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CUBED, INC. - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations(Edgar Glimpses Via Acquire Media NewsEdge) Forward-Looking Statements Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements." These forward-looking statements generally are identified by the words "believes," "project," "expects," "anticipates," "estimates," "intends," "strategy," "plan," "may," "will," "would," "will be," "will continue," "will likely result," and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The information contained in this Quarterly Report is intended to provide "Form 10 information" within the meaning of Rule 144(i)(3) under the Securities Act of 1933. Management's Discussion and Analysis of Financial Condition and Results of Operations Company Overview Cubed, Inc. is a Nevada corporation (formerly known as Northwest Resources, Inc.) that has recently acquired from Crackpot, Inc., certain Intellectual Property (the "IP") related to the Get CUBED™ mobile-first platform. The Get CUBED™ mobile-first platform is a three-dimensional functional cube that appears on the screens of mobile device owners, allowing developers and users to present complex and contextual concepts in a clear and simple manner. The Cube is thus a canvas designed to instigate creativity and improve communication in today's mobile-first world. Emphasizing clarity over clutter, Get CUBED™ provides businesses, charities, thumbloggers™ and other subscribers of this new mobile app with a simpler way to organize the central forms of human expression - audio, video, image and text- and then pass them along to others in a single compelling platform. This allows Cube Users to share information; market their products and services; and project their ideas, among other things, all in a manner that is vastly more compelling and concise than ever available in the mobile space before the Cube. Our management consists of Joseph White, Chief Executive Officer and Director; Alfred Rapetti, Director; and Doug Shinsato, interim Chief Financial Officer and Director. Our principal offices are located at 830 South 4th St., Las Vegas, Nevada 89101. Web domain: www.getcubed.com. Overview of the Get CUBED™ mobile-first platform We recently acquired all the IP rights for the three-dimensional, interactive mobile-based platform known as the Cube. The Cube is a cloud based Information Communication Technology that provides users with a creative, dynamic three-dimensional canvas for the delivery of multimedia content. The Cube's three-dimensional presentation delivers a diverse, attractive, consolidated and effective tool for all kinds of communications. It has sufficient space to store, simplify, and deliver rich data and multimedia content, and it is compatible with multiple operating systems and devices, including both Apple IOS and Android mobile apps. On a single Cube, large enterprises and small to medium businesses ("SMBs") can provide product or service information in text, audio, picture or video format. Individual users can create their virtual image, utilizing the same Cube platform-for social media, e-messaging, texting, click-to-connect, geo-location services and e-commerce. 4 Table of Contents A Cube's capabilities include, but are not limited to: -Continuous mobile audio updating -Image uploading and cropping -Video uploading (both created on the fly and pre-recorded) -ThumbloggingTM (time stamped text with corresponding pics and or gifs) -e-Commerce -Intricate, pane by pane analytics for paid subscribers of third party interaction of their cubes. -Proprietary user controlled advertising network including mobile live presentation of localized, redeemable offers, with the ability to love or crush cubes via the app -Geo-awareness -Live mapping services -Click-2-connect (get in direct contact immediately with the cube creator by call, email and or physical directions) -Intra-app sharing through proprietary tossing of Cubes to other users -Broad sharing of Cube via sms, email, social media, embedding -Proprietary Cracking CubesTM (leaving audio, video, pics, text on other people's cubes) 5 Table of Contents Revenue Models The following are our current revenue models: 1. Subscription: For a price of $5.95 per month users can subscribe and pay for the Cube "Plush Plan". The Plush Plan allows the user access to the full functionality of over 20+ widgets of the Cube platform. This plan may also involve additional fees for customizable services, such as texting or in-house creation of cubes. The Plush Plan gives users full access to dynamic analytics of user interactivity with their Cubes such as the amount of time visitors spent on each pane of the cube, pane by pane bounce rate, engagement rate, distribution of viewership on each cube. It also includes nearby searching capabilities, e- Commerce and customer interaction widgets. 2. Advertising: Advertisers pay for advertisements that appear within the Cube platform through opening of Get Cubed™app in an interactive yet non-intrusive manner with the consumer and the advertisement/offer. This manifests itself in a proprietary 'love or destroy' emotionally engaging manner. Additionally, enterprise customers can use the cube as a proprietary embedded mobile advertisement. This ubiquitous proprietary first contact, seamlessly brings the customer into the Get Cubed™ app ecosystem. 3. Corporate Enterprise account: Enterprise clients will pay us to white-label a Get Cubed™ Presence within app stores with their name and assets. This in turn brings the customers into the cube eco system while allowing for the unlocked cube to have the client's brand within the app when a user opens it. We call this the "Bow Tie Business Plan". 4. Enterprise Information Distribution. Distributors of information such as call centers pay us to use their cube as a delivery mechanism to distribute information or support in a manner that allows for extended customer engagement. This proprietary call extension is paid for on a per delivery basis, and allows for added first contact offer revenue participation. Free Cubes. There is also a free version of the cube which gives users a limited, yet rich cube experience. A free user has the option of getting a free cube with limited, pre-defined widgets. A free plan provides the user with the ability to add only audio, images, videos and text to their cubes. A user can still toss & crack cubes and can participate in the redeemable offer/proprietary Spin-2-Win portion of the app. The free plan does not provide free users with e-Commerce capabilities, analytics, GPS capabilities, searchable functionality or any of the over 20 specialized widgets, all of which are available to subscribers. Subscription -- How to Get Cubed™ and become a Subscriber While there are multiple ways to get a Cube, individuals typically will obtain our product in one of the following first contact experiences: 1. From an embedded cube online or mobile advertising delivery; 2. Short code SMS delivery; 3. Call center contact; 4. In person presentation by resellers; 5. Toss or shared by a business or individual; 6. Emailed by a business or individual; 7. First contact through Social Media Placement; 8. Tossed, SMS, or Bluetooth proprietary contact from a billboard or in-retail display; 9. Downloading the Android or iOS app from app stores and websites 6 Table of Contents Advertising -How Advertising works within a Cubed World There are a multitude of pricing models in the advertising world - all of which can be accommodated and employed according to the situational demands of each particular event in a Cube. They vary by client, by agency, even by each campaign. Similarly, budgets are allocated in a variety of ways and so spending follows the allocation type. A company that wishes to embed a cube with advertising can do so on their website and/or on third party channels. Fees are paid generally on the basis of estimated viewership of the particular cube. Additionally, Company's can incorporate third party advertising on their cube in a form of joint venture and earn a fee if they wish. Some of the most common display advertising pricing models include: 1. Cost-per-impression. Charges are based on the number of times an ad is served. This is usually a very small monetary amount: pennies to a few dollars per thousand impressions. 2. Cost-per-click. The advertiser only pays when someone clicks on the ad unit, with fees from a few cents up to several dollars depending on the competitiveness in the advertiser's vertical market. 3. Cost-per-lead. Advertisers pay based on how many people fill in their personal information such as their name, email address, address, phone number, etc. The more data fields desired, the higher the price. 4. Cost-per-acquisition. Advertisers pay depending on how many people actually make direct contact with the company or the company is able to contact them - via phone, email, live chat, video chat. 5. Cost-per-chat. A fee is paid by the advertiser each time a customer engages in a live text, audio, or video chat. Pricing can range from a few dollars and up depending on the audience. 6. Hybrid pricing. Advertisers pay a monthly base price for a subscription plus a cost per use - impression/click/lead/chat. With regards to publishers and rich media platforms there are various pricing models as well: 1. Cost-per-cube. Each time they use the platform they pay a certain charge - prices can range from several hundred dollars to several thousand dollars. 2. Platform licenses. A flat rate per year for creating as many display ad cubes as they like. 3. Hybrid licenses. A set annual rate (usually lower than a Platform license), plus some cost per use. Information distribution - Call Centers and the use of the Cube Quite commonly, call centers will receive inbound caller questions and wish to follow up with information support to the caller on what was discussed. Our plan is to offer the Cube for this sort of purpose, information distribution in every form. In this example, the call center operator can provide the follow up information to the caller on a cube for which we would be paid. Additionally, on the same cube, the operator could send an advertisement, with a sponsored offering to the caller, creating a separate revenue opportunity. 7 Table of Contents Plan of Operations Our objective is to provide the platform that will enable cube users to create and control messages and virtual images that they want to project and narrow-cast to relevant, common-interest groups. In order to be successful, the first requirement is to build and release a stable and reliable product that has gone through rigorous quality assurance and stress testing. We believe we have achieved this milestone and have thus begun our product launch. The second requirement is to explain to prospective users the unique value of the Cube. We have begun this effort by negotiating distribution and reseller agreements with various individuals and companies that are sophisticated users of current, but dated digital technologies. The third requirement is to ensure that we have the proper organizational structure and processes within our organization to deliver and install the Cube as demand ramps up. We are now in the process of establishing guidelines for our resellers and major customers to fulfill this requirement. Marketing Strategies Our plan is to initially target three user groups: (1) Entities with large customer databases or fan-bases; (2) Small and Medium Size Businesses (SMBs); and (3) individual users. All three of these groups currently utilize multiple platforms that are based on pre-Mobile First technologies. In order to achieve an early high diffusion rate for our Cube, we will simultaneously focus on "sell-through" introduction and retention strategies aimed at individual users and work closely with our enterprise customers to ensure that they effectively and efficiently use the Cube to increase the rate of customer acquisition and to decrease the cost of reaching their target customers. This plan is possible because the Cube can be replicated almost instantaneously and can be customized for major user groups with little time and effort. Small- and Medium-Sized Businesses --There are approximately 30 million SMBs in the US. Most of these businesses would benefit significantly if they could reduce their marketing costs and still build greater awareness of their product and services. The Cube enables SMBs to contact their customers on their smart phones on a regular basis with new offers and promotions to encourage patronage, at a low cost compared to other methods of marketing. As a result, the Cube effectively reduces the small business' advertising costs and increases its revenues. Market Analysis--The Emerging Mobile First World Mobile internet usage now makes up roughly 15% of all internet traffic, up from just 1% only 4 years ago. We intend for our Cube to lead the way in increasing this growing Mobile traffic explosion. It is clear that connectivity will fundamentally revolve around mobile devices, and this is particularly true in the developing world where often an individual's first online experience is with a mobile device, rather than a clunky computer. Ten out of the top 15 countries using mobile devices are in the developing world. In India, for example, more people use mobile devices rather than PCs to browse online. Globally, website visits via mobile devices have doubled in the past year alone. Research and development Research and development will be necessary to constantly improve the Cube. Future development efforts of the IP will be done by us and certain contract software developers we plan to work with on an ongoing basis. Competition Our competitors come from existing delivery platforms such as Google, Facebook, Yahoo, and the niche delivery platforms like YouTube, Twitter, and Yelp that have a large advertiser customer base that use 20th Century broad-blast techniques to reach their customers. The Cube is the first platform that allows the aggregation of all of these communications pathways, as well as others, indiscriminately. 8 Table of Contents Intellectual Property We have purchased the following intellectual property from Crackpot, Inc.: Patent Title / Trademark Filing Date Engine, System and Method of Providing Interactive Content Delivery Management July 11, 2013 Systems and Method for Mobile Social Network Interactions November 12, 2013 System and Methods for Delivery Information and a Platform for Same January 22, 2014 Computer-Implemented Virtual Object for Managing Digital Content February 12, 2014 Multi-Dimensional Content Platform for a Network February 12, 2014 An Apparatus, System and Method for a Graphical User Interface for a Multi-Dimensional Networked Content Platform February 12, 2014 System and Method for Creating a Unique Media and Information Management Platform February 12, 2014 Multi-Dimensional Content Platform for a Network March 12, 2014 CUBE (Design) October 1, 2012 CRACKPOT CUBE October 1, 2012 CRACKPOT CULTURE October 1, 2012 YOUR VOICE. YOUR WORLD October 16, 2012 CRACK A CUBE November 15, 2013 CUBE February 5, 2014 GET CUBED February 10, 2014 GET CUBED (and design) February 10, 2014 CUBD February 18, 2014 HERE'S TO CLARITY OVER CLUTTER February 24, 2014 THUMBLOGGING February 26, 2014 MOBILE FIRST TECHNOLOGY March 20, 2014 Domain Names 1) getcubed.com 2) crackpotcube.com Staffing As of April 21, 2014, we had approximately 50 employees and independent consultants comprised of our officers and other staff. Legal Proceedings We are not currently a party to any legal proceedings. 9 Table of Contents Executive Officers The following table contains information with respect to our current executive officers and directors: Name Age Principal Positions Joseph White 29 President, CEO and Director Doug Shinsato 64 Interim Chief Financial Officer and Director Alfred Rapetti 67 Director Joseph D. White is our new President, Director and CEO. He has spent the better part of the last five years working and studying in SE Asia, South Africa and Europe, searching for a more effective way for creative concepts to be broadcast in an increasingly mobile first world, first with Home Game Inc. and then Crackpot, Inc. In 2011, Mr. White was a legal assistant in the defense of Jovica Stanisic at the United Nations-International Criminal Tribunal for the former Yugoslavia in The Hague. He also studied international law and development economics at the University of The Western Cape Faculty of Law in South Africa, La Faculte de Droit de l'Universite de Nice in France and ultimately received his Juris Doctorate from Thomas Jefferson School of Law in San Diego. He earned his BA in Political Science from the University of Nevada, Las Vegas in 2007. Douglas Shinsato is our interim Chief Financial Officer and Director. Mr. Shinsato has served in operational and executive roles at both well-established and early stage technology companies in Japan, Korea, Taiwan, China, Southeast Asia, India, Russia and Central Asia. Since January 2007 through January 2014, Mr. Shinsato worked with Banyan Tree Advisors and from March 2011 to current has sat on the board of directors of Creative Intelligence Associates, a private consulting company based in Tokyo, Japan. Prior to joining Cubed, Inc., Mr. Shinsato has also served as the President, Japan for leading technology companies such as PTC and Siebel Systems and as head of Asia Pacific for Autodesk, Interactive Intelligence and Genesys Labs. He was a Senior Partner at Deloitte Touche Tohmatsu and the Vice President Asia in charge of the management services and IT consulting practices at EDS/A.T. Kearney and board member for EDS Japan. Earlier, Doug worked in Japan as a strategy consultant focused on information and communications technology for the Boston Consulting Group and served as an Adjunct Professor at the Graduate Business School of Sophia University in Tokyo. Doug received his BA and MBA from the University of Southern California. He also earned a JD from Stanford Law School, and is a member of the California State Bar and Washington, D.C. Bar. Alfred A Rapetti is our newly appointed director. From September 2010 through the present Mr. Rapetti has served as a director of Standard Gold, Inc. (a public company trading under the symbol SMPR), during which time he also served as its Chairman (from January 2011 to May 2011) and President (from May 2011 to December 2011). Throughout this time he managed business development of SMPR, including the acquisition of and its conversion to a precious metals processing company with multiple facilities in Nevada. From June 2010 to March 2011, Mr. Rapetti served as managing director of mergers and acquisitions of New Oak Capital. From January 2010 to June 2010, Mr. Rapetti was a consultant for various companies. From January 2009 to December 2009, Mr. Rapetti served as managing director of mergers and acquisitions and new business for Ballamor Capital Management with 3 billion under management. Prior to 2009, Mr. Rapetti purchased and became executive chairman of Avantair, Inc. until the company became a publicly reporting company. He was senior managing director of The Stamford Capital Group, Inc. and completed 258 transactions exceeding 6 billion dollars during his tenure at that firm. Mr. Rapetti has a B.Sc. in Nuclear Engineering and a B.Sc. in Marine Engineering from SUNY Maritime College. Term of Office Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board. Family Relationships There are no family relationships between or among the directors, executive officers or persons nominated or chosen by us to become directors or executive officers. Involvement in Certain Legal Proceedings To the best of our knowledge, during the past ten years, none of the following occurred with respect to a present or former director, executive officer, or employee: (1) any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time; (2) any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) being subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his or her involvement in any type of business, securities or banking activities; and (4) being found by a court of competent jurisdiction (in a civil action), the SEC or the Commodities Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated. 10 Table of Contents Committees of the Board We do not currently have a compensation committee, executive committee, or stock plan committee. Audit Committee We do not have a separately-designated standing audit committee. The entire Board of Directors performs the functions of an audit committee, but no written charter governs the actions of the Board when performing the functions of what would generally be performed by an audit committee. The Board approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, the Board reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor. Our Board of Directors, which performs the functions of an audit committee, does not have a member who would qualify as an "audit committee financial expert" within the definition of Item 407(d)(5)(ii) of Regulation S-K. We believe that, at our current size and stage of development, the addition of a special audit committee financial expert to the Board is not necessary. Nomination Committee Our Board of Directors does not maintain a nominating committee. As a result, no written charter governs the director nomination process. Our size and the size of our Board, at this time, do not require a separate nominating committee.When evaluating director nominees, our directors consider the following factors: - The appropriate size of our Board of Directors; - Our needs with respect to the particular talents and experience of our directors; - The knowledge, skills and experience of nominees, including experience in finance, administration or public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the Board; - Experience in political affairs; - Experience with accounting rules and practices; and - The desire to balance the benefit of continuity with the periodic injection of the fresh perspective provided by new Board members. Our goal is to assemble a Board that brings together a variety of perspectives and skills derived from high quality business and professional experience. In doing so, the Board will also consider candidates with appropriate non-business backgrounds. Other than the foregoing, there are no stated minimum criteria for director nominees, although the Board may also consider such other factors as it may deem are in our best interests as well as our stockholders. In addition, the Board identifies nominees by first evaluating the current members of the Board willing to continue in service. Current members of the Board with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination. If any member of the Board does not wish to continue in service or if the Board decides not to re-nominate a member for re-election, the Board then identifies the desired skills and experience of a new nominee in light of the criteria above. Current members of the Board are polled for suggestions as to individuals meeting the criteria described above. The Board may also engage in research to identify qualified individuals. To date, we have not engaged third parties to identify or evaluate or assist in identifying potential nominees, although we reserve the right in the future to retain a third party search firm, if necessary. The Board does not typically consider shareholder nominees because it believes that its current nomination process is sufficient to identify directors who serve our best interests. Code of Ethics As of April 21, 2014, we had not adopted a Code of Ethics for Financial Executives, which would include our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. EXECUTIVE COMPENSATION Compensation Discussion and Analysis We presently do not have employment agreements with any of our current management. The Company's compensation methods are currently being developed for approval and implementation. We do not currently provide any compensation to directors for their service as directors but may do so in the future. We are currently in the process of setting up the compensation arrangement for our officers. 11 Table of Contents Summary Compensation Table The table below summarizes all compensation awarded to, earned by, or paid to each named executive officer for our last two completed fiscal years for all services rendered to us. SUMMARY COMPENSATION TABLE Nonqualified Non-Equity Deferred Name and Option Incentive Plan Compensation All Other principal Salary Bonus Stock Awards Awards Compensation Earnings Compensation Total position Year ($) ($) ($) ($) ($) ($) ($) ($) Taylor Edgerton, former President, 2013 0 0 0 0 0 0 0 0 CEO, CFO, and director 2012 0 0 0 0 0 0 0 0 Narrative Disclosure to the Summary Compensation Table We did not pay our former sole officer, Taylor Edgerton, any compensation for his services as an officer. Our current executive officers did not serve during the fiscal years ended November 30, 2013 and November 30, 2012. Outstanding Equity Awards At Fiscal Year-end Table The table below summarizes all unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer outstanding as of the end of our last completed fiscal year. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END OPTION AWARDS STOCK AWARDS Equity Equity Incentive Incentive Plan Plan Awards: Market Awards: Market or Equity Value Number Payout Incentive Number of Shares of Value of Plan of or Unearned Unearned Awards: Shares Shares Shares, Shares, Number of Number of Number of or Shares of Shares or Shares or Securities Securities Securities of Stock Other Other Underlying Underlying Underlying Stock That That Rights Rights Unexercised Unexercised Unexercised Option Have Have That Have That Options Options Unearned Exercise Option Not Not Not Have Not (#) (#) Options Price Expiration Vested Vested Vested Vested Name Exercisable Unexercisable (#) ($) Date (#) ($) (#) (#) Taylor Edgerton, former officer 0 0 0 0 0 0 0 0 0 12 Table of Contents Compensation of Directors Table The table below summarizes all compensation paid to our directors for our last completed fiscal year. DIRECTOR COMPENSATION Non-Equity Non-Qualified Fees Earned or Incentive Deferred All Paid in Plan Compensation Other Cash Stock Awards Option Awards Compensation Earnings Compensation Total Name ($) ($) ($) ($) ($) ($) ($) Taylor Edgerton, former director 0 0 0 0 0 0 0 Narrative Disclosure to the Director Compensation Table We did compensate our former director, Taylor Edgerton, for his services as a director. Our current directors did not serve during the fiscal year ended November 30, 2013. Securities Authorized for Issuance Under Equity Compensation Plans To date, we have not adopted a stock option plan or other equity compensation plan and have not issued any stock, options, or other securities as compensation. Disclosure of Commission Position of Indemnification for Securities Act Liabilities In accordance with the provisions in our articles of incorporation, we will indemnify an officer, director, or former officer or director, to the full extent permitted by law. Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the "Act") may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of us in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. 13 Table of Contents SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of April 21, 2014, the current beneficial ownership of our common stock by each executive officer and director, by each person known by us to beneficially own more than 5% of the our common stock and by the executive officers and directors as a group, based on a total of 25,547,455 shares of common stock issued and outstanding as of April 21, 2014: Name and address of beneficial Amount of beneficialTitle of class owner ownership Percent of class Douglas Shinsato 353 E. Bonneville Ave #727 Common Las Vegas, NV 89101 1,000,000 3.90 % Joseph White 353 E. Bonneville Ave. #805 Common Las Vegas, NV 89101 3,200,000 12.48 % Alfred Rapetti 24 Via Bel Canto #611 Common Henderson, NV 89011 1,000,000 3.90 % All Officers and Directors as a Group (one person) 5,200,000 20.27 % Other 5% owners David Doust 3826 S. Ashland Dr. Common Salt Lake City, UT 84109 2,500,000 9.75 % Stephen White 353 E. Bonneville Ave. #125 Common Las Vegas, NV 89101 3,200,000 12.48 % John McDonnell 1523 Barley Mill Rd Common Wilmington, DE 19807 2,500,000 9.75 % (1) As used in this table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have "beneficial ownership" of any security that such person has the right to acquire within 60 days after such date. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS AND DIRECTOR INDEPENDENCE Except as set forth below, none of our directors or executive officers, nor any proposed nominee for election as a director, nor any person who beneficially owns, directly or indirectly, shares carrying more than 5% of the voting rights attached to all of our outstanding shares, nor any members of the immediate family (including spouse, parents, children, siblings, and in-laws) of any of the foregoing persons has any material interest, direct or indirect, in any transaction since our incorporation or in any presently proposed transaction which, in either case, has or will materially affect us: 1. None 14 Table of Contents Director Independence We are not a "listed issuer" within the meaning of Item 407 of Regulation S-K and there are no applicable listing standards for determining the independence of our directors. Applying the definition of independence set forth in Rule 4200(a)(15) of The Nasdaq Stock Market, Inc., we do not have any independent directors. Description of Securities Our authorized capital stock consists of 90,000,000 shares of common stock, with a par value of $0.001 per share, and 10,000,000 shares of preferred stock, with a par value of $0.001 per share. As of April 21, 2014, there were 25,547,455 shares of our common stock issued and outstanding. We have not issued any shares of preferred stock. Common Stock Our common stock is entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Except as otherwise required by law or provided in any resolution adopted by our board of directors with respect to any series of preferred stock, the holders of our common stock will possess all voting power. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all shares of our common stock that are present in person or represented by proxy, subject to any voting rights granted to holders of any preferred stock. Holders of our common stock representing fifty percent (50%) of our capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of our stockholders. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our Articles of Incorporation. Our Articles of Incorporation do not provide for cumulative voting in the election of directors. Subject to any preferential rights of any outstanding series of preferred stock created by our board of directors from time to time, the holders of shares of our common stock will be entitled to such cash dividends as may be declared from time to time by our board of directors from funds available therefore. Subject to any preferential rights of any outstanding series of preferred stock created from time to time by our board of directors, upon liquidation, dissolution or winding up, the holders of shares of our common stock will be entitled to receive pro rata all assets available for distribution to such holders. In the event of any merger or consolidation with or into another company in connection with which shares of our common stock are converted into or exchangeable for shares of stock, other securities or property (including cash), all holders of our common stock will be entitled to receive the same kind and amount of shares of stock and other securities and property (including cash). Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock. Preferred Stock Our board of directors is authorized by our articles of incorporation to divide the authorized shares of our preferred stock into one or more series, each of which must be so designated as to distinguish the shares of each series of preferred stock from the shares of all other series and classes. Our board of directors is authorized, within any limitations prescribed by law and our articles of incorporation, to fix and determine the designations, rights, qualifications, preferences, limitations and terms of the shares of any series of preferred stock including, but not limited to, the following: 1. The number of shares constituting that series and the distinctive designation of that series, which may be by distinguishing number, letter or title; 2. The dividend rate on the shares of that series, whether dividends will be cumulative, and if so, from which date(s), and the relative rights of priority, if any, of payment of dividends on shares of that series; 3. Whether that series will have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights; 4. Whether that series will have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors determines; 5. Whether or not the shares of that series will be redeemable, and, if so, the terms and conditions of such redemption, including the date or date upon or after which they are redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; 6. Whether that series will have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of such sinking fund; 7. The rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation, and the relative rights of priority, if any, of payment of shares of that series; 8. Any other relative rights, preferences and limitations of that series 15 Table of Contents Provisions in Our Articles of Incorporation and By-Laws That Would Delay, Defer or Prevent a Change in Control Our articles of incorporation authorize our board of directors to issue a class of preferred stock commonly known as a "blank check" preferred stock. Specifically, the preferred stock may be issued from time to time by the board of directors as shares of one (1) or more classes or series. Our board of directors, subject to the provisions of our Articles of Incorporation and limitations imposed by law, is authorized to adopt resolutions; to issue the shares; to fix the number of shares; to change the number of shares constituting any series; and to provide for or change the following: the voting powers; designations; preferences; and relative, participating, optional or other special rights, qualifications, limitations or restrictions, including the following: dividend rights, including whether dividends are cumulative; dividend rates; terms of redemption, including sinking fund provisions; redemption prices; conversion rights and liquidation preferences of the shares constituting any class or series of the preferred stock. In each such case, we will not need any further action or vote by our shareholders. One of the effects of undesignated preferred stock may be to enable the board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a tender offer, proxy contest, merger or otherwise, and thereby to protect the continuity of our management. The issuance of shares of preferred stock pursuant to the board of director's authority described above may adversely affect the rights of holders of common stock. For example, preferred stock issued by us may rank prior to the common stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of common stock. Accordingly, the issuance of shares of preferred stock may discourage bids for the common stock at a premium or may otherwise adversely affect the marketprice of the common stock. Dividend Policy We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future. Warrants and Options We have not issued any options or warrants to purchase our capital stock. Nevada Anti-Takeover Laws Nevada Revised Statutes sections 78.378 to 78.379 provide state regulation over the acquisition of a controlling interest in certain Nevada corporations unless the articles of incorporation or bylaws of the corporation provide that the provisions of these sections do not apply. Our articles of incorporation and bylaws do not state that these provisions do not apply. The statute creates a number of restrictions on the ability of a person or entity to acquire control of a Nevada company by setting down certain rules of conduct and voting restrictions in any acquisition attempt, among other things. The statute is limited to corporations that are organized in the state of Nevada and that have 200 or more stockholders, at least 100 of whom are stockholders of record and residents of the State of Nevada; and does business in the State of Nevada directly or through an affiliated corporation. Because of these conditions, the statute currently does not apply to our company. 16 Table of Contents Market Information Our common stock is quoted under the symbol "CRPT" on the OTCBB operated by the Financial Industry Regulatory Authority, Inc. ("FINRA") and the OTCQB operated by OTC Markets Group, Inc. Few market makers continue to participate in the OTCBB system because of high fees charged by FINRA. The criteria for listing on either the OTCBB or OTCQB are similar and include that we remain current in our SEC reporting. Our reporting is presently current and, since inception, we have filed our SEC reports on time. To date, an active trading market has not developed for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder may be unable to resell his securities in our company. The following tables set forth the range of high and low prices for our common stock for the each of the periods indicated as reported by the OTCQB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. Fiscal Year Ending 11.30.13 Quarter Ended High $ Low $ November 30, 2013 n/a n/a August 31, 2013 n/a n/a May 31, 2013 n/a n/a February 28, 2013 n/a n/a Fiscal Year Ending 11.30.12 Quarter Ended High $ Low $ November 30, 2012 n/a n/a August 31, 2012 n/a n/a May 31, 2012 n/a n/a February 28, 2012 n/a n/a As of April 21, 2014, the last trading price for our common stock was $5.00 per share. 17 Table of Contents Penny Stock The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by ruleor regulation. The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statement showing the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement as to transactions involving penny stocks, and a signed and dated copy of a written suitability statement. These disclosure requirements may have the effect of reducing the trading activity for our common stock. Therefore, stockholders may have difficulty selling our securities. Results of Operations for the three months ended February 28, 2014 and February 28, 2013, and from May 21, 2010 (inception) through February 28, 2014. We have not earned any revenues since the inception of our current business operations. We incurred expenses and a net loss in the amount of $15,333 for the three months ended February 28, 2014, compared to expenses and a net loss of $2,799 for the three months ended February 28, 2013. We have incurred total expenses and a net loss of $168,340 from inception on May 21, 2010 through February 28, 2014. Results of Operations for the Years Ended November 30, 2013 and 2012, and for the period from inception (May 21, 2010) to November 30, 2013. We have not earned any revenues since the inception of our current business operations. We incurred expenses and a net loss in the amount of $41,935 for the year ended November 30, 2013. Our expenses for the year ended November 30, 2013 included professional fees of $34,736, a charge for impairment of our mineral property of $6,500, and general and administrative expenses of $699. We incurred expenses and a net loss of $28,577 for the year ended November 30, 2012. Our expenses for the year ended November 30, 2012 included professional fees of $28,001, exploration costs of $570, and general and administrative expenses of $6. We have incurred total expenses and a net loss of $153,007 from inception on May 21, 2010 through November 30, 2013. **Our result of operations for the three months ended February 28, 2014 and February 28, 2013, and for the years ended November 30, 2013 and November 30, 2012 relate solely to our former mineral exploration business. Accordingly, they are not indicative of the results that can be expected for our current lineof business.** As we continue with development and expansion of our Get CUBED™ mobile-first platform business, we expect that our gross revenues and expenses will increase significantly. Liquidity and Capital Resources As of February 28, 2014, we had current assets in the amount of $1,484, consisting entirely of cash. Our current liabilities as of February 28, 2014 were $131,824 and consisted entirely of accrued professional fees. Thus, we had a working capital deficit of $130,340 as of February 28, 2014. Our ability to carry out our business plan will depend on our ability to raise additional capital. We will be dependent on raising sufficient capital in order to continue with our plan of operations and to accumulate a customer base for our products which can be expected to generate net profits. We do not have any formal commitments or arrangements for the sales of stock or the advancement or loan of funds at this time. There can be no assurance that such additional financing will be available to us on acceptable terms, or at all. 18 Table of Contents Going Concern As discussed in the notes to our financial statements, we have no established source of revenue. This has raised substantial doubt for our auditors about our ability to continue as a going concern. Without realization of additional capital, it would be unlikely for us to continue as a going concern. Our activities to date have been supported by equity financing. Management continues to seek funding from its shareholders and other qualified investors to pursue its business plan. Off Balance Sheet Arrangements As of February 28, 2014, there were no off balance sheet arrangements. Critical Accounting Policies In December 2001, the SEC requested that all registrants list their most "critical accounting polices" in the Management Discussion and Analysis. The SEC indicated that a "critical accounting policy" is one which is both important to the portrayal of a company's financial condition and results, and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Currently, we do not believe that any accounting policies fit this definition. Recently Issued Accounting Pronouncements We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow. |