UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| [X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF |
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 2010
| [ ] | 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 333-143039
NINE MILE SOFTWARE, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 20-8006878 |
| (State or other jurisdiction of | (I.R.S. Employer Identification No.) |
| incorporation or organization) |
579 W. Heritage Park Blvd. #220C, Layton, UT 84041
(Address of principal executive offices)
(888) 660-6568
(Registrant’s telephone number, including area code)
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 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 [ ] No [ ]
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 filer | [ ] | Accelerated filer | [ ] |
| Non-accelerated filer | [ ] | Smaller reporting company | [X] |
| (Do not check if a smaller reporting company) |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date.
| Class | Outstanding as of August 11, 2010 |
| Common Stock, $0.001 par value | 2,598,801 |
TABLE OF CONTENTS
| Heading | Page | |
| PART I -- FINANCIAL INFORMATION | ||
| Item 1. | Financial Statement | 3 |
| Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 11 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 12 |
| Item 4(T). | Controls and Procedures | 13 |
| PART II -- OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 13 |
| Item 1A. | Risk Factors | 13 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 13 |
| Item 3. | Defaults Upon Senior Securities | 13 |
| Item 4. | (Removed and Reserved) | 13 |
| Item 5. | Other Information | 13 |
| Item 6. | Exhibits | 13 |
| Signatures | 14 | |
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PART I — FINANCIAL INFORMATION
Item 1. Financial Statements
The accompanying unaudited balance sheet of Nine Mile Software, Inc. at June 30, 2010 and related unaudited statements of operations, and cash flows for the three and six months ended June 30, 2010 and 2009 and the period from November 30, 2006 (date of inception) to June 30, 2010, have been prepared by management in conformity with United States generally accepted accounting principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December 31, 200 9 financial statements. Operating results for the period ended June 30, 2010, are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2010 or any other subsequent period.
NINE MILE SOFTWARE, INC.
FINANCIAL STATEMENTS
JUNE 30, 2010
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| (A Development Stage Company) | |||||||||
| Condensed Consolidated Balance Sheets | |||||||||
| ASSETS | |||||||||
| June 30, | December 31, | ||||||||
| 2010 | 2009 | ||||||||
| (unaudited) | (audited) | ||||||||
| CURRENT ASSETS | |||||||||
| Cash | $ | 77,385 | $ | 138,604 | |||||
| Prepaid expenses | - | 11,650 | |||||||
| Total Current Assets | 77,385 | 150,254 | |||||||
| EQUIPMENT, net | 2,804 | 3,460 | |||||||
| OTHER ASSETS | |||||||||
| Copyrights, net | 1,012 | 1,071 | |||||||
| Total Other Assets | 1,012 | 1,071 | |||||||
| TOTAL ASSETS | $ | 81,201 | $ | 154,785 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| CURRENT LIABILITIES | |||||||||
| Payroll liabilities | $ | 5,838 | $ | 6,288 | |||||
| Accounts payable and accrued expenses | 1,483 | 40 | |||||||
| Notes payable and accrued interest-related party | 50,417 | - | |||||||
| Total Current Liabilities | 57,738 | 6,328 | |||||||
| COMMITMENTS AND CONTINGENCIES | - | - | |||||||
| STOCKHOLDERS' EQUITY | |||||||||
| Common stock; 50,000,000 shares authorized, at | |||||||||
| $0.001 par value, 2,598,801 and 2,598,801 | |||||||||
| shares issued and outstanding, respectively | 2,599 | 2,599 | |||||||
| Additional paid-in capital | 657,112 | 635,426 | |||||||
| Deficit accumulated during the development stage | (636,248) | (489,568) | |||||||
| Total Stockholders' Equity | 23,463 | 148,457 | |||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 81,201 | $ | 154,785 | |||||
| The accompanying notes are an integral part of these financial statements. | |||||||||
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| (A Development Stage Company) | ||||||||||||||||
| Condensed Consolidated Statements of Operations | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| From Inception | ||||||||||||||||
| For the Three | For the Three | For the Six | For the Six | on November 30, | ||||||||||||
| Months Ended | Months Ended | Months Ended | Months Ended | 2006 Through | ||||||||||||
| June 30, | June 30, | June 30, | June 30, | June 30, | ||||||||||||
| 2010 | 2009 | 2010 | 2009 | 2010 | ||||||||||||
| (Restated) | (Restated) | |||||||||||||||
| REVENUES | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||
| COST OF SALES | - | - | - | - | - | |||||||||||
| GROSS MARGIN | - | - | - | - | - | |||||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Research and development | 16,725 | 23,014 | 35,548 | 46,668 | 192,620 | |||||||||||
| General and administrative | 53,794 | 44,394 | 110,925 | 89,882 | 456,816 | |||||||||||
| Total Operating Expenses | 70,519 | 67,408 | 146,473 | 136,550 | 649,436 | |||||||||||
| LOSS FROM OPERATIONS | (70,519) | (67,408) | (146,473) | (136,550) | (649,436) | |||||||||||
| OTHER INCOME | ||||||||||||||||
| Interest expense | (417) | (10) | (417) | (10) | (417) | |||||||||||
| Interest income | 87 | 1,121 | 210 | 2,349 | 13,605 | |||||||||||
| Total Other Income (Expense) | (330) | 1,111 | (207) | 2,339 | 13,188 | |||||||||||
| LOSS BEFORE INCOME TAXES | (70,849) | (66,297) | (146,680) | (134,211) | (636,248) | |||||||||||
| PROVISION FOR INCOME TAXES | - | - | - | - | - | |||||||||||
| NET LOSS | $ | (70,849) | $ | (66,297) | $ | (146,680) | $ | (134,211) | $ | (636,248) | ||||||
| BASIC AND DILUTED LOSS PER COMMON SHARE | $ | (0.03) | $ | (0.03) | $ | (0.06) | $ | (0.05) | ||||||||
| WEIGHTED AVERAGE NUMBER | ||||||||||||||||
| OF COMMON SHARES OUTSTANDING | 2,598,801 | 2,596,288 | 2,598,801 | 2,596,288 | ||||||||||||
| The accompanying notes are an integral part of these financial statements. | ||||||||||||||||
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| (A Development Stage Company) | |||||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||||
| (unaudited) | |||||||||||
| From Inception | |||||||||||
| on November 30, | |||||||||||
| For the Six Months Ended | 2006 Through | ||||||||||
| June 30, | June 30, | ||||||||||
| 2010 | 2009 | 2010 | |||||||||
| (Restated) | |||||||||||
| OPERATING ACTIVITIES | |||||||||||
| Net loss | $ | (146,680) | $ | (134,211) | $ | (636,248) | |||||
| Adjustments to reconcile net loss to net cash | |||||||||||
| used by operating activities: | |||||||||||
| Fair value of options granted | 21,686 | 21,686 | 83,130 | ||||||||
| Amortization expense | 59 | 60 | 178 | ||||||||
| Depreciation expense | 656 | 183 | 1,135 | ||||||||
| Common stock issued for services | - | - | 880 | ||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Change in prepaid expenses | 11,650 | (1,000) | - | ||||||||
| Change in payroll liabilities | (450) | - | 5,838 | ||||||||
| Change in accounts payable and accrued expenses | 1,860 | (7,758) | 1,900 | ||||||||
| Net Cash Used in | |||||||||||
| Operating Activities | (111,219) | (121,040) | (543,187) | ||||||||
| INVESTING ACTIVITIES | |||||||||||
| Purchase of equipment | - | (1,200) | (3,939) | ||||||||
| Copyright costs incurred | - | - | (1,190) | ||||||||
| Net Cash Used in | |||||||||||
| Investing Activities | - | (1,200) | (5,129) | ||||||||
| FINANCING ACTIVITIES | |||||||||||
| Proceeds from notes payable | 50,000 | - | 50,000 | ||||||||
| Proceeds from common stock issued | - | - | 575,701 | ||||||||
| Net Cash Provided by | |||||||||||
| Financing Activities | 50,000 | - | 625,701 | ||||||||
| NET INCREASE (DECREASE) IN CASH | (61,219) | (122,240) | 77,385 | ||||||||
| CASH AT BEGINNING OF PERIOD | 138,604 | 405,553 | - | ||||||||
| CASH AT END OF PERIOD | $ | 77,385 | $ | 283,313 | $ | 77,385 | |||||
| SUPPLEMENTAL DISCLOSURES OF | |||||||||||
| CASH FLOW INFORMATION | |||||||||||
| CASH PAID FOR: | |||||||||||
| Interest | $ | - | $ | - | $ | - | |||||
| Income Taxes | $ | - | $ | - | $ | - | |||||
| The accompanying notes are an integral part of these financial statements. | |||||||||||
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NINE MILE SOFTWARE, INC.
(A Development Stage Company)
Notes to the Condensed Consolidated Financial Statements
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2010 and for all periods presented have been 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 have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2009 audited financial statements. The results of operations for the period ended June 30, 2010 and 2009 are not necessarily indicative of the operating results for the full years.
NOTE 2 - GOING CONCERN
The Company’s financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has had no revenues and has generated losses from operations.
In order to continue as a going concern and achieve a profitable level of operations, the Company will need, among other things, additional capital resources and to develop a consistent source of revenues. Management’s plans include investing in and developing all types of businesses related to the computer software industry.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
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 at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, TradeWarrior, Inc. All intercompany accounts and transactions are eliminated in consolidation. See Note 5.
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NINE MILE SOFTWARE, INC.
(A Development Stage Company)
Notes to the Condensed Consolidated Financial Statements
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recent Accounting Pronouncements
In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to Topic 505 clarifies the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a limit on the amount of cash that will be distributed is not a stock dividend for purposes of applying Topics 505 and 260. Effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a retrospective basis. The Company does not expect the provisions of ASU 2010-01 to have a material effect on the financial position, results of operations or cash flows of the Company.
In October 2009, the FASB issued Accounting Standards Update 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. This update addressed the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than a combined unit and will be separated in more circumstances that under existing US GAAP. This amendment has eliminated that residual method of allocation. Effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company does not expect the provisions of ASU 2009-13 to have a material effect on the financial position, results of operations or cash flows of the Company.
With the exception of the pronouncements noted above, no other accounting standards or interpretations issued or recently adopted are expected to have a material impact on the Company’s financial position, operations or cash flows.
NOTE 4- STOCK PURCHASE OPTIONS
On May 1, 2007, the Company issued a total of 610,000 stock purchase options exercisable for the purchase of our common stock at $0.025 per share for $160. The Company issued an additional 40,000 stock purchase options during 2008. The options were issued to directors, executive officers and other individuals expected to become employees. The options are not exercisable for a period of one year and are subject to a vesting schedule. Fifty percent of the options will vest when the Company first realizes a quarterly profit from operations or when it has sold an aggregate of 80 of its stock trading programs. The balance of the options will vest when the Company first records $1.0 million in total revenues. The options will expire if not exe rcised within 60 months of issuance, on May 1, 2012.
The Company estimates the fair value of each stock award at the grant date by using the Black-Scholes option pricing model. The following weighted average assumptions used for grants in the year ended December 31, 2007: dividend yield of zero percent; expected volatility of 100.%; risk-free interest rates of 5.35% and expected life of 5.0 years. The Company recognized no expense for the fair value of the options granted during 2007. Management has determined that the performance condition are improbable to occurring.
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NINE MILE SOFTWARE, INC.
(A Development Stage Company)
Notes to the Condensed Consolidated Financial Statements
NOTE 4- STOCK PURCHASE OPTIONS (CONTINUED)
On July 31, 2008, the Company granted a total of 300,000 stock purchase options exercisable for the purchase of our common stock at $0.75 per share from the 400,000 stock purchase options under the 2008 plan. The options were issued to directors, executive officers and other individuals expected to become employees. The options vest over 3 years. The options will expire if not exercised within 60 months of issuance, on July 31, 2013.
| The following weighted average assumptions used for grants in the year ended December 31, 2008: dividend yield of zero percent; expected volatility of 100%; risk-free interest rates of 3.35% and expected life of 3.0. The Company recognized $21,686 and $43,372 of expense for the fair value of the options during the six months ended June 30, 2010 and the year 2009, respectively. |
A summary of the status of the Company’s stock option plans as of June 30, 2010 and December 31, 2009 and the changes during the period are presented below:
| 2010 | 2009 | |
| Unexercised options, beginning of year | 950,000 | 950,000 |
| Stock options issued during the year | - | - |
| Stock options expired | - | - |
| Stock options exercised | - | - |
| Unexercised options, end of year | 950,000 | 950,000 |
Note 5 -- SIGNIFICANT EVENTS
| On May 21, 2010, the Company formed a wholly owned subsidiary named TradeWarrior to hold its assets. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, TradeWarrior, Inc. All intercompany accounts and transactions are eliminated in consolidation. |
NOTE 6 -- RELATED PARTY TRANSACTIONS
On June 1, 2010, the Company borrowed $50,000 under a promissory note from the relatives of an officer. The note is due with interest accrued at 10% per annum on June 1, 2011 and is secured by the assets of the Company. As of June 30, 2010, the Company had accrued interest of $417. |
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NINE MILE SOFTWARE, INC.
(A Development Stage Company)
Notes to the Condensed Consolidated Financial Statements
NOTE 7 – RESTATEMENT
The Company has restated its financial statements for the period ended June 30, 2010 to reflect an adjustment in the volatility used to compute the value of options granted, to accrue additional liabilities, and to reclassify some research and development expenses out of general and administrative expenses. A comparison of the Company’s balance sheet and statement of operations before and after the adjustment is as follows:
| June 30, 2009 | Change | June 30, 2009 | |
| (Original) | (Restated) | ||
| Cash | 283,745 | (432) | 283,313 |
| Prepaid expenses | - | 1,000 | 1,000 |
| Equipment, net | - | 1,017 | 1,017 |
| Accounts payable | 2,471 | 3,824 | 6,295 |
| Deficit accumulated during | |||
| the development stage | (295,287) | (40,007) | (335,294) |
| Research and development | 1,463 | 21,551 | 23,014 |
| General and administrative | 56,751 | (12,956) | 44,395 |
| Loss from operations | 56,214 | 9,195 | 67,400 |
| Interest expense | - | (10) | (10) |
| Net loss | 57,093 | 9,204 | 66,297 |
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following information should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Form 10-Q.
Plan of Operation
Since our inception in November 2006, we have been developing the TradeWarrior rebalancing software and released TradeWarrior Small Business 1.0 on July 28th, 2010. TradeWarrior is a portfolio rebalancing and trade generation program created for financial and investment advisory firms. It is designed to help advisors quickly and efficiently trade a large number of client accounts to an assigned “target model”. TradeWarrior will be primarily marketed to independent Registered Investment Advisors (“RIAs”).
After launching TradeWarrior Small Business, we have begun development on TradeWarrior Ultimate, which will be the full-featured version of TradeWarrior. Management anticipates launching a beta version of TradeWarrior Ultimate in the third quarter 2010, with a full release in the fourth quarter 2010, but it will be largely dependent on sales of TradeWarrior Small Business and/or additional funds being available. During the development period of TradeWarrior Ultimate, a beta group of 5 to10 RIA users will be using the program and providing industry feedback. This is essential to gain perspective and insight into the industry needs in a real time feedback loop in order to adjust the program to real life needs of end users.
We also plan to develop a client relation management (“CRM”) database. Most investment advisory firms have a CRM database that is used to store general client information such as names, mailing and e-mail addresses and account numbers. It is also used to keep track of client contacts, such as letters sent, e-mails, and phone calls, client financial planning information, and prospects and business contacts. We do not plan to use proceeds from our public offering to develop a CRM product, but we expect to develop and market the CRM product when sufficient cash flows from TradeWarrior sales are realized. Adding CRM capability to TradeWarrior is a potential area of expansion for our business.
We do not expect to make major capital expenditure for completing development and marketing TradeWarrior. We do anticipate an increase in employees if TradeWarrior is marketed successfully. In preparation for marketing TradeWarrior, management will assess the potential demand for up to two customer service personnel to assist in responding to new customers’ questions, orientation and installation of programs. In addition, we will assess the potential demand to hire additional programmers to speed development of functionality within TradeWarrior. Management believes we could be generating revenue within the first quarter after we commercially release TradeWarrior Small Business.
Results of Operations and Liquidity and Capital Resources
We have not realized revenues since inception. For the three-month period ended June 30, 2010 (“second quarter”), we realized a net loss of $70,849 ($0.03 per share) compared to a net loss of $66,297 ($0.03 per share) for the three-month period ended June 30, 2009. The increase in net loss for the second quarter of 2010 is primarily attributed to the 21% increase in general and administrative expenses from $44,394 in second quarter of 2009 to $53,794 in 2010, due to increased audit and advertising expenses. The net loss for the second quarter of 2010 was partially offset by a 24% decrease in research and development expenses from $23,014 in 2009 to $16, 725 in 2010, based on an effort by the Company to conserve cash.
For the six-month period ended June 30, 2010, we realized a net loss of $146,680 ($0.06 per share) compared to a net loss for the six-month period ended June 30, 2009 of $134,211 ($0.05 per share). The increase in net loss is attributed to the 23% increase in general and administrative expenses from $89,882 in the 2009 period to $110,925 in the 2010 period, due to increased audit, payroll and advertising expenses. The net loss was partially offset by the 8% decrease in research and development expenses from $46,668 in the first six months of 2009 to $35,548 for the 2010 period, based on an effort by the Company to conserve Cash.
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At June 30, 2010, we had total assets of $81,201, primarily in cash of $77,385, and stockholders’ equity of $23,463, compared to total assets of $154,785 and stockholders' equity of $148,457 at December 31, 2009. The decrease in total assets and stockholders' equity at June 30, 2010 is primarily attributed to the 44% decrease in cash from $138,604 to $77,385, due to payment of operating expenses. Net cash used in operating activities was $111,219 for the first six months of 2010 compared to $121,040 for the first six months of 2009. The 2010 results were primarily due to the net loss of $146,680, which was partially offset by the $11,650 decrease in prepaid expenses and $21,686 attributed to the grant of options. We also realized cash procee ds from financing activities of $50,000 pursuant to a promissory note payable during the first six months of 2010.
At June 30, 2010, working capital decreased to $19,647 compared to $143,926 at December 31, 2009, primarily attributed to the $61,219 decrease in cash, $11,650 decrease in prepaid expenses and the addition of $50,417 in notes payable. We anticipate meeting our working capital needs during the remainder of 2010 through additional funding through equity or debt financing, sales revenue, or a combination of these options. We have no other agreements or arrangements for additional funding and there can be no assurance any such funding will be available to us, or if available, such funding will be on acceptable or favorable terms to us.
Going Concern Consideration
Because we are a development stage company with no current revenues, we are relying on the proceeds of our initial public offering to launch our software product. If we do not have adequate capital to eventually develop a consistent source of revenues, we may have to curtail or cease operations. Additionally, even if we complete development of the TradeWarrior and generate revenues, there can be no assurances that revenues will be sufficient to enable us to generate profits and cash flows from operations. In that event, if we are unable to secure additional funding there is substantial doubt about our ability to continue as a going concern.
Inflation
In the opinion of management, inflation has not and will not have a material effect on our operations in the immediate future. Management will continue to monitor inflation and evaluate the possible future effects of inflation on our business and operations.
Off-balance Sheet Arrangements
We have no off-balance sheet arrangements.
Forward-Looking and Cautionary Statements
This report contains forward-looking statements relating to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “will” “should," “expect," "intend," "plan," anticipate," "believe," "estimate," "predict," "potential," "continue," or similar terms, variations of such terms or the negative of such terms. These statements are only predictions and involve known and unknown risks, uncertainties and other factors included in our periodic reports with the SEC. Although forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment, actual results could differ materially from th ose anticipated in such statements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. |
This item is not required for a smaller reporting company.
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Item 4(T). Controls and Procedures.
Evaluation of Disclosure Controls and Procedures. Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Disclosure and control procedures are also designed to ensure that such information is accumulated and communicated to management, including the chief executive officer and principal accounting officer, to allow timely decisions regarding required disclosures.
As of the end of the period covered by this quarterly report, we carried out an evaluation, under the supervision and with the participation of management, including our chief executive officer and principal accounting officer, of the effectiveness of the design and operation of our disclosure controls and procedures. In designing and evaluating the disclosure controls and procedures, management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and impleme nting possible controls and procedures, management is required to apply its reasonable judgment. Based on the evaluation described above, our management, including our principal executive officer and principal accounting officer, have concluded that, as of June 30, 2010, our disclosure controls and procedures were not effective due to a lack of adequate segregation of duties and the absence of an audit committee.
Changes in Internal Control Over Financial Reporting. Management has evaluated whether any change in our internal control over financial reporting occurred during the second quarter of fiscal 2010. Based on its evaluation, management, including the chief executive officer and principal accounting officer, has concluded that there has been no change in our internal control over financial reporting during the second quarter of fiscal 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings to which we are a party or to which any of our property is subject and, to the best of our knowledge, no such actions against us are contemplated or threatened.
| Item 1A. | Risk Factors |
This item is not required for a smaller reporting company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
This Item is not applicable.
Item 3. Defaults Upon Senior Securities
This Item is not applicable.
Item 4. (Removed and Reserved)
Item 5. Other Information
This Item is not applicable.
Item 6. Exhibits
| Exhibit 31.1 | Certification of C.E.O. Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| Exhibit 31.2 | Certification of Principal Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| Exhibit 32.1 | Certification of C.E.O. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| Exhibit 32.2 | Certification of Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
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SIGNATURES
Pursuant to the requirements 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.
| August 13, 2010 | NINE MILE SOFTWARE, INC. | |
| By: | /s/ DAMON DERU | |
| Damon Deru | ||
| CEO and Director | ||
| August 13, 2010 | By: | /s/ MICHAEL CHRISTENSEN |
| Michael Christensen | ||
| Secretary and Director | ||
| (Principal Accounting Officer) | ||
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