Unassociated Document
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
-----------------------------------------
FORM
10-QSB
-----------------------------------------
x
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
|
|
FOR
THE QUARTERLY PERIOD ENDED September 30, 2007
|
|
|
|
|
o
|
TRANSITION REPORT
UNDER 13 OR 15(D) OF THE EXCHANGE ACT
|
|
FOR
THE QUARTERLY PERIOD FROM _____ TO
_________.
|
|
|
|
|
|
|
Commission
File # 000-52404
VALUERICH,
INC.
(Exact
name of registrant as specified in its charter)
Delaware
|
41-2102385
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification Number)
|
1804
N.
Dixie Highway, Suite A
West
Palm
Beach, Florida 33407
(ADDRESS
OF PRINCIPAL EXECUTIVE OFFICES)
(561)
832-8878
(ISSUER
TELEPHONE NUMBER)
Securities
registered pursuant to Section 12(b) of the Act: None
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
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements
for
the past 90 days.
Yes x
No o
Indicate
by check mark whether the registrant is a shell company as defined in Rule
12b-2
of the Exchange Act.
Yes
o
No x
Number
of
shares of the registrant's common stock outstanding as of November 14, 2007 is:
8,151,539
1
SAFE
HARBOR STATEMENT
This
Quarterly Report on Form 10-QSB contains forward- looking statements within
the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Discussions
containing such forward- looking statements may be found in Item 2 hereof,
as
well as in this Report generally. In addition, when used in this
Report, the words “believes,” “anticipates,” “expects,” “estimates,” “plans,”
“intends, “ and similar expressions are intended to identify forward-looking
statements. All forward- looking statements are subject to a number
of risks and uncertainties that could cause actual results to differ materially
form projected results.
2
Table
of Contents
|
|
Page
|
|
|
|
PART
I
|
FINANCIAL
INFORMATION
|
|
|
|
|
ITEM
1.
|
FINANCIAL
STATEMENTS
|
|
|
· Unaudited
Condensed Balance Sheets as of September 30, 2007
|
|
|
· Unaudited Condensed
Statement of Operations for the Three Months Ended September 30,
2007 and
2006
|
|
|
· Unaudited Condensed
Statement of Operations for the Nine Months Ended September 30, 2007
and
2006
|
|
|
· Unaudited
Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended
September
30, 2007 and 2006
|
|
|
|
|
ITEM
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
|
|
|
|
ITEM
3.
|
CONTROLS
AND PROCEDURES
|
|
|
|
|
|
|
|
PART
II
|
OTHER
INFORMATION
|
|
|
|
|
ITEM
1.
|
LEGAL
PROCEEDINGS
|
|
|
|
|
ITEM
1A.
|
RISK
FACTORS
|
|
|
|
|
ITEM
2.
|
UNREGISTERED
SALES OF SECURITIES AND USE OF PROCEEDS
|
|
|
|
|
ITEM
5.
|
OTHER
INFORMATION
|
|
|
|
|
|
EXHIBITS
|
|
|
|
|
|
FORM
10-QSB SIGNATURE PAGE
|
|
3
ITEM
1. FINANCIAL STATEMENTS
VALUERICH,
INC.
1.
|
Unaudited
Condensed Balance Sheets as of September 30,
2007
|
3.
|
Unaudited
Condensed Consolidated Statements of Cash Flows for the Nine Months
Ended
September 30, 2007.
|
4
VALUERICH,
INC.
|
Consolidated
Balance Sheet
|
|
|
September 30,2007
|
|
ASSETS
|
|
(Unaudited)
|
|
CURRENT
ASSETS
|
|
|
|
Cash
|
|
|
4,079,171
|
|
Accounts
receivable
|
|
|
42,554
|
|
Pre-paid
Expenses
|
|
|
41,662
|
|
Deferred
Financing Cost
|
|
|
10,476
|
|
Total
Current Assets
|
|
|
4,173,863
|
|
|
|
|
|
|
FIXED
ASSETS
|
|
|
|
|
Fixed
Assets, at cost
|
|
|
106,459
|
|
Accumulated
depreciation
|
|
|
(62,960 |
) |
Net
Fixed Assets
|
|
|
43,500
|
|
TOTAL
ASSETS
|
|
|
4,217,363
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ DEFICIT
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
|
79,163
|
|
Deferred
Revenue
|
|
|
249,493
|
|
Shareholder
Notes Payable – current portion
|
|
|
70,000
|
|
Convertible
Notes Payable – current portion
|
|
|
50,000
|
|
Total
Current Liabilities
|
|
|
448,657
|
|
Convertible
Shareholders’ Notes Payable
|
|
|
9,500
|
|
Total
Long Term Debt
|
|
|
9,500
|
|
Total
Liabilities
|
|
|
458,157
|
|
|
|
|
|
|
STOCKHOLDERS’
DEFICIT
|
|
|
|
|
Common
stock, 100,000,000 shares authorized of $0.01 par value, 8,151,539
shares
issued and outstanding.
|
|
|
81,515
|
|
Capital
in excess of par value
|
|
|
7,032,071
|
|
Accumulated
Deficit
|
|
|
(3,354,380 |
) |
Total
Stockholders’ Equity
|
|
|
3,759,207
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
4,217,363
|
|
5
ValueRich,
Inc.
|
Consolidated
Statements of Operations
|
(Unaudited)
|
|
|
For
the Three Months Ended
|
|
|
For
the Nine Months Ended
|
|
|
|
September
30,
|
|
|
September
30,
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
REVENUE
|
|
|
|
|
|
|
|
|
|
|
|
|
Expos,
net
|
|
|
—
|
|
|
|
—
|
|
|
|
573,394
|
|
|
|
437,508
|
|
Magazines,
net
|
|
|
—
|
|
|
|
94,988
|
|
|
|
318,223
|
|
|
|
192,944
|
|
|
|
|
—
|
|
|
|
94,988
|
|
|
|
891,617
|
|
|
|
630,452
|
|
COST
OF SALES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expos
|
|
|
27,075
|
|
|
|
—
|
|
|
|
534,083
|
|
|
|
357,951
|
|
Magazines
|
|
|
13,804
|
|
|
|
32,127
|
|
|
|
143,975
|
|
|
|
104,103
|
|
|
|
|
40,879
|
|
|
|
32,127
|
|
|
|
678,058
|
|
|
|
462,054
|
|
GROSS
PROFIT
|
|
|
(40,879 |
) |
|
|
62,861
|
|
|
|
213,559
|
|
|
|
168,398
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
& Marketing
|
|
|
4,265
|
|
|
|
1,463
|
|
|
|
19,048
|
|
|
|
24,021
|
|
Staffing
Costs
|
|
|
577,907
|
|
|
|
205,356
|
|
|
|
1,027,391
|
|
|
|
482,618
|
|
Office
Expenses
|
|
|
68,090
|
|
|
|
53,736
|
|
|
|
195,548
|
|
|
|
173,910
|
|
Professional
Fees
|
|
|
334,013
|
|
|
|
24,865
|
|
|
|
375,237
|
|
|
|
103,053
|
|
Stock
Issued Late to Founder/Employees
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
140,000
|
|
Financing
Cost
|
|
|
786
|
|
|
|
—
|
|
|
|
15,032
|
|
|
|
67,519
|
|
Depreciation
Expense
|
|
|
6,158
|
|
|
|
4,995
|
|
|
|
16,931
|
|
|
|
13,780
|
|
|
|
|
991,219
|
|
|
|
290,415
|
|
|
|
1,649,187
|
|
|
|
1,004,901
|
|
NET
OPERATING INCOME (LOSS)
|
|
|
(1,032,098 |
) |
|
|
(227,554 |
) |
|
|
(1,435,628 |
) |
|
|
(836,503 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
Expense
|
|
|
(14,869 |
) |
|
|
(5,075 |
) |
|
|
2,393
|
|
|
|
3,096
|
|
Other
Income (Expense)
|
|
|
—
|
|
|
|
900
|
|
|
|
1,687
|
|
|
|
(32,541 |
) |
|
|
|
(14,869 |
) |
|
|
(4,175 |
) |
|
|
4,080
|
|
|
|
(29,445 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
PROFIT/(LOSS) BEFORE INCOME TAX
|
|
|
(1,017,229 |
) |
|
|
(223,379 |
) |
|
|
(1,439,708 |
) |
|
|
(807,058 |
) |
Income
tax
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
NET
PROFIT/(LOSS)
|
|
|
(1,017,229 |
) |
|
|
(223,379 |
) |
|
|
(1,439,708 |
) |
|
|
(807,058 |
) |
BASIC
LOSS PER COMMON SHARE
|
|
|
(0.12 |
) |
|
|
(0.05 |
) |
|
|
(0.18 |
) |
|
|
(0.17 |
) |
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
|
|
|
8,151,539
|
|
|
|
4,616,936
|
|
|
|
8,151,539
|
|
|
|
4,616,936
|
|
ValueRich,
Inc
|
Consolidated
Statements of Cash Flows
|
|
|
For
the Nine Months Ended
|
|
|
|
September
30,
|
|
|
|
(Unaudited)
|
|
|
|
2007
|
|
|
2006
|
|
CASH
FLOWS FROM OPERATING
ACTIVITIES:
|
|
|
|
|
|
|
Net
Income/Loss
|
|
|
-1,439,713
|
|
|
|
-807,060
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
14,753
|
|
|
|
13,780
|
|
Bad
Debt Expense
|
|
|
-20,000
|
|
|
|
20,000
|
|
(Gain)
Loss on Disposition of Fixed Assets
|
|
|
1,634
|
|
|
|
—
|
|
Non-Cash
Stock Issuance
|
|
|
14,246
|
|
|
|
207,519
|
|
Accrued
Interest Converted To Notes Payable
|
|
|
—
|
|
|
|
—
|
|
Changes
in operating assets and liabilities:
|
|
|
—
|
|
|
|
—
|
|
(Increase)
Decrease in accounts receivable
|
|
|
-1,269
|
|
|
|
-59,464
|
|
(Increase)
decrease in prepaid expenses
|
|
|
-35,129
|
|
|
|
-213,511
|
|
Increase
(decrease) in accounts payable and accrued expenses
|
|
|
-86,645
|
|
|
|
-39,331
|
|
Increase
(decrease) in deferred revenue
|
|
|
168,913
|
|
|
|
313,601
|
|
Net
Cash Used in Operating Activities
|
|
|
-1,383,209
|
|
|
|
-564,466
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase
of Fixed Assets
|
|
|
-977
|
|
|
|
-27,965
|
|
Net
Cash Used in Investing Activities
|
|
|
-977
|
|
|
|
-27,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds
from Stock Issuances
|
|
|
5,009,101
|
|
|
|
1,676,654
|
|
Proceeds
from notes payable
|
|
|
—
|
|
|
|
352,800
|
|
Repayments
of notes payable
|
|
|
—
|
|
|
|
—
|
|
Repayments
of shareholder notes payable
|
|
|
(425,642 |
) |
|
|
(113,858 |
) |
Proceeds
from convertible shareholders’ notes payable
|
|
|
—
|
|
|
|
(32,500 |
) |
Proceeds
from convertible notes payable
|
|
|
—
|
|
|
|
(237,500 |
) |
Officer
advances (payments), net
|
|
|
-62,167
|
|
|
|
-934
|
|
Net
Cash Provided by Financing Activities
|
|
|
4,521,292
|
|
|
|
1,644,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCREASE (DECREASE) IN CASH
|
|
|
3,137,106
|
|
|
|
1,052,231
|
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
|
942,066
|
|
|
|
218,058
|
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
|
|
4,079,172
|
|
|
|
1,270,289
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
Cash
Paid For:
|
|
|
|
|
|
|
|
|
Interest
|
|
|
42,449
|
|
|
|
20,853
|
|
Income
taxes
|
|
|
—
|
|
|
|
—
|
|
Non-Cash
Financing Activities:
|
|
|
—
|
|
|
|
—
|
|
Conversion
of convertible shareholders’ notes payable
|
|
|
—
|
|
|
|
—
|
|
Conversion
of convertible notes payable
|
|
|
—
|
|
|
|
—
|
|
Non-Cash
Stock Issuance
|
|
|
14,246
|
|
|
|
207,519
|
|
7
ValueRich,
Inc
|
Consolidated
Statements of Cash Flows
|
|
|
For
the Nine Months Ended
|
|
|
|
September
30,
|
|
|
|
(Unaudited)
|
|
|
|
2007
|
|
|
2006
|
|
CASH
FLOWS FROM OPERATING
ACTIVITIES:
|
|
|
|
|
|
|
Net
Income/Loss
|
|
|
-1,439,713
|
|
|
|
-807,060
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
14,753
|
|
|
|
13,780
|
|
Bad
Debt Expense
|
|
|
-20,000
|
|
|
|
20,000
|
|
(Gain)
Loss on Disposition of Fixed Assets
|
|
|
1,634
|
|
|
|
—
|
|
Non-Cash
Stock Issuance
|
|
|
14,246
|
|
|
|
207,519
|
|
Accrued
Interest Converted To Notes Payable
|
|
|
—
|
|
|
|
—
|
|
Changes
in operating assets and liabilities:
|
|
|
—
|
|
|
|
—
|
|
(Increase)
Decrease in accounts receivable
|
|
|
-1,269
|
|
|
|
-59,464
|
|
(Increase)
decrease in prepaid expenses
|
|
|
-35,129
|
|
|
|
-213,511
|
|
Increase
(decrease) in accounts payable and accrued expenses
|
|
|
-86,645
|
|
|
|
-39,331
|
|
Increase
(decrease) in deferred revenue
|
|
|
168,913
|
|
|
|
313,601
|
|
Net
Cash Used in Operating Activities
|
|
|
-1,383,209
|
|
|
|
-564,466
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase
of Fixed Assets
|
|
|
-977
|
|
|
|
-27,965
|
|
Net
Cash Used in Investing Activities
|
|
|
-977
|
|
|
|
-27,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds
from Stock Issuances
|
|
|
5,009,101
|
|
|
|
1,676,654
|
|
Proceeds
from notes payable
|
|
|
—
|
|
|
|
352,800
|
|
Repayments
of notes payable
|
|
|
—
|
|
|
|
—
|
|
Repayments
of shareholder notes payable
|
|
|
(425,642 |
) |
|
|
(113,858 |
) |
Proceeds
from convertible shareholders’ notes payable
|
|
|
—
|
|
|
|
(32,500 |
) |
Proceeds
from convertible notes payable
|
|
|
—
|
|
|
|
(237,500 |
) |
Officer
advances (payments), net
|
|
|
-62,167
|
|
|
|
-934
|
|
Net
Cash Provided by Financing Activities
|
|
|
4,521,292
|
|
|
|
1,644,662
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCREASE (DECREASE) IN CASH
|
|
|
3,137,106
|
|
|
|
1,052,231
|
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
|
942,066
|
|
|
|
218,058
|
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
|
|
4,079,172
|
|
|
|
1,270,289
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
Cash
Paid For:
|
|
|
|
|
|
|
|
|
Interest
|
|
|
42,449
|
|
|
|
20,853
|
|
Income
taxes
|
|
|
—
|
|
|
|
—
|
|
Non-Cash
Financing Activities:
|
|
|
—
|
|
|
|
—
|
|
Conversion
of convertible shareholders’ notes payable
|
|
|
—
|
|
|
|
—
|
|
Conversion
of convertible notes payable
|
|
|
—
|
|
|
|
—
|
|
Non-Cash
Stock Issuance
|
|
|
14,246
|
|
|
|
207,519
|
|
8
ValueRich,
Inc.
Notes
to
the Consolidated Financial Statements
September
30, 2007
NOTE
1
BASIS OF FINANCIAL STATEMENT PRESENTATION
The
accompanying unaudited condensed financial statements have been prepared by
the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included
in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted in accordance with such rules and
regulations. The information furnished in the interim condensed financial
statements include normal recurring adjustments and reflects all adjustments,
which, in the opinion of management, are necessary for a fair presentation
of
such financial statements. Although management believes the disclosures and
information presented are adequate to make the information not misleading,
it is
suggested that these interim condensed financial statements be read in
conjunction with the Company's audited financial statements and notes for the
year ended December 31, 2006 included in the Company’s Registration
Statement on Form SB-2. Operating results for the nine months ended
September 30, 2007 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2007.
NOTE
2
INITIAL PUBLIC OFFERING
On
August
7, 2007, we completed an initial public offering of our common stock in which
we
raised approximately $5,600,000 in gross proceeds or $4,900,000 net of
commission, expenses and underwriting fees related to the
offering. We issued 1,637,230 in the offering, bringing our total
outstanding shares to 8,151,539.
9
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
OPERATIONS
Overview
and Background
We
were
incorporated under the laws of the state of Florida on July 11, 2003. On March
3, 2006, we reincorporated in the state of Delaware. We operate various online
and offline media-based properties for corporate and financial professionals.
Our properties include i) iValueRich.com, ii) ValueRich magazine and iii) the
ValueRich Small-cap Financial Expo. iValueRich.com is a global online community
providing a complete range of practical business solutions for all public
companies and the millions of industry related businesses and professionals
that
seek to do business with each other. The small-cap financial expo is a unique
expo-style financial conference format for small-cap public companies to
showcase their products and services and have continuous access to investment
bankers and buy-side professionals. ValueRich magazine is published quarterly
and is a glossy full-color magazine of approximately 120 pages that is geared
toward an affluent readership of investment related professionals and corporate
leaders.
We
have a
limited operating history. We launched iValuerich.com in June 2006, we hosted
our first financial expo in March 2005, and we published our first edition
of
ValueRich magazine in the spring of 2004. During our limited operating history,
we have not been profitable. During our fiscal years ended December 31, 2005
and
December 31, 2006, we incurred net losses of approximately $230,000 and
$937,000, respectively, and for the three months ended September 30, 2007,
we
incurred a net loss of $1,017,230.
Our
corporate mission is to create the world’s largest community of Wall Street
professionals and small-cap public company executives. To accomplish this we
will use our online and offline properties, including our global Internet
community, print publishing and self promoting financial events to connect
the
corporate and financial professionals that make up the securities industry.
We
seek to accomplish this through our integrated portfolio of products and
services that we now provide for the small public capitalization market
place.
Critical
Accounting Policies
Our
discussion and analysis of our financial condition and results of operations
are
based upon our financials statements, which have been prepared in accordance
with accounting principles generally accepted in the United States of America.
The only critical accounting policy is the recognition of revenue. Revenues
are
recognized in the period that services are provided. For revenue from product
sales, we recognize revenue in accordance with Staff Accounting Bulletin No.
104, “Revenue Recognition” (“SAB104”), which superseded Staff Accounting
Bulletin No. 101, “Revenue Recognition in Financial Statements” (“SAB101”). SAB
101 requires that four basic criteria must be met before revenue can be
recognized: (1) persuasive evidence of an arrangement exists; (2) delivery
has
occurred; (3) the selling price is fixed and determinable; and (4)
collectibility is reasonably assured. Determination of criteria (3) and (4)
are
based on management’s judgments regarding the fixed nature of the selling prices
of the products delivered and the collectibility of those amounts. Provisions
for discounts and rebates to customers, estimated returns and allowances, and
other adjustments are provided for in the same period the related sales are
recorded. We defer any revenue for which the product has not been delivered
or
is subject to refund until such time that we and the customer jointly determine
that the product has been delivered or no refund will be required. Payments
received in advance are deferred until the product is delivered or service
is
rendered. SAB 104 incorporates Emerging Issues Task Force 00-21 (“EITF 00-21”),
“Multiple-Deliverable Revenue Arrangements.” EITF 00-21 addresses accounting for
arrangements that may involve the delivery or performance of multiple products,
services and/or rights to use assets. The effect of implementing EITF 00-21
on
our financial position and results of operations was not
significant.
The
preparation of our financial statements also requires us to make estimates
and
judgments that affect the reported amounts of assets, liabilities, revenues
and
expenses, and related disclosures of contingent assets and liabilities, although
we do not consider those estimates to represent critical accounting policies.
On
an ongoing basis, we evaluate our estimates, including those related to
reserves, impairment of long-lived assets and value of our stock issued for
services. We base our estimates on historical experience and on various other
assumptions that we believe to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value
of
assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or
conditions; however, we believe that our estimates, including those for the
above-described items, are reasonable.
10
Results
of Operations
Nine Months
Ended September 30, 2007 Compared to Nine Months Ended
September 30, 2006
ValueRich’s
business model consists of quarterly magazine publishing and periodic (usually
quarterly) expo events. During the nine months ended September 30,
2006, our total revenue increased from $261,164 for the nine months ended
September 30, 2006 to $891,617 for the nine months ended September 30,
2007. This increase was primarily attributed to an increase in
revenue form expos from $437,508 to $573,394 and an increase in magazine revenue
from $192,945 to $318,223. This does not include any amounts that we received
as
advance subscriptions to our October 2007 expo of approximately $250,000, which
cannot be realized until after the expo and will be realized in the fourth
quarter.
Our
total
cost of sales for the nine months ended September 30, 2007 was $678,059 as
compared to $462,055 for the nine months ended September 30,
2006. Expo costs increased from $357,952 in the prior year’s nine
month period ended September 30, 2006 to $534,084 for the nine months ended
September 30, 2007. Magazine costs also increased for the comparable
periods. Total operating expenses increased significantly from $1,004,903 for
the nine months ended September 30, 2006 to $1,649,190 for the nine months
ended
September 30, 2007. The increase in total operating expenses was
primarily attributable to an increase in staffing costs from $482,618 to
$1,027,391 and an increase in professional fees from $103,053 to $375,238.
The
increased staffing costs were primarily attributable to one time bonus payments
to certain employees in an effort to make their overall compensation package
consistent with those of other executives in similar companies in our
industry. The increase in professional fees is attributable to
certain expenses incurred in connection with our initial public offering of
our
common stock which closed in August. None of these expenses are expected to
be
recurring expense. Net loss for the nine months ended September 30, 2007
increased to ($1,649,190) from ($1,004,903) primarily as a result of the
additional staffing costs and professional fees and to a lesser extent, the
decrease in revenue and increase in cost of sales.
Three Months
Ended September 30, 2007 Compared to Three Months Ended September 30,
2006
During
the third quarter, we did not have any expo events or publish any editions
of
our magazine and therefore we generated no revenue. However, we have
received advance subscriptions to our October 2007 expo of approximately
$250,000, which cannot be realized until after the expo and will be realized
in
the fourth quarter.
Our
total
cost of sales for the three months ended September 30, 2007 was $40,879 as
compared to $32,127 for the three months ended September 30,
2006. Expo costs increased from none in the prior year’s three month
period ended September 30, 2006 to $27,075 for the three months ended September
30, 2007 which was offset by a decrease in magazine expenses from $32,127 to
$13,804 for the comparable three month period. Total operating expenses
increased significantly from $290,416 for the three months ended September
30,
2006 to $991,221 for the three months ended September 30, 2007. The
increase in total operating expenses was primarily attributable to an increase
in staffing costs from $205,356 to $577,907 and an increase in professional
fees
from $24,865 to $334,013, which was partially offset by a decrease in expenses
for financial service and the fact that, unlike 2006 no stock was issued to
founder employees during 2007. The increased staffing costs were
primarily attributable to one time bonus payments aggregating $325,000 to
certain employees in an effort to make their overall compensation package
consistent with those of other executives in similar companies in our
industry. The increase in professional fees is attributable to
certain expenses incurred in connection with our initial public offering of
our
common stock which closed in August and consulting fees. None of these expenses
are expected to be recurring expense. Net loss for the quarter ended September
30, 2007 increased to ($1,032,100) from($223,380) primarily as a result of
the
additional staffing costs and professional fees and to a lesser
extent, the decrease in revenue and increase in cost of sales..
Liquidity
and Capital Resources
The
Company had a net increase in cash of $3,137,106 for the nine months ended
September 30, 2007 from December 31, 2006. Cash used in operations
was $1,383,210 for this period, as compared to cash used in operations of
$564,466 for the comparable 2006 period. Included in the net cash
provided by operations for the nine months ended September 30, 2007 was $128,307
in accounts payable, an increase of $88,976 as compared to the prior year,.
Noncash stock issuances decreased from $207, 519 to $14,753 for the nine months
ended September 30, 2007 and deferred revenue also decreased from $313,601
to
$168,913. Cash used in investing activities decreased from $27,965 for the
nine
months ended September 30, 2006 to $977 for the
nine months ended September 30, 2007. Cash provided by
financing activities for the nine months ended September 30, 2007 totaled
$4,521,292 compared to cash provided from financing activities of $1,644,662
for
the nine months ended September 30, 2006. The increase in cash provided by
financing activities was primarily a result of increases in proceeds form the
issuance of our stock in out initial public offering.
11
Since
our
inception we have financed our operations from the sale of common stock, the
issuance of convertible notes payable and officer advances. We expect our cash
on hand will be sufficient for us to continue our operations for the next 12
months.. We have raised $4,932,778 from the public offering of our securities
(after deducting the underwriting discounts and commissions, the underwriter’s
non-accountable expense allowance and the estimated expenses of the offering
payable by us) which we believe will allow us to (i) host two large-scale expos;
(ii) host at least two smaller, scaled-down expos; (iii) publish four issues
of
ValueRich magazine; and (iv) host iValuerich.com.
We
expect
that the market for our services will continue to grow as the number of
small-cap companies in the global economy increases. Even in times of economic
downturn, we believe that small-cap companies will continue to need our services
and get the necessary exposure to grow their business. There are no known
trends, events or uncertainties that have or are reasonably likely to have
a
material impact upon our financial results.
Subsequent
Event
In
an
effort to expand our iValueRich.com community, we have entered into a letter
of
intent to purchase all of the outstanding securities of US Euro Securities,
Inc., the lead underwriter of our initial public offering. The
purchase price will consist of a combination of cash, a promissory note and
warrants exercisable for shares of our common stock and upon consummation will
result in a decrease in our cash, an increase in our liabilities and additional
dilution upon exercise of the warrants. The acquisition of US EURO Securities
is
subject to the negotiation and execution of a definitive acquisition agreement
and customary closing conditions, including the receipt of all required
regulatory approvals by the SEC, FINRA and The American Stock Exchange. No
assurance can be given as to when, or if, all negotiations will be completed
and
such closing conditions will be satisfied.
Evaluation
of disclosure controls and procedures.
The
Company maintains controls and procedures designed to ensure that information
required to be disclosed in this report is recorded, processed, accumulated
and
communicated to management, including the Chief Executive Officer and the Chief
Financial Officer, to allow timely decisions regarding the required
disclosure.
As
of
September 30, 2007, the management, with the participation of the Chief
Executive Officer and Chief Financial Officer, carried out an evaluation of
the
effectiveness of the design and operation of these disclosure controls and
procedures. The Chief Executive Officer and Chief Financial Officer concluded
that these disclosure controls and procedures are effective as of September
30,
2007.
Changes
in internal controls.
The
Company has made no changes in its internal controls or in other factors that
could significantly affect these controls, nor did it take any corrective
action, as the evaluation revealed no significant deficiencies or material
weaknesses, in the quarter ended September 30, 2007.
PART
II. OTHER INFORMATION
ITEM
1. LEGAL PROCEEDINGS
The
Company has had no legal proceedings in the quarter ended September 30,
2007.
Information
about risk factors appear in our Registration Statement on Form SB-2 (File
No.333-135511). There have been no material changes from the risk
factors previously disclosed in the Registration Statement.
ITEM
2. UNREGISTERED SALES OF SECURITIES
ITEM
5. OTHER INFORMATION
None
12
ITEM
6. EXHIBITS
|
|
|
|
Exhibits:
|
|
|
|
31.1
|
Certification
of CEO Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
32.1
|
Certification
of CEO Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002
|
Pursuant
to the requirements of the Securities and Exchange Act of 1934, the Registrant
had duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
|
|
VALUERICH,
INC.
|
|
|
(Registrant)
|
Date: November
14, 2007
|
|
By:
/s/ Joseph C. Visconti
|
|
|
Joseph
C. Visconti
|
|
|
Chief
Executive Officer
|
|
|
(Principal
Executive Officer and
Principal
Financial Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|