Summary of DISABOOM, INC. - Yahoo! Finance

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Cautionary Statement about Forward-Looking Statements

This Form 10-Q contains forward-looking statements regarding future events and the Company's future results that are subject to the safe harbors created under the Securities Act of 1933 (the "Securities Act") and the Securities Exchange Act of 1934 (the "Exchange Act"). These statements are based on current expectations, estimates, forecasts, and projections about the industry in which the Company operates and the beliefs and assumptions of the Company's management. Words such as "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," "continues," "may," variations of such words, and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of the Company's future financial performance, the continuing development of the Company's website, the prospects for selling advertising on the website and new visitors and visitor page views related to advertising agreements, the Company's anticipated growth and potentials in its business, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified under "Risk Factors" in our Form 10-K for the year ended December 31, 2008 and under Item 1A of Part II of this report. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.

The Company is under no duty to update any of these forward-looking statements after the date of this report. You should not place undue reliance on these forward-looking statements.

Plan of Operation

About the Company

We were incorporated in the State of Colorado on September 5, 2006 with the primary purpose of developing the first interactive online community dedicated to constantly improving the way Americans with disabilities or functional limitations live their lives. Our network of websites (the "Disaboom Network") serves as a comprehensive online resource as well as a social media and publishing platform not only for people living with such conditions, but their immediate families and friends, caregivers, recreation and rehabilitation providers, employers, and other related communities. Our headquarters are located in the metropolitan area of Denver, Colorado.

The Company released the first fully operational version of our main website (www.disaboom.com) on January 24, 2008. On October 9, 2007, the Company acquired an online dating and social networking website with the domain name Lovebyrd.com, and re-branded Lovebyrd.com in the quarter ended March 31, 2008 as a related website of Disaboom.com. On February 1, 2008 the Company launched a website with the domain name DisaboomJobs.com, which is the first website dedicated to providing employment-related resources and services to the disability community and their employers who are actively trying to create a more inclusive workforce. On July 31, 2009, the Company announced the launch of its redesigned DisaboomJobs.com website. The Company's main website and related microsites for employment-related resources and services, as well as dating, are collectively referred to herein as the Disaboom Network.

There are more than 54 million American adults living with disabilities or functional limitations today in the United States alone, and over 650 million worldwide. We believe Disaboom offers a new solution to the difficulties faced by this traditionally underserved market. Persons living with disabilities or functional limitations have unique needs, as do the people in their lives who are directly affected by such disabilities or functional limitations.

We promote the trademarked name of our website, Disaboom.com, and related microsites DisaboomJobs.com and Lovebyrd.com, by primarily implementing a combination of search engine optimization and search engine marketing ("SEO/SEM") advertising campaigns, as well as organic and social marketing campaigns, intended to encourage people to visit our sites. We believe that with the present absence of a comprehensive, community-oriented network of websites specifically for people living with or directly affected by disabilities or functional limitations, this traditionally underserved target audience will visit and participate in our community, and contribute to its growth and success.

Summary of Activities to Date

The activities of the Company in 2008 generally focused on the initial operational matters of an early stage internet company, including (i) the initial launch of the first fully operational version of our main website (www.disaboom.com) on January 24, 2008, (ii) launching additional resources and services through related microsites and the Company's marketplace, (iii) integrating our main website and related microsites into the Disaboom Network,
(iv) driving internet traffic into the Disaboom Network, and (v) beginning to generate traditional cost per mille ("CPM") related advertising and sponsorship revenues, as well as directory services revenues.

During the third and fourth calendar quarters of 2008, and through the period ended September 30, 2009, the Company began and continues today to respond aggressively to recessionary economic conditions, the liquidity crisis, capital market volatility, and the general economic outlook (collectively, "general economic conditions"), and their resultant adverse impact on the internet advertising industry. During the period ended September 30, 2009 and through the filing date of this Form 10-Q, the Company continues to aggressively reduce and monitor our overall operating expenditures in response to general economic and internet advertising market conditions. We also continue to monitor and evaluate our business needs and resources on an ongoing basis, and may scale back in certain areas that are not deemed essential to the Company's near term success. Management is exploring potential sources of capital so that the Company can continue to fund our current and planned business operations (Note 4). However, current conditions in the financial markets have significantly limited the availability of these resources and we have yet to raise sufficient capital to fund such operations.

Business Changes and Business Progress in the Context of General Economic Conditions

Market growth of traditional static banner and display advertising products in several online advertising market sectors has slowed considerably, and some sectors experienced negative growth during the third and fourth calendar quarters of 2008, and into the third quarter of 2009. This was due in particular to the general economic conditions. Online advertising market growth has also generally slowed due to online advertising pricing declines resulting from increased competition among numerous websites for advertisers to choose from. However, market growth related to niche website advertising which is directed at a specific target audience such as Disaboom, as well as new media online advertising, is anticipated to recover more quickly than general website advertising and traditional advertising products as economic conditions have begun to improve.

Beginning in September 2008, the Company, with the full support of its Board of Directors, aggressively responded to dramatically changing economic, capital market, and internet advertising conditions. The Company appointed new leadership, restructured its management team and employee base, and dramatically reduced its overall cost structure to reflect these new realities - while at the same time launching a series of initiatives designed to enhance its future growth and drive to profitability. Since the third calendar quarter of 2008, the Company has reduced various operating costs and launched certain business initiatives, including:

· Average monthly recurring cash operating expenditures for the quarter ended September 30, 2008 were $642,512; average monthly recurring cash operating expenditures for the most recent quarter ended September 30, 2009 were $202,653, a decrease of 68 percent.

· There were 63 full-time employees during the month of August 2008, and only 19 full-time employees as of September 30, 2009, a decrease of approximately 70 percent.

· There were a number of outsourced third party vendor services relationships as of August 2008; the Company has aggressively restructured its operations, terminated almost all of its third party vendor services relationships, and performs the necessary core functions in-house as of September 30, 2009.

· Beginning in the quarter ended June 30, 2009, the Company launched a comprehensive initiative involving the redesign of its enterprise technology and web assets (i.e., websites); on August 1, 2009 we launched our redesigned jobs website DisaboomJobs.com, and on October 1, 2009, we launched our redesigned media website, Disaboom.com

· There were three groups of standard products available for sale to advertisers as of August 2008; there are four groups of standard products, as well as 10 additional individual products, available for sale to advertisers as of September 30, 2009

Focus Going Forward

Our focus through the quarter ending September 30, 2009 and the remainder of 2009 will likely continue to be:

(i) the continued growth of our new customer sales, existing customer renewals, and cash collections, as well as the proactive management of our total cash operating expenditures;

(ii) the continued optimization, stabilization, and enhancement of each of the Company's recently redesigned websites, and their underlying platform;

(iii) the identification and pursuit of targeted traffic and growth opportunities related to the Disaboom Network, including the Company's redesign efforts, through various search engine, social media, social networking, business development and partnership initiatives, and other activities; and

(iv) the ongoing development and evolution of resources, products and services related to the Disaboom Network, our social media and publishing platform, our user community, and our customers.

Ultimately, the features and products offered through the Disaboom Network that we will focus our time and resources to, may change due to general economic and internet advertising market conditions and as a result of which generates the best revenue and cash flow opportunities for the Company.

We believe that the greater the awareness in the marketplace of the Disaboom Network, our community and brand, and our social media and publishing platform, the greater the amount of market penetration, organic traffic, advertising product opportunities and billable revenue we will experience and capitalize upon.

Results of Operations:

During the three months ended September 30, 2009, our revenues decreased 48% to $101,329 from $196,242 during the three months ended September 30, 2008. During the nine months ended September 30, 2009 our revenues increased 30% to 505,540 from $387,457 during the nine months ended September 30, 2008. Beginning in May 2008, the Company began to develop its initial directory services product capabilities and section of its website which was subsequently launched during the three months ended September 30, 2008, resulting in greater revenues during this period. During the period June through August 2008, the Company hired a number of telesales oriented personnel who began to realize limited initial sales and revenue success immediately prior to the beginning of the liquidity crisis and rapid deterioration of general economic conditions beginning in September 2008. While revenues for the three and nine month periods ended September 30, 2009 were also adversely impacted by general economic conditions and certain limitations with the Company's existing website, 2008 revenues for the three and nine months ended September 30, 2008 were generated under a dramatically higher cost structure than currently exists at the Company.

During the three months ended September 2009, our net loss decreased 70% to $693,015, from $2,322,753 during the three months ended September 30, 2008. During the nine months ended September 30, 2009 our net loss decreased 79% to $1,956,931 from $9,288,654. These decreases were primarily a result of the Company's ongoing initiative to dramatically reduce its cost structure in light of general economic conditions, without impairing its core operating capabilities. This includes significant reductions in headcount as the Company eliminated various positions and initiatives not deemed essential to its 2009 success, the elimination of several Marketplace sales personnel, and transitioning from a variety of third party outsourced vendor services to an in-house environment as summarized above. Average monthly recurring cash operating expenditures for the quarter ended September 30, 2008 were $642,512; average monthly recurring cash operating expenditures for the most recent quarter ended September 30, 2009 were $202,653, a decrease of 68 percent. These cost reductions contributed to our decrease in general and administrative costs generally.

As of September 30, 2008, the Company had 35 full time and 6 part time employees, and outsourced all of its design, software development, and marketing efforts related to the online brand building and launches of its main and employment related websites. The Company also maintained various third party outsourced vendor services relationships to include public relations, content, as well as hosting and database management. As of September 30, 2009, the Company had 19 full time employees, 3 part time employees, and minimal outsourced third party vendor services relationships.

Liquidity and Capital Resources

As of September 30, 2009 we had working capital deficit of ($83,164) as compared to working capital $1,540,527 as of December 31, 2008. At September 30, 2009 we had current assets of $421,881, including $256,519 in cash and cash equivalents. Our working capital and current assets decreased from the three month period ended June 30, 2009, and during the nine month period ended September 30, 2009, as we funded our operations from our resources on-hand. While we earned revenues during the quarter ended September 30, 2009, these revenues were not sufficient to cover our expenditures.

Effective July 2, 2009 the Company entered into a Redemption and Lock-Up Agreement with its former Chairman and Chief Executive Officer who is a significant Company shareholder who then owned approximately 15.5% of our outstanding common stock. Pursuant to the agreement the Company purchased five million shares of Company common stock in consideration for $200,000. The Company purchased the shares in order to make the shares available for other corporate purposes as the Board determined it was likely the Company would need to raise additional capital in 2009. The Company believes that having the shares available for issuance is in the Company's, and its shareholders', best interest in that any such issuances will now cause less dilution to the Company's existing shareholders.

With our projected sales, operations and expenditures we expect that our current financial resources are sufficient to fund our operations into the fourth calendar quarter of 2009. Our current resources on-hand are not sufficient to cover our costs through the end of fiscal 2009, however. During the fourth calendar quarter of fiscal 2009, we will need to raise additional funds through equity or debt financing to continue to fund our current and planned business operations. Management is currently pursuing various sources of capital. Current conditions in the financial markets have severely limited the availability of these resources, however, and we cannot assure you that sufficient capital will be available on reasonable terms, if at all. Moreover, as a result of on-going recent volatility in the capital markets and the depressed market price of our common stock it may be increasingly difficult for us to obtain additional debt or equity financing. As such, the ability of the Company to continue as a going concern is dependent on the receipt of additional financing and/or proceeds on the sale of assets and ultimately its ability to generate sufficient cash from operations and financing sources to meet obligations as they come due. If these activities are not successful, the Company may have to suspend or cease operations altogether.