What changed in this filing

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Item 2. Management’s Discussion and Analysis

2008-11-13 compared with 2008-08-12 · 172 added, 123 removed, 105 unchanged (74% of the section changed)

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fairly depicts our financial condition and results of operations for all periods

first quarter of fiscal year 2008 we sold our Global Market Pro family of

financial data products to Stockgroup, since those products serve a specific

market that Stockgroup has a larger presence in.

During the first quarter of our

fiscal year 2009 we have continued to focus on sales of our HipLink family of

software applications and services utilized by businesses and their employees to

wirelessly connect to critical business systems, information and processes.

These products maintain high gross and operating margins and form the core of

our enterprise software marketing strategy with wireless and mobile features

available in the software.

We also continue to work towards closing the

acquisition of the majority of the assets and liabilities of Flint Telecom, Inc.

Although all contractual extensions have expired, we are

working with Flint to execute an extension that will provide enough time for

Flint to complete the outstanding closing contingencies.

If however, the Flint

transaction does not close, we will continue to look for another merger

the first half of our fiscal year 2009 we have continued to focus on sales of

our HipLink family of software applications and services utilized by businesses

and their employees to wirelessly connect to critical business systems,

information and processes.

These products maintain high gross and operating

margins and form the core of our enterprise software marketing strategy with

wireless and mobile features available in the software.

We also continued to

work towards closing the acquisition of the assets and liabilities of Flint

Telecom, Inc.

(“FTI”), which closed on October 1, 2008.

believes that it has adequate working capital for the next 12

net loss of $(234,565), $(0.10) per share basic and diluted, in the three months

ended June 30, 2008, as compared to net income of $195,146, $0.11 per share

basic and $0.09 per share diluted, in the three months ended June 30,

Our overall cash increased by $4,217 in the three months ended

June 30, 2008, compared to the three months ended June 30, 2007, in which our

overall cash increased by $82,387.

OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2008 AND 2007

for the three months ended June 30, 2008 decreased 27% to $230,735 as compared

to $314,331 in the same three month period ended June 30, 2007.

This is due to a

continued weakness in our software sales for the first quarter of FY 2009 due to

a continued weakness in the wireless messaging software market.

three months ended September 30, 2008, we had a net loss of $68,881 ($0.02 per

share basic and diluted), as compared to net income of $3,328,361 ($1.85 per

share basic and $1.69 per share diluted) in the three months ended September 30,

We had a net loss of $303,446 ($0.13 per share basic and diluted) in the

six months ended September 30, 2008, as compared to net income of $3,471,805

($1.94 per share basic and $1.77 per share diluted) in the six months ended

September 30, 2007.

Our overall cash decreased by $139,222 in the six

months ended September 30, 2008, compared to an increase by $181,007 in the six

months ended September 30, 2007.

OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2008 AND

for the three months ended September 30, 2008 increased 204% to $425,680 as

compared to $139,803 for the three months

September 30, 2007.

Revenues for the six months ended September 30,

2008 increased 45% to $656,415 as compared to $454,134 for the six months ended

September 30, 2007.

This increase is due to a sale to one significant

new customer in the three months ended September 30, 2008

versus the same period in 2007.

OF REVENUES AND GROSS MARGIN

overall gross profit margin increased to 99% in the three months ended June 30,

2008 from 93% in the same three month period ended June 30, 2007.

in gross profit margin is principally due to the sale of the financial data and

software services assets, which had higher costs and a lower gross profit.

cost of revenues principally includes costs of engineering development directed

to specifically identified products, and costs of servicing and hosting customer

Other costs directly related to the financial data software and

services assets, are data feed costs, which have been eliminated with the sale

of those assets.

expenses decreased 3% to $461,219 in the three months ended June 30, 2008 versus

$473,191 for the same three month period in the last fiscal year, mainly due to

a decrease in research and development expenses as a result of moving

engineering and development offshore, as well as a decrease in stock and option

compensation expenses due to a reduction in stock and option

These expenses were offset somewhat by the increase in sales

and marketing expenses as new sales staff and marketing programs were initiated.

We categorize

operating expenses into four major categories:

research and development, sales

and marketing, general and administrative, and stock, option and warrant

The table below summarizes the changes in these four categories of

operating expenses (unaudited):

overall gross profit margin increased to 99.8% in the three months ended

September 30, 2008 from 98.7% in the same period ended September 30,

The overall gross profit margin increased to 99.6% for the six

months ended September 30, 2008 from 95% in the same period ended September 30,

The increase in gross profit margin during the three and six months ended

September 30, 2008 is principally due to a decrease in the cost of

The cost of revenues principally includes costs of engineering

development directed to specifically identified products, and costs of servicing

and hosting customer products.

expenses increased 4% to $552,642 in the three month period ended September 30,

2008 versus $530,613 for the same period in the last fiscal year, and increased

1% to $1,013,861 in the six month period ended September 30, 2008 versus

$1,003,887 for the same period in the last fiscal year.

This increase

is mainly due to a slight increase in sales and marketing and general and

administrative expenses.

We categorize operating expenses into four

major categories:

research and development, sales and marketing, general and

administrative, and stock, option and warrant expense.

The table below

summarizes the changes in these five categories of operating expenses

and development

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and development expenses are expenses incurred in developing new products and

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expense as incurred.

These costs decreased substantially due to

moving our research and development efforts offshore.

These costs increased slightly due to an

increase in product enhancements for current products.

engineering costs are due to production projects for existing products and

these projects also increased slightly in the second quarter ended

September 30, 2008.

marketing expenses consist of costs incurred to develop and implement marketing

6 unchanged sentences

sales personnel and maintaining a customer support call center.

increased compared to last year due to an increase in sales and marketing

increased slightly in the three and six months ended September 30, 2008 compared

to the same periods in last year due to an increase in sales and marketing

and administrative expenses include senior management, accounting, legal,

2 unchanged sentences

This category also includes the costs associated with

being a publicly traded company, including the costs of SEC filings, and

investor and public relations.

These costs decreased slightly during the three

months ended June 30, 2008 versus 2007 due to a decrease in the use of outside

services from independent contractors and our move from the American Stock

Exchange (“Amex”) to the OTC Bulletin Board and the resulting elimination of

costs related to being listed on the Amex.

being a publicly traded company, including the costs of SEC filings, investor

relations and public relations efforts.

These costs have increased slightly

during the three and six months ended September 30, 2008 versus 2007 due to a

slight increase in the costs associated with being a publicly traded

non-cash charges for compensation consist mainly of grants of stock, options and

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market value at the date of issuance.

The decline in this expense is directly

related to the reduction in the number and amount of stock and option grants in

the three months ended June 30, 2008 as compared to the three months ended June

The substantial decline in this expense is

directly related to the substantial reduction in the number and amount of stock

and option grants in the three and six months ended September 30,

INCOME (EXPENSE)

$2,493 in other expense for the three months ended June 30, 2008 is comprised

mainly of accrued interest on the note payable to Flint, offset by interest and

other miscellaneous income.

$374,716 in other income for the three months ended June 30, 2007 is comprised

mainly from the gain on the sale of the financial data software and services

assets offset by interest expense from the amortization of the debt discount and

the accrued interest on notes payable.

$58,966 for the three months ended September 30, 2008 and $56,473 for the six

months ended September 30, 2008 in other income is comprised

mainly from the income from our contract with Stockgroup where we are providing

transitional services (See Note 7).

$3,720,924 for the three months ended September 30, 2007 and $4,044,021 for the

six months ended September 30, 2007 in other income is comprised mainly from the

gain on the software license sold to Innofone (See Note 10).

AND CAPITAL RESOURCES

overall cash increased by $4,217 for the three months ended June 30, 2008 as

compared to an increase in cash of $82,387 for the three months ended June 30,

The sources and uses of cash are summarized as follows

cash was spent on operating resources during the six months ended September 30,

2008 versus the same period in 2007, but the sale of a convertible

promissory note to Flint Telecom Ltd.

provided $200,000 in cash in the six month

period ended September 30, 2008.

Consequently the overall cash

decreased by $139,222 for the six months ended September 30, 2008 versus a cash

increase of $181,007 for the six months ended September 30, 2007.

and uses of cash are summarized as follows (unaudited):

used in operating activities

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increase in cash and cash equivalents

the three months ended June 30, 2008, cash used in operating activities from

increase (decrease) in cash and cash equivalents

the six months ended September 30, 2008, cash used in operating activities from

continuing operations consisted principally of an operating loss of $359,919

resulting from gross profits of $653,942 and operating expenses of $1,013,861.

Other operating activities contributing to a decrease in

cash were a decline in accounts payable and deferred revenue offset by cash

produced mainly through a decrease in accounts receivable, including the

receivable from Stockgroup, and an increase in accrued expenses and other

current liabilities.

the three months ended June 30, 2007, cash used in operating activities from

Also, the transitional services we provide to Stockgroup produced other income

of $56,473, which was slightly offset by interest expense of

Other operating activities contributing to the decrease in

cash were an increase in accounts receivable of $222,429 and in the Stockgroup

receivable of $16, 288, as well as a decrease in deferred revenue of $46,411.

The decline in cash was partially offset by an increase in accrued liabilities

the six months ended September 30, 2007, cash used in operating activities from

continuing operations consisted principally of an operating loss of $572,216

resulting from gross profits of $431,671 and operating expenses of $1,003,887.

Also, a gain on the sale of the financial data and software services assets

offset by interest expense of $25,989 produced other income of $374,716.

operating activities contributing to the increase in cash were mainly from an

increase in deferred revenue of $62,955.

Activities that contributed to a

decrease in cash were an increase in accounts receivable, including the

receivable from Stockgroup and a decrease in accounts payable of

provided by investing activities in the three months ended June 30, 2008

consisted of proceeds resulting from the interim services agreement with

During the three months ended June 30, 2007, cash

provided by investing activities consisted of proceeds resulting from the asset

sale to Stockgroup and from the interim services agreement with

provided by financing activities for the three months ended June 30, 2008

consisted of $200,000 in proceeds from the issuance of a convertible promissory

note to Flint Telecom, Ltd.

(See Note 6).

Cash used in financing activities for

the three months ended June 30, 2007 consisted of payment on an equipment

June 30, 2008, we had cash and cash equivalents of $226,601, an increase of

Also, a gain on the sale of the software license sold to Innofone, offset by

interest expense of $49,314 produced other income of $4,044,021.

Other operating

activities contributing to the increase in cash were mainly from a decrease in

accounts receivable of $217,023 offset by an increase in the Stockgroup

receivable of $41,463.

There was also an increase in cash resulting from the

capitalization of a $100,000 fee we paid in March 2007 related to the potential

merger with Citytalk, which we wrote off because the merger did not

the six months ended September 30, 2008, cash provided by investing activities

consisted of the collection of the long term receivable from Stockgroup.

the six months ended September 30, 2007, cash provided by investing activities

consisted of proceeds resulting from the asset sale to Stockgroup and the

related interim services agreement with Stockgroup.

provided by financing activities for the six months ended September 30, 2008

consisted of the sale of a convertible promissory note to Flint Telecom Ltd.

which provided $200,000 in cash.

Cash used in financing activities for the six

months ended September 30, 2007 consisted principally of the repayment of $717

on a line of credit from a computer company.

September 30, 2008, we had cash and cash equivalents of $83,162, a decrease of

$139,222 from the balance at March 31, 2008, which was $226,601.

working capital deficit remained basically constant as of June 30, 2008 at

($42,166) as compared to a working capital deficit of ($42,103) at March 31,

We have not yet generated sufficient revenues to cover the costs of

continued product development and support, sales and marketing efforts and

general and administrative expenses.

We have an operating lease for our facility

in Los Gatos, California for which the future minimum lease payments are $62,496

in fiscal 2009 and $3,600 in fiscal 2010.

There are no material commitments for

capital expenditures at June 30, 2008.

believes that it has adequate working capital for the next 12

working capital deficit increased as of September 30, 2008 at ($91,884) as

compared to a working capital deficit of ($42,103) at March 31, 2008 .

We have not yet

generated sufficient revenues to cover the costs of continued product

development and support, sales and marketing efforts and general and

administrative expenses.

We have an operating lease for our facility in Los

Gatos, California for which the future minimum lease payments are $119,908 in

fiscal 2008, $62,496 in fiscal 2009 and $3,600 in fiscal 2010.

material commitments for capital expenditures at September 30,

believes that it has adequate cash and cash

equivalents to provide working capital for the next 12

ACCOUNTING PRONOUNCEMENTS

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applies whenever other standards require or permit assets or liabilities to be

measured at fair

The standard does not expand the use of fair value in any new

circumstances.

SFAS 157 must be adopted prospectively as of the beginning

of the year it is initially applied.

SFAS 157 is effective for financial

statements issued for fiscal years beginning after November 15, 2007, and

interim periods within those fiscal years.

We do not believe that the adoption

of SFAS 157 currently has a material impact on our financial

measured at fair value.

The standard does not expand the use of fair value in

any new circumstances.

SFAS 157 must be adopted prospectively as of the

beginning of the year it is initially applied.

SFAS 157 is effective for

financial statements issued for fiscal years beginning after November 15,

2007, and interim periods within those fiscal years.

We do not believe that the

adoption of SFAS 157 currently has a material impact on our financial

December 2007, the FASB issued SFAS No.

141 (revised 2007), “Business

Combinations” (SFAS 141R) which replaces SFAS No.

SFAS 141R retains the

purchase method of accounting for acquisitions, but requires a number of

changes, including changes in the way assets and liabilities are recognized in

the purchase accounting.

It also changes the recognition of assets acquired and

liabilities assumed arising from contingencies, requires the capitalization of

in-process research and development at fair value, and requires the expensing of

acquisition-related costs as incurred.

SFAS 141R is effective for us beginning

January 1, 2009 and will apply prospectively to business combinations completed

on or after that date.

We do not expect the adoption of SFAS 141R to have a

material impact on our consolidated financial statements.

December 2007, the FASB issued SFAS No.

160, “Noncontrolling Interests in

Consolidated Financial Statements, an amendment of ARB 51” (SFAS 160) which

changes the accounting and reporting for minority interests.

Minority interests

will be recharacterized as noncontrolling interests and will be reported as a

component of equity separate from the parent’s equity, and purchases or sales of

equity interests that do not result in a change in control will be accounted for

as equity transactions.

In addition, net income attributable to the

noncontrolling interest will be included in consolidated net income on the face

of the income statement and, upon a loss of control, the interest sold, as well

as any interest retained, will be recorded at fair value with any gain or loss

recognized in earnings.

160 is effective for us beginning January

1, 2009 and will apply prospectively, except for the presentation and disclosure

requirements, which will apply retrospectively.

We do not expect the adoption of

SFAS 160 to have a material impact on our consolidated financial

LOOKING STATEMENTS AND RISK FACTORS

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forward-looking statements contained in the Private Securities Litigation Reform

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis