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RBIZ > SEC Filings for RBIZ > Form 10-Q on 23-Jun-2014All Recent SEC Filings

Show all filings for REALBIZ MEDIA GROUP, INC

Form 10-Q for REALBIZ MEDIA GROUP, INC


23-Jun-2014

Quarterly Report


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the attached consolidated unaudited financial statements and notes thereto, and our consolidated audited financial statements and related notes for our fiscal year ended October 31, 2013 found in our Annual Report on Form 10-K. In addition to historical information, the following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Where possible, we have tried to identify these forward looking statements by using words such as "anticipate," "believe," "intends," or similar expressions. Our actual results could differ materially from those anticipated by the forward-looking statements due to important factors and risks including, but not limited to, those set forth in our Annual Report on Form 10-K.

Cautionary Note Regarding Forward-Looking Statements

Some of the statements made in this section of our report are forward-looking statements. These forward-looking statements generally relate to and are based upon our current plans, expectations, assumptions and projections about future events. Our management currently believes that the various plans, expectations, and assumptions reflected in or suggested by these forward-looking statements are reasonable. Nevertheless, all forward-looking statements involve risks and uncertainties and our actual future results may be materially different from the plans, objectives or expectations, or our assumptions and projections underlying our present plans, objectives and expectations, which are expressed in this section.

In light of the foregoing, prospective investors are cautioned that the forward-looking statements included in this filing may ultimately prove to be inaccurate-even materially inaccurate. Because of the significant uncertainties inherent in such forward-looking statements, the inclusion of such information should not be regarded as a representation or warranty by RealBiz Media Group, Inc. or any other person that our objectives, plans, expectations or projections that are contained in this filing will be achieved in any specified time frame, if ever. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document. The risks discussed in the Item 1A of this filing should be considered in evaluating our prospects and future performance.

Critical Accounting Policies and Estimates

The discussion and analysis of the Company's financial condition and results of operations are based upon its consolidated unaudited financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these unaudited financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent liabilities. On an on-going basis, management evaluates past judgments and estimates, including those related to bad debts, potential impairment of intangible assets, accrued liabilities, and contingencies. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The accounting policies and related risks described in the Company's annual report on Form 10-K as filed with the Securities and Exchange Commission on February 13, 2014 are those that depend most heavily on these judgments and estimates. As of April 30, 2014, there had been no material changes to any of the critical accounting policies contained therein.

Results of Operations

Three months ended April 30, 2014 compared to three months ended April 30, 2013.

Revenues

Our total revenues decreased 21% to $252,560 for the three months ended April 30, 2014, compared to $319,174 for the three months ended April 30, 2013, a decrease of $66,614. This is due to the loss of several single agent accounts and smaller brokers to competitors who offered more features.

Cost of Revenues

Cost of revenues increased 28% to $17,135 for the three months ended April 30, 2014, compared to $13,414 for the three months ended April 30, 2013, an increase of $3,721. This is due to the recognition of commissions for the revenue share portion of the multiple listing service contracts.

Operating Expenses

Our operating expenses, which include salaries and benefits, selling and promotion and general and administrative expenses, remained relatively stable and increased to $1,259,196 for the three months ended April 30, 2014, compared to $1,253,606 for the three months ended April 30, 2013, an increase of $5,590. This increase was substantially due to an increase in web hosting of $182,409, and to a lesser extent an increase in investor relations of $82,144, an increase in selling and promotion of $57,970, an increase in audit and accounting of $31,353, an increase in legal and professional of $21,097, an increase in travel and entertainment of $20,085, an increase in depreciation of $19,630, an increase in filing fees of $13,270, an increase in bank charges of $4,132 and an increase in dues and subscriptions of $3,982. Additionally, this was offset by a decrease in amortization of intangible assets of $359,104 and to a lesser extent a decrease in salaries and benefits of $20,681, a decrease in consulting fees of $19,409, a decrease in insurance of $10,358, a decrease in rent of $7,558, a decrease in office expense of $6,076, a decrease in miscellaneous expense of $7,021 and a decrease in telephone expense of $634.

Other Income (Expenses)

Our other income/expenses decreased 60% to $154,026 of other income for the three months ended April 30, 2014, compared to $384,513 of other income for the three months ended April 30, 2013, a decrease of $230,487. This decrease was substantially due a decrease in gain on forgiveness of debt of $384,304 and to a lesser extent a decrease in exchange gains of $23,428 and interest expense of $444. This was an offset by an increase in other income of $177,689 primarily due to a net grant received from a grant program in Canada to encourage research and development.

Net Loss

We had a net loss of $869,745 for the three months ended April 30, 2014, compared to net loss of $563,333 for the three months ended April 30, 2013, an increase of $306,412. The increase in net loss from 2013 to 2014 was substantially due to an increase in web hosting of $182,409, a decrease in gain on forgiveness of debt of $384,304 and to a lesser extent an increase in investor relations of $82,144 and selling and promotion of $57,970, offset by a decrease in amortization of $359,104 and other items that net to $41,311.

Six months ended April 30, 2014 compared to six months ended April 30, 2013.

Revenues

Our total revenues decreased 16% to $498,614 for the six months ended April 30, 2014, compared to $591,169 for the six months ended April 30, 2013, a decrease of $92,555. This is due to the loss of several single agent accounts and smaller brokers to competitors who offered more features.

Cost of Revenue

Cost of revenues increased 10% to $39,125 for the six months ended April 30, 2014, compared to $35,619 for the six months ended April 30, 2013, an increase of $3,506. This is due to the recognition of commissions for the revenue share portion of the multiple listing service contracts.

Operating Expenses

Our operating expenses, which include salaries and benefits, selling and promotion and general and administrative expenses, increased 65% to $2,941,880 for the six months ended April 30, 2014, compared to $1,779,242 for the six months ended April 30, 2013, an increase of $1,162,638. This increase was substantially due to an increase in consulting fees of $651,248 and to a lesser extents an increase in investor relations of $210,502, an increase in web hosting of $182,809, an increase in travel and entertainment of $91,185, an increase in selling and promotion of $89,633, an increase in audit and accounting fees of $47,879, an increase in legal and professional fees of $41,018, an increase in filing fees of $21,200, an increase in depreciation of $10,410, an increase in bank charges of $9,312, an increase in insurance of $7,384 and an increase in office expense of $1,390. This was partial offset by a decrease in salaries and benefits of $177,585 and to a lesser extent a decrease in amortization of intangibles of $14,767, a decrease in rent of $466 and a decrease in miscellaneous expenses of $8,514.

Other Income (Expenses)

Our other income/expenses decreased 58% to $160,668 for the six months ended April 30, 2014, compared to $381,723 of other income for the six months ended April 30, 2013, a decrease of $221,055. This decrease was substantially due a decrease in gain on forgiveness of debt of $384,304 and to a lesser extent an increase in exchange losses of $13,126 and interest expense of $1,314. This was an offset by an increase in other income of $177,689 primarily due to a net grant received from a grant program in Canada to encourage research and development.

Net Loss

We had a net loss of $2,321,723 for the six months ended April 30, 2014, compared to net loss of $841,969 for the six months ended April 30, 2013, an increase of $1,479,754. The increase in net loss from 2013 to 2014 was substantially due to an increase in consulting fees incurred in raising capital of $651,248 and to a lesser extent an increase in investor relations of $210,502, along with other factors noted above.

Assets and Employees; Research and Development

We do not currently anticipate purchasing any equipment or other assets in the near term, however, as we expand operations, we will need additional equipment and employees to create and market our products.

Liquidity and Capital Resources; Anticipated Financing Needs

At April 30, 2014, the Company had $23,210 cash on-hand, a decrease of $1,281,064 from $1,304,374 at the end of fiscal 2013. The decrease in cash was due primarily to operating expenses.

Net cash used in operating activities was $1,773,614 for the six months ended April 30, 2014, an increase of $1,535,380 from $238,234 used during the six months ended April 30, 2013. This increase was mainly due to an increase in net loss and due from affiliates offset by stock based compensation and consulting fees.

We have financed our operations since inception primarily through proceeds from equity financings and revenue derived from operations. During the six months ended April 30, 2014, we raised $795,100 from the sale of common stock and warrants and the exercise of warrants. Our continued operations will primarily depend on our ability to raise additional capital from various sources including equity and debt financings, as well as our revenue derived from operations. We can give no assurances that any additional capital that we are able to obtain will be sufficient to meet our needs or will be on favorable terms. Based on our current plans, we believe that our cash provided from the above sources will be sufficient to enable us to meet our planned operating needs for at least the next 12 months.

We have based our estimate on assumptions that may prove to be wrong. We may need to obtain additional funds sooner or in greater amounts than we currently anticipate. Potential sources of financing include strategic relationships, public or private sales of our shares or debt and other sources. We may seek to access the public or private equity markets when conditions are favorable due to our long-term capital requirements. We do not have any committed sources of financing at this time, and it is uncertain whether additional funding will be available when we need it on terms that will be acceptable to us, or at all. If we raise funds by selling additional shares of common stock or other securities convertible into common stock, the ownership interest of our existing stockholders will be diluted. If we are not able to obtain financing when needed, we may be unable to carry out our business plan. As a result, we may have to significantly limit our operations and our business, financial condition and results of operations would be materially harmed.

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