UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2009.
OR
o TRANSITIONAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
Commission file number: 000-53783
T.O.D. TASTE ON DEMAND INC.
(Exact Name of Registrant as Specified in Its Charter)
Nevada | 75-3255056 | |
(state or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
55 Hakeshet Street, Reuth, Israel 91708
(Address of principal executive offices)(Zip Code)
+972 8 9263001
(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 þ 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. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o | Accelerated filer o |
Non-accelerated filer o ( (Do not check if a smaller reporting company) | Smaller Reporting Company þ |
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
Table of Contents
Item No. | Description | Page No. | ||
PART I - FINANCIAL INFORMATION | 1 | |||
Item 1. | Financial Statements | 1 | ||
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12 | ||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 14 | ||
Item 4T. | Controls and Procedures | 14 | ||
PART II - OTHER INFORMATION | 14 | |||
Item 1. | Legal Proceedings | 14 | ||
Item 1A | Risk Factors | 14 | ||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 14 | ||
Item 3. | Defaults Upon Senior Securities | 15 | ||
Item 4. | Submission of Matters to a Vote of Security Holders | 15 | ||
Item 5. | Other Information | 15 | ||
Item 6. | Exhibits | 15 | ||
SIGNATURES | 16 |
ii
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
T.O.D. TASTE ON DEMAND INC.
(A Development Stage Company)
Financial Statements
December 31, 2009
CONTENTS
Financial Statements | Page(s) | |
Balance Sheets – As of December 31, 2009 (Unaudited) and June 30, 2009 (Audited) | 2 | |
Statements of Operations – For the three months ended December 31, 2009 and 2008, the six months ended December 31, 2009 and 2008, and for the period from August 31, 2007 (Inception) to December 31, 2009 (Unaudited) | 3 | |
Statements of Cash Flows – For the three months ended December 31, 2009 and 2008, the six months ended December 31, 2009 and 2008 , and for the period from August 31, 2007 (Inception) to December 31, 2009 (Unaudited) | 4 | |
Notes to Financial Statements (Unaudited) | 5-11 |
1
(A Development Stage Company)
Balance Sheets
December 31, 2009 | June 30, 2009 | |||||||
(Unaudited) | (Audited) | |||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash | $ | 541 | $ | 530 | ||||
Total Current Assets | 541 | 530 | ||||||
Total Assets | $ | 541 | $ | 530 | ||||
Liabilities and Stockholders' Deficit | ||||||||
Current Liabilities: | ||||||||
Accounts payable | $ | 11,591 | $ | 9,812 | ||||
Loan payable - related party | 3,072 | 3,072 | ||||||
Note payable - related party | 8,000 | - | ||||||
Total Current Liabilities | 22,663 | 12,884 | ||||||
Stockholders' Deficit: | ||||||||
Preferred stock, $0.001 par value; 10,000,000 shares authorized; none issued and outstanding | - | - | ||||||
Common stock, $0.001 par value, 160,000,000 shares authorized; 3,867,257 and 3,857,257 shares issued and outstanding, respectively | 3,867 | 3,857 | ||||||
Additional paid-in capital | 71,666 | 70,676 | ||||||
Deficit accumulated during the development stage | (97,655 | ) | (86,887 | ) | ||||
Total Stockholders' Deficit | (22,122 | ) | (12,354 | ) | ||||
Total Liabilities and Stockholders' Deficit | $ | 541 | $ | 530 |
See accompanying notes to unaudited financial statements
2
T.O.D Taste On Demand Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
For the Three Months | For the Six Months | For the Period from | ||||||||||||||||||
Ended December 31, | Ended December 31, | August 31, 2007 (Inception) to | ||||||||||||||||||
2009 | 2008 | 2009 | 2008 | December 31, 2009 | ||||||||||||||||
Revenues | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Operating Expenses | ||||||||||||||||||||
General and administrative | 5,951 | 6,858 | 10,768 | 16,646 | 77,941 | |||||||||||||||
Research and development | - | 2,500 | - | 7,000 | 20,504 | |||||||||||||||
Total Operating Expenses | 5,951 | 9,358 | 10,768 | 23,646 | 98,445 | |||||||||||||||
Loss from Operations | (5,951 | ) | (9,358 | ) | (10,768 | ) | (23,646 | ) | (98,445 | ) | ||||||||||
Interest Income | - | 17 | - | 92 | 790 | |||||||||||||||
Net Loss | $ | (5,951 | ) | $ | (9,341 | ) | $ | (10,768 | ) | $ | (23,554 | ) | $ | (97,655 | ) | |||||
Net Loss Per Common Share - Basic and Diluted | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.00 | ) | $ | (0.01 | ) | $ | (0.03 | ) | |||||
Weighted average number of common shares outstanding during the period - basic and diluted | 3,867,257 | 3,770,021 | 3,862,230 | 3,747,428 | 3,693,752 |
See accompanying notes to unaudited financial statements
3
(A Development Stage Company)
Statement of Cash Flows
(Unaudited)
For the Period from | ||||||||||||
For the Six Months Ended | August 31, 2007 (Inception) to | |||||||||||
December 31, 2009 | December 31, 2008 | December 31, 2009 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net Loss | $ | (10,768 | ) | $ | (23,554 | ) | $ | (97,655 | ) | |||
Adjustments to reconcile net loss to cash used in operating activities: | ||||||||||||
Stock issued for intellectual property - related party | - | - | 1,000 | |||||||||
Stock issued for services - related party | - | - | 1,000 | |||||||||
Stock issued for consulting services | 1,000 | 2,000 | 8,000 | |||||||||
Changes in operating assets and liabilities: | ||||||||||||
(Increase) Decrease in prepaid expenses | 167 | |||||||||||
Increase in accounts payable | 1,779 | (5,311 | ) | 12,641 | ||||||||
Net Cash Used In Operating Activities | (7,989 | ) | (26,698 | ) | (75,014 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Proceeds from loan - related party | - | - | 3,072 | |||||||||
Proceeds from note - related party | 8,000 | - | 8,000 | |||||||||
Proceeds from issuance of common stock | - | 11,200 | 64,483 | |||||||||
Net Cash Provided By Financing Activities | 8,000 | 11,200 | 75,555 | |||||||||
Net Increase (Decrease) in Cash | 11 | (15,498 | ) | 541 | ||||||||
Cash - Beginning of Period | 530 | 18,592 | - | |||||||||
Cash - End of Period | $ | 541 | $ | 3,094 | $ | 541 | ||||||
SUPPLEMENTARY CASH FLOW INFORMATION: | ||||||||||||
Cash Paid During the Period for: | ||||||||||||
Taxes | $ | - | $ | - | $ | - | ||||||
Interest | $ | - | $ | - | $ | - | ||||||
SUPPLEMENTARY DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||
Stock issued to settle accounts payable - related party | $ | - | $ | - | $ | 1,050 |
See accompanying notes to unaudited financial statements
4
T.O.D. TASTE ON DEMAND INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2009
(Unaudited)
Note 1 Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the United States Securities and Exchange Commission for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The results for the interim period are not necessarily indicative of the results to be expected for the full year.
The unaudited interim financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which contains the audited financial statements and notes thereto, together with the Management’s Discussion and Analysis, for the period ended June 30, 2009. The interim results for the period ended December 31, 2009 are not necessarily indicative of results for the full fiscal year.
Note 2 Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
T.O.D. Taste On Demand Inc. (the "Company"), was incorporated in Nevada on August 31, 2007.
The Company is developing a device that will allow drinkers of bottled water to choose one of a few flavors as they pour the water from the bottle into the glass.
The Company’s year end is June 30.
Development Stage
The Company's financial statements are presented as those of a development stage enterprise. Activities during the development stage primarily include equity based financing and further implementation of the business plan. The Company has not generated any revenues since inception.
5
T.O.D. TASTE ON DEMAND INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2009
(Unaudited)
Risks and Uncertainties
The Company intends to operate in an industry that is subject to rapid technological change. The Company's operations are subject to significant risk and uncertainties including financial, operational, technological, regulatory and other risks associated with a development stage company, including the potential risk of business failure.
Also see Note 3 regarding going concern matters.
Use of Estimates
The preparation of financial statements in conformity with U.S. generally accepted accounting principles 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 period.
Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from estimates.
Cash and Cash Equivalents
The Company considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. At December 31, 2009 and June 30, 2009, respectively, the Company had no cash equivalents.
The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At December 31, 2009 and June 30, 2009, respectively, there were no balances that exceeded the federally insured limit.
Earnings per Share
Basic earnings (loss) per share is computed by dividing net income (loss) by weighted average number of shares of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock, common stock equivalents and potentially dilutive securities outstanding during the period. For the period from August 31, 2007 (inception) to December 31, 2009, the Company had no common stock equivalents that could potentially dilute future earnings (loss) per share; hence, a separate computation of diluted earnings (loss) per share is not presented.
6
T.O.D. TASTE ON DEMAND INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2009
(Unaudited)
Segment Information
During the fiscal years 2010 and 2009, respectively, the Company only operated in one segment; therefore, segment information has not been presented.
Share Based Payments
Generally, all forms of share-based payments, including stock option grants, restricted stock grants and stock appreciation rights, are measured at their fair value on the awards’ grant date, and based on the estimated number of awards that are ultimately expected to vest. Share-based payment awards issued to non-employees for services rendered are recorded at either the fair value of the services rendered or the fair value of the share-based payment, whichever is more readily determinable. The expense resulting from share-based payments are recorded as a component of general and administrative expense.
Research and Development
The Company expenses all research and development costs as incurred.
Fair Value of Financial Instruments
The carrying amounts of the Company’s short-term financial instruments, including the Company’s current assets (exclusive of cash) and current liabilities, approximate fair value due to the relatively short period to maturity for these instruments.
Recent Accounting Pronouncements
Effective June 30, 2009, the Company adopted a new accounting standard for subsequent events, as codified in ASC 855-10. The update modifies the names of the two types of subsequent events either as recognized subsequent events (previously referred to in practice as Type I subsequent events) or non-recognized subsequent events (previously referred to in practice as Type II subsequent events). In addition, the standard modifies the definition of subsequent events to refer to events or transactions that occur after the balance sheet date, but before the financial statements are issued (for public entities) or available to be issued (for nonpublic entities). It also requires the disclosure of the date through which subsequent events have been evaluated. The update did not result in significant changes in the practice of subsequent event disclosures, and therefore the adoption did not have a material impact on the Company’s financial statements.
7
T.O.D. TASTE ON DEMAND INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2009
(Unaudited)
Effective July 1, 2009, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted Accounting Principles – Overall (“ASC 105-10”). ASC 105-10 establishes the FASB Accounting Standards Codification (the “Codification”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with U.S. GAAP. Rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative U.S. GAAP for SEC registrants. All guidance contained in the Codification carries an equal level of authority. The Codification superseded all existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the Codification is non-authoritative. The FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts. Instead, it will issue Accounting Standards Updates (“ASUs”). The FASB will not consider ASUs as authoritative in their own right. ASUs will serve only to update the Codification, provide background information about the guidance and provide the bases for conclusions on the change(s) in the Codification. References made to FASB guidance throughout this document have been updated for the Codification.
Effective July 1, 2009, the Company adopted FASB ASU No. 2009-05, Fair Value Measurements and Disclosures (Topic 820) (“ASU 2009-05”). ASU 2009-05 provided amendments to ASC 820-10, Fair Value Measurements and Disclosures – Overall, for the fair value measurement of liabilities. ASU 2009-05 provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using certain techniques. ASU 2009-05 also clarifies that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of a liability. ASU 2009-05 also clarifies that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. Adoption of ASU 2009-05 did not have a material impact on the Company’s results of operations or financial condition.
Note 3 Going Concern
As reflected in the accompanying financial statements, the Company has a net loss of $10,768 and net cash used in operations of $7,989 for the six months ended December 31, 2009; and a working capital and stockholders’ deficit of $22,122 and a deficit accumulated during the development stage of $97,655 at December 31, 2009. In addition, the Company is in the development stage and has not yet generated any revenues.
The ability of the Company to continue as a going concern is dependent on Management's plans, which include potential asset acquisitions, mergers or business combinations with other entities, further implementation of its business plan and continuing to raise funds through debt or equity raises. The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. These financial statements do not include any adjustments relating to the recovery of the recorded assets or the classification of the liabilities that might be necessary should the Company be unable to continue as a going concern.
8
T.O.D. TASTE ON DEMAND INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2009
(Unaudited)
In response to these problems, management has taken the following actions:
· | the Company is continuing efforts to further develop the product through research and development; and |
· | the Company is seeking third party debt or equity financing financing. |
Note 4 Fair Value
The Company has categorized its assets and liabilities recorded at fair value based upon the fair value hierarchy specified by GAAP.
The levels of fair value hierarchy are as follows:
● | Level 1 inputs utilize unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access; |
● | Level 2 inputs utilize other-than-quoted prices that are observable, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs such as interest rates and yield curves that are observable at commonly quoted intervals; and |
● | Level 3 inputs are unobservable and are typically based on our own assumptions, including situations where there is little, if any, market activity. |
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the Company categorizes such financial asset or liability based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.
Both observable and unobservable inputs may be used to determine the fair value of positions that are classified within the Level 3 category. There were no instruments requiring a fair value classification at December 31, 2009 and 2008, respectively.
Note 5 Loan Payable – Related Party
During May 2009, the Company’s Chief Executive Officer advanced $3,072 to pay corporate expenses. The advance is non-interest bearing, unsecured and due one year from the issuance date.
During October 2009, the Company’s Chief Executive Officer advanced $700 to pay corporate expenses. The advance is non-interest bearing, unsecured and due on demand.
9
T.O.D. TASTE ON DEMAND INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2009
(Unaudited)
Note 6 Note Payable – Related Party
In October 2009, the Company issued a promissory note to a related party in the amount of $8,000. The note is non-interest bearing, unsecured and due upon demand.
Note 7 Stockholders’ Equity (Deficit)
In September 2007, the Company issued an aggregate 1,000,000 shares of common stock, having a fair value of $1,000 ($0.001/share), to its Chairman, CEO and Director for the acquisition of certain intellectual property (“IP”). The IP was received under an assignment agreement pertaining to the product known as "Taste on Demand" to the Company. Pursuant to Staff Accounting Bulletin Topic 5(G), “Transfers of Nonmonetary Assets by Promoters or Shareholders”, the patent was contributed to the Company at its historical cost basis of $0 as determined under generally accepted accounting principles. The Company expensed this stock issuance as a component of research and development.
In September 2007, the Company issued 2,000,000 shares of common stock to its founders for $20,000 ($0.01/share).
In September 2007, the Company issued 100,000 shares of common stock, having a fair value of $1,000 ($0.01/share), based upon the recent cash offering price, to its Director, in consideration for future services. The Company amortized the related compensation on a quarterly basis over a one-year period.
During October, November and December 2007, the Company issued an aggregate 544,400 shares of common stock to third party investors under a private placement offering for $27,233 ($0.05/share).
In November 2007, the Company issued 10,000 shares of common stock, having a fair value of $500 ($0.05/share), based upon the recent cash offering price, for consulting services.
In February 2008, the Company issued 40,000 shares of common stock, having a fair value of $2,000 ($0.05/share), based upon the recent cash offering price, for consulting services.
In May 2008, the Company issued 17,857 shares of common stock, having a fair value of $2,500 ($0.14/share), based upon the fair value of the services provided, for consulting services.
In July 2008, the Company issued 14,286 shares of common stock, having a fair value of $2,000 ($0.14/share), based upon the fair value of the services provided, for consulting services.
On November 10, 2008, the Company completed a private offering to related party stockholders to sell 80,000 shares of common stock for $11,200 ($0.14/share).
10
T.O.D. TASTE ON DEMAND INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2009
(Unaudited)
On November 10, 2008, the Company’s articles of incorporation were amended to change the authorized number of shares of its common stock from 65,000,000 shares to 160,000,000 shares of $0.001 par value, common stock.
On February 9, 2009, the Company issued 7,500 shares of common stock to settle accounts payable with a related party stockholder. The shares had a fair value of $1,050 ($0.14/share), based upon the quoted closing trading price. There was no gain or loss associated with this stock issuance.
On February 19, 2009, the Company completed a private offering with a related party stockholder to sell 7,500 shares of common stock for $1,050 ($0.14/share)
In March, 2009, the Company completed a private offering with a related party stockholder to sell 7,500 shares of common stock for $1,050 ($0.14/share).
In May 2009, the Company completed a private offering to related party stockholders to sell 35,714 shares of common stock for $5,000 ($0.14/share).
In October 2009, the Company issued 10,000 shares of common stock, for consulting services, having a fair value of $1,000 ($0.10/share), based upon the quoted closing trading price.
Note 8 Subsequent Events
The Company has evaluated for subsequent events between the balance sheet date of December 31, 2009 and February 1, 2010, the date the financial statements were issued, and has determined that there are no additional disclosures required.
11
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
As used in this Quarterly Report on Form 10-Q (this “Report”), references to the “Company,” “TOD,” “we,” “our” or “us” refer to T.O.D. Taste on Demand Inc. unless the context otherwise indicates.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and the notes thereto included elsewhere in this report and with the Management’s Discussion and Analysis or Plan of Operations and the audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2009.
Forward-Looking Statements
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements. These forward-looking statements are based on current expectations, estimates, forecasts and projections about us, our future performance, the industry in which we operate, our beliefs and our management’s assumptions. In addition, other written or oral statements that constitute forward-looking statements may be made by us or on our behalf. Words such as “expects,” “anticipates,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to assess. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. Except as required under the federal securities laws and the rules and regulations of the Securities and Exchange Commission, we do not have any intention or obligation to update publicly any forward-looking statements or risk factors included herein, whether as a result of new information, future events, changes in assumptions or otherwise. Further information on potential factors that could affect our business is described under the heading “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended June 30, 2009. Readers are also urged to carefully review and consider the various disclosures we have made in that report.
Our Business
We were incorporated in the State of Nevada on August 31, 2007. We are a development stage company and from our inception to date, we have not generated any revenue from operations.
Our goal is to develop a special device that will allow drinkers of bottled water to choose from certain selected flavors and make their own drink by virtue of pouring the water from the bottle through our filter cork.
On January 30, 2008 we filed a registration statement on Form SB-2 which was declared effective on February 14, 2008. As a result we became a reporting company. On July 25, 2008, our stock began trading on the Over the Counter Bulletin Board under the symbol TODT.OB.
Our vision is to develop our products that will become widely accepted in the market. Our growth may be achieved through licensing the technology, or direct manufacturing and distribution of our products. Therefore we plan to focus in the coming months on the development of the T.O.D. Cork and the application for flavoring water through capsules. The development of our T.O.D. Cork first prototype has been completed and we are now working on the development of the required capsules in four flavors in order to have a full functioning prototype that we can use.
RESULTS OF OPERATIONS –THREE AND SIX MONTHS ENDED DECEMBER 31, 2009 COMPARED TO THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2008.
We have not had any revenues from operations since our inception on August 31, 2007. We have a net loss of $5,951 and $10,768 for the three and six months ended December 31, 2009, respectively, compared with $9,341 and 23,554 for the three months and six ended December 31, 2008, respectively.
This negative cash flow is attributable to our operating expenses, which decreased significantly during the three and six months ended December 31, 2009 compared with the three and six months ended December 31, 2008, mainly because of shortage of capital to fund our operations and growth.
Research and Development
Research and development expenses for the three and six months ended December 31, 2009 decreased to $0 and $0 from $2,500 and $7,000 for the three and six months ended December 31, 2008, respectively. We have completed the development of the first prototype of the plastic component of our T.O.D. Cork but needed to significantly slow our continued development of the product and the development of related capsules due to shortage of capital to finance such expenses.
12
General and Administrative Expenses
General and administrative expenses for the three and six months ended December 31, 2009 decreased to $5,951 and $10,768 from $6,858 and $16,646 for the three and six months ended December 31, 2008, respectively. General and administrative expenses in the three and six months ended December 31, 2009, were attributed to professional fees primarily in connection with fees related to the preparation and filing of our annual report for the fiscal year ended June 30, 2009 as well as annual state filing fees.
Liquidity and Capital Resources
As of December 31, 2009, total cash was $541. On December 31, 2009, we had a working capital deficit of $22,122 and a deficit accumulated during the development stage of $97,655. We intend to finance our future operations with related party and third party stock issuances and loans.
Net cash used in operating activities was $7,989 during the six months ended December 31, 2009. Net cash used by operating activities in the six months ended December 31, 2009 primarily consisted of payments to professional service providers and annual state filing fees. Our cash is not sufficient to provide for the basic operation expenses and maintenance costs for the next 12 months. In October 2009, we borrowed $8,000 from a principal shareholder, Kaeyo Investments Ltd. in order to be able to finance our operations. The loan is interest free and payable upon demand. In October 2009, our Chief Executive Officer (“CEO”) advanced $700 to us to pay for our corporate expense. The advance is non-interest bearing, unsecured and due 30 days from the CEO’s demand.
Our future success and ability to generate sufficient revenues to support our operation depends on the successful development and commercialization of our T.O.D. Cork. We expect to incur a minimum of $80,000 in expenses during the next twelve months of operations, including in connection with the continuing protection of our intellectual property, expenses related to being a public company and expenses in connection with the development of our products. In order to have sufficient cash to meet our anticipated requirements for the next twelve months, we will be dependent upon our ability to obtain additional financing. We would therefore be required to seek additional financing to pay for our expenses. There can be no assurance that we will be able to obtain such additional financing at acceptable terms to us, or at all. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans or lines of credit. Our inability to raise funds will have a severe negative impact on our ability to remain a viable company.
Going Concern Consideration
We had a net loss of $10,768 and net cash used in operating activities of $7,989 for the six months ended December 31, 2009. In addition, we have a working capital deficit of $22,122 and accumulated deficit during the development stage of $97,655 at December 31, 2009. At December 31, 2009, due to numerous negative indicators such as a loss from operations, net cash used in operations, and a deficit accumulated during the development stage, there are concerns regarding our ability to continue as a going concern. Our financial statements included in this report, as well as the audited financial statements included in our Registration Statement on Form SB-2 (Registration No. 333-148928) for the period ended November 30, 2007 and the audited financial statements included in our Annual Report for the fiscal years ended June 30, 2008 and June 30, 2009, contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.
Item 4T. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission. Our principal executive and financial officer has reviewed the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-14(c) and 15d-14(c)) within the end of the period covered by this Quarterly Report on Form 10-Q and has concluded that the disclosure controls and procedures are effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported in a timely manner. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the last day they were evaluated by our principal executive and financial officer.
Changes in Internal Controls over Financial Reporting
There have been no changes in the Company's internal control over financial reporting during the last quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.
Item 1A. Risk Factors
A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
In October 2009 we issued 10,000 shares of our common stock to our consultant in consideration for services rendered. The issuance was deemed exempt under Regulation S under the Securities Act of 1933, as amended (the “Act”) and/or Section 4(2) of the Act
Purchases of equity securities by the issuer and affiliated purchasers
None.
Use of Proceeds
None
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Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
There was no matter submitted to a vote of security holders during the fiscal quarter ended December 31, 2009.
Item 5. Other Information.
None
Item 6. Exhibits.
Description | ||
31.1* | Rule 13a-14(a) Certification of Principal Executive and Principal Financial Officer | |
32.1** | Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350. |
*Filed herewith.
**Furnished herewith.
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
T.O.D. TASTE ON DEMAND INC. | ||
February 2, 2010 | By: | /s/ David Katzir |
Name: | David Katzir | |
Title: | President, Treasurer, and Director (Principal | |
Executive and Financial Officer) |
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