CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements in this Report may be “forward-looking statements,” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which can be identified by the use of terminology such as "estimates," "projects," "plans," "believes," "expects," "anticipates," "intends," or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. However, as the Company intends to issue “penny stock,” as such term is defined in Rule 3a51-1 promulgated under the Exchange Act, the Company is ineligible to rely on these safe harbor provisions. Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on current expectations, estimates and projections about our business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may, and are likely to, differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those described above and those risks discussed from time to time in this Report, including the risks described under “Risk Factors,” “Management’s Discussion and Analysis” and “Our Business.”
There are important factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors, include, without limitation, the following: our ability to develop our technology platform and our products; our ability to protect our intellectual property; the risk that we will not be able to develop our technology platform and products in the current projected timeframe; the risk that our products will not achieve performance standards in clinical trials; the risk that the clinical trial process will take longer than projected; the risk that our products will not receive regulatory approval; the risk that the regulatory review process will take longer than projected; the risk that we will not be unsuccessful in implementing our strategic, operating and personnel initiatives; the risk that we will not be able to commercialize our products; any of which could impact sales, costs and expenses and/or planned strategies. Additional information regarding factors that could cause results to differ can be found in this Report and in our other filings with the Securities and Exchange Commission.
The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments, except as required by the Exchange Act. Unless otherwise provided in this Report, references to the "Company," “Pay Mobile,” the "Registrant," the "Issuer," "we," "us," and "our" refer to Pay Mobile, Inc.
PART I
ITEM 1:
BUSINESS
Introduction
Paymobile is in the business of providing truly integrated payment solutions for consumers and corporate clients by incorporating its proprietary mobile payment technology with the issuance of open-loop prepaid Visa cards.
Many payment platforms in the market today fail to deliver a satisfactory customer experience. Paymobile differs from these online and legacy platforms in that customers enjoy instant access to their funds after receiving social payments, deposits or remittances to their account. Cardholders will be able to make purchases online or anywhere Visa is accepted worldwide in addition to being able to withdraw cash from any ATM.
Paymobile’s primary focus will be on providing end-to-end payment solutions targeting multiple sales verticals including government disbursements, payroll, corporate incentives, gift, and consumer spend, social payments, remittance and more. Open-loop stored-value cards offer significant benefits to consumers and corporations alike and, when integrated with mobile technologies, can become a powerful financial tool.
Paymobile’s mobile technology will allow customers to download a Paymobile app for their Smartphone or use SMS messaging to perform functions such as viewing their account balance and transaction history, sending and receiving fund transfers in real-time and more. Phase two of our mobile solution will be the launch of the Paymobile ‘PayKEY’. PayKEY will simplify online and mobile purchases by linking the cardholder’s mobile phone to their Paymobile open-loop card account which allows for the instant, secure completion of the merchant checkout process.
Paymobile’s integrated money-transfer feature will allow cardholders to transfer funds over their mobile device to another cardholder anywhere in the world in real-time over the Visa Money Transfer platform. Immigrants can send money back home to their families faster, more inexpensively, and more securely than previously possible.
Paymobile also plans to partner with existing retail distribution channels and reload networks to facilitate real-time cash reloads to the customer’s account.
Paymobile generates revenues from the following sources among others:
·
Card sales and activation fees
Reload fees
Private brand and co-brand fees
Program setup fees
Float interest
Interchange
Transaction fees
ATM fees
Monthly card fees
Data mining fees
Money transfer fees
Our marketing plan in year one will focus on supporting the rollout of Paymobile card programs across multiple market segments by leveraging existing relationships.
1
Corporate Development
Reverse Acquisition of Paymobile
Pay Mobile, Inc., (Paymobile or the Company), was incorporated on March 31, 1980, under the laws of the State of California as Expertelligence, Inc. On June 26, 2006, the Company reincorporated in Nevada. On March 24, 2011, the Company amended its Articles of Incorporation to change its name to Pay Mobile, Inc.
On May 15, 2011, we completed a reverse acquisition transaction through a share exchange with whereby we acquired all of the issued and outstanding shares of common stock of Paymobile, Inc. Delaware in exchange for 80,000,000 shares of our common stock, par value $0.0001 per share. Contemporaneous with this transaction, our past President and National Business Investors each agreed to collectively cancel 50,000,000 shares of our common stock. Subsequent to the transactions described herein, the Company had a total of 126,214,138 shares of common stock issued and outstanding and Paymobile's former shareholders became the majority shareholders of the Company, holding shares which constituted approximately 63.4% of the then issued and outstanding shares. As a result of the reverse acquisition, Paymobile, Inc. became our wholly owned subsidiary and its stockholders became our controlling stockholders. The share exchange transaction with Paymobile was treated as a reverse acquisition, with Paymobile as the accounting acquirer and the Company as the legal survivor. Unless the context suggests otherwise, when we refer in this report to business and financial information for periods prior to the consummation of the reverse acquisition, we are referring to the business and financial information of Paymobile.
Also upon the closing of the reverse acquisition of Paymobile, the board of directors increased its size from one (1) to two (2) members and Mr. Gino Porco and Mr. Peter Strang were appointed to fill the vacancies created by the resignation of Mr. Terreforte and such increase. In addition, the board of directors appointed Mr. Porco to serve as our President, Chief Executive Officer and as our Chief Financial Officer.
As a result of our acquisition of Paymobile, Paymobile Inc. became our wholly owned subsidiary and we have assumed the business and operations of Paymobile.
Current Status of our Business
As of the date of this Report, the Company has signed contracts with two customers for the deployment of prepaid VISA cards. The Company has also been named as a Program Manager with an affiliated company to issue reloadable cards for a municipal city.
During the next twelve months, we intend to focus our efforts on launching our existing customers and acquiring new customers. We will have to concentrate further efforts on raising capital to support our new deployment as well and development plans. We expect the sales cycle with customer to take approximately six months, covering the period from initiation of our sales solicitation through technical demonstrations, testing, negotiations and closing of contracts to successful launch of Cards. We will continue our sales and marketing program.
Industry Overview
The open-loop prepaid Card business is well defined in the United States with many participants. In Canada, there are only a few players as a result of the larger financial institutions and their lack of willingness to support smaller players in the market.
Operational Overview
We currently have a relationship with a Credit Union to be our card issuer. Our Affiliated Company, SelectCore Ltd. provides the back office and systems for reporting our card activity. We have developed our mobile messaging component for reporting to the individual card holder. We expect to begin migrating all back office processes to our own location and management in 2012.
Competition
There are a number of payment solutions that are similar in nature that represent a competitive challenge including but not limited to OboPay, PayPal, Green Dot, Netspend. Most open loop card programs allow consumers to make payments at the point of sale and online. Although many of the companies we will compete against have significantly greater resources, financial and otherwise, we believe that the market for mobile integrated payment solutions is still at its infancy and large enough to successfully support many competitive offerings.
2
Employees
At December 31, 2011 the Company did not have any employees. The Company has eight full-time consultants who are dedicated to the primary functions of proprietary technology, sales and marketing and corporate administration. These include our Chief Executive Officer and CFO, our VP and Manager of Sales, our Controller, our Project Managers and our Creative Director.
We anticipate hiring full time employees in 2012 and expect to hire a majority of the existing Consultants under employment contracts in 2012.
We have engaged consultants for accounting, legal, and other part-time and occasional services.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
In addition to this Report, we are also required to file periodic reports and other information with the Securities and Exchange Commission, including quarterly reports and annual reports which include our audited financial statements. You may read and copy any reports, statements or other information we file at the Commission’s public reference facility maintained by the Commission at 100 F Street, N.E., Washington, D.C. 20549, on official business days during the hours of 10:00am to 3:00pm. You can request copies of these documents, upon payment of a duplicating fee, by writing to the Commission. Please call the Commission at 1-800-SEC-0330 for further information on the operation of the public reference room. Our SEC filings are also available to the public through the Commission Internet site at http\\www.sec.gov. These filings may be inspected and copied (at prescribed rates) at the Commission's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549.
You may also request a copy of our filings at no cost, by writing of telephoning us at:
24 Ripley Avenue
Toronto, Ontario, Canada M5S 3N9