UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For Quarter Ended September 30, 2010
OR
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period from _______ to _______
Commission file number 33-20432
KIWIBOX.COM, INC.
Formerly known as Magnitude Information Systems, Inc.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 75-2228828 | |
(State or other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) |
| (212) 239-8210 | ||
| (Address of Principal Executive Office) (Zip Code) | (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 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 past 90 days.: Yes x 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 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 | 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 o No x
The number of shares of Registrant’s Common Stock, $0.0001 par value, outstanding as of November 8, 2010, was 498,243,060 shares.
KIWIBOX.COM, INC.
INDEX
| Page | |
| Number | |
| PART 1 - FINANCIAL INFORMATION | |
| Item 1 Financial Statements | |
| Condensed Balance Sheets | |
| - September 30, 2010 (unaudited) and December 31, 2009 | 3 |
| Condensed Statements of Operations | |
| - Three and nine months ended September 30, 2010 and 2009 (unaudited) | 4 |
| Condensed Statements of Cash Flows | |
| - Nine months ended September 30, 2010 and 2009 (unaudited) | 5 - 6 |
| Notes to Condensed Financial Statements | 7 - 16 |
| Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 – 18 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 19 |
| Item 4T.Controls and Procedures | 19 |
| PART II - OTHER INFORMATION | 20 - 21 |
| Item 1. Legal Proceedings | 20 |
| Item 1A. Risk Factors | 20 |
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 20 |
| Item 3. Defaults Upon Senior Securities | 20 |
| Item 4T. Submission of Matters to a Vote of Security Holders | 20 |
| Item 5. Other information | 20 |
| Item 6. Exhibits | 21 |
| SIGNATURES | 22 |
2
PART I - Item 1 Financial Statements
KIWIBOX.COM, INC.
CONDENSED BALANCE SHEETS
September 30, 2010 | December 31, 2009 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 20,698 | $ | 2,518 | ||||
| Accounts receivable, net of allowance for doubtful accounts of $0 | 120 | 2,000 | ||||||
| Prepaid expenses and other current assets | 52,104 | 80,523 | ||||||
| Total Current Assets | 72,922 | 85,041 | ||||||
| Property and equipment, net of accumulated depreciation of $85,955 and $85,841 | 17,873 | 18,705 | ||||||
| Website development costs, net of accumulated amortization of $17,570 and $1,813 | 101,439 | 19,945 | ||||||
| Other assets | 12,487 | 17,724 | ||||||
| Total Assets | 204,721 | 141,415 | ||||||
| Liabilities and Stockholders’ Equity (Impairment) | ||||||||
| Current Liabilities | ||||||||
| Accounts payable and accrued expenses | 503,147 | 535,618 | ||||||
| Obligations to be settled in stock | 164,678 | 132,900 | ||||||
| Dividends payable | 517,786 | 479,339 | ||||||
| Convertible notes payable – related parties | 1,894,980 | 990,000 | ||||||
| Liability for derivative conversion features – related party debt | 2,142,304 | - | ||||||
| Loans and notes payable - other | 140,000 | 140,000 | ||||||
| Current maturities of long-term debt | 33,529 | 33,529 | ||||||
| Total Current Liabilities | 5,396,424 | 2,311,386 | ||||||
| Long-term Debt | - | - | ||||||
| Total Liabilities | 5,396,424 | 2,311,386 | ||||||
| Stockholders’ Equity (Impairment) | ||||||||
Preferred Stock, $0.001 par value, non-voting, 3,000,000 shares authorized; | ||||||||
| 85,890 and 85,890 shares issued and outstanding | 86 | 86 | ||||||
| Common Stock, $0.0001 par value, 1,400,000,000 shares authorized; | ||||||||
| issued and outstanding 498,243,060 and 478,168,060 shares | 49,824 | 47,817 | ||||||
| Common Stock subscribed | - | 500 | ||||||
| Additional paid-in capital | 45,556,868 | 45,519,375 | ||||||
| Stock subscription receivable | - | (125,000 | ) | |||||
| Accumulated (deficit) | (50,798,481 | ) | (47,612,749 | ) | ||||
| Total Stockholders’ Equity (Impairment) | (5,191,703 | ) | (2,169,971 | ) | ||||
| Total Liabilities and Equity (Impairment) | $ | 204,721 | $ | 141,415 | ||||
The accompanying notes are an integral part of the condensed financial statements.
3
KIWIBOX.COM, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| Total Revenues | $ | 417 | 14,928 | $ | 1,820 | $ | 53,772 | |||||||||
| Cost of Goods Sold | 1155 | 9,223 | 1,940 | 20,720 | ||||||||||||
| Gross Profit (Loss) | (738 | ) | 5,705 | (120 | ) | 33,052 | ||||||||||
| Selling expenses | 60,710 | 10,213 | 132,904 | 111,778 | ||||||||||||
| Stock-based compensation (see below) | - | 121,929 | - | 121,929 | ||||||||||||
| General and administrative expenses | 251,995 | 258,212 | 761,918 | 1,103,988 | ||||||||||||
| Loss from Operations | (313,443 | ) | (384,649 | ) | (894,942 | ) | (1,304,643 | ) | ||||||||
| Other Income (Expense) | ||||||||||||||||
| Miscellaneous income | 3,000 | - | 14,377 | - | ||||||||||||
| Misc. non-operating expenses | (99 | ) | (450 | ) | (6,630 | ) | (450 | ) | ||||||||
| Foreign currency transaction loss | - | - | (5,585 | ) | - | |||||||||||
| Change in fair value –derivative liability | (177,271 | ) | - | (177,271 | ) | (77,806 | ) | |||||||||
| Amortization of deferred financing cost | - | - | - | (4,000 | ) | |||||||||||
| Gain on extinguishment of debt | - | 32,416 | - | 32,416 | ||||||||||||
| Gain on disposition of assets | - | - | 2,285 | - | ||||||||||||
| Interest income | 42 | 5 | 42 | 5 | ||||||||||||
| Interest expense-derivative conversion features | (1,965,033 | ) | - | (1,965,033 | ) | - | ||||||||||
| Interest expense-debt | (45,633 | ) | (32,291 | ) | (114,527 | ) | (668,101 | ) | ||||||||
| Total Other Income (Expense) | (2,184,994 | ) | (32,741 | ) | (2,252,342 | ) | (717,936 | ) | ||||||||
| Loss from Operations before Provision for Income Taxes | (2,498,437 | ) | (417,390 | ) | (3,147,284 | ) | (2,022,579 | ) | ||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net Loss | $ | (2,498,437 | ) | $ | (417,390 | ) | $ | (3,147,284 | ) | $ | (2,022,579 | ) | ||||
| Dividends on Preferred Stock | (12,816 | ) | (12,816 | ) | (38,447 | ) | (38,447 | ) | ||||||||
Net Loss applicable to Common Shareholders | $ | (2,511,253 | ) | $ | (430,205 | ) | $ | (3,185,731 | ) | $ | (2,061,026 | ) | ||||
| Loss per Common Share | $ | (0.005 | ) | $ | ( 0.001 | ) | $ | (0.006 | ) | $ | (0.005 | ) | ||||
| Weighted Average Number of Common Shares Outstanding | 497,907,895 | 448,633,886 | 495,665,674 | 449,301,580 | ||||||||||||
All of the stock-based compensation relates to selling, general and administrative expenses.
The accompanying notes are an integral part of the condensed financial statements.
4
KIWIBOX.COM, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2010 | 2009 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net Loss | $ | (3,147,284 | ) | $ | (2,022,579 | ) | ||
| Adjustments to Reconcile Net Loss to Net Cash Used by Operations | ||||||||
| Depreciation and amortization | 24,459 | 45,885 | ||||||
| Change in fair value – derivative liabilities | 177,271 | 77,806 | ||||||
| Loss (gain) on disposal of assets | (2,285 | ) | 450 | |||||
| Intrinsic value of beneficial conversion rights | 1,965,033 | 600,000 | ||||||
| Securities issued for expenses | - | 121,929 | ||||||
| Interest accretion on long term debt | - | 1,385 | ||||||
| Decreases (Increases) in Assets | ||||||||
| Accounts receivable | 1,880 | 2,008 | ||||||
| Prepaid expenses | 28,419 | 9,300 | ||||||
| Increases (decreases) in Liabilities | ||||||||
| Obligations to be settled in stock | 70,777 | 31,847 | ||||||
| Accounts payable and accrued expenses | 132,509 | 48,250 | ||||||
| Net Cash Used by Operating Activities | (749,221 | ) | (1,083,719 | ) | ||||
| Cash Flows from Investing Activities | ||||||||
| Other assets | 5,237 | (14,500 | ) | |||||
| Proceeds from sale of assets | 4,520 | - | ||||||
| Cash outlay - website development costs | (97,251 | ) | - | |||||
| Purchases of property and equipment | (10,105 | ) | 7,000 | |||||
| Net Cash Used by Investing Activities | (97,599 | ) | (21,500 | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Proceeds from loans and notes | 740,000 | 1,190,000 | ||||||
| Issuance of common stock | 125,000 | - | ||||||
| Net Cash Provided by Financing Activities | 865,000 | 1,190,000 | ||||||
| Net Increase (Decrease) in Cash | 18,180 | 84,781 | ||||||
| Cash at Beginning of Period | 2,518 | 5,000 | ||||||
| Cash at End of Period | $ | 20,698 | $ | 89,781 | ||||
The accompanying notes are an integral part of the consolidated financial statements.
5
KIWIBOX.COM, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||
| Nine Months Ended September 30, 2010 | ||||
| Cashless exercise of warrants | $ | 1,312 | ||
| Settlement of obligations with common stock and common stock options | $ | 39,000 | ||
| Reclassification of accrued interest to debt principal | $ | 164,980 | ||
| Nine Months Ended September 30, 2009 | ||||
| Reclassification of derivative liabilities to Additional Paid-in capital | $ | 3,408,618 | ||
| Forgiveness of debt by related party | $ | 213,570 | ||
| Settlement of obligations with common stock and common stock options | $ | 80,000 | ||
6
KIWIBOX.COM, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 30, 2010
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Organization
Kiwibox.Com, Inc. (the “Company”) was incorporated as a Delaware corporation on April 19, 1988 under the name Fortunistics, Inc. On November 18, 1998, the Company changed its name to Magnitude Information Systems, Inc. On December 31, 2009, the Company changed its name to Kiwibox.com, Inc.
On August 16, 2007 the Company acquired all outstanding shares of Kiwibox Media, Inc.
The Company, Magnitude, Inc. and Kiwibox Media Inc. were separate legal entities until December 31, 2009, with Kiwibox Media, Inc. being a wholly owned subsidiary. On December 31, 2009, the two subsidiaries Magnitude, Inc. and Kiwibox Media, Inc. merged into the Company.
Prior to the implementation of its strategic business plan in 2007, the Company’s primary product was an integrated suite of proprietary software modules previously marketed under the name ErgoEnterprise™. During the latter half of fiscal year 2006, Company management concluded that the marketplace for the Company’s ergonomic software products was not developing, and would not develop to the material extent necessary in the next 12 to 24 months, to support and sustain the Company’s sales efforts. Accordingly, management determined that it would be in the best interests of the Company and its shareholders to identify another business opportunity and pursue it for the benefit of our shareholders. On February 19, 2007, the Company, pursuant to its strategic plan to seek another business opportunity, signed an Agreement and Plan of Reorganization with the owners of a social networking website, to acquire their Kiwibox.com website and business, represented by Kiwibox Media, Inc. Pursuant to that certain Agreement and Plan of Reorganization, in August, 2007, Kiwibox Media, Inc. merged with and into Magnitude Operations, Inc., a wholly owned subsidiary of Magnitude Information Systems, Inc., in a “reverse merger” transaction. The three shareholders of Kiwibox Media, Inc. transferred and delivered all of the outstanding stock of Kiwibox Media, Inc. to Magnitude Operations, Inc. for cancellation and received in exchange shares of Magnitude Information Systems, Inc. at closing. Also at closing and as a result of the merger, the separate legal existence of Magnitude Operations, Inc. ceased and Kiwibox Media, Inc. became the surviving corporation of the merger and a wholly owned subsidiary of Magnitude Information Systems, Inc.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required for annual financial statements. These financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in the Company’s annual report on Form 10-K for the year ended December 31, 2009.
In the opinion of the Company’s management, all adjustments (consisting of normal recurring accruals) necessary to present fairly the Company’s financial position as of September 30, 2010, the results of operations for the three and nine months ended September 30, 2010 and 2009, and the cash flows for the nine months ended September 30, 2010 and 2009, have been included.
Principles of Consolidation
The consolidated financial statements for the period ended December 31, 2009 include the accounts of Kiwibox.com, Inc. (f/k/a Magnitude Information Systems, Inc.) and its subsidiaries Magnitude, Inc. and Kiwibox Media, Inc. All significant inter-company balances and transactions have been eliminated.
7
KIWIBOX.COM, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
September 30, 2010
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Depreciation and Amortization
Property and equipment are recorded at cost. Depreciation on equipment, furniture and fixtures and leasehold improvements is computed on the straight-line method over the estimated useful lives of such assets between 3-10 years, or lease term for leasehold improvements, if for a shorter period. Maintenance and repairs are charged to operations as incurred.
Evaluation of Long Lived Assets
Long-lived assets are assessed for recoverability on an ongoing basis. In evaluating the fair value and future benefits of long-lived assets, their carrying value would be reduced by the excess, if any, of the long-lived asset over management’s estimate of the anticipated undiscounted future net cash flows of the related long-lived asset.
Fair Value Measurements
The Company adopted the provisions of ASC 820, Fair Value Measurements and Disclosures, which is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Under ASC 820, a framework was established for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. Since the number of shares issuable under the Company’s Series G convertible preferred stock was indeterminable during the year ended December 31, 2008, the Company had measured the fair value of warrants and options outstanding at December 31, 2008, which was determined to be $3,330,812, measured using significant unobservable inputs (Level 3) under a Black-Scholes valuation method. On February 19, 2009, all outstanding shares of the Series G stock automatically converted into 17,857,142 common shares, thereby removing the indeterminable factor and giving rise to a reclassification of the entire position of $3,408,618 into additional paid-in capital, which included a further $77,806 loss incurred during the first quarter 2009, reported in the Statement of Operations under Other Income (Expense). The Company accounted for certain convertible debentures modified in the three months ended September 30, 2010 as derivative liabilities required to be bifurcated form the host contract in accordance with ASC 815-40, Contracts in Entity’s Own Equity, as the conversion feature embedded in the convertible debentures could result in the note principal and related accrued interest being converted to a variable number of the Company’s common shares (see Note 12).
Securities Issued for Services
The Company accounts for stock, stock options and stock warrants issued for services and compensation by employees under the fair value method. For non-employees, the fair market value of the Company’s stock on the date of stock issuance or option/grant is used. The Company has determined the fair market value of the warrants/options issued under the Black-Scholes Pricing Model. The Company has adopted the provisions of ASC 718, “Compensation – Stock Compensation”, which establishes accounting for equity instruments exchanged for employee services. Under the provisions of ASC 718, share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the employee's requisite service period (generally the vesting period of the equity grant).
Reclassification of certain securities under ASC 815-15
Pursuant to ASC 815-15, “Contracts in Entity’s own Equity”, if a company has more than one contract subject to this Issue, and partial reclassification is required, there may be different methods that could be used to determine which contracts, or portions of contracts, should be reclassified. The Company's method for reclassification of such contracts is reclassification of contracts with the latest maturity date first. During the first quarter of 2009, we reclassified a position of $3,408,618 from liabilities for derivative securities to additional paid-in capital after the indeterminate factor in connection with the conversion clause of certain convertible preferred shares was removed.
8
KIWIBOX.COM, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2010
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Capitalization of Software /Website development costs
The Company capitalizes outside-contracted development work in accordance with the guidelines published under ASC 350-50, “Website Development Costs”. Under ASC 350-50, costs incurred during the planning stage are expensed, while costs relating to software used to operate a web site or for developing initial graphics should be accounted for under ASC 350-50, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use, unless a plan exists or is being developed to market the software externally. Under ASC 350-50, internal and external costs incurred to develop internal-use computer software during the application development stage should be capitalized. Costs to develop or obtain software that allows for access or conversion of old data by new systems should also be capitalized, excluding training costs.
Fees incurred for web site hosting, which involve the payment of a specified, periodic fee to an Internet service provider in return for hosting the web site on its server(s) connected to the Internet, are expensed over the period of benefit, and included in cost of sales in the accompanying financial statements. A total of $97,251 and $21,758 was capitalized for web-site development work during the nine months ended September 30, 2010 and the year ended December 31, 2009, respectively. During 2009, a new software platform was placed into service. The old capitalized cost of $64,650, including the remaining unamortized balance from 2008 totaling $30,771 was written off as they were deemed to be impaired.
Income Taxes
The Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expenses are expected to be settled in the Company’s income tax return. Certain items of revenue and expense are reported for Federal income tax purposes in different periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has incurred net operating losses for financial-reporting and tax-reporting purposes. Accordingly, for Federal and state income tax purposes, the benefit for income taxes has been offset entirely by a valuation allowance against the related federal and state deferred tax asset.
Net Loss Per Share
Net loss per share, in accordance with the provisions of ASC 260, “Earnings Per Share” is computed by dividing net loss by the weighted average number of shares of Common Stock outstanding during the period. Common Stock equivalents have not been included in this computation since the effect would be anti-dilutive. Such common stock equivalents totaled 187,454,852 common shares at September 30, 2010, comprised of 151,731,315 shares issuable upon exercise of stock purchase warrants, 8,650,000 shares issuable upon exercise of stock options, 729,537 shares exercisable upon conversion of convertible preferred shares, and 26,344,000 shares potentially issuable upon conversion of convertible debt. Such debt and the related accrued interest, presently convertible at the option of two holders at a price of $0.01 per share, totals $1,889,423 which would yield 188,942,300, respectively if fully exercised, however, the respective notes, all of which were issued to these two investors, carry a stipulation whereby the number of all shares issued pursuant to a conversion, may in the aggregate not exceed a number that would increase the total share holdings beneficially owned by such investor to a level above 9.99%. At the end of the quarter, this clause limits any conversion to the aforementioned number of shares. All of the aforementioned conversions or exercises, as the case may be, are at the option of the holders.
9
KIWIBOX.COM, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2010
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Revenue Recognition
The Company’s revenue is derived from advertising on the Kiwibox.Com website. Most contracts require the Company to deliver the customer impressions, click-throughs or new customers, or some combination thereof. Accordingly, advertising revenue is estimated and recognized for the period in which customer impressions, click through or new customers are delivered. Licensing or hosting revenue consists of an annual contract with clients to provide web-site hosting and assistance.
Use of Estimates
The preparation of financial statements in conformity with 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. Actual results could differ from those estimates.
2. GOING CONCERN
The ability of the Company to continue its operations is dependent on increasing sales and obtaining additional capital and financing. Our revenues during the foreseeable future are insufficient to finance our business and we are entirely dependent on the willingness of existing investors to continue supporting the Company with working capital loans and equity investments, and our ability to find new investors should the financial support from existing investors prove to be insufficient. If we were unable to obtain a steady flow of new debt or equity-based working capital we would be forced to cease operations. In their report for the fiscal year ended December 31, 2009, our auditors had expressed an opinion that, as a result of the losses incurred, there was substantial doubt regarding our ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might be necessary if the Company were unable to continue as a going concern. Management’s plans are to continue seeking equity and debt capital until cash flow from operations cover funding needs.
3. CONCENTRATIONS OF BUSINESS AND CREDIT RISK
The Company maintains cash balances in a financial institution which is insured by the Federal Deposit Insurance Corporation up to $250,000. Balances in these accounts may, at times, exceed the federally insured limits. At September 30, 2010, cash balances in bank accounts did not exceed this limit. The Company provides credit in the normal course of business to customers located throughout the U.S. and overseas. The Company performs ongoing credit evaluations of its customers and maintains allowances for doubtful accounts based on factors surrounding the credit risk of specific customers, historical trends, and other information.
4. PREPAID EXPENSES
Prepaid Expenses at the end of the quarter consisted of $21,501 in prepaid business insurance costs, $29,455 in prepayments on promotional supplies inventory, and $1,148 made up of several smaller positions.
5. PROPERTY AND EQUIPMENT
| Property and equipment consist of the following at | September 30, 2010 | December 31, 2009 | ||||||
| Furniture | $ | 14,322 | $ | 6,646 | ||||
| Leasehold Improvements | 24,130 | 24,131 | ||||||
| Equipment | 65,376 | 73,770 | ||||||
| 103,828 | 104,546 | |||||||
| Less accumulated depreciation | 85,955 | 85,841 | ||||||
| Total | $ | 17,873 | $ | 18,705 | ||||
Depreciation expense charged to operations was $8,702 and $25,723 in the first nine months of 2010 and 2009, respectively.
10
KIWIBOX.COM, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2010
6. INTANGIBLE ASSETS
Intangible assets consisted of software for website development costs as follows:
September 30, 2010 | December 31, 2009 | |||||||
| Website development costs | $ | 119,009 | $ | 21,758 | ||||
| Less accumulated amortization | 17,570 | 1,813 | ||||||
| Total | $ | 101,439 | $ | 19,945 | ||||
During 2009, a new software platform developed by a third party was adapted for use by the Company and placed into service. The developmental costs associated with this adaptation, amounting to $21,758 were capitalized and the remaining unamortized balance of the 2008 capitalized costs, totaling $30,771 were written off as they were deemed to be impaired. Amortization expense for the nine months ending Sept 30, 2010 and 2009 was $15,757 and $16,163, respectively. Additional amortization over the next 5 years will be as follows:
| Amortization expense | ||||
| December 31, 2010 | $ | 11,276 | ||
| December 31, 2011 | 41,339 | |||
| December 31, 2012 | 35,631 | |||
| December 31, 2013 | 13,193 | |||
| December 31, 2014 | - | |||
7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consisted of the following at:
September 30, 2010 | December 31, 2009 | |||||||
| Accounts payable | $ | 247,363 | $ | 208,792 | ||||
| Accrued interest | 116,152 | 170,860 | ||||||
| Accrued payroll, payroll taxes and commissions | 9,188 | 15,331 | ||||||
| Accrued professional fees | 130,444 | 116,900 | ||||||
| Miscellaneous accruals | - | 23,735 | ||||||
| Total | $ | 503,147 | $ | 535,618 | ||||
8. OBLIGATIONS TO BE SETTLED IN STOCK
Obligations to be settled in stock consisted of the following at
| September 30, | December 31, | |||||||
| 2010 | 2009 | |||||||
| Obligation for warrants granted for compensation | $ | 50,000 | $ | 20,000 | ||||
| 900,000 common shares issuable to a consultant who was a director of the company, for services rendered. | 36,000 | 36,000 | ||||||
| 200,000 (2010) and 1,250,000 (2009) common shares, and 2,900,000 (2010) and 2,200,000 (2009) stock options issuable to two officers of the Company pursuant to their respective employment Agreements | 60,858 | 67,990 | ||||||
| 1,800,000 (2010) and 900,000 (2009) stock options issuable to one director who also serves as the Company’s general counsel | 17,820 | 8,910 | ||||||
| $ | 164,678 | $ | 132,900 | |||||
11
KIWIBOX.COM, INC.
NOTES TO CONDENSED FINANCIALSTATEMENTS
SEPTEMBER 30, 2010
9. LOANS PAYABLE
The Company (Formerly Magnitude, Inc.) had borrowings under short term loan agreements with the following terms and conditions at September 30, 2010 and December 31, 2009:
| On December 4, 1996, The company (Formerly Magnitude, Inc.) repurchased 500,000 shares of its common stock and retired same against issuance of a promissory note maturing twelve months thereafter accruing interest at 5% per annum and due December 4, 1998. This note is overdue as of September 30, 2005 and no demand for payment has been made. | $ | 75,000 | ||
| Total | $ | 75,000 |
10. NOTES PAYABLE
| September 30, | December 31, | |||||||
| 2010 | 2009 | |||||||
| Balance of non-converted notes outstanding. Attempts to locate the holder of this note, to settle this liability, have been unsuccessful. | $ | 25,000 | $ | 25,000 | ||||
| In January 2008 a shareholder loaned the Company $40,000 pursuant to which the Company issued a demand note bearing interest at the rate of 5% per year. | 40,000 | 40,000 | ||||||
| From September 2008 through September 2010 two shareholders loaned the Company funds under the terms of the convertible notes issued, as modified in March 2009 and July 2010 (see Note 12). | 1,844,980 | 990,000 | ||||||
| In September 2010, a shareholder loaned the Company $50,000 under a demand note at 10%. | 50,000 | - | ||||||
| Total | $ | 1,959,980 | $ | 1,055,000 | ||||
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KIWIBOX.COM, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2010
11. LONG-TERM DEBT
Long-term debt as of September 30, 2010 and December 31, 2009 is comprised of the following:
| Discounted present value of a non-interest bearing $70,000 settlement with a former investor of Magnitude, Inc. to be paid in 24 equal monthly payments commencing July 1, 1997. The imputed interest rate used to discount the note is 8% per annum. This obligation is in default. | 33,529 | |||
| Total | 33,529 | |||
| Less current maturities | 33,529 | |||
| Long-term debt, net of current maturities | $ | - |
12. DERIVATIVE CONVERSION FEATURES
On July 27, 2010, the Company issued two Class A Senior Convertible Revolving Promissory Notes (“Class A Notes”), one to Cambridge Services, Inc., in the principal amount of $683,996, consolidating the series of loans (and related accrued interest) made to the Company since June 26, 2009, and one to Discover Advisory Company, in the principal amount of $1,160,984, consolidating the series of loans (and related accrued interest) made to the Company since September 19, 2008 and including advances through September 30, 2010. Each of these promissory notes are due on demand, accrue interest at the rate of 10%, per annum, are convertible (including accrued interest) at the option of each lender into Common Stock of the Company at 50% of the averaged ten closing prices for the Company's Common Stock for the ten (10) trading days immediately preceding the Conversion Date but in no event less than $0.001 (the "Conversion Price"). Both promissory notes contain conversion caps, limiting conversions under these notes to a maximum beneficial ownership position of Company common stock to 9.99% for each lender. Each of these notes contains Company covenants, requiring the lenders’ prior written consent in order for the Company to merge, issue any common or preferred stock or any convertible debt instruments, declare a stock split or dividends, increase any compensation to its officers or directors by more than five (5%) during any calendar year.
The Company accounted for the conversion features underlying these convertible debentures modified in the three months ended September 30, 2010 in accordance with ASC 815-40, Contract in Entity’s Own Equity, as the conversion feature embedded in the convertible debentures could result in the note principal and related accrued interest being converted to a variable number of the Company’s common shares. The Company determined the value of the derivate conversion features at the commitment date to be $1,965,033 utilizing a Black-Scholes valuation model. The fair value of the derivative conversion features was determined to be $2,142,304 at September 30, 2010. The change in fair value of the liability for the conversion feature resulted in a cost of $177,271 for the three and nine months ended September 30, 2010, which is included in Other Income (Expense) in the accompanying financial statements.
On March 31, 2009, certain notes held by shareholders were amended to include an option for the holder to convert the debt into common stock at $0.01 per share. The intrinsic value of the beneficial conversion feature was valued at $600,000 resulting in a charge to interest and a credit to additional paid-in capital in the same amount during the nine months ended September 30, 2009. The notes were subsequently amended to include the stipulation that the shares to be issued if the holder elected a conversion, together with other shares held by the shareholders, may not result in an ownership interest exceeding 9.9%. These notes were also part of the modification of the conversion terms in the three months ended September 30, 2010 noted above.
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KIWIBOX.COM, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2010
13. COMMITMENTS AND CONTINGENCIES
We maintain offices for our operations at 330 W. 38th Street, New York, New York 10018, for approximately 900 square feet. This lease expires at the end of 2010 and requires minimum monthly rentals of $2,199 plus tenants’ share of utility/cam/property tax charges which average approximately $400 per month. During the 1st quarter of 2010 the Company successfully negotiated with the landlord to give up a lease of an office located at the same address consisting of approximately 500 square feet.
In May 2010 the Company negotiated a lease of an apartment in New York City for the CEO in order to reduce travel costs. The lease is for 12 months at $2,775 per month.
Our total rent expenses were $39,225 and $69,397 during the nine months ended September 30, 2010 and 2009, respectively.
During the second quarter in 2009 we entered into an agreement with a consultant to serve as the Company’s Chief Technology Officer. The agreement has a term of twelve months and may be extended by mutual consent. It provides for remuneration for services and expenses at the rate of $20,000 and 100,000 restricted shares per month, and a signing bonus of 500,000 restricted shares. During the first quarter in 2010, the Company issued the 500,000 shares for the signing bonus and 950,000 shares towards the accrued monthly allowance. In the third quarter the company issued an additional 500,000 shares towards the accrued monthly allowance.
During the third quarter in 2009 we entered into an engagement agreement with a consultant to assist the Company in the liaison to the Company’s shareholders and investors, to promote the Company and its website to the public markets, and to identify potential strategic partners, acquisition opportunities, and joint venture partners for the Company’s social networking website business. The agreement is deemed to have commenced on January 1, 2009 and extends through December 31, 2011, and calls for compensation to the consultant in the form of 2,000,000 five years warrants for the purchase of common shares, exercisable at $ 0.025 per share with a cashless exercise provision, for every six months period during the term of the agreement, and the payment in cash of unspecified amounts, the latter at the sole discretion of the Company. The agreement furthermore recognizes that the same consultant had previously provided similar services to the Company for which he received a one-time payment in form of 15,000,000 five years warrants, exercisable at $0.0025 per share. The 15,000,000 warrants were exercised during the three months ended March 31, 2010 pursuant to a cashless exercise into 13,125,000 shares of common stock.
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KIWIBOX.COM, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2010
14. RELATED PARTY TRANSACTIONS
During the nine months ended September 30, 2010 and 2009 one outside director of the Company who also serves as the Company’s general and securities counsel, was paid an aggregate $45,000 and $65,000, respectively, for each period for legal services. The director also received 100,000 common stock options per month during the three and nine months ended September 30, 2010, valued at $2,970 and $8,910, respectively.
During the three and nine months ended September 30, 2009 we paid our Chief Executive Officer $12,000 and $12,000, respectively, for outside consulting services performed.
During the three and nine months ended September 30, 2010, we incurred an aggregate $61,087 and $188,364, respectively, to companies controlled by the Chief Technology Officer of the Company for website expenses and software development ($61,087 for three months and $180,779 for nine months) and Company promotional and marketing expenses ($0 for three months and $7,585 for nine months). During the three and nine months ended September 30, 2009 we incurred an aggregate $6,138 and $9,141, respectively, to these companies, for server hosting expenses.
Through September 30, 2010, the beneficial ownership in the Company’s securities held respectively, by Tell Capital AG of Switzerland and its principal, Ulrich Schuerch on a consolidated basis, was approximately 10.4% and approximately 9.9% for Discovery Advisory Company, located in the Bahamas, and Cambridge Services Inc. of Switzerland, of the voting stock. Both Discovery Advisory Company and Cambridge Services Inc. are major creditors, having advanced operating capital against issuance by the Company of convertible promissory notes to during 2009 and 2010. During the three and nine months ended September 30, 2010, Cambridge Services, Inc. advanced an additional $220,000 and $690,000, respectively. At September 30, 2010, $1,080,984 and $763,996 of such notes were outstanding and owed to Discovery Advisory Company and Cambridge Services Inc, respectively. Additionally Ulrich Schuerch advanced the Company $50,000 for which a note was issued, this is a demand note at a rate of interest of 10%.
15. FAIR VALUE
Some of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that approximate fair value due to their liquid or short-term nature, such as cash and cash equivalents, receivables and payables.
Effective July 1 2009, the Company adopted ASC 820, Fair Value Measurements and Disclosures. This topic defines fair value for certain financial and nonfinancial assets and liabilities that are recorded at fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. This guidance supersedes all other accounting pronouncements that require or permit fair value measurements. The Company accounted for the conversion features underlying certain convertible debentures in accordance with ASC 815-40, Contracts in Entity’s Own Equity, as the conversion feature embedded in the convertible debentures could result in the note principal and related accrued interest being converted to a variable number of the Company’s common shares.
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KIWIBOX.COM, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2010
Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include active exchange- traded securities and exchange-based derivatives.
Level 2 — inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level 2 inputs include fixed income securities, non-exchange-based derivatives, mutual funds, and fair-value hedges.
Level 3 — unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. Financial assets and liabilities utilizing Level 3 inputs include infrequently-traded, non-exchange-based derivatives and commingled investment funds, and are measured using present value pricing models.
The following table reconciles, for the nine month period ended September 30, 2010, the beginning and ending balances for financial instruments that are recognized at fair value in the consolidated financial statements:
| Conversion Liability at January 1, 2010 | - | |||
| Value of beneficial conversion features of new debentures | 1,965,033 | |||
| Change in value of beneficial conversion features during period | 177,271 | |||
| Reductions in fair value due to principal conversions | - | |||
| Conversion Liability at September 30, 2010 | $ | 2,142,304 |
The fair value of the conversion features are calculated at the time of issuance and the Company records a conversion liability for the calculated value. The Company recognizes interest expense for the recognition of the conversion liability.
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Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY STATEMENT PURSUANT TO "SAFE HARBOR" PROVISIONS OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934
The information in this annual report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such Act provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about their businesses so long as they identify these statements as forward looking and provide meaningful cautionary statements identifying important factors that could cause actual results to differ from the projected results. All statements other than those statements of historical fact made in this report are forward looking. In particular, the statements herein regarding industry prospects and future results of operations or financial position are forward-looking statements. Forward-looking statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly from management’s expectations.
The following discussion and analysis should be read in conjunction with the consolidated financial statements of Kiwibox.Com, Inc., contained herein and in the Company’s annual report for the year ended December 31, 2009 as filed on Form 10-K. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.
Description of Business
Based on the market the Company has modified its business plan to optimize New York City membership. The result of this change is that New York City membership is up 45 percent in the third quarter in relation to the second quarter of 2010. In continuing the efforts to increase the membership and page impressions not only through organic growth, the company has decided to pursue that growth by acquisition. Therefore the Company has started investigating the social network market for a complimentary target.
The Company is attaching great importance to its technology development to follow up the top social network leaders and give their users an alternative opportunity. On the marketing side the company is still continuing its efforts in street promotion and event organizing.
The operating expenses, not including stock-based compensation remain at a level of approximately $65,000 to $80,000 per month. We are currently receiving funding at these levels from existing investors (see sections “Loans and Notes Payable”).
Results of Operations for the Three and Nine Months Ended September 30, 2010 Compared to the Three and Nine Months Ended September 30, 2009
For the three and nine months ended September 30, 2010, total revenues amounted to $417 and $1,820, respectively, compared to $14,928 and $53,772 recorded in the same periods in 2009.
Gross profit (loss) for the nine months ended September 30, 2010 amounted to $(120) after accounting for $1,940 in cost of sales. After deducting selling and general and administrative expenses of $312,705 and $894,822 for the three and nine months ended September 30, 2010, compared to $390,354 and $1,337,695 recorded in the same period in 2009, the Company realized operating losses of $313,443 and $894,942 for the three and nine months ended September 30, 2010 compared to operating losses of $384,649 and $1,304,643 in the same periods in 2009. The significant decline in operating expenses was the result of severe cost cutting measures initiated in the course of current restructuring efforts. In particular, outlays for salaries and consulting expenses were sharply reduced due to cut-backs in staffing and curtailment of consultant retentions.
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The quarter concluded with a net loss of $2,498,437 for the quarter and a loss of $3,147,284 for the first nine months of 2010. After accounting for dividends accrued on outstanding preferred stock which totaled $12,816 and $38,447, respectively, the net loss applicable to common shareholders was $2,511,253 or $0.005 per share and $3,185,731 or $0.006 per share for the three and nine months ended September 30, 2010, compared to a loss of $430,205 or $0.001 per share and $2,061,026 or $0.005 per share for the same periods in 2009. The large portion of this loss during the third quarter was the a result of the Other Income (Expense) of ($2,184,994) and ($2,252,342) for the three and nine months ended September 30, 2010, respectively. These were a result of the accounting treatment for the convertible notes held by Cambridge Services, Inc. and Discover Advisory Company, resulting in interest expense of $1,965,033 and a loss for the change in value of the underlying derivative conversion features of $177,271 during the three months then ended (as explained in Note 12 and 15).
Liquidity and Capital Resources
We have financed our business with new debt since our cash flow is insufficient to provide the working capital necessary to fund our operations. We received $270,000 in cash from short-term loans from accredited private investors during the quarter. We have an ongoing and urgent need for working capital to fund our operations. If we are unable to continue to receive new equity investments or obtain loans, we will not be able to fund our operations and we will be required to close our business.
Our deficit in working capital amounted to $5,323,502 at September 30, 2010, as compared to $2,226,345 at December 31, 2009. The change is primarily attributable to the other expense incurred in the three months ended 2010 from embedded derivatives and the receipt by the company of an aggregate $740,000 in short term loans during 2010. Stockholders’ equity showed an impairment of $5,191,703 at the end of the period, compared to an impairment of $2,169,971 at the beginning of the year. The negative cash flow from operations during the nine months totaled $749,221 and was financed by new debt and $125,000 in equity capital from subscriptions for “units” consisting of common stock shares and stock purchase warrants.
We have no bank debt and aside from trade payables and accruals, our indebtedness at September 30, 2010 consisted of certain notes and loans aggregating $2,034,980. The position “Obligations to be settled in stock” of $164,678 accounts for common shares due under consulting agreements, and for services to be settled in common stock options and warrants, where the underlying securities had not yet been issued. Current liabilities also include $2,142,304 in embedded derivative liabilities and $517,786 accrued unpaid dividends on outstanding preferred stock. Such dividends will be paid only if and when capital surplus and cash-flow from operations are sufficient to cover the outstanding amounts without thereby unduly impacting the Company’s ability to continue operating and growing its business.
Our current cash reserves and net cash flow from operations expected during the near future will be insufficient to fund our operations and website development and marketing plan over the next twelve months. We expect to fund these requirements with further investments in form of debt or equity capital and are in ongoing discussions with existing investors to secure funding. There can be no assurance, however, that we will be able to secure needed financing in the future and identify a financing source or sources, and if we do, whether the terms of such financing will be acceptable or commercially reasonable.
Absent the receipt of needed equity investment or loans, we will be compelled to severely curtail operations and possibly, close our business operations. Assuming we can receive current funds to continue to operate our businesses, we may need additional funding for marketing and website development, absent of which our website development, results of operations and financial condition could be subject to material adverse consequences.
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Item 3. Quantitative and Qualitative Disclosures about Market Risk
A smaller reporting company is not required to provide the information required by this Item.
Item 4T. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company’s Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the fiscal period ended September 30, 2010 covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer has concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective as required under Rules 13a-15(e) and 15d-15(e) under the Exchange Act.
As of September 30, 2010, management assessed, with the participation of the Chief Executive Officer and Chief Financial Officer, the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control – Integrated Framework for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective as more fully described below. Based on management’s assessment over financial reporting, management believes as of September 30, 2010, the Company’s internal control over financial reporting was not effective due to the following deficiencies:
1. The Company’s control environment did not have adequate segregation of duties and lacked adequate accounting resources to address non routine and complex transactions and financial reporting matters on a timely basis.
2. The Company had only a part time chief financial officer performing all accounting related duties on site, presenting the risk that the reporting of these non routine and complex transactions during the preparation of our future financial statements and disclosures may not be accomplished in a timely manner.
Company management believes that notwithstanding the above identified deficiencies that constitute our material weakness, that the financial statements fairly present, in all material respects, the Company’s consolidated balance sheets as of September 30, 2010 and 2009 and the related statements of operations, stockholders’ equity, and cash flows for the quarters ended September 30, 2010 and 2009, in conformity with generally accepted accounting principles.
Management’s Remediation Initiatives
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:
- On May 1, 2010, we hired our Comptroller, an experienced certified public accountant, to be our Chief Financial Officer;
- We will supplement, where necessary, existing resources with additional qualified third party consultants;
- We will institute more stringent approval process for financial transactions, and
- We will perform additional procedures and analysis for significant transactions as a mitigating control in the control environment due to segregation of duties issues.
Changes in Internal Controls over Financial Reporting
Other than as stated above, during the quarter ended September 30, 2010, there have been no changes in the Company’s internal control over financial reporting that have materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II - OTHER INFORMATION
| Item 1 | LEGAL PROCEEDINGS |
At the time of this report, the Company is not a party in any pending material legal proceedings.
| Item 1A. | RISK FACTORS |
A smaller reporting company is not required to provide the information required by this Item.
| Item 2 | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
| a) | Issuance of unregistered securities |
During the first nine months of 2010 the Company issued the following unregistered securities:
(i) 5,000,000 common shares and 1,250,000 stock purchase warrants, exercisable during three years at $0.05 per share, to two investors pursuant to private placement subscriptions, resulting in the receipt by the Company of $125,000.
(ii) 1,950,000 common shares to an officer of the Company pursuant to the terms of his employment agreement (see “Commitments and Contingencies”).
(iii) 13,125,000 common shares to a consultant pursuant to his cashless exercise of stock purchase warrants for 15,000,000 shares (see “Commitments and Contingencies”).
The Company relied upon the private placement exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), provided by Section 4(2) thereof in connection with the issuance of the above identified securities. The Company had a pre-existing relationships with the recipients of above securities and no general solicitation was involved; the certificates representing the common shares issued contained restrictive legends, designated them as restricted securities and stating that any transfer or other disposition of such shares can only be made in compliance with the registration requirements of the Securities Act or pursuant to exemptions there from.
| (b) | Not applicable |
| (c) | None |
| Item 3 | DEFAULTS UPON SENIOR SECURITIES |
The Company, as of the date of this filing, is in arrears on the payment of certain dividends on its Series A, C, and D Senior Convertible Preferred Stock. Such arrears total approximately $518,000. These dividends have been accrued, however, the Company’s management has refrained from making payments at this time because of the absence of positive equity and/or surplus funds.
| Item 4 | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
- None
| Item 5 | OTHER INFORMATION |
- None
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| Item 6 | EXHIBITS AND REPORTS ON FORM 8-K |
| (a) | Exhibits |
Exhibit No. | Description | |
| 31.01A. | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated November 8, 2010. | |
| 31.02A. | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated November 8, 2010. | |
| 32.01A. | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated November 8, 2010. | |
| (b) | Reports on Form 8-K: |
On May 4, 2010, the Company filed a report on Form 8-K, disclosing the resignation of the Chief Financial Officer and appointment of a new Chief Financial Officer ..
On March 2, 2010, the Company filed a current report on Form 8-K, disclosing its receipt of the final tranche from an accredited investor in connection with its private placement.
On February 19, 2010, the Company filed a current report on Form 8-K, disclosing that that the Financial Industry Regulatory Agency (“FINRA”) approved the Company’s corporate name change and assigned a new trading symbol to the Company’s common stock.
On July 30, 2010, the Company filed a report on Form 8-K, advising that Rudolf Hauke resigned as the Chief Executive Officer and as a member of the Company’s Board of Directors and that effective as of August 1, 2010, the Company appointed Andre Scholz to serve as Chief Executive Officer. Mr. Scholz previously served as the Company’s Chief Technology Officer.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized.
| Kiwibox.Com, INC. | ||||
| Date: November 8, 2010 | By: | /s/ Craig S. Cody | ||
| Craig S. Cody | ||||
| Chief Financial Officer | ||||
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