UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended October 31, 2009
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________ to ____________
333-147250
(Commission File Number)
ERE Management, Inc.
(Exact name of registrant as specified in charter)
Nevada 98-0540833
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
8275 Southern Eastern Avenue, Suite 200
Las Vegas, Nevada, 89123
(Address of principal executive offices)
(702) 990-8402
(Registrant's Telephone Number, including Area Code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirement for
the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of December 15, 2009, 2,440,000 shares of the issuer's common stock, $0.001
par value, were outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) 3
Item 2. Management's Discussion and Analysis or Plan of Operation 19
Item 3. Quantitative and Qualitative Disclosures About Market Risk 21
Item 4. Controls and Procedures 21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits 22
Signiture 23
2
ITEM 1. FINANCIAL STATEMENTS
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
INDEX TO FINANCIAL STATEMENTS
OCTOBER 31, 2009, AND 2008
(UNAUDITED)
Financial Statements -
Balance Sheets as of October 31, 2009, and July 31, 2009................ 4
Statements of Operations for the Three Months Ended
October 31, 2009, and 2008, and Cumulative from Inception............. 5
Statements of Cash Flows for the Three Months Ended
October 31, 2009, and 2008, and Cumulative from Inception............. 6
Notes to Financial Statements October 31, 2009, and 2008................ 7
3
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS (NOTE 2)
AS OF OCTOBER 31, 2009, AND JULY 31, 2009
(Unaudited)
October 31, July 31,
2009 2009
-------- --------
ASSETS
CURRENT ASSETS:
Cash $ 2,791 $ 1,261
-------- --------
Total current assets 2,791 1,261
-------- --------
PROPERTY AND EQUIPMENT:
Website development costs 5,950 5,950
-------- --------
5,950 5,950
Less - Accumulated amortization (3,967) (3,471)
-------- --------
Net property and equipment 1,983 2,479
-------- --------
TOTAL ASSETS $ 4,774 $ 3,740
======== ========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
CURRENT LIABILITIES:
Accounts payable - Trade $ 9,250 $ 7,450
Accrued liabilities 3,818 5,018
Due to related party 13,985 9,985
-------- --------
Total current liabilities 27,053 22,453
-------- --------
Total liabilities 27,053 22,453
-------- --------
COMMITMENT AND CONTINGENCIES
STOCKHOLDERS' (DEFICIT):
Common stock, par value $0.001 per share, 20,000,000 shares
authorized; 2,440,000 shares issued and outstanding in 2009 2,440 2,440
Additional paid-in capital 46,060 46,060
(Deficit) accumulated during the development stage (70,779) (67,213)
-------- --------
Total stockholders' (deficit) (22,279) (18,713)
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 4,774 $ 3,740
======== ========
The accompanying notes to financial statements are
an integral part of these balance sheets.
4
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS (NOTE 2)
FOR THE THREE MONTHS ENDED OCTOBER 31, 2009, AND 2008,
AND CUMULATIVE FROM INCEPTION (MAY 29, 2007)
THROUGH OCTOBER 31, 2009
(Unaudited)
Three Months Ended Cumulative
October 31, From
2009 2008 Inception
----------- ----------- -----------
Revenues $ -- $ -- $ --
----------- ----------- -----------
EXPENSES:
General and administrative-
Accounting and audit fees 2,250 1,500 19,700
Transfer agent fees 300 300 16,060
Legal fees - Other -- -- 13,573
Filing fees -- -- 6,099
Office rent 450 451 4,440
Consulting fees -- -- 4,000
Amortization 496 496 3,967
Web design and hosting fees 50 51 1,917
Legal fees - Incorporation -- -- 499
Bank service charges 20 -- 203
Office supplies -- -- 196
Licenses and fees -- -- 125
----------- ----------- -----------
Total general and administrative expenses 3,566 2,798 70,779
----------- ----------- -----------
(LOSS) FROM OPERATIONS (3,566) (2,798) (70,779)
OTHER INCOME (EXPENSE) -- -- --
PROVISION FOR INCOME TAXES -- -- --
----------- ----------- -----------
NET (LOSS) $ (3,566) $ (2,798) $ (70,779)
=========== =========== ===========
(LOSS) PER COMMON SHARE:
(Loss) per common share - Basic and Diluted $ (0.00) $ (0.00)
=========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING - BASIC AND DILUTED 2,440,000 2,440,000
=========== ===========
The accompanying notes to financial statements are
an integral part of these statements.
5
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS (NOTE 2)
FOR THE THREE MONTHS ENDED OCTOBER 31, 2009, AND 2008,
AND CUMULATIVE FROM INCEPTION (MAY 29, 2007)
THROUGH OCTOBER 31, 2009
(Unaudited)
Three Months Ended Cumulative
October 31, From
2009 2008 Inception
-------- -------- ---------
OPERATING ACTIVITIES:
Net (loss) $ (3,566) $ (2,798) $(70,779)
Adjustments to reconcile net (loss) to net cash
(used in) operating activities:
Amortization 496 496 3,967
Changes in operating assets & liabilities-
Account payable - Trade 1,800 152 9,250
Accrued liabilities (1,200) (1,949) 3,818
-------- -------- --------
NET CASH (USED IN) OPERATING ACTIVITIES (2,470) (4,099) (53,744)
-------- -------- --------
INVESTING ACTIVITIES:
Website development costs -- -- (5,950)
-------- -------- --------
NET CASH (USED IN) INVESTING ACTIVITIES -- -- (5,950)
-------- -------- --------
FINANCING ACTIVITIES:
Due to related party 4,000 -- 13,985
Issuance of common stock for cash -- -- 62,000
Deferred offering costs -- -- (13,500)
-------- -------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 4,000 -- 62,485
-------- -------- --------
NET (DECREASE) INCREASE IN CASH 1,530 (4,099) 2,791
CASH - BEGINNING OF PERIOD 1,261 11,201 --
-------- -------- --------
CASH - END OF PERIOD $ 2,791 $ 7,102 $ 2,791
======== ======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ -- $ -- $ --
======== ======== ========
Income taxes $ -- $ -- $ --
======== ======== ========
The accompanying notes to financial statements are
an integral part of these statements.
6
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 31, 2009, and 2008
(Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
GENERAL ORGANIZATION AND BUSINESS
ERE Management, Inc. ("ERE" or the "Company") is a Nevada corporation in the
development stage. The Company was incorporated under the laws of the State of
Nevada on May 29, 2007. The business plan of ERE is to develop software,
specializing in providing sales tool solutions for the real estate industry.
More specifically, ERE has developed an online Content Management System ("CMS")
that enables real estate agents to easily build a website to showcase their
listings. In addition, there are several opportunities ERE plans to consider for
future developments to enhance the Real Estate CMS. The accompanying financial
statements of ERE Management, Inc. were prepared from the accounts of the
Company under the accrual basis of accounting.
In 2007, ERE commenced a capital formation activity to effect a Registration
Statement on Form SB-2 with the Securities and Exchange Commission, and raise
capital of up to $60,000 from a self-underwritten offering of 1,200,000 shares
of newly issued common stock in the public markets. The Registration Statement
on Form SB-2 was filed with the SEC on November 9, 2007, and declared effective
on November 21, 2007. On January 24, 2008, the Company completed an offering of
its registered common stock as explained in Note 3.
UNAUDITED INTERIM FINANCIAL STATEMENTS
The accompanying interim financial statements of ERE as of October 31, 2009, and
July 31, 2009, and for the three months ended October 31, 2009, and 2008, and
cumulative from inception, are unaudited. However, in the opinion of management,
the interim financial statements include all adjustments, consisting only of
normal recurring adjustments, necessary to present fairly ERE's financial
position as of October 31, 2009, and July 31, 2009, and the results of its
operations and its cash flows for the three months ended October 31, 2009, and
2008, and cumulative from inception. These results are not necessarily
indicative of the results expected for the fiscal year ending July 31, 2010. The
accompanying financial statements and notes thereto do not reflect all
disclosures required under accounting principles generally accepted in the
United States of America. Refer to the Company's audited financial statements as
of July 31, 2009, filed with the SEC for additional information, including
significant accounting policies.
7
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 31, 2009, and 2008
(Unaudited)
CASH AND CASH EQUIVALENTS
For purposes of reporting within the statements of cash flows, the Company
considers all cash on hand, cash accounts not subject to withdrawal restrictions
or penalties, and all highly liquid investments instruments purchased with a
maturity of three months or less to be cash and cash equivalents.
REVENUE RECOGNITION
The Company is in the development stage and has yet to realize revenues from
operations. It plans to realize revenues from product sales when the products
are delivered to customers, and collection is reasonably assured. For product
support and product software updates, ERE plans to realize revenues when
completion of services have occurred, provided there is persuasive evidence of
an agreement, acceptance has been approved by its customers, the fee is fixed or
determinable based on the completion of stated terms and conditions, and
collection of any related receivable is probable.
INTERNAL WEBSITE DEVELOPMENT COSTS
Under Emerging Issues Taskforce Statement 00-2, ACCOUNTING FOR WEBSITE
DEVELOPMENT COSTS ("EITF 00-2"), costs and expenses incurred during the planning
and operating stages of the Company's website are expensed as incurred. Under
EITF 00-2, costs incurred in the website application and infrastructure
development stages are capitalized by the Company and amortized to expense over
the website's estimated useful life or period of benefit. As of October 31,
2009, and July 31, 2009, the Company had undertaken a project related to the
development of an internal-use website amounting to $5,950.
COSTS OF COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE
Under Statement of Position 98-1, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE
DEVELOPED OR OBTAINED FOR INTERNAL USE ("SOP 98-1"), the Company capitalizes
external direct costs of materials and services consumed in developing or
obtained internal-use computer software; payroll and payroll-related costs for
employees who are directly associated with and who devote time to the
internal-use computer software project; and, interest costs related to loans
incurred for the development of internal-use software. As of October 31, 2009,
and July 31, 2009, the Company had not undertaken any projects related to the
development of internal-use software.
8
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 31, 2009, and 2008
(Unaudited)
COSTS OF COMPUTER SOFTWARE TO BE SOLD OR OTHERWISE MARKETED
Under Statement of Financial Accounting Standards No. 86, ACCOUNTING FOR THE
COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED, OR OTHERWISE MARKETED ("SFAS No.
86"), the Company capitalizes costs associated with the development of certain
software products held for sale when technological feasibility is established.
Capitalized computer software costs of products held for sale are amortized over
the useful life of the products from the software release date. As of October
31, 2009, the Company had capitalized $5,950 (July 31, 2009 - $5,950) related to
its website software to be sold and recorded $3,967 (July 31, 2009 - $3,471) in
accumulated amortization.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company evaluates the recoverability of long-lived assets and the related
estimated remaining lives at each balance sheet date. ERE records an impairment
or change in useful life whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable or the useful life has changed.
For the three months ended October 31, 2009, and 2008, no events or
circumstances occurred for which an evaluation of the recoverability of
long-lived assets was required.
LOSS PER COMMON SHARE
Basic loss per share is computed by dividing the net loss attributable to the
common stockholders by the weighted average number of shares of common stock
outstanding during the period. Diluted loss per share is computed similar to
basic loss per share except that the denominator is increased to include the
number of additional common shares that would have been outstanding if the
potential common shares had been issued and if the additional common shares were
dilutive. There were no dilutive financial instruments issued or outstanding for
the three months ended October 31, 2009, and 2008.
DEFERRED OFFERING COSTS
The Company defers as other assets the direct incremental costs of raising
capital until such time as the offering is completed. At the time of the
completion of the offering, the costs are charged against the capital raised.
Should the offering be terminated, deferred offering costs are charged to
operations during the period in which the offering is terminated. As of July 31,
2008, ERE reclassified deferred offering costs of $13,500 to additional paid-in
capital.
9
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 31, 2009, and 2008
(Unaudited)
INCOME TAXES
Income taxes are provided in accordance with SFAS No. 109, "ACCOUNTING FOR
INCOME TAXES" ("SFAS No. 109"). Under SFAS No. 109, deferred tax assets and
liabilities are determined based on temporary differences between the bases of
certain assets and liabilities for income tax and financial reporting purposes.
The deferred tax assets and liabilities are classified according to the
financial statement classification of the assets and liabilities generating the
differences.
The Company maintains a valuation allowance with respect to deferred tax assets.
ERE establishes a valuation allowance based upon the potential likelihood of
realizing the deferred tax asset and taking into consideration the Company's
financial position and results of operations for the current period. Future
realization of the deferred tax benefit depends on the existence of sufficient
taxable income within the carryforward period under the Federal tax laws.
Changes in circumstances, such as the Company generating taxable income, could
cause a change in judgment about the realizability of the related deferred tax
asset. Any change in the valuation allowance will be included in income in the
year of the change in estimate.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company estimates the fair value of financial instruments using the
available market information and valuation methods. Considerable judgment is
required in estimating fair value. Accordingly, the estimates of fair value may
not be indicative of the amounts ERE could realize in a current market exchange.
As of October 31, 2009, and July 31, 2009, the carrying value of financial
instruments approximated fair value due to the short-term nature and maturity of
these instruments.
CONCENTRATION OF RISK
As of October 31, 2009, and July 31, 2009, the Company maintained its cash
account at one commercial bank. The balance in the account was subject to FDIC
coverage.
SUBSEQUENT EVENTS
The management of the Company performs a review and evaluation of subsequent
events following the end of each quarterly and annual financial period. For the
three-month period ended October 31, 2009, the review and evaluation of
subsequent events for proper accrual and disclosure was completed through
December 6, 2009, which was the date the financial statements were available to
be issued.
10
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 31, 2009, and 2008
(Unaudited)
ESTIMATES
The financial statements are prepared on the basis of accounting principles
generally accepted in the United States of America. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of October 31, 2009, and July 31, 2009, and expenses
for the three months ended October 31, 2009, and 2008, and cumulative from
inception. Actual results could differ from those estimates made by management.
(2) DEVELOPMENT STAGE ACTIVITIES AND GOING CONCERN
The Company is currently in the development stage and has engaged in limited
operations. Initial operations have included capital formation, organization,
target market identification, marketing plans, and software development. The
business plan of ERE is to specialize in providing sales tool solutions for the
real estate industry by developing and selling an online Content Management
System ("CMS") that enables real estate agents to easily build a website to
showcase their listings.
During the period from May 29, 2007, through October 31, 2009, the Company was
incorporated and issued 1,600,000 shares of common stock to its Director and
President for cash proceeds of $20,000. In addition, ERE commenced a capital
formation activity to effect a Registration Statement on Form SB-2 with the SEC,
and raised capital of $42,000 from a self-underwritten offering of 840,000
shares of newly issued common stock in the public markets. The Registration
Statement on Form SB-2 was filed with the SEC on November 9, 2007, and declared
effective on November 21, 2007. On January 24, 2008, ERE completed an offering
of its registered common stock as explained in Note 3. The Company also intends
to conduct additional capital formation activities through the issuance of its
common stock and to further conduct its operations.
While management of the Company believes that it will be successful in its
planned operating activities, there can be no assurance that ERE will be
successful in the development or sale of its planned CMS product, or related
services that will generate sufficient revenues to sustain the operations of the
Company.
The accompanying financial statements have been prepared in conformity with
accounting principals generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. The Company has
incurred an operating loss since inception and its cash resources are
insufficient to meet its planned business objectives. These and other factors
raise substantial doubt about the Company's ability to continue as a going
concern. The accompanying 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.
11
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 31, 2009, and 2008
(Unaudited)
(3) COMMON STOCK
The Company is authorized to issue 20,000,000 shares of $0.001 par value common
stock. All shares of common stock have equal voting rights, are non-assessable,
and have one vote per share. Voting rights are not cumulative and, therefore,
the holders of more than 50 percent of the common stock could, if they choose to
do so, elect all of the Directors of the Company.
On July 16, 2007, the Company issued 1,600,000 shares of its common stock to Mr.
Imperial for cash proceeds of $20,000. On July 17, 2007, Mr. Imperial was
elected to the Board of Directors, and became the President, Secretary, and
Treasurer of the Company.
In addition, in 2007, ERE commenced a capital formation activity to effect a
Registration Statement on Form SB-2 with the SEC, and raise capital of up to
$60,000 from a self-underwritten offering of 1,200,000 shares of newly issued
common stock at a price of $0.05 per share in the public markets. The
Registration Statement on Form SB-2 was filed with the SEC on November 9, 2007,
and declared effective on November 21, 2007. On January 24, 2008, the Company
completed and closed the offering by selling 840,000 shares, of the 1,200,000
registered shares, of its common stock, par value of $0.001 per share, at an
offering price of $0.05 per share for proceeds of $42,000.
(4) INCOME TAXES
The provision (benefit) for income taxes for the three months ended October 31,
2009, and 2008, was as follows (assuming a 15 percent effective income tax
rate):
Three Months Ended
October 31,
-----------------------------
2009 2008
-------- --------
Current Tax Provision:
Federal-
Taxable income $ -- $ --
-------- --------
Total current tax provision $ -- $ --
======== ========
Deferred Tax Provision:
Federal-
Loss carryforwards $ 535 $ 420
Change in valuation allowance (535) (420)
-------- --------
Total deferred tax provision $ -- $ --
======== ========
12
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 31, 2009, and 2008
(Unaudited)
ERE had deferred income tax assets as of October 31, 2009, and July 31, 2009, as
follows:
October 31, July 31,
2009 2009
-------- --------
Loss carryforwards $ 10,617 $ 10,082
Less - Valuation allowance (10,617) (10,082)
-------- --------
Total net deferred tax assets $ -- $ --
======== ========
The Company had net operating loss carryforwards for income tax reporting
purposes of $70,779 and $67,213 as of October 31, 2009, and July 31, 2009,
respectively that may be offset against future taxable income. The net operating
loss carryforwards begin to expire in the year 2027. Current tax laws limit the
amount of loss available to be offset against future taxable income when a
substantial change in ownership occurs or a change in the nature of the
business. Therefore, the amount available to offset future taxable income may be
limited.
No tax benefit has been reported in the financial statements for the realization
of loss carryforwards, as the Company believes there is high probability that
the carryforwards will not be utilized in the foreseeable future. Accordingly,
the potential tax benefits of the loss carryforwards are offset by a valuation
allowance of the same amount.
(5) RELATED PARTY TRANSACTIONS
As described in Note 3, on July 16, 2007, the Company issued 1,600,000 shares of
its common stock to Mr. Imperial for cash proceeds of $20,000. On July 17, 2007,
Mr. Imperial was elected to the Board of Directors, and became the President,
Secretary, and Treasurer of the Company.
On September 26, 2007, intellectual property rights were received from the
Director and president of ERE for $0 value. The Company received intellectual
property rights relating to the development of an online CMS software product
for the real estate industry.
As of October 31, 2009, there was a balance owed to a Director and officer of
the Company for a working capital loan in the amount of $13,985 (July 31,
2009-$9,985). The loan is non-interest bearing, unsecured, and has no specific
terms of repayment.
13
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 31, 2009, and 2008
(Unaudited)
(6) RECENT ACCOUNTING PRONOUNCEMENTS
In March 2008, the FASB issued FASB Statement No. 161, "DISCLOSURES ABOUT
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - AN AMENDMENT OF FASB STATEMENT
133" ("SFAS No. 161"). SFAS No. 161 enhances required disclosures regarding
derivatives and hedging activities, including enhanced disclosures regarding
how: (a) an entity uses derivative instruments; (b) derivative instruments and
related hedged items are accounted for under FASB No. 133, "ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES"; and (c) derivative instruments
and related hedged items affect an entity's financial position, financial
performance, and cash flows. Specifically, SFAS No. 161 requires:
- disclosure of the objectives for using derivative instruments in terms
of underlying risk and accounting designation;
- disclosure of the fair values of derivative instruments and their
gains and losses in a tabular format;
- disclosure of information about credit-risk-related contingent
features; and
- cross-reference from the derivative footnote to other footnotes in
which derivative-related information is disclosed.
SFAS No. 161 is effective for fiscal years and interim periods beginning after
November 15, 2008. Earlier application is encouraged. The management of ERE does
not expect the adoption of this pronouncement to have a material impact on its
financial statements.
In May 2008, the FASB issued FASB Statement No. 162, "THE HIERARCHY OF GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES" ("SFAS No. 162"). SFAS No. 162 is intended to
improve financial reporting by identifying a consistent framework, or hierarchy,
for selecting accounting principles to be used in preparing financial statements
that are presented in conformity with U.S. generally accepted accounting
principles ("GAAP") for nongovernmental entities.
Prior to the issuance of SFAS No. 162, GAAP hierarchy was defined in the
American Institute of Certified Public Accountants ("AICPA") Statement on
Auditing Standards, "THE MEANING OF PRESENT FAIRLY IN CONFORMITY WITH GENERALLY
ACCEPT ACCOUNTING Principles" ("SAS No. 69"). SAS No. 69 has been criticized
because it is directed to the auditor rather than the entity. SFAS No. 162
addresses these issues by establishing that the GAAP hierarchy should be
directed to entities because it is the entity (not the auditor) that is
responsible for selecting accounting principles for financial statements that
are presented in conformity with GAAP.
14
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 31, 2009, and 2008
(Unaudited)
The sources of accounting principles that are generally accepted are categorized
in descending order as follows:
a) FASB Statements of the Financial Accounting Standards Board and
Interpretations, FASB Statement No. 133 Implementation Issues, FASB
Staff Positions, and American Institute of Certified Public
Accountants (AICPA) Accounting Research Bulletins and Accounting
Principles Board Opinions that are not superseded by actions of the
FASB.
b) FASB Technical Bulletins and, if cleared by the FASB, AICPA Industry
Audit and Accounting Guides and Statements of Position.
c) AICPA Accounting Standards Executive Committee Practice Bulletins that
have been cleared by the FASB, consensus positions of the FASB
Emerging Issues Task Force (EITF), and the Topics discussed in
Appendix D of EITF Abstracts (EITF D-Topics).
d) Implementation guides (Q&As) published by the FASB staff, AICPA
Accounting Interpretations, AICPA Industry Audit and Accounting Guides
and Statements of Position not cleared by the FASB, and practices that
are widely recognized and prevalent either generally or in the
industry.
SFAS No. 162 is effective 60 days following the SEC's approval of the Public
Company Accounting Oversight Board amendment to its authoritative literature. It
is only effective for nongovernmental entities; therefore, the GAAP hierarchy
will remain in SAS No. 69 for state and local governmental entities and federal
governmental entities. The management of ERE does not expect the adoption of
this pronouncement to have a material impact on its financial statements.
In May 2008, the FASB issued FASB Statement No. 163, "ACCOUNTING FOR FINANCIAL
GUARANTEE INSURANCE CONTRACTS" ("SFAS No. 163"). SFAS No. 163 clarifies how FASB
Statement No. 60, "ACCOUNTING AND REPORTING BY INSURANCE ENTERPRISES" ("SFAS No.
60"), applies to financial guarantee insurance contracts issued by insurance
enterprises, including the recognition and measurement of premium revenue and
claim liabilities. It also requires expanded disclosures about financial
guarantee insurance contracts.
15
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 31, 2009, and 2008
(Unaudited)
The accounting and disclosure requirements of SFAS No. 163 are intended to
improve the comparability and quality of information provided to users of
financial statements by creating consistency. Diversity exists in practice in
accounting for financial guarantee insurance contracts by insurance enterprises
under SFAS No. 60, "ACCOUNTING AND REPORTING BY INSURANCE ENTERPRISES." That
diversity results in inconsistencies in the recognition and measurement of claim
liabilities because of differing views about when a loss has been incurred under
FASB Statement No. 5, "ACCOUNTING FOR CONTINGENCIES" ("SFAS No. 5"). SFAS No.
163 requires that an insurance enterprise recognize a claim liability prior to
an event of default when there is evidence that credit deterioration has
occurred in an insured financial obligation. It also requires disclosure about
(a) the risk-management activities used by an insurance enterprise to evaluate
credit deterioration in its insured financial obligations and (b) the insurance
enterprise's surveillance or watch list.
SFAS No. 163 is effective for financial statements issued for fiscal years
beginning after December 15, 2008, and all interim periods within those fiscal
years, except for disclosures about the insurance enterprise's risk-management
activities. Disclosures about the insurance enterprise's risk-management
activities are effective the first period beginning after issuance of SFAS No.
163. Except for those disclosures, earlier application is not permitted. The
management of ERE does not expect the adoption of this pronouncement to have
material impact on its financial statements.
On May 22, 2009, the FASB issued FASB Statement No. 164, "NOT-FOR-PROFIT
ENTITIES: MERGERS AND ACQUISITIONS" ("SFAS No. 164"). SFAS No. 164 is intended
to improve the relevance, representational faithfulness, and comparability of
the information that a not-for-profit entity provides in its financial reports
about a combination with one or more other not-for-profit entities, businesses,
or nonprofit activities. To accomplish that, this Statement establishes
principles and requirements for how a not-for-profit entity:
a. Determines whether a combination is a merger or an acquisition.
b. Applies the carryover method in accounting for a merger.
c. Applies the acquisition method in accounting for an acquisition,
including determining which of the combining entities is the acquirer.
d. Determines what information to disclose to enable users of financial
statements to evaluate the nature and financial effects of a merger or
an acquisition.
This Statement also improves the information a not-for-profit entity provides
about goodwill and other intangible assets after an acquisition by amending FASB
Statement No. 142, "GOODWILL AND OTHER INTANGIBLE ASSETS," to make it fully
applicable to not-for-profit entities.
16
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 31, 2009, and 2008
(Unaudited)
SFAS No. 164 is effective for mergers occurring on or after December 15, 2009,
and acquisitions for which the acquisition date is on or after the beginning of
the first annual reporting period beginning on or after December 15, 2009. Early
application is prohibited. The management of ERE does not expect the adoption of
this pronouncement to have material impact on its financial statements.
On May 28, 2009, the FASB issued FASB Statement No. 165, "SUBSEQUENT EVENTS"
("SFAS No. 165"). FASB No. 165 establishes general standards of accounting for
and disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. Specifically,
FASB No. 165 provides:
1. The period after the balance sheet date during which management of a
reporting entity should evaluate events or transactions that may occur
for potential recognition or disclosure in the financial statements.
2. The circumstances under which an entity should recognize events or
transactions occurring after the balance sheet date in its financial
statements.
3. The disclosures that an entity should make about events or
transactions that occurred after the balance sheet date.
In accordance with this Statement, an entity should apply the requirements to
interim or annual financial periods ending after June 15, 2009. The management
of ERE does not expect the adoption of this pronouncement to have material
impact on its financial statements.
On June 9, 2009, the FASB issued FASB Statement No. 166, "ACCOUNTING FOR
TRANSFERS OF FINANCIAL ASSETS- AN AMENDMENT OF FASB STATEMENT NO. 140" ("SFAS
No. 166"). SFAS No. 166 revises the derecognization provision of SFAS No. 140
"ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENT
OF LIABILITIES" and will require entities to provide more information about
sales of securitized financial assets and similar transactions, particularly if
the seller retains some risk with respect to the assets. It also eliminates the
concept
of a "qualifying special-purpose entity."
This statement is effective for financial asset transfers occurring after the
beginning of an entity's first fiscal year that begins after November 15, 2009.
The management of ERE does not expect the adoption of this pronouncement to have
a material impact on its financial statements.
In June 2009, the FASB issued FASB Statement 167 "AMENDMENTS TO FASB
INTERPRETATION NO. 46(R)" (SFAS No. 167"). SFAS No. 167 amends certain
requirements of FASB Interpretation No. 46(R), "CONSOLIDATION OF VARIABLE
INTEREST ENTITIES" to improve financial reporting by companies involved with
variable interest entities and to provide additional disclosures about the
involvement with variable interest entities and any significant changes in risk
exposure due to that involvement. A reporting entity will be required to
disclose how its involvement with a variable interest entity affects the
reporting entity's financial statements.
17
ERE MANAGEMENT, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
October 31, 2009, and 2008
(Unaudited)
This Statement shall be effective as of the beginning of each reporting entity's
first annual reporting period that begins after November 15, 2009. The
management of ERE does not expect the adoption of this pronouncement to have a
material impact on its financial statements.
In June 2009, the FASB issued FASB Statement No. 168, "THE FASB ACCOUNTING
STANDARDS CODIFICATION AND THE HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES - A REPLACEMENT OF FASB STATEMENT NO. 162" ("SFAS No. 168"). SFAS No.
168 establishes the FASB Accounting Standards Codification (the "Codification")
to become the single official source of authoritative, nongovernmental U.S.
generally accepted accounting principles (GAAP). The Codification did not change
GAAP, but reorganizes the literature.
SFAS No. 168 is effective for interim and annual periods ending after September
15, 2009. The management of ERE does not expect the adoption of this
pronouncement to have a material impact on its financial statements.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This Report on Form 10-Q contains forward-looking statements that involve risks
and uncertainties. You should not place undue reliance on these forward-looking
statements. Our actual results could differ materially from those anticipated in
the forward-looking statements for many reasons, including the risks described
in this report, our Registration Statement on Form SB-2 and other filings we
make from time to time with the Securities and Exchange Commission. Although we
believe the expectations reflected in the forward-looking statements are
reasonable, they relate only to events as of the date on which the statements
are made. We do not intend to update any of the forward-looking statements after
the date of this report to conform these statements to actual results or to
changes in our expectations, except as required by law.
This discussion and analysis should be read in conjunction with the unaudited
interim financial statements and notes thereto included in this Report and the
audited financials in our Annual Report on Form 10-KSB for the year ended July
31, 2009 filed with the Securities and Exchange Commission.
OVERVIEW
We are a development stage company with limited operations and no revenues from
our business activities. Our registered independent auditors have issued a going
concern opinion. This means that our registered independent auditors believe
there is substantial doubt that we can continue as an on-going business for the
next 12 months. We do not anticipate that we will generate significant revenues
until we have implemented our marketing plan to generate customers. Accordingly,
we must raise cash from sources other than our operations in order to implement
our marketing plan.
In our management's opinion, there is a need for software that allows real
estate agents with no technical knowledge to build websites and post their
listings and to maintain and update the websites with new product listings
easily and quickly. We are focused on developing such CMS software products and
offering them to independent and non-independent real estate agents.
As of January 24, 2008, we completed the sale of 840,000 shares of our common
stock pursuant to the terms of the SB-2 Registration Statement that went
effective on November 21, 2007, and we generated $42,000 in gross proceeds. We
believe that this capital formation activity will allow us to continue our
product development, market our software product, and remain in business until
the end of the 2009 fiscal year. If we are unable to generate revenues after the
12 months for any reason, or if we are unable to make a reasonable profit after
12 months, we may have to suspend or cease operations. At the present time, we
have not made any arrangements to raise additional cash. We may seek to obtain
additional funds through a second public offering, private placement of
securities, or loans. Other than as described in this paragraph, we have no
other financing plans at this time.
19
PLAN OF OPERATION
Our specific goal is to develop our software product and to execute our
marketing plan. Initially, we plan to commence marketing of our software product
via direct distribution channels. We have started to devise our marketing
strategy which we plan to begin to implement in the next fiscal quarter.
We will also distribute our software products through our website and
third-party websites that sell complementary software programs. Third-party
websites will be compensated via a commission for their sales.
RESULTS OF OPERATIONS
REVENUES
We had no revenues for the period from May 29, 2007 (date of inception), through
October 31, 2009.
EXPENSES
Our expenses for the three months ended October 31, 2009 and 2008, were $3,566
and $2,798, respectively, and for the period from May 29, 2007 (date of
inception), through October 31, 2009, were $70,779. These expenses were
comprised primarily of legal fees, transfer agent fees, accounting and audit
fees, filing fees, and consulting fees.
NET INCOME (LOSS)
Our net loss for the three months ended October 31, 2009 and 2008 was $3,566 and
$2,798, respectively. During the period from May 29, 2007 (date of inception),
through October 31, 2009, we incurred a net loss of $70,779. This loss consisted
primarily of legal fees, transfer agent fees, accounting and audit fees, filing
fees, and consulting fees.
PURCHASE OR SALE OF EQUIPMENT
We do not expect to purchase or sell any plant or significant equipment. We
anticipate to purchase some office equipment up to a maximum of $1,200.
LIQUIDITY AND CAPITAL RESOURCES
Our balance sheet as of October 31, 2009 reflects assets of $4,774 in the form
of cash and website development costs. Since inception, we have sold 2,440,000
shares of common stock with gross proceeds of $48,500. However, cash resources
provided from our capital formation activities have, from inception, been
insufficient to provide the working capital necessary to operate our Company.
20
We anticipate generating losses in the near term, and therefore, may be unable
to continue operations in the future. If we require additional capital, we would
have to issue debt or equity or enter into a strategic arrangement with a third
party. There can be no assurance that additional capital will be available to
us. We currently have no agreements, arrangements, or understandings with any
person to obtain funds through bank loans, lines of credit, or any other
sources.
GOING CONCERN CONSIDERATION
In their report on our financial statements as of July 31, 2009, our registered
independent auditors included a paragraph regarding our ability as a Company to
continue as a going concern. We have also included a note to the accompanying
unaudited financial statements as of October 31, 2009, that describes the
circumstances that pertain to this matter.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None
ITEM 4. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES:
Our management evaluated, with the participation of our Chief Executive Officer
and Chief Financial Officer, the effectiveness of the design and operation of
our disclosure controls and procedures as of the end of the period covered by
this quarterly report on Form 10-Q. Based on this evaluation, our Chief
Executive Officer and our Chief Financial Officer have concluded that our
disclosure controls and procedures are effective to ensure that information we
are required to disclose in reports that we file or submit under the Securities
Exchange Act of 1934 (i) is recorded, processed, summarized, and reported within
the time periods specified in Securities and Exchange Commission rules and
forms, and (ii) is accumulated and communicated to our management, including our
Chief Executive Officer and our Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure. Our disclosure controls
and procedures are designed to provide reasonable assurance that such
information is accumulated and communicated to our management. Our disclosure
controls and procedures include components of our internal control over
financial reporting. Management's assessment of the effectiveness of our
internal control over financial reporting is expressed at the level of
reasonable assurance that the control system, no matter how well designed and
operated, can provide only reasonable, but not absolute, assurance that the
control system's objectives will be met.
21
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING:
There were no changes in our internal control over financial reporting that
occurred during our last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We may be involved from time to time in ordinary litigation, negotiation, and
settlement matters that will not have a material effect on our operations or
finances. We are not aware of any pending or threatened litigation against us or
our officers and Directors in their capacity as such that could have a material
impact on our operations or finances.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS
Exhibit
Number Description
- ------ -----------
3.1 Articles of Incorporation (included as Exhibit 3.1 to the Form SB-2
filed November 9, 2007, and incorporated herein by reference).
3.2 Bylaws (included as Exhibit 3.2 to the Form SB-2 filed November 9,
2007, and incorporated herein by reference).
31.1 Certification of the Chief Executive and Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Officers pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
22
SIGNATURE
In accordance with the requirements of the Securities Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ERE MANAGEMENT INC
Date: December 15, 2009 By: /s/ Joselito Christopher G. Imperial
----------------------------------------------
Joselito Christopher G. Imperial
President and Chief Executive and
Chief Financial Officer
23