AVGG.. $0.20
STATEMENT OF OPERATIONS DATA:
31 Jan-10 31-Jan-09
------------ ------------
General and administrative expenses:
Salaries and benefits $ 569,886 $ 515,398
Consulting 136,200 30,513
General administration 1,046,673 277,577
------------ ------------
Total general and administrative expenses 1,752,759 823,488
------------ ------------
Net loss from operations $ (1,752,759) $ (823,488)
------------ ------------
Other revenues and expenses:
Interest income 1,291,979 71
Gain on sale FX Direct Direct 23,597,942 0
Gain on short term investments 220,498 0
Consulting fees 0 254,451
Sub-lease income 0 30,892
------------ ------------
Net income (loss) before provision for income taxes $ 23,357,660 $ (538,074)
Provision for income taxes (6,280,425) 0
------------ ------------
Net income (loss) $ 17,077,235 $ (538,074)
============ ============
Basic & fully diluted net income (loss) per common share:
Basic income (loss) per share $ 0.93 $ (0.03)
Fully diluted income (loss) per share $ 0.83 $ (0.03)
Weighted average of common shares outstanding:
Basic 18,285,166 18,268,104
Fully diluted 20,657,202 18,268,104
BALANCE SHEET DATA
As at January 31,
2010 2009
------------ ------------
Total assets $ 21,731,860 $ 2,549,394
Total liabilities $ 5,600,951 $ 3,498,970
------------ ------------
Stockholders' equity (deficit) $ 16,130,909 $ (949,576)
============ ============
19
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
BACKGROUND
The Company was incorporated in the State of Nevada in February 2000. In
January 2001, the Company purchased 100% of the issued and outstanding shares of
FX3000, Inc. (formerly Oxford Global Network, Ltd.), a Delaware corporation, the
designer of the FX3000 currency trading software platform. The FX3000 software
program is a financial real time quote and money management platform for use by
independent foreign currency traders.
In March 2002, the Company transferred its FX3000 software program to FX
Direct Dealer, LLC ("FX Direct") a joint venture company that markets the FX3000
software program. The Company received a 25% interest in the joint venture in
return for the transfer. On January 26, 2009, the Company entered into a
purchase and sale agreement (the "Purchase Agreement"), pursuant to which the
Company agreed to sell (the "Sale") its approximate 25% membership interest (the
"Membership Interest") in FX Direct to FX Direct. The Agreement provided that it
was effective as of December 31, 2008, as a result of which the Company was not
entitled to receive any allocations of profit, loss or distributions from FX on
account of its Membership Interest after such date. On March 17, 2009, the
Company completed the Sale of the Membership Interest to FX Direct.
The aggregate purchase price of the Membership Interest was approximately
$26,000,000, of which $9,000,000 was paid in cash at the closing of the Sale and
the remaining $17,000,000 (of which approximately $4.7 million had been paid as
of January 31, 2010) is payable in 36 equal monthly installments of $472,222.22,
bearing interest at the rate of 10% per annum and evidenced by a subordinated
promissory note that was issued pursuant to a Cash Subordinated Loan Agreement
("Loan Agreement").
The Company intends to seek to acquire and/or develop new technologies and
other business opportunities. In this regard, effective as of July 20, 2009, the
Company entered into an Asset Purchase Agreement with Dan Khasis, LLC
("Seller"), pursuant to which the Company acquired all of the rights to Seller's
website "moveidiot.com" and the related software for a purchase price of $57,000
plus the issuance to Seller of 25,000 restricted shares of Common Stock. In
addition, Seller may receive up to an additional 50,000 restricted shares of
Common Stock if certain membership goals for the moveidiot.com website are met
in the 12 months following the closing. MoveIdiot.com is an online website which
helps people and businesses expedite their move from place to another. The
Company will also consider investing in commercial real estate ventures.
RESULTS OF OPERATIONS
The Company did not generate any revenues from software maintenance in the
fiscal year ended January 31, 2010 ("Fiscal 2010") or the fiscal year ended
January 31, 2009 ("Fiscal 2009"), as the Company's software servicing and
maintenance services for FX Direct were terminated in fiscal 2008 (which ended
as of January 31, 2008) and there were no revenues generated by the Company from
its other software products during either of these periods.
20
General and administrative expenses in Fiscal 2010 increased to $1,752,759,
as compared to $823,488, in Fiscal 2009, primarily as a result of an increase in
professional fees in connection with closing the sale of its interest in FX
Direct and in responding to a previously disclosed SEC investigation, increased
consulting expenses in connection with a review of the Company's existing
PromotionStat and Cyberfence products and services as well as in connection with
management's evaluation of potential new investments and increased compensation
expenses.
Other revenues and expenses in Fiscal 2010, included a gain on the sale of
the Company's interest in FX Direct of $23,597,942, interest income of
$1,291,979 related to its cash balances and note receivable from FX Direct and a
gain of $220,498 on short term investments. Other revenues and expenses in
fiscal 2009 included consulting fees of $254,451 and sublease income of $30,892.
The Company had a provision for income taxes of $6,280,425 in Fiscal 2010
primarily related to the gain on the sale of its interest in FX Direct and no
similar provision in Fiscal 2009.
As a result of the foregoing, the Company had net income of $17,077,235 in
Fiscal 2010 as compared to a net loss of ($538,074) in Fiscal 2009.
LIQUIDITY AND CAPITAL RESOURCES
At January 31, 2010, the Company had cash and short term investments on
hand of $8,968,260 as compared with cash of $134,918 at January 31, 2009.
On March 17, 2009, the Company completed the Sale of its Membership
Interest to FX Direct. The aggregate purchase price of the Membership Interest
was approximately $26,000,000, of which $9,000,000 was paid in cash at the
closing of the Sale and the remaining $17,000,000 (of which approximately $4.7
million had been paid as of January 31, 2010) is payable in 36 equal monthly
installments of $472,222.22, bearing interest at the rate of 10% per annum and
evidenced by a subordinated promissory note that was issued pursuant to a Cash
Subordinated Loan Agreement ("Loan Agreement"). The Loan Agreement provides the
Company with an increased interest rate in the event of late payments by the
Purchaser and with the remedy of liquidation in the event of a default. The
Company also received approximately $250,000 from the Purchaser in full
satisfaction of amounts owed to the Company for providing certain services to
the Purchaser.
The Company intends to retain the proceeds of the Sale for general working
capital purposes and to engage in new business opportunities. The Company
believes that the proceeds of the sale of its interest in FX Direct will be
sufficient to fund its operations during fiscal 2011.
CASH FLOWS
For Fiscal 2010, net cash used in operating activities was $4,790,569 as
compared to net cash provided by operating activities of $23,808 in Fiscal 2009.
The substantial decrease in cash provided by operating activities in the 2010
period resulted from an increase in the loss from operations and a reduction of
accounts payable of $3,362,466 primarily in connection with the payment of
accrued compensation expenses.
21
For Fiscal 2010, net cash provided by investing activities was $7,441,964,
representing proceeds from the sale of the Company's interest in FX Direct and
collections on the related note receivable, offset by the purchase of short-term
investments, as compared to no net cash used in investing activities in Fiscal
2009.
For Fiscal 2010, net cash used in financing activities was ($38,551),
representing repayment of shareholder advances as compared to net cash provided
by financing activities of $43,823 in Fiscal 2009, representing shareholder
advances.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
At January 31, 2010, the Company had no outstanding borrowings under loan
facilities.
