Sputnik Enterprises (SPNI) 10-Q 2013 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2013

o TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _________ to _________.

Commission file number 000-52366

SPUTNIK ENTERPRISES, INC.

(Exact name of small business issuer as specified in its charter)

Nevada	52-2348956
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

7512 Dr. Phillips Blvd., Suite 50-355, Orlando, FL 32819

(Address of principal executive offices)

(855) 873-7536

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller Reporting Company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  x  No ¨

As of May 14, 2013 there were 295,278 shares issued and outstanding of the registrant’s common stock. 

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Unaudited Financial Statements		3
	Balance Sheets as of March 31, 2013 and March 31, 2012 (unaudited)		F-1
	Statements of Operations for the Three Months Ended March 31, 2013 and 2012, and from re-entering the development stage, February 29, 2008 to March 31, 2013 (unaudited)		F-2
	Statements of Cash Flows for the Three Months Ended March 31, 2013 and 2012, and from re-entering the development stage, February 29, 2008 to September 30, 2012 (unaudited)		F-3
	Notes to Unaudited Financial Statements		F-4
Item 2.	Management’s Discussion and Analysis or Plan of Operations		3
Item 3.	Quantitative and Qualitative Disclosure about Market Risk		4
Item 4.	Controls and Procedures		5
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings		6
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		6
Item 3.	Defaults Upon Senior Securities		6
Item 4.	Mine Safety Disclosures		6
Item 5.	Other Information		6
Item 6.	Exhibits		7
Signatures			8

2

PART I — FINANCIAL INFORMATION

Item 1.  Financial Statements.

SPUTNIK ENTERPRISES, INC.

 (A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

	March 31, 2013 (unaudited)			December 31, 2012 (audited)
ASSETS
Current Assets
Cash	$	100		$	5,625
Total Current Assets		100			5,625
TOTAL ASSETS	$	100		$	5,625
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts Payable		1,500			4,766
Due to affiliate and shareholder		67,625			40,000
Total Current Liabilities		69,125			40,000
Stockholders' Deficit
Common stock, $.001 par value, 50,000,000 shares authorized, 295,278 shares issued and outstanding in both periods		295			295
Paid-in capital		1,981,385			1,981,385
Accumulated deficit		(1,912,863	)		(1,912,863	)
Accumulated deficit from prior operations		(137,842	)		(107,958	)
Total Stockholders' Deficit		(69,025	)		(39,141	)
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT	$	100		$	5,625

See notes to financial statements.

F-1

SPUTNIK ENTERPRISES, INC.

 (A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended March 31,						Re-entering Development Stage (February 29, 2008) to March 31,
	2013			2012			2013
Revenue	$	-		$	-		$	-
Cost of goods sold		-			-			-
Gross profit		-			-			-
Expenses:
General and administrative costs		29,884			4,657			130,410
Total operating expense		29,884			4,657			130,410
Operating Loss		(29,884	)		(4,657	)		(130,410	)
Interest expense		-			500			7,432
NET LOSS	$	(29,884	)	$	(5,157	)	$	(137,842	)
Basic and diluted loss per share	$	( 0.10	)	$	( 0.02	)
Weighted average shares outstanding		295,278			295,278

See notes to financial statements.

F-2

SPUTNIK ENTERPRISES, INC.

 (A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

 (unaudited)

	Three Months Ended March 31,						Re-entering Development Stage (February 29, 2008) to March 31,
	2013			2012			2013
Cash Flows from Operating Activities
Net loss from operations	$	(29,884	)	$	(5,157	)	$	(93,885	)
Adjustments to reconcile net loss to cash used in operating activities:
Imputed interest on note payable		-			500			8,431
Note payable issued for legal expenses		-			-			25,000
Increase/(Decrease) in Accounts payable		(3,266	)		-			1,500
Net cash used in operating activities		(33,150	)		(4,657	)		(102,911	)
Cash Flows from Investing Activities
Net cash used in investing activities		-			-			-
Cash Flows from Financing Activities
Donated capital from shareholder		-			4,657			60,386
Cash received on notes payable		-			-			15,000
Proceeds from shareholders		27,625			-			27,625
Net cash provided by financing activities		27,625			4,657			103,011
Net change in cash		( 5,525	)		-			100
Cash at beginning of period		5,625			-			-
Cash at end of period	$	100		$	-		$	100
					-
Supplemental Disclosures of Cash Flow Information
Cash paid for interest	$	-		$	-		$	-
Cash paid for income taxes		-			-			-

See notes to financial statements.

F-3

SPUTNIK ENTERPRISES, INC.

 (A DEVELOPMENT STAGE COMPANY)

Notes to Financial Statements

 (unaudited)

NOTE 1 - ORGANIZATION

Sputnik Enterprises Inc. was incorporated in the State of Delaware on September 27, 2001 under the name Sputnik, Inc. On February 10, 2005, we filed Articles of Conversion and new Articles of Incorporation in Nevada and became a Nevada corporation. From that time until February 29, 2008 the Company developed and marketed Wi-Fi software, services, and hardware for the public access wireless networking market.

On November 13, 2007 we formed a wholly owned subsidiary, Laika, Inc., and transferred all of our assets and liabilities to Laika.

On February 6, 2008, the Company amended its Articles of Incorporation to change the name of Sputnik, Inc. to Sputnik Enterprises, Inc. upon conclusion of the sale of the stock of Laika, Inc. to AstroChimp, Inc.

On February 29, 2008, we closed the sale of the stock of our wholly owned subsidiary, Laika, Inc. to AstroChimp, Inc. for cancellation of a loan of $65,000 from David LaDuke to us, leaving us as a shell company. AstroChimp is wholly-owned by Mr. LaDuke. Subsequently AstroChimp, Inc. changed its name to Sputnik, Inc. and continues to own and operate its business as a private entity. The Company was considered to have re-entered the development stage at this time.

NOTE 2 – BASIS OF PRESENTATION

Interim Financial Statements

The accompanying interim unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended March 31, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. For further information, refer to the financial statements and footnotes thereto included in our Form 10-K Report for the fiscal year ended December 31, 2012.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company reviews new accounting standards as issued. No new standards had any material effect on these financial statements. The accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these financial statements as presented and does not anticipate the need for any future restatement of these financial statements because of the retro-active application of any accounting pronouncements issued subsequent to March 31, 2013 through the date these financial statements were issued.

F-4

Development Stage Company

The Company is a development stage company as defined by ASC 915, Development Stage Entities. The Company is still devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced. All losses accumulated since inception are considered part of the Company's development stage activities.

Recently Issued Accounting Standards

The Company reviews new accounting standards as issued. No new standards had any material effect on these financial statements. The accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these financial statements as presented and does not anticipate the need for any future restatement of these financial statements because of the retro-active application of any accounting pronouncements issued subsequent to March 31, 2013 through the date these financial statements were issued.

NOTE 4 - GOING CONCERN

The Company incurred a net loss of $29,884 during the three months ended March 31, 2013 and had net cash used in operating activities of $33,150 for the same period. Additionally, the Company had a deficit accumulated during the development stage of $137,842 at March 31, 2013. In view of these matters, the Company's ability to continue as a going concern is dependent upon the Company's ability to achieve a level of profitability or to obtain adequate financing through the issuance of debt or equity in order to finance its operations. Management intends to raise additional funds by way of a public or private offering. Management believes that the actions presently being taken to further implement its business plan and generate revenues provide the opportunity for the Company to continue as a going concern. The financial statements of the Company do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

While the Company is attempting to commence operations and produce revenues, the Company’s cash position may not be significant enough to support the Company’s daily operations. While the Company believes in the viability of its strategy to increase revenues and in its ability to raise additional funds, there can be no assurances to that effect. The ability of the Company to continue as a going concern is dependent upon the Company’s ability to further implement its business plan and generate revenues.

NOTE 5 - RELATED PARTY TRANSACTIONS

Free Office Space

The Company has been provided office space by its Chief Executive Officer at no cost. Management has determined that such cost is nominal and did not recognize the rent expense in its financial statement.

F-5

Officer Compensation

The Company has agreed to pay its chief executive officer, Mr. Tony Gebbia, $5,000 per month until such time the Company and Mr. Gebbia enter into a formal Employment Agreement.

The Company incurred $15,000 and $0 in compensation expense for the three months ended March 31, 2013 and 2012, respectively.

Advances from Stockholder

From time to time, stockholders of the Company may but are not obligated to advance funds to the Company for working capital purposes. These advances are unsecured, interest bearing as agreed at time of repayment and due on demand.

Stockholder loans totaled $67,625 and $40,000 at March 31, 2013 and March 31, 2012, respectively.

NOTE 6 – EQUITY

On February 14, 2013, the Company and Dutchess Opportunity Fund, II, LP entered into an Investment Agreement and a Registration Rights Agreement, which provides for the investment by Dutchess of up to $25 million over a period of 36 months. Under the terms of the Investment Agreement and Registration Rights Agreement, Dutchess will purchase common stock of the Company, subject to and wholly conditioned upon the Company filing an S-1 registration statement to register the shares acquired by Dutchess and the registration statement of the shares being declared effective by the Securities and Exchange Commission. The Investment Agreement sets forth the terms and conditions under which Dutchess will purchase the common stock of the Issuer and other material conditions to the agreement between the parties.

Common Stock

The Company has authority to issue fifty million (50,000,000) common with a par value of $.001of which 295,278 have been issued. The Company intends to issue additional shares in an effort to capital to find its operations.

No holder of shares of stock of any class is entitled, as a matter of right, to subscribe for or purchase or receive any part of any new or additional issue of shares of stock of any class, or of securities convertible into shares of stock of any class, whether now hereafter authorized or whether issued for money, for consideration other than money, or by way of dividend.

F-6

Preferred stock

The Company has authority to issue ten million (10,000,000) common with a par value of $.001 of which no shares have been issued at March 31, 2013.

NOTE 7 - SUBSEQUENT EVENTS

Management has evaluated subsequent events through the date the financial statements were issued. Based on our evaluation the following events have occurred and require disclosure:

The Company entered into an Asset Purchase Agreement on April 23, 2013, with Wireless NRG, LLC, a Florida limited liability company. Subject to the terms and conditions of the Agreement, at the closing, the Company agrees to transfer to Wireless NRG, LLC, one million eight hundred thirty one thousand nine hundred and seventeen (1,831,917) common shares at $.001 par value, and execute a promissory note for $1,715,000 in favor of Wireless NRG, LLC, in exchange for all assets of Wireless NRG, LLC. The assets acquired by the Company will be contributed to a subsidiary of the Company, Kudo Technologies, Inc., at the closing, and thereafter the business will be conducted in the subsidiary.

Closing of the transaction is subject to and wholly conditioned upon the delivery of an acceptable audit, conducted by a member of the PCAOB, of Wireless NRG, LLC’s books and records for the years ending 12-31-2011 and 12-31-2012, the execution of all required documentation to affect the transaction, and the completion of due diligence to the satisfaction and approval of the Company in its sole discretion.

F-7

Item 2.  Management’s Discussion and Analysis or Plan of Operation.

This 10−Q contains forward-looking statements. Our actual results could differ materially from those set forth as a result of general economic conditions and changes in the assumptions used in making such forward-looking statements. The following discussion and analysis of our financial condition and results of operations should be read together with the audited consolidated financial statements and accompanying notes and the other financial information appearing elsewhere in this report. The analysis set forth below is provided pursuant to applicable Securities and Exchange Commission regulations and is not intended to serve as a basis for projections of future events. Refer also to "Cautionary Note Regarding Forward Looking Statements" and “Risk Factors” below.

The following discussion of our financial condition and results of operations as of September 30, 2012 should be read in conjunction with our financial statements and the related notes as provided under Item 1. With respect to the discussion within this Item 2, the terms “Sputnik,” “we,” “us,” and “our” refer to Sputnik Enterprises, Inc.

Overview

Sputnik, Inc. was incorporated in Delaware on September 27, 2001. On February 10, 2005, we filed Articles of Conversion and new Articles of Incorporation in Nevada and became a Nevada corporation due to lower corporate filing fees.

On November 13, 2007, we formed a wholly owned subsidiary, Laika, Inc., and transferred all of our assets and liabilities to Laika. On February 29, 2008, we closed the sale of the stock of our wholly owned subsidiary, Laika, Inc. to AstroChimp, Inc., leaving us as a shell company. We also changed our name to Sputnik Enterprises on February 29, 2008.

Results of Operations for the Three Months Ended March 31, 2013 Compared to the Three Months Ended March 31, 2012

Due to the fact that we were a shell company in both periods, we had revenues of $0 for the three months ended March 31, 2013, which was unchanged from our revenue of $0 for the three months ended March 31, 2012. Also related to our continuing status as a shell company, our cost of goods sold and gross profits were $0 in both periods.

Our net loss for the three months ended March 31, 2013 was $29,884, which was an increase of $24,727 from our net loss of $5,157 in the three-month period ended March 31, 2012. The increase is due to increases in legal and accounting expense, as well as officer compensation.

Liquidity and Capital Resources

We are a shell company. We have no internal sources of cash. Our only sources of cash are advance by our affiliates or shareholders as we have no assets, liabilities or source of revenues . All expenses will be funded by such advances. From time to time, stockholders of the Company will advance funds to the Company for working capital purposes. These advances are unsecured, non-interest bearing and due on demand. Stockholder loans totaled $67,625 at March 31, 2013.

3

We are not aware of any known trends or any known demands, commitments, events or uncertainties that will result in or are reasonably likely to result in a material increase or decrease of our liquidity.

We have no material commitments for capital expenditures as of the end of March 31, 2013.

Off-balance Sheet Arrangements.

We have no off-balance sheet arrangements at March 31, 2013.

Cautionary Note About Forward-Looking Statements

The information contained in this Report includes some statements that are not purely historical and are “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and as such, may involve risks and uncertainties. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, perceived opportunities in the market and statements regarding our mission and vision. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. You can generally identify forward-looking statements as statements containing the words “anticipates,” “believes,” “continue,” “could,” “estimates,” “expects,” “intends,” “may,” “might,” “plans,” “possible,” “potential,” “predicts,” “projects,” “seeks,” “should,” “will,” “would” and similar expressions, or the negatives of such terms, but the absence of these words does not mean that a statement is not forward-looking. For example, our forward-looking statements may include statements regarding:

·      Our projected sales and profitability,

·      Our growth strategies,

·      Anticipated trends in our industry,

·      Our future financing plans, and

·      Our anticipated needs for working capital.

In light of these risks, uncertainties and assumptions, the future events, developments or results described by our forward-looking statements herein could turn to be materially different from those we discuss or imply.

Item 3.  Quantitative and Qualitative Disclosure about Market Risk

Not applicable.

4

Item 4.  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act) that are designed to ensure that information required to be disclosed in the Company’s Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were not effective.

For a full discussion of our internal control over financial reporting, please refer to Item 9A, Controls and Procedures, in our 2012 Annual Report on Form 10-K.

Changes in Internal Control over Financial Reporting

There have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act) during the fiscal quarter ended March 31, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

5

PART II — OTHER INFORMATION

Item 1.  Legal Proceedings.

None.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

(a) Unregistered Sales of Equity Securities.

The Registrant did not sell any unregistered securities during the three months ended September 30, 2012.

(b) Use of Proceeds.

The Registrant did not sell any unregistered securities during the three months ended September 30, 2012.

Item 3.  Defaults Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures.

Not Applicable.

Item 5.  Other Information.

None.

6

Item 6.  Exhibits.

(a) Exhibits.

Exhibit	Item
31.1	Certification of Principal Executive and Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Principal Executive and Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
Exhibit 101	Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements.*

101.INS**	XBRL Instance Document*
101.SCH**	XBRL Taxonomy Extension Schema Document*
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document*
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document*

______________

* This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

7

 SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SPUTNIK ENTERPRISES,INC.
Date: May 15, 2013	By:	/s/ Anthony Gebbia
		(President)

In accordance with the Exchange Act, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

SIGNATURE	NAME	TITLE	DATE
/s/ Anthony Gebbia	Anthony Gebbia	President, Principal Executive Officer,	May 15, 2013
		Principal Financial Officer and Principal Accounting Officer

8

EXHIBIT INDEX

Exhibit	Item
31.1	Certification of Principal Executive and Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Principal Executive and Principal Financial Officer pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002
Exhibit 101	Interactive data files formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to the Consolidated Financial Statements.*

101.INS**	XBRL Instance Document*
101.SCH**	XBRL Taxonomy Extension Schema Document*
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document*
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document*
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document*
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document*

______________

* This exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 of the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in any filings.

** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

9