UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC  20549



FORM 10-QSB



(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, 2005



[  ]

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 001-05996



DATAJUNGLE SOFTWARE INC.

(Exact name of small business issuer as specified in its charter)



Nevada

91-0835748

(State or other jurisdiction of

(IRS Employer Identification

incorporation or organization)

Number)



1 Hines Road, Suite 202, Ottawa, Ontario, Canada, K2K 3C7

(Address of principal executive offices)



Registrants Telephone Number, Including Area Code: (613) 254-7246



Common Stock

(None)

Title of each class

Name and exchange on which registered



Check whether the issuer (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 as the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.



Yes [X ]  No [  ]





At August 12, 2005, 17,281,173 shares of the registrants common stock were outstanding.



Transitional Small Business Disclosure Format (Check one):

Yes (   )

No (X)







1





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TABLE OF CONTENTS



PART I



PAGE





ITEM 1.

Consolidated Condensed Balance Sheets as of June 30, 2005

and December 31, 2004

4



Consolidated Condensed Statements of Operations for the Three Month

and Six Month Periods Ended June 30, 2005 and 2004

5



Consolidated Condensed Statements of Cash Flows for the Six Month

Periods Ended June 30, 2005 and 2004

6



Notes to Consolidated Condensed Financial Statements

7



ITEM 2.

Managements Discussion and Analysis or Plan of Operation

18



ITEM 3.

Controls and Procedures

25



PART II



ITEM 1.

Legal Proceedings

25



ITEM 2.

Changes in Securities

26



ITEM 3.

Defaults Upon Senior Securities

26



ITEM 4.

Submission of Matters to a Vote of Security Holders

26



ITEM 5.

Other Information

27



ITEM 6.

Exhibits and Reports on Form 8-K

27



Signatures

28



Certifications

29



















2





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PART 1





ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS









DATAJUNGLE SOFTWARE INC.



Three and six months ended June 30, 2005 and 2004









































3





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DATAJUNGLE SOFTWARE INC.

Consolidated Condensed Balance Sheets



June 30, 2005 and December 31, 2004

(In U.S. dollars)



_____________________________________________________________________________________________________

June 30,

December 31,

2005

2004

_____________________________________________________________________________________________________

(Unaudited)

Assets



Current assets:

Cash and cash equivalents

$

9,762

$

10,056

Accounts receivable

59,084

83,405

Investment tax credits receivable

56,314

42,563

Prepaid expenses (note 8(b))

387,374

9,688

_____________________________________________________________________________________________________

512,534

145,712



Deferred consulting services (note 8(b))

597,902

-



Property and equipment

8,733

15,181

_____________________________________________________________________________________________________

$

1,119,169

$

160,893

_____________________________________________________________________________________________________



Liabilities and Stockholders Deficiency



Current liabilities:

Accounts payable (note 4)

$

154,130

$

130,865

Accrued liabilities

275,115

219,115

Promissory notes payable (note 5)

560,423

196,000

Promissory notes payable to related party (note 6)

448,180

456,905

Deferred revenue

6,517

4,161

_____________________________________________________________________________________________________

1,444,365

1,007,046

Stockholders deficiency (note 8):

Common stock, $0.001 par value. Authorized 300,000,000; 
issued and outstanding 17,281,173 shares at June 30,
2005 and at December 31, 200417,28117,281

Share subscriptions received

50,000

35,000

Common stock to be issued for services (note 8(b))

157,000

-

Additional paid-in capital

3,058,733

2,122,346

Accumulated other comprehensive loss

(173,490)

(183,180)

Deficit

(3,434,720)

(2,837,600)

_____________________________________________________________________________________________________

(325,196)

(846,153)

Basis of presentation (note 2(a))

Guarantees (note 11)

Subsequent events (note 14)

_____________________________________________________________________________________________________

$

1,119,169

$

160,893

_____________________________________________________________________________________________________



See accompanying notes to unaudited interim period consolidated condensed financial statements.



4





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DATAJUNGLE SOFTWARE INC.

Consolidated Condensed Statements of Operations



Three and six months ended June 30, 2005 and 2004

(In U.S. dollars)



_____________________________________________________________________________________________________

Three months

Three months

Six months

Six months



ended

ended

ended

ended

June 30,

June 30,

June 30,

June 30,

2005

2004

2005

2004

_____________________________________________________________________________________________________

(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Revenues:



Products

$

17,626

$

108,033

$

34,549

$

162,438

Services

41,122

306,065

85,795

307,406

_____________________________________________________________________________________________________

58,748

414,098

120,344

469,844



Cost of revenues:

Cost of products

3,227

61,277

4,304

96,417

Cost of services

2,107

133,914

9,164

134,559

_____________________________________________________________________________________________________

5,334

195,191

13,468

230,976



_____________________________________________________________________________________________________

Gross profit

53,414

218,907

106,876

238,868



Expenses:

General and administrative

231,580

125,059

384,972

180,464

Research and development (note 9)

61,493

181,709

64,141

298,932

Sales and marketing

109,760

72,355

220,398

119,716

Depreciation of property and equipment

4,814

4,718

9,697

7,644

_____________________________________________________________________________________________________

407,647

383,841

679,208

606,756



_____________________________________________________________________________________________________

(354,233)

(164,934)

(572,332)

(367,888)



Other income (expenses):

Interest income

-

634

-

3,899

Interest expense

(12,871)

(2,154)

(20,609)

(4,061)

Foreign exchange loss

(1,958)

(1,980)

(4,179)

(3,682)

_____________________________________________________________________________________________________

(14,829)

(3,500)

(24,788)

(3,844)

_____________________________________________________________________________________________________

Net loss

$

(369,062)

$

(168,434)

$

(597,120)

$

(371,732)

_____________________________________________________________________________________________________



Loss per common share - basic and diluted
(note 10)

$

0.02

$

0.01

$

0.03

$

0.02

_____________________________________________________________________________________________________



Weighted-average common shares
outstanding

17,281,173

15,190,946

17,281,173

15,190,946

_____________________________________________________________________________________________________



See accompanying notes to unaudited interim period consolidated condensed financial statements.



5





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DATAJUNGLE SOFTWARE INC.

Consolidated Condensed Statements of Cash Flows



Six months ended June 30, 2005 and 2004

(In U.S. dollars)



_____________________________________________________________________________________________________

Six months

Six months

ended

ended

June 30,

June 30,

2005

2004

_____________________________________________________________________________________________________

(Unaudited)

(Unaudited)

Cash flows from operating activities:

Net loss

$

(597,120)

$

(371,732)

Items not involving cash:

Depreciation of property and equipment

9,697

7,644

Interest expense

19,290

3,815

Compensation expense (recovery)

(163,005)

175,079

Consulting fees

250,518



Change in non-cash operating working capital

103,486

3,982

_____________________________________________________________________________________________________

Net cash used in operating activities

(377,134)

(181,212)



Cash flows from investing activities:

Purchase of property and equipment

(3,595)

(2,965)



Cash flows from financing activities:

Proceeds from promissory notes payable

422,423

30,000

Payments of promissory notes payable

(58,000)

(33,209)

Share issuance costs

(300)

(3,495)

Share subscriptions received

15,000

247,500

_____________________________________________________________________________________________________

Net cash provided by financing activities

379,123

240,796



Effects of exchange rates on cash and cash equivalents

1,312

7,015



_____________________________________________________________________________________________________

Net increase (decrease) in cash and cash equivalents

(294)

63,634



Cash and cash equivalents, beginning of period

10,056

46,558



_____________________________________________________________________________________________________

Cash and cash equivalents, end of period

$

9,762

$

110,192

_____________________________________________________________________________________________________



Supplemental information to Consolidated Condensed Statements of Cash Flows:



For the six months ended June 30, 2005, the Company paid $1,319 in interest expense (Six months ended June 30, 2004 - $3,287).











See accompanying notes to unaudited interim period consolidated condensed financial statements.



6





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DATAJUNGLE SOFTWARE INC.

Notes to Consolidated Condensed Financial Statements



Three and six months ended June 30, 2005 and 2004

(In U.S. dollars)



_________________________________________________________________________________________________________



1.

General:

DataJungle Software Inc. (the Company) was incorporated in the State of Washington on June 5, 1968 as Quad Metals Corporation (Quad).  Quad became a Nevada incorporated company on December 11, 2002 when it merged with its wholly-owned subsidiary.  The Company was renamed to DataJungle Software Inc. on November 18, 2003.  The Company is a developer of web-based enterprise-class business intelligence software solutions that translate business data into interactive tables, charts and maps.  These solutions consist of modules of functionality that can be assembled to the specific requirements of the customer and customized to the needs of each user class within the customers business.



2.

Summary of significant accounting policies:

(a)

Basis of presentation:

These consolidated condensed financial statements are prepared in accordance with generally accepted accounting principles in the United States of America and include the accounts of DataJungle Software Inc. and its wholly-owned subsidiary, DataJungle Ltd.  All significant intercompany balances and transactions have been eliminated in consolidation.  The accounting policies are consistent with the policies outlined in the Companys audited financial statements at and for the year ended December 31, 2004.

The condensed financial statements included herein are unaudited but, in the opinion of management, include all adjustments (consisting only of normal recurring entries) necessary for fair presentation of the consolidated condensed financial position and results of operations of the Company for the periods presented.  The results of operations for the six months ended June 30, 2005 are not necessarily representative of the operating results expected for the full fiscal year ending December 31, 2005.  Moreover, these consolidated condensed financial statements do not purport to contain complete disclosure in conformity with generally accepted accounting principles used in the United States of America and should be read in conjunction with the Companys audited consolidated financial statements at and for the year ended December 31, 2004.

The consolidated condensed financial statements have been prepared assuming that the Company will continue as a going concern.  The Company has minimal revenues, negative working capital of $931,831 as at June 30, 2005 and has incurred a loss of $597,120 for the six months then ended.  As of June 30, 2005, the Company has an accumulated deficit of $3,434,720 which results in a stockholders deficiency of $325,196.  In addition, the Company expects to continue to incur operating losses for the foreseeable future and has no lines of credit or other financing facilities in place.  To date, the Company has been able to finance its operations on a month-to-month basis from investors who recognize the advancement of the Companys activities.



7





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DATAJUNGLE SOFTWARE INC.

Notes to Consolidated Condensed Financial Statements, page 2



Three and six months ended June 30, 2005 and 2004

(In U.S. dollars)



_________________________________________________________________________________________________________



2.

Summary of significant accounting policies (continued):

(a)

Basis of presentation (continued):

All of the factors above raise substantial doubt about the Companys ability to continue as a going concern.  Managements plans to address these issues include raising capital through the private placement of equity and renegotiating the repayment terms of accounts payable, accrued liabilities and promissory notes payable.  The Companys ability to continue as a going concern is subject to managements ability to successfully implement the above plans.  Failure to implement these plans could have a material adverse effect on the Companys financial position and or results of operations and may result in ceasing operations.  The consolidated condensed statements do not include adjustments that would be required if the assets are not realized and the liabilities settled in the normal course of operations.  Even if successful in obtaining financing in the near term, the Company cannot be certain that cash generated from its future operations will be sufficient to satisfy its liquidity requirements in the longer term and it may need to continue to raise capital by selling additional equity or by obtaining credit facilities.

The Companys future capital requirements will depend on many factors, including, but not limited to, the market acceptance of its products, the level of its promotional activities and advertising required to generate product sales.  No assurance can be given that any such additional funding will be available or that, if available, it can be obtained on terms favorable to the Company.

(b)

Foreign currency translation:

The consolidated condensed financial statements of the Company include the accounts of the Company in U.S. dollars and the accounts of its wholly-owned subsidiary, translated into U.S. dollars using Financial Accounting Standards Boards Statement No. 52, Foreign Currency Translation for the translation of foreign currency operations.  The financial statements of the Companys subsidiary are measured using the Canadian dollar as its functional currency.  Assets and liabilities have been translated into U.S. dollars using the exchange rates in effect at the balance sheet date.  Revenues and expenses have been translated into U.S. dollars using the average exchange rate for the period.  Gains and losses have been reported as a separate component of accumulated other comprehensive loss.

(c)

Revenue recognition:

For contracts requiring significant customization or services, the Company recognizes revenue using the completed contract method in accordance with the guidance in Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts.  Under the completed contract method, revenue is recognized in the period when all substantial obligations of the Company under the terms and conditions of a contract have been satisfied.  Cash receipts received in advance of the recognition of revenue and rights to advance payments are recorded in the consolidated condensed balance sheet as deferred revenue.  Labor costs associated with a contract that has not been recognized as revenue are capitalized in the consolidated condensed balance sheet as contracts in process.  A provision for contract losses is recognized as soon as the losses become evident.



8





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DATAJUNGLE SOFTWARE INC.

Notes to Consolidated Condensed Financial Statements, page 3



Three and six months ended June 30, 2005 and 2004

(In U.S. dollars)



_________________________________________________________________________________________________________



2.

Summary of significant accounting policies (continued):

(c)

Revenue recognition (continued):

For sales of product licenses, the Company recognizes revenue in accordance with Statement of Position 97-2, Software Revenue Recognition (SOP 97-2), as amended by Statement of Position 98-9, Software Revenue Recognition with Respect to Certain Transactions, issued by the American Institute of Certified Public Accountants.  Revenue from sale of product licenses is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectibility is probable.

Revenue from product support contracts is recognized ratably over the life of the contract.  Revenue from services is recognized at the time such services are rendered.

For contracts with multiple elements such as product licenses, product support and services, the Company follows the residual method.  Under this method, the total fair value of the undelivered elements of the contract, as indicated by vendor specific objective evidence, is deferred and subsequently recognized in accordance with the provisions of SOP 97-2.  The difference between the total contract fee and the amount deferred for the undelivered elements is recognized as revenue related to the delivered elements.  Vendor specific objective evidence for support and consulting services is obtained from contracts where these elements have been sold separately.  Where the Company cannot determine the fair value of all the obligations, the revenue is deferred until such time as it can be determined or the element is delivered.

(d)

Stock-based compensation:



The Company applies the intrinsic value-based method of accounting prescribed by accounting principles board (APB) opinion no. 25, Accounting for Stock Issued to Employees, and related interpretations including fasb interpretation no. 44, Accounting for Certain Transactions Involving Stock Compensation an Interpretation of APB Opinion No. 25, to account for its stock options for employees.  Under this method, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price.  Statement of financial accounting standards (SFAS) no. 123, Accounting for Stock-based Compensation and SFAS no. 148, Accounting for Stock- based Compensation  Transition and Disclosure, an Amendment of FASB Statement No. 123, established accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans.  As permitted by existing accounting standards, the company has elected to continue to apply the intrinsic-value based method of accounting described above, and has adopted only the disclosure requirements of sfas 123, as amended.







9





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DATAJUNGLE SOFTWARE INC.

Notes to Consolidated Condensed Financial Statements, page 4



Three and six months ended June 30, 2005 and 2004

(In U.S. dollars)



_________________________________________________________________________________________________________



2.

Summary of significant accounting policies (continued):

(d)

Stock-based compensation:

The following table illustrates the effect on net loss if the fair value-based method had been applied to all outstanding and unvested awards in each period.



_____________________________________________________________________________________________________

Three months

Three months

Six months

Six months

ended

ended

ended

ended

June 30,

June 30,

June 30,

June 30,

2005

2004

2005

2004

_____________________________________________________________________________________________________



Net loss, as reported

$

(369,062)

$

(168,434)

$

(597,120)

$

(371,732)



Add (deduct) stock-based employee

compensation expense (recovery)

included in reported net loss

(29,384)

140,419

(163,005)

175,079

Deduct total stock-based employee

compensation expense

determined under fair

value-based method for all

awards

(123,647)

(43,114)

(311,456)

(26,209)



_____________________________________________________________________________________________________

Pro forma net loss

$

(522,093)

$

(71,129)

$

(1,071,581)

$

(222,862)

_____________________________________________________________________________________________________



Loss per common share:

Basic and diluted  as

reported

$

0.02

$

0.01

$

0.03

$

0.02

Basic and diluted  pro forma

0.03

0.00

0.06

0.01

_____________________________________________________________________________________________________



(e)

Deferred consulting services:

Deferred consulting services represent the portion of prepaid non-cash consulting fees for services to be rendered in periods in excess of twelve months from the balance sheet date.  Prepaid non-cash consulting fees related to services to be rendered within twelve months are included in prepaid expenses on the balance sheet.  These costs will be charged to expenses as the services are rendered.  If for any reason circumstances arise which would indicate that the services will not be performed in the future, these prepaid non-cash consulting fees will be charged to expenses immediately.



10





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DATAJUNGLE SOFTWARE INC.

Notes to Consolidated Condensed Financial Statements, page 5



Three and six months ended June 30, 2005 and 2004

(In U.S. dollars)



_________________________________________________________________________________________________________



3.

Comprehensive loss:

Comprehensive loss includes the net loss and other comprehensive loss (OCL).  OCL refers to changes in net assets from transactions and other events and circumstances other than transactions with stockholders.  These changes are recorded directly as a separate component of stockholders deficiency and excluded from net loss.  The only comprehensive loss item for the Company relates to foreign currency translation adjustments pertaining to the translation of the financial statements of the Companys subsidiary, from Canadian dollars, the functional currency of the subsidiary, to U.S. dollars, the reporting and functional currency of the Company.



_____________________________________________________________________________________________________

Three months

Three months

Six months

Six months

ended

ended

ended

ended

June 30,

June 30,

June 30,

June 30,

2005

2004

2005

2004

_____________________________________________________________________________________________________



Net loss

$

(369,062)

$

(168,434)

$

(597,120)

$

(371,732)

Other comprehensive income (loss):

Currency translation adjustment

(6,817)

12,491

(9,690)

18,323



_____________________________________________________________________________________________________

Comprehensive loss

$

(375,879)

$

(155,943)

$

(606,810)

$

(353,409)

_____________________________________________________________________________________________________



4.

Related party transaction:

Included in accounts payable as of June 30, 2005 is $26,196 due to a corporation controlled by an officer and director of the Company for consulting services rendered during the three months ended June 30, 2004.



5.

Promissory notes payable:



_____________________________________________________________________________________________________

June 30,

December 31,

2005

2004

_____________________________________________________________________________________________________





Promissory notes, payable on demand, bearing interest at 12%



per annum, secured by an assignment of accounts receivable

(note 5(a))

560,423

196,000

_____________________________________________________________________________________________________

$

560,423

$

196,000

_____________________________________________________________________________________________________







11





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DATAJUNGLE SOFTWARE INC.

Notes to Consolidated Condensed Financial Statements, page 6



Three and six months ended June 30, 2005 and 2004

(In U.S. dollars)



_________________________________________________________________________________________________________



5.

Promissory notes payable (continued):

Additional terms and conditions related to the promissory notes are as follows:

(a)

During the six months ended June 30, 2005, the Company received cash consideration of $422,423 in exchange for the issuance of 12% promissory notes and repaid $58,000 to the lender.  Accrued interest of $21,364 (December 31, 2004 - $2,074) has been included in accrued liabilities at June 30, 2005.

6.

Promissory notes payable to related party:



_____________________________________________________________________________________________________

June 30,

December 31,

2005

2004

_____________________________________________________________________________________________________

Promissory note, payable in Canadian dollars on seven days

notice, no fixed repayment terms, bearing interest at 10% per

annum compounded semi-annually until September 16, 2003

and non-interest bearing thereafter, convertible at the option

of the holder into common stock of the Company at any time

and secured by a general security agreement representing

a first floating charge on all assets of the Company

$

448,180

$

456,905

_____________________________________________________________________________________________________



Additional terms and conditions related to the promissory notes payable to related party are as follows:

Under the terms of the promissory note, the Company can repay all amounts of principal and interest at any time without penalty or bonus.  The promissory note is denominated in Canadian dollars.  In accordance with the terms of a Memorandum of Agreement dated February 21, 2003, the lender has a right to convert all amounts of principal and interest to common stock of the Company at the rate of one common share for each $0.15 Canadian of debt converted or at such lower rate paid by any third party dealing at arms length with the Company.  In addition, as long as at least $100,000 Canadian of principal and interest is outstanding, the lender has certain rights related to management and direction of the Company.  Included in accrued liabilities is $79,317 (December 31, 2004  $80,861) in accrued interest on this note.  The lender has agreed that the promissory note together with accrued interest would be convertible, at the lenders option, into 4,309,302 common shares of the Company.



7.

Stock option plan:

Under the Companys Stock Option Plan (the Plan) up to 5,000,000 shares of authorized but unissued common stock of the Company can be granted to officers, employees and consultants.  Options are granted with an exercise price equal to or greater than the stocks fair market value at the date of grant, vest over a period of time as determined by the Board of Directors and expire no later than ten years from the date of vesting.

At June 30, 2005, there were 1,971,548 additional shares available for grant under the Plan.



12





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DATAJUNGLE SOFTWARE INC.

Notes to Consolidated Condensed Financial Statements, page 7



Three and six months ended June 30, 2005 and 2004

(In U.S. dollars)



_________________________________________________________________________________________________________



7.

Stock option plan (continued):

During the three months ended March 31, 2005, there were 60,000 stock options granted to employees.  The per share weighted-average fair value of stock options granted to employees under the Plan during the three months ended March 31, 2005 was $0.51 on the date of grant using the Black Scholes option-pricing model with the following weighted-average assumptions: expected dividend yield 0%, risk-free interest rate of 4.09%, volatility rate of 135%, and an expected life of 5.8 years.

During the three months ended June 30, 2005, there were 25,000 stock options granted to employees.  The per share weighted-average fair value of stock options granted to employees under the Plan during the three months ended June 30, 2005 was $0.28 on the date of grant using the Black Scholes option-pricing model with the following weighted-average assumptions: expected dividend yield 0%, risk-free interest rate of 3.81%, volatility rate of 131%, and an expected life of 6.0 years.

During the three months ended June 30, 2005, an employee forfeited 175,000 stock options to purchase 175,000 common shares at $0.51 expiring at various dates up to March 31, 2012.  During the three months ended March 31, 2005, there were no forfeitures of stock options by employees.

As a result of modifications to stock options in prior years, the Company is required to account for modified options using variable accounting as prescribed by APB 25.  For the six months ended June 30, 2005, non-cash compensation recovery of $104,562, $56,065 and $8,763 has been included in research and development, general and administrative and sales and marketing expenses, respectively relating to these modifications.  For the six months ended June 30, 2004, non-cash compensation expense of $124,495, $39,937 and $8,708 has been included in research and development, general and administrative and sales and marketing expenses, respectively.

For the six months ended June 30, 2005, non-cash compensation expense of $6,385 (six months ended June 30, 2004 - $1,939 was included in general and administrative expenses) has been included in sales and marketing expenses with respect to stock options granted to non-employees and modification of options issued to non-employees.

8.

Stockholders deficiency:

(a) Share issuance costs:

During the three months ended June 30, 2005, share issuance costs (recovery) of $(1,193) were incurred and recorded as a credit to additional paid-in capital.

During the three months ended March 31, 2005, the Company received $15,000 from investors pursuant to subscription agreements to purchase 50,000 shares of common stock at $0.30 per share.  Share issuance costs (recovery) of $(1,324) were incurred and recorded as a credit to additional paid-in capital.  The recovery of $1,324 is net of share issuance costs of $300.

(b) Warrants and common stock pursuant to consulting agreements:

On November 22, 2004, the Company entered into a consulting agreement with an unrelated party to provide investor relations services to the Company for the period from November 22, 2004 to December 31, 2008.  As compensation for these services, the Company agreed to issue 3,000,000 warrants for the purchase of common stock at $0.50 per share expiring on December 31, 2009.  On January 17, 2005, the



13





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DATAJUNGLE SOFTWARE INC.

Notes to Consolidated Condensed Financial Statements, page 8



Three and six months ended June 30, 2005 and 2004

(In U.S. dollars)



_________________________________________________________________________________________________________



8.

Stockholders deficiency (continued):

(b) Warrants and common stock pursuant to consulting agreements:

Company issued 1,500,000 Series A warrants and 1,500,000 Series B warrants pursuant to this consulting agreement.

The Series A warrants can be exercised at any time on or before December 31, 2009 at an exercise price of $0.50 per share or by means of a cashless exercise provision if there is no effective registration statement registering the resale of the underlying shares.  The fair value of the Series A warrants was calculated as $982,198 using the Black Scholes option pricing model with the following weighted average assumptions:  expected dividend yield 0%; risk-free interest rate of 3.6%; expected volatility of 145%, and an expected life of 5.11 years.  Of this amount $59,790 has been included in general and administrative expenses for the three months ended June 30, 2005 (June 30, 2004 - $Nil).  $239,161 and $597,902 have been included in prepaid expenses and deferred consulting services as at June 30, 2005, respectively.  These amounts will be recognized as an expense on a straight-line basis as services are rendered from July 1, 2005 to December 31, 2008.

The Series B warrants can be exercised at any time after July 31, 2006 at an exercise price of $0.50 per share or by means of a cashless exercise provision if there is no registration statement registering the resale of the underlying shares and expire on December 31, 2009.  The Series B warrants can be exercised prior to July 31, 2006 if the Company has not terminated the consulting agreement and the Company has received at least $2,000,000 of investment from any and all sources during the period from July 1, 2004 to July 31, 2006.  In accordance with EITF 96-18 Accounting for Equity Instruments that are Issued to other than Employees for Acquiring, or in Conjunction with Selling, Goods or Services, the lowest aggregate fair value of the Series B warrants is used for recognition purposes.  At June 30, 2005, no services have yet been rendered.

Effective January 1, 2005, the Company entered into a consulting agreement with an unrelated party to provide investor communication and public relations services to the Company for the period from January 1, 2005 to December 31, 2005.  As compensation for these services, the Company agreed to issue 200,000 shares of common stock and 200,000 Series A warrants for the purchase of common stock at $0.50 per share expiring on December 31, 2009.  The fair value of the 200,000 shares of common stock has been estimated at $126,000 and has been included in common stock to be issued for services at June 30, 2005.  Of this amount, the Company has included $63,000 in general and administrative expenses for the six months ended June 30, 2005.  The remaining balance of $63,000 is included in prepaid expenses at June 30, 2005 and will be recognized as an expense on a straight-line basis as services are rendered from July 1, 2005 to December 31, 2005.  The fair value of the 200,000 Series A warrants was calculated as $114,677 using the Black Scholes option pricing model with the following weighted average assumptions:  expected dividend yield 0%; risk-free interest rate of 3.69%; expected volatility of 142%, and an expected life of 5 years.  Of this amount, $57,338 has been included in general and administrative expenses for the six months ended June 30, 2005 and $57,339 has been included in prepaid expenses as at June 30, 2005.  The $57,339 will be recognized as an expense on a straight-line basis as services are rendered from July 1, 2005 to December 31, 2005.



14





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DATAJUNGLE SOFTWARE INC.

Notes to Consolidated Condensed Financial Statements, page 9



Three and six months ended June 30, 2005 and 2004

(In U.S. dollars)



_________________________________________________________________________________________________________



8. Stockholders deficiency (continued):

Effective May 20, 2005, the Company entered into a consulting agreement with an unrelated party to provide public relations and investor communications services to the Company for the period from May 20, 2005 to September 19, 2005.  As compensation for these services, the Company agreed to issue 100,000 shares of common stock.  The fair value of the common stock has been estimated at $31,000 at May 20, 2005 and has been included in common stock to be issued for services at June 30, 2005.  Of this amount, $10,333 has been included in general and administrative expenses for the three months ended June 30, 2005 and $20,667 has been included in prepaid expenses at June 30, 2005.  The balance of $20,667 will be recognized as an expense on a straight-line basis as services are rendered from July 1, 2005 to September 19, 2005.

9.

Research and development:



_____________________________________________________________________________________________________

Three months

Three months

Six months

Six months



ended

ended

ended

ended

June 30,

June 30,

June 30,

June 30,

2005

2004

2005

2004

_____________________________________________________________________________________________________



Costs incurred

$

69,381

$

186,183

$

78,580

$

309,623

Investment tax credits

(7,888)

(4,474)

(14,439)

(10,691)

_____________________________________________________________________________________________________

$

61,493

$

181,709

$

64,141

$

298,932

_____________________________________________________________________________________________________



10.

Net loss per share:

As the Company incurred a net loss during the six months ended June 30, 2005 and 2004, the loss per common share is based on the weighted-average common shares outstanding.  The following outstanding instruments could potentially dilute loss per share for the periods presented:



_____________________________________________________________________________________________________

Six months

Six months

ended

ended

June 30,

June 30,

Number of shares issued upon:

2005

2004

_____________________________________________________________________________________________________

Exercise of options to purchase common stock

3,028,452

3,302,300

Conversion of promissory notes

4,309,302

4,309,302

Subscriptions to purchase common stock

166,667

1,056,500

Exercise of Series A warrants

1,700,000

-

Exercise of Series B warrants

1,500,000

-

Common stock to be issued pursuant to consulting agreements

300,000

-

_____________________________________________________________________________________________________





15





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DATAJUNGLE SOFTWARE INC.

Notes to Consolidated Condensed Financial Statements, page 10



Three and six months ended June 30, 2005 and 2004

(In U.S. dollars)



_________________________________________________________________________________________________________



11.

Guarantees:

The Company has entered into agreements that contain features which meet the definition of a guarantee under FASB Interpretation No. 45 (FIN 45).  FIN 45 defines a guarantee to be a contract that contingently requires the Company to make payments (either in cash, financial instruments, other assets, common shares ofthe Company or through provision of services) to a third party based on changes in an underlying economic characteristic (such as interest rates or market value) that is related to an asset, liability or an equity security of the other party.  The Company has the following guarantees which are subject to the disclosure requirements of FIN 45.

Product warranties

As part of the normal sale of software products, the Company has provided certain of its customers with product warranties of 30 days from date of sale.  Based on managements best estimate of probable liability under its product warranties, no product warranty accrual was recorded as of June 30, 2005 and December 31, 2004.

12.

Segmented reporting:

The Company operates in one dominant industry segment, which involves providing web-based software solutions that translate data into tables, charts and maps.  The Companys solutions can extend the functionality of business intelligence software packages from other vendors by adding pre-built software objects on top of those vendors solutions.  Alternatively, the Companys pre-built software objects can be assembled and bundled with data from major data vendors to provide functionality and enhanced presentation capabilities.

External revenues attributable to geographic areas based on the location of the customer are as follows:

_____________________________________________________________________________________________________

Three months

Three months

Six months

Six months

ended

ended

ended

ended

June 30,

June 30,

June 30,

June 30,

2005

2004

2005

2004

_____________________________________________________________________________________________________

United States

$

41,122

$

404,222

$

102,718

$

459,968

Canada

17,626

-

17,626

-

Asia

-

9,876

-

9,876

_____________________________________________________________________________________________________



The Companys assets are located as follows:



_____________________________________________________________________________________________________

June 30,

December 31,

2005

2004

_____________________________________________________________________________________________________

Canada

$

140,958

$

160,716

United States

978,211

177

_____________________________________________________________________________________________________





16





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DATAJUNGLE SOFTWARE INC.

Notes to Consolidated Condensed Financial Statements, page 11



Three and six months ended June 30, 2005 and 2004

(In U.S. dollars)



_________________________________________________________________________________________________________



13.

Economic dependence:

Three of the Companys customers account for 97% of revenue for the six months ended June 30, 2005 (June 30, 2004  four customers account for 98%).



14.

Subsequent events:



Subsequent to June 30, 2005, the Company issued 12% demand promissory notes for a total obligation of $43,098.



Subsequent to June 30, 2005, an employee forfeited 125,000 stock options to purchase 125,000 common shares at $0.51 per share expiring at various dates up to June 30, 2010.



Subsequent to June 30, 2005, a Director of the Company forfeited 66,000 stock options to purchase 66,000 common shares at $0.51 per share expiring at various dates up to June 14, 2012.















































17





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ITEM 2

MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION



CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS



We caution readers that certain important factors may affect our actual results and could cause such results to differ materially from any forward-looking statements that we make in this report.  For this purpose, any statements that are not statements of historical fact may be deemed to be forward-looking statements.



We caution readers that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties.  In fact, actual results most likely will differ materially from those projected in the forward-looking statements as a result of various factors.  Some factors that could adversely affect actual results and performance include:



*

our limited operating history;

*

our minimal sales to date;

*

our future requirements for additional capital funding;

*

the failure of our technology and products to perform as specified;

*

the discontinuance of growth in the use of the Internet;

*

the enactment of new adverse government regulations; and

*

the development of better technology and products by others.



You should carefully consider and evaluate all of these factors. In addition, we do not undertake to update forward-looking statements after we file this report with the SEC, even if new information, future events or other circumstances have made them incorrect or misleading.



Critical Accounting Policies



The financial statements of the Company are prepared in accordance with generally accepted accounting principles in the United States of America.  The following accounting policies are considered to be critical to an understanding of the financial position and results of operations for the Company.  Additional accounting policies for the Company have been disclosed in the audited consolidated financial statements at and for the year ended December 31, 2004.



(a) Revenue recognition

The following policy on revenue recognition was adopted in prior years and continues to be applicable in the current year:

For contracts requiring significant customization or services, the Company recognizes revenue using the completed contract method in accordance with the guidance in Statement of Position 81-1, Accounting for Performance of Construction-Type and Certain Production-Type Contracts.  Under the completed contract method, revenue is recognized in the period when all substantial obligations of the Company under the terms and conditions of a contract have been satisfied.  Cash receipts received in advance of the recognition of revenue and rights to advance payments are recorded in the balance sheet as deferred revenue.  Labor costs associated with a contract that has not been recognized as revenue are capitalized in the balance sheet as contracts in process.  A provision for contract losses is recognized as soon as the losses become evident.



18





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During the year-ended December 31, 2004, the Company made its initial sales of product licenses.  As a consequence, the following policy on revenue recognition was adopted in the year-ended December 31, 2004:

For sales of product licenses, the Company recognizes revenue in accordance with Statement of Position 97-2, Software Revenue Recognition (SOP 97-2), as amended by Statement of Position 98-9, Software Revenue Recognition with Respect to Certain Transactions, issued by the American Institute of Certified Public Accountants.  Revenue from sale of product licenses is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable and collectibility is probable.

Revenue from product support contracts is recognized ratably over the life of the contract.  Revenue from services is recognized at the time such services are rendered.

For contracts with multiple elements such as product licenses, product support and services, the Company follows the residual method.  Under this method, the total fair value of the undelivered elements of the contract, as indicated by vendor specific objective evidence, is deferred and subsequently recognized in accordance with the provisions of SOP 97-2.  The difference between the total contract fee and the amount deferred for the undelivered elements is recognized as revenue related to the delivered elements.  Vendor specific objective evidence for support and consulting services is obtained from contracts where these elements have been sold separately.  Where the Company cannot determine the fair value of all the obligations, the revenue is deferred until such time as it can be determined or the element is delivered.

(b)

Stock-based compensation:

The Company applies the intrinsic value-based method of accounting prescribed by Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations including FASB Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation an interpretation of APB Opinion No. 25, to account for its stock options for employees.  Under this method, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeded the exercise price.  Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation and SFAS No. 148, Accounting for Stock- Based Compensation  Transition and Disclosure, an amendment of FASB Statement No. 123, established accounting and disclosure requirements using a fair value-based method of accounting for stock-based employee compensation plans.  As permitted by existing accounting standards, the Company has elected to continue to apply the intrinsic-value based method of accounting described above, and has adopted only the disclosure requirements of SFAS 123, as amended.

(c)

Deferred consulting services:

The Company adopted the following policy related to deferred consulting services during the three months ended March 31, 2005 and it continues to be applicable in the current quarter:

Deferred consulting services, which arose on the issuance of stock-based compensation, represent the portion of prepaid non-cash consulting fees for services to be rendered in periods in excess of twelve months from the balance sheet date.  Prepaid non-cash consulting fees related to services to be rendered within twelve months are included in prepaid expenses on the balance sheet.  These costs will be charged to expenses as the services are rendered.  If for any reason circumstances arise which would indicate that the services will not be performed in the future, these prepaid non-cash consulting fees will be charged to expenses immediately.



19





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Results of Operations



For the three month period ended June 30, 2005 compared to the three month period ended June 30, 2004



Revenue:Revenues for the three months ended June 30, 2005 were $58,748 compared to $414,098 for the three months ended June 30, 2004.  Revenues for the three months ended June 30, 2005 included the following:



·

$39,313 for one contract for services;

·

$17,626 for two contracts for products;

·

$1,809 related to product support contracts.



Revenues for the three months ended June 30, 2004 included the following:



·

$346,672 recognized for accounting purposes in that period as a result of using the completed contract method of accounting for one contract for services and two contracts for products that had been started in prior periods;

·

$57,550 for two contracts for services;

·

$9,876 for one contract for products.



Gross margin:Gross margin for the three months ended June 30, 2005 was $53,414 (91% of revenue) compared to $218,907 (53% of revenue) for the three months ended June 30, 2004.  In 2005, the contracts for products were for license fees and required minimal cost to complete.  In addition, the contract for services was for an ongoing project requiring minimal cost to complete.  In 2004, one of the contracts for product and one of the contracts for services were expected to result in lower margins as they included a significant labor component.



General and administrative expenses:General and administrative expenses for the three months ended June 30, 2005 were $231,580 compared to $125,059 for the three months ended June 30, 2004.  The increase in costs of approximately $107,000 includes the following significant items:



·

Increase in compensation related costs of approximately $13,000 due to an increase in the level of full-time staffing.

·

Decrease in stock related compensation expense of approximately $44,000 resulting from a net reduction in the intrinsic value of certain stock options of the Company accounted for using variable accounting due to a decrease in the market price of Company common stock.

·

Increase in consulting expense of approximately $114,000.  This resulted from the issuance in January, 2005 of 3,200,000 warrants to purchase common stock and an agreement to issue 200,000 shares of common stock in exchange for investor relations and public relations services.  In addition, the Company agreed to issue 100,000 shares of common stock for public relations and investor communications services for a four month period commencing in May, 2005.

·

Increase of approximately $16,000 in professional fees due to the current regulatory environment.

·

Increase of approximately $7,000 in financing fees due to an increase in the level of debt required to fund on-going operations.





20





---



Sales and marketing expenses:Sales and marketing expenses for the three months ended June 30, 2005 were $109,760 compared to $72,355 for the three months ended June 30, 2004.  The increase in costs of approximately $37,000 includes the following significant items:



·

Increase in compensation related costs of approximately $48,000 due to hiring of two full-time sales representatives and a sales consultant.  In June, 2005, the Company terminated one of the sales representatives.

·

Decrease in stock related compensation expense of approximately $5,000 resulting from a net reduction in the intrinsic value of certain stock options of the Company accounted for using variable accounting due to a decrease in the market price of Company common stock.

·

Increase of approximately $3,000 in the costs of on-line demonstrations of our products and services due to the increase in staffing.

·

Decrease of approximately $6,000 in travel costs.

·

Decrease of approximately $3,000 in other miscellaneous costs.



Research and development expenses:Research and development expenses for the three months ended June 30, 2005 were $61,493 compared to $181,709 for the three months ended June 30, 2004.  The decrease in costs of approximately $120,000 includes the following significant items:



-

Decrease in compensation related costs of approximately $2,000 due to an overall decrease in the level of staffing offset by the impact of translating payroll in Canadian dollars to U.S. dollars.

-

Decrease in stock related compensation expense of approximately $121,000 resulting from a net reduction in the intrinsic value of certain stock options of the Company accounted for using variable accounting due to a decrease in the market price of Company common stock.

-

Decrease in consulting fees of approximately $8,000 due to utilizing an employee for graphics work rather than a consultant and a decrease in the requirements for outside support for our internal computer systems.

-

Increase in other costs of approximately $2,000 resulting from fees for a technology partner program.

-

Net decrease of approximately $9,000 in the amount of research and development costs transferred to contracts-in-process and cost of sales.



Depreciation:

Depreciation was $4,814 for the three months ended June 30, 2005 compared to $4,718 for the three months ended June 30, 2004.



Interest expense:

Interest expenseincreased from $2,154 for the three months ended June 30, 2004 to $12,871 for the three months ended June 30, 2005 as a result of an increase in the level of debt.



Foreign exchange:

Foreign exchange expense was $1,958 for the three months ended June 30, 2005 compared to $1,980 for the three months ended June 30, 2004.



Net loss:

Net loss was $369,062 ($0.02 per share) for the three months ended June 30, 2005 compared to $168,434 ($0.01 per share) for the three months ended June 30, 2004.  Our revenues and future profitability and future rate of growth are substantially dependent upon our ability to:



*

license our software applications to a sufficient number of clients



21





---



*

modify the successful software applications, over time, to provide enhanced benefits to existing users; and

*

successfully develop related software applications.



For the six month period ended June 30, 2005 compared to the six month period ended June 30, 2004



Revenue:Revenues for the six months ended June 30, 2005 were $120,344 compared to $469,844 for the three months ended June 30, 2004.   Revenues for the six months ended June 30, 2005 included the following:



·

$82,876 for one contract for services;

·

$34,549 for three contracts for products;

·

$2,919 related to product support contracts.



Revenues for the six months ended June 30, 2004 included the following:



·

$346,672 recognized for accounting purposes in that period as a result of using the completed contract method of accounting for one contract for services and two contracts for products that had been started in prior periods;

·

$58,890 for two contract for services;

·

$64,282 for two contracts for products.



Gross margin:Gross margin for the six months ended June 30, 2005 was $106,876 (89% of revenue) compared to $238,868 (51% of revenue) for the six months ended June 30, 2004.  In 2005, the contracts for products were for license fees and required minimal cost to complete.  In addition, the contract for services was for an ongoing project requiring minimal cost to complete.  In 2004, two of the contracts for products and the contracts for services were expected to result in lower margins as they included a significant labor component.



General and administrative expenses:General and administrative expenses for the six months ended June 30, 2005 were $384,972 compared to $180,464 for the six months ended June 30, 2004.  The increase in costs of approximately $205,000 includes the following significant items:



·

Increase in compensation related costs of approximately $39,000 due to an increase in the level of full-time staffing.

·

Decrease in stock related compensation expense of approximately $98,000 resulting from a net reduction in the intrinsic value of certain stock options of the Company accounted for using variable accounting due to a decrease in the market price of Company common stock.

·

Increase in consulting expense of approximately $218,000 as a result of the issuance in January, 2005 of 3,200,000 warrants to purchase common stock and an agreement to issue 200,000 shares of common stock in exchange for investor relations and public relations services.  In addition, the Company agreed to issue 100,000 shares of common stock for public relations and investor communications services for a four month period commencing in May, 2005.

·

Increase of approximately $29,000 in professional fees due to the current regulatory environment.

·

Increase of approximately $13,000 in financing fees due to an increase in the level of debt required to fund on-going operations



22





---



·

Net increase of approximately $4,000 in other miscellaneous costs.



Sales and marketing expenses:Sales and marketing expenses for the six months ended June 30, 2005 were $220,398 compared to $119,716 for the six months ended June 30, 2004.  The increase in costs of approximately $101,000 includes the following significant items:



·

Increase in compensation related costs of approximately $112,000 due to hiring of two full-time sales representatives and a sales consultant.  In June, 2005, the Company terminated one of the sales representatives.

·

Decrease in stock related compensation expense of approximately $11,000 resulting from a net reduction in the intrinsic value of certain stock options of the Company accounted for using variable accounting due to a decrease in the market price of Company common stock.

·

Increase of approximately $5,000 in the costs of on-line demonstrations of our products and services due to the increase in staffing.

·

Decrease of approximately $4,000 in travel costs.

·

Decrease of approximately $1,000 in other miscellaneous costs.



Research and development expenses:Research and development expenses for the six months ended June 30, 2005 were $64,141 compared to $298,932 for the six months ended June 30, 2004.  The decrease in costs of approximately $235,000 includes the following significant items:



·

Decrease in compensation related costs of approximately $23,000 due to an overall decrease in the level of staffing.

·

Decrease in stock related compensation expense of approximately $229,000 resulting from a net reduction in the intrinsic value of certain stock options of the Company accounted for using variable accounting due to a decrease in the market price of Company common stock.

·

Decrease in consulting fees of approximately $3,000 due to a decrease in the requirements for outside support for our internal computer systems.

·

Increase in other costs of approximately $6,000 resulting from fees for a technology partner program.

·

Increase of approximately $1,000 in other miscellaneous costs.

·

Net decrease of approximately $13,000 in the amount of research and development costs transferred to contracts-in-process and cost of sales.



Depreciation:

Depreciation increased from $7,644 for the six months ended June 30, 2004 to $9,697 for the six months ended June 30, 2005.



Interest expense:

Interest expenseincreased from $4,061 for the six months ended June 30, 2004 to $20,609 for the six months ended June 30, 2005 as a result of an increase in the level of debt.



Foreign exchange:

Foreign exchange expense increased from $3,682 for the six months ended June 30, 2004 to $4,179 for the six months ended June 30, 2005.



Net loss:

Net loss was $597,120 ($0.03 per share) for the six months ended June 30, 2005 compared to $371,732 ($0.02 per share) for the six months ended June 30, 2004.  Our revenues and future profitability and future rate of growth are substantially dependent upon our ability to:



·

license our software applications to a sufficient number of clients



23





---



·

modify the successful software applications, over time, to provide enhanced benefits to existing users; and

·

successfully develop related software applications.



Financial Condition and Liquidity



General:At June 30, 2005 working capital was a negative $931,831 compared to negative working capital of $861,334 at December 31, 2004.  The Company had $9,762 in cash at June 30, 2005 compared to $10,056 at December 31, 2004.



During the period from July 1, 2005 to August 9, 2005, the Company issued 12% demand promissory notes in exchange for cash consideration of $43,098.  The net resources raised are not sufficient to fund ongoing operations.  Consequently, the Company will require additional capital and the ability to operate on a profitable basis.  The Company cannot be certain that sufficient resources will be available or that, if available, resources can be obtained on terms favorable to the Company.



All of the factors above raise substantial doubt about the Companys ability to continue as a going concern.  Managements plans to address these issues include raising capital through the private placement of equity and renegotiating the repayment terms of accounts payable, accrued liabilities and promissory notes payable.  The Companys ability to continue as a going concern is subject to managements ability to successfully implement the above plans.  Failure to implement these plans could have a material adverse effect on the Companys position and or results of operations and may result in ceasing operations.  Even if successful in obtaining financing in the near term, the Company cannot be certain that cash generated from its future operations will be sufficient to satisfy its liquidity requirements in the longer term and it may need to continue to raise capital by selling additional equity or by obtaining credit facilities.



Net cash used in operating activities:During the six months ended June 30, 2005, the Company used $377,134 in cash in operations compared to a use of cash in operations of $181,212 for the six months ended June 30, 2004.  The use of cash in operations for the six months ended June 30, 2005 resulted from a loss of $597,120 for the period and a recovery in compensation expense of $163,005 offset by non-cash consulting fees of $250,518, depreciation of $9,697, non-cash interest expense of $19,290 and a net change in non-cash working capital of $103,486.  The use of cash for the six months ended June 30, 2004 resulted from a loss of $371,732 offset by non-cash compensation expense of $175,079, a net change in non-cash working capital of $3,982, depreciation expense of $7,644 and non-cash interest expense of $3,815.



Net cash used in investing activities:During the six months ended June 30, 2005, the Company purchased property and equipment of $3,595 compared to purchases of $2,965 for the six month period ended June 30, 2004.



Net cash provided by financing activities:During the six months ended June 30, 2005, the Company raised $364,423 (net of repayments of $58,000) by issuing 12% promissory notes and $15,000 from subscriptions to purchase 50,000 shares of common stock at $0.30 per share offset by $300 in share related issuance costs.  During the six months ended June 30, 2004, the Company raised $247,500 from subscriptions to purchase 825,000 shares of common stock at $0.30 per share offset by $3,495 in share related issuance costs.





24





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ITEM 3

CONTROLS AND PROCEDURES



The term disclosure controls and procedures is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, or the Exchange Act.  This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the Securities and Exchange Commission.

In connection with the review of the Company's consolidated financial statements for the three and six month periods ended June 30, 2005, the Company's independent registered public accounting firm advised the Board of Directors and management of certain significant internal control deficiencies that they considered to be, in the aggregate, a material weakness.  In particular, our independent registered public accounting firm identified the following weaknesses in our internal control systems: (1) lack of segregation of duties and (2) lack of formal procedures relating to all areas of financial reporting including a lack of review by management.  The independent registered public accounting firm indicated that they considered these deficiencies to be reportable conditions as that term is defined under standards established by the American Institute of Certified Public Accountants.  A material weakness is a significant deficiency in one or more of the internal control components that alone or in the aggregate precludes our internal controls from reducing to an appropriately low level of risk that material misstatements in our financial statements will not be prevented or detected on a timely basis.  The Company considered these matters in connection with the period-end closing of accounts and preparation of related consolidated financial statements and determined that no prior period financial statements were materially affected by such matters.  We believe that the material weakness began in 2003 and existed at the end of the period covered by this report.



The size of the Company has prevented us from being able to employ sufficient resources at this time to enable us to have an adequate level of supervision and segregation of duties within our internal control system.  We will continue to monitor and assess the costs and benefits of additional staffing within the Company.  However, we have not taken any formal steps at this time to correct the material weaknesses identified by our independent registered public accounting firm.  If we are unable to correct these material weaknesses, there is more than a remote likelihood that a material misstatement to our SEC reports will not be prevented or detected, in which case investors could lose confidence in the accuracy and completeness of our financial reports.  This could have an adverse effect on our ability to raise additional capital and could also have an adverse effect on our stock price.



As required by the SEC rules, we have evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this Quarterly Report.  This evaluation was performed under the supervision and with the participation of the Company's management, including the President & Chief Executive Officer and Vice President Finance, Secretary and Treasurer.  Based upon that evaluation, our President & Chief Executive Officer and Vice President Finance, Secretary and Treasurer have concluded that the Company's controls and procedures were not effective as of the end of the period covered by this Quarterly Report due to inadequate supervision and segregation of duties.



PART II



ITEM 1.

LEGAL PROCEEDINGS



NONE





25





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ITEM 2.

CHANGES IN SECURITIES



During the three months ended March 31, 2005, the Company had the following transactions:



·

Issued $234,000 of 12% promissory notes and repaid $58,000 of these promissory notes;

·

Issued 3,000,000 stock purchase warrants to purchase 3,000,000 common shares at an exercise price of $0.50 per share expiring on December 31, 2009 to an unrelated party pursuant to a consulting agreement for investor relations services to December 31, 2008.  1,500,000 of these warrants can be cancelled by the Company prior to July 31, 2006 if we cancel the consulting agreement and have not received at least $2,000,000 in investment from any and all sources during the period from July 1, 2004 to July 31, 2006;

·

Issued 200,000 stock purchase warrants to purchase 200,000 common shares at an exercise price of $0.50 per share expiring on December 31, 2009 to an unrelated party pursuant to a consulting agreement for investor communication and public relations services to December 31, 2005.  In addition, the Company agreed to issue 200,000 shares of common stock pursuant to this agreement;

·

Granted 85,000 stock purchase options to purchase 85,000 common shares at exercise prices between $0.43 and $0.75 expiring at various dates to January 18, 2013;

·

Received $15,000 in subscriptions to purchase 50,000 shares of common stock at $0.30 per share.



During the three months ended June 30, 2005, the Company had the following transactions:



·

Issued $188,423 of 12% promissory notes;

·

Granted 25,000 stock purchase options to purchase 25,000 common shares at $0.31 expiring at various dates up to June 13, 2008;

·

Cancelled 175,000 stock purchase options to purchase 175,000 common shares at $0.51 expiring at various dates up to March 31, 2012;

·

Agreed to issue 100,000 shares of common stock to an unrelated party pursuant to an agreement to provide public relations and investor communications services to September 19, 2005.



During the period from July 1, 2005 to August 9, 2005, the Company had the following transactions:



·

Issued 12% demand promissory notes in exchange for cash consideration of $43,098.

·

Cancelled 125,000 stock purchase options to purchase 125,000 common shares at $0.51 per share expiring at various dates up to June 30, 2010.

·

Cancelled 66,000 stock purchase options to purchase 66,000 common shares at $0.51 per share expiring at various dates up to June 14, 2012.



The foregoing securities were issued in reliance upon the exemption provided by Section 4(2) under the Securities Act of 1933 and the rules promulgated thereunder.





ITEM 3.

DEFAULTS UPON SENIOR SECURITIES



NONE



ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



NONE



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ITEM 5.

OTHER INFORMATION



NONE



ITEM 6.

EXHIBITS AND REPORTS ON FORM 8-K



a)

Exhibits



31.a

Certification of President & Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.b

Certification of Vice President Finance, Secretary & Treasurer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.a

Certification of President & Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.b

Certification of Vice President Finance, Secretary & Treasurer pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



b)

Reports on Form 8-K



Form 8-K filed on August 8, 2005 relating to the resignation of Robert Lendvai as a Director of the Company for personal reasons effective August 5, 2005

















































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SIGNATURES







In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.







DATAJUNGLE SOFTWARE INC.



By:

/s/   Edward Munden

Edward Munden

President & Chief Executive Officer



Dated: August 12, 2005



In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the small business issuer and in the capacities and on the dates indicated.







/s/   Edward Munden

Edward Munden

President & Chief Executive Officer

(principal executive officer)



Dated: August 12, 2005







/s/   Larry Bruce

Larry Bruce

Vice President Finance, Secretary and Treasurer

(principal financial officer)



Dated:  August 12, 2005



















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