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SMOOFI, INC. - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

July 31, 2014

The information contained in this Form 10-Q is intended to update the information contained in our Prospectus dated February 24, 2014 and presumes that readers have access to, and will have read, the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other information contained in such Prospectus. The following discussion and analysis also should be read together with our financial statements and the notes to the financial statements included elsewhere in this Form 10-Q.

The following discussion contains certain statements that may be deemed "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements appear in a number of places in this Report, including, without limitation, "Management's Discussion and Analysis of Financial Condition and Results of Operations." These statements are not guarantees of future performance and involve risks, uncertainties and requirements that are difficult to predict or are beyond our control. Forward-looking statements speak only as of the date of this quarterly report. You should not put undue reliance on any forward-looking statements. We strongly encourage investors to carefully read the factors described in our Prospectus dated February 24, 2014in the section entitled "Risk Factors" for a description of certain risks that could, among other things, cause actual results to differ from these forward-looking statements. We assume no responsibility to update the forward-looking statements contained in this quarterly report on Form 10-Q. The following should also be read in conjunction with the unaudited Financial Statements and notes thereto that appear elsewhere in this report.

Company Overview



SmooFi plans to be an online marketplace for services that includes service requestors and service providers. Service requestors (people requesting a service) name their own price, date and time for any service. A service requestor can also select qualifying criteria such as number of reviews or review rankings of a service provider. The first service provider who can provide that service, on that date, at that time and meets the service ranking requirements will get the project. No bidding, no waiting a week for an auction to close, no shifting through bidders.

SmooFi plans to match up daily job requests and fills market demand for service requests throughout their local city. SmooFi combines an online marketplace and online community that connects local resources with local need. The goal is to create jobs and provide a market value for basic services by aggregating these low cost services within each local market. This will maximize value for both the person or company requesting the service and for the person or company providing the service.

As an example, a service requestor may place a listing on SmooFi to walk their dog at 7pm on Saturday October 14th AND service provider must have at least 10 reviews (jobs) completed by SmooFi. The first service provider who has 10 reviews that accepts this service to walk the dog wins the job. If the service provider doesn't show for the service, their service review will be lowered, if they do a good job, they will get a higher service review by the service requestor.

SmooFi can be used for hundreds of types of services including:

Pet walking Car washes House cleaning Grocery and other delivery services Education, Music or other lessons Lawn mowing Data input Moving services And much more.. -9-



Additionally, SmooFi creates an online service community where members track service provider history, including rankings, reliability, on time, etc. and creates an automated service request around this ranking and history.

SmooFi keeps a complete audit trail of current and future service requests, costs and allows you to make payment to service providers via credit card or directly from your bank account through third party payment providers such as PayPal. Service providers can now receive credit card payment for services they use to have to get cash for. Plus these funds will be automatically transferred into their bank account.

Results of Operation



Three months ended June 30, 2014

Revenue

Revenues were $12,000 for the three months ended June 30, 2014 related to the outsource placement.

Cost of Sales



Cost of Sales were $9,500 for the three months ended June 30, 2014 which were related to the cost associated with providing the outsource placement services.

Development, General and Administrative Expenses

Development, general and administrative expenses were $41,689 for the three months ended June 30, 2014. The expenses consisted primarily of $15,000 for website, $12,500 from dues and subscription, and software development and $8,400 for professional fees.

Interest Expense and Other



Interest expense was $2,975 for the three months ended June 30, 2014 which related to interest accrued on borrowings.

October 15, 2013 (date of inception) to June 30, 2014

Revenue

Revenues were $12,000 for October 15, 2013 (date of inception) to June 30, 2014 related to the outsource placement.

Cost of Sales

Cost of Sales were $9,500 for October 15, 2013 (date of inception) to June 30, 2014 which were related to the cost associated with providing the outsource placement services..

Development, General and Administrative Expenses

Development, general and administrative expenses were $122,386 from October 15, 2014 (date of inception) to June 30, 2014. The expenses consisted primarily of $40,017 for website, $18,500 from dues and subscription and software development $57,219 for professional fees.

Interest Expense and Other



Interest expense was $9,337 for October 15, 2013 (date of inception) to June 30, 2014 which related to interest accrued on borrowings.

Liquidity and Capital Resources

The following is a summary of the Company's cash flows provided by (used in) operating, investing, and financing activities for October 15, 2013 (date of inception) to June 30, 2014:

October 15, 2013 (inception) to June 30, 2014 Operating Activities $ (35,802 ) Investing Activities (1,995 ) Financing Activities 139,325 Net Effect on Cash $ 101,528 -10-



Since acquiring the business plan and website, most of our resources and work have been devoted to planning our business, web site development, mobile application development, implementing systems and controls, and completing our registration statement. When those procedures are done, which we believe will occur over the next few months, we will primarily work on our intended service offerings as well further internal development of software for which we have developed our initial framework of and completed some coding of this software. We believe that the work needed to initiate and complete our software development, attract developers, and initiate our marketing plans, including the development of a saleable product suite, will range between $80,000 and $100,000 if outside contractors and experts are used. If we are able to secure funding to outsource these procedures, of which there are no assurances, we can commence the launch of our intended services and software products to the public. If we are only able to use internal resources only (primarily consisting of the services of our president and chief executive officer), the process will take much longer and our initial launch may be limited to a much smaller target market. If we are unable to raise any funds, the development costs would have to be provided by our president and chief executive officer to the extent that he is capable and willing to provide such funds. While we have engaged the services of an established software development firm which we use on an as "needed basis" their function and assistance is limited by our availability of financing. Our goal would be to have software product available, services available, multiple sales channels and a comprehensive corporate website up and running within one year, but there is no way of estimating what the likelihood of achieving that goal would be.

Private capital, if sought, we believe will be sought from former business associates of our president and chief executive officer or through private investors referred to us by those same business associates. To date, we have sold 1,800,000 shares of our common stock for $18,000 through a private placement and we sold 578,600 shares of our common stock at $0.125 per share for total gross proceeds of $72,325 through a public placement.

If a market for our shares ever develops, of which there can be no assurances, we may use restricted shares of our common stock to compensate employees/consultants and independent contractors wherever possible. We cannot predict the likelihood or source of raising capital or funds that may be needed to complete the development of our business plan and its stages as outlined above.

We have embarked upon an effort to become a public company and, by doing so, have incurred and will continue to incur additional significant expenses for legal, accounting and related services. Once we become a public entity, subject to the reporting requirements of the Exchange Act of 1934, we will incur ongoing expenses associated with professional fees for accounting, legal and a host of other expenses including annual reports and proxy statements, if required. We estimate that these costs will range up to $50,000 per year over the next few years and may be significantly higher if our business volume and transactional activity increases but should be lower during our first year of being public because our overall business volume (and financial transactions) will be lower, and we will not yet be subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 until we exceed $75 million in market capitalization (if ever). These obligations will certainly reduce our ability and resources to expand our business plan and activities. We hope to be able to use our status as a public company to increase our ability to use noncash means of settling outstanding obligations (i.e. issuance of restricted shares of our common stock) and compensate independent contractors who provide professional services to us, although there can be no assurances that we will be successful in any of these efforts. We will also reduce compensation levels paid to management (if we attract or retain outside personnel to perform this function) if there is insufficient cash generated from operations to satisfy these costs.

There are no current plans to seek private investment. We do not have any current plans to raise funds through the sale of securities except as set forth herein. We hope to be able to use our status as a public company to enable us to use non-cash means of settling obligations and compensate persons and/or firms providing services to us, although there can be no assurances that we will be successful in any of those efforts. However, these actions, if successful, will result in dilution of the ownership interests of existing shareholders, may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management's ability to maintain control of SmooFi because the shares may be issued to parties or entities committed to supporting existing management. SmooFi may offer shares of its common stock to settle a portion of the professional fees incurred in connection with its registration statement. No negotiations have taken place with any professional and no assurances can be made as to the likelihood that any professional will accept shares in settlement of obligations due them.

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As of June 30, 2014, we owed $85,481 in connection with organizational costs, professional services related to this offering, business and framework development costs incurred. We have not entered into any formal agreements, written or oral, with any vendors or other providers for payment of services or expenses and to our as "needed basis" software development firm as further described below. There are no other significant liabilities at June 30, 2014.

As of June 30, 2014, the Company had one note payable issued and outstanding with a total principle of $50,000 and accrued interest of $7,907. The notes are due on December 31, 2014 and have an interest rate of 12%. The proceeds are being used for basic working capital purposes and costs associated with this offering.

Going Concern



We have sufficient working capital currently and may secure additional working capital through loans or sales of common stock. Nevertheless, our auditor has issued a "going concern" qualification as part of his opinion in the Audit Report dated January 7, 2014 for the period from October 15, 2013 (inception) to December 31, 2013, and our unaudited financial statements for the quarter ended June 30, 2014 include a "going concern" footnote contingent on us to be able to raise working capital to grow our operations.

Critical Accounting Policies

The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the financial statements and accompanying notes. The SEC has defined a company's critical accounting policies as the ones that are most important to the portrayal of the company's financial condition and results of operations, and which require the company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. We believe that our estimates and assumptions are reasonable under the circumstances; however, actual results may vary from these estimates and assumptions. We have identified in Note 1 - "Summary of Accounting Policies" to the Financial Statements contained in this Quarterly Report certain critical accounting policies that affect the more significant judgments and estimates used in the preparation of the financial statements.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

Contractual Obligations



As a "smaller reporting company" as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.

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Source: Edgar Glimpses


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