UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 WASHINGTON,
D.C. 20549
 
 FORM
10-Q
 
 x
              QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the quarterly period ended March 31, 2010 ̈
              TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the transition period from______ to ______________Commission
      file number 000-105778
 
 JUMA
      TECHNOLOGY CORP.(Exact
      Name of Registrant as Specified in its
Charter)
 
 Delaware
              
              68-0605151(State
      or other jurisdiction of incorporation
                or
      organization)
              
              (I.R.S.
      Employer Identification No.)
 
 154
      TOLEDO STREET, FARMINGDALE, NY
              
              11735(Address
      of Principal Executive Offices)
              
              (Zip
      Code)
 
 (631)
      300-1000(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 (§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
 
 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
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 ̈ (Do
      not check if a smaller reporting company)
              Smaller
      reporting companyþ
 
 Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). Yes ̈ Nox
 
 Indicate
the number of shares outstanding of each of the issuer’s classes of common
equity, as of the latest practicable date. 46,468,945 Common Shares as of
May 10, 2010
 
  TABLE OF
CONTENTS
 
 PagePART
      I – FINANCIAL INFORMATIONItem
      1.
                Financial
      StatementsCondensed
      Consolidated Balance Sheets as of  March 31, 2010 and December
      31, 2009
                3Condensed
      Consolidated Statements of Operations for the three months ended
      March 31, 2010 and 2009
                4Condensed
      Consolidated Statements of Cash Flows for the three months ended March 31,
      2010 and 2009
                5Notes
      to Condensed Consolidated Financial Statements
                6-14Item
      2.
                Management’s
      Discussion and Analysis of Financial Condition and Results of
      OperationsResults
      of Operations for the three months ended March 31, 2010 and
      2009
                15-16Liquidity
      and Capital Resources
                16-18Item
      3.
                Quantitative
      and Qualitative Disclosures about Market Risk
                18Item
      4.
                Controls
      and Procedures
                18PART
      II – OTHER INFORMATIONItem
      1.
                Legal
      Proceedings
                19Item
      1A.
                Risk
      Factors
                19Item
      2.
                Unregistered
      Sales of Equity Securities and Use of Proceeds
                19Item
      3.
                Defaults
      Upon Senior Securities
                19Item
      4.
                (Removed
      and Reserved).
                19Item
      5.
                Other
      Information
                19Item
      6.
                Exhibits
                19Signatures
                20Certifications
  2
 
 PART
I - FINANCIAL INFORMATION
 Item
1. Financial Statements
 Juma
Technology Corp. and Subsidiaries
 Condensed
Consolidated Balance Sheets
 
 March
      31,
                    2010
                  
                  
                  December
      31,
                    2009(Unaudited)
                  
                  
                  (Audited)ASSETSCurrent
      assets:Cash
                  
                  $
                  2,314,930
                  
                  
                  $
                  961,001Accounts
      receivable, (net of allowance of $206,653 and $213,471,
      respectively)
                  
                  
                  1,927,931
                  
                  
                  
                  2,175,034Inventory
                  
                  
                  157,288
                  
                  
                  
                  161,770Prepaid
      expenses
                  
                  
                  32,353
                  
                  
                  
                  26,837Other
      current assets
                  
                  
                  133,889
                  
                  
                  
                  133,889Total
      current assets
                  
                  
                  4,566,391
                  
                  
                  
                  3,458,531Fixed
      assets, (net of accumulated depreciation of $928,147 and $827,839,
      respectively)
                  
                  
                  1,134,697
                  
                  
                  
                  1,224,120Other
      assets
                  
                  
                  221,554
                  
                  
                  
                  248,509Total
      assets
                  
                  $
                  5,922,642
                  
                  
                  $
                  4,931,160LIABILITIES
      AND STOCKHOLDERS' DEFICIENCYCurrent
      liabilities:Notes
      payable
                  
                  $
                  297,951
                  
                  
                  $
                  297,486Convertible
      notes payable, (net of discount of  $806,280 and $604,435,
      respectively)
                  
                  
                  14,723,079
                  
                  
                  
                  12,099,346Current
      portion of capital leases payable
                  
                  
                  139,998
                  
                  
                  
                  174,115Accounts
      payable
                  
                  
                  2,115,520
                  
                  
                  
                  2,022,532Accrued
      expenses and taxes payable
                  
                  
                  1,825,010
                  
                  
                  
                  1,685,810Deferred
      revenue
                  
                  
                  15,564
                  
                  
                  
                  76,174Total
      current liabilities
                  
                  
                  19,117,122
                  
                  
                  
                  16,355,463Capital
      leases payable, net of current maturities
                  
                  
                  13,878
                  
                  
                  
                  25,466Convertible
      notes payable, (net of discount of  $14,725 and $0,respectively)
                  
                  
                  636,506
                  
                  
                  
                  700,000Total
      liabilities
                  
                  
                  19,767,506
                  
                  
                  
                  17,080,929Commitments
      and contingenciesStockholders'
      deficiencySeries
      A Preferred stock, $0.0001 par value, 8,333,333 shares authorized,8,333,333
      shares issued and outstanding, respectively
                  
                  
                  833
                  
                  
                  
                  833Series
      B Preferred stock, $0.0001 par value, 1,666,667 shares authorized,1,666,500
      and 1,666,500 shares issued and outstanding, respectively
                  
                  
                  167
                  
                  
                  
                  167Series
      C Preferred Stock, $0.0001 par value, 10,000,000 shares authorized, no
      shares issued
                  
                  
                  -
                  
                  
                  
                  -Common
      stock, $0.0001 par value, 900,000,000 shares authorized, 46,468,945 and
      46,468,945 sharesissued
      and outstanding, respectively
                  
                  
                  4,646
                  
                  
                  
                  4,646Additional
      paid-in capital
                  
                  
                  33,921,009
                  
                  
                  
                  32,901,105Warrants
                  
                  
                  4,051,656
                  
                  
                  
                  3,155,145Retained
      deficit
                  
                  
                  (51,823,175
                  )
                  
                  
                  (48,211,665
                  )Total
      stockholders' deficiency
                  
                  
                  (13,844,864
                  )
                  
                  
                  (12,149,769
                  )Total
      liabilities and stockholders' deficiency
                  
                  $
                  5,922,642
                  
                  
                  $
                  4,931,160
 
 The
accompanying notes are an integral part of these Condensed Consolidated
Financial Statements.
  3
  Juma
Technology Corp. and Subsidiaries
 Condensed
Consolidated Statements of Operations
 For
the three months ended March 31,
 
 March 31,
                      2010
                    
                    
                    March 31,
                      2009Sales
                    
                    $
                    2,312,905
                    
                    
                    $
                    4,649,552Cost
      of goods sold
                    
                    
                    1,708,112
                    
                    
                    
                    3,324,460Gross
      margin
                    
                    
                    604,793
                    
                    
                    
                    1,325,092Operating
      expensesSelling
                    
                    
                    505,900
                    
                    
                    
                    375,816Research
      and development
                    
                    
                    47,356
                    
                    
                    
                    133,358General
      and administrative
                    
                    
                    1,681,701
                    
                    
                    
                    1,478,679Total
      operating expenses
                    
                    
                    2,234,957
                    
                    
                    
                    1,987,853(Loss)
      from operations
                    
                    
                    (1,630,164
                    )
                    
                    
                    (662,761
                    )Amortization
      of discount on notes
                    
                    
                    (1,558,754
                    )
                    
                    
                    (430,545
                    )Interest
      (expense), net
                    
                    
                    (417,514
                    )
                    
                    
                    (307,866
                    )(Loss)
      before income taxes
                    
                    
                    (3,606,432
                    )
                    
                    
                    (1,401,172
                    )Provision
      for income taxes
                    
                    
                    5,078
                    
                    
                    
                    2,915Net
      (loss)
                    
                    $
                    (3,611,510
                    )
                    
                    $
                    (1,404,087
                    )Deemed
      preferred stock dividend
                    
                    
                    -
                    
                    
                    
                    5,599,440Net
      (loss) attributable to common shareholders
                    
                    $
                    (3,611,510
                    )
                    
                    $
                    (7,003,527
                    )Basic
      and diluted net (loss) per share
                    
                    $
                    (0.08
                    )
                    
                    $
                    (0.15
                    )Weighted
      average common shares outstanding
                    
                    
                    46,468,945
                    
                    
                    
                    46,343,945
 
 The
accompanying notes are an integral part of these Condensed Consolidated
Financial Statements.
  4
  Juma
Technology Corp. and Subsidiaries
 Condensed
Consolidated Statements of Cash Flows
 For
the three months ended March 31,
 
 2010
                  
                  
                  2009Operating
      ActivitiesNet
      loss
                  
                  $
                  (3,611,510
                  )
                  
                  $
                  (1,404,087
                  )Adjustments
      to reconcile net (loss) to net cash (used) by operating
      activities:Depreciation
      expense
                  
                  
                  100,308
                  
                  
                  
                  93,266Stock
      option compensation expense
                  
                  
                  111,556
                  
                  
                  
                  176,828Amortization
      of discount on notes
                  
                  
                  1,558,754
                  
                  
                  
                  430,545Bad
      debt expense
                  
                  
                  (6,818
                  )
                  
                  
                  (97,864
                  )Warrants
      issued for services
                  
                  
                  30,000
                  
                  
                  
                  -Amortization
      of loan costs
                  
                  
                  26,955
                  
                  
                  
                  23,205Changes
      in operating assets and liabilities:Accounts
      receivable
                  
                  
                  253,921
                  
                  
                  
                  (465,326
                  )Inventory
                  
                  
                  4,482
                  
                  
                  
                  173,815Prepaid
      expenses
                  
                  
                  (5,516
                  )
                  
                  
                  (22,032
                  )Other
      current assets
                  
                  
                  -
                  
                  
                  
                  71,922Accounts
      payable and accrued expenses
                  
                  
                  232,188
                  
                  
                  
                  (134,414
                  )Deferred
      revenue
                  
                  
                  (60,610
                  )
                  
                  
                  (101,043
                  )Net
      cash flows (used) by operating activities
                  
                  
                  (1,366,290
                  )
                  
                  
                  (1,255,185
                  )Investing
      ActivitiesAcquisition
      of fixed assets
                  
                  
                  (10,885
                  )
                  
                  
                  (25,322
                  )Increase
      in other assets
                  
                  
                  -
                  
                  
                  
                  (10,696
                  )Net
      cash flows (used) provided by investing activities
                  
                  
                  (10,885
                  )
                  
                  
                  (36,018
                  )Financing
      ActivitiesProceeds
      from issuance of convertible notes payable
                  
                  
                  3,000,000
                  
                  
                  
                  1,475,000Repayment
      of convertible notes payable
                  
                  
                  (223,191
                  )
                  
                  
                  -Proceeds
      from stock option exercise
                  
                  
                  -
                  
                  
                  
                  -Repayment
      of capital leases payable
                  
                  
                  (45,705
                  )
                  
                  
                  (62,194
                  )Net
      cash flows provided by financing activities
                  
                  
                  2,731,104
                  
                  
                  
                  1,412,806Net
      change in cash
                  
                  
                  1,353,929
                  
                  
                  
                  121,603Cash,
      beginning of year
                  
                  
                  961,001
                  
                  
                  
                  364,046Cash,
      end of year
                  
                  $
                  2,314,930
                  
                  
                  $
                  485,649Supplemental
      Cash Flow Information:Interest
      paid
                  
                  $
                  58,982
                  
                  
                  $
                  58,323Income
      taxes paid
                  
                  
                  5,078
                  
                  
                  
                  2,915
 
 The
accompanying notes are an integral part of these Condensed Consolidated
Financial Statements.
  5
  Juma
Technology Corp. and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements
 March
31, 2010
 
 NOTE 1 – ORGANIZATION
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Organization
 
 Juma
Technology, LLC, was formed in the State of New York on July 12, 2002. On
November 14, 2006, Juma Technology, LLC consummated an agreement with X and O
Cosmetics, Inc. to merge 100% of its member interests (“Reverse Merger”) in
exchange for 33,250,731 shares of common stock in X and O Cosmetics, Inc. The
transaction was treated for accounting purposes as a recapitalization by Juma
Technology, LLC as the accounting acquirer.
 
 As part
of the Reverse Merger, the former officer and director of X and O Cosmetics,
Inc., Glen Landry returned 251,475,731 of his shares of common stock back to
treasury, so that following the transaction there were 41,535,000 shares of
common stock issued and outstanding.
 
 On
January 28, 2007, X and O Cosmetics, Inc. changed its name to Juma Technology
Corp.
 
 Juma
Technology Corp. (the “Company”) is a highly specialized convergence systems
integrator with a complete suite of services for the implementation and
management of an entity’s data, voice and video requirements. The Company is
focused on providing converged communications solutions for various vertical
markets with an emphasis in driving long-term professional services engagements,
maintenance, monitoring and management contracts. The Company utilizes several
different technologies in order to provide its expertise and solutions to
clients across a broad spectrum of business-critical requirements, regardless of
the objectives. The Company also offers telephone carrier services that enhance
functionality and increase fault-tolerance while providing for robust business
continuity via disaster recovery mechanisms. Its flagship offering allows
Internet Protocol PBX’s to be interconnected within a client’s global network
and to the Public Switched Telephone Network in 30 minutes or less, regardless
of PBX manufacturer.
 
 The
Company also operates a wholly-owned subsidiary, AGN Networks, Inc. (“AGN”)
which was acquired on March 6, 2007 utilizing another wholly-owned subsidiary of
the Company, Juma Acquisition Corp. (“Juma Acquisition”). In February 2008, AGN
Networks, Inc. changed its name to Nectar Services Corp.
(“Nectar”).
 
 While the
Company operates through different subsidiaries, management believes that all
such subsidiaries constitute a single operating segment since the subsidiaries
have similar economic characteristics.
 
 The
financial statements include the accounts of the Company and its wholly-owned
subsidiaries Nectar and Juma Acquisition. All material intercompany balances and
transactions have been eliminated in the consolidated financial
statements.
 
 The
accompanying interim condensed consolidated financial statements have been
prepared, without audit, in accordance with the instructions to Form 10-Q for
interim financial reporting pursuant to the rules and regulations of the
Securities and Exchange Commission. While these statements reflect all normal
recurring adjustments which are, in the opinion of management, necessary for a
fair presentation of the results of the interim period, they do not include all
of the information and footnotes required by U.S. generally accepted accounting
principles for complete financial statements. Therefore, the interim condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes included in the Company’s annual
report filed on Form 10-K for the fiscal year ended December 31,
2009.
 
 The
results and trends on these interim condensed consolidated financial statements
for the three months ended March 31, 2010 and 2009 may not be representative of
those for the full fiscal year or any future periods.
 
 Revenue
Recognition
 
 The
Company derives revenue primarily from the sale and service of communication
systems and applications. The Company recognizes revenue when persuasive
evidence of an arrangement exists, delivery has occurred, the fee is fixed and
determinable, collectability is reasonably assured, contractual obligations have
been satisfied, and title and risk of loss have been transferred to the
customer. Revenues from the sales of products that include installation services
are recognized on the percentage of completion basis pursuant to the provisions
of ASC 605-35 “Construction-type and Production-type
Contracts.”
  6
  Juma
Technology Corp. and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements
 March
31, 2010
 
 For each
contract, the Company compares the costs incurred in the course of performing
such contract during a reporting period to the total estimated costs of full
performance of the contract and recognizes a proportionate amount of revenue for
such period. Revenue from the sales of products that include installation
services is recognized at the time the products are installed, after
satisfaction of all the terms and conditions of the underlying customer
contract. The Company also derives revenue from maintenance services, including
services provided under contracts and on a time and materials basis. Maintenance
contracts typically have terms that range from one to five years. Revenue from
services performed under maintenance contracts is deferred and recognized
ratably over the term of the underlying customer contract or at the end of the
contract, when obligations have been satisfied. For services performed on a time
and materials basis, revenue is recognized upon performance of the services. The
Company also earns commissions on maintenance contracts. Commissions are
recognized as revenue over the term of the related maintenance
contract.
 
 Inventory
 
 Inventory,
which consists of finished goods, is valued at the lower of cost or market. The
first-in, first-out method is used to value the inventory.
 
 Earnings Per
Share
 
 Basic
earnings per share are calculated by dividing net income (loss) by the weighted
average of common shares outstanding during the period. Diluted earnings per
share is calculated by using the weighted average of common shares outstanding
adjusted to include the potentially dilutive effect of outstanding stock
options, warrants, convertible loans and other convertible securities utilizing
the treasury stock method. There were  178,841,286 and 93,349,965
potentially dilutive shares for the three months ended March 31, 2010 and 2009,
respectively. The effect of the potentially dilutive shares has been ignored, as
it would be antidilutive.
 
 Recent Accounting
Pronouncements
 
 In June
2008 the FASB promulgated Emerging Issues Task Force Issue 08-4, “Transition
Guidance for Conforming Changes to EITF Issue No. 98-5, 'Accounting for
Convertible Securities with Beneficial Conversion Features or Contingently
Adjustable Conversion Ratios.” EITF Issue 08-4 specifies conforming changes made
to EITF Issue 98-5 that resulted from EITF Issue 00-27 and Statement 150 and is
effective for financial statements issued for fiscal years ending after December
15, 2008 with earlier application permitted. The Company has adopted the
provisions of EITF Issue 08-4.
 
 Reclassifications
 
 Certain
amounts included for the period ended March 31, 2009 in the financial statements
have been reclassified to conform to the presentation for the period ended March
31, 2010.
 
 Assets Subject to
Lien
 
 The
Company’s major supplier has a $2,000,000 lien on the Company’s
assets.
 
 NOTE 2 – ACCOUNTS
RECEIVABLE
 
 Accounts
receivable consists of the following:
 
 March 31,
                    2010
                  
                  
                  December 31,
                    2009Billed
                  
                  $
                  1,523,487
                  
                  
                  $
                  1,814,132Unbilled
                  
                  
                  611,097
                  
                  
                  
                  574,373Allowance
      for doubtful accounts
                  
                  
                  (206,653
                  )
                  
                  
                  (213,471
                  )$
                  1,927,931
                  
                  
                  $
                  2,175,034
 
 NOTE 3 – NOTE
RECEIVABLE
 
 On
December 15, 2006, the Company loaned $250,000 to AGN Networks, Inc. a Florida
corporation (“AGN”), pursuant to the terms of a Promissory Note (the “Note”).
The Note is unsecured and bears interest at the rate of 8% per annum payable to
the Company on or about December 15, 2007. On March 6, 2007, the Company entered
into and closed on an agreement and plan of merger with AGN and as a result AGN
has become a wholly-owned subsidiary of the Company. The Company forgave
$125,000 of the Note, which was assumed by Avatel Technologies,
Inc.
  7
  Juma
Technology Corp. and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements
 March
31, 2010
 
 On
September 18, 2007, an addendum to the merger agreement between the Company and
AGN stated, among other items, that if the Company does not acquire the business
of Avatel Technologies, Inc. then the forgiveness of the $125,000 is void and
the $125,000 would be payable to the Company upon written notice. In March 2008,
the Company exercised its right to receive payment of $125,000 under this
note.
 
 NOTE 4 – ACQUISITION OF
AGN NETWORKS, INC.
 
 On March
6, 2007, the Company completed the acquisition of AGN through the merger of AGN
into a newly formed wholly-owned subsidiary of the Company, Juma Acquisition,
pursuant to an Agreement and Plan of Merger, dated March 6, 2007 (the
"Agreement").
 
 In
accordance with the terms and provisions of the Agreement, in exchange for all
of the capital stock of AGN, the Company paid a total of $200,000 to Mr. Ernie
Darias and Mr. Albert Rodriquez (the "AGN shareholders"). This amount was paid
by issuing ninety-day promissory notes to each of Mr. Darias and Mr. Rodriquez.
In addition, the Agreement provides that Juma will forgive $125,000 of the loan
previously made to AGN. Also, the Company issued an aggregate of 320,000 shares
of common stock to the shareholders of AGN in connection with the Agreement. The
Company committed that the 320,000 shares will have a value of at least $640,000
one year from the date of the Agreement or the Company will issue to the AGN
shareholders a two-year promissory note reflecting the difference between the
value of the 320,000 shares and $640,000. The Company also paid off certain
obligations of AGN to Avatel Technologies, Inc., an entity owned by certain
shareholders of AGN, in the aggregate amount of $675,000 by paying $200,000 in
cash and by issuing a promissory note for the balance. The Company has entered
into an employment agreement with Mr. Rodriquez. The Employment Agreement with
Mr. Rodriquez is for a term of two years and a base salary of $125,000 per
annum.
 
 On
September 18, 2007, an Addendum (the “Addendum”) was added to the Agreement. The
Addendum stated that AGN would pay an additional $188,216 towards obligations
due to Avatel Technologies, Inc. in exchange for the forgiveness of any
intercompany loans or claims that Avatel Technologies, Inc. and its shareholders
may have against the Company or AGN. The Addendum also stated that $125,000 of
the Note which was forgiven would be payable to the Company, at any time, if the
Company does not acquire the business of Avatel Technologies, Inc. (See Note
3)
 
 Associated
with the acquisition of AGN the Company recorded goodwill of $1,870,259, which
was deemed impaired in March 2007. In September 2007, a reduction to the
impaired goodwill of $425,779 was recorded. This adjustment to the impaired
goodwill is related to the Addendum and the forgiveness of any intercompany
loans. As of September 30, 2007, the impaired goodwill was
$1,444,480.
 
 In March
2008, the Company recorded a loan for $329,600 to the shareholders of AGN,
pursuant to the agreement. This loan bears interest at a rate of 7.5%, and
principal and interest are payable in quarterly installments over two years.
Concurrent with the execution of this loan, the Company exercised its right to
receive the $125,000 due to the Company based on the Addendum signed on
September 18, 2007. The net effect of these transactions resulted in an
adjustment to the purchase price and the creation of goodwill of $204,600, which
was deemed impaired.
 
 NOTE 5 –CONVERTIBLE NOTES
PAYABLE and WARRANTS TO PURCHASE COMMON STOCK
 
 On
February 7, 2007, the Company began offering up to $2,000,000 of convertible
promissory notes. The notes are non-interest bearing, mature in eighteen months
and are convertible, at the holders option, into common stock of the Company at
$1.00 per share. Each investor will also receive one-half share of common stock
for each dollar of the principal amount of the notes purchased. As of March 31,
2009, the Company has sold $2,225,000 in notes. Of this amount $100,000 has been
converted into common stock; $725,000 has been repaid and the notes cancelled;
and $1,000,000 bearing annual interest at 14% was exchanged for a new note of
$1,000,000 bearing annual interest of 14% and 1,065,790 shares of the Company’s
common stock as further described below. In connection with the reporting of
these convertible notes, the Company has not recorded a beneficial conversion
feature as the conversion price was in excess of the stock price on the date the
notes were entered into. The Company has recorded a discount of $741,667 to
record the cost of the shares issued in lieu of interest.
 
 On July
28, 2008 the holder of $1,000,000 of convertible promissory notes comprised of a
$500,000 note with a maturity date in October 2008 and another $500,000 note
with a maturity date in December 2008 exchanged these notes for new convertible
promissory notes with face value $1,000,000 maturing in December 2009 and
1,065,790 shares of the Company’s common stock. The new notes bear interest at
an annual rate of 14% and are convertible into shares of common stock at a
conversion price of $0.67 per share. The new notes were valued at $1,104,185 and
the value of the notes and the common stock issued exceeded the carrying value
of the old notes by $767,384, which was recorded as an early extinguishment of
debt.
  8
  Juma
Technology Corp. and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements
 March
31, 2010
 
 On August
16, 2007, The Company signed a $5,000,000, 6% convertible promissory note with
Vision Opportunity Master Fund, Ltd. ( a managing director of Vision Opportunity
Master Fund, Ltd. is a director of the Company). Interest on the note is due
quarterly and matures within nine months. The note also carries a Mandatory
Conversion Option which calls for conversion of the note into convertible
preferred stock once the Company is approved to issue preferred stock. The
conversion price for this mandatory conversion is $0.60 per share. The note also
carries an optional conversion feature, at the right of the holder, into Common
Stock at $0.60 per share. The note also calls for the issuance of Series A,
Series B, and Series C warrants and a potential future investment at the option
of the holder. During September 2007, Vision converted the promissory note into
8,333,333 shares of Series A Convertible Preferred Stock.
 
 In
connection with the issuance of the warrants and beneficial conversion feature,
the Company has reflected a value at the date of issuance for the warrants of
$1,622,452 and a beneficial conversion feature value of $1,351,187. The fair
value of the warrant grant was estimated on the date of the grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions: expected volatility of 15%, risk free interest rate of 6%; and
expected lives of between one and five years. The value of the beneficial
conversion feature has been expensed during the quarter ended September 30,
2007, as the warrants were exercisable immediately.
 
 On
November 29, 2007, the Company entered into a Note and Warrant Purchase
Agreement with Vision Opportunity Master Fund, Ltd. (“Purchaser”) with respect
to the sale of notes in an aggregate principal amount of up to $6,000,000. Also
on November 29, 2007, the Company entered into Amendment No. 1 to the Note
Purchase Agreement. Under the Note Purchase Agreement, as amended, the Company
executed and delivered to Vision Opportunity Master Fund, Ltd. (a) the Company’s
$2,500,000 principal amount, senior secured 10% convertible promissory note, (b)
the Company’s $600,000 principal amount, senior secured 10% convertible
promissory note and, (c) one warrant to purchase an aggregate of 7,300,000
shares of the Company’s common stock and (d) one warrant to purchase an
aggregate of 1,000,000 shares of the Company’s common stock.The notes mature in
2010, and the warrants expire in November 2012.
 
 In
connection with the issuance of the warrants and beneficial conversion feature,
the Company has reflected a value at the date of issuance for the warrants of
$1,578,452 and a beneficial conversion feature value of $250,596. The fair value
of the warrant grant was estimated on the date of the grant using the
Black-Scholes option-pricing model with the following weighted average
assumptions: expected volatility of 15%, risk free interest rate of 6%; and
expected lives of between 1 to 5 years.
 
 On March
7, 2008, the Company closed the second tranche under the Note Purchase
Agreement. The Company issued an additional convertible promissory note to the
Purchaser in the principal amount of $1,450,000. The notes accrue interest at
10% per annum from the date of issuance and mature in November 2010. In
connection with this second tranche the Company has recorded a beneficial
conversion feature of $46,774 which has been expensed since the notes are
convertible into common stock at any time.
 
 On June
20, 2008, the Company closed the third tranche under the Note Purchase
Agreement. The Company issued an additional convertible promissory note to
the Purchaser in the principal amount of $1,450,000. The notes accrue interest
at 10% per annum from the date of issuance and mature in November
2010.
 
 The notes
issued under the November 29, 2007 agreement accrue interest at 10% per annum
from the date of issuance, and are payable, at the Company’s option in cash on
the maturity date, which is November 2010. The notes contain various events of
default such as failing to make a payment of principal or interest when due,
which if not cured, would require the Company to repay the holder immediately
the outstanding principal sum of and any accrued interest on the notes. Each
note requires the Company to prepay under the note if certain “Triggering
Events” or “Major Transactions” occur while the note is outstanding. The holders
of the notes are entitled to convert the notes into shares of the Company’s
common stock at any time based on the fixed conversion price of $0.75 per
share.
 
 Also, on
June 20, 2008, the Company made several amendments to the convertible notes
outstanding with aggregate principal amount $6,000,000 issued under the
agreement dated November 29, 2007, including a reduction in the conversion price
per share from $0.75 to $0.60. In addition, the exercise price of the warrants
outstanding to purchase an aggregate 8,300,000 shares of common stock issued
under the same agreement was reduced from $0.90 to $0.72. At the same time the
Company and the holder entered into an agreement whereby the holder tendered all
the warrants to purchase an aggregate 8,300,000 shares of common stock and the
Company issued 498,000 shares of Series B Convertible Preferred Stock to the
holder. All the warrants tendered were cancelled.
  9
  Juma
Technology Corp. and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements
 March
31, 2010
 
 Using the
Black Scholes method it was determined that the reduction in the conversion
price per share under the convertible notes from $0.75 to $0.60 resulted in an
increase in the fair value of the associated conversion options of $341,000. The
increase in the fair value of the conversion options was recorded as a reduction
in the carrying value of the convertible notes and an increase in additional
paid-in capital. The resulting discount on the convertible notes will be
amortized to interest expense over the remaining life of the notes. An expected
volatility of 55% and risk free interest rate of 2.88% were used when applying
the Black Scholes method.
 
 The
issuance of 498,000 shares of Series B Convertible Preferred Stock resulted in a
beneficial conversion feature in the amount of $1,112,200, which was recorded as
a deemed dividend to preferred shareholders. The fair value of the exchanged
warrants before the reduction in exercise price was used to value the preferred
stock when calculating the beneficial conversion feature. The fair value of the
warrants was calculated using the Black Scholes method with expected volatility
of 55% and risk free interest rate of 3.57%.
 
 In order
to facilitate the issuance of the Series B Convertible Preferred Stock, the
Company first filed with the Delaware Secretary of State a Certificate Reducing
the Number of Authorized Shares of Series A Convertible Preferred Stock from
10,000,000 shares to 8,333,333 shares and then the Company filed with the
Delaware Secretary of State a Certificate of Designation of the Relative Rights
and Preferences of the Series B Convertible Preferred Stock. Under the
Certificate of Designation, 1,666,667 shares of the Company’s authorized
preferred stock have been designated as Series B Convertible Preferred
Stock.
 
 On August
15, 2008 the expiration date of the series C warrants to purchase 2,777,778
shares of common stock at $0.90 per share issued in August 2007 was extended
from August 16, 2008 to October 16, 2008. The extension of the expiration date
resulted in a reduction of the amount of additional paid-in capital allocated to
warrants.
 
 On
September 12, 2008 the exercise price of the series A warrants to purchase
8,333,333 shares of common stock was reduced from $0.90 per share to $0.72 per
share. At the same time all these warrants were exchanged for 500,000 shares of
series B convertible preferred stock.
 
 On
September 12, 2008, the exercise price of the series B warrants was reduced from
$1.35 per share to $0.75 per share. At the same time the number of shares that
can be purchased with these warrants was increased from 2,777,778 to 6,250,000.
These modifications resulted in an increase in the amount of additional paid-in
capital allocated to warrants.
 
 On
September 12, 2008, the exercise price under the series C warrants was increased
from $0.90 to $4.00; the class of stock receivable upon exercise of the series C
warrants was changed from common to series B convertible preferred stock; the
number of series C warrants outstanding was deceased from 2,777,778 to 625,000.
These modifications resulted in an increase in the amount of additional paid-in
capital allocated to warrants. In addition, and the holders exercised 312,500
series C warrants, receiving 312,500 shares of series B convertible preferred
stock in exchange for $1,250,000.
 
 On
October 15, 2008 the expiration date of the Series C Warrants issued to Vision
Opportunity Master Fund on August 16, 2007 was changed from October 16, 2008 to
November 16, 2008.  The extension of the expiration date resulted in a
reduction of the amount of additional paid-in capital allocated to warrants. On
November 13, 2008 the exercise price per share of the Series C Warrants was
changed from $4.00 to $3.512 and the number of shares of Series B Preferred
Stock to be issued upon complete exercise was changed from 312,500 to 356,000.
And on November 14, 2008 the outstanding part of the Series C Warrant was
entirely exercised. The Company received $1,250,272 in cash and issued 356,000
shares of Series B Convertible Preferred Stock.
 
 On
November 13, 2008 the exercise price per share of the Series B Warrants was
changed from $0.75 to $0.46, which resulted in a reduction of the amount of
additional paid-in capital allocated to warrants. Also on November 13, 2008 the
per share conversion price of the Series A Convertible Preferred Stock was
changed from $0.60 to $0.25. This transaction was accounted for as an
extinguishment that resulted in recording a deemed dividend to preferred
shareholders. And also on November 13, 2008, the per share conversion price of
the Series B Convertible Preferred Stock was changed from $0.60 to $0.50. This
transaction was accounted for as an extinguishment that resulted in a reduction
in deemed dividends to preferred shareholders.
 
 Also, on
November 13, 2008, the Company acknowledged that the price protection provision
of the convertible notes held by Vision Opportunity Master Fund and Vision
Capital Advisors had been triggered resulting in a change in the conversion
price from $0.60 to $0.25, which was accounted for as an extinguishment where
the cost basis of the new debt was determined to equal the cost basis of the old
debt.
  10
  Juma
Technology Corp. and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements
 March
31, 2010
 
 On
February 9, 2009 the Company issued to Vision Opportunity Master Fund a
convertible promissory note with principal amount $1,500,000 and a warrant to
purchase 3,000,000 shares of common stock in exchange for $1,500,000 in cash.
The promissory note matures one year from the date of issuance, bears interest
at an annual rate of 10% and is initially convertible into shares the Company’s
common stock at a conversion price of $0.25. The warrants have an exercise price
of $0.25 and a term of five years. The conversion price of the promissory notes
and the exercise price of the warrants are subject to adjustment upon the
occurrence of certain events. The Company recognized a beneficial conversion
feature of $360,000 in connection with the issuance of the convertible
promissory note, which was expensed since the notes can be converted at any
time.
 
 On May
21, 2009 the Company issued to Vision Opportunity Master Fund a convertible
promissory note with principal amount $4,542,500 and a warrant to purchase
15,141,667 shares of common stock in exchange for cancellation of the promissory
note with principal amount $1,500,000 issued on February 9, 2009 and $3,000,000
in cash. The promissory note issued matures one year from the date of issuance,
bears interest at an annual rate of 10% and is initially convertible into shares
of the Company’s common stock at a conversion  price of $0.15. The
warrants have an exercise price of $0.15 per share and a term of five years. In
addition, the following price protection provisions were invoked: the conversion
price on all convertible notes held by Vision was reduced from $0.25 to $0.15;
the conversion price of the Series A Preferred Stock was reduced from $0.25 to
$0.15; and the exercise price of the Series B Warrants held by Vision was
reduced from $0.46 to $0.25.
 
 The
Company recognized a beneficial conversion feature of  approximately
$2,422,000 in connection with the convertible promissory notes issued on May 21,
2009. The beneficial conversion feature was expensed immediately since the notes
can be converted into shares of common stock at any time. The Company recognized
a loss of approximately $97,000 on early extinguishment of debt related to
cancellation of the promissory note with principal amount of $1,500,000 issued
on February 9, 2009. The reduction in the conversion price on all convertible
notes held by Vision from $0.25 to $0.15 resulted in a loss on the early
extinguishment of debt of  $1,018,810. The reduction in the conversion
price of the Series A Preferred Stock from $0.25 to $0.15 resulted in a deemed
dividend of  $1,666,667. The reduction in the exercise price of the
Series B Warrants held by Vision from $0.46 to $0.25 resulted in increase of
additional paid-in capital allocated to warrants of $259,516.
 
 On
September 24, 2009 the Company issued to Vision Capital Advantage Fund, LP a
convertible promissory note with principal amount $1,036,280.53 and a warrant to
purchase 3,454,268  shares of common stock in exchange for
$1,036,280.53 in cash. The promissory note matures in May 2010, bears interest
at an annual rate of 10% and is initially convertible into shares of the
Company’s common stock at a conversion price of $0.15. The warrants have an
exercise price of $0.15 and expire in May 2014. The conversion price of the
promissory notes and the exercise price of the warrants are subject to
adjustment upon the occurrence of certain events. The Company recognized a
beneficial conversion feature of $691,000 in connection with the issuance of the
convertible promissory note, which was expensed since the notes can be converted
at any time.
 
 On
December 23, 2009, Company issued to Vision Opportunity Master Fund, Ltd., a
convertible promissory note with principal amount $500,000 and a warrant to
purchase 1,666,667 shares of the Company’s common stock in exchange for $500,000
in cash. The promissory note matures in May 2010, bears interest at an annual
rate of 10% and is initially convertible into shares of the Company’s common
stock at a conversion price of $0.15. The warrants have an exercise price of
$0.15 and expire in May 2014. The conversion price of the promissory notes and
the exercise price of the warrants are subject to adjustment upon the occurrence
of certain events.  In addition  pursuant to price
protection provision, the exercise price on warrants to purchase 3,000,000
shares of the Company’s common stock issued in February 2009 was reduced from
$0.25 to $0.15 per share. The Company recognized a beneficial conversion feature
of $333,333 in connection with the issuance of the convertible promissory note,
which was expensed since the notes can be converted at any time. The reduction
in the exercise price of the warrants resulted in decrease of additional paid-in
capital allocated to warrants of  $51,401.
 
 On
January 28, 2010 the Company issued to Vision Opportunity Master Fund, Ltd. a
convertible promissory note with principal amount $500,000 and a warrant to
purchase 1,666,667 shares of common stock in exchange for $500,000 in cash. The
promissory note matures in May 2010, bears interest at an annual rate of 10% and
is initially convertible into shares of the Company’s common stock at a
conversion price of $0.15. The warrants have an exercise price of $0.15 and
expire in May 2014. The Company recognized a beneficial conversion feature of
$166,667 in connection with the issuance of the convertible promissory note,
which was expensed since the note can be converted at any time.
 
 On
February 25, 2010 the Company issued to Vision Opportunity Master Fund, Ltd. a
convertible promissory note with principal amount $500,000 and a warrant to
purchase 1,666,667 shares of common stock in exchange for $500,000 in cash. The
promissory note  matures in May 2010, bears interest at an annual rate
of 10% and is initially convertible into shares of the Company’s common stock at
a conversion price of $0.15. The warrants have an exercise price of $0.15 and
expire in May 2014. The Company recognized a beneficial conversion feature of
$266,667 in connection with the issuance of the convertible promissory note,
which was expensed since the note can be converted at any time.
  11
  Juma
Technology Corp. and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements
 March
31, 2010
 
 On March
31, 2010 the Company issued to Vision Opportunity Master Fund, Ltd. a
convertible promissory note with principal amount $2,000,000 and a warrant to
purchase 6,666,666 shares of the Company’s common stock in exchange for
$2,000,000 in cash. The promissory note matures in May 2010, bears interest at
an annual rate of 10% and is initially convertible into shares of the Company’s
common stock at a conversion price of $0.15. The warrants have an exercise price
of $0.15 and expire in May 2014. The Company recognized a beneficial conversion
feature of $400,000 in connection with the issuance of the convertible
promissory note, which was expensed since the note can be converted at any
time.
 
 NOTE 6 - CAPITAL LEASE
OBLIGATIONS
 
 CitiCorp Vendor Finance,
Inc.
 
 The
Company leases software and computer equipment under capital lease arrangements
with CitiCorp Vendor Finance, Inc. Pursuant to the lease, the lessor retains
actual title to the leased property until the termination of the lease, at which
time the property can be purchased for one dollar.
 
 The lease
dated June 2, 2006 is for software and computer equipment for the Company. The
term of the lease is sixty months with monthly payments of $3,461, which is
equal to the cost to amortize $172,187 over a five-year period at an interest
rate of 7.6% per annum.
 
 Var Resources
Inc.
 
 The
Company leases computer equipment under capital lease arrangements with Var
Resources, Inc. Pursuant to the lease, the lessor retains actual title to the
leased property until the termination of the lease, at which time the property
can be purchased for one dollar.
 
 There are
five leases dated November 19, 2007 for software and computer equipment used at
the Company’s various data centers. The terms of the leases are thirty-six
months with total monthly payments of $8,600, which is equal to the cost to
amortize $253,174 over a 3-year period at an interest rate of 13.5% per
annum.
 
 Hitachi Data
Systems
 
 The
Company leases software and computer equipment under capital lease arrangements
with Hitachi Data Systems. Pursuant to the lease, the lessor retains actual
title to the leased property until the termination of the lease, at which time
the property can be purchased for one dollar.
 
 The lease
dated December 31, 2007 is computer equipment used at the Company’s various data
centers. The term of the lease is thirty-six months with monthly payments of
$4,296.04, which is equal to the cost to amortize $130,658 over a 3-year period
at an interest rate of 11.3% per annum.
 
 Future
minimum lease payments are as follows:
 
 Year
                      
                      Total
                        Payments
                      
                      
                      Interest
                        Payments
                      
                      
                      Principal
                        Payments2010
                      
                      
                      138,122
                      
                      
                      
                      17,301
                      
                      
                      
                      120,8212011
                      
                      
                      26,537
                      
                      
                      
                      1,071
                      
                      
                      
                      25,466
 
 NOTE 7 – LEASE
COMMITMENTS
 
 The
Company leases its Farmingdale, NY (from a related party) and New York, NY
premises pursuant to individual sublease agreements accounted for as operating
leases. The lease on the Farmingdale, NY premises expires on May 31, 2016, and
the lease on the New York, NY premises lease expires on November 30, 2011. Both
premises are under a non-cancelable operating lease.
 
 The
Company also has operating leases for office equipment. The operating leases are
for forty-eight months and expire April 30, 2011.
  12
  Juma
Technology Corp. and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements
 March
31, 2010
 
 NOTE 8 – STOCK
OPTIONS
 
 On
January 28, 2007 the Company adopted the 2006 Stock Option Plan of Juma
Technology Corp., (the “2006 Plan”). The Plan provides for up to 6,228,750
shares of incentive and non-qualified options that may be granted to employees,
directors and certain key affiliates. Under the Plan, incentive options may be
granted at not less than the fair market value on the date of grant and
non-statutory options may be granted at or below fair market value. The Company
wishes to utilize the Plan to attract, maintain and develop management by
encouraging ownership of the Company's Common Stock by key employees, directors,
and others. Options under the Plan will be either “incentive options” under
Section 422A of the Internal Revenue Code of 1986, as amended, or “non-qualified
stock options” which are not intended to so qualify.
 
 At March
31, 2010, the Company has 5,786,956 stock options to officers, employees and
consultants outstanding at exercise prices ranging from $0.17 to $1.33 per share
under the 2006 Plan. These options carry a ten year term and vest ratably over
five years. The options vested during the first twelve months shall not be
available to the optionee until the first anniversary of the stock option grant.
Options for officers are issued at a 15% premium over fair market value, carry a
five year life and vest ratably over one year. Using the Black-Scholes pricing
model the Company has determined that the fair value of these options is
approximately $958,693. During the three months ended March 31, 2010, the
Company granted options to purchase 205,000 shares of common stock. The fair
value of options granted during the three months ended March 31, 2010 was
determined using expected volatility of 68.3%, terms of ten years and risk free
interest rate of 3.68%.
 
 On August
31, 2007 the Company adopted the 2007 Stock Option Plan of Juma Technology
Corp., (the “2007 Plan”). The Plan provides for up to 6,228,750 shares of
incentive and non-qualified options that may be granted to employees, directors
and certain key affiliates. Under the Plan, incentive options may be granted at
not less than the fair market value on the date of grant and non-statutory
options may be granted at or below fair market value. The Company wishes to
utilize the Plan to attract, maintain and develop management by encouraging
ownership of the Company's Common Stock by key employees, directors, and others.
Options under the Plan will be either “incentive options” under Section 422A of
the Internal Revenue Code of 1986, as amended, or “non-qualified stock options”
which are not intended to so qualify.
 
 At March
31, 2010, the Company has 6,008,750 stock options to officers, employees and
consultants outstanding at exercise prices ranging from $0.20 to $0.60 per share
under the 2007 Plan. These options carry a ten year term and vest ratably over
various terms. The options vested during the first twelve months shall not be
available to the optionee until the first anniversary of the stock option grant.
Options for officers are issued at a 15% premium over fair market value, carry a
five year life and vest ratably over various terms. Using the Black-Scholes
pricing model the Company has determined that the fair value of these options is
approximately $631,488 .
 
 On
December 17, 2008 the Company adopted the 2008 Stock Option Plan of Juma
Technology Corp., (the “2008 Plan”). The Plan provides for up to 6,228,750
shares of incentive and non-qualified options that may be granted to employees,
directors and certain key affiliates. Under the Plan, incentive options may be
granted at not less than the fair market value on the date of grant and
non-statutory options may be granted at or below fair market value. The Company
wishes to utilize the Plan to attract, maintain and develop management by
encouraging ownership of the Company's Common Stock by key employees, directors,
and others. Options under the Plan will be either “incentive options” under
Section 422A of the Internal Revenue Code of 1986, as amended, or “non-qualified
stock options” which are not intended to so qualify.
 
 At March
31, 2010, the Company has 5,738,250 stock options to officers, employees
and consultants outstanding at exercise prices ranging from $0.14 to $0.16 per
share under the 2008 Plan. These options carry a ten year term and vest ratably
over various terms. Options for officers are issued at a 15% premium over fair
market value, carry a five year life and vest ratably over a one year term.
Using the Black-Scholes pricing model the Company has determined that the fair
value of these options is approximately $407,925.
 
 On July
16, 2009 the Company adopted the 2009 Stock Option Plan of Juma Technology
Corp., (the “2009 Plan”).The Plan provides for up to 10,000,000 shares of
incentive and non-qualified options that may be granted to employees, directors
and certain key affiliates. Under the Plan, incentive options may be granted at
not less than the fair market value on the date of grant and non-statutory
options may be granted at or below fair market value. The Company wishes to
utilize the Plan to attract, maintain and develop management by encouraging
ownership of the Company's Common Stock by key employees, directors, and others.
Options under the Plan will be either “incentive options” under Section 422A of
the Internal Revenue Code of 1986, as amended, or “non-qualified stock options”
which are not intended to so qualify. Through March 31, 2010 no options have
been issued under the 2009 Plan.
  13
  Juma
Technology Corp. and Subsidiaries
 Notes
to Condensed Consolidated Financial Statements
 March
31, 2010
 
 NOTE 9 – PREFERRED
STOCK
 
 In July
2007, the Board of Directors approved an amendment to the
Company's certificate of incorporation to authorize 10,000,000 shares of
$0.0001 par value preferred stock.
 
 On August
16, 2007, the Company signed a $5,000,000, 6% convertible promissory note with
Vision Opportunity Master Fund, Ltd (“Vision”). Interest on the note is due
quarterly and matures within nine months. The note also carries a Mandatory
Conversion Option which calls for conversion of the note into Convertible
Preferred Stock once the Company is approved to issue preferred stock. The
conversion price for this mandatory conversion is $0.60 per share. The Series A
Convertible Preferred stock is convertible into Common Stock of the Company at a
4:1 ratio and carries a 6% dividend. The note also carries an optional
conversion, at the right of the holder, into Common Stock at $0.60 per share.
The note also calls for the issuance of Series A, Series B, and Series C
warrants and a potential future investment at the option of the holder. During
September 2007, Vision converted the promissory note into 8,333,333 shares of
Series A Convertible Preferred Stock.
 
 On June
20, 2008, the Company issued 498,000 shares of Series B Convertible Preferred
Stock to Vision Opportunity Master Fund in exchange for warrants to purchase
8,300,000 shares of the Company’s common stock. All the warrants tendered were
cancelled. The Series B Convertible Preferred stock is convertible into Common
Stock of the Company at a 24:1 ratio.
 
 In order
to facilitate the issuance of the Series B Convertible Preferred Stock, the
Company first filed with the Delaware Secretary of State a Certificate Reducing
the Number of Authorized Shares of Series A Convertible Preferred Stock from
10,000,000 shares to 8,333,333 shares and then the Company filed with the
Delaware Secretary of State a Certificate of Designation of the Relative Rights
and Preferences of the Series B Convertible Preferred Stock. Under the
Certificate of Designation, 1,666,667 shares of the Company’s authorized
preferred stock have been designated as Series B Convertible Preferred
Stock.
 
 On
September 12, 2008, 8,333,333 series A warrants to purchase common stock were
exchanged for 500,000 shares for series B convertible preferred
stock.
 
 On
September 12, 2008, 312,500 series C warrants were exercised, resulting in the
issuance of 312,500 shares of series B convertible preferred stock in exchange
for cash payment of $1,250,000.
 
 On
November 14, 2008 the outstanding part of the Series C Warrant was entirely
exercised. The Company received $1,250,272 in cash and issued 356,000 shares of
Series B Convertible Preferred Stock.
 
 On
February 9, 2009, the per share conversion price of the series B preferred stock
was reduced from $0.50 to $0.25 pursuant to its price protection provisions. The
Company recognized a deemed dividend to preferred shareholders of $5,599,440 as
a result.
 
 On May
21, 2009, the per share conversion price of the series A preferred stock was
reduced from $0.25 to $0.15 pursuant to its price protection provisions. The
Company recognized a deemed dividend to preferred shareholders of $1,666,667 as
a result.
 
 As of
March 31, 2010, there were $770,137 in accrued unpaid dividends on the series A
convertible preferred stock.
 
 NOTE 10 – SUBSEQUENT
EVENT
 
 Exchange
of warrants for series C preferred stock.
 
 On April
30, 2010 Vision Opportunity Master Fund, Ltd. and Vision Capital Advantage Fund,
L.P. exchanged their holdings of certain warrants to purchase the Company’s
common stock for 1,970,756 shares of the Company’s Series C Preferred Stock.
Warrants to purchase 23,595,936 shares at $0.15 per share expiring in May 2014,
3,000,000 shares at $0.15 per share expiring in February 2014 and 6,250,000
shares at $0.25 per share expiring in August 2012 were exchanged. Vision
Opportunity Master Fund, Ltd. retains their holding of warrants to purchase to
purchase 6,666,666 shares at $0.15 expiring in March 2015.
  14
  Item 2.
              Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operation
 
 Forward-Looking
Statements
 
 Historical
results and trends should not be taken as indicative of future operations.
Management’s statements contained in this Report that are not historical facts
are forward-looking statements. Actual results may differ materially from those
included in the forward-looking statements. Forward-looking statements, which
are based on certain assumptions and describe future plans, strategies and
expectations of the Company, are generally identifiable by use of the
words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,”
“prospects,” or similar expressions. The Company’s ability to predict results or
the actual effect of future plans or strategies is inherently uncertain. Factors
which could have a material adverse affect on the operations and future
prospects of the Company on a consolidated basis include, but are not limited
to: changes in economic conditions, legislative/regulatory changes, availability
of capital, interest rates, competition, significant restructuring and
acquisition activities, and generally accepted accounting principles. These
risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements. Further
information concerning the Company and its business, including additional
factors that could materially affect the Company’s financial results, is
included herein and in the Company’s other filings with the SEC.
 
 Information
regarding market and industry statistics contained in this Report is included
based on information available to the Company that it believes is accurate. It
is generally based on industry and other publications that are not produced for
purposes of securities offerings or economic analysis. We have not reviewed or
included data from all sources, and cannot assure investors of the accuracy or
completeness of the data included in this Report. Forecasts and other
forward-looking information obtained from these sources are subject to the same
qualifications and the additional uncertainties accompanying any estimates of
future market size, revenue and market acceptance of products and services. The
Company does not undertake any obligation to publicly update any forward-looking
statements. As a result, investors should not place undue reliance on these
forward-looking statements.
 
 Results
of Operations for the three months ended March 31, 2010
 
 Revenues
for the three months ended March 31, 2010 decreased $2,336,647 or 50% to
$2,312,905, compared with revenues of $4,649,552 for the three months ended
March 31, 2009. The decrease in revenues was predominantly due to decreased
sales to existing customers.
 
 Cost of
goods sold for the three months ended March 31, 2010 decreased $1,616,348 or 49%
to $1,708,112, compared to $3,324,460 for the three months ended March 31, 2009.
The decrease in cost of goods sold is primarily attributable to the decrease in
revenue.
 
 Gross
margin for the three months ended March 31, 2010 decreased $720,299 or 54% to
$604,793, compared to $1,325,092 for the three months ended March 31, 2009. The
decrease is directly attributable to the decrease in revenue.
 
 Selling
expenses increased by $130,084 or 35% to $505,900 for the three months ended
March 31, 2010, compared to $375,816 for the three months ended March 31, 2009.
The increase was predominantly due to an increase in marketing
efforts.
 
 Research
and development expenses decreased by $86,002 or 64% to $47,356 for the three
months ended March 31, 2010, compared to $133,358 for the three months ended
March 31, 2009. All research and development expenses were incurred by Nectar.
The decrease is primarily attributable to a decrease in the use of
consultants.
 
 General
and administrative expenses increased by $203,022 or 14% to $1,681,701 for the
three months ended March 31, 2010, compared to $1,478,679 for the three months
ended March 31, 2009. Salary expense increased approximately $139,000 in the
three months ended March 31, 2010 compared to the three months ended March 31,
2009.
 
 Amortization
of discounts on notes increased $1,128,209 or 262% to $1,558,754 for the three
months ended March 31, 2010 compared to $430,545 for the three months ended
March 31, 2009.  Discounts on convertible notes payable being
amortized over the term of the note increased approximately $655,000 and
recognition of beneficial conversion features increased approximately $473,000
in the three months ended March 31, 2010 compared to the three months ended
March 31, 2009. The beneficial conversion features are expensed when recognized
since the notes can be converted at any time.
 
 Interest
expense (net) totaled $417,514 for the three months ended March 31, 2010
compared to $307,866 for the three months ended March 31, 2009. The increase is
primarily attributable to the issuance of additional convertible promissory
notes.
 
 The
Company incurred a net loss of $3,611,510 for the three months ended March 31,
2010 compared to a net loss of $7,003,527 for the three months ended March 31,
2009. Nectar incurs significant operational and development expenses that
management believes will continue for the foreseeable future. Nectar generated a
net loss of approximately $633,000 for the three months ended March 31, 2010.
The Company expects Nectar’s loss to continue until new sales outpace the
current level of costs.
  15
  For the
three months ended March 31, 2009, the Company recognized a deemed dividend to
preferred shareholders of $5,599,440 as a result of  a decrease in the
per share conversion price of the series B preferred stock from $0.50 to $0.25
pursuant to its price protection provisions.
 
 Liquidity
and Capital Resources
 
 As of
March 31, 2010, the Company had total current assets of $4,566,391, and total
current liabilities of $19,117,122, resulting in a current working capital
deficit of $14,550,731. Also, at March 31, 2010 the Company had $
$2,314,930 in cash. Management does not believe that these amounts will be
sufficient for the upcoming year, nor does it believe that the current business
will be able to sustain the anticipated growth of the operations. Management
will attempt to rely on external sources of capital to finance the execution of
our business plan. We do not have any firm commitments to raise additional
capital nor is there any assurance additional capital will be available at
acceptable terms. We continue to seek additional sources of funding for working
capital purposes.
 
 On
February 7, 2007, the Company began offering up to $2,000,000 of convertible
promissory notes. The notes are non-interest bearing, mature in eighteen months
and are convertible, at the holder’s option, into common stock of the Company at
$1.00 per share. Each investor will also receive one-half share of common stock
for each dollar of the principal amount of the notes purchased. As of March 31,
2010, the Company has sold $2,225,000 in notes. Of this amount $100,000 has been
converted into common stock; $832,500 has been repaid and the notes cancelled;
and $1,000,000 bearing annual interest of 14% was exchanged for a new
convertible note of $1,000,000 bearing annual interest of 14% and 1,065,790
shares of the Company’s common stock as further described below.
 
 On July
28, 2008 the holder of $1,000,000 of convertible promissory notes comprised of a
$500,000 note with maturity date in October 2008 and another $500,000 note with
a maturity date in December 2008 exchanged these notes for new convertible
promissory notes with face value $1,000,000 maturing in December 2009 and
1,065,790 shares of the Company’s common stock. The new notes bear interest at
an annual rate of 14% and are convertible into shares of common stock at a
conversion price of $0.67 per share.
 
 On August
16, 2007, the Company signed a $5,000,000, 6% convertible promissory note with
Vision Opportunity Master Fund, Ltd. Interest on the note is due quarterly and
matures within nine months. The note also carries a Mandatory Conversion Option
which calls for conversion of the note into Convertible Preferred Stock once the
Company is approved to issue preferred stock. The conversion price for this
mandatory conversion is $0.60 per share. The Series A Convertible Preferred
stock is convertible into Common Stock of the Company at a 4:1 ratio and carries
a 6% dividend. The note also carries an optional conversion feature, at the
right of the holder, into Common Stock at $0.60 per share. The note also calls
for the issuance of Series A, Series B, and Series C warrants and a potential
future investment at the option of the holder. During September 2007, Vision
converted the promissory note into 8,333,333 shares of Series A Convertible
Preferred Stock.
 
 On
November 29, 2007, the Company entered into a Note and Warrant Purchase
Agreement with Vision Opportunity Master Fund, Ltd. (“Purchaser”) with respect
to the sale of Notes in an aggregate principal amount of up to $6,000,000. Also
on November 29, 2007, the Company entered into Amendment No. 1 to the Note
Purchase Agreement. Under the Note Purchase Agreement, as amended, the Company
executed and delivered to Vision Opportunity Master Fund, Ltd. (a) the Company’s
$2,500,000 principal amount, senior secured 10% convertible promissory note, (b)
the Company’s $600,000 principal amount, senior secured 10% convertible
promissory note and, (c) one warrant to purchase an aggregate of 7,300,000
shares of the Company’s common stock, and (d) one warrant to purchase an
aggregate of 1,000,000 shares of the Company’s common stock.
 
 On March
7, 2008, the Company closed the second tranche under the Note Purchase
Agreement. The Company issued an additional convertible promissory note to the
Purchaser in the principal amount of $1,450,000. And on June 20, 2008, the
Company closed the third tranche under the Note Purchase Agreement. The Company
issued an additional convertible promissory note to the Purchaser in the
principal amount of $1,450,000.
 
 The notes
issued under the November 29, 2007 agreement accrue interest at 10% per annum
from the date of issuance, and are payable, at the Company’s option, in cash or
shares of its common stock, quarterly in arrears commencing
on  December 31, 2007, March 31, 2008 and June 30, 2008, respectively.
The maturity date of the notes is November 2010. The notes contains various
events of default such as failing to make a payment of principal or interest
when due, which if not cured, would require the Company to repay the holder
immediately the outstanding principal sum of and any accrued interest on the
notes. Each note requires the Company to prepay under the note if certain
“Triggering Events” or “Major Transactions” occur while the note is
outstanding.
  16
  On June
20, 2008, the Company made several amendments to the convertible notes
outstanding with aggregate principal amount $6,000,000 issued under the
agreement dated November 29, 2007, including a reduction in the conversion price
per share from $0.75 to $0.60. In addition, the exercise price of the warrants
outstanding to purchase in aggregate 8,300,000 shares of common stock issued
under the same agreement was reduced from $0.90 to $0.72. At the same time the
Company and the holder entered into an agreement whereby the holder tendered all
the warrants to purchase an aggregate 8,300,000 shares of common stock and the
Company issued 498,000 shares of Series B Convertible Preferred Stock to the
holder. All the warrants tendered were cancelled.
 
 In order
to facilitate the issuance of the Series B Convertible Preferred Stock, the
Company first filed with the Delaware Secretary of State a Certificate Reducing
the Number of Authorized Shares of Series A Convertible Preferred Stock from
10,000,000 shares to 8,333,333 shares and then the Company filed with the
Delaware Secretary of State a Certificate of Designation of the Relative Rights
and Preferences of the Series B Convertible Preferred Stock. Under the
Certificate of Designation, 1,666,667 shares of the Company’s authorized
preferred stock have been designated as Series B Convertible Preferred
Stock.
 
 On August
15, 2008 the expiration date of the series C warrants to purchase 2,777,778
shares of common stock at $0.90 per share issued in August 2007 was extended
from August 16, 2008 to October 16, 2008.
 
 On
September 12, 2008 the exercise price of the series A warrants to purchase
8,333,333 shares of common stock was reduced from $0.90 per share to $0.72 per
share. At the same time all these warrants were exchanged for 500,000 shares of
series B convertible preferred stock.
 
 On
September 12, 2008, the exercise price of the series B warrants was reduced from
$1.35 per share to $0.75 per share. At the same time the number of shares that
can be purchased with these warrants was increased from 2,777,778 to
6,250,000.
 
 On
September 12, 2008, the exercise price under the series C warrants was increased
from $0.90 to $4.00; the class of stock receivable upon exercise of the series C
warrants was changed from common to series B convertible preferred stock; the
number of series C warrants outstanding was deceased from 2,777,778 to 625,000.
In addition, the holders exercised 312,500 series C warrants, receiving 312,500
shares of series B convertible preferred stock in exchange for
$1,250,000.
 
 On
October 15, 2008 the expiration date of the Series C Warrants issued to Vision
Opportunity Master Fund on August 16, 2007 was changed from October 16, 2008 to
November 16, 2008. On November 13, 2008 the exercise price per share of the
Series C Warrants was changed from $4.00 to $3.512 and the number of shares of
Series B Preferred Stock to be issued upon complete exercise was changed from
312,500 to 356,000. And on November 14, 2008 the outstanding part of the Series
C Warrant was entirely exercised. The Company received $1,250,272 in cash and
issued 356,000 shares of Series B Convertible Preferred Stock.
 
 On
November 13, 2008 the exercise price per share of the Series B Warrants was
changed from $0.75 to $0.46. Also on November 13, 2008 the per share conversion
price of the Series A Convertible Preferred Stock was changed from $0.60 to
$0.25. And also on November 13, 2008, the per share conversion price of the
Series B Convertible Preferred Stock was changed from $0.60 to
$0.50.
 
 Also, on
November 13, 2008, the Company acknowledged that the price protection provision
of the convertible notes held by Vision Opportunity Master Fund and Vision
Capital Advisors had been triggered resulting in a change in the conversion
price from $0.60 to $0.25.
 
 On
February 9, 2009 the Company issued to Vision Opportunity Master Fund a
convertible promissory note with principal amount $1,500,000 and a warrant to
purchase 3,000,000 shares of common stock in exchange for $1,500,000 in cash.
The promissory note matures one year from the date of issuance, bears interest
at an annual rate of 10% and is initially convertible into shares the Company’s
common stock at a conversion price of $0.25. The warrants have an exercise price
of $0.25. The conversion price of the promissory notes and the exercise price of
the warrants are subject to adjustment upon the occurrence of certain
events.
 
 On May
21, 2009 the Company issued to Vision Opportunity Master Fund a convertible
promissory note with principal amount $4,542,500 and a warrant to purchase
15,141,667 shares of common stock in exchange for cancellation of the promissory
note with principal amount $1,500,000 issued on February 9, 2009 and $3,000,000
in cash. The promissory note issued matures one year from the date of issuance,
bears interest at an annual rate of 10% and is initially convertible into shares
of the Company’s common stock at a conversion price of $0.15. The warrants have
an exercise price of $0.15 per share and a term of five years. In addition, the
following price protection provisions were invoked: the conversion price on all
convertible notes held by Vision was reduced from $0.25 to $0.15; the conversion
price of the Series A Preferred Stock was reduced from $0.25 to $0.15; and the
exercise price of the Series B Warrants held by Vision was reduced from $0.46 to
$0.25.
 
 On
September 24, 2009 the Company issued to Vision Capital Advantage Fund, LP a
convertible promissory note with principal amount $1,036,281 and a warrant
to purchase 3,454,268  shares of common stock in exchange for
$1,036,281 in cash. The promissory note matures in May 2010, bears interest at
an annual rate of 10% and is initially convertible into shares the Company’s
common stock at a conversion price of $0.15. The warrants have an exercise price
of $0.15 and expire in May 2014. The conversion price of the promissory notes
and the exercise price of the warrants are subject to adjustment upon the
occurrence of certain events.
  17
  On
December 23, 2009, Company issued to Vision Opportunity Master Fund, Ltd., a
convertible promissory note with principal amount $500,000 and a warrant to
purchase 1,666,667 shares of the Company’s common stock in exchange for $500,000
in cash. The promissory note matures in May 2010, bears interest at an annual
rate of 10% and is initially convertible into shares of the Company’s common
stock at a conversion price of $0.15. The warrants have an exercise price of
$0.15 and expire in May 2014. The conversion price of the promissory notes and
the exercise price of the warrants are subject to adjustment upon the occurrence
of certain events.  In addition  pursuant to price
protection provision, the exercise price on warrants to purchase 3,000,000
shares of the Company’s common stock issued in February 2009 was reduced from
$0.25 to $0.15 per share.
 
 On
January 28, 2010 the Company issued to Vision Opportunity Master Fund, Ltd. a
convertible promissory note with principal amount $500,000 and a warrant to
purchase 1,666,667 shares of common stock in exchange for $500,000 in cash. The
promissory note matures in May 2010, bears interest at an annual rate of 10% and
is initially convertible into shares of the Company’s common stock at a
conversion price of $0.15. The warrants have an exercise price of $0.15 and
expire in May 2014.
 
 On
February 25, 2010 the Company issued to Vision Opportunity Master Fund, Ltd. a
convertible promissory note with principal amount $500,000 and a warrant to
purchase 1,666,667 shares of common stock in exchange for $500,000 in cash. The
promissory note  matures in May 2010, bears interest at an annual rate
of 10% and is initially convertible into shares of the Company’s common stock at
a conversion price of $0.15. The warrants have an exercise price of $0.15 and
expire in May 2014.
 
 On March
31, 2010 the Company issued to Vision Opportunity Master Fund, Ltd. a
convertible promissory note with principal amount $2,000,000 and a warrant to
purchase 6,666,666 shares of the Company’s common stock in exchange for
$2,000,000 in cash. The promissory note matures in May 2010, bears interest at
an annual rate of 10% and is initially convertible into shares of the Company’s
common stock at a conversion price of $0.15. The warrants have an exercise price
of $0.15 and expire in May 2014.
 
 Cash flow
used in operations totaled $1,366,290 for the three months ended March 31, 2010
compared to $1,255,185 for the three months ended March 31, 2009. The increase
in cash flow used in operations is attributable primarily to an increase in net
loss offset by an increase in amortization of discounts notes and increases of
changes in accounts receivable and accounts payable and accrued
expenses.
 
 Cash flow
used by investing activities was $10,855 for the three months ended March 31,
2010 compared to $36,018 for the three months ended March 31, 2009. The decrease
in cash flow used in investing activities is due primarily to a decrease in the
acquisition of fixed assets.
 
 Cash flow
provided by financing activities increased to $2,731,104 for the three months
ended March 31, 2010 compared cash flow provided by financing activities of
$1,412,806 for the three months ended March 31, 2009. The increase is
attributable to an increase in proceeds from the issuance of convertible
promissory notes.
 
 Item
3. Quantitative and Qualitative Disclosures about Market Risk
 
 Not
applicable.
 
 Item
4. Controls and Procedures
 
 Evaluation of Disclosure
Controls and Procedures
  We
carried out an evaluation of the effectiveness of the design and operation of
our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of March 31, 2010. This evaluation was carried out
under the supervision and with the participation of our Chief Executive Officer,
Mr. Anthony M. Servidio and Chief Financial Officer, Mr. Anthony Fernandez.
Based upon that evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that, as of March 31, 2010, our disclosure controls and
procedures are effective.
 
 Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.
 
 Changes in Internal Control
over Financial Reporting
 
 There
have been no changes in our internal controls over financial reporting during
the quarter ended March 31, 2010 that have materially affected or are reasonably
likely to materially affect such controls.
  18
  Limitations on the
Effectiveness of Internal Controls
 
 Our
management does not expect that our disclosure controls and procedures or our
internal control over financial reporting will necessarily prevent all fraud and
material error. Our disclosure controls and procedures are designed to provide
reasonable assurance of achieving our objectives and our Chief Executive Officer
and Chief Financial Officer concluded that our disclosure controls and
procedures are effective at that reasonable assurance level. Further, the design
of a control system must reflect the fact that there are resource constraints,
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within the Company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of simple error or mistake. Additionally, controls
can be circumvented by the individual acts of some persons, by collusion of two
or more people, or by management override of the internal control. The design of
any system of controls also is based in part upon certain assumptions about the
likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions.
Over time, control may become inadequate because of changes in conditions, or
the degree of compliance with the policies or procedures may
deteriorate.
 
 PART
II-OTHER INFORMATION
 
 Item
1. Legal Proceedings
 
 None.
 
 Item
1A. Risk Factors
 
 Not
applicable.
 
 Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds
 
 None.
 
 Item
3. Defaults Upon Senior Securities
 
 None.
 
 Item 4. (Removed and
Reserved).
 
 None.
 
 Item
5. Other Information
 
 None.
 
 Item 6.
              
              Exhibits31.1
              
              Certification
      by Chief Executive Officer pursuant to Rule 13a-1431.2
              
              Certification
      by Chief Financial Officer pursuant to Rule 13a-1432.1
              
              Certification
      by Chief Executive Officer pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.32.2
              
              Certification
      by Chief Executive Officer pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002.
  19
  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.
 
 Juma Technology Corp.(Registrant)Date:
      May 13, 2010
                
                /s/ Anthony M. ServidioAnthony
      M. ServidioChief
      Executive Officer and Chairman(Principal
      Executive Officer)Date:
      May 13, 2010
                
                /s/ Anthony FernandezAnthony
      FernandezChief
      Financial Officer(Principal
      Financial and Accounting
Officer)
  20