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þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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IMMEDIATEK, INC.
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(Exact name of registrant as specified in its charter)
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Nevada
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86-0881193
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(State or other jurisdiction of incorporation or
organization)
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(IRS Employer Identification No.)
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3301 Airport Freeway, Suite 200
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Bedford, Texas
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76021
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(Address of principal executive offices)
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(Zip code)
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(888) 661-6565
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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)
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Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o (Do not check if a smaller reporting company)
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Smaller reporting company þ
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S-1
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·
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our inability to continue as a going concern;
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·
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our history of losses, which may continue;
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·
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our inability to utilize the funds received in a manner that is accretive;
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our inability to generate sufficient funds from operating activities to fund operations;
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difficulties in developing and marketing new products;
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our inability to prevent or minimize interruptions in our service and interruptions to customer data access, and any related impact on our reputation;
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our inability to retain existing recurring customers and attract new recurring customers;
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our inability to execute our growth and acquisition strategy;
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our dependence on third-party contractors, platforms, software, websites, and technologies used in the creation and maintenance of the FilesAnywhere service;
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our exploration and evaluation of a broad range of possible strategic alternatives; and
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general economic conditions.
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Immediatek, Inc.
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Unaudited Consolidated Balance Sheets
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June 30,
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December 31,
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||||||||
2014
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2013
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Current assets:
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|||||||||
Cash
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$ | 143,135 | $ | 324,171 | |||||
Accounts receivable, net
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394,200 | 148,979 | |||||||
Prepaid expenses and other current assets
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92,543 | 83,303 | |||||||
Total current assets
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629,878 | 556,453 | |||||||
Fixed assets, net
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606,267 | 695,901 | |||||||
Intangible assets, net
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628,364 | 755,662 | |||||||
Goodwill
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766,532 | 766,532 | |||||||
Other assets
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26,442 | 20,871 | |||||||
Total Assets | $ | 2,657,483 | $ | 2,795,419 | |||||
Current liabilities:
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Accounts payable
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$ | 297,374 | $ | 216,059 | |||||
Accrued liabilities
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128,072 | 135,791 | |||||||
Deferred revenue
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912,200 | 662,804 | |||||||
Total liabilities
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1,337,646 | 1,014,654 | |||||||
Preferred Stock:
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Series A convertible preferred stock (conditionally redeemable); $0.001 par value
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|||||||||
4,392,286 authorized, issued and outstanding; redemption/liquidation
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preference of $3,000,000
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3,000,000 | 3,000,000 | |||||||
Series B convertible preferred stock (conditionally redeemable); $0.001 par value
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69,726 authorized, issued and outstanding; redemption/liquidation
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preference of $500,000
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500,000 | 500,000 | |||||||
Stockholders' deficit:
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Common stock, $0.001 par value, 500,000,000 shares authorized, 15,865,641
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shares issued and outstanding
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15,865 | 15,865 | |||||||
Additional paid in capital
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5,376,772 | 5,355,772 | |||||||
Accumulated deficit
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(7,572,800 | ) | (7,090,872 | ) | |||||
Total stockholders' deficit
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(2,180,163 | ) | (1,719,235 | ) | |||||
Total Liabilities, Preferred Stock and Stockholders' Deficit
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$ | 2,657,483 | $ | 2,795,419 |
Immediatek, Inc.
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Unaudited Consolidated Statements of Operations
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For the Three Months Ended June 30,
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For the Six Months Ended June 30,
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2014
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2013
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2014
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2013
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Revenues
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$ | 824,119 | $ | 783,651 | $ | 1,571,996 | $ | 1,600,613 | ||||||||
Cost of revenues
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(280,764 | ) | (376,809 | ) | (581,129 | ) | (744,519 | ) | ||||||||
Gross margin
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543,355 | 406,842 | 990,867 | 856,094 | ||||||||||||
Expenses:
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Research and development
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190,317 | 223,562 | 372,710 | 440,022 | ||||||||||||
Sales and marketing
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176,681 | 300,161 | 379,181 | 533,080 | ||||||||||||
General and administrative
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267,289 | 265,965 | 533,376 | 477,988 | ||||||||||||
Non-cash consulting expense-related party
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10,500 | 10,500 | 21,000 | 21,000 | ||||||||||||
Depreciation and amortization
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80,377 | 81,715 | 161,165 | 163,252 | ||||||||||||
Total expenses
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725,164 | 881,903 | 1,467,432 | 1,635,342 | ||||||||||||
Net operating loss
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(181,809 | ) | (475,061 | ) | (476,565 | ) | (779,248 | ) | ||||||||
Other income:
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Litigation settlement income
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- | 633,334 | - | 633,334 | ||||||||||||
Other income
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796 | - | 796 | - | ||||||||||||
Interest income
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41 | 170 | 133 | 452 | ||||||||||||
Total other income
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837 | 633,504 | 929 | 633,786 | ||||||||||||
Income Tax Expense
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2,692 | - | 6,292 | - | ||||||||||||
Net Income (loss)
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$ | (183,664 | ) | $ | 158,443 | $ | (481,928 | ) | $ | (145,462 | ) | |||||
Weighted average number of common
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shares outstanding:
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Basic
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15,865,641 | 15,865,641 | 15,865,641 | 15,865,641 | ||||||||||||
Fully Diluted
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- | 30,660,640 | - | - | ||||||||||||
Income (loss) per common share
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attributable to common stockholders:
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Basic
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$ | (0.01 | ) | $ | 0.01 | $ | (0.03 | ) | $ | (0.01 | ) | |||||
Fully diluted
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$ | (0.01 | ) | $ | 0.01 | $ | (0.03 | ) | $ | (0.01 | ) |
Immediatek, Inc.
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Unaudited Consolidated Statements of Cash Flow
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For the Six Months Ended June 30,
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2014
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2013
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Cash flows from operating activities
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Net loss
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$ | (481,928 | ) | $ | (145,462 | ) | ||
Adjustments to reconcile net loss to net cash provided
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by (used in) operating activities:
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Depreciation and amortization
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247,406 | 238,329 | ||||||
Non-cash consulting fees - related party
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21,000 | 21,000 | ||||||
Changes in assets and liabilities:
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Accounts receivable
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(245,221 | ) | (63,749 | ) | ||||
Prepaid expenses and other assets
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(14,811 | ) | (8,640 | ) | ||||
Accounts payable
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81,315 | 91,013 | ||||||
Accrued liabilities
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(7,719 | ) | 18,924 | |||||
Deferred revenue
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249,396 | 159,466 | ||||||
Net cash provided by/(used in) operating activities
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(150,562 | ) | 310,881 | |||||
Cash flows from investing activities
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Purchase of fixed assets
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(30,474 | ) | (200,685 | ) | ||||
Net cash used in investing activities
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(30,474 | ) | (200,685 | ) | ||||
Net decrease in cash
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(181,036 | ) | 110,196 | |||||
Cash at the beginning of the period
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324,171 | 712,458 | ||||||
Cash at the end of the period
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$ | 143,135 | $ | 822,654 | ||||
Income taxes paid
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$ | 12,500 | $ | 15,338 |
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·
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Our Business – a general description of our business, our objectives, our areas of focus and the challenges and risks of our business.
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Critical Accounting Policies and Estimates – a discussion of accounting policies that require critical judgments and estimates.
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Operations Review – an analysis of our consolidated results of operations for the periods presented in this Quarterly Report on Form 10-Q.
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Liquidity, Capital Resources and Financial Position – an analysis of our cash flows and debt and contractual obligations; and an overview of our financial condition.
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For the Three Months Ended June 30,
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2014
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2013
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(unaudited)
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(unaudited)
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Net income (loss)
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$ | (183,664 | ) | $ | 158,443 | |||
Net cash provided by (used in) operating activities
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$ | (78,851 | ) | $ | 404,440 | |||
For the Six Months Ended June 30,
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2014 | 2013 | |||||||
(unaudited)
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(unaudited)
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Net loss
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$ | (481,928 | ) | $ | (145,462 | ) | ||
Net cash provided by (used in) operating activities
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$ | (150,562 | ) | $ | 310,881 |
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·
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Convertible Securities. From time to time, we have issued, and in the future may issue, convertible securities with beneficial conversion features. We account for these convertible securities in accordance with ASC Topic 470, Beneficial Conversion Feature.
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Revenue Recognition. Officeware generates revenue primarily from monthly fees for the services and products that it offers. While revenues for Officeware’s FilesAnywhere.com product are often received in advance of providing the applicable service, the Company defers recognizing such revenues until the service has been performed. Revenues for Officeware’s custom products for large enterprises are often received after such services are provided. The Company recognizes such revenues when service has been provided and collection is reasonably assured.
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Goodwill. We assess goodwill for potential impairments at the end of each fiscal year, or during the year if an event or other circumstance indicates that we may not be able to recover the carrying amount of the asset. In evaluating goodwill for impairment, we perform a two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment to be recognized, if any. In the first step of the review process, we compare the estimated fair value of the reporting unit with its carrying value. If the estimated fair value of the reporting unit exceeds its carrying amount, no further analysis is needed. If the estimated fair value of the reporting unit is less than its carrying amount, we proceed to the second step of the review process to calculate the implied fair value of the reporting unit goodwill in order to determine whether any impairment is required. We calculate the implied fair value of the reporting unit goodwill by allocating the estimated fair value of the reporting unit to all of the assets and liabilities of the reporting unit as if the reporting unit had been acquired in a business combination. If the carrying value of the reporting unit’s goodwill exceeds the implied fair value of the goodwill, we recognize an impairment loss for that excess amount. In allocating the estimated fair value of the reporting unit to all of the assets and liabilities of the reporting unit, we use industry and market data, as well as knowledge of the industry and our past experiences. We base our calculation of the estimated fair value of a reporting unit on the income approach. For the income approach, we use internally developed discounted cash flow models that include, among others, the following assumptions: projections of revenues and expenses and related cash flows based on assumed long-term growth rates and demand trends; and estimated discount rates. We base these assumptions on our historical data and experience, and our expectations.
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For the Three Months Ended June 30,
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2014 vs 2013
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2014
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2013
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Fav/(Unfav)
Variance
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% Variance
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Revenues
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$ | 824,119 | $ | 783,651 | $ | 40,468 | 5.16 | % | ||||||||
Cost of revenues
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(280,764 | ) | (376,809 | ) | 96,045 | 25.49 | % | |||||||||
Gross margin
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543,355 | 406,842 | 136,513 | 33.55 | % | |||||||||||
Expenses:
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Research and development
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190,317 | 223,562 | 33,245 | 14.87 | % | |||||||||||
Sales and marketing
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176,681 | 300,161 | 123,480 | 41.14 | % | |||||||||||
General and administrative
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267,289 | 265,965 | (1,324 | ) | (0.50 | %) | ||||||||||
Non-cash consulting expense-related party
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10,500 | 10,500 | - | - | ||||||||||||
Depreciation and amortization
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80,377 | 81,715 | 1,338 | 1.64 | % | |||||||||||
Total expenses
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725,164 | 881,903 | 156,739 | 17.77 | % | |||||||||||
Net operating income (loss)
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(181,809 | ) | (475,061 | ) | 293,252 | 61.73 | % | |||||||||
Other income:
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Litigation settlement income
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- | 633,334 | (633,334 | ) | (100.00 | %) | ||||||||||
Other income
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796 | - | 796 | 100.00 | % | |||||||||||
Interest income
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41 | 170 | (129 | ) | (75.88 | %) | ||||||||||
Total other income
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837 | 633,504 | (632,667 | ) | (99.87 | %) | ||||||||||
Income Tax Expense
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2,692 | - | (2,692 | ) | - | |||||||||||
Net income (loss)
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$ | (183,664 | ) | $ | 158,443 | $ | (342,107 | ) | (215.92 | %) |
For the Six Months Ended June 30,
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2014 vs 2013
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2014
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2013
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Fav/(Unfav)
Variance
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% Variance
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Revenues
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$ | 1,571,996 | $ | 1,600,613 | $ | (28,617 | ) | (1.79 | %) | |||||||
Cost of revenues
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(581,129 | ) | (744,519 | ) | 163,390 | 21.95 | % | |||||||||
Gross margin
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990,867 | 856,094 | 134,773 | 15.74 | % | |||||||||||
Expenses:
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Research and development
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372,710 | 440,022 | 67,312 | 15.30 | % | |||||||||||
Sales and marketing
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379,181 | 533,080 | 153,899 | 28.87 | % | |||||||||||
General and administrative
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533,376 | 477,988 | (55,388 | ) | (11.59 | %) | ||||||||||
Non-cash consulting expense-related party
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21,000 | 21,000 | - | - | ||||||||||||
Depreciation and amortization
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161,165 | 163,252 | 2,087 | 1.28 | % | |||||||||||
Total expenses
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1,467,432 | 1,635,342 | 167,910 | 10.27 | % | |||||||||||
Net operating loss
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(476,565 | ) | (779,248 | ) | 302,683 | 38.84 | % | |||||||||
Other income:
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Litigation settlement income
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- | 633,334 | (633,334 | ) | (100.00 | %) | ||||||||||
Other income
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796 | - | 796 | 100.00 | % | |||||||||||
Interest income
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133 | 452 | (319 | ) | (70.58 | %) | ||||||||||
Total other income
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929 | 633,786 | (632,857 | ) | (99.85 | %) | ||||||||||
Income Tax Expense
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6,292 | - | (6,292 | ) | - | |||||||||||
Net loss
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$ | (481,928 | ) | $ | (145,462 | ) | $ | (336,466 | ) | (231.31 | %) |
Legal Proceedings.
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Exhibit
Number
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Description of Exhibit
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3.1
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Amended and Restated Articles of Incorporation of the Registrant, dated as of June 2, 2006 and filed with the Secretary of State of the State of Nevada on June 5, 2006 (filed as Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-QSB for quarter ended March 31, 2006 (filed on June 26, 2006) and incorporated herein by reference).
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3.2
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Bylaws of the Registrant (filed as Exhibit 3.2 to the Registrant’s Annual Report on Form 10-KSB for year ended December 31, 2005 (filed on May 11, 2006) and incorporated herein by reference).
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4.1
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Form of common stock certificate of the Registrant (filed as Exhibit 4.1 to the Registrant’s Annual Report on Form 10-KSB for year ended December 31, 2005 (filed on May 11, 2006) and incorporated herein by reference).
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4.2
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Amended and Restated Certificate of Designation, Rights and Preferences of Series A Convertible Preferred Stock of the Registrant, dated as of October 13, 2009 and filed with the Secretary of State of the State of Nevada on October 15, 2009 (filed as Exhibit 4.1 to the Registrant’s Form 8-K (filed on October 19, 2009) and incorporated herein by reference).
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4.3
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Form of stock certificate for Series A Convertible Preferred Stock (filed as Exhibit 4.8 to the Registrant’s Quarterly Report on Form 10-QSB for quarter ended March 31, 2006 (filed on June 26, 2006) and incorporated herein by reference).
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4.4
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Amended and Restated Certificate of Designation, Rights and Preferences of Series B Convertible Preferred Stock of the Registrant, dated as of October 13, 2009 and filed with the Secretary of State of the State of Nevada on October 15, 2009 (filed as Exhibit 4.2 to the Registrant’s Form 8-K (filed on October 19, 2009) and incorporated herein by reference).
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4.5
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Form of stock certificate for Series B Convertible Preferred Stock (filed as Exhibit 4.5 to the Registrant’s Annual Report on Form 10-K for year ended December 31, 2008 (filed on March 31, 2009) and incorporated herein by reference).
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10.1*+
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Software Reseller and License Agreement, dated as of June 24, 2014, by and between Officeware Corporation and Konica Minolta Business Solutions U.S.A., Inc.
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31.1*
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Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
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Exhibit
Number
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Description of Exhibit
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31.2*
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Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
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32.1*
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Certification Required by 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).
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32.2*
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Certification Required by 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).
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101*
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XBRL data files of Financial Statements and Notes contained in this Quarterly Report on Form 10-Q.
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*
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Indicates document filed herewith.
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+
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Indicates confidential information has been omitted from this document and has been filed separately with the SEC pursuant to a confidential treatment request under Rule 24b-2.
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Date: August 14, 2014
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IMMEDIATEK, INC., | ||
a Nevada corporation | |||
By: | /s/ Timothy M. Rice | ||
Name: | Timothy M. Rice | ||
Title: | Chief Executive Officer and President | ||
(On behalf of the Registrant and as Principal
Executive Officer)
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Date: August 14, 2014
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|||
By: | /s/ Timothy McCrory | ||
Name: | Timothy McCrory | ||
Title: | Chief Financial Officer | ||
(On behalf of the Registrant and as Principal
Financial Officer)
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Exhibit
Number
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Description of Exhibit
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3.1
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Amended and Restated Articles of Incorporation of the Registrant, dated as of June 2, 2006 and filed with the Secretary of State of the State of Nevada on June 5, 2006 (filed as Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-QSB for quarter ended March 31, 2006 (filed on June 26, 2006) and incorporated herein by reference).
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3.2
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Bylaws of the Registrant (filed as Exhibit 3.2 to the Registrant’s Annual Report on Form 10-KSB for year ended December 31, 2005 (filed on May 11, 2006) and incorporated herein by reference).
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4.1
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Form of common stock certificate of the Registrant (filed as Exhibit 4.1 to the Registrant’s Annual Report on Form 10-KSB for year ended December 31, 2005 (filed on May 11, 2006) and incorporated herein by reference).
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4.2
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Amended and Restated Certificate of Designation, Rights and Preferences of Series A Convertible Preferred Stock of the Registrant, dated as of October 13, 2009 and filed with the Secretary of State of the State of Nevada on October 15, 2009 (filed as Exhibit 4.1 to the Registrant’s Form 8-K (filed on October 19, 2009) and incorporated herein by reference).
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4.3
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Form of stock certificate for Series A Convertible Preferred Stock (filed as Exhibit 4.8 to the Registrant’s Quarterly Report on Form 10-QSB for quarter ended March 31, 2006 (filed on June 26, 2006) and incorporated herein by reference).
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4.4
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Amended and Restated Certificate of Designation, Rights and Preferences of Series B Convertible Preferred Stock of the Registrant, dated as of October 13, 2009 and filed with the Secretary of State of the State of Nevada on October 15, 2009 (filed as Exhibit 4.2 to the Registrant’s Form 8-K (filed on October 19, 2009) and incorporated herein by reference).
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4.5
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Form of stock certificate for Series B Convertible Preferred Stock (filed as Exhibit 4.5 to the Registrant’s Annual Report on Form 10-K for year ended December 31, 2008 (filed on March 31, 2009) and incorporated herein by reference).
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10.1*+
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Software Reseller and License Agreement, dated as of June 24, 2014, by and between Officeware Corporation and Konica Minolta Business Solutions U.S.A., Inc.
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31.1*
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Certification of Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
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31.2*
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Certification of Principal Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act.
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32.1*
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Certification Required by 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).
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32.2*
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Certification Required by 18 U.S.C. Section 1350 (as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).
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101*
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XBRL data files of Financial Statements and Notes contained in this Quarterly Report on Form 10-Q.
|
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*
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Indicates document filed herewith.
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|
+
|
Indicates confidential information has been omitted from this document and has been filed separately with the SEC pursuant to a confidential treatment request under Rule 24b-2.
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