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[August 12, 2014]
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
(Edgar Glimpses Via Acquire Media NewsEdge) Forward Looking Statements This quarterly report on Form 10-Q and other reports that we file with the SEC contain statements that are considered forward-looking statements.
Forward-looking statements give the Company's current expectations, plans, objectives, assumptions or forecasts of future events. All statements other than statements of current or historical fact contained in this quarterly report, including statements regarding the Company's future financial position, business strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "anticipate," "estimate," "plans," "potential," "projects," "ongoing," "expects," "management believes," "we believe," "we intend," and similar expressions. These statements are based on the Company's current plans and are subject to risks and uncertainties, and as such the Company's actual future activities and results of operations may be materially different from those set forth in the forward-looking statements. Any or all of the forward-looking statements in this periodic report may turn out to be inaccurate and as such, you should not place undue reliance on these forward-looking statements. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financial condition, results of operations, business strategy and financial needs. The forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks, uncertainties and assumptions due to a number of factors, including: · dependence on key personnel; · competitive factors; · degree of success of research and development programs; · the operation of our business; and · general economic conditions in the Asia-Pacific Region.
These forward-looking statements speak only as of the date on which they are made, and except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the cautionary statements contained in this periodic report.
Use of Terms Except as otherwise indicated by the context and for the purposes of this report only, references in this report to: · "Seratosa" the "Company," "we," "us," or "our," are to the business of Seratosa Inc., a Delaware corporation; · "SEC" are to the Securities and Exchange Commission; · "Securities Act" are to the Securities Act of 1933, as amended; · "Exchange Act" are to the Securities Exchange Act of 1934, as amended; · "U.S. dollars," "dollars" and "$" are to the legal currency of the United States.
2 --------------------------------------------------------------------------------You should read the following plan of operation together with our financial statements and related notes appearing elsewhere in this quarterly report and the most recent Form 10-K and Form 10-Q. This plan of operation contains forward-looking statements that involve risks, uncertainties, and assumptions.
The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors.
Overview Seratosa specializes in providing e-commerce solutions and services that facilitate multi-channel B2C (business-to-consumer) and B2B (business-to-business) transactions. Its solutions and services enable e-commerce transactions with speed and efficiency, and allow an interactive and engaging customer experience as well as targeted marketing and advertising.
The Company's revenues are generated from one-time integration fees for the implementation of e-commerce solutions as well as recurring license and service fees. The Company currently hosts the following existing e-commerce solutions: 1.
4-GS, Ltd. is a B2B e-commerce platform that optimizes supply chain sourcing for international enterprise customers through B2B Search Engine Optimization (SEO), e-catalog and inventory management systems and a transaction platform.
ZBL Cybermarketing, Ltd. is a Search Engine Marketing (SEM) and Search Engine Optimization (SEO) provider and utilizes the Company's e-commerce solutions to identify and engage targeted consumer segments and optimize purchase conversions.
iMedia, Ltd. is a mobile advertising platform that enables online vendors to reach and engage its customer audience through mobile ads and apps.
Liquidity and Capital Resources Our registered independent auditors for the year ended December 31, 2013 have issued a going concern opinion as per our most recent Form 10-K. This means that there is substantial doubt that we can continue as an on-going business for the next 12 months unless we obtain additional capital or generate revenues to pay our bills. We believe that we can generate revenues as a provider of e-commerce solutions and services. Our other source for cash at this time is investments by others in the Company. We may need to raise cash to fully implement our projects and stay in business.
On June 30, 2014, we had negative working capital of $100,954 compared with negative working capital of $138,995 on December 31, 2013. The increase in working capital is due to our reduced net loss. Operating activities generated $7,107 in cash in the three months ended June 30, 2014. Investing activities provided $0 in the three months ended June 30, 2014. Financing activities provided $0 in the three months ended June 30, 2014.
We may not have enough working capital to complete our plan of operations. If it turns out that we have not raised enough capital to complete our anticipated business development, we will try to raise additional funds from private placements, convertible debentures or loans. There is no assurance that we will raise additional capital in the future or that future financings will be available to us on acceptable terms. If we require additional capital and are unable to raise it, we may have to suspend or cease operations.
Revenue Recognition We earned revenue from providing hosting and integration services to 4-GS, Ltd., ZBL Cybermarketing, Ltd. and i-Media, Ltd. For all customers, we provide e-commerce solutions with our engineering team 3 --------------------------------------------------------------------------------and personnel in Asia. We charge 4-GS, ZBL Cybermarketing and i-Media monthly integration and hosting fees plus additional professional fees for project management and consulting. The fee arrangement with those three companies is covered under the strategic partnership agreement with Soconison Technology Ventures, dated July 11, 2011. Soconison Technology Ventures is a shareholder in 4-GS, ZBL Cybermarketing and i-Media.
Results of Operation Service Revenue Service Revenue was $928,570 and $806,700 for the three months ended June 30, 2014 and 2013, respectively. The increase is due to recognizing higher revenue from our customers.
Cost of Service Cost of Service was $536,260 and $802,940 for the three months ended June 30, 2014 and 2013, respectively. The decrease was caused by lower personnel costs required for the development and hosting of e-commerce solutions for our customers.
Operating Expenses General and administrative: General and administrative expenses were $450,419 and $505,258 for the three months ended June 30, 2014 and 2013, respectively.
The decrease was caused by more effective cost management.
Net Loss The Company had a net loss of $58,109 and net income of $501,498 for the three months ended June 30, 2014 and 2013, respectively. The decrease in net loss was due to increased revenue and more effective cost management.
Off-Balance Sheet Arrangements The Company has no off-balance sheet arrangements.
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