FORM
10-Q
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
Quarter Ended September 30, 2015
OR
☐
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 33-20432
KIWIBOX.COM,
INC.
Formerly
known as Magnitude Information Systems, Inc.
(Exact
Name of Registrant as Specified in its Charter)
| Delaware |
75-2228828 |
| (State or other Jurisdiction of |
(IRS Employer Identification No.) |
| Incorporation or Organization) |
|
| 330
West 42ND St. Suite 3210 New York, NY 10036 |
(212)
239-8210 |
| (Address of Principal Executive Office) (Zip
Code) |
(Registrant’s telephone number
including area code) |
Indicate
by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90 days.: Yes ☒ No ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller
reporting company. See definitions of “large accelerated filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act (Check one):
Large
accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐ Smaller
reporting company ☑
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ☐ No ☑
The
number of shares of Registrant’s Common Stock, $0.0001 par value, outstanding as of November 15, 2015, was 683,693,060 shares.
KIWIBOX.COM,
INC.
INDEX
| |
Page |
| |
Number |
| PART 1 - FINANCIAL
INFORMATION |
|
| |
|
| Item 1 Financial Statements |
|
| |
|
Balance Sheets
- September 30, 2015 (unaudited) and December 31, 2014 |
3 |
| |
|
Statements of Operations
- Three and nine months ended September 30, 2015 and 2014 (unaudited) |
4 |
| |
|
Statements of Cash
Flows
- Nine months ended September 30, 2015 and 2014 (unaudited) |
5 - 6 |
| |
|
| Notes to Financial
Statements |
7 - 17 |
| |
|
| Item
2 Management’s Discussion and Analysis of Financial Condition and Results of Operations |
18 |
| |
|
| Item 3. Quantitative and Qualitative
Disclosures About Market Risk |
22 |
| |
|
| Item 4T. Controls and Procedures |
22 |
| |
|
| PART II - OTHER
INFORMATION |
23 |
| |
|
| Item 1. Legal Proceedings |
23 |
| |
|
| Item 1A. Risk Factors |
23 |
| |
|
| Item 2. Unregistered Sales
of Equity Securities and Use of Proceeds |
23 |
| |
|
| Item 3. Defaults Upon Senior Securities |
23 |
| |
|
| Item 4T. Submission of Matters to a
Vote of Security Holders |
23 |
| |
|
| Item 5. Other information |
23 |
| |
|
| Item 6. Exhibits |
24 |
| |
|
| SIGNATURES |
25 |
PART
I - Item 1 Financial Statements
KIWIBOX.COM,
INC.
BALANCE
SHEETS
(Unaudited)
| | |
September 30, 2015 | |
December 31, 2014 |
| | |
| |
|
| Assets | |
| | | |
| | |
| Current Assets | |
| | | |
| | |
| Cash | |
$ | 3,846 | | |
$ | 299 | |
| Account receivable-affiliate,
net of allowance for doubtful accounts $0 | |
| 48,286 | | |
| 28,146 | |
| Loan receivable-
affiliate | |
| 90,074 | | |
| 30,000 | |
| Prepaid
expenses and other current assets | |
| 60,458 | | |
| 228,075 | |
| Total Current Assets | |
| 202,664 | | |
| 286,520 | |
| Property
and equipment, net of accumulated depreciation of $113,742 and $110,583 | |
| 3,529 | | |
| 4,971 | |
| Website
development costs, net of accumulated amortization of $254,264 and $254,264 | |
| — | | |
| — | |
| Other
assets | |
| 12,862 | | |
| 17,803 | |
| Total
Assets | |
$ | 219,055 | | |
$ | 309,294 | |
| | |
| | | |
| | |
| Liabilities and Stockholders’ Equity
(Impairment) | |
| | | |
| | |
| | |
| | | |
| | |
| Current Liabilities: | |
| | | |
| | |
| | |
| | | |
| | |
| Accounts payable | |
| 197,213 | | |
| 257,949 | |
| Accrued expenses | |
| 4,306,545 | | |
| 3,408,864 | |
| Due to related parties | |
| 67,261 | | |
| 65,909 | |
| Obligations to be
settled in stock | |
| 288,172 | | |
| 276,568 | |
| Dividends payable | |
| 774,103 | | |
| 735,655 | |
| Loans and notes
payable - other | |
| 100,000 | | |
| 100,000 | |
| Loans and notes
payable – related parties | |
| 340,000 | | |
| 340,000 | |
| Convertible notes
payable-related parties | |
| 11,998,700 | | |
| 11,193,700 | |
| Current maturities
of long-term debt | |
| 33,529 | | |
| 33,529 | |
| Liability
for derivative conversion feature –related parties | |
| 15,926,674 | | |
| 14,482,427 | |
| Total Current Liabilities | |
| 34,032,197 | | |
| 30,894,601 | |
| | |
| | | |
| | |
| Commitments and contingencies | |
| — | | |
| — | |
| | |
| | | |
| | |
| Stockholders’ Equity (Impairment) | |
| | | |
| | |
| Preferred Stock, $0.001 par value, non-voting,
3,000,000 shares authorized; 85,890 shares issued and outstanding | |
| 86 | | |
| 86 | |
| Common Stock, $0.0001 par value, 1,400,000,000
shares authorized; 683,693,060 shares issued and outstanding | |
| 68,367 | | |
| 68,367 | |
| Additional paid-in capital | |
| 52,726,105 | | |
| 52,726,105 | |
| Accumulated deficit | |
| (86,607,700 | ) | |
| (83,379,865 | ) |
| Total Stockholders’
Equity (Impairment) | |
| (33,813,142 | ) | |
| (30,585,307 | ) |
| Total Liabilities
and Equity (Impairment) | |
$ | 219,055 | | |
$ | 309,294 | |
The
accompanying notes are an integral part of the financial statements.
KIWIBOX.COM,
INC.
CONDENSED
STATEMENTS OF OPERATIONS
(Unaudited)
| | |
Three Months Ended | |
|
Nine Months Ended |
| | |
September
30, | |
|
September
30, |
| | |
2015 | |
2014 | |
|
2015 | |
2014 |
| | |
| |
| |
|
| |
|
| Advertising | |
$ | — | | |
$ | — | | |
|
| — | | |
$ | 25 | |
| Advertising - affiliate | |
| 5,843 | | |
| 7,579 | | |
|
| 20,139 | | |
| 27,053 | |
| Total
Revenues | |
| 5,843 | | |
| 7,579 | | |
|
| 20,139 | | |
| 27,078 | |
| Cost of Goods Sold | |
| | | |
| | | |
|
| | | |
| | |
| Website
hosting expenses | |
| 3,103 | | |
| 5,152 | | |
|
| 8,418 | | |
| 13,942 | |
| Total
Cost of Goods Sold | |
| 3,103 | | |
| 5,152 | | |
|
| 8,418 | | |
| 13,942 | |
| | |
| | | |
| | | |
|
| | | |
| | |
| Gross Profit (Loss) | |
| 2,740 | | |
| 2,427 | | |
|
| 11,721 | | |
| 13,136 | |
| | |
| | | |
| | | |
|
| | | |
| | |
| Selling expenses | |
| 127,373 | | |
| 77,167 | | |
|
| 355,503 | | |
| 268,659 | |
| | |
| | | |
| | | |
|
| | | |
| | |
| General and administrative
expenses | |
| 168,263 | | |
| 193,269 | | |
|
| 510,187 | | |
| 630,201 | |
| | |
| | | |
| | | |
|
| | | |
| | |
| Loss From Operations | |
| (292,896 | ) | |
| (268,009 | ) | |
|
| (853,969 | ) | |
| (885,724 | ) |
| | |
| | | |
| | | |
|
| | | |
| | |
| Other Income (Expense) | |
| | | |
| | | |
|
| | | |
| | |
| Miscellaneous income | |
| — | | |
| — | | |
|
| — | | |
| — | |
| Change in fair value–derivative
liability | |
| 127,123 | | |
| 417,430 | | |
|
| 278,233 | | |
| 121,827 | |
| Interest expense-derivative
conversion features | |
| (571,343 | ) | |
| (530,623 | ) | |
|
| (1,722,480 | ) | |
| (1,664,218 | ) |
| Interest
expense | |
| (307,381 | ) | |
| (274,945 | ) | |
|
| (891,172 | ) | |
| (796,271 | ) |
| Total
Other Income (Expense) | |
| (751,601 | ) | |
| (388,138 | ) | |
|
| (2,335,419 | ) | |
| (2,338,662 | ) |
| | |
| | | |
| | | |
|
| | | |
| | |
| Loss Before Benefit (Provision) for Income
Taxes | |
| (1,044,497 | ) | |
| (656,147 | ) | |
|
| (3,189,388 | ) | |
| (3,224,386 | ) |
| Benefit (Provision)
for Income Taxes | |
| 0 | | |
| 0 | | |
|
| 0 | | |
| 0 | |
| Net Income (Loss) | |
$ | (1,044,497 | ) | |
$ | (656,147 | ) | |
|
$ | (3,189,388 | ) | |
$ | (3,224,386 | ) |
| Dividends on Preferred
Stock | |
| (12,815 | ) | |
| (12,815 | ) | |
|
| (38,447 | ) | |
| (38,447 | ) |
| Net Income (Loss)
Applicable to Common Shareholders, basic and diluted | |
$ | (1,057,312 | ) | |
$ | (668,962 | ) | |
|
$ | (3,227,835 | ) | |
$ | (3,262,833 | ) |
| Net Loss Per Common
Share, basic and diluted | |
$ | (0.002 | ) | |
| (0.001 | ) | |
|
$ | (0.005 | ) | |
$ | (0.005 | ) |
| Weighted Average of Common Shares
Outstanding | |
| 683,693,060 | | |
| 683,693,060 | | |
|
| 683,693,060 | | |
| 683,693,060 | |
| | |
| | | |
| | | |
|
| | | |
| | |
| Comprehensive Income (Loss): | |
| | | |
| | | |
|
| | | |
| | |
| Net
Income (Loss) | |
$ | (1,044,497 | ) | |
$ | (656,147 | ) | |
|
$ | (3,189,388 | ) | |
$ | (3,224,386 | ) |
| Total
Comprehensive Income (Loss) | |
$ | (1,044,497 | ) | |
$ | (656,147 | ) | |
|
$ | (3,189,388 | ) | |
$ | (3,224,386 | ) |
The
accompanying notes are an integral part of the financial statement,s.
KIWIBOX.COM,
INC.
STATEMENTS OF CASH FLOWS |
| (Unaudited) |
| | |
|
| | |
Nine Months Ended |
| | |
September
30, |
| | |
2015 | |
2014 |
| Cash Flows From Operating Activities | |
| | | |
| | |
| Net
Income (Loss) | |
$ | (3,189,388 | ) | |
$ | (3,224,386 | ) |
Adjustments
to Reconcile Net Loss
to Net Cash Used by Operations | |
| | | |
| | |
| Depreciation and
amortization | |
| 3,159 | | |
| 5,929 | |
| Change in fair value
– derivative liabilities | |
| (278,233 | ) | |
| (121,827 | ) |
| Intrinsic value
of beneficial conversion feature | |
| 1,722,480 | | |
| 1,664,218 | |
| Decreases
(Increases) in Assets | |
| | | |
| | |
| Accounts receivable
- affiliate | |
| (20,140 | ) | |
| (18,469 | ) |
| Prepaid expenses | |
| 167,619 | | |
| 53,556 | |
| | |
| | | |
| | |
| Increases
(Decreases) in Liabilities: | |
| | | |
| | |
| Bank overdraft | |
| — | | |
| 8,408 | |
| Liabilities to be
settled in stock | |
| 11,604 | | |
| 12,960 | |
| Accounts payable | |
| (60,735 | ) | |
| 1,154 | |
| Accrued
expenses | |
| 897,681 | | |
| 798,666 | |
| Net
Cash Used by Operating Activities | |
| (745,955 | ) | |
| (819,791 | ) |
| | |
| | | |
| | |
| Cash Flows From Investing Activities: | |
| | | |
| | |
| Cash proceeds (outlay)
– other assets | |
| 4,941 | | |
| (205 | ) |
| Loans to affiliate | |
| (60,074 | ) | |
| — | |
| Purchases
of property and equipment | |
| (1,717 | ) | |
| (2,515 | ) |
| Net
Cash Used by Investing Activities | |
| (56,850 | ) | |
| (2,720 | ) |
| | |
| | | |
| | |
| Cash Flows From Financing Activities: | |
| | | |
| | |
| Proceeds from loans/notes | |
| 805,000 | | |
| 790,000 | |
| Net
proceeds (repayments) to related parties | |
| 1,352 | | |
| 28,852 | |
| Net
Cash Provided by Financing Activities | |
| 806,352 | | |
| 818,852 | |
| | |
| | | |
| | |
| Net Increase (Decrease) in Cash | |
| 3,547 | | |
| (3,659 | ) |
| | |
| | | |
| | |
| Cash at beginning of period | |
| 299 | | |
| 3,659 | |
| Cash at end of period | |
$ | 3,846 | | |
$ | — | |
| | |
| | | |
| | |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |
| | | |
| | |
| Interest
Paid | |
$ | — | | |
$ | 1,511 | |
| Income
Taxes Paid | |
$ | 300 | | |
$ | 0 | |
The
accompanying notes are an integral part of the financial statements.
KIWIBOX.COM,
INC.
STATEMENTS
OF CASH FLOWS
(Unaudited)
| NON-CASH INVESTING
AND FINANCING ACTIVITIES: | |
|
| | |
|
| Nine Months Ended
September 30, 2015 | |
|
| | |
| | |
| Year
to date dividend accruals | |
$ | 38,447 | |
| | |
| | |
| | |
| | |
| Nine Months Ended
September 30, 2014 | |
| | |
| | |
| | |
| Year
to date dividend accruals | |
$ | 38,447 | |
Kiwibox.Com,
Inc.
Notes
to Financial Statements
1.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature
of Organization
Kiwibox.Com,
Inc. (the “Company”) was incorporated as a Delaware corporation on April 19, 1988 under the name Fortunistics, Inc.
On November 18, 1998, the Company changed its name to Magnitude Information Systems, Inc. On December 31, 2009, the Company changed
its name to Kiwibox.com, Inc.
On
August 16, 2007 the Company acquired all outstanding shares of Kiwibox Media, Inc.
The
Company, Magnitude, Inc. and Kiwibox Media Inc. were separate legal entities until December 31, 2009, with Kiwibox Media, Inc.
being a wholly owned subsidiary. On December 31, 2009, the two subsidiaries, Magnitude, Inc. and Kiwibox Media, Inc. merged into
the Company.
On
September 30, 2011, Kiwibox.com acquired the German based social network Kwick! Community GmbH & Co. KG (“Kwick”),
a wholly-owned subsidiary.
On
September 24, 2013, Kwick Community GmbH & Co. KG signed an equity purchase agreement to acquire Interscholz Internet Services
GmbH and Co KG, a German limited liability company, and all the equity of its general partner, Interscholz Beteiligungs GmbH.
As of the balance sheet date, and pursuant to the terms of the contract, since full payment was not made for the purchase price
of Interscholz Internet Services GmbH & Co KG, ownership does not transfer to Kwick Community GmbH & Co KG. Full payment
must be made for ownership to transfer to Kwick. As of December 31, 2013 only $515,037 of the total purchase price of $1,352,000
was made. On December 9, 2013 the acquisition of Interscholz Internet Services GmbH and Co KG by Kwick was rescinded due to non
compliance with the terms of the addendum to the contract, calling for the full purchase price to have been paid. However, Kwick
did acquire all the equity of the general partner, Interscholz Beteiligungs GmbH, as full payment was not a requirement for transfer
of ownership of that entity.
On
December 10, 2013, the Company signed an Equity Purchase Agreement with Marcus Winkler to sell to him eighty (80%) percent of
the equity of its German subsidiary, KWICK! Community GmbH & Co. KG, a German limited liability company, and Kwick! Beteiligungs
GmbH, its general partner (collectively, “Kwick”). The sale was approved on December 18, 2013. Due to the fact that
the parent company ceased to have a controlling financial interest in Kwick, the subsidiary was deconsolidated from that date
forward. On December 30, 2013 a total of 15% of the remaining 20% of the equity of Kwick was transferred to the Chief Executive
Officer of Kwick (the “Kwick CEO”), in consideration for the Kwick CEO pledging to the bank 5,000 Euros as collateral,
on behalf of Kiwibox, for bank overdrafts incurred by “Kwick’s” wholly-owned subsidiary Interscholz Beteiligungs
GmbH, as general partner (managing partner) for Interscholz Internet Services GmbH & Co KG; as it is the duty of the general/managing
partner to secure liquidity for the partnership. Since Kiwibox owned 20% of Kwick they were required, under German law, as managing
partner of Interscholz Beteiligungs GmbH to secure liquidity for Interscholz Internet Services GmbH & Co KG. Therefore, 15%
of Kiwibox’s 20% of Kwick was given to the Kwick CEO in exchange for the CEO pledging the necessary collateral. In addition
to the collateral given by the Kwick CEO, as new 15% shareholder of Kwick, the Kwick CEO also agreed to keep the Interscholz Beteiligungs
GmbH business going. This transfer was unanimously approved with written consent of the Board of Directors. Since the fair value
of Kiwibox’s interest in Kwick is zero, this transaction had no material impact on the financial statements.
Interim
Financial Information
The
condensed balance sheet at December 31, 2014 was derived from audited financial statements but does not include all disclosures
required by accounting principles generally accepted in the United States of America. The other information in these condensed
financial statements is unaudited but, in the opinion of management, reflects all adjustments necessary for a fair presentation
of the results for the periods covered. All such adjustments are of a normal recurring nature unless disclosed otherwise. These
condensed financial statements, including notes, have been prepared in accordance with the applicable rules of the Securities
and Exchange Commission and do not include all of the information and disclosures required by accounting principles generally
accepted in the United States of America for complete financial statements. These condensed financial statements should be read
in conjunction with the financial statements and additional information as contained in our Annual Report on Form 10-K for the
year ended December 31, 2014.
Cash
and Cash Equivalents
The
Company accounts for cash and other highly liquid investments with original maturities of three months or less as cash and cash
equivalents.
Kiwibox.Com,
Inc.
Notes
to Financial Statements
Principles
of Consolidation
Depreciation
and Amortization
Property
and equipment are recorded at cost. Depreciation on equipment, furniture and fixtures and leasehold improvements is computed on
the straight-line method over the estimated useful lives of such assets between 3-10 years, or lease term for leasehold improvements,
if for a shorter period. Maintenance and repairs are charged to operations as incurred. Software costs are amortized using the
straight line method and amortized over their estimated useful lives. Amortization begins when the related software is ready for
its intended use in accordance with Accounting Standards Codification (“ASC”) 350-40, Internal-Use Software, Subsequent
Measurement.
Advertising
Costs
Advertising
costs are charged to operations when incurred. Advertising expense was $1,200 and $ 2,300 for the three and nine months ended
September 30, 2015 and $1,466 and $2,083 for the same periods in 2014, respectively.
Evaluation
of Long Lived Assets
Long-lived
assets are assessed for recoverability on an ongoing basis. In evaluating the fair value and future benefits of long-lived assets,
their carrying value would be reduced by the excess, if any, of the long-lived asset over management’s estimate of the anticipated
undiscounted future net cash flows of the related long-lived asset.
Any
impairment of the Company’s internally-developed software is recognized and measured in accordance with the provisions of
ASC 360-10-35, Intangibles-Goodwill and Other, Internal-Use Software, Subsequent Measurement, which requires that assets
be grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other
groups of assets. The guidance is applicable, for example, when one of the following events or changes in circumstances occurs
related to computer software being developed or currently in use indicating that the carrying amount may not be recoverable:
a. Internal-use
computer software is not expected to provide substantive service potential.
b. A
significant change occurs in the extent or manner in which the software is used or is expected to be used.
c. A
significant change is made or will be made to the software program.
d. Costs
of developing or modifying internal-use computer software significantly exceed the amount originally expected to develop or modify
the software.
Fair
Value Measurements
The
Company adopted the provisions of ASC 820, Fair Value Measurements and Disclosures, which is effective for fiscal years
beginning after November 15, 2007, and interim periods within those fiscal years. Under ASC 820, a framework was established for
measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements.
The Company accounted for certain convertible debentures issued in the year ended December 31, 2014 and the nine months ended
September 30, 2015 as derivative liabilities required to be bifurcated from the host contract in accordance with ASC 815-40, Contracts
in Entity’s Own Equity, as the conversion feature embedded in the convertible debentures could result in the note principal
and related accrued interest being converted to a variable number of the Company’s common shares (see Note 13).
|
Kiwibox.Com,
Inc.
Notes
to Financial Statements |
Securities
Issued for Services
The
Company accounts for stock, stock options and stock warrants issued for services and compensation by employees under the fair
value method. For non-employees, the fair market value of the Company’s stock on the date of stock issuance or option/grant
is used. The Company has determined the fair market value of the warrants/options issued under the Black-Scholes Pricing Model.
The Company has adopted the provisions of ASC 718, “Compensation – Stock Compensation”, which establishes accounting
for equity instruments exchanged for employee services. Under the provisions of ASC 718, share-based compensation cost is measured
at the grant date, based on the fair value of the award, and is recognized as an expense over the employee's requisite service
period (generally the vesting period of the equity grant).
Reclassification
of certain securities under ASC 815-15
Pursuant
to ASC 815-15, “Contracts in Entity’s own Equity”, if a company has more than one contract subject to this Issue,
and partial reclassification is required, there may be different methods that could be used to determine which contracts, or portions
of contracts, should be reclassified. The Company's method for reclassification of such contracts is reclassification of contracts
with the latest maturity date first.
Capitalization
of Software /Website development costs
The
Company capitalizes outside-contracted development work in accordance with the guidelines published under ASC 350-50, “Website
Development Costs”. Under ASC 350-50, costs incurred during the planning stage are expensed, while costs relating to software
used to operate a web site or for developing initial graphics should be accounted for under ASC 350-50, Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use, unless a plan exists or is being developed to market the
software externally. Under ASC 350-50, internal and external costs incurred to develop internal-use computer software during the
application development stage should be capitalized. Costs to develop or obtain software that allows for access or conversion
of old data by new systems should also be capitalized, excluding training costs.
Fees
incurred for web site hosting, which involve the payment of a specified, periodic fee to an Internet service provider in return
for hosting the web site on its server(s) connected to the Internet, are expensed over the period of benefit, and included in
cost of sales in the accompanying financial statements.
Income
Taxes
The
Company provides for income taxes based on enacted tax law and statutory tax rates at which items of income and expenses are expected
to be settled in the Company’s income tax return. Certain items of revenue and expense are reported for Federal income tax
purposes in different periods than for financial reporting purposes, thereby resulting in deferred income taxes. Deferred taxes
are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established
when necessary to reduce deferred tax assets to the amount expected to be realized. The Company has incurred net operating losses
for financial-reporting and tax-reporting purposes. Accordingly, for Federal and state income tax purposes, the benefit for income
taxes has been offset entirely by a valuation allowance against the related federal and state deferred tax asset.
Net
Loss Per Share
Net
loss per share, in accordance with the provisions of ASC 260, “Earnings Per Share” is computed by dividing net loss
by the weighted average number of shares of Common Stock outstanding during the period. Common Stock equivalents have not been
included in this computation since the effect would be anti-dilutive. Such common stock equivalents totaled 88,503,240 common
shares at September 30, 2015, comprised of 10,500,000 shares issuable upon exercise of stock purchase warrants, 4,500,000 shares
issuable upon exercise of stock options, 729,537 shares exercisable upon conversion of convertible preferred shares, and 72,773,703
shares potentially issuable upon conversion of convertible debt. Such debt and the related accrued interest with principal totaling
$11,998,700 convertible at the option of four debt holders at a price of 50% of the average closing price for the preceding 10
days, would yield in excess of 17.7 billion shares if fully converted at September 30, 2015. However, the respective notes, all
of which were issued to these investors, carry a stipulation whereby the number of all shares issued pursuant to a conversion,
may in the aggregate not exceed a number that would increase the total share holdings beneficially owned by such investor to a
level above 9.99%. At the end of the period, this clause limits any conversion to the aforementioned number of shares. All of
the aforementioned conversions or exercises, as the case may be, are at the option of the holders.
Kiwibox.Com,
Inc.
Notes
to Financial Statements
Revenue
Recognition
The
Company’s revenue is derived from advertising on the Kiwibox.Com website. Most contracts require the Company to deliver
the customer impressions, click-throughs or new customers, or some combination thereof. Accordingly, advertising revenue is estimated
and recognized for the period in which customer impressions, click through or new customers are delivered. Licensing or hosting
revenue consists of an annual contract with clients to provide web-site hosting and assistance.
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.
2.
GOING CONCERN
The
ability of the Company to continue its operations is dependent on increasing sales and obtaining additional capital and financing.
Our revenues during the foreseeable future are insufficient to finance our business and we are entirely dependent on the willingness
of existing investors to continue supporting the Company with working capital loans and equity investments, and our ability to
find new investors should the financial support from existing investors prove to be insufficient. If we were unable to obtain
a steady flow of new debt or equity-based working capital we would be forced to cease operations. In their report for the fiscal
year ended December 31, 2014, our auditors had expressed an opinion that, as a result of the losses incurred, there was substantial
doubt regarding our ability to continue as a going concern. The accompanying financial statements do not include any adjustments
that might be necessary if the Company were unable to continue as a going concern. Management’s plans are to continue seeking
equity and debt capital until cash flow from operations cover funding needs.
3.
CONCENTRATIONS OF BUSINESS AND CREDIT RISK
The
Company maintains cash balances in a financial institution which is insured by the Federal Deposit Insurance Corporation up to
$250,000. Balances in these accounts may, at times, exceed the federally insured limits. At September 30, 2015 and December 31,
2014, cash balances in bank accounts did not exceed this limit. The Company provides credit in the normal course of business to
customers located throughout the U.S. and overseas. The Company performs ongoing credit evaluations of its customers and maintains
allowances for doubtful accounts based on factors surrounding the credit risk of specific customers, historical trends, and other
information.
4.
PREPAID EXPENSES
Prepaid
expenses consist of the following at:
| | |
September
30, 2015 | |
December
31, 2014 |
| Consulting
Fees | |
$ | 55,000 | | |
$ | 220,000 | |
| Business
insurance | |
| 5,458 | | |
| | |
| | |
$ | 60,458 | | |
$ | 228,075 | |
Kiwibox.Com,
Inc.
Notes
to Financial Statements
5.
PROPERTY AND EQUIPMENT
Property
and equipment consist of the following at:
| | |
September
30, 2015 | |
December
31, 2014 |
| Furniture | |
$ | 15,040 | | |
$ | 14,322 | |
| Leasehold
Improvements | |
| 24,130 | | |
| 24,130 | |
| Equipment | |
| 78,101 | | |
| 77,102 | |
| | |
| 117,271 | | |
| 115,554 | |
| Less
accumulated depreciation | |
| 113,742 | | |
| 110,583 | |
| Total | |
$ | 3,529 | | |
$ | 4,971 | |
Depreciation
expense charged to operations was $3,159 and $3,353 in the first nine months of 2015 and 2014, respectively.
6. INTANGIBLE
ASSETS
| | |
September
30, 2015 | |
December
31, 2014 |
| Website
development costs | |
$ | 254,264 | | |
$ | 254,264 | |
| Less
accumulated amortization | |
| 254,264 | | |
| 254,264 | |
| Total | |
$ | 0 | | |
$ | 0 | |
Amortization
expense for the nine months ended September 30, 2015 and 2014 was $0 and $2,576, respectively.
7.
INVESTMENT IN UNCONSOLIDATED SUBSIDIARY
On
December 10, 2013, the company signed an equity purchase agreement with Marcus Winkler to sell to him eighty (80%) percent of
the equity of its German subsidiary, Kwick. Pursuant to the terms of the agreement, the purchaser paid 36,000 Euros as the purchase
price and the company was required to obtain shareholder approval of the sale as required under applicable Delaware Law. The majority
shareholder approval was obtained on December 18, 2013. In addition, the Company and Mr. Winkler signed a Lock-Up and Standstill
Agreement pursuant to the general terms of which the Company agreed not to participate in the management, operations or finances
of Kwick, which shall be exclusively managed and under control of the purchaser. Accordingly, the Company’s minority ownership
position shall be subject, in all respects, to the exclusive control of the purchaser. Mr. Winkler also has investment and voting
control over Kreuzfeld Ltd., a major creditor of the company, which holds a Class AA convertible promissory note with an outstanding
balance (including accrued interest) of $5,255,198 as of September 30, 2015.
Due
to the significant reduction in the Company’s percentage of controlling interest in Kwick (down to 20%), coupled with the
contract restrictions over voting rights and management of the operations of Kwick subsequent to December 18, 2013, the Company
recognized the deconsolidation of Kwick as of that date, resulting in a loss on deconsolidation of $253,557, and now carries the
investment in Kwick under the cost method of accounting. On December 30, 2013 a total of 15% of the remaining 20% of the equity
of Kwick was transferred to the Chief Executive Officer of Kwick (the “Kwick CEO”), in consideration for the Kwick
CEO pledging to the bank 5,000 Euros as collateral, on behalf of Kiwibox, for bank overdrafts incurred by “Kwick’s”
wholly-owned subsidiary Interscholz Beteiligungs GmbH, as general partner (managing partner) for Interscholz Internet Services
GmbH & Co KG: as it is the duty of the general partner/managing partner to secure liquidity for the partnership. Since Kiwibox
owned 20% of Kwick they were required, under German law, as managing partner of Interscholz Beteiligungs GmbH to secure liquidity
for Interscholz Internet Services GmbH & Co KG. Therefore, 15% of Kiwibox’s 20% was given to the Kwick CEO in exchange
for the CEO pledging the necessary collateral. In addition to the collateral given by the Kwick CEO, as new 15% shareholder of
Kwick, the Kwick CEO also agreed to keep the Interscholz Beteiligungs GmbH business going. This transfer was unanimously approved
with written consent of the Board of Directors. Since the fair value of Kiwibox’s interest in Kwick is zero, this transaction
had no material impact on the financial statements.
Kiwibox.Com,
Inc.
Notes
to Financial Statements
Due
to the significant reductions in fair value of this reporting unit that were considered other than temporary, and impairment of
the related goodwill, the carrying value of this cost method investment was zero at December 31, 2014 and September 30, 2015.
8.
ACCRUED EXPENSES
Accrued
expenses consisted of the following at:
| | |
September
30, 2015 | |
December
31, 2014 |
| Accrued
interest | |
$ | 4,128,586 | | |
$ | 3,237,414 | |
| Accrued
payroll, payroll taxes and commissions | |
| 18,919 | | |
| 26,619 | |
| Accrued
professional fees | |
| 126,612 | | |
| 111,900 | |
| Accrued
rent/deferred rent obligation | |
| 11,693 | | |
| 12,196 | |
| Miscellaneous
accruals | |
| 20,735 | | |
| 20,735 | |
| Total | |
$ | 4,306,545 | | |
$ | 3,408,864 | |
9.
OBLIGATIONS TO BE SETTLED IN STOCK
Obligations
to be settled in stock consisted of the following at September 30, 2015 and December 31, 2014:
| | |
September
30, 2015 | |
December
31, 2014 |
| | |
| | | |
| | |
| Obligation
for warrants granted for compensation | |
$ | 100,000 | | |
$ | 100,000 | |
600,000 common shares
issuable to a consultant
who was a director of the company, for services
rendered. | |
| 36,000 | | |
| 36,000 | |
| | |
| | | |
| | |
2,100,000 (2015) and
1,200,000 shares (2014) common
Shares, and 2,900,000 (2015) and 2,900,000 (2014)
Stock options issuable to two officers
of the Company
Pursuant to their respective employment agreements | |
| 63,248 | | |
| 62,258 | |
| | |
| | | |
| | |
| 7,500,000
(2015) and 1,200,000 shares (2014) common Shares, and 2,900,000 (2015) and 2,900,000 (2014) Stock options issuable to two
officers of the Company Pursuant to their respective employment agreements. | |
| 77,200 | | |
| 68,310 | |
| | |
| | | |
| | |
| 1,000,000
warrants granted on the Pixunity.de asset Purchase | |
| 10,000 | | |
| 10,000 | |
| | |
| | | |
| | |
| 1,200,000
shares granted in 2015 for compensation for services | |
| 1,704 | | |
| — | |
| | |
$ | 288,172 | | |
$ | 276,568 | |
10. LOANS
PAYABLE
The
Company (Formerly Magnitude, Inc.) had borrowings under short term loan agreements with the following terms and conditions at
September 30, 2015 and December 31, 2014:
| On
December 4, 1996, The company (Formerly Magnitude, Inc.) repurchased 500,000 shares of its common stock and retired same against
issuance of a promissory note maturing twelve months thereafter accruing interest at 5% per annum and due December 4, 1998.
This note is overdue as of September 30, 2005 and no demand for payment has been made. | |
$ | 75,000 | |
| Total | |
$ | 75,000 | |
Kiwibox.Com,
Inc.
Notes
to Financial Statements
11.
NOTES PAYABLE
| | |
September 30, | |
December 31, |
| | |
2015 | |
2014 |
| Balance
of non-converted notes outstanding. Attempts to locate the holder of this note, to settle this liability, have been unsuccessful. | |
$ | 25,000 | | |
$ | 25,000 | |
| | |
| | | |
| | |
| From September 2008
through September 2015 five creditors loaned the Company funds under the terms of the convertible notes issued, as modified
in March 2009 and July 2010 and April 2011 and August 2012 (see Note 12) | |
| 11,998,700 | | |
| 11,193,700 | |
| | |
| | | |
| | |
| During 2011, a shareholder
loaned the company $340,000 under demand notes at 10% | |
| 340,000 | | |
| 340,000 | |
| | |
| | | |
| | |
| Total | |
$ | 12,363,700 | | |
$ | 11,558,700 | |
12.
LONG-TERM DEBT
Long-term
debt as of September 30, 2015 and December 31, 2014 is comprised of the following:
Discounted
present value of a non-interest bearing $70,000 settlement with a former investor of
Magnitude, Inc. to be paid in 24 equal monthly payments commencing July 1, 1997. The
imputed interest rate used to discount the note is 8% per annum. This obligation is in
default. | |
| 33,529 | |
Total | |
| 33,529 | |
| Less
current maturities | |
| 33,529 | |
| Long-term
debt, net of current maturities | |
$ | — | |
13.
DERIVATIVE CONVERSION FEATURES
On
July 27, 2010, the Company issued two Class A Senior Convertible Revolving Promissory Notes (“Class A Notes”), one
to Cambridge Services, Inc., in the principal amount of $683,996, consolidating the series of loans (and related accrued interest)
made to the Company since June 26, 2009, and one to Discover Advisory Company, in the principal amount of $1,160,984, consolidating
the series of loans (and related accrued interest) made to the Company since September 19, 2008 and including advances through
September 30, 2010. Each of these promissory notes are due on demand, accrue interest at the rate of 10%, per annum, are convertible
(including accrued interest) at the option of each lender into Common Stock of the Company at 50% of the averaged ten closing
prices for the Company's Common Stock for the ten (10) trading days immediately preceding the Conversion Date but in no event
less than $0.001 (the "Conversion Price"). Both promissory notes contain conversion caps, limiting conversions under
these notes to a maximum beneficial ownership position of Company common stock to 9.99% for each lender. Each of these notes contains
Company covenants, requiring the lenders’ prior written consent in order for the Company to merge, issue any common or preferred
stock or any convertible debt instruments, declare a stock split or dividends, increase any compensation to its officers or directors
by more than five (5%) during any calendar year. During the three and nine months ended September 30, 2015 no debt was converted.
Kiwibox.Com,
Inc.
Notes
to Financial Statements
The
Company renegotiated certain outstanding promissory notes with its four major creditors, Discover Advisory Company of the Bahamas
(“DAC”), Kreuzfeld Ltd. of Switzerland (“Kreuzfeld”), Cambridge Services, Inc. of Panama (“CSI”)
and Vermoegensverwaltungs-Gesellschaft Zurich LTD of Switzerland (“VGZ”). As of August 1, 2012, the Company authorized
the issue of a new series of corporate notes, the Class AA Senior Secured Convertible Revolving Promissory Notes, dated as of
August 1, 2012 (the New Note(s)”) and issued New Notes: (1) to DAC, with a maximum credit facility of $5,000,000 which replaced
the Company’s outstanding Class A Senior Convertible Revolving Promissory Note, dated July 27, 2010, in the original principal
amount of $1,080,984, now cancelled, which had an outstanding balance due (including accrued interest) of $4,764,109 as of December
31, 2014 and $5,587,256 at September 30, 2015; (2) to Kreuzfeld, with a maximum credit facility of $5,000,000 which replaced the
Company’s outstanding Class A Senior Convertible Revolving Promissory Note, dated September 16, 2011, in the original principal
amount of $2,000,000, now cancelled, which had an outstanding balance due (including accrued interest) of $4,696,785 at December
31, 2014 and $5,255,198 at September 30, 2015; (3) to CSI, with a maximum credit facility of $2,000,000 which replaced the Company’s
outstanding Class A Senior Convertible Revolving Promissory Note, dated August 1, 2011, in the original principal amount of $1,303,996,
now cancelled, with an outstanding balance due (including accrued interest) of $3,807,184 as of December 31, 2014, and $3,962,773
at September 30, 2015 and; (4) to VGZ, with a maximum credit facility of $2,000,000 which replaced the Company’s outstanding
Class A Senior Convertible Revolving Promissory Note, dated September 30, 2010, in the original principal amount of $2,000,000,
now cancelled, with an outstanding balance due (including accrued interest) of $1,032,355 as of December 31, 2014 and $1,090,093
at September 30, 2015. All of the New Notes accrue interest at the rate of 10%, are convertible into common shares at the conversion
rate equal to 50% of the averaged ten closing prices for the Company's Common Stock for the ten (10) trading days immediately
preceding the Conversion Date but in no event less than $0.001, and are due on demand.. Pursuant to an Equity and Stock Pledge
Agreement, also negotiated and executed as of August 1, 2012, the repayment of the outstanding indebtedness of the New Notes is
secured by all of the limited partnership interests of the Company’s partly-owned (now deconsolidated) German subsidiary,
KWICK! Community GmbH & Co. KG, a private German limited partnership (“KG”), and all of its shares of the sole
general partner of KG, KWICK! Community Beteiligungs GmbH.
The
Company accounted for the conversion features underlying these convertible debentures in accordance with ASC 815-40, Contract
in Entity’s Own Equity, as the conversion feature embedded in the convertible debentures could result in the note principal
and related accrued interest being converted to a variable number of the Company’s common shares. The Company determined
the value of the derivate conversion features of new debentures issued to these holders plus accrued interest during the nine
months ended September 30, 2015 under these terms at the relevant commitment dates to be $1,722,480 utilizing a Black-Scholes
valuation model. The change in fair value of the liability for the conversion feature resulted in income of $278,233 for the nine
months ended September 30, 2015, which is included in Other Income (Expense) in the accompanying financial statements. The fair
value of these derivative conversion features was determined to be $15,926,674 at September 30, 2015.
14.
COMMITMENTS AND CONTINGENCIES
We
maintain offices for our operations at 330 W. 42th Street, New York, New York 10036, for approximately 990 square feet. This lease
requires initial minimum monthly rentals of $3,833 plus tenants’ share of utility/cam/property tax charges which average
approximately $291 per month. The property is subject to a five year lease, with future minimum rentals as follows:
| 2015 |
|
12,200 |
| 2016 |
|
49,289 |
| 2017 |
|
50,768 |
| 2018 |
|
47,847 |
Kiwibox.Com,
Inc.
Notes
to Financial Statements
In
May 2010 the Company negotiated a lease of an apartment in New York City for the CEO in order to reduce travel costs. The lease
was for 12 months at $2,775 per month through May 31, 2011. In May 2011 the lease was extended through August 31, 2011 at the
rate of $2,837. In August 2011 the lease was extended through December 31, 2011 at the rate of $2,837 per month. In December 2011
the lease was again extended through May 31, 2012 with no change in the base rent. In May 2012 the lease was extended through
December 31, 2012 at a monthly rate of $2,943, this lease was then extended through December 31, 2013 at the same terms. In December
2013 the lease was extended through May 31, 2014. The lease was again extended through May 31, 2016 in March of 2015.
Our
total rent expenses were $67,814 and $62,108 during the nine months ended September 30, 2015 and 2014, respectively.
The
Company is party to a consulting agreement with its Chief Executive Officer for monthly cash compensation of $18,333, or $220,000
per year. Payment for January 1, 2015 through December 31, 2015 was made on November 20, 2014 in accordance with the terms of
this new agreement. In the nine months ended September 30, 2015 and September 30, 2014 this officer was also granted 900,000 shares.
On
March 7, 2011 the Company announced its acquisition of the assets of Pixunity.DE a German photo book community. We purchased the
internet domain name, the software codes for capturing, uploading and sharing images and the list of its approximate 15,000 members.
The principal reason for this purchase was to acquire the source code and technology for image sharing which could have cost us
up to $100,000 to develop this technology in house. We are currently integrating the image sharing software into our Kiwibox website
and do not intend to market or rely upon the pixunity brand for our business.
15.
RELATED PARTY TRANSACTIONS
During
the nine months ended September 30, 2015, the Company sold advertising space on its Kiwibox.com website to Kwick totaling $20,139
the balance due from Kwick at September 30, 2015 for these transactions is $48,286. The Company also has outstanding loans due
from Kwick of $90,074 at September 30, 2015. Kwick is majority-owned by Mr. Winkler, who in turn is a related party of the Company
(see Note 7).
During
the nine months ended September 30, 2015 and 2014 one outside director of the Company who also serves as the Company’s general
and securities counsel, was paid an aggregate $37,125 and $29,781 respectively, for legal services. The director also received
100,000 common stock options per month during the three and nine month periods ended September 30, 2015 and 2014, valued at $2,970
and $8,910, respectively in each year.
During
the three and nine months ended September 30, 2015 and 2014 we incurred aggregate expenses of $23,856 and $218,620 and $75,658
and $241,415 respectively, to companies controlled by the Chief Executive Officer, for website hosting, website development and
technical advisory services, server farm installations and IT equipment purchases. The officer also earned 100,000 common shares
per month during the nine months ended September 30,2015 and 2014 under a consulting agreement valued at $990 and $4,050 respectively.
The officer also received $220,000 in November 2014 for prepaid consulting fees toward 2015 under the terms of a consulting agreement.
Through
September 30, 2015, approximately 10% of the voting stock was beneficially held by Discovery Advisory Company, located in the
Bahamas, and Cambridge Services Inc., Kreuzfeld, LTD and Vermoegensverwaltungs-Gesellschaft Zurich LTD. (VGZ) of Switzerland.
Discovery Advisory Company, Cambridge Services Inc., Kreuzfeld, LTD and VGZ are major creditors, having advanced operating capital
against issuance by the Company of convertible promissory notes during 2015 and 2014. During the three months and nine months
ended September 30, 2015 Discovery Advisory Company advanced an additional $80,000 and $525,000. During the three months and nine
months ended September 30, 2015 Kreuzfeld, LTD advanced an additional $180,000 and $280,000. At September 30, 2015, $4,231,722
and $3,080,060 of such notes were outstanding and owed to Discovery Advisory Company and Cambridge Services Inc, respectively
and $3,914,959 and $771,958 owed to Kreuzfeld, Ltd. and VGZ, respectively.
Kiwibox.Com,
Inc.
Notes
to Financial Statements
16.
FAIR VALUE
Some
of the Company’s financial instruments are not measured at fair value on a recurring basis but are recorded at amounts that
approximate fair value due to their liquid or short-term nature, such as cash and cash equivalents, receivables and payables.
Effective
July 1 2009, the Company adopted ASC 820, Fair Value Measurements and Disclosures. This topic defines fair value for
certain financial and nonfinancial assets and liabilities that are recorded at fair value, establishes a framework for
measuring fair value, and expands disclosures about fair value measurements. This guidance supersedes all other
accounting pronouncements that require or permit fair value measurements. The Company accounted for the conversion features
underlying certain convertible debentures in accordance with ASC 815-40, Contracts in Entity’s Own Equity, as
the conversion feature embedded in the convertible debentures could result in the note principal and related accrued interest
being converted to a variable number of the Company’s common shares.
Effective
July 1 2009, the Company adopted ASC 820-10-55-23A, Scope Application to Certain Non-Financial Assets and Certain Non-Financial
Liabilities, delaying application for non-financial assets and non-financial liabilities as permitted. ASC 820 establishes
a framework for measuring fair value, and expands disclosures about fair value measurements. ASC 820 establishes a fair value
hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:
| Level
1 — quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company
has the ability to access as of the measurement date. Financial assets and liabilities utilizing Level 1 inputs include active
exchange- traded securities and exchange-based derivatives. |
| |
| Level
2 — inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability
or indirectly observable through corroboration with observable market data. Financial assets and liabilities utilizing Level
2 inputs include fixed income securities, non-exchange-based derivatives, mutual funds, and fair-value hedges. |
| |
| Level
3 unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or
liability at the measurement date. Financial assets and liabilities utilizing Level 3 inputs include infrequently- traded,
non-exchange-based derivatives and commingled investment funds and are measured using present value pricing models. The company
values the conversion liabilities using the Black-Scholes model and the assumptions are updated using independent data such
as the risk free rate, volatility and expected life for each valuation date based on changes over time. |
The
following table reconciles, for the nine months ended September 30, 2015, the beginning and ending balances for financial instruments
that are recognized at fair value in the consolidated financial statements (all Level 3):
| Conversion
Liability at January 1, 2015 | |
$ | 14,482,427 | |
| Value
of beneficial conversion features of new debentures | |
| 1,722,480 | |
| Change
in value of beneficial conversion features during period | |
| (278,233 | ) |
| Reductions
in fair value due to principal conversions | |
| — | |
| Conversion
Liability at September 30, 2015 | |
$ | 15,926,674 | |
The
fair value of the conversion features are calculated at the time of issuance and the Company records a conversion liability for
the calculated value. The Company recognizes interest expense for the recognition of the conversion liability.
Kiwibox.Com,
Inc.
Notes
to Financial Statements
For
2015, the fair value of the embedded conversion liabilities was determined using the Black-Scholes model calculating fair value
based on the conversion discount as well as the term and short-term bond rate. During the nine months ended September 30, 2015
the following assumptions were used: (1) conversion discounts of 50%; (2) a look back period of 10 days (3) bond rates of 0.01%
to 0.06% and (4) volatility range of 0% to 351%.
Fluctuation
in value is largely based on the change in the daily share price accompanied by the conversion discount. The change in volatility
has the greater effect on the conversion liability during each reporting period, as higher volatility levels will yield larger
values.
17.
SUBSEQUENT EVENTS
During
October 2015 and through November 15, 2015 we received $70,000 of working capital from accredited investors, which are covered
by convertible promissory notes.
Item
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CAUTIONARY
STATEMENT PURSUANT TO "SAFE HARBOR" PROVISIONS OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934
The
information in this annual report contains forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. Such Act provides a “safe harbor” for forward-looking statements to encourage companies to provide
prospective information about their businesses so long as they identify these statements as forward looking and provide meaningful
cautionary statements identifying important factors that could cause actual results to differ from the projected results. All
statements other than those statements of historical fact made in this report are forward looking. In particular, the statements
herein regarding industry prospects and future results of operations or financial position are forward-looking statements. Forward-looking
statements reflect management’s current expectations and are inherently uncertain. Our actual results may differ significantly
from management’s expectations.
The
following discussion and analysis should be read in conjunction with the consolidated financial statements of Kiwibox.Com, Inc.,
contained herein and in the Company’s annual report for the year ended December 31, 2013 as filed on Form 10-K. This discussion
should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion
reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best
present assessment of our management.
Description
of Business
Overview
On
December 31, 2009 Magnitude Information Systems, Inc. changed its name to Kiwibox.Com, Inc.
We
own and operate “Kiwibox.com”, a social networking website. Initially launched in 1999, Kiwibox.com is an online social
networking community. Kiwibox has a regional-based advertising-system that allows target-group-optimized ads for advertisers and
sponsors.
Kiwibox
Operations
Kiwibox.com
is a social network for young adults all around the world for web based - and mobile usage, a community to find new friends and
to meet new people online and in the real world. Kiwibox continues to follow the mobile trend by updating its mobile applications
to keep members engaged across its multiple platforms. Unlike traditional social networking sites such as MySpace and Facebook,
Kiwibox combines "magazine" content and social networking technology in its website, creating attractive topics for
its membership to peruse and enjoy. Kiwibox provides advertisers with a superior, worry-free advertising platform with Profile
targeted technology to reach Web browser based and mobile Apps Customers.
The
Company has successfully integrated Pixunity, a photo-sharing application, to the US market and will continue to add enhancement
features throughout the year. At the same time we continue to increase our market presence. Our promotional teams, both inside
and outside of New York City, continue to develop partnerships with event organizers and businesses along the West Coast
of the United States and plan further expansion of these types of market alliances throughout 2015.
Our
operating expenses, not including stock-based compensation, are at a level of approximately $96,000 per month (see sections “Loans
and Notes Payable”).
Kiwibox
shall continue to rely upon its advertising agreement with Triple Double U (”TDU”), an exclusive German online advertising
agency, which agreements have been negotiated by our former subsidiary, Germany-based Kwick, for the Kiwibox network for web and
mobile advertisements
Overall,
we have equipped our entire Kiwibox.com website with the newest state-of-the-art advertising features which enable sponsors to
self-direct their message to specific target audiences based on gender, age, geographic region, education, and interests. Included
in this array of features is our “search and be found” function, incorporating Search-Engine optimization with privacy
options that improves search results. We have continued in the third quarter of 2015 to facilitate friends’ searches
and establish networks of users on a global basis.
Potential
Revenue Streams and Marketing Strategy
Currently
we generate the majority of our revenue from advertising/sponsorships. We anticipate revenue growth from increased membership
activity and our revitalized website as we continue to implement new marketing strategies. Our software and networking technologies
that we incorporated during the last 2 years now permit our mobile devices to accept and receive direct advertising. Our social
networks permit us to work with potential advertisers to identify the right member groups for direct target advertising, a marketing
channel that is readily accessible to our social media community.
Our
continuing membership growth is fueled by infiltrating our users into local event venues where they participate and simultaneously
communicate with our social network via the regular deployment of our cutting-edge App updates. As a result, the Kiwibox network
enjoys continuing user sign-ups and continuing loyalty of users to our social network. Due to our long-time experience with our
German affiliate, the KWICK! Community (“Kwick”), we were able to fulfill the front-end and back-end needs for this
remarkable growth.
Community
means social network – and thrives on membership networking. Our new website is based on the latest web technology which
makes it easier for users to stay connected and to interact with each other. Most importantly, our website features permit our
community members to stay informed in “real” time about events and parties in areas we are targeting through our promotional
teams.
The
results of our marketing efforts clearly show the following positive trends in the growth of our community at September 30, 2015:
| • | | Active
Members – Our Kiwibox.com website has 4.69 Million Active Members as of September
30, 2015, an increase of approximately 8 % over the second quarter, 2015. Active
users are those which have logged in to Kiwibox.com during the last 30 days. |
| • | | Unique
Visitors- – For the quarter ended September 30, 2015, we had 5.4 Million Unique
Visitors to our Kiwibox.com website, an increase of approximately 8% over second quarter
2015 results. Unique Visitors refers to the number of distinct individuals requesting
pages from our Kiwibox.com website during a specific period, regardless of how often
they visit. Visits refer to the number of times our Kiwibox.com website is visited, no
matter how many visitors make up those visits. |
| • | | Page
Impressions – We had 430.7 Million Page Impressions during the third quarter of
2015, a slight decrease of approximately 7.5 % over the prior quarter. Generally, Page
Views refer to a number of pages which are viewed or clicked on our Kiwibox.com website
during the quarter. |
| • | | Guestbook
Entries – For the quarter ended September 30, 2015, Kiwibox.com had 151.4 Million
Guestbook Entries, an increase of approximately 2% from the previous quarter. A Guestbook
is a logging system that permits visitors to our Kiwibox.com website to leave a public
comment. |
| • | | Blog
Entries – Our Kiwibox.com website members and visitors entered 109.5 Million Blog
Entries during the third quarter of 2015, an approximate 3% increase over the prior quarter.
A Blog Entry is a message entered in our Kiwibox.com. |
| • | | Mobile
Users – For the quarter ended September 30,2015 Kiwibox.com had 510,000 Mobile
Installations, an increase of approximately 10% over the previous quarter. |
Market
Position
Our
social media’s market penetration continues to rely upon our innovations where we strive to enhance our member’s experiences
with our community. Showcasing events and member rendezvous at select venues represents a mere token of Kiwibox’s community
appeal. Our members enjoy our interactive platforms where we blog, play games, chat and share pictures. As a social media company
Kiwibox strives to deploy the tools necessary for our members to readily connect, communicate and party; whether in the U.S.A.
or worldwide.
The
Kiwibox Network is in a unique position because it combines the excitement of a dating community with the benefits and accessibility
of a real social network. The Kiwibox Network encourages members to explore local events in their area, connect with other members
and enjoy the additional member exclusive benefits the social network is offering, such as games,
blogging, chatting, picture-sharing and online-flirting. This community behavior binds users to the platform and is the base for
our viral marketing.
Safety
Kiwibox.com
has developed an effective monitoring model which assists in maintaining a safe site for our member base, combining both technology
based systems and user moderation. Users communicate and share information in an environment where they feel both secure and at
ease. Members of the Kiwibox team monitor forums and groups daily to ensure the content is appropriate.
In
addition to our monitoring system, the Kiwibox.com platform is equipped with advanced technology safety features. This includes
the private sphere configuration of users, contact blocs for larger age differentials, anti-spam protection and intelligent self-learning
user-scoring feature. In addition to this, Kiwibox.com has implemented state of the art security features such as former Attorney
General Andrew M. Cuomo’s hash value database in order to block images of illegal sexual content. With the combination of
human moderation and advanced technology, users are afforded a safe and secure site.
Competition
Our
primary competitors are other online social networks, including Facebook, Instagram, Tinder and Tumbler. Facebook is widely considered
as the industry leaders, however, recently statistics and strategic announcements have indicated a shift in the target audience
from teens and college students to a much broader and more adult demographic, because of their international focus. We plan to
distinguish ourselves by targeting the US-market and by combining the social-network advantages with user generated content –
from users to users, while stressing the community feeling. As these other social networks have made changes to their websites
we have been able to capitalize on the disenfranchised users and bring them into our online community.
Technology
Development
The
Company attaches great importance to its innovative technology developments and continues to follow the top social network market
leaders with technology upgrades, providing its users with an alternative social networking opportunity.
The
Kiwibox Network is focusing on the fast growing mobile usage phenomenon, being online with friend’s every time and everywhere.
The Kiwibox Network released multiple updates in the 4th quarter of 2014 for its IOS and Android Applications. At present,
more than 700,000 company Apps are installed in our social media marketplace. Our entire Event
page was redesigned during the last quarter of 2014, targeted to generate income based on direct
advertisement sales with partners and not through the Banner Ads market. In 2015, Kiwibox plans to optimize the Ads-Sales by organizing
a department dedicated to target group based editorial and exclusive Ads-Sales.
To
stay ahead in our marketplace the Kiwibox stationary device platform is now reinforced by multiple data centers, providing redundant
security for our network. We anticipate rolling out our new super-charged Kiwibox Platform, turbo-charging the speed of our user
experience and containing a new state-of-the-art, redesigned user interface. These new developments, including the release of
Kiwibox’s new Android and IOS Apps for mobile devices, are targeted for launch before Christmas.
Intellectual
Property
The
Kiwibox.com web and mobile software and other related intellectual property rights are important assets. We hold the Internet
domain names Kiwibox.com, Kiwibox.net, Kiwibox.org, as well as other country-code top level domains and feature-based domains
like 4kiwi.com.
Governmental
Regulations
Our
Kiwibox website operations are subject to state, federal and international laws, rules and regulations that cover on-line business,
privacy policies, consumer protection and product marketing. The Kiwibox website business is subject to state, federal and international
laws, rules and regulations applicable to online commerce, including user privacy policies, product pricing policies, website
content and general consumer protection laws. Various laws, rules and regulations have been adopted, and probably will be
adopted in the future, that apply to the Internet, including available online content, privacy concerns, online marketing, “spam”
and unsolicited commercial email, taxation issues, and regulations that effect and monitor the quality of products and services.
A
portion of these laws, rules and regulations that concern the Internet and its uses have been only recently adopted. Courts and
administrative agencies have not yet fully interpreted these legal requirements as to their application and scope. Accordingly,
our Kiwibox website business is subject to the uncertainties of future interpretations and application of these legal requirements.
The application and interpretation of these legal requirements or the passage of new and/or revised laws, rules and regulations
could reduce the demand for Kiwibox website services, increase its operational costs, and expose it to potential liability. Any
such events could have a material adverse effect upon our Kiwibox website business and financial condition. Our failure, or that
of our business partners, to accurately predict and anticipate the interpretation or application of these laws, rules and regulations,
whether now in force or adopted in the future, could have a detrimental impact on our operations, create negative publicity for
us and expose us to potential liability.
State
and federal agencies are applying consumer protection laws to regulate the on-line use, collection and dissemination of personal
information and website content. These laws require us to implement programs to notify our website users of our privacy and security
programs. Consumer protection laws will require us to obtain the consent of our website users if we want to collect and use certain
portions of their personal information. We are currently voluntarily working in partnership with the New York State Attorney General’s
office and have incorporated hash value technology into our website.
The
Federal Trade Commission (“FTC”) is the lead federal agency monitoring Internet websites and their content. State
attorneys general have become active monitors of the Internet at the local State level. These governmental bodies may investigate
or bring enforcement actions against website operators they deem in violation of applicable consumer protection laws. We believe
that our Kiwibox website’s collection and dissemination of information programs, including our privacy policies, do and
will continue to comply with existing laws. However, a decision by a federal or state agency that any of our Kiwibox website’s
business practices do not meet applicable legal standards could result in liability and have a material adverse effect on our
business and financial condition.
Employees
Currently,
we have 3 employees.
Results
of Operations for the Three and Nine Months Ended September 30, 2015 Compared to the Three and Nine Months Ended September 30,
2014
For
the three and nine months ended September 30, 2015, total revenues amounted to $5,843 and $20,139, respectively compared to $7,579
and $27,078 recorded in the same periods in 2014. All revenue was received from our affiliate Kwick.
Gross
Profit (Loss) for the three and nine months ended September 30, 2015 amounted to $2,740 and $11,721, respectively, after accounting
for $3,103 and $8,418 respectively, in cost of sales. After deducting selling and general and administrative expenses of $295,636
and $865,690 for the three and nine months ended September 30, 2015, compared to $270,436 and $898,860 recorded in the same periods
in 2014, the Company realized operating losses of $292,896 and $853,969 for the three and nine months ended September 30, 2015
compared to operating losses of $268,009 and $885,724 in the same periods in 2014.
The
quarter concluded with a net loss of $1,044,497 for the quarter and net loss of $3,189,388 for the first nine months of 2015.
After accounting for dividends accrued on outstanding preferred stock which totaled $38,447, the net loss applicable to common
shareholders for the nine months ended September 30, 2015 was $3,227,835 or $0.005 per share compared to a net loss applicable
to common shareholders of $3,262,833 or $0.005 per share for the same period in 2014.
Liquidity
and Capital Resources
We
have financed our business with new debt since our cash flow is insufficient to provide the working capital necessary to fund
our operations. We received $260,000 in cash from short-term loans from accredited private investors during the quarter. We
have an ongoing and urgent need for working capital to fund our operations. If we are unable to continue to receive new equity
investments or obtain loans, we will not be able to fund our operations and we will be required to close our business.
Our
deficit in working capital amounted to $33,829,533 at September 30, 2015, as compared to $30,608,081 at December 31, 2014. Stockholders’
equity showed an impairment of $33,813,142 at the end of the period, compared to an impairment of $30,585,307 at the beginning
of the year. The negative cash flow from operations during the nine months totaled $745,955 and was financed by new debt.
The
Company had $0 of bank debt as of September 30, 2015. Aside from trade payables and accruals, our remaining indebtedness at September
30, 2015 consisted of certain notes and loans aggregating 12,438,700, liabilities for derivative conversion features of $15,926,674,
amounts due to related parties of $67,261 and the following obligations. The position “Obligations to be settled in stock”
of $288,172 accounts for common shares due under consulting agreements, and for services to be settled in common stock options
and warrants, where the underlying securities had not yet been issued. Current liabilities also include $774,103 accrued unpaid
dividends on outstanding preferred stock. Such dividends will be paid only if and when capital surplus and cash-flow from operations
are sufficient to cover the outstanding amounts without thereby unduly impacting the Company’s ability to continue operating
and growing its business.
Our
current cash reserves and net cash flow from operations expected during the near future will be insufficient to fund our operations
and website development and marketing plan over the next twelve months. We expect to fund these requirements with further investments
in form of debt or equity capital and are in ongoing discussions with existing investors to secure funding. There can be no assurance,
however, that we will be able to secure needed financing in the future and identify a financing source or sources, and if we do,
whether the terms of such financing will be acceptable or commercially reasonable.
Absent
the receipt of needed equity investment or loans, we will be compelled to severely curtail operations and possibly, close
our business operations. Assuming we can receive current funds to continue to operate our businesses, we may need additional funding
for marketing and website development, absent of which our website development, results of operations and financial condition
could be subject to material adverse consequences.
Item
3. Quantitative and Qualitative Disclosures about Market Risk
A
smaller reporting company is not required to provide the information required by this Item.
Item
4T. CONTROLS AND PROCEDURES
(a)
Evaluation of Disclosure Controls and Procedures.
The
Company’s Chief Executive Officer and Chief Financial Officer has evaluated the effectiveness of the Company’s disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the fiscal period ended September
30, 2015 covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, the Chief Executive Officer and Chief Financial
Officer has concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective
as required under Rules 13a-15(e) and 15d-15(e) under the Exchange Act.
As
of September 30, 2015, management assessed, with the participation of the Chief Executive Officer and Chief Financial Officer,
the effectiveness of our internal control over financial reporting based on the criteria set forth in Internal Control –
Integrated Framework for effective internal control over financial reporting established in Internal Control--Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting
such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal
controls and procedures were not effective as more fully described below. Based on management’s assessment over
financial reporting, management believes as of September 30, 2015, the Company’s internal control over financial reporting
was not effective due to the following deficiencies:
1.
The Company’s control environment did not have adequate segregation of duties and lacked adequate accounting resources to
address non routine and complex transactions and financial reporting matters on a timely basis.
2.
The Company had only a part time chief financial officer performing all accounting related duties on site, presenting the risk
that the reporting of these non routine and complex transactions during the preparation of our future financial statements and
disclosures may not be accomplished in a timely manner. Additionally in September 2012 the Company hired a comptroller to assist
the Chief Financial Officer. Effective May 31,2015 the chief financial officer resigned and the CEO Andre Scholz took over the
position as chief financial officer while the comptroller that was assisting the previous part time chief financial officer assumed
the day to day transactional activity.
Company
management believes that notwithstanding the above identified deficiencies that constitute our material weakness, that the financial
statements fairly present, in all material respects, the Company’s consolidated balance sheets as of September 30, 2015
and December 31, 2014 and the related statements of operations, and cash flows for the three and nine months ended September 30,
2015 and 2014, in conformity with generally accepted accounting principles.
Management’s
Remediation Initiatives
In
an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated,
or plan to initiate, the following series of measures:
| - | | When
available, we will devote additional resources to supplement, where necessary, existing
resources with additional qualified third party consultants; |
| - | | We
are continuing to institute more stringent approval processes for financial transactions,
and |
| - | | We
are continuing to perform additional procedures and analyses for significant transactions
as a mitigating control in the control environment due to segregation of duties issues. |
Changes
in Internal Controls over Financial Reporting
Other
than as stated above, during the quarter ended September 30, 2014, there have been no changes in the Company’s internal
control over financial reporting that have materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting.
PART
II - OTHER INFORMATION
Item
1 LEGAL PROCEEDINGS
At
the time of this report, the Company is not a party in any pending material legal proceedings.
Item
1A. RISK FACTORS
A
smaller reporting company is not required to provide the information required by this Item.
Item
2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
| |
(a) |
Issuance of unregistered securities |
During
the three and nine months in 2015 the Company did not sell any unregistered securities.
Item
3 DEFAULTS UPON SENIOR SECURITIES
The
Company, as of the date of this filing, is in arrears on the payment of certain dividends on its Series A, C, and D Senior Convertible
Preferred Stock. Such arrears total approximately $765,100. These dividends have been accrued, however, the Company’s management
has refrained from making payments at this time because of the absence of positive equity and/or surplus funds.
Item
4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
-
None
Item
5 OTHER INFORMATION
-
None
Item
6 EXHIBITS AND REPORTS ON FORM 8-K
| (a) |
Exhibits |
|
| |
|
|
| |
31.01 |
Certification of Chief Executive Officer pursuant to Rule 13a-14(a)
and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 14, 2015. |
| |
|
|
| |
31.02 |
Certification of Chief Financial Officer pursuant to Rule 13a-14(a)
and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated August 14, 2015. |
| |
|
|
| |
32.01 |
Certification of Chief Executive Officer 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, dated August 14,
2015. |
| |
|
|
| (b) |
Reports on Form 8-K |
|
| |
|
During in the third quarter in 2015, the Company filed the following
reports on Form 8-K: |
| |
|
On October 19, 2014, the Company filed a current report on Form
8-K, announcing an operational update for the third quarter |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report on Form 10-Q to be signed
on its behalf by the undersigned, thereunto duly authorized.
| Date: November 13, 2015 |
|
Kiwibox.Com, Inc. |
| |
|
|
| |
By: |
/s/
Andre Scholz |
| |
|
Andre Scholz |
| |
|
Chief
Executive Officer
Chief
Financial Officer |
Exhibit
31.01
CERTIFICATION
PURSUANT TO
SECTION
302 OF
THE
SARBANES-OXLEY ACT OF 2002
I, Andre
Scholz, certify that:
| (1) |
I have reviewed the
quarterly report on Form 10-Q of Kiwibox.Com, 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 small business issuer as of, and for, the periods presented
in this report; |
| (4) |
The small business issuer’s
other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer 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 small business issuer, 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 account principles; |
| |
(c) |
Evaluated
the effectiveness of the small business issuer’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 small business issuer’s internal control over financial reporting that occurred during
the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s
internal control over financial reporting; and |
| (5) |
The small business issuer’s
other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the small business issuer’s auditors and the audit committee of small business issuer’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 small business issuer’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 small business issuer’s
internal control over financial reporting. |
| |
|
|
|
| |
November 16, 2015 |
/s/
Andre Scholz |
|
| |
|
Andre Scholz |
|
| |
|
President,
Chief Executive Officer
(principal
executive officer) |
Exhibit
31.02
CERTIFICATION
PURSUANT TO
SECTION
302 OF
THE
SARBANES-OXLEY ACT OF 2002
I, Andre
Scholz, certify that:
| (1) |
I have reviewed the
quarterly report on Form 10-Q of Kiwibox.Com, 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 small business issuer as of, and for, the periods presented
in this report; |
| (4) |
The small business issuer’s
other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange
Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer 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 small business issuer, 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 account principles; |
| |
(c) |
Evaluated
the effectiveness of the small business issuer’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 small business issuer’s internal control over financial reporting that occurred during
the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s
internal control over financial reporting; and |
| (5) |
The small business issuer’s
other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting,
to the small business issuer’s auditors and the audit committee of small business issuer’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 small business issuer’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 small business issuer’s
internal control over financial reporting. |
| |
|
|
|
| |
November 16,
2015 |
/s/
Andre
Scholz |
|
| |
|
Andre
Scholz |
|
| |
|
Chief
Financial Officer
(principal
financial officer and principal
accounting
officer) |
Exhibit
32.01
CERTIFICATION
PURSUANT TO
18
U.S.C. §1350,
AS
ADOPTED PURSUANT TO
SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report of Kiwibox.Com, Inc.(the “Company”) on Form 10-Q for the period
ended September 30, 2015 (the “Report”), each of the undersigned, Andre Scholz, President and Chief
Executive Officer of the Company and Chief Financial Officer of the Company, hereby certifies pursuant to 18 U.S.C.
§1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| |
1. |
The Report fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| |
2. |
The information contained in the Report fairly
presents, in all material respects, the financial condition and results of operations of the Company. |
| |
|
|
| Date: November 16, 2015 |
|
|
|
| |
|
|
|
| |
By: |
/s/ Andre
Scholz |
|
| |
|
Andre Scholz |
|
| |
|
President and Chief Executive Officer |
|
| |
|
(principal executive officer) |
|
| |
|
|
| Date: November 16, 2015 |
|
|
|
| |
|
|
|
| |
By: |
/s/ Andre
Scholz |
|
| |
|
Andre
Scholz |
|
| |
|
Chief Financial Officer |
|
| |
|
(principal financial officer and principal accounting officer) |
|
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