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MOMO > SEC Filings for MOMO > Form 10-Q on 19-Nov-2013All Recent SEC Filings

Show all filings for MOPALS.COM, INC.

Form 10-Q for MOPALS.COM, INC.


19-Nov-2013

Quarterly Report


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The following is management's discussion and analysis of the consolidated financial condition and results of operations of Mopals.com, Inc. ("Mopals", the "Company", "we", and "our") for the three and nine month period ended September 30, 2013. The following information should be read in conjunction with the consolidated interim financial statements for the period ended September 30, 2013 and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q (this "Report").

Overview

Mopals.com, Inc. was incorporated under the laws of Delaware on February 6, 2003 as MagnaData, Inc. In February of 2005, articles of amendment were filed with the State of Delaware changing the name of our company to MortgageBrokers.com Holdings, Inc. and thereafter, operated as a mortgage brokerage in Canada. On March 26, 2013, articles of amendments were filed with the State of Delaware changing the name of our company to Mopals.com, Inc. pursuant to execution of an asset spin out and shareholder loan cancellation agreement and subsequent execution of a share exchange agreement. Pursuant to the terms of the share exchange agreement, the Company acquired 100% of the issued and outstanding equity securities of Mopals Inc. ("Mopals (Nevada)"), a Nevada private corporation, in exchange for the issuance of 50,000,000 shares of the Company's common stock.

Mopals carries out all business through its wholly owned subsidiary, Mopals Canada Inc. Mopals Canada Inc. (formerly IQIC.com Inc.) was incorporated federally in Canada on August 7, 2012.

Mopals is a development stage internet and mobile based social media brand loyalty company. Mopals is currently beta testing the first version of our web and mobile software application for both the iOS and Android mobile device operating systems. It is our intent that the Mopals technology platform under development will allow consumers to earn incentives for their spending and referral behavior with retail businesses and allow retail businesses to build their customer base and enhance customer experiences through promotional programs. Our consumer incentives are centered around MoCoins (our points based incentive and currency) for a number of online and 'in-store' behaviors within a consumer's social network including rewards for promotional participation; 'liking', sharing or reviewing an experience at a business; referring business promotions; creating content driving polls; or referring friends to join the Mopals community. Mopals aims to be a leader in how brands inspire customer loyalty, driving online, brand enhancing behavior and sales. It is our aim that our technology platform will enable businesses to connect with their customers, giving them a cost effective means to encourage and reward brand enhancing behavior. It is our intent that our proprietary platform 'IQ Engine' under development will also allow businesses to receive data associated with their consumer's behavior from which they might target offers and marketing strategies.

Following our product launch, it is Mopal's plan to earn revenue from business subscriptions to receive ongoing consumer data and as well as from receiving a percentage of promotion-based sales revenue from participating businesses.

In additional to the financial condition and results of operations of the Company, it is management's belief that growth of our Company will also, in part, be demonstrated through the metrics of MoCoins points sold, the total number of consumers signed up and making use of the Mopals platform and the number of retail businesses who sign on to and offer promotions through the Mopals community.

As of September 30, 2013, the Company had fourteen (14) full-time employees and eighteen (18) independent contractors.

The Company's corporate offices are located at 294 Richmond Street East, Suite 200, Toronto, Ontario, CANADA, M5A 1P5. Our current contact information for our Ontario office is telephone number: (416) 362-4888. Our internet website can be found under the domain name: www.mopals.com.


Results of Operations

Three months ended September 30, 2013

Mopals had no reported revenue in our third quarter of 2013.

The Company's reported operating expenses during the three month period ending September 30, 2013 were $387,556. The primary components that comprise our operating expenses were salaries and consultant/contractor fees, general and administrative expenses and occupancy costs which are explained in detail as follows:

? 49.8% of the operating expenses in the reporting period were associated with salaries, contractor expenses and consulting fees.

? 43.1% of the operating expenses in the reporting period were associated with general and administrative expenses.

? 6.2% of our operating expenses in the reporting period were associated with occupancy costs associated with an office lease.

Our net loss for the three months ended September 30, 2013 was $387,556.

Nine months ended September 30, 2013

Mopals had no reported revenue in the nine month period ending September 30, 2013.

The Company's reported operating expenses during the nine month period ending September 30, 2013 were $773,122. The primary components that comprise our operating expenses were salaries and consultant/contractor fees, general and administrative expenses and occupancy costs which are explained in detail as follows:

? 59.1% of the operating expenses in the reporting period were associated with salaries, contractor expenses and consulting fees.

? 29.9% of the operating expenses in the reporting period were associated with general and administrative expenses.

? 9.7% of our operating expenses in the reporting period were associated with occupancy costs associated with an office lease.

Our net loss for the nine months ended September 30, 2013 was $773,122. For the period August 7, 2012 (inception) through September 30, 2013, our net loss was $936,360.

Liquidity and Capital Resources

At September 30, 2013, we had $38,406 in cash, $112,069 in prepaid expenses and $49,709 in equipment, computer software, computer hardware and furniture for a total of $200,184 in assets. Comparatively as at December 31, 2012, we had $175,799 in cash and $32,317 in prepaid expenses and $55,322 in equipment and furniture for a total of $263,438 in assets.

At September 30, 2013, we had $22,560 in accounts payable and accrued liabilities, $14,924 in accruals for stock-based compensation associated with former discontinued operations, $129 in subscription payables for common stock of the Company and $566,200 in loans payable to the Company's principal shareholder for a total of $603,813 in liabilities. Comparatively as at December 31, 2012, we had $20,348 in accounts payable and accrued liabilities and $364,315 in loans payable to the Company's principal shareholder for a total of $384,663 in liabilities.


Management makes the following comments regarding the most significant factors affecting the Company's liquidity and capital resources and their measured trends over the reporting period:

The Company's cash position decreased by approximately 78.1% over the first nine months of 2013 associated with the following:

o the Company used $824,892 in cash for operating activities over the first nine months of 2013. As a development stage company, Mopals has no revenue yet while it is building its products and services, hires software development, marketing and sales staff and establishes market partners to launch our business; and,

o the Company received $673,039 in cash from financing activities over the first nine months of 2013 as we received funds from our principal shareholder in the amount of $201,885 and received $469,105 from the subscription receivable.

The Company reported a net cash flow utilization from operating activities for the first nine months of 2013 of $824,892 with a net increase in cash flow from financing activities of $673,039 and a net negative cash flow from the purchase of capital equipment of $4,421 during the same period for an overall net negative cash flow of 156,274 out of the Company during the period.

The Company needs to raise additional capital to fund our development stage Company activities and to position the Company for a market launch of its planned products and services to generate revenue before the existing capital resources are fully utilized.

In the event that the Company runs out of available working capital resources or experiences an unforeseen negative impact to cash flow, our Company will need to rely upon the issuance of common stock and additional capital contributions from shareholders and/or loans from shareholders and third-party lenders to meet its working capital needs. There is no certainty that there will be a market for the Company's capital stock.

Off-Balance Sheet Arrangements

None.

Critical Accounting Policies

The financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States ("GAAP"). GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue, and expense amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

Going Concern

The Company's consolidated financial statements are presented on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business.

For the nine months reporting period ended September 30, 2013, the Company reported a net loss from operations of $773,122 with a net decrease in cash from operating, investing and financing activities of $156,274 during the same period. Since inception to September 30, 2013, the Company reported a net loss from operations of $936,360. Certain conditions noted below raise doubt about the Company's ability to continue as a going concern.

As a development stage company, the Company's ability to continue as a going concern is contingent upon its ability to secure additional debt or equity financing. Management's plan is to secure additional working capital funds through future debt or equity financings. There is no certainty that there will be a market for the Company's capital stock.


The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

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