Dazed (MEDH) 10-Q 2009 Q2 Quarterly report

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2009
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT

Commission file number: 000-52558

DISABOOM, INC.

(Exact name of the registrant as specified in its charter)

Colorado	20-5973352
(State or other jurisdiction	(IRS Employer Identification No.)
of incorporation or organization)

7730 E. Belleview Avenue, Suite A306

Greenwood Village, CO 80111

(Address of principal executive offices)

Registrant’s telephone number, including area code: (303) 952-6500

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 o

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 o No o

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:

Large accelerated filero  Accelerated filero Non-accelerated filero  Smaller reporting Companyx

There were 40,454,975 shares of the issuer’s common stock, par value $0.0001, outstanding as of August 13, 2009.

DISABOOM INC.

QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 2009

	PAGE
PART I – Financial Information
Item 1. Financial Statements:
Balance Sheets as of June 30, 2009 (unaudited) and December 31, 2008	2
Statements of Operations for the three-month periods and six-month periods ended June 30, 2009 and June 30, 2008 (unaudited)	3
Statements of Cash Flows for the six-month periods ended June 30, 2009 and June 30, 2008 (unaudited)	4
Notes to Financial Statements (unaudited)	5
Item 2. Management’s Discussion and Analysis	14
Item 4T. Controls and Procedures	18
PART II – Other Information
Item 1. Legal Proceedings	II-1
Item 1A. Risk Factors	II-1
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	II-1
Item 5. Other Information	II-2
Item 6. Exhibits	II-2

1

DISABOOM, INC.

BALANCE SHEETS

	June 30, 2009			December 31, 2008
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	259,586		$	1,035,637
Short-term investments		741,031			916,039
Accounts receivable, net;		124,796			220,144
Prepaid expenses		136,767			136,349
Total current assets		1,262,180			2,308,169
Property and equipment, net		63,421			59,312
Deposits		10,917			10,917
Total assets	$	1,336,518		$	2,378,398
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	197,881		$	249,555
Accrued expenses		184,498			221,323
Unearned revenue		132,644			293,607
Other current liabilities		451			3,157
Total liabilities (all current)		515,474			767,642
Commitments and contingencies
Shareholders’ equity (Note 3):
Preferred stock, $0.0001 par value; authorized 10,000,000 shares; none issued and outstanding
Common stock, $0.0001 par value; authorized 100,000,000 shares; 45,448,742 and 43,343,603 issued and outstanding, respectively		4,545			4,334
Shares to be issued		18,750
Additional paid-in capital		20,854,544			20,399,547
Accumulated deficit		(20,056,795	)		(18,793,125	)
Total shareholders’ equity		821,044			1,610,756
Total liabilities and shareholders’ equity	$	1,336,518		$	2,378,398

The accompanying notes are an integral part of these financial statements.

2

DISABOOM, INC.

STATEMENTS OF OPERATIONS
(Unaudited)

	Three months ended June 30,			Three months ended June 30,			Six months ended June 30,			Six months ended June 30,
	2009			2008			2009			2008
Revenue	$	163,577		$	141,355		$	404,211		$	191,215
Expenses:
Sales and marketing		(401,244	)		(1,600,054	)		(909,179	)		(3,729,766	)
General, administrative and other		(434,681	)		(1,928,921	)		(984,943	)		(3,416,142	)
Loss from operations		(672,348	)		(3,387,620	)		(1,489,911	)		(6,954,693	)
Other income (expense):
Interest income		21,729			18,985			29,845			71,340
Gain (loss) on short-term investments		115,940			50,816			196,151			(82,548	)
Net loss	$	(534,679	)	$	(3,317,819	)	$	(1,263,915	)	$	(6,965,901	)
Net loss per share, basic and diluted (Note 2)	$	(0.01	)	$	(0.08	)	$	(0.03	)	$	(0.16	)
Weighted average number of common shares outstanding, basic and diluted (Note 2)		45,283,958			43,173,903			44,441,793			42,342,288

The accompanying notes are an integral part of these financial statements.

3

DISABOOM, INC.

STATEMENTS OF CASH FLOWS
(Unaudited)

	Six months ended June 30,			Six months ended June 30,
	2009			2008
Cash flows from operating activities:
Net loss	$	(1,263,915	)	$	(6,965,901	)
Adjustments to reconcile net loss to cash used in operating activities:
Stock-based compensation expense		162,382			579,817
Common stock issued for services		15,327			42,500
Unrealized (gain) loss on short-term investments		(196,151	)		82,548
Depreciation expense		16,659			7,701
Changes in operating assets and liabilities:
Accounts receivable		95,348			(4,517	)
Prepaid expenses and deposits		(418	)		(355,614	)
Accounts payable		(51,674	)		48,885
Accrued expenses		(36,825	)		(27,692	)
Unearned revenue		(160,963	)		35,340
Other current liabilities		(2,706	)		(7,667	)
Net cash used in operating activities		(1,422,936	)		(6,564,600	)
Cash flows from investing activities:
Purchase of investments		(28,826	)		(122,842	)
Sale of investments		399,985			843,082
Purchase of property and equipment		(20,524	)		(21,739	)
Net cash provided by investing activities		350,635			698,501
Cash flows from financing activities:
Proceeds from issuance of common stock		296,250			2,342,000
Proceeds from redemption of warrants, net		—			2,720,947
Proceeds from exercise of options		—			11,000
Net cash provided by financing activities		296,250			5,073,947
Decrease in cash and cash equivalents		(776,051	)		(792,152	)
Cash and cash equivalents at beginning of period		1,035,637			4,432,751
Cash and cash equivalents at end of period	$	259,586		$	3,640,599

The accompanying notes are an integral part of these financial statements.

4

DISABOOM, INC.

NOTES TO FINANCIAL STATEMENTS

Six months ended June 30, 2009
(Unaudited)

1.	Organization and basis of presentation:
	Disaboom, Inc. (the “Company”) was incorporated in the State of Colorado on September 5, 2006 with the primary purpose of developing the first interactive online community dedicated to constantly improving the way Americans with disabilities or functional limitations live their lives. Our network of websites (the “Disaboom Network”) serves as a comprehensive online resource as well as a social media and publishing platform not only for people living with such conditions, but their immediate families and friends, caregivers, recreation and rehabilitation providers, employers, and other related communities. The activities of the Company in 2008 generally focused on the initial operational matters of an early stage company, including (i) the initial launch of the first fully operational version of our main website (www.disaboom.com), (ii) expanding the resources, services, product offerings and capabilities of our main website, social network and publishing platform, (iii) launching additional resources and services through related microsites and the Company’s marketplace, (iv) integrating our main website and related microsites into the Disaboom Network, (v) driving internet traffic into the Disaboom Network, and (vi) beginning to generate traditional cost per mille (“CPM”) related advertising and sponsorship revenues, as well as directory services revenues.
	During the third and fourth calendar quarters of 2008, and through the period ended June 30, 2009, the Company began, and continues to respond aggressively to recessionary economic conditions, the liquidity crisis, capital market volatility, and the general economic outlook, and their resultant adverse impact on the internet advertising industry. During the period ended June 30, 2009 and through the filing date of this Form 10-Q, the Company continues to aggressively reduce and monitor its overall operating expenditures in response to general economic and internet advertising market conditions. We also continue to monitor and evaluate our business needs and resources on an ongoing basis, and may scale back in certain areas that are not deemed essential to the Company’s near term success. Our objective is to balance investment in the Company’s sales function and capabilities, as summarized herein, while conserving our financial resources to ensure we have sufficient liquidity to fund our planned business operations.
	During the three and six month periods ended June 30, 2009, the Company recognized approximately $163,577 and $404,211 in revenues, and incurred net losses of approximately $534,679 and $1,263,915, respectively. During the three and six month periods ended June 30, 2008, the Company recognized approximately $141,355 and $191,215 in revenues, and incurred net losses of approximately $3,317,819 and $6,965,901 respectively. The ability to successfully generate future revenues is dependent on a number of factors, including (i) the availability of capital to continue to develop, operate and maintain the Disaboom Network, (ii) the ability to commercialize the Disaboom Network through advertising, sponsorship, and directory services sales, as well as partnerships with other organizations within and outside the disability industry, and (iii) the ability to attract and retain visitors to the Disaboom Network. There can be no assurance that the Company will not encounter setbacks related to these activities.
	The balance sheet as of June 30, 2009, and the statements of operations and cash flows for the three and six month periods ended June 30, 2009 and 2008, respectively, have been prepared by the Company and have not been audited. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary to present fairly the financial position, results of operations and cash flows at June 30, 2009 and for all periods presented have been appropriately made.
	Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s 2008 Annual Report on Form 10-K. The results of operations for interim periods presented are not necessarily indicative of the operating results for the full year.

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	To date, the Company has in large part relied on equity financing to fund its operations. In February and March 2009, the Company raised additional equity funds through a private placement (Note 3). Management currently projects that 2009 expected revenue growth, plus the equity funds raised in March 2009, will provide sufficient funds to meet cash flow needs into but not through our fourth fiscal quarter. However, management cannot provide any assurance that the projections will prove accurate or that unexpected liquidity needs will not arise. As such, the Company will likely need to attempt to raise outside capital through either debt or equity financing during the 2009 fiscal year to fund our operations. Management and the Board of Directors monitor the Company’s financial resources on an ongoing basis and may adjust planned business activities and operations as needed to ensure we have sufficient operating capital.
	The December 31, 2008 balance sheet was derived from the Company’s December 31, 2008 audited financial statements.
2.	Summary of significant accounting policies:
	Revenue recognition:
	During the six months ended June 30, 2009, the Company received revenue primarily through the sale of its portfolio of traditional and new media advertising products on its flagship website Disaboom.com, and related microsites DisaboomJobs.com and Lovebyrd.com, as well as from the sale of various directory services products related to the Marketplace section of the Company’s main website. Advertising revenue comprised 97% of the Company’s total revenue. Advertising revenue and directory services revenues are recognized ratably over the period in which it is delivered and earned primarily through (1) the development and release of sponsor advertisements, landing pages, features, and channels on the Disaboom Network, (2) the delivery of advertising impressions by recognized and independent third party vendors, and (3) the publication and availability of business listings and other directory service products in the Company’s Marketplace. The Company has agreements ranging in term from one month test agreements to twelve month advertising, sponsorship and marketplace directory services agreements. At June 30, 2009, unearned revenue of $132,644 represents amounts received under advertising contracts for which the advertisements or directory services products have not yet been presented or fully delivered.
	Cash and cash equivalents:
	The Company considers all highly liquid investments with original maturities of three months or less at date of purchase to be cash equivalents.
	Short-term investments:
	Short-term investments consist of mutual funds. The Company accounts for short-term marketable securities in accordance with SFAS 115, “Accounting for Certain Investments in Debt and Equity Securities.”
	Marketable securities are classified as trading securities, as the Company expects to use these funds for operating purposes within the next year. Trading securities are reported at fair market value and unrealized gains and losses are included in earnings.
	The Company currently maintains a bank account through Cambridge Investment Research Advisors, Inc. Through this account the Company invests a portion of its cash in short term commercial notes that are highly liquid and traditionally very low risk. However, the current credit crisis in the United States has continued from 2008 into 2009 and capital market conditions remain highly volatile.

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Use of estimates in financial statement preparation:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates.

Accounts receivable:

Accounts receivable are recorded at their face amount less an allowance for doubtful accounts. The allowance for doubtful accounts reflects management’s best estimate of probable losses in the accounts receivable balance. Management determines the allowance based on known troubled accounts, historical experience, and other currently available evidence. The allowance for doubtful accounts was $10,000 at June 30, 2009 and December 31, 2008. The Company generally does not require collateral from its customers. At June 30, 2009, three customers accounted for 23%, 13%, and 6% of the outstanding accounts receivable.

Website development costs:

The Company has adopted the provisions of Financial Accounting Standards Board (“FASB”) Emerging Issues Task Force (“EITF”) 00-2, “Accounting for Web Site Development Costs,” which specifies the appropriate accounting for costs incurred in connection with the development and maintenance of web sites. Under EITF 00-2, costs related to certain web site development activities are expensed as incurred (such as planning and operating stage activities). Costs relating to certain website application and infrastructure development are generally capitalized, and are amortized over their estimated useful life. Based upon the Company’s product development process and constant modification of the Company’s website, costs incurred by the Company during the application development stage have been insignificant. Therefore, through June 30, 2009, the Company has expensed all significant website development costs as these costs primarily related to planning and operational activities. For the three and six months ended June 30, 2009 and 2008, website development costs of approximately $1,500, $73,000, $1,500 and $84,000 respectively, were expensed.

Property and equipment:

Property and equipment are stated at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Upon retirement or disposal of assets, the accounts are relieved of cost and accumulated depreciations and related gain or loss is reflected in earnings. The useful lives are generally as follows:

Furniture and fixtures	3-5 years
Computer software, hardware and office equipment	3-5 years

Expenditures for maintenance, repair and renewals of minor items are charged to expense as incurred.

Stock-based compensation:

The Company accounts for stock options and similar equity instruments in accordance with SFAS No. 123(R),Share-Based Payment. SFAS 123(R) requires the recognition of the cost of employee services received in exchange for an award of equity instruments in the financial statements and is measured based on the grant date fair value of the award. SFAS 123(R) also requires the stock option compensation expense to be recognized over the period during which an employee is required to provide service in exchange for the award (usually the vesting period).

The Board of Directors has adopted the 2006 Stock Option Plan (the “2006 Plan”). The 2006 Plan authorizes the Board of Directors to grant stock bonuses or stock options to purchase shares of the Company’s common stock to employees, officers, directors and consultants. Options granted under the 2006 Plan may be either incentive stock options or non-qualified stock options. The aggregate number of shares of common stock as to which options and bonuses may be granted under the 2006 Plan cannot exceed 7,000,000.

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On September 16, 2008 the Board of Directors adopted the 2008 Stock Option Plan (the “2008 Plan”) and reserved 3,000,000 shares under the 2008 Plan. During the six months ended June 30, 2009 the Company granted stock options to purchase 82,500 shares under the 2008 Plan, at a weighted average price of $0.16 per share. The options are subject to various vesting schedules and are exercisable through various dates, the latest of which is in 2015.

The weighted average fair value of stock options granted during the six months ended June 30, 2009 was estimated to be $0.16 per option. The Company used the following assumptions to determine the fair value of stock option grants during the six months ended June 30, 2009 and 2008:

	2009			2008
Expected term (years)		3			2.25-4
Volatility		72	%		69-85	%
Risk-free interest rate		1.05 - 1.14	%		1.87-3.73	%
Dividend yield		0	%		0	%

The expected term of stock options represents the period of time that the stock options granted are expected to be outstanding and was calculated using the simplified method per the guidance of SAB 107 “Share Based Payment” (“SAB 107”) for “plain vanilla” options. The expected volatility is based on the historical price volatility of the common stock of similar companies in the internet industry. The risk-free interest rate represents the U.S. Treasury bill rate for the expected term of the related stock options. The dividend yield represents the anticipated cash dividend over the expected term of the options.

Summary of stock option activity for the six months ended June 30, 2009 is presented below:

	Shares Under Option			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at January 1, 2009		7,597,750		$	0.44
Granted		82,500		$	0.18
Exercised		—		$	—
Expired		(13,750	)	$	0.49
Forfeited		(257,375	)	$	0.70
Outstanding at June 30, 2009		7,409,125		$	0.35		3.98	$	—
Vested at June 30, 2009		3,373,038		$	0.45		3.57	$	—

During the three and six months ended June 30, 2009, compensation expense of $71,143 and $162,382 was recorded.

A summary of the status of the Company’s non-vested options as of and for the six months ended June 30, 2009, is presented below.

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	Nonvested Shares Under Option			Weighted Average Grant Date Fair Value
Outstanding January 1, 2009		5,089,087		$	0.20
Granted		82,500		$	0.18
Vested		(864,375	)	$	0.45
Expired		(13,750	)	$	0.49
Forfeited		(257,375	)	$	0.70
Nonvested at June 30, 2009		4,036,087		$	0.27

As of June 30, 2009, the Company had $237,938 of unrecognized compensation cost related to stock options that will be recognized over a weighted average period of approximately 2.5 years.

Loss per share:

The Company computes net earnings (loss) per share in accordance with SFAS No. 128, “Earnings per Share”, which establishes standards for computing and presenting net earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding and the number of dilutive potential common share equivalents during the period. Stock options and warrants are not considered in the calculation, as the impact of potential common shares (16,877,000 at June 30, 2009 and 14,681,090 at June 30, 2008) would be to decrease loss per share. Therefore, diluted loss per share is equivalent to basic loss per share.

Fair Value

The carrying amount of cash and cash equivalents, short-term investments, accounts receivable, and accounts payable is deemed to approximate fair value due to the immediate or short-term maturity of these financial instruments.

The Company adopted SFAS No. 157,Fair Value Measurements (“SFAS 157”) on January 1, 2008. SFAS 157 defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements.

SFAS 157 defines fair value as the price that would be received to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, SFAS 157 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:

Level 1:Observable inputs such as quoted market prices in active markets for identical assets or liabilities, such as the Company’s equity securities reflected in the table below.

Level 2:Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3:Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.

The following table sets forth the Company’s financial assets measured at fair value by level within the fair value hierarchy. As required by FAS 157, assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company did not have any Level 3 financial assets as of June 30, 2009.

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	Total		Level 1
Assets:
Cash equivalents		20,282		20,282
Short-term investments		741,031		741,031
		761,313		761,313

Effective January 1, 2008, the Company also adopted SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities—Including an Amendment of FASB Statement No. 115, which allows an entity to choose to measure certain financial instruments and liabilities at fair value on a contract-by-contract basis. Subsequent fair value measurement for the financial instruments and liabilities an entity chooses to measure will be recognized in earnings. As of June 30, 2009`, the Company did not elect such option for our financial instruments and liabilities.

Recent pronouncements:

In April 2009, the FASB issued FSP SFAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments”, or FSP 107-1, which will require that the fair value disclosures required for all financial instruments within the scope of SFAS 107, “Disclosures about Fair Value of Financial Instruments”, be included in interim financial statements. This FSP also requires entities to disclose the method and significant assumptions used to estimate the fair value of financial instruments on an interim and annual basis and to highlight any changes from prior periods. FSP 107-1 is effective beginning with this interim period ended June 30, 2009. The adoption of FSP 107-1 did not have a material impact on the Company’s statements.

In September 2006, the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 157, “Fair Value Measurements” (SFAS No. 157). SFAS No. 157 establishes a common definition for fair value to be applied to U.S. GAAP requiring use of fair value, establishes a framework for measuring fair value, and expands disclosure about such fair value measurements. SFAS No. 157 is effective for financial assets and financial liabilities for fiscal years beginning after November 15, 2007. Issued in February 2008, FSP 157-1 “Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13” removed leasing transactions accounted for under Statement 13 and related guidance from the scope of SFAS No. 157. FSP 157-2 “Partial Deferral of the Effective Date of Statement 157” (FSP 157-2), deferred the effective date of SFAS No. 157 for all nonfinancial assets and nonfinancial liabilities to fiscal years beginning after November 15, 2008.

In October 2008, the FASB issued FSP 157-3 “Determining Fair Value of a Financial Asset in a Market That is Not Active” (FSP 157-3). FSP 157-3 clarified the application of SFAS No. 157 in an inactive market. It demonstrated how the fair value of a financial asset is determined when the market for that financial asset is inactive. FSP 157-3 was effective upon issuance, including prior periods for which financial statements had not been issued.

In April 2009, the FASB issued FSP FAS 157-4, “Determining Whether a Market Is Not Active and a Transaction Is Not Distressed” (FSP 157-4). FSP 157-4 provides additional guidance on factors to consider in estimating fair value when there has been a significant decrease in market activity for a financial asset. FSP 157-4 is effective beginning with this interim period ended June 30, 2009. The adoption of this standard did not have a material impact on the Company’s financial statements.

10

In June 2009, the FASB approved its Accounting Standards Codification (“Codification”) as the single source of authoritative United States accounting and reporting standards applicable for all non-governmental entities, with the exception of the SEC and its staff. The Codification which changes the referencing of financial statements is effective for interim or annual periods ending after September 15, 2009. Therefore in the third quarter of fiscal year 2009, all references made to US GAAP will use the new Codification numbering system prescribed by the FASB. As the codification is not intended to change or alter existing US GAAP, it is not expected to have any impact on the Company’s financial position or results of operations, upon adoption.

Effective April 1, 2009, certain of the Company’s employees, including the person serving as the Company’s Chief Executive Officer, President and Chief Financial Officer, agreed to receive restricted shares of Company common stock, for services rendered to the Company, in lieu of receiving a portion of their salary. The total amount of salary foregone by all of the employees as a whole on a monthly basis is approximately $5,200. The number of shares to be issued to each employee on a monthly basis will be determined based upon the amount of monthly salary foregone by each employee, an average share price of the Company’s common stock, and a market based discount to compensate for the restricted nature of the stock grant. Each employee who has or will receive restricted shares has entered into a Compensation & Subscription Agreement for the period beginning on April 1, 2009, and ending no later than December 31, 2009 (Note 3).

3.	Shareholders’ equity:
	On March 19, 2009, the Company closed on $296,250 in gross proceeds under a private placement. In the closing, the Company issued a total of 1,850,000 shares of common stock at a price of $0.15 per share. The shares were issued in reliance on Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder, and the offering was made to accredited investors only. The Company is to issue an additional 125,000 shares upon receipt of certain documents. No commissions or other remuneration were paid in connection with these issuances.
	During the three months ended June 30, 2009 the Company issued a total of 255,138 shares of common stock for services rendered by employees in lieu of receiving a portion of their salary. The Company recorded the compensation expense of $15,327 based on the market price of the common stock issued.
4.	Significant agreements and subsequent events:
	On March 31, 2009 the Company and its former Chief Executive Officer mutually agreed to terminate a $5,000 per month consulting agreement.
	On March 1, 2009, the Company terminated a Master Services Agreement with a third party vendor, dated January 3, 2008, for hosting and database management services. The Master Services Agreement was terminated primarily in conjunction with the Company’s ongoing initiative to dramatically reduce its cost structure in light of general economic conditions, as well as to transition certain outsourced services to an in-house environment. The remaining financial obligation under the Master Services Agreement at the time of termination was approximately $150,000. On April 8, 2009 the Company and the third party vendor entered into a mutual settlement agreement and release whereby the Company paid to the third party vendor $75,000.
	Effective April 1, 2009, certain of the Company’s employees, including the person serving as the Company’s Chief Executive Officer, President and Chief Financial Officer, agreed to receive restricted shares of Company common stock, for services rendered to the Company, in lieu of receiving a portion of their salary. The total amount of salary foregone by all of the employees as a whole on a monthly basis is approximately $5,200. The number of shares to be issued to each employee on a monthly basis will be determined based upon the amount of monthly salary foregone by each employee, an average share price of the Company’s common stock, and a market based discount to compensate for the restricted nature of the stock grant. Each employee who has or will receive restricted shares has entered into a Compensation & Subscription Agreement for the period beginning on April 1, 2009, and ending no later than December 31, 2009 (Note 3).

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	On May 12, 2009 the Company and the Company’s former Executive Director of Content and Chief Medical Officer mutually agreed to terminate the terms and obligations of his three year employment agreement with the Company. Although he is no longer serving as the Company’s Executive Director of Content and Chief Medical Officer, he is now serving as the Company’s Chairman of the Board of Directors, as well as its Chief Medical Adviser. The Company and the former Executive Director of Content and the Chief Medical Officer agreed that certain restrictive covenants imposed on him and the Company’s indemnification obligations, as set forth in his employment agreement, continue to be in force and effect, and agreed to pay him severance equal to approximately eight months of his then current annual salary.
	Effective July 2, 2009 the Company entered into a Redemption and Lock-Up Agreement with its former Chairman and Chief Executive Officer who is a significant Company shareholder and previously owned approximately 15.5% (now approximately 5%) of our outstanding common stock. Pursuant to the agreement the Company purchased 5 million shares of Company common stock in consideration for $200,000. As part of the agreement, the Company’s former Chairman and Chief Executive Officer agreed that for a period of fourteen months he will not engage in certain transactions with respect to his remaining shares of Company common stock (approximately 2.1 million shares), such as sell, pledge, lend or otherwise dispose of his remaining shares without receiving prior Company consent. The Company purchased the shares in order to make the shares available for other corporate purposes. If the Board of Directors deems it advisable and appropriate for the Company to issue additional shares of its common stock the Company believes that having the shares available for issuance is in the Company’s, and its shareholders’, best interest in that any such issuances will now cause less dilution to the Company’s existing shareholders.
	The Company evaluated events through August 14, 2009 for consideration of a subsequent event to be included in its June 30, 2009 financial statements, issued August 14, 2009.
5.	Income taxes:
	No income tax benefit was recorded for any of the periods presented, as management was unable to conclude that it was more likely than not that the income tax benefit would be realized.
	The Tax Reform Act of 1986 contains provisions that limit the utilization of net operating loss and tax credit carryforwards if there has been a change of ownership as described in Section 382 of the Internal Revenue Code. Such an analysis has not been performed by the Company to determine the impact of these provisions on the Company’s net operating losses. A limitation under these provisions would reduce the amount of losses available to offset future taxable income of the Company.
6.	Commitments and contingencies:
	On May 12, 2009, the Company entered into a new lease agreement for its existing administrative offices under a non-cancellable operating lease that commences on August 1, 2009, and expires on October 31, 2012. The new lease agreement cancels the Company’s obligation to pay rent for the duration of the term of the Lease Agreement entered into on July 8, 2008.

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Future lease payments are as follows:

2009 (remaining 6 months)	55,712
2010	119,579
2011	133,458
2012	117,443
Total	426,192

The Company is involved in various claims and assessments arising in the ordinary course of business. In the opinion of management, the eventual disposition of these matters will not have a material adverse effect in the financial statements.

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ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

          Cautionary Statement about Forward-Looking Statements

          This Form 10-Q contains forward-looking statements regarding future events and the Company’s future results that are subject to the safe harbors created under the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). These statements are based on current expectations, estimates, forecasts, and projections about the industry in which the Company operates and the beliefs and assumptions of the Company’s management. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “may,” variations of such words, and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of the Company’s future financial performance, the continuing development of the Company’s website, the prospects for selling advertising on the website and new visitors and visitor page views related to advertising agreements, the Company’s anticipated growth and potentials in its business, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified under “Risk Factors” in our Form 10-K for the year ended December 31, 2008. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.

          The Company is under no duty to update any of these forward-looking statements after the date of this report. You should not place undue reliance on these forward-looking statements.

Plan of Operation

          About the Company

          We were incorporated in the State of Colorado on September 5, 2006 with the primary purpose of developing the first interactive online community dedicated to constantly improving the way Americans with disabilities or functional limitations live their lives. Our network of websites (the “Disaboom Network”) serves as a comprehensive online resource as well as a social media and publishing platform not only for people living with such conditions, but their immediate families and friends, caregivers, recreation and rehabilitation providers, employers, and other related communities. Our headquarters are located in the metropolitan area of Denver, Colorado.

          The Company released the first fully operational version of our main website (www.disaboom.com) on January 24, 2008. On October 9, 2007, the Company acquired an online dating and social networking website with the domain name Lovebyrd.com, and re-branded Lovebyrd.com in the quarter ended March 31, 2008 as a related website of Disaboom.com. On February 1, 2008 the Company launched a website with the domain name DisaboomJobs.com, which is the first website dedicated to providing employment-related resources and services to the disability community and their employers who are actively trying to create a more inclusive workforce. On July 31, 2009, the Company announced the launch of its redesigned DisaboomJobs.com website. The Company’s main website and related microsites for employment-related resources and services, as well as dating, are collectively referred to herein as the Disaboom Network.

          There are more than 54 million American adults living with disabilities or functional limitations today in the United States alone, and over 650 million worldwide. We believe Disaboom offers a new solution to the difficulties faced by this traditionally underserved market. Persons living with disabilities or functional limitations have unique needs, as do the people in their lives who are directly affected by such disabilities or functional limitations.

          We promote the trademarked name of our website, Disaboom.com, and related microsites DisaboomJobs.com and Lovebyrd.com, by primarily implementing a combination of search engine optimization and search engine marketing (“SEO/SEM”) advertising campaigns, as well as organic and social marketing campaigns, intended to encourage people to visit our sites. We believe that with the present absence of a comprehensive, community-oriented network of websites specifically for people living with or directly affected by disabilities or functional limitations, this traditionally underserved target audience will visit and participate in our community, and contribute to its growth and success.

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Summary of Activities to Date

          The activities of the Company in 2008 generally focused on the initial operational matters of an early stage internet company, including (i) the initial launch of the first fully operational version of our main website (www.disaboom.com) on January 24, 2008, (ii) launching additional resources and services through related microsites and the Company’s marketplace, (iii) integrating our main website and related microsites into the Disaboom Network, (iv) driving internet traffic into the Disaboom Network, and (v) beginning to generate traditional cost per mille (“CPM”) related advertising and sponsorship revenues, as well as directory services revenues.

          During the third and fourth calendar quarters of 2008, and through the period ended June 30, 2009, the Company began and continues today to respond aggressively to recessionary economic conditions, the liquidity crisis, capital market volatility, and the general economic outlook (collectively, “general economic conditions”), and their resultant adverse impact on the internet advertising industry. During the period ended June 30, 2009 and through the filing date of this Form 10-Q, the Company continues to aggressively reduce and monitor our overall operating expenditures in response to general economic and internet advertising market conditions. We also continue to monitor and evaluate our business needs and resources on an ongoing basis, and may scale back in certain areas that are not deemed essential to the Company’s near term success. Our objective is to balance investment in the Company’s sales function and capabilities, as summarized herein, while conserving our financial resources to ensure we have sufficient liquidity to fund our planned business operations.

          Business Changes and Business Progress in the Context of General Economic Conditions

          Market growth of traditional static banner and display advertising products in several online advertising market sectors has slowed considerably, and some sectors experienced negative growth during the third and fourth calendar quarters of 2008, and through at least through the second quarter of 2009. This was due in particular to the general economic conditions. Online advertising market growth has also generally slowed due to online advertising pricing declines resulting from increased competition among numerous websites for advertisers to choose from. However, market growth related to niche website advertising which is directed at a specific target audience such as Disaboom, as well as new media online advertising, is anticipated to recover more quickly than general website advertising and traditional advertising products as economic conditions begin to improve.

          Beginning in September 2008, the Company, with the full support of its Board of Directors, aggressively responded to dramatically changing economic, capital market, and internet advertising conditions. The Company appointed new leadership, restructured its management team and employee base, and dramatically reduced its overall cost structure to reflect these new realities – while at the same time launching a series of initiatives designed to enhance its future growth and drive to profitability. Since the third calendar quarter of 2008, the Company has realized the following financial results and launched the following business initiatives:

• Average monthly cash operating expenditures for the quarter ended June 30, 2008 were $1,546,206; average monthly cash operating expenditures for the most recent quarter ended June 30, 2009 were $244,162, a decrease of 84 percent.

• There were 63 full-time employees during the month of August 2008, and only 20 full-time employees as of June 30, 2009, a decrease of 68 percent.

• There were a number of outsourced third party vendor services relationships as of August 2008; the Company has aggressively restructured its operations, terminated almost all of its third party vendor services relationships, and performs the necessary core functions in-house as of June 30, 2009.

• Unique visitors to the Disaboom Network during the month of August 2008 were approximately 285,000; there were approximately 1,345,000 unique visitors during the month of June 2009, an increase of 370 percent.

• Beginning in December 2008, the Company launched a new sales initiative, and began to hire, train, and develop online sales executives on a very limited basis; for the quarters ended December 31, 2008, March 31, 2009, and June 30, 2009, sales related to this initiative were approximately $33,000, $141,000, and $230,000, respectively.

• There were three groups of standard products available for sale to advertisers as of August 2008; there are four groups of standard products, as well as 10 additional individual products, available for sale to advertisers as of June 30, 2009.

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• Beginning in the quarter ended June 30, 2009, the Company launched a comprehensive initiative involving the entire redesign of its enterprise technology, including its enterprise framework, social media applications, and web assets (i.e., websites); the primary objective of the redesign initiative is to dramatically enhance the user experience by simplifying navigation and substantially increasing site speed.

          Focus Going Forward

          Our focus through the quarter ending September 30, 2009 and the remainder of 2009 will likely continue to be:

          (i) the continued growth of our new customer sales, existing customer renewals, and cash collections, as well as the proactive management of our total cash operating expenditures, with the aim of ultimately achieving the status of cash flow positive in our business operations in late 2009;

          (ii) the completion of the comprehensive initiative involving the entire redesign of the Company’s enterprise technology, including its enterprise framework, social media applications, and web assets (i.e., websites) summarized above;

           (iii) the identification and pursuit of targeted traffic and growth opportunities related to the Disaboom Network, (including the redesign of our website Disaboom.com), our social media and publishing platform, through various search engine, social media, social networking, business development and partnership initiatives, and other activities; and

          (iv) the ongoing development and evolution of resources, products and services related to the Disaboom Network, our social media and publishing platform, our user community, and our customers.

          Ultimately, the features and products offered through the Disaboom Network that we will focus our time and resources to, may change due to general economic and internet advertising market conditions and as a result of which generates the best revenue and cash flow opportunities for the Company.

          We believe that the greater the awareness in the marketplace of the Disaboom Network, our community and brand, and our social media and publishing platform, the greater the amount of market penetration, organic traffic, advertising product opportunities and billable revenue we will experience and capitalize upon.

Results of Operations:

          During the three months ended June 30, 2009, our revenues increased 16% to $163,577 from $141,355 during the six months ended June 30, 2008. During the six months ended June 30, 2009 our revenues increased 111% to $404,211 from $191,215 during the six months ended June 30, 2008. While the level of these increases were adversely impacted by general economic conditions and certain limitations with the Company’s existing website, revenues for the three and six months ended June 30, 2008 were generated under a dramatically higher cost structure than currently exists at the Company. The revenue increases were driven by the Company’s ability to surpass the important customer credibility milestones of receiving one million monthly unique visitors and having a fully operational main website for at least one year, and being able to demonstrate steadily improving or otherwise above industry average advertiser results and customer testimonials as their campaigns have been optimized throughout the terms of their agreements.

          During the three months ended June 30, 2009, our net loss decreased 84% to $534,679, from $3,317,819 during the three months ended June 30, 2008. During the six months ended June 30, 2009 our net loss decreased 82% to $1,263,915 from $6,965,901. These decreases were primarily a result of the Company’s ongoing initiative to dramatically reduce its cost structure in light of general economic conditions, without impairing its core operating capabilities. This includes significant reductions in headcount as the Company eliminated various positions and initiatives not deemed essential to its 2009 success, the elimination of several Marketplace sales personnel, and transitioning from a variety of third party outsourced vendor services to an in-house environment as summarized above. Average monthly cash operating expenditures for the quarter ended June 30, 2008 were $1,546,206; average monthly cash operating expenditures for the quarter ended June 30, 2009 were $244,162, a decrease of 84%. June 2009 monthly cash operating expenditures were approximately $200,000.

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          As of June 30, 2008, the Company had 35 full time and 6 part time employees, and outsourced all of its design, software development, and marketing efforts related to the online brand building and launches of its main and employment related websites. The Company also maintained various third party outsourced vendor services relationships to include public relations, content, as well as hosting and database management. As of June 30, 2009, the Company had 20 full time employees, 3 part time employees, and minimal outsourced third party vendor services relationships. The reduction in staff contributed to our reduction in expenses for June 30, 2009.

Liquidity and Capital Resources

          As of June 30, 2009 we had working capital of $746,706 as compared to working capital $1,540,527 as of December 31, 2008. At June 30, 2009 we had current assets of $1,262,180, including $259,586 in cash and cash equivalents, and $741,031 in short-term investments. Our working capital and current assets decreased from March 31, 2009 as during the six month period ended June 30, 2009 we primarily funded our operations from our resources on-hand. While we earned revenues during the quarter ended June 30, 2009, these revenues were not sufficient to cover our expenditures.

          With our projected sales, operations and expenditures we expect that our current financial resources are sufficient to fund our operations into the fourth calendar quarter of 2009. We expect that during fiscal 2009 we will need to raise additional funds through equity or debt financing to continue to fund our current and pla nned business operations. Current conditions in the global and financial markets have currently limited the availability of these resources. We cannot assure you that capital will be available on reasonable terms, if at all. Therefore, the inability to raise additional funds, either through equity or debt financing could materially impair our ability to generate revenues, or continue our current business operations.

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ITEM 4T. Controls and Procedures.

a.Disclosure Controls

          As of June 30, 2009, we have carried out an evaluation under the supervision of, and with the participation of our Chief Executive and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15(e) under the Securities and Exchange Act of 1934, as amended. Based on the evaluation as of June 30, 2009, our Chief Executive and Chief Financial Officer has concluded that our disclosure controls and procedures (as defined in Rule 13a-15(e)) under the Securities Exchange Act of 1934) were effective.

          Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

b.Changes in Internal Control Over Financial Reporting

          There was no change in the Company’s internal control over financial reporting that occurred during the fiscal quarter to which this report relates that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

None.

ITEM 1A. Risk Factors

          There have been no material changes to the information included in risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2008.

ITEM 2. Unregistered Sale of Equity Securities and Use of Proceeds

          The following sets forth the information required by Item 701 of Regulation S-K with respect to the unregistered sale of equity securities that occurred during the quarter or subsequently and not previously reported in our quarterly report on form 10-Q for the quarter ended March 31, 2009.

          On April 30, 2009, the Company issued a total of 98,250 shares of common stock share to certain employees of the Company for services rendered, in lieu of receiving $5,109 in compensation. The number of shares issued to each employee was determined based upon the amount of monthly salary foregone by each employee. An average share price of the Company’s common stock and market based discount to compensate for the restricted nature of the stock. As such, the Company did not receive cash consideration for the shares, instead the shares were issued in consideration for services. We relied on the exemption from registration provided by sections 4(2) and 4(6) under the Securities Act of 1933 for the issuance of common stock to one employee(being our President and accredited investor). Further, we relied on the exemption from registration provided by section 4(2) under the Securities Act of 1933 for the issuance of common stock to the other employees because we: (i) did not engage in any public advertising or general solicitation in connection with the issuance: (ii) made available to each recipient disclosure regarding all aspects of our business including our reports filed with the SEC and our press releases, and other financial business and corporate information, and (iii) believed that for each issuance the recipient obtained all information regarding the Company he or she requested (or believed appropriate) and received answers to all questions he or she (and their advisors) posed, and otherwise understood the risks of accepting our securities for investment purposes. No commissions or other remuneration was paid in connection with these issuances.

On May 31, 2009, the Company issued a total of 71,454 shares of common stock at a price per share to certain employees of the Company for services rendered, in lieu of receiving $5,109 in compensation. The number of shares issued to each employee was determined based upon the amount of monthly salary foregone by each employee. An average share price of the Company’s common stock and market based discount to compensate for the restricted nature of the stock. As such, the Company did not receive cash consideration for the shares, instead the shares were issued in consideration for services. We relied on the exemption from registration provided by sections 4(2) and 4(6) under the Securities Act of 1933 for the issuance of common stock to one employee(being our President and accredited investor). Further, we relied on the exemption from registration provided by section 4(2) under the Securities Act of 1933 for the issuance of common stock to the other employees because we: (i) did not engage in any public advertising or general solicitation in connection with the issuance: (ii) made available to each recipient disclosure regarding all aspects of our business including our reports filed with the SEC and our press releases, and other financial business and corporate information, and (iii) believed that for each issuance the recipient obtained all information regarding the Company he or she requested (or believed appropriate) and received answers to all questions he or she (and their advisors) posed, and otherwise understood the risks of accepting our securities for investment purposes. No commissions or other remuneration was paid in connection with these issuances.

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On June 30, 2009, the Company issued a total of 85,434 shares of common stock to certain employees of the Company for services rendered, in lieu of receiving $5,109 in compensation. The number of shares issued to each employee was determined based upon the amount of monthly salary foregone by each employee. An average share price of the Company’s common stock and market based discount to compensate for the restricted nature of the stock. As such, the Company did not receive cash consideration for the shares, instead the shares were issued in consideration for services. We relied on the exemption from registration provided by sections 4(2) and 4(6) under the Securities Act of 1933 for the issuance of common stock to one employee(being our President and accredited investor). Further, we relied on the exemption from registration provided by section 4(2) under the Securities Act of 1933 for the issuance of common stock to the other employees because we: (i) did not engage in any public advertising or general solicitation in connection with the issuance: (ii) made available to each recipient disclosure regarding all aspects of our business including our reports filed with the SEC and our press releases, and other financial business and corporate information, and (iii) believed that for each issuance the recipient obtained all information regarding the Company he or she requested (or believed appropriate) and received answers to all questions he or she (and their advisors) posed, and otherwise understood the risks of accepting our securities for investment purposes. No commissions or other remuneration was paid in connection with these issuances.

ITEM 5. Other Information

None

ITEM 6. Exhibits.

3.1	Articles of Incorporation,as amended(1)
3.1.1	Amendment to the Articles of Incorporation(2),(4)
3.2	Bylaws(3)
10.1	Form Compensation and Subscription Agreement, (as executed by certain employees including our CEO, CFO, and President) filed herewith
10.2	Severance Agreement with Glen House, effective as of May 1, 2009 filed herewith
31.1	Certification of CEO and CFO Pursuant to Exchange Act Rules 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, filed herewith.
32.1	Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, filed herewith.
	(1) Incorporated by reference from Form 10-QSB, filed May 15, 2007.
	(2) Incorporated by reference from Form 8-K, filed August 24, 2007.
	(3) Incorporated by reference from Form 8-K, filed March 6, 2008.
	(4) Incorporated by reference from Form 8-K filed November 7, 2008.

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DISABOOM INC.

SIGNATURES

          In accordance with Section 12, 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	DISABOOM, INC.
August 14, 2009	By:	/s/ John Walpuck
Date		John Walpuck,
		President, Principal Financial Officer
		and Principal Executive Officer

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