Commission File Number:
|
0-13215
|
WARP 9, INC.
|
|
(Exact name of registrant as specified in its charter)
|
|
NEVADA
|
30-0050402
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
6500 Hollister Avenue, Suite 120, Santa Barbara, CA 93117
|
|
(Address of principal executive offices) (Zip Code)
|
|
(805) 964-3313
|
|
Registrant's telephone number, including area code
|
|
(Former name, former address and former fiscal year, if changed since last report)
|
Yes
|
[_X_]
|
No
|
[__]
|
Yes
|
[_X_]
|
No
|
[__]
|
Large accelerated filer
|
[___]
|
Accelerated filer
|
[___]
|
|
Non-accelerated filer
(Do not check if a smaller reporting company)
|
[___]
|
Smaller reporting company
|
[_X_]
|
Yes
|
[__]
|
No
|
[_X_]
|
PART I – FINANCIAL INFORMATION
|
Page
|
|||
Item 1.
|
Consolidated Financial Statements
|
3
|
||
Consolidated Balance Sheets as of March 31, 2012 (unaudited) and June 30, 2011 (audited)
|
3
|
|||
Consolidated Statements of Operations for the Three Months and Nine Months ended March 31, 2012 and March 31, 2011 (unaudited)
|
4
|
|||
Consolidated Statement of Shareholders’ Equity for the Nine Months ended March 31, 2012 (unaudited)
|
5
|
|||
Consolidated Statements of Cash Flows for the Nine Months ended March 31, 2012 and March 31, 2011 (unaudited)
|
6
|
|||
Notes to Consolidated Financial Statements (unaudited)
|
7
|
|||
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
10
|
||
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
13
|
||
Item 4T.
|
Controls and Procedures
|
13
|
||
PART II - OTHER INFORMATION
|
||||
Item 1.
|
Legal Proceedings
|
14
|
||
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
14
|
||
Item 3.
|
Defaults Upon Senior Securities
|
14
|
||
Item 4.
|
Mine Safety Disclosures
|
14
|
||
Item 5.
|
Other Information
|
14
|
||
Item 6.
|
Exhibits
|
14
|
||
Signatures
|
15
|
March 31, 2012
|
June 30, 2011
|
|||||||
(Unaudited)
|
||||||||
ASSETS
|
||||||||
CURRENT ASSETS
|
||||||||
Cash
|
$
|
55,629
|
$
|
575,398
|
||||
Accounts Receivable, net
|
118,880
|
68,269
|
||||||
Prepaid and Other Current Assets
|
29,202
|
25,388
|
||||||
TOTAL CURRENT ASSETS
|
203,711
|
669,055
|
||||||
PROPERTY & EQUIPMENT, at cost
|
||||||||
Furniture, Fixtures & Equipment
|
88,023
|
89,485
|
||||||
Computer Equipment
|
273,410
|
632,793
|
||||||
Computer Software
|
14,025
|
20,972
|
||||||
Leasehold Improvements
|
18,696
|
18,696
|
||||||
394,154
|
761,946
|
|||||||
Less accumulated depreciation
|
(322,331
|
)
|
(681,131
|
)
|
||||
NET PROPERTY AND EQUIPMENT
|
71,823
|
80,815
|
||||||
OTHER ASSETS
|
||||||||
Lease Deposit
|
8,244
|
8,244
|
||||||
Internet Domain, net
|
1,333
|
1,513
|
||||||
Licensing fees
|
20,000
|
29,000
|
||||||
TOTAL OTHER ASSETS
|
29,577
|
38,757
|
||||||
TOTAL ASSETS
|
$
|
305,111
|
$
|
788,627
|
||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||
CURRENT LIABILITIES
|
||||||||
Accounts Payable
|
$
|
47,746
|
$
|
71,248
|
||||
Accrued Expenses
|
77,584
|
92,845
|
||||||
Deferred Income
|
24,753
|
32,010
|
||||||
Deferred Operating Lease Liability
|
5,471
|
4,045
|
||||||
Note Payable
|
39,838
|
37,867
|
||||||
Customer Deposit
|
21,361
|
27,873
|
||||||
TOTAL CURRENT LIABILITIES
|
216,753
|
265,888
|
||||||
LONG TERM LIABILITIES
|
||||||||
Note payable
|
-
|
1,971
|
||||||
TOTAL LONG TERM LIABILITIES
|
-
|
1,971
|
||||||
TOTAL LIABILITIES
|
216,753
|
267,859
|
||||||
SHAREHOLDERS' EQUITY
|
||||||||
Preferred Stock, $0.001 Par Value;
|
||||||||
5,000,000 Authorized Shares; no shares issued and outstanding
|
-
|
-
|
||||||
Common Stock, $0.001 Par Value;
|
||||||||
495,000,000 Authorized Shares;
|
||||||||
96,135,126 and 96,135,126 Shares Issued and Outstanding , respectively
|
96,135
|
96,135
|
||||||
Additional Paid In Capital
|
7,301,720
|
7,299,905
|
||||||
Accumulated Deficit
|
(7,309,497)
|
(6,875,272
|
)
|
|||||
TOTAL SHAREHOLDERS' EQUITY
|
88,358
|
520,768
|
||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
305,111
|
$
|
788,627
|
||||
Three Months Ended
|
Nine Months Ended
|
|||||||||||||||
March 31, 2012
|
March 31, 2011
|
March 31, 2012
|
March 31, 2011
|
|||||||||||||
REVENUE
|
$
|
220,406
|
$
|
228,281
|
$
|
628,899
|
$
|
728,004
|
||||||||
COST OF SERVICES
|
30,408
|
14,176
|
80,773
|
54,871
|
||||||||||||
GROSS PROFIT
|
189,998
|
214,105
|
548,126
|
673,133
|
||||||||||||
OPERATING EXPENSES
|
||||||||||||||||
Selling, general and administrative expenses
|
276,983
|
220,428
|
882,565
|
795,897
|
||||||||||||
Research and development
|
24,544
|
29,178
|
92,554
|
75,443
|
||||||||||||
Stock option expense
|
894
|
63
|
1,815
|
265
|
||||||||||||
Depreciation and amortization
|
5,404
|
6,762
|
17,065
|
20,212
|
||||||||||||
TOTAL OPERATING EXPENSES
|
307,825
|
256,431
|
993,999
|
891,817
|
||||||||||||
LOSS FROM OPERATIONS BEFORE OTHER INCOME/(EXPENSES)
|
(117,827
|
)
|
(42,326
|
)
|
(445,873
|
)
|
(218,684
|
)
|
||||||||
OTHER INCOME/(EXPENSE)
|
||||||||||||||||
Interest income
|
-
|
6,087
|
(6,401
|
)
|
24,236
|
|||||||||||
Other income
|
7,500
|
7,500
|
22,740
|
15,000
|
||||||||||||
Penalties
|
-
|
(98)
|
-
|
(98)
|
||||||||||||
Interest expense
|
(1,030)
|
(1,403
|
)
|
(3,029)
|
(3,415
|
)
|
||||||||||
TOTAL OTHER INCOME (EXPENSE)
|
6,470
|
12,086
|
13,310
|
35,723
|
||||||||||||
LOSS FROM OPERATIONS BEFORE PROVISION FOR TAXES
|
(111,357)
|
(30,240
|
)
|
(432,563)
|
(182,961
|
)
|
||||||||||
PROVISION FOR INCOME (TAXES)/BENEFIT
|
||||||||||||||||
Income tax (provision)/benefit
|
-
|
11,473
|
(1,662
|
)
|
17,981
|
|||||||||||
PROVISION FOR INCOME (TAXES)/BENEFIT
|
-
|
11,473
|
(1,662
|
)
|
17,981
|
|||||||||||
NET LOSS
|
$
|
(111,357)
|
$
|
(18,767
|
)
|
$
|
(434,225)
|
$
|
(164,980
|
)
|
||||||
BASIC AND DILUTED EARNINGS PER SHARE
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
$
|
(0.00
|
)
|
||||
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
|
||||||||||||||||
BASIC AND DILUTED
|
96,135,126
|
68,115,963
|
96,135,126
|
68,115,963
|
||||||||||||
Additional
|
||||||||||||||||||||||||||||
Preferred Stock
|
Common Stock
|
Paid-in
|
Accumulated
|
|||||||||||||||||||||||||
Shares
|
Value
|
Shares
|
Value
|
Capital
|
Deficit
|
Total
|
||||||||||||||||||||||
Balance, June 30, 2011
|
-
|
$
|
-
|
96,135,126
|
$
|
96,135
|
$
|
7,299,905
|
$
|
(6,875,272
|
)
|
$
|
520,768
|
|||||||||||||||
Stock compensation expense (unaudited)
|
-
|
-
|
-
|
-
|
1,815
|
-
|
1,815
|
|||||||||||||||||||||
Net loss for the nine months ended March 31, 2012 (unaudited)
|
-
|
-
|
-
|
-
|
-
|
(434,225)
|
(434,225)
|
|||||||||||||||||||||
Balance, March 31, 2012 (unaudited)
|
-
|
$
|
-
|
96,135,126
|
$
|
96,135
|
$
|
7,301,720
|
$
|
(7,309,497)
|
$
|
88,358
|
Nine Months Ended
|
||||||||
March 31, 2012
|
March 31, 2011
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net loss
|
$
|
(434,225)
|
$
|
(164,980
|
)
|
|||
Adjustment to reconcile net loss to net cash
|
||||||||
used by operating activities
|
||||||||
Depreciation and amortization
|
17,065
|
20,212
|
||||||
Bad debt expense
|
11,256
|
(48,165
|
)
|
|||||
Cost of stock compensation recognized
|
1,815
|
265
|
||||||
Contributed services
|
-
|
64,614
|
||||||
Change in assets and liabilities:
|
||||||||
(Increase) Decrease in:
|
||||||||
Accounts receivable
|
(61,867
|
)
|
(556
|
)
|
||||
Prepaid and other assets
|
(3,814
|
)
|
(11,288
|
)
|
||||
Deferred tax asset
|
-
|
(20,185
|
)
|
|||||
Deferred operating lease liability
|
1,426
|
3,418
|
||||||
Deposits
|
-
|
8,205
|
||||||
Other Assets
|
9,000
|
-
|
||||||
Increase (Decrease) in:
|
||||||||
Accounts payable
|
(23,502
|
)
|
(52,384
|
)
|
||||
Accrued expenses
|
(15,261)
|
(1,257
|
)
|
|||||
Deferred income
|
(7,257
|
)
|
21,676
|
|||||
Other liabilities
|
(6,512)
|
(900
|
)
|
|||||
NET CASH PROVIDED/(USED) IN OPERATING ACTIVITIES
|
(511,876
|
)
|
(181,325
|
)
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Net purchase / (disposal) of property and equipment
|
(7,893
|
)
|
(5,478
|
)
|
||||
NET CASH USED IN INVESTING ACTIVITIES
|
(7,893
|
)
|
(5,478
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Payments on notes payable
|
-
|
(21
|
)
|
|||||
NET CASH PROVIDED/(USED) IN FINANCING ACTIVITIES
|
-
|
(21
|
)
|
|||||
NET DECREASE IN CASH
|
(519,769
|
)
|
(186,824
|
)
|
||||
CASH, BEGINNING OF PERIOD
|
575,398
|
733,737
|
||||||
CASH, END OF PERIOD
|
$
|
55,629
|
$
|
546,913
|
||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
|
||||||||
Interest paid
|
$
|
27
|
$
|
432
|
||||
Taxes paid
|
$
|
3,849
|
$
|
2,204
|
||||
1.
|
BASIS OF PRESENTATION
|
2.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
Management reviewed accounting pronouncements issued during the nine months ended March 31, 2012, and no pronouncements were adopted during the period.
|
March 31, 2012
|
||||||||
Options
|
Weighted
average
exercise
price
|
|||||||
Outstanding -beginning of period
|
3,588,000
|
$
|
0.01
|
|||||
Granted
|
-
|
-
|
||||||
Exercised
|
-
|
-
|
||||||
Forfeited
|
(10,000
|
)
|
0.40
|
|||||
Outstanding - end of period
|
3,578,000
|
$
|
0.01
|
|||||
Exercisable at the end of period
|
437,628
|
$
|
0.03
|
|||||
Weighted average fair value of
|
||||||||
options granted during the year
|
$
|
14,000
|
Exercise
prices
|
Number of
options
outstanding
|
Weighted
Average
remaining
contractual
life (years)
|
||||||||
$ | 0.350 | 20,000 | 1.75 | |||||||
$ | 0.050 | 50,000 | 2.56 | |||||||
$ | 0.050 | 8,000 | 6.33 | |||||||
$ | 0.004 | 3,500,000 | 9.54 | |||||||
3,578,000 |
|
Management has evaluated subsequent events according to the requirements of ASC TOPIC 855, and has determined that no such events require disclosure.
|
Item 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
●
|
statements concerning the potential benefits that Warp 9, Inc. (“W9” or the “Company”) may experience from its business activities and certain transactions it contemplates or has completed; and
|
●
|
statements of W9’s expectations, beliefs, future plans and strategies, anticipated developments and other matters that are not historical facts. These statements may be made expressly in this Form 10-Q. You can find many of these statements by looking for words such as “believes,” “expects,” “anticipates,” “estimates,” “opines,” or similar expressions used in this Form 10-Q. These forward-looking statements are subject to numerous assumptions, risks and uncertainties that may cause W9’s actual results to be materially different from any future results expressed or implied by W9 in those statements. The most important facts that could prevent W9 from achieving its stated goals include, but are not limited to, the following:
|
|
(a)
|
volatility or decline of the Company's stock price;
|
|
(b)
|
potential fluctuation in quarterly results;
|
|
(c)
|
failure of the Company to earn revenues or profits;
|
|
(d)
|
inadequate capital to continue or expand its business, and inability to raise additional capital or financing to implement its business plans;
|
|
(e)
|
failure to further commercialize its technology or to make sales;
|
|
(f)
|
loss of customers and reduction in demand for the Company's products and services;
|
|
(g)
|
rapid and significant changes in markets;
|
|
(h)
|
litigation with or legal claims and allegations by outside parties, reducing revenue and increasing costs;
|
|
(i)
|
insufficient revenues to cover operating costs;
|
|
(j)
|
failure of the re-licensing or other commercialization of the Roaming Messenger technology to produce revenues or profits;
|
|
(k)
|
aspects of the Company’s business are not proprietary and in general the Company is subject to inherent competition;
|
|
(l)
|
further dilution of existing shareholders’ ownership in Company;
|
|
(m)
|
uncollectible accounts and the need to incur expenses to collect amounts owed to the Company;
|
|
(n)
|
the Company does not have an Audit Committee nor sufficient independent directors.
|
EXHIBIT NO.
|
DESCRIPTION
|
|
31.1
|
Section 302 Certification
|
|
31.2
|
Section 302 Certification
|
|
32.1
|
Section 906 Certification
|
|
32.2
|
Section 906 Certification
|
|
EX-101.INS
|
XBRL INSTANCE DOCUMENT
|
|
EX-101.SCH
|
XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT
|
|
EX-101.CAL
|
XBRL TAXONOMY EXTENSION CALCULATION LINKBASE
|
|
EX-101.DEF
|
XBRL TAXONOMY EXTENSION DEFINITION LINKBASE
|
|
EX-101.LAB
|
XBRL TAXONOMY EXTENSION LABELS LINKBASE
|
|
EX-101.PRE
|
XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE
|
WARP 9, INC.
|
|||
(Registrant)
|
|||
Dated: May 15, 2012
|
By:
|
/s/ William E. Beifuss
|
|
William E. Beifuss, Chief Executive Officer
|
|||
By: /s/ William E. Beifuss
|
Dated: May 15, 2012
|
William E. Beifuss, Chief Executive Officer and Corporate Secretary
(Principal Executive Officer)
|
|
By: /s/ Gregory S. Boden
|
|
Gregory S. Boden, Chief Financial Officer
(Principal Financial/Accounting Officer)
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Warp 9, 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 (of 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.
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Warp 9, 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.
|
|
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 (of 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: May 15, 2012
|
||
By: /s/ William E. Beifuss
|
||
William E. Beifuss, Chief Executive Officer
|
||
(Principal Executive Officer)
|
Date: May 15, 2012
|
||
By: /s/ Gregory S. Boden
|
||
Gregory S. Boden, Chief Financial Officer
|
||
(Principal Financial/Accounting Officer)
|
LIQUIDITY AND OPERATIONS
|
9 Months Ended |
---|---|
Mar. 31, 2012
|
|
LIQUIDITY AND OPERATIONS | Note 3. LIQUIDITY AND OPERATIONS
The company had net losses of $434,225 and $164,980 for the nine month periods ended March 31, 2012 and 2011, respectively, and net cash used in operating activities of $511,876 and $181,325 for the same periods, respectively.
While we expect that our capital needs in the foreseeable future will be met by cash-on-hand and existing cash flow, there is no assurance that the Company will generate any or sufficient positive cash flows, or have sufficient capital, to finance its growth and business operations, or that such capital will be available on terms that are favorable to the Company or at all. The Company has recently been incurring operating losses and experiencing negative cash flow. In the current financial environment, it could become difficult for the Company to obtain business leases and other equipment financing. There is no assurance that we would be able to obtain additional working capital through the private placement of common stock or from any other source.
Going Concern The accompanying financial statements have been prepared on a going concern basis of accounting, which contemplates continuity of operations, realization of assets and liabilities and commitments in the normal course of business. The accompanying financial statements do not reflect any adjustments that might result if the Company is unable to continue as a going concern. The Company does not generate significant revenue, and has negative cash flows from operations, which raise substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern and appropriateness of using the going concern basis is dependent upon, among other things, an additional cash infusion. Management believes the existing shareholders and potential prospective new investors will provide the additional cash needed to meet the Company’s obligations as they become due, and will allow the development of its core of business.
|