UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For quarterly period ended September 30, 2014
or
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Transition period from _______________ to ______________
Commission File Number: 0-13215
WARP 9, INC.
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(Exact name of registrant as specified in its charter)
NEVADA 30-0050402
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
1933 CLIFF DRIVE, SUITE 11, SANTA BARBARA, CA 93109
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(Address of principal executive offices) (Zip Code)
(805) 964-3313
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Registrant's telephone number, including area code
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the proceeding 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.
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Yes[_X_] No[__]
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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).
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Yes[_X_] No[__]
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Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check One).
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Large accelerated filer [___] Accelerated filer [___]
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Non-accelerated filer [___] Smaller reporting company [_X_]
(Do not check if a smaller
reporting company)
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Indicate by check mark whether the Registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
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Yes[__] No[_X_]
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
As of November 12, 2014, the number of shares outstanding of the registrant's
class of common stock was 105,790,195.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION PAGE
------------------------------ ------
Item 1. Consolidated Financial Statements 3
Consolidated Balance Sheets as of September 30, 2014
(unaudited) and June 30, 2014 3
Consolidated Statements of Operations for the Three months
ended September 30, 2014 and September 30, 2013 (unaudited) 4
Consolidated Statement of Shareholders' Equity/(Deficit)
for the Three Months ended September 30, 2014 (unaudited) 5
Consolidated Statements of Cash Flows for the Three Months
ended September 30, 2014 and September 30, 2013 (unaudited) 6
Notes to Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
Item 4. Controls and Procedures 17
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings 17
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 18
Item 4. Mine Safety Disclosures 18
Item 5. Other Information 18
Item 6. Exhibits 18
Signatures 20
-2-
PART I. - FINANCIAL INFORMATION
-------------------------------
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
WARP 9, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, 2014 June 30, 2014
------------------ -------------------
ASSETS
CURRENT ASSETS
Cash $ 18,536 $ 50,041
Accounts Receivable, net 83,322 101,393
Prepaid and Other Current Assets 3,798 5,440
------------------ -------------------
TOTAL CURRENT ASSETS 105,656 156,874
------------------ -------------------
PROPERTY & EQUIPMENT, at cost
Furniture, Fixtures & Equipment 10,533 10,533
Computer Equipment 26,337 23,982
Computer Software 1,904 1,904
------------------ -------------------
38,774 36,419
Less accumulated depreciation (25,182) (24,033)
------------------ -------------------
NET PROPERTY AND EQUIPMENT 13,592 12,386
------------------ -------------------
OTHER ASSETS
Lease Deposit 5,955 5,955
------------------ -------------------
TOTAL OTHER ASSETS 5,955 5,955
------------------ -------------------
TOTAL ASSETS $ 125,203 $ 175,215
================== ===================
LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
CURRENT LIABILITIES
Accounts Payable $ 74,462 $ 69,946
Accrued Expenses 75,562 134,611
Accrued Interest - 11,932
Deferred Income 18,896 3,300
Convertible Notes Payable, current, net 193,807 140,008
Derivative Liability 1,600,545 2,169,051
Note Payable, Other - 37,867
Customer Deposit 6,846 6,846
------------------ -------------------
TOTAL CURRENT LIABILITIES 1,970,118 2,573,561
------------------ -------------------
LONG TERM LIABILITIES
Convertible Notes Payable, net 67,157 10,528
Accrued Expenses, long term 221,103 222,153
------------------ -------------------
TOTAL LONG TERM LIABILITIES 288,260 232,681
------------------ -------------------
TOTAL LIABILITIES 2,258,378 2,806,242
------------------ -------------------
SHAREHOLDERS' EQUITY/(DEFICIT)
Preferred Stock, $0.001 Par Value;
5,000,000 Authorized Shares; no shares issued and outstanding - -
Common Stock, $0.001 Par Value;
495,000,000 Authorized Shares;
100,878,825 and 100,878,825 Shares Issued and Outstanding, respectively 100,879 100,879
Additional Paid In Capital 7,471,782 7,466,090
Accumulated Deficit (9,705,836) (10,197,996)
------------------ -------------------
TOTAL SHAREHOLDERS' EQUITY/(DEFICIT) (2,133,175) (2,631,027)
------------------ -------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT) $ 125,203 $ 175,215
================== ===================
The accompanying notes are an integral part of these consolidated financial statements.
-3-
WARP 9, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Quarter Ended
September 30, 2014 September 30, 2013
-------------------- ---------------------
REVENUE $ 114,781 $ 235,316
COST OF SERVICES 14,037 66,686
-------------------- ---------------------
GROSS PROFIT 100,744 168,630
-------------------- ---------------------
OPERATING EXPENSES
Selling, general and administrative expenses 309,723 252,919
Stock option expense 5,692 5,840
Depreciation and amortization 1,149 39,196
-------------------- ---------------------
TOTAL OPERATING EXPENSES 316,564 297,955
-------------------- ---------------------
LOSS FROM OPERATIONS BEFORE OTHER INCOME AND TAXES (215,820) (129,325)
-------------------- ---------------------
OTHER INCOME/(EXPENSE)
Other income - 5,000
Gain on sale of fixed assets - 420
Gain on extinguishment of debt 111,546 -
Gain on changes in derivative liability 708,506 -
Interest expense (110,472) (8,165)
-------------------- ---------------------
TOTAL OTHER INCOME (EXPENSE) 709,580 (2,745)
-------------------- ---------------------
EARNINGS/(LOSS) FROM OPERATIONS BEFORE PROVISION FOR TAXES 493,760 (132,070)
-------------------- ---------------------
PROVISION FOR INCOME TAXES
Income taxes paid (1,600) (2,753)
-------------------- ---------------------
PROVISION FOR INCOME TAXES (1,600) (2,753)
-------------------- ---------------------
NET INCOME/(LOSS) $ 492,160 $ (134,823)
==================== =====================
EARNINGS/(LOSS) PER SHARE
BASIC $ 0.00 $ (0.00)
==================== =====================
DILUTED $ 0.00 $ (0.00)
==================== =====================
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING
BASIC 100,878,825 96,135,126
==================== =====================
DILUTED 261,216,811 96,135,126
==================== =====================
The accompanying notes are an integral part of these consolidated financial statements.
-4-
WARP 9, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY/(DEFICIT)
(Unaudited)
Additional
Preferred Stock Common Stock Paid-in Accumulated
Shares Value Shares Value Capital Deficit Total
----------- ----------- -------------- ----------- -------------- ------------ --------------
Balance, June 30, 2013 - $ - 96,135,126 $ 96,135 $ 7,373,623 $(7,783,849) $ (314,091)
Stock compensation expense - - - - 22,986 - 22,986
Note conversion - - 4,743,699 4,744 14,231 - 18,975
Net loss - - - - - (2,414,147) (2,414,147)
Discount on Note - - - - 55,250 - 55,250
----------- ----------- -------------- ----------- -------------- ------------ --------------
Balance, June 30, 2014 - - 100,878,825 100,879 7,466,090 (10,197,996) (2,631,027)
Stock compensation expense (unaudited) - - - - 5,692 - 5,692
Net Income (unaudited) - - - - - 492,160 492,160
----------- ----------- -------------- ----------- -------------- ------------ --------------
Balance, September 30, 2014 (unaudited) - $ - 100,878,825 $ 100,879 $ 7,471,782 $(9,705,836) $ (2,133,175)
=========== =========== ============== =========== ============== ============ ==============
The accompanying notes are an integral part of these consolidated financial statements.
-5-
WARP 9, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Quarter Ended
September 30, 2014 September 30, 2013
------------------ ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss) $ 492,160 $ (134,823)
Adjustment to reconcile net loss to net cash
(used) by operating activities
Depreciation and amortization 1,149 39,196
Bad debt expense 3,781 -
Cost of stock compensation recognized 5,692 5,840
Amortization of debt discount 96,877 2,894
Gain on sale of fixed assets - (420)
Gain on settlement of debt (111,546) -
Gain on change in derivative liability (708,506) -
Change in assets and liabilities:
(Increase) Decrease in:
Accounts receivable 14,290 23,587
Prepaid and other assets 1,642 (8,221)
Other assets - (2,955)
Increase in:
Accounts payable 4,516 59,063
Accrued expenses 15,199 2,798
Deferred income 15,596 -
Other liabilities - 4,398
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NET CASH (USED) IN OPERATING ACTIVITIES (169,150) (8,643)
------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (2,355) (2,368)
Proceeds from sale of fixed assets - 420
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NET CASH (USED) IN INVESTING ACTIVITIES (2,355) (1,948)
------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable 140,000 35,000
------------------ ------------------
NET CASH PROVIDED IN FINANCING ACTIVITIES 140,000 35,000
------------------ ------------------
NET INCREASE/(DECREASE) IN CASH (31,505) 24,409
CASH, BEGINNING OF YEAR 50,041 12,636
------------------ ------------------
CASH, END OF QUARTER $ 18,536 $ 37,045
================== ==================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 44 $ 17
================== ==================
Taxes paid $ 1,600 $ 2,753
================== ==================
The accompanying notes are an integral part of these consolidated financial statements.
-6-
WARP 9, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
SEPTEMBER 30, 2014
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all normal recurring adjustments considered necessary for a fair
presentation have been included. Operating results for the three months
ended September 30, 2014 are not necessarily indicative of the results that
may be expected for the year ending June 30, 2015. For further information
refer to the financial statements and footnotes thereto included in the
Company's Form 10K for the year ended June 30, 2014.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of Warp 9, Inc. is
presented to assist in understanding the Company's financial statements.
The financial statements and notes are representations of the Company's
management, which is responsible for their integrity and objectivity. These
accounting policies conform to accounting principles generally accepted in
the United States of America and have been consistently applied in the
preparation of the financial statements.
The Consolidated Financial Statements include the Company and its
majority-owned subsidiary ("Warp 9, Inc., a Delaware corporation"). All
significant inter-company transactions are eliminated in consolidation.
ACCOUNTS RECEIVABLE
The Company extends credit to its customers, who are located nationwide.
Accounts receivable are customer obligations due under normal trade terms.
The Company performs continuing credit evaluations of its customers'
financial condition. Management reviews accounts receivable on a regular
basis, based on contracted terms and how recently payments have been
received to determine if any such amounts will potentially be uncollected.
The Company includes any balances that are determined to be uncollectible
in its allowance for doubtful accounts. After all attempts to collect a
receivable have failed, the receivable is written off. The balance of the
allowance account at September 30, 2014 and June 30, 2014 are $28,687 and
$24,907 respectively.
REVENUE RECOGNITION
The Company recognizes income when the service is provided or when product
is delivered. We present revenue, net of customer incentives. Most of the
income is generated from professional services and site development fees.
We provide online marketing services that we purchase from third parties.
The gross revenue presented in our statement of operations is in accordance
with ASC 605-45.
We also offer professional services such as development services. The fees
for development services with multiple deliverables constitute a separate
unit of accounting in accordance with ASC 605-25, which are recognized as
the work is performed.
Upfront fees for development services or other customer services are
deferred until certain implementation or contractual milestones have been
achieved. The deferred revenue as of September 30, 2014 and June 30, 2014
was $18,896 and $3,300, respectively.
For the quarter ended, September 30, 2014, monthly recurring fees for
mobile and desktop e-commerce development account for 29% of the Company's
total revenues, professional services account for 66% and the remaining 5%
of total revenues are from resale of third party products and services.
For the quarter ended, September 30, 2013, monthly recurring fees for
mobile and desktop e-commerce development account for 33% of the Company's
total revenues, professional services account for 65% and the remaining 2%
of total revenues are from resale of third party products and services.
STOCK-BASED COMPENSATION
The Company addressed the accounting for share-based payment transactions
in which an enterprise receives employee services in exchange for either
equity instruments of the enterprise or liabilities that are based on the
fair value of the enterprise's equity instruments or that may be settled by
the issuance of such equity instruments. The transactions are
-7-
WARP 9, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
SEPTEMBER 30, 2014
accounted for using a fair-value-based method and recognized as expenses in
our statement of income. There was no material impact on the Company's
financial statement of operations.
Stock-based compensation expense recognized during the period is based on
the value of the portion of stock-based payment awards that is ultimately
expected to vest. Stock-based compensation expense recognized in the
consolidated statement of operations during the quarter ended September 30,
2014, included compensation expense for the stock-based payment awards
granted prior to, but not yet vested, as of September 30, 2014 based on the
grant date fair value estimated. Stock-based compensation expense
recognized in the statement of operations for the quarter ended September
30, 2014 is based on awards ultimately expected to vest, or has been
reduced for estimated forfeitures. Forfeitures are estimated at the time of
grant and revised, if necessary, in subsequent periods if actual
forfeitures differ from those estimates. The stock-based compensation
expense recognized in the consolidated statements of operations during the
quarter ended September 30, 2014 and 2013 was $5,692 and $5,840,
respectively.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
Management reviewed accounting pronouncements issued during the three
months ended September 30, 2014, and no pronouncements were adopted during
the period.
3. LIQUIDITY AND OPERATIONS
The Company had net income of $492,160 and net loss of $134,823 for the
three months periods ended September 30, 2014 and 2013, respectively, and
net cash used in operating activities of $169,150 and $8,643 for the same
periods, respectively.
While Warp 9 expects that its capital needs in the foreseeable future may
be met by cash-on-hand and projected positive cash-flow, there is no
assurance that the Company will be able to generate enough positive cash
flow or have sufficient capital to finance its growth and business
operations, or that such capital will be available on terms that are
favorable to the Company or at all. In the current financial environment,
it could become difficult for the Company to obtain equipment leases and
other business financing. There is no assurance that Warp 9 would be able
to obtain additional working capital through the private placement of
common stock or from any other source.
GOING CONCERN
The accompanying financial statements have been prepared on a going concern
basis of accounting, which contemplates continuity of operations,
realization of assets and liabilities and commitments in the normal course
of business. The accompanying financial statements do not reflect any
adjustments that might result if the Company is unable to continue as a
going concern. The Company does not generate significant revenue, and has
negative cash flows from operations, which raise substantial doubt about
the Company's ability to continue as a going concern. The ability of the
Company to continue as a going concern and appropriateness of using the
going concern basis is dependent upon, among other things, an additional
cash infusion. The Company has obtained funds from its shareholders since
its inception through September 30, 2014. It is management's plan to
generate additional working capital from increasing sales from its desktop
and Warp 9 Mobile service offerings, and then continue to pursue its
business plan and purposes.
4. CONVERTIBLE NOTES PAYABLE
At June 30, 2007, the Company reclassified an accounts payable account to a
vendor in the amount of $154,429 to a note payable. The monthly payment on
the note is $3,342 per month and bears annual interest at the rate of 10%
per annum. At June 30, 2014, the outstanding principal and accrued interest
balance was $49,799. During the quarter ended September 30, 2014, the
Company wrote off $49,799 pertaining to this liability, due to the statute
of limitations having expired, and reported this amount as a gain on
extinguishment of debt.
On March 25, 2013, the Company entered into a convertible promissory note
(the "March 2013 Note") in the amount of $100,000, at which time an initial
advance of $50,000 was received to cover operational expenses. The lender
advanced an additional $20,000 on April 16, 2013, an additional $15,000 on
May 1, 2013 and an additional $15,000 on May 16, 2013, for a total draw of
$100,000. The terms of the March 2013 Note allow the lender to convert all
or part of the outstanding balance plus accrued interest, at any time after
the effective date, at a conversion price of the lower of (a) $0.015 per
share, or (b) 50% of the lowest trade price of Common Stock recorded on any
trade day after the effective date of the agreement. The March 2013 Note
bears interest at a rate of 10% per year and matures on September 25, 2015.
On May 23, 2014, the lender converted $17,000 of the $100,000 outstanding
balance and accrued interest of $1,975 into 4,743,699 shares of common
stock. On October 14, 2014, the lender converted $17,000 of the $83,000
outstanding balance and accrued interest of $2,645 into 4,911,370 shares of
common stock. The balance of the March 2013 Note, as of September 30, 2014
is $66,000.
-8-
WARP 9, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
SEPTEMBER 30, 2014
On May 16, 2013, the Company signed a convertible promissory note (the "May
2013 Note") in the amount of $100,000, at which time an initial advance of
$10,000 was received to cover operational expenses. The lender advanced an
additional $20,000 on June 3, 2013, an additional $25,000 on July 2, 2013,
an additional $10,000 on September 3, 2013 and an additional $35,000 on
February 18, 2014, for a total draw of $100,000. The terms of the May 2013
Note allow the lender to convert all or part of the outstanding balance
plus accrued interest, at any time after the effective date, at a
conversion price of the lower of (a) $0.015 per share, or (b) 50% of the
lowest trade price of Common Stock recorded on any trade day after the
effective date of the agreement. The Company recognized a discount on the
May 2013 Note in the amount of $20,000, due to the beneficial conversion
feature. This discount is being recognized over twelve months, beginning on
the date of each tranche payment. As of September 30, 2014, the Company
included $46,331 in interest expense related to the discount. The Company
recorded debt discount of $23,669 related to the conversion feature of the
May 2013 Note, along with derivative liabilities. The May 2013 Note bears
interest at a rate of 10% per year and matures on November 16, 2015.
On March 4, 2014, the Company entered into a convertible promissory note
(the "March 2014 Note") in the amount of $250,000, at which time an initial
advance of $25,000 was received to cover operational expenses. The lender
advanced an additional $20,000 on March 17, 2014 and an additional $30,000
on April 2, 2014, for a total draw of $75,000. The terms of the March 2014
Note allow the lender to convert all or part of the outstanding balance
plus accrued interest, at any time after the effective date, at a
conversion price of the lower of (a) $0.012 per share, or (b) 50% of the
lowest trade price of Common Stock recorded on any trade day after the
effective date of the agreement. The Company recorded a debt discount of
$59,506 related to the beneficial conversion feature of the March 2014
Note, along with derivative liabilities. This discount is recognized over
18 months, beginning on the date of each tranche payment. As of September
30, 2014, the Company included $15,494 in interest expense related to the
discount. The March 2014 Note bears interest at a rate of 10% per year and
matures 18 months from the effective date of each advance.
On April 16, 2014, the Company entered into a convertible promissory note
(the "April 2014 Note") in the amount of $300,000, at which time an initial
advance of $40,000 was received to cover operational expenses. The lender
advanced an additional $55,000 on April 30, 2014, an additional $40,000 on
May 16, 2014, an additional $40,000 on June 2, 2014 and an additional
$35,000 on June 30, 2014, for a total draw of $210,000. The terms of the
April 2014 Note allow the lender to convert all or part of the outstanding
balance plus accrued interest, at any time after the effective date, at a
conversion price of the lower of (a) $0.012 per share, or (b) 50% of the
lowest trade price of Common Stock recorded on any trade day after the
effective date of the agreement. The Company recorded a debt discount of
$251,994 related to the conversion feature of the April 2014 Note, along
with derivative liabilities. This discount is recognized over 18 months,
beginning on the date of each tranche payment. As of September 30, 2014,
the Company included $48,006 in interest expense related to the discount.
The April 2014 Note bears interest at a rate of 10% per year and matures 18
months from the effective date of each advance.
On September 5, 2014, the Company entered into a convertible promissory
note (the "September 2014 Note") in the amount of $250,000, at which time
an initial advance of $40,000 was received to cover operational expenses.
The lender advanced an additional $10,000 on September 17, 2014, an
additional $30,000 on October 1, 2014 and an additional $40,000 on October
16, 2014, for a total draw of $120,000. The terms of the September 2014
Note allow the lender to convert all or part of the outstanding balance
plus accrued interest, at any time after the effective date, at a
conversion price of the lower of (a) $0.015 per share, or (b) 50% of the
lowest trade price of Common Stock recorded on any trade day after the
effective date of the agreement. The Company recorded a debt discount of
$47,934 related to the conversion feature of the April 2014 Note, along
with derivative liabilities. As of September 30, 2014, the Company included
$2,066 in interest expense related to the discount. The September 2014 Note
bears interest at a rate of 10% per year and matures 18 months from the
effective date of each advance.
ASC Topic 815 provides guidance applicable to convertible debt issued by
the Company in instances where the number into which the debt can be
converted is not fixed. For example, when a convertible debt converts at a
discount to market based on the stock price on the date of conversion, ASC
Topic 815 requires that the embedded conversion option of the convertible
debt be bifurcated from the host contract and recorded at their fair value.
In accounting for derivatives under accounting standards, the Company
recorded a liability of $1,600,545 representing the estimated present value
of the conversion feature considering the historic volatility of the
Company's stock, and a discount of $383,104 representing the imputed
interest associated with the embedded derivative. The discount is amortized
over the life of the convertible debt, and the derivative liability is
adjusted periodically according to stock price fluctuations. At the time of
conversion, any remaining derivative liability will be charged to
additional paid-in capital.
-9-
WARP 9, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
SEPTEMBER 30, 2014
For purpose of determining the fair market value of the derivative
liability, the Company used Black Scholes option valuation model. The
significant assumptions used in the Black Scholes valuation of the
derivative are as follows:
Stock price on the valuation dates $ 0.0153
Conversion price for the debt $ 0.004 - 0.00555
Dividend yield 0%
Years to maturity 2 months - 18 months
Risk free rate 0.13% - 0.36%
Expected volatility 145.49% - 162.05%
Following is the five year maturity schedule for our convertible notes
payable:
Year ended June 30, Principle Discount Net Book Value
------------------- ---------- ---------- ---------------
2015 $ 100,000 $ (13,303) $ 86,697
2016 $ 508,000 $(333,733) $ 174,267
2017 $ - $ - $ -
2018 $ - $ - $ -
2019 $ - $ - $ -
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments, including cash and cash equivalents,
accounts receivable, accounts payable and accrued liabilities are carried
at cost, which approximates their fair value, due to the relatively short
maturity of these instruments. As of September 30, 2014 and 2013, the
Company's capital lease obligations and notes payable have stated borrowing
rates that are consistent with those currently available to the Company
and, accordingly, the Company believes the carrying value of these debt
instruments approximates their fair value.
Fair value is defined as the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. ASC Topic 820 established a
three-tier fair value hierarchy which prioritizes the inputs used in
measuring fair value. The hierarchy gives the highest priority to
unadjusted quoted prices in active markets for identical assets or
liabilities (level 1measurements) and the lowest priority to unobservable
inputs (level 3 measurements). These tiers include:
o Level 1, defined as observable inputs such as quoted prices for
identical instruments in active markets;
o Level 2, defined as inputs other than quoted prices in active markets
that are either directly or indirectly observable such as quoted
prices for similar instruments in active markets or quoted prices for
identical or similar instruments in markets that are not active; and
o Level 3, defined as unobservable inputs in which little or no market
data exists, therefore requiring an entity to develop its own
assumptions, such as valuations derived from valuation techniques in
which one or more significant inputs or significant value drivers are
unobservable.
We measure certain financial instruments at fair value on a recurring
basis. Assets and liabilities measured at fair value on a recurring basis
are as follows at September 30, 2014:
Total (Level 1) (Level 2) (Level 3)
----------- --------- --------- ----------
Assets $ - $ - $ - $ -
----------- --------- --------- ----------
Total assets measured at fair value $ - $ - $ - $ -
----------- --------- --------- ----------
Liabilities
Derivative liability 1,600,545 - - 1,600,545
Convertible notes, net of discount 260,964 - - 260,964
----------- --------- --------- ----------
Total liabilities measured at
fair value $ 1,861,509 $ - $ - $1,861,509
=========== ========= ========= ==========
-10-
WARP 9, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
SEPTEMBER 30, 2014
Assets and liabilities measured at fair value on a recurring basis are as
follows at September 30, 2013:
Total (Level 1) (Level 2) (Level 3)
----------- --------- --------- ----------
Assets $ - $ - $ - $ -
----------- --------- --------- ----------
Total assets measured at fair value $ - $ - $ - $ -
----------- --------- --------- ----------
Liabilities
Derivative liability - - - -
Convertible notes, net of discount 161,845 - - 161,845
----------- --------- --------- ----------
Total liabilities measured at
fair value $ 161,845 $ - $ - $ 161,845
=========== ========= ========= ==========
5. RELATED PARTIES
During the fiscal year ended June 30, 2012, the Company signed a licensing
agreement with PageTransformer, to obtain expertise in the area of mobile
app and mobile web development. This licensing agreement expired on June
30, 2014 and was not renewed. The two founders of PageTransformer, Andrew
VanNoy and Zachary Bartlett, are our current Chief Executive Officer and
our current Vice President of Operations, respectively. Other than the
original licensing fee paid to PageTransformer, the Company has not made
any subsequent payments to PageTransformer under the licensing agreement.
6. CAPITAL STOCK
At September 30, 2014 and 2013, the Company's authorized stock consists of
495,000,000 shares of common stock, par value $0.001 per share. The Company
is also authorized to issue 5,000,000 shares of preferred stock, par value
of $0.001 per share. The rights, preferences and privileges of the holders
of the preferred stock will be determined by the Board of Directors prior
to issuance of such shares. On May 23, 2014, the March 2013 Note holder
converted $17,000 out of the $100,000 balance along with accrued interest
of $1,975 into 4,743,699 shares of common stock. On October 14, 2014, the
March 2013 Note holder converted $17,000 of the $83,000 outstanding balance
and accrued interest of $2,645 into 4,911,370 shares of common stock. No
transactions effecting capital stock were noted during the quarter (or
three months) ended September 30, 2014.
7. STOCK OPTIONS AND WARRANTS
STOCK OPTIONS
Our 2003 Stock Option Plan for Directors, Officers, Employees and Key
Consultants (the "2003 Plan") authorizing the issuance of up to 5,000,000
shares of our common stock pursuant to the grant and exercise of up to
5,000,000 stock options terminated upon the expiration of the remaining
options granted under the 2003 Plan on May 24, 2014. In the future, we plan
to establish a new management stock option plan pursuant to which stock
options may be authorized and granted to our executive officers, directors,
employees and key consultants. We expect to authorize up to 10% of our
issued and outstanding Common Stock for future issuance under such plan.
The Plan has been approved by the holders of our outstanding shares. We
believe that stock option awards motivate our employees to work to improve
our business and stock price performance, thereby further linking the
interests of our senior management and our stockholders. The board
considers several factors in determining whether awards are granted to an
executive officer, including those previously described, as well as the
executive's position, his or her performance and responsibilities, and the
amount of options, if any, currently held by the officer and their vesting
schedule. Our policy prohibits backdating options or granting them
retroactively. As of June 30, 2014, no stock options granted under the Plan
remain outstanding and the Plan terminated. As of September 30, 2014,
13,000,000 stock options granted outside of the Plan are outstanding.
The weighted average remaining contractual life of options outstanding as
of September 30, 2014 was as follows:
-11-
WARP 9, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
SEPTEMBER 30, 2014
Weighted
Average
Number of remaining
Exercise options contractual
prices outstanding life (years)
------------------- --------------- ------------------
$ 0.005 12,500,000 4.87
$ 0.004 500,000 7.04
---------------
13,000,000
===============
A summary of the Company's stock option activity and related information
follows:
Quarter ended
September 30, 2014
--------------------------------
Weighted
average
exercise
Options price
----------------- --------------
Outstanding -beginning of period 13,000,000 $ 0.005
Granted - $ -
Exercised - $ -
Forfeited - $ 0.005
----------------- --------------
Outstanding - end of period 13,000,000 $ 0.005
================= ==============
Exercisable at the end of the period 9,252,511 $ 0.005
================= ==============
Weighted average fair value of
options granted during the year $ -
==============
WARRANTS
During the quarter ended September 30, 2014, the Company issued no warrants
for services. A summary of the Company's warrant activity and related
information follows:
Quarter Ended
September 30, 2014
----------------------------------
Weighted
Weighted Average
average remaining
exercise contractual
Warrants price life (years)
----------- --------- ------------
Outstanding/exercisable -
beginning of period 28,019,163 $ 0.003
Granted - -
Exercised - -
Forfeited - -
----------- --------- ------------
Outstanding/exercisable -
end of period 28,019,163 $ 0.003 1.52
=========== ========= ============
8. SUBSEQUENT EVENTS
Management has evaluated subsequent events according to the requirements of
ASC TOPIC 855, and has reported the following events:
On October 1, 2014, October 16, 2014 and October 31, 2014, the Company
received advances in the amounts of $30,000, $40,000 and $40,000,
respectively, on the September 2014 Note.
On October 14, 2014, the March 2013 Note holder converted $17,000 of the
$83,000 outstanding balance of the March 2013 Note, including accrued
interest of $2,645, into 4,911,370 shares of common stock.
-12-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
--------------------------------------------------------------------------------
CAUTIONARY STATEMENTS
This Form 10-Q contains financial projections and other
"forward-looking statements," as that term is used in federal securities laws,
about Warp 9, Inc.'s ("Warp 9," "we," "us," or the "Company") financial
condition, results of operations, and business. These statements include, among
others:
o statements concerning the potential for benefits that Warp 9
may experience from its business activities and certain
transactions it contemplates or has completed; and
o statements of Warp 9's expectations, future plans and
strategies, anticipated developments, and other matters that
are not historical facts. These statements may be made
expressly in this Form 10-Q. You can find many of these
statements by looking for words such as "believes," "expects,"
"anticipates," "estimates," or similar expressions used in
this Form 10-Q. These forward-looking statements are subject
to numerous assumptions, risks, and uncertainties that may
cause the Company's actual results to be materially different
from any future results expressed or implied by the Company in
those statements. The most important facts that could prevent
the Company from achieving its stated goals include, but are
not limited to, the following:
(a) volatility or decline of the Company's stock price;
(b) potential fluctuation in quarterly results;
(c) failure of the Company to earn revenues or profits;
(d) inadequate capital to continue or expand its
business, and inability to raise additional capital
or financing to implement its business plans;
(e) failure to further commercialize its technology or to
make sales;
(f) reduction in demand for the Company's products and
services;
(g) rapid and significant changes in markets;
(h) litigation with or legal claims and allegations by
outside parties;
(i) insufficient revenues to cover operating costs;
(j) aspects of the Company's business are not proprietary
and in general the Company is subject to inherent
competition;
(k) further dilution of existing shareholders' ownership
in Company;
(l) uncollectible accounts and the need to incur expenses
to collect amounts owed to the Company; and
(m) lack of an Audit Committee and a sufficient number of
independent directors.
There is no assurance that the Company will be profitable. The Company
may not be able to successfully develop, manage, or market its products and
services. The Company may not be able to attract or retain qualified executives
and technology personnel. The Company may not be able to obtain customers for
its products or services. The Company's products and services may become
obsolete. Government regulation may hinder the Company's business. Additional
dilution in outstanding stock ownership may be incurred due to the issuance of
more shares, warrants and stock options, the exercise of outstanding warrants
and stock options.
Because these statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by forward-looking
statements. The Company cautions you not to place undue reliance on these
statements, which speak only as of the date of this Form 10-Q. The cautionary
statements contained or referred to in this section should be considered in
connection with any subsequent written or oral forward-looking statements that
the Company or persons acting on its behalf may issue. The Company does not
undertake any obligation to review or confirm analysts' expectations or
-13-
estimates or to release publicly any revisions to any forward-looking statements
to reflect events or circumstances after the date of this Form 10-Q or to
reflect the occurrence of unanticipated events.
The following discussion should be read in conjunction with our
condensed consolidated financial statements and notes to those statements. In
addition to historical information, the following discussion and other parts of
this quarterly report contain forward-looking information that involves risks
and uncertainties.
CURRENT OVERVIEW
We are a provider of mobile and e-commerce solutions for midsize online
sellers in the retail and business to business ("B2B") industries. Our solutions
and services are designed to help multi-channel retailers maximize digital
commerce revenues by applying our technologies and solutions for mobile
e-commerce, desktop e-commerce, e-mail marketing, social media, and other
digital avenues. Offered as an outsourced and fully managed
Software-as-a-Service ("SaaS") model, our solutions allow customers to focus on
their core business, rather than technical implementations and software and
hardware architecture, design, and maintenance. We also offer professional
services to our clients which include graphic design, store management, new
feature development, promotion management, search engine optimization ("SEO"),
Social Media management, merchandizing, integration to third party payment
processing and fulfillment systems, analytics, custom reporting, and strategic
consultation.
We believe our products and services allow our clients to lower costs
and focus on promoting and marketing their brand, product line, and website
while leveraging the investments we have made in technology and infrastructure
to operate a dynamic digital presence.
Research and development efforts have been focused both on these new
products and on updating our current products with new features. In the planning
phase of these new features, we look to direct client feedback and feature
requests; we study the e-commerce landscape to determine features that will
provide our clients with a competitive advantage in producing greater and more
effective selling; and we also examine features that will create a competitive
advantage during our sales process to clients. Emerging and declining trends
also play a role in how clients perceive what features should be provided by
which vendors and we are sometimes able to capitalize on these opportunities by
bundling features for greater value and/or increased fees and revenue.
A significant portion of the Company's revenues are from monthly
recurring fees for mobile and desktop development. During the quarter ended
September 30, 2014, these products accounted for approximately 29% of our gross
revenue. During the quarter ended September 30, 2014, professional services
accounted for approximately 66% of our gross revenue.
CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our financial condition and results of
operations, including the discussion on liquidity and capital resources, are
based upon our financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities. On an ongoing basis,
management re-evaluates its estimates and judgments, particularly those related
to the determination of the estimated recoverable amounts of trade accounts
receivable, impairment of long-lived assets, revenue recognition, and deferred
tax assets. We believe the following critical accounting policies require more
significant judgment and estimates used in the preparation of the financial
statements.
We maintain an allowance for doubtful accounts for estimated losses
that may arise if any of our customers are unable to make required payments.
Management specifically analyzes the age of customer balances, historical bad
debt experience, customer credit-worthiness, and changes in customer payment
terms when making estimates of the uncollectability of our trade accounts
receivable balances. If we determine that the financial conditions of any of our
customers has deteriorated, whether due to customer specific or general economic
issues, increases in the allowance may be made. Accounts receivable are written
off when all collection attempts have failed.
We follow the provisions of ASC 605-10-25, that four conditions must be
met before revenue can be recognized: (i) there is persuasive evidence that an
arrangement exists, (ii) delivery has occurred or service has been rendered,
(iii) the price is fixed or determinable, and (iv) collection is reasonably
assured.
Income taxes are accounted for under the asset and liability method.
Under this method, to the extent that we believe that the deferred tax asset is
not likely to be recovered, a valuation allowance is provided. In making this
determination, we consider estimated future taxable income and taxable timing
differences expected in the future. Actual results may differ from those
estimates.
-14-
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments, including cash and cash equivalents,
accounts receivable, accounts payable and accrued liabilities are carried at
cost, which approximates their fair value, due to the relatively short maturity
of these instruments. As of September 30, 2014 and 2013, the Company's capital
lease obligations and notes payable have stated borrowing rates that are
consistent with those currently available to the Company and, accordingly, the
Company believes the carrying value of these debt instruments approximates their
fair value.
Fair value is defined as the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. ASC Topic 820 established a three-tier
fair value hierarchy which prioritizes the inputs used in measuring fair value.
The hierarchy gives the highest priority to unadjusted quoted prices in active
markets for identical assets or liabilities (level 1measurements) and the lowest
priority to unobservable inputs (level 3 measurements). These tiers include:
o Level 1, defined as observable inputs such as quoted prices
for identical instruments in active markets;
o Level 2, defined as inputs other than quoted prices in active
markets that are either directly or indirectly observable such
as quoted prices for similar instruments in active markets or
quoted prices for identical or similar instruments in markets
that are not active; and
o Level 3, defined as unobservable inputs in which little or no
market data exists, therefore requiring an entity to develop
its own assumptions, such as valuations derived from valuation
techniques in which one or more significant inputs or
significant value drivers are unobservable.
We measure certain financial instruments at fair value on a recurring
basis. Assets and liabilities measured at fair value on a recurring basis are as
follows at September 30, 2014:
Total (Level 1) (Level 2) (Level 3)
----------- --------- --------- ----------
Assets $ - $ - $ - $ -
----------- --------- --------- ----------
Total assets measured at fair value $ - $ - $ - $ -
----------- --------- --------- ----------
Liabilities
Derivative liability 1,600,545 - - 1,600,545
Convertible notes, net of discount 260,964 - - 260,964
----------- --------- --------- ----------
Total liabilities measured at
fair value $ 1,861,509 $ - $ - $1,861,509
=========== ========= ========= ==========
Assets and liabilities measured at fair value on a recurring basis are
as follows at September 30, 2013:
Total (Level 1) (Level 2) (Level 3)
----------- --------- --------- ----------
Assets $ - $ - $ - $ -
----------- --------- --------- ----------
Total assets measured at fair value $ - $ - $ - $ -
----------- --------- --------- ----------
Liabilities
Derivative liability - - - -
Convertible notes, net of discount 161,845 - - 161,845
----------- --------- --------- ----------
Total liabilities measured at
fair value $ 161,845 $ - $ - $ 161,845
=========== ========= ========= ==========
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2014, COMPARED TO
THE THREE MONTHS ENDED SEPTEMBER 30, 2013.
REVENUE
Total revenue for the three months ended September 30, 2014 decreased
by $120,535 to $114,781, compared to $235,316 for the three months ended
September 30, 2013. The decrease was primarily due to a decline of our mobile
website development revenue during the current period.
-15-
COST OF REVENUE
The cost of revenue for the three months ended September 30, 2014
decreased by $52,649 to $14,037, compared to $66,686 for the three months ended
September 30, 2013. The overall decrease was primarily due to a reduction in
revenue during the current period.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling, general, and administrative ("SG&A") expenses three months
ended September 30, 2014 increased $56,804 to $309,723, compared to $252,919 for
the three months ended September 30, 2013. The overall increase in SG&A expenses
was primarily due to an increase in salary expenses.
RESEARCH AND DEVELOPMENT
Research and development expenses for the three months ended September
30, 2014 and September 30, 2013 were both zero.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization expenses for the three months ended
September 30, 2014 decreased $38,047 to $1,149, compared to $39,196 for the
three months ended September 30, 2013. The decrease was due to the Company
decommissioning its data center and disposing of the data center equipment in
the prior period, some of which had not been fully depreciated.
OTHER INCOME AND EXPENSE
Total other income (expense) for the three months ended September 30,
2014 increased $712,325 to net other income of $709,580, compared to net other
expense of $2,745 for the three months ended September 30, 2013. The increase
was primarily due to gain on extinguishment of debt and gain on the changes in
derivative liability.
NET INCOME/(LOSS)
The consolidated net income for the three months ended September 30,
2014 was $492,160, compared to the consolidated net loss of ($134,823) for the
three months ended September 30, 2013. The increase in net income for the period
was primarily due to non-cash gains on extinguishment of debt and changes in
derivative liability.
LIQUIDITY AND CAPITAL RESOURCES
The Company had a net working capital deficit (i.e. the difference
between current assets and current liabilities) of ($1,864,462) at September 30,
2014 compared to a net working capital deficit of ($2,416,687) at June 30, 2014.
The decrease in net working capital deficit at September 30, 2014 was caused by
a decrease in derivative liability.
Cash flow used in operating activities was ($169,150) for the three
months ended September 30, 2014, compared to cash flow used in operating
activities of ($8,643) for the three months ended September 30, 2013. The
increase in cash flow used in operating activities of $160,507 was primarily due
to a gain on settlement of debt and a gain on changes in derivative liability,
partially offset by an increase in net income.
Cash flow used in investing activities was ($2,355) for the three
months ended September 30, 2014, compared to cash flow used in investment
activities of ($1,948) for the three months ended September 30, 2013. The
increase in cash flow provided in investing activities of $407 during the
current period, was primarily due to the purchase of computer equipment.
Cash flow provided in financing activities was $140,000 for the three
months ended September 30, 2014 as compared to $35,000 for the three months
ended September 30, 2013. The increase in cash flow provided in financing
activities of $105,000 was due to proceeds received by the Company from a
convertible promissory note.
While we expect that our capital needs in the foreseeable future will
be met by cash-on-hand and existing cash flow, there is no assurance that we
will generate any or sufficient positive cash flows, or have sufficient capital,
to finance our growth and business operations, or that such capital will be
available on terms that are favorable to us or at all. The Company has recently
been incurring operating losses and experiencing negative cash flow. In the
current financial environment, it could become difficult for the Company to
obtain business leases and other equipment financing. There is no assurance that
we would be able to obtain additional working capital through the private
-16-
placement of common stock or from any other source.
OFF-BALANCE SHEET ARRANGEMENTS
None.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------------------------------------------------------------------
Not Applicable.
ITEM 4. CONTROLS AND PROCEDURES
--------------------------------
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed by Warp 9 in the reports that
it files under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") is recorded, processed, summarized and reported within the time periods
specified in the rules and forms of the Securities and Exchange Commission.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed by an
issuer that it files under the Exchange Act is accumulated and communicated to
the issuer's management, including its principal executive officer and principal
financial officers, or persons performing similar functions as appropriate to
allow timely decisions regarding required disclosure. The Company's Chairman,
Chief Executive Officer, and Chief Financial Officer are responsible for
establishing and maintaining disclosure controls and procedures for the Company.
Management has evaluated the effectiveness of the Company's disclosure
controls and procedures as of September 30, 2014 (under the supervision and with
the participation of the Company's Chairman, Chief Executive Officer, and Chief
Financial Officer) pursuant to Rule 13a-15(e) under the Securities Exchange Act
of 1934, as amended. As part of such evaluation, management considered the
matters discussed below relating to internal control over financial reporting.
Based on this evaluation, the Company's Chairman, Chief Executive Officer, and
Chief Financial Officer have concluded that the Company's disclosure controls
and procedures are effective as of September 30, 2014.
INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company's management is responsible for establishing and
maintaining adequate internal control over financial reporting, (as defined in
Rule 13a-15(f) under the Securities Exchange Act of 1934). The Company's
internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes of accounting
principles generally accepted in the United States. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect
misstatements. Therefore, even those systems determined to be effective can
provide only reasonable assurance of achieving their control objectives.
Furthermore, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate due to change in
conditions, or the degree of compliance with the policies or procedures may
deteriorate. After evaluating the Company's internal controls over financial
reporting, the Company's Chairman, Chief Executive Officer, and Chief Financial
Officer have concluded that the internal controls over financial reporting are
effective as of September 30, 2014.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There have been no changes in the Company's internal control over
financial reporting that occurred during the Company's three month period ended
September 30, 2014 that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial reporting.
PART II. - OTHER INFORMATION
-----------------------------
ITEM 1. LEGAL PROCEEDINGS
--------------------------
There are no current legal proceedings as of this time.
The Company may file additional collection actions and be involved in
other litigation in the future.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
--------------------------------------------------------------------
None.
-17-
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
----------------------------------------
None.
ITEM 4. MINE SAFETY DISCLOSURES
--------------------------------
Not applicable.
ITEM 5. OTHER INFORMATION
--------------------------
None.
ITEM 6. EXHIBITS
-----------------
(a) Exhibits
EXHIBIT NO. DESCRIPTION
--------------------- -----------------------------------------------------------------------------------------
3.1 Articles of Incorporation (1)
3.2 Bylaws (1)
4.1 Specimen Certificate for Common Stock (1)
4.2 Non-Qualified Employee Stock Option Plan (2)
4.3 Convertible Debenture dated December 28, 2005 (3)
4.4 Form of $0.08 Warrant (3)
4.5 Form of $0.10 Warrant (3)
4.6 Form of $0.12 Warrant (3)
10.1 First Agreement and Plan of Reorganization between Latinocare Management Corporation, a
Nevada corporation, and Warp 9, Inc., a Delaware corporation (4)
10.2 Second Agreement and Plan of Reorganization between Latinocare Management Corporation, a
Nevada corporation, and Warp 9, Inc., a Delaware corporation (5)
10.3 Exchange Agreement and Representations for shareholders of Warp 9, Inc.(4)
10.4 Securities Purchase Agreement dated as of March 28, 2005 between Roaming
Messenger, Inc.
and Wings Fund, Inc.(6)
10.5 Periodic Equity Investment Agreement dated as of March 28, 2005 between Roaming
Messenger, Inc. and Wings Fund, Inc.(6)
10.6 Registration Rights Agreement dated as of March 28, 2005 between Roaming Messenger, Inc.
and Wings Fund, Inc.(6)
10.7 Securities Purchase Agreement dated December 28, 2005 between the Company and Cornell
Capital Partners LLP (3)
10.8 Investor Registration Rights Agreement dated December 28, 2005 (3)
10.9 Insider Pledge and Escrow Agreement dated December 28, 2005 by and among the Company,
Cornell and David Gonzalez as escrow agent (3)
10.10 Security Agreement dated December 28, 2005 by and between the Company and Cornell (3)
10.11 Escrow Agreement Dated December 28, 2005 by and among the Company, Cornell and David
Gonzalez, as Escrow Agent (3)
10.12 Irrevocable Transfer Agent Instructions (3)
10.13 Exclusive Technology License Agreement, dated September 18, 2006 (8)
10.14 Subscription Agreement with Zingerang Inc., dated September 18, 2006 (8)
10.15 Termination of License Agreement with Carbon Sciences, Inc., dated April 2, 2007 (9)
10.16 Completion of Securities Purchase Agreement dated December 28, 2005 between the Company
and Cornell Capital Partners LLP (10)
21.1 List of Subsidiaries (7)
31.1 Section 302 Certification
31.2 Section 302 Certification
32.1 Section 906 Certification
32.2 Section 906 Certification
EX-101.INS XBRL INSTANCE DOCUMENT*
EX-101.SCH XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT*
EX-101.CAL XBRL TAXONOMY EXTENSION CALCULATION LINKBASE*
EX-101.DEF XBRL TAXONOMY EXTENSION DEFINITION LINKBASE*
-18-
EX-101.LAB XBRL TAXONOMY EXTENSION LABELS LINKBASE*
EX-101.PRE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE*
-------------------
(1) Incorporated by reference from the exhibits included with the Company's
prior Report on Form 10-KSB filed with the Securities and Exchange
Commission, dated March 31, 2002.
(2) Incorporated by reference from the exhibits included in the Company's
Information Statement filed with the Securities and Exchange
Commission, dated August 1, 2003.
(3) Incorporated by reference from the exhibits included in the Company's
Current Report on Form 8-K filed with the Securities and Exchange
Commission on December 29, 2005.
(4) Incorporated by reference from the exhibits included with the Company's
prior Report on Form SC 14F1 filed with the Securities and Exchange
Commission, dated April 8, 2003.
(5) Incorporated by reference from the exhibits included with the Company's
prior Report on Form 8K filed with the Securities and Exchange
Commission, dated May 30, 2003.
(6) Incorporated by reference to exhibits filed with the Company's Current
Report on Form 8-K filed with the Securities and Exchange Commission
dated March 30, 2005.
(7) Incorporated by reference to the exhibits filed with the Company's
prior Annual Report on Form 10-KSB/A filed with the Securities and
Exchange Commission, dated October 12, 2007.
(8) Incorporated by reference to exhibits filed with the Company's Current
Report on Form 8-K filed with the Securities and Exchange Commission,
dated September 22, 2005.
(9) Incorporated by reference to exhibits filed with the Company's Current
Report on Form 8-K filed with the Securities and Exchange Commission,
dated May 8, 2007.
(10) Incorporated by reference to exhibits filed with the Company's Current
Report on Form 8-K filed with the Securities and Exchange Commission,
dated June 10, 2008.
* Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the interactive
data files on Exhibit 101 hereto are deemed not filed or part of a registration
statement or prospectus for purposes of Sections 11 or 12 of the Securities Act
of 1933, as amended, and otherwise are not subject to liability under those
sections.
-19-
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.
WARP 9, INC.
--------------------------------------
(Registrant)
Dated: November 12, 2014 By:/s/ Andrew Van Noy
---------------------------------------
Andrew Van Noy,
Chief Executive Officer and President
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
By: /s/ Andrew Van Noy Dated: November 12, 2014
-----------------------------------------------------
Andrew Van Noy, Chief Executive Officer and President
(Principal Executive Officer)
By: /s/ Gregory Boden Dated: November 12, 2014
-----------------------------------------------------
Gregory Boden, Chief Financial Officer
(Principal Financial/Accounting Officer)
-20-