Edgar Filing: HEREUARE INC

Unassociated Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTER ENDED JUNE 30, 2009

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM ___________ TO _____________

Commission file number 000-33033

hereUare, Inc.

(Exact name of registrant as specified in its charter)

Delaware	02-0575232
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

228 Hamilton Ave, 3rd floor

Palo Alto, CA 94301

(Address of principal executive offices including zip code)

(650) 798-5288

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x 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 definition 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 x		Smaller Reporting Company ¨
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

Applicable only to corporate issuers:

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: The number of shares of common stock, par value $0.0001, outstanding as of August 18, 2009 is 34,458,813.

hereUare, Inc.

and Subsidiaries

FORM 10-Q

For June 30, 2009

TABLE OF CONTENTS

Part I.	Consolidated Financial Information

Item 1.	Consolidated Financial Statements (unaudited)	3

	Consolidated Balance Sheets as of June 30, 2009 (unaudited) and December 31, 20078(audited)	3

	Consolidated Statements of Operations for The Three-Month and Six-Month Periods ended June 30, 2009 and 2008 (unaudited)	4

	Consolidated Statements of Cash Flows for The Six-Month Period ended June 30, 2009 and 2008 (unaudited)	5

	Notes to Unaudited Consolidated Financial Statements	6

Item 2.	Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations	13

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	16

Item 4.	Controls and Procedures	16

Part II.	Other Information

Item 1.	Legal Proceedings	17

Item 1A.	Risk Factors	17

Item 2.	Unregistered Sales of Equity, Securities and Use of Proceeds	24

Item 3.	Defaults Under Senior Securities	24

Item 4.	Submission of Matters to a Vote of Security Holders	25

Item 5.	Other Information	25

Item 6.	Exhibits	25

Signatures		26

Exhibit Index		27

Certifications

HEREUARE, INC. AND SUBSIDIARIES

(FORMERLY PEOPLENET INTERNATIONAL CORPORATION)

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

	June 30, 2009			December 31, 2008
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	31,497		$	6,900
Account receivable		449			106
Prepaid expenses		17,557			35,301
Total Current Assets		49,503			42,307

PROPERTY AND EQUIPMENT-NET		608,666			701,289
INTANGIBLE ASSETS-NET		114,967			206,608
DEPOSITS		50,000			185,293
Total Non-Current Assets		773,632			1,093,190

TOTAL ASSETS	$	823,135		$	1,135,497

LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	774,124			511,472
Deferred revenue		10,390			12,391
Due to related parties		297,583			309,070
Convertible notes payable, net		110,000			-
Shares to be issued		86,000			45,000
Total current liabilities		1,278,096			877,933

STOCKHOLDERS' EQUITY/(DEFICIT):

Common stock, $0.0001 par value; 100,000,000 shares authorized; 34,443,313 shares issued and 34,343,313 shares outstanding as of June, 2009 and 34,438,313 shares issued and 34,338,313 outstanding as of December 31, 2008.		3,455			3,454
Treasury Stock; 100,000 shares		(10	)		(10	)
Prepaid consulting		(99,573	)		-
Additional paid in capital		84,676,424			77,466,062
Subscription receivable		(8,000	)		(8,000	)
Accumulated deficit		(85,029,143	)		(77,205,829	)
Translation Adjustment		1,887			1,887
Total stockholders' equity/(deficit)		(454,961	)		257,564
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	823,135		$	1,135,497

The accompany notes are an integral part of these consolidated financial statements

HEREUARE, INC. AND SUBSIDIARIES

(FORMERLY PEOPLENET INTERNATIONAL CORPORATION)

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2009 AND 2008

(UNAUDITED)

	Three month periods ended June 30,						Six month periods ended June, 30
	2009			2008			2009			2008
NET REVENUE	$	1,720		$	7,819		$	4,145		$	16,584
COST OF GOODS SOLD		562			9,563			1,760			18,193
GROSS PROFIT (LOSS)		1,158			(1,744	)		2,385			(1,609	)

OPERATING EXPENSES
Depreciation and amortization		88,101			103,307			185,769			211,613
Rent		81,736			121,909			183,095			209,719
Salaries and payroll taxes		43,036			314,233			60,530			616,448
Professional fees		75,028			344,889			156,866			544,395
Impairment of investment		-			-						-
General and administrative expenses		7,117,372			573,636			7,237,941			3,496,608
Total operating expenses		7,405,273			1,457,974			7,824,201			5,078,783

LOSS FROM OPERATIONS		(7,404,115	)		(1,459,718	)		(7,821,816	)		(5,080,392	)

OTHER INCOME
Interest income		60			809			101			1,533

LOSS BEFORE INCOME TAXES		(7,404,055	)		(1,458,909	)		(7,821,715	)		(5,078,859	)

INCOME TAX		-			-			1,600			2,520

NET LOSS		(7,404,055	)		(1,458,909	)		(7,823,315	)		(5,081,379	)

*BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON STOCK OUTSTANDING		34,341,060			34,415,367			34,339,694			34,255,088

BASIC AND DILUTED NET LOSS PER SHARE	$	(0.22	)	$	(0.04	)	$	(0.23	)	$	(0.15	)

*Weighted average number of shares used to compute basis and diluted loss per share is the same since the effect of dilutive securities is anti-dilutive

The accompany notes are an integral part of these unaudited consolidated financial statements

HEREUARE, INC. AND SUBSIDIARIES

(FORMERLY PEOPLENET INTERNATIONAL CORPORATION)

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2009 AND 2008

(UNAUDITED)

	2009			2008
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		(7,823,315	)	$	(5,081,378	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		185,769			211,613
Issuance of stock options for compensation		7,062,194			3,147,288
Issuance of warrants for services		3,595			-
(Increase) decrease in current assets:
Account receivable		(343	)		-
Inventory		-			1,265
Prepaid expense		17,744			80,080
Deposits		176,295			(87,987	)
Increase (decrease) in current liabilities:
Accounts payable and accrued expenses		262,651			(29,206	)
Deferred Revenue		(2,001	)		466
Net cash used in operating activities		(117,411	)		(1,757,859	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment		(1,100	)		(201,804	)
Purchase of intangible assets		(405	)		(65,268	)
Leasehold Improvement		-			(89,768	)
Net cash used in investing activities		(1,505	)		(356,840	)

CASH FLOWS FROM FINANCING ACTIVITIES
Advance from stockholder		41,000			-
Proceeds from/(payment to) related parties		(11,487	)		8,618
Proceeds from convertible notes payable		110,000			-
Proceeds from subscription receivable		-			45,000
Proceeds from issuance of common stock for cash		45,000			2,219,028
Repurchase treasury stock		-			(50,000	)
Net cashprovided by financing activities		143,513			2,222,646

NET INCREASE IN CASH & CASH EQUIVALENTS		24,597			107,947
CASH & CASH EQUIVALENTS, BEGINNING BALANCE		6,900			705,839
CASH & CASH EQUIVALENTS, ENDING BALANCE	$	31,497		$	813,786

SUPPLEMENTAL DISCLOSURES:
Income tax payments		1,600		$	2,520
Interest payments		-		$	-

The accompany notes are an integral part of these unaudited consolidated financial statements

PART I

HEREUARE, INC. AND SUBSIDIARIES

(FORMERLY PEOPLENET INTERNATIONAL CORPORATION)

NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Nature of Operations and Spin-off

HereUare, Inc. (the "Company") was incorporated on February 5, 1997 in the state of Delaware. The Company focuses on development and sales of communication software solutions including web-based email and office automation bundle and a voice over internet protocol telephony product. The Company had been a wholly owned subsidiary of Pacific Systems Control Technology, Inc. ("PSCT") until February 8, 2002 when the Company completed its spin-off transaction from PSCT and became an independent entity.

On September 22, 2006, the Company acquired 100% of hereUare Communications, Inc., a Delaware corporation ("hereUare"). hereUare is an operator of web-based search engine and other Internet software solutions founded in 2002. Consequently, hereUare's financial position, results of operations and cash flows subsequent to the acquisition are included in the accompanying audited consolidated financial statements.

In August 2007, the Company established a wholly owned subsidiary in Vietnam, hereUare Communications Company Ltd. Vietnam, in anticipation of engaging in business activities in that country. As of June 30, 2009, the subsidiary in Vietnam has not generated revenue for the Company but has served as an engineering and operations center.

Note 2 - Summary of Significant Accounting Policies

Basis of Presentation: The accompanying unaudited consolidated financial statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") Form 10-Q and generally accepted accounting principles for interim financial reporting. The information furnished herein reflects all adjustments (consisting of normal recurring accruals and adjustments) which are, in the opinion of management, necessary to fairly present the operating results for the respective periods. Certain information and footnote disclosures normally present in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted pursuant to such rules and regulations. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company's Annual Report for the year ended December 31, 2008 on Form 10-K. The results of the three months ended June 30, 2009 are not necessarily indicative of the results to be expected for the full year ending December 31, 2009.

Principles of Consolidation: The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, hereUare Communications, Inc. and hereUare Communications Company Ltd. Vietnam. All material inter-company accounts have been eliminated in consolidation.

Use of Estimates, Risks and Uncertainties - The preparation of financial statements in conformity with generally accepted accounting principles in the United States ("GAAP") requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the collectability of accounts receivable, accounts payable, sales returns and recoverability of long-term assets.

Reclassification - Certain comparative amounts have been reclassified to conform to the three month periods ended June 30, 2009 and 2008.

Stock-based compensation-The Company adopted SFAS No. 123 (Revised 2004), Share Based Payment (“SFAS No. 123R”), under the modified-prospective transition method on January 1, 2006. SFAS No. 123R requires companies to measure and recognize the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value. Share-based compensation recognized under the modified-prospective transition method of SFAS No. 123R includes share-based compensation based on the grant-date fair value determined in accordance with the original provisions of SFAS No. 123, Accounting for Stock-Based Compensation, for all share-based payments granted prior to and not yet vested as of January 1, 2006 and share-based compensation based on the grant-date fair-value determined in accordance with SFAS No. 123R for all share-based payments granted after January 1, 2006. SFAS No. 123R eliminates the ability to account for the award of these instruments under the intrinsic value method prescribed by Accounting Principles Board (“APB”) Opinion No. 25, Accounting for Stock Issued to Employees, and allowed under the original provisions of SFAS No. 123. Prior to the adoption of SFAS No. 123R, the Company accounted for our stock option plans using the intrinsic value method in accordance with the provisions of APB Opinion No. 25 and related interpretations.

Loss per share - Earnings per share is calculated in accordance with the Statement of Financial Accounting Standards No. 128 (SFAS No. 128), "Earnings per share". Basic net income per share is based upon the weighted average number of common shares outstanding. Diluted net income per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Recent pronouncements -

In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments.” This FSP essentially expands the disclosure about fair value of financial instruments that were previously required only annually to also be required for interim period reporting. In addition, the FSP requires certain additional disclosures regarding the methods and significant assumptions used to estimate the fair value of financial instruments. These additional disclosures will be required beginning with the quarter ending June 30, 2009. The Company is currently evaluating the requirements of these additional disclosures.

In June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140” (“SFAS 166”), which requires additional information regarding transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related to transferred financial assets. SFAS 166 eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures. SFAS 166 is effective for fiscal years beginning after November 15, 2009.

In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“SFAS 167”), which modifies how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. SFAS 167 clarifies that the determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. SFAS 167 requires an ongoing reassessment of whether a company is the primary beneficiary of a variable interest entity. SFAS 167 also requires additional disclosures about a company’s involvement in variable interest entities and any significant changes in risk exposure due to that involvement. SFAS 167 is effective for fiscal years beginning after November 15, 2009.

In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles (“SFAS No. 168”), which becomes effective for financial statements issued for interim and annual periods ending after September 15, 2009. SFAS No. 168 replaces SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles. SFAS No. 168 identifies the sources of accounting principles and the framework for selecting principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with US GAAP (the GAAP hierarchy).

Note 3 - Property and Equipment

The property & equipment comprised of the following at June 30, 2009 and December 31, 2008:

	June 30, 2009		December 31, 2008
Equipment		936,064		934,964
Furniture		141,078		141,078
Leasehold improvement		89,768		89,768
Total Property & Equipment		1,166,910		1,165,810
Less accumulated depreciation		(558,244)		(464,522	)
Net Property & Equipment		608,666		701,289

Depreciation expense was $44,717 and $93,723 for the three and six months ended June 30, 2009 and $51,328 and $117,012 for the same periods in 2008, respectively.

Note 4 - Intangible Assets

Intangible assets include software solutions and domain names. The related accumulated amortization as of June 30, 2009 and December 31, 2008 is as follows:

	June 30, 2009		December 31, 2008
Software solutions		547,317		546,912
Domain name		32,321		32,321
Total Intangible Assets		579,638		579,233
Less accumulated amortization		(464,671)		(372,625	)
Net Intangible Assets		114,967		206,608

Amortization expense was $43,338 and $92,046 for the three and six months ended June 30, 2009 and 31,239 and 55,144 for the same periods in 2008, respectively.

Amortization expenses of intangible assets over the current year and next year are as follows:

Amortization

2009:		$	92,949
2010:		$	18,818

Note 5 - Deposits

Deposits comprised of the following as of June 30, 2009 and December 31, 2008:

	June 30, 2009		December 31, 2008
Rent deposit – Mountain View	$	-	$	114,750
Rent deposit – Los Angeles		-		2,189
Rent deposit – Vietnam		-		10,000
Attorney retainer deposit		50,000		50,000
Other deposits		-		8,354
Total deposits	$	50,000	$	185,293

Note 6 - Accounts Payable and Accrued Expenses

Account payable and accrued expenses comprised of the following at June 30, 2009 and December 31, 2008:

	June 30, 2009		December 31, 2008
Accounts payable	$	640,615	$	373,873
Accrued litigation		72,000		72,000
Other accrued expenses		61,590		65,599
Total accounts payable & accrued expenses	$	774,124	$	511,472

Note 7 - Related Party Transactions

As of June 30, 2009, the net amount due to and from related parties was $297,583, the majority of which was related to eCapital Group, Inc., a company controlled by the CEO of the Company. The amounts due to related parties are due on demand, interest free and unsecured as of June 30, 2009. As of December 31, 2008, the Company had an amount due to eCapital Group, Inc. of $309,070.

Deferred revenue as of June 30, 2009 amounted to $10,390. Deferred revenue as at December 31, 2008 amounted to $12,390 and resulted as part of sale to eCapital Group, Inc.

Note 8 - Commitments and Contingencies

As a result of litigation against its prior parent corporation, Pacific Systems Control Technology ("PSCT"), PSCT and its subsidiaries, including the Company, entered into a global settlement and mutual release of all claims with a former PSCT employee. Under the agreement, PSCT and the other former parties to the litigation, including the Company, agreed to pay to the former employee a total sum of $100,000 plus interest at the rate of 10% per year, payable in installments at the rate of $3,000 per month. As of December 31, 2004, the outstanding balance under the settlement agreement was $72,000. The Company accrued the $72,000 on its financial statements as of December 31, 2004 in the event PSCT is unable to fulfill its obligations under the settlement agreement.

On June 8, 2006, the Company entered into a 5-year lease agreement with CarrAmerica Techmart which expires on June 15, 2011. Rent expenses in future periods pursuant to this lease agreement are shown below. In July 2008, we subleased the space for the remainder of the lease term to Egenera, Inc. pursuant to a sublease agreement by which the sub-lessee pays for all of the future rent expenses.

On August 1, 2007, the Company entered into a lease for 530 square meters of office space in Vietnam with Nguyen Van Tan and Vo Thi Ngoc Lan which expires on August 1, 2012. The lease commences on August 1, 2007 and rent expense is fixed at $4,200 per month. The Company prepaid the rent under this lease for 24 months through July 31, 2009. On February 28, 2009, the Company ended its rent contract and prepaid rent and the security deposit were refunded to the company.

On January 28, 2008, the Company entered into a 5-year lease agreement with 1061 Terra Bella Associates, LLC, which expires on February 28, 2013. Future rent expense per this new lease agreement is as following:

2010:	$	286,387
2011:	$	296,656
2012:	$	306,849
2013:	$	271,575
Thereafter:	$	52,700

The Company ceased paying its monthly rent of $28,450 in December of 2008 and is therefore in default under this lease, owing approximately $95,000 as of June 30, 2009, after the landlord applied its security deposit. The Company received a notice of abandonment from the landlord during June, 2009. The Company intends to negotiate a settlement with its landlord although there can be no assurance it will succeed or what the terms of any such settlement would be.

Since April 2009, the Company has been leasing approximately 4,000 square feet of office space in Palo Alto, CA on a month to month basis for $15,000 per month from eCapital Group, Inc., an entity controlled by Company CEO Benedict Van.

Note 9 - Common Stock / Options / Warrants

Common Stock

2009

The Company has begun to conduct a common stock financing at $2.00 per share to current stockholders who are accredited investors and to other selected individuals. During the quarter ended June 30, 2009, the Company received $31,000 for 15,500 shares of common stock at a price of $2 per share; the shares had not been issued at quarter end. While the Company has set an anticipated maximum offering size of $1,000,000, there can be no assurance that any further subscriptions will be received.

During the quarter, the Company issued 5,000 shares of common stock in conjunction with a transaction completed in 2008.

2008

During the year ended December 31, 2008, the Company issued the 298,449 shares of common stock for $2,686,028 in cash at the price of $9 per share, and repurchased 100,000 shares for $50,000 into treasury stock. Shares to be issued totaled $45,000 representing 5,000 shares as of December 31, 2008.

Stock Options

Between January 22 and March 17, 2008, the Company granted a total of 560,000 options with an exercise price of $9.00 per share to 3 employees and 1 consultant. These options expire in 5 years and vest between one to four years.

Between May 19 and June 23, 2008, the Company granted a total of 55,000 options with an exercise price of $9.00 per share to 2 employees. These options expire in 5 years and vest between one to four years.

On September 2, 2008, the Company granted a total of 200,000 options with an exercise price of $9.00 per share to 3 employees. These options expire in 5 years and vest over 4 years.

Due to the termination of employees and contractors, the number of options that expired within the quarter ended March 30, 2009 was 338,000 shares.

On May 18, 2009, the Board of Directors approved the extension of expiration of 3,639,999 options which would expire in May 2009, for another 3 years to May 2012, including 2,699,999 options held by its CEO, director, and largest beneficial stockholder Benedict Van and 30,000 options held by an outside director.

The following summary presents the incentive and non-qualified options under the plan granted, exercised, expired and outstanding at June 30, 2009:

			Weighted
			Average		Aggregate
			Exercise		Intrinsic
	Under Plan		Price		Value
Balance, December 31, 2008		5,383,999		0.97	$	5,222,479
Granted		-		-
Lapsed		338,000		2.99
Exercised		-		-
Balance, June 30, 2009		5,045,999		0.83	$	-

The following summary presents the weighted average exercise prices, number of options outstanding and exercisable, and the remaining contractual lives of the Company's stock options at June 30, 2009:

Options

Outstanding

Weighted

Options Exercisable

Average

Weighted

Remaining

Average

Number

Contractual

Exercise

Number

Exercise

Outstanding

Life

Price

Exercisable

Price

Options

5,045,999

0.62

0.83

4,873,602

0.70

Warrants

In a settlement with three shareholders in December 2006, the Company granted a three-year warrant to purchase 750,000 shares of the Company's stock at $6 per share. The non-cash expense of the warrant, calculated by a Black-Scholes model, in the amount of $1,238,303 was recorded in the Company's financial statements for the year ended December 31, 2006. In the second quarter of 2009, in exchange for $45,000, the Company and this warrant holder have agreed to increase the number of warrants by 200,000, that is from 750,00 to 950,000, and to extend the term for another three years, so that the warrant will expire on December 31, 2012, instead of December 31, 2009.

In exchange for certain consulting services, the Company granted two shareholders a three-year warrant to purchase 100,000 shares of the Company's stock at $9 per share.

The following summary presents the warrants granted, exercised, expired and outstanding at June 30, 2009:

		Weighted
		Average		Aggregate
		Exercise		Intrinsic
		Price		Value
Balance, December 31, 2008	750,000	$	6.00	$	-
Granted	300,000		7.00		-
Exercised	-		-		-
Balance, June 30, 2009	1,050,000	$	6.29	$	-

The following summary presents the weighted average exercise prices, number of warrants outstanding and exercisable, and the remaining contractual lives of the Company's warrants at June 30, 2009:

Warrants

Outstanding

Weighted

Warrants Exercisable

Average

Weighted

Remaining

Average

Number

Contractual

Exercise

Number

Exercise

Outstanding

Life

Price

Exercisable

Price

Warrants

1,050,000

1.47

6.29

976,553

6.08

Note 10 - Convertible Debt

On various dates in June 2009, the Company entered into four convertible debt agreements pursuant to which the company borrowed a total of $110,000. Under the terms of the agreements, the Company is obligated to pay a fixed interest rate of between 2% and 7% (4.27% weighted average rate). The loans all mature between July and October of 2009. Each of the loan agreements gives the lender the right to convert the amount due into the common stock of the Company at price of $2.00 per share at any time prior to the loan being paid.

Note 11 - Going concern

The Company's consolidated financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has an accumulated deficit of $85,029,143 at June 30, 2009. The Company incurred a net loss of $7,823,315 for the quarter ended June 30, 2009.

In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management's plans and the ongoing operations of the Company require additional working capital in the next twelve months. However, there can be no assurance that sufficient capital could be raised at acceptable terms due to current investment climate.

Note 12 – Subsequent Events

On July 3, 2009, the Company offered, and Jon C. Walls accepted, full-time employment, with his start date currently anticipated to be on or about September 1, 2009, in the position of Chief Operating Officer and Chief Financial Officer. Benedict Van will remain Chairman of the Board and Chief Executive Officer. Per the offer letter, Mr. Walls will earn salary at the per annum rate of $120,000 and on his start date, he will be granted a 1,000,000 share non-statutory stock option with an exercise price of $9.00 per share. The option will have a term of ten years, with 250,000 shares exercisable immediately and the remaining 750,000 shares becoming exercisable at the rate of 15,625 shares per month over the next 48 months so long as Mr. Walls remains a Company employee.

On July 9, 2009, the Company sold 5,000 shares of common stock for $10,000 in cash at the price of $2 per share. The shares have not yet been issued.

On August 6, 2009 the Company amended its agreement to grant two shareholders a three-year warrant to purchase 100,000 shares of the Company's stock at $9 per share in exchange for certain consulting services, to grant them a second three-year warrant to purchase 100,000 shares of the Company's stock at $9 per share.

Item 2. Management's Discussion And Analysis Of Financial Condition And Results Of Operations

Forward Looking Information

The following section discusses the significant operating changes, business trends, financial condition, earnings and liquidity that have occurred in the three-month period ended June 30, 2009. This discussion should be read in conjunction with the Company's consolidated financial statements and notes appearing elsewhere in this report.

The following discussion may contain forward-looking statements that are subject to risks and uncertainties. When used in this discussion, the words "believes," "anticipates" and "intends" and similar expressions are intended to identify forward-looking statements, but the absence of these words does not necessarily mean that a statement is not forward looking. Forward-looking statements include, but are not limited to, statements about our anticipated expansion, product introduction, cash requirements, financing efforts and results and other plans, objectives, expectations, intentions, and target markets, and are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in these forward-looking statements for many reasons, including the factors described below in Part II, Item 1A, “Risk Factors” of this Form 10-Q. We undertake no obligation to publicly release any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of anticipated events. Readers are urged, however, to review the factors and risks we describe in reports we file from time to time with the Securities and Exchange Commission, which may be accessed at the Commission's website at www.sec.gov.

Recent Accounting Pronouncements

Critical Accounting Policies

In the ordinary course of business, the Company has made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ significantly from those estimates under different assumptions and conditions. The Company believes that the following discussion addresses the Company's most critical accounting policies, which are those that are most important to the portrayal of the Company's financial condition and results or because their application requires significant management judgment, are described in the following paragraphs. The Company constantly re-evaluates these significant factors and makes adjustments where facts and circumstances dictate. Although historically, actual results have not significantly deviated from those determined using the necessary estimates inherent in the preparation of financial statements, future actual results may vary significantly. Estimates and assumptions include, but are not limited to, customer receivables, long-term asset lives, contingencies and litigation. The Company has also chosen certain accounting policies when options were available, by applying SFAS No. 123 (Revised 2004), Share Based Payment (“SFAS No. 123R”):

The Company's most critical accounting policies are applied consistently for all years presented and many are described in Note 2 of our financial statements. Our operating results would be affected if other alternatives were used. Information about the impact on our operating results is included in the footnotes to our consolidated financial statements.

Results of Operation

hereUare, whose name was changed from PeopleNet International Corporation on March 26, 2007 to hereUare, Inc., was formed in February 1997, under the name American Champion Media, as a wholly owned subsidiary of Pacific Systems Control Technology ("PSCT"), formerly known as American Champion Entertainment. Through a spin-off transaction on February 8, 2002, hereUare became an independent entity and PSCT distributed its shares of hereUare to the shareholders of PSCT as of the record date of January 16, 2002.

Throughout the quarter ended June 30, 2009, the Company was operating at the reduced level of the prior quarter and was primarily preparing to launch one of its initial products, hereUareMessage e-Messaging & Groupware once the Company is able to raise adequate financing, of which there can be no assurance. Also, on June 22, 2009 the Company launched its hereUare Local Classifieds, an online classifieds site targeting local consumers. However, the site did not generate any revenues during the quarter and it is unlikely that it will generate any significant revenues until the Company raises adequate financing to properly market the site, of which there can be no assurance. As a result the Company did not generate material revenues during the quarter.

Revenues and Gross Profit (Loss)

Revenue and gross profit during the three-month periods ended June 30, 2009, and 2008, were minimal. During the three-month period ended June 30, 2009, we generated sales of $1,720, mainly from the Company's VoIP product. Cost of goods sold was $562, which included domestic and international telecom termination charges for testing purposes, resulting in a gross profit figure of $1,158. Revenues were $7,819 and cost of goods sold were $9,563 for the quarterly period ended June 30, 2008, resulting in a gross loss of $1,744.

Costs and Expenses

During the three-month periods ended June 30, 2009 and 2008, we incurred depreciation and amortization expenses of $88,101 and $103,307, respectively, and rent expenses in the amounts of $81,736 and $121,909, respectively. We also had $43,036 in salaries and payroll taxes for the three-month period ended June 30, 2009 as compared to $314,233 for the same period in 2008. This decrease was the result of management employees working at reduced or no pay, the termination or resignation of most US employees, and the furlough of Vietnam employees until the Company’s cash situation improves, at which time the Company hopes to be able to re-hire most of them, although no assurance can be given. We incurred professional fees in the amounts of $75,028 and $344,889 respectively for same periods in 2009 and 2008, with the decrease again being primarily related to the Company’s reduced activities.

General and administrative expenses for the quarter ended June 30, 2009 were $7,117,372 which included $7,012,748 of non-cash option expenses estimated by using a Black-Scholes option pricing model. General and administrative expenses for the same period in 2008 of $573,636 included non-cash option expenses of $386,551 also estimated by using a Black-Scholes option pricing model. The increase in non-cash option expenses resulted primarily due the extension of expiration of 3,639,999 options which would expire in May 2009, for another 3 years to May 2012, including 2,699,999 options held by its CEO, director, and largest beneficial stockholder Benedict Van and 30,000 options held by an outside director. General and administrative expenses, excluding the non-cash option expenses, decreased to $104,624 for the quarter ended June 30, 2009, versus $187,085 for the quarter ended June 30, 2008.

Liquidity and Capital Resources

Stockholders' deficit, as of June 30, 2009, was $454,961 and net cash used in operating activities was $117,411 for the first six months of 2009.

As of June 30, 2009, the Company had approximately $31,497 in cash and current liabilities of about $1,278,096. Of these current liabilities, $297,583 were to related parties which are due on demand but which the other parties have agreed not to demand until the Company has adequate cash reserves and $72,000 are as a result of an old judgment jointly owed with its predecessor which the Company does not expect to have to pay. In addition, $50,000 is covered by deposits (see Note 5), $10,390 is Deferred Revenue, $110,000 is associated with the Company’s Convertible Notes Payable and $86,000 is related to cash received for shares of the Company’s common stock which it has not yet issued. The remaining $652,124 of current liabilities, which represent accounts payable and accrued liabilities, include the following: $135,258 for equipment, $92,151 for contractors, $43,680 for legal (net), $73,458 for market research, $17,010 for insurance, $23,500 for accounting, $18,085 for broadband, $90,505 for rent, $12,584 for payroll liabilities and $141,167 in miscellaneous expenses and accrued liabilities.

The Company needs cash in order to make payments toward these $652,124 of accounts payable and other accrued liabilities and to launch its hereUareMessage e-Messaging & Groupware product. The Company currently estimates that its cash requirements for the next few months will be between $75,000 and $125,000 per month, although no assurance can be given that they will not unexpectedly be higher. The Company has begun a financing at $2.00 per share from accredited stockholders and other select persons with a targeted maximum of $1,000,000 to meet these near-term requirements, although there can be no assurance that the Company will be able to raise these monies which it requires to remain in business on these terms or other terms management deems acceptable or at all.

The Company will need to continuously raise funds for operations and to cover its current liabilities, unless and until the Company is able to generate substantial revenues from its new products of which there can be no assurance. Assuming the Company is able to raise adequate financing, the Company plans to begin to market its software and communication products and expects to generate revenues in future periods but also expects its operations to use substantial amounts of cash, especially in the near-term. The Company currently plans to raise more monies in follow-on financings in the coming quarters in order to fund its operations. However, there can be no assurance that the Company will generate material revenues from its products or will be able to raise additional monies in the ongoing or next financing, and if so on attractive terms.

On various dates in June 2009, the Company entered into 4 convertible debt agreements pursuant to which the company borrowed a total of $110,000. Under the terms of the agreements, the Company is obligated to pay a fixed interest rate of between 2% and 7% (4.27% weighted average rate). The loans all mature between July and October of 2009. Each of the agreements gives the lender the right to convert the amount due into the common stock of the Company at price of $2.00 per share at any time prior to the loan being paid. If the lenders do not exercise their conversion rights, the Company will require cash to repay these loans in the next three months or else it will be in default under these loans. The Company is currently in default of $20,000 of these loans which have already become due.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We have little exposure to foreign currency risk as all our sales are denominated in US dollars as is most of our spending.

We have little exposure to financial market risks since we have no investments and only loans which are due prior to the end of October, 2009.

Item 4. Controls and Procedures

(a) Disclosure Controls and Procedures.

(i) Disclosure Controls and Procedures. We maintain disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive and Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

(ii) Limitations on the Effectiveness of Disclosure Controls. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met, taking into account the totality of the circumstances. Our disclosure controls and procedures have been designed to meet the reasonable assurance standards. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures 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.

(iii) Evaluation of Disclosure Controls and Procedures. Our principal executive and financial officer has evaluated our disclosure controls and procedures as of June 30, 2009, and have determined that they were effective at the reasonable assurance level.

(b) Changes in Internal Control Over Financial Reporting

Our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) is designed to provide reasonable assurance regarding the reliability of our financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles. There was no change in our internal control over financial reporting identified in connection with the evaluation described in Item 4(a)(iii) above that occurred during the second quarter of 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings. None

Item 1A. Risk Factors.

We have few capital resources and will be dependent upon future financing to generate the cash necessary to operate our business. Should we fail to raise such financing, we may be forced to cease operations.

As of June 30, 2009 we had cash of only $31,497 and working capital of ($1,228,593). Historically, we relied on funds raised from private sale of our common stock to accredited investors and were only able to support our small operation and development of our technology. Although we are currently seeking $1,000,000 of financing to launch our products and services and to pay down our net effective third party accounts payable and accrued expenses of $652,124 as of June 30, 2009, representing $774,124 of total accounts payable and accrued expenses less $50,000 of deposits and $72,000 owed jointly with the Company’s predecessor toward a four-year old debt, there is no assurance that we will be successful in raising the funds necessary on favorable terms. Management remains doubtful whether enough revenues can be generated in the near term to sustain our operations and intends to seek substantial additional funding thereafter for introducing and marketing our suite of software products. Otherwise, we will not be able to introduce them in a large-scale manner and may have to scale down or cease our operations. In the event that financing activities cannot generate adequate funds to launch our marketing efforts, we intend to curtail our operations until such funds are available. Although the Company continues to seek financing to support our working capital needs, we have no assurance that we will be successful in raising the funds required. In the event that the Company is not successful in generating sufficient capital resources on terms acceptable to us to satisfy our approximately $650,000 of accounts payable and accrued liabilities, there could be a material adverse effect on our business, results of operations, liquidity, and financial condition and the Company may not be able to remain in operation.

We lack revenue history and currently do not have a proven business model to generate revenue. Absent revenue, our business will fail.

In the past years, we have concentrated on developing our products and have not generated significant revenues. We have only recently begun testing our products and services on a limited basis and have generated minimal revenues. There can be no assurance that as we roll-out our products, we will be able to generate material revenues from them. Many of our services, such as search and VoIP, have been historically offered free of charge to users, with companies depending upon advertising to generate revenues. There can be no assurance that we will be able to persuade advertisers that it is cost effective for them to pay us for advertising their products and services. Even if we are successful initially in generating advertising revenue, there can be no assurance that we will be successful long-term. hereUare Message has not generated any revenue to date and is the product from which we plan to receive most of our revenue in the near-term. Because we have no experience in selling hereUare Message, there can be no assurances that we will be successful in generating revenue from it.

We have never been and may never become profitable. We will need to be profitable in order to succeed.

We have never been profitable. In fact, during both fiscal 2007 and 2008, we were not even able to operate with a gross profit. There can be no assurance that we will ever generate a gross profit, much less and operating profit. Even if we achieve profitability, there can be no assurance that we will be able to sustain it.

We expect to incur operating losses for the foreseeable future.

Some of our products are still in the developmental stage, and prior to completing the commercialization of our products, we anticipate that we may incur operating expenses without realizing substantial revenues, for example while indexing 10 billion pages for hereUare Search. We therefore expect to incur losses into the foreseeable future.

If we are unable to manage our projected growth, our prospects may be limited and our potential for profitability may be adversely affected.

We intend to expand our sales and marketing, and research and development programs. Rapid expansion may strain our managerial, financial and other resources. If we are unable to manage our projected growth, our business, operating results and financial condition could be adversely affected. Our systems, procedures, controls and management resources also may not be adequate to support our future operations. We will need to continually improve our operational, financial and other internal systems to manage our growth effectively, and any failure to do so may lead to inefficiencies and redundancies and result in reduced prospects for our company.

We are materially dependent on acceptance of our products in development by our target markets. If our products, when commercially ready, are not accepted, our revenues will be adversely affected and we may not be able to generate revenue from these markets.

The target markets for our technologies and products in development will principally include consumers, retailers, advertisers, small to medium businesses, and enterprises. If our products in development are not widely accepted by these markets, we may not be able to generate sales of our products into these markets. Technology for the Internet evolve quickly as compared to other industries, if technology evolves beyond the capabilities of our products, the market may not accept our products.

Our dependence on new products and enhancements to current products means that we are dependent upon our research and development team for key components of our platforms and delivery systems and technical or personnel issues could delay the launch of our products and reduce acceptance rates of our products.

We depend on our research and development department for the delivery of components integral to our systems. Our reliance on these teams creates risks related to our potential inability to launch our systems. Specifically, we depend or may in the future depend on these teams to write software code to power our systems or to help implement them, such as indexing ten billion pages for hereUare Search. Any interruption of our technology development could significantly delay the introduction or update our products and have a material adverse effect on our revenues, profitability and financial condition. Within the last year we have abandoned two products: OneBizDirectory (a web-based yellow pages) and OneUniverse (a social networking platform), in part because of team issues and in part due to market conditions. There can be no assurance that we will be able to continue with our new product development and the enhancement of our current products and failure to do so may requires us to abandon additional products.

Defects in our systems could reduce demand for our products and result in delays in market acceptance and injury to our reputation.

Complex software systems and technologies used in our products may contain undetected defects that are subsequently discovered at any point in the lifecycle of our products. Defects in our products may result in a loss of sales, delay in market acceptance, loss of opportunity or other economic loss to our customers, and injury to our reputation and increased costs to remedy interruptions in our service or products.

We depend on our technology and products which incorporate our technology. The loss of access to this technology as a result of intellectual property claims or otherwise would terminate or delay the further development of our products, injure our reputation or otherwise impair our viability as a company.

We rely on technologies that we acquired or developed through our proprietary research and development efforts. The loss of these technologies for any reason would seriously impair our business and future viability. If we are required to enter into license agreements with third parties for replacement technologies, and assuming such licenses are even available to us, we could be subject to high royalty payments. In addition, any defects in our technology or any technology we may license in the future could prevent the implementation or impair the functionality of our products, delay new product introductions or injure our reputation and results of operations.

We may be unable to adapt or upgrade our technologies and products as the markets in which we compete evolve, which would leave us at a significant competitive disadvantage.

The Internet and online marketplace is rapidly evolving as new technologies are developed to create unforeseen needs. We may be unable to adapt or upgrade our technologies, or otherwise invent and develop new technologies, to meet theses competitive technologies. If we cannot develop new more sophisticated or advanced technologies and systems, or interface with newly developed technologies from our competitors our business could suffer serious harm to its reputation and could negatively impact our results of operations.

We will need to raise additional capital, which will be dilutive to our current shareholders.

We will need to raise additional funds in order to advance our business plan, and to carry out a full scale commercialization of our products. To the extent we need to raise additional capital, we may do so in the near future, if conditions in the markets are favorable. If and when we achieve initial market acceptance our technologies and products, we may desire to attempt to accelerate our growth to take advantage of increasing demand and raise additional capital at that time as well. Any additional capital could take the form of equity or debt financing. In addition, any future equity financing will be dilutive to shareholders.

We face significant competition from large-scale Internet content, product and service aggregators, principally Google, Microsoft and AOL.

We face significant competition from companies, principally Google, Microsoft and AOL, that have aggregated a variety of Internet products, services and content in a manner similar to ours. These companies are in dominant positions in the Internet service industry and have well established relationships with online advertisers. Their strength may adversely affect our ability to execute our business plan. Their services directly compete with ours, including Internet search, local search and directories, consumer e-mail service, VoIP, and advertising solutions. These large-scale competitors and possible additional entrants have significantly greater operational, strategic, financial, personnel or other resources than we do, as well as greater brand recognition overall. These competitors are expected to be continuously more effective than us in targeting services and advertisements to the specific preferences of their users thereby giving them a competitive advantage.

We also face competition from other Internet service companies, including Internet access providers, device manufacturers offering online services and destination websites.

Our users must access our services through Internet access providers, including wireless providers and providers of cable and broadband Internet access. To the extent that an access provider or device manufacturer offers online services competitive with ours, the user may elect to use the services or properties of that access provider or manufacturer. In addition, the access provider or manufacturer may make it difficult to access our services by not listing them in the access provider's or manufacturer's own directory. Such access providers and manufacturers may prove better able to target services and advertisements to the preferences of their users.

We also compete for customers, users and advertisers with many other providers of online services, including destination websites and social media and networking sites. Some of these competitors may have more expertise in a particular segment of the market, and within such segment, have longer operating histories, larger advertiser or user bases, and more brand recognition or technological features than we offer.

In the future, competitors may acquire additional competitive offerings, and if we are unable to complete strategic acquisitions or investments, our business could be adversely affected. Further, competitors may consolidate with each other to become more competitive, and new competitors may enter the market. If our competitors are more successful than we are in developing compelling products or attracting and retaining users, advertisers or customers, then we may have difficulty in executing our business plan.

We face significant competition from traditional media companies which could limit our ability to generate advertising revenue.

We also compete with traditional media companies for advertising. Most advertisers currently spend only a small portion of their advertising budgets on Internet advertising. We do not have indication that these traditional advertisers will allocate some of their advertising budget for our services.

Decreases or delays in advertising spending by advertisers due to general economic conditions could harm our ability to generate advertising revenue.

Expenditures by advertisers tend to be cyclical, reflecting overall economic conditions and budgeting and buying patterns. Since our business plan anticipates significant activities from advertising, any decreases in or delays in advertising spending due to general economic conditions could reduce our chances in carrying out our plan.

We are, and may in the future be, subject to intellectual property infringement claims, which are costly to defend, could result in significant damage awards, and could limit our ability to provide certain content or use certain technologies in the future.

Internet, technology, media companies and patent holding companies often possess a significant number of patents. Further, many of these companies and other parties are actively developing or purchasing search, indexing, electronic commerce and other Internet-related technologies, as well as a variety of online business models and methods. We believe that these parties will continue to take steps to protect these technologies, including, but not limited to, seeking patent protection. As a result, disputes regarding the ownership of technologies and rights associated with online business are likely to continue to arise in the future.

As we expand our business and develop new technologies, products and services, we may become increasingly subject to intellectual property infringement claims. In the event that there is a determination that we have infringed third-party proprietary rights such as patents, copyrights, trademark rights, trade secret rights or other third party rights such as publicity and privacy rights, we could incur substantial monetary liability, be required to enter into costly royalty or licensing agreements or be prevented from using the rights, any of which could require us to change our business practices in the future and limit our ability to compete effectively. We may also incur substantial expenses in defending against third-party infringement claims regardless of the merit of such claims.

If we are unable to protect our intellectual property, or obtain patents for the technologies we are currently researching, we may lose a competitive advantage or incur substantial litigation costs to protect our rights and we be unable to protect our intellectual property rights.

Our future success depends in part upon our proprietary technology. Our protective measures, including future patents, trademarks and trade secret laws, may prove inadequate to protect our proprietary rights. We are in the process of filing patent applications for our technologies and although we do not currently foresee issues arising as a result of our pending patents, there can be no assurance that any of these patents will be issued or that patents will not be challenged. Established companies in our industry generally are aggressive in attempts to block new entrants to their markets, and our products, if developed and commercialized, may interfere (or may be alleged to interfere) with the intellectual property rights of these companies. Our viability will depend on its products not infringing patents that we expect would be vigorously prosecuted. Furthermore, the validity and breadth of claims in our technology patents involve complex legal and factual questions and, therefore, are highly uncertain. Even if we are granted patents relating to our technology, there can be no assurance that we would be able to successfully assert our patents against competing products. Once we receive a patent, the scope of any patent to which we have or may obtain rights may not prevent others from developing and selling competing products. The validity and breadth of claims covered in technology patents involve complex legal and factual questions, and the resolution of such claims may be highly uncertain, lengthy, and expensive. In addition, any future patents which we may file may be held invalid upon challenge; others may claim rights in or ownership of our patents.

We may not be able to enforce or protect our intellectual property rights, which may harm our ability to compete and adversely affect our business.

Our ability to enforce our patents, copyrights, software licenses, and other intellectual property is subject to general litigation risks, as well as uncertainty as to the enforceability of our intellectual property rights in various countries. When we seek to enforce our rights, we are often subject to claims that the intellectual property right is invalid, is otherwise not enforceable, or is licensed to the party against whom we are asserting a claim. In addition, our assertion of intellectual property rights often results in the other party seeking to assert alleged intellectual property rights of its own against us, which may adversely impact our business in the manner discussed above. If we are not ultimately successful in defending ourselves against these claims in litigation, we may not be able to sell a particular product or family of products, due to an injunction, or we may have to pay material amounts of damages, which could in turn negatively affect our results of operations. In addition, governments may adopt regulations or courts may render decisions requiring compulsory licensing of intellectual property to others, or governments may require that products meet specified standards that serve to favor local companies. Our inability to enforce our intellectual property rights under these circumstances may negatively impact our competitive position and our business.

If we are unable to retain our existing senior management and key personnel and hire new highly skilled personnel, we may not be able to execute our business plan.

We are substantially dependent on the continued services of our senior management, including our chief executive officer, Benedict Van, as well as Jon Walls, who is presently a full-time consultant with us but who has agreed to become our Chief Operating Officer and Chief Financial Officer on or about September 1, 2009. These individuals have acquired specialized knowledge and skills in the Internet industries and our business operations. The loss of any of these individuals could harm our business. Additionally, within the past year, we have experienced a great deal of turnover. Our CFO resigned, effective as of December 4, 2008, and our engineering manager in charge of certain new product development previously resigned. Our business is also dependent on our ability to retain, hire and motivate talented, highly skilled personnel, particularly sales people. The competition for such executives and for other highly skilled personnel can be intense, particularly in the San Francisco Bay Area, where our corporate headquarters, and the headquarters of several of our vertical and horizontal competitors, are located. If we do not succeed in recruiting, retaining and motivating our key employees and in attracting new key personnel, we may be unable to meet our business plan and as a result, our stock price may decline. Because the success of hereUareMessage is highly dependent on sales personnel, if we do not succeed in recruiting, retaining and motivating top sales people, the success of our hereUareMessage launch could be in jeopardy.

Our directors and executive officers may experience conflicts of interest which may detrimentally affect our business development activities and our results of operations.

Our principal executive officers and directors, also serve in capacities at other companies that may be a direct or indirect conflict to our business. They may also be inventors or visionaries of our technologies. To the extent that our interests diverge from those of the other companies our executive officers and directors may become subject to conflicts of interest which could lead them to make decisions which are not necessarily in the best interests of our other stockholders. This could result in material adverse consequences to our company, its value and the value of your investment in the Company.

We operate in intensely competitive industries, and our failure to respond quickly to technological developments and incorporate new features into our products could have an adverse effect on our ability to compete.

We operate in intensely competitive industries that experience rapid technological developments, changes in industry standards, changes in customer requirements, and frequent new product introductions and improvements. If we are unable to respond quickly and successfully to these developments, we may lose our competitive position, and our products or technologies may become uncompetitive or obsolete. To compete successfully, we must maintain a successful R&D effort, develop new products and enhance the synergies between our products, and improve our existing products and processes at the same pace or ahead of our competitors. We may not be able to successfully develop and market these new products, the products we invest in and develop may not be well received by customers, and products developed and new technologies offered by others may affect the demand for our products. These types of events could have a variety of negative effects on our competitive position and our financial results, such as reducing our revenue, increasing our costs, lowering our gross margin percentage, and requiring us to recognize impairments of our assets.

We may have difficulty scaling and adapting our existing technology architecture to accommodate increased traffic when we launch our products and services.

Our products and services have only been tested on a limited basis. As we launch our products and services through our marketing campaign, we expect Internet traffic to our websites to significantly increase over a short time. We have very limited experience in handling a heightened traffic level by our hardware and customer service operations. Our future will depend on our ability to adapt to rapidly changing technologies, to adapt our products and services to evolving industry standards and to improve the performance and reliability of our products and services. Rapid increases in the levels or types of use of our online properties and services could result in delays or interruptions in our service.

New technologies could block our advertisements or our search marketing listings, which would harm our operating results.

Technologies have been developed and are likely to continue to be developed that can block the display of our advertisements or our search marketing listings. Advertisement-blocking technology could have an adverse affect on our ability to execute our plan to capture revenues.

Our online operations are subject to security risks and systems failures.

Security risks.

Online security breaches could materially adversely affect our collective businesses, financial condition, or results of operations. Any well-publicized compromise of security could deter use of the Internet in general or use of the Internet to conduct transactions that involve transmitting confidential information or downloading sensitive materials in particular. In offering online payment services, we may increasingly rely on technology licensed from third parties to provide the security and authentication necessary to effect secure transmission of confidential information, such as consumer credit card numbers. Advances in computer capabilities, new discoveries in the field of cryptography or other developments could compromise or breach the algorithms that we use to protect our consumers' transaction data. In addition, experienced programmers or "hackers" may attempt to misappropriate proprietary information or cause interruptions in our services which could require us to expend significant capital and resources to protect against these problems.

Other system failures.

The uninterrupted performance of our computer systems is critical to the operations of our Internet sites. We may have to restrict access to our Internet sites to solve problems caused by computer viruses or other system failures. Our customers may become dissatisfied by any systems disruption or failure that interrupts our ability to provide our content. Repeated system failures could substantially reduce the attractiveness of our Internet site and/or interfere with commercial transactions, negatively affecting our ability to generate revenues. Our Internet sites must, in the future if we grow, accommodate a high volume of traffic and deliver regularly updated content. Our sites have, on occasion, experienced slower response times and network failures. These types of occurrences in the future could cause users to perceive our web sites as not functioning properly and therefore induce them to frequent Internet sites other than ours. In addition, our customers depend on their own Internet service providers for access to our sites. Our revenues could be negatively affected by outages or other difficulties customers experience in accessing our Internet sites due to Internet service providers' system disruptions or similar failures unrelated to our systems.

We may be exposed to liability over privacy concerns.

Despite the display of our privacy policy on our website, any penetration of our network security or misappropriation of our customers' personal or credit card information could subject us to liability. We may be liable for claims based on unauthorized purchases with credit card information, impersonation or other similar fraud claims. Claims could also be based on other misuses of personal information, such as for unauthorized marketing purposes. These claims could result in litigation, which could divert management's attention from the operation of our business and result in the imposition of significant damages. In addition, the Federal Trade Commission and several states have investigated the use by Internet companies of personal information. In 1998, the U.S. Congress enacted the Children's Online Privacy Protection Act of 1998. The Federal Trade Commission recently promulgated final regulations interpreting this act. We depend upon collecting personal information from our customers and we believe that the regulations under this act will make it more difficult for us to collect personal information from some of our customers. Any failure to comply with this act may make us liable for substantial fines and other penalties. We could also incur expenses if new regulations regarding the use of personal information are introduced or if our privacy practices are investigated.

Our management owns or controls a significant number of the outstanding shares of Common Stock and will continue to have significant ownership of its voting securities for the foreseeable future.

Our management, either directly or indirectly through their control of affiliated companies, own or control approximately 48.01% of our issued and outstanding capital stock as of June 30, 2009. See "Security Ownership of Certain Beneficial Owners and Management." As a result, these persons would have the ability, acting as a group, to effectively control our affairs and business, including the election of directors and subject to certain limitations, approval or preclusion of fundamental corporate transactions. This concentration of ownership may be detrimental to the interest of our minority shareholders in that it may:

limit shareholders' ability to elect or remove directors;

delay or prevent a change in the control;

impede a merger, consolidation, take over or other transaction involving the Company; or

discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company.

We do not intend to pay dividends in the foreseeable future.

We have never paid cash dividends. We do not anticipate that we would pay cash dividends in the foreseeable future. Instead, we intend to retain future earnings, if any, for reinvestment in its business and/or to fund future acquisitions. You should not invest in our securities in the anticipation of receiving dividends.

Item 2.

Unregistered Sales of Equity, Securities and Use of Proceeds. In the quarterly period ended June 30, 2009, the Company sold 15,500 shares of common stock to an individual in a private placement exempt from registration under Rule 506 of Regulation D of the Securities Act of 1933. The shares were sold at a price of $2.00 per share for aggregate proceeds of $31,000. As of June 30, 2009, the shares had not yet been issued. In the quarterly period ended June 30, 2009, the Company issued convertible promissory notes to four individuals in a private placement exempt from registration under Rule 506 of Regulation D of the Securities Act of 1933 pursuant to which the company borrowed a total of $110,000. Under the terms of the notes, the lender has the right to convert the amount due into the common stock of the Company at the price of $2.00 per share at any time prior to the loans being paid. All five of the investors were accredited investors.

Item 3.

Defaults Under Senior Securities. None

Item 4.

Submission of Matters to a Vote of Security Holders. None

Item 5.

Other Information. None

Item 6.

Exhibits.

See Exhibit Index below for a list of those exhibits that are incorporated by reference. The following exhibits are included with this report.

Exhibit 31.1 Rule 13a-14(a) / 15d-14(a) Certification of Benedict Van, CEO and CFO.

Exhibit 32.0 Section 1350 Certification.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf on August 19, 2009 by the undersigned, thereunto duly authorized.

hereUare, Inc.

(Registrant)

By: /s/ Benedict Van

Benedict Van

Chief Executive Officer & Chief Financial Officer

INDEX TO EXHIBITS

(a) Exhibits Incorporated by Reference

Exhibit No.

Exhibit Description

3.1 (1)	Certificate of Incorporation, as amended on July 24, 2001
3.1 (5)	Certificate of Ownership and Merger of PeopleNet Name Change Subsidiary, Inc. with and into PeopleNet International Corporation

3.2 (1)	By-laws
4.1 (1)	2001 Stock Option Plan

4.2 (1)	2001 Non-Employee Director Stock Option Plan
4.3 (1)	2001 Stock Incentive Plan

10.1 (1)	Agreement between American Champion Media & American Champion Entertainment dated as of July 10, 2001
10.2 (1)	Agreement among ACEI, American Champion Media, ECapital Group & Anthony Chan, dated as of June 20, 2001

10.3 (1)	Agreement between American Champion Media & World Channel dated as of December 27, 2000
10.4 (1)	Agreement between American Champion Media & Brighter Child Interactive dated as of September 30, 1999

10.5 (1)	Agreement between American Champion Media & Prestige Toys Corp dated as of October 13, 1999
10.6 (2)	Agreement - Sale of Assets between ECapital Group & PeopleNet International dated March 21, 2002

10.7 (2)	Agreement - Sale of Assets between PeopleNet Corporation & PeopleNet International dated March 21, 2002
10.8 (3)	Lease Agreement with CarrAmerica Techmart, LLC

10.9 (4)	Agreement and Plan of Merger with hereUare Communications, Inc., dated August 25, 2006
10.10 (6)	Lease Agreement with 1061 Terra Bella Associates, LLC

1. Filed as an exhibit to the Company's Form 10-SB/A dated as of December 3, 2001

2. Filed as an exhibit to the Company's Form 8-K dated as of March 21, 2002, and filed on April 4, 2002

3. Filed as Exhibit 10.8 to the Company's quarterly Report on Form 10-QSB filed on August 14, 2006

4. Filed as Exhibit 10.9 to the Company's Form 8-K dated as of August 25, 2006, and filed on August 31, 2006

5. Filed as Exhibit 3 to the Company's Form 8-K dated as of March 26, 2007, and filed on March 29, 2007

6. Filed as Exhibit 10.10 to the Company's Form 10-KSB dated April 15, 2008.

(b) Exhibits Filed Herewith

31.1 Rule 13a-14(a) / 15d-14(a) Certification of Benedict Van, CEO and CFO

32.0 Section 1350 Certification