UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2022

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______________ to _______________.

 

Commission file number: 000-53316

 

gofba_10qimg1.jpg  

GOFBA, INC.

(Exact name of registrant as specified in its charter)

 

California

 

94-3453342

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer 

Identification No.)

 

 

 

3281 E. Guasti Road, Suite 700

Ontario, CA

 

91761

(Address of principal executive offices)

 

(Zip Code)

 

(909) 212-7662 

Registrant’s telephone number, including area code

_________________________________

(Former address, if changed since last report)

 

__________________________________

(Former fiscal year, if changed since last report)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

None

 

None 

 

None

 

Securities registered pursuant to Section 12(g) of the Act:

 

Common Stock, no par value 

(Title of class)

 

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 ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated Filer

Smaller reporting company

 

 

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒

 

Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:

 

Indicate by check mark whether the registrant filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐     No ☐

 

Applicable only to corporate issuers:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. As of August 15, 2022, there were 51,152,134 shares of common stock, no par value, outstanding.

 

 

 

 

GOFBA, INC. 

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements (Unaudited)

 

F-1

 

 

 

 

 

Condensed Consolidated Balance Sheets

 

 

F-2

 

 

Condensed Consolidated Statements of Operations

 

 

F-3

 

 

Condensed Consolidated Statements of Stockholders' Deficit

 

 

F-4

 

 

Condensed Consolidated Statements of Cash Flows

 

 

F-5

 

 

Notes to Condensed Consolidated Financial Statements

 

 

F-6

 

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

 

3

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

 

14

 

Item 4.

Controls and Procedures

 

 

14

 

 

 

 

 

 

PART II - OTHER INFORMATION

 

 

 

 

 

Item 1.

Legal Proceedings

 

 

17

 

Item 1A.

Risk Factors

 

 

17

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

 

17

 

Item 3.

Defaults Upon Senior Securities

 

 

17

 

Item 4.

Mine Safety Disclosures

 

 

17

 

Item 5.

Other Information

 

 

17

 

Item 6.

Exhibits

 

 

18

 

 

 

 

 

 

 

Signatures

 

 

20

 

 

 

2

Table of Contents

 

ITEM 1. Condensed Consolidated Financial Statements 

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

Condensed Consolidated Balance Sheets of Gofba, Inc. as of June 30, 2022 (unaudited) and December 31, 2021

F-2

 

Condensed Consolidated Statements of Operations of Gofba, Inc. for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)

F-3

 

Condensed Consolidated Statements of Stockholders’ Deficit of Gofba, Inc. for the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)

F-4

 

Condensed Consolidated Statements of Cash Flows of Gofba, Inc. for the Six Months Ended June 30, 2022 and 2021 (Unaudited)

F-5

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

F-6

 

 
F-1

Table of Contents

 

GOFBA, INC.

 

Condensed Consolidated Balance Sheets

As of June 30, 2022 (Unaudited) and December 31, 2021

 

 

 

June 30,

 

 

 December 31,

 

 

 

2022

 

 

2021

 

Assets

 

(000's)

 

 

(000's)

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$7

 

 

$45

 

Prepaid expenses and other current assets

 

 

28

 

 

 

28

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

35

 

 

 

73

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

 

6

 

 

 

17

 

Software development costs, net (Note 3)

 

 

1,092

 

 

 

1,018

 

 

 

 

 

 

 

 

 

 

Total assets

 

$1,133

 

 

$1,108

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Deficit

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$2,103

 

 

$2,108

 

Deposits on common stock subscriptions (Note 4)

 

 

131

 

 

 

131

 

Stockholder payable (Note 5)

 

 

7,685

 

 

 

7,026

 

Note payable (Note 6)

 

 

390

 

 

 

330

 

Note payable - related party (Note 7)

 

 

1,691

 

 

 

1,285

 

Interest payable – related party (Note 7)

 

 

271

 

 

 

236

 

Total current liabilities

 

 

12,271

 

 

 

11,116

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

12,271

 

 

 

11,116

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies (Note 9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ deficit (Note 4)

 

 

 

 

 

 

 

 

Common stock, no par value; 200,000,000 shares authorized; 51,152,134 and  51,143,634 shares outstanding at June 30, 2022 and December 31, 2021, respectively

 

 

16,544

 

 

 

16,501

 

Non-controlling interest

 

 

(2,577)

 

 

(2,560)

Accumulated deficit

 

 

(25,105)

 

 

(23,949)

 

 

 

 

 

 

 

 

 

Total stockholders’ deficit

 

 

(11,138)

 

 

(10,008)

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders’ deficit

 

$1,133

 

 

$1,108

 

 

See accompanying notes to unaudited condensed consolidated financial statements

 

 
F-2

Table of Contents

 

GOFBA, INC.

 

Condensed Consolidated Statements of Operations

For the Three and Six Months Ended June 30, 2022 and 2021 (Unaudited)

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(000's)

 

 

 (000's)

 

 

(000's)

 

 

(000's)

 

 

 

(except share and per share amounts)

 

 

(except share and per share amounts)

 

Revenues

 

$-

 

 

 

-

 

 

$-

 

 

$-

 

Cost of goods sold

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

464

 

 

 

480

 

 

 

928

 

 

 

966

 

Professional fees

 

 

92

 

 

 

89

 

 

 

214

 

 

 

222

 

Depreciation and amortization

 

 

15

 

 

 

23

 

 

 

31

 

 

 

39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total costs and expenses

 

 

571

 

 

 

592

 

 

 

1,173

 

 

 

1,227

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(571)

 

 

(592)

 

 

(1,173)

 

 

(1,227)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

(571)

 

 

(592)

 

 

(1,173)

 

 

(1,227)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to non-controlling interest

 

 

(9)

 

 

(27)

 

 

(17)

 

 

(54)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss attributable to the Company

 

$(562)

 

$(565)

 

$(1,156)

 

$(1,173)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$(0.01)

 

$(0.01)

 

$(0.02)

 

$(0.02)

Diluted

 

$(0.01)

 

$(0.01)

 

$(0.02)

 

$(0.02)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

51,152,134

 

 

 

51,129,240

 

 

 

51,149,088

 

 

 

51,128,772

 

Diluted

 

 

51,152,134

 

 

 

51,129,240

 

 

 

51,149,088

 

 

 

51,128,772

 

 

See accompanying notes to unaudited condensed consolidated financial statements

 

 
F-3

Table of Contents

 

GOFBA, INC.

 

 Condensed Consolidated Statements of Stockholders’ Deficit

For the Three and Six Months Ended June 30, 2022 and 2021

(Unaudited)

 

 

 

 Common Stock

 

 

 Non-controlling

 

 

 Accumulated

 

 

       

 

 

 

 Shares

 

 

 Amount

 

 

 Interest

 

 

 Deficit

 

 

Total 

 

 

 

 

 

(000's)

 

 

(000's)

 

 

(000's)

 

 

(000's)

 

Balance, December 31, 2021

 

 

51,143,634

 

 

$16,501

 

 

$(2,560)

 

$(23,949)

 

$(10,008)

Sales of common stock for cash (Note 4)

 

 

8,500

 

 

$43

 

 

 

 

 

 

 

 

 

 

 

43

 

Net loss

 

 

-

 

 

 

-

 

 

 

(8)

 

 

(594)

 

 

(602)

Balance, March 31, 2022

 

 

51,152,134

 

 

 

16,544

 

 

 

(2,568)

 

 

(24,543)

 

 

(10,567)

Net loss

 

 

-

 

 

 

-

 

 

 

(9)

 

 

(562)

 

 

(571)

Balance, June 30, 2022

 

 

51,152,134

 

 

$16,544

 

 

$(2,577)

 

$(25,105)

 

$(11,138)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2020

 

 

51,128,298

 

 

$16,424

 

 

$(2,457)

 

$(21,677)

 

$(7,710)

Net loss

 

 

-

 

 

 

-

 

 

 

(27)

 

 

(608)

 

 

(635)

Balance, March 31, 2021

 

 

51,128,298

 

 

 

16,424

 

 

 

(2,484)

 

 

(22,285)

 

 

(8,345)

Sales of common stock for cash (Note 4)

 

 

2,936

 

 

 

15

 

 

 

-

 

 

 

-

 

 

 

15

 

Net loss

 

 

-

 

 

 

-

 

 

 

(27)

 

 

(565)

 

 

(592)

Balance, June 30, 2021

 

 

51,131,234

 

 

$16,439

 

 

$(2,511)

 

$(22,850)

 

$(8,922)

 

See accompanying notes to unaudited condensed consolidated financial statements

 

 
F-4

Table of Contents

 

GOFBA, INC.

 

Consolidated Statements of Cash Flows

For the Six Months Ended June 30, 2022 and 2021 (Unaudited)

 

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

 

(000's)

 

 

(000's)

 

Cash flows from operating activities

 

 

 

 

 

 

Net loss

 

$(1,173)

 

$(1,227)

Less: Net loss attributable to non-controlling interest

 

 

(17)

 

 

(54)

Net loss attributable to the Company

 

 

(1,156)

 

 

(1,173)

Adjustments to reconcile net loss to net cash

 

 

 

 

 

 

 

 

used in operating activities:

 

 

 

 

 

 

 

 

Net loss attributable to non-controlling interest

 

 

(17)

 

 

(54)

Non-cash lease expense (Note 8)

 

 

639

 

 

 

639

 

Depreciation and amortization expense

 

 

31

 

 

 

39

 

Changes in:

 

 

 

 

 

 

 

 

Prepaid expenses and other current assets

 

 

-

 

 

 

8

 

Accounts payable and accrued expenses

 

 

(99)

 

 

198

 

Interest payable - note payable

 

 

12

 

 

 

-

 

Interest payable - related party

 

 

35

 

 

 

32

 

Net cash used in operating activities

 

 

(555)

 

 

(311)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

 

Proceeds from sales of common stock

 

 

43

 

 

 

15

 

Proceeds from SBA Loan

 

 

-

 

 

 

88

 

Proceeds from note payable - related party

 

 

406

 

 

 

-

 

Proceeds from note payable

 

 

48

 

 

 

270

 

Net advances (repayments) against stockholder payable

 

 

20

 

 

 

152

 

 

 

 

 

 

 

 

 

 

Net cash provided by financing activities

 

 

517

 

 

 

525

 

Net (decrease) increase in cash and cash equivalents

 

 

(38)

 

 

214

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of the period

 

 

45

 

 

 

36

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$7

 

 

$250

 

 

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

Interest

 

$-

 

 

$-

 

Income taxes

 

$800

 

 

$800

 

 

 

 

 

 

 

 

 

 

Non-cash investing activities:

 

 

 

 

 

 

 

 

Accrual of software developments costs

 

$93

 

 

$125

 

 

See accompanying notes to unaudited condensed consolidated financial statements

 

 
F-5

Table of Contents

 

GOFBA, INC.

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

1. Business and Significant Accounting Policies

 

Business

 

Gofba, Inc. (“Gofba”) was incorporated on November 6, 2008, pursuant to the laws of the State of California. The Company is a unique bundled internet solution, consisting of search, chat, email, and offsite file transfer and storage modules, created to address dangerous, pressing issues not adequately addressed by its competitors. Gofba was established to provide users with a safe haven on the internet.

 

Basis of Presentation

 

The accompanying condensed consolidated financial statements have been prepared on an accrual basis of accounting in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”), as set forth in the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”).

 

 The unaudited condensed consolidated financial statements herein have been prepared by the Company pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The accompanying interim unaudited condensed consolidated financial statements have been prepared under the presumption that users of the interim financial information have either read or have access to the audited consolidated financial statements for the latest fiscal year ended December 31, 2021. Accordingly, note disclosures which would substantially duplicate the disclosures contained in the December 31, 2021 audited consolidated financial statements may have been omitted from these interim unaudited condensed consolidated financial statements.

 

Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2022. For further information, refer to the audited consolidated financial statements and notes for the fiscal year ended December 31, 2021.

 

Principles of Consolidation

 

The accompanying condensed consolidated financial statements include the accounts of Gofba and the accounts of Great Tech, Inc. (“GTI”), an entity wholly-owned by Gofba’s Chairperson, President and majority stockholder. The consolidated entities are referred to herein as the “Company” and intercompany balances and transactions have been eliminated in consolidation.

 

Management determined that GTI is a variable interest entity primarily because it is thinly capitalized and may require additional capital to finance its activities. Management also determined that Gofba is the primary beneficiary of GTI based primarily on common stockholders and the related party nature of GTI’s decision-makers and daily business operators.

 

 
F-6

Table of Contents

 

GOFBA, INC.

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

Management Estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Future Operations, Liquidity, and Capital Resources

 

The Company has not yet commenced its primary revenue-generating operations and has a material working capital deficit and a history of experiencing operating losses. Historically, the Company’s primary sources of liquidity come from sales of subscriptions to purchase shares of the Company’s common stock. During the six months ended June 30, 2022, subject to available cash flows, the Company continued to develop its technologies, its strategy to monetize its intellectual properties and its business plan. Management intends to rely on additional sales of the Company’s common stock, as well as related party relationships, to provide sufficient liquidity to meet the Company’s cash requirements for a period of at least the next twelve months. Given the uncertain nature of management’s plans, combined with the Company’s significant stockholders’ deficit, there is substantial doubt about the Company’s ability to continue as a going concern. The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern; however, there can be no assurance that its operations will become profitable or that sources of financing, including the issuance of debt and/or equity securities, will be available at times and on terms acceptable to the Company, or at all. From January 1, 2022 through June 30, 2022, the Company sold subscriptions to issue 8,500 shares of its common stock to 4 non-affiliated investors in exchange for $42,500 of cash proceeds and received cash proceeds of $454,000 from the issuance of notes payable. All stock sales were made pursuant to the Company’s primary offering in its effective Registration Statement on Form S-1. The Company requires significant amounts of cash to fund its planned development activities and repay its debt, and as such management plans to raise additional funds throughout 2022 to meets its working capital needs.

 

The Company plans to focus on creating new revenue generating activities through various initiatives. Since the Company has not completed development of its technologies and has not established any sources of recurring revenue to cover its operating costs, the Company plans to continue to fund its losses through continued issuance of its common stock and support from its primary stockholder and other related parties.

 

In March 2020, the World Health Organization characterized a novel coronavirus disease (“COVID-19”) as a pandemic. COVID-19 has had a widespread and detrimental effect on the global economy as a result of the continued increase in the number of cases and affected countries and actions by public health and governmental authorities, businesses, other organizations and individuals to address the outbreak, including travel bans and restrictions, quarantines, shelter in place, stay at home or total lock-down orders and business limitations and shutdowns. The ultimate impact of the COVID-19 pandemic on the Company’s business, results of operations, development of the Company’s technologies, and ability to raise capital is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence. Any resulting financial impact cannot be reasonably estimated at this time, but management expects it will continue to have a material impact on the Company’s business, financial condition and results of operations.

 

 
F-7

Table of Contents

 

GOFBA, INC.

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

Cash and Cash Equivalents

 

The Company considers all highly liquid investments with a maturity of three months or less, when acquired, to be cash equivalents. Substantially all of the Company’s cash and cash equivalents are maintained at one financial institution domiciled in the United States. Amounts on deposit with these financial institutions may, from time to time, exceed the federally-insured limit, as well as coverage provided by the Securities Investment Protection Corporation.

 

Property and Equipment

 

Property and equipment is recorded at cost. The Company provides for depreciation over estimated useful lives of between three and six years using the straight-line method. Leasehold improvements are depreciated over the lesser of the estimated useful life or the lease term. Repairs and maintenance expenditures that do not significantly add value to property and equipment, or prolong its life, are charged to expense as incurred. Gains and losses on dispositions of property and equipment are included in the operating results of the related period.

 

Software Development Costs

 

Software development costs are capitalized once the technological feasibility of a product is established. Significant management judgments and estimates are utilized in the assessment of when technological feasibility is established and the evaluation is performed on a product-by-product basis. For products where proven technology exists, this may occur early in the development cycle. When a product is ready for its intended use, capitalized software development costs are amortized over an estimated useful life of four years.

 

 
F-8

Table of Contents

 

GOFBA, INC.

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

Impairment of Long-Lived Assets

 

Management reviews the recoverability of long-lived assets, such as property and equipment and software development costs, whenever events or changes in circumstances occur that indicate the carrying value of the asset or asset group may not be recoverable. The assessment for possible impairment is based on the Company’s ability to recover the carrying value of the asset or asset group from the expected pre-tax cash flows, undiscounted and without interest charges, from the related operations. If the aggregate of the net cash flows is less than the carrying value of such assets, an impairment loss is recognized for the difference between estimated fair value and carrying value. The determination and measurement of impairment of long-lived assets requires management to estimate future cash flows and the fair value of long-lived assets. Management determined that there were no impairment charges to be recognized for the six months ended June 30, 2022 and 2021. There can be no assurance, however, that market conditions and technologies will not change or demand for the Company’s products will materialize, which could result in an impairment of long-lived assets in the future.

 

Income Taxes

 

The Company uses the asset and liability method of accounting for income taxes. Accordingly, deferred income tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. Current income taxes are based on the year’s taxable income for federal and state income tax reporting purposes.

 

The Company’s net deferred tax assets at June 30, 2022 and 2021 consist principally of net operating losses. The Company provided a 100% valuation allowance for the tax effect of these net operating losses, and as a result, no benefit for income taxes has been provided in the accompanying condensed consolidated statements of operations. The Company provided the valuation allowance since management could not determine that it was “more likely than not” that the benefits of the deferred tax assets would be realized.

 

U.S. GAAP prescribes a comprehensive model for how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that it has taken or expects to take on a tax return. A favorable tax position is to be included in the calculation of tax liabilities and expenses if a company concludes that it is more likely than not that its adopted tax position will prevail if challenged by tax authorities. The Company did not recognize any adjustments regarding its tax accounting treatments for the three months ended June 30, 2022 and 2021. As a result of the Company’s net operating losses, all income tax return years remain open to examination by tax authorities.

 

 
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GOFBA, INC.

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

Revenue Recognition

 

The Company recognizes revenue when a customer obtains control of promised services or products. The amount of revenue recognized reflects the consideration that the Company expects to be entitled to receive in exchange for these services/products. To achieve this core principle, management applies the following steps:

 

1. Identification of the contract, or contracts, with the customer

 

The Company determines it has a contract with a customer when the contract is approved, it can identify each party’s rights regarding the services to be transferred, it can identify the payment terms for the services, it has determined the customer has the ability and intent to pay and the contract has commercial substance. At contract inception, the Company evaluates whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation. The Company applies judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, credit and financial information pertaining to the customer.

 

2. Identification of the performance obligations in the contract

 

Performance obligations promised in a contract are identified based on the services and the products that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from the Company, and are distinct in the context of the contract, whereby the transfer of the services and the products is separately identifiable from other promises in the contract.

 

3. Determination of the transaction price

 

The transaction price is determined based on the consideration to which the Company expects to be entitled in exchange for transferring services (or products) to the customer. Variable consideration is included in the transaction price if, in management’s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.

 

4. Allocation of the transaction price to the performance obligation in the contract

 

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price. 

 

 
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GOFBA, INC.

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

5. Recognition of the revenue when, or as, a performance obligation is satisfied

 

Revenue is recognized at the time the related performance obligation is satisfied by transferring the control of the promised service (or product) to a customer. Revenue is recognized as control is transferred to the customer, in an amount that reflects the consideration expected to be received.

 

Revenue is recorded at the net sales price, which is the transaction price, and includes estimates of variable consideration. The amount of variable consideration that is included in the transaction price is constrained to the extent that it is probable that a significant reversal in the amount of the cumulative revenue will not occur when the uncertainty is resolved.

 

Net Loss per Share

 

Basic net loss per share is calculated by dividing net loss by the weighted-average common shares outstanding during the period. Diluted net loss per share is calculated by dividing the net loss by the weighted-average shares and dilutive potential common shares outstanding during the period. When applicable, dilutive potential shares may consist of dilutive shares issuable upon the exercise or vesting of outstanding stock options and warrants computed using the treasury stock method. During a period where a net loss is incurred, dilutive potential shares are excluded from the computation of dilutive net loss per share, as the inclusion is anti-dilutive.

 

Recent Accounting Pronouncements

 

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”) as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards. ASU 2019-12 removes certain exceptions from Topic 740, Income Taxes, including (i) the exception to the incremental approach for intra period tax allocation; (ii) the exception to accounting for basis differences when there are ownership changes in foreign investments; and (iii) the exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses. ASU 2019-12 also simplifies GAAP in several other areas of Topic 740 such as (i) franchise taxes and other taxes partially based on income; (ii) transactions with a government that result in a step up in the tax basis of goodwill; (iii) separate financial statements of entities not subject to tax; and (iv) enacted changes in tax laws in interim periods. ASU 2019-12 is effective for annual reporting periods beginning after December 15, 2021 (and interim periods within fiscal year 2023), and early adoption is permitted. The Company is currently evaluating the impact of adopting ASU 2019-12 on its condensed consolidated financial statements and related disclosures.

 

 
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GOFBA, INC.

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

In February 2016, the FASB issued ASU No. 2016-02, “Leases” (Topic 842) (“ASU 2016-02”). Under ASU 2016-02, an entity will be required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. ASU 2016-02 offers specific accounting guidance for a lessee, a lessor, and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. ASU 2016-02 is effective for the Company for annual reporting periods beginning after December 15, 2021 (and interim periods within fiscal year 2023), and requires a modified retrospective adoption, with early adoption permitted. While management is continuing to assess all potential impacts of the standard, management currently believes the most significant impact relates to the accounting and reporting of operating leases on the consolidated balance sheet and the expectation that the Company’s assets and liabilities will increase significantly.

 

Reclassifications

 

Certain prior year amounts have been reclassified for comparative purposes to conform to the current-year financial statement presentation. These reclassifications had no effect on previously reported results of operations.

 

2. Property and Equipment

 

Property and equipment, net consisted of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

Office furniture, equipment and software

 

$206,000

 

 

$206,000

 

Less accumulated depreciation

 

 

(200,000)

 

 

(189,000)

Property and equipment, net

 

$6,000

 

 

$17,000

 

 

Depreciation expense for the three months ended June 30, 2022 and 2021 was $5,000 and $7,000, respectively. Depreciation expense for the six months ended June 30, 2022 and 2021 was $11,000 and $13,000, respectively.

 

 
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GOFBA, INC.

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

3. Software Development Costs

 

Software development costs, net consisted of the following:

 

 

 

June 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

Capitalized software in-process

 

$982,000

 

 

$888,000

 

Website development

 

 

763,000

 

 

 

763,000

 

Less accumulated amortization

 

 

(653,000)

 

 

(633,000)

Software development costs, net

 

$1,092,000

 

 

$1,018,000

 

 

Amortization expense for the three months ended June 30, 2022 and 2021 was $10,000 and $16,000, respectively. Amortization expense for the six months ended June 30, 2022 and 2021 was $20,000 and $26,000, respectively.

 

4. Stockholders’ Equity (Deficit)

 

Preferred Stock

 

The Company is authorized to issue 20,000,000 shares of preferred stock, no par value. The Company has not issued, nor established any series for, any of its preferred stock. The Company’s preferred stock is “blank check preferred” whereby the Company’s Board of Directors may create a series of preferred stock and set the rights and preferences of such preferred stock, without further stockholder approval. The availability or issuance of preferred shares in the future could delay, defer, discourage or prevent a change in control.

 

Common Stock

 

The Company has authorized 200,000,000 shares of common stock, no par value, and as of June 30, 2022 and December 31, 2021, the shares outstanding were 51,152,134 and 51,143,634 shares, respectively. Of these outstanding shares, 50,041,498 shares were issued as of June 30, 2022 and December 31, 2021.

 

In 2014, the Company agreed to issue 42,634,878 shares of its common stock to the Company’s co-founder, who is also the Company’s Chairperson and President. These shares were promised to this individual as a co-founder upon incorporating the Company in 2008. These shares were issued by the Company in March 2018.

 

In 2014, the Company agreed to issue 1,000,000 shares of its common stock to the Company’s co-founder, who is also the Company’s Chief Executive Officer. These shares were promised to this individual as a co-founder upon incorporating the Company in 2008. These shares were issued by the Company in March 2018.

 

On the date these shares were agreed to be issued, the Company’s business model was still in development, as was a significant portion of its technologies. Further, the Company’s liquidity was extremely limited. As a result, the estimated fair value of these ‘founder shares’ was nominal on the date the Company committed to their issuance.

 

 
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GOFBA, INC.

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

During the first quarter of 2018, the Company’s board of directors voluntarily elected to approve the issuance of shares of common stock to a number of individuals and entities, including directors and officers, that have worked with the Company over the last several years and assisted with the creation and testing of the Company’s various products. The Company was not obligated to issue these shares and the shares were not issued pursuant to any consulting agreement or stock compensation plan. In total, the Company approved the issuance of an aggregate of 1,228,610 shares of its common stock. The awarded shares were fully-vested on the date of grant and the Company recognized a charge to professional fees in the amount of $3,072,000, which was based on the estimated fair value of common stock awarded.

 

During the six months ended June 30, 2022, the Company sold subscriptions to issue 8,500 shares of common stock in exchange for $42,500 of cash proceeds. These sales were made pursuant to the Company’s primary offering in its effective Registration Statement on Form S-1. 

 

Deposits on Common Stock Subscriptions

 

Since inception of the Company, and before the issuance of the Company’s disclosure statement in January 2017 (see below), the Company received gross cash proceeds of approximately $11,000,000 as deposits from investors who have indicated an interest in purchasing shares of the Company’s common stock. The Company has refunded an aggregate of approximately $2,350,000.

 

In a disclosure statement from the Company dated January 9, 2017, each potential investor was asked to ratify their investment decision and thereby acquire shares of the Company’s common stock. The Company also provided each potential investor the option of rescinding its investment interest, in which case the Company would return any deposit they submitted and would not issue them any shares of common stock. As of June 30, 2022 and December 31, 2021, deposits of approximately $8,650,000 have been ratified.

 

In addition, as of June 30, 2022, the Company has not received a response from individuals or entities representing deposits of $131,000. Based on the refundable nature of the Company’s common stock subscriptions, and until each potential investor ratified their investment decision, amounts received by the Company have been presented as liabilities in the accompanying condensed consolidated balance sheets. As of June 30, 2022 and December 31, 2021, deposits on common stock subscriptions were $131,000. During the six months ended June 30, 2022, the Company did not make any payment to return deposits on common stock subscriptions.

 

Warrants and Stock Options

 

There are no warrants or stock options granted, issued or outstanding as of June 30, 2022 and December 31, 2021.

 

 
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GOFBA, INC.

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

5. Stockholder Payable 

 

The Company has primarily relied on the financial and human resources, relationships, funding and expertise of its founding stockholders, who are husband and wife, since inception. As a result, the Company advances and receives funds as the Company’s cash needs dictated and during the six months ended June 30, 2022 and 2021, amounts funded and/or loaned to the Company by its Chairperson, President and majority stockholder were $660,000 and $795,000, respectively, and amounts returned during the same periods were $1,000 and $4,000, respectively. As of June 30, 2022 and December 31, 2021, the stockholder payable balance outstanding was $7,685,000 and $7,026,000, respectively. The stockholder payable does not bear interest, is not collateralized and has no formal repayment terms.

 

6. Notes Payable

 

On June 18, 2021, the Company entered into a promissory note with an investor of the Company. Under the terms of the promissory note, the Company borrowed $270,000 at7% at annual, simple interest and was obligated to pay monthly interest starting July 15, 2021 with the principal balance paid on June 15, 2022. In June 2022, the parties ratified an extension of the maturity date of the note to June 15, 2023. The balance of the promissory note as of June 30, 2022 was $270,000 and interest payable related to the promissory note as of June 30, 2022 was $9,450. For the three and six months ended June 30, 2022, the Company incurred interest expense from the promissory note of $4,725 and $9,450, respectively. There was no such note during the three and six months ending June 30, 2021.

 

On November 18, 2021, the Company entered in another promissory note with the same investor. Under the terms of the promissory note, the Company borrowed $60,000 at 7% at annual, simple interest and was obligated to pay monthly interest starting December 15, 2021 with the principal balance paid on November 18, 2022. The balance of the promissory note as of June 30, 2022 was $60,000 and interest payable related to the promissory note as of June 30, 2022 was $2,100. For the three and six months ended June 30, 2022, the Company incurred interest expense from the promissory note of $1,050 and $2,100, respectively. There was no such note during the three and six months ending June 30, 2021.

 

 
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GOFBA, INC.

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

On February 24, 2022, the Company entered in another promissory note with a different investor and Board of Director of the Company. Under the terms of the promissory note, the Company borrowed $42,000 at 7% at annual, simple interest and was obligated to pay monthly interest starting February 24, 2022 with the principal balance paid on March 15, 2023. The balance of the promissory note as of June 30, 2022 was $42,000 and interest payable related to the promissory note as of June 30, 2022 was $490. For the three and six months ended June 30, 2022, the Company incurred interest expense from the promissory note of $735 and $980, respectively. There was no such note during the three and six months ending June 30, 2021. 

 

On March 31, 2022, the Company entered in another promissory note with the same investor. Under the terms of the promissory note, the Company borrowed $6,000 at 7% at annual, simple interest and was obligated to pay monthly interest starting August 30, 2022 with the principal balance paid on July 30, 2023. The balance of the promissory note as of June 30, 2022 was $6,000 and interest payable related to the promissory note as of June 30, 2022 was $-0-. For the three and six months ended June 30, 2022, the Company incurred interest expense from the promissory note of $-0-. There was no such note during the three and six months ending June 30, 2021.

 

7. Note Payable – Related Party 

 

On May 1, 2018, the Company entered into a promissory note with a trust controlled by the Company’s Chairperson, President and majority stockholder. Under the terms of the promissory note, the Company borrowed $1,285,000 at 5% annual, simple interest and was obligated to repay the principal and interest amounts on January 1, 2022. On March 30, 2022, the parties ratified an extension of the maturity date of the note to January 1, 2023. The promissory note contains standard acceleration provisions upon an event of default and the borrowing is not collateralized. The balance of the promissory note as of June 30, 2022 and December 31, 2021 was $1,285,000, and interest payable related to the promissory note as of June 30, 2022 and December 31, 2021 was $252,000 and $236,000, respectively. For the three months ended June 30, 2022, and 2021 the Company incurred interest expense from the promissory note of $16,000 and $16,000, respectively. For the six months ended June 30, 2022, and 2021 the Company incurred interest expense from the promissory note of $32,000 and $32,000, respectively.

 

On May 6, 2022, the Company entered into another promissory note with the same trust. Under the terms of the promissory note, the Company borrowed $406,200 at 5% annual, simple interest and is obligated to repay the principal and interest amounts on December 1, 2022. The promissory note contains standard acceleration provisions upon an event of default and the note is uncollateralized. The balance of the promissory note as of June 30, 2022 was $406,200, and interest payable related to the promissory note as of June 30, 2022 was $3,385. For the three and six months ended June 30, 2022 the Company incurred interest expense from the promissory note of $3,385. There was no such note during the three and six months ending June 30, 2021.

 

 
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GOFBA, INC.

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

8. SBA Loan

 

In January 2021, the Company entered into a Paycheck Protection Program Term Note (the “Note”) with a lender pursuant to the Paycheck Protection Program of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration (the “SBA”). The Company received total proceeds of $88,000, which management believes were used in accordance with the requirements of the CARES Act. Until the ten-month anniversary of the covered period of the Note (the “Deferment Period”), neither principal nor interest is due and payable. Interest will continue to accrue during the deferment period. After the Deferment Period, the outstanding principal of the Note that is not forgiven will convert to an amortizing term loan at an interest rate of 1% per annum requiring equal monthly payments of principal and interest. The Company is accounting for the Note using the debt model under ASC Topic 470. In August 2021, all amounts due pursuant to the Note, including accrued interest, were forgiven. As a result, the balance due under the Note was $0 as of June 30, 2022 and December 31, 2021.

 

9. Commitments and Contingencies

 

Commitments

 

Since inception, the Company has leased access to computer storage and processing space from a trust controlled by the Company’s Chairperson, President and majority stockholder. Under the terms of the agreement, the Company first became obligated to pay for these services on January 1, 2009, when the monthly payment was $44,000 or $525,000 for the 2009 year. From 2010 to 2014, the service payments were $875,000 annually. From 2015 through 2019, the service payments were $1,050,000 annually. The parties agreed to renew the agreement for 2020 under the same terms, and on June 1, 2020, the Company leased two additional computer servers. As a result, the monthly lease payment was increased by $35,000 annually. For 2021, the parties agreed to renew the agreement under the same terms as the end of 2020. For three months June 30, 2022 and 2021, expenses associated with these services were $271,000 and $271,000, respectively. For six months June 30, 2022 and 2021, expenses associated with these services were $542,000 and $542,000, respectively. The Company’s board of directors has ratified and approved the terms of each annual service agreement. The master agreement expired October 30, 2020 and has since been renewed for an additional five years with a new expiration of October 30, 2025. Amounts owed to the Chairperson, President and majority stockholder for amounts owing under this arrangement are included in stockholder payable (Note 5).

 

In October 2017, the Company entered into an operating lease with a trust controlled by the Company’s Chairperson, President, and majority stockholder for office and internet server space located in Chino Hills, California for monthly rent of $16,000. The agreement expires October 1, 2022. Amounts owed to the Chairperson, President and majority stockholder for amounts owing under this arrangement are included in stockholder payable (Note 5).

 

In August 2015, the Company entered into an operating lease (as amended) for office space in Ontario, California, which expired on October 31, 2021. Currently, the Company leases space at the location on a month-to-month basis. Rent expense for office space for the three months ended June 30, 2022 and 2021 was $500 and $700, respectively.

 

 
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GOFBA, INC.

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

Concentrations

 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and money market funds. Management mitigates such potential risks by maintaining the Company’s cash balances with entities that management believes possess high-credit quality. 

 

Other Contingencies

 

From inception of the Company through January 9, 2017, the date of the disclosure statement described in Note 4, the Company received cash proceeds as deposits from individuals who indicated an interest in purchasing shares of the Company’s stock. At the time of these transactions, management does not believe that the Company offered securities for sale, as defined by the Securities Act of 1933. However, if such transactions were deemed to be an offering of securities, management believes that the Company complied with Section 4(a)(2) of the Securities Act of 1933, including the requirement that each purchaser be an accredited investor (as defined) or a sophisticated investor (as defined). In the event that the Company was deemed to have offered securities for sale and did not comply with Section 4(a)(2) of the Securities Act of 1933, the Company may be required to refund amounts received and/or be subject to penalties from security regulators. The accompanying condensed consolidated financial statements do not include any amounts related to this uncertainty.

 

Periodically, the Company receives services from individuals that the Company classifies as independent contractors. Management believes that such individuals are independent contractors because, among other things, they can choose whether, when, and where to provide services and are free to provide services to others. However, if the Company was required to classify such individuals as employees, it would likely incur significant additional expenses, potentially including expenses associated with the application of wage and hour laws, employee benefits, social security contributions, taxes, and penalties. The accompanying condensed consolidated financial statements do not include any amounts related to this uncertainty.

 

 
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Table of Contents

 

GOFBA, INC.

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

10. Income Taxes

 

As of June 30, 2022, the Company has net deferred income tax assets that are mainly comprised of Federal and state net operating loss carryforwards in the amounts of approximately $11,000,000.

 

Management has established a valuation allowance equal to the entire amount of the Company’s net deferred income tax assets due to the uncertainty that the deferred income tax assets will be realized by the Company’s ability to generate sufficient future taxable income.

 

Utilization of the net operating loss carryforwards may be subject to annual limitations under Sections 382 and 383 of the Internal Revenue Code of 1986 and similar state provisions due to equity ownership changes that have occurred previously or that could occur in future. These ownership changes may limit the amount of net operating loss carryforwards that can be utilized to offset future taxable income and tax.

 

The Company has reviewed its tax positions and has determined that it has no significant uncertain tax positions at June 30, 2022 and December 31, 2021.

 

11. Legal Proceedings

 

In the ordinary course of business, the Company is from time to time, involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon the Company’s condensed consolidated financial condition and/or results of operations. However, matters currently pending or threatened are not expected to have a material adverse effect on the Company’s condensed consolidated financial position or results of operations.

 

12. Related Party Transactions

 

On May 6, 2022, February 24, 2022, November 18, 2021, and June 18, 2021, the Company entered into promissory notes with investors and a Board of Director of the Company. See Note 6 above for further discussion.

 

The Company has primarily relied on the financial and human resources, relationships, funding and expertise of its founding stockholders, who are husband and wife, since inception. See Note 5 above for further discussion.

 

On May 1, 2018, the Company entered into a promissory note with a trust controlled by the Company’s Chairperson, President and majority stockholder. See Note 7 above for further discussion.

 

 
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GOFBA, INC.

 

Notes to Condensed Consolidated Financial Statements (unaudited)

 

Since inception, the Company has leased access to computer storage and processing space, as well as office space, from a trust controlled by the Company’s Chairperson, President and majority stockholder. See Note 9 above for further discussion.

 

On May 14, 2018, the Company entered into employment agreements with Anna Chin and William DeLisi to serve as the Company’s President and Chief Executive Officer, respectively, under which the Company agreed to compensate Ms. Chin and Mr. DeLisi each at the annual salary of $121,000, beginning January 1, 2018 and terminating on December 31, 2023, with the possibility of extending the term for one additional year. In the event the Company is not able to pay Ms. Chin and/or Mr. DeLisi cash compensation for their salaries, the Company may issue shares of its common stock, valued at $5.00 per share, in lieu of such cash compensation. Any such shares are to be issued at the end of each calendar quarter for any cash compensation they did not receive. Ms. Chin and Mr. DeLisi are also entitled to standard executive employee health and life insurance benefits and certain severance payments in the event of termination. As of June 30, 2022 and December 31, 2021, amounts owed to these officers totaled $790,000 and $805,000, respectively, and such amounts are included in accounts payable and accrued expenses.

 

 
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

 

Disclaimer Regarding Forward Looking Statements

 

Our Management’s Discussion and Analysis or Plan of Operation contains not only statements that are historical facts, but also statements that are forward-looking. Forward-looking statements are, by their very nature, uncertain and risky. These risks and uncertainties include international, national and local general economic and market conditions; the COVID-19 global pandemic; demographic changes; our ability to sustain, manage, or forecast growth; our ability to successfully make and integrate acquisitions; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other risks that might be detailed from time to time in our filings with the Securities and Exchange Commission.

 

Although the forward-looking statements in this Quarterly Report reflect the good faith judgment of our management, such statements can only be based on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report and in our other reports as we attempt to advise interested parties of the risks and factors that may affect our business, financial condition, and results of operations and prospects.

 

Overview

 

We are a unique bundled internet solution, consisting of search, chat, email, and offsite file transfer and storage modules, created to address dangerous, pressing issues not adequately addressed by our competitors. Gofba was established to address the current dangers that threaten the everyday internet user. We see two primary threats. The first is unrestricted, free access to inappropriate material. We have developed proprietary search algorithms which eliminate or make scarce inappropriate material from search results. The second is security. To address this, we have developed proprietary security algorithms which provide an enhanced level of protection for users. We believe we are the online solution to these problems; providing users with a safe haven on the internet.

 

Corporate Overview

 

We were incorporated in the State of California as Gofba, Inc. on November 6, 2008.

 

Our offices are located at 3281 E. Guasti Road, Suite 700, Ontario, CA 91761, telephone number (909) 212-7662.

 

This discussion and analysis should be read in conjunction with our condensed consolidated financial statements included as part of this report.

 

 
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Critical Accounting Policies

 

Revenue

 

We recognize revenue when a customer obtains control of promised services or products. The amount of revenue recognized reflects the consideration that we expect to be entitled to receive in exchange for these services/products. To achieve this core principle, management applies the following steps:

 

1. Identification of the contract, or contracts, with the customer

 

We determine that we have a contract with a customer when the contract is approved, it can identify each party’s rights regarding the services to be transferred, it can identify the payment terms for the services, it has determined the customer has the ability and intent to pay and the contract has commercial substance. At contract inception, we evaluate whether two or more contracts should be combined and accounted for as a single contract and whether the combined or single contract includes more than one performance obligation. We apply judgment in determining the customer’s ability and intent to pay, which is based on a variety of factors, including the customer’s historical payment experience or, in the case of a new customer, credit and financial information pertaining to the customer.

 

2. Identification of the performance obligations in the contract

 

Performance obligations promised in a contract are identified based on the services and the products that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the service either on its own or together with other resources that are readily available from third parties or from us, and are distinct in the context of the contract, whereby the transfer of the services and the products is separately identifiable from other promises in the contract.

 

3. Determination of the transaction price

 

The transaction price is determined based on the consideration to which we expect to be entitled in exchange for transferring services (or products) to the customer. Variable consideration is included in the transaction price if, in management s judgment, it is probable that a significant future reversal of cumulative revenue under the contract will not occur.

 

 
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4. Allocation of the transaction price to the performance obligation in the contract

 

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price.

 

5. Recognition of the revenue when, or as, a performance obligation is satisfied

 

Revenue is recognized at the time the related performance obligation is satisfied by transferring the control of the promised service (or product) to a customer. Revenue is recognized as control is transferred to the customer, in an amount that reflects the consideration expected to be received.

 

 Revenue is recorded at the net sales price, which is the transaction price, and includes estimates of variable consideration. The amount of variable consideration that is included in the transaction price is constrained to the extent that it is probable that a significant reversal in the amount of the cumulative revenue will not occur when the uncertainty is resolved.

 

Software Development Costs

 

Software development costs are capitalized once the technological feasibility of a product is established. Significant management judgments and estimates are utilized in the assessment of when technological feasibility is established and the evaluation is performed on a product-by-product basis. For products where proven technology exists, this may occur early in the development cycle. When a product is ready for its intended use, capitalized software development costs are amortized over an estimated useful life of four years.

 

Critical Accounting Estimates

 

The preparation of financial statements in conformity with GAAP requires estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent liabilities in the condensed consolidated financial statements and accompanying notes.  These judgments and estimates are based on past events and expectations of future outcomes. Actual results may differ from our estimates.

 

We continually review our accounting policies, how they are applied and how they are reported and disclosed in our financial statements. We have reviewed our critical accounting estimates with the audit and compliance committee of our Board of Directors.

 

See Note 1 of the Notes to the Condensed Consolidated Financial Statements included in  Part 1, Item 1 of this Form 10-Q for a summary of significant accounting policies and the effect on our financial statements.

 

Following is a summary of our critical accounting estimates and how they are applied in preparation of the financial statements.

 

 
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Website development in progress

 

We capitalize the software development costs once the technological feasibility of a product is established. Significant management judgments and estimates are utilized in the assessment of when technological feasibility is established and the evaluation is performed on a product-by-product basis. The technological feasibility of product is established when we have completed all planning, designing, coding, and testing activities that are necessary to establish that the product can be produced to meet its design specifications including functions, features, and technical performance requirements. The amount of software development costs to be capitalized is allocated based on the time and cost of our employees and service providers spend creating and developing the product.

 

On May 6, 2022, February 24, 2022, November 18, 2021, and June 18, 2021, we entered into promissory notes with investors and a Board of Director of the Company. See Note 6 to the accompanying condensed consolidated financial statements included in this report for further discussion.

 

Principles of Consolidation

 

Our condensed consolidated financial statements include the accounts of Gofba and the accounts of Great Tech, Inc. (GTI), an entity wholly-owned by Gofba’s Chairperson, President and majority stockholder. The consolidated entities are referred to herein as the “Company” and intercompany balances and transactions have been eliminated in consolidation.

 

Management determined that GTI is a variable interest entity primarily because it is thinly capitalized and may require additional capital to finance its activities. Management also determined that Gofba is the primary beneficiary of GTI based primarily on common stockholders and the related party nature of GTI’s decision-makers and daily business operators.

 

Recent Accounting Pronouncements

 

Recent accounting pronouncements are disclosed in Note 1 to our condensed consolidated financial statements.

 

Results of Operations

 

We have no significant revenue-generating operations, a material working capital deficit and a history of experiencing operating losses. Historically, our primary sources of liquidity have come from deposits on common stock subscriptions and operating expenses paid on our behalf by our Chairperson, President and majority stockholder. During 2021, and the year-to-date period in 2022, we continued to develop our technologies, our strategy to monetize our intellectual properties and our business plan. Our management intends to rely on additional sales of our common stock, as well as loans and/or payments from our Chairperson, President and majority stockholder, to provide sufficient liquidity to meet our cash requirements for a period of at least the next twelve months. Given the uncertain nature of our plans, and our reliance on related parties, there is substantial doubt about our ability to continue as a going concern. The accompanying condensed consolidated financial statements have been prepared assuming that we will continue as a going concern; however, there can be no assurance that our operations will generate substantial revenue or become profitable or that sources of financing, including the issuance of debt and/or equity securities, and continued borrowings from related parties, will be available at times and on terms acceptable to us, or at all. During the six months ended June 30, 2022, we issued promissory notes for $454,000 cash proceeds, and sold subscriptions to issue 8,500 shares of common stock in exchange for $42,500 of cash proceeds. As of the date of this report, we continue to seek equity financing which we expect to be sold pursuant to our primary offering in our effective Registration Statement on Form S-1.

 

 
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We plan to focus on creating new revenue generating activities through various initiatives. Since we have not established any recurring sources of revenue to cover our operating costs, we plan to continue to fund our losses through continued issuance of our common stock and receiving financial support from related parties, including our Chairperson, President and majority stockholder.

 

During the six months ended June 30, 2022, we continued efforts in launching our Five Star Business Listing services and GOFBA News modules. During the six months ended June 30, 2022, there were no revenues generated from these two new modules. We expect these new modules to grow and increase in user activity but we cannot reasonably estimate the financial impact at this time on our business.

 

In March 2020, the World Health Organization characterized a novel coronavirus disease (“COVID-19”) as a pandemic. COVID-19 has had a widespread and detrimental effect on the global economy as a result of the continued increase in the number of cases and affected countries and actions by public health and governmental authorities, businesses, other organizations and individuals to address the outbreak, including travel bans and restrictions, quarantines, shelter in place, stay at home or total lock-down orders and business limitations and shutdowns. The COVID-19 pandemic had a negative impact on our business, results of operations, and development of our technologies by causing increased difficulties in our efforts to raise equity capital. We have relied on third party loans and cash advances from related parties. We expect the pandemic to have a negative impact through 2022. Any resulting financial impact cannot be reasonably estimated at this time, but we expect it will continue to have a material impact on our business, financial condition and results of operations.

 

 
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Summary of Results of Operations

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

(000's)

 

 

(000's)

 

 

(000's)

 

 

(000's)

 

Revenues

 

$-

 

 

$-

 

 

$-

 

 

$-

 

Cost of goods sold

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Gross profit (loss)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

464

 

 

 

480

 

 

$928

 

 

$966

 

Professional fees

 

 

92

 

 

 

89

 

 

 

214

 

 

 

222

 

Depreciation and amortization

 

 

15

 

 

 

23

 

 

 

31

 

 

 

39

 

Total operating expenses

 

 

571

 

 

 

592

 

 

 

1,173

 

 

 

1,227

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net operating loss

 

 

(571)

 

 

(592)

 

$(1,173)

 

$(1,227)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

$(571)

 

$(592)

 

$(1,173)

 

$(1,227)

 

Three Months ended June 30, 2022 compared to Three Months ended June 30, 2021

 

Revenue and Gross Profit

 

We generated no revenue during the three months ended June 30, 2022 and 2021. We do not expect to generate significant future revenues from sales of customer hardware products.

 

Net Loss

 

Our net loss decreased by $21,000 to $571,000 during the three months ended June 30, 2022 from $592,000 during the same period last year. The decrease in the net loss compared to the prior year is a result of a decline in general and administrative expenses of $16,000 and in depreciation and amortization of $8,000.

 

For the three months ended June 30, 2022, our most significant expense is included in general and administrative expense and represents over $300,000 of services related to our use of a related party’s office space, server towers, super computers and virtual servers. The counterparty to this agreement is a trust controlled by our Chairperson, President and majority stockholder. The annual agreement stipulating the equipment utilized and the monthly fee is ratified and approved by our board of directors.

 

General and Administrative Expenses

 

General and administrative expenses decreased by $16,000, to $464,000 for the three months ended June 30, 2022 from $480,000 during the same period last year. During the quarter ended June 30, 2022, the most significant expenses related to our use of a related party’s server towers, office space, super computers and virtual servers from a trust controlled by our Chairperson, President and majority stockholder in the amount of $319,000, software and application maintenance expenses of approximately $86,000, and executive compensation of approximately $14,000 (as an additional $56,000 was capitalized as software development costs). The salary expense results from executive agreements, further discussed below and in the notes to our 2021 condensed consolidated financial statements.

 

 
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Professional Fees

 

Our professional fees increased by $3,000, to $92,000 during the three months ended June 30, 2022 from $89,000 during the same period in 2021. Professional fees incurred during the three months ended June 30, 2022, related principally to our outsourced staffing fees of approximately $57,000 and legal, accounting and public company related expenses of approximately $35,000 associated with us preparing our first quarter Form 10-Q and a post-effective amendment to our Registration Statement on Form S-1, which were filed during the second quarter of 2022 with the Securities and Exchange Commission. We expect professional fees to fluctuate with the needs of our business and overall strategy to implement our business plan. In the event we undertake a significant transaction, such as an acquisition, securities offering, or file a registration statement, we would expect these fees to substantially increase during that period.

 

Depreciation and Amortization Expenses

 

Our depreciation and amortization expenses decreased by $8,000 to $15,000 from $23,000 during the three months ended June 30, 2022, as compared to the same period last year. 

 

Six Months ended June 30, 2022 compared to Six Months ended June 30, 2021

 

Revenue and Gross Profit

 

We generated no revenue during the six months ended June 30, 2022 and 2021. We do not expect to generate significant future revenues from sales of customer hardware products.

 

Net Loss

 

Our net loss decreased by $54,000 to $1,173,000 during the six months ended June 30, 2022 from $1,227,000 during the same period last year. The decrease in the net loss compared to the prior year is a result of a decline in general and administrative expenses of $38,000, in professional fees of $8,000, and in depreciation and amortization of $8,000.

 

For the six months ended June 30, 2022, our most significant expense is included in general and administrative expense and represents over $600,000 of services related to our use of a related party’s office space, server towers, super computers and virtual servers. The counterparty to this agreement is a trust controlled by our Chairperson, President and majority stockholder. The annual agreement stipulating the equipment utilized and the monthly fee is ratified and approved by our board of directors.

 

 
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General and Administrative Expenses

 

General and administrative expenses decreased by $38,000, to $928,000 for the six months ended June 30, 2022 from $966,000 during the same period last year. During the six months ended June 30, 2022, the most significant expenses related to our use of a related party’s server towers, office space, super computers and virtual servers from a trust controlled by our Chairperson, President and majority stockholder in the amount of $639,000, software and application maintenance expenses of approximately $149,000, and executive compensation of approximately $28,000 (as an additional $112,000 was capitalized as software development costs). The salary expense results from executive agreements, further discussed below and in the notes to our 2021 condensed consolidated financial statements.

 

Professional Fees

 

Our professional fees decreased by $8,000, to $214,000 during the six months ended June 30, 2022 from $222,000 during the same period in 2021. Professional fees incurred during the six months ended June 30, 2022, related principally to our outsourced staffing fees of approximately $118,000 and legal, accounting and public company related expenses of approximately $96,000 associated with us preparing our 2021 Annual Report on Form 10-K and first quarter Form 10-Q and a post-effective amendment to our Registration Statement on Form S-1. We expect professional fees to fluctuate with the needs of our business and overall strategy to implement our business plan. In the event we undertake a significant transaction, such as an acquisition, securities offering, or file a registration statement, we would expect these fees to substantially increase during that period.

 

Depreciation and Amortization Expenses

 

Our depreciation and amortization expenses decreased by $8,000 to $31,000 from $39,000 during the six months ended June 30, 2022, as compared to the same period last year. 

 

Liquidity and Capital Resources

 

We are still developing our technology platforms and technologies and are incurring operating losses. As a result, we have no recurring revenue streams and we have never generated positive operating cash flows. Our cash on hand as of June 30, 2022 was $7,000 and our monthly cash flow burn rate was approximately $40,000. To assist with our cash requirements, in February 2022, we obtained $454,000 of cash proceeds from the issuance of promissory notes payable to existing investors and Board of Director. We need to continue raising funds through debt or equity financings for the remainder of 2022 to meet our current monthly cash requirements of approximately $40,000. In addition, we have incurred a significant amount of debt, $1.5 million including accrued interest, which is due January 1, 2023. Since inception, our liquidity has been tight and we have significant short-term cash needs. Historically, these needs were satisfied through proceeds from deposits received for the sales of our common stock and loan and/or payments made on our behalf by our Chairperson, President and majority stockholder. We currently do not believe we will be able to satisfy our cash needs from our revenues for at least several years to come.

 

 
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During the six months ended June 30, 2022, we continued to develop our platform and technologies, strategy to monetize our intellectual properties and our business plan. We intend to rely on additional sales of the our common stock, as well as related party relationships and resources, to provide sufficient liquidity to meet our cash requirements for a period of at least the next twelve months. Given the uncertain nature of these plans, there is substantial doubt about our ability to continue as a going concern. There can be no assurance that our operations will become profitable or that sources of financing, including the issuance of debt and/or equity securities, and borrowings from related parties, will be available at times and on terms acceptable to us, or at all. During the six months ended June 30, 2022, we sold 8,500 shares of stock subscriptions for cash proceeds of $42,500 and made no payments to return deposits on common stock subscriptions.

 

We plan to focus on creating revenue generating activities through various initiatives. Since we have not established any sources of recurring revenue to cover our operating costs, we plan to continue to fund our losses through continued issuance of our common stock and support from our majority stockholder and other related parties.

 

In order to repay our obligations in full, or in part, when due, we will be required to raise significant capital from other sources. There is no assurance, however, that we will be successful in these efforts.

 

As stated earlier in this report, the impact of the COVID-19 pandemic is highly uncertain and cannot be predicted with confidence; however, management expects it to negatively impact the development of the Company’s technologies and its ability to raise capital.

 

Cash Requirements

 

We had cash balances of $7,000 and $45,000 as of June 30, 2022 and December 31, 2021, respectively. Based on limited revenues, current cash balances and current expected monthly cash burn rate of approximately $40,000, we will need financial support from related parties and will need to raise money from the issuance of equity and/or debt securities, to fund operations. Further, we have a $1,285,000 note payable that is contractually due on January 1, 2023 (as amended), along with accrued interest of $252,000. During the three months ended June 30, 2022, we continued to seek out additional debt and/or equity financing and in April 2022, we obtained a $6,000 promissory note and in May 2022, we obtained another promissory note of $402,000. We may not be successful in obtaining the continued financial support of related parties and unrelated parties, borrowing additional funds or raising money from the issuance of our securities.

 

Sources and Uses of Cash

 

Operating

 

We used cash for operating activities of $555,000 during the six months ended June 30, 2022, as compared to $311,000 for the same period in 2021. The most significant factor in our operating cash used is our net loss, adjusted for non-cash expenses. In the first quarter of 2022, the net cash used in operating activities consisted primarily of our net loss of $1,157,000, offset by non-cash lease expenses of $639,000. In six months ended June 30, 2021, the net cash used in operating activities consisted primarily of our net loss of $1,173,000, which was offset by non-cash lease expenses of $639,000. We expect to continue to use significant cash amounts in our operating activities.

 

 
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Investing

 

We did not use any cash in investing activities during the six months ended June 30, 2022 and 2021. We expect to use cash in investing activities in future periods, the extent of which is dependent on the availability of cash and business needs.

 

Financing

 

Net cash provided by financing activities for the six months ended June 30, 2022 was $517,000, compared to $525,000 for the same period in 2021. During the six months ended June 30, 2022, cash proceeds from the sale of common stock subscriptions were $42,500, and net advances from stockholder payable were $20,000. We also received $454,000 from promissory notes issued to existing investors and member of Board of Directors. During the same period last year, financing activities consisted of cash proceeds from sales of common stock of $15,000, promissory note from existing investors of $270,000 and advances from stockholder payable of $152,000. Additionally, during the same period last year, we received $88,000 from a Small Business Administration loan obtained under the CARES Act.

 

Contractual Obligations

 

As a smaller reporting company, we are not required to provide this information.

 

Off Balance Sheet Arrangements

 

We have no off balance sheet arrangements.

 

Related Party Transactions 

 

On May 14, 2018, we entered into employment agreements with Anna Chin and William DeLisi to serve as our President and Chief Executive Officer, respectively, under which we agreed to compensate Ms. Chin and Mr. DeLisi each at the annual salary of $121,000, beginning January 1, 2018 and terminating on December 31, 2023, with the possibility of extending the term for one additional year. In the event we are not able to pay Ms. Chin and/or Mr. DeLisi cash compensation for their salaries, we may issue shares of our common stock, valued at $5.00 per share, in lieu of such cash compensation. Ms. Chin and Mr. DeLisi are also entitled to standard executive employee health and life insurance benefits and certain severance payments in the event of termination. As of June 30, 2022 and December 31, 2021, $790,000 and 805,000 are due to these officers.

 

 
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Since our inception, we have leased access to server towers, super computers and virtual servers from a trust controlled by our Chairperson, President and majority stockholder. Under the terms of the agreement, we first became obligated to pay for these services on January 1, 2009, when the monthly payment was $44,000 or $525,000 for the 2009 year. From 2010 to 2014, the service payments were $875,000 annually. From 2015 through 2019, the service payments were $1,050,000 annually. The parties agreed to renew the agreement for 2020 under the same terms. On June 1, 2020, we leased two additional computer servers. As a result, the monthly lease payment was increased by $35,000 annually. For 2021, the parties agreed to renew the agreement under the same terms as the end of 2020. For the three months ended June 30, 2022 and 2021, expenses associated with these services were $271,000 and $271,000, respectively. For the six months ended June 30, 2022 and 2021, expenses associated with these services were $542,000 and $542,000, respectively. Our board of directors has ratified and approved the terms of each annual service agreement. The agreement expired on October 30, 2020 and was renewed through October 30, 2025. Amounts owed to the Chairperson, President and majority stockholder for amounts owing under this arrangement are included in stockholder payable.

 

In October 2017, we entered into an operating lease with a trust controlled by our Chairperson, President, and majority stockholder for office and internet server space for monthly rent of $16,000. The agreement expires October 1, 2023. Amounts owed to the Chairperson, President and majority stockholder under this arrangement are included in stockholder payable.

 

We have primarily relied on the financial and human resources, relationships, funding and expertise of our founding stockholders, who are husband and wife, since inception. As a result, we advance and receive funds as our cash needs dictate and during the six months ended June 30, 2022 and 2021, amounts funded to us by our Chairperson, President and majority stockholder were $660,000 and $402,000, respectively, and amounts returned during the same periods were $1,000 and $4,000, respectively. As of June 30, 2022 and December 31, 2021, the stockholder payable balance outstanding was $7,685,000 and $7,026,000, respectively. The stockholder payable does not bear interest, is not collateralized and has no formal repayment terms.

 

On May 6, 2022, February 24, 2022, November 18, 2021, and June 18, 2021, we entered into promissory notes with investors and a Board of Director of the Company. See Note 6 to the accompanying condensed consolidated financial statements included in this report for further discussion.

 

 
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ITEM 3 Quantitative and Qualitative Disclosures About Market Risk

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

ITEM 4 Controls and Procedures

 

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer (our Principal Accounting Officer), of the effectiveness of our disclosure controls and procedures (as defined) in Exchange Act Rules 13a – 15(c) and 15d – 15(e)). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer, who are our principal executive officer and principal financial officer, respectively, concluded that, as of June 30, 2022, our disclosure controls and procedures were not effective (1) to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (2) to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to us, including our chief executive and chief financial officers, as appropriate to allow timely decisions regarding required disclosure.

 

Our Chief Executive Officer and Chief Financial Officer (our Principal Accounting Officer) do not expect that our disclosure controls or internal controls will prevent all error and all fraud. No matter how well conceived and operated, our disclosure controls and procedures can provide only a reasonable level of assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented if there exists in an individual a desire to do so. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

 

 
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Furthermore, smaller reporting companies face additional limitations. Smaller reporting companies employ fewer individuals and find it difficult to properly segregate duties. Often, one or two individuals control every aspect of the company’s operation and are in a position to override any system of internal control. Additionally, smaller reporting companies tend to utilize general accounting software packages that lack a rigorous set of software controls.

 

Our disclosure controls and procedures are not effective because of material weaknesses in internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2021. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on this assessment, management has identified the following material weaknesses that have caused management to conclude that, as of December 31, 2021, our disclosure controls and procedures, and our internal control over financial reporting, were not effective at the reasonable assurance level:

 

1. We do not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature, segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible, the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals. Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

 

2. We have not documented our internal controls. We have limited policies and procedures that cover the recording and reporting of financial transactions and accounting provisions. As a result, we may be delayed in our ability to calculate certain accounting provisions. While we believe these provisions are accounted for correctly in the attached financial statements, our lack of internal controls could lead to a delay in our reporting obligations. Management evaluated the impact of our failure to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

 

3. Our corporate governance and U.S. GAAP and SEC accounting resources were not commensurate with those required of a public company. Although we are working to increase our accounting resources as our budget allows, we do not have all resources in place, which could lead to a delay in our reporting obligations.

 

 
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To address these material weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented. Accordingly, we believe that the condensed consolidated financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

 

Remediation of Material Weaknesses

 

In order to remediate the material weakness in our documentation, evaluation and testing of internal controls, we intend to hire additional qualified and experienced personnel to assist us in remedying these material weaknesses as our business grows and as additional financial and other resources become available to us.

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in the our internal controls over financial reporting during the period covered by this report that have materially affected, or are reasonably likely to materially affect, such internal control over financial reporting.

 

 
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PART II – OTHER INFORMATION

 

ITEM 1 Legal Proceedings

 

In the ordinary course of business, we are from time to time involved in various pending or threatened legal actions. The litigation process is inherently uncertain and it is possible that the resolution of such matters might have a material adverse effect upon our financial condition and/or results of operations. However, in the opinion of our management, matters currently pending or threatened against us are not expected to have a material adverse effect on our financial position or results of operations.

 

ITEM 1A Risk Factors

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds

 

During the three months ended June 30, 2022, we did not issue any unregistered securities.

 

ITEM 3 Defaults Upon Senior Securities

 

There have been no events which are required to be reported under this Item.

 

ITEM 4 Mine Safety Disclosures

 

There have been no events which are required to be reported under this Item.

 

ITEM 5 Other Information

 

Status of Registered Offering

 

There have been no events which are required to be reported under this Item.

 

Status of Refunds to Pre-Subscribers

 

As noted in our previous filings with the Commission, certain individuals or entities that gave us pre-subscription orders between 2009 and 2016 for shares of our common stock at between $1 and $5 per share, to be issued in the future if certain conditions were met, requested the return of their funds prior to the conditions being met. As of December 31, 2019, thirty-one of the pre-subscribers that indicated they wish to receive the investment back had not received their money back. Those pre-subscribers that requested a return of their funds but had not received their funds had indicated to us they were willing to wait until we completed our primary offering that is the subject of that S-1 Registration Statement that went effective with the Securities and Exchange Commission on November 12, 2019, before they receive their funds back. As of May 15, 2021, we had raised $1,607,500 under our primary offering, which is not the entire amount of our primary offering, but is more than the total amount owed to the pre-subscribers requesting a return of their funds. As a result, in early May 2021, we sent letters to all those pre-subscribers that had requested a return of their funds but had not received them yet, asking that they confirm their address to us so we can return their funds. As we receive those letters back from pre-subscribers we will return their funds timely to the address indicated by each pre-subscriber.

 

During the three months ended June 30, 2022, the Company did not make any payment to return deposits on common stock subscriptions, and as of June 30, 2022, $131,000 is owed to the pre-subscribers.

 

 
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ITEM 6 Exhibits

 

Item No.

 

Description

 

 

 

3.1(1)

 

Amended and Restated Articles of Incorporation of Gofba, Inc.

 

 

 

3.2 (1)

 

Amended and Restated Bylaws of Gofba, Inc.

 

 

 

10.1(1)

 

Lease with RAR2-Inland Empire Offices-CA, Inc. dated July 9, 2015

 

 

 

10.2(1)

 

Form of Stock Purchase Agreement for Litigation Settlement Offering

 

 

 

10.3(1)

 

Settlement and Release Agreement by and between Gofba, Inc. and Sharlene Chang, et al dated October 3, 2017

 

 

 

10.4(1)

 

Amendment No. 1 to Settlement and Release Agreement by and between Gofba, Inc. and Sharlene Chang, et al dated March 27, 2018

 

 

 

10.5(1)

 

Computer Towers Lease Agreement dated November 1, 2006

 

 

 

10.6(1)

 

Form of Annual Amendment to Computer Towers Lease Agreement

 

 

 

10.7(1)

 

Employment Agreement with Anna Chin dated May 14, 2018

 

 

 

10.8(1)

 

Employment Agreement with William DeLisi dated May 14, 2018

 

 

 

10.9(1)

 

Promissory Note issued to Sunray Trust dated May 1, 2018

 

 

 

10.10(2)

 

Amendment No. 1 to Computer Tower Lease Agreement by and between Gofba, Inc. Sunray Trust dated January 1, 2021

 

 

 

10.11(2)

 

Amendment No. 1 to Promissory Note issued to Sunray Trust dated March 5, 2021

10.12(3)

 

Amendment to Computer Towers Lease Agreement dated November 1, 2021

 

 
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31.1

 

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer (filed herewith)

 

 

 

31.2

 

Rule 13a-14(a)/15d-14(a) Certification of Chief Accounting Officer (filed herewith)

 

 

 

32.1

 

Section 1350 Certification of Chief Executive Officer (filed herewith).

 

 

 

32.2

 

Section 1350 Certification of Chief Accounting Officer (filed herewith).

 

 

 

101.INS **

 

XBRL Instance Document

 

 

 

101.SCH **

 

XBRL Taxonomy Extension Schema Document

 

 

 

101.CAL **

 

XBRL Taxonomy Extension Calculation Linkbase Document

 

 

 

101.DEF **

 

XBRL Taxonomy Extension Definition Linkbase Document

 

 

 

101.LAB **

 

XBRL Taxonomy Extension Label Linkbase Document

 

 

 

101.PRE **

 

XBRL Taxonomy Extension Presentation Linkbase Document

_____________

*

Filed herewith.

 

 

**

XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

 

(1)

Incorporated by reference from our Registration Statement on Form S-1 filed with the Commission on May 25, 2018.

 

 

(2)

Incorporated by reference from our Annual Report on Form 10-K (12/31/19) filed with the Commission on April 14, 2020.

 

 

(3) 

Incorporated by reference from our Annual Report on From 10-K (12/31/20) filed with the Commission on March 25, 2021 

 

 
19

Table of Contents

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

Gofba, Inc.

 

 

 

 

Dated: August 15, 2022

By:

/s/ William DeLisi

 

 

William DeLisi

 

 

 

Chief Executive Officer

 

 

 

 

 

Dated: August 15, 2022

By:

/s/ Anna Chin

 

 

 

Anna Chin

 

 

 

Chief Financial Officer

 

 
20

 


gofba_ex311.htm

 

EXHIBIT 31.1

 

Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer

 

I, William DeLisi, certify that:

 

I have reviewed this Quarterly Report on Form 10-Q of Gofba, Inc.;

 

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;

 

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;

 

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exhibit 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 consolidated 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

 

The registrant’s other certifying officer(s) 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 the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses 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:    August 15, 2022

 

 

 

 

 

/s/ William DeLisi

 

 

By:

William DeLisi

 

 

 

Chief Executive Officer

 


gofba_ex312.htm

 

EXHIBIT 31.2

 

Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer

 

I, Anna Chin, certify that:

 

1. I have reviewed this Quarterly Report on Form 10-Q of Gofba, Inc.;

 

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;

 

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;

 

The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exhibit 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 consolidated 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

 

The registrant’s other certifying officer(s) 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 the registrant’s board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses 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:    August 15, 2022

 

 

 

 

 

/s/ Anna Chin

 

 

By:

Anna Chin

 

 

 

Chief Financial Officer and Chief Accounting Officer

 


gofba_ex321.htm

 

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO 18 USC, SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

 

                In connection with the Quarterly Report of Gofba, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2022, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, William DeLisi, President of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

 

 

(1)

The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

 

 

 

(2)

Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated:    August 15, 2022

 

 

 

 

 

/s/ William DeLisi

 

 

By:

William DeLisi

 

 

 

Chief Executive Officer

 

 

A signed original of this written statement required by Section 906 has been provided to Gofba, Inc. and will be retained by Gofba, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

 


gofba_ex322.htm

 

EXHIBIT 32.2

 

CERTIFICATION PURSUANT TO 18 USC, SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

 OF THE SARBANES-OXLEY ACT OF 2002

 

                In connection with the Quarterly Report of Gofba, Inc. (the “Company”) on Form 10-Q for the quarter ended June 30, 2022, as filed with the Securities and Exchange Commission on or about the date hereof (the “Report”), I, Anna Chin, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:

 

 

(1)

The Report fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

 

 

 

(2)

Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

Dated: August 15, 2022

 

 

 

 

 

/s/ Anna Chin

 

 

By:

Anna Chin

 

 

 

Chief Financial Officer and Chief Accounting Officer

 

 

A signed original of this written statement required by Section 906 has been provided to Gofba, Inc. and will be retained by Gofba, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.


gofba-20220630.xsd
Attachment: XBRL TAXONOMY EXTENSION SCHEMA


gofba-20220630_lab.xml
Attachment: XBRL TAXONOMY EXTENSION LABEL LINKBASE


gofba-20220630_cal.xml
Attachment: XBRL TAXONOMY EXTENSION CALCULATION LINKBASE


gofba-20220630_pre.xml
Attachment: XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE


gofba-20220630_def.xml
Attachment: XBRL TAXONOMY EXTENSION DEFINITION LINKBASE