UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X]
| | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September
30, 2014
| [ ]
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to ________
COMMISSION FILE NUMBER 000-54504
NOUVEAU VENTURES INC.
(Exact name of registrant as specified in its
charter)
NEVADA |
|
27-4636847 |
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
|
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3254 Prospect Ave. |
|
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La Crescenta, CA 91214 |
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89052 |
(Address of principal executive offices) |
|
(Zip Code) |
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(818) 249-1157 |
(Registrant's telephone number, including area code) |
|
|
|
Not Applicable |
(Former name, 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 [X ] 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 [X ] 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. See the definitions
of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2
of the Exchange Act.
Large
accelerated filer [ ] |
Accelerated
filer [ ] |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) |
Smaller
reporting company [X] |
Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
[ ] No [X]
Indicate
the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: As
of November 18, 2014, the Registrant had 50,818,888 shares of common stock outstanding.
Nouveau Ventures Inc.
(formerly SaaSMAX, Inc.)
For the quarter ended September 30, 2014
FORM 10-Q
PAGE NO.
PART I. FINANCIAL INFORMATION |
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Item 1. |
Financial Statements: |
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Condensed Balance Sheets (Unaudited) |
3 |
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Condensed Statements of Operations (Unaudited) |
4 |
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Condensed Statements of Cash Flows (Unaudited) |
5 |
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Notes to Condensed Financial Statements (Unaudited) |
6 |
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Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations |
13 |
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Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
17 |
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Item 4. |
Controls and Procedures |
18 |
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PART II. OTHER INFORMATION |
18 |
Item 1. |
Legal Proceedings |
18 |
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Item 1A. |
Risk Factors |
18 |
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Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
22 |
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Item 3. |
Defaults Upon Senior Securities |
22 |
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Item 4. |
Mine Safety Disclosures |
22 |
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Item 5. |
Other Information |
22 |
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Item 6. |
Exhibits |
23 |
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Signatures |
24 |
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 8-03
of Regulation S-X, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial
position, results of operations, cash flows, and stockholders' equity (defict) in conformity with generally accepted accounting
principles. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations
and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the
three and nine months ended September 30, 2014 are not necessarily indicative of the results that can be expected for the year
ending December 31, 2014.
As used in this Quarterly Report, the terms
“we,” “us,” “our,” “Nouveau” and the “Company” mean Nouveau Ventures
Inc. and its subsidiaries, unless otherwise indicated. All dollar amounts in this Quarterly Report are expressed in U.S. dollars,
unless otherwise indicated.
NOUVEAU VENTURES INC. |
(Fomerly SaaSMAX, Inc.) |
CONDENSED BALANCE SHEETS |
(Unaudited) |
| |
| |
|
| |
September 30, 2014 | |
December 31, 2013 |
| |
| |
|
ASSETS | |
| | | |
| | |
| |
| | | |
| | |
Current assets: | |
| | | |
| | |
Cash | |
$ | 2,146 | | |
$ | 4,670 | |
Total current assets | |
| 2,146 | | |
| 4,670 | |
| |
| | | |
| | |
Technology Acquisition Agreement, net | |
| 59,697 | | |
| — | |
Distributor Agreement, net | |
| 46,945 | | |
| 56,250 | |
| |
| | | |
| | |
Total assets | |
$ | 108,788 | | |
$ | 60,920 | |
| |
| | | |
| | |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |
| | | |
| | |
| |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable and accrued expenses | |
$ | 80,525 | | |
$ | 37,631 | |
Loan payable - related party | |
| 28,615 | | |
| 10,000 | |
Total current liabilities | |
| 109,140 | | |
| 47,631 | |
| |
| | | |
| | |
Total liabilities | |
| 109,140 | | |
| 47,631 | |
| |
| | | |
| | |
Commitments and contingencies | |
| | | |
| | |
| |
| | | |
| | |
Stockholders’ equity (deficit) | |
| | | |
| | |
Preferred stock, $0.001 par value; 20,000,000 shares authorized; no shares issued and outstanding | |
| — | | |
| — | |
Common stock, $0.001 par value; 1,200,000,000 shares authorized; 50,018,888 and 58,818,888 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively | |
| 50,019 | | |
| 58,819 | |
Additional paid-in capital | |
| 1,207,635 | | |
| 1,074,886 | |
Accumulated deficit | |
| (1,258,006 | ) | |
| (1,120,416 | ) |
Total stockholders’ equity (deficit) | |
| (352 | ) | |
| 13,289 | |
| |
| | | |
| | |
Total liabilities and stockholders’ equity (deficit) | |
$ | 108,788 | | |
$ | 60,920 | |
| |
| | | |
| | |
See accompanying notes to the unaudited condensed financial statements |
NOUVEAU VENTURES INC. |
(Formerly SaaSMAX, Inc.) |
CONDENSED STATEMENTS OF OPERATIONS |
(Unaudited) |
| |
| |
| |
| |
|
| |
Three months ended September 30, | |
Nine months ended September 30, |
| |
2014 | |
2013 | |
2014 | |
2013 |
| |
| |
| |
| |
|
Revenues |
|
$ |
— | |
|
$ |
— | |
$ |
— | |
$ |
— |
| |
| |
| |
| |
|
| |
| |
| |
| |
|
Operating expenses | |
| | | |
| | | |
| | | |
| | |
Professional fees | |
| 80,285 | | |
| 102,972 | | |
| 141,176 | | |
| 102,972 | |
Marketing | |
| — | | |
| 15,000 | | |
| — | | |
| 15,000 | |
General and administrative | |
| 5,123 | | |
| 25,194 | | |
| 15,164 | | |
| 25,194 | |
Total operating expenses | |
| 85,408 | | |
| 143,166 | | |
| 156,340 | | |
| 143,166 | |
| |
| | | |
| | | |
| | | |
| | |
Net operating loss from continuing operations | |
| (85,408 | ) | |
| (143,166 | ) | |
| (156,340 | ) | |
| (143,166 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other income | |
| | | |
| | | |
| | | |
| | |
Gain on cancellation of Earn-Out Shares | |
| — | | |
| — | | |
| 18,750 | | |
| — | |
Total other income | |
| — | | |
| — | | |
| 18,750 | | |
| — | |
| |
| | | |
| | | |
| | | |
| | |
Net loss from continuing operations | |
| (85,408 | ) | |
| (143,166 | ) | |
| (137,590 | ) | |
| (143,166 | ) |
| |
| | | |
| | | |
| | | |
| | |
Discontinued operations: | |
| | | |
| | | |
| | | |
| | |
Loss from discontinued operations (including $0 from gain on disposal) | |
| — | | |
| — | | |
| — | | |
| (273,510 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss | |
$ | (85,408 | ) | |
$ | (143,166 | ) | |
$ | (137,590 | ) | |
$ | (416,676 | ) |
| |
| | | |
| | | |
| | | |
| | |
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| | |
Weighted average number of common shares outstanding - basic and fully diluted | |
| 49,901,497 | | |
| 53,386,632 | | |
| 51,989,584 | | |
| 53,234,016 | |
| |
| | | |
| | | |
| | | |
| | |
Net loss per share - Basic and fully diluted | |
| | | |
| | | |
| | | |
| | |
From continuing operations | |
$ | (0.01 | ) | |
$ | (0.00 | ) | |
$ | (0.01 | ) | |
$ | (0.00 | ) |
From discontinued operations | |
| — | | |
| — | | |
| — | | |
| (0.02 | ) |
Net loss per share - basic and fully diluted | |
$ | (0.01 | ) | |
$ | (0.01 | ) | |
$ | (0.01 | ) | |
$ | (0.02 | ) |
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See accompanying notes to the unaudited consolidated financial statements | | |
NOUVEAU VENTURES INC. |
(Formerly SaaSMAX, Inc.) |
CONDENSED STATEMENTS OF CASH FLOWS |
(Unaudited) |
| |
| |
|
| |
Nine months ended September 30, |
| |
2014 | |
2013 |
| |
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Cash flows from operating activities | |
| | | |
| | |
Net loss | |
$ | (137,590 | ) | |
$ | (416,676 | ) |
Loss from discontinued operations | |
| — | | |
| 273,510 | |
Adjustments to reconcile net loss to net cash used in operating activities | |
| | | |
| | |
Stock based compensation | |
| 82,699 | | |
| 18,750 | |
Gain on cancellation of Earn-Out Shares | |
| (18,750 | ) | |
| — | |
Depreciation and amortization | |
| 9,608 | | |
| 2,421 | |
Changes in operating assets and liabilities | |
| | | |
| | |
Accounts payable and accrued expenses | |
| 42,894 | | |
| 22,961 | |
Net cash used in operating activities - continuing operations | |
| (21,139 | ) | |
| (99,034 | ) |
Net cash provided by (used in) operating activities - discontinued operations | |
| — | | |
| (99,090 | ) |
Net cash used in operating activities | |
| (21,139 | ) | |
| (198,124 | ) |
| |
| | | |
| | |
Cash flows from investing activities | |
| | | |
| | |
Purchase of distribution agreement | |
| — | | |
| (50,000 | ) |
Payment for discontinued operations | |
| — | | |
| (7,131 | ) |
Net cash used in investing activities - continuing operations | |
| — | | |
| (57,131 | ) |
Net cash used in investing activities - discontinued operations | |
| — | | |
| (35,154 | ) |
Net cash used in investing activities | |
| — | | |
| (92,285 | ) |
| |
| | | |
| | |
Cash flows from financing activities | |
| | | |
| | |
Proceeds from loan payable - related party | |
| 18,615 | | |
| — | |
Proceeds from issuance of common stock | |
| — | | |
| 150,000 | |
Net cash provided by financing activities - continuing operations | |
| 18,615 | | |
| 150,000 | |
Net cash provided by financing activities - discontinued operations | |
| — | | |
| 125,000 | |
Net cash provided by financing activities | |
| 18,615 | | |
| 275,000 | |
| |
| | | |
| | |
Net increase (decrease) in cash | |
| (2,524 | ) | |
| (15,409 | ) |
| |
| | | |
| | |
Cash, beginning of period | |
| 4,670 | | |
| 16,375 | |
| |
| | | |
| | |
Cash, end of period | |
$ | 2,146 | | |
$ | 966 | |
| |
| | | |
| | |
Supplemental disclosure of cash flow information: | |
| | | |
| | |
Income taxes paid | |
$ | — | | |
$ | — | |
Interest paid | |
$ | — | | |
$ | — | |
| |
| | | |
| | |
Supplemental disclosure of noncash investing and financing activities: | |
| | |
Issuance of stock for Technology Acquisition Agreement | |
$ | 60,000 | | |
$ | — | |
Net liabilities on transfer of Subsidiary | |
$ | — | | |
$ | 77,387 | |
Issuance of common stock for Distribution Agreement | |
$ | — | | |
$ | 2,500 | |
Cancellation of shares of common stock | |
$ | 9,000 | | |
$ | 2,157 | |
Issuance of common stock for conversion of debt | |
$ | — | | |
$ | 127,740 | |
Issuance of Earn-Out Shares | |
$ | — | | |
$ | 1,500 | |
| |
| | | |
| | |
See accompanying notes to the unaudited condensed financial statements |
Nouveau Ventures
Inc.
(Formerly SaaSMAX, Inc.)
Notes to the Condensed Unaudited Financial Statements
September 30, 2014
NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nouveau Ventures Inc. (“Nouveau”,
the “Company”, “we”, “us” or “our”) formerly known as SaaSMAX, Inc. (“SaaSMAX”)
was incorporated on January 19, 2011 (“Inception”) under the laws of the State of Nevada. Effective September 8, 2014,
SaaSMAX merged with our subsidiary (the “Nouveau”). In accordance with the merger, all of the issued and outstanding
shares of Nouveau were cancelled, all issued and outstanding shares of SaaSMAX continued to be issued and outstanding shares of
the merged company and we changed our name to Nouveau Ventures Inc. Through the end of June 2013, the Company developed and launched
an online global business-to-business marketplace for software-as-a-service (“SAAS”) providers, resellers and users.
On July 1, 2013, the Company transferred all of its assets and business operations to SaaSMAX Corp. (“Corp”), the Company’s
then wholly-owned subsidiary, in exchange for Corp assuming all of the Company’s indebtedness at that date, other than Convertible
Notes totaling $225,000. On July 10, 2013, the Company entered into a Share Exchange Agreement (the “Share Exchange Agreement”)
with Dina Moskowitz, the Company’s sole Executive Officer and Director whereby Ms. Moskowitz cancelled 25,880,448 of her
common shares of the Company, in consideration for her acquisition of all of the issued and outstanding common shares of Corp.
See further discussion in Note 2 – Discontinued Operations.
Effective July 9, 2013 the Company entered into
a distribution agreement with California Clean Air Technologies, LLC, a Nevada limited liability company (“CCAT”),
and we are now focusing our business operations on the marketing, selling and distribution of a propane diesel dual fuel retrofit
system (“DFRS Products”) owned by CCAT (“continuing operations”).
Going concern
As of September 30, 2014, we had current
assets of $2,146, comprising of cash, and current liabilities of $109,140, resulting in a working capital deficit of
$106,995. We had neither the funds nor an established profitable business to finance payment of our liabilities in the normal
course of business or our ongoing business plan. No assurance can be given that the Exclusive Distributor Agreement (see Note
4) with CCAT will be successful and result in profits for the Company. Our business plan requires that we raise additional
capital to fund our operations throughout 2014 and there can be no assurance that we will be able to raise any or all of the
capital required. We have generated no revenue from our operations as a distributor of DRFS Products and have incurred a net
loss of $137,590 and net cash used in operating activities of $21,139 during the nine months ended September 30, 2014. We
will have to obtain additional funding from the sale of our securities, the sale of debt instruments or from strategic
transactions in order to fund our current level of operations and there can be no assurance that we will be able to raise any
or all of the capital required. If the Company is unable to generate sufficient cash flow from operations and, or, continue
to obtain financing to meet its working capital requirements, it may have to curtail its business sharply or cease business
altogether.
The accompanying financial statements have been
prepared assuming that the Company will continue as a going concern that contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. However, the ability of the Company to continue as a going concern on a longer-term
basis will be dependent upon the ability to generate sufficient cash flow from operations to meet its obligations on a timely basis,
the ability to successfully raise additional financing, and the ability to ultimately attain profitability.
Basis of presentation
The accompanying
unaudited financial statements of Nouveau have been prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and applicable regulations of the U.S. Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles
generally accepted in the United States have been omitted pursuant to such rules and regulations. In the opinion of management,
all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of financial position
and results of operations have been included. Our operating results for the three and nine months ended September 30, 2014 are
not necessarily indicative of the results that may be expected for the year ending December 31, 2014. The accompanying unaudited
financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December
31, 2013, which are included in our Annual Report on Form 10-K.
Revenue recognition
Upon the generation of revenue, the Company
shall follow the guidance of the Securities and Exchange Commission’s Staff Accounting Bulletin 104 for revenue recognition.
The Company will recognize revenue when it is realized or realizable and earned. The Company considers revenue realized or realizable
and earned when it has persuasive evidence of an arrangement that the services have been rendered to the customer, the sales price
is fixed or determinable, and collectability is reasonably assured. Deferred revenues shall be recorded when cash has been collected,
however the related service has not yet been provided.
Use of estimates
The preparation of financial statements in conformity
with generally accepted accounting principles 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
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash
For purposes of the balance sheet and statement
of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or
less to be cash equivalents.
Intangible Assets
Purchased intangible assets are recorded
at cost, where cost is the amount of cash or cash equivalents paid or the fair value of other consideration given to acquire an
asset at the time of its acquisition. The cost of such an intangible asset is measured at fair value unless the exchange transaction
lacks commercial substance or the fair value of neither the asset received nor the asset given up is reliably measurable. If the
fair value of either the asset received or the asset given up can be measured reliably, then the fair value of the asset given
up is used to measure cost unless the fair value of the asset received is more clearly evident.
Intangible assets with finite useful
lives that are acquired separately are carried at cost less accumulated amortization and accumulated impairment losses. Amortization
is recognized on a straight-line basis over their estimated useful lives. The estimated useful life and amortization method are
reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.
Intangible assets which have indefinite lives are not amortized, and are stated at cost less accumulated impairment losses.
Fair value estimates
Pursuant to the Accounting Standards Codification
(“ASC”) No. 820, “Disclosures About Fair Value of Financial Instruments”, the Company records its
financial assets and liabilities at fair value. ASC No. 820 provides a framework for measuring fair value, clarifies the definition
of fair value and expands disclosures regarding fair value measurements. ASC No. 820 establishes a three-tier hierarchy, which
prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1—Inputs
are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date.
Level 2—Inputs
(other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through
correlation with market data at the measurement date and for the duration of the asset/liability’s anticipated life.
Level 3—Inputs
reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement
date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.
The fair value of a financial instrument is
the amount for which the instrument could be exchanged in a current transaction between willing parties. Cash, accounts payable,
accrued expenses and loan payable approximate fair value because of the short maturity of these instruments. The Company currently
has no other financial assets or liabilities that are measured at fair value.
The Company’s non-financial assets, which
consist of an Exclusive Distributor Agreement (see Note 4), are not required to be measured at fair value on a recurring basis.
However, if certain triggering events occur, or if an annual impairment test is required and the Company is required to evaluate
the non-financial asset for impairment, a resulting asset impairment would require that the non-financial asset be recorded at
the fair value.
Net loss per common share
Net loss per common share is computed pursuant
to ASC No. 260 “Earnings Per Share”. Basic net loss per share is computed by dividing net loss by the weighted average
number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing net loss by
the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period. Dilutive
loss per share excludes all potential common shares if their effect is anti-dilutive.
Recently issued accounting pronouncements
In June 2014, the Financial Accounting Standards
Board ("FASB") issued update ASU 2014-10, “Development Stage Entities (Topic 915)”. Amongst
other things, the amendments in this update removed the definition of development stage entity from Topic 915, thereby removing
the distinction between development stage entities and other reporting entities from US GAAP. In addition, the amendments
eliminate the requirements for development stage entities to (1) present inception-to-date information on the statements of income,
cash flows and shareholders’ equity, (2) label the financial statements as those of a development stage entity; (3)
disclose a description of the development stage activities in which the entity is engaged and (4) disclose in the first year in
which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments
are effective for annual reporting periods beginning after December 31, 2014 and interim reporting periods beginning after December
15, 2015, however entities are permitted to early adopt for any annual or interim reporting period for which the financial statements
have yet to be issued. The Company has elected to early adopt these amendments and accordingly have not labeled the financial
statements as those of a development stage entity and have not presented inception-to-date information on the respective financial
statements.
In August 2014, the FASB issued ASU No.
2014-15, “Presentation of Financial Statements—Going Concern.” The provisions of ASU No. 2014-15 require management
to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that
are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt,
(2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating
effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration
of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and
(6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be
issued). The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods
and interim periods thereafter. The Company is currently assessing the impact of ASU No. 2014-15 on the Company’s consolidated
financial statements.
Other accounting standards that have been issued
or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated
financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact
on or are unrelated to its financial condition, results of operations, cash flows or disclosures.
NOTE 2 – DISCONTINUED OPERATIONS
As a result of the Share Exchange Agreement
entered into on July 10, 2013, with Ms. Moskowitz, all assets and liabilities, other than Convertible Notes totaling $225,000,
of Corp were sold to Ms. Moskowitz. The operations relating to that business prior to July 1, 2013 are reported as discontinued
operations in the accompanying consolidated statements of operations.
The components of the discontinued operations
are as follows:
| |
Nine months ended September 30, 2013 |
| |
| | |
Revenues | |
$ | 6,628 | |
Cost of services | |
| 4,825 | |
Gross profit | |
| 1,803 | |
Operating expenses | |
| | |
Salaries and professional fees | |
| 84,409 | |
Technology and development | |
| 19,285 | |
General and administrative | |
| 44,983 | |
Total operating expenses | |
| 148,677 | |
Loss from operations | |
| (146,874 | ) |
Other expense | |
| | |
Interest expense | |
| 102,636 | |
Legal settlement | |
| 24,000 | |
Total other expense | |
| 126,636 | |
Net loss | |
| (273,510 | ) |
NOTE 3 – RELATED PARTY TRANSACTIONS
As of September 30, 2014, a shareholder of the
Company has loaned us $28,615 for working capital needs. The loans accrue interest at 10% per annum, compounded annually, and have
no maturity date.
On July 22, 2013, the Company entered into consulting
agreements with Mr. Rainer, to act as Director, Chief Financial Officer, Secretary and Treasurer of the Company and Mr. Moll, to
act as Director, Chief Executive Officer and President of the Company (the “Consultant(s)”). The consulting agreements
were to continue until July 21, 2023, subject to earlier termination as provided in the consulting agreements. During the term
of the consulting agreements, and subject to the Company completing equity financing totaling not less than $1,000,000 the Company
shall pay each of the Consultants a base consulting fee of $5,000 per month in consideration of their services.
Effective February 4, 2014, Harold C. Moll resigned
as our Chief Executive Officer, President and as a Director. The resignations of Mr. Moll were not due to or caused by any disagreement
with us, related to our operations, policies, practices or otherwise. Rob Rainer, our Chief Financial Officer, Secretary and Treasurer
and a Director, was appointed our Chief Executive Officer and President to fill the vacancies resulting from Mr. Moll’s resignations.
In connection with Mr. Moll’s resignation,
Mr. Moll agreed to terminate his Management Consulting Agreement dated July 22, 2013 and surrender for cancellation to us the 9,000,000
Earn-Out Shares issued to him under his management consulting agreement. In addition, Mr. Moll agreed to transfer 7,262,304 shares
of our common stock held by him to Rob Rainer.
See also Note 5 regarding Earn-Out Shares granted
to the Consultants.
NOTE 4 – EXCLUSIVE DISTRIBUTOR AGREEMENT
The Company entered into an agreement dated
July 9, 2013 (the “Exclusive Distributor Agreement”) with California Clean Air Technologies, LLC, a Nevada limited
liability company (“CCAT”) whereby the Company obtained the exclusive distribution rights in Canada (non-exclusive
for British Columbia, Alberta and Saskatchewan) to market, sell and distribute a propane diesel duel fuel retrofit system (“DFRS
Products”) owned by CCAT.
CCAT is a Southern California-based developer,
marketer and distributor of diesel engine retrofit products, including a patent-pending Propane Diesel Dual-Fuel Retrofit SystemTM
(“DFRS”). DFRS is a retrofit system that demonstrates high (approximately 50%) substitution rates of propane fuel for
diesel fuel without loss of power or torque, while exhibiting very low emissions of pollutants, such as hydrocarbons (HC), nitrogen
oxides (NOx), carbon monoxide (CO), and particulate matter (PM or soot).
The Exclusive Distributor Agreement is for a
term of five (5) years unless sooner terminated in accordance with the provisions of the Exclusive Distributor Agreement. The
Company has the right to extend the Agreement for an additional five (5) year term, if it is in compliance with the Minimum Royalty
requirements described below.
Under the terms of the Exclusive Distributor
Agreement, as consideration for the exclusive distribution rights, the Company (i) issued 300,000 shares of its common stock to
CCAT, and (ii) issued a promissory note in the principal amount of $50,000 payable without interest on July 30, 2013. The
promissory note has been paid in full as of December 31, 2013. As additional consideration for the Exclusive Distributor Agreement,
the Company will pay to CCAT a royalty of $750 per sale of DFRS Products. CCAT will have the exclusive rights to install
the DFRS Products at a fixed price between $2,500 and $5,000, depending on the size of the engine. CCAT may, on 30 days written
notice, terminate the Exclusive Distributor Agreement if the Company fails to achieve sufficient sales to generate Minimum Royalties
of $22,500 (Year 1), $37,500 (Year 2), $60,000 (Year 3), $82,500 (Year 4), and $105,000 (Year 5).
The Exclusive Distributor Agreement was valued
by the Company at $62,500 and is being amortized over the 5 year term. Amortization expense totaling $3,194 and $9,305 is included
in the accompanying statements of operations for the three and nine months ended September 30, 2014.
NOTE 5 – STOCKHOLDERS’ EQUITY
(DEFICIT)
On August 19, 2014, we entered into a Technology
Acquisition Agreement (the “Technology Acquisition Agreement”) with David St. James (the “Inventor”). Closing
of the Technology Acquisition Agreement occurred on August 23, 2014 (“Closing”). Under the terms of the Technology
Acquisition Agreement, the Inventor assigned his right, title and interest in a patented technology for optimizing airflow to internal
combustion engines to create more power (the “Technology”) and inventions utilizing the Technology that are the subject
of United States Patent No. US 7,849,840 (the “Patent”) in consideration of the following:
1. Issuance to the Inventor of
200,000 shares of our common stock (the “Shares”) valued at $0.30 per share, representing the most recent price for
which our common stock had sold in the market place. The Shares are held in the custody of our legal counsel and released to the
Inventor on the following schedule:
(a) 50,000 Shares released on Closing;
(b) 50,000 Shares released four (4)
months after Closing;
(c) 50,000 Shares released eight
(8) months after Closing; and
(d) 50,000 Shares released twelve
(12) months after Closing.
Notwithstanding that the Shares are
held in custody and are not released to the Inventor, all voting and dividend rights in respect of the Shares accrue to the Inventor
and he is entitled to exercise such rights and receive such benefits in respect of the Shares.
The Technology Acquisition Agreement
was valued at the total fair market value of the Shares issued of $60,000 in the accompanying balance sheet and is being amortized
over the remaining 16 year life of the Patent.
2. The Inventor also retained a
royalty of 5% of gross revenues from the exploitation of the Technology, subject to minimum royalty payments of $1,500 per calendar
month.
3. As further consideration for
the sale, assignment and transfer of the Technology, we agreed to make expenditures of $100,000 to develop and commercialize the
Technology within twelve (12) months from Closing.
We have the right to sub-license our
interest in the Technology, subject to the Inventor being paid 30% of all revenues obtained through sub-licensing.
In the event the Company is unable
to fulfill its obligations under number 2 or 3 above and such default is not cured within 15 days written notice, the Technology
Acquisition Agreement may be terminated and Nouveau shall re-assign the Patent and transfer the intellectual property to the Inventor.
Any Shares not released, or scheduled to be released in the next 30 days from the date of termination shall be returned to the
Company for cancellation and the Inventor shall have no further rights in respect of such Shares. In the event of termination,
the value of the Patent, net of accumulated amortization will be written down to $0.
During the nine month ended September 30, 2014,
the Inventor earned $3,000 in royalties of which $1,500 was accrued as of September 30, 2014. The Company has not incurred any
development fees related to the Technology as of September 30, 2014.
On August 23, 2014, we issued the Shares in
the name of the Inventor and released 50,000 of the Shares to him in accordance with the Technology Acquisition Agreement.
Effective April 16, 2014 the Company completed
a 12:1 forward stock split. All numbers for shares of common stock disclosed in these financial statements have been retrospectively
restated for this forward stock split.
During August 2013, the Company received proceeds
totaling $100,000 from the sale of 2,400,000 shares of our common stock and granted 1,200,000 shares of common stock, valued at
$50,000, as payment in full of the $50,000 promissory note issued for the Exclusive Distributor Agreement.
On July 22, 2013, we issued a total of 18,000,000
shares of our common stock (the “Earn-Out Shares”) to both Mr. Moll and Mr. Rainer under the terms of their consulting
agreements. The Earn-Out Shares are held in the custody of the Company and will be released on the basis of 10% of the original
number of Earn-Out Shares on each anniversary of the consulting agreements. The Earn-Out Shares are not beneficially owned by Mr.
Moll or Mr. Rainer until they are released to them on the respective anniversary dates. The Earn-Out Shares may not be sold, transferred
or pledged, and are subject to forfeiture under the termination provisions of the management consulting agreements. The Earn-Out
Shares were valued at $750,000 based on the grant date fair value and are included in additional paid in capital as deferred compensation.
During the three and nine months ended September 30, 2014, we recognized $63,949 and $82,699 of stock based compensation related
to the Earn-Out Shares, which is included in professional fees in the accompanying condensed statements of operations.
As discussed above in Note 3 – Related
Party Transactions, Mr. Moll resigned his positions effective February 4, 2014 and his 9,000,000 Earn-Out Shares were cancelled.
As a result of the cancellation, we recognized a gain in the amount of $18,750 which is included in other income in the accompanying
condensed consolidated statements of operations for the nine months ended September 30, 2014.
On July 18, 2013, we issued an aggregate of
9,642,888 shares of our common stock as payment for $225,000 of Convertible Notes.
On July 9, 2013, we issued 300,000 shares of
our common stock, valued at $12,500, to CCAT as part consideration of the exclusive distribution rights granted by CCAT to the
Company. The shares were issued pursuant to Rule 506 of Regulation D of the Securities Act and CCAT has represented that it is
an “accredited investor” as defined in Regulation D of the Securities Act.
On July 8, 2013, as consideration for the acquisition
of all of the issued and outstanding common shares of Corp, Ms. Moskowitz cancelled 25,880,448 of her common shares of the Company.
The shares were valued at $0.042 per share or $1,078,352 based on the most recent sale of our common stock to accredited investors.
NOTE 6 –STOCK INCENTIVE PLAN
In accordance with the Company’s 2011
Stock Incentive Plan, (the “Plan”), we are authorized to grant up to 12,000,000 shares of common stock, stock options
intended to qualify as Incentive Stock Options, “ISO”, under Section 422 of the Internal Revenue Code of 1986, as amended,
non-qualified options and stock appreciation rights to our employees, officers, directors and consultants. As a result of the Share
Exchange Agreement, on May 17, 2013 we notified all of our option holders, holding a total of 5,301,660 stock options, that their
options were being cancelled as they relate to discontinued operations.
NOTE 7 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events
from the balance sheet date through the date the financial statements were issued and determined there are no items to disclose
other than as follows:
Related Party Loan
On November 12, 2014, a shareholder of the Company
loaned us $1,530 for working capital needs. The loan accrues interest at 10% per annum, compounded annually, and has no maturity
date.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this Quarterly
Report on Form 10-Q constitute "forward-looking statements.” These statements, identified by words such as “plan,”
"anticipate,” "believe,” "estimate,” "should,” "expect" and similar expressions
include our expectations and objectives regarding our future financial position, operating results and business strategy. These
statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other
factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those
described in the forward-looking statements. Such risks and uncertainties include those set forth under the caption "Part
II, Item 1A. Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. We advise you to carefully review the reports
and documents we file from time to time with the United States Securities and Exchange Commission (the “SEC”), particularly
our periodic reports filed with the SEC pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”).
OVERVIEW
We were incorporated on January 19, 2011 under
the laws of the State of Nevada. Effective September 8, 2014, we changed our name from “SaaSMax, Inc.” to “Nouveau
Ventures Inc.” (the “Name Change”). We were formerly developing and launching an online business-to-business
marketplace and channel management tools for the rapidly growing software-as-a-service ("SAAS") market (the “SaaSMAX
Marketplace”). We have decided to shift our business operations to the marketing, selling and distribution of a propane diesel
dual fuel retrofit system (“DFRS Products”) owned by California Clean Air Technologies, LLC, a Nevada limited liability
company (“CCAT”).
Since our departure from the SAAS industry and
our venture into the diesel retrofit industry, we have commenced our marketing operations for the DFRS Products. We engaged a marketing
consultant (the “Canadian Consultant”) and paid $15,000 for marketing services during our 2013 fiscal year.
Our Canadian Consultant has been attending installations
of the DFRS Products in the United States in preparation for potential sales and installations in Canada.
Exclusive Distributor Agreement
We entered into an agreement dated July 9, 2013
(the “Exclusive Distributor Agreement”) with CCAT for the exclusive distribution rights in Canada (non-exclusive for
British Columbia, Alberta and Saskatchewan) to market, sell and distribute DFRS Products owned by CCAT. See “Exclusive Distributor
Agreement” below.
CCAT and DFRS Products
CCAT is a Southern California-based developer,
marketer and distributor of diesel engine retrofit products, including a patent-pending Propane Diesel Dual-Fuel Retrofit SystemTM
(“DFRS”). DFRS is a retrofit system that demonstrates high (approximately 50%) substitution rates of propane fuel for
diesel fuel without loss of power or torque, while exhibiting very low emissions of pollutants, such as hydrocarbons (HC), nitrogen
oxides (NOx), carbon monoxide (CO), and particulate matter (PM or soot).
In November 2011, the California Air Resource
Board (“CARB”) awarded CCAT an Alternative Fuel Certification for a dual-fuel device. CARB is a widely recognized global
leader in air quality regulations and related research. CARB certification is recognized by the US EPA and all 50 states.
The national market contains approximately 16
million potential engines to be retrofitted on-road and 4.4 million off-road. CCAT’s initial business focus is to sell to
the off-road mobile and stationary markets where it believes it has no serious competition.
Acquisition of CCAT
We are also negotiating to acquire CCAT. The
proposed acquisition would involve the issuance of a very large number (control block) of our common shares to CCAT’s owners
and would be conditional on us having available significant financing for the development of CCAT’s business. The exact terms
of the proposed acquisition have not been established. There is no assurance that the negotiations will be successful or that we
will be able to raise the necessary funding for CCAT’s business.
Recent Corporate Developments
We experienced the following Corporate Developments
since the filing of our Form 10-Q for the nine months ended September 30, 2014:
Technology Acquisition Agreement
On August 19, 2014, we entered into a Technology
Acquisition Agreement (the “Technology Acquisition Agreement”) with David St. James (the “Inventor”). Closing
of the Technology Acquisition Agreement occurred on August 23, 2014 (“Closing”). Under the terms of the Technology
Acquisition Agreement, the Inventor assigned his right, title and interest in a patented technology for optimizing airflow to internal
combustion engines to create more power (the “Technology”) and inventions utilizing the Technology that are the subject
of United States Patent No. US 7,849,840 (the “Patent”) in consideration of the following:
1. Issuance to the Inventor of 200,000 shares
of our common stock (the “Shares”) at a deemed price of $0.30 per share, representing the most recent price for which
our common stock sold in the market place. The Shares are held in the custody of our legal counsel and released to the Inventor
on the following schedule:
(a) 50,000 Shares released on Closing;
(b) 50,000 Shares released four
(4) months after Closing;
(c) 50,000 Shares released eight
(8) months after Closing; and
(d) 50,000 Shares released twelve
(12) months after Closing.
Notwithstanding that the Shares are held in
custody and are not released to the Inventor, all voting and dividend rights in respect of the Shares accrue to the Inventor and
he is entitled to exercise such rights and receive such benefits in respect of the Shares.
The Technology Acquisition Agreement was valued
at the total fair market value of the Shares issued of $60,000 in the accompanying balance sheet and is being amortized over the
remaining 16 year life of the Patent.
2. The Inventor also retained a royalty of
5% of gross revenues from the exploitation of the Technology, subject to minimum royalty payments of $1,500 per calendar month
(the “Minimum Royalties”).
3. As further consideration for the sale,
assignment and transfer of the Technology, we agreed to make expenditures of $100,000 to develop and commercialize the Technology
within twelve (12) months from Closing.
In the event the Company is unable to fulfill
its obligations under number 2 or 3 above and such default is not cured within 15 days written notice, the Technology Acquisition
Agreement may be terminated and Nouveau shall re-assign the Patent and transfer the intellectual property to the Inventor. Any
Shares not released, or scheduled to be released in the next 30 days from the date of termination shall be returned to the Company
for cancellation and the Inventor shall have no further rights in respect of such Shares. In the event of termination, the value
of the Patent, net of accumulated amortization will be written down to $0.
We have the right to sub-license our interest
in the Technology, subject to the Inventor being paid 30% of all revenues obtained through sub-licensing.
On August 23, 2014, the Inventor was appointed
as our Vice-President, Secretary and as a Director.
On August 23, 2014, on Closing of the Technology
Acquisition Agreement, we issued an aggregate of 200,000 shares of our common stock (the “Shares”)
in the name of the Inventor and released 50,000 of the Shares to him. The Shares were issued as part consideration for the entry
into the Technology Acquisition Agreement and pursuant to the exemption from registration requirements contained in Section 4(2)
of the Securities Act.
Merger and Name Change
Effective September 8, 2014, we changed our
name to “Nouveau Ventures Inc.” (the “Name Change”). To effect the Name Change, our wholly-owned subsidiary,
Nouveau Ventures Inc., merged with and into us, and we continued as the surviving entity. Other than the Name Change, no other
changes were made to the Company’s articles of incorporation and shareholder approval for the merger was not required.
Amendment To Articles Of Incorporation
Effective April 16, 2014, we amended our Articles
of Incorporation in accordance with Article 78.207 of Chapter 78 of the Nevada Revised Statutes by increasing our issued and authorized
common stock on a twelve-for-one basis (the “Stock Split”). Accordingly, our authorized common stock was increased
from 100,000,000 shares, par value $0.001 per share, to 1,200,000,000 shares, par value $0.001 per share and our issued and outstanding
shares of common stock increased correspondingly from 4,151,574 shares to 49,818,888 shares.
As a result of the Stock Split, our common stock
will trade under the symbol “SAAXD” for a period of 20 trading days beginning April 16, 2014. After 20 trading days,
the “D” will be removed from our symbol.
A copy of our filed stamped Certificate of Change
to its authorized capital is attached as an exhibit to our Current Report on Form 8-K, filed with the SEC on April 17, 2014.
RESULTS OF OPERATIONS
The following discussion should be read
in conjunction with our interim financial statements and the related notes that appear elsewhere in this Quarterly Report.
Three Months Ended September 30, 2014 (“Q3 2014”)
Compared to the Three Months Ended September 30, 2013 (“Q3 2013”) and Nine Months Ended September 30, 2014 Compared
to the Nine Months Ended September 30, 2013
| |
Three months ended September 30, | |
% Change | |
Nine months ended September 30, | |
% Change |
| |
2014 | |
2013 | |
| |
2014 | |
2013 |
| |
| |
| |
| |
| |
| |
|
Revenues | |
$ | — | | |
$ | — | | |
| 0 | % | |
$ | — | | |
$ | — | | |
| 0 | % |
Operating expenses | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Professional fees | |
| 80,285 | | |
| 102,972 | | |
| -22 | % | |
| 141,176 | | |
| 102,972 | | |
| 37 | % |
Marketing | |
| — | | |
| 15,000 | | |
| -100 | % | |
| — | | |
| 15,000 | | |
| -100 | % |
General and administrative | |
| 5,123 | | |
| 25,194 | | |
| -80 | % | |
| 15,164 | | |
| 25,194 | | |
| -40 | % |
Total operating expenses | |
| 85,408 | | |
| 143,166 | | |
| -40 | % | |
| 156,340 | | |
| 143,166 | | |
| 9 | % |
Net operating loss from continuing operations | |
| (85,408 | ) | |
| (143,166 | ) | |
| -40 | % | |
| (156,340 | ) | |
| (143,166 | ) | |
| 9 | % |
Other income (expense) | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Gain on cancellation of Earn-Out Shares | |
| — | | |
| — | | |
| 0 | % | |
| 18,750 | | |
| — | | |
| 100 | % |
Loss from discontinued operations (including $0 from gain on disposal) | |
| — | | |
| — | | |
| 0 | % | |
| — | | |
| (273,510 | ) | |
| -100 | % |
Total other income (expense) | |
| — | | |
| — | | |
| 0 | % | |
| 18,750 | | |
| (273,510 | ) | |
| 107 | % |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Net loss | |
$ | (85,405 | ) | |
$ | (143,166 | ) | |
| -40 | % | |
$ | (137,590 | ) | |
$ | (416,676 | ) | |
| 67 | % |
Revenues
We have not recognized any revenues since shifting
our business operations to the marketing, selling and distribution of DFRS Products in July 2013. We expect to generate revenue
with our acquisition of the rights to sell the DFRS Products. However, we do not currently have any sales or revenue history with
respect to the DFRS Products or the diesel retrofit industry. As such, there is no assurance that our business efforts in this
area will prove to be successful.
Operating Expenses
Our operating expenses decreased 40% during
Q3 2014 in comparison to Q3 2013. The decrease was due to several factors including a decrease in legal fees of approximately $55,000
as services associated with the Share Exchange Agreement entered into during Q3 2013 were not necessary in Q3 2014. This decrease
was offset by an approximate $45,000 increase in the value of the Earn-Out Shares to Mr. Rainer due to an increase in the fair
market value of the shares from Q3 2013 to Q3 2014. Operating expenses also decrease due to marketing fees of $15,000 paid during
Q3 2013 to our Canadian Consultant to promote the DFRS product in the US and Canada for which no such expenditure was necessary
in Q3 2014.
Our operating expenses increased 9% during the
nine months ended September 30, 2014 in comparison to the nine months ended September 30, 2013 due to the discontinuation of our
SAAS operations effective June 30, 2013. Our operating expenses shown above during the nine months ended September 30, 2013 consist
of expenses incurred while focusing on the diesel retrofit industry for the period from July 1, 2013 through September 30, 2013.
Operating expenses for the period from January 1, 2013 through June 30, 2013 represent those expenses incurred while operating
in the SAAS industry and accordingly, are included in our loss from discontinued operations.
Professional fees consist primarily of fees
associated with legal and accounting fees resulting from the filing requirements necessary for a public company, as well as, stock
based compensation related to agreements with Chief Executive Officer and the Inventor.
Marketing expenses consist of consulting fees
incurred in the development and marketing of the DFRS Products.
General and administrative expenses primarily
relate to management fees, regulatory expenses, depreciation, Internet services, travel, entertainment, automotive and office expenses.
Gain On Cancellation of Earn-Out Shares
Effective February 4, 2014, Harold C. Moll resigned
as our Chief Executive Officer, President and as a Director of the Company. Mr. Moll agreed to terminate his Management Consulting
Agreement dated July 22, 2013 and surrender for cancellation to us the 9,000,000 Earn-Out Shares issued to him under his management
consulting agreement. As a result of the cancellation, we recognized a gain on cancellation of earn-out shares in the amount of
$18,750.
Loss From Discontinued Operations
During the nine months ended September 30, 2013,
we recorded a loss from discontinued operations of $273,510. Loss from discontinued operations consists of our operating activities
prior to our departure from the SAAS industry and our venture into the diesel retrofit industry on July 1, 2013. Our operating
expenses as disclosed relate to our operating activities with respect to the DFRS Products.
We expect our operating expenses to change with
our departure from the SAAS industry and our venture into the diesel retrofit industry. As such, our previous results of operations
will not be indicative of our future results of operations.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital
| |
At September 30, 2014 | |
At December 31, 2013 | |
Percentage Change |
Current Assets | |
$ | 2,146 | | |
$ | 4,670 | | |
| -54 | % |
Current Liabilities | |
| (109,141 | ) | |
| (46,631 | ) | |
| 134 | % |
Working Capital Deficit | |
$ | (106,995 | ) | |
$ | (42,961 | ) | |
| 149 | % |
Cash Flows
| |
Nine months ended September 30, |
| |
2014 |
Cash Flows Used In Operating Activities | |
$ | (21,139 | ) |
Cash Flows Used In Investing Activities | |
| — | |
Cash Flows Provided By Financing Activities | |
| 18,615 | |
Net Increase (Decrease) In Cash During Period | |
$ | (2,524 | ) |
Our only source of financing for the nine month
period ended September 30, 2014 were short-term loans from a shareholder. The notes bear interest at 10% per annum and are payable
on demand.
Our plan of operation calls for us to spend
significantly more than our current capital resources or the amount of financing that we have been able to obtain to date. Any
substantial financing that we are able to obtain is expected to be in the form of equity financing.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant 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
There are no material changes to the critical
accounting policies and estimates described in the audited financial statements for the period ended December 31, 2013 included
in our Annual Report on Form 10-K filed with the SEC.
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK.
We are a smaller reporting company as
defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
ITEM 4. CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures
Based upon an evaluation of the effectiveness
of our disclosure controls and procedures performed by our Chief Executive Officer as of the end of the period covered by this
report, our Chief Executive Officer, concluded that our disclosure controls and procedures have not been effective as a result
of a weakness in the design of internal control over financial reporting identified below.
We identified material weaknesses in our internal
control over financial reporting primarily attributable to (i) lack of segregation of incompatible duties; and (ii) insufficient
Board of Directors representation. These weaknesses are due to our inadequate staffing during the period covered by this report
and our lack of working capital to hire additional staff. Management has retained an outside, independent financial consultant
to record and review all financial data, as well as prepare our financial reports, in order to mitigate this weakness. Although
management will periodically re-evaluate this situation, at this point it considers that the risk associated with such lack of
segregation of duties and the potential benefits of adding employees to segregate such duties are not cost justified. We intend
to hire additional accounting personnel to assist with financial reporting as soon as our finances will allow.
Changes in Internal Controls Over Financial
Reporting
There have been no changes in our internal controls
over financial reporting that occurred during the quarterly period covered by this report that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item
1. Legal Proceedings.
On June 3, 2013, we entered into a settlement
agreement (the “Settlement Agreement”) with Tony Osibov (“Osibov”) settling all outstanding claims between
Osibov and us. As consideration for the Settlement Agreement, we agreed to pay Mr. Osibov $24,000 of which $15,000 had been paid
as of June 30, 2013 and $9,000 remained in accounts payable, which was divested pursuant to the Share Exchange Agreement. Mr. Osibov
agreed to sell his 300,000 shares of our common stock to unaffiliated third parties for $6,000 within 30 days from the date of
the Settlement Agreement. Additionally, Mr. Osibov relinquished us and Ms. Moskowitz our former CEO from any and all rights that
he has alleged that he has to any of our intellectual property, which we subsequently divested, except for the relinquishment of
the PHP object oriented application backup system for creating application programming interfaces, called PHPMC.
Item
1A. RISK FACTORS.
The following are certain risk factors that
could affect our business, financial position, results of operations or cash flows. These risk factors should be considered along
with the forward-looking statements contained in this Quarterly Report on Form 10-Q because these factors could cause our
actual results or financial condition to differ materially from those projected in forward-looking statements. The following discussion
is not an all-inclusive listing of risks, although we believe these are the more material risks that we face. If any of the following
occur, our business, financial position, results of operations or cash flows could be negatively affected. We caution the reader
to keep these risk factors in mind and refrain from attributing undue certainty to any forward-looking statements, which speak
only as of the date of this Quarterly Report.
We are reliant on CCAT to produce the DFRM
products.
The DRFM Products are controlled by the CCAT
and we cannot produce the DRFM products on our own. We are currently restricted to the manufacturing capacity of CCAT or it’s
agents.
We have a lack of operating history in the
diesel retrofit industry and there is no assurance that our business efforts in this field will be successful.
With our entry into the Exclusive Distribution
Agreement with CCAT, we are embarking on a change of business. Although our Board of Directors and Executive Officers have extensive
business experience, they do not have experience in the diesel retrofit industry. Many of our competitors will have greater experience
and/or greater financial resources than we do at this time. We intend to hire sales and consulting teams with experience in the
diesel retrofit industry. However, there is no assurance that our business efforts in the diesel retrofit industry will prove successful.
Demand for and supply of our products and
services may be adversely affected by several factors, some of which we cannot predict or control, that could adversely affect
our financial position, results of operations or cash flows.
The demand for our products and services could
be affected by several factors, including:
economic
downturns in the markets in which we sell our products; |
competition
from retrofit products; |
changes
in customer preferences; |
product
obsolescence or technological changes that render our products less desirable to use or more expensive to produce; |
changes
in environmental regulations that may make our products illegal to sell in their present form; |
inability
of our supplier to obtain raw materials used in production due to factors such as work stoppages, shortages or supplier plant
shutdowns; and |
inability
to supply products due to factors such as work stoppages, plant shutdowns or regulatory changes and exogenous factors, like
severe weather. |
If any of these events occur, the demand for
and supply of our products and services could suffer, which could have a material adverse affect on our financial position, results
of operations and cash flows.
We face competition from other diesel retrofit
companies, which could adversely affect our sales, results of operations or cash flows.
We compete with companies that produce similar
products and with companies that produce different products that are designed for the same end uses. We encounter competition based
on several key criteria, including product performance and quality, product price, product availability and security of supply,
responsiveness of product development in cooperation with customers and customer service.
We expect that our competitors will continue
to develop and introduce new and enhanced products, which could cause a decline in the market acceptance of our products. In addition,
our competitors could cause a reduction in the selling prices of some of our products as a result of intensified price competition.
Competitive pressures can also result in the loss of major customers. An inability to compete successfully could have an adverse
effect on our financial position, results of operations or cash flows.
We may also experience increased competition
from companies that offer products based on alternative technologies and processes that may be more competitive or better in price
or performance, causing us to lose customers and result in a decline in our sales volume and earnings.
Additionally, some of our customers may already
be or may become large enough to justify developing in-house production capabilities. Any significant reduction in customer orders
as a result of a shift to in-house production could adversely affect our future sales and operating prospects.
Current and future disruptions in the global
credit and financial markets could limit our access to financing, which could negatively impact our business.
Domestic and foreign credit and financial markets
have experienced extreme disruption in the past three years, including volatility in security prices, diminished liquidity and
credit availability, declining valuations of certain investments and significant changes in the capital and organizational structures
of certain financial institutions. We are unable to predict the likely duration and severity of the continuing disruption in the
credit and financial markets or of any related adverse economic conditions. These market conditions may limit our ability to access
the capital necessary to grow and maintain our business. Accordingly, we may be forced to delay raising capital, issue shorter
tenors than we prefer or pay unattractive interest rates, which could increase our interest expense, decrease our profitability
and significantly reduce our financial flexibility. Overall, our results of operations, financial condition and cash flows could
be materially adversely affected by the disruptions in the global credit and financial markets.
The global economic downturn may have a negative
effect on our business and operations.
The global economic downturn has caused a general
tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, and lower business
spending, all of which may have a negative effect on our business, results of operations, financial condition and liquidity. Potential
customers may be unable to fund purchases or may determine to reduce purchases or inventories or may cease to continue in business.
In addition, our supplier may not be able to supply us with needed raw materials on a timely basis, may increase prices or go out
of business, which could result in our inability to meet customer demand or could affect our gross margins.
The timing, strength or duration of any recovery
in the global economic markets remains uncertain, and there can be no assurance that market conditions will improve in the near
future or that our results will not continue to be materially and adversely affected. Such conditions make it very difficult to
forecast operating results, make business decisions and identify and address material business risks. There can be no assurance
that the economy and our operating results will continue to improve, that the economy will not experience another significant downturn.
In such an event, our operating results, financial condition and business could be adversely affected.
The agreements governing our debt contain various
covenants that limit our ability to take certain actions, failure to comply with which could have a material adverse effect on
us.
The agreements governing our senior secured
term loan contain a number of covenants that, among other things, limit our ability to: transfer or sell all or substantially all
of our assets or make certain other restricted payments. Any future refinancing of the term loan is likely to contain similar restrictive
covenants.
To service our indebtedness, we will require
a significant amount of cash. Our ability to generate cash depends on many factors beyond our control.
Our ability to pay interest on our debt and
to satisfy our other debt obligations will depend in part upon our future financial and operating performance and upon our ability
to renew or refinance borrowings. Prevailing economic conditions and financial, business, competitive, legislative, regulatory
and other factors, many of which are beyond our control, will affect our ability to make these payments. While we believe that
cash flow from our current level of operations, available cash and available borrowings will provide adequate sources of liquidity
for at least the next twelve months, a significant drop in operating cash flow resulting from economic conditions, competition
or other uncertainties beyond our control could create the need for alternative sources of liquidity. If we are unable to generate
sufficient cash flow to meet our debt service obligations, we will have to pursue one or more alternatives, such as, reducing or
delaying capital or other expenditures, refinancing debt, selling assets, or raising equity capital.
We cannot assure you, however, that our business
will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to
enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness
on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness, including our term loan
and revolving credit facility, on commercially reasonable terms or at all.
Because
our stock is a penny stock, stockholders will be more limited in their ability to sell their stock.
The SEC has adopted rules that regulate broker-dealer
practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than
$5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system.
Because our securities constitute "penny
stocks" within the meaning of the rules, the rules apply to us and to our securities. The rules may further affect the ability
of owners of shares to sell our securities in any market that might develop for them. As long as the quotation price of our common
stock is less than $5.00 per share, the common stock will be subject to Rule 15g-9 under the Exchange Act. The penny stock rules
require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by
the SEC, that:
| 1. | contains a description of the nature and level of risk in the market
for penny stocks in both public offerings and secondary trading; |
| 2. | contains a description of the broker's or dealer's duties to the
customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements
of securities laws; |
| 3. | contains a brief, clear, narrative description of a dealer market,
including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; |
| 4. | contains a toll-free telephone number for inquiries on disciplinary
actions; |
| 5. | defines significant terms in the disclosure document or in the conduct
of trading in penny stocks; and |
| 6. | contains such other information and is in such form, including language,
type, size and format, as the SEC shall require by rule or regulation. |
The broker-dealer also must provide, prior to
effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation
of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or
other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements
showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior
to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written
suitability statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market
for our stock.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
No senior securities were issued and outstanding during the three
and nine months ended September 30, 2014.
ITEM 4. MINE
SAFETY DISCLOSURES.
Not applicable to our Company.
ITEM 5. OTHER
INFORMATION.
None.
ITEM 6. EXHIBITS.
The following exhibits are either provided with
this Quarterly Report or are incorporated herein by reference:
Exhibit
Number |
Description
of Exhibit |
2.1 |
Agreement and Plan of Merger dated August 20, 2014 between SaaSMax Inc. (as surviving company) and Nouveau Ventures Inc. (as merging entity).(9) |
3.1 |
Articles of Incorporation.(1) |
3.2 |
Bylaws.(1) |
3.3 |
Bylaw No. 2A to Article III - Directors.(5) |
3.4 |
Certificate of Change Pursuant to NRS 78.209.(7) |
3.5 |
Certificate of Merger.(9) |
3.6 |
Articles of Merger between the Company (as surviving company) and Nouveau Ventures Inc. (as merging entity), with surviving entity changing its name to "Nouveau Ventures Inc."(9) |
4.1 |
Stock Incentive Plan.(2) |
10.1 |
Stock Incentive Plan.(2) |
10.2 |
Convertible Promissory Note for $25,000 dated July 1, 2012, amended January 23, 2013.(3) |
10.3 |
Convertible Promissory Note for $25,000 dated August 15, 2012, amended January 23, 2013.(3) |
10.4 |
Convertible Promissory Note for $25,000 dated September 26, 2012, amended January 23, 2013.(3) |
10.5 |
Convertible Promissory Note for $25,000 dated October 26, 2012, amended January 23, 2013.(3) |
10.6 |
Convertible Promissory Note for $25,000 dated December 6, 2012, amended January 23, 2013.(3) |
10.7 |
Convertible Promissory Note for $25,000 dated January 9, 2013, amended January 23, 2013.(3) |
10.8 |
Convertible Promissory Note for $25,000 dated February 23, 2013.(3) |
10.9 |
Letter dated January 24, 2013 confirming maturity dates of amended convertible notes.(3) |
10.10 |
Exclusive Distributor Agreement dated July 9, 2013 between the Company and California Clean Air Technologies, LLC.(4) |
10.11 |
Promissory Note in favor of California Clean Air Technologies, LLC in the principal amount of $50,000.(4) |
10.12 |
Asset Purchase Agreement dated July 1, 2013 between the Company and its wholly-owned subsidiary, SaaSMAX Corp.(4) |
10.13 |
Share Exchange Agreement dated July 10, 2013 between the Company and Dina M. Moskowitz for the transfer of shares of the Company’s wholly-owned subsidiary, SaaSMAX Corp.(4) |
10.14 |
Management Consulting Agreement dated July 22, 2013 between the Company and Harold C. Moll.(5) |
10.15 |
Management Consulting Agreement dated July 22, 2013 between the Company and Rob Rainer.(5) |
10.16 |
Termination of Management Consulting Agreement and Cancellation of Earn-Out Shares between the Company and Harold C. Moll dated February 4, 2014.(6) |
10.17 |
Mutual release between the Company and Harold C. Moll dated February 4, 2014.(6) |
10.18 |
Technology Acquisition Agreement dated August 19, 2014 among the Company, David St. James and the Company’s wholly-owned subsidiary, Nouveau Ventures Inc.(8) |
10.19 |
Agreement and Plan of Merger dated August 20, 2014 between the Company and Nouveau Ventures Inc.(8) |
31.1 |
Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1 |
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS |
XBRL Instance Document. |
101.SCH |
XBRL Taxonomy Extension Schema. |
101.CAL |
XBRL Taxonomy Extension Calculation Linkbase. |
101.DEF |
XBRL Taxonomy Extension Definition Linkbase. |
101.LAB |
XBRL Taxonomy Extension Label Linkbase. |
101.PRE |
XBRL Taxonomy Extension Presentation Linkbase. |
| (1) | Filed as an exhibit to our Registration Statement on Form S-1 filed
on May 23, 2011. |
| (2) | Filed as an exhibit to our Registration Statement on Form S-1/A
filed on August 15, 2011. |
| (3) | Filed as an exhibit to our Current Report on Form 8-K filed on April
17, 2013. |
| (4) | Filed as an exhibit to our Current Report on Form 8-K filed on July
15, 2013. |
| (5) | Filed as an exhibit to our Current Report on Form 8-K filed on July
25, 2013. |
| (6) | Filed as an exhibit to our Current Report on Form 8-K filed on February
6, 2014. |
| (7) | Filed as an exhibit to our Current Report on Form 8-K filed on April
17, 2014. |
| (8) | Filed as an exhibit to our Current Report on Form 8-K filed on August
21, 2014. |
| (9) | Filed as an exhibit to our Current Report on Form 8-K filed on September
9, 2014. |
SIGNATURES
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.
|
|
|
NOUVEAU VENTURES INC. |
|
|
|
|
|
|
|
|
|
|
|
|
Date: |
November 18, 2014 |
By: |
/s/ Rob Rainer |
|
|
|
ROB RAINER |
|
|
|
President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer |
|
|
|
(Principal Executive Officer and Principal Accounting Officer) |
|
|
|
|
Exhibit
31.1
CERTIFICATIONS
I, Rob Rainer, certify that;
| (1) | I have reviewed this Quarterly Report on Form 10-Q of Nouveau
Ventures 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) | I am 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 Rule 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 us 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) | I have disclosed, based on my 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 control over financial reporting.
|
| | ___________________________________ |
By: Rob Rainer
| Title: | Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer |
Exhibit
32.1
CERTIFICATION OF
CHIEF EXECUTIVE AND
CHIEF FINANCIAL OFFICER
PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Rob Rainer, the Chief Chief Executive
Officer and Chief Financial Officer of Nouveau Ventures Inc. (the “Company”), hereby 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:
| (i) | the Quarterly Report on Form 10-Q of the
Company, for the fiscal quarter ended September 30, 2014, and to which this certification is attached as Exhibit 32.2 (the “Report”)
fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
| (ii) | the information contained in the Report fairly
presents, in all material respects, the financial condition and results of operations of the Company. |
By: |
/s/ Rob Rainer
|
Name: |
ROB RAINER
|
Title: |
Chief Executive Officer and Chief Financial Officer, President Secretary
and Treasurer
|
Date:
|
November
18, 2014 |
A
signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company
and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
This certification accompanies the Form
10-Q to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference
into any filing of the Company under the Securities Act of 1933 or the Securities Exchange Act of 1934 (whether made before or
after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.
Nouveau Ventures (GM) (USOTC:SAAX)
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Nouveau Ventures (GM) (USOTC:SAAX)
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