ITEM 2. MANAGEMENT`S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section of this report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
Company History
Cold Cam, Inc.
(Cold Cam, the Company, we, us or our)
is a development stage company incorporated in the State of Nevada on October 25, 2012. We intend to develop a camera system to be placed on the inside of the refrigerator door. It will take pictures of the contents every time the door closes. Those pictures will appear on a touch screen, which can be seen on the outside of the refrigerator door, eliminating the need to search for items or keep the refrigerator door open for prolonged periods of time. This touch screen would also allow the user to upload pictures, write notations or messages and have a calendar for daily or weekly reminders.
We plan on generating revenue by licensing our product to refrigerator manufacturing companies. We expect to negotiate our compensation based on a percentage of the price of every refrigerator sold with our technology.
At this time, we have not developed our product or contacted any possible client or developer. The Company has not yet implemented its business model and to date, has generated no revenues.
Results of Operations for the Three Months Ended January 31, 2014 Compared to the Three Months Ended January 31, 2013
Revenue
We recognized no revenue in the three months ended January 31, 2014 or 2013 as we are a development stage company and have not commenced operations as yet.
Operating Expenses
During the three months ended January 31, 2014 we incurred operating expenses of $4,720 compared to $7,702 in the three months ended January 31, 2013, a decrease of $2,982. The majority of our expenses were associated with the filing of the Companys form S-1, including auditing and accounting fees.
Net Losses
During the three months ended January 31, 2014 we incurred losses of $4,720 compared to $7,702 in the three months ended January 31, 2013, due to the factors discussed above.
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Capital resources and Liquidity
As of January 31, 2014 we had $600 in cash, and liabilities of
$17,833 compared to $841 cash and $13,354 liabilities as at October 31, 2013.
Operating Activities
During the three months ended January 31, 2014 we used $11,731 in our operating activities compared to $7,702 during the three months ended January 31, 2013. During the three months ended January 31, 2013 we incurred a net loss of $4,720 and paid accounts payable of $7,011. This compared to the three months ended January 31, 2013 when we incurred losses of $7,702 but there were no movements in operating assets of liabilities.
Investing Activities
We neither generated funds, nor used funds, in investing activities during the three month periods ended January 31, 2014 or 2013.
Financing Activities
During the three months ended January 31, 2014 we received $11,490 by way of loan from our sole officer, director and principal shareholder compared to $846 during the three month ended January 31, 2013.
We have registered 10,206,000 of our common stock for sale to the public. Our registration statement became effective on June 13, 2013 and we are in the process of seeking equity financing to fund our operations over the next 12 months. The Company will fail if funds are not either raised in this offering or by loans, either from the President or from other interested parties. If we are unable to raise enough funds through this offering, the Company would have to seek additional capital through debt or equity.
As of the date of this report, the current funds available to the Company will not be sufficient to continue maintaining its reporting status. The Companys sole officer and director, Mr. Kato is committed to provide funds required to maintain the reporting status in the form of a non-secured loan for the next twelve months as the expenses are incurred if no other proceeds are obtained by the Company. However, there is no contract in place or written agreement securing this agreement. Management believes if the Company cannot maintain its reporting status with the SEC it will have to cease all efforts directed towards the Company. As such, any investment previously made would be lost in its entirety.
Should the Company fail to raise capital through this offering and Mr. Kato is unwilling or unable to loan the Company funds to proceed with its plans the Company will have to cease all business activities until such time further funds are raised. As the Company does not currently have enough cash to fund its business plan and may not have enough to pay all of its liabilities; if the Company is unable to raise funds from this offering it may be able to issue restricted common shares to its creditors to satisfy their debts. The Company would only offer its creditors shares to settle debt if unable to raise equity financing. The Company would not settle any related party debt with this type of share offering. The Companys current debts are to its attorney, and EDGARizer, there is no assurance that any of the Companys creditors would accept restricted shares from the company in exchange for their debts.
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Plan of Operation
Over the next 12 months, provided that we have raised enough funds, our Company expects to start generating revenue after completing the steps described below. If we do not raise enough cash through this offering, the following plan of operation below will take effect after we raise enough funds to do so.
The expenses referenced herein, including the costs for the materials and equipment, were estimated based on the Presidents personal expectations and it is not based in any market research or third party professionals opinion. For this reason, there is no certainty that the amounts disclosed will be sufficient to accomplish the objectives listed herein.
Further, we do not know how our prototype will look or operate or what materials and equipment will be needed, as we have not yet hired or contacted any possible developer. However, the Companys President has a vision for the products end use, look and feel. The product, has essentially 3 major components, a camera, a computer pad and a specific software application. There are many manufactures of various tablet style computers in both China and Taiwan, these are readily available in small volume and at reasonable costs, as well as the camera. The Company intends to hire an overseas application developer to write our application, we will support only the Android operating system as it allows for the widest choice of compatible tablet technology. The Companys President has done further research on the possibility of using bluetooth technology to eliminate the requirements of wires between the tablet and the camera allowing for easier installation and the possible installation for existing fridges.
1.
Searching for and hiring a developer (length 2 months):
We plan on searching for a capable developer for our product. We intend to interview the prospected developers, negotiate payment according to our available funds and hire the most suitable one. The Company's President will be responsible for all the research, negotiations and hiring third party developer(s). We plan on searching for developers and meeting expenses. We plan on placing paid classified ads, on the internet and in newspapers.
2.
Product development and testing (length 9 months):
After hiring a developer, we plan on purchasing the necessary materials and equipment according to the developer's needs (such as: tools, wires, touch screens and/or tablets, cameras, etc). The Company's President will be responsible for all the shopping and purchasing. We intend to allocate the costs to pay the developer and for purchasing materials and equipment.
We do not expect to rent space. We do not plan to manufacture products, such as the camera, connection wires or touch screens. We intend to develop specific software for our product needs.
Our goal is to assemble a functional prototype using existing components and technologies. For this reason, it is possible that there will be some costs related to intellectual property rights and/or licensing costs from the equipment and parts used in our prototype for large manufacturing.
We do not expect to have to pay for licensing or to intellectual property rights costs because we will not manufacture this product in large scale. Having to pay for licensing and to intellectual property rights would be the responsibility of the refrigerator manufacturing company to which we would license our products.
3.
Selling/Licensing process (length 1 month):
Once we have our prototype developed, our goal is to present it to refrigerator manufacturing companies. We intend to develop our website and produce
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printing material with professional photos. The initial contact would be made via mail, email and phone calls. The company's President will be responsible for having professional photo-shoots. He would also be in charge of the mailing, emailing and phone calls to prospected buyers. The website would be developed by a contracted company or individual, according to the President's decision and based on the funds available.
We expect to start generating revenue after the successful accomplishment of this step and the steps described above, considering that we can find and close a deal with a possible client.
4.
Office supplies and related costs (length 12 months):
Funds to be used for office supplies, internet and telephone bills. We plan on reserving following the amounts to pay for office costs.
Capital Resources
If the Company is unsuccessful in raising the additional proceeds through a private placement offering it will then have to seek additional funds through debt financing, which would be highly difficult for a new development stage company to secure. Therefore, the company is highly dependent upon the success of the anticipated private placement offering and failure thereof would result in the Company having to seek capital from other sources such as debt financing, which may not even be available to the company. However, if such financing were available, because the Company is a development stage company with no operations to date, it would likely have to pay additional costs associated with high risk loans and be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such debt financing and determine whether the business could sustain operations and growth and manage the debt load. If the Company cannot raise additional proceeds via a private placement of its common stock or secure debt financing it would be required to cease business operations. As a result, investors in the Companys common stock would lose all of their investment.
Off Balance Sheet Arrangement
The Company is dependent upon the sale of its common shares to obtain the funding necessary to carry its business plan. Our President, Yonekatsu Kato has undertaken to provide the Company with operating capital to sustain its business over the next twelve month period, as the expenses are incurred, in the form of a non-secured loan. However, there is no contract in place or written agreement securing these agreements. Investors should be aware that Mr. Katos undertaking is neither under a contract nor agreement between him and the Company.
Other than the above described situation the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.