SOURCE: MOBILE AREA NETWORKS INC

MOBILE AREA NETWORKS INC - 10-Q

 

 

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_________________

FORM 10-Q

_________________

 ?    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2012

or

?     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from: ______ to ______

_________________

Mobile Area Networks, Inc.

(Exact name of registrant as specified in its charter) 

_________________

Florida

333-18439

59-3482752

(State or Other Jurisdiction

(Commission

(I.R.S. Employer

of Incorporation or Organization)

File Number)

Identification No.)

2772 Depot Street, Sanford, Florida 32773
(Address of Principal Executive Offices) (Zip Code)

(407) 333-2350
(Registrant’s telephone number, including area code)

N/A
(Former name or former address and former fiscal year, if changed since last report)

_________________

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  ?    No ?  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  ?    No ?  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

Large accelerated filer  ?

Accelerated filer  ?

Non-accelerated filer  ?

Smaller reporting company  ?

 Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes  ?     No  ?

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of the issuer's common stock, as of the latest practical date:

As of March 31, 2012, 49,060,788 shares of voting common stock were outstanding

 

 

 

 

Mobile Area Networks, Inc.

 

Index

 

 

Page

 

 PART I – FINANCIAL INFORMATION

 

Item 1

Financial Statements

 

 

Balance Sheets

1

 

Statement of Operations

2

 

Statement of Cash Flows

3

 

Notes to Financial Statements

4

 

 

 

Item 2

Management’s Discussion and Analysis of Financial Condition and Results of Operations

5

Item 3

Quantitative and Qualitative Disclosures about Market Risk

6

Item 4

Controls and Procedures

6

 

 

 

 

PART II- OTHER INFORMATION

Item 1

Legal Proceedings

6

Item 1A

Risk Factors

6

Item 2

Unregistered Sales of Equity Securities and Use of Proceeds

6

Item 3

Defaults Upon Senior Securities

6

Item 4

Submission of Matters to a Vote of Securities Holders

6

Item 5

Other Information

6

Item 6

Exhibits

7

 

Signatures

8

 

 

 

 

 

 

 

 

 

 

 

MOBILE AREA NETWORKS, INC.

(A Florida Corporation)

Sanford, Florida

Balance Sheets

Item 1. Financial Statements

 

Assets

 

12/31/2011

3/31/2012

Current assets:

 

 

 

Cash

 

 -   

 -   

Accounts Receivable

46,420

30,647

Inventory

 

63,479

47,894

Other current assets

 -   

 -   

Total current assets

109,899

78,542

 

 

 

 

Property and equipment, net

9,282

7,735

 

 

 

 

Other Assets

 

7,092

7,092

 

 

 

   

 

 

126,273

93,369

 

 

 

 

Liabilities and Stockholder's Equity

 

Current liabiliies:

 

 

   Bank overdraft

 

31,574.31

29,410

Notes & leases-current

108,342.05

108,878

Accounts payable

87,605.50

87,605

Accrued expenses

419,797.40

460,673

Total current liabilites

647,319.26

686,568

Other liabilities

 

 

 

Notes & leases-long-term

 -   

 -   

Accrued salaries-related  party

1,428,048

1,458,048

 Advances from stockholders

455,000

451,844

Total Liabilities

 

2,530,367

2,596,461

Equity

 

 

 

 Common stock

 

4,656,635

4,656,635

 Paid-In Capital

 

56,840

56,840

 Treasury stock

 

 -   

 -   

 Accumulated deficit

(7,117,569)

(7,216,567)

 Total deficit

 

(2,404,093)

(2,503,091)

Total Liabilities and deficit

126,273

93,369

 

1

 

 

MOBILE AREA NETWORKS, INC.

(A Florida Corporation)

Sanford, Florida

Statements of Operations

 

Three months ended March 31, 2012 and 2011

(unaudited)

 

 

 

 

Three Months

 

Three Months

 

 

Ended

 

Ended

 

 

March 31,

 

March 31,

 

 

2012

 

2011

 

 

 

 

 

 

 

 

 

Sales-Net of Returns and Allowances

 

$

26,278

 

 

 

60,574

 

 

 

 

 

 

 

 

 

 

Cost of Goods Sold

 

 

52,877

 

 

 

43,325

 

 

 

 

 

 

 

 

 

 

Gross Profit (Loss)

 

 

(26,599

)

 

 

17,249

 

 

 

 

 

 

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

 

Depreciation

 

 

1,547

 

 

 

1,547

 

Bad Debt Expense

 

 

  

 

 

 

2,000

 

Interest and Finance Charges

 

 

3,067

 

 

 

4,212

 

Outside Services

 

 

6,130

 

 

 

1,300

 

Administrative Payroll and Payroll Taxes

 

 

30,309

 

 

 

48,074

 

Professional Services

 

 

  

 

 

 

1,000

 

Other Operating Expenses

 

 

31,346

 

 

 

37,718

 

Total Operating Expenses

 

 

72,399

 

 

 

95,851

 

Net Income (Loss) before taxes

 

 

(96,998

)

 

 

(78,602

)

Provision for Taxes

 

 

  

 

 

 

  

 

Net Income (Loss) for the Period

 

$

(96,998

)

 

$

(78,602

)

 

 

 

 

 

 

 

 

 

Weighted Average Number of Common Shares

 

 

 

 

 

 

 

 

Outstanding-Basic and Diluted

 

 

49,060,788

 

 

 

49,060,788

 

 

 

 

 

 

 

 

 

 

Net loss per share-Basic and Diluted

 

$

(0.00

)

 

 

(0.00

)

 

 

See accompanying notes to financial statements.

 

 

2

 

 

 

 

 

 

MOBILE AREA NETWORKS, INC.

(A Florida Corporation)

Sanford, Florida

Statements of Cash Flows

 

Three months ended March 31, 2012 and 2011

(Unaudited)

 

 

 

Three Months

 

Three Months

 

 

Ended

 

Ended

 

 

March 31,

 

March 31,

 

 

2012

 

2011

Cash flows from operating activities

 

 

 

 

Net income (loss) for the Period

$ 

 (98,998)

$ 

        (78,602)

Adjustments to Reconcile Net Loss to Net Cash Flows from Operating  Activities:

 

 

 

        Depreciation

 

1,547

 

1,547 

         Bad Debt Expense

 

 

2,000 

Changes in Assets and Liabilities:

 

 

 

 

        Accounts Receivable       

 

15,772 

 

(26,500)

         Inventory

 

15,585 

621

         Accounts Payable 

 

 

689 

         Accrued Expenses

 

40,876 

 

39,554 

         Accrued Salaries-Related Party

 

30,000 

 

30,000 

Net Cash Flows from Operating Activities

 

4,782 

 

(30,691)

 

 

 

 

 

Cash Flows from Investing  Activities

 

 

 

 

         Acquisition of Property and Equipment

 

 

Cash Flows from Financing Activities

 

 

 

 

          Advances (Repayments) from Stockholders       

 

(3,156)

 

26,800 

          Increases (Repayment) of Notes and Capital Leases Payable

537 

 

516 

 

 

 

 

 

Net Cash Flows from Financing Activities

 

(2,619)

 

27,316      

 

 

 

 

 

Net Change in Cash and Cash Equivalents

 

2,163    

 

(3,375)

 

 

 

 

 

Cash and Cash Equivalents (Bank Overdraft)-Beginning of  Period

 

(31,574)

 

(13,587)

 

 

 

 

 

Cash and Cash Equivalents (Bank Overdraft)-End of  Period

 $

(29,411)

$ 

   $(16,962)

 

 

 

 

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

 

 

 

     Cash paid for:

 

 

 

 

          Taxes

 

               

 

                     

 

 

 

 

 

          Interest

 $

                    3,067 

$ 

4,212 

 

See accompanying notes to financial statements.

 

 

3

 

  

 

MOBILE AREA NETWORKS, INC.

(A Florida Corporation)

Sanford, Florida

Notes to Financial Statements

 

Note A -              Basis of Presentation

 

The condensed financial statements of Mobile Area Networks, Inc. (the ”Company”) included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in conjunction with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the annual audited financial statements and the notes thereto included in the Company’s annual report on Form 10-K.

 

The accompanying unaudited interim financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole.

 

Reclassifications

Certain amounts in the prior year financial statements have been reclassified to conform with the current year presentation.

 

 

Note B -              Going Concern

 

The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has reported a net loss of $96,998 and $78,602 for the three months ended March 31, 2012 and 2011, respectively. As a result, there is an accumulated deficit of $7,216,568 at March 31, 2012. The primary causes of the loss for 2012 and operating losses in earlier years are attributable to decreases in orders from several key customers, competition and soft economic conditions.

 

The Company’s continued existence is dependent upon its ability to raise capital and/or achieving profitable operations. The Company plans to raise sufficient working capital through equity offerings and restructure debt to lower its monthly payments and interest costs. The Company continues to fund operational deficits through the acquisition of debt and equity financing through private individuals. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

 

4

 

 

 Item 2. Management’s discussion and analysis of financial condition and results of operations

 

 

Liquidity and Capital Resources 

Working Capital amounted to $(608,026) at March 31, 2012 compared to $(539,419) at December 31, 2011. Bank Overdraft amounted to $29,411 at March 31, 2012 as compared to $31,574 at December 31, 2011. As more fully described under the Company’s statements of cash flows in the accompanying financial statements, net cash from or (used in) operating activities for the three months ended March 31, 2012 and 2011 was $4,782 and $(30,691). For the three months ended March 31, 2012 and 2011, cash was provided primarily by operations and partly by advances from shareholders. During the three months ended March 31, 2012 and 2011, cash was used to fund operations.

As indicated herein, the Company’s short term liquidity needs have been historically satisfied primarily from the continuing sale of the Company stock and advances from stockholders.

 

Results of Operations

Sales decreased during the current period first quarter as compared with the year earlier period. For the three months ended March 31, 2012 sales were $26,278 and for the three months ended March 31, 2011, sales were $60,574. The decrease relates to a reduction in shipments to customers related to soft economic conditions.

Cost of Goods Sold increased during the current period first quarter as compared with the year earlier first quarter. For the three months ended March 31, 2012, Cost of Goods Sold were $52,877 and for the three months ended March 31, 2011, Cost of Goods Sold were $43,325 The increase relates to factory rent expense which is a fixed cost. Cost of Goods Sold mostly varies with the level of Sales, however, rent expense does not.

Total Operating Expenses decreased to $72,399 for the three months ended March 31, 2012 from $95,851 for the three months ended March 31, 2011.

Depreciation expense was unchanged at $1,547 for the current year first quarter and the prior year first quarter.

Bad Debt Expense was $-0- and $2,000 for the three months ended March 31, 2012 and 2011, respectively. The allowance for uncollectible accounts is considered adequate for the current period.

Interest and Finance Charges expense decreased to $3,067 for the three months ended March 31, 2012 from $4,212 for the three months ended March 31, 2011. The decrease is related to credit card payables that are less in the current period.

Outside Services expense is $6,130 for the three months ended March 31, 2012 compared to $1,300 for the three months ended March 31, 2011. The current year increase was due to an increased use of contract labor for plant operations. 

Administrative Payroll and Payroll Taxes expense decreased to $30,309 for the three months ended March 31, 2012 from $48,074 for the three months ended March 31, 2011. The decrease reflects staff reductions necessitated by the contraction in business activity.

Professional Services expense was $-0- for the three months ended March 31, 2012 and $1,000 for the three months ended March 31, 2011. The amounts reflect fees paid to the independent public accountant for auditing services and also fees for legal services.

5

 

Other Operating Expenses were $31,346 for the three months ended March 31, 2012 and $37,718 for the three months ended March 31, 2011. Other Operatng Expenses includes spending for local taxes, licenses, insurance expenses, travel and telephone. The decreases occurred mostly in marketing, health insurance and travel.

The Net Loss for the Period was $96,998 for the three months ended March 31, 2012, an increase from the $78,602 Net Loss reported for the three months ended March 31, 2011. The Net Income (Loss) Per Share remained unchanged at $.00. 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

Not required by smaller reporting companies. 

 

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act, is recorded, processed, summarized and reported within the time periods required under the SEC’s rules and forms and that the information is gathered and communicated to our management, including our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as appropriate, to allow for timely decisions regarding financial disclosure.

As required by SEC Rule 15d-15(e), we carried out an evaluation under the supervision and with the participation of our management, including the Chief Executive Officer/Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Exchange Act Rule 15d-14 as of the end of the period covered by this report. Based on the foregoing evaluation, our Chief Executive Officer/Chief Financial Officer have concluded that our disclosure controls and procedures are not effective.

There have been no changes in the Company’s internal control over financial reporting during the most recently completed fiscal quarter that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting. 

 

PART II – OTHER INFORMATION             

Item

 

1.              Legal Proceedings

 

 

 

None

 

Item

 

1A.              Risk Factors

 

Not

 

required by smaller reporting companies.

 

Item

 

2.               Unregistered Sales of Equity Securities and Use of Proceeds

 

 

 

None

 

Item

 

3.              Defaults Upon Senior Securities

 

 

 

None

 

Item

 

4.              Submission of Matters to a Vote of Security Holders

 

 

 

None

 

Item

 

5.              Other Information

 

6

 

 

Forward-Looking Statements

The Quarterly Report on Form 10-Q contains certain statements of a forward-looking nature relating to future events or the future financial performance of the Company. Such statements are only predictions and the actual events or results may differ materially from the results discussed in the forward-looking statements. Factors that could cause or contribute to such differences include those discussed below as well as those discussed in other filings made by the Company with the Securities and Exchange Commission, including the Company’s Annual Report included in its annual filing on Form 10-K.

 

 

 

Item 6.              Exhibits

 

31.1

Certification Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

31.2

Certification Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

 

 

32

Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished pursuant to Item 601(b)(32) of Regulation S-K).

             

 

 

7

 

 

 

 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: November 2, 2012

         

Mobile Area Networks, Inc.

 

 

 

 

 

 

 

By:  

/s/ George Wimbish

 

 

George Wimbish

 

 

Director, Chairman and President

 

8

 

 

 

EXHIBIT 31.1

CERTIFICATION PURSUANT TO THE SARBANES-OXLEY ACT

I, George Wimbish, certify that:

1.

 

I have reviewed this quarterly report on Form 10-Q of Mobile Area Networks, Inc.;

 

2.

 

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

 

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for the periods presented in this report;

 

4.

 

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)

 

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

 

b)

 

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)

 

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)

 

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

 

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting , to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a)

 

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

b)

 

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

 

Date: October 31, 2012

 

/s/ George Wimbish

 

George Wimbish

 

Chief Executive Officer

 

 

 

 

EXHIBIT 31.2

CERTIFICATION PURSUANT TO THE SARBANES-OXLEY ACT

I, Jerald R. Hoeft, certify that:

1.

 

I have reviewed this quarterly report on Form 10-Q of Mobile Area Networks, Inc.;

 

2.

 

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.

 

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for the periods presented in this report;

 

4.

 

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)

 

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

 

b)

 

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)

 

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)

 

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.

 

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting , to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

a)

 

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

b)

 

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

 

Date: October 31, 2012

 

 

/s/ Jerald R. Hoeft

 

Jerald R. Hoeft

 

Chief Financial Officer

 

 

 

 

EXHIBIT 32

CERTIFICATION

In connection with the Quarterly Report of Mobile Area Networks, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, George Wimbish, Chief Executive Officer and Jerald R. Hoeft, Chief Financial Officer, of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

 

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

 

(2)

The information contained in the Report fairly presents, in all material respects the financial condition and results of the Company.

 

Date: October 31, 2012

/s/ George Wimbish

 

George Wimbish

 

Chief Executive Officer

 

 

 

/s/ Jerald R. Hoeft

 

Jerald R. Hoeft

 

Chief Financial Officer