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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Spriza Inc (CE) | USOTC:SPRZ | OTCMarkets | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.0001 | 0.00 | 00:00:00 |
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2014
Commission File Number: 333-185669
SPRIZA, INC.
(Exact name of
registrant as specified in its charter)
| Nevada | 90-0888324 |
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
111 Penn Street, El Segundo, CA 90245
(Address of
principal executive offices, including zip code)
(650) 204-7903
(Telephone number,
including area code)
111 Penn
Street, El
Segundo, CA90245
(Former
name or former address, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes [ ] No [X]
Indicate by check mark if the registrant
is not required to file reports pursuant to Section 13 or 15(d) of the Exchange
Act.
Yes [ ] No [X]
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 [X] No [ ]
Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Web site,
if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files).
Yes [X] No [ ]
Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this
chapter) is not contained herein, and will not be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
[X]
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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer [ ] | Accelerated filer [ ] |
| Non-accelerated filer [ ] (Do not check if a smaller reporting company) | Smaller reporting company [X] |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes [ ] No [X]
The aggregate market value of the voting stock held by non-affiliates of the issuer on June 30, 2014, based upon the $0.75 per share closing price of such stock on that date, was $33,769,920.
As of April 15, 2015, there were 69,616,734 shares of our common stock issued and outstanding.
Documents Incorporated by Reference: None.
SPRIZA, INC.
ANNUAL REPORT ON FORM 10K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014
Table of Contents
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K (the “Report”) contains a number of forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and that reflect management’s current views and expectations with respect to our business, strategies, products, future results and events, and financial performance. All statements made in this Report other than statements of historical fact, including statements that address operating performance, the economy, events or developments that management expects or anticipates will or may occur in the future, including statements related to potential strategic transactions, distributor channels, volume growth, revenues, profitability, new products, adequacy of funds from operations, cash flows and financing, our ability to continue as a going concern, statements regarding future operating results and non-historical information, are forward-looking statements. In particular, the words such as “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” “will,” “can,” “plan,” “predict,” “could,” “future,” variations of such words, and similar expressions identify forward-looking statements, but are not the exclusive means of identifying such statements and their absence does not mean that the statement is not forward-looking.
Readers should not place undue reliance on these forward-looking statements, which are based on management’s current expectations and projections about future events, are not guarantees of future performance, are subject to risks, uncertainties and assumptions and apply only as of the date of this Report. Our actual results, performance or achievements could differ materially from historical results as well the results expressed in, anticipated or implied by these forward-looking statements. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
In particular, our business, including our financial condition and results of operations may be impacted by a number of factors, including, but not limited to, the following:
For a discussion of some of the factors that may affect our business, results and prospects, see “Item 1A. Risk Factors” Readers are also urged to carefully review and consider the various disclosures made by us in this Report and in our other reports we file with the Securities and Exchange Commission, including our periodic reports on Form 10-Q and current reports on Form 8-K, and those described from time to time in our press releases and other communications, which attempt to advise interested parties of the risks and factors that may affect our business, prospects and results of operations.
REFERENCES
As used in this Report: (i) the terms “we”, “us”, “our”, “Spriza” and the “Company” mean Spriza, Inc.; (ii) “SEC” refers to the Securities and Exchange Commission; (iii) “Securities Act” refers to the United States Securities Act of 1933, as amended; (iv) “Exchange Act” refers to the United States Securities Exchange Act of 1934, as amended; and (v) all dollar amounts refer to United States dollars unless otherwise indicated.
PART I
ITEM 1. BUSINESS
Overview
On September 17, 2012 we were incorporated as Level20 Inc. in the State of Nevada. On October 25, 2013 we changed our name to Spriza, Inc.
On October 17, 2012, we entered into an Asset Purchase Agreement with Raptify Marketing Systems Ltd. (“Raptify”), whereby we acquired certain assets from Raptify in exchange for 5,000,000 shares of our common stock, 3,000,000 shares of which were received by Raptify and 2,000,000 shares of which were received by certain other stakeholders of Raptify.
Our principal executive offices are located at 111 Penn Street, El Segundo, CA 90245, and our telephone number at this address is (650) 204-7903. Our website is www.spriza.com. Information contained on our website is not a part of this Annual Report on Form 10-K. We completed our initial public offering on June 12, 2013. On November 4, 2013, our common stock was quoted under the symbol “SPRZ” on the OTC BB operated by the Financial Industry Regulatory Authority, Inc. (“FINRA”).
Our Business and Intellectual Property
We own and operate the patent-pending proprietary SPRIZA™ contest marketing platform. We filed the US Patents, filing No. 12753864 and submitted the Canadian filings, No. 2261/P1551CA00. We acquired these assets through an Asset Purchase Agreement and we currently hold patent pending status for both jurisdictions.
Trademarks pertaining to SPRIZA™ and its Star Icon logo as well as our tagline “Win, Laugh, Live” have been applied for in the United States and Canada. Currently all trademarks listed above are in a pending status.
Our intellectual property is a fully developed, commercially operational incentive contest marketing system and platform that builds brand awareness and generates qualified targeted leads for any size of business through a patent-pending online contest marketing solution trademarked as “SPRIZA™”. SPRIZA™ taps into the power of shared interests and personal relationships within targeted markets producing traceable and quantifiable results at every stage of the contest. It provides deep, real-time analytics and reporting, through robust tools that measure marketing and advertising budgets for real time return on investment analysis and demographic profiling. SPRIZA™ leverages social media strategies based on business objectives enabling our clients “Branders” to measure results of marketing efforts. The result is a network of subscribers that participate in contest promotions centered around their personal and shared interests. SPRIZA™ produces quantifiable and verifiable participant data results, which can be used for ongoing marketing purposes with targeted demographics. SPRIZA™ data results assess how many consumers responded, whom they shared the contest with, the level of engagement, how many other contest participants were influenced and sales value generated. SPRIZA™ is designed to work with most social media engines including Facebook, Twitter and Pinterest and offers full mobile capability to engage popular mobile applications including iPhone, Android, Blackberry and Windows mobile operating systems.
We seek patent protection for those inventions and technologies for which we believe such protection is suitable and is likely to provide a competitive advantage to us. Because patent applications in the United States are maintained in secrecy until either the patent application is published or a patent is issued, we may not be aware of third-party patents, patent applications and other intellectual property relevant to our products that may block our use of our intellectual property or may be used in third-party products that compete with our products and processes. In the event a competitor or other party successfully challenges our products, processes, patents or licenses or claims that we have infringed upon their intellectual property, we could incur substantial litigation costs defending against such claims, be required to pay royalties, license fees or other damages or be barred from using the intellectual property at issue, any of which could have a material adverse effect on our business, operating results and financial condition.
We also rely substantially on trade secrets, proprietary technology, nondisclosure and other contractual agreements, and technical measures to protect our technology, application, design, and manufacturing know-how, and work actively to foster continuing technological innovation to maintain and protect our competitive position. We cannot assure you that steps taken by us to protect our intellectual property and other contractual agreements for our business will be adequate, that our competitors will not independently develop or patent substantially equivalent or superior technologies or be able to design around patents that we may receive, or that our intellectual property will not be misappropriated.
Spriza.com – Contest Portal
Delivery and distribution to the consumer of all contest offerings will be based upon user profile by location, interests and other preferences. Our web site www.spriza.com aggregates all contests, while segmenting distribution based upon the means of client submission and their branding strategy to specifically determine which offerings are available nationally and regionally. Post marketing opportunities will occur within this platform to drive affiliate revenue and secondary sales.
Small/Medium Business Contest Creation Tool
We offer a low cost entry platform targeting small to mid-sized businesses wishing to promote themselves through self-directed contests on a local or regional level. This portal offers a comprehensive toolkit and tutorials to initiate, register and administer a fully-compliant contest or sweepstake, providing basic templates and customization options to uniquely brand their efforts and monitor their results using fundamental reporting tools. This option may not require or include any 3rd party intervention but does provide limited access to support and assistance through our administration team.
1
Advertising Agency Contest Creation Tool
Our enterprise solution is a backend system providing every available tool and customization option to those agencies and marketing firms wishing to offer our products to their corporate clients in a closed loop campaign as a standalone offering or as integration to existing programs and marketing efforts. This option is expected to provide full support and assistance to the agency behind the scenes. We anticipate that utilities and reporting tools will be comprehensive and customizable, allowing for white-labeling to their own client base. We expect that this solution will be best suited to major national brands rolling out a complete North American campaign.
International Licensing & Site Mirrors
For international expansion we anticipate that International Licensed Affiliates wishing to duplicate our offerings in foreign countries will have the opportunity to acquire exclusive licensing through our international release of mirror programs, enabling them to tailor a solution to their local market’s culture, currency, language and compliance to legal requirements. We have finalized our international licensing model and we are currently identifying licensees for international expansion in Asia, Europe and South America.
Sales and Marketing
Our SPRIZA™ technology is designed to integrate seamlessly within existing social media platforms. We expect to grow our revenues through multiple streams including contest revenue, lead generation, ecommerce conversion and ongoing marketing initiatives.
Traditional marketing efforts to promote contests or corporate promotional giveaways have included direct mail, newspaper, radio, television and some have included online efforts but they have generally not successfully leveraged the viral nature of social media such as Facebook or Twitter. Our patent-pending solution rewards a company with a competition advantage based on its ability to drive viral distribution and participation towards sales and lead generation. There are other online contesting companies such as Strutta and WildfireApp that are more focused on driving interest to social pages. This brand engagement dies at the closing of that promotional offer and usually only incentivizes a limited amount of the participants.
Our patent-pending method of contest distribution uses incentive based, viral marketing where participants are rewarded for sharing the contest with like-minded family, friends and associates. Participants’ odds increase with the more people they invite as does their chances of sharing in that winning experience with that chain of winners. This incentive based marketing creates a new and proprietary way for brands to attract and identify customers, brand influencers and ambassadors to sell goods and services.
The contest subscriber website is www.spriza.com, where users will be able to create an account, set personal preferences, link to their social media profiles and consume, share and engage in branded contests throughout North America. This site has three main sections: open contests they are participating in, closed contests they previously participated in and current and available contests that can be searched or screen based on personal preferences. Within each section individuals will be served promotional materials, deals, and advertising relevant to that brand and personal preference. Each section will likely contain short videos on the brand experience, to explain what the brand experience offers if customers win and a video of the winners sharing and consuming the winning brand experience.
We intend to email our www.spriza.com subscribers contest offers that are targeted by location and personal preferences. Consumers can also access our contests directly through our website and mobile applications. We expect that new subscribers will be driven to Spriza™ through all digital advertising efforts such as paid, search, social, mobile, location, email and, where essential, traditional methods. All contests will initially be seeded throughout our database of subscribers but also promoted through our client’s social media assets and client lists thus driving up our total subscribers.
A typical contest might offer an all-inclusive weekend at a brand name hotel in Las Vegas and a set of brand name golf clubs. Contests would immediately be pushed out and shared by golf lovers and enthusiasts from one personal contact to another. The advantage of our SPRIZA™ platform is that each contestant in the winning referral chain is a winner and in this example goes on the trip and all share the experience together. We anticipate that this experience will be documented and distributed through social media to all the contestants that participated as a further means of advertising for our clients. We believe that seeing winning participants consume the incentive adds further validation and credibility to our SPRIZA™ platform and capabilities and allows our clients to further leverage their media assets. We plan to earn upfront fees from the brands for the campaign, online advertising fees and additional affiliate revenue by promoting “after-campaign” deals and incentives to this group throughout the year.
Regardless if we are running a contest for a national brand throughout North America or a local merchant within a single city, they all must strictly adhere to the rules, regulatory and compliance specified by the government and governing bodies in each jurisdiction. Age, eligibility, terms and conditions, bonding, insurance and many other finite details are part of our core competencies and our commitment when delivering campaigns to our clients. We anticipate SPRIZA™ evolving to include a campaign creation toolbox that allows for dynamic contest creation, where an agency, brand manager or our employee can map out a campaign quickly with proper terms conditions, contracts, approval sign off and a compliance checklist.
Competition
The digital and mobile technology business is highly fragmented and extremely competitive and subject to rapid change. The market for customers is intensely competitive and such competition is expected to continue to increase. We believe that our ability to compete depends upon many factors within and beyond our control, including the timing and market acceptance of new solutions and enhancements to existing businesses developed by us, our competitors, and their advisers. SPRIZA™ is an online contest platform that utilizes digital media and technology to distribute and feature local and national branded promotional campaigns. Many consumers maintain simultaneous relationships with multiple digital brands and products and can easily shift consumption from one provider to another.
2
Our competitors are in segments such as the following:
Our SPRIZA™ contest platform is both promotional “Promotional Platform” and social “Social Platform”.
Our principal competitors, when comparing “Promotional Platforms” are: Wildfire by Google, Strutta, Prizelogic, HelloWorld (formerly ePrize), and Prizeo. Our SPRIZA™ contest platform differs, in most part, from these competitors by seamlessly integrating our promotion platform and the social experience into a channel that can provide both the brand/cause experience to drive engagement and link that activity directly to online and offline commerce. Through our SPRIZA™ platform, we build a referral network of like-minded consumers who actively participate with the brands they love and it allows us to retarget and entertain our subscribers based on their specific preferences and activity.
Our principal competitors, when comparing “Social Platforms” are: Pinterest, Twitter, Facebook, WhatsApp and Groupon. Our SPRIZA™ contest platform differs, in most part, from these competitors by not only building a large subscriber base but establishing a unique referral network that has the means to engage, reward, remarket and incentivize its user base to foster new connections and ongoing commerce activity.
Our competitors are in segments such as the following:
In addition, new competitors may be able to launch new businesses at relatively low cost. In addition, either existing or new competitors may develop new technologies, and our existing and potential customers may shift their mass branding campaigns to these new technologies. Therefore, we cannot be sure that we will be able to successfully implement our business strategy in the face of such competition.
Business goals and milestones
We have completed or advanced, over the past few months, the following business goals and milestones:
We have completed our SPRIZA™ rebranding project including media kit, sales and marketing packages and corporate peripherals. We also completed the following achievements during 2014:
In 2015 SPRIZA™ launched an Android mobile phone application to be followed by an iPhone app. Achieving this objective would further enhance the user experience giving direct access anytime, anywhere similar to Facebook, Twitter and other popular social media applications. The new app will also increase effectiveness to communicate new information, updates and location based details when required.
The Company also launched launch a Do-it-Yourself (“DIY”) contest building and toolbox platform for small and medium sized businesses in February of 2015 and an Agency Media Kit.
The DIY contest toolbox is available through Spriza’s website (www.spriza.com) and through the business user’s private account toolbox. Clients are now able to upload, self-administer and activate contests within minutes through their own Spriza step-by-step business account.
The DIY contest platform will have three pricing tiers to allow for flexibility of budgets and ease of entry onto the platform. Each tier will give the client a robust option to build-out its contest marketing strategy depending on their budget and needs. The addition of the DIY platform will allow for greater access to Spriza’s marketing tools, capable of serving the diverse needs of several business verticals. This will allow greater ease of entry and flexibility for clients to market through Spriza; thus potentially expanding the number of paying clients in our database.
3
The DIY toolbox platform has an extensive analytics dashboard, providing the key metrics companies are looking for in their marketing campaigns. With mounting pressure on the overall ROI of any marketing initiative, more businesses are looking to marketing platforms that offer such detailed information.
Opening the Do-it-Yourself platform will have a positive effect on Spriza’s overall user’s statistics. The more contests that are created through different business verticals the more users will filter into the Spriza database, which in turn creates revenue through upfront fees, affiliate revenue, lead generation, downloads and coupon conversion.
We are in the final stages of completing a North American wide marketing campaign which will focus on driving the participation of prospective Fortune 500 companies and large corporate sponsorship to the contest platform.
Business strategy
Secure Necessary Funds
As at April 15, 2015 we have approximately $500,000 in cash. We will require additional funds during the remainder of fiscal 2015 to continue to aggressively grow our business and execute our 2015 business plan and to make strategic acquisitions.
Drive client growth and revenue through contest campaigns
To drive client growth, we plan to expand the number of ways in which subscribers can discover contests through our marketplace. As revenue is recognized we plan to continue investments into our sales force and partnership networks to further client relationships and acquire local expertise. Retention will be focused on providing our clients with a positive campaign experience and offering targeted placement of their contest campaigns to our subscribers, tools to manage these campaigns more effectively and superior customer service. Current efforts are focused on developing a sponsorship campaign that is centered on the 18-25 year old demographic offering four year college tuitions as the contest incentive. We are also in negotiations with Fortune 500 companies to run online contests. The sponsorship fees associated with a contest driven advertising campaign of this size is estimated at $1.5 million with 70% of this amount to be campaign costs, and 30% would be our profit. Additionally, securing contracts directly with brands and established advertising agencies will be necessary to achieve desired growth. We are establishing the go-to-market strategy and digital marketing initiatives essential to engage with prospective clients to secure contracts and achieve this milestone.
Drive the growth of our subscriber base
We plan to invest significant effort to acquire subscribers through online marketing initiatives. Our goal will be to retain existing and acquire new subscribers by providing preference driven and targeted contests, quality subscriber service and expanding the number of contest offerings through both local and national brands. Activity has commenced on the development and release of our digital marketing strategy to encourage subscriber sign up and generate brand participation.
Expand affiliate and business development partnerships
We intend to establish an online reseller network of commissioned agents and strategic partners. We hope to sign partnership agreements with online companies such as Google, Microsoft, Yahoo and Facebook. These intended partners could display, promote and distribute our contests to their users in exchange for a share of the revenue generated from our campaigns. We currently have no such agreements or arrangements with Google, Microsoft, Yahoo or Facebook. We intend to maintain ongoing efforts to expand our business with strategic affiliates and business development partnerships.
Increase our product offering through innovation
We intend to develop new versions and product releases to increase the number of subscribers and clients that transact business through our SPRIZA™ online contest marketing platform. We believe our network of subscribers will be a focal point for companies to promote their brands and showcase all of their contests. Expansion from an online presence into all mobile, tablet and operating systems is an essential innovation for us.
Establish our presence in the marketplace as the leading Online Contesting Platform
All efforts will be made to firmly establish us as the leader in the delivery, fulfillment and distribution of brand driven online contests to a subscriber base. In addition to the traditional and digital marketing efforts it is not uncommon for these efforts to be supported by viral sharing and word of mouth marketing that is prevalent with many online subscriber based communities. This behavior is often encouraged through referral or loyalty incentives.
Research and Development
On May 15, 2013 we contracted a San Francisco consulting firm with technology development capabilities in the Philippines to complete the redevelopment of our technology platform. On December 1, 2013 we completed SPRIZA™ and on March 18, 2014 unveiled it to the public with real-time contests being run and hosted. During the year ended December 31, 2014 we spent $115,711 (2013 - $227,596) on completion of this project and have allocated the cost to intellectual property.
Segment Information
We have one operating segment: contest marketing; and two geographic segments: North America and the Philippines.
4
Regulation
We are subject to the laws and regulations of those jurisdictions in which we conduct client contests, which are generally applicable to business operations, such as business licensing requirements, income taxes and payroll taxes. In general, conducting client contests in the United States, Canada, and other jurisdictions are subject to certain regulatory and/or supervisory requirements. Certain jurisdictions within the United States and Canada require registration of the client contests, bonding, insurance and secondary language inclusion. These do not apply to all jurisdictions and in most cases only one or none of the above is mandatory. As an example, Rhode Island asks that if our client has a local presence it must register the contest; New York and Florida require bonding and registration, and Quebec, Canada requires registration, bonding and the inclusion of the French language.
We are also subject to a number of foreign and domestic laws and regulations that affect companies conducting business on the Internet. As a company in a new and rapidly innovating industry, we are exposed to the risk that many of these laws may evolve or be interpreted by regulators or in the courts in ways that could materially affect our business. These laws and regulations may involve taxation, unclaimed property, intellectual property, product liability, travel, distribution, electronic contracts and other communications, competition, consumer protection, the provision of various online payments and point of sale services, employee, merchant and customer privacy and data security or other areas.
Seasonality
Our business is not a seasonal business.
Employees
As of April 15, 2015, we had 14 employees including 2 contractors and 4 directors.
Available Information
We electronically file reports with the SEC. The public may read and copy any materials we have filed with the SEC at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site (www.sec.gov) that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 are also available free of charge through our website (www.spriza.com), as soon as reasonably practicable after electronically filing with or otherwise furnishing such information to the SEC, and are available in print to any stockholder who requests it. The Company's Code of Conduct, Corporate Governance Guidelines and committee charters are also posted on the site.
ITEM 1A. RISK FACTORS
An investment in our common stock involves a high degree of risk. You should carefully consider the following risks, as well as the other information contained in this Form 10-K, before investing. If any of the following risks actually occurs, our business, business prospects, financial condition, cash flow and results of operations could be materially and adversely affected. In this case, the trading price of our common stock could decline, and you might lose part or all of your investment. We may amend or supplement the risk factors described below from time to time by other reports we file with the SEC in the future.
Risks Related to Our Company
If we do not obtain additional financing, our business expansion plans will be delayed and we may not achieve profitable operations.
We will require additional capital to achieve our 2015 operating plan. We intend to seek additional funds through private placements of our common stock or other securities. Our business plan calls for incurring ongoing expenses in staff, administration and marketing. If no additional financing is secured, we may have to significantly curtail our 2015 operating plan. If that is the case, our business will not grow as desired. Our ability to raise additional financing is unknown. We do not have any formal commitments or arrangements for the advancement of funds. Consequently, there can be no assurance that we will be able to obtain continued access to capital as and when needed or, if so, that the terms of any available financing will be subject to commercially, reasonable terms. If we are unable to raise suitable financing, our business expansion plans may be delayed and we may be unable to achieve profitable operations.
Since we have a limited operating history and insignificant revenues to date, we may be unable to achieve or maintain profitability. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by an emerging growth company.
We have limited financial resources and limited revenues to date. The likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delays frequently encountered by an emerging growth company starting a new business enterprise and the highly competitive environment in which we will operate. Since we have a limited operating history, we cannot assure you that our business will be profitable or that we will ever generate sufficient revenues to fully meet our expenses and totally support our anticipated activities.
Our ability to continue as a business and implement our business plan will depend on our ability to raise sufficient funds. There is no assurance that any debt or equity offerings will be successful or that we will remain in business or be able to implement our business plan if the offerings are not successful.
5
Since there is some doubt as to our ability to continue as a going concern, as noted in RBSM, LLP’s opinion for the year ended December 31, 2014, it may be difficult for us to effectuate our business plan.
We have incurred losses since our inception on September 17, 2012. In 2013 our net losses were $484,398 and $1,233,765 at year end December 31, 2014. We have not been successful in establishing profitable operations. Our financial statements have been prepared on a going concern basis. Unanticipated costs and expenses, or the inability to generate revenues, could require additional financing; which would be sought through the issuance of equity or debt instruments. The fact that there are going concern considerations may make raising additional funds or obtaining loans more difficult. To the extent financing is not available, we may not be able, or may be delayed in efforts, to implement our business plan or meeting our obligations. This could result in the entire loss of any investment in shares of our common stock. We will continue to evaluate our projected expenditures relative to our available cash and to evaluate additional means of financing in order to satisfy our working capital and other cash requirements. Details regarding these concerns are included in Note 3 to the financial statements included in this Report.
Risks Related to Our Business
If we are unable to successfully market our products or our products do not perform as expected, our business and financial condition will be adversely affected.
We are subject to the risks generally associated with new product introductions and applications, including lack of market acceptance, delays in commercial implementation, and failure of products to perform as expected. In order to introduce and market new or enhanced products successfully with minimal disruption in customer purchasing patterns, we must manage the transition from existing products in the market. There can be no assurance that we will be successful in developing and marketing, on a timely basis, product enhancements or products that respond to technological advances by others, that our new products will adequately address the changing needs of the market or that we will successfully manage product transitions. Further, failure to generate sufficient cash from operations or financing activities to develop or obtain improved products and technologies could have a material adverse effect on our results of operations and financial condition.
Because of pressures from competitors with more resources, we may fail to implement our business strategy profitably.
The digital and mobile technology business is highly fragmented and extremely competitive and subject to rapid change. The market for customers is intensely competitive and such competition is expected to continue to increase. We believe that our ability to compete depends upon many factors within and beyond our control, including the timing and market acceptance of new solutions and enhancements to existing businesses developed by us, our competitors, and their advisers. SPRIZA™ is an online and mobile contest platform that utilizes digital media and technology to distribute and feature local and national branded promotional campaigns. Many consumers maintain simultaneous relationships with multiple digital brands and products and can easily shift consumption from one provider to another. Our principal competitors are in segments such as the following:
In addition, new competitors may be able to launch new businesses at relatively low cost. In addition, either existing or new competitors may develop new technologies, and our existing and potential customers may shift their mass branding campaigns to these new technologies. Therefore, we cannot be sure that we will be able to successfully implement our business strategy in the face of such competition.
If our product does not achieve market acceptance, we may not have sufficient financial resources to fund our operations or further development.
While we believe that a viable market exists for our products, there can be no assurance that our SPRIZA™ technology will prove to be an attractive alternative to conventional or competitive products in the markets that we have identified for exploitation. In the event that a viable market for our products cannot be created as envisaged by our business strategy or our products do not achieve market acceptance, we may need to commit greater resources than are currently available to develop a commercially viable and competitive product. There can be no assurance that we would have sufficient financial resources to fund such development or that such development would be successful. In addition, if our product does not generate sufficient revenues, or we are unable to raise additional capital, we may be unable to fund our operations. Our ability to raise additional funds will depend on financial, economic and other factors, many of which are beyond our control. There can be no assurance that, when required, sufficient funds will be available to us on satisfactory terms.
Our business will suffer if our network systems fail or become unavailable.
A reduction in the performance, reliability and availability of our network infrastructure would harm our ability to distribute our products to our users, as well as our reputation and ability to attract and retain customers. Our systems and operations could be damaged or interrupted by fire, flood, power loss, telecommunications failure, Internet breakdown, earthquake and similar events. Our systems could also be subject to viruses, break-ins, sabotage, acts of terrorism, acts of vandalism, hacking, cyber-terrorism and similar misconduct. We might not carry adequate business interruption insurance to compensate us for losses that may occur from a system outage. Any system error or failure that causes interruption in availability of our product or an increase in response time could result in a loss of potential customers, which could have a material adverse effect on our business, financial condition and results of operations. If we suffer sustained or repeated interruptions, then our products and services could be less attractive to our users and our business would be materially harmed.
6
If our clients do not meet the needs and expectations of our subscribers, our business could suffer.
Our business depends on our reputation for providing high-quality contests, and our brand and reputation may be harmed by actions taken by clients that are outside our control. Any perceived shortcomings of one or more of our clients, particularly with respect to an issue affecting the quality of the prize offered or the products or services sold, may be attributed by our subscribers to us, thus damaging our reputation, brand value and potentially affecting our results of operations. In addition, negative publicity and subscriber sentiment generated as a result of fraudulent or deceptive conduct by our clients could damage our reputation, reduce our ability to attract new subscribers or retain our current subscribers, and diminish the value of our brand.
We plan on continually making efforts to improve our systems to identify suspicious activity, detect fraud and improve our defenses. However, if fraudulent or other malicious activity is perpetrated, and we are unable to detect and prevent it, the affected customers’ campaigns may experience or perceive a reduced return on their investment. This may lead to high levels of dissatisfaction with our advertising services, refusals to pay, refund demands or withdrawal of future business.
If fraudulent or other malicious activity occurs, and we are unable to detect and prevent it, we could also experience increased costs relating to remuneration or losses as a result of these activities. Any of these occurrences could damage our brand and lead to a loss of customers and revenue and increased costs.
We may be unable to protect our intellectual property rights from third-party claims and litigation, which could be expensive, divert management's attention, and harm our business.
Our success is dependent in part on obtaining, maintaining and enforcing our proprietary rights and our ability to avoid infringing on the proprietary rights of others.
We seek patent protection for those inventions and technologies for which we believe such protection is suitable and is likely to provide a competitive advantage to us. Because patent applications in the United States are maintained in secrecy until either the patent application is published or a patent is issued, we may not be aware of third-party patents, patent applications and other intellectual property relevant to our products that may block our use of our intellectual property or may be used in third-party products that compete with our products and processes. In the event a competitor or other party successfully challenges our products, processes, patents or licenses or claims that we have infringed upon their intellectual property, we could incur substantial litigation costs defending against such claims, be required to pay royalties, license fees or other damages or be barred from using the intellectual property at issue, any of which could have a material adverse effect on our business, operating results and financial condition.
We also rely substantially on trade secrets, proprietary technology, nondisclosure and other contractual agreements, and technical measures to protect our technology, application, design, and manufacturing know-how, and work actively to foster continuing technological innovation to maintain and protect our competitive position. We cannot assure you that steps taken by us to protect our intellectual property and other contractual agreements for our business will be adequate, that our competitors will not independently develop or patent substantially equivalent or superior technologies or be able to design around patents that we may receive, or that our intellectual property will not be misappropriated.
If we are unable to manage growth, our operations could be adversely affected.
Our progress is expected to require the full utilization of our management, financial and other resources, which to date has occurred with limited working capital. Our ability to manage growth effectively will depend on our ability to improve and expand operations, including our financial and management information systems, and to recruit, train and manage sales personnel. There can be no assurance that management will be able to manage growth effectively.
If we do not properly manage the growth of our business, we may experience significant strains on our management and operations and disruptions in our business. Various risks arise when companies and industries grow quickly. If our business or industry grows too quickly, our ability to meet customer demand in a timely and efficient manner could be challenged. We may also experience development delays as we seek to meet increased demand for our products. Our failure to properly manage the growth that we or our industry might experience could negatively impact our ability to execute on our operating plan and, accordingly, could have an adverse impact on our business, our cash flow and results of operations, and our reputation with our current or potential customers.
We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
We are an “emerging growth company,” as defined in the Jumpstart our Business Startups Act of 2012, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile and lower than what might otherwise have been the case.
Under the Jumpstart Our Business Startups Act, “emerging growth companies” can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves to this exemption from new or revised accounting standards and, therefore, we will be subject to the same new or revised accounting standards as other public companies that are not “emerging growth companies.”
7
Because we are subject to additional regulatory compliance requirements as a result of becoming a public company, which includes Section 404 of the Sarbanes-Oxley Act of 2002, and our management has limited experience managing a public company, the failure to comply with these regulatory requirements could harm our business.
Our management and outside professionals will need to devote a substantial amount of time to new compliance initiatives and to meeting the obligations that are associated with being a public company and we may not successfully or efficiently manage this transition. Chris Robbins, our Chief Financial Officer, joined us on October 25, 2013. Jay Cowles also joined the management team and became a director and Chief Operating Officer in February of 2015. We will also rely on legal counsel and accounting professionals to help with our future SEC reporting requirements. This will likely divert needed capital resources away from the objectives of implementing our business plan. These expenses could be more costly than we are able to bear and could result in us not being able to successfully implement our business plan.
We expect rules and regulations such as the Sarbanes-Oxley Act of 2002 to increase our legal and accounting compliance costs and make some activities more time-consuming than in the past. We may need to hire a number of additional employees with public accounting and disclosure experience in order to meet our ongoing obligations as a public company.
As a smaller reporting company, our management will be required to provide a report on the effectiveness of our internal control over financial reporting, but will not be required to provide an auditor’s attestation regarding such report and management’s report need not be provided until our second annual report. Section 404 compliance efforts may divert internal resources and will take a significant amount of time and effort to complete. We may not be able to successfully complete the procedures and certification of Section 404 by the time we will be required to do so. If we fail to do so, or if in the future our management determines that our internal control over financial reporting is not effective, we could be subject to sanctions or investigations by the SEC or other regulatory authorities. Furthermore, investor perceptions of our company may suffer, and this could cause a decline in the market price of our stock. Furthermore, whether or not we comply with Section 404(b), any failure of our internal control over financial reporting could have a material adverse effect on our stated results of operations and harm our reputation. If we are unable to implement necessary procedures or changes effectively or efficiently, it could harm our operations, financial reporting or financial results.
Compensation may be paid to our officers, directors and employees regardless of our profitability, which may limit our ability to finance our business plan and adversely affect our business.
Our Chief Executive Officer and Chief Financial Officer will be receiving compensation and any other current or future employees of our company may be entitled to receive compensation, payments and reimbursements regardless of whether we operate at a profit or a loss. Any compensation received by Mr. Danard or Mr. Robbins or any other executive in the future will be determined from time to time by the board of directors. Such obligations may negatively affect our cash flow and our ability to finance our business plan, which could cause our business to fail.
Our business and growth may suffer if we are unable to attract and retain key employees.
Our success depends on the expertise and continued service of our Chief Executive Officer, Robert Danard and certain other key technical personnel. These individuals are a significant factor in our growth and ability to meet our business objectives. It may be difficult to find a sufficiently qualified individual to replace Mr. Danard or other key technical personnel in the event of death, disability or resignation, resulting in our being unable to implement our business plan and even a complete cessation of our operations, which would likely result in the total loss of an investor's investment
Furthermore, our ability to expand operations to accommodate our anticipated growth will also depend on our ability to attract and retain qualified media, management, finance, marketing, sales and technical personnel. However, competition for these types of employees is intense due to the limited number of qualified professionals. Our ability to meet our business development objectives will depend in part on our ability to recruit, train and retain top quality people with advanced skills who understand our technology and business. We hope that we will be able to attract competent employees, but no assurance can be given that we will be successful in this regard. If we are unable to engage and retain the necessary personnel, our business may be materially and adversely affected.
Risks Related to Our Common Stock
Penny Stock” rules may make buying or selling our securities difficult.
Trading in our securities is subject to the SEC’s “penny stock” rules and it is anticipated that trading in our securities will continue to be subject to the penny stock rules for the foreseeable future. The SEC has adopted regulations that generally define a penny stock to be any equity security that has a market price of less than $5.00 per share, subject to certain exceptions. These rules require that any broker-dealer who recommends our securities to persons other than prior customers and accredited investors must, prior to the sale, make a special written suitability determination for the purchaser and receive the purchaser’s written agreement to execute the transaction. Unless an exception is available, the regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock market and the risks associated with trading in the penny stock market. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from recommending transactions in our securities, which could limit the liquidity and adversely affect the market price for our common stock.
8
Our securities are traded on the Pink OTC Markets as an OTC BB issuer, which may not provide us much liquidity for our investors as national securities exchanges such as the NYSE MKT and NASDAQ.
Our securities are quoted on the Pink OTC Markets under the BB tier (“the OTC markets”). The OTC markets are inter-dealer, over-the-counter markets that provide significantly less liquidity than the NASDAQ Stock Market or other national securities exchanges. Securities traded on these OTC markets are usually thinly traded, highly volatile, have fewer market makers and tend not to be followed by analysts. The SEC’s order handling rules, which apply to NASDAQ-listed securities, do not apply to securities quoted on the OTC markets. Quotes for stocks included on the OTC markets are not listed in newspapers. Therefore, prices for securities traded solely on the OTC markets may be difficult to obtain and holders of our securities may be unable to resell their securities at or near their original acquisition price, or at any price.
A sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.
If our stockholders sell substantial amounts of our common stock in the public market, the market price of our common stock could fall.
Any future equity or debt issuances by us may have dilutive or adverse effects on our existing shareholders.
We may issue additional shares of common due to warrants or options being exercised that could dilute your ownership in our company. Moreover, any issuances by us of equity securities may be at or below the prevailing market price of our common stock and in any event may have a dilutive impact on our shareholders, which could cause the market price of our common stock to decline.
We have not paid dividends in the past and do not expect to pay dividends in the future. Any returns on investment may be limited to the value of our common stock.
We have never paid cash dividends on our common stock and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting us. If we do not pay dividends, our common stock may be less valuable.
Our stock price is volatile and you may not be able to sell your shares for more than what you paid.
Our stock price has been subject to significant volatility, and you may not be able to sell shares of common stock at or above the price you paid for them. The trading price of our common stock has been subject to fluctuations in the past. During the year ended December 31, 2014, our common stock traded at prices as low as $0.55 per share and as high as $1.39 per share.
The market price of the common stock could continue to fluctuate in the future in response to various factors, including, but not limited to:
The stock market in general has continued to experience volatility which may further affect our stock price.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Our principal executive offices are located at 111 Penn Street, El Segundo, CA 90245. We lease these facilities on a month-to-month basis at a cost of $252 per month. We also have a Canadian office located at Ste. 202 1107 17th Ave SW, Calgary, Alberta, Canada T2T 0B5. We lease these facilities at a cost of $3,000 per month. We believe these facilities are suitable for our current needs. We housed 5 technical developers in Manila, Philippines; the lease space came at a cost of $1000 per month, which was inclusive in our contract that concluded January 2014.
ITEM 3. LEGAL PROCEEDINGS
In the ordinary course of business, we may be involved in legal proceedings from time to time. As of the date hereof, except as set forth herein, there are no known legal proceedings against the Company. No governmental agency has instituted proceedings, served, or threatened us with any complaints.
However, on March 4, 2015, the Alberta Securities Commission (Alberta) (the “ASC”) issued an order that all trading of the securities and derivatives of Spriza halt until the end of the day of March 25, 2015, or until the ASC revokes its order. On March 30, 2015, the ASC notified the Company that the order expired on March 24, 2015. On March 4, 2015, the Securities Exchange Commission (the “SEC”) issued a release announcing the temporary suspension of trading in the securities of Spriza. Spriza, through its attorneys, has been working to satisfy any concerns maintained by the ASC and the SEC.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Information
Prior to November 4, 2013, there was no public trading market for our securities. On November 4, 2013, our common stock was quoted under the symbol “SPRZ” on the OTC BB operated by FINRA.
The following table sets forth the range of high and low bid prices for our common stock for each applicable quarterly period. The table reflects inter-dealer prices without retail mark-up, mark-down or commissions and may not represent actual transactions.
Fiscal Year Ended December 31, 2013:
| Low ($) | High ($) | ||
| First Quarter | nil | nil | |
| Second Quarter | nil | nil | |
| Third Quarter | nil | nil | |
| Fourth Quarter | 0.25 | 0.75 |
Fiscal Year Ended December 31, 2014:
| Low ($) | High ($) | ||
| First Quarter | 0.75 | 0.94 | |
| Second Quarter | 0.75 | 0.75 | |
| Third Quarter | 0.55 | 0.90 | |
| Fourth Quarter | 0.65 | 1.39 |
Fiscal Year 2015 to date:
| Low ($) | High ($) | ||
| First Quarter to date | 0.25 | 2.00 |
The closing price of our common stock on the OTC BB on April 13, 2015 was $0.10 per share.
The shares quoted are subject to the provisions of Section 15(g) and Rule 15g-9 of the Securities Exchange Act of 1934, as amended (the Exchange Act"), commonly referred to as the "penny stock" rule.
The SEC generally defines penny stock to be any equity security that has a market price less than $5.00 per share, subject to certain exceptions that do not apply to our company.
For transactions covered by these rules, broker-dealers must make a special suitability determination for the purchase of such securities and must have received the purchaser's written consent to the transaction prior to the purchase. Additionally, for any transaction involving a penny stock, unless exempt, the rules require the delivery, prior to the first transaction, of a risk disclosure document relating to the penny stock market. A broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, and current quotations for the securities. Finally, the monthly statements must be sent disclosing recent price information for the penny stocks held in the account and information on the limited market in penny stocks. Consequently, these rules may restrict the ability of broker dealers to trade and/or maintain a market in the company’s common stock and may affect the ability of shareholders to sell their shares.
Number of Shareholders
As of April 15, 2015 there were 69,616,734 shares of our common stock issued and outstanding and approximately 522 shareholders. The transfer agent of our common stock is Empire Stock Transfer Inc. 1859 Whitney Mesa Drive, Henderson, NV 89014.
Dividends
We have never paid cash dividends or distributions to our equity owners. We do not expect to pay cash dividends on our common stock, but instead, intend to utilize available cash to support the development and expansion of our business. Any future determination relating to our dividend policy will be made at the discretion of our Board of Directors and will depend on a number of factors, including but not limited to, future operating results, capital requirements, financial condition and the terms of any credit facility or other financing arrangements we may obtain or enter into, future prospects and in other factors our Board of Directors may deem relevant at the time such payment is considered. There is no assurance that we will be able or will desire to pay dividends in the near future or, if dividends are paid, in what amount.
Stock Repurchases
There were no shares repurchased during the year ended December 31, 2014.
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Securities Issued in Unregistered Transactions
During the year ended December 31, 2014, we issued the following securities in unregistered transactions:
In Q1 of 2014 we issued a total 135,657 common shares to one foreign accredited investor for gross proceeds of $40,698 pursuant to the exercise of warrants at $0.30 per share. We relied upon Rule 506 of Regulation D and/or Regulation S of the Securities Act as these securities were issued to foreign investors who are “accredited investors,” as such term is defined in Rule 501(a) under the Securities Act in offshore transactions (as defined in Rule 902 under Regulation S of the Securities Act), based upon representation made by such investors.
In the first quarter of 2014 we also issued 1,540,800 units (each a “Unit”) to thirteen foreign accredited investors for gross proceeds of $385,200 pursuant to a $0.25 Unit non-brokered private placement which closed in March of 2014. Each Unit contained one common share and one common share purchase warrant to acquire an additional share at $0.50 per share expiring March 10, 2015. We relied upon Rule 506 of Regulation D and/or Regulation S of the Securities Act as these securities were issued to foreign investors who are “accredited investors,” as such term is defined in Rule 501(a) under the Securities Act in offshore transactions (as defined in Rule 902 under Regulation S of the Securities Act), based upon representation made by such investors.
In the fourth quarter of 2014 we received subscription funds of $150,000 from three foreign accredited investors by the purchase of 300,000 common shares of the Company in a non-brokered private placement at $0.50 per common share. We also received $47,500 from one foreign accredited investor from the exercise of warrants at $0.50 per common share attached to the March 2014 Unit offering. These subscriptions were received in 2014 but the shares were not issued until February of 2015 (See Subsequent Sales). We relied upon Rule 506 of Regulation D and/or Regulation S of the Securities Act as these securities were issued to foreign investors who are “accredited investors,” as such term is defined in Rule 501(a) under the Securities Act in offshore transactions (as defined in Rule 902 under Regulation S of the Securities Act), based upon representation made by such investors.
Subsequent Sales of Unregistered Securities
Subsequent to December 31, 2014, we issued the following securities in unregistered transactions:
On February 12, 2015 we issued a total of 1,600,000 common shares at $0.50 per common share to fourteen foreign accredited investors for gross proceeds of $800,000 pursuant to our $0.50 non-brokered private placement. We relied upon Rule 506 of Regulation D and/or Regulation S of the Securities Act as these securities were issued to foreign investors who are “accredited investors,” as such term is defined in Rule 501(a) under the Securities Act in offshore transactions (as defined in Rule 902 under Regulation S of the Securities Act), based upon representation made by such investors.
On February 12, 2015 we also issued 397,800 common shares for $198,900 from six foreign accredited investors from the exercise of warrants attached to the March 2014 Unit private placement. We relied upon Rule 506 of Regulation D and/or Regulation S of the Securities Act as these securities were issued to foreign investors who are “accredited investors,” as such term is defined in Rule 501(a) under the Securities Act in offshore transactions (as defined in Rule 902 under Regulation S of the Securities Act), based upon representation made by such investors.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR RESULTS OF OPERATIONS
The discussion that follows is derived from our audited balance sheets as of December 31, 2014 and 2013 and the audited statements of operations and cash flows for the year ended December 31, 2014 (“2014”) and December 31, 2013 (“2013”).
Results of Operations for the year ended December 31, 2014 and December 31, 2013.
The net loss for 2014 increased by $749,367 to $1,233,765 (2013 - $484,398). This increase was due to a full twelve months of operations and development during 2014 and additions to our staff and business operations.
During 2014 we generated $78,056 (2013 - $7,000) in revenues. We expect to generate significant revenues during fiscal 2015.
During 2014 we incurred $1,332,895 in operating expenses (2013 - $482,421). During 2014 operating expenses consisted of: $293,635 (2013 - $79,479) of stock-based compensation due to implementing our 2013 Incentive Award Plan; $405,701 (2013 - $180,424) in consulting fees and salaries including $106,038 (2013 - $82,836) paid to our Chief Executive Officer; $71,307 (2013 - $37,745) in branding and marketing; $15,305 (2013 - $22,974) in regulatory fees, $250,587 (2013 - $89,709) in professional fees including legal and audit, $72,814 (2013 - $43,262) in travel and $99,500 (2013 - $22,321) in office expenses. We incurred total $86,546 (2013 - $6,507) in depreciation and amortization which include the depreciation of property and equipment of $6,748, (2013 - $4,271) and amortization of intangibles of $79,798 (2013 - $2,236). We expect that operating expenses will continue to increase as we are able to raise capital and further our business operations.
During 2014 we accrued no interest on short term loans. In 2013 we accrued $8,977 of interest payable on $395,000 of short-term loans. On September 6, 2013 short-term loans, plus accrued interest of $8,977, were converted into 2,693,183 Units at $0.15 per Unit. Each unit contained one common share and one common share purchase warrant exercisable at $0.30 for a three year period. We do not expect to incur interest expense in the future.
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LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2014, the Company has a working capital deficit of $98,770. Our cash on hand was $41,262 which includes restricted cash of $10,000. At December 31, 2013 we had working capital of $451,205; cash on hand was $493,539 inclusive of the restricted cash of $10,000.
Over the fourth quarter of 2014 and the first quarter of 2015 we increased our cash position by $998,900. Subsequent to December 31, 2014, we had received $150,000 for the $0.50 private placement and $47,500 in $0.50 warrants; we received a further $650,000 pursuant to our $0.50 common share private placement for a total of 1,600,000 common shares plus an additional $151,400 from the exercise of 397,800 warrants in total and the Company issued 397,800 common shares..
The following table sets forth the major sources and uses of cash for our last two fiscal years ended December 31, 2014 and 2013:
|
2014 $ |
2013 $ |
|||||
| Net cash used in operating activities |
(809,490) |
(350,881) |
||||
| Net cash used in investing activities |
(149,550) |
(290,278) |
||||
| Net cash provided by financing activities |
470,897 |
1,132,258 |
||||
| Net increase (decrease) in cash |
(488,143) |
491,099 |
||||
Cash Used in Operating Activities
During 2014 operating activities used $809,490 in cash (2013 – $350,881). Use of cash was primarily attributable to funding the net loss of $1,233,765 in 2014 (2013-$484,398) offset by a non-cash charge of $86,546 (2013 - $6,507) for depreciation and amortization and a non-cash charge of $293,635, (2013-$79,479) for stock-based compensation. Our suppliers financed $72,697 in 2014 (2013-$47,531) of the net loss.
Cash Used in Investing Activities
During 2014 we used $149,550 (2013 - $290,278) in investing activities. On May 15, 2013 we contracted a San Francisco consulting firm with development capabilities in the Philippines to develop SPRIZA™. On December 1, 2013 we completed the SPRIZA™ technology and on March 18, 2014 SPRIZA™ was unveiled to the public with real-time contests being run.
Our SPRIZA™ contest marketing platform includes: subscriber portal, mobile device support, do-it-yourself platform and tools allowing us to develop a database of concurrent customers and users. During 2014 we spent $115,711, (2013 - $227,596) on completion of this project and have allocated the cost to intellectual property. During 2014 we spent $132,813 (2013 - $44,711) on our corporate and contest website and $454, (2013 - $8,811) on trademarks. We also spent $7,276 (2013 - $3,910) on office furniture and computers.
Cash from Financing Activities
During 2014 financing activities provided $470,897 in cash consisting of:
Need for Additional Capital
We have approximately $500,000 in cash at April 15, 2015 raised from a private placement from fourteen foreign accredited investors closed in February 2015 for total proceeds of $800,000 at $0.50 per common share for 1,600,000 shares issued. We may require further capital to achieve our 2015 operating plan.
OFF BALANCE-SHEET ARRANGEMENTS
We have not had, and at December 31, 2014 do not have, 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 that is material to investors.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our discussion and analysis of our financial condition and results of operations are based upon our financial statements that have been prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). This preparation requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent assets and liabilities. US GAAP provides the framework from which to make these estimates, assumption and disclosures. We choose accounting policies within US GAAP that management believes are appropriate to accurately and fairly report our operating results and financial position in a consistent manner. Management regularly assesses these policies in light of current and forecasted economic conditions. In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management’s Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
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Intangible Assets
Intangible assets are comprised primarily of the cost of trademarks and intellectual property. We evaluate our trademarks annually for impairment or earlier if there is an indication of impairment. If there is an indication of impairment of identified intangible assets not subject to amortization, we compare the estimated fair value with the carrying amount of the asset. An impairment loss is recognized to write-down the intangible asset to its fair value if it is less than the carrying amount. The fair value is calculated using the income approach. However, preparation of estimated expected future cash flows is inherently subjective and is based on our best estimate of assumptions concerning expected future conditions. Based on our impairment analysis performed for the year ended December 31, 2014 and December 31, 2013, the estimated fair values of trademarks and other intangible assets exceeded their respective carrying values. Amortization is computed on a straight-line basis over the estimated useful lives of the assets which are estimated to be five years.
Stock-based Compensation
We account for stock-based payments to employees in accordance with ASC 718, “Stock Compensation” (“ASC 718”). Stock-based payments to employees include grants of stock, grants of stock options and issuance of warrants that are recognized in the statement of operations based on their fair values at the date of grant.
We account for stock-based payments to non-employees in accordance with ASC 718 and Topic 505-50, “Equity-Based Payments to Non-Employees.” Stock-based payments to non-employees include grants of stock, grants of stock options and issuances of warrants that are recognized in the consolidated statement of operations based on the value of the vested portion of the award over the requisite service period as measured at its then-current fair value as of each financial reporting date.
We calculate the fair value of option grants and warrant issuances utilizing the Black-Scholes pricing model. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. ASC 718 requires forfeitures to be estimated at the time stock options are granted and warrants are issued to employees and non-employees, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock option or warrant. We estimate forfeiture rates for all unvested awards when calculating the expense for the period. In estimating the forfeiture rate, we monitor both stock option and warrant exercises as well as employee termination patterns.
The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight-line basis over the requisite service period of the award.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
There have been no recently issued Accounting Pronouncements that impact us.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Spriza, Inc.
We have audited the accompanying balance sheet of Spriza, Inc. (“the Company”) as of December 31, 2014 and the related statements of operations, stockholders’ equity and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Manhattan Scientifics, Inc. at December 31, 2014 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses and had negative cash flows from operations that raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ RBSM LLP
Las Vegas, NV
April 15, 2015
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Spriza, Inc.
We have audited the accompanying balance sheets of Spriza, Inc. (the “Company”) as of December 31, 2013 and 2012, and the related statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2013 and the period from September 17, 2012 (Inception) to December 31, 2012 and the period from September 17, 2012 (Inception) to December 31, 2013. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits of the financial statements include examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2013 and 2012, and the results of its operations, stockholders’ equity, and cash flows for the year ended December 31, 2013 and the period from September 17, 2012 (Inception) to December 31, 2012 and the period from September 17, 2012 (Inception) to December 31, 2013 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered recurring losses and had negative cash flows from operations that raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ L.L. Bradford & Company, LLC
L.L. Bradford & Company, LLC
Las Vegas, Nevada
March 31, 2014
15
Spriza, Inc.
Balance Sheets
| December 31, 2014 $ |
December 31, 2013 $ |
|||||
| ASSETS | ||||||
| Current Assets | ||||||
| Cash | 5,396 | 493,539 | ||||
| Restricted Cash | 10,000 | - | ||||
| Accounts Receivables (net of Allowance for Bad Debt of $37,500) | 25,866 | - | ||||
| Total Current Assets | 41,262 | 493,539 | ||||
| Property and equipment, net of accumulated depreciation of $11,019 and $4,271 (Note 4) | 25,166 | 24,638 | ||||
| Intangible assets, net of accumulated amortization of $82,033 and $2,236 (Note 4) | 336,610 | 284,132 | ||||
| Deposits | 2,737 | - | ||||
| Total Assets | 405,775 | 802,309 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||
| Current Liabilities | ||||||
| Accounts payable | 115,032 | 42,334 | ||||
| Note payable –related party (Note 5) | 25,000 | - | ||||
| Total Current Liabilities | 140,032 | 42,334 | ||||
| Stockholders’ Equity | ||||||
| Preferred Stock, 10,000,000 shares authorized, $0.0001 par value, none issued | - | - | ||||
| Common Stock, 190,000,000 shares authorized, $0.0001 par value 67,618,934 and 65,942,477 issued and outstanding, respectively (Note 6) | 6,762 | 6,594 | ||||
| Additional Paid in Capital | 1,997,085 | 1,257,720 | ||||
| Accumulated (Deficit) | (1,738,104 | ) | (504,339 | ) | ||
| Total Stockholders’ Equity | 265,743 | 759,975 | ||||
| Total Liabilities and Stockholders’ Equity | 405,775 | 802,309 |
The accompanying notes are an integral part to these financial statements.
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Spriza, Inc.
Statements of Operations
| For the Year ended December 31, 2014 $ |
For the Year ended December 31, 2013 $ |
|||||
| Revenue | 78,056 | 7,000 | ||||
| Interest income | 74 | - | ||||
| Total Revenue | 78,130 | 7,000 | ||||
| Expenses | ||||||
| Branding and marketing | 71,307 | 37,745 | ||||
| Bad Debt | 37,500 | - | ||||
| Consulting | 218,121 | 97,588 | ||||
| Consulting – related party | 187,580 | 82,836 | ||||
| Depreciation and amortization | 86,546 | 6,507 | ||||
| Office | 99,500 | 22,321 | ||||
| Professional fees | 250,587 | 89,709 | ||||
| Regulatory fees | 15,305 | 22,974 | ||||
| Stock-based compensation | 293,635 | 79,479 | ||||
| Travel | 72,814 | 43,262 | ||||
| Total Operating Expenses | 1,332,895 | 482,421 | ||||
| Net Loss before Other Income (Expense) | (1,254,765 | ) | (475,421 | ) | ||
| Other Income (Expense) | ||||||
| Other Income | 21,000 | - | ||||
| Interest expense | - | (8,977 | ) | |||
| Net Loss | (1,233,765 | ) | (484,398 | ) | ||
| Net Loss Per Share – Basic and Diluted | (0.02 | ) | (0.01 | ) | ||
| Weighted Average Shares Outstanding – Basic and Diluted | 67,386,199 | 53,300,000 |
The accompanying notes are an integral part to these financial statements.
17
Spriza, Inc.
Statements of Cash Flows
| For the Year ended December 31, 2014 $ |
For the Year Ended December 31, 2013 $ |
|||||
| Operating Activities | ||||||
| Net loss | (1,233,765 | ) | (484,398 | ) | ||
| Add back non-cash items: | ||||||
| Depreciation and amortization | 86,546 | 6,507 | ||||
| Stock-based compensation | 293,635 | 79,479 | ||||
| Changes in operating assets and liabilities: | ||||||
| (Increase) in other assets | (2,737 | ) | ||||
| (Increase) in accounts receivable, accruals and allowance | (25,866 | ) | ||||
| Increase in accounts payable and accruals | 72,697 | 47,531 | ||||
| Net Cash Used in Operating Activities | (809,490 | ) | (350,881 | ) | ||
| Investing Activities | ||||||
| Restricted cash | (10,000 | ) | - | |||
| Purchase of equipment | (7,276 | ) | (3,910 | ) | ||
| Increase of intangible assets | (132,274 | ) | (286,368 | ) | ||
| Net Cash Used in Investing Activities | (149,550 | ) | (290,278 | ) | ||
| Financing Activities | ||||||
| Short-term loan proceeds | 405,000 | |||||
| Repayment of short-term loans | - | (25,000 | ) | |||
| Notes payable – related party | 25,000 | - | ||||
| Proceeds from common stock | 445,897 | 752,258 | ||||
| Net Cash Provided by Financing Activities | 470,897 | 1,132,258 | ||||
| Increase in Cash | (488,143 | ) | 491,099 | |||
| Cash - Beginning of Year | 493,539 | 2,440 | ||||
| Cash - End of Year | 5,396 | 493,539 | ||||
| Non-cash Financing and Investing Activities: | ||||||
| Short-term loans and interest settled for shares | - | 403,977 | ||||
| Supplemental Disclosures: | ||||||
| Interest paid | - | - | ||||
| Income taxes paid | - | - |
The accompany notes are an integral part to these financial statements.
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Spriza, Inc.
Statement of Stockholders’ Equity
| Shares # |
Amount $ |
Additional Paid-in Capital $ |
Accumulated Deficit $ |
Total $ |
|
| Balance – December 31, 2012 | 41,000,000 | 4,100 | 24,500 | (19,941) | 8,659 |
| Shares issued for cash at $0.005 per share pursuant to an S-1 Registration Statement | 20,000,000 | 2,000 | 98,000 | - | 100,000 |
| Shares issued for conversion of short-term loans and interest at $0.15 per share | 2,693,183 | 269 | 403,708 | - | 403,977 |
| Shares issued for cash at $0.15 per share | 1,500,201 | 150 | 224,880 | - | 225,030 |
| Shares issued for cash at $0.30 per share pursuant to warrants exercised | 749,093 | 75 | 224,653 | - | 224,728 |
| 810,000 common shares subscribed for cash at $0.25 per share | - | - | 202,500 | - | 202,500 |
| Stock-based compensation | - | - | 79,479 | - | 79,479 |
| Net loss | - | - | - | (484,398) | (484,398) |
| Balance – December 31, 2013 | 65,942,477 | 6,594 | 1,257,720 | (504,339) | 759,975 |
| Shares issued for cash at $0.25 per share | 1,540,800 | 154 | 182,546 | - | 182,700 |
| Shares issued for cash at $0.30 per share pursuant to warrants exercised | 135,657 | 14 | 40,684 | - | 40,698 |
| 350,000 common shares subscribed for cash at $0.50 per share | - | - | 175,000 | - | 175,000 |
| 95,000 common shares subscribed for cash at $0.50 per share pursuant to warrants exercised | - | - | 47,500 | - | 47,500 |
| Stock-based compensation | - | - | 293,635 | - | 293,635 |
| Net loss | - | - | - | (1,233,765) | (1,233,765) |
| Balance – December 31, 2014 | 67,618,934 | 6,762 | 1,997,085 | (1,738,104) | 265,743 |
The accompany notes are an integral part to these financial statements.
19
Spriza, Inc.
Notes to Financial Statements
| 1. | Nature of Operations |
| On September 17, 2012 we were incorporated as Level20 Inc. in the State of Nevada. On October 25, 2013 we changed our name to Spriza, Inc. |
| On October 17, 2012, we entered into an Asset Purchase Agreement with Raptify Marketing Systems Ltd. (“Raptify”), whereby we acquired certain intellectual property and related assets from Raptify in exchange for 5,000,000 shares of our common stock, 3,000,000 shares of which was received by Raptify and 2,000,000 shares of which were received by certain other stakeholders of Raptify (See Note 4). |
| Our intellectual property is a fully developed, commercially operational incentive contest marketing system and platform that builds brand awareness and generates qualified targeted leads for any size of business through a patent-pending online contest marketing solution trademarked as “SPRIZA™”. SPRIZA™ taps into the power of shared interests and personal relationships within targeted markets producing traceable and quantifiable results at every stage of the contest. It provides deep, real-time analytics and reporting, through robust tools that measure marketing and advertising budgets for real time return on investment analysis and demographic profiling. SPRIZA™ leverages social media strategies based on business objectives enabling our clients “Branders” to measure results of marketing efforts. The result is a network of subscribers that participate in contest promotions centered and shared around their personal and shared interests. SPRIZA™ produces quantifiable and verifiable participant data results, which can be used for ongoing marketing purposes with targeted demographics. SPRIZA™ data results assess how many consumers responded, whom they shared the contest with, the level of engagement, how many other contest participants were influenced and sales value generated. SPRIZA™ is designed to work with most social media engines including Facebook, Twitter and Pinterest and offers full mobile capability to engage popular mobile applications including iPhone, Android, Blackberry and Windows mobile operating systems. |
| 2. | Summary of Significant Accounting Policies |
| Use of Estimates |
| The preparation of financial statements in accordance with US GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses in the reporting period. We regularly evaluate estimates and assumptions related to the useful life and recoverability of long-lived assets, stock-based compensation, and deferred income tax asset valuation allowances. We base our estimates and assumptions on current facts, historical experience and various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by us may differ materially and adversely from our estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. |
| Cash and Cash Equivalents |
| Cash and cash equivalents include cash on deposit in overnight deposit accounts and investments in money market accounts. |
| Property and Equipment |
| Property and equipment are all stated at historical cost less accumulated depreciation. Depreciation is computed on a straight-line basis over the estimated useful lives of the assets which are estimated to be five years. |
| Long-Lived Assets |
| We account for long-lived assets in accordance with ASC Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. We assess recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value or disposable value. As of December 31, 2014 and 2013, we have no impaired long-lived assets. |
| Intangible Assets |
| Intangible assets are comprised primarily of the cost of trademarks and intellectual property. We evaluate our trademarks annually for impairment or earlier if there is an indication of impairment. If there is an indication of impairment of identified intangible assets not subject to amortization, we compare the estimated fair value with the carrying amount of the asset. An impairment loss is recognized to write-down the intangible asset to its fair value if it is less than the carrying amount. The fair value is calculated using the income approach. However, preparation of estimated expected future cash flows is inherently subjective and is based on our best estimate of assumptions concerning expected future conditions. Based on our impairment analysis performed for the year ended December 31, 2014 and December 31, 2013, the estimated fair values of trademarks and other intangible assets exceeded their respective carrying values. Amortization is computed on a straight-line basis over the estimated useful lives of the assets which are estimated to be five years. |
| Revenue Recognition |
| Revenue is recognized in accordance with Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements, as revised by SAB No. 104. We recognize revenue when the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the selling price is fixed or determinable; and collection is reasonably assured. The revenues are derived from the agreements with the business that utilize the online platform developed by the Company. Revenue is recognized as per the terms negotiated with the client, most often with 50% received on the signing of the Statement of Work and the balance due 30 days of the completion of the contest. |
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| Fair Value |
| We comply with the provisions of ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements required under other accounting pronouncements. See Note 11. |
| Financial Instruments |
| We have financial instruments whereby the fair value of the financial instruments could be different from that recorded on a historical basis. Our financial instruments consist of cash, accounts and loans receivables, accounts payable and accrued expenses. The carrying amounts of our financial instruments approximate their fair values as of December 31, 2014 and 2013 due to their short-term nature. |
| Income Taxes |
| We follow ASC subtopic 740-10 for recording the provision for income taxes. ASC 740-10 requires the use of the asset and liability method of accounting for income taxes. Under the asset and liability method, deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. |
| Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. |
| Stock-based Compensation |
| We account for stock-based payments to employees in accordance with ASC 718, “Stock Compensation” (“ASC 718”). Stock-based payments to employees include grants of stock, grants of stock options and issuance of warrants that are recognized in the statement of operations based on their fair values at the date of grant. |
| We account for stock-based payments to non-employees in accordance with ASC 718 and Topic 505-50, “Equity-Based Payments to Non-Employees.” Stock-based payments to non-employees include grants of stock, grants of stock options and issuances of warrants that are recognized in the consolidated statement of operations based on the value of the vested portion of the award over the requisite service period as measured at its then-current fair value as of each financial reporting date. |
| We calculate the fair value of option grants and warrant issuances utilizing the Black-Scholes pricing model. The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. ASC 718 requires forfeitures to be estimated at the time stock options are granted and warrants are issued to employees and non-employees, and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered stock option or warrant. We estimate forfeiture rates for all unvested awards when calculating the expense for the period. In estimating the forfeiture rate, we monitor both stock option and warrant exercises as well as employee termination patterns. |
| The resulting stock-based compensation expense for both employee and non-employee awards is generally recognized on a straight-line basis over the requisite service period of the award. |
| Basic and Diluted Net Income (Loss) Per Share |
| Net loss per share is computed in accordance with ASC subtopic 260-10. We present basic loss per share (“EPS”) and diluted EPS on the face of our statements of operations. Basic EPS is computed by dividing reported earnings by the weighted average shares outstanding. Diluted EPS is computed by adding to the weighted average shares the dilutive effect if common stock was issued upon the exercise of stock options and warrants. For the year ended December 31, 2014 and December 31, 2013, the denominator in the diluted EPS computation is the same as the denominator for basic EPS due to the anti-dilutive effect of outstanding warrants on our net loss. Total potentially dilutive common share equivalents relating to stock purchase warrants and options granted or issued, as at December 31, 2014 and 2013 is 9,304,435 and 7,994,291, respectively. |
| Recent Pronouncements |
| We continually assess any new accounting pronouncements to determine their applicability to us. Where it is determined that a new accounting pronouncement affects our financial reporting, we undertake a study to determine the consequence of the change to our financial statements and assure that there are proper controls in place to ascertain that our financial statements properly reflect the change. |
| In January 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-04, Receivables - Troubled Debt Restructurings by Creditors ("ASU 2014-04"), which intends to clarify when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan should be derecognized and the real estate recognized. ASU 2014-04 is effective for annual periods, and interim periods within those annual periods beginning after December 15, 2014. We will adopt this standard effective January 1, 2015. Our adoption of ASU 2014-14 is not expected to have a material impact on our financial statements. |
21
| In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The standard is effective for annual periods beginning after December 15, 2016, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our financial statements and have not yet determined the method by which we will adopt the standard in 2017. |
| In August 2014, the FASB issued ASU No. 2014-15, Presentation of Financial Statements—Going Concern. The provisions of ASU No. 2014-15 require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently assessing the impact of this ASU on the Company’s financial statements. |
| 3. | Going Concern |
| The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. We have begun operations but have not generated significant revenue to date. These conditions give rise to doubt about our ability to continue as a going concern. These financial statements do not include adjustments relating to the recoverability and classification of reported asset amounts or the amount and classification of liabilities that might be necessary should we be unable to continue as a going concern. Our continuation as a going concern is dependent upon our ability to obtain additional financing and to generate profits and positive cash flow. |
| 4. | Property and Equipment and Intangible Assets |
| On October 17, 2012, we entered into an asset purchase agreement (the “APA”) with Raptify Marketing Systems Ltd. (“Raptify”), whereby we acquired certain assets from Raptify in exchange for 5,000,000 shares of our common stock, 3,000,000 shares of which were received by Raptify and 2,000,000 shares of which were received by certain other stakeholders of Raptify. The fair value of the assets acquired was $25,000 which was allocated to identifiable assets as follows: intellectual property $1 and computer systems, $24,999. |
| On May 15, 2013 we contracted a San Francisco consulting firm with technology development capabilities in the Philippines to complete the redevelopment of our technology platform. On December 1, 2013 we completed SPRIZA™ and on March 18, 2014 unveiled it to the public with real-time contests being run. SPRIZA™ includes: subscriber portal, mobile device support, do-it-yourself platform and tools allowing us to develop a database of concurrent customers and users. During the year ended December 31, 2014 we spent $115,711 (December 31, 2013 - $227,596) on completion of this project and have allocated the cost to intellectual property. |
| 5. | Short-term Debt and Note Payable |
| We received 6% interest bearing, secured short-term loans of $395,000 during the years ended December 31, 2013. On September 6, 2013 these loans, plus accrued interest of $8,977, were converted into 2,693,183 Units at $0.15 per Unit. Each Unit contained one common share and one common share purchase warrant exercisable at $0.30 for a three year period. |
| We also received a further $10,000 pursuant to a non-interest bearing short-term loan for a total of $25,000 which was repaid on April 19, 2013. |
| The Company received a short term non-interest bearing short-term loan from a related party of $25,000 in September of 2014 which was repaid in January 2015. The Company currently has no debt. |
| 6. | Common Stock |
| We filed a registration statement on Form S-1 with the United States Securities Commission (the “S-1”). The S-1 registered 20,000,000 common shares to be sold at $0.005 per common share for proceeds of $100,000. The S-1 was declared effective on April 22, 2013 and the 20,000,0000 shares registered thereunder were sold on June 12, 2013 for gross proceeds of $100,000. |
| On September 6, 2013 all outstanding short-term loans, plus accrued interest of $8,977, were converted into 2,693,183 Units at $0.15 per Unit. Each unit contained one common share and one common share purchase warrant exercisable at $0.30 for a three year period. |
| On October 25, 2013 we increased our authorized capital stock from 100,000,000 to 200,000,000. We now have the authority to issue 190,000,000 common shares and 10,000,000 preferred shares. |
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| On November 1, 2013 we issued a total of 1,500,201 units for proceeds of $225,030 pursuant to our $0.15 Unit Offering which closed October 31, 2013. Each Unit contained one common share and one common share purchase warrant exercisable at $0.30 for a three year period. |
| On November 1, 2013 we issued a total 749,093 shares for proceeds of $224,728 pursuant to the exercise of $0.30 warrants. |
| In March of 2014 we received $182,700 pursuant to the issuance of 1,540,800 Units of our $0.25 non-brokered private placement ($202,500 was received in 2013) and $40,697 received pursuant to a warrant exercised at $0.30. |
| In August through to year end in 2014 we received $175,000 pursuant to our $0.50 common share non-brokered private placement: and $47,500 received pursuant to a warrant exercised at $0.50. These common shares were subsequently issued in February of 2015. |
| 7. | Warrants |
| As at December 31, 2014 we had 4,754,435 common share purchase warrants outstanding having an average exercise price of $0.36 per common share and having an average expiration date of 1.28 years. |
| Number of Warrants | Weighted-Average Price Per Share |
||
| Beginning Balance, January 1, 2013 | - | - | |
| Granted | 4,193,384 | $0.30 | |
| Exercised | (749,093) | $0.30 | |
| Cancelled or Expired | - | - | |
| Ending Balance, December 31, 2013 | 3,444,291 | $0.30 | |
| Granted | 1,540,800 | $0.50 | |
| Exercised | (230,656) | $0.32 | |
| Cancelled or Expired | - | - | |
| Ending Balance, December 31, 2014 | 4,754,435 | $0.36 |
| Warrants Outstanding | Warrants Exercisable | ||||||
| Weighted Average Remaining Exercise Prices | Weighted Average Number Outstanding | Average Remaining Contractual Life (Years) | Exercise Price | Number Exercisable | Contractual Life (Years) | ||
| $0.36 | 1,808,434 | 1.68 | $0.30 | 1,808,434 | 1.68 | ||
| $0.36 | 1,500,201 | 1.84 | $0.30 | 1,500,201 | 1.84 | ||
| $0.36 | 1,445,800 | 0.19 | $0.50 | 1,445,800 | 0.19 | ||
| 4,754,435 | 1.28 | $0.36 | 4,754,435 | 1.28 | |||
| 8. | Stock-based Compensation |
| On October 29, 2013, we granted 4,550,000 stock options to directors, officers and employees to acquire 4,550,000 common shares at $0.15 per share having an option life of five years. A total of 25% vest on April 30, 2014, with a further 25% vesting on each of October 31, 2014, April 30, 2015 and October 31, 2015. During the year ended December 31, 2014, we recorded stock-based compensation of $293,635 and in December 31, 2013 - $79,479. |
| The weighted average grant date fair value of stock options granted during the year ended December 31, 2014 was $0.15. |
| The fair value of stock options granted was calculated using the Black-Scholes option-pricing model based on the following assumptions: |
| Risk-Free Interest Rate: Based on the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equivalent to the expected term of the options being valued. |
| Dividend Yield: Based on the projection of future stock prices and dividends expected to be paid. |
| Expected Term: Represents the period of time that stock options are expected to be outstanding based on historic exercise behavior. |
| Expected Volatility: Due to our limited trading history, we do not have sufficient history to estimate the volatility of our common stock price for the expected life of the options. We calculate expected volatility based on reported data for similar publicly traded companies for which historical information is available and will continue to do so until the historical volatility of our common stock is sufficient to measure expected volatility for future option grants. |
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| The weighted average assumptions used for each of the year ended December 31, is as follows: |
| 2014 | 2013 | ||||||
| Expected dividend yield | 0% | 0% | |||||
| Risk-free interest rate | 1.61% | 1.29% | |||||
| Expected volatility | 65% | 82% | |||||
| Expected option life (in years) | 4.00 | 5.00 |
| The following table summarizes the continuity of our stock options: |
|
Number of Options |
Weighted Average Exercise Price |
Weighted- Average Remaining Contractual Term (years) |
Aggregate Intrinsic Value |
||||||||||
| $ | $ | ||||||||||||
| Granted, October 29, 2013 | 4,550,000 | 0.15 | 4.83 | 2,684,500 | |||||||||
| Outstanding, December 31, 2013 | 4,550,000 | 0.15 | 4.83 | 2,684,500 | |||||||||
| Granted | - | - | - | - | |||||||||
| Outstanding, December 31, 2014 | 4,550,000 | 0.15 | 3.83 | 5,642,000 | |||||||||
| Exercisable, December 31, 2014 | 2,275,000 | 0.15 | 3.83 | 2,821,000 |
| A summary of the changes of the Company’s non-vested stock options is presented below: |
|
Number of Options |
Weighted Average Grant Date Fair Value |
||||||
| $ | |||||||
| Non-vested at December 31, 2013 | 4,550,000 | 0.15 | |||||
| Granted | - | - | |||||
| Vested | 2,275,000 | 0.15 | |||||
| Non-vested at December 31, 2014 | 2,275,000 | 0.15 |
| As at December 31, 2014, there was $70,314 of unrecognized compensation cost related to non-vested stock options expected to be recognized over a weighted average period of 0.83 years. |
| 9. | Related Party Transactions |
| The President and Chief Executive Officer of the Company was paid a total of $106,038 during the year (2013 - $82,836). The Chief Financial Officer of the Company was paid a total of $17,792. As at December 31, 2014 there were no employment agreements in place for any of the named executive officers or employees. |
| The Company received a short term non-interest bearing short-term loan from a related party of $25,000 in September of 2014 which was repaid in January 2015. The Company currently has no debt. |
| 10. | Income Taxes |
| Deferred income tax assets and liabilities are computed annually for differences between financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. |
24
| The effective tax rate on the net loss before income taxes differs from the U.S. statutory rate as follows: |
| December 31, | |||||||
| 2014 | 2013 | ||||||
| U.S statutory rate | 35% | 35% | |||||
| Less valuation allowance | (35% | ) | (35% | ) | |||
| Effective tax rate | 0% | 0% | |||||
| The significant components of deferred tax assets and liabilities are as follows: |
| December 31, | |||||||
| Deferred tax assets | 2014 | 2013 | |||||
| Net operating losses | 483,000 | 105,170 | |||||
| Less valuation allowance | (483,000 | ) | (105,170 | ) | |||
| Deferred tax asset - net valuation allowance | $ | - | $ | - | |||
| We have a net operating loss carryover of approximately $1,380,000 available to offset future income for income tax reporting purposes, which will expire in various years through 2033, if not previously utilized. |
| We adopted the provisions of ASC 740-10-50, “Accounting for Uncertainty in Income Taxes”. We had no material unrecognized income tax assets or liabilities for the year ended December 31, 2014 and December 31, 2013. |
| Our policy regarding income tax interest and penalties is to expense those items as general and administrative expense but to identify them for tax purposes. During the year ended December 31, 2014 and December 31, 2013 there was no income tax or related interest and penalty items in the income statement, or liabilities on the balance sheet. We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. We are not currently involved in any income tax examinations. |
| 11. | Fair Value Measurements |
| ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability. The three levels of the fair value hierarchy under ASC Topic 820-10 are described below: |
| Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. |
| Level 2 – Valuations based on quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. |
| Level 3 – Valuations based on inputs that are supportable by little or no market activity and that are significant to the fair value of the asset or liability. Our level 3 assets consist of our intellectual property fair valued at $336,610 at December 31, 2014 and $284,132 December 31, 2013. |
| 12. | Subsequent Events |
| We have evaluated all subsequent events through the date these financial statements were issued and determined that there are no subsequent events to record or to disclose except as follows: |
| In February 2015 the Company increased its cash position by $998,900. Subsequent to December 31, 2014 where we had received $150,000 for the $0.50 private placement and $47,500 in $0.50 warrants; we received a further $650,000 pursuant to our $0.50 common share private placement for a total of 1,600,000 common shares plus an additional $151,400 from the exercise of 397,800 warrants in total. |
| On February 5, 2015 Justin Sather resigned as a director of the Company. Mr. Jay Cowles joined the Board as a director and was appointed the Chief Operating Officer effective February 2, 2015. |
| On March 4, 2015, the Alberta Securities Commission (Alberta) (the “ASC”) issued an order that all trading of the securities and derivatives of Spriza halt until the end of the day of March 25, 2015, or until the ASC revokes its order. On March 30, 2015, the ASC notified the Company that the order expired on March 24, 2015. On March 4, 2015, the Securities Exchange Commission (the “SEC”) issued a release announcing the temporary suspension of trading in the securities of Spriza. Spriza, through its attorneys, has been working to satisfy any concerns maintained by the ASC and the SEC. |
25
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
During the last two fiscal years, we have had no disagreements with our accountants on accounting and financial disclosure.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Rob Danard, who is our chief executive officer and Chris Robbins, who is our chief financial officer, are responsible for establishing and maintaining our disclosure controls and procedures. Disclosure controls and procedures means controls and other procedures that are designed to ensure that information we are required to disclose in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to ensure that information required to be disclosed by us in those reports is accumulated and communicated to management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our chief executive officer and chief financial officer evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of December 31, 2014. Based on that evaluation our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures were not effective as of December 31, 2014.
Changes in internal controls
There were no changes in our internal controls over financial reporting that occurred during the quarter ended December 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management's Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. As defined by the SEC, internal control over financial reporting is a process designed by, or under the supervision of our principal executive officer and principal financial officer and implemented by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements in accordance with U.S. generally accepted accounting principles.
Our internal control over financial reporting includes those policies and procedures that:
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As of December 31, 2014 we conducted an evaluation, under the supervision and with the participation of our chief executive officer (our principal executive officer) and our chief financial officer (also our principal financial and accounting officer) of the effectiveness of our internal control over financial reporting based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, or the COSO Framework. Management's assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of those controls.
Based upon this assessment, management concluded that our internal control over financial reporting was effective.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to an exemption for smaller reporting companies set forth in Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
ITEM 9B. OTHER INFORMATION
On January 20, 2015, Spriza, Inc. (the “Company”) was notified that L.L. Bradford & Company, LLC had resigned as our auditor.
The report provided by L.L. Bradford & Company, LLC in connection with the Company's financial statements for the fiscal year-ended December 31, 2013, did not contain an adverse opinion or disclaimer of opinion, nor was the report qualified or modified as to uncertainty, audit scope, or accounting principles, except that L.L. Bradford & Company, LLC's report contained an explanatory paragraph regarding substantial doubt about the Registrant's ability to continue as a going concern.
26
There were no disagreements between the Company and L.L. Bradford & Company, LLC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of L.L. Bradford & Company, LLC, would have caused L.L. Bradford & Company, LLC to make reference to the subject matter of the disagreements in connection with its reports on the company's financial statements; and there were no other reportable events as that term is described in Item 304(a)(1)(v) of Regulation S-K.
As reported above, on January 21 2015, the Audit Committee appointed RBSM LLP to be the Company's independent registered public accountant for the fiscal year ending December 31, 2014. During the two most recent completed fiscal years and through January 21, 2015, neither the Company nor anyone on its behalf consulted with RBSM LLP regarding any of the following: (i) the application of accounting principles to a specific transaction, either completed or proposed; (ii) the type of audit opinion that might be rendered on the company's financial statements, and none of the following was provided to the Company (a) a written report, or (b) oral advise that RBSM, LLP concluded was an important factor considered by the Company in reaching a decision as to an accounting, auditing or financial reporting issue; or (iii) any matter that was subject of a disagreement, as the term is defined in Item 304(a)(1)(iv) of Regulation S-K, or a reportable event, as described in Item 304(a)(1)(v) of Regulation S-K
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Executive Officers and Directors
The names, ages, and respective positions of our directors and executive officers are set forth below:
| Name | Age | Present Positions |
| Rob Danard | 42 | President and Chief Executive Officer and a Director |
| Chris Robbins | 56 | Chief Financial Officer, Treasurer and Secretary and a Director |
| Russell Krywolt | 41 | Director |
| Justin Sather | 40 | Director (Resigned February 5, 2015) |
| Jay Cowles | 44 | Director and Chief Operating Officer (Effective February 2, 2015) |
Rob Danard – President and Chief Executive Officer and a Director
Danard is our President and Chief Executive Officer as well as a director and has served in those positions since September 17, 2012. Mr. Danard resigned his positions as Chief Financial Officer, Secretary and Treasurer on October 25, 2013. Mr. Danard had served in these positions since September 17, 2012. Mr. Danard began his career in 1998, while studying Business at the University of Calgary. In 2009, Mr. Danard operated WealthMates Inc., a privately held corporation where he held the position of President providing business development and consulting services. During this time at WealthMates he assisted in the business with product development and client engagement. In 2010 he and his partner Kent Speakman founded Engageia Inc. a digital marketing agency. Engageia was involved with digital strategy, advisory, consulting, social media, community engagement, application development, event activation and start-up incubation. Engageia was nominated as the top digital agency in North America in social media by iMedia Connection. There is no current business activity in Engageia, Inc.; it is more of a tombstone of past work accomplished by Mr. Danard and his business partner, Mr. Speakman. It currently has taken no new clients and is simply maintenance of the corporation and brand. Throughout 2010 to present, as a senior enterprise sales associate with Cortex Business Solutions, he sold oil and gas procurement software to the energy industries top oil and gas producers. Mr. Danard is qualified to be a director based on his extensive experience in the social media industry.
Chris Robbins – Chief Financial Officer, Treasurer, Secretary and a Director
Mr. Robbins was elected to our board and appointed Chief Financial Officer, Secretary and Treasurer on October 25, 2013. Mr. Robbins has experience with financial reporting for public companies and will have an active role in our ongoing operations. Mr. Robbins has over 20 years of public company experience in the areas of financing, corporate governance, audit and disclosure requirements for both US and Canadian public companies. As Chief Financial Officer he is also responsible for overseeing the financial reporting for review by the audit committee and liaison with our auditors. Mr. Robbins has had financial reporting experience in the medical, mining exploration, telecommunications and internet based industries. Mr. Robbins’ expertise spans a wide range of corporate and financial issues including stock exchange listings and listings maintenance within Canada and maintaining compliance as a reporting issuer with the Securities and Exchange Commission in the United States. His experience spans public and private financings, pre-IPO venture financings, secondary offerings and prospectus exempt offerings, stock option and share compensation plans.
Mr. Robbins’ responsibilities over the years include corporate, legal, regulatory affairs and compliance issues. As Chief Financial Officer he is also responsible for overseeing the financial reporting for review by the audit committee and liaisons with external auditors. Mr. Robbins is also a director of Gungnir Resources Inc., a publicly listed Toronto Venture Exchange company. Mr. Robbins is qualified to be a director based on his extensive experience in financial reporting for public companies.
Russell Krywolt – Director
Mr. Krywolt was elected to our board on October 25, 2013. Mr. Krywolt has started and operated various businesses in various industries. Mr. Krywolt has been an advisor and board member of private companies. From 2005 onward he has been the owner and President of Photaris Technology Solutions Inc., a company that provides software development, network and systems administration, consulting, and other information technology services to multiple clients. In 2009, Mr. Krywolt founded Raptify Marketing Systems Ltd. to develop and market a social relationship marketing program, and was President and CEO of that company until the intellectual property and technology assets were acquired by us pursuant to an Asset Purchase Agreement. Also, during the past number of years, Mr. Krywolt has served as Director and CTO of IPE Investment Pitch Enterprises Ltd. Mr. Krywolt is qualified to be a director of the Company based on his extensive experience in developing software platforms and operating in the social media industry.
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Justin Sather – Director
Mr. Sather was elected to our board on October 25, 2013. Mr. Sather is an active scout for the New York Rangers Hockey Organization. Mr. Sather’s years as a professional sports agent have given him an extensive background in sales and negotiating. Mr. Sather has a degree in Public Relations and Advertising from Gonzaga University. Mr. Sather is qualified to be a director of the Company based on his extensive experience in business. Mr. Sather resigned as a director on February 5, 2015.
Jay Cowles
A successful financial markets entrepreneur whose integrity has earned him the respect of colleagues and clients, Mr. Cowles brings a wealth of experience managing corporate growth. In his ten years at Globex Foreign Exchange (now Firma FX), he was instrumental in planning and implementing strategies to scale up operations from the startup level to its present 250 employees.
As a regional director, Mr. Cowles personally managed the establishment of various branches around the world. Globex’s annual trading volume now approaches $6 billion, and in 2007 the firm was Ernst & Young’s Entrepreneur of the Year.
Mr. Cowles advises on early stage technology companies both in the private and public sectors most recently with an online payment solution providing flexible, convenient options for clients called Vogogo.com. His combination of building teams, software platforms and funding projects at seed level is an invaluable asset to any company seeking advisement from early stages to thriving ventures. Mr. Cowles was elected to the board on February 2, 2015.
Our directors serve until our next annual stockholders meeting or until their successors are duly elected and qualified. Officers hold their positions at the will of the board of directors.
Family Relationships
None.
Board Independence
We are not required to have any independent members of the Board of Directors. The board of directors has determined that (i) each of Rob Danard, Chris Robbins and Jay Cowles, has a relationship which, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and is not an “independent director” as defined in the Marketplace Rules of The NASDAQ Stock Market and (ii) Russell Krywolt is an independent director as defined in the Marketplace Rules of The NASDAQ Stock Market.
Meetings and Committees of the Board of Directors
During the fiscal year ended December 31, 2014, our board of directors held four meetings and approved certain actions by unanimous written consent. We expect our directors to attend all board and committee meetings and to spend the time needed and meet as frequently as necessary to properly discharge their responsibilities.
Committees
On October 29, 2013 our Board of Directors adopted our audit, nominating and corporate governance, and compensation committee charters.
Audit Committee
Our Audit Committee consists of Chris Robbins and Russell Krywolt, with Mr. Sather elected as Chairman of the Committee. Our Board of Directors has determined that Mr. Krywolt is “independent” as that term is defined under applicable SEC rules and under the current listing standards of the NASDAQ Stock Market. Due to our relatively small size the audit committee currently does not have a financial expert as defined in Sections 406 and 407 of the Sarbanes-Oxley Act of 2002. The audit committee will rely on legal counsel and accounting professionals to help with our ongoing SEC reporting requirements.
Our Audit Committee’s responsibilities include: (i) reviewing the independence, qualifications, services, fees, and performance of the independent auditors, (ii) appointing, replacing and discharging the independent auditor, (iii) pre-approving the professional services provided by the independent auditor, (iv) reviewing the scope of the annual audit and reports and recommendations submitted by the independent auditor, and (v) reviewing our financial reporting and accounting policies, including any significant changes, with management and the independent auditor. The Audit Committee has reviewed and discussed with management the Company’s audited financial statements for the year ended December 31, 2014. Based on the reviews and discussions referred to above, the Audit Committee has recommended to the Board of Directors that the financial statements referred to above be included in this Form 10-K.
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Nominating and Corporate Governance Committee
Our Governance and Nominating Committee consists of Rob Danard and Chris Robbins, with Mr. Robbins elected as Chairman of the Committee. The Board of Directors has determined that none of the members is “independent” under the current listing standards of the NASDAQ Stock Market.
Our Governance and Nominating Committee has responsibility for assisting the Board in, among other things, effecting the organization, membership and function of the Board and its committees. The Governance and Nominating Committee shall identify and evaluate the qualifications of all candidates for nomination for election as directors. In addition, the Governance and Nominating Committee is responsible for developing, recommending and evaluating corporate governance standards and a code of business conduct and ethics.
Compensation Committee
Our Compensation Committee consists of Rob Danard and Chris Robbins, with Mr. Danard elected as Chairman of the Committee. Our Board of Directors has determined that neither of Messrs. Danard or Robbins is “independent” under the current listing standards of the NASDAQ Stock Market. Our Board of Directors has adopted a written charter setting forth the authority and responsibilities of the Compensation Committee.
Our Compensation Committee has responsibility for assisting the Board of Directors in, among other things, evaluating and making recommendations regarding the compensation of our executive officers and directors, assuring that the executive officers are compensated effectively in a manner consistent with our stated compensation strategy, producing an annual report on executive compensation in accordance with the rules and regulations promulgated by the SEC, periodically evaluating the terms and administration of our incentive plans and benefit programs and monitoring of compliance with the legal prohibition on loans to our directors and executive officers.
Involvement in Certain Legal Proceedings
None of our directors or executive officers: (i) has been involved as a general partner or executive officer of any business which has filed a bankruptcy petition; (ii) has been convicted in any criminal proceeding nor is subject to any pending criminal proceeding; (iii) has been subjected to any order, judgment or decree of any court permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and (iv) has been found by a court, the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law.
Code of Ethics
The Company has adopted a formal code of ethics that applies to our directors, officers and employees as at March 1, 2014.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the compensation earned by Executive Officers during the last two fiscal years:
| Name and Principal Position | Year |
Salary ($) |
Bonus ($) |
Stock Awards ($) |
Option Awards ($) |
Non-Equity Incentive Plan Compensation ($) |
Nonqualified Deferred Compensation Earnings ($) |
All Other Compensation ($) |
Total ($) |
| 2014 | 106,038 | Nil | Nil | Nil | Nil | Nil | Nil | 106,038 | |
|
Rob Danard, President and Chief Executive Officer |
2013 | 82,836 | Nil | Nil | 34,936 | Nil | Nil | Nil | 117,772 |
| 2012 | Nil | Nil | Nil | Nil | Nil | Nil | Nil | Nil | |
|
Chris Robbins, Chief Financial Officer, Treasurer and Secretary |
2014 2013 |
17,792 Nil |
Nil Nil |
Nil Nil |
Nil 17,468 |
Nil Nil |
Nil Nil |
Nil Nil |
17,792 17,468 |
| 2012 | Nil | Nil | Nil | Nil | Nil | Nil | Nil | Nil | |
Performance Awards
We do not maintain any plans in respect of the retirement of our directors and executive officers.
Stock Incentive Plan
Pursuant to a Board of Director Meeting, held on October 29, 2013, the Board reviewed and adopted the 2013 Incentive Award Plan (the “Plan”) to award stock options to our directors, officers, employees and consultants. On October 29, 2013 the board approved the allocation of up to 6,300,000 stock options to acquire 6,300,000 common shares. The initial grant, effective October 29, 2013, is for 4,550,000 options set at an exercise price of $0.15 being the then current fair market value. A total of 25% vested on each of April 30, 2014 and October 31, 2014 with a further 25% scheduled to vest on each of April 30, 2015 and October 31, 2015.
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The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer as of December 31, 2014:
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
| OPTION AWARDS | STOCK AWARDS | ||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable |
Equity Incentive Plan Awards: Number of
Securities Underlying Unexercised Unearned Options (#) |
Option Exercise Price ($) |
Option Expiry Date |
Number of Shares or Units of Stock That Have Not
Vested (#) |
Market Value of Shares or Units
of Stock That Have Not Vested ($) |
Equity Incentive Plan Awards: Number of
Unearned Shares, Units or Other Rights That Have
Not Vested (#) |
Equity Incentive Plan Awards: Market or Payout Value
of Unearned Shares, Units or Other Rights That Have Not Vested (#) |
| Rob Danard | - | 2,000,000 | Nil | 0.15 | 10/29/2018 | Nil | Nil | Nil | Nil |
| Chris Robbins | - | 1,000,000 | Nil | 0.15 | 10/29/2018 | Nil | Nil | Nil | Nil |
Compensation of Directors
The table below summarizes all compensation paid to our directors during the year ended December 31, 2014:
| DIRECTOR COMPENSATION | |||||||
| Name |
Fees Earned or Paid in Cash ($) |
Stock Awards ($) |
Option Awards ($) |
Non-Equity Incentive Plan Compensation ($) |
Non-Qualified Deferred Compensation Earnings ($) |
All Other Compensation ($) |
Total ($) |
| Russ Krywolt | Nil | Nil | 3,494 | Nil | Nil | Nil | Nil |
| Justin Sather | Nil | Nil | 6,987 | Nil | Nil | Nil | Nil |
We did not pay our directors, Rob Danard and Chris Robbins, who also act as senior officers, any fees or other compensation for acting as a director during our fiscal year ended December 31, 2014 and 2013.
Our directors are reimbursed for reasonable travel and other out-of-pocket expenses incurred in attending meetings of the board.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of April 15, 2015 by: (i) each person (including any group) known to us to own more than 5% of any class of our voting securities, (ii) each of our directors, (iii) each of our officers and (iv) our officers and directors as a group. Except as otherwise indicated, each shareholder listed possess sole voting and investment power with respect to the shares shown. Except as otherwise noted, each shareholder’s address is care of the Company at 111 Penn Street, El Segundo, CA 90245.
| Name and address |
Amount and nature of beneficial ownership |
Percent of class1 % | ||
|
Rob Danard |
18,500,000 |
26.57 |
||
|
Chris Robbins |
250,000 |
* |
||
|
Russ Krywolt² |
3,000,000 |
4.31 |
||
|
Justin Sather |
842,374 |
1.21 |
||
|
Jay Cowles |
3,000,000 |
4.31 |
||
|
Shareholders of Greater than 5% of Issued and Outstanding Stock |
N/A |
|||
30
* Less than one percent.
(1) Based on 69,616,734 shares of common stock issued and outstanding as of April 15, 2015. Under Rule 13d-3 of the Exchange Act a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights.
(2) Consists of the of 3,000,000 shares owned by Raptify Marketing Systems Ltd. located at 525 Seymour Street, Ste. 735, Vancouver, BC, Canada V6B 3H7, of which Mr. Krywolt is the control person.
Securities Authorized For Issuance under Compensation Plans
The table set forth below present’s information relating to our equity compensation plans as of the date of December 31, 2013:
| Plan Category |
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) |
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) |
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding column (a)) |
| 2013 Incentive Award Plan | 4,550,000 | $0.15 | 1,750,000 |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Party Transactions
During 2014 we paid Rob Danard, our President and Chief Executive Officer, a total of $106,038 (2013 - $82,836) Our Chief Financial Officer was paid $17,792 in 2014 and $Nil in 2013. As at December 31, 2014 there were no employment agreements in place for any of the named executive officers or employees. As at the date of this report the Company paid Rob Danard, our President and Chief Executive Officer, a total of $24,000 in 2015 and $8,620 accrued to Chris Robbins, our Chief Financial Officer in 2014. Jay Cowles who joined our board as a director and Chief Operating Officer on February 2, 2015 is considered a related party and had loaned the company $25,000 in September of 2014; subsequently repaid in January 2015.
Review, Approval and Ratification of Related Party Transactions
Our Board of Directors has responsibility for establishing and maintaining guidelines relating to any related party transactions between us and any of our officers or directors. Any conflict of interest between a director or officer and us must be referred to the non-interested directors, if any, for approval. We intend to adopt written guidelines for the board of directors which will set forth the requirements for review and approval of any related party transactions.
Director Independence
We periodically review the independence of each director. Pursuant to this review, our directors and officers, on an annual basis, are required to complete a detailed questionnaire to determine if there are any transactions or relationships between any of the directors or officers (including immediate family and affiliates) and us. If any transactions or relationships exist, we then consider whether such transactions or relationships are inconsistent with a determination that the director is independent.
Conflicts Relating to Officers and Directors
To date, we do not believe that there are any conflicts of interest involving our officers or directors. With respect to transactions involving real or apparent conflicts of interest, we have adopted policies and procedures which require that: (i) the fact of the relationship or interest giving rise to the potential conflict be disclosed or known to the directors who authorize or approve the transaction prior to such authorization or approval, (ii) the transaction be approved by a majority of our disinterested outside directors, and (iii) the transaction be fair and reasonable to us at the time it is authorized or approved by our directors.
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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following is a summary of the fees billed to us by L.L. Bradford & Company, LLC during 2014 and 2013 for professional services rendered for the fiscal year ended December 31, 2014 and December 31, 2013:
| Fee Category | 2014 Fees |
2013 Fees |
||||
| Audit Fees | $ | $ | ||||
| L.L. Bradford & Company, LLC | 12,792 | 22,500 | ||||
| RBSM LLP | 19,000 | - | ||||
| Tax Fees | - | - | ||||
| All Other Fees | - | - | ||||
| Total Fees | $ | 31,792 | $ | 22,500 |
Audit Related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported under "Audit Fees".
Tax Fees consist of fees billed for professional services for tax compliance, tax advice and tax planning.
All Other Fees consist of fees for products and services other than the services reported above. There were no management consulting services provided in fiscal 2014 or 2013.
Pre-Approval Policies and Procedures
Our Audit Committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit-related services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent auditors and management are required to periodically report to the our Board of Directors regarding the extent of services provided by the independent auditors in accordance with this pre-approval, and the fees for the services performed to date. Our Board of Directors may also pre-approve particular services on a case-by-case basis.
Our Board of Directors has considered whether the provision of non-audit services is compatible with maintaining the principal accountant's independence.
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Documents filed as part of this Report are as follows:
(A) Financial Statements: The financial statements, related notes and report of independent registered public accounting firm are included in Item 8 of Part II of this 2014 Annual Report on Form 10-K.
(B) Exhibits: The required exhibits are included at the end of this Report and are described in the exhibit index.
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EXHIBIT INDEX
| Exhibit No. | Description of Exhibit |
| 2.1 | Asset Purchase Agreement dated October 17, 2012 (1) |
| 3.1 | Articles of Incorporation (2) |
| 3.2 | Certificate of Amendment to Articles of Incorporation (3) |
| 3.3 | Bylaws (2) |
| 10.1 | 2013 Incentive Award Plan* |
| 14 | Code of Ethics* |
| 31.1 | Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a)* |
| 31.2 | Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a)/15d-14(a)* |
| 32.1 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350* |
| 101 .INS | XBRL Instance Document* |
| 101 .SCH | XBRL Taxonomy Extension Schema Document* |
| 101 .CAL | XBRL Taxonomy Calculation Linkbase Document* |
| 101 .DEF | XBRL Taxonomy Extension Definition Linkbase Document* |
| 101 .LAB | XBRL Taxonomy Label Linkbase Document* |
| 101 .PRE | XBRL Taxonomy Presentation Linkbase Document* |
1. Incorporated herein by reference to the
Registration Statement on Form S-1/A filed on February 14, 2013.
2. Incorporated herein by reference to the
Registration Statement on Form S-1 filed on December 24, 2012.
3. Incorporated herein by reference to the
Current Report on Form 8-K filed on October 29, 2013.
* Filed herewith
33
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: April 15, 2015
| Spriza, Inc. By: /s/ Rob Danard Name: Rob Danard Title: Chief Executive Officer (principal executive officer) |
In accordance with the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| Signature | Title | Date |
| /s/ Rob Danard | President, Chief Executive Officer and Director | April 15, 2015 |
| /s/ Chris Robbins | Chief Financial Officer, Treasurer, Secretary and Director | April 15, 2015 |
| /s/ Russ Krywolt | Director | April 15, 2015 |
| /s/ Jay Cowles | Director | April 15, 2015 |
Exhibit 31.1
Certification of the Chief Executive
Officer
Pursuant to §240.13a- 14 or §240. 15d- 14
of the Securities Exchange Act of 1934, as amended
I, Rob Danard, hereby certify that:
(1) I have reviewed this annual report on Form 10-K for the year ended December 31, 2014 (the “report”) of Spriza, 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 registrant as of, and for, the periods presented in this report;
(4) The registrant's other certifying officers 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 registrant 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 registrant, including its 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 accounting principles;
(c) Evaluated the effectiveness of the registrant'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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant'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 registrant's internal control over financial reporting.
| Dated: April 15, 2015 | |
| /s/ Rob Danard Chief Executive Officer (principal executive officer) |
Exhibit 31.2
Certification of the Chief Financial
Officer
Pursuant to §240.13a- 14 or §240. 15d- 14
of the Securities Exchange Act of 1934, as amended
I, Chris Robbins, hereby certify that:
(1) I have reviewed this annual report on Form 10-K for the year ended December 31, 2014 (the “report”) of Spriza, 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 registrant as of, and for, the periods presented in this report;
(4) The registrant's other certifying officers 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 registrant 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 registrant, including its 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 accounting principles;
(c) Evaluated the effectiveness of the registrant'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 registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
(5) The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant'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 registrant's internal control over financial reporting.
| Dated: April 15, 2015 | |
| /s/ Chris Robbins Chief Financial Officer (principal financial and accounting officer) |
Exhibit 32
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), the undersigned officer of Spriza, Inc., a Nevada corporation (the "Company"), does hereby certify, to the best of his knowledge, that:
1.The Annual Report on Form 10-K for the year ending December 31, 2014 (the "Report") of the Company complies in all material respects with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Rob Danard,
Chief Executive Officer
(principal executive officer)
/s/ Chris Robbins,
Chief Financial Officer
(principal accounting officer)
Date: April 15, 2015
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