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[March 17, 2014]
NEW MEDIA INSIGHT GROUP, INC. - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Edgar Glimpses Via Acquire Media NewsEdge) Forward-Looking Statements Except for historical information, this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our business strategy, future revenues and anticipated costs and expenses. Such forward-looking statements include, among others, those statements including the words "expects," "anticipates," "intends," "believes" and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed herein as well as in the "Description of Business - Risk Factors" section in our Form 10-K, as filed on July 26, 2013. You should carefully review the risks described in our 10-K and in other documents we file from time to time with the Securities and Exchange Commission. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.
13 -------------------------------------------------------------------------------- Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.
All references in this Form 10-Q to "company", "we", "us", or "our" are to New Media Insight Group, Inc.
General Overview New Media Insight Group, Inc. was incorporated on March 29, 2010 in the State of Nevada, U.S.A. Our fiscal year end is April 30. Our administrative offices are located at 28202 N. 58th Street, Cave Creek, AZ 85331. Our telephone number is (480) 275-2294.
On July 8, 2011, our board of directors approved an amendment and restatement of our company's bylaws, in their entirety. The amended bylaws primarily reduced the number of shareholders required to approve corporate actions by written consent of shareholders to a majority, as permitted pursuant to Nevada law.
In accordance with board approval, our company filed a Certificate of Change with the Nevada Secretary of State to give effect to a forward split of our authorized, issued and outstanding shares of common stock on a 17 new for one old basis, such that our authorized capital increased from 100,000,000 to 1,700,000,000 shares of common stock and correspondingly, our issued and outstanding shares of common stock increased from 3,437,500 to 58,437,500 common shares, all with a par value of $0.001.
The forward stock split became effective with the Over-the-Counter Bulletin Board at the opening of trading on April 19, 2013. Our trading symbol is "NMED".
Our CUSIP number is 64704U 207.
Our company is continuing to pursue and expand upon the same business however is in the process of significantly enhancing its product and service offering and is developing new and proprietary technology in the area of mobile payments and online monetization. Our company is a development stage company and operates as an internet marketing business providing clients with the latest in new media and mobile / smart phone advertising solutions. We will specialize in developing mobile marketing, loyalty, and communication solutions. Our company's mission is to help local merchants connect, communicate and transact with their customers in a more effective way.
Effective September 1, 2013, our company entered into an exclusive agency agreement with Paywith Worldwide Inc., pursuant to which our company will market a new and revolutionary product called mCards (mobile cards) throughout the entire United States with exclusivity and ownership in the following territories; Arizona, Colorado, Nevada, Oregon, Utah and Washington. Pursuant to the agreement, our company will generate revenue associated with every mCard transaction that takes place using the mCardNetwork. Under the agreement, our company will have the following obligations to Paywith: º Achieve the following targets within the territory: Number of Signed Target Date Merchant Agreements 6 months after effective date 500 12 months after effective date 2,000 18 months after effective date 10,000 º Our company has paid $150,000 to Paywith for the exclusive licensing rights mentioned above.
On April 1, 2013, we entered into an employment agreement with Michael Palethorpe, our sole director and officer, with an effective date of May 1, 2013. Pursuant to the terms of the employment agreement, Mr. Palethorpe will receive compensation of $6,000 per month until April 31, 2014 after which the base salary will be reviewed for May 1, 2014 and beyond. Mr. Palethorpe is also entitled to an annual stock option grant equal to 30% of his base salary to be granted at the beginning of the calendar year. The price of the options will be the fair market value of the company's stock at the time the options are granted and will expire three years after the grant date. Further, Mr. Palethorpe is entitled to receive 2,000,000 stock options upon execution of the employment agreement. These option vest at the rate of 500,000 options every six months at an exercise price of $0.75 per share and expire three years after the date of issuance. As of the date of this report, we have not yet issued these stock options to Mr. Palethorpe.
14 -------------------------------------------------------------------------------- Executive Summary We work with local merchants and small and medium sized businesses to help them improve their customer loyalty and attract new customers. Our unique mobile and social marketing solutions are designed to engage consumers in transacting using their mobile devices. Our company is virtual in nature, meaning that employees and contractors will primarily work from home, negating the need to retain formal office space. Our services are highly specialized and focus on mobile payments, mobile / smart phone marketing, mobile search engine optimization, as well as social media advertising through Twitter, Facebook, and LinkedIn.
Professional web designers, optimization technicians, and Google AdWord specialists are retained on a contractual basis and as demand requires. We license various aspects of our technology and then customize the development of unique solutions via numerous development partners so as to ensure we have our own intellectual property and proprietary solutions. Supporting functions such as creative and graphic design work are also included in our portfolio to better service clients.
Strategic Initiatives Fully optimized NMIG website: we are in the late design process to launch our new and fully SEO friendly website. The site will be optimized to rank high on Google, Bing, and Yahoo organic searches in the states of Washington, Oregon, Colorado, Utah, California, Nevada, and Arizona.
Direct Mail Campaign: We will use Direct Mail as a key driver for our geographic marketing and exposure campaigns. The purpose of these campaigns will be to target market merchants and small and medium sized businesses, whose businesses could benefit from our marketing services and communications technology.
Telemarketing: We are looking to engage an outside telemarketing agency to help with our lead generation and sales of our services to local merchants. This organization's responsibilities will be to reach the manager, owner or decision maker at a merchant location and set up appointments for one of our reps to do a more in depth presentation of our services and local marketing platforms and solutions.
Mobile / Smart Phone Advertising: Our company is deeply involved in an effort to expand our services to include smart phone marketing. The exponential growth of smart phone use and its related marketing potential is unprecedented, and NMIG is now positioned to capitalize on this irresistible trend. We are looking to engage an outside agency to work with to create an exclusive "Mobile Application" which our merchants can use as a "Mobile Rewards and Marketing" application. We are currently in discussions with a number of strong mobile development companies and are in the final stages of selecting our partner for this initiative.
Results of Operations The following summary of our results of operations should be read in conjunction with our audited financial statements for the year ended April 30, 2013.
Our operating results for the nine month periods ended January 31, 2014 and 2013 are summarized as follows: Nine Months Ended January 31, 2014 2013 Revenue $ 241 $ - Other income $ - $ 9,389 Operating Expenses $ 160,311 $ 15,212 Operating Loss $ (160,070 ) $ (5,823 ) 15 -------------------------------------------------------------------------------- Revenue Our company earned its initial revenues starting in the third quarter of the fiscal year ended April 30, 2011. The revenues were from the sale of website designs, search engine optimization programs, and viral social media marketing campaigns, and were recognized upon the completion of these programs. We earned revenues of $241 for the nine months ended January 31, 2014 compared to revenues of $0 for the nine months ended January 31, 2013. Minimal revenues in 2014 can be attributed to a conscious decision on the part of our directors to retrench their efforts and spend the requisite time needed to both understand and exploit the burgeoning use of mobile technology. Until our re-sharpened efforts gain traction, growth will remain slow.
Expenses Our total expenses for the nine month periods ended January 31, 2014 and 2013 are outlined in the table below: Nine Months Ended January 31, 2014 2013 Amortization $ 41,667 $ - Selling and advertising 18,070 - General and administrative 8,975 450 Salaries 58,664 - Depreciation 234 - Professional fees 32,701 14,762 Total $ 160,311 $ 15,212 Expenses for the nine month period ended January 31, 2014, increased substantially compared to the comparative period in 2013. The increases for the nine month period ended January 31, 2014 were primarily as a result of a significant increase in director salaries and selling and administrative expenses due to an exclusive agency agreement with a company in the business of developing and operating an internet based marketing platform.
Liquidity and Financial Condition Working Capital At At January 31, April 30, 2014 2013 Change Current Assets $ 257,692 $ 27 $ 257,665 Current Liabilities $ 5,785 $ 27,872 $ (22,087 ) Working Capital (Deficit) $ 251,907 $ (27,845 ) $ 279,752 Cash Flows Nine Months Ended January 31, 2014 2013 Net Cash Used in Operating Activities $ (141,739 ) $ (3,293 ) Net Cash Used by Investing Activities $ (152,079 ) $ - Net Cash Used In Financing Activities $ 549,953 $ - Net Increase (Decrease) in Cash During the Period $ 256,135 $ (3,293 ) We have acquired additional funds to fund our budgeted expenses in the near future. There is no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on their investment in our common stock. Further, we may continue to be unprofitable. Additionally, there is no assurance that any party will advance additional funds to us in order to enable us to sustain our plan of operations or to repay our liabilities.
16 -------------------------------------------------------------------------------- Liquidity and Capital Resources From inception until the date of this filing we have had limited operating activities. Our financial statements from inception (March 29, 2010) through the period ended January 31, 2014, reported revenues of $38,691 and a net loss of $264,804.
Growth of our operations will be based on our ability to internally finance from cash flow and raise equity and/or debt to increase sales and production. Our primary sources of liquidity are: (i) cash from sales of our services; and (ii) financing activities. Our cash balance as of January 31, 2014 was $256,162.
Limited Operating History; Need for Additional Capital The report of our auditors on our audited financial statements for the fiscal year ended April 30, 2013, contains a going concern qualification as we have suffered losses since our inception. We have minimal assets and have not yet established an ongoing source of revenues sufficient to cover our operating costs and allow it to continue as a going concern. Unless and until we commence material operations and achieve material revenues, we will remain dependent on financings to continue our operations.
There is no historical financial information about us on which to base an evaluation of our performance. We are a development stage company and have not generated revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources and possible cost overruns due to the price and cost increases in and services.
At present, we do have enough cash on hand to cover operating costs for the next 12 months.
Our officers and directors have generally indicated a willingness to provide services and financial contributions if necessary. Currently we have an employment agreement, effective May 1, 2013, with Michael Palethorpe, our sole director and officer. Pursuant to the terms of the employment agreement, Mr.
Palethorpe, is eligible to receive 2,000,000 stock options, which vest at a rate of 500,000 every 6 months. Each option has an exercise price of $0.75 and will expire after three years. As at the date of this report, the options have not yet been issued.
If we are unable to meet our needs for cash from either the money that we raised from our offering, or possible alternative sources, then we may be unable to continue, develop, and expand our operations. We have an agreement to undertake any product research and development during the next twelve months. There are also no plans or expectations to acquire or sell any plant or plant equipment in the first full year of operations.
Plan of Operation and Cash Requirements Our company began selling its services in December 2010. Our company saw its revenues fall in 2012, primary due to a decision on the part of the directors to retrench and devote a lot of their energies toward the development of smart phone marketing initiatives. Our company is now in the process of marketing and selling our mCardsNetwork portfolio of services. Our plan of action over the next twelve months is to diligently market and promote the platform, to develop promotional materials for the platform, and participate in trade shows and exhibitions. We aim to sign up 2,000 merchant agreements before September 2014 and 10,000 before April 2015.
The success of our operations will be based on our ability to grow by financing the operation through internal cash flow or to raise funds through equity and/or debt financing to invest in marketing and sales of our services. Our company was able to generate adequate capital in this challenging market for credit, which has created a condition where some of our marketing plans are now possible. The availability of future equity and/or debt financings remains uncertain.
We expect to continue a number of marketing initiatives that we started last quarter including the following: 17 -------------------------------------------------------------------------------- º Continued development of a fully optimized websites º www.newmediainsights.com º www.mcardnetwork.com º Embrace the use and expansion of mobile marketing technology º Extensive social media marketing including the leveraging of Facebook, Twitter, and LinkedIn º Facebook(
) º Continued recruitment of talent (Craigslist listing) º Networking for sales leads at local technology events As our business is a marketing and advertising company we are able to complete most of our marketing initiatives without incurring additional outside expenses by completing the work internally hence being able to keep our advertising and marketing costs to a minimum. Over the next 12 months, we anticipate that our company will not require additional funds to meet our working capital requirements. In the event that we need additional funds in addition to the cash on hand, we will endeavor to proceed with our plan of operations by locating alternative sources of financing.
We do not anticipate hiring any staff during the next 12 months of operation, and will rely on the services of our officers and directors and outside contractors.
If we are unable to increase sales and cash flow we still have sufficient working capital to implement our strategy for the next 12 months. However, over time this could cause us to curtail or suspend our operations and may eventually cause our business to fail.
Going Concern As of the nine month period ended January 31, 2014, our company has a loss of $160,070 and an accumulated deficit of $264,804. Our company intends to fund operations through operational cash flow and equity/debt financing arrangements.
These sources may be insufficient to fund its capital expenditures, working capital and other cash requirements for the future. In response to these problems, management intends to raise additional funds through increased sales and public or private placement offerings. These factors, among others, raise substantial doubt about our company's ability to continue as a going concern.
The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
Critical Accounting Policies Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our company's periodic filings with the Securities and Exchange Commission include, where applicable, disclosures of estimates, assumptions, uncertainties and markets that could affect the financial statements and future operations of our company.
18 -------------------------------------------------------------------------------- Cash and Cash Equivalents Cash and cash equivalents include cash in banks, money market funds, and certificates of term deposits with maturities of less than three months from inception, which are readily convertible to known amounts of cash and which, in the opinion of management, are subject to an insignificant risk of loss in value. Our company had $256,162 and $27 in cash and cash equivalents at January 31, 2014 and April 30, 2014, respectively.
Net Income or (Loss) Per Share of Common Stock Our company has adopted ASC 260, "Earnings per Share," ("EPS") which requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. In the accompanying financial statements, basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the period.
2,000,000 options were granted as part of a salary agreement, but the options have not been vested as of January 31, 2014. 1,100,000 warrants were issued as part of a stock sale to a new shareholder. Due to the net loss, the options and warrants are not used in the calculation of earnings per share because the options and warrants are considered to be antidilutive.
The following table sets forth the computation of basic and diluted earnings per share: Nine Months Ended January 31, 2014 2013 Net Income (loss) applicable to Common Shares $ (160,070 ) $ (5,823 ) Weighted average common shares outstanding (Basic) 59,447,826 58,437,500 Options - - Warrants - - Weighted average common shares outstanding (Diluted) 59,447,826 58,437,500 Net loss per share (Basic and Diluted) $ ( 0.00 ) $ (0.00 ) Concentrations of Credit Risk Our company's financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents and related party payables it will likely incur in the near future. Our company places its cash and cash equivalents with financial institutions of high credit worthiness. At times, its cash and cash equivalents with a particular financial institution may exceed any applicable government insurance limits. Our company's management plans to assess the financial strength and credit worthiness of any parties to which it extends funds, and as such, it believes that any associated credit risk exposures are limited.
19 -------------------------------------------------------------------------------- Advertising Advertising is expensed as incurred. Advertising expense was $18,070 and $0 for the nine months ended January 31, 2014 and 2013, respectively.
Revenue Recognition Our company recognizes revenue from the sale of services in accordance with ASC 605, "Revenue Recognition." Revenue consists of internet marketing services; focusing on website design, search engine optimization, and viral social media marketing. Sales income is recognized only when all of the following criteria have been met: i) Persuasive evidence for an agreement exists; ii) Service has been provided; iii) The fee is fixed or determinable; and iv) Revenue is reasonably assured.
Recent Accounting Pronouncements Management has considered all recent accounting pronouncements issued since the last audit of our consolidated financial statements. Our company's management believes that these recent pronouncements will not have a material effect on our company's consolidated financial statements.
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