10-Q 1 g6779.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended February 28, 2013 OR [ ] 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 000-53910 VuMEE, Inc. (Exact Name of Registrant as Specified in Its Charter) Nevada 35-2340897 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 3170 N. Federal Hwy., Suite 215 Lighthouse Point, FL Lauderdale, FL 33064 (Address of Principal Executive Offices) (Zip Code) (800) 854-0654 (Registrant's Telephone Number, Including Area Code) 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. [X] Yes [ ] No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant has been required to submit and post such files). [X] Yes [ ] No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] 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. The number of shares of Common Stock issued and outstanding as of April 9, 2013 was 60,001,000. VuMEE, Inc. Table of Contents Page Number ------ PART I - FINANCIAL INFORMATION................................................ 4 Item 1. Consolidated Financial Statements.................................... 4 Item 2. Management's Discussion and Analysis of Financial Condition and Result of Operations.................................................18 Item 3. Quantitative and Qualitative Disclosures About Market Risk...........26 Item 4. Controls and Procedures..............................................26 PART II - OTHER INFORMATION...................................................26 Item 1. Legal Proceedings....................................................26 Item 1A. Risk Factors.........................................................27 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds..........27 Item 3. Defaults Upon Senior Securities......................................27 Item 4. Mine Safety Disclosures..............................................27 Item 5. Other Information....................................................27 Item 6. Exhibits.............................................................27 SIGNATURES....................................................................29 2 FORWARD-LOOKING STATEMENTS Some of the statements contained in this Form 10-Q that are not historical facts are "forward-looking statements" which can be identified by the use of terminology such as "estimates," "projects," "plans," "believes," "expects," "anticipates," "intends," or the negative or other variations, or by discussions of strategy that involve risks and uncertainties. We urge you to be cautious of the forward-looking statements, that such statements, which are contained in this Form 10-Q, reflect our current beliefs with respect to future events and involve known and unknown risks, uncertainties and other factors affecting our operations, market growth, services, products and licenses. No assurances can be given regarding the achievement of future results, as actual results may differ materially as a result of the risks we face, and actual events may differ from the assumptions underlying the statements that have been made regarding anticipated events. All written forward-looking statements made in connection with this Form 10-Q that are attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements. Given the uncertainties that surround such statements, you are cautioned not to place undue reliance on such forward-looking statements. Our unaudited condensed consolidated financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our consolidated financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report. Unless otherwise specified in this quarterly report, all dollar amounts are expressed in United States dollars and all references to "common stock" refer to shares of our common stock. Our company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. As used in this quarterly report, the terms "we", "us", "our" and "our company" mean VuMee, Inc. and our subsidiary, Data Pangea LLC, a Florida limited liability corporation, unless otherwise indicated. 3 PART I - FINANCIAL INFORMATION ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS VuMEE, Inc. FKA Paperworks, Inc. (A Development Stage Company) Condensed Consolidated Balance Sheets (Unaudited) February 28, August 31, 2013 2012 -------- -------- ASSETS CURRENT ASSETS: Cash $ 1,314 $ 30,297 Accounts receivable 14,027 -- Prepaid expenses -- 2,860 -------- -------- TOTAL CURRENT ASSETS 15,341 33,157 -------- -------- PROPERTY AND EQUIPMENT: Computer equipment 64,810 64,810 Furniture and fixtures 2,000 2,000 Leasehold improvements 1,681 1,681 -------- -------- TOTAL PROPERTY AND EQUIPMENT 68,491 68,491 -------- -------- Less accumulated depreciation 14,938 3,826 Property and equipment, net 53,553 64,665 -------- -------- INTANGIBLE ASSETS: Website development 395,891 334,196 Intangible assets - other 81,229 125,000 Domain 4,800 -- -------- -------- TOTAL INTANGIBLE ASSETS 481,920 459,196 -------- -------- Less accumulated amortization 30,885 11,208 Intangible assets, net 451,035 447,988 -------- -------- Security deposits 25,640 10,512 -------- -------- TOTAL ASSETS $545,569 $556,322 ======== ======== See notes to condensed consolidated financial statements. 4 VuMEE, Inc. FKA Paperworks, Inc. (A Development Stage Company) Condensed Consolidated Balance Sheets (continued) (Unaudited)

See notes to condensed consolidated financial statements. 5 VuMEE, Inc. FKA Paperworks, Inc. (A Development Stage Company) Condensed Consolidated Statements of Operations (Unaudited)

See notes to condensed consolidated financial statements. 6 VuMEE, Inc. FKA Paperworks, Inc. (A Development Stage Company) Condensed Consolidated Statements of Cash Flows (Unaudited)

See notes to condensed consolidated financial statements. 7 VuMEE, Inc. FKA Paperworks, Inc. (A Development Stage Company) Condensed Consolidated Statements of Stockholders' Deficiency (Unaudited)

See notes to condensed consolidated financial statements 8 VuMEE, Inc. FKA Paperworks, Inc. (A Development Stage Company) Notes to Condensed Consolidated Financial Statements February 28, 2013 (Unaudited) 1. NATURE AND CONTINUANCE OF OPERATIONS VuMee, Inc., F/K/A PaperWorks, Inc. ("the Company") was incorporated under the laws of State of Nevada on April 30, 2008, with an authorized capital of 75,000,000 common shares with a par value of $0.001. The Company's year- end is August 31st. The Company is in the development stage. The Company, pursuant to a Plan of Merger dated April 23, 2012, deemed it advisable that VuMee, Inc. (it's wholly owned subsidiary) be merged into the Company with the Company remaining as the surviving corporation under the name "VuMee, Inc.". Also on April 23, 2012, the Company voted to effect a split of its authorized, issued and outstanding shares of common stock on a one (1) old for ten (10) new basis, such that its authorized capital shall increase from 75,000,000 shares to 750,000,000 shares of common stock and, correspondingly, its issued and outstanding shares increased from 6,000,000 shares to 60,000,000 shares of common stock, all with a par value of $0.001; no fractional shares were issued in connection with the forward split, in the case of a fractional share, the fractional share were rounded up. GOING CONCERN These consolidated financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has incurred losses since inception resulting in an accumulated deficit of $1,297,651, as at February 28, 2013 and further losses are anticipated in the development of its business raising substantial doubt about the Company's ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with existing cash on hand and loans from directors and or private placement of common stock. ACQUISITION On May 17, 2012, the Company closed a share exchange agreement with Data Pangea, LLC, a Florida Limited Liability Company, in exchange for 30,001,000 shares of its common stock. Concurrently a former director and officer cancelled 30,000,000 shares previously held. This transaction was accounted for as a reverse merger. These statements contain the balance sheet and operations of Data Pangea before and after the merger. Since, Data Pangea was started in March 2012, there is no financial information at February 28, 2012. 9 Data Pangea, LLC.is a limited liability company organized on March 22, 2012 under the laws of Florida. Data Pangea, LLC d/b/a VuMee was founded on the principle that celebrities should be monetized for video content that they publish to their social networks. Data Pangea is a development stage entity that was organized to purchase and utilize the intangible assets of a company related by certain common owners. VuMee allows celebrities with a social network fan base ("Celebrities") the ability to generate revenue by simply uploading video content to their social networks. The VuMee platform allows Celebrities the ability to share in the advertising revenues with the Company. VuMee is a fully functional celebrity video sharing platform via a mobile experience. VuMee has developed an automated mobile video content distribution network for distributing video content with paid advertising over mobile networks. VuMee's proprietary business model harnesses the global power of existing social networks, by providing a way to monetize Celebrities' friends and fans. VuMee provides the ability for anyone or any brand with a fan base, to upload video via the VuMee App on their mobile device or PC, and seamlessly share that content with their fan base. VuMee's proprietary business methodology and software provides the method of coupling paid advertising with video content which allows the Celebrity to generate revenue through the VuMee platform. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of financial information have been included. Operating results for the period, March 22, 2012 through February 28, 2013 are not necessarily indicative of the results that may be expected for the year ending August 31, 2013. PRINCIPLES OF CONSOLIDATION These condensed consolidated financial statements include the amounts of the Company and its wholly owned subsidiary Data Pangea, LLC, company organized in the state of Nevada. All material inter-company balances and transactions were eliminated upon consolidation. DEVELOPMENT STAGE COMPANY The Company complies with the ASC 915, its characterization of the Company as a Development Stage enterprise. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. We believe our estimates and assumptions are reasonable; 10 however, such estimates and assumptions are subject to a number of risks and uncertainties that may cause actual results to differ materially from such estimates. RISKS AND UNCERTAINTIES The Company's business could be impacted by price pressure on its product manufacturing, acceptance of its products in the market place, new competitors, changes in federal and/or state legislation and other factors. If the Company is unsuccessful in securing adequate liquidity, its plans may be curtailed. Adverse changes in these areas could negatively impact the Company's financial position, results of operations and cash flows. CASH Cash equivalents include all highly liquid debt instruments with original maturities of three months or less which are not securing any corporate obligations. CONCENTRATIONS OF CREDIT RISK AND FAIR VALUE Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and accounts receivable. The Company maintains cash deposits primarily with three financial institutions. All deposits are fully insured as of February 28, 2013. The Company has not previously experienced any losses on such deposits. Additionally, the Company performs periodic evaluations of the relative credit ratings of these institutions as part of its investment strategy. Concentrations of credit risk with respect to accounts receivable are limited due to accelerated payment terms in current customer contracts and creditworthiness of the current customer base. The carrying amounts of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued expenses approximate fair value due to the short-term nature of these instruments. The carrying value of loans and notes payable approximate their fair value based on their terms which reflect market conditions existing as of February 28, 2013. ACCOUNTS RECEIVABLE, CREDIT Accounts receivable consist of amounts due for advertising on the website. An allowance for doubtful accounts is considered to be established for any amounts that may not be recoverable, which is based on an analysis of the Company's customer credit worthiness, and current economic trends. Receivables are determined to be past due, based on payment terms of original invoices. The Company does not typically charge interest on past due receivables. Based on management's review of accounts receivable, an allowance for doubtful accounts was not considered necessary at February 28, 2013. There were no accounts receivables at August 31, 2012. 11 PROPERTY AND EQUIPMENT Property and equipment is stated at cost. Depreciation is computed by the straight-line method over estimated useful lives (3-7 years). Intellectual property assets are stated at their fair value acquisition cost. Amortization of intellectual property assets is calculated by the straight line method over their estimated useful lives (3- 15 years). Historical costs are reviewed and evaluated for their net realizable value of the assets. The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation and amortization period or the unamortized balance is warranted. Based upon its most recent analysis, the Company believes that no impairment of property and equipment existed at February 28, 2013. Depreciation expenses were $5,556, $11,113 and $14,938, for the three and six months ended February 28, 2013 and from March 22, 2012 (inception) through February 28, 2013, respectively. LONG-LIVED ASSETS Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable. When required impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. When fair values are not available, the Company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets. We did recognize impairment losses for the period ended November 30, 2012 in the amount of $55,422. There are no additional impairment losses as of February 28, 2013. REVENUE RECOGNITION Revenues of the Company will be from the sale of advertising on the web-site and video viewing platform. Revenues will be recognized once all of the following criteria have been met: * persuasive evidence of an arrangement exists; * delivery of Facebook's obligations to our customer has occurred; * the price is fixed or determinable; and * collectability of the related receivable is reasonably assured. Advertising revenue is generated from the display of advertisements on our website and viewing platform. The arrangements are evidenced by either online acceptance of terms and conditions or contracts that stipulate the types of advertising to be delivered, the timing and the pricing. The typical term of an advertising arrangement is approximately 30 days with billing generally occurring after the delivery of the advertisement. We will recognize revenue from the display of impression-based advertisements on our website in the contracted period when the impressions are delivered. Impressions are considered delivered when an advertisement appears in pages delivered to users. 12 We will also recognize revenue from the delivery of click-based advertisements on our website. Revenue associated with these advertisements is recognized in the period that a user clicks on an advertisement. ADVERTISING The costs of advertising are expensed as incurred. Advertising expenses are included in the Company's operating expenses. Advertising expenses were $0, for the three and six months ended February 28, 2013 and from March 22, 2012 (inception) through February 28, 2013, respectively. RESEARCH AND DEVELOPMENT Research expenditure is recognized as an expense when it is incurred. Development expenditure is recognized as an expense except that expenditure incurred on development projects are capitalized as long-term assets to the extent that such expenditure is expected to generate future economic benefits. Development expenditure is capitalized if, and only if an entity can demonstrate all of the following: 1. its ability to measure reliably the expenditure attributable to the asset under development; 2. the product or process is technically and commercially feasible; 3. its future economic benefits are probable; 4. its ability to use or sell the developed asset; 5. the availability of adequate technical, financial and other resources to complete the asset under development; and 6. its intention to complete the intangible asset and use or sell. INCOME TAXES The Company accounts for income taxes under the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. EARNINGS PER SHARE The Company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260, "Earnings per Share". Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of the Company. RECENT ACCOUNTING PRONOUNCEMENTS The Company reviews new accounting standards as issued. No new standards had any material effect on these consolidated financial statements. The accounting pronouncements issued subsequent to the date of these consolidated financial statements that were considered significant by management were evaluated for the potential effect on these consolidated financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these consolidated financial statements as presented and does not anticipate the need for any future restatement of these consolidated financial statements because of the retro-active application of any accounting pronouncements issued subsequent to February 28, 2013 through the date these consolidated financial statements were issued. 13 3. FINANCIAL INSTRUMENTS AND FAIR VALUES The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Fair value estimates are made at a specific point in time, based upon relevant market information about the financial instrument. The carrying amount of cash and other assets approximates fair value due to the short-term maturities of these instruments. The fair values of all other financial instruments, including debt, approximate their book values as the instruments are short-term in nature or contain market rates of interest. 4. INTANGIBLE ASSETS During 2011 and the first months of 2012, VuMee, LLC a Delaware limited liability company, was developing a social media video sharing platform. In March 2012, as part of a settlement agreement between members, VuMee, LLC transferred the intangible assets developed to VuMee Acquisition LLC, also a Delaware limited liability company. On March 23, 2012 VuMee Acquisition and Data Pangea entered into an asset purchase agreement, whereby Data Pangea purchased all of the intangible assets of VuMee Acquisition. The final value of each asset and the allocation of the purchase price of the intangible assets has not yet been determined. Current estimates are listed below. Certain members of VuMee, LLC and VuMee, Acquisition LLC also have an interest in Data Pangea. Due to the related party relationship, the recorded values of the intangible assets acquired by Data Pangea will be limited to the consideration given. Identifiable intangible assets at February 28, 2013 include the following: Amortization Amount Period (years) ------ -------------- Trade names, logos, trademarks $ 10,000 10 years Internet domain name 4,800 10 years Software 71,229 3 years Website 395,891 3 years -------- TOTAL $481,920 ======== Amortization expenses were $17,414, $25,254 and $36,463, for the three and six months ended February 28, 2013 and from March 22, 2012 (inception) through February 28, 2013, respectively. During the quarter ended November 30, 2012, the Company impaired all of its original intangible assets related to patents, customer lists, and infrastructure - procedures, manual and records, in the amount of $55,422. 14 5. NOTE PAYABLE - SHORT-TERM The Company has a note payable in the amount of $150,000. The interest is at 8% per annum and shall be paid quarterly in arrears commencing October 15, 2012 and quarterly thereafter. The note matures on June 30, 2013. 6. LINE OF CREDIT On November 26, 2012, we entered into a line of credit agreement with Coventry Capital LLC pursuant to which the investor will make available up to $2,000,000 by way of advances. Pursuant to the terms of the agreement, all indebtedness shall be paid to the investor on November 26, 2013 and thereon, shall bear interest at the rate of 8% per annum, calculated annually. The investor has the option to, at any time, convert any portion of outstanding debt into shares of our common stock at the closing price of our stock on the day preceding the notice to convert. The line of credit balance as of February 28, 2013 was $149,950. 7. DUE TO RELATED PARTY As of February 28, 2013, the Company has loans payable to stockholders in the amount of $784,688. Interest at 12% per annum and will accrue quarterly beginning August 29, 2012 with all unpaid interest and principal payable on September 1, 2013. 8. COMMON STOCK The total number of common shares authorized that may be issued by the Company is 750,000,000 shares with a par value of one tenth of one cent ($0.001) per share. No other class of shares are authorized. On August 31, 2008, the company issued 3,000,000 pre-split shares of the common stock for total cash proceeds of $15,000. On July 13, 2009, the Company issued 3,000,000 pre-split shares of common stock for total cash proceeds of $45,000.00. On May 17, 2012 the Company issued 30,001,000 shares of its common stock for the acquisition of Data Pangea, LLC, and cancelled 30,000,000 shares of common stock of a former director and officer. At February 28, 2013 there were no outstanding stock options or warrants. As of February 28, 2013, the Company had 60,001,000 common shares issued and outstanding. 9. COMMITMENTS AND CONTINGENCIES LEASES VuMEE is leasing corporate office space located in Pompano Beach, Florida from an unrelated third party. The lease was effective May 4, 2012, and provides for a term of three years and two months with monthly rental payments of $2,696 with 3% annual increases. The lease provides for a one, three year renewal unless 15 either party provides at least 30 days' prior written notice to the other of its intent to terminate the lease upon expiration of the then-current term. The total rents paid were $19,035 and $26,862, for the six months ended February 28, 2013 and from March 22, 2012 (inception) through February 28, 2013, respectively. Effective March 1, 2013, the Company relocated and entered into a new lease agreement. The monthly payment are $800 and the term of the lease is for 25 months ending March 31, 2015. The Company leases equipment under several operating leases from a third party. The leases end in October 2014, and the monthly lease payments are approximately $10,000. The lease payments were recorded as computer and internet expenses. Lease expenses were approximately $60,000 and $100,000 for the six months ended February 28, 2013 and from March 22, 2012 (inception) through February 28, 2013, respectively. LEGAL PROCEEDINGS From time to time, the Company is party to business disputes arising in the normal course of its business operations. The Company's management believes that none of these actions, standing alone, or in the aggregate, is currently material to the Company's operations or financial condition. EMPLOYMENT AGREEMENTS On September 1, 2012, the Company entered into one year employment agreements with Michael Spiegel, Chief Executive Officer and Lou Rosen, Chief Financial Officer for monthly compensation in the amount of $12,500 and $12,500, respectively. The amount of $150,000 had been accrued and reflected on the balance sheet as of February 28, 2013. 10. INCOME TAXES As of February 28, 2013, the Company had net operating loss carry forwards of approximately $1,297,651 that may be available to reduce future years' taxable income through 2032. Future tax benefits which may arise as a result of these losses have not been recognized in these consoldiatd financial statements, as their realization is determined not likely to occur and accordingly, the Company has recorded a valuation allowance for the deferred tax asset relating to these tax loss carry-forwards. Significant components of the Company's net deferred income taxes are as follows: March 22, 2012 (Inception) through February 28, 2013 ----------------- Deferred tax assets: Net operating loss carryforwards $ 454,178 --------- Deferred tax assets 454,178 Less valuation allowance (454,178) --------- Net deferred tax assets $ -- ========= 16 A reconciliation of the U.S. statutory federal income tax rate to the effective income tax rate (benefit) follows: March 22, 2012 (Inception) through February 28, 2013 ----------------- U.S. Federal Statutory rate (35.00%) State income taxes, net of federal benefit (3.58%) Change in valuation allowance 38.58% ------ 0.00% ====== In assessing the ability to realize a portion of the deferred tax assets, management considers whether it is more than likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities and projected future taxable income in making the assessment. After consideration of the evidence, both positive and negative, management has determined that a $454,178 valuation allowance at February 28, 2013 is necessary to reduce the deferred tax assets to the amount that will more likely than not be realized. The change in the valuation allowance for the current year is $246,980. At February 28, 2013, the Company has available net operating loss carryforwards for federal and state income tax purposes of $1,297,651 expiring at various times through 2032. 11. VALUATION AND QUALIFYING ACCOUNTS A summary of the activity in the Company's valuation and qualifying accounts is as follows:

17 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS CORPORATE OVERVIEW Our company was incorporated under the laws of State of Nevada on April 30, 2008 under the name PaperWorks, Inc., with an authorized capital of 75,000,000 common shares with a par value of $0.001. On May 2, 2012, we filed Articles of Merger with the Nevada Secretary of State to change the name of our company to "VuMee Inc.", to be effected by way of a merger with our wholly-owned subsidiary VuMee Inc., which was created solely for the name change. Also on May 2, 2012, we filed a Certificate of Change with the Nevada Secretary of State to give effect to a forward split of our authorized and issued and outstanding shares of common stock on a 10 new for 1 old basis and, consequently, our company's authorized capital increased from 75,000,000 to 750,000,000 shares of common stock and our issued and outstanding shares of common stock shall increased from 6,000,000 to 60,000,000 shares of common stock, all with a par value of $0.001. These amendments became effective on May 8, 2012 upon approval from the Financial Industry Regulatory Authority ("FINRA"). The forward split and name change became effective with the Over-the-Counter Bulletin Board at the opening of trading on May 8, 2012. Our new symbol is "VUME". Our CUSIP number is 92922C105. CURRENT BUSINESS On May 17, 2012, our company closed a share exchange agreement with Data Pangea, LLC, a Florida limited liability company, in exchange for 30,001,000 shares of its common stock. Concurrently a former director and officer of our company cancelled 30,000,000 shares previously held. This transaction was accounted for as a reverse merger. These statements contain the balance sheet and operations of Data Pangea before and after the merger. Since, Data Pangea was started on March 22, 2012 there is no audited balance sheet at February 28, 2012. Data Pangea is a limited liability company, organized on March 22, 2012 under the laws of Florida. Data Pangea, d/b/a VuMee, was founded on the principle that celebrities should be monetized for video content that they publish to their social networks. Our company is a development stage entity that was organized to purchase and utilize the intangible assets of a company related by certain common owners. VuMee allows celebrities with a social network fan base the ability to generate revenue by simply uploading video content to their social networks. The VuMee platform allows celebrities the ability to share in the advertising revenues with our company. VuMee is a fully functional celebrity video sharing platform via a mobile experience. VuMee has developed an automated mobile video content distribution network for distributing video content with paid advertising over mobile networks. VuMee's proprietary business model harnesses the global power of existing social networks, by providing a way to monetize celebrities' friends and fans. VuMee provides the ability for anyone or any brand with a fan base, to 18 upload video via the VuMee App on their mobile device or PC, and seamlessly share that content with their fan base. VuMee's proprietary business methodology and software provides the method of coupling paid advertising with video content which allows the celebrity to generate revenue through the VuMee platform. On June 29, 2012, our subsidiary, Data Pangea LLC, entered into a loan agreement with MLJP LLC, whereby MLJP has agreed to lend US$350,000 to Data Pangea. This loan is evidenced by a promissory note pursuant to which the principal amount will be due and payable on the earlier of September 1, 2013. The loan will bear interest at the rate of 12% per annum, payable in quarterly, in arrears, commencing August 29, 2012, and quarterly thereafter. On November 26, 2012, we entered into a line of credit agreement with Coventry Capital LLC pursuant to which Coventry will make available up to $2,000,000 by way of advances. Pursuant to the terms of the agreement, all indebtedness shall be paid to Coventry on November 26, 2013 and thereon, shall bear interest at the rate of 8% per annum, calculated annually. Coventry has the option to, at any time, convert any portion of the outstanding debt into shares of our common stock at the closing price of our stock on the day preceding the notice to convert. RESULTS OF OPERATIONS The following summary of our results of operations should be read in conjunction with our consolidated financial statements for the quarter ended February 28, 2013 which are included herein. THREE AND SIX MONTHS ENDED FEBRUARY 28, 2013 AND FROM MARCH 22, 2012 (INCEPTION) TO FEBRUARY 28, 2013. Cumulative From Three Months Six Months March 22, 2012 Ended Ended (Inception) to February 28, February 28, February 28, 2013 2013 2013 ------------ ------------ ------------ Revenues $ 19,413 $ 34,029 $ 34,029 Expenses $ 323,645 $ 739,686 $ 1,331,680 Net Loss $ (304,232) $ (705,657) $ (1,297,651) 19 Expenses Our operating expenses for the three and six months ended February 28, 2013 and from March 22, 2012 (inception) to February 28, 2013 are outlined in the table below:

NET LOSS For the three and six months ended February 28, 2013 and from March 22, 2012 (inception) to February 28, 2013, our company incurred a net loss of $304,232, $705,657 and $1,297,651, respectively. Most of the expenses for the quarter were due to payroll and related expenses, management fees, impairment losses, marketing and computer expenses. LIQUIDITY AND CASH REQUIREMENTS Working Capital At At February 28, August 31, 2013 2012 ------------ ------------ Current Assets $ 15,341 $ 33,157 Current Liabilities $ 1,343,220 $ 238,316 Working Capital $ (1,327,879) $ (205,159)

20 As of February 28, 2013 we had $1,314 in cash, current assets of $15,341, current liabilities of $1,343,220 and a working capital deficit of ($1,327,879). We currently have $1,314 cash in the bank. We do not expect to satisfy our cash requirements for business operations for the next 12 months with our current cash in the bank. We had working capital deficit of ($1,327,879) at February 28, 2013. Our operating and capital requirements in connection with supporting our expanding operations and introducing new products have been and will continue to be significant to us. Since inception, our losses from operations along with the increased costs and working capital required to grow our business were satisfied through the initial contribution. CASH FLOWS FOR THE SIX MONTHS ENDED FEBRUARY 28, 2013 AND FROM MARCH 22, 2012 (INCEPTION) THROUGH FEBRUARY 28, 2013 CASH FLOWS USED IN OPERATING ACTIVITIES Operating activities used net cash for the six months ended February 28, 2013 and from March 22, 2012 (inception) through February 28, 2013 of ($469,897) and ($977,491), respectively. Net cash used reflects an adjusted net loss for the six months ended February 28, 2013 and from March 22, 2012 (inception) through February 28, 2013 of $705,657 and $1,297,651, respectively. The period adjustments for various items which impact net loss but do not impact cash during the period, such as impairment loss, amortization and depreciation, and changes in accounts receivable, prepaid expenses, security deposits, accounts payable, accrued management fees, and accrued interest payable. CASH FLOWS USED IN INVESTING ACTIVITIES Our investing activities used $83,724 for the six months ended February 28, 2013 and $605,833 in net cash from March 22, 2012 (inception) through February 28, 2013. Net cash used is composed primarily of purchases of furniture and equipment, website development costs and purchase of intangibles. CASH FLOWS FROM FINANCING ACTIVITIES Our financing activities provided cash in the amount $524,638 for the six months ended February 28, 2013 and $1,584,638 from March 22, 2012 (inception) through February 28, 2013. Net cash provided was composed primarily of related party loans, line of credit, proceeds received on notes payable and initial contributions of capital. FUTURE FINANCING If we do not generate substantial revenue from operations we will require additional financing to fund our planned operations. We currently do not have committed sources of additional financing and may not be able to obtain additional financing, particularly, if the volatile conditions in the stock and financial markets, and more particularly the market for an early development stage company stocks persist. 21 There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, if and when it is needed, we will be forced to delay or scale down some or all of our development activities or perhaps even cease the operation of our business. Since inception we have funded our operations primarily through equity financings and we expect that we will continue to fund our operations through the equity and debt financing if revenues are insufficient. If we raise additional financing by issuing equity securities, our existing stockholders' ownership will be diluted. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. There is no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his, her, or its investment in our common stock. Further, we may continue to be unprofitable. On June 29, 2012, our subsidiary Data Pangea LLC entered into a loan agreement with MLJP LLC, whereby MLJP has agreed to lend $350,000 to Data Pangea. This loan is evidenced by a promissory note pursuant to which the principal amount will be due and payable on the earlier of September 1, 2013. The loan will bear interest at the rate of 12% per annum, payable in quarterly, in arrears, commencing August 29, 2012, and quarterly thereafter. On November 26, 2012, we entered into a line of credit agreement with Coventry Capital LLC pursuant to which Coventry will make available up to $2,000,000 by way of advances. Pursuant to the terms of the agreement, all indebtedness shall be paid to Coventry on November 26, 2013 and thereon, shall bear interest at the rate of 8% per annum, calculated annually. Coventry has the option to, at any time, convert any portion of the outstanding debt into shares of our common stock at the closing price of our stock on the day preceding the notice to convert. OFF BALANCE SHEET ARRANGEMENTS We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders. CRITICAL ACCOUNTING POLICIES Our unaudited consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of financial information have been included. Operating results for the period, March 22, 2012 through February 28, 2013 are not necessarily indicative of the results that may be expected for the year ending August 31, 2013. 22 DEVELOPMENT STAGE COMPANY Our company complies with the ASC 915, its characterization of our company as a Development Stage enterprise. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, they may ultimately differ from actual results. We believe our estimates and assumptions are reasonable; however, such estimates and assumptions are subject to a number of risks and uncertainties that may cause actual results to differ materially from such estimates. RISKS AND UNCERTAINTIES Our company's business could be impacted by price pressure on its product manufacturing, acceptance of its products in the market place, new competitors, changes in federal and/or state legislation and other factors. If our company is unsuccessful in securing adequate liquidity, its plans may be curtailed. Adverse changes in these areas could negatively impact our company's financial position, results of operations and cash flows. CASH Cash equivalents include all highly liquid debt instruments with original maturities of three months or less which are not securing any corporate obligations. CONCENTRATIONS OF CREDIT RISK AND FAIR VALUE Financial instruments that potentially subject our company to concentrations of credit risk consist principally of cash and accounts receivable. Our company maintains cash deposits primarily with three financial institutions. All deposits are fully insured as of February 28, 2013. Our company has not previously experienced any losses on such deposits. Additionally, our company performs periodic evaluations of the relative credit ratings of these institutions as part of its investment strategy. Concentrations of credit risk with respect to accounts receivable are limited due to accelerated payment terms in current customer contracts and creditworthiness of the current customer base. The carrying amounts of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued expenses approximate fair value due to the short-term nature of these instruments. The carrying value of loans and notes payable approximate their fair value based on their terms which reflect market conditions existing as of February 28, 2013. 23 ACCOUNTS RECEIVABLE, CREDIT Accounts receivable consist of amounts due for advertising on the website. An allowance for doubtful accounts is considered to be established for any amounts that may not be recoverable, which is based on an analysis of our company's customer credit worthiness, and current economic trends. Receivables are determined to be past due, based on payment terms of original invoices. Our company does not typically charge interest on past due receivables. Based on management's review of accounts receivable, an allowance for doubtful accounts was not considered necessary at February 28, 2013. There were no accounts receivables at August 31, 2012. PROPERTY AND EQUIPMENT Property and equipment is stated at cost. Depreciation is computed by the straight-line method over estimated useful lives (3-7 years). Intellectual property assets are stated at their fair value acquisition cost. Amortization of intellectual property assets is calculated by the straight line method over their estimated useful lives (3- 15 years). Historical costs are reviewed and evaluated for their net realizable value of the assets. The carrying amount of all long-lived assets is evaluated periodically to determine if adjustment to the depreciation and amortization period or the unamortized balance is warranted. Based upon its most recent analysis, our company believes that no impairment of property and equipment existed at February 28, 2013. Depreciation expenses were $5,556, $11,113 and $14,938, for the three and six months ended February 28, 2013 and from March 22, 2012 (inception) through February 28, 2013, respectively. LONG-LIVED ASSETS Long-lived assets such as property, equipment and identifiable intangibles are reviewed for impairment whenever facts and circumstances indicate that the carrying value may not be recoverable. When required impairment losses on assets to be held and used are recognized based on the fair value of the asset. The fair value is determined based on estimates of future cash flows, market value of similar assets, if available, or independent appraisals, if required. If the carrying amount of the long-lived asset is not recoverable from its undiscounted cash flows, an impairment loss is recognized for the difference between the carrying amount and fair value of the asset. When fair values are not available, Our company estimates fair value using the expected future cash flows discounted at a rate commensurate with the risk associated with the recovery of the assets. During the quarter ended November 30, 2012, our company impaired all of its original intangible assets related to patents, customer lists, and infrastructure - procedures, manual and records, in the amount of $55,422. Amortization expenses were $17,414, $25,254 and $36,463, for the three and six months ended February 28, 2013 and from March 22, 2012 (inception) through February 28, 2013, respectively. REVENUE RECOGNITION Revenues of our company will be from the sale of advertising on the web-site and video viewing platform. Revenues will be recognized once all of the following criteria have been met: * persuasive evidence of an arrangement exists; * delivery of Facebook's obligations to our customer has occurred; 24 * the price is fixed or determinable; and * collectability of the related receivable is reasonably assured. Advertising revenue is generated from the display of advertisements on our website and viewing platform. The arrangements are evidenced by either online acceptance of terms and conditions or contracts that stipulate the types of advertising to be delivered, the timing and the pricing. The typical term of an advertising arrangement is approximately 30 days with billing generally occurring after the delivery of the advertisement. We will recognize revenue from the display of impression-based advertisements on our website in the contracted period when the impressions are delivered. Impressions are considered delivered when an advertisement appears in pages delivered to users. We will also recognize revenue from the delivery of click-based advertisements on our website. Revenue associated with these advertisements is recognized in the period that a user clicks on an advertisement. ADVERTISING The costs of advertising are expensed as incurred. Advertising expenses are included in our company's operating expenses. Advertising expenses were $0, for the three and six months ended February 28, 2013 and from March 22, 2012 (inception) through February 28, 2013, respectively. RESEARCH AND DEVELOPMENT Research expenditure is recognized as an expense when it is incurred. Development expenditure is recognized as an expense except that expenditure incurred on development projects are capitalized as long-term assets to the extent that such expenditure is expected to generate future economic benefits. Development expenditure is capitalized if, and only if an entity can demonstrate all of the following: 1. its ability to measure reliably the expenditure attributable to the asset under development; 2. the product or process is technically and commercially feasible; 3. its future economic benefits are probable; 4. its ability to use or sell the developed asset; 5. the availability of adequate technical, financial and other resources to complete the asset under development; and 6. its intention to complete the intangible asset and use or sell. INCOME TAXES Our company accounts for income taxes under the liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. 25 EARNINGS PER SHARE Our company computes basic and diluted earnings per share amounts in accordance with ASC Topic 260, "Earnings per Share". Basic earnings per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock that could share in the earnings of our company. 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 EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the SECURITIES EXCHANGE ACT OF 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure. As of the end of our quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our chief executive officer (our principal executive officer) and our chief financial officer (our principal financial officer and principle accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report. CHANGES IN INTERNAL CONTROLS During the period covered by this report there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest. 26 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 None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None. ITEM 4. MINE SAFETY DISCLOSURES Not applicable ITEM 5. OTHER INFORMATION None. ITEM 6. EXHIBITS Exhibit No. Description ----------- ----------- (2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR SUCCESSION 2.1 Share Exchange - Agreement - between VuMee Inc. and Data Pangea LLC dated May 7 2012 (incorporated by reference to our Current Report on Form 8-K filed on May 10, 2012) (3) ARTICLES OF INCORPORATION; BYLAWS 3.1 Articles of Incorporation (incorporated by reference to our Registration Statement on Form S-1 filed on December 5, 2008) 3.2 Bylaws (incorporated by reference to our Registration Statement on Form S-1 filed on December 5, 2008) 3.3 Articles of Merger (incorporated by reference to our Current Report on Form 8-K filed on May 10, 2012) 3.4 Certificate of Change (incorporated by reference to our Current Report on Form 8-K filed on May 10, 2012) (10) MATERIAL CONTRACTS 10.1 NFS Lease Agreement for equipment dated March 3, 2012 (Incorporated by reference to our Current Report on Form 8-K filed on May 25, 2012) 10.2 Agreement with Cogent Communications dated March 28, 2012 (Incorporated by reference to our Current Report on Form 8-K filed on May 25, 2012) 10.3 Agreement with Terremark dated April 16, 2012 (Incorporated by reference to our Current Report on Form 8-K filed on May 25, 2012) 27 10.4 Agreement with NTT Communications dated April 23, 2012 (Incorporated by reference to our Current Report on Form 8-K filed on May 25, 2012) 10.5 Agreement with American Registry for Internet Numbers, Ltd. Dated April 30, 2012 (Incorporated by reference to our Current Report on Form 8-K filed on May 25, 2012) 10.6 Agreement with Open X Banner Ads and Video dated May 7, 2012 (Incorporated by reference to our Current Report on Form 8-K filed on May 25, 2012) 10.7 Loan Agreement among Data Pangea LLC and MLJP LLC dated June 29, 2012 (Incorporated by reference to our Current Report on Form 8-K filed on July 6, 2012) 10.8 Consulting Agreement with Michael Spiegel dated September 1, 2012 (Incorporated by reference to our Current Report on Form 8-K/A filed on September 13, 2012) 10.9 Consulting Agreement with Louis Rosen dated September 1, 2012 (Incorporated by reference to our Current Report on Form 8-K/A filed on September 13, 2012) 10.10 Line of Credit Financing Agreement with Coventry Capital LLC dated November 26, 2012 (Incorporated by reference to our Current Report on Form 8-K filed on December 5, 2012) (31) RULE 13A-14 / 15D-14 CERTIFICATIONS 31.1* Certification of Acting Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of Acting Principal Financial Officer and Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (32) SECTION 1350 CERTIFICATIONS 32.1* Certification of Acting Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2* Certification of Acting Principal Financial Officer and Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101** INTERACTIVE DATA FILES 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. ** Submitted herewith. Users of this data are advised that, pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise are not subject to liability under those sections. 28 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. VUMEE, INC. Dated: April 15, 2013 By: /s/ Michael Spiegel ------------------------------------ Michael Spiegel Chief Executive Officer, President, and Director (Principal Executive Officer) Dated: April 15, 2013 By: /s/ Louis Rosen ------------------------------------ Louis Rosen Chief Financial Officer and Director (Principal Financial Officer and Principal Accounting Officer) 29

VUMEE INC. 10-Q