Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 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 last 90 days. YES [X] NO [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (SS 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 [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 | [ ] | | 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]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of October 29, 2013, there were 11,680,000 shares of the registrant’s $0.0001 par value common stock issued and outstanding.
Special Note Regarding Forward-Looking Statements
Various statements in this report contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived from utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to:
2
•
our recent exit from shell status, lack of profitable operations and risk we will ever generate revenues or profits,
•
need for additional capital,
•
our ability to continue as a going concern,
•
the development stage of our business,
•
our inability to manage our growth,
•
potential infringement of third party intellectual property rights,
•
our common stock is quoted on the OTC Markets,
•
anti-takeover aspects of our certificate of incorporation and bylaws and the ability of our Board to issue preferred stock without stockholder consent,
•
the application of penny stock rules to trading in our common stock,
•
convertible notes held by our Chairman, and
•
the dilutive impact of outstanding convertible notes and warrants.
Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements and readers should carefully review this report, our Annual Report on Form 10-K for the year ended December 31, 2012, as amended, and our other filings with the Securities and Exchange Commission in their entirety. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.
OTHER PERTINENT INFORMATION
We maintain our web site at www.bullsnbears.com. Information on this web site is not a part of this report.
Unless specifically set forth to the contrary, when used in this report the terms “BullsNBears,” the “Company,” "we", "us", "our" and similar terms refer to BullsNBears.com, Inc., a Delaware corporation formerly known as Spicy Gourmet Manufacturing, Inc. In addition, the “third quarter of 2013” refers to the three months ended September 30, 2013, the “third quarter of 2012” refers to the three months ended September 30, 2012, “2013” refers to the year ending December 31, 2013, and “2012” refers to the year ended December 31, 2012.
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PART I - FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS.
BULLSNBEARS.COM, INC.
(A Development Stage Company)
Balance Sheets
8
The accompanying notes are an integral part of these unaudited financial statements.
9
BULLSNBEARS.COM, INC.
(A Development Stage Company)
Notes to the Unaudited Financial Statements
1.
Nature of Operations and Continuance of Business
The unaudited interim financial statements included herein have been prepared by BullsnBears.com, Inc. (the “Company”) in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (the “SEC”). We suggest that these interim financial statements be read in conjunction with the audited financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2012, as amended, as filed with the SEC. We believe that all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein and that the disclosures made are adequate to make the information not misleading. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year as reported in Form 10-K have been omitted.
2.
Going Concern
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. During the period from inception through September 30, 2013, the Company has generated no revenues and has an accumulated deficit of $1,220,018. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, its ability to identify future investment opportunities and obtain the necessary debt or equity financing and generating profits from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
3.
Related Party Transactions
Notes and Convertible Notes Payable
On October 20, 2012, in accordance with an Asset Purchase Agreement, the Company and a current officer and director of the Company entered into a one year, 6% Promissory Note for $150,000, prior to him joining the Company. Accrued interest on the Promissory Note totaled $1,775 at December 31, 2012. During the nine months ended September 30, 2013, the Company repaid the note and a total of $2,405 in accrued interest.
On October 31, 2012, the Company and an officer and director of the Company entered into a one year, 10% Senior Convertible Note for office equipment totaling $20,955 and supplies totaling $761, or a total of $21,716. The principal amount of the Senior Convertible Note can be convertible, at the sole option of the holder and in whole or in part, into shares of common stock of the Company at a conversion price to be determined by the Board of Directors of the Company at or prior to the maturity date. The Senior Convertible Note and the payment of the principal thereof and interest thereon shall at all times and in all respects constitute the Senior Indebtedness of the Company and shall not be junior or subordinate in right of payment to any other indebtedness of the Company. Accrued interest on the Senior Convertible Note totaled $1,987 and $363 at September 30, 2013 and December 31, 2012, respectively.
On December 31, 2012, the Company and an officer and director of the Company entered into a one-year, 10% Senior Convertible Note for cash advances totaling $20,700 and expenses paid on behalf of the company totaling $9,508, or a total of $30,208. During the nine months ended September 30, 2013, the Company repaid the note and a total of $375 in accrued interest.
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From May through September 2013, the Company borrowed a total of $60,500 in unsecured short-term loans from an officer and director of the Company. During July, 2013 $15,000 of the short-term loans was repaid. At September 30, 2013, $45,500 of the short-term loans was outstanding and is accruing interest at 6% per annum. Accrued interest on these short term loans totals $407 at September 30, 2013.
BULLSNBEARS.COM, INC.
(A Development Stage Company)
Notes to the Unaudited Financial Statements
3.
Related Party Transactions (Continued)
Office Space
The Company pays an officer $3,114 per month for rent of office space on a month-to-month basis.
Consulting Expense
The Company owes an officer $144,231 for consulting expense which is included in accounts payable, related party.
4.
Convertible Promissory Notes Payable
During January through September 30, 2013, the Company issued Convertible Promissory Notes (the “Notes”) for cash totaling $893,000. The Notes bear interest at 10% per annum, are unsecured and due in one year from the date of issuance. At the maturity date, the holders of the Notes have the right to convert the unpaid principal and accrued interest into shares of common stock of the Company at a price of $1.00 per share. Accrued interest on the Notes was $16,939 at September 30, 2013.
5.
Common Stock Warrants
On December 30, 2010, pursuant to the Chapter 11 Plan of Reorganization confirmed by the U.S. Bankruptcy Court (the Court) in the matter of Spicy Gourmet Organics, Inc. ("SGO"), the Court ordered the distribution of warrants to purchase common stock of the Company to all administrative creditors of SGO. The creditors received five warrants in the company for each $0.05 of SGO's administrative debt held, or an aggregate of 5,000,000 warrants consisting of 1,000,000 "A Warrants" each convertible into one share of common stock at an exercise price of $3.00; 1,000,000 "B Warrants" each convertible into one share of common stock at an exercise price of $4.00; 1,000,000 "C Warrants" each convertible into one share of common stock at an exercise price of $5.00; 1,000,000 "D Warrants" each convertible into one share of common stock at an exercise price of $6.00; and 1,000,000 "E Warrants" each convertible into one share of common stock at an exercise price of $7.00. All warrants are exercisable at any time prior to November 19, 2015.
During October 2012, the Company agreed to reduce the exercise price of the outstanding warrants to $0.25 per share. As a result, the reduction of exercise price was considered a modification in accordance with ASC 718, whereby the difference in the fair value of the warrants measured immediate preceding and at the modification date of $164,508 was recognized as expense upon modification.
The fair value of the warrants was computed using the Black-Scholes pricing model with the following assumptions:
| |
Expected Term | 3 years |
Expected volatility | 255.30% |
Risk free interest rate | 0.39% |
Expected dividend yield | 0.00% |
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The following table summarizes the outstanding warrants and associated activity for the nine months ended September 30, 2013 and the year ended December 31, 2012:
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BULLSNBEARS.COM, INC.
(A Development Stage Company)
Notes to the Unaudited Financial Statements
5.
Common Stock Warrants (Continued)
| | | | | | | |
| |
Number of Warrants Outstanding | | |
Weighted Average Price | | Weighted Average Remaining Contractual Life |
Balance, December 31, 2012 | | 5,000,000 | | $ | 0.25 | | 2.89 |
Granted | | - | | | - | | - |
Exercised | | - | | | - | | - |
Expired | | - | | | - | | - |
Balance, September 30, 2013 | | 5,000,000 | | $ | 0.25 | | 2.39 |
The aggregate intrinsic value of the above warrants as of September 30, 2013 and December 31, 2012 was $15,250,000 and $13,750,000 based on a quoted market price of the Company’s common stock of $3.05 and $3.00 per share, respectively.
6.
Subsequent Events
During October 2013, an officer and director of the Company loaned a total of $42,500 in short-term notes to the Company.
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ITEM 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, or implied, by those forward-looking statements. You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms. These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements. Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
OVERVIEW
Prior to our acquisition in October 2012, of the URL domain names and websites of bullsnbears.com and bullnbearsinfo.com we were a “shell company” as that term is defined in Federal securities laws. We are now a development stage company that is in the process of developing a financial networking portal to fill the gap we believe that currently exists between the financial community and investors. We expect that the financial social media network will provide information and business gathering place for investors, public and private companies, brokers, Securities and Exchange Commission attorneys and accounting firms, all in one location. We expect to generate revenue predominantly through advertising, subscription and e-commerce activities.
Following the closing of the acquisition of these assets, during the fourth quarter of 2012 we commenced the design and development of the system, and these efforts continued during the first nine months of 2013. To facilitate the further implementation of our business model, on August 15, 2013 we entered into a Service Bureau and User License Agreement with The Shield, Ilc. pursuant to which we will provide to our subscribers computer terminal access to U.S. securities markets, which will include real time Level I and Level II access and full financial news services, as well as maintenance and technical support. During the third quarter of 2013 we launched, using the content provided by this agreement, two platforms designed to provide information on broader markets for individual investors. We are now offering both a Level I platform and a real time Level II platform which are available on a monthly subscription basis. We expect to begin reporting revenues from these websites during the fourth quarter of 2013.
In order to provide the funds necessary to fully implement our business model and properly capitalize our company through the first stages of our business development plan and satisfy our obligations as they become due, we will need to raise approximately $4,100,000. We expect to use those funds to provide funds for general operating capital, including funds necessary to hire and compensate executive and other employees, as well as for IT development, including staffing, support and equipment, advertising and marketing, expansion of business operations, and general working capital. Although we have received approximately $898,000 in net proceeds from the sale of our one-year 10% convertible promissory notes during the first nine months of 2013, we used these proceeds for the payment of our operating expenses and to satisfy related party debt obligations and we are using the proceeds for general
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working capital. We do not have any firm commitments to provide the capital which is necessary to fund the development of our company and there are no assurances we will be successful in raising the necessary capital. In that event, our ability to fully implement our business model and begin generating revenues from our operations would be in jeopardy.
GOING CONCERN
We have incurred net losses of $1,220,018 since inception through September 30, 2013. The report of our independent registered public accounting firm on our financial statements for the period of inception (December 30, 2010) through December 31, 2012 contains an explanatory paragraph regarding our ability to continue as a going concern based upon our loss from operations and working capital deficit. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to generate revenues or report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company.
RESULTS OF OPERATIONS
We did not generate any revenues during any period presented in the unaudited financial statements included in this report. During the third quarter of 2013 and the nine months ended September 30, 2013, our operating expenses included non-cash depreciation and amortization related to the value of the URL domain names and websites we purchased in October 2012, expenses associated with content subscription for our websites and general and administrative expenses. During the third quarter of 2012 and the nine months ended September 30, 2012, we were still considered a “shell company” and our operating expenses were limited general and administrative expenses. Although we expect our operating expenses to significantly increase during the balance of 2013, we are unable at this time to quantify the amount of the expected increase.
Liquidity and Capital Resources
Working Capital
| | | | |
| | September 30, | | December 31, |
| | 2013 (unaudited) | | 2012 |
Current Assets | $ | 1,153 | $ | 10,769 |
Current Liabilities | | (1,143,777) | | (313,530) |
Working Capital (Deficit) | $ | (1,142,624) | $ | (302,761) |
Cash Flows
| | | | |
| | Nine months ended | | Nine months ended |
| | September 30, 2013 | | September 30, 2012 |
Cash Flows Used in Operating Activities | $ | (762,601) | $ | (4,000) |
Cash Flows Used in Investing Activities | | (6,364) | | - |
Cash Flows Provided by Financing Activities | | 758,292 | | - |
Net Increase (Decrease) in Cash During Period | $ | (10,673) | $ | (4,000) |
Balance Sheet
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As at September 30, 2013, the Company’s assets are mainly comprised of prepaid expenses and URL domain names and websites purchased during October 2012.
The Company’s total current liabilities increased approximately 266% at September 30, 2013 compared with December 31, 2012. The increase in total liabilities is mainly attributed to the issuance of convertible promissory notes totaling $893,000, partially offset by the repayment of $197,988 of related party debt and accrued interest during the nine months ended September 30, 2013.
As at September 30, 2013, the Company had a cash overdraft of $16,709 and a working capital deficit of $1,142,624 compared with a cash balance of $10,673 and working capital deficit of $302,761 at December 31, 2012. The increase in working capital deficit is mainly due to the proceeds of the convertible promissory notes, partially offset by the repayment of related party debt and accrued interest during the nine months ended September 30, 2013.
We do not have any external sources of working capital and have been relying upon the sale of convertible notes and working capital advances from an officer and director to provide funds for our operations. Our working capital is not sufficient to fund our operations for the next 12 months and satisfy our obligations as they become due. In addition, we have $893,000 principal amount 10% convertible promissory notes, which mature between January 2014 and September 2014. While these notes are convertible at the option of the holders into shares of our common stock at a price of $1.00 per share, there is presently an extremely limited market for our common stock and there are no assurances these note holders will seek to convert these obligations. We do not have the funds necessary to satisfy these notes. As described earlier in this report, we also need to raise significant capital to provide funds to implement our business model and pay our operating expenses. If we are not successful in raising the necessary capital, we may be required to curtail some or all of our operations.
Cash Flows from Operating Activities
During the nine months ended September 30, 2013, the Company used $762,601 of cash flow from operating activities compared with use of $4,000 of cash flow during the nine months ended September 30, 2012. The increase in the use of cash flow for operating activities is mainly due an increase in net loss related to the commencement of initial operations.
Cash Flows from Investing Activity
During the nine months ended September 30, 2013, the Company used $6,364 of cash flow from investing activities compared with the use of $0 of cash flow during the nine months ended September 30, 2012. The increase in the use of cash flow for investing activities is mainly due to the purchase of office and computer equipment related to the commencement of operating activities.
Cash Flows from Financing Activities
During the nine months ended September 30, 2013, the Company received $758,292 of cash flow from financing activities. During the nine months ended September 30, 2012, the Company did not receive any cash from financing activities. The increase in cash provided by financing activities is mainly due to the issuance of convertible promissory notes totaling $893,000, partially offset by the repayment of $197,988 of related party debt and accrued interest during the nine months ended September 30, 2013.
Off-Balance Sheet Arrangements
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We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Future Financings
We will continue to rely on the issuance of debt and equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and exploration activities.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 (the “Exchange Act”) and are not required to provide the information under this item.
ITEM 4.
CONTROLS AND PROCEDURES.
Evaluation of disclosure controls and procedures
Our management, with the participation of our chief executive who also serves as our chief financial officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this Quarterly Report on Form 10-Q. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Based on that evaluation, our chief executive officer who also serves as our chief financial officer concluded that, as of September 30, 2013, our disclosure controls and procedures were, subject to the limitations noted above, effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules, regulations and forms, and that such information is accumulated and communicated to our management, including our chief executive officer who also serves as our chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in internal control over financial reporting
There were no changes in internal control over financial reporting during the last fiscal quarter 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.
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None.
ITEM 1A.
RISK FACTORS.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Between May 13, 2013 and September 30, 2013 , we issued and sold to twenty six accredited investors a total of an additional $320,000 principal amount of our one year 10% convertible promissory notes in a private offering exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(a)(2) and Regulation D of that act. We received gross proceeds of $320,000. We did not pay any commissions or finder’s fee and we are using the net proceeds for working capital.
The notes bear interest at the rate of 10% per annum, accrued and paid on the six-month anniversary of the date of issuance, and at the maturity date. At the maturity date, the holder of a note has the right to convert the unpaid principal and accrued interest due under the note into shares of our common stock at a conversion price of $1.00 per share.
ITEM 3.
DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4.
MINE SAFETY DISCLOSURES.
Not applicable to our company’s operations.
ITEM 5.
OTHER INFORMATION.
From May 2013 to September 2013, the Company borrowed a total of $55,500 in short-term loans from James Palladino, an officer and director of the Company. These advances bear interest at the rate of 6% per annum and are due on demand. At September 30, 2013, $40,500 of the short-term loans was outstanding.
ITEM 6.
EXHIBITS.
| | | | | |
| | Incorporated by reference | |
Exhibit | Document Description | Form | Date | Number | Filed herewith |
10.6 | Service Bureau and User License Agreement dated August 12, 2013 by and between BullsnBears.com Inc. and The Shield, Inc. | 8-K | 8/16/2013 | 10.6 | |
31.1 | Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer | | | | ü |
31.2 | Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer | | | | ü |
32.1 | Section 1350 Certification of Chief Executive Officer and Chief Financial Officer | | | | ü |
101.INS | XBRL Instance Document** | | | | ü |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase ** | | | | ü |
101.LAE | XBRL Taxonomy Extension Label Linkbase ** | | | | ü |
101.DEF | XBRL Taxonomy Extension Definition Linkbase ** | | | | ü |
101.SCH | XBRL Taxonomy Extension Schema ** | | | | ü |
**
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed “furnished” and not “filed” or part of a report for purposes of Sections 11 or 12 of the Securities Act of 1933, or deemed “furnished” and not “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under these sections.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on this 30th day of October, 2013.
| | |
| BullsnBears.com, Inc. |
| (the “Registrant”) |
| | |
| BY: | ___________________________ |
| | James M. Palladino, Chief Executive Officer, Chief Financial Officer |
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![[bullsnbears10q93013_10q001.jpg]](https://capedge.com/proxy/10-Q/0001504412-13-000389/bullsnbears10q93013_10q001.jpg)