Item 2.
Management`s Discussion and Analysis of Financial Condition and Results of Operations
This section of this report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
Overview
Vacation Home Swap, Inc. was incorporated in the State of Nevada on March 31, 2009 and has a fiscal year end of April 30.
On April 19, 2013, Vacation Home Swap, Inc., a Nevada corporation (the "Company") entered into a Share Exchange Agreement (the "Exchange Agreement") with Boost My Ads, Inc., a company organized under the laws of the British Virgin Islands ("Boost") and the shareholders of Boost (the "Boost Shareholders"). On June 30, 2013, the Share Exchange Agreement (the
“
Exchange Agreement
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) between Vacation Home Swap, Inc., a Nevada corporation (the
“
Company
”
), Boost My Ads, Inc., a company organized under the laws of the British Virgin Islands (
“
Boost
”
) and the shareholders of Boost (the
“
Boost Shareholders
”
) was terminated pursuant to Section 6.01 (c) of the Exchange Agreement, which stated that the Exchange Agreement shall be terminated without penalty if the voluntary share exchange was not consummated on or before June 30, 2013. There were no material relationships between the Company or its affiliates and Boost or the Boost Shareholders, other than in respect of the Exchange Agreement.
Vacation Home Swap intends to enter into an Internet-based vacation home swapping company. The company plans to have a website where people can exchange homes for their holidays and travels.
As of the fiscal quarter ended July 31, 2013 we had no cash in the bank. We incurred operating expenses in the amount of $20,570 in the three month period ended July 31, 2013 as compared to $4,150 at three month period ended July 31, 2012. Since inception we have incurred operating expenses of $130,550.
The net decrease in cash provided by operating activities during the quarter ended July 31, 2013 was $10,000 compared to none for the quarter ended July 31, 2012.
The cash provided by financing activities during the quarter ended July 31, 2013 was $10,000 compared to none for the quarter ended July 31, 2012.
Plan of Operation
The Company has not yet generated any revenue from its operations. As of the fiscal quarter ended July 31, 2013 we had no cash. We incurred operating expenses in the amount of $20,570 in the quarter ended July 31, 2013. These operating expenses were comprised of professional fees and office and general expenses.
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Our current cash holdings will not satisfy our liquidity requirements and we will require additional financing to pursue our planned business activities. We have registered 368,000,000 of or our common stock for sale to the public. Our registration statement became effective on April 8, 2010 and we are in the process of seeking equity financing to fund our operations over the next 12 months.
Management believes that if subsequent private placements are successful, we will generate sales revenue within the following twelve months thereof. However, additional equity financing may not be available to us on acceptable terms or at all, and thus we could fail to satisfy our future cash requirements.
If Vacation Home Swap is unsuccessful in raising the additional proceeds through a private placement offering it will then have to seek additional funds through debt financing, which would be very difficult for a new development stage company to secure. Therefore, the company is highly dependent upon the success of the anticipated private placement offering described herein and failure thereof would result in Vacation Home Swap having to seek capital from other resources such as debt financing, which may not even be available to the company. However, if such financing were available, because Vacation Home Swap is a development stage company with no operations to date, it would likely have to pay additional costs associated with high risk loans and be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such debt financing and determine whether the business could sustain operations and growth and manage the debt load. If Vacation Home Swap cannot raise additional proceeds via a private placement of its common stock or secure debt financing it would be required to cease business operations. As a result, investors in Vacation Home Swap common stock would lose all of their investment.
Over the 12 month period starting upon completion of the offering under this registration statement, Vacation Home Swap must raise capital and start its sales. The first stage of our operations over this period is to establish our office and acquire the computer and office equipment we need to begin operations during the initial 60 days after raising enough money to start our business. We believe that it will cost $8,000 to buy and secure the necessary computer equipment. We do not intend to hire employees. Our sole officer and director will handle our administrative duties.
The second stage is to hire consultants to develop the key part of the business: create the website. Our Company`s website will include links to maps, weather information, country habits, local services and stores, community information, information about neighbourhood and special events. Concurrently we intend to purchase a software system to comply with our needs, which the client can add home pictures, videos from his home, indicate through a link the local services and stores nearby, and create an internal inbox for messages received/sent. We believe that it will cost $15,000 initially to have our website operational. The initial operation of the website is anticipated to be ready in 120 days after raising enough money to start our business.
The last stage is our Marketing and Sales campaign. We intend to include advertisements in travel and home design magazine and various Internet search engines; and promote and sell ads into our website along famous coffee shops, outlets, restaurants and bars, technology companies and airline companies. We believe that marketing and sales campaign will cost up to $45,000. We expect to be fully operational within 180 days after raising enough money to start our business.
We do not currently have any employees and management does not plan to hire employees at this time. We do not expect the purchase or sale of any significant equipment and has no current material commitments.
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Limited Operating History; Need for Additional Capital
There is no historical financial information about us upon which to base an evaluation of our performance. We are a development stage corporation and have not generated any revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources.
Capital Resources
If Vacation Home Swap is unsuccessful in raising the additional proceeds through a private placement offering it will then have to seek additional funds through debt financing, which would be highly difficult for a new development stage company to secure. Therefore, the company is highly dependent upon the success of the anticipated private placement offering and failure thereof would result in Vacation Home Swap having to seek capital from other sources such as debt financing, which may not even be available to the company. However, if such financing were available, because Vacation Home Swap is a development stage company with no operations to date, it would likely have to pay additional costs associated with high risk loans and be subject to an above market interest rate. At such time these funds are required, management would evaluate the terms of such debt financing and determine whether the business could sustain operations and growth and manage the debt load. If Vacation Home Swap cannot raise additional proceeds via a private placement of its common stock or secure debt financing it would be required to cease business operations. As a result, investors in Vacation Home Swap common stock would lose all of their investment.
Off Balance Sheet Arrangement
The company is dependent upon the sale of its common shares to obtain the funding necessary to carry its business plan. Our President, Donald MacDow has undertaken to provide the Company with operating capital to sustain its business over the next twelve month period, as the expenses are incurred, in the form of a non-secured loan. However, there is no contract in place or written agreement securing these agreements. Investors should be aware that Mr. MacDow expression is neither a contract nor agreement between him and the company.
Other than the above described situation the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Item 4.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
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Based upon an evaluation of the effectiveness of disclosure controls and procedures, our principal executive and financial officer has concluded that as of the end of the period covered by this Quarterly Report on Form 10-Q our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act) were not effective. As reported in our Annual Report on Form 10-K for the year ended April 30, 2012, the Company
’
s principal executive and financial officer has determined that there are material weaknesses in our disclosure controls and procedures.
The material weaknesses in our disclosure control procedures are as follows:
1
.
Lack of formal policies and procedures necessary to adequately review significant accounting transactions.
The Company utilizes a third party independent contractor for the preparation of its financial statements. Although the financial statements and footnotes are reviewed by our management, we do not have a formal policy to review significant accounting transactions and the accounting treatment of such transactions. The third party independent contractor is not involved in the day to day operations of the Company and may not be provided information from management on a timely basis to allow for adequate reporting/consideration of certain transactions.
2
.
Audit Committee and Financial Expert
. The Company does not have a formal audit committee with a financial expert, and thus the Company lacks the board oversight role within the financial reporting process.
We intend to initiate measures to remediate the identified material weaknesses including, but not necessarily limited to, the following:
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Establishing a formal review process of significant accounting transactions that includes participation of the Chief Executive Officer, the Chief Financial Officer and the Company
’
s corporate legal counsel.
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Form an Audit Committee that will establish policies and procedures that will provide the Board of Directors a formal review process that will among other things, assure that management controls and procedures are in place and being maintained consistently.
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Changes in Internal Controls over Financial Reporting
As reported in our Annual Report on Form 10-K for the year ended April 30, 2012, management is aware that there a significant deficiency and a material weakness in our internal control over financial reporting and therefore has concluded that the Company
’
s internal controls over financial reporting were not effective as of April 30, 2012. The significant deficiency relates to a lack of segregation of duties due to the small number of employees involvement with general administrative and financial matters. The material weakness relates to a lack of formal policies and procedures necessary to adequately review significant accounting transactions.
There have not been any changes in the Company's internal control over financial reporting during the quarter ended July 31, 2013 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
”
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