U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X . | Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934 |
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| For the quarterly period ended March 31, 2012 |
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. | Transition Report under Section 13 or 15(d) of the Exchange Act |
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| For the Transition Period from ________to __________ |
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Commission File Number: 333-152837
BookMerge Technologies Inc.
(Exact Name of Registrant as Specified in its Charter)
NEVADA | 36-4627722 |
(State of other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification Number) |
1560 N. Maple Street |
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Corona CA | 92880 |
(Address of principal executive offices) | (Zip Code) |
Registrant's Phone: (951) 734-5344 |
Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or 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 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 | .(Do not check if a smaller reporting company) | Smaller reporting company | X. |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes . No X .
As of Mar. 31, 2012, the issuer had 114,238,500 shares of common stock issued and outstanding.
| TABLE OF CONTENTS | Page |
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PART I – FINANCIAL INFORMATION | ||
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Item 1. | Financial Statements | 3 |
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operation | 13 |
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 14 |
Item 4. | Controls and Procedures | 15 |
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PART II – OTHER INFORMATION | ||
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Item 1. | Legal Proceedings | 16 |
Item 1A. | Risk Factors | 16 |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 16 |
Item 3. | Defaults Upon Senior Securities | 16 |
Item 4. | Submission of Matters to a Vote of Security Holders | 16 |
Item 5. | Other Information | 16 |
Item 6. | Exhibits | 16 |
2
ITEM 1 FINANCIAL STATEMENTS
BOOK MERGE |
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TECHNOLGIES INC. |
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FINANCIAL STATEMENTS |
(BOOKMERGE) |
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For the nine months ended |
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March 31, 2012 |
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John Kinross-Kennedy, C.P.A. |
17848 Skypark Circle |
Irvine, CA 92614-6401 |
(949) 955-2522. Fax (949)724-3817 |
jkinross@zamucen.com |
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BOOK MERGE TECHNOLOGIES INC. | |||||||
CONSOLIDATED BALANCE SHEET | |||||||
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| March 31, |
| June 30, |
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| 2012 |
| 2011 |
| ASSETS |
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Current Assets |
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| Cash and cash equivalents | $ | 634 | $ | 6,110 | ||
| Accounts Receivable |
| 19,005 |
| 19,194 | ||
| Inventory |
| 15,027 |
| 25,757 | ||
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| Total Current Assets |
| 34,666 |
| 51,061 | |
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Property plant and equipment, |
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| net of accumulated depreciation |
| 615,878 |
| 692,272 | ||
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Other Assets |
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| Notes Receivable |
| 40,000 |
| 40,000 | ||
| Deposits |
| 18,036 |
| 18,036 | ||
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| Total Other Assets |
| 58,036 |
| 58,036 | |
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| TOTAL ASSETS | $ | 708,580 | $ | 801,369 | ||
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| LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current Liabilities |
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| Bank Overdraft |
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| Accounts payable and accrued expenses |
| 198,934 |
| 162,759 | ||
| Bank Line of Credit |
| 69,076 |
| 74,329 | ||
| Deferred Rent |
| 5,455 |
| 5,455 | ||
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| Total Current Liabilities |
| 273,465 |
| 242,543 | |
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Other Liabilities |
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| Note Payable |
| 95,000 |
| 95,000 | ||
| Deferred Investments (Note 2) |
| 116,000 |
| 104,000 | ||
| Shareholder Loans |
| 64,500 |
| 64,500 | ||
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| Total Other Liabilities |
| 275,500 |
| 263,500 | |
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| Total Liabilities |
| 548,965 |
| 506,043 | |
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Stockholders' Equity |
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| Common Stock, $0.001 par value, authorized 100,000 shares; Issued and outstanding: 104,238,500 as at June 30, 2011 114,238,500 as at March 31, 2012 |
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| 114,239 |
| 104,239 | |||
| Additional paid-in capital |
| 1,890,888 |
| 1,890,888 | ||
| Deficit |
| (1,845,512) |
| (1,699,801) | ||
| Net Income |
| - |
| - | ||
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| Total Stockholders' Equity |
| 159,615 |
| 295,326 | |
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| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 708,580 | $ | 801,369 |
4
BOOK MERGE TECHNOLOGIES INC. | |||||||||
CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||
For the six and nine months ended March 31, 2012 and 2011 | |||||||||
(unaudited) | |||||||||
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| For the three months ended |
| For the nine months ended | ||||
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| March 31, |
| March 31, | ||||
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| 2012 |
| 2011 |
| 2012 |
| 2011 |
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Revenues | $ | 29,799 | $ | 40,328 | $ | 119,044 | $ | 78,698 | |
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Cost of Sales exclusive of depreciation expense |
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| 3,422 |
| 10,430 |
| 41,337 |
| 82,497 | ||
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Selling, General and Administrative Expenses |
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Advertising and Marketing |
| - | 1,394 |
| 15,411 |
| 8,979 | ||
Occupancy Costs |
| 13,324 |
| (756) |
| 49,756 |
| 21,008 | |
Depreciation |
| 25,465 |
| 25,198 |
| 76,394 |
| 75,594 | |
Salaries and wages |
| 42 |
| 44,641 |
| 35,573 |
| 117,817 | |
Legal and professional fees |
| 1,331 |
| 12,261 |
| 17,172 |
| 29,799 | |
Other selling, general and administrative |
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Expenses |
| 12,613 |
| 13,404 |
| 29,707 |
| 36,617 | |
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| 52,775 |
| 96,142 |
| 224,013 |
| 289,814 |
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Net Income before other income and expenses |
| (26,398) |
| (66,244) |
| (146,306) |
| (293,613) | |
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Other Income and expenses |
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Interest income |
| - |
| - |
| - |
| 606 | |
Other income |
| 70 |
| - |
| 595 |
| 7,185 | |
Interest expense |
| - |
| (2,743) |
| - |
| (1,517) | |
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| 70 |
| (2,743) |
| 595 |
| 6,274 |
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Net Income, at 100% | $ | (26,328) | $ | (68,987) | $ | (145,711) | $ | (287,339) | |
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Minority interest (Note 1) |
| - |
| - |
| - |
| - | |
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Net Income |
| (26,328) |
| (68,987) |
| (145,711) |
| (287,339) | |
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Basic and dilutive earnings per share | $ | - | $ | - | $ | - | $ | - | |
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Weighted average number of shares outstanding |
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| 114,238,500 |
| 79,870,500 |
| 111,947,591 |
| 79,740,500 |
5
BOOK MERGE TECHNOLGIES INC. | |||||||
CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||
For the nine months ended March 31, 2012 and 2011 | |||||||
(Unaudited) | |||||||
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| 2012 $ |
| 2011 $ |
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| Cash Flows from Operating Activities |
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| Net Income after taxes | (145,711) |
| (287,339) | ||
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| Adjustments to reconcile net loss to net cash used by operations: |
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| Depreciation | 76,394 |
| 75,594 |
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| Amortization | - |
| (60,000) |
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| Change in operating assets and liabilities: |
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| Accounts Receivable | 189 |
| 5 |
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| Accounts Payable and accrued expenses | 36,175 |
| (18,227) |
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| Credit Cards | - |
| (46,495) |
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| Inventory | 10,730 |
| 24,786 |
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| Deferred Rent | - |
| (3,010) |
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| Deferred Payroll | - |
| (8,000) |
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| Settlement Agreements | - |
| 17,472 |
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| Current portion, long term debt | - |
| (6,000) |
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| Net Cash provided by Operating Activities | (22,223) |
| (311,214) |
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| Cash Flows from Investing Activities |
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| Purchase of Property and Equipment | - |
| (12,000) | ||
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| Repayment and reclassification of capital lease | - |
| (9,291) | ||
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| Proceeeds (amortizaton) of deferred investments |
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| Sale of stock for cash | - |
| 57,000 | ||
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| Net Cash (used by) Investing Activities | - |
| 35,709 | |
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| Cash Flows from Financing Activities |
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| Bank overdraft |
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| Bank Line of Credit | (5,253) |
| 28,247 | ||
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| Proceeds of loans | 22,000 |
| 8,000 | ||
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| Conributed Capital | - |
| 231,827 | ||
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| Net Cash (used by) Financing Activities | 16,747 |
| 268,074 |
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| Net increase (decrease) in cash | (5,476) |
| (7,431) | |||
| Minority Interest |
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| Cash and cash equivalents, beginning of period | 6,110 |
| 8,785 | |||
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| Cash and cash equivalents, end of period | 634 |
| 1,354 | |||
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| Supplemental disclosure of cash flow information |
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| Income taxes paid | 800 |
| 800 | |
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| Interest paid | - |
| - | |
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| Supplemental disclosure of Non Cash Activities |
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| Reorganization adjustments | 231,827 |
| (22,000) | |
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| Equipment | (12,000) |
| - | |
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| Stock issued to retire debt | 10,000 |
| - | |
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6
Book Merge Technologies Inc.
(F.K.A. Book Merge Technologies Inc.)
Notes to Financial Statements
For the year ended
March 31, 2012
1.
Organization and Nature of Operations
Organization
On October 7, 2010 the Company, as Book Merge Technology, Inc, (BMT), entered into a plan of reorganization with a private company, Book Merge Technologies Inc. (BOOK MERGE). A reverse merger was effected on October 11, 2010, wherein BMT was the surviving company and legal acquirer whereas BOOK MERGE was the operating company. BMT subsequently changed its name to Book Merge Technologies, Inc.
The Company F.K.A. Book Merge Technology, Inc. (BMT, the legal acquirer) was incorporated February 28, 2008 In the State of Nevada as Big West Environmental, Inc. The Company intended to enter into the sale and distribution of solar PV panels. The Company has devoted substantially all its efforts to business planning and development since inception. The Company realized no revenue from its planned business purpose. After evaluation of current opportunities, the Company entered into an agreement with BOOK MERGE on October 7, 2010 to enter the bio fuel industry. The Company changed its name to Book Merge Technology Inc. on August 12, 2011.
Book Merge Technologies, Inc. (BOOK MERGE, the operating company), (originally Ryan Enterprises Inc.), was incorporated under the laws of the State of Nevada on December 23, 2003 for the purpose of developing, marketing and commercializing bio-diesel fuel, bio-diesel processors and related products. The Company has the relevant licenses for bio diesel production in California and is doing business as “Extreme Biodiesel”.
Current Business of the Company
On January 1, 2008, the operating company, BOOK MERGE, purchased an existing business, Extreme Biodiesel, which had, since 2004, been manufacturing home biodiesel processors. In February, 2008 BOOK MERGE moved to an 11,400 square foot building at 1560 Maple Street, Corona, California to set up a licensed bio diesel refinery and factory for refining diesel oil and manufacturing bio diesel processors. A spike in fuel prices in 2008 created a demand for BOOK MERGE’s processors that propelled processor sales in that year to $885,825. The refinery at the outset was able to produce 2,000 gallons per day and is being expanded.
On October 7, 2010 the two companies BMT and BOOK MERGE entered into a Plan of reorganization whereby Book Merge (BMT) was to acquire a minimum of 51% controlling interest in BOOK MERGE. The plan was for all BOOK MERGE stockholders to swap their stock for BookMerge stock on a 2 for 1 basis, (2 BOOK MERGE for 1 BookMerge), giving BookMerge control. BOOK MERGE would be wound up and operations conducted under BookMerge. BookMerge would assume the name Book Merge Technologies. The effect is a reverse merger, wherein BookMerge is the surviving company and legal acquirer whereas BOOK MERGE, (the operating company), is the accounting acquirer. Operations of the entity are reported as those of BOOK MERGE.
On October 11, 2010 BookMerge had achieved a 51% interest in BOOK MERGE, gaining control. The reverse acquisition was effected on that date. The reorganization continued with stock swaps and was completed by March 31, 2011. BOOK MERGE became a subsidiary of BookMerge. BookMerge subsequently changed its name to Book Merge Technologies, Inc. on August 12, 2011.
Unaudited Interim Financial Statements
The accompanying unaudited financial statements have been prepared by the Company, pursuant to the rules and regulations of the Securities Exchange commission (the “SEC”) as applicable to smaller reporting companies, and generally accepted accounting principles for interim accounting reporting. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally presented in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted pursuant to such rules and regulations. These unaudited condensed financial statements should be read in conjunction with the audited financial statements and footnotes included in the Company’s Annual Report on Form 10K. The results of the nine month period ended March 31, 2012 are not necessarily indicative of the results to be expected for the full year ending June 30, 2012.
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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 certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. Significant estimates made by management are, among others, realizability of long-lived assets, deferred taxes and stock option valuation.
Cash and equivalents
Cash and equivalents include investments with initial maturities of three months or less.
Fair Value of Financial Instruments
The Financial Accounting Standards Board issued ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures" for financial assets and liabilities. FASB ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:
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Level 1: Quoted prices in active markets for identical assets or liabilities
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Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.
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Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The Company has classified its assets and liabilities into these levels depending upon the data relied upon to determine the fair values. The following fair value hierarchy table represents the Company’s financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2012:
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| Significant |
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| in Active |
| Other |
| Significant |
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| Markets for |
| Observable |
| Unobservable |
| Balance as of |
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| IdenticalAssets |
| Inputs |
| Inputs |
| December31, |
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| (Level 1) |
| (Level 2) |
| (Level 3) |
| 2009 |
Assets |
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Note Receivable | $ | 40,000 | - | - | $ | 40,000 | |||
| Deposits |
| 18,036 |
| - |
| - |
| 18,036 |
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| $ | 58,036 | $ | - | $ | - | $ | 58,036 |
Liabilities |
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| Bank Line of Credit | $ | 69,076 |
| - |
| - | $ | 69,076 |
| Deferred Investments |
| - |
| 116,000 |
| - |
| 116,000 |
| Stockholder Loans |
| - |
| 64,500 |
| - |
| 64,500 |
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| $ | 69,076 | $ | 180,500 | $ | - | $ | 249,576 |
8
Income Taxes
The Company utilizes FASB ACS 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized.
The Company generated a deferred tax credit through net operating loss carryforward. However, a valuation allowance of 100% has been established
Interest and penalties on tax deficiencies recognized in accordance with ACS accounting standards are classified as income taxes in accordance with ASC Topic 740-10-50-19.
Stock-based Compensation
(FASB) ASC Topic 718, Stock Compensation (formerly FASB Statement 123R) requires generally that all equity awards granted to employees be accounted for at grant-date “fair value”. Fair value is equal to the underlying value of the stock for “full value” awards such as restricted stock and performance shares, and estimated using an option pricing model with traditional inputs for “appreciation” awards such as stock options and stock appreciation rights. There are special provisions for nonpublic companies that are intended to ease compliance with accounting for stock compensation.
The Company was not registered as at March 31, 2012 and there is no market for its stock. Stock value based on book value or discounted net asset value is not considered reliable. For purposes of stock compensation, the Company will therefore adopt the most reliable indication of stock value: quantum meruit, i.e. the value of services rendered, based on industry average rates and services contribution.
Recent Accounting Pronouncements
In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04, "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs." The amendments in this update generally represent clarifications of Topic 820, but also include some instances where a particular principle or requirement for measuring fair value or disclosing information about fair value measurements has changed. This update results in common principles and requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. GAAP and IFRS. The amendments in this update are to be applied prospectively. The amendments are effective for interim and annual periods beginning after December 15, 2011. Early application is not permitted. The Company does not expect this guidance to have a significant impact on its consolidated financial position, results of operations or cash flows.
In June 2011, the FASB issued ASU No. 2011-05, "Presentation of Comprehensive Income." This update was amended in December 2011 by ASU No. 2011-12, "Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05." This update defers only those changes in update 2011-05 that relate to the presentation of reclassification adjustments. All other requirements in update 2011-05 are not affected by this update, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. ASU No. 2011-05 and 2011-12 are effective for fiscal years (including interim periods) beginning after December 15, 2011. The Company does not expect this guidance to have a significant impact on its consolidated financial position, results of operations or cash flows.
In December 2011, the FASB issued ASU No. 2011-11, "Disclosures about Offsetting Assets and Liabilities." The amendments in this update require enhanced disclosures around financial instruments and derivative instruments that are either (1) offset in accordance with either ASC 210-20-45 or ASC 815-10-45 or (2) subject to an enforceable master netting arrangement or similar agreement, irrespective of whether they are offset in accordance with either ASC 210-20-45 or ASC 815-10-45. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The amendments are effective during interim and annual periods beginning on or after January 1, 2013. The Company does not expect this guidance to have any impact on its consolidated financial position, results of operations or cash flows.
A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, the Company’s management has not determined whether implementation of such standards would be material to its financial statements.
9
Going Concern
The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The company experienced and a loss of $ 145,711 in the nine months ended March 31, 2012, ($287,339 in 2011), and .a cumulative loss since incorporation February 28, 2008 of $1,845,512. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease development of operations.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish its plans to generate bio-diesel revenue from an expanded refinery. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount and classifications or liabilities or other adjustments that might be necessary should the Company be unable to continue as a going concern.
Basic and Diluted Net Loss Per Share
Net loss per share is calculated in accordance with FASB ASC 260, Earnings Per Share, for the period presented. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilative convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.
The Company has potentially dilutive securities outstanding as of March 31, 2012 in the form of convertible debt. However the conversion would be anti dilutive, since the Company is in a loss position, and was therefore not considered in the calculation of earnings per share.
The following is a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations for the nine month period ended March 31, 2012 and 2011:
Numerator: |
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| 2012 |
| 2011 |
Basic and diluted net loss per share: |
|
|
|
|
Net Loss |
| $ (145,711) |
| (287,339) |
|
|
|
|
|
Denominator |
|
|
|
|
|
|
|
|
|
Basic and diluted weighted average |
|
|
|
|
number of shares outstanding |
| 111,947,591 |
| 79,740,500 |
|
|
|
|
|
|
|
|
|
|
Basic and Diluted Net Loss Per Share | $ | (0.00) | $ | (0.00) |
| Notes Receivable | |||
|
| 2012 |
| 2011 |
| $ | 40,000 | $ | 40,000 |
An advance of $40,000 on March 18, 2009 to Superior Service Recycling was made in a preliminary agreement to purchase Superior’s business. This business provides BOOK MERGE with used vegetable oil for bio- diesel production. It is owned by Scott Brown, a stockholder and Technical Director of BOOK MERGE. The Board of Directors has stated the intention of completing the transaction. The advance carries no interest or terms of repayment. The agreement to purchase Superior's business expired December 31, 2012, which triggered the maturity date of January 1, 2013. There is no collateral underlying the note receivable.
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Property, Plant and Equipment |
|
|
Refinery | $ | 857,025 |
Leasehold Improvements |
| 31,885 |
Vehicles |
| 52,935 |
Furniture and fixtures |
| 3,422 |
945,267 |
|
|
Accumulated depreciation |
| (329,389) |
Property, plant and equipment, net | $ | 615,878 |
Depreciation | $ | 76,394 |
(Included in Other General and |
|
|
Administrative Expenses on the |
|
|
Statement of Operations). |
|
|
Property plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method with useful lives used in computing depreciation ranging from 6 to 10 years. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Expenditures for maintenance and repairs are charged to operations as incurred; additions, renewals and betterments are capitalized.
| Bank Line of Credit | ||
| March 31, | ||
| 2012 |
| 2011 |
$ | 69,076 | $ | 78,212 |
The line of credit is funded by Bank of the West, carries interest at 4.75% and is payable upon demand. The interest rate is variable based on Bank of the West prime rate.
Note Payable | |||
| December 31, | ||
| 2011 |
| 2010 |
$ | 95,000 | $ | 95,000 |
On November 11, 2009 the Company entered into a stock purchase agreement with Envirotek Inc., a Nevada holding company, which holds stock of entities engaged in alternative fuel production such as bio-diesel. Under the agreement, Envirotek was to acquire 51% of BOOK MERGE stock, and to loan BOOK MERGE $250,000 in stages. In November 2009 Envirotek advanced BOOK MERGE $65,000 and a further 30,000 from January 28 to March 3rd2010 under promissory notes. The $65,000 note carries no interest, requires no payments and matures January 20, 2013. On April 26, 2010 The Board of Directors rescinded the agreement with Envirotek Inc. This effectively ended the business relationship between the two companies. Envirotek subsequently ceased operations. The advances were classified as a non current liability pending renewed communication with Envirotek.
Deferred Investment: “Hayden Loan” | |||
March 31, | |||
| 2012 |
| 2011 |
|
|
|
|
$ | 116,000 | $ | 54,000 |
On February 25, 2010 the Company signed an investment agreement with two individuals, Steve Hayden III and Steve Hayden IV. According to the terms of the agreemnt, the Company issued an irrevocable promissory note for $100,000 on that date. An initial payment of $25,000 was received. Subsequent payments aggregating to a combined total of $100,000 completed the funding of the note on June 9, 2010. The lenders were granted royalty rights of 25% of Net Profit over 24 months beginning June 30, 2010. Net Profit was defined as fuel sales less oil, delivery and processing costs, and taxes. The minimum return was specified as $200,000. No royalty payments have been payable under the agreement.
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Stockholder Loans | ||||
|
| March 31, | ||
|
| 2012 |
| 2011 |
Robert Neuberger | $ | 50,000 | $ | 50,000 |
Joseph Spadafore |
| 8,500 |
| 2,000 |
Ryan Spadafore |
| 6,000 |
| - |
| $ | 64500 | $ | 52000 |
Stockholder loans carry no interest, have no terms of repayment, and are non callable.
Repayment is discretionary. Both lenders are officers of the Company.
3.
Provision for Income Tax
No provision was made for federal income tax for the nine months ended March 31, 2012 since the Company had significant net operating loss. The provision for income taxes consists of the state minimum tax imposed on corporations.
The net operating loss carryforward for federal and state income tax purposes as of March 31, 2012 is approximately $ 1,845,000. The net operating losses will expire in 2028 through 2032 unless utilized beforehand.
The availability of the Company’s net operating loss carryforwards are subject to limitation if there is a 50% or more positive change in the ownership of the Company’s stock.
The Company has a deferred tax asset of approximately $738,000, however a valuation allowance has been recorded of 100%, since in the opinion of management it is “more-likely- than-not” that the deferred tax assets will not be realized.
4.
Capital Structure
Common Stock
On September 1, 2011, 10,000,000 shares of common stock were issued in reducing the deferred investment loans by $10,000.
As at March 31, 2012 the Company was authorized to issue 200,000,000 common shares, of which 114,238,500 were issued and outstanding.
5.
Commitments and Contingencies
The Company entered into a three year lease for an office and manufacturing building in Corona, California on February 15, 2008 at the rate of $8,050 per month. Lease commitments over the life of the lease are:
Fiscal year ended December 31, |
|
|
2012 | $ | $ 96,600 |
2013 | $ | $ 68,425 |
6.
Legal Proceedings
There were no legal proceedings against the Company with respect to matters arising in the ordinary course of business. Neither the Company nor any of its officers or directors is involved in any other litigation or is involved either as plaintiffs or defendants, and have no knowledge of any threatened or pending litigation against them or any of the officers or directors
7.
Subsequent Events
Events subsequent to March 31, 2012 have been evaluated through August 27, 2012, the date these statements were available to be issued, to determine whether they should be disclosed to keep the financial statements from being misleading. Management found no other subsequent events to report.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
All statements, other than statements of historical facts, included or incorporated by reference in this Form 10-Q which address activities, events or developments which the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof); finding suitable merger or acquisition candidates; expansion and growth of the Company's business and operations; and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. However, whether actual results or developments will conform with the Company's expectations and predictions is subject to a number of risks and uncertainties, including general economic, market and business conditions; the business opportunities (or lack thereof) that may be presented to and pursued by the Company; changes in laws or regulation; and other factors, most of which are beyond the control of the Company.
These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as "believes," "anticipates," "expects," "estimates," "plans," "may," "will," or similar terms. These statements appear in a number of places in this Filing and include statements regarding the intent, belief or current expectations of the Company, and its directors or its officers with respect to, among other things: (i) trends affecting the Company's financial condition or results of operations for its limited history; (ii) the Company's business and growth strategies; and, (iii) the Company's financing plans. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Such factors that could adversely affect actual results and performance include, but are not limited to, the Company's limited operating history, potential fluctuations in quarterly operating results and expenses, government regulation, technological change and competition.
Consequently, all of the forward-looking statements made in this Form 10-QSB are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update any such forward-looking statements.
GENERAL DESCRIPTION OF BUSINESS
Book Merge Technologies, Inc. operation is to develop, market and commercialize bulk bio-diesel fuel, home bio-diesel processors and increase capacity of the related waste vegetable oil and brown grease inceptor/grease trap cleaning and collection areas of BOOK MERGE. BOOK MERGE's mission is to create awareness and provide a cost-effective, high-quality alternative diesel fuel, create "green" jobs, reduce the environmental impact of fossil fuels and diminish US reliance on foreign oil.
With the closing of the acquisition BookMerge plans to secure sufficient capital to fund the operation of Extreme Biodiesel. Book Merge Technologies, Inc. dba Extreme Biodiesel (BOOK MERGE) was formed on October 19, 2007 as a Nevada corporation qualified to do business in California. BOOK MERGE was formed to develop market and commercialize bulk bio-diesel fuel, personal biodiesel processors and related products.
BOOK MERGE’s mission is to satisfy the biodiesel demand and eliminate US reliance on foreign oil, reduce the environmental impact of fossil fuels, avoid petroleum price volatility, create “green” jobs, reduce transportation costs for goods, and help create a self-sustaining fuel system in the USA.
BOOK MERGE currently has an existing fully licensed and permitted bio-diesel production facility in Corona, CA capable of producing up to 4,000 gallons and is plant is expandable to 20,000 gallons per day of bio-diesel fuel from virgin and waste vegetable oil. BOOK MERGE has completed IRS Fuel Tax registration requirements for fuel tax credits and rebates, obtained the difficult State of California Developmental Fuel Variance License, State of California Board of Equalization excise tax registration, State of California Department of Food and Agriculture Rendering and Transportation licenses along with city permitting and licensing for the large refinery and home processor sales. Final EPA RFS II registration for ASTM Certification is pending. The company currently employs five employees and two independent contractors.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Company has a limited operating history upon which an evaluation of the Company, its current business and its prospects can be based. The Company's prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development. Such risks include inadequate funding the company's inability to anticipate and adapt to a developing market, the failure of the company's infrastructure, changes in laws that adversely affect the company's business, the ability of the Company to manage its operations, including the amount and timing of capital expenditures and other costs relating to the expansion of the company's operations, the introduction and development of different or more extensive communities by direct and indirect competitors of the Company, including those with greater financial, technical and marketing resources, the inability of the Company to attract, retain and motivate qualified personnel and general economic conditions.
The Company expects that its operating expenses will increase significantly, especially as it implements its business plan. To the extent that increases in its operating expenses precede or are not followed by commensurate increases in revenues, or that the Company is unable to adjust operating expense levels accordingly, the Company's business, results of operations and financial condition would be materially and adversely affected. There can be no assurances that the Company can achieve or sustain profitability or that the Company's operating losses will not increase in the future.
RESULTS OF OPERATIONS
The Company has achieved no significant revenue or profits to date, and the Company anticipates that it will continue to incur net losses for the foreseeable future. The Company incurred a net loss of approximately $26,328 for the three months ended Mar. 31, 2012, compared with a net loss of $68,987 for the three months ended March 31, 2011.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception the Company has had limited operating capital, and has relied heavily on debt and equity financing.
The financial statements as of and for the period ended on June 30, 2010 expressed their substantial doubt as to the Company's ability to continue as a going concern. Without additional capital, it is unlikely that the Company can continue as a going concern. The Company plans to raise operating capital via debt and equity offerings. However, there are no assurances that such offerings will be successful or sufficient to fund the operations of the Company. In the event the offerings are insufficient, the Company has not formulated a plan to continue as a going concern. Moreover, if such offerings are successful, they may result in substantial dilution to the existing shareholders.
CRITICAL ACCOUNTING POLICIES
In Financial Reporting release No. 60, "CAUTIONARY ADVICE REGARDING DISCLOSURE ABOUT CRITICAL ACCOUNTING POLICIES" ("FRR 60"), the Securities and Exchange Commission suggested that companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the SEC defined the most critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, our most critical accounting policies include: non-cash compensation valuation that affects the total expenses reported in the current period and the valuation of shares and underlying mineral rights acquired with shares. The methods, estimates and judgments we use in applying these most critical accounting policies have a significant impact on the results we report in our financial statements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is not exposed to market risk related to interest rates or foreign currencies.
14
CONTROLS AND PROCEDURES
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 , as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our president (also our principal executive officer) and our secretary, treasurer and chief financial officer (also our principal financial and accounting officer) to allow for timely decisions regarding required disclosure.
As of March 31, 2011 we carried out an evaluation, under the supervision and with the participation of our president (also our principal executive officer and our chief financial officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our President and Chief Financial Officer concluded that our disclosure controls and procedures were effective for our corporate reporting as of the end of the period covered by this Quarterly Report. Accounting professionals have been added to address the weaknesses addressed in the Dec. 31, 2010 Form 10Q.
CHANGES IN INTERNAL CONTROLS.
There was no change in our internal controls or in other factors that could affect these controls during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.
15
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any legal proceedings.
ITEM 1A. RISK FACTORS
There are no material changes in the risk factors set forth in the Company’s Form 8K filed Jan. 26, 2011.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following documents are included or incorporated by reference as exhibits to this report:
Exhibit Number | Description |
31.1 | Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
31.2 | Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
32.1 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
(b) REPORTS ON FORM 8-K
None.
SIGNATURES
In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: Sept. 11, 2012
|
| BookMerge Technologies, Inc. |
|
| Registrant |
|
|
|
| By: | /s/ Richard Carter |
|
| Richard Carter Chairman of the Board Chief Executive Officer |
16