
| September 30, | September 30, | (inception) to | ||||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | September 30, 2012 | ||||||||||||||||
| Revenue | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
| Operating expenses: | ||||||||||||||||||||
| General and administrative | 108,174 | 7,514 | 119,465 | 16,166 | 143,059 | |||||||||||||||
| Total operating expenses | 108,174 | 7,514 | 119,465 | 16,166 | 143,059 | |||||||||||||||
| Net operating loss | (108,174 | ) | (7,514 | ) | (119,465 | ) | (16,166 | ) | (143,059 | ) | ||||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest expense | - | - | (50 | ) | - | (50 | ) | |||||||||||||
| Net loss | $ | (108,174 | ) | $ | (7,514 | ) | $ | (119,515 | ) | $ | (16,166 | ) | $ | (143,109 | ) | |||||
| Weighted average number of common shares | ||||||||||||||||||||
| outstanding - basic and fully diluted | 10,400,000 | 9,653,261 | 10,400,000 | 8,562,637 | ||||||||||||||||
| Net (loss) per share - basic and fully diluted | $ | (0.01 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.00 | ) | ||||||||
See accompanying notes to financial statements.
| 4 |
CHARLIE GPS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Nine | For the Nine | November 29, 2010 | ||||||||||
| Months Ended | Months Ended | (inception) to | ||||||||||
| September 30, 2012 | September 30, 2011 | September 30, 2012 | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||||||
| Net (loss) | $ | (119,515 | ) | $ | (16,166 | ) | $ | (143,109 | ) | |||
| Adjustments to reconcile net loss | ||||||||||||
| to net cash used in operating activities: | ||||||||||||
| Imputed interest on non-interest bearing related party loans | 50 | - | 50 | |||||||||
| Decrease (increase) in assets: | ||||||||||||
| Prepaid expenses | 5,507 | (8,027 | ) | - | ||||||||
| Inventories | - | (1,258 | ) | (1,258 | ) | |||||||
| Increase (decrease) in liabilities: | ||||||||||||
| Accounts payable | 107,426 | - | 107,526 | |||||||||
| Net cash used in operating activities | (6,532 | ) | (25,451 | ) | (36,791 | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
| Proceeds from notes payable, related party | 2,000 | 1,650 | 4,791 | |||||||||
| Proceeds from the sale of common stock | - | 24,000 | 32,000 | |||||||||
| Net cash provided by financing activities | 2,000 | 25,650 | 36,791 | |||||||||
| NET CHANGE IN CASH | (4,532 | ) | 199 | - | ||||||||
| CASH AT BEGINNING OF PERIOD | 4,532 | 8,000 | - | |||||||||
| CASH AT END OF PERIOD | $ | - | $ | 8,199 | $ | - | ||||||
| SUPPLEMENTAL INFORMATION: | ||||||||||||
| Interest paid | $ | - | $ | - | ||||||||
| Income taxes paid | $ | - | $ | - | ||||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||
| Contributed capital from the forgiveness of debt, related party | $ | 5,941 | $ | - | ||||||||
See accompanying notes to financial statements.
| 5 |
Charlie GPS, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
Note 1 – Nature of Business and Significant Accounting Policies
Nature of Business
Charlie GPS, Inc. (“the Company”) was incorporated in the state of Nevada on November 29, 2010 (“Inception”). The Company was in the GPS tracking system business up until October 16, 2012 when the Company began to redirect the Company’s business in a way that would take advantage of certain current trends in the social media marketplace.
These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary for fair presentation of the information contained therein.
Development Stage Company
The Company is currently considered a development stage company as defined by FASB ASC 915-10-05. As a development stage enterprise, the Company discloses the deficit accumulated during the development stage and the cumulative statements of operations and cash flows from inception to the current balance sheet date. An entity remains in the development stage until such time as, among other factors, revenues have been realized. To date, the development stage of the Company’s operations consists of developing the business model and marketing concepts.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
We maintain cash balances in non-interest-bearing accounts, which do not currently exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents.
Inventory
The Company uses the first-in first-out inventory method, stated at lower of cost or market. Regardless of which physical units are actually sold, this approach always values inventory by assuming that products that enter inventory later are the items that remain in inventory. The Company’s inventory solely consists of GPS units that are considered finished goods.
Fair Value of Financial Instruments
Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, prepaid expenses and accrued expenses reported on the balance sheet are estimated by management to approximate fair value primarily due to the short term nature of the instruments. The Company had no items that required fair value measurement on a recurring basis.
Basic and Diluted Loss Per Share
The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For the periods presented, potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.
Stock-Based Compensation
The Company adopted FASB guidance on stock based compensation upon inception at November 29, 2010. Under FASB ASC 718-10-30-2, all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. The Company has not had any stock and stock options issued for services and compensation for the nine months ended September 30, 2012 and 2011.
| 6 |
Charlie GPS, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
Revenue Recognition
The Company recognizes service revenue using four basic criteria that must be met before revenue can be recognized: (1) persuasive evidence of an arrangement exists; (2) delivery has occurred; (3) the selling price is fixed and determinable; and (4) collectability is reasonably assured. Determination of criteria (3) and (4) are based on management’s judgment regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.
Advertising and Promotion
All costs associated with advertising and promoting products are expensed as incurred. These expenses were $-0- for the nine months ended September 30, 2012 and 2011.
Income Taxes
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is provided for significant deferred tax assets when it is more likely than not, that such asset will not be recovered through future operations.
Uncertain Tax Positions
In accordance with ASC 740, “Income Taxes” (“ASC 740”), the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.
Various taxing authorities periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities.
The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.
Recent Accounting Pronouncements
In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.
In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.
In July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.
| 7 |
Charlie GPS, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. This update defers the requirement to present items that are reclassified from accumulated other comprehensive income to net income in both the statement of income where net income is presented and the statement where other comprehensive income is presented. The adoption of ASU 2011-12 is not expected to have a material impact on our financial position or results of operations.
In December 2011, the FASB issued ASU No. 2011-11 “Balance Sheet: Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). This Update requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS. The amended guidance is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. The Company is currently evaluating the impact, if any, that the adoption of this pronouncement may have on its results of operations or financial position.
In September 2011, the FASB issued ASU No. 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. The guidance in ASU 2011-08 is intended to reduce complexity and costs by allowing an entity the option to make a qualitative evaluation about the likelihood of goodwill impairment to determine whether it should calculate the fair value of a reporting unit. The amendments also improve previous guidance by expanding upon the examples of events and circumstances that an entity should consider between annual impairment tests in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. Also, the amendments improve the examples of events and circumstances that an entity having a reporting unit with a zero or negative carrying amount should consider in determining whether to measure an impairment loss, if any, under the second step of the goodwill impairment test. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The adoption of this guidance did not have a material impact on the Company’s financial position or results of operations.
Note 2 – Going Concern
As shown in the accompanying financial statements, the Company has no revenues, and incurred net losses from operations resulting in an accumulated deficit of $143,109 as of September 30, 2012. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is actively pursuing new ventures to increase revenues. In addition, the Company is currently seeking additional sources of capital to fund short term operations. The Company, however, is dependent upon its ability to secure equity and/or debt financing and there are no assurances that the Company will be successful, therefore, without sufficient financing it would be unlikely for the Company to continue as a going concern.
The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. The financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.
Note 3 – Related Parties
The Company received unsecured, non-interest bearing demand loans totaling $2,000 and $1,141 at various dates through September 30, 2012 and December 31, respectively from the Company’s former CEO. These loans were forgiven and contributed as capital on June 30, 2012.
| 8 |
Charlie GPS, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
On August 20, 2012 a related party contributed capital of $2,800 by paying for audit and accounting services on behalf of the Company.
Interest has been imputed using the Company’s estimated borrowing rate of 8% per annum. Estimated interest expense of $50 and $-0- has been recognized during the nine months ended September 30, 2012 and 2011, respectively.
Note 4 – Fair Value of Financial Instruments
The Company adopted FASB ASC 820-10 upon inception at November 29, 2010. Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.
The Company doesn’t have any financial instruments that must be measured under the new fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:
Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.
The following schedule summarizes the valuation of financial instruments at fair value on a non-recurring basis in the balance sheets as of September 30, 2012 and December 31, 2011:
| Fair Value Measurements at September 30, 2012 | ||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets | ||||||||||||
| None | $ | - | $ | - | $ | - | ||||||
| Total assets | - | - | - | |||||||||
| Liabilities | ||||||||||||
| None | - | - | - | |||||||||
| Total liabilities | - | - | - | |||||||||
| $ | - | $ | - | $ | - | |||||||
| Fair Value Measurements at December 31, 2011 | ||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||
| Assets | ||||||||||||
| None | $ | - | $ | - | $ | - | ||||||
| Total assets | - | - | - | |||||||||
| Liabilities | ||||||||||||
| None | - | - | - | |||||||||
| Total liabilities | - | - | - | |||||||||
| $ | - | $ | - | $ | - | |||||||
| 9 |
Charlie GPS, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
Note 5 – Inventory
As of September 30, 2012 and December 31, 2011 inventory consisted of the following:
| September 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| Finished goods, GPS units | $ | 1,258 | $ | 1,258 | ||||
Note 6 – Notes Payable, Related Parties
At various dates through September 30, 2012, the Company received unsecured, non-interest bearing loans totaling $3,141, due on demand from the Company’s former CEO. On June 30, 2012, the former CEO forgave these loans and contributed them as capital, along with $50 of imputed interest.
Note 7 – Changes in Stockholders’ Equity (Deficit)
The Company has authorized 75,000,000 shares of $0.001 par value common stock.
Common Stock
On December 29, 2010, the Company sold 8,000,000 shares of stock at a price of $0.001 per share to its sole Director, for total proceeds of $8,000.
During the period from June 23, 2011 to September 12, 2011 the Company sold 2,400,000 shares of common stock at a price of $0.01 per share for total cash proceeds of $24,000.
During the period from November 29, 2010 (Inception) to December 31, 2011 the Company sold 10,400,000 shares of common stock for total cash proceeds of $32,000.
Note 8 – Income Taxes
The Company accounts for income taxes under FASB ASC 740-10, which requires use of the liability method. FASB ASC 740-10-25 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences.
For the nine months ended September 30, 2012 and the year ended December 31, 2011, the Company incurred net operating losses and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At September 30, 2012, the Company had approximately $143,109 of federal net operating losses. The net operating loss carry forwards, if not utilized, will begin to expire in 2025.
The components of the Company’s deferred tax asset are as follows:
| September 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carry forwards | $ | 143,109 | $ | 23,594 | ||||
| Net deferred tax assets before valuation allowance | $ | 50,090 | $ | 8,260 | ||||
| Less: Valuation allowance | (50,090 | ) | (8,260 | ) | ||||
| Net deferred tax assets | $ | - | $ | - | ||||
| 10 |
Charlie GPS, Inc.
(A Development Stage Company)
Notes to Financial Statements
(Unaudited)
Based on the available objective evidence, including the Company’s history of its loss, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at September 30, 2012 and December 31, 2011, respectively.
A reconciliation between the amounts of income tax benefit determined by applying the applicable U.S. and State statutory income tax rate to pre-tax loss is as follows:
| September 30, | December 31, | |||||||
| 2012 | 2011 | |||||||
| Federal and state statutory rate | 35 | % | 35 | % | ||||
| Change in valuation allowance on deferred tax assets | (35 | %) | (35 | %) | ||||
In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions.
Note 9 – Subsequent Events
The Company has evaluated subsequent events from September 30, 2012 through the date whereupon the financial statements were issued and has determined that there are no items to disclose.
| 11 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
Forward Looking Statements
Statements made in this Quarterly Report on Form 10-Q (the “Quarterly Report”) that are not historical or current facts are “forward-looking statements” made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements often can be identified by the use of terms such as “may,” “will,” “expect,” “believe,” “anticipate,” “estimate,” “approximate” or “continue,” or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management’s best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events.
Introduction
Charlie GPS Inc. started operations in the GPS business on November 29, 2010. We had planned to offer a convenient and cost effective vehicle tracking solution comprising of a GPS tracking unit and software. A GPS tracking unit is a device that uses the Global Positioning System to determine the precise location of a vehicle, person, or any other asset to which it is attached and to record the position of the asset at regular intervals. On October 16, 2012 the Company began to redirect the Company’s business in a way that would take advantage of certain current trends in the social media marketplace. We have begun discussions with potential new management who are interested in taking the Company into a new strategic direction. This team would redirect the Company’s business in a way that would take advantage of certain current trends in the social media marketplace.
The completion of this described change is conditioned on, among other things, the parties reaching agreement on all final terms and conditions of the proposed management change. The Company can provide no assurances that these conditions will be satisfied and cautions investors against making investment decisions based on any expectation that the proposed transaction will be consummated, because, in its view, such expectations are speculative.
Results of Operation
We are a development stage company and have not generated any revenue to date. We have incurred recurring losses to date. Our financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include adjustments relating to the recoverability and realization of assets and classification of liabilities that might be necessary should we be unable to continue in operation. We expect we will require additional capital to meet our long term operating requirements. We expect to raise additional capital through, among other things, the sale of equity or debt securities.
Results of Operations for the Three Months Ended September 30, 2012 and 2011:
The following table summarizes selected items from the statement of operations for the three months ended September 30, 2012 and 2011, respectively.
| For the three | For the three | |||||||||||
| months ended | months ended | Increase / | ||||||||||
| September 30, 2012 | September 30, 2011 | (Decrease) | ||||||||||
| Revenue | $ | - | $ | - | $ | - | ||||||
| Operating expenses: | ||||||||||||
| General and administrative | 108,174 | 7,514 | 100,660 | |||||||||
| Total operating expenses: | 108,174 | 7,514 | 100,660 | |||||||||
| Net operating loss | (108,174 | ) | (7,514 | ) | 100,660 | |||||||
| Total other income (expense) | - | - | - | |||||||||
| Net (loss) | $ | (108,174 | ) | $ | (7,514 | ) | $ | 100,660 | ||||
| 12 |
Three Month Period Ended September 30, 2012 Compared to Three Month Period Ended September 30, 2011
Our net loss for the three month period ended September 30, 2012 was $(108,174) compared to a net loss of $(7,514) for the three month period ended September 30, 2011, an increase of $100,660, or 1,340%. During the three month periods ended September 30, 2012 and 2011, we did not generate any revenue.
During the three month period ended September 30, 2012, we incurred general and administrative expenses $108,174 compared to $7,514 incurred during three month period ended September 30, 2011, an increase of $100,660, or 1,340%. General and administrative expense consisted primarily of professional fees and costs to maintain our common stock with a transfer agent. Our increased general and administrative expenses were primarily due to legal fees incurred during the third quarter of 2012 related to our search for merger candidates to shift our business focus and take advantage of certain current trends in the social media marketplace, which were not incurred during the comparative three month period ended September 30, 2011.
The weighted average number of shares outstanding was 10,400,000 for the three month period ended September 30, 2012.
Results of Operations for the Nine Months Ended September 30, 2012 and 2011:
The following table summarizes selected items from the statement of operations for the nine months ended September 30, 2012 and 2011, respectively.
| For the nine | For the nine | |||||||||||
| months ended | months ended | Increase / | ||||||||||
| September 30, 2012 | September 30, 2011 | (Decrease) | ||||||||||
| Revenue | $ | - | $ | - | $ | - | ||||||
| Operating expenses: | ||||||||||||
| General and administrative | 119,465 | 16,166 | 103,299 | |||||||||
| Total operating expenses: | 119,465 | 16,166 | 103,299 | |||||||||
| Net operating loss | (119,465 | ) | (16,166 | ) | 103,299 | |||||||
| Total other income (expense) | (50 | ) | - | 50 | ||||||||
| Net (loss) | $ | (119,515 | ) | $ | (16,166 | ) | $ | 103,349 | ||||
Nine Month Period Ended September 30, 2012 Compared to Nine Month Period Ended September 30, 2011
Our net loss for the nine month period ended September 30, 2012 was $(119,515) compared to a net loss of $(16,166) for the nine month period ended September 30, 2011, an increase of $103,349, or 639%. During the nine month periods ended September 30, 2012 and 2011, we did not generate any revenue.
During the nine month period ended September 30, 2012, we incurred general and administrative expenses $119,465 compared to $16,166 incurred during nine month period ended September 30, 2011, an increase of $103,299, or 639%. General and administrative expense consisted primarily of professional fees and costs to maintain our common stock with a transfer agent. Our increased general and administrative expenses were primarily due to legal fees incurred during the third quarter of 2012 related to our search for merger candidates to shift our business focus and take advantage of certain current trends in the social media marketplace, which were not incurred during the comparative nine month period ended September 30, 2011.
The weighted average number of shares outstanding was 10,400,000 for the nine month period ended September 30, 2012.
| 13 |
Liquidity and Capital Resources
The following table summarizes total assets, accumulated deficit, stockholders’ equity and working capital at September 30, 2012 compared to December 31, 2011.
| September 30, | December 31, | Increase / | ||||||||||
| 2012 | 2011 | (Decrease) | ||||||||||
| Total Assets | $ | 1,258 | $ | 11,297 | $ | (10,039 | ) | |||||
| Accumulated (Deficit) | $ | (143,109 | ) | $ | (23,594 | ) | $ | 119,515 | ||||
| Stockholders’ Equity (Deficit) | $ | (103,468 | ) | $ | 10,056 | $ | (113,524 | ) | ||||
| Working Capital | $ | (103,468 | ) | $ | 10,056 | $ | (113,524 | ) | ||||
As at September 30, 2012, our current assets were $1,258 compared to $11,297 at December 31, 2011. Current assets were comprised of $1,258 in inventory. As of September 30, 2012, our current liabilities were $104,726. Current liabilities were comprised of $104,726 in accounts payable, which was primarily owed to our attorneys.
Stockholders’ equity was $(103,468) as of September 30, 2012 compare to stockholders’ equity of $10,056 as of December 31, 2011.
Cash Flows from Operating Activities
We have not generated positive cash flows from operating activities. For the nine month period ended September 30, 2012, net cash flows used in operating activities was $(6,532) consisting of a net loss of $(119,515), a decrease in prepaid expenses of $5,507, $50 of imputed interest on related party loans and an increase of $107,426 in accounts payable. Net cash flows used in operating activities was $(36,791) for the period from inception (November 29, 2010) to September 30, 2012.
Cash Flows from Financing Activities
We have financed our operations primarily from either advancements or the issuance of equity and debt instruments. For the nine month period ended September 30, 2012, net cash provided by financing activities was $2,000 received from proceeds from notes payable. For the period from inception (November 29, 2010) to September 30, 2012, net cash provided by financing activities was $36,791 received from proceeds from the issuance of common stock, and loans from our Director.
Plan of Operation and Funding
Our cash reserves are not sufficient to meet our obligations for the next twelve month period. As a result, we will need to seek additional funding in the near future. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of shares of our common stock. We may also seek to obtain short-term loans from our directors or unrelated parties, although no such arrangements have been made. We do not have any arrangements in place for any future equity financing.
Material Commitments
As of September 30, 2012, we had no material commitments.
Purchase of Significant Equipment
We do not intend to purchase any significant equipment during the next twelve months.
Off-Balance Sheet Arrangements
As of the date of this Quarterly Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
| 14 |
Going Concern
The independent auditors’ audit report accompanying our financial statements for the fiscal year ended December 31, 2011 contained an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern. The financial statements have been prepared “assuming that we will continue as a going concern,” which contemplates that we will realize our assets and satisfy our liabilities and commitments in the ordinary course of business.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not required for smaller reporting companies.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
An evaluation was conducted under the supervision and with the participation of our Chief Executive and Financial Officer of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2012. Based on that evaluation, our Chief Executive and Financial Officer concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.
Changes in Internal Control Over Financial Reporting
An evaluation was performed under the supervision of our Chief Executive Financial Officer of whether any change in our internal control over financial reporting (as defined in the Exchange Act Rules 13a-15(f) and 15d-15(f)) occurred during the quarter ended September 30, 2012. Based on that evaluation, our Chief Executive and Financial Officer, concluded that there were no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
| 15 |
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Management is not aware of any legal proceedings contemplated by any governmental authority or any other party involving us or our properties. As of the date of this Quarterly Report, no director, officer or affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an adverse interest to us in any legal proceedings. Management is not aware of any other legal proceedings pending or that have been threatened against us or our properties.
Item 1A. Risk Factors
Not required for smaller reporting companies.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits
|
Exhibit Number |
Description of Exhibits | |
| 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | |
| 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | |
| 32.1/32.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | |
| 101.INS | XBRL Instance Document.*** | |
| 101.SCH | XBRL Schema Document.*** | |
| 101.CAL | XBRL Calculation Linkbase Document.*** | |
| 101.DEF | XBRL Definition Linkbase Document.*** | |
| 101.LAB | XBRL Labels Linkbase Document.*** | |
| 101.PRE | XBRL Presentation Linkbase Document.*** |
* Indicates a document being filed with this Quarterly Report.
** Information in this Quarterly Report furnished herewith shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section.
*** To be furnished by amendment. The XBRL related information in Exhibit 101 shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability of that section and shall not be incorporated by reference into any filing or other document pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing or document.
| 16 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CHARLIE GPS INC. | ||
| Dated: November 16, 2012 | By: /s/ Lisa Andoh | |
| Name: Lisa Andoh | ||
|
Title: President, Chief Executive Officer and Chief Financial Officer (Principal Financial Officer) | ||
| 17 |
Exhibit 31.1
CERTIFICATION OF CEO PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Lisa Andoh, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Charlie GPS 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;
| 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.
Date: November 16, 2012
| /s/ Lisa Andoh | |
| Lisa Andoh | |
|
President, Chief Executive Officer and Chief Financial Officer (Principal Financial Officer) |
Exhibit 31.2
CERTIFICATION OF CFO PURSUANT TO RULE 13a-14(a) OR 15d-14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934, AS ADOPTED PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002
I, Lisa Andoh, certify that:
| 1. | I have reviewed this Quarterly Report on Form 10-Q of Charlie GPS 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;
| 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.
Date: November 16, 2012
| /s/ Lisa Andoh | |
| Lisa Andoh | |
|
President, Chief Executive Officer and Chief Financial Officer (Principal Financial Officer) |
Exhibit 32.1
CERTIFICATION OF CEO PURSUANT TO 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 Charlie GPS Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Lisa Andoh, the President, Chief Executive Officer and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:
(1) the Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company for the periods presented therein.
| /s/ Lisa Andoh | |
| Lisa Andoh | |
|
President, Chief Executive Officer and Chief Financial Officer (Principal Financial Officer) |
November 16, 2012
This Certification accompanies this Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
|
Changes in Stockholders' Equity (Deficit) (Detail Textuals) (USD $)
|
1 Months Ended | 3 Months Ended | 13 Months Ended | |
|---|---|---|---|---|
|
Dec. 29, 2010
|
Sep. 30, 2011
|
Dec. 31, 2011
|
Sep. 30, 2012
|
|
| Common Stock, Shares Authorized | 75,000,000 | 75,000,000 | ||
| Common Stock, Par or Stated Value Per Share | $ 0.001 | $ 0.001 | ||
| Stock Issued During Period, Shares, Issued for Cash | 8,000,000 | 2,400,000 | 10,400,000 | |
| Share Price | $ 0.001 | $ 0.001 | ||
| Stock Issued During Period, Value, Issued for Cash | $ 8,000 | $ 24,000 | $ 32,000 |
|
Fair Value of Financial Instruments
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Sep. 30, 2012
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| Disclosure Text Block Supplement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial Instruments Disclosure [Text Block] | Note 4 – Fair Value of Financial Instruments
The Company adopted FASB ASC 820-10 upon inception at November 29, 2010. Under FASB ASC 820-10-5, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The standard outlines a valuation framework and creates a fair value hierarchy in order to increase the consistency and comparability of fair value measurements and the related disclosures. Under GAAP, certain assets and liabilities must be measured at fair value, and FASB ASC 820-10-50 details the disclosures that are required for items measured at fair value.
The Company doesn’t have any financial instruments that must be measured under the new fair value standard. The Company’s financial assets and liabilities are measured using inputs from the three levels of the fair value hierarchy. The three levels are as follows:
Level 1 - Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2 - Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs).
Level 3 - Unobservable inputs that reflect our assumptions about the assumptions that market participants would use in pricing the asset or liability.
The following schedule summarizes the valuation of financial instruments at fair value on a non-recurring basis in the balance sheets as of September 30, 2012 and December 31, 2011:
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