f10qsb0607_eps.htm
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
______________
FORM
10-QSB
______________
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the quarterly period ended June 30, 2007
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
For
the transition period from ______________ to
______________
Commission
File No. 000-50494
______________
EFFECTIVE
PROFITABLE SOFTWARE, INC.
(Exact
name of small business issuer as specified in its charter)
______________
Delaware
|
98-0412432
|
(State
or other jurisdiction of
incorporation
or organization)
|
(I.R.S.
Employer Identification No.)
|
1
Innwood Circle, Suite 209, Little Rock, Arkansas
|
72211
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(501)
223-3310
|
(Issuer’s
telephone number)
|
Check
whether the issuer (1) has filed all reports required to be filed by Section
13
or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter
period that the issuer was required to file such reports), and (2)has been
subject to such filing requirements for the past 90 days. Yes x No
o
Check
whether the registrant has filed all documents and reports required to be filed
by Sections 12, 13, or 15(d) of the Exchange Act subsequent to the distribution
of securities under a plan confirmed by a court. Yes o No
x
Indicate
by check mark whether the registrant is a shell company as defined in Rule
12b-2
of the Exchange Act.
Yes
x No
o
State
the
number of shares outstanding of each of the issuer's classes of common
equity,
as of August 20, 2007: 53,980,000 shares of common stock.
Transitional
Small Business Disclosure Format (check one): Yes o
No
x
TABLE
OF CONTENTS
PART
I - FINANCIAL INFORMATION
|
1
|
Item
1. Financial Information
|
10
|
Item
2. Management’s Discussion and Analysis or Plan of
Operation
|
12
|
Item
3. Controls and Procedures
|
|
|
|
PART
II -OTHER INFORMATION
|
13
|
Item
1. Legal Proceedings.
|
|
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds.
|
|
Item
3. Defaults Upon Senior Securities.
|
|
Item
4. Submission of Matters to a Vote of Security Holders.
|
|
Item
5. Other Information.
|
|
Item
6. Exhibits and Reports of Form 8-K.
|
|
|
|
SIGNATURES
|
14
|
PART
I - FINANCIAL INFORMATION
Item
1. Financial
Information
EFFECTIVE
PROFITABLE SOFTWARE, INC.
(A
DEVELOPMENT STAGE COMPANY)
TABLE
OF CONTENTS
PAGE
|
1
|
CONDENSED
CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2007
(UNAUDITED)
|
|
|
|
PAGE
|
2
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS
ENDED
JUNE 30, 2007 AND 2006, AND FOR THE PERIODS FROM FEBRUARY 23, 2004
(INCEPTION) TO JUNE 30, 2007 (UNAUDITED)
|
|
|
|
PAGE
|
3-4
|
CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ DEFICIENCY FOR THE
PERIOD FROM FEBRUARY 23, 2004 (INCEPTION) TO JUNE 30, 2007
(UNAUDITED)
|
|
|
|
PAGE
|
5
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE
30,
2007 AND 2006, AND FOR THE PERIOD FROM FEBRUARY 23, 2004 (INCEPTION)
TO
JUNE 30, 2007 (UNAUDITED)
|
|
|
|
PAGES
|
6 -
11
|
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF JUNE 30, 2007
(UNAUDITED)
|
|
|
|
EFFECTIVE
PROFITABLE SOFTWARE, INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
CONDENSEDCONSOLIDATED
BALANCE
SHEET
AS
OF JUNE 30, 2007
(UNAUDITED)
ASSETS
|
|
CURRENT
ASSETS
|
|
|
|
Cash
|
|
$ |
1,507
|
|
Total
Current Assets
|
|
|
1,507
|
|
|
|
|
|
|
PROPERTY
AND EQUIPMENT, NET
|
|
|
3,268
|
|
|
|
|
|
|
OTHER
ASSETS
|
|
|
|
|
Deposits
|
|
|
750
|
|
Total
Other Assets
|
|
|
750
|
|
|
|
|
|
|
TOTAL
ASSETS
|
|
$ |
5,525
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ DEFICIENCY
|
|
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
$ |
21,404
|
|
Stockholder
loans
|
|
|
52,634
|
|
|
|
|
|
|
TOTAL
LIABILITIES
|
|
|
74,038
|
|
|
|
|
|
|
STOCKHOLDERS’
DEFICIENCY
|
|
|
|
|
Common
stock, $0.0001 par value, 100,000,000 shares authorized,
53,980,000 shares issued and outstanding
|
|
|
5,400
|
|
Additional
paid in capital
|
|
|
251,460
|
|
Accumulated
deficit during development stage
|
|
|
(325,373 |
) |
Total
Stockholders’ Deficiency
|
|
|
(68,513 |
) |
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
|
|
$ |
5,525
|
|
|
|
|
|
|
See
accompanying notes to condensed consolidated financial statements.
EFFECTIVE
PROFITABLE SOFTWARE, INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(UNAUDITED)
|
|
For
the Three Months Ended June 30, 2007
|
|
|
For
the Three Months Ended
June
30, 2006 (Restated)
|
|
|
For
the Six Months Ended
June
30, 2007
|
|
|
For
the Six Months Ended
June
30, 2006 (Restated)
|
|
|
For
the Period from February 23, 2004 (Inception) to June 30,
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REVENUE
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-Kind
contribution of Officer’s Salary
|
|
|
27,250
|
|
|
|
- |
|
|
|
27,250
|
|
|
|
- |
|
|
|
81,750
|
|
Professional
Fees
|
|
|
3,404
|
|
|
|
- |
|
|
|
9,980
|
|
|
|
- |
|
|
|
61,849
|
|
General
and administrative
|
|
|
9,902
|
|
|
|
16,675
|
|
|
|
14,643
|
|
|
|
26,360
|
|
|
|
168,983
|
|
Total
Operating Expenses
|
|
|
40,556
|
|
|
|
16,675
|
|
|
|
51,873
|
|
|
|
26,360
|
|
|
|
312,582
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
FROM OPERATIONS
|
|
|
(40,556 |
) |
|
|
(16,675 |
) |
|
|
(51,873 |
) |
|
|
(26,360 |
) |
|
|
(312,582 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME (EXPENSE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(30 |
) |
Loss
on disposal of assets
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,893
|
|
Interest
expense
|
|
|
710
|
|
|
|
26
|
|
|
|
1,332
|
|
|
|
854
|
|
|
|
5,928
|
|
Total
Other (Income) Expense
|
|
|
710
|
|
|
|
26
|
|
|
|
1,332
|
|
|
|
854
|
|
|
|
12,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS
BEFORE PROVISION FOR INCOME TAXES
|
|
|
(41,266 |
) |
|
|
(16,701 |
) |
|
|
(53,205 |
) |
|
|
(27,214 |
) |
|
|
(325,373 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for Income Taxes
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS
|
|
$ |
(41,266 |
) |
|
$ |
(16,701 |
) |
|
|
(53,205 |
) |
|
|
(27,214 |
) |
|
|
(325,373 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Loss Per Share – Basic and Diluted
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average Number of Common Shares Outstanding – Basic and
Diluted
|
|
|
53,804,176
|
|
|
|
53,440,440
|
|
|
|
53,642,983
|
|
|
|
52,846,851
|
|
|
|
|
|
See
accompanying notes to condensed consolidated financial statements.
EFFECTIVE
PROFITABLE SOFTWARE, INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS’
DEFICIENCY
FOR
THE PERIOD FROM FEBRUARY 23, 2004 (INCEPTION) TO JUNE 30,
2007
(UNAUDITED)
|
|
Common
Stock
|
|
|
Additional
Paid-In
|
|
|
Accumulated
Deficit During Development
|
|
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued to founders for cash ($0.00002 per share)
|
|
|
45,000,000
|
|
|
$ |
4,500
|
|
|
$ |
(3,600 |
) |
|
$ |
-
|
|
|
$ |
900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for legal services ($0.02 per share)
|
|
|
500,000
|
|
|
|
50
|
|
|
|
9,950
|
|
|
|
-
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services ($0.02 per share)
|
|
|
2,500,000
|
|
|
|
250
|
|
|
|
49,750
|
|
|
|
-
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for cash ($0..02 per share)
|
|
|
2,280,000
|
|
|
|
230
|
|
|
|
45,370
|
|
|
|
-
|
|
|
|
45,600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-kind
contribution of interest on stockholder loans
|
|
|
-
|
|
|
|
-
|
|
|
|
646
|
|
|
|
-
|
|
|
|
646
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the period from February 23, 2004 (inception) to December
31,
2004
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(110,081 |
) |
|
|
(110,081 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2004
|
|
|
50,280,000
|
|
|
|
5,030
|
|
|
|
102,116
|
|
|
|
(110,081 |
) |
|
|
(2,935 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for services ($0.02 per share)
|
|
|
500,000
|
|
|
|
50
|
|
|
|
9,950
|
|
|
|
-
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for cash ($0.02 per share)
|
|
|
500,000
|
|
|
|
50
|
|
|
|
9,950
|
|
|
|
-
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-kind
contribution of interest on stockholder loans
|
|
|
-
|
|
|
|
-
|
|
|
|
1,787
|
|
|
|
-
|
|
|
|
1,787
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued in reverse merger
|
|
|
500,000
|
|
|
|
50
|
|
|
|
(1,650 |
) |
|
|
-
|
|
|
|
(1,600 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss, 2005
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(51,484 |
) |
|
|
(51,484 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
December 31, 2005 (restated)
|
|
|
51,780,000
|
|
|
|
5,180
|
|
|
|
122,153
|
|
|
|
(161,565 |
) |
|
|
(34,232 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
issued for cash ($0.02 per share)
|
|
|
1,700,000
|
|
|
|
170
|
|
|
|
33,830
|
|
|
|
-
|
|
|
|
34,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-kind
contribution of interest on stockholder loans
|
|
|
-
|
|
|
|
-
|
|
|
|
1,248
|
|
|
|
-
|
|
|
|
1,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-kind
contribution of compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
54,500
|
|
|
|
-
|
|
|
|
54,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In
–kind contribution of automobile allowance
|
|
|
-
|
|
|
|
-
|
|
|
|
1,500
|
|
|
|
-
|
|
|
|
1,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See
accompanying notes to condensed consolidated financial statements.
EFFECTIVE
PROFITABLE SOFTWARE, INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN STOCKHOLDERS’
DEFICIENCY
FOR
THE PERIOD FROM FEBRUARY 23, 2004 (INCEPTION) TO JUNE 30,
2007
(UNAUDITED)
Net
loss, 2006
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(110,603 |
) |
|
|
(110,603 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE,
December 31, 2006
|
|
|
53,480,000
|
|
|
|
5,350
|
|
|
|
213,231
|
|
|
|
(272,168 |
) |
|
|
(53,587 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
Issued for cash ($0.02 per share)
|
|
|
500,000
|
|
|
|
50
|
|
|
|
9,950
|
|
|
|
-
|
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-kind
contribution of compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
27,250
|
|
|
|
-
|
|
|
|
27,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In-kind
contribution of interest of stockholder loans
|
|
|
-
|
|
|
|
-
|
|
|
|
1,029
|
|
|
|
-
|
|
|
|
1,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss for the six months ended June 30, 2007
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(53,205 |
) |
|
|
(53,205 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE,
June 30, 2007
|
|
|
53,980,000
|
|
|
$ |
5,400
|
|
|
$ |
251,460
|
|
|
$ |
(325,373 |
) |
|
$ |
(68,513 |
) |
See
accompanying notes to condensed consolidated financial
statements.
EFFECTIVE
PROFITABLE SOFTWARE, INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT
OF CASH FLOWS
(UNAUDITED)
|
|
For
the Six Months Ended June 30, 2007
|
|
|
For
the Six Months June 30, 2006
|
|
|
For
the Period from February 23, 2004 (Inception) to June 30,
2007
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$ |
(53,205 |
) |
|
$ |
(27,214 |
) |
|
$ |
(325,373 |
) |
Adjustments
to reconcile net loss to net cash provided by (used in) operating
activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
In-Kind
Compensation
|
|
|
27,250
|
|
|
|
-
|
|
|
|
81,750
|
|
Depreciation
|
|
|
463
|
|
|
|
462
|
|
|
|
5,130
|
|
Loss
on disposal of property and equipment
|
|
|
-
|
|
|
|
-
|
|
|
|
6,893
|
|
In-kind
contribution of expenses
|
|
|
1,029
|
|
|
|
578
|
|
|
|
6,210
|
|
Stock
issued for payment of services and expenses
|
|
|
-
|
|
|
|
|
|
|
|
70,000
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
-
|
|
|
|
-
|
|
|
|
(750 |
) |
Prepaid
expenses
|
|
|
250
|
|
|
|
550
|
|
|
|
|
|
Accounts
payable and accrued expenses
|
|
|
2,452
|
|
|
|
3,400
|
|
|
|
19,803
|
|
Net
Cash Provided By (Used In) Operating Activities
|
|
|
(21,761 |
) |
|
|
(22,224 |
) |
|
|
(136,337 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from the sale of property and equipment
|
|
|
-
|
|
|
|
-
|
|
|
|
3,425
|
|
Purchase
of property and equipment
|
|
|
-
|
|
|
|
-
|
|
|
|
(18,716 |
) |
Net
Cash Provided By (Used In) Investing Activities
|
|
|
-
|
|
|
|
-
|
|
|
|
(15,291 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of loan payable – related party
|
|
|
20,000
|
|
|
|
-
|
|
|
|
111,420
|
|
Repayment
of loan payable – related party
|
|
|
(7,962 |
) |
|
|
(12,481 |
) |
|
|
(58,785 |
) |
Proceeds
from issuance of common stock
|
|
|
10,000
|
|
|
|
34,000
|
|
|
|
100,500
|
|
Net
Cash Provided By (Used In) Financing Activities
|
|
|
22,038
|
|
|
|
21,519
|
|
|
|
153,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
INCREASE (DECREASE) IN CASH
|
|
|
277
|
|
|
|
(705 |
) |
|
|
1,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
|
|
|
1,230
|
|
|
|
2,335
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS AT END OF PERIOD
|
|
$ |
1,507
|
|
|
$ |
1,630
|
|
|
$ |
1,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid during the period for interest
|
|
$ |
62
|
|
|
$ |
276
|
|
|
$ |
1,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
paid during the period for taxes
|
|
$ |
-
|
|
|
$ |
-
|
|
|
$ |
-
|
|
See
accompanying notes to condensed consolidated financial
statements.
EFFECTIVE
PROFITABLE SOFTWARE, INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF JUNE 30, 2007
(UNAUDITED)
NOTE
1
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES AND
ORGANIZATION
|
(A)
Basis of Presentation
The
accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
and the rules and regulations of the Securities and Exchange Commission for
interim financial information. Accordingly, they do not include all
the information necessary for a comprehensive presentation of financial position
and results of operations.
It
is
management’s opinion however, that all material adjustments (consisting of
normal recurring adjustments) have been made which are necessary for a fair
financial statements presentation. The results for the interim period
are not necessarily indicative of the results to be expected for the
year.
(B)
Organization
Effective
Profitable Software, Inc. F/K/A Modena 2, Inc. (a development stage company)
was
incorporated in the state of Delaware on November 18, 2003.
EPS,
Inc., (a development stage company) was incorporated in the state of Arkansas
on
February 23, 2004.
On
May
10th, 2005
pursuant to a stock purchase agreement and share exchange between the Effective
Profitable Software, Inc. and EPS, Inc. and the shareholders of EPS, Inc.,
we
purchased all of the outstanding shares of EPS for the issuance of 10,156,000
(50,780,000 post-split) shares of our stock to EPS
shareholders. Pursuant to the agreement, EPS became a wholly owned
subsidiary of the Company. As a result of the agreement, the
transaction was treated for accounting purposes as a reorganization by the
accounting acquirer (EPS, Inc.) and as a recapitalization by the accounting
acquiree (Effective Profitable Software, Inc.).
Accordingly,
the financial statements include the following:
(1) The
balance sheet consists of the net assets of the acquirer at historical cost
and
the net assets of the acquiree at historical cost.
(2) The
statement of operations includes the operations of the acquirer for the periods
presented and the operations of the acquiree from the date of the
merger.
Activities
during the development stage include developing the business plan and raising
capital.
EFFECTIVE
PROFITABLE SOFTWARE, INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF JUNE 30, 2007
(UNAUDITED)
Effective
Profitable Software, Inc. and its wholly-owned subsidiary are hereafter referred
to as the “Company”.
The
Company intends to develop computer software for use in technical analysis
of
financial markets.
(C)
Principles of Consolidation
The
2007
and 2006 financial statements include the accounts of Effective Profitable
Software, Inc. and its wholly-owned subsidiary EPS, Inc.
All
significant intercompany accounts and transactions have been eliminated in
consolidation.
(D)
Revenue Recognition
Revenue
is recognized when persuasive evidence of an arrangement exists, delivery
has
occurred, the fee is fixed or determinable and collectability is
assured.
(E)
Cash and Cash Equivalents
The
Company considers cash on hand and amounts on deposit with financial
institutions which have original maturities of three months or less to be
cash
and cash equivalents.
(F) Use
of
Estimates
In
preparing financial statements in conformity with generally accepted accounting
principles, management is required to make estimates and assumptions that
affect
the reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the financial statements and revenues
and
expenses during the reported period. Actual results could differ from
those estimates
(G)
Income Taxes
The
Company accounts for income taxes under the Statement of Financial Accounting
Standards No. 109, “Accounting for Income Taxes” (“Statement
109”). Under Statement 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities
and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. Under Statement 109, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period
that
includes the enactment date.
EFFECTIVE
PROFITABLE SOFTWARE, INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF JUNE 30, 2007
(UNAUDITED)
(H)
Fair Value of Financial Instruments
The
Company’s financial instruments include accounts payable and liabilities to
shareholders. The carrying amounts of other financial instruments
approximate their fair value because of short-term maturities.
(I)
Earnings Per Share
Basic
earnings per share is computed by dividing earnings available to stockholders
by
the weighted-average number of shares outstanding for the period as guided
by
the Financial Accounting Standards Board (FASB) under Statement of Financial
Accounting Standards (SFAS) No. 128, “Earnings per Shares”. Diluted
EPS reflects the potential dilution of securities that could share in the
earnings. As of June 30, 2007 and 2006, the Company does not have any
outstanding dilutive securities.
(J)
Concentrations of Credit Risk
Financial
instruments which potentially expose the Company to concentrations of credit
risk consist principally of operating demand deposit accounts if those accounts
are in excess of $100,000. As at June 30, 2007 there were no cash
deposits in excess of the FDIC limit.
(K)
Recent Accounting Pronouncements
In
September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements”. The objective of SFAS 157 is to increase consistency and
comparability in fair value measurements and to expand disclosures about
fair
value measurements. SFAS 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements. SFAS 157 applies under
other accounting pronouncements that require or permit fair value measurements
and does not require any new fair value measurements. The provisions of SFAS
No.
157 are effective for fair value measurements made in fiscal years beginning
after November 15, 2007. The adoption of this statement is not expected to
have
a material effect on the Company's future reported financial position or
results
of operations.
In
February 2007, the Financial Accounting Standards Board (FASB) issued SFAS
No.
159, “The Fair Value Option for Financial Assets and Financial Liabilities
–
Including an Amendment of FASB Statement No. 115”.
EFFECTIVE
PROFITABLE SOFTWARE, INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF JUNE 30, 2007
(UNAUDITED)
This
statement permits entities to choose to measure many financial instruments
and
certain other items at fair value. Most of the provisions of SFAS No. 159
apply
only to entities that elect the fair value option. However, the amendment
to
SFAS No. 115 “Accounting for Certain Investments in Debt and Equity
Securities” applies to all entities with available-for-sale and trading
securities. SFAS No. 159 is effective as of the beginning of an entity’s first
fiscal year that begins after November 15, 2007. Early adoption is permitted
as
of the beginning of a fiscal year that begins on or before November 15, 2007,
provided the entity also elects to apply the provision of SFAS No. 157,
“Fair Value Measurements”. The adoption of this statement is not
expected to have a material effect on the Company's financial
statements.
NOTE
2
|
RELATED
PARTY TRANSACTIONS
|
The
Company’s officers have loaned the Company working capital in the form of
unsecured demand notes. At June 30, 2007 the Company owed
$52,634. There are no terms on the note and the Company expects to
retire these notes during the year 2007. The Company is accruing
interest at a rate of 4% per annum and classifying the expense as an in-kind
contribution.
NOTE
3
|
STOCKHOLDERS’
EQUITY
|
(A)
Issuance of Common Stock to Founders
On
February 23, 2004, the company issued 45,000,000 shares of common stock to
the
Company’s officers for services regarding the initial start up of the
Company. The value of these shares was $900, or $.00002 per
share.
(B)
Stock Issued for Cash
During
the period ended December 31, 2004, the Company undertook a private placement
issuance, Regulation D Rule offering whereby 2,280,000 shares of common stock
were issued for cash of $45,600, or $0.02 per share.
During
the year ended December 31, 2005, the Company issued 500,000 shares to an
investor for cash of $10,000, or $0.02 per share.
During
the three months ended March 31, 2006, the Company issued 500,000 shares
to an
investor for cash of $10,000 or $0.02 per share..
During
April 2006, the Company issued 1,200,000 shares to one investor for cash
of
$24,000 ($0.02 per share).
During
May 2007, the Company issued 500,000 shares to one investor for cash of $10,000
($0.02 per share).
EFFECTIVE
PROFITABLE SOFTWARE, INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF JUNE 30, 2007
(UNAUDITED)
(C)
Stock Issued in Reverse Merger
On
May
10, 2005, Effective Profitable Software, Inc. exchanged 500,000 shares of
common
stock for all the outstanding shares of EPS.
(D)
Stock Issued for Services
On
April
1, 2004, the Company issued 500,000 shares of common stock for legal
services. The value of these shares was $10, 000 or $0.02 per
share.
During
2004, the Company issued 2,500,000 shares of common stock for
services. The value of these shares was $50,000, or $0.02 per
share.
In
January 2005, the Company issued 500,000 shares of common stock for
services. The value of these shares was $10,000, or $0.02 per
share.
(E)
In-Kind Contribution
During
the period ended December 31, 2004, $646 of in-kind contributions relating
to
imputed interest on related party loans was recorded.
During
the year ended December 31, 2005, $1,787 of in-kind contributions relating
to
imputed interest on related party loans was recorded.
During
the year ended December 31, 2006, $1,248 of in kind contributions relating
to
imputed interest on related party loans was recorded.
During
the year ended December 31, 2006, $54,500 of in-kind contributions relating
to
compensation of officers was recorded.
During
the year ended December 31, 2006, $1,500 of in-kind contributions relating
to
automobile allowance was recorded.
During
the six months ended June 30, 2007, $1,029 of in-kind contribution relating
to
imputed interest on related party loans was recorded.
During
the six months ended June 30, 2007, $27,250 of in-kind contributions relating
to
compensation of officers was recorded.
EFFECTIVE
PROFITABLE SOFTWARE, INC. AND SUBSIDIARY
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS
OF JUNE 30, 2007
(UNAUDITED)
As
reflected in the accompanying financial statements, the Company is in the
development stage with no revenue, a working capital deficiency of $72,531,
a
stockholder’s deficiency of $68,513 and has a negative cash flow from operations
of $136,337 from inception. This raises substantial doubt about its
ability to continue as a going concern. The ability of the Company to
continue as a going concern is dependent on the Company’s ability to raise
additional capital and implement its business plan. The financial
statements do not include any adjustments that might be necessary if the
Company
is unable to continue as a going concern.
Management
believes that actions presently being taken to obtain additional funding
and
implement its strategic plans provide the opportunity for the Company to
continue as a going concern.
.
Item
2. Management’s
Discussion and Analysis or Plan of Operation
The
following discussion and analysis provides information which management believes
is relevant to an assessment and understanding of our financial condition.
The
discussion should be read in conjunction with our financial statements and
notes
thereto appearing in this prospectus. The following discussion and analysis
contains forward-looking statements, which involve risks and uncertainties.
Our
actual results may differ significantly from the results, expectations and
plans
discussed in these forward- looking statements.
Overview
On
May
10, 2005, pursuant to a Stock Purchase Agreement and Share Exchange between
us
and EPS, Inc., an Arkansas corporation, and the shareholders of EPS, we
purchased all of the outstanding shares of EPS for the issuance of 10,156,000
shares of our stock to the EPS shareholders. Pursuant to the Agreement, EPS
became a wholly owned subsidiary of the Company. Pursuant to the terms of
the
Agreement, we filed Articles of Amendment with the State of Delaware changing
our name to Effective Profitable Software, Inc.
Based
on
the acquisition of EPS we changed our business focus to become an evaluation
software company which focuses on bringing affordable evaluation tools to
the
general public. We are based in Little Rock, Arkansas and are led by Don
Bratcher, Gary Moore and Richard Torti. We use in house proprietary software
for
evaluation of markets, stocks, commodities, and other financial instruments.
We
have developed an innovative financial markets evaluation system we call
the
TimingWave. At the center of the system is a 100% mechanical, unemotional
timing
model that is both powerful and simple to use. The system’s web-based access
will make it both affordable and accessible and our evaluations are easily
understood.
On
May
20, 2005, our directors and shareholders approved a 5-1 forward split of
our
outstanding common shares increasing the amount of shares owned by these
shareholders to 51,280,000 shares.
_______________________________________
Plan
of
Operations
During
the next twelve months, we expect to take the following steps in connection
with
the operations:
Initially
we plan to prepare and execute a marketing plan to develop our subscription
base. The majority of our member base will be obtained from two sources:
search
engine results and links placed in online market timing directories via link
exchange programs. Link exchange means placing your website address on another
website for advertising. You can opt to pay on a “per-click” basis or by
allowing the other website to advertise on your website.
We
anticipate that within thirty to sixty days, a comprehensive marketing plan
will
be developed. We expect to spend approximately $5,000 on marketing in the
areas
of Keyword Advertising and Sponsored Links through Google, FindWhat, and
other
similar targeted keyword programs. Another area that we will vigorously pursue
as part of our marketing and branding program is search engine placement.
By
continuing to work to optimize the site, and by increasing the number of
links
to the site, we feel we can receive better search results and search engine
saturation, which in turn directs more traffic to the website. In addition
to
our internet based effort we intend to advertise in national papers. We
anticipate additional subscriptions from word of mouth.
Once
the
trading system (Timingwave) is built on Trade Station and E-signal, which
we
expect to be completed in 3 to 5 months, a free 30-day trial will be offered
to
all existing platform subscribers for both signal and trade station clients,
which total 540,000 clients. We expect the cost to build the Timingwave on
Trade
Station and Signal to be $25,000 to $40,000. Once we achieve our goal of
1,000
subscribers, we should have the funds to advertise and hire salesmen to solicit
enough funds to reach our next goal of 10,000 additional subscribers. Our
ultimate goal is $100,000,000 in managed money for clients using the Timingwave
signals.
Tutorials
to use the indicators will be provided on the website. Those satisfied with
the
indicators may subscribe online. Links will be provided to trade platforms
to
allow the subscribers to access the Timingwave signals. Certified Fund managers
will solicit clients on the website and by seminars and direct contact with
Money managers and wealthy individuals, with a performance incentive of 20%
profit per quarter. Advertising will be done on the internet through Google,
and
in print ads that will refer potential customers to our website for detailed
explanations of fees and historical results. We anticipate acquiring 1000
subscribers from the free trial period. In the first quarter of 2007, we
intend
to charge a subscription fee of $300 per quarter for our services. We intend
to
inform our existing customers when they subscribe that this is an initial
offer
and prices will increase. Income from initial subscribers will provide funds
for
advertising for additional subscribers and salesmen to be hired to contact
wealthy individuals and money managers to solicit funds and subscriptions.
A
model Portfolio of $100,000 will be created and results will be posted daily.
Our current hypothetical portfolio is up 55%.
We
do not
have enough cash to satisfy our minimum cash requirements for the next
twelve
months. We require additional funds to increase marketing, to expand operations,
and for further development of our website. Gary Moore, our President,
has
agreed to provide us with the funds that we need until we start producing
revenue or can acquire funds from other sources. No significant purchases
of
equipment are anticipated; however, a substantial surge in traffic and/
or
membership could necessitate the purchase of additional servers.
As
reflected in the accompanying financial statements, we are in the development
stage and have not yet commenced operations. This raises substantial doubt
about
our ability to continue as a going concern. Our ability to continue as
a going
concern is dependent on our ability to raise additional capital and implement
our business plan. The financial statements do not include any adjustments
that
might be necessary if we are unable to continue as a going concern.
EPS,
Inc.
continues to record real time trades in order to give a history of the
software’s performance. The industry standard is a minimum of one year’s
results. We have now 9 months of data. Rosenthal & Collins, our only client,
is independently testing the system. We are working on building its software
on
the trade station platform which will enable us to offer it to over 500,000
subscriber. We do not have a target date for this completion. However once
this
is completed we intend to commence a print and internet based marketing
program.
On
August
10, 2007, the Company earned $3,901, or 10% of the profit realized from
trades
executed on a $500,000 model portfolio. The model portfolio is based
on software developed by the Company.
___________________________________________
Capital
Resources and Liquidity
Our
audited balance sheet as of June 30, 2007 reflects assets of $5,525, consisting
of cash of $1,507, property and equipment of $3,268 and deposits of $750.
Total
liabilities as of June 30, 2007 were $74,038, consisting of accounts payable
of
$21,404 and stockholder loans of $52,634.
We
believe that actions presently being taken to obtain additional funding
and
implement our strategic plans provide the opportunity for us to continue
as a
going concern.
Recent
Financial Pronouncements
In
September 2006, the FASB issued SFAS No. 157, “Fair Value
Measurements”. The objective of SFAS 157 is to increase consistency and
comparability in fair value measurements and to expand disclosures about
fair
value measurements. SFAS 157 defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements. SFAS 157 applies
under
other accounting pronouncements that require or permit fair value measurements
and does not require any new fair value measurements. The provisions of
SFAS No.
157 are effective for fair value measurements made in fiscal years beginning
after November 15, 2007. The adoption of this statement is not expected
to have
a material effect on the Company's future reported financial position or
results
of operations.
In
February 2007, the Financial Accounting Standards Board (FASB) issued SFAS
No.
159, “The Fair Value Option for Financial Assets and Financial Liabilities
–
Including an Amendment of FASB Statement No. 115”. This
statement permits entities to choose to measure many financial instruments
and
certain other items at fair value. Most of the provisions of SFAS No. 159
apply
only to entities that elect the fair value option. However, the amendment
to
SFAS No. 115 “Accounting for Certain Investments in Debt and Equity
Securities” applies to all entities with available-for-sale and trading
securities. SFAS No. 159 is effective as of the beginning of an entity’s first
fiscal year that begins after November 15, 2007. Early adoption is permitted
as
of the beginning of a fiscal year that begins on or before November 15,
2007,
provided the entity also elects to apply the provision of SFAS No. 157,
“Fair Value Measurements”. The adoption of this statement is not
expected to have a material effect on the Company's financial
statements.
Going
Concern Consideration
As
reflected in the accompanying financial statements, we are in the development
stage with no revenue, a working capital deficiency of $5,525, a stockholder’s
deficiency of $68,513 and a negative cash flow from operations of $136,337
from
inception. Accordingly, there is substantial doubt about our ability
to continue
as a going concern. Our ability to continue as a going concern is dependent
on
our ability to raise additional capital and implement our business plan.
The
financial statements do not include any adjustments that might be necessary
if
the Company is unable to continue as a going
concern.
We
believe that actions presently being taken to obtain additional funding and
implement our strategic plans provide the opportunity for us to continue
as a
going concern.
Critical
Accounting Policies
Our
financial statements and related public financial information are based on
the
application of accounting principles generally accepted in the United States
(“GAAP”). GAAP requires the use of estimates; assumptions, judgments and
subjective interpretations of accounting principles that have an impact on
the
assets, liabilities, revenue and expense amounts reported. These estimates
can
also affect supplemental information contained in our external disclosures
including information regarding contingencies, risk and financial condition.
We
believe our use if estimates and underlying accounting assumptions adhere
to
GAAP and are consistently and conservatively applied. We base our estimates
on
historical experience and on various other assumptions that we believe to
be
reasonable under the circumstances. Actual results may differ materially
from
these estimates under different assumptions or conditions. We continue to
monitor significant estimates made during the preparation of our financial
statements.
Our
significant accounting policies are summarized in Note 1 of our financial
statements. While all these significant accounting policies impact our financial
condition and results of operations, we view certain of these policies as
critical. Policies determined to be critical are those policies that have
the
most significant impact on our financial statements and require management
to
use a greater degree of judgment and estimates. Actual results may differ
from
those estimates. Our management believes that given current facts and
circumstances, it is unlikely that applying any other reasonable judgments
or
estimate methodologies would cause effect on our consolidated results of
operations, financial position or liquidity for the periods presented in
this
report.
Off-Balance
Sheet Arrangements
We
have
no off-balance sheet arrangements.
Item
3. Controls and
Procedures
Evaluation
of disclosure controls and procedures
Under
the
supervision and with the participation of our management, including our
principal executive officer and Chief Financial Officer , we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities
Exchange Act of 1934, as amended (Exchange Act), as of June 30, 2007. Based
on
that evaluation, our principal executive officer and principal financial
officer
concluded that, a material weakness in our internal accounting controls existed
prior to June 30, 2007 so that our disclosure controls and procedures in
place
were not adequate to ensure that information required to be disclosed by
us,
including our consolidated subsidiaries, in reports that we file or submit
under
the Exchange Act, is recorded, processed, summarized and reported on a timely
basis in accordance with applicable rules and regulations. Although our
principal executive officer and principal financial officer believe our current
existing disclosure controls and procedures are adequate to enable us to
comply
with our disclosure obligations, we intend to formalize and document the
procedures already in place and establish a disclosure committee.
Changes
in internal controls
We
made
significant changes to our internal controls prior to the Evaluation Date.
We
have applied the necessary corrective action and believe this weakness has
been
remediated. Based upon same, there were no further changes (including corrective
actions with regard to significant deficiencies or material weaknesses) in
our
internal controls over financial reporting that occurred during the first
quarter of fiscal 2007 that has materially affected, or is reasonably likely
to
materially affect, our internal control over financial reporting.
PART
II - OTHER INFORMATION
Item
1. Legal
Proceedings.
We
are
currently not a party to any pending legal proceedings and no such actions
by,
or to the best of our knowledge, against us have been threatened.
Item
2. Unregistered
Sales of Equity Securities and Use of Proceeds.
In
May
2007, the Company issued 500,000 shares of common stock, at a price per
share of
$0.02, to Bob Eubanks for $10,000 cash. Our securities were issued in
reliance on the exemption from registration provided by Section 4(2) of
the
Securities Act of 1933. No commissions were paid for the issuance of such
securities. All of the above issuances of our securities qualified for
exemption
under Section 4(2) of the Securities Act of 1933 since the issuance of
such
securities by us did not involve a public offering. The above listed party
were
sophisticated investors and had access to information normally provided
in a
prospectus regarding us. The offering was not a “public offering” as defined in
Section 4(2) due to the insubstantial number of persons involved in the
deal,
size of the offering, manner of the offering and number of securities offered.
We did not undertake an offering in which we sold a high number of securities
to
a high number of investors. In addition, the above listed party had the
necessary investment intent as required by Section 4(2) since they agreed
to and
received share certificates bearing a legend stating that such shares are
restricted pursuant to Rule 144 of the 1933 Securities Act. These restrictions
ensure that these shares and the shares underlying the warrants would not
be
immediately redistributed into the market and therefore not be part of
a “public
offering.” Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of the Securities
Act
of 1933 for the above transaction.
Item
3. Defaults
Upon Senior Securities.
None
Item
4. Submission
of Matters to a Vote of Security Holders.
No
matter
was submitted during the quarter ending June 30, 2007, covered by this report
to
a vote of our shareholders, through the solicitation of proxies or
otherwise.
Item
5. Other
Information.
None
Item
6. Exhibits
and Reports of Form 8-K.
|
(a)
|
Reports
on Form 8-K and Form 8K-A
|
|
|
|
|
|
None
|
|
|
|
|
(b)
|
Exhibits
|
|
|
|
|
|
Exhibit
Number
|
Exhibit
Title
|
|
|
|
|
|
|
3.1
|
Certificate
of Incorporation; Certificate of Amendment to Certificate of Incorporation
*
|
|
|
|
|
|
|
3.3
|
By-Laws
*
|
|
|
|
|
|
|
31.1
|
Certification
of Gary Moore pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
31.2
|
Certification
of Don Bratcher pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
32.1
|
Certification
of Gary Moore pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
32.2
|
Certification
of Don Bratcher pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to
Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
|
|
*
Incorporated by reference to our quarterly report for the period-ending
September 30, 2005 filed on Form 10-QSB filed with the SEC on June
7, 2006
(File No. 000-50494).
|
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, there unto duly
authorized.
EFFECTIVE
PROFITABLE SOFTWARE, INC.
By:
/s/Gary
Moore
Gary
Moore
President,
Chief
Executive Officer
August
20, 2007
16