UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 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 June 30, 2012





 ̈
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 000-52988





NUVEL HOLDINGS, INC.


(Exact name of registrant as specified in its charter)





Florida

27-1230588(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)





315 University Avenue, Los Gatos, California 95030


(Address of principal executive offices)





(408) 899-5981


(Registrant's telephone number)





Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  ̈  No x





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.





Large accelerated filer    ̈
Accelerated filer                     ̈Non-accelerated filer      ̈

Do not check if a smaller reporting company
Smaller reporting company  x





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





As of August 20, 2012 the registrant had 11,838,040 shares of common stock, par value $.001 per share, issued and outstanding.













Table of Contents














TABLE OF CONTENTS








PagePART I  FINANCIAL INFORMATIONItem 1.
Financial Statements.

F - 1Condensed Consolidated Balance Sheets As of June 30, 2012 (Unaudited) and December 31, 2011

F - 1Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2012 and 2011, and for the Period from January 20, 2010 (inception) to June 30, 2012

F - 2Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2012 and 2011, and for the Period from January 20, 2010 (inception) to June 30, 2012

F - 3Notes to the Unaudited Condensed Consolidated Financial Statements

F - 4 - F - 11Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations

3Item 3.
Quantitative and Qualitative Disclosures About Market Risk

7Item 4.
Controls and Procedures

7PART II  OTHER INFORMATIONItem 1.
Legal Proceedings

8Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds

8Item 6.
Exhibits

8SignaturesExhibits/Certifications














- 2 -
 Table of Contents








Item 1.   FINANCIAL STATEMENTS.











NUVEL HOLDINGS, INC. AND SUBSIDIARY(A COMPANY IN THE DEVELOPMENT STAGE)CONDENSED CONSOLIDATED BALANCE SHEETSAssets

June 30,


December 31,2012


2011Current assets:

(unaudited)Cash

$
-


$
34,792Prepaid expenses


1,000



2,900Deferred financing costs, net


-



36,666Total current assets

$
1,000


$
74,358Capitalized software costs


48,000



-Total assets

$
49,000


$
74,358Liabilities and Stockholders’ DeficiencyCurrent liabilities:Accounts payable

$
419,696


$
246,545Advances from related party


124,200



-Cash overdraft


58,660



-Accrued interest


506,588



306,060Accrued payroll and related expenses


524,892



375,333Other accrued expenses


-



25,000Notes payable, net of debt discount of $0 and $80,500 as ofJune 30, 2012 and December 31, 2011, respectively (see notes 2 & 5)


665,000



484,500Convertible notes payable, net of debt discount of $43,880 and $1,316,849as of June 30, 2012 and December 31, 2011, respectively (sees note 2 & 4)


2,776,120



1,383,151Warrant liabilities


1,733,071



2,331,149Total current liabilities


6,808,227



5,151,738Commitments and ContingenciesStockholders' deficiency:Preferred stock, $0.001 par value; authorized, 15,000,000 shares;no issued or outstanding shares as of June 30, 2012 and December 31, 2011


-



-Preferred stock issuable


385,000



-Common stock, $0.001 par value; authorized, 100,000,000 shares;Issued and outstanding, 11,764,706 shares as of June 30, 2012 and December 31, 2011


11,765



11,765Additional paid in capital


1,881,115



1,881,115Deficit accumulated during the development stage


(9,037,107
)


(6,970,260
)Total stockholders' deficiency


(6,759,227
)


(5,077,380
)Total liabilities and stockholders' deficiency

$
49,000


$
74,358The accompanying notes are an integral part of these condensed consolidated financial statements.













F - 1
 Table of Contents








NUVEL HOLDINGS, INC. AND SUBSIDIARY(A COMPANY IN THE DEVELOPMENT STAGE)CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)Three Months Ended

June 30, 2012


Three Months Ended

June 30, 2011


Six Months Ended

June 30, 2012


Six Months Ended

June 30, 2011


Period from

January 20, 2010

(Inception) to

June 30, 2012Revenue

$
-


$
-


$
-


$
-


$
-Operating expenses:Marketing and promotion


12,895



10,034



31,007



17,573



137,082Payroll and benefits


298,807



108,102



592,316



407,028



2,521,793Merger costs


-



-



-



-



2,614,780General and administrative


92,857



74,227



305,670



130,134



803,040Research and development


21,288



97,600



142,269



158,488



676,632425,847



289,963



1,071,262



713,223



6,753,327Total operating expensesOperating loss


(425,847
)


(289,963
)


(1,071,262
)


(713,223
)


(6,753,327
)Other income (expense)Change in fair value of warrant liabilities


579,724



8,250



686,678



14,875



483,778Amortization of debt discount


(192,482
)


(20,542
)


(1,442,069
)


(39,021
)


(1,840,968
)Amortization of deferred financing costs


(8,168
)


(66,000
)


(39,666
)


(124,167
)


(420,000
)Interest expense


(101,541
)


(90,872
)


(200,528
)


(159,228
)


(506,590
)Total other income (expense)


277,533



(169,164
)


(995,585
)


(307,541
)


(2,283,780
)Net loss

$
(148,314
)

$
(459,127
)

$
(2,066,847
)

$
(1,020,764
)

$
(9,037,107
)Net loss per common share: basic and diluted

$
(0.01
)

$
(0.05
)

$
(0.18
)

$
(0.10
)Weighted average number of common sharesoutstanding: basic and diluted


11,764,706



10,000,000



11,764,706



10,000,000The accompanying notes are an integral part of these condensed consolidated financial statements.












F - 2
 Table of Contents












NUVEL HOLDINGS, INC. AND SUBSIDIARY(A COMPANY IN THE DEVELOPMENT STAGE)CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)Six Months Ended

June 30, 2012


Six Months Ended

June 30, 2011


Period from

January 20, 2010

(Inception) to

June 30, 2012Cash flows from operating activities:Net loss

$
(2,066,847
)

$
(1,020,764
)

$
(9,037,107
)Adjustments to reconcile net loss to net cashused in operating activities:Amortization of debt discount


1,442,069



39,021



1,840,968Amortization of deferred financing costs


39,666



124,167



420,000Change in fair value of warrant liabilities


(686,678
)


(14,875
)


(483,778
)Non-cash merger costs


-



-



2,224,780Changes in operating assets and liabilities:Accounts payable


173,151



105,099



419,697Accrued interest


200,528



159,228



506,588Accrued payroll and related expenses


149,559



-



524,892Other accrued expenses


(25,000
)


-



-Prepaid expenses


1,900



-



(1,000
)Net cash used in operating activities


(771,652
)


(608,124
)


(3,584,960
)Cash flows from investing activities:Capitalized software costs


(48,000
)


-



(48,000
)Net cash used in investing activities


(48,000
)


-



(48,000
)Cash flows from financing activities:Proceeds from notes payable


100,000



80,000



970,000Repayment of notes payable


-



(80,000
)


(305,000
)Proceeds from convertible notes payable


120,000



675,000



2,820,000Proceeds from preferred stock issuable


385,000



-



385,000Cash overdraft


58,660



60,641



58,660Fees paid to third parties in connection withconvertible notes payable


(3,000
)


(137,000
)


(420,000
)Advance from a related party


124,200



-



124,200Proceeds from initial capital contribution


-



-



100Net cash provided by financing activities


784,860



598,641



3,632,960Net decrease in cash


(34,792
)


(9,483
)


-Cash, beginning of the period


34,792



10,083



-Cash, end of the period

$
-


$
600


$
-Non-Cash Investing and Financing Activities:Value of warrants recorded as debt discount inconnection with convertible notes payable

$
56,400


$
45,125


$
1,852,649Value of warrants recorded as debt discount inconnection with notes payable

$
32,200


$
-


$
112,700Reclassification of warrant liability uponsurrender of warrants

$
-


$
-


$
588,000Issuance of founders’ shares

$
-


$
-


$
10,000The accompanying notes are an integral part of these condensed consolidated financial statements.








F - 3
 Table of Contents










NUVEL HOLDINGS, INC. AND SUBSIDIARY


(A COMPANY IN THE DEVELOPMENT STAGE)


NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS








Note 1.  Business Organization, Nature of Operations and Basis of Presentation





Nuvel Holdings, Inc. is a Florida corporation incorporated on October 19, 2009.  Nuvel Holdings, Inc. was previously known as Harmony Metals, Inc. prior to its name change effective on April 10, 2012.  On March 20, 2012, Harmony Metals, Inc. acquired the outstanding shares of HRMY Sub, Inc., a newly formed Florida corporation.  On April 10, 2012, Harmony Metals, Inc. merged HRMY Sub, Inc. into itself and changed its name to Nuvel Holdings, Inc. (the "Company") solely to effect a name change.





On December 30, 2011, the Company, certain stockholders of the Company (the “Company Stockholders”), Nuvel, Inc., a Delaware Company, (“Nuvel DE”) and all of the stockholders of Nuvel DE (the “Nuvel DE Stockholders”) entered into and consummated transactions pursuant to a Share Exchange Agreement. Following the close of the Share Exchange Agreement, Harmony succeeded to the business of Nuvel DE as its sole line of business. As a result of the Share Exchange Transaction, Nuvel DE became a wholly owned subsidiary of the Company, and the officers of Nuvel DE became officers of the Company.  The transaction was accounted for as a reverse recapitalization, whereby Nuvel DE is
deemed to be the acquirer for accounting purposes.  The financial statements set forth in this report for all periods prior to the reverse recapitalization are the historical financial statements of Nuvel DE, and have been retroactively restated to give effect to the Share Exchange Transaction.





The Company previously conducted its operations through a sole operating subsidiary, Harmony Metals Design, Inc., a Florida corporation, which was incorporated on June 17, 2010. On February 1, 2012, the Company assigned to Sahej Holdings, Inc. all of the outstanding shares of Harmony Metals Design, Inc. that it owned pursuant to an Assignment and Assumption Agreement. Harmony Metals Design, Inc. therefore ceased to be a wholly owned subsidiary of the Company.





The Company designs, develops and markets Wide Area Network Acceleration (WANa) Solutions that are built for the purpose of accelerating and optimizing the flow of information over the Internet. The Company’s products are deployed by its customers throughout their network infrastructures to improve the performance of their networks and reduce network costs, while enhancing network security. The Company also develops mobile applications on innovative platforms of smart phones and tablet devices.





The Company has been presented as a "development stage enterprise.” The Company’s primary activities since inception, have been the design and development of its products, negotiating strategic alliances and other agreements, and raising capital.  The Company had not commenced its principal operations, nor had it generated any revenues from its operations through June 30, 2012.





The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and disclosures required by GAAP for annual financial statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are considered necessary for a fair presentation of the condensed consolidated financial statements of the Company as of June 30, 2012, for the three and six months ended June 30, 2012 and 2011 and for the period from January 20, 2010 (inception)
to June 30, 2012. The results of operations for the three and six months ended June 30, 2012 are not necessarily indicative of the operating results for the full year ending December 31, 2012. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related disclosures of the Company as of December 31, 2011 and for the year then ended, which were filed with the Securities and Exchange Commission on Form 10-K on April 13, 2012.
















F - 4
 Table of Contents











NUVEL HOLDINGS, INC. AND SUBSIDIARY


(A COMPANY IN THE DEVELOPMENT STAGE)


NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS








Note 2.  Going Concern and Management Plans





The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.  As of June 30, 2012, the Company had a cash overdraft of $58,660 and working capital deficiency of $6,807,227 and stockholders’ deficiency of $6,759,227.  The Company has not generated any revenues and incurred net losses since inception.  These matters raise substantial doubt about the Company’s ability to continue as a going concern.  The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and
classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.





The Company's primary source of operating funds since inception has been note financings.  Subsequent to June 30, 2012 and through August 15, 2012, the Company secured additional financing aggregating $300,000 (See Note 9).  The Company currently has notes payable and convertible notes payable aggregating approximately $665,000 and $2,620,000, respectively, that are past maturity and in default.  The Company is currently in negotiations with the note holders to extend the maturity date of the notes.  However, no assurance can be provided that the Company will be able to do so.The Company
expects that its current cash on hand will fund its operations only through September 2012.





The Company is currently a development stage enterprise and needs to raise additional capital in order to be able to accomplish its business plan objectives.  The Company is continuing its efforts to secure additional funds through debt or equity instruments due to the impending lack of funds.  Management believes that it will be successful in obtaining additional financing based on its history of raising funds; however, no assurance can be provided that the Company will be able to do so. There is no assurance that any funds it raises will be sufficient to enable the Company to attain profitable operations or continue as a going concern. To the extent that the Company is unsuccessful, the Company
may need to curtail or cease its operations and implement a plan to extend payables or reduce overhead until sufficient additional capital is raised to support further operations.  There can be no assurance that such a plan will be successful.





Note 3.  Summary of Significant Accounting Policies





Principles of Consolidation





The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Nuvel, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.





Use of Estimates





The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the periods. Actual results could differ from these estimates. The Company’s significant estimates and assumptions include amortization, the fair value of the Company’s stock, debt discounts, warrant liabilities, and the valuation allowance relating to the Company’s deferred tax
assets.




Reclassifications









Capitalized Software Costs



















F - 5
 Table of Contents











NUVEL HOLDINGS, INC. AND SUBSIDIARY


(A COMPANY IN THE DEVELOPMENT STAGE)


NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS








Note 3.  Summary of Significant Accounting Policies (continued)





Net Loss Per Share





The Company computes basic net loss per share by dividing net loss per share available to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities. Diluted earnings per share, if presented, would include the dilution that would occur upon the exercise or conversion of all potentially dilutive securities into common stock using the “treasury stock” and/or “if converted” methods as applicable. The computation of basic and diluted loss per share for the six months ended June 30, 2012 and 2011, excludes potentially dilutive securities because their inclusion would be
anti-dilutive.  Anti-dilutive securities excluded from the computation of basic and diluted net loss per share are as follows:





June 30,2012


2011Warrants to purchase common stock


5,257,716



850,000





Fair Value of Financial Instruments





The Company measures the fair value of financial assets and liabilities based on the guidance of ASC 820, “Fair Value Measurements and Disclosures,” which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.





ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.





The carrying amounts of cash, accounts payable, accrued expenses, and notes payable approximate fair value due to the short-term nature of these instruments. The carrying amounts of the Company’s short term credit obligations approximate fair value because the effective yields on these obligations, which include contractual interest rates taken together with other features such as concurrent issuance of warrants and/or embedded conversion options, are comparable to rates of returns for instruments of similar credit risk.





Financial liabilities as of June 30, 2012 and measured at fair value on a recurring basis are summarized below:





June 30,2012


Quoted prices in

active markets for

identical assets

(Level 1)


Significant

other

observable

inputs

(Level 2)


Significant

unobservable

inputs

(Level 3)Warrant liabilities

$
1,733,071


$
-


$
-


$
1,733,071














F - 6
 Table of Contents









NUVEL HOLDINGS, INC. AND SUBSIDIARY


(A COMPANY IN THE DEVELOPMENT STAGE)


NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS








Note 3.  Summary of Significant Accounting Policies (continued)





Level 3 liabilities are valued using unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the warrant liabilities. For fair value measurements categorized within Level 3 of the fair value hierarchy, the Company’s Chief Financial Officer, who reports to the Chief Executive Officer, determine its valuation policies and procedures.  The development and determination of the unobservable inputs for Level 3 fair value measurements and fair value calculations are the responsibility of the Company’s Chief Financial Officer and are approved by the Chief Executive Officer.





Level 3 Valuation Techniques





Level 3 financial liabilities consist of the warrant liabilities for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation.  Changes in fair value measurements categorized within Level 3 of the fair value hierarchy are analyzed each period based on changes in estimates or assumptions and recorded as appropriate.





The warrant liabilities are measured at fair value using a compound option model that includes characteristics of both a binomial lattice and Black-Scholes formula and are classified within Level 3 of the valuation hierarchy.





A significant decrease in the volatility or a significant increase in the Company’s stock price, in isolation, would result in a significantly lower fair value measurement. Changes in the values of the derivative liabilities are recorded in Change in Fair Value of Derivative Liabilities within Other Expense on the Company’s Condensed Consolidated Statements of Operations.





As of June 30, 2012, there were no transfers in or out of Level 3 from other levels in the fair value hierarchy.





The significant assumptions and valuation methods that the Company used to determine the fair value of the warrant liabilities at June 30, 2012 are as follows:
 
 Dividend Yield


0
%Volatility


80.0
%Risk-free interest rate


0.33
%Expected lives

2 yearsWeighted average fair value per warrant

$
0.33
 The following table sets forth a summary of the changes in the fair value of the Company’s Level 3 financial liabilities that are measured at fair value on a recurring basis:





Three

Months Ended

June 30, 2012


Six

Months Ended

June 30, 2012Balance-beginning of period

$
2,318,295


$
2,331,149Aggregate fair value of warrants issued


-



88,600Reclassification to equity upon reclassification of warrants


(5,500
)


-Change in fair value of warrant liabilities


(579,724
)


(686,678
)Balance-end of period

$
1,733,071


$
1,733,071












F - 7
 Table of Contents










NUVEL HOLDINGS, INC. AND SUBSIDIARY


(A COMPANY IN THE DEVELOPMENT STAGE)


NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS








Note 3.  Summary of Significant Accounting Policies (continued)





The significant assumptions and valuation methods that the Company used to determine the grant date fair value of the warrant liabilities are discussed in Note 5.





Recent Accounting Pronouncements





In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-04, Fair Value Measurement (Topic 820). This updated accounting guidance establishes common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with U.S. generally accepted accounting principles (GAAP) and International Financial Reporting Standards (IFRS). This guidance includes amendments that clarify the intent about the application of existing fair value measurements and disclosures, while other amendments change a principle or requirement for fair value measurements or disclosures. This ASU is effective
for interim and annual periods beginning after December 15, 2011.  The adoption of this standard did not have a material impact on the Company’s condensed consolidated financial position and results of operations.





Subsequent Events





Management has evaluated subsequent events or transactions occurring through the date on which the condensed consolidated financial statements were issued. Based upon the evaluation, the Company did not identify any recognized or non-recognized subsequent events that would have required adjustment or disclosure in the condensed consolidated financial statements, except as disclosed in Note 9.





Note 4.  Secured Convertible Promissory Notes





On December 30, 2011, the Company entered into an agreement amending certain convertible notes (the “Third Amendment”) totaling $2,700,000.  Under the Third Amendment, the maturity date of the notes were extended until the later of (i) two (2) months from the Maturity Date of each individual Investor’s Note (after giving effect to any extension options exercised by the Company) and (ii) February 28, 2012 to grant the Company additional time necessary to complete the Qualified Financing. A Qualified Financing is defined as the sale for cash by the Company or any company with which it completes a reverse merger or any business combination of debt or equity securities generating aggregate gross
proceeds of at least $1,500,000. In connection with the Third Amendment, the investors received an aggregate of 2,862,716 warrants to purchase the Company’s common stock exercisable at $0.54 per share (the “Third Amendment Warrants”).  The Company determined that the Third Amendment Warrants did not contain fixed settlement provisions because the exercise price can be adjusted based on new issuances. As such, the Company was required to record the Third Amendment Warrants as liabilities and mark to market all such derivatives to fair value each reporting period.





During the six months ended June 30, 2012, the Company issued additional Third Amendment convertible notes payable aggregating $120,000. The notes bear interest at the rate of 12% per annum.  Through June 30, 2012, the Company evaluated the conversion option in these instruments and determined that the instruments are contingently convertible since the Third Amendment notes could not be converted to equity, as a Qualified Financing (as defined above) did not occur.














F - 8
 Table of Contents











NUVEL HOLDINGS, INC. AND SUBSIDIARY


(A COMPANY IN THE DEVELOPMENT STAGE)


NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS








Note 4.  Secured Convertible Promissory Notes (continued)





In connection with the Third Amendment convertible notes payable issued during the six months ended June 30, 2012, the Company issued these note holders an aggregate of 120,000 warrants to purchase common stock with an exercise price of $0.54.  These Third Amendment warrants expire on the earlier of seven years from the grant date or the closing of a sale or merger transaction (as defined).   The aggregate grant date fair value of $56,400 was applied to the principal amount of the convertible notes payable to determine the debt discount.  Accordingly, the Company allocated $56,400 of the offering proceeds to the fair value of the warrants on their respective dates of issuance and recorded
them as liabilities in the accompanying condensed consolidated balance sheet.  Such debt discount was amortized through May 2012.





During the three and six months ended June 30, 2012, the Company recognized $160,282 and $1,329,369 in amortization of the deferred debt discount relating these Third Amendment convertible notes payable.





The fair value of the warrants was calculated on the issuance date using a compound option model that includes characteristics of both a binomial lattice and the Black-Scholes formula valued with the following weighted average assumptions:





Dividend Yield


0
%Volatility


80.00
%Risk-free interest rate


0.22
%Expected lives
2 yearsWeighted average fair value per warrant

$
0.47Warrants issued


120,000Aggregate grant date fair value

$
56,400





During the three and six months ended June 30, 2012, the Company marked the Third Amendment warrants to fair value and recorded a gain of $328,099 and $388,953, respectively, relating to the change in fair value of warrant liabilities issued in connection with the Third Amendment convertible notes.





As of the date of the report, convertible notes payable aggregating approximately $2,620,000 are past maturity and in default.





Note 5.  Notes Payable





During the six months ended June 30, 2012, the Company issued certain notes payable aggregating $100,000. The notes bear interest at the rate of 12% per annum and matured on March 7, 2012.





In connection with the notes payable issued during the six months ended June 30, 2012, the Company issued these note holders an aggregate of 70,000 warrants to purchase common stock with an exercise price of $0.54.  These warrants expire on the earlier of seven years from the grant date or the closing of a sale or merger transaction (as defined).   The aggregate grant date fair value of $32,200 was applied to the principal amount of the notes payable to determine the debt discount.  Accordingly, the Company allocated $32,200 of the offering proceeds to the fair value of the warrants on their respective dates of issuance and recorded them as liabilities in the accompanying condensed
consolidated balance sheet.  Such debt discount was being amortized through May 2012.  During the three and six months ended June 30, 2012, the Company recognized $32,200 and $112,700, respectively, in amortization of the deferred debt discount relating to notes payable.




















F - 9
 Table of Contents













NUVEL HOLDINGS, INC. AND SUBSIDIARY


(A COMPANY IN THE DEVELOPMENT STAGE)


NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS








Note 5.  Notes Payable (continued)





The Company determined that the warrants did not contain fixed settlement provisions because the exercise price can be adjusted based on new issuances. As such, the Company was required to record the warrants as liabilities and mark to market all such derivatives to fair value each reporting period through June 30, 2012.  The fair value of the warrants on the issuance date was calculated using a compound option model that includes characteristics of both a binomial lattice and the Black-Scholes formula valued with the following weighted average assumptions:





Dividend Yield


0
%Volatility


80.00
%Risk-free interest rate


0.30
%Expected lives
2 yearsWeighted average fair value per warrant

$
0.46Warrants issued


70,000Aggregate grant date fair value

$
32,200





During the three and six months ended June 30, 2012, the Company marked these warrants to fair value and recorded a gain of $251,625 and $297,725, respectively, relating to the change in fair value of warrants issued in connection with notes payable.





Note 6.  Commitments and Contingencies





Litigations, Claims and Assessments





In the normal course of business, the Company may be involved in legal proceedings, claims and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There are no such matters that are deemed material to the condensed consolidated financial statements as of June 30, 2012.

















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NUVEL HOLDINGS, INC. AND SUBSIDIARY


(A COMPANY IN THE DEVELOPMENT STAGE)


NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS








Note 7.  Stockholders’ Deficiency





Preferred Stock Subscription Agreement





The Company has designated 7,150,000 shares of its authorized preferred stock of the Company with par value of $.001 per share as Series A Preferred Stock (“Series A Preferred”).  The holders of the Series A Preferred shall be entitled to cumulative dividends at the rate of 8% of the Original Purchase Price per annum (as defined below).  In the event of any liquidation, dissolution or winding-up of the Company,  the assets of the Company shall be distributed first to the holders of Series A Preferred an amount per share of Series A Preferred equal the sum of (i) two times the Original Purchase Price and (ii) any declared and unpaid dividends, which shall be paid in cash.
Each holder of shares of Series A Preferred shall be entitled to one vote for each whole share of Common Stock into which such shares of Series A Preferred could be converted.  At the option of the holder, the outstanding shares of Series A Preferred are convertible into shares of Common Stock at a rate of $0.70 per share within thirty six months after the Original Issue Date.  The Series A Preferred Stock will automatically convert into shares of the Company's common stock (1) on the third anniversary of the original issuance date or (2) if the Company's average stock price is $1.20 for 20 consecutive trading days and trading volume is at least $150,000.





During the six months ended June 30, 2012, the Company entered into a subscription agreement with certain investors for an aggregate of 549,999 shares of the Company's newly designated Series A Preferred Stock and Warrants to purchase 50% of the shares of Common Stock that the Series A Preferred Stock would be converted into at a conversion price of $0.70 per share. The Company received proceeds of $385,000 ($0.70 per unit, which shall be referred to as the “Original Purchase Price”) in connection with the subscription agreement.  The warrants have a five year term and have an exercise price of $0.80 per share, and a grant date fair value of $98,286 which is subject to customary
anti-dilution adjustments. As of June 30, 2012, the preferred stock and warrants had not been issued to the investors and were recorded as Preferred Stock Issuable on the condensed consolidated balance sheet.  On August 20, 2012, the Company issued the 549,999 shares to the investors and recorded a deemed dividend of approximately $74,000 in connection with the transaction.





Warrants





Details of warrants outstanding as of June 30, 2012 are as follows:





Shares


Weighted

Average

Exercise

Price


Weighted

Average

Remaining

Contractual

Term


Aggregate

Intrinsic

ValueWarrants outstanding at January 1, 2012


5,067,716


$
0.54


5.87Granted


190,000


$
0.54



6.82Expired


-



-Exercised


-



-Warrants outstanding at June 30, 2012


5,257,716


$
0.54



5.96



-Exercisable


5,257,716


$
0.54



5.96



-





Note 8.  Related Party Transactions





During the three and six months ended June 30, 2012, the Company received advances from a former director aggregating approximately $94,200 and $124,200, respectively, which are included in accounts payable as of June 30, 2012.





Note 9. Subsequent Events





Subsequent to June 30, 2012 and through August 15, 2012, the Company secured $300,000 in the form of deposits on a pending financing transaction. These investors will receive an aggregate of 150,000 shares of common stock in connection with the short term loans.





On August 3, 2012, the Company issued a total of 73,334 shares of Common Stock to three consultants in consideration of their consulting services.  These services were valued at approximately $62,000.












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Item  2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS





The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and the notes to those financial statements appearing elsewhere in this Report.





Certain statements in this Report constitute forward-looking statements. These forward-looking statements include statements, which involve risks and uncertainties, regarding, among other things, (a) our projected sales, profitability, and cash flows, (b) our growth strategy, (c) anticipated trends in our industry, (d) our future financing plans, and (e) our anticipated needs for, and use of, working capital. They are generally identifiable by use of the words “may,” “will,” “should,” “anticipate,” “estimate,” “plan,” “potential,” “project,” “continuing,” “ongoing,”
“expects,” “management believes,” “we believe,” “we intend,” or the negative of these words or other variations on these words or comparable terminology. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur. You should not place undue reliance on these forward-looking statements.





The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events.





The "Company", "we," "us," and "our," refer to (i) Nuvel Holdings, Inc., a Florida corporation, and (ii) Nuvel, Inc., a Delaware corporation, which is a wholly-owned subsidiary of Nuvel Holdings, Inc.





Overview





The Company, through its wholly-owned subsidiary, engages in the business of designing, developing and selling a family of proxy and other appliances, and related software and services that secure, accelerate and optimize the delivery of business applications, Web content and other information to distributed users over a Wide Area Network (“WAN”), or across an enterprise’s gateway to the public Internet (also known as the "Web"). Our products provide our end user customers with information about the applications and Web traffic running on their networks, including the ability to discover, classify, manage and control communications between users and applications across internal networks, the WAN
and the Internet. Our products are also designed to accelerate and optimize the performance of our end users’ business applications and content, whether used internally or hosted by external providers. We have also developed and designed personal safety applications that are accessible via various mobile and tablet platforms.





We are a development stage enterprise. Our primary activities have been the design and development of our products, negotiating strategic alliances and other agreements and raising capital. We have not commenced our principal operations, nor have we generated any material revenues.





Since inception, we have incurred substantial losses. As of June 30, 2012 and December 31, 2011, our accumulated deficit was $9,037,107 and $6,970,260, respectively, and as of June 30, 2012 our working capital and stockholders’ deficiency was $6,807,227 and $5,077,380, respectively.  We have not yet generated revenues and our losses have principally been operating expenses incurred in design, development, marketing and promotional activities in order to commercialize our products.  We expect to continue to incur additional costs for operating and marketing activities over at least the next year.





Based upon our working capital deficiency as of June 30, 2012 and December 31, 2011, and the lack of any revenues, we require equity and/or debt financing to continue our operations.  Subsequent to June 30, 2012 and through August 15, 2012, the Company secured additional financing aggregating $300,000. The Company currently has notes payable and convertible notes aggregating approximately  $665,000 and $2,620,000, respectively, that are past maturity and in default.  The Company expects that its current cash on hand will fund operations only through September 2012.  Due to the impending lack of funds, we are currently considering several different financing alternatives
to support our operations thereafter. If we are unable to obtain such additional financing on a timely basis and, notwithstanding any request we may make, our debt holders do not agree to convert their notes into equity or extend the maturity dates of their notes, we may have to curtail our development, marketing and promotions activities, which would have a material adverse effect on our business, financial condition and results of operations, and ultimately we could be forced to discontinue our operations and liquidate.  See “Liquidity and Capital Resources” and “Availability of Additional Funds” below.














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Three months ended June 30, 2012 compared with the three months ended June 30, 2011





Marketing and promotion expenses





Marketing and promotion expenses include costs related to the advertising, marketing, and promotion of our products.  For the three months ended June 30, 2012, marketing and promotion expenses increased by $2,861, or 29%, as compared to the three months ended June 30, 2011. The increase resulted primarily from the increase in the advertising fees for internet search words in 2012.





We expect that marketing and promotion expenses will continue to increase in the future as we increase our marketing activities following full commercialization of our products and services.





Payroll and benefits





Payroll and benefits consist primarily of salaries and benefits to employees.  For the three months ended June 30, 2012, payroll and benefits increased by $190,705 as compared to the three months ended June 30, 2011. The Company currently has 7 full time employees.





General and administrative expenses





General and administrative expenses consist primarily of corporate support expenses such as legal and professional fees, investor relations and telecommunications expenses.  For the three months ended June 30, 2012, general and administrative expenses increased by $18,630, or 25%, as compared to the three months ended June 30, 2011.  The increase resulted primarily from an increase in professional fees related to our initial SEC filings.





We expect that our general and administrative expenses will continue to increase as we incur additional costs to support the growth in our business.





Research and development expenses





Research and development expenses consist primarily of consulting fees paid to develop our software products.  Research and development expenses are expensed as they are incurred. For the three months ended June 30, 2012, research and development expenses decreased by $76,312, or 78%, as compared to the three months ended June 30, 2011.  The decrease resulted primarily from a change in our development firm in the second quarter of 2012 and the capitalization of software costs.





Other income (expense)





Other income (expense) represents the change in fair value of warrant liabilities, amortization of debt discount and deferred financing charges, and interest expense.  For the three months ended June 30, 2012, other income (expense) decreased by $446,697, or 264%, as compared to the three months ended June 30, 2011.  The Company marked certain warrants to fair value which accounted for a gain of $579,724 relating to the change in fair value of warrant liabilities compared to a gain of $8,250 in the prior year period. The amortization of the debt discount increased by $171,940 as additional convertible notes were issued and the acceleration of the debt discount from the cancellation of notes
and warrants.  The amortization of deferred financing costs decreased by $57,832 as less costs related to raising funds were incurred.    Interest expense increased by $10,669 as additional new notes were issued and the maturity dates of certain outstanding notes which were at or past maturity were extended.















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Six months ended June 30, 2012 compared with the six months ended June 30, 2011





Marketing and promotion expenses





Marketing and promotion expenses include costs related to the advertising, marketing, and promotion of our products.  For the six months ended June 30, 2012, marketing and promotion expenses increased by $13,434, or 76%, as compared to the six months ended June 30, 2011. The increase resulted primarily from the increase in the advertising fees for internet search words in 2012.





We expect that marketing and promotion expenses will continue to increase in the future as we increase our marketing activities following full commercialization of our products and services.





Payroll and benefits





Payroll and benefits consist primarily of salaries and benefits to employees.  For the six months ended June 30, 2012, payroll and benefits increased by $185,288 as compared to the six months ended June 30, 2011. The Company currently has 7 full time employees.





General and administrative expenses





General and administrative expenses consist primarily of corporate support expenses such as legal and professional fees, investor relations and telecommunications expenses.  For the six months ended June 30, 2012, general and administrative expenses increased by $175,536, or 135%, as compared to the six months ended June 30, 2011.  The increase resulted primarily from an increase in professional fees related to our initial SEC filings.





We expect that our general and administrative expenses will continue to increase as we incur additional costs to support the growth in our business.





Research and development expenses





Research and development expenses consist primarily of consulting fees paid to develop our software products.  Research and development expenses are expensed as they are incurred. For the six months ended June 30, 2012, research and development expenses decreased by $16,219, or 10%, as compared to the six months ended June 30, 2011.  The decrease resulted primarily from our transition in developers and maintaining two at the same time during the first quarter of 2012 offset by the capitalization of software costs in the period ended June 30, 2012.





Other expense





Other expense represents the change in fair value of warrants, amortization of debt discount and deferred financing charges, and interest expense.  For the six months ended June 30, 2012, other expenses increased by $688,044, or 224%, as compared to the six months ended June 30, 2011.  The Company marked certain warrants to fair value which accounted for a gain of $686,678 relating to the change in fair value of warrant liabilities compared to a gain of $14,875 in the prior year period. The amortization of the debt discount increased by $1,403,048 as additional convertible notes were issued and the acceleration of the debt discount from the cancellation of notes and warrants.  The
amortization of deferred financing costs decreased by $84,501 as less costs related to raising funds were incurred.    Interest expense increased by $41,300 as additional new notes were issued and the certain maturity dates of notes which were at or past maturity were extended.













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Liquidity and Capital Resources





We measure our liquidity in a number of ways, including the following:





June 30, 2012


December 31, 2011Cash

$
-


$
34,792Working Capital Deficiency

$
(6,759,227
)

$
(5,077,380
)Debt (Current)

$
3,485,000


$
3,265,000





From January 20, 2010 (inception) through June 30, 2012, we raised a total of $3,790,000 from the issuance of notes payable and convertible notes (of which $305,000 was repaid) and $385,000 in equity issuances.  As of June 30, 2012, we had a cash overdraft of $58,660, and a working capital deficiency of $6,807,227.   As of December 31, 2011, we had $34,792 in unrestricted cash, and a working capital deficiency of $5,077,380. Subsequent to June 30, 2012 and through August 15, 2012, the Company secured additional debt financing aggregating $300,000.





Net Cash Used in Operating Activities





We experienced negative cash flow from operating activities for the six months ended June 30, 2012 and 2011 in the amounts of $771,652 and $608,124, respectively.





The cash used in operating activities in the six months ended June 30, 2012 was due to cash used to fund a net loss of $2,066,847, adjusted for non-cash expenses related to amortization of debt discount, amortization of deferred financing costs, and the change in fair value of warrant liabilities in the aggregate amount of $795,057 as well as a change in operating assets and liabilities of $500,138. The Company has been required to extend payables in order to conserve cash balances.





The cash used in operating activities for the six months ended June 30, 2011 was due to cash used to fund a net loss of $1,020,764, adjusted for non-cash expenses related to amortization of debt discount, amortization of deferred financing costs, and the change in fair value of warrant liabilities in the aggregate amount of $148,313 as well as a change in operating assets and liabilities of $264,327. The Company has been required to extend payables in order to conserve cash balances.





Net Cash Used in Investing Activities





The cash used in investing activities for the six months ended June 30, 2012 was for the capitalization of software costs.





Net Cash Provided by Financing Activities





Cash provided by financing activities for the six months ended June 30, 2012 and 2011 was $784,860 and $598,641, respectively, primarily from the issuance of notes payable, convertible notes, subscribed preferred stock, and advances from a former director.





Availability of Additional Funds





Based upon our working capital deficiency as of June 30, 2012 and the lack of any revenues, we require equity and/or debt financing to continue our operations.  Subsequent to June 30, 2012 and through August 15, 2012, the Company secured additional financing aggregating $300,000.  The Company currently has notes payable and convertible notes payable totaling approximately $665,000 and $2,620,000, respectively, that are past due and in default.  The Company expects that its current cash on hand will fund our operations only through September 2012.  Due to the impending lack of funds, we will need to raise further capital, through the sale of additional equity
securities or otherwise, to support our future operations and to repay our debt (unless, if requested, the debt holders agree to convert their notes into equity or extend the maturity dates of their notes).  Our operating needs include the planned costs to operate our business, including amounts required to fund working capital and capital expenditures.  Our future capital requirements and the adequacy of our available funds will depend on many factors, including our ability to successfully commercialize our products and services, and competing technological and market developments.














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We may be unable to raise sufficient additional capital when we need it or to raise capital on favorable terms. Debt financing may require us to pledge certain assets and enter into covenants that could restrict certain business activities or our ability to incur further indebtedness, and may contain other terms that are not favorable to our stockholders or us. If we are unable to obtain adequate funds on reasonable terms, we may be required to significantly curtail or discontinue operations or to obtain funds by entering into financing agreements on unattractive terms.





These matters raise substantial doubt about our ability to continue as a going concern. Our condensed consolidated financial statements included elsewhere in this quarterly report have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate our continuation as a going concern and the realization of assets and satisfaction of liabilities in the normal course of business.  The carrying amounts of assets and liabilities presented in the condensed consolidated financial statements do not necessarily purport to represent realizable or settlement values.  The condensed consolidated financial statements do not include any adjustment
that might result from the outcome of this uncertainty.





Critical Accounting Policies and Estimates





Use of Estimates





The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at dates of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the periods. Actual results could differ from these estimates. Our significant estimates and assumptions include amortization, the fair value of our stock, debt discounts, warrant liabilities, and the valuation allowance relating to the Company’s deferred tax assets.





Recently Issued Accounting Pronouncements





Reference is made to the “Recent Accounting Pronouncements” in Note 3 to the condensed consolidated financial statements included in this Quarterly Report for information related to new accounting pronouncements, none of which had a material impact on our consolidated financial statements.





Off Balance Sheet Arrangements





As of June 30, 2012, there were no off balance sheet arrangements.





Contractual Obligations





The following is a summary of our contractual obligations and their respective maturity dates as of June 30, 2012:





Contractual Obligations

Total


2012


2013


2014


2015Short-term debt obligations

$
3,485,000


$
3,485,000


$
-


$
-


$
-Interest obligations (1)


506,588



506,588



-



-



-Operating lease obligations (2)


4,200



4,200



-



-



-$
3,995,788


$
3,995,788


$
-


$
-


$
-


_______________





(1)
Interest rate obligations are presented through the maturity dates of each component of short-term debt.





(2)
Operating lease obligations represent payment obligations under non-cancelable lease agreements classified as operating leases and disclosed pursuant to ASC 840 “Accounting for Leases,” as may be modified or supplemented. These amounts are not recorded as liabilities as of the current balance sheet date.












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Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK





Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).





Item 4.  CONTROLS ANDPROCEDURES





Disclosure Controls and Procedures





As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out an evaluation by the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on that evaluation, our management concluded that the Company’s disclosure controls and procedures were not effective at a reasonable assurance level such that the information relating to us and our consolidated subsidiary required to be disclosed in our Exchange Act reports (i) is recorded, processed, summarized and
reported within the time periods specified in the SEC’s rules and forms, and (ii) is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure as of June 30, 2012.





As of December 31, 2011, we had identified certain matters that constituted a material weakness in our internal controls over financial reporting that continued to exist as of June 30, 2012. Specifically, we have limited segregation of duties within our accounting and financial reporting functions. Segregation of duties within our company is limited due to the small number of employees that are assigned to positions that involve the processing of financial information. Although we are aware that segregation of duties within our company is limited, we believe (based on our current roster of employees and certain control mechanisms we have in place), that the risks associated with having limited segregation of duties
are currently insignificant. We have taken steps to address this matter, including the hiring of a Chief Financial Officer in December 2011. We believe that we have made significant progress towards remediating this weakness; however, we must still complete the process of design-specific control procedures and testing them for effectiveness before we can report that this weakness has been fully remediated.  Although we believe that these steps have enabled us to improve our internal controls, additional time is still required to fully document our systems, implement control procedures and test their operating effectiveness before we can definitively conclude that we have remediated our material weakness.





Changes in Internal Controls





There were no changes in the Company’s internal control over financial reporting that occurred during the six months ended June 30, 2012 that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.





Limitations of the Effectiveness of Control





A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations of any control system, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.














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PART II OTHER INFORMATION





Item 1.  LEGAL PROCEDINGS





None.





Item 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS





During the second quarter of 2012, the Company received investments from accredited investors for the sales of 549,999 shares of its Series A Preferred Stock, par value $.001 (“Series A Preferred Stock”) and warrants to purchase 50% of the shares of Common Stock that the Series A Preferred Stock such Investors purchased would be able to be converted into at an exercise price of $0.80 per share (the “Series A Warrants”). The Company closed the first round of the offering of its Series A Preferred Stock and the Series A Warrants on August 20, 2012.





On August 3, 2012, the Company issued a total of 73,334 shares of Common Stock to three consultants in consideration of their consulting services.





The above issuances were effectuated pursuant to the exemption from the registration requirements of the Securities Act of 1933 (the “Act”), as amended, provided by Section 4(2) of the Act and/or Regulation D promulgated thereunder.





Item 6.  EXHIBITS





(a)   Exhibits





Exhibit Number

Description31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.1

Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002101.INS

XBRL Instance Document101.SCH

XBRL Taxonomy Extension Schema Document101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document101.DEF

XBRL Taxonomy Extension Definition Linkbase Document101.LAB

XBRL Taxonomy Extension Label Linkbase Document101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document













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SIGNATURES





Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized.





NUVEL HOLDINGS, INC.Date: August 20, 2012
By:
/s/  Jay ElliotJay ElliotPresident and Chief Executive Officer(principal executive officer)Date: August 20, 2012
By:
/s/  Jorge FernandezJorge FernandezChief Financial Officer(principal financial officer and accounting officer)














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