UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2008
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or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to __________________
Commission File No. 0-21419
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clickNsettle.com, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 23-2753988
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4400 Biscayne Boulevard, Suite 950, Miami, Florida 33137
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(Address of principal executive offices) (Zip Code)
(305) 573-4112
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(Registrant's Telephone Number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) 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 [ ]
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer", "accelerated
filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
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 [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
On May 8, 2008, the number of shares of outstanding Common Stock of the
issuer was 11,277,516.
clickNsettle.com, Inc.
FORM 10-Q
QUARTER ENDED MARCH 31, 2008
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements F-1-F-12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 1
Item 3. Quantitative and Qualitative Disclosures About
Market Risk N/A
Item 4. Controls and Procedures 3
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 3
Item 1A. Risk Factors 3
Item 2. Unregistered Sales of Equity Securities and
Use of Proceeds 4
Item 3. Defaults upon Senior Securities 5
Item 4. Submission of Matters to a Vote of Security Holders 5
Item 5. Other Information 5
ITEM 6. Exhibits 5
SIGNATURES 6
EXHIBIT INDEX 7
clickNsettle.com, Inc.
CONDENSED BALANCE SHEETS
March 31, 2008 June 30, 2007
ASSETS (Unaudited) (Audited)
---------------------- -----------------------
Current assets:
Cash and cash equivalents $ 2,680,315 $ 82,097
Prepaids 16,631 5,013
------------ ------------
Total Current Assets 2,696,946 87,110
------------ ------------
TOTAL ASSETS $ 2,696,946 $ 87,110
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable $ - $ 25,829
------------ ------------
Total current liabilities - 25,829
Commitments and Contingencies
Stockholders' equity:
Preferred stock; $0.001 par value, 50,000,000 shares
authorized, none issued and outstanding - -
Common stock; $0.001 par value, 750,000,000 shares
authorized, 11,277,516 shares issued and outstanding
in 2008; 1,018,169 shares issued and 992,919
shares outstanding in 2007 11,277 1,018
Additional paid-in capital 12,993,833 10,241,721
Accumulated Deficit (10,308,164) (10,097,540)
Less treasury stock (25,250 shares) at cost - (83,918)
------------ ------------
Total stockholders' equity 2,696,946 61,281
------------ ------------
Total liabilities and stockholders' equity $ 2,696,946 $ 87,110
============ ============
See accompanying notes to unaudited condensed financial statements.
F-1
clickNsettle.com, Inc.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------ ------------------------
2008 2007 2008 2007
Operating Expenses
Professional fees $ 55,577 $ - $ 173,950 $ -
General and administrative 29,702 16,418 64,389 61,533
------------ ------------ ------------ -----------
Total Operating Expenses 85,279 16,418 238,339 61,533
------------ ------------ ------------ -----------
Loss from operations (85,279) (16,418) (238,339) (61,533)
============ ============ ============ ===========
Other Income
Interest Income 12,938 1,071 27,715 3,330
------------ ------------ ------------ -----------
Total Other Income 12,938 1,071 27,715 3,330
------------ ------------ ------------ -----------
Net Loss $ (72,341) $ (15,347) $ (210,624) $ (58,203)
============ =========== ============ ===========
Net loss per share - basic and diluted $ (0.01) $ (0.02) $ (0.05) $ (0.06)
============ =========== ============ ===========
Weighted average number of shares
outstanding during the period --
basic and diluted 6,338,232 992,921 4,340,358 992,921
============ =========== ============ ===========
See accompanying notes to unaudited condensed financial statements.
F-2
clickNsettle.com, Inc.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Nine Months Ended March 31, 2008
and For the Years Ended June 30, 2007 and 2006
(Unaudited)
Additional Total
Common Stock Paid in Accumulated Treasury Subscription Stockholders'
Shares Amount Capital Deficit Stock Receivable Equity
---------- -------- ----------- ------------- ---------- ------------ -------------
Balance, June 30, 2006 1,018,155 $ 1,018 $10,221,921 (10,022,096) $ (83,918) $ - $ 116,925
Increase in shares issued due to
reconciliation with transfer agent 15 - - - - - -
Imputed contribution to capital
for services provided by
related party - - 19,800 - - - 19,800
Net loss, 2007 - - - (75,444) - - (75,444)
========== ======= =========== ============= =========== ========== ===========
Balance, June 30, 2007 1,018,170 1,018 10,241,721 $(10,097,540) $ (83,918) $ - $ 61,281
Issuance of common stock for cash
($0.349/share) 4,492,105 4,492 1,562,508 - - (25,500) 1,541,500
Issuance of common stock as
finder's fee ($0.001/share) 30,000 30 (30) - - - -
Cash paid as finder's fee - - (55,000) - - - (55,000)
Net loss for the 3 months ended
September 30, 2007 - - - (92,833) - - (92,833)
---------- -------- ----------- ------------- ---------- -----------------------
Balance, September 30, 2007 5,540,275 $ 5,540 $11,749,199 $(10,190,373) $ (83,918) $ (25,500) $1,454,948
Unaudited
Collection of prior period
Subscription - - - - - 25,500 25,500
F-3
Net loss for the 3 months ended
December 31, 2007 - - - (45,450) - - (45,450)
---------- -------- ----------- ------------- ---------- ----------- -----------
Balance, December 31, 2007
Unaudited 5,540,275 $ 5,540 $11,749,199 $(10,235,823) $ (83,918) $ - $1,434,998
---------- -------- ----------- ------------- ---------- ----------- -----------
Issuance of common stock for cash
($0.23/share), net of offering
costs 5,762,448 5,762 1,328,527 - - - 1,334,289
Cancellation of treasury stock (25,250) (25) (83,893) - 83,918 - -
Increase in shares issued due to
Reconciliation with transfer agent 43
Net loss for the 3 months ended
March 31, 2008 - - - (72,341) - - (72,341)
---------- -------- ----------- ------------- ---------- ----------- -----------
Balance, March 31, 2008
Unaudited 11,277,516 $11,277 $12,993,833 $(10,308,164) $ - $ - $2,696,946
========== ======== =========== ============= ========== =========== ===========
See accompanying notes to unaudited condensed financial statements.
F-4
clickNsettle.com, Inc.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
For the nine months ended March 31,
2008 2007
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Cash Flows From Operating Activities
Net Loss $ (210,624) $ (58,203)
Adjustments to reconcile net loss
to net cash used in operations
Contributed services-
former related party - 15,800
Changes in operating assets
and liabilities:
Increase (Decrease) in:
Prepaid asset (11,618) 6,048
(Increase) Decrease in:
Accounts payable and
accrued liabilities (25,829) (3,672)
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Net Cash Used in Operating Activities (248,071) (40,027)
============= ============
Cash Flows From Financing Activities:
Proceeds from sale of common stock 2,905,100 -
Offering Costs (3,811) -
Cash paid as finder's fee (55,000) -
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Net Cash Provided by Financing Activities 2,846,289 -
============= ============
Net Increase (Decrease) in Cash
and Cash Equivalents 2,598,218 (40,027)
Cash and cash equivalents
Beginning of Period $ 82,097 $ 129,220
------------- ------------
Cash and cash equivalents
End of Period $ 2,680,315 $ 89,193
============= ============
Supplemental disclosure of
cash flow information:
Cash paid for interest $ - $ -
============= ============
Cash paid for taxes $ - $ -
============= ============
Supplemental disclosure of non-cash
investing and financing activities:
Stock paid as finder's fee
(30,000 shares) (See Note 3) $ 300 $ -
============= ============
Cancellation of treasury stock $ 83,918 $ -
============= ============
See accompanying notes to unaudited condensed financial statements.
F-5
clickNsettle.com, Inc.
Notes to Financial Statements
March 31, 2008
(Unaudited)
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
of America and the rules and regulations of the United States Securities and
Exchange Commission for interim financial information. Accordingly, they do
not include all the information and footnotes necessary for a comprehensive
presentation of financial position and results of operations.
It is management's opinion, however, that all material adjustments
(consisting of normal recurring adjustments) have been made that are
necessary for a fair financial statement presentation. The results for the
interim period are not necessarily indicative of the results to be expected
for the year.
For further information, refer to the audited financial statements and
footnotes of the Company for the year ended June 30, 2007, included in the
Company's Form 10-KSB.
2. Nature of Operations and Summary of Significant Accounting Policies
(A) Nature of Operations and Liquidity
clickNsettle.com, Inc. ("CLIK") previously provided a broad range of
Alternative Dispute Resolution ("ADR") services, primarily arbitrations and
mediations, principally in the United States. CLIK incorporated on January
12, 1994 and began operations on February 15, 1994. On October 31, 1994, the
predecessor operating company, which CLIK's former Chief Executive Officer
primarily owned, was acquired by and became a wholly owned subsidiary of
CLIK. The transaction was accounted for as a transfer of assets between
companies under common control, with the assets and liabilities of the
predecessor operating company combined with those of CLIK at their historical
carrying values. The predecessor operating company also provided a broad
range of ADR services, including arbitrations and mediations. The predecessor
operating company began operations in March 1992.
Prior to January 1, 2006, the accompanying financial statements of
clickNsettle.com, Inc. included the accounts of its wholly owned
subsidiaries, Michael Marketing LLC and clickNsettle.com LLC (collectively
referred to herein as the "Company"). As of January 1, 2006, the Company
transferred ownership of its wholly owned subsidiary, Michael Marketing LLC,
to National Arbitration and Mediation, Inc. ("NAMI"). Such subsidiary was
inactive and had no operations or net assets. Previously, the Company
dissolved its other wholly owned subsidiary, clickNsettle.com LLC, as it was
also inactive and had no operations or net assets. On January 13, 2005, CLIK
sold its ADR services. As such, the Company no longer owns any subsidiaries
and has no operations.
F-6
The accompanying unaudited financial statements have been prepared on
the basis which assumes that the Company will continue to operate as a going
concern and which contemplates the realization of assets and the satisfaction
of liabilities and commitments in the normal course of business. As
reflected in the accompanying financial statements, the Company has a net
loss of $210,624 and net cash used in operations of $248,071 for the nine
months ended March 31, 2008. The Company has positive working capital of
$2,696,946 at March 31, 2008, and has the ability to meet all obligations due
over the course of the next twelve months.
The Company currently intends to effect a merger, acquisition or other
business combination with an operating company utilizing any combination of
its common stock, cash on hand or other funding sources that the Company
believes are available. There can be no assurances that management's efforts
to consummate a merger, acquisition or business combination with an operating
company or management's efforts to identify other funding sources will be
successful.
(B) Use of Estimates
In preparing financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities, disclosure of contingent assets and liabilities at the date of
the financial statements, and revenues and expenses during the periods
presented. Actual results may differ from these estimates.
(C) Cash and Cash Equivalents
The Company minimizes its credit risk associated with cash by
periodically evaluating the credit quality of its primary financial
institution. The balance at times may exceed federally insured limits. At
March 31, 2008, the balance exceeded the federally insured limit by
$2,383,468.
(D) Net Loss per Share
Basic earnings (loss) per share is computed by dividing the net loss
less preferred dividends for the period by the weighted average number of
shares outstanding. Diluted loss per share is computed by dividing net loss
less preferred dividends by the weighted average number of shares outstanding
including the effect of share equivalents. On March 13, 2008, the Company
declared a one for ten reverse stock split. All share and per share amounts
have been retroactively restated.
At March 31, 2008 and June 30, 2007, the Company had outstanding common
stock equivalents consisting of 21,399 and 21,399 stock options,
respectively, which could potentially dilute loss per share. All common
stock equivalents existing at these dates were antidilutive due to the
reported net loss; as such, there was no separate computation for diluted
earnings per share.
F-7
(E) Income Taxes
The Company accounts for income taxes under the liability method in
accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." Under this method, deferred income tax assets
and liabilities are determined based on differences between the financial
reporting and tax bases of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse.
We adopted the provisions of FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes-An Interpretation of FASB Statement No. 109"
("FIN 48"). FIN 48 contains a two-step approach to recognizing and measuring
uncertain tax positions. The first step is to evaluate the tax position for
recognition by determining if the weight of available evidence indicates it
is more likely than not that the position will be sustained on audit,
including resolution of related appeals or litigation processes, if any. The
second step is to measure the tax benefit as the largest amount that is more
than 50% likely to be realized upon ultimate settlement. We consider many
factors when evaluating and estimating our tax positions and tax benefits,
which may require periodic adjustments. At March 31, 2008, we did not record
any liabilities for uncertain tax position.
(F) Segment Information
The Company follows Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related Information." At
March 31, 2008, the Company only operated in one segment; therefore, segment
information has not been presented.
(G) Recent Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 157, "Fair Value Measurements", which clarifies the principle
that fair value should be based on the assumption that market participants
would use when pricing an asset or liability. It also defines fair value and
establishes a hierarchy that prioritizes the information used to develop
assumptions. SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007. The Company does not expect
SFAS No. 157 to have a material impact on its financial position, results of
operations or cash flows.
In February 2007, the FASB issued Statement of Financial Accounting
Standards No. 159, "The Fair Value Option for Financial Assets and Financial
Liabilities", which permits entities to choose to measure many financial
instruments and certain other items at fair value. The unrealized gains and
losses on items for which the fair value option has been elected should be
reported in earnings. The decision to elect the fair value option is
determined on an instrument-by-instrument basis, should be applied to an
entire instrument and is irrevocable. Assets and liabilities measured at
fair values pursuant to the fair value option should be reported separately
in the balance sheet from those instruments measured using other measurement
attributes. SFAS No. 159 is effective as of the beginning of the Company's
F-8
2008 fiscal year. The adoption of SFAS No. 159 is not expected to have a
material effect on the Company's financial position, results of operations or
cash flows.
In December 2007, the FASB issued SFAS No. 160, "Noncontrolling
Interests in Consolidated Financial Statements, an amendment of Accounting
Research Bulletin No. 51" ("SFAS 160"). SFAS 160 establishes accounting and
reporting standards for ownership interests in subsidiaries held by parties
other than the parent, changes in a parent's ownership of a noncontrolling
interest, calculation and disclosure of the consolidated net income
attributable to the parent and the noncontrolling interest, changes in a
parent's ownership interest while the parent retains its controlling
financial interest and fair value measurement of any retained noncontrolling
equity investment. SFAS 160 is effective for financial statements issued for
fiscal years beginning after December 15, 2008, and interim periods within
those fiscal years. Early adoption is prohibited. The adoption of SFAS No.
160 is not expected to have a material effect on its financial position,
results of operations or cash flows.
In December 2007, the FASB issued SFAS 141R, Business Combinations
("SFAS 141R"), which replaces FASB SFAS 141, Business Combinations. This
Statement retains the fundamental requirements in SFAS 141 that the
acquisition method of accounting be used for all business combinations and
for an acquirer to be identified for each business combination. SFAS 141R
defines the acquirer as the entity that obtains control of one or more
businesses in the business combination and establishes the acquisition date
as the date that the acquirer achieves control. SFAS 141R will require an
entity to record separately from the business combination the direct costs,
where previously these costs were included in the total allocated cost of the
acquisition. SFAS 141R will require an entity to recognize the assets
acquired, liabilities assumed, and any noncontrolling interest in the
acquired at the acquisition date, at their fair values as of that date. This
compares to the cost allocation method previously required by SFAS 141. SFAS
141R will require an entity to recognize as an asset or liability at fair
value for certain contingencies, either contractual or non-contractual, if
certain criteria are met. Finally, SFAS 141R will require an entity to
recognize contingent consideration at the date of acquisition, based on the
fair value at that date. This Statement will be effective for business
combinations completed on or after the first annual reporting period
beginning on or after December 15, 2008. Early adoption of this standard is
not permitted and the standards are to be applied prospectively only. Upon
adoption of this standard, there would be no impact to the Company's results
of operations and financial condition for acquisitions previously completed.
The adoption of SFAS No. 141R is not expected to have a material effect on
the Company's financial position, results of operations or cash flows.
In January 2008 the SEC released SAB No. 110, which amends SAB No. 107
which provided a simplified approach for estimating the expected term of a
"plain vanilla" option, which is required for application of the Black-
Scholes option pricing model (and other models) for valuing share options.
At the time, the Staff acknowledged that, for companies choosing not to rely
on their own historical option exercise data (i.e., because such data did not
provide a reasonable basis for estimating the term), information about
exercise patterns with respect to plain vanilla options granted by other
companies might not be available in the near term; accordingly, in SAB No.
F-9
107, the Staff permitted use of a simplified approach for estimating the term
of plain vanilla options granted on or before December 31, 2007. The
information concerning exercise behavior that the Staff contemplated would be
available by such date has not materialized for many companies. Thus, in SAB
No. 110, the Staff continues to allow use of the simplified rule for
estimating the expected term of plain vanilla options until such time as the
relevant data becomes widely available. The Company does not expect its
adoption of SAB No. 110 to have a material impact on its financial position,
results of operations or cash flows.
In March 2008, the FASB issued SFAS No. 161, "Disclosures About
Derivative Instruments and Hedging Activities-An Amendment of FASB Statement
No. 133" ("SFAS 161"). SFAS 161 establishes the disclosure requirements for
derivative instruments and for hedging activities with the intent to provide
financial statement users with an enhanced understanding of the entity's use
of derivative instruments, the accounting of derivative instruments and
related hedged items under Statement 133 and its related interpretations, and
the effects of these instruments on the entity's financial position,
financial performance, and cash flows. This statement is effective for
financial statements issued for fiscal years beginning after November 15,
2008. The Company does not expect its adoption of SFAS 161 to have a
material effect on its financial position, results of operations or cash
flows.
Other accounting standards that have been issued or proposed by the FASB
or other standards-setting bodies do not require adoption until a future date
and are not expected to have a material impact on the financial statements
upon adoption.
(H) Reclassifications
Certain amounts in the year 2007 financial statements have been
reclassified to conform to the year 2008 presentation. These
reclassifications had no material effect on the financial position, results
of operations or cash flows.
3. Stockholders' Equity
(A) Stock Issued for Cash
On September 26, 2007, the Company sold 4,492,105 shares of restricted
common stock for $1,567,000 ($0.349/share). The sale resulted in control of
the Company being obtained by a third-party investor group.
On December 19, 2007, the Company entered into a stock purchase
agreement with a new group of investors for the sale of 51% of the Company's
outstanding stock. The transaction closed on March 18, 2008, whereby the
Company sold 5,762,448 shares of common stock for $1,334,289 net of offering
costs ($0.23/share). This transaction resulted in a further change of
control.
F-10
(B) Stock Issued as Finder's Fee
On September 26, 2007, the Company issued 30,000 shares of restricted
common stock having a fair value of $300 as a finder's fee relating to the
Company's change in control. The payment had a net effect on equity of $0,
as additional paid in capital was debited and common stock was credited for
the same balance at par value.
(C) Cash Paid as Finder's Fee
On September 26, 2007, the Company paid $55,000 to an individual as a
finder's fee.
(D) Stock Options
A summary of stock option activity for the nine months ended March 31,
2008 (unaudited) and for the year ended June 30, 2007 is as follows:
Weighted
Average
Number of Exercise
Options Price
Stock Options
Balance at June 30, 2006 44,897 $14.20
Granted - -
Exercised - -
Cancelled/Forfeited (23,498) 24.40
----------- -----------
Balance at June 30, 2007 21,399 3.02
Granted - -
Exercised - -
Cancelled/Forfeited - -
----------- -----------
Balance at March 31, 2008 (unaudited) 21,399 3.02
=========== ===========
Options exercisable at March 31, 2008 21,399 3.02
=========== ===========
Weighted average fair value of options
granted during 2008 $ -
===========
F-11
Outstanding Exercisable
------------------------------------- ---------------------
Number Weighted Number
Outstanding Average Weighted Exercisable Weighted
at Remaining Average at Average
Range of March 31 Contractual Exercise March 31 Exercise
Exercise Price 2008 Life Price 2008 Price
- ----------------------------------------------------------------------------
$ 0.50-$ 1.08 15,000 5.75 yrs. $ 0.79 15,000 $ 0.79
$ 1.55-$ 2.00 3,999 3.86 yrs. $ 1.83 3,999 $ 1.83
$ 7.82-$11.25 900 0.49 yrs. $ 9.34 900 $ 9.34
$24.69 1,500 2.24 yrs. $24.69 1,500 $24.69
----------- ---------- ----------- --------- ---------
$ 0.50-$24.69 21,399 4.03 yrs. $ 3.02 21,399 $ 3.02
=========== ========== =========== ========= =========
(E) Authorized Capital
On March 13, 2008, the Company increased its authorized share capital to
50,000,000 shares of preferred stock and 750,000,000 shares of common stock.
(F) Cancellation of Treasury Stock
On March 14, 2008, the Company cancelled its treasury stock.
F-12
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited, condensed financial statements included herein,
commencing at page F-1, have been prepared in accordance with the
requirements of Regulation S-K and, therefore, omit or condense certain
footnotes and other information normally included in financial statements
prepared in accordance with accounting principles generally accepted in the
United States of America. In the opinion of management, all adjustments
(including all normal recurring adjustments) necessary for a fair
presentation of the financial information for the interim periods reported
have been made.
Results of operations for the three and nine months ended March 31,
2008, are not necessarily indicative of the results of operations expected
for the year ending June 30, 2008.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion with regard to our financial condition and
operating results contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements are based on current plans and expectations of clickNsettle.com,
Inc. (the "Company" or "CLIK") and involve risks and uncertainties that could
cause actual future activities and results of operations to be materially
different from those set forth in the forward-looking statements. Important
factors that could cause actual results to differ include, among others, our
inability to consummate an acquisition of an operating business or, in the
event that we do consummate a transaction, our ability to successfully manage
and operate the combined business.
The discussion of our financial condition and results of operations
should be read in conjunction with our unaudited, condensed financial
statements and notes thereto included elsewhere in this Report and the
Company's Annual Report on Form 10-KSB filed with the Securities and Exchange
Commission.
FINANCIAL RESULTS FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2008
For the quarter ended March 31, 2008, we recorded a net loss of
approximately $72,300 or less than $0.01 per share. Included in the
financial results for the quarter ended March 31, 2008, were professional
fees of approximately $55,600 and general and administrative expenses of
approximately $29,700, which together constituted our total operating
expenses. We had interest income of approximately $12,900 during the most
recent quarter. The interest income is significantly higher than we have
previously had as a result of the working capital contributed to the Company
in connection with two changes of control, in which we sold restricted
securities to investors.
1
For the three months ended March 31, 2007, the Company recorded a net
loss of approximately $15,300 or $0.02 per share. Although the amount of the
loss was significantly less during this quarter in 2007, the loss per share
was twice as much because we had fewer outstanding shares in 2007. The
Company's operating expenses for the three months ended March 31, 2007, were
approximately $16,400, which was the amount spent for general and
administrative expenses to maintain our status as a reporting public company.
Interest income during the three months ended March 31, 2007 was
approximately $1,100.
For the nine months ended March 31, 2008, we recorded a net loss of
approximately $210,600 or $0.05 per share. Our expenses for the nine months
were approximately $238,300. We had interest income of approximately $27,700
during the nine months.
For the nine months ended March 31, 2007, the Company recorded a net
loss of approximately $58,200 or $0.06 per share. The Company's operating
expenses for the nine months ended March 31, 2007 were approximately $61,500.
Interest income during the nine months ended March 31, 2007 was approximately
$3,300.
The increase in operating expenses in fiscal 2008 is attributable to the
two changes of control in September 2007 and March 2008.
We do not expect to generate operating revenues or income until such
time as we effect a business combination with an operating company. However,
in the event that we do consummate a merger or acquire an operating company,
there can be no assurances that the combined operation will operate
profitably.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2008, the Company had cash of approximately $2.7
million. The Company had no liabilities at March 31, 2008. The Company's
cash is invested in money market accounts and certificates of deposit. We
anticipate that the primary uses of working capital will include general and
administrative expenses, professional fees to maintain our status as a
reporting public company, and costs associated with seeking to locate and
consummate a business combination. We believe that we have sufficient funds
to cover our expenses for at least the next twelve months.
OFF-BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS
We have no off-balance sheet arrangements and no contractual
obligations.
On March 18, 2008, we sold a 51% interest in the Company to a small
group of investors that included Dr. Phillip Frost, former chairman of Ivax
Corporation. The purchase price for these shares was $1,334,289 net of
offering costs, an amount that was approximately equal to the Company's cash,
after deduction of liabilities, on the closing date.
2
PLAN OF OPERATION
Management of the Company is devoting its efforts to consummating a
merger or acquisition with an operating business. In the event that we
identify an acceptable operating business, we will effect the transaction
utilizing any combination of our common stock, cash on hand, or other funding
sources that we reasonably believe are available. We currently have no
contractual commitments with regard to effecting an acquisition or other
business combination with an operating company.
ITEM 4. CONTROLS AND PROCEDURES
As of March 31, 2008, our President and Chief Executive Officer and
Chief Financial Officer evaluated the Company's disclosure controls and
procedures, and they concluded that we maintain effective disclosure controls
and procedures. There were no changes in our internal control over financial
reporting during the quarter ended March 31, 2008.
Disclosure controls and procedures mean the methods designed to ensure
that information that the Company is required to disclose in the reports that
it files with the Securities and Exchange Commission is recorded, processed,
summarized and reported within the time periods required. Our controls and
procedures are designed to ensure that all information required to be
disclosed is accumulated and communicated to our management to allow timely
decisions regarding disclosure. Our controls and procedures are also
designed to provide reasonable assurance of the reliability of our financial
reporting and accurate recording of our financial transactions.
A control system, however well designed and operated, can provide only
reasonable, not absolute, assurance that the control system's objectives will
be met. There are inherent limitations in all control systems, and no
evaluation of controls can provide absolute assurance that all control gaps
or instances of fraud have been detected. These inherent limitations include
the realities that the judgments in decision-making can be faulty, and that
simple errors or mistakes can occur.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
We face risks. These risks include those described below and may
include additional risks of which we are not currently aware or which we
currently do not believe are material. If any of the events or circumstances
described in the following risks actually occur, our financial condition or
results of operations could be adversely affected. These risks should be
read in conjunction with the other information set forth in this report.
WE DO NOT HAVE AN OPERATING BUSINESS, AND, IF THE COMPANY ACQUIRES A NEW
BUSINESS, OUR SHAREHOLDERS WILL SUFFER SIGNIFICANT DILUTION.
3
On January 13, 2005, the Company sold its alternative dispute
resolution/mediation business. We are searching for an operating entity to
acquire or with which to enter into a merger transaction. There can be no
assurances that an operating company will be acquired or that a merger
transaction will be consummated. Also, the Company's cash may not be
sufficient to acquire a new operating business or to enter into a merger
transaction. In addition, if we acquire a new operating business or enter
into a merger transaction, we expect that the transaction will be
accomplished through the issuance of stock of the Company, resulting in
significant dilution to existing shareholders.
WE HAVE NO REVENUES, BUT WE INCUR COSTS AND EXPENSES.
We have not had any revenue since January 13, 2005. If we do not
acquire another operating business, we cannot generate revenues. Moreover,
we will continue to incur costs for our public reporting obligations and for
searching for an operating business. It is likely that in order to acquire a
new operating business or to enter into a merger transaction, significant
costs will be incurred. There can be no assurances that the cash on hand
will be sufficient to cover such costs.
OUR COMMON STOCK IS TRADED ON THE NASD OTC ELECTRONIC BULLETIN BOARD AND IS
SUBJECT TO THE PENNY STOCK RULES.
Trading in our securities has been conducted in the over-the-counter
market on the NASD's OTC Electronic Bulletin Board. As a result, an investor
may find it more difficult to purchase, dispose of and obtain accurate
quotations as to the value of our securities.
In addition, as the trading price of our common stock has been less than
$5.00 per share, trading in our stock is also subject to the requirements of
Rule 15g-9 under the Securities Exchange Act of 1934. Under that rule,
broker/dealers who recommend such low-priced securities to persons other than
established customers and accredited investors must satisfy special sales
practice requirements, including (a) the requirement that they make an
individualized written suitability determination for the purchaser and (b)
the receipt of the purchaser's written consent prior to the transaction.
The Securities Enforcement Remedies and Penny Stock Reform Act of 1990
also requires additional disclosure in connection with any trades involving a
stock defined as a penny stock (generally, any equity security not traded on
an exchange or quoted on the NASDAQ SmallCap Market that has a market price
of less than $5.00 per share), including the delivery, prior to any penny
stock transaction, of a disclosure schedule explaining the penny stock market
and the risks associated therewith. Such requirements could severely limit
the market liquidity of our securities and the ability of stockholders to
sell their securities in the secondary market.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On March 18, 2008, we sold 5,762,448 shares of our common stock to a
group of investors led by Dr. Phillip Frost (the "Purchasers").
4
The Shares were issued pursuant to the private placement exemption
provided by Section 4(2) of the Securities Act of 1933 (the "1933 Act"). The
Shares are "restricted securities" as defined in Rule 144 under the 1933 Act
and the certificates evidencing the Shares bear a legend stating the
restrictions on resale. There were no underwriting discounts or commissions.
We used the proceeds of the sale for working capital.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On January 25, 2008, the holders of approximately 53% of our issued and
outstanding common stock approved an amendment to our Certificate of
Incorporation (i) to increase the number of authorized shares of our capital
stock to 800 million shares, consisting of 750 million shares of Common
Stock, $0.001 par value, and 50 million shares of Preferred Stock, $0.001 par
value, (ii) to implement a one-for-ten reverse stock split of the currently
outstanding shares of our capital stock, (iii) to remove from our original
Certificate of Incorporation an extraneous provision and a provision that
allowed us to restrict stockholder inspection rights, and (iv) to integrate
into a single Amended and Restated Certificate of Incorporation our original
Certificate of Incorporation, all amendments previously filed with the
Secretary of State of Delaware, and the new amendments approved on January
25, 2008. The Amended and Restated Certificate of Incorporation became
effective on March 13, 2008, when it was filed with the Secretary of State of
Delaware.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS
(a) Exhibits.
Exhibit 31.1 Certification of Chief Executive
Officer pursuant to Rule 13a-14(a)
Exhibit 31.2 Certification of Chief Financial
Officer pursuant to Rule 13a-14(a)
Exhibit 32 Certification pursuant to Rule 13a-14(b)
and Section 1350, Title 18, United States Code
5
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
clickNsettle.com, Inc.
(Registrant)
Dated: May 15, 2008 By: /s/ Glenn L. Halpryn
---------------------------------------
Glenn L. Halpryn
Chairman and President
(Principal Executive Officer)
Dated: May 15, 2008 By: /s/ Alan Jay Weisberg
---------------------------------------
Alan Jay Weisberg
Chief Financial Officer
(Principal Financial and
Accounting Officer)
6
EXHIBIT INDEX
Exhibit No. Description
31.1 Certification of Chief Executive Officer
pursuant to Rule 13a-14(a)
31.2 Certification of Chief Financial Officer
pursuant to Rule 13a-14(a)
32 Certification pursuant to Rule 13a-14(b) and
Section 1350, Title 18, United States Code.
7
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Glenn L. Halpryn, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
clickNsettle.com, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of
an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's internal
control over financial reporting.
Dated: May 15, 2008 /s/ Glenn L. Halpryn
---------------------------------------
Glenn L. Halpryn
Chief Executive Officer and President
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Alan Jay Weisberg, certify that:
1. I have reviewed this quarterly report on Form 10-Q of
clickNsettle.com, Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material respects
the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-
15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused
such internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's most
recent fiscal quarter (the registrant's fourth fiscal quarter in the case of
an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the equivalent
functions):
(a) All significant deficiencies and material weaknesses in the design
or operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or
other employees who have a significant role in the small business issuer's
internal control over financial reporting.
Dated: May 15, 2008 /s/ Alan Jay Weisberg
---------------------------------------
Alan Jay Weisberg
Chief Financial Officer
Exhibit 32
CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT
TO 18 U.S.C. SECTION 1350
In connection with the Quarterly Report on Form 10-Q of
clickNsettle.com, Inc. for the period ended March 31, 2008, as filed with the
Securities and Exchange Commission (the "Report"), we, Glenn L. Halpryn,
Chief Executive Officer of clickNsettle.com, Inc., and Alan Jay Weisberg,
Chief Financial Officer of clickNsettle.com, Inc., hereby certify pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of
clickNsettle.com, Inc.
Dated: May 15, 2008 /s/ Glenn L. Halpryn
---------------------------------------
Glenn L. Halpryn
Chief Executive Officer
Dated: May 15, 2008 /s/ Alan Jay Weisberg
---------------------------------------
Alan Jay Weisberg
Chief Financial Officer
A signed original of this written statement required by Section 906 has been
provided to clickNsettle.com, Inc. and will be retained by clickNsettle.com,
Inc. and furnished to the Securities and Exchange Commission or its staff
upon request.