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 September 30, 2010
| o | 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) |
563 West 500 South, Ste 330, Bountiful, UT 84010
(Address of principal executive offices)
(877) 499-9192
(Registrant’s telephone number, including area code)
579 W. Heritage Park Blvd. #220C, Layton, UT 84041
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the 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 large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company
| Large accelerated filer | o | Accelerated filer | o |
| Non-accelerated filer | o | 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 o 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 November 12, 2010 |
| Common Stock, $0.001 par value | 2,598,801 |
| TABLE OF CONTENTS | |
| Heading | Page |
PART I — FINANCIAL INFORMATION | |
| Item 1. Financial Statements | 3 |
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | 10 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 12 |
| Item 4(T). Controls and Procedures | 12 |
PART II — OTHER INFORMATION | |
| Item 1. Legal Proceedings | 12 |
| Item 1A. Risk Factors | 12 |
| Item 2 Unregistered Sales of Equity Securities and Use of Proceeds | 12 |
| Item 3. Defaults Upon Senior Securities | 12 |
| Item 4. (Removed and Reserved) | 12 |
| Item 5. Other Information | 12 |
| 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 September 30, 2010 and related unaudited statements of operations and cash flows for the three and nine months ended September 30, 2010 and 2009 and the period from November 30, 2006 (date of inception) to September 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, 2009 financial statements. Operating results for the period ended September 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
September 30, 2010
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NINE MILE SOFTWARE, INC.
Condensed Consolidated Balance Sheets
| ASSETS | ||||||||
| September 30, | December 31, | |||||||
| 2010 | 2009 | |||||||
| (Unaudited) | ||||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 47,955 | $ | 138,604 | ||||
| Prepaid expenses | - | 11,650 | ||||||
| Total Current Assets | 47,955 | 150,254 | ||||||
| EQUIPMENT, net | 2,475 | 3,460 | ||||||
| OTHER ASSETS | ||||||||
| Copyrights, net | 982 | 1,071 | ||||||
| Total Other Assets | 982 | 1,071 | ||||||
| TOTAL ASSETS | $ | 51,412 | $ | 154,785 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Payroll liabilities | $ | 4,756 | $ | 6,288 | ||||
| Accounts payable and accrued expenses | 550 | 40 | ||||||
| Deferred revenue | 10,608 | - | ||||||
| Notes payable and accrued interest-related party | 51,667 | - | ||||||
| Total Current Liabilities | 67,581 | 6,328 | ||||||
| COMMITMENTS AND CONTINGENCIES | - | - | ||||||
| STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| 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 | 667,955 | 635,426 | ||||||
| Deficit accumulated during the development stage | (686,723 | ) | (489,568 | ) | ||||
| Total Stockholders' Equity (Deficit) | (16,169 | ) | 148,457 | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 51,412 | $ | 154,785 | ||||
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NINE MILE SOFTWARE, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
| From Inception | ||||||||||||||||||||
| For the Three | For the Three | For the Nine | For the Nine | on November 30, | ||||||||||||||||
| Months Ended | Months Ended | Months Ended | Months Ended | 2006 Through | ||||||||||||||||
| September 30, | September 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| 2010 | 2009 | 2010 | 2009 | 2010 | ||||||||||||||||
| (Restated) | (Restated) | |||||||||||||||||||
| REVENUES | $ | 7,242 | $ | - | $ | 7,242 | $ | - | $ | 7,242 | ||||||||||
| OPERATING EXPENSES | ||||||||||||||||||||
| Research and development | 17,017 | 16,948 | 52,565 | 63,616 | 209,637 | |||||||||||||||
| General and administrative | 39,501 | 61,510 | 150,427 | 151,392 | 496,318 | |||||||||||||||
| Total Operating Expenses | 56,518 | 78,458 | 202,992 | 215,008 | 705,955 | |||||||||||||||
| LOSS FROM OPERATIONS | (49,276 | ) | (78,458 | ) | (195,750 | ) | (215,008 | ) | (698,713 | ) | ||||||||||
| OTHER INCOME | ||||||||||||||||||||
| Interest expense | (1,250 | ) | - | (1,667 | ) | (10 | ) | (1,667 | ) | |||||||||||
| Interest income | 52 | 1,663 | 262 | 4,012 | 13,657 | |||||||||||||||
| Total Other Income | (1,198 | ) | 1,663 | (1,405 | ) | 4,002 | 11,990 | |||||||||||||
| LOSS BEFORE INCOME TAXES | (50,474 | ) | (76,795 | ) | (197,155 | ) | (211,006 | ) | (686,723 | ) | ||||||||||
| PROVISION FOR INCOME TAXES | - | - | - | - | - | |||||||||||||||
| NET LOSS | $ | (50,474 | ) | $ | (76,795 | ) | $ | (197,155 | ) | $ | (211,006 | ) | $ | (686,723 | ) | |||||
| BASIC AND DILUTED LOSS PER COMMON SHARE | $ | (0.02 | ) | $ | (0.03 | ) | $ | (0.08 | ) | $ | (0.08 | ) | ||||||||
| WEIGHTED AVERAGE NUMBER | ||||||||||||||||||||
| OF COMMON SHARES OUTSTANDING | 2,598,801 | 2,597,199 | 2,598,801 | 2,596,592 | ||||||||||||||||
| The accompanying notes are an integral part of these financial statements. | ||||||||||||||||||||
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NINE MILE SOFTWARE, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| From Inception | ||||||||||||
| on November 30, | ||||||||||||
| For the Nine Months Ended | 2006 Through | |||||||||||
| September 30, | September 30, | |||||||||||
| 2010 | 2009 | 2010 | ||||||||||
| (Restated) | ||||||||||||
| CASH FLOW FROMOPERATING ACTIVITIES | ||||||||||||
| Net loss | $ | (197,155 | ) | $ | (211,006 | ) | $ | (686,723 | ) | |||
| Adjustments to reconcile net loss to net cash | ||||||||||||
| used by operating activities: | ||||||||||||
| Fair value of options granted | 32,529 | 32,529 | 93,973 | |||||||||
| Amortization expense | 89 | 89 | 208 | |||||||||
| Depreciation expense | 985 | 275 | 1,464 | |||||||||
| Common stock issued for services | - | 880 | 880 | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Change in deferred revenue | 10,608 | - | 10,608 | |||||||||
| Change in prepaid expenses | 11,650 | (5,000 | ) | - | ||||||||
| Change in payroll liabilities | (1,532 | ) | - | 4,756 | ||||||||
| Change in accounts payable and accrued expenses | 2,177 | (7,758 | ) | 2,217 | ||||||||
| Net Cash Used in | ||||||||||||
| Operating Activities | (140,649 | ) | (189,991 | ) | (572,617 | ) | ||||||
| CASH FLOW FROMINVESTING ACTIVITIES | ||||||||||||
| Purchase of equipment | - | (1,200 | ) | (3,939 | ) | |||||||
| Copyright costs incurred | - | - | (1,190 | ) | ||||||||
| Net Cash Used in | ||||||||||||
| Investing Activities | - | (1,200 | ) | (5,129 | ) | |||||||
| CASH FLOW FROM FINANCING ACTIVITIES | ||||||||||||
| Proceeds from notes payable - related party | 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 | (90,649 | ) | (191,191 | ) | 47,955 | |||||||
| CASH AT BEGINNING OF PERIOD | 138,604 | 405,553 | - | |||||||||
| CASH AT END OF PERIOD | $ | 47,955 | $ | 214,362 | $ | 47,955 | ||||||
| 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.
Notes to the Condensed Consolidated Financial Statements
September 30, 2010 and December 31, 2009
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 September 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 September 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 limited 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) Prior to the realization of revenues during the three months ended September 30, 2010, the Company was classified as a development stage enterprise.
Revenue Recognition
The Company follows guidance found in ASC 985-605 to recognize revenue from the sale of license agreements for its software products. Because the licensing arrangement does not require significant production, modification, or customization of software, revenue shall be recognized when all of the following criteria are met:
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NINE MILE SOFTWARE, INC.
Notes to the Condensed Consolidated Financial Statements
September 30, 2010 and December 31, 2009
NOTE 3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue Recognition (continued)
The Company allocates the total arrangement fee among each element based on vendor-specific objective evidence of relative fair value of each of the elements.
In accordance with ASC 985-605-25-10 (c) the Company records licensing and postcontractual support revenues as deferred revenue and recognizes revenue over the life of the agreement, in most cases 12 months. The Company records all revenue from postcontract customer support included in the agreements with the initial licensing fee and no portion of the sale is allocated toward postcontract customer support.
Training and installation services are sold for stated periods and numbers of hours. Revenues are recognized ratably as the services are provided. Advance payments for these services are deferred and revenue is recognized in the periods when the services are performed.
The Company does offer a 30 day money back guarantee but as of the end of the period, all sales had passed the 30 day period with no refunds, thus no allowance for returns has been made.
Recent Accounting Pronouncements
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 adopted the provisions of ASU 2009-13 in conjunction with its initial revenues duri ng the third quarter 2010.
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 op tions will expire if not exercised 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 conditions are improbable of occurring.
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.
NOTE 4 - STOCK PURCHASE OPTIONS (CONTINUED)
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 $32,529 and $43,372 of expense for the fair value of the options during the nine months ended September 30, 2010 and the year 2009, respectively.
A summary of the status of the Company’s stock option plans as of September 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 September 30, 2010, the Company had accrued interest of $1,667.
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NINE MILE SOFTWARE, INC.
Notes to the Condensed Consolidated Financial Statements
September 30, 2010 and December 31, 2009
NOTE 7 – RESTATEMENT
The Company has restated its financial statements for the period ended September 30, 2009 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:
| September 30, 2009 | Change | September 30, 2009 | |
| (Previously Reported) | (Restated) | ||
| Equipment, net | - | 925 | 925 |
| Accounts payable | 2,040 | 4,255 | 6,295 |
| Deficit accumulated during | |||
| the development stage | (408,759) | (3,330) | (412,089) |
| Research and development | 5,464 | 58,152 | 63,616 |
| General and administrative | 210,490 | (59,098) | 151,392 |
| Loss from operations | (215,954) | 946 | (215,008) |
| Interest expense | - | (10) | (10) |
| Net loss | (211,942) | 936 | (211,006) |
NOTE 8 – SUBSEQUENT EVENTS
In accordance with ASC 855 Company management reviewed all material events through the date of this report and determined that there are no material subsequent events to report.
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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 on July 28th, 2010. During the third quarter 2010, Nine Mile Software experienced their first quarterly revenues from license sells of TradeWarrior. 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 is primarily marketed to independent Registered Investment Advisors (“RIAs”).
We have successfully launched and started selling TradeWarrior in the 3rd Q 2010, which demonstrates there is a market for our software. We estimate that approximately 90% to 95% of all RIA’s in the US do not currently use any commercial trading and rebalancing software which demonstrates great market potential for our TradeWarrior program. Management anticipates they will be spending much of their ongoing efforts selling and marketing our software. We plan to accomplish our sales goals by our internal sales efforts as well as leveraging other 3rd Party strategic relationships within the industry.
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 fourth quarter 2010, with a full release in the first quarter 2011, 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 at some future point. 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 increased marketing of 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.
Results of Operations and Liquidity and Capital Resources
Prior to the third quarter of 2010, we had not realized revenues since inception. During the third quarter of 2010, we had revenues of $7,242 evidencing the successful release and marketability of our TradeWarrior software. For the three-month period ended September 30, 2010 (“third quarter”), we realized a net loss of $50,474 ($0.02 per share) compared to a net loss of $76,795 ($0.03 per share) for the three-month period ended September 30, 2009. The decrease in net loss for the third quarter of 2010 is primarily attributed to the realizing our initial revenues and the 36% decrease in general and administrative expenses, from $61,510 in third quarter of 2009 to $39,501 in the comparable 2010 quarter, due to decreased salaries, audit and advertis ing expenses. Research and development expenses increased slightly in the third quarter of 2010 to $17,017 compared to $16,948 in the third quarter of 2009.
For the nine-month period ended September 30, 2010, we realized a net loss of $197,155 ($0.08 per share) compared to a net loss for the nine-month period ended September 30, 2009 of $211,006 ($0.08 per share). The decrease in net loss is attributed to realizing our initial revenues and a 1% decrease in general and administrative expenses from $151,392 in the 2009 period to $150,427 in the 2010 period, due to normal fluctuation in operating expenses. Also during the first nine months of 2010, research and development expenses decreased 17% to $52,565, compared to $63,616 for the 2009 period, attributed to the completion of a substantial portion of research and development of our TradeWarrior software.
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At September 30, 2010, we had total assets of $51,412, primarily in cash of $47,955, and a stockholders’ deficit of $16,169, compared to total assets of $154,785, primarily in cash of $138,604, and total stockholders' equity of $148,457 at December 31, 2009. The decrease in total assets and stockholders' equity at September 30, 2010 is primarily attributed to the 65% decrease in cash due to our net losse incurred during the period. Net cash used in operating activities was $140,649 for the first nine months of 2010 compared to $189,991 for the first nine months of 2009. The 2010 results were primarily due to the net loss of $197,155, which was partially offset by the $11,650 decrease in prepaid expenses and $32,529 attributed to the grant of options.&# 160; We also realized cash proceeds from financing activities of $50,000 pursuant to a promissory note payable during the first nine months of 2010.
At September 30, 2010, working capital decreased to a negative $19,626 compared to $143,926 at December 31, 2009. This decrease is primarily attributed to the $90,649 decrease in cash, $11,650 decrease in prepaid expenses and the addition of $51,667 in notes payable. We anticipate meeting our working capital needs during the remainder of 2010 with our available cash and possibly by 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
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 insignificant 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.
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 September 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 third 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 third 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.
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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.
| Date: November 17, 2010 | NINE MILE SOFTWARE, INC. | |
| By:: | /s/ DAMON DERU | |
| Damon Deru | ||
| CEO and Director | ||
| Date: November 17, 2010 | By: | /s/ MICHAEL CHRISTENSEN |
| Michael Christensen | ||
| Secretary and Director | ||
| (Principal Accounting Officer) | ||
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