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, 2009
[_] 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 check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [_] 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 9, 2009.
SAGE INTERACTIVE, INC.
Index
Page
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of April 30, 2009 (unaudited) and
July 31, 2008 3
Statements of Operations (unaudited) for the three months and
nine months ended April 30, 2009 and 2008, and for
the period from inception (July 19, 2007) to April 30, 2009 4
Statements of Cash Flows (unaudited) for the nine months ended
April 30, 2009 and 2008, and for the period from
inception (July 19, 2007) to April 30, 2009 5
Notes to Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 12
Item 4T. 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
SAGE INTERACTIVE, INC.
(A Development Stage Company)
BALANCE SHEETS
April 30, July 31,
2009 2008
-------- --------
(Unaudited)
ASSETS
------
Current assets:
Cash and cash equivalents $ 2,092 $ 16,139
Reimbursable expenses -- 199
-------- --------
Total current assets 2,092 16,338
Website development costs, net 4,594 5,700
-------- --------
Total assets $ 6,686 $ 22,038
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------
Current liabilities:
Accounts payable $ 1,385 $ 1,000
Accrued expenses 1,375 2,295
Accrued compensation 10,200 2,000
-------- --------
Total current liabilities 12,960 5,295
-------- --------
Stockholders' equity (deficit):
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
April 30, 2009 and July 31, 2008 920 920
Additional paid-in capital 44,080 44,080
(Deficit) accumulated during the development stage (51,274) (28,257)
-------- --------
Total stockholders' equity (deficit) (6,274) 16,743
-------- --------
Total liabilities and stockholders' equity (deficit) $ 6,686 $ 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 and nine months ended April 30, 2009 and 2008,
and for the period from Inception (July 19, 2007) to April 30, 2009
(Unaudited)
Three Three Nine Nine From Inception
months months months months (July 19, 2007)
ended ended ended ended to
April 30, April 30, April 30, April 30, April 30,
2009 2008 2009 2008 2009
--------- --------- --------- --------- ------------
Revenues $ -- $ -- $ 250 $ 500 $ 750
Cost of revenues -- -- 199 398 597
--------- --------- --------- --------- ------------
Gross profit -- -- 51 102 153
--------- --------- --------- --------- ------------
Expenses:
General and administrative
Consulting fees 3,000 6,000 9,000 11,699 18,799
Legal and accounting fees 1,375 4,390 11,260 13,640 27,195
Taxes, licenses and permits -- -- 276 200 1,257
All other general and administrative 95 356 1,426 1,256 3,070
Amortization 474 -- 1,106 -- 1,106
--------- --------- --------- --------- ------------
Total expenses 4,944 10,746 23,068 26,795 51,427
--------- --------- --------- --------- ------------
Net (loss) $ (4,944) $ (10,746) $ (23,017) $ (26,693) $ (51,274)
========= ========= ========= ========= ============
Net (loss) per common share:
Basic and Diluted $ (0.01) $ (0.01) $ (0.03) $ (0.03) $ (0.06)
========= ========= ========= ========= ============
Weighted average shares outstanding:
Basic and Diluted 920,000 920,000 920,000 910,763 900,536
========= ========= ========= ========= ============
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, 2009 and 2008 and for the
period from Inception (July 19, 2007) to April 30, 2009
(Unaudited)
Nine Nine From Inception
months months (July 19, 2007)
ended ended to
April 30, April 30, April 30,
2009 2008 2009
-------- -------- ------------
Cash flows from operating activities:
Net (loss) $(23,017) $(26,693) $ (51,274)
-------- -------- ------------
Adjustments to reconcile net (loss) to net
cash used by operating activities:
Amortization 1,106 -- 1,106
Changes in operating assets and liabilities:
Decrease (increase) in reimbursable expenses 199 (199) --
Increase in accounts payable 385 394 1,385
Increase (decrease) in accrued expenses (920) 4,390 1,375
Increase in accrued compensation 8,200 1,000 10,200
-------- -------- ------------
Total adjustments 8,970 5,585 14,066
-------- -------- ------------
Net cash (used in) operating activities (14,047) (21,108) (37,208)
-------- -------- ------------
Cash flows from investing activities:
Web site development expenditures -- -- (5,700)
-------- -------- ------------
Net cash (used in) investing activities -- -- (5,700)
-------- -------- ------------
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 (14,047) (1,108) 2,092
Cash and equivalents at beginning of period 16,139 25,000 --
-------- -------- ------------
Cash and equivalents at end of period $ 2,092 $ 23,892 $ 2,092
======== ======== ============
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, 2009
(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, 2009, results of operations for the three months and nine months ended April
30, 2009, and cash flows for the nine months ended April 30, 2009, 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.
Reclassifications: Certain amounts previously presented for prior periods
have been reclassified to conform with the current presentation. The
reclassifications had no effect on net loss or total stockholders' equity.
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 accounting standards
and interpretations recently issued, 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 nine months ended April 30, 2009, the Company
incurred a net loss of $23,017. At April 30, 2009, the Company had an
accumulated deficit of $51,274. 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 nine months ended April 30, 2009, 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 nine months ended April 30, 2009, compensation costs of
$9,000 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.
7
One of the Company's stockholders is also the Company's legal counsel. As
of April 30, 2009, 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 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 Change in
Estimated NOL NOL Tax Benefit Valuation Valuation Net Tax
Period Ending Carry forward Expires from NOL Allowance Allowance Benefit
- -------------- ------------- ------- ----------- --------- --------- -------
April 30, 2009 41,100 Various 7,600 (7,600) (2,370) --
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 tax asset 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 of Financial Condition and Results
of Operations
Overview
The following discussion updates our plan of operation for the next twelve
months. It also analyzes our financial condition at April 30, 2009 and compares
it to our financial condition at July 31, 2008. Finally, the discussion
summarizes the results of our operations for the three months and nine months
ended April 30, 2009. 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.
We are considered a development stage company for accounting purposes, since we
are working to implement our plan of operations and have not received any
significant revenues from operations. We are unable to predict with any degree
of accuracy when that situation will change. We expect to incur losses until
such time, if ever, we begin generating significant revenue from operations.
Liquidity and Capital Resources
As of April 30, 2009, we had a working capital deficit of $(10,868), comprised
of current assets of $2,092 and current liabilities of $12,960. This represents
a decrease of $21,911 in working capital compared to the balance of $11,043
reported at July 31, 2008. During the nine months ended April 30, 2009, we
consumed working capital to fund costs incurred to develop our business.
We intend to use our limited working capital 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 will need additional funding in order to market our services and to achieve
our ultimate goals. We do not believe that the Company's current capital
resources will be sufficient to fund its operating activity and other capital
resource demands for the next twelve months. Our ability to continue as a going
concern is contingent upon our ability to obtain capital through the sale of
equity or issuance of debt, or a joint venture, and ultimately attaining
profitable operations. 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. Recent events in worldwide capital
markets may make it more difficult for us to obtain additional capital
resources. Any sales of our securities would dilute the ownership of our
existing investors.
Net cash used in operating activities during the nine months ended April 30,
2009 was $14,047 compared to $21,108 during the nine months ended April 30,
2008.
During the nine months ended April 30, 2009 and 2008, our investment activities
neither provided nor used any funds.
9
During the nine months ended April 30, 2009 there were no cash flows from
financing activities. During the nine months ended April 30, 2008, we sold
20,000 shares of common stock at $1.00 per share for cash proceeds of $20,000.
Results of Operations - Three Months Ended April 30, 2009 Compared to the Three
Months Ended April 30, 2008
For the three months ended April 30, 2009, we recorded a net loss of $(4,944),
or $(0.01) per share, compared to a net loss for the corresponding period in
2008 of $(10,746) or $(0.01) per share.
We reported no revenue for either the three months ended April 30, 2009 or the
three months ended April 30, 2008.
Operating expenses were $4,944 for the three months ended April 30, 2009
compared to $10,746 for the three months ended April 30, 2008, a decrease of
$5,802. All of the operating expenses represent costs to implement our business
plan, including professional fees associated with our status as a public company
and consulting fees for development of our business. The decrease in operating
expenses is primarily attributable to certain design costs totaling $3,000 which
were incurred during 2008 and were not repeated during 2009. Certain legal and
accounting fees were reduced in 2009 as we streamlined our financial reporting
process. Furthermore, we began amortizing the development costs of our website
during October 2008 resulting in amortization expense of $474 for the three
months ended April 30, 2009 compared to $Nil during prior periods.
Results of Operations - Nine Months Ended April 30, 2009 Compared to the Nine
Months Ended April 30, 2008
For the nine months ended April 30, 2009, we recorded a net loss of $(23,017),
or $(0.03) per share, compared to a net loss for the corresponding period in
2008 of $(26,693) or $(0.03) per share.
Revenue for the nine months ended April 30, 2009 was $250, compared to $500 for
the same period in 2008. All sales since inception have been related party
sales. Cost of revenues for the nine months ended April 30, 2009 was $199
compared to $398 during the nine months ended April 30, 2008, representing web
development costs incurred for jobs that were completed during the periods.
Operating expenses were $23,068 for the nine months ended April 30, 2009
compared to $26,795 for the nine months ended April 30, 2008, a decrease of
$3,727. There were $5,700 of design costs incurred during the nine months ended
April 30, 2008 which were not repeated during 2009. We agreed to pay consulting
fees to our President of $1,000 per month beginning in November, 2007. These
fees totaled $9,000 for the nine months ended April 30, 2009 compared to $6,000
for the nine months ended April 30, 2008. Furthermore, we began amortizing the
development costs of our website during October 2008 resulting in amortization
expense of $1,106 for the nine months ended April 30, 2009 compared to $Nil
during prior periods. All of the expenses represent costs required to implement
our business plan, including professional fees associated with our status as a
public company and consulting fees for development of our business.
10
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.
11
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 Principal Executive Officer and Principal Financial
Officer, as appropriate to allow timely decisions regarding required disclosure.
As of April 30, 2009, under the supervision and with the participation of our
Principal 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 Principal 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, 2009 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 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
31.1 Certification of Principal Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
31.2 Certification of Principal 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
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.
SAGE INTERACTIVE, INC.
Dated: June 11, 2009 By: /s/ Brian D. Frenkel
--------------------
Brian D. Frenkel
President and Principal Executive Officer
14