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8-Jun-2012
Quarterly Report
Results of Operations for the Three and Six Months Ended June 30, 2011 compared to the Three and Six Months Ended June 30, 2010.
Total revenues increased by $233 to $30,089 for the three months ended June 30, 2011 compared to $29,856 for the prior period ended June 30, 2010. Total revenues decreased by $(1,288) to $47,952 for the six months ended June 30, 2011 compared to $49,240 for the prior period ended June 30, 2010. We attributed the decrease to the lack of funds to increase adverting expenditures in order to take advantage of market opportunities.
Cost of sales increased by $9,031 to $20,806 for the three months ended June 30, 2011 compared to $11,775 for the prior period ended June 30, 2010. Cost of sales increased by $11,354 to $34,481 for the six months ended June 30, 2011 compared to $23,127 for the prior period ended June 30, 2010. The gross profit decreased $(8,798) to $9,283 for the three months ended June 30, 2011 compared to $18,081 for the prior period ended June 30, 2010. Gross profits for the six month period ended decreased by $(12,642) to $13,471 compared to $26,113 for the prior period ended June 30, 2010. The decrease in gross profits is attributed to the increased cost of sales and general economic conditions.
Operating expenses, including marketing, selling and general and administrative expenses for the three months ended June 30, 2011 increased by $19,332 to $49,649 compared to $30,317 for the prior period ended June 30, 2010. Operating expenses for the six months ended June 30, 2011 increased by $19,115 to $74,718 compared to $55,603 for the prior period ended June 30, 2010. The increase in operating expenses resulted primarily from an increase in accounting and legal fees incurred in the current period.
Interest expense for the three months ended June 30, 2011 totaled $23,429, an increase of $18,894 over $4,535 for the three months ended June 30, 2010. Interest expense for the six months ended June 30, 2011 totaled $47,839, an increase of $39,865 over $7,974 for the six months ended June 30, 2010. The increase in interest expense resulted from increased borrowing during the current period plus $38,842 of interest expense resulting from the amortization of debt discounts during the six months ended June 30, 2011.
Net loss for the six months ended June 30, 2011 was $(105,009) as compared to a net loss of $(37,794) for the six months ended June 30, 2010.
Liquidity and Capital Resources
At June 30, 2011, we had an accumulated deficit of $(536,451), and we expect to incur additional losses in the foreseeable future. While we have funded our operations since inception through investor and related party loans and through collection of our accounts receivable, there can be no assurance that adequate financing will continue to be available to us and, if available, on terms that are favorable to us.
As of June 30, 2011, our available balance of cash was $1,813.
We expect to put our present and anticipated capital resources to expanding our operations.
To date, the Company has incurred substantial losses, and will require financing for working capital to meet its operating obligations. We anticipate that we will require financing on an ongoing basis for the foreseeable future.
If the Company cannot find sources of additional financing to fund its working capital needs, the Company will be unable to obtain sufficient capital resources to operate our business. We cannot assure you that we will be able to access any financing in sufficient amounts or at all when needed. Our inability to obtain sufficient working capital funding will have an immediate material adverse effect upon our financial condition and our business.
The Company currently has no other significant sources of working capital or cash commitments. However, no assurance can be given that the Company will raise sufficient funds from such financing arrangements, or that Company will ever produce sufficient revenues to sustain its operations, or that a market will develop for its common stock for which a significant amount of the Company's financing is dependent upon.
During the six months ended June 30, 2011, the Company had a net decrease in cash of $(17). The Company's principal sources and uses of funds were as follows:
Cash used in operating activities. The Company used $(40,017) in cash for operating activities for the six months ended June 30, 2011 as compared to $(24,837) in the prior six months ended June 30, 2010. This result is primarily attributed to the increased net loss for the period, partially offset by a derivative liability of $34,393.
Cash provided by financing activities. The Company received proceeds from convertible promissory notes payable of $40,000 during the six months ended June 30, 2011.
There was no significant impact on the Company's operations as a result of inflation for the six months ended June 30, 2011.
Off Balance Sheet Arrangements
During the six months ended June 30, 2011, we did not engage in any material off-balance sheet activities nor have any relationships or arrangements with unconsolidated entities established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. Further, we have not guaranteed any obligations of unconsolidated entities nor do we have any commitment or intent to provide additional funding to any such entities.
Forward Looking Statements - Cautionary Factors
Certain statements in this report contain "forward-looking statements" that may relate to such matters as anticipated financial performance, future revenues or earnings, business prospects, projected ventures, new products and services, anticipated market performance and similar matters. When used in this report, the words "may," "will," expect," anticipate," "continue," "estimate," "project," "intend," and similar expressions are intended to identify forward-looking statements regarding events, conditions, and financial trends that may affect our future plans of operations, business strategy, operating results, and financial position. We caution readers that a variety of factors could cause our actual results to differ materially from the anticipated results or other matters expressed in forward-looking statements.
Additional risks and uncertainties not currently known or deemed to be immaterial also may materially adversely affect the business, financial condition and/or operating results.
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