UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: April 30, 2008
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____ to ________
SAGE INTERACTIVE, INC.
----------------------
(Exact Name of Registrant as Specified in its Charter)
NEVADA 000-52882 26-0578268
- --------------------------------- ------------ ---------------
(State or other jurisdiction (Commission I.R.S. Employer
of incorporation or organization) File No.) Identification
Number
2340 South Columbine Street, Denver, CO 80210
---------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code: (303) 847-9000
----------------------------------------------------
Former name, former address, and former fiscal year,
if changed since last report
Check 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 preceeding
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 checkmark whether the registrant is a large 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 [_] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [_] No [X]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 920,000 shares of common stock
outstanding as of June 10, 2008.
SAGE INTERACTIVE, INC.
Index
Page
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Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of April 30, 2008 (unaudited) and
July 31, 2007 3
Statements of Operations (unaudited) for the three months and
nine months ended April 30, 2008, and for the period
from inception (July 19, 2007) to April 30, 2008 4
Statements of Cash Flows (unaudited) for the nine months ended
April 30, 2008, and for the period from inception
(July 19, 2007) to April 30, 2008 5
Notes to Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis or Plan of Operation 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 12
Item 4. Controls and Procedures 12
Part II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 1A. Risk Factors 13
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information. 13
Item 6. Exhibits 13
SIGNATURES 14
2
SAGE INTERACTIVE, INC.
(A Development Stage Company)
BALANCE SHEETS
April 30, July 31,
2008 2007
---------- ----------
(Unaudited) (See Note 1)
ASSETS
Current assets:
Cash and cash equivalents $ 23,892 $ 25,000
Reimbursable expenses 199 --
---------- ----------
Total current assets $ 24,091 $ 25,000
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,000 $ 606
Accrued expenses 5,390 --
---------- ----------
Total current liabilities 6,390 606
---------- ----------
Stockholders' equity:
Preferred stock - $0.001 par value, 5,000,000 shares authorized:
No shares issued or outstanding -- --
Common stock - $0.001 par value, 100,000,000 shares authorized:
920,000 shares issued and outstanding 920 900
Additional paid-in capital 44,080 24,100
Deficit accumulated during the development stage (27,299) (606)
---------- ----------
Total stockholders' equity 17,701 24,394
---------- ----------
Total liabilities and stockholders' equity $ 24,091 $ 25,000
========== ==========
The accompanying notes are an integral part of these financial statements.
3
SAGE INTERACTIVE, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
for the three months and nine months ended April 30, 2008, and for the
period from Inception (July 19, 2007) to April 30, 2008
(Unaudited)
Three Nine From
months months Inception
ended ended (July 19, 2007)
April 30, April 30, to
2008 2008 April 30, 2008
--------- --------- --------------
Revenues $ -- $ 500 $ 500
Cost of revenues -- 398 398
--------- --------- --------------
Gross profit -- 102 102
--------- --------- --------------
Expenses:
General and administrative:
Employee costs 3,000 6,000 6,000
Consulting fees 3,000 5,699 5,699
Legal and accounting fees 4,390 13,640 13,640
Taxes, licenses and permits -- 200 806
Other 356 1,256 1,256
--------- --------- --------------
Total expenses 10,746 26,795 27,401
--------- --------- --------------
Net (loss) $ (10,746) $ (26,693) $ (27,299)
========= ========= ==============
Net (loss) per common share:
Basic and Diluted $ (0.01) $ (0.03) $ (0.03)
========= ========= ==============
Weighted average shares outstanding:
Basic and Diluted 920,000 906,245 910,704
========= ========= ==============
The accompanying notes are an integral part of these financial statements.
4
SAGE INTERACTIVE, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
for the nine months ended April 30, 2008
and for the period from Inception (July 19, 2007) to April 30, 2008
(Unaudited)
Inception
(July 19, 2007)
to
2008 April 30, 2008
-------- --------------
Cash flows from operating activities:
Net (loss) $(26,693) $ (27,299)
-------- --------------
Adjustments to reconcile net (loss)
to net cash used by operating activities:
(Increase) in reimbursable expenses (199) (199)
Increase in accounts payable and accrued expenses 5,784 6,390
-------- --------------
Total adjustments 5,585 6,191
-------- --------------
Net cash (used in) operating activities (21,108) (21,108)
-------- --------------
Cash flows from investing activities:
Net cash (used in) investing activities -- --
-------- --------------
Cash flows from financing activities:
Cash proceeds from sale of stock 20,000 45,000
-------- --------------
Net cash provided by financing activities 20,000 45,000
-------- --------------
Net increase (decrease) in cash and equivalents (1,108) 23,892
Cash and equivalents at beginning of period 25,000 --
-------- --------------
Cash and equivalents at end of period $ 23,892 $ 23,892
======== ==============
Supplemental Cash Flow Information
Interest paid $ -- $ --
======== ==============
Income taxes paid $ -- $ --
======== ==============
The accompanying notes are an integral part of these financial statements.
5
SAGE INTERACTIVE, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
April 30, 2008
(Unaudited)
1. Summary of Significant Accounting Policies
Interim Financial Information: The interim financial statements included
herein have been prepared by the Company, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission ("SEC") as promulgated
in Item 210 of Regulation S-X. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America ("US GAAP") have
been condensed or omitted pursuant to such SEC rules and regulations. In the
opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation of financial position as of April
30, 2008, results of operations for the three months and nine months ended April
30, 2008, and cash flows for the six months ended April 30, 2008, as applicable,
have been made. The results for these interim periods are not necessarily
indicative of the results for the entire year. The accompanying financial
statements should be read in conjunction with the audited financial statements
and the notes thereto included in the Company's Form 10-SB.
Basis of Presentation: Sage Interactive, Inc. (the Company) was organized
under the laws of the State of Nevada on July 19, 2007. The Company has been in
the development stage since its formation and has not yet generated significant
revenues from its planned operations. It plans to provide web development
services from its headquarters in Denver, Colorado. The Company has chosen July
31 as its fiscal year-end.
Development Stage Company: The Company presents its financial statements in
conformity with the accounting principles generally accepted in the United
States of America that apply to enterprises that are beginning their operations.
As a development stage enterprise, the Company must utilize accounting
principles consistent with those required of an established enterprise, and, in
addition, discloses the deficit accumulated during the development stage and the
cumulative statements of operations and cash flows from commencement of
development stage to the current balance sheet date.
Per Share Amounts: SFAS 128, "Earnings Per Share," provides for the
calculation of "Basic" and "Diluted" earnings per share. Basic earnings per
share includes no dilution and is computed by dividing net income (or loss) by
the weighted-average number of shares outstanding during the period. Diluted
earnings per share reflect the potential dilution of securities that could share
in the earnings of the Company, similar to fully diluted earnings per share.
Since inception the Company has not issued any potentially dilutive securities.
Use of Estimates: The preparation of the Company's financial statements in
conformity with generally accepted accounting principles requires the Company's
management to make estimates and assumptions that affect the amounts of assets
and liabilities, the 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.
6
Recent Accounting Pronouncements: In December 2007, the FASB issued FAS No.
160, Noncontrolling Interests in Consolidated Financial Statements (SFAS 160),
which becomes effective on August 1, 2009. This standard establishes accounting
and reporting standards for ownership interests in subsidiaries held by parties
other than the parent, the amount of consolidated net income attributable to the
parent and to the noncontrolling interest, changes in a parent's ownership
interest and the valuation of retained non-controlling equity investments when a
subsidiary is deconsolidated. The Statement also establishes reporting
requirements that provide sufficient disclosures that clearly identify and
distinguish between the interests of the parent and the interests of the
non-controlling owners. Management is currently evaluating the impact of
adopting this statement.
In March 2008, the FASB issued FAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities - an Amendment of FASB Statement No. 133
(SFAS 161), which becomes effective on February 1, 2009. This standard changes
the disclosure requirements for derivative instruments and hedging activities.
Entities are required to provide enhanced disclosures about (a) how and why an
entity uses derivative instruments, (b) how derivative instruments and related
hedged items are accounted for under SFAS 133 and its related interpretations,
and (c) how derivative instruments and related hedged items affect an entity's
financial position, financial performance, and cash flows. Management is
currently evaluating the impact of adopting this statement.
There were various other accounting standards and interpretations issued
during 2008 and 2007, none of which are expected to a have a material impact on
the Company's financial position, operations or cash flows.
2. Going Concern
The accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplates continuation of the Company as a going concern.
The Company is in its development stage and has not yet generated
significant revenues from operations. It has experienced losses from operations
as a result of its investment necessary to achieve its operating plan, which is
long-range in nature. For the period ended April 30, 2008, the Company incurred
a net loss of $22,303. At April 30, 2008, the Company had an accumulated deficit
of $22,909. These conditions raise substantial doubt about the ability of the
Company to continue as a going concern.
Management does not believe that the Company's current capital resources
will be sufficient to fund its operating activity and other capital resource
demands during its next fiscal year. Management plans to obtain capital through
the sale of equity or issuance of debt, joint venture or sale of its assets, and
ultimately attaining profitable operations. Management believes that this plan
provides an opportunity for the Company to continue as a going concern.
The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.
3. Related Party Transactions:
During the nine months ended April 30, 2008, revenues include sales to a
related party of $500.
7
During the nine months ended April 30, 2008, employee costs included $6,000
paid to our Chief Executive Officer.
Office space is provided to the Company at no cost by its Chief Executive
Officer. No provision for these costs has been included in these financial
statements as the amounts are not material.
One of the Company's stockholders is also the Company's legal counsel. As
of April 30, 2008, no legal fees had been accrued or paid to this stockholder.
4. Income Taxes
Deferred income taxes arise from temporary timing differences in the
recognition of income and expenses for financial reporting and tax purposes. The
Company's deferred tax assets consist entirely of the benefit from net operating
loss (NOL) carry forwards. The net operating loss carry forward, if not used,
will expire in various years through 2028, and is subject to restrictions
imposed by the Internal Revenue Code. The Company's deferred tax assets are
offset by a valuation allowance due to the uncertainty of the realization of the
net operating loss carry forwards. Net operating loss carryforwards may only be
utilized to offset future taxable income, if any, and may be further limited by
other provisions of the tax laws.
The Company's deferred tax assets, valuation allowance, and change in
valuation allowance are as follows:
Estimated Change in
Estimated NOL NOL Tax Benefit Valuation Valuation Net Tax
Period Ending Carry-forward Expires from NOL Allowance Allowance Benefit
- -------------- ------------- ------- ----------- --------- --------- -------
July 31, 2007 $606 2027 $112 $(112) $112 --
April 30, 2008 $26,693 2028 $4,938 $(4,938) $4,938 --
Income taxes at the statutory rate are reconciled to the Company's actual income
taxes as follows:
Income tax (benefit) at statutory rate resulting
from net operating loss carryforward (15.0%)
State tax (benefit) net of Federal benefit (3.5%)
Deferred income tax valuation allowance 18.5%
--------
Actual tax rate 0%
========
5. Stockholders' Equity
Effective December 16, 2007, the Company completed the sale of 20,000
shares of common stock at $1.00 per share for cash proceeds of $20,000.
8
Item 2. Management's Discussion and Analysis or Plan of Operation
Overview
The following discussion updates our plan of operation for the next twelve
months. It also analyzes our financial condition at April 30, 2008 and compares
it to our financial condition at July 31, 2007. Finally, the discussion
summarizes the results of our operations for the three months and nine months
ended April 30, 2008. This discussion and analysis should be read in conjunction
with our audited financial statements for the period ended July 31, 2007,
including footnotes, and the discussion and analysis included in our Form 10-SB.
Plan of Operation
Sage Interactive, Inc. (the "Company") was organized under the laws of the State
of Nevada on July 19, 2007. Our plan of operation is to provide web development
services from our headquarters in Denver, Colorado.
Liquidity and Capital Resources
As of April 30, 2008, we had working capital of $17,701. We had current assets
of $24,091 and current liabilities of $6,390. This represents a decrease of
$6,693 in working capital compared to the balance of $24,394 reported at July
31, 2007. During the nine months ended April 30, 2008, our working capital
declined as we invested our capital resources in the development of our
business.
To fund our operations, we issued 20,000 shares of common stock for $20,000 in
cash. These funds are being used for legal, accounting, administrative,
consulting and marketing costs. We intend to use our limited cash to purchase
necessary equipment, retain a small amount of working capital and begin
marketing our services. We will increase capital expenditures consistent with
any growth in operations, infrastructure or personnel.
We may need to find additional funding in order to market our services. In this
event, we may seek additional financing in the form of loans or sales of our
stock. There is no assurance that we will be able to obtain any needed financing
on favorable terms, or at all, or that we will find qualified purchasers for the
sale of our common stock. Any sales of our securities would dilute the ownership
of our existing investors.
During the nine months ended April 30, 2008, we used cash of $21,108 in
operating activities and received cash proceeds of $20,000 from the sale of
common stock.
Results of Operations - Three Months Ended April 30, 2008 (Please see the
explanatory note regarding the comparison to the Three Months Ended April 30,
2007)
(Explanatory Note) Since we commenced operations on July 19, 2007, there were no
comparable amounts for the prior year.
We are considered a development stage company for accounting purposes, since we
are working to implement our plan of operations. We are unable to predict with
any degree of accuracy when this classification will change. We expect to incur
losses until such time, if ever, we emerge from the development.
For the three months ended April 30, 2008, we recorded a net loss of $(10,746),
or $ (0.01) per share.
9
Revenue for the three months ended April 30, 2008 was $nil and cost of revenues
for the three months ended April 30, 2008 was $nil. As we are still in the
development stage, we expect revenues to fluctuate significantly during the
quarterly reporting periods.
Operating expenses were $10,746 for the three months ended April 30, 2008. All
of the expenses represent costs required to implement our business plan.
Results of Operations - Nine Months Ended April 30, 2008 (Please see the
explanatory note regarding the comparison to the Nine Months Ended April 30,
2007)
(Explanatory Note) Since we commenced operations on July 19, 2007, there were no
comparable amounts for the prior year.
We are considered a development stage company for accounting purposes, since we
are working to implement our plan of operations. We are unable to predict with
any degree of accuracy when this classification will change. We expect to incur
losses until such time, if ever, we emerge from the development stage.
For the nine months ended April 30, 2008, we recorded a net loss of $(26,693),
or $(0.03) per share.
Revenue for the nine months ended April 30, 2008 was $500, representing sales to
a related party. Cost of revenues for the nine months ended April 30, 2008 was
$398, representing web development costs incurred for the job that was completed
during the period.
Operating expenses were $26,795 for the nine months ended April 30, 2008. All of
the expenses represent costs required to implement our business plan.
Forward-Looking Statements
This Form 10-Q contains or incorporates by reference "forward-looking
statements," as that term is used in federal securities laws, about our
financial condition, results of operations and business. These statements
include, among others:
- statements concerning the benefits that we expect will result from our
business activities and that we contemplate or have completed; and
- statements of our expectations, beliefs, future plans and strategies,
anticipated developments and other matters that are not historical facts.
These statements may be made expressly in this document or may be incorporated
by reference to other documents that we will file with the SEC. You can find
many of these statements by looking for words such as "believes," "expects,"
"anticipates," "estimates" or similar expressions used in this report or
incorporated by reference in this report.
These forward-looking statements are subject to numerous assumptions, risks and
uncertainties that may cause our actual results to be materially different from
any future results expressed or implied in those statements. Because the
statements are subject to risks and uncertainties, actual results may differ
materially from those expressed or implied. We caution you not to put undue
reliance on these statements, which speak only as of the date of this report.
Further, the information contained in this document or incorporated herein by
reference is a statement of our present intention and is based on present facts
and assumptions, and may change at any time and without notice, based on changes
in such facts or assumptions.
10
Risk Factors Impacting Forward-Looking Statements
The important factors that could prevent us from achieving our stated goals and
objectives include, but are not limited to, those set forth in our report on
Form 10-SB, other reports filed with the SEC and the following:
o The worldwide economic situation;
o Any change in interest rates or inflation;
o The willingness and ability of third parties to honor their
contractual commitments;
o Our ability to raise additional capital, as it may be affected by
current conditions in the stock market and competition for risk
capital;
o Environmental and other regulations, as the same presently exist and
may hereafter be amended;
We undertake no responsibility or obligation to update publicly these
forward-looking statements, but may do so in the future in written or oral
statements. Investors should take note of any future statements made by or on
our behalf.
11
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are not aware of any market risk factors in addition to those disclosed in
the Form 10-SB filed on October 30, 2007.
Item 4. Controls and Procedures
(a) Disclosure Controls and Procedures. We maintain a system of controls and
procedures designed to ensure that information required to be disclosed by us in
reports that we file or submit under the Securities Exchange Act of 1934, as
amended, is recorded, processed, summarized and reported, within time periods
specified in the SEC's rules and forms and to ensure that information required
to be disclosed by us in the reports that we file or submit under the Securities
Exchange Act of 1934, as amended, is accumulated and communicated to our
management, including our Chief Executive Officer and Principal Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.
As of April 30, 2008, under the supervision and with the participation of our
Chief Executive Officer and Principal Financial Officer, management has
evaluated the effectiveness of the design and operation of our disclosure
controls and procedures. Based on that evaluation, the Chief Executive Officer
and Principal Financial Officer concluded that our disclosure controls and
procedures were effective.
(b) Changes in Internal Controls. There were no changes in our internal control
over financial reporting during the quarter ended April 30, 2008 that materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.
12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 1A. Risk Factors.
We are not aware of any market risk factors in addition to those disclosed
in the Form 10-SB filed on October 30, 2007.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
During the periods covered by this report, we issued shares of our common
stock without registering those securities under the Securities Act of 1933, as
amended ("Securities Act"). On July 30, 2007, we issued 900,000 shares of common
stock to our founders for cash proceeds of $25,000. From November, 2007 to
December, 2007, we issued 20,000 shares of common stock to investors for cash
proceeds of $20,000.
In each case, we relied on exemptions provided under the Securities Act. We
took steps to see that the investors had available the same type of information
that would be included in a registration statement. Finally, each certificate
representing shares issued pursuant to those exemptions has been inscribed by
the restricted legend required by Rule 144.
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.
a. Exhibits
31.1 Certification of Chief Executive Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
32 Certification of Officers pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
13
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the Company
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SAGE INTERACTIVE, INC.
/s/ Brian D. Frenkel
-------------------
Dated: June 13, 2008 By: Brian D. Frenkel
President and Principal Executive Officer
14