UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One) | ||
[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended:June 30, 2004 | ||
Or | ||
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from ____________ to _____________ | ||
Commission File Number: 000-50465 | ||
STAT SOFTWARE, INC. (Exact name of registrant as specified in its charter) | ||
Nevada (State or other jurisdiction of incorporation or organization) | 76-0702680 (I.R.S. Employer Identification No.) | |
2061 East Sahara Avenue Las Vegas, Nevada (Address of principal executive offices) | 89107 (Zip Code) | |
(702) 732-2744 (Registrant's telephone number, including area code) | ||
N/A (Former name, former address and former fiscal year, if changed since last report) | ||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 4,314,000
STAT SOFTWARE, INC.
(A Development Stage Company)
Table of Contents
| Page |
PART I - FINANCIAL INFORMATION | |
Item 1. Financial Statements | 3 |
Balance Sheet | 4 |
Statements of Operations | 5 |
Statements of Cash Flows | 6 |
Notes | 7 |
Item 2. Management's Discussion and Plan of Operation | 8 |
PART II - OTHER INFORMATION | |
Item 4. Controls and Procedures | 10 |
Item 6. Exhibits | 10 |
SIGNATURES | 11 |
-2-
PART I - FINANCIAL INFORMATION
Item 1. Unaudited Financial Statements
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial reporting and pursuant to the rules and regulations of the Securities and Exchange Commission ("Commission"). While these statements reflect all normal recurring adjustments which are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the financial statements and footnotes thereto, which are included in the Company's Annual Report on Form 10-KSB previously filed with the Commission on March 31, 2004, and subsequent amendments made thereto.
-3-
Stat Software, Inc.
(a Development Stage Company)
Balance Sheet
(Unaudited)
June 30, | |
2004 | |
Assets | |
Current assets: | |
Cash and equivalents | $32,896 |
Accounts receivable | 1,500 |
Prepaid expense | 1,000 |
Total current assets | 35,396 |
Fixed asses, net | 2,371 |
$37,767 | |
Liabilities and Stockholders’ Equity | |
Current liabilities: | |
Accounts payable | - |
Stockholders’ equity: | |
Preferred stock, $0.001 par value, 5,000,000 | |
shares authorized, zero shares issued and outstanding | - |
Common stock, $0.001 par value, 20,000,000 | |
shares authorized, 4,314,000 shares | |
issued and outstanding as of 6/30/04 | 4,314 |
Additional paid-in capital | 96,386 |
Prior period adjustment | (1,656) |
(Deficit) accumulated during development stage | (61,277) |
37,767 | |
$37,767 | |
The accompanying Notes are an integral part of these financial statements.
-4-
Stat Software, Inc.
(a Development Stage Company)
Statements of Operations
(Unaudited)
June 13, 2002 | |||||
Three Months Ending | Six Months Ending | (Inception) to | |||
June 30, | June 30, | June 30, | |||
2004 | 2003 | 2004 | 2003 | 2004 | |
Revenue – related party | $5,000 | $13,500 | $17,250 | $13,500 | $60,588 |
Cost of revenue: | |||||
Contract labor – related party | 4,875 | 6,000 | 6,875 | 6,000 | 27,982 |
Contract labor | 2,601 | 9,000 | 9,139 | 9,000 | 29,246 |
7,476 | 15,000 | 16,014 | 15,000 | 57,228 | |
Gross profit (loss) | (2,476) | (1,500) | 1,236 | (1,500) | 3,360 |
Expenses: | |||||
General and administrative expenses | 2,257 | - | 6,254 | 1,000 | 12,922 |
General and administrative expenses – related party | - | 6,250 | - | 6,250 | 12,500 |
Research and development | - | - | 2,962 | - | 12,500 |
Depreciation expense | 311 | - | 622 | - | 1,299 |
Organizational and offering costs | - | - | - | 3,105 | 11,416 |
Consulting – related party | - | - | - | - | 17,500 |
Total expenses | 2,568 | 6,250 | 9,838 | 10,355 | 68,137 |
Other income (expense): | |||||
Gain on forgiveness of debt | 3,500 | - | 3,500 | - | 3,500 |
Net (loss) | $(1,544) | $(7,750) | $(5,102) | $(11,855) | $(61,277) |
Weighted average number of | |||||
Common shares outstanding – basic and fully diluted | 4,314,000 | 3,300,000 | 4,314,000 | 3,300,000 | |
Net (loss) per share – basic and fully diluted | $(0.00) | $(0.00) | $(0.00) | $(0.00) | |
The accompanying notes are an integral part of these financial statements.
-5-
Stat Software, Inc.
(a Development Stage Company)
Statements of Cash Flows
(Unaudited)
June 13, 2002 | |||
Six Months Ending | (Inception) to | ||
June 30, | June 30, | ||
2004 | 2003 | 2004 | |
Cash flows from operating activities | |||
Net (loss) | $(5,102) | $(11,855) | $(61,277) |
Adjustment to reconcile net (loss) to | |||
net cash (used) by operating activities: | |||
Depreciation | 622 | - | 1,299 |
Amortization of prepaid rent –related party | - | 6,250 | 12,500 |
Shares issued for consulting – related party | - | - | 17,500 |
Changes in operating assets and liabilities | |||
(Increase) in accounts receivable | (1,500) | - | (1,500) |
(Increase) in prepaid expenses | (1,000) | - | (1,000) |
(Increase) in accounts payable | (3,500) | - | - |
Net cash (used) by operating activities | (10,480) | (5,605) | (32,478) |
Cash flows from investing activities | |||
Purchase of fixed assets | - | (1,679) | (4,658) |
Net cash (used) by investing activities | - | (1,679) | (4,658) |
Cash flows from financing activities | |||
Issuances of common stock | - | 48,050 | 70,032 |
Net cash provided by financing activities | - | 48,050 | 70,032 |
Net increase in cash | (10,480) | 40,766 | 32,896 |
Cash and equivalents – beginning | 43,376 | 10,214 | - |
Cash and equivalents – ending | $32,896 | $50,980 | $32,896 |
Supplemental disclosures: | |||
Interest paid | $- | $- | $- |
Income taxes paid | $- | $- | $- |
Non-cash transactions: | |||
Shares issued for consulting and prepaid rent | |||
to related parties | $- | $- | $30,000 |
Number of shares issued for consulting and | |||
prepaid rent to related parties | - | - | 1,980,000 |
The accompanying notes are an integral part of these financial statements.
-6-
Stat Software, Inc.
(a Development Stage Company)
Notes
Note 1 - Basis of presentation
The consolidated interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.
These statements reflect all adjustments, consisting of normal recurring adjustments, which, in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these consolidated interim financial statements be read in conjunction with the audited financial statements and notes of the Company filed with its Form 10KSB with the US Securities and Exchange Commission for the year ended December 31, 2003. The Company follows the same accounting policies in the preparation of interim reports.
Results of operations for the interim periods are not indicative of annual results.
Note 2 – Fixed assets
The Company recorded depreciation expense of $622 and $-0- during the six months ended June 30, 2004 and 2003, respectively.
Note 3 – Stockholder’s equity
The Company did not issue any shares of its preferred or common stock during the six months ended June 30, 2004.
Note 4 – Related party transactions
The Company paid its officer and director contract labor fees totaling $6,875 during the six months ended June 30, 2004.
The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts.
Note 5 – Research and development costs
The Company expended $2,962 towards research and development of its software technology during the six months ended June 30, 2004.
-7-
Item 2. Management's Discussion and Plan of Operation
Forward-Looking Statements
This Quarterly Report contains forward-looking statements about STAT Software, Inc.’s business, financial condition and prospects that reflect management’s assumptions and beliefs based on information currently available. We can give no assurance that the expectations indicated by such forward-looking statements will be realized. If any of our management’s assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, STAT’s actual results may differ materially from those indicated by the forward-looking statements.
The key factors that are not within our control and that may have a direct bearing on operating results include, but are not limited to, acceptance of our services, our ability to expand our customer base, managements’ ability to raise capital in the future, the retention of key employees and changes in the regulation of our industry.
There may be other risks and circumstances that management may be unable to predict. When used in this Quarterly Report, words such as, "believes," "expects," "intends," "plans," "anticipates," "estimates"and similar expressions are intended to identify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.
Management’s Discussion and Analysis
We were incorporated on June 13, 2002. Our efforts to date have focused primarily on recruiting independent contract labor and on the development of biometric security products that use individually unique physical characteristics for identification and security purposes, inventory database applications and secure on-line education products.
We generated $5,000 in revenues during the three months ended June 30, 2004. In the year ago period ended June 30, 2003, we generated revenues of $13,500. In the six months ended June 30, 2004, revenues were $17,250, an increase of $3,750 compared with revenues of $13,500 during the six months ended June 30, 2003. From our inception on June 13, 2002 to June 30, 2004, we generated an aggregate of $60,588 in revenues. All of these revenues were derived solely from sales of our information technology services and software products. We have two recurring clients who account for substantially all of our revenues.
Cost of revenues, consisting solely of contract labor fees, were $7,476 for the three month period ended June 30, 2004, of which $4,875 were paid to a related party. Comparatively, cost of labor for the second quarter ended June 30, 2003 was $15,000, of which $6,000 was paid to related parties. In the six months ended June 30, 2004, cost of revenues was $16,014, $6,875 of which was paid to a related party. During the six months ended June 30, 2003, our cost of revenues totaled $15,000, with $6,000 being paid to a related party. Since our inception, cost of revenues were $57,228, of which $27,982 were paid to related parties.
Total expenses for the period from our inception to June 30, 2004, were $68,137. Consulting fees in the amount of $17,500 paid to Michael Kelley and Douglas Condie, both of whom are related parties, was paid in lieu of cash in the form of our common stock. General and administrative expenses aggregated $25,422, of which $12,500 was paid to related parties. Research and development costs were $12,500. Organizational expenses of $11,416 was recorded in relation to our offering of common stock pursuant to Regulation D, Rule 504 of the Securities Act of 1933. We also recorded $1,299 in depreciation expense since inception.
Total expenses for the three months ended June 30, 2004 was $2,568. Approximately $2,257 of that amount is attributable to general and administrative expenses. Additionally, we recorded $311 in depreciation expense for the period. In the three months ended June 30, 2003, total expenses were $6,250, all of which is credited to general and administrative costs paid to related parties.
During the three months ended June 30, 2004, we recorded a one-time gain on forgiveness of debt in the amount of $3,500.
-8-
Resultantly, we incurred a net loss of $61,277 since our inception to June 13, 2002. During the three months ended June 30, 2004, our net loss totaled $1,544, a decrease of $6,206 or 80% from the year ago three month period ended June 30, 2003.
Since our incorporation, we have raised capital through sales of our common equity. All told, we raised $70,032 in cash from sales of our common stock. We believe that our cash on hand as of June 30, 2004 of $32,896 is sufficient to continue operations through the year ended December 31, 2004 without significant increases in revenues or additional capital infusions. Our recurring cash expenditures are approximately $5,000 per month, while our revenues for the foreseeable future total approximately $2,250 per month. At this rate, we expect to have negative cash flows of approximately $16,500 for the fiscal year 2004. However, if our costs of operations increase unexpectedly, we may need to raise additional capital by issuing equity or debt securities in exchange for cash. There can be no assurance that we will be able to secure additi onal funds in the future to stay in business. Our principal accountants have expressed substantial doubt about our ability to continue as a going concern because we have limited operations and have not commenced planned principal operations.
There are no other known trends, events or uncertainties that have had or that are reasonably expected to have a material impact on our revenues from continuing operations. Additionally, we do not believe that our business is subject to seasonal factors.
Our management does not expect to incur costs related to research and development. We do expect to encounter costs for the development of software for our clients on a per project basis.
We currently do not own any significant plant or equipment that we would seek to sell in the near future.
Our management does not anticipate the need to hire additional full- or part- time employees over the next 12 months, as the services provided by our officers and directors appear sufficient at this time. We believe that our operations are currently on a small scale that is manageable by a few individuals. We intend to hire independent contractors to assist with software development and service fulfillment. We currently utilize the services of two such contractors. These contractors are not expected to be paid salaries; instead they will be paid on a contract basis as work is completed. Thus, these individuals are not intended to be employees of our company.
We have not paid for expenses on behalf of any of our directors. Additionally, we believe that this fact shall not materially change.
-9-
Item 3. Controls and Procedures
Within 90 days prior to the date of filing of this report, we carried out an evaluation, under the supervision and with the participation of our management, including the Chief Executive Officer and our Chief Financial Officer, of the design and operation of our disclosure controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective for gathering, analyzing and disclosing the information we are required to disclose in the reports we file under the Securities Exchange Act of 1934, within the time periods specified in the SEC’s rules and forms. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls subsequent to the date of this evaluation.
PART II - OTHER INFORMATION
Item 6. Exhibits
Exhibit Number | Name and/or Identification of Exhibit |
3 | Articles of Incorporation & By-Laws |
(a) Articles of Incorporation (1) | |
(b) By-Laws (1) | |
31 | Rule 13a-14(a)/15d-14(a) Certifications |
(a) Douglas P. Condie | |
(b) Richard B. Vincent | |
32 | Certification under Section 906 of the Sarbanes-Oxley Act (18 U.S.C. Section 1350) |
(1) Incorporated by reference to the exhibits to the Company's General Form for Registration of Securities of Small Business Issuers on Form 10-SB, filed on November 12, 2003.
-10-
SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
STAT SOFTWARE, INC. | ||
(Registrant) | ||
Signature | Title | Date |
/s/ Douglas P. Condie | Chief Executive Officer | August 20, 2004 |
Douglas P. Condie | ||
/s/ Richard B. Vincent | Chief Financial Officer | August 20, 2004 |
Richard B. Vincent | ||
-11-
