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: October 31, 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 December 12, 2008.
SAGE INTERACTIVE, INC.
Index
Page
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of October 31, 2008 (unaudited) and
July 31, 2008 3
Statements of Operations (unaudited) for the three months
ended October 31, 2008 and 2007, and for the period
from inception (July 19, 2007) to October 31, 2008 4
Statements of Cash Flows (unaudited) for the three months
ended October 31, 2008 and 2007, and for the period from
inception (July 19, 2007) to October 31, 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 11
Item 4T. Controls and Procedures 11
Part II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 1A. Risk Factors 12
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits 12
SIGNATURES 13
SAGE INTERACTIVE, INC.
(A Development Stage Company)
BALANCE SHEETS
October 31, July 31,
2008 2008
----------- --------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 11,700 $ 16,139
Reimbursable expenses -- 199
----------- -----------
Total current assets 11,700 16,338
Website development costs, net 5,542 5,700
----------- -----------
Total assets $ 17,242 $ 22,038
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,100 $ 1,000
Accrued expenses 2,500 2,295
Accrued expenses, related party 4,200 2,000
----------- -----------
Total current liabilities 11,800 5,295
----------- -----------
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 at
October 31, 2008 and July 31, 2008 920 920
Additional paid-in capital 44,080 44,080
(Deficit) accumulated during the development stage (39,558) (28,257)
----------- -----------
Total stockholders' equity 5,442 16,743
----------- -----------
Total liabilities and stockholders' equity $ 17,242 $ 22,038
=========== ===========
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 ended October 31, 2008 and 2007, and for the
period from Inception (July 19, 2007) to October 31, 2008
(Unaudited)
From
Three Three Inception
months months (July 19,
ended ended 2007) to
October 31, October 31, October 31,
2008 2007 2008
----------- ----------- ------------
Revenues $ 250 $ -- $ 750
Cost of revenues 199 -- 597
----------- ----------- ------------
Gross profit 51 -- 153
----------- ----------- ------------
Expenses:
General and administrative
Consulting fees 3,000 -- 12,799
Legal and accounting fees 7,500 7,500 23,435
Taxes, licenses and permits 276 200 1,257
All other general and administrative 418 153 2,062
Amortization 158 -- 158
----------- ----------- ------------
Total expenses 11,352 7,853 39,711
----------- ----------- ------------
Net (loss) $ (11,301) $ (7,853) $ (39,558)
=========== =========== ============
Net (loss) per common share:
Basic and Diluted $ (0.01) $ (0.01) $ (0.04)
=========== =========== ============
Weighted average shares outstanding:
Basic and Diluted 920,000 900,000 893,040
=========== =========== ============
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 three months ended October 31, 2008 and 2007 and for the
period from Inception (July 19, 2007) to October 31, 2008
(Unaudited)
From
Three Three Inception
months months (July 19,
ended ended 2007) to
October 31, October 31, October 31,
2008 2007 2008
----------- ----------- -----------
Cash flows from operating activities:
Net (loss) $ (11,301) $ (7,853) $ (39,558)
----------- ----------- -----------
Adjustments to reconcile net (loss) to net
cash used by operating activities:
Amortization 158 -- 158
Changes in operating assets and liabilities:
Decrease in reimbursable expenses 199 -- --
Increase in accounts payable 4,100 4,394 5,100
Increase in accrued expenses 2,405 -- 6,700
----------- ----------- -----------
Total adjustments 6,862 4,394 11,958
----------- ----------- -----------
Net cash (used in) operating activities (4,439) (3,459) (27,600)
----------- ----------- -----------
Cash flows from investing activities:
Capital expenditures -- -- (5,700)
----------- ----------- -----------
Net cash (used in) investing activities -- -- (5,700)
----------- ----------- -----------
Cash flows from financing activities:
Cash proceeds from sale of stock -- -- 45,000
----------- ----------- -----------
Net cash provided by financing activities -- -- 45,000
----------- ----------- -----------
Net increase (decrease) in cash and equivalents (4,439) (3,459) 11,700
Cash and equivalents at beginning of period 16,139 25,000 --
----------- ----------- -----------
Cash and equivalents at end of period $ 11,700 $ 21,541 $ 11,700
=========== =========== ===========
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
October 31, 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 October
31, 2008, results of operations for the three months ended October 31, 2008, and
cash flows for the three months ended October 31, 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
for the year ended July 31, 2008, included in the Company's Form 10-K.
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.
6
Use of Estimates: The preparation of financial statements in conformity
with US GAAP requires management to make estimates and assumptions that affect
the reported amount of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Management
routinely makes judgments and estimates about the effects of matters that are
inherently uncertain. Estimates that are critical to the accompanying financial
statements include the identification and valuation of assets and liabilities,
valuation of deferred tax assets, and the likelihood of loss contingencies.
Management bases its estimates and judgements on historical experience and on
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results could differ from these estimates. Estimates and
assumptions are revised periodically and the effects of revisions are reflected
in the financial statements in the period it is determined to be necessary.
Recent Accounting Pronouncements: There were various other accounting
standards and interpretations issued during 2008, 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 October 31, 2008, the Company
incurred a net loss of $11,301. At October 31, 2008, the Company had an
accumulated deficit of $39,558. 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. Commitments, Contingencies and Related Party Transactions
During the three months ended October 31, 2008, revenues consist of sales
to a related party of $250.
The Company has an agreement with its President that provides for
compensation of $1,000 per month. The agreement can be terminated at any time by
either party. During the three months ended October 31, 2008, compensation costs
of $3,000 were accrued pursuant to this agreement.
Office space is provided to the Company at no cost by its President. No
provision for these costs has been included in these financial statements as the
amounts are not material.
One of the Company's founding stockholders is also the Company's legal
counsel. As of October 31, 2008, no legal fees had been accrued or paid to this
stockholder.
7
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 2029, 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 carry forwards 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 Estimated
NOL Tax Change in
Carry- NOL Benefit Valuation Valuation Net Tax
Period Ending forward Expires from NOL Allowance Allowance Benefit
- ---------------- --------- ------- --------- --------- --------- -------
July 31, 2007 $ 606 2027 $ 112 $ (112) $ (112) --
July 31, 2008 27,651 2028 5,115 (5,115) (5,115) --
October 31, 2008 11,301 2029 2,091 (2,091) (2,091) --
-------- ------- -------
Total $ 39,558 $ 7,318 $(7,318)
======== ======= =======
Income taxes at the statutory rate are reconciled to the Company's reported
income tax expense (benefit) as follows:
Income tax (benefit) at statutory rate resulting
from net operating loss carry forward (15.0%)
State tax (benefit) net of Federal benefit (3.5%)
Deferred income tax valuation allowance 18.5%
--------
Reported tax rate 0%
========
At this time, the Company is unable to determine if it will be able to benefit
from its deferred tax asset. There are limitations on the utilization of net
operating loss carry forwards, including a requirement that losses be offset
against future taxable income, if any. In addition, there are limitations
imposed by certain transactions which are deemed to be ownership changes.
Accordingly, a valuation allowance has been established for the entire deferred
tax asset.
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 October 31, 2008 and
compares it to our financial condition at July 31, 2008. Finally, the discussion
summarizes the results of our operations for the three months ended October 31,
2008. This discussion and analysis should be read in conjunction with our
audited financial statements for the period ended July 31, 2008, including
footnotes, and the discussion and analysis included in our Form 10-K.
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. We are unable at this time
to predict when, if ever, our objectives will be achieved.
Liquidity and Capital Resources
- -------------------------------
As of October 31, 2008, we had a working capital deficit of $(100), comprised of
current assets of $11,700 and current liabilities of $11,800. This represents a
decrease of $11,143 in working capital compared to the balance of $11,043
reported at July 31, 2008. During the three months ended October 31, 2008, our
working capital declined as we invested our capital resources in the development
of our business.
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 cash reserve 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.
Net cash used in operating activities during the three months ended October 31,
2008 was $4,439 compared to $3,459 during the three months ended October 31,
2007.
During the three months ended October 31, 2008 and 2007 there were no cash flows
from investing activities or from financing activities.
Results of Operations - Three Months Ended October 31, 2008 Compared to the
- ---------------------------------------------------------------------------
Three Months Ended October 31, 2007
- -----------------------------------
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 three months ended October 31, 2008, we recorded a net loss of
$(11,301), or $(0.01) per share, compared to a net loss for the corresponding
period in 2007 of $(7,853) or $(0.01) per share.
9
Revenue for the three months ended October 31, 2008 was $250, representing sales
to a related party. Cost of revenues for the three months ended October 31, 2008
was $199, representing web development costs incurred for the job that was
completed during the period. We commenced operations on July 19, 2007 and did
not report any revenue or cost of sales for the three months ended October 31,
2007.
Operating expenses were $11,352 for the three months ended October 31, 2008
compared to $7,853 for the three months ended October 31, 2007, an increase of
$3,499. All of the expenses represent costs required to implement our business
plan. The increase consists primarily of consulting costs of $3,000 which the
Company began incurring in November 2007 at the rate of $1,000 per month.
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
Item 3. Quantitative and Qualitative Disclosures About Market Risk
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 annual report
on Form 10-K, 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.
Item 4T. 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 October 31, 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 October 31, 2008 that
materially affected, or is reasonably likely to materially affect, our internal
controls over financial reporting.
11
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 our Form 10-K filed with the SEC.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None
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.
12
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: December 15, 2008 By: Brian D. Frenkel
President and Principal Executive Officer
13