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AIRWARE LABS CORP. - 10-Q - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

August 14, 2014

The following Management's Discussion and Analysis should be read in conjunction with Airware Labs Corp. financial statements and the related notes thereto. The Management's Discussion and Analysis contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words "believe," "plan," "intend," "anticipate," "target," "estimate," "expect," and the like, and/or future-tense or conditional constructions ("will," "may," "could," "should," etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this Report on Form 10-Q. The Company's actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors. The Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances occurring after the date of this Report on Form 10-Q.

The following discussion should be read in conjunction with our unaudited consolidated financial statements and related notes and other financial data included elsewhere in this report. See also the notes to our consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended September 30, 2013.

Results of Operations



Total revenue for the three months ended June 30, 2014 was $113,365, as compared to $673 for the three months ended June 30, 2013. Operating expenses in the quarter ended June 30, 2014 amounted to $289,887 as compared to $581,495 for the quarter ended June 30, 2013. The decrease in expenses is the result of a reduction in legal fees and consulting expenses.

Total revenue for the nine months ended June 30, 2014 was $168,705, as compared to $199,487 for the nine months ended June 30, 2013. Operating expenses for the nine months ended June 30, 2014 amounted to $881,602 as compared to $1,309,084 for the nine months ended June 30, 2013.

The net loss for the quarter ended June 30, 2014 was $659,696 as compared to $719,532 for the quarter ended June 30, 2013. This is due to reduced operating expenses offset by a significant increase in interest expense. The net loss for the nine months ended June 30, 2014 was $16,381,817 as compared to $1,551,271 for the nine months ended June 30, 2013.

Liquidity and Capital Resources

Our balance sheet as at June 30, 2014 reflects $77,853 in cash and cash equivalents as compared to $19,942 as at September 30, 2013. We intend to raise the balance of our cash requirements for the next 12 months from private placements or a registered public offering (either self-underwritten or through a broker-dealer). Additionally, we have the Stockbridge secured bridge note to draw from, which as of August 4, 2014 has an available balance of $498,000. If we are unsuccessful in raising enough money through future capital-raising efforts, we may review other financing possibilities such as bank loans. At this time, our Company does not have a commitment from any broker/dealer to provide additional financing. There is no assurance that any additional financing will be available or if available, on terms that will be acceptable.

Cash Flow from Operating Activities

During the nine months ended June 30, 2014, the Company's operating activities used $555,545 in cash as compared to $323,584 used by operating activities for the nine months ended June 30, 2013. The increase in cash used for operating activities is primarily due to payments towards accounts payable.

Cash Flow from Investing Activities

During the nine month periods ended June 30, 2014 and 2013, the Company used $0 and $35,534 respectively, in cash for investing activities. The decrease in cash used for investing activities is primarily due to there not being any purchases of fixed assets in the nine months ended June 30, 2014.

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Cash Flow from Financing Activities

During the nine months ended June 30, 2014, the Company received $613,456 in cash from financing activities. This consisted of $1,217,718 in net financing from notes payable less $604,262 in payments for the re-purchase of common stock and options. This compares with $386,817 provided during the nine months ended June 30, 2013 which consisted of $185,000 in net financing from notes payable, $433,750 in proceeds from the issuance of stock for cash and ($231,933) in net repayments from factoring accounts payable and accounts receivable.

Going Concern



We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing.

Future Financings

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund our operations and other activities.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Critical Accounting Policies



Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

Recently Issued Accounting Pronouncements

The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.

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Source: Edgar Glimpses


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