SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) Securities
Exchange Act of 1934 for Quarterly Period Ended September 30, 2008
- -OR-
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities And Exchange Act of 1934 for the transaction period from
_________ to________
Commission File Number 333-150462
EXCEL GLOBAL, INC.
(Exact Name of Registrant As Specified In Its Charter)
<s> <c> <c>
Nevada 26-0657736
(State or other jurisdiction (Primary Standard (I.R.S. Employer
of incorporation or Industrial Classification Identification
organization) Code Number) Number)
816 South Robertson Blvd.
Los Angeles, CA 90035
(Address of principal executive offices, Zip Code)
(310) 623-7505
- ------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the issuer (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-accelerate filer, or a small
reporting company as defined by Rule 12b-2 of the Exchange Act):
Large accelerated filer [ ] Non-accelerated filer [ ]
Accelerated filer [ ] Smaller reporting company [x]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [x]
The number of outstanding shares of the registrant's common stock,
November 15, 2008:
Common Stock - 8,141,000
2
EXCEL GLOBAL, INC.
FORM 10-Q
For the quarterly period ended September 30, 2008
INDEX
Page
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 13
Item 4T. Controls and Procedures 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 1A. Risk Factors 14
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds 14
Item 3. Defaults upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security
Holders 14
Item 5. Other Information 14
Item 6. Exhibits 14
SIGNATURES
3
PART I
Item I - FINANCIAL STATEMENTS
EXCEL GLOBAL, INC.
BALANCE SHEETS
As of
September 30, December 31,
2008 2007
---------- ----------
(Unaudited)
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ASSETS
- ------
Current assets:
Cash in Bank $ 51,611 $ -
Accounts receivable - 25,000
---------- ----------
Total Current Assets 51,611 25,000
---------- ----------
Property and equipment, net of accumulated
depreciation of $34 for 2008, and none for 2007 1,998 -
Other Assets
License Rights 51,000 51,000
Deposit 1,000 -
---------- ----------
Total Other Assets 52,000 51,000
---------- ----------
TOTAL ASSETS $ 105,609 $ 76,000
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------
Current Liabilities
Accounts payable $ 50,000 $ 50,000
Accrued expenses 11,083 25,200
Officer loan 33,680 853
---------- ----------
Total Current Liabilities 94,763 76,053
---------- ----------
Stockholders' Deficit:
Common stock, no par value, 25,000,000 shares
authorized, 8,141,000 and 7,100,000 shares
issue and outstanding as of 2008 and 2007,
respectively 356,250 71,000
Deficit Accumulated in the development stage (345,404) (71,053)
---------- ----------
Total Stockholders' Equity (Deficit) 10,846 (53)
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 105,609 $ 76,000
========== ==========
The accompanying notes are an integral part
of these interim unaudited financial statements
4
EXCEL GLOBAL, INC.
STATEMENTS OF OPERATIONS (Unaudited)
For the three For the nine For the period from
Months ended months ended August 2, 2007, Inception
Sept. 30, 2008 to Sept. 30, 2007
---------------------------- -------------------------
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Operating Expenses
Research and development $ 200,000 $ 200,000 $ -
Selling, general and
administrative expenses 34,719 72,998 6,435
--------- --------- ---------
Total Operating Expenses 234,719 272,998 6,435
Operating loss (234,719) (272,998) (6,435)
Other Income (Expenses):
Interest and Other Income - - -
Interest and Other Expenses 553 553 -
--------- --------- --------
Total Other Income (Expenses) 553 553 -
--------- --------- --------
Net loss before Income Taxes (235,272) (273,551) (6,435)
Provision for Taxes - 800 -
--------- --------- --------
Net Loss $(235,272) $(274,351) $(6,435)
========= ========= ========
Net loss per share,
Basic and Diluted $ (0.03) $ (0.04) NIL
Weighted Average Number
of Shares 7,794,000 7,331,333 7,100,000
The accompanying notes are an integral part
of these interim unaudited financial statements
5
EXCEL GLOBAL, INC.
STATEMENT OF CASH FLOWS
For the period from
For the nine months August 2, 2007, Inception
September 30, 2008 to September 30, 2007
------------------- -------------------------
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Cash Flow from Operating Activities:
Net Loss $ (274,351) $ (6,435)
Adjustment to reconcile net loss to
net cash used by operating activities:
Depreciation 34 -
Stock issued for services 27,500 -
(Increase) Decrease in:
Accounts receivable 25,000 -
Deposit (1,000) -
Increase(Decrease) in:
Accrued expenses (14,117) -
---------- ----------
Net Cash used by Operating Activities (236,934) (4,435)
Cash Flow from Investing Activities:
Purchase of property and equipment (2,032) -
---------- ----------
Net Cash used by Investing Activities (2,032) -
---------- ----------
Cash Flow from Financing Activities:
Proceeds from officer advances 32,827 4,435
Proceeds from sale of stock 257,750 -
---------- ---------
Net Cash provided by Financing Activities 290,577 4,435
---------- ---------
Net Increase in Cash 51,611 -
Cash Balance at beginning of period - -
---------- ---------
Cash Balance at end of Period $ 51,611 -
========== =========
Supplemental Disclosure:
Taxes Paid $ - $ -
The accompanying notes are an integral part
of these interim unaudited financial statements
6
EXCEL GLOBAL, INC.
NOTES TO INTERIM UNAUDITED FINANCIAL STATEMENTS
- -----------------------------------------------------------
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Excel Global, Inc. (the "Company") was incorporated in the state of
Nevada on August 2, 2007.
The Company is a web-based service provider offering real time
information captured through the use of its prime product known as the
EDGE. This allows the Company together information for its clients
with immediate analysis to its results allowing the client to react to
the information more efficiently.
Presentation of Interim Information. The financial information at
September 30, 2008 and for the three and nine months ended September
30, 2008 are unaudited, but includes all adjustments (consisting only
of normal recurring adjustments) that the Company considers necessary
for a fair presentation of the financial information set forth herein,
in accordance with accounting principles generally accepted in the
United States of America (U.S. GAAP"") for interim financial
information, and with the instructions to Form 10-Q. Accordingly, such
information does not include all of the information and footnotes
required by U.S. GAAP for annual financial statements. For further
information refer to the Financial Statements and footnotes thereto for
the year ended December 31, 2007 included in the Company's Form S-1.
The balance sheet as of December 31, 2007 has been derived from the
audited financial statements at that date but does not include all of
the information and footnotes required by U.S. GAAP for complete
financial statements.
The results for the three and nine months ended September 30, 2008 may
not be indicative of results for the year ending December 31, 2008 or
any future periods.
Use of estimates. The preparation of the accompanying financial
statements in conformity with accounting principles generally accepted
in the United States requires management to make certain estimates and
assumptions that directly affect the results of reported assets,
liabilities, revenue, and expenses. Actual results may differ from
these estimates.
Revenue Recognition. The Company recognizes revenue when service is
rendered, providing that collectibility is reasonably assured. Revenue
consists primarily of gross administrative fees. Amounts received
prior to providing the service date are classified as deferred revenue.
The Company did not generate any revenue during the three months ended
September 30, 2008.
Cash Equivalents. For purposes of the statements of cash flows, the
Company considers all highly liquid debt instruments with an original
maturity of three months or less to be cash equivalents.
7
EXCEL GLOBAL, INC.
NOTES TO AUDITED FINANCIAL STATEMENTS
- -----------------------------------------------------------
NOTE 1 - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)
Property and Equipment. Property and equipment are valued at cost.
Maintenance and repair costs are charged to expenses as incurred.
Depreciation is computed on the straight-line method based on the
estimated useful lives of the assets, generally 5 to 7 years.
Depreciation expense for the three months ended September 30, 2008 and
2007 was $34 and none, respectively.
Fair Value of Financial Instruments. All financial instruments are
carried at amounts that approximate estimated fair value.
Research and Development. The Company records research and development
expenses as they incurred.
Income Taxes. Income tax expense is based on pretax financial
accounting income. Deferred tax assets and liabilities are recognized
for the expected tax consequences of temporary differences between the
tax bases of assets and liabilities and their reported amounts.
Licensing Rights. As of September 30, 2008, the Company capitalized
$51,000 for licensing agreement rights.
Impairment of Long-Lived Assets. Long-lived assets and certain
identifiable intangible assets to be held and used are reviewed for
impairment whenever events or changes in circumstance indicate that the
carrying amount of such assets may not be recoverable. Determination
of recoverability is based on an estimate of undiscounted future cash
flows resulting from the use of the asset and its eventual disposition.
Measurement of an impairment loss for long-lived assets and certain
identifiable intangible assets that management expects to hold and use
is based on the fair value of the asset. Long-lived assets and certain
identifiable intangible assets to be disposed of are reported at the
lower of carrying amount or fair value costs to sell.
Net Loss Per Share. Basic net loss per share includes no dilution and
is computed by dividing net loss available to common stockholders by
the weighted average number of common stock outstanding for the period.
Diluted net loss per share does not differ from basic net loss per
share as the Company did not have dilutive items during the audit
period.
Stock Based Compensation: Effective January 1, 2006, the Company
adopted the fair value recognition provisions of FASB Statement No.
123(r), "Shares-Based Payment" (SFAS 123R), using the modified-
prospective-transition method. Under that transition method,
compensation cost recognized in 2006 includes: (a) compensation cost
for all share-based payments granted prior to, but no yet vested as of
January 1, 2006 based on the grant date fair value calculated in
8
accordance with the original provisions of SFAS 123, and (b)
compensation cost for all share-based payments granted subsequent to
December 31, 2005, based on the grant-date fair value estimated in
accordance with the provisions of SFAS 123(r). As a result of adopting
SFAS 123(r) on January 1, 2006, the Company reorganized per-tax
compensation expense related to stock options of $51,511 and $1784,604
for the there months and nine months ended September 30, 2008.
New Accounting Pronouncements: In March 2008, Financial Accounting
Standards Board {"FASB") issued Statement of Financial Accounting
Standards (SFAS) No. 161, "Disclosures about Derivative Instruments and
Hedging Activities" ("SFAS 161"). SFAS 161 is intended to improve
financial reporting about derivative instruments and hedging activities
by requiring companies to enhance disclosure about how these
instruments and activities affect their financial position, performance
and cash flows. SFAS 161 also improves the transparency about the
location and amounts of derivative instruments in a company's financial
statements and how they are accounted for under SFAS 133. SFAS 161 is
effective for financial statements issued for fiscal years beginning
after November 15, 2008 and interim periods beginning after that date.
As such, the Company is required to adopt these provisions beginning
with the quarter ending in February 2009. Adoption of SFAS 161 is not
expected to have a material impact on the Company's financial
statements.
In December 2007, the FASB issued SFAS No. 141 (revised 2007),"Business
Combinations" ("SFAS No.141(R)"). SFAS No. 141(R) will replace SFAS
141, and establishes principles and requirements for how the acquirer
in a business combination reorganizes and measures in its financial
statements the identifiable assets acquired, the liabilities assumed
and any noncontrolling interest in the acquiree; recognizes and
measures the goodwill acquired in the business combination or gain from
a bargain purchase; and determines what information to disclose to
enable users of the financial statements to evaluate the nature and
financial effects of the business combination. SFAS No. 141(R) applies
prospectively to business combinations for which the acquisition date
is on or after the beginning of the first annual reporting period
beginning on or after December 15, 2008. Currently, the Company does
not anticipate that this Statement will have a significant impact on
its financial statements.
In December 2007, the FASB issued SFAS No. 160,"Non-Controlling
Interests in Consolidated Financial Statements - an amendment of ARB
No. 51" ("SFAS No. 160"). This statement requires that noncontrolling
or minority interests in subsidiaries be presented in the consolidated
statement of financial position within equity, but separate from the
parents' equity, and that the amount of the consolidated net income
attributable to the parent and to the noncontrolling interest be
clearly identified and presented on the face of the consolidated
statement of income. SFAS No. 160 will be effective for the Company's
fiscal year beginning August 1, 2009. The adoption of this statement
did not have a material effect on the Company's financial statements.
9
In December 2007, the FASB ratified the consensus reached on Emerging
Issues Task Force Issue No. 07-1, "Accounting for Collaborative
Arrangements Related to the Development and Commercialization of
Intellectual Property" ("EITF 07-1"). EITF 07-1 defines collaborative
arrangements and establishes reporting requirements for transactions
between participants in a collaborative arrangement and between
participants in the arrangement and third parties. EITF 07-1 will be
effective for the Company's fiscal year beginning August 1, 2009. The
Company is currently evaluating the potential impact of this standard
on the financial statements.
In December 2007, the SEC issued Staff Accounting Bulletin No. 110
("SAB 110"). SAB 110 permits companies to continue to use the
simplified method, under certain circumstances, in estimating the
expected term of "plain vanilla" options beyond December 31, 2007. SAB
110 updates guidance provided in SAB 107 that previously stated that
the Staff would not expect a company to use the simplified method for
share option grants after December 31, 2007. Adoption of SAB 110 is not
expected to have a material impact on the Company's financial
statements.
NOTE 2 - GOING CONCERN
The Company's financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
settlement of liabilities and commitments in the normal course of
business. In the near term, the Company expects operating costs to
continue to exceed funds generated from operations. As a result, the
Company expects to continue to incur operating losses, and the
operations in the near future are expected to continue to use working
capital.
Management of the Company is actively increasing marketing efforts to
increase revenues. The ability of the Company to continue as a going
concern is dependent on its ability to meet its financing arrangement
and the success of its future operations. The financial statements do
not include any adjustments that might be necessary if the Company is
unable to continue as a going concern.
NOTE 3 - LICENSE RIGHTS
On November 28, 2007, the Company acquired a license from a software
developer, Service Technology, Inc. ("Licensor"). The Licensor has a
certain social networking software for use on the website. According
to the license rights, the Company is authorized by this agreement to
utilize the software in any manner within the course and scope of its
business.
The Company agreed to compensate the Licensor with a payment of
$50,000, and in 100,000 common shares of the Company. As of September
30, 2008, the Company recorded $51,000 for its license rights.
10
The Company has indefinite term for the rights; therefore, the license
right is not being amortized but will be reviewed for impairment
annually or more frequently if impairment indicators arise, in
accordance with SFAS 142.
NOTE 4 - ACCRUED EXPENSES
Accrued expenses consisted of the following:
September 30, December 31
2008 2007
(Unaudited) (Audited)
------------- ----------
Accrued Professional Fees $ 2,000 $ 9,250
Accrued Interest 553 8,195
Employee Reimbursable 7,730 6,955
State Income Tax 800 800
--------- ---------
Total Accrued Expenses $ 11,083 $ 25,200
NOTE 5 - STOCKHOLDERS' EQUITY
During the three months ended September 30, 2008, the Company issued
100,000 shares of its common stock, valued at $0.25 per share or
$25,000, to its Secretary and a director of the Company in
consideration of their services rendered to the Company, and also
issued 10,000 shares of common stock, valued at $0.25 per share or
$2,500, to a broker for brokerage fees.
During the three months ended September 30, 2008, the Company received
$257,750 and sold 1,031,000 shares of the Company's common stock to
various investors at a price of $0.25 per share.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Results of Operations for the three and nine months ended September 30,
2008 and for the period from inception to September 30, 2007.
We did not earn any revenue for the three months ended September 30,
2008. The net loss of $(235,272) for the three months ended September
30, 2008 was due to research and development ($200,000) and selling,
general and administrative expenses ($34,719).
We did not earn any revenue for the nine months ended September 30,
2008. For the nine months ended September 30, 2008, we had a net loss
of $274,551. This loss was due to research and development ($200,000),
costs of being a reporting company and selling, general and
administrative expenses of $72,998.
We did not earn any revenue for the period from August 2 (inception) to
September 30, 2007. For the period from inception to September 30,
2007, we had selling, general and administrative expenses of $6,435
which were mainly related to organization expenses.
Results of Operations for the years ended December 31, 2007.
The net loss of $(71,053) for the year ended December 31, 2007 was due
to commencement of operations.
Revenues
- --------
Excel Global did not receive any revenues for the three and nine months
ended September 30, 2008
Revenues of $25,000 for the year ended December 31, 2007 were
attributed to commencement of operations.
Selling, general and administrative expense
- -------------------------------------------
For the three months ended September 30, 2008, we had general,
administrative and selling expenses of $34,719 due to expenses relating
to our recent public offering and to being a reporting company.
For the nine months ended September 30, 2008, we had general,
administrative and selling expenses of $72,998 due to expenses relating
to our recent public offering and to being a reporting company.
For the year ended December 31, 2007, we had general, administrative
and selling expenses of $95,253 due to the commencement of operations.
Selling, general and administrative expenses will continue to increase
as we implement sales and marketing initiatives.
Liquidity and Capital Resources
- -------------------------------
During the nine months ended September 30, 2008, we purchased property
and equipment resulting in net cash used by investing activities of
$2,032.
12
During the nine months ended September 30, 2008, net cash provided by
financing activities was $32,827 from the proceeds of an officer loan
and proceeds from the sale of stock of $257,750.
During the year ended December 31, 2007, we did not pursue any
investing activities.
During the year ended December 31, 2007, net cash provided by financing
activities was $853 from the proceeds of an officer loan. .
We are currently not aware of any trends that are reasonably likely to
have a material impact on our liquidity. Our current cash balance is
estimated to be sufficient to fund our current operations for two
months. We are attempting to increase the sales to raise much needed
cash for the remainder of the year, which will be supplemented by our
efforts to raise cash through the issuance of equity securities. It is
our intent to secure a market share in the software application and
service industry which we feel will require additional capital over the
long term to undertake sales and marketing initiatives, and to manage
timing differences in cash flows.
Plan of Operations
- ------------------
Our main focus in the next twelve months is to complete our public
offering and utilize a portion of the funds raised to increase our
marketing efforts to increase sales of the Edge and our services.
Our long term capital strategy is to increase our cash balance through
the receipt of revenues and financing transactions, including the
issuance of debt and/or equity securities. We have not yet determined
any specific offering terms, if any.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We do not consider the effects of interest rate movements to be a
material risk to our financial condition. We do not hold any
derivative instruments and do not engage in any hedging activities.
Item 4T. Controls and Procedures.
During the three months ended September 30, 2008, there were no changes
in our internal controls over financial reporting (as defined in Rule
13a-15(f) and 15d-15(f) under the Exchange Act) that have materially
affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management,
including our chief executive officer and chief financial officer, we
conducted an evaluation of our disclosure controls and procedures, as
13
such term is defined under Rule 13a-15(e) and Rule 15d-15(e)
promulgated under the Securities Exchange Act of 1934, as amended, as
of September 30, 2008. Based on this evaluation, our chief executive
officer and chief principal financial officers have concluded such
controls and procedures to be effective as of September 30, 2008 to
ensure that information required to be disclosed by the issuer in the
reports that it files or submits under the Act is recorded, processed,
summarized and reported, within the time periods specified in the
Commission's rules and forms and to ensure that information required to
be disclosed by an issuer in the reports that it files or submits under
the Act is accumulated and communicated to the issuer's management,
including its principal executive and principal financial officers, or
persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 1A. Risk Factors.
We may continue to have potential liability even though we made a
rescission offer.
In July 2007, we sold an excess of 31,000 common shares over the
1,000,000 common shares registered in our recent public offering. In
order to address this issue, we offered rescission to the shareholder
who purchased these 31,000 common shares. Even though the shareholder
declined the offer, we may remain liable under the Securities Act of
1933 for a possible further rescission. However, we must offer
rescission to all of the shareholders who purchased in the recent
offering, the Securities Act of 1933 does not provide that a rescission
offer will extinguish a holder's right to rescind the issuance of
shares that were not registered or exempt from the registration
requirements under the Securities Act of 1933. Consequently, should
any recipients of a rescission offer reject the offer, expressly or
impliedly, we may remain liable under the Securities Act of 1933 for
the purchase price of the shares that are subject to the rescission
offer.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
In July 2007, we sold an excess of 31,000 common shares over the
1,000,000 common shares registered in our recent public offering. This
issuance may not have complied with the Securities Act of 1933 because
these securities were not registered under federal securities laws and
we did not seek to qualify these securities for exemption from
registration.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information. None.
Item 6. Exhibits
Exhibit 31 - Certifications pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
Exhibit 32 - Certifications pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to 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.
Dated: November 19, 2008
EXCEL GLOBAL, INC.
By: /s/Betty Soumekh
- ---------------------------
Betty Soumekh, Chief Executive Officer