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| SBJX.OB > SEC Filings for SBJX.OB > Form 10-Q on 20-May-2009 | All Recent SEC Filings |
20-May-2009
Quarterly Report
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Statements in this discussion which are not historical facts may be considered "forward looking statements" within the meaning of Section 21E of the Securities Act of 1934, as amended. The words "believe", "expect", "anticipate", "estimate", and similar expressions identify forward looking statements. Any forward looking statement involves risks and uncertainties that could cause actual events or results to differ, perhaps materially, from the events described in the forward looking statements. Readers are cautioned not to place undue reliance on these forward looking statements. The Company undertakes no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise. The risks associated with the Company's forward looking statements include, but are not limited to, risks associated with the Company's losses and uncertain profitability, sales and marketing strategies, competition, general economic conditions, reliance on key management and production people, current and future capital needs, dilution, effects of outstanding notes and convertible debentures, limited public market for the Company's capital stock, low stock price, and lack of liquidity.
The following discussion and analysis should be read in conjunction with the Financial Statements, related notes and other information included in this quarterly report on Form 10-Q and the annual report Form 10K for 12-31-2008.
Description of Business
Subjex Corporation, is a Minnesota corporation formed in 1999, for the creation, custom development and incubation of "outside the box" artificial intelligence technologies. We translate our advanced technology development methods into extreme value solutions for specialized industries. In other words: we develop products that our clientele bring to the market directly or as a private labeled product.
Since 1999, Subjex Corporation has strived to be a "behind the scenes" leader in artificial intelligence software development. Our development projects have included SEO (Search Engine Optimization) "cloaking" software, e-commerce advertising, search engine technology and products for the capital markets.
One of our most recent successes is Forecast Market Software (FMS), a trade timing and index forecasting engine that forecasts the DJIA, the XAU, and the DJT. Since its launch in February 2006, FMS has become a quantitative analysis industry leader, powering one of the best performing hedge funds in the industry, Qubitrage LLC (www.qubitrage.com) a Nevada based hedge fund (averaging nearly 40% annual returns since inception).
Subjex Corporation developed one the first semi-autonomous virtual agent Customer Service Representative (CSR) products in the market in 2001. "SubjexCSR" as it was called originally was tested on over 500 e-commerce business web sites for over 4 years. Our latest artificial intelligence CSR/CRM project called AiNDEE (www.AiNDEE.com) was introduced in 2008. Unlike conventional CSR/CRM software solutions on the market, that are mainly auto responder "dialogue based" (stimulus response) products, AiNDEE is one of the most highly advanced artificial intelligent CRM/sales solutions available. It incorporates many new ground breaking advancements in virtual communication and human interaction. Able to engage in real "interview" conversation, where it asks users questions about what they just asked (multi-tiered bi-directional dialogue), AiNDEE is a break-through in CRM (Customer Relationship Management).
Principal Product Development and Resulting Services
On February 15th 2008 the Company launched version 3 of FMS which since this time has performed up to managements expectations. During 2008, the Company licensed the use of the underlying algorithms of Forecast Market Software to Qubitrage LLC "Qubitrage" a Nevada based hedge fund to monetize the "FMS" (Forecast Market Software) technology. See "Recent Developments" for more details.
Trademarks and Patents
The Company's policy is to hold trademarks and patent protection for its business that management feels is necessary to protect the Company interests.
The Company believes it is in compliance with all current federal and state environmental laws.
Employees
The Company currently has employees, an outside team of consultants and contractors to fit the Company's operational needs. The Company considers its relations with its consultants and contractors to be outstanding.
Competition
The Company is aware of other companies selling solutions that appear to be similar to Subjex; however management is not aware of any companies that are selling the same solutions as we offer. In addition, management continues to market it products to businesses, qualified investors and institutions. The Company believes that its solutions are more effective than its competition. Management believes that while some companies may have greater resources than us, we have more advanced products which continue to grow in power and client usage.
Recent Developments
Subjex Corporation has recently become part of a technology collaboration development project with the US Business Authority (www.usbusinessauthority.com). USBA's aim is to bring human interactive artificial intelligent CSR/CRM solutions like "AiNDEE" which, to its select clientele, thus creating 24/7/365 revenue share opportunities with the end clients. The U.S. Business Authority's unique intelligence gathering methodology and capabilities, allow them to effectively identify and deliver strategic business solutions, which reveal unprecedented new revenue share opportunities while also substantially decreasing both net and gross attrition rates across the board in our end clients business.
Recently the Company has become engaged with Qubitrage LLC "Qubitrage" a Nevada based hedge fund to monetize the "FMS" (Forecast Market Software) technology. In exchange for the exclusive use of the FMS technology Qubitrage agreed to give all earned fees (2% annual management fee and 20% performance fee) to the Company. This agreement is designed to create a revenue stream to the Company in direct proportion to the success of the FMS technology in the markets and the funds under management. Therefore the Company has agreed to market the hedge fund at its own expense. Further the Company has provided its CEO, Andrew Dean Hyder as the fund manager. Mr. Hyder will not receive any additional compensation for this duty.
FMS (Forecast Market Software) is based upon a proprietary artificial intelligence trade timing engine invented by Andrew D. Hyder. Subjex Corporation licenses the algorithm processes for its FMS product from its Chief Executive Officer, Andrew D. Hyder, on an exclusive 10 year self-renewing contract basis.
FMS has proven to be successful in terms of its long term objective of generating positive returns. The performance of FMS has been exceptional in terms of percentage returns in 2006 in which it generated an audited 70% return. However the software did undergo problems in the 4th quarter of 2007 in which all the gains for 2007 were lost in this quarter. Therefore the net result of 2007 was a loss of 23%. Management proceeded to reengineer the software based on the original algorithm more closely. As a result of the reengineering, management now believes that FMS will perform more in line with 2006 results. This is evident to management since the final enhancements were made on Feb 15th 2008. Since this time FMS has taken only small trade losses, and has earned over 58% for its clients in 2008 and 7% for the first quarter of 2009. The Company does not plan on making future changes to FMS now that it is performing as desired. However as with any system in the markets, there are risks associated with any investment.
The Company's basis of accounting contemplates the realization of assets and the satisfaction of its liabilities and commitments in the normal course of operations. Since inception, the Company has incurred losses of $7,082,239 and has a working capital deficit of $669,617 as of March 31, 2009. The Company had a working capital deficit and recurring net losses from operations in 2008 also.
Despite the net losses of past years operations, the funds spent have resulted in a significant ownership and control of technology and infrastructure which the company expects to generate considerable earnings in the future. The FMS technology in managements view simply needed the proper marketing form to attract large instutional funds to mirror its trades. There is no further technology infrastructure investments necessary to grow the FMS business. FMS is out-performing the vast majority of main-stream investments, therefore, in management's view it is simply a matter of time before substantial earnings will be made as a result.
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