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EX-31.1 - DEMATCO INC | v162661_ex31-1.htm |
EX-32.1 - DEMATCO INC | v162661_ex32-1.htm |
U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
x
ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the
fiscal year ended May 31, 2009
¨
TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the
transition period from ___________ to ___________
Commission
file number: 0-50333
DEMATCO,
INC.
(FORMERLY
ADVANCED MEDIA TRAINING, INC.)
(Name of
small business issuer in its charter)
Delaware
|
95-4810658
|
|
(State
or other jurisdiction of
|
(IRS
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
17337
Ventura Boulevard, Suite 208, Encino, California
|
91316
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(818)
759-1876
(Issuer's
telephone number)
Securities
registered under Section 12(b) of the Exchange Act:
Title of
each class registered: None
Name of
each exchange on which registered: None
Securities
registered under Section 12(g) of the Exchange Act:
Common
Stock, par value $.001
(Title of
class)
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
Yes ¨ No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934.
Yes ¨ No x
Indicate
by check mark if the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2)has been subject to such filing requirements for the past 90
days.
Yes x No ¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes ¨ No ¨
Indicate
by check mark if disclosure of delinquent filers in response to Item 405 of
Regulation S-K is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Smaller
reporting company x
|
Indicate
by check mark whether the registrant is a "shell company" as defined in Rule
12b-2 of the Securities Exchange Act of 1934. Yes ¨ No x
Based on
closing price of the issuer's common stock on November 28, 2008 the aggregate
market value of the voting stock held by non-affiliates of the registrant on
that date was approximately $1,808,950.
The
Registrant has 193,103,524 shares of Common stock, par value $.001 per share,
issued and outstanding as of September 4, 2009.
Documents
incorporated by reference: None
CONTENTS
PAGE
|
||
PART
I
|
||
Item
1.
|
Description
of Business
|
3
|
Item
2.
|
Description
of Property
|
6
|
Item
3.
|
Legal
Proceedings
|
6
|
Item
4.
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Submission
of Matters to a Vote of Security Holders
|
6
|
PART
II
|
||
Item
5.
|
Market
for Common Equity and Related Stockholder Matters
|
7
|
Item
6.
|
Selected
Financial Data
|
8
|
Item
7
|
Management's
Discussion and Analysis or Plan of Operation
|
9
|
Item
8.
|
Financial
Statements
|
13
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
26
|
Item
9A.
|
Controls
and Procedure
|
26
|
PART
III
|
||
Item
10.
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Directors,
Executive Officers, Promoters and Control Persons; Compliance with Section
16(a) of the Exchange Act
|
28
|
Item
11.
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Executive
Compensation
|
29
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management
|
30
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Item
13.
|
Certain
Relationships and Related Transactions
|
30
|
Item
14.
|
Principal
Accountant Fees and Services
|
31
|
Item
15.
|
Exhibits
|
32
|
SIGNATURES
|
33
|
FORWARD-LOOKING
STATEMENTS
This
report contains forward-looking statements. The forward-looking statements
include all statements that are not statements of historical fact. The
forward-looking statements are often identifiable by their use of words such as
"may," "expect," "believe," "anticipate," "intend," "could," "estimate," or
"continue," or the negative or other variations of those or comparable terms.
Our actual results could differ materially from the anticipated results
described in the forward-looking statements. Factors that could affect our
results include, but are not limited to, those discussed in Item 6,
"Management's Discussion and Analysis or Plan of Operation" and included
elsewhere in this report.
2
PART
I
ITEM
1.
|
DESCRIPTION
OF BUSINESS.
|
(a)
|
BACKGROUND
|
We were
incorporated in Delaware on March 20, 2000, under the name "Web Star Training,
Inc." On June 9, 2000, we changed our name to "Advanced Knowledge, Inc." Then,
on May 14, 2003, we changed our name to "Advanced Media, Inc.," and on August
10, 2004, to better reflect our then core business, we changed our name to
Advanced Media Training, Inc. On January 25, 2007, as a result of a change in
our management and core business we changed our name to Dematco, Inc. (See
Company History.)
(b)
|
DESCRIPTION
OF BUSINESS
|
Our
business consists of utilizing our highly specialized dematerialization process
to convert physical securities into electronic form, thus facilitating the
trading of such securities on selected financial markets throughout the world.
At present, we are focused on the dematerialization of certain financial
instruments and senior life settlement insurance policies and the structuring of
such policies into pools of securities under various contracts with our
customers. Our services are conducted through our wholly owned subsidiary
Dematco Group Corp., a British Virgin Islands company which was
incorporated during our last fiscal year. We intend to wind down our UK
subsidiary, Dematco, Ltd., through which we previously conducted
operations.
Our
revenue model is based on charging our clients a percentage of the face value of
the dematerialized financial instruments. By entering into several
dematerialization agreements, we have begun the process of dematerialization of
certain insurance policies which we intend to have pooled and then unitized and
marketed to qualified investors through regulated entities in the USA and
Europe. These contracts call for us to receive a percentage of the face amount
of the policies on a gradual basis.
On July
27, 2006 we signed an Agreement with Admiral Asset Group Inc. ("AAG") of New
York, to dematerialize certain senior life settlement policies to be structured
by AAG, enabling them to be traded in electronic form. The Agreement has an
initial term of three years and will cover successive tranches of these SLSPs as
and when they are issued. It is anticipated that the first tranche will have a
total face value of approximately one hundred million dollars.
During
August and September 2008, we entered into additional contracts for the
dematerialization of SLSPs in the aggregate face amount of $480,000,000
($30,000,000 entered into in August and $450,000,000 in September) which
management believes will generate ultimately approximately $9,600,000 in
revenues based on the fees payable under the contracts. In addition, on
September 30, 2008, we entered into a Unitisation Services Agreement to compile
dematerialized securities with an original face amount of $100,000,000 into
units. We expect this agreement to generate approximately $3,000,000 in
aggregate fees.
We have
structured our contracts for dematerializing financial instruments on behalf of
third parties to provide for a deposit of 0.25% of the face value of the
financial instruments being dematerialized to be paid at commencement of the
contract, and the balance of 1.75% of the face value to be paid upon completion
of the dematerialization of those financial instruments, and the whole of the
income arising on each contract is recognized at the point of completion of
dematerialization. In addition, under our unitization services agreement, we
charge a fee of 3% of the face value of the underlying Securities
payable upon completion of the process unitising the underlying
Securities.
3
To date,
we have received initial fees from these agreements in the aggregate amount of
$60,000. Although we have estimated the expected revenues from each of these
agreements based upon their terms, we have not yet begun pooling the life
insurance policies to be dematerialized under these agreements and we can make
no assurances that they will be completed or revenues thereunder
realized.
Dematerialization
is the digital process of eliminating physical certificates for securities and
other negotiable instruments. Dematerialized instruments are not on paper and no
certificate exists. They are maintained in the form of entries in the books of
stock transfer agents and depositories. Essentially, unlike the traditional
method of possessing a share certificate as proof of ownership of shares, in the
DMAT system, the shares are held in a dematerialized form as a record of
security ownership. The SIA (Securities Industry Association) defines
"Dematerialization" as "the process of eliminating physical certificates as a
record of security ownership, or where ownership of the security exists only as
an accounting record. Dematerialization eliminates certificates, replacing them
with electronic ownership records. The goal of dematerialization is to
facilitate paperless transactions, which streamlines processing, lowers costs
and reduces the risk associated with lost, stolen or counterfeit
certificates.
Historically,
investors had two choices for holding equities: 1) in street name in an account
with a brokerage firm or bank-custodian or 2) ownership on the books of the
issuer and a physical certificate personally held by the investor. Through
dematerialization, which is also referred to as the Direct Registration System
(DRS), investors will have a third option: shares directly registered on the
books of the issuer without holding a certificate.
DRS was
developed at the direction of the Securities and Exchange Commission as an
alternative for securities ownership. Under DRS, the security is registered on
the books of the Transfer Agent without the need for a physical certificate.
This is commonly referred to as "book entry."
Under
DRS, investors receive transaction advices and periodic account statements. It
provides for the electronic movement of securities between the Investor's
account on the books of the transfer agent and the Investor's
broker-dealer.
The State
of Delaware has recently changed its statutes to permit book-entry only stock
ownership. Companies incorporated in the state now have the option of
eliminating certificates altogether by their participation in DRS.
Our
process of dematerialization begins when we enter into a contract with a
customer who either owns securities it wishes to have dematerialized, or, as in
the case with our current contracts to dematerialize SLSPs, wishes to have a
pool of SLSPs compiled for it to purchase dematerialized. For example, we may
enter into an agreement with a customer who wishes to invest in a pool of SLSPs
and have them securitized. The customer may specify that it is interested in
SLSPs that meet certain criteria such as the age of the insured or the time
since the origination of the policies. The customer may also indicate that it
wishes the pool structured is a certain unique way or it may defer to us to
devise an appropriate structure based upon its criteria. We arrange for the
acquisition and composition of the pool and design it on behalf of the customer
and offer the customer the expertise of our management in optimizing the
structure to achieve the customers’ objectives.
The SLSPs
in the pool are entered into electronic form and then the pool is securitized
and sometimes unitized (combined into units of securities). The SLSPs are
physically kept with depositories who are nominated by trustees. Once the SLSPs
are converted into electronic form and assigned a CUSIP number, they are
tradable through qualified brokers and other specialists.
4
At this
point, we cannot estimate the extent to which we will structure pools of SLSPs
based on our customers’ specifications versus our own design although we expect
to provide increasingly customized products as our process develops over time.
We believe that the expertise our management provides in structuring the pools
and the innovative designs of the pools themselves will prove valuable to our
customers and drive our revenues.
In
addition to the dematerialization agreements noted above, on September 24, 2008,
we entered into a Fee Sharing Agreement with Private Trading Systems Ltd.
pursuant to which DeMatco is to introduce clients to Private Trading Systems
whose dematerialized securities it will then list on its proprietary electronic
trading system. The agreement further provides for us to share a portion of fees
generated under our dematerialization agreements in the amount of 10% of all
initiation fees and 20% of all completion fees. In addition, PTS is to share
with DeMatco 20% of all fees and commissions it receives for listing securities
on its electronic trading system from customers introduced by
DeMatco.
We
currently have no employees.
Mr. Robert Stevens, our Chief Executive Officer and Chairman of the Board
of Directors, Mr. Terence Ramsden, our principal shareholder, and Mr. Lindsay
Smith, one of our Directors, each work on a part-time basis. During the 12
months ended May 31, 2008, Mr. Stevens, and Mr. Ramsden, contributed their
services to the company with an aggregate estimated value of $400,000. In March
of 2008, Mr. Stevens, and Mr. Ramsden, received shares of the Company's common
stock valued at $800,000. During the 12 months ended May 31, 2009, Mr. Stevens
contributed services to the company with an estimated value of $170,000 and in
September 2008 received shares of the company’s common stock valued at $125,000
as compensation. During September and November 2008, we also issued 8,000,000
and 2,000,000 shares to consultants for services rendered having an aggregate
value of $200,000 and $60,000, respectively.
COMPETITION
While
there are a large number of organizations that perform dematerialization of
paper certificates into electronic form, what management believes differentiates
DeMatco from others is that we specialize in the restructuring and the
fragmentation of blocks of assets and financial instruments into forms which can
be dematerialized and put into electronic systems for trading. In particular,
DeMatco has developed products and derivative instruments based on insurance
assets that are believed to be unique at present and for which we have applied
for a process patent.
We have
now begun to dematerialize certain insurance policies which it is intended
should be pooled and then unitized and marketed to qualified investors through
regulated entities in the USA and Europe.
COMPANY
HISTORY
On
February 24, 2006, our authorized shares of common stock were increased from
25,000,000 to 200,000,000. On March 20, 2006, we closed a transaction with
Dematco Ltd, a United Kingdom corporation ("Dematco Ltd."), in which DeMatco
Inc. issued 6,464,000 of its common stock, for 8,080,000 shares of Dematco Ltd's
equity in a 5 for 4 stock exchange. The 8,080,000 shares of Dematco Ltd's common
stock equaled eight percent (8%) of its total issued and outstanding equity.
Additionally, as part of the transaction DeMatco Inc. received an option to
exchange 92,920,000 shares of its common stock for all the remaining issued and
outstanding equity of Dematco Ltd. From our inception and until December 11,
2006, the date on which we exercised our option to purchase the remaining issued
and outstanding stock of Dematco, Ltd., our sole business was the production and
distribution of workforce training videos for use by both domestic and
international corporations.
5
As a
result of the above referenced transactions, Dematco, Ltd. became a wholly owned
subsidiary of the Company and at the same time, elected a new slate of directors
and appointed new corporate officers. Concurrent with the acquisition, our new
management decided to change the Company's core business to that of its just
acquired wholly owned subsidiary, Dematco, Ltd., (see DESCRIPTION OF BUSINESS
page 3), and to as soon as feasible cease all activities related to the business
of producing and distributing workforce training videos.
On April
4, 2007, in order to facilitate our exit from the corporate training video
business and enable our management to devote our resources to the business of
our recently acquired subsidiary, Dematco, Ltd., we entered into an Asset and
Liability Assumption Agreement, effective as of December 11, 2006, whereby our
other wholly owned subsidiary, Progressive Training, Inc. ("Progressive")
acquired all of our assets and liabilities related to the production and
distribution of workforce training videos. Additionally, on April 4, 2007, our
Board of Directors approved and agreed to a debt conversion agreement among
three parties, namely, (i) the Company as the parent corporation, (ii)
Progressive, as our then wholly owned subsidiary, and (iii) Progressive's
president, Buddy Young. Under the terms of the agreement, Mr. Young agreed to
convert $80,000 of the $138,174 debt owed to him by us pursuant to a promissory
note, in exchange for the transfer to Mr. Young of 1,000,000 shares of
Progressive common stock from the 1,750,000 shares owned by us. Consequently,
Mr. Young became Progressive's principal shareholder while the Company retained
750,000 shares of Progressive.
Additionally,
on January 31, 2008, we, entered into a Note Satisfaction and Exchange Agreement
with our former wholly owned subsidiary Progressive Training, Inc., pursuant to
which Progressive forgave the principal amount of Thirty Thousand Nine Hundred
and Ninety Dollars ($30,990.00) owed to it by the Company in exchange for the
distribution of all of our remaining interest in Progressive (which interest
consisted of seven hundred and fifty thousand (750,000) shares of Progressive's
common stock to our shareholders, as of March 25, 2008, pursuant to a formula
wherein for every one hundred sixty (160) shares of our stock owned by a
shareholder as at the Record Date, said shareholder received one (1) share of
Progressive, with no shareholder receiving less than one hundred shares. As a
result, the Company does not have any further interest in or relationship with
Progressive.
ITEM
2.
|
DESCRIPTION
OF PROPERTY.
|
We
currently utilize office space provided to us rent free by our former president.
The space consisting of approximately 750 square feet is located at 17337
Ventura Boulevard, Suite 208, Encino, California 91316. Additionally, our
subsidiary Dematco Limited utilizes office space at 271 St. Albans Road, Hemel
Hemstead, England. We plan to maintain the office location in England, and
believe it will be adequate for our operations through the end of our current
fiscal year. We intend to move our US office from California to a location on
the East Coast.
ITEM
3.
|
LEGAL
PROCEEDINGS.
|
As of the
date hereof, we are not a party to any material legal proceedings, and we are
not aware of any such claims being contemplated against us.
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
|
No
matters were submitted to a vote of security holders during the fourth quarter
of the fiscal year ended May 31, 2009.
6
PART
II
ITEM
5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
MARKET
INFORMATION
On October 5, 2005 our common stock
began trading on the over-the-counter Bulletin Board system (also known as
OTCBB), under the stock symbol, (AMTN). In February 2007, concurrent with our
name change from Advanced Media Training to Dematco, our stock symbol was
changed to DMAT.
The following table sets forth the
high and low bid price for our common stock as reported on the
OTCBB:
High
|
Low
|
|||||||
Fiscal
Year Ended May 31, 2009:
|
||||||||
First
quarter
|
$ | 0.041 | $ | 0.011 | ||||
Second
quarter
|
$ | 0.095 | $ | 0.01 | ||||
Third
quarter
|
$ | 0.019 | $ | 0.003 | ||||
Fourth
quarter
|
$ | 0.013 | $ | 0.003 |
High
|
Low
|
|||||||
Fiscal
Year Ended May 31, 2008:
|
||||||||
First
quarter
|
$ | 0.51 | $ | 0.10 | ||||
Second
quarter
|
$ | 0.29 | $ | 0.04 | ||||
Third
quarter
|
$ | 0.19 | $ | 0.02 | ||||
Fourth
quarter
|
$ | 0.14 | $ | 0.01 |
As the foregoing are over-the-counter
market quotations, they reflect inter-dealer prices, without retail markup,
markdown, or commissions, and may not represent actual
transactions.
The OTCBB requires that the company's
stock be registered with the Securities and Exchange Commission, that the
company be current with its Securities and Exchange Commission filing
requirements, and have at least one (1) market maker. There are no requirements
as to stock price, bid and asked quotes, number of shareholders, the number of
shares held by each shareholder, or the number of shares traded.
HOLDERS
As of September 4, 2009, we have
193,103,524 shares of common stock issued and outstanding held by 173
shareholders of record. We currently have no outstanding options or warrants for
the purchase of our common stock.
DIVIDEND
POLICY
We have not declared any cash
dividends on our common stock since our inception and do not anticipate paying
such dividends in the foreseeable future. We plan to retain any future earnings
for use in our business. Any decisions as to future payments of dividends will
depend on our earnings and financial position and such other facts as the board
of directors deems relevant. We are not limited in our ability to pay
dividends on our securities.
7
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
In February 2008, we adopted our 2008
Incentive Stock Plan. To date, we have issued an aggregate of
50,250,000 shares of common stock to directors, officers and consultants under
the plan but have not issued any options, warrants or other derivative
securities although these are authorized under the plan. No
additional securities remain available for issuance under the plan as
illustrated by the following table:
Plan Category
|
Number of
Securities to be
Issued upon
Exercise of
Outstanding
Options, Warrants
and Rights
|
Weighted-Average
Exercise Price Of
Outstanding
Options, Warrants
and Rights
|
Number of
Securities
Remaining Available
for Future Issuance
under Equity
Compensation Plans
|
|||||||||
Equity
compensation plans approved by security holders:
|
— | — | -0- | |||||||||
Equity
compensation plans not approved by security holders:
|
— | — | -0- | |||||||||
Total
|
— | — | -0- |
For a description of our 2008
Incentive Stock Plan, please see Note 8 to the company’s financial statements
contained elsewhere in this Annual Report on Form 10-K.
RECENT
SALES OF UNREGISTERED SECURITIES
In September 2008, we issued
5,000,000 of our common stock to our Chief Executive Officer, Robert Stevens, in
exchange for services valued at $125,000.
In September 2008, we also issued
8,000,000 shares of our common stock to Mr. Louis Shefsky, in exchange for
consulting services valued at $200,000.
In November 2008, we issued 2,000,000
shares of our common stock to Performance Capital, in exchange for consulting
services valued at $60,000.
All of the foregoing shares were
issued in reliance upon Section 4(2) of the Securities Act of 1933, as amended,
as they were not issued in connection with any public offering.
ITEM
6. SELECTED FINANCIAL INFORMATION
Year
|
Year
|
November
1, 2005
|
||||||||||
Ended
|
Ended
|
(inception)
to
|
||||||||||
05/31/2009
|
05/31/2008
|
05/31/2009
|
||||||||||
Statement
of Operations Data
|
||||||||||||
Revenue
|
$ | - | $ | - | $ | - | ||||||
General
and administrative expenses
|
$ | 974,864 | $ | 1,885,439 | $ | 3,182,126 | ||||||
Research
and development
|
$ | 430,498 | $ | 250,000 | $ | 930,498 | ||||||
Interest
expense, related party
|
$ | 3,407 | $ | 4,705 | $ | 10,736 | ||||||
Interest
expense
|
$ | — | $ | 1,301,999 | $ | 1,345,665 | ||||||
Net
loss
|
$ | (1,456,811 | ) | $ | (3,442,943 | ) | $ | (5,517,867 | ) | |||
Net
loss per share
|
$ | (0.01 | ) | $ | (0.03 | ) | ||||||
Balance
Sheet Data
|
||||||||||||
Total
assets
|
$ | 219 | $ | 2,284 | ||||||||
$ | 1,176,104 | $ | 475,331 | |||||||||
Stockholders’
deficit
|
$ | (1,175,885 | ) | $ | (473,047 | ) |
8
ITEM
7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
You should read this section together
with our financial statements and related notes thereto included elsewhere in
this report. In addition to the historical information contained herein, this
report contains forward-looking statements that are subject to risks and
uncertainties. Forward-looking statements are not based on historical
information but relate to future operations, strategies, financial results or
other developments. Forward-looking statements are necessarily based upon
estimates and assumptions that are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are
beyond our control and many of which, with respect to future business decisions,
are subject to change. Certain statements contained in this Form 10-K,
including, without limitation, statements containing the words "believe,"
"anticipate," "estimate," "expect," "are of the opinion that" and words of
similar import, constitute "forward-looking statements." You should not place
any undue reliance on these forward-looking statements.
You should be aware that our results
from operations could materially be effected by a number of factors, which
include, but are not limited to the following: economic and business conditions
specific to the financial/securities industries; competition from other
companies offering similar services, our ability to control costs and expenses,
access to capital, and our ability to meet contractual obligations. There may be
other factors not mentioned above or included elsewhere in this report that may
cause actual results to differ materially from any forward-looking
information.
CRITICAL
ACCOUNTING POLICIES
Our discussion and analysis of our
financial condition and results of operations are based upon our statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States. The preparation of these financial
statements requires us to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenues and expenses. In
consultation with our Board of Directors, we have identified five critical
accounting policies that we believe are key to an understanding of our financial
statements. These are important accounting policies that require
management's most difficult, subjective judgments.
The first critical policy relates to
the preparation and disclosure of our financial statements. The accompanying
financial statements have been prepared assuming that the Company will continue
as a going concern, which contemplates the realization of assets and the
liquidation of liabilities in the normal course of business. The
Company is
in its development stage and has no source of revenue from
operations. This raises substantial doubt about the Company's ability
to continue as a going concern. The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities that
might result from this uncertainty. The Company has survived only through
borrowings from shareholders. The Company must raise funds or
continue borrowings in the near future to survive. There is no
assurance that management can find investors or continue borrowings to cover the
losses generated.
9
The second critical accounting policy
relates to the issuance of debt with a beneficial conversion feature. The
Company has valued the convertible note payable (imputing an interest rate of
20%) and the related beneficial conversion option to convert the principal
balance into shares using the “Relative Fair Value” approach. The
fair value of the conversion option was determined using the Black Scholes
model. The relative fair value of this conversion option represented
approximately 83% of the total instrument, thus resulting in a large discount on
the original debenture. The Company amortized the discount using the interest
method through the date of conversion to common stock
The third critical policy
relates to shares issued for services. We value the shares issued based on the
closing price of our stock on the date of grant.
The fourth critical policy relates to
the inducement to convert debt. During 2008, we lowered the original conversion
price of our convertible note payable to induce the holder to convert into
common stock. The difference in shares issued from that originally to be issued
was valued at the closing price of our stock on the date of conversion and
recorded as additional interest expense.
RESULTS
OF OPERATIONS
General
As stated earlier, on December 11,
2006, we completed the acquisition of Dematco, Ltd., and at the same time,
elected a new slate of directors and appointed new corporate officers.
Concurrent with the acquisition, our new management decided to change the
Company’s business to that of its just acquired wholly-owned subsidiary,
Dematco, Ltd., (see DESCRIPTION OF BUSINESS page 3), and to as soon as feasible
cease all activities related to the business of producing and distributing
workforce training videos. Effective March 1, 2007, we entered into an Asset and
Liability Assumption Agreement with our then wholly-owned subsidiary Progressive
Training, Inc., and as a result ceased all activities associated with our former
business.
Since that date, and for the
foreseeable future, all of our efforts will be focused on the further
development and marketing of our dematerialization process.
Revenues
To date, we have not generated
revenue from our dematerialization process.
Expenses
During the year ended May 31, 2009,
our general and administrative expenses were $974,864. Included in
this amount is $385,000 for the value of stock issued for services, $125,000 of
wages to our officers who have waived payment and applied this amount to paid in
capital, $180,481 of consulting and professional services and $69,092 of legal
and accounting expenses. During this same period we incurred $430,498
of research and development, $3,407 of interest expense related to a note
payable with a shareholder and a loss on investments of $47,242.
During the year ended May 31, 2008,
our general and administrative expenses were $1,885,439. Included in
this amount is $1,410,000 for the value of stock issued for services, $150,000
of wages to our officers who have waived payment and applied this amount to paid
in capital, $144,752 of consulting and professional services and $165,228 of
legal and accounting expenses. During this same period we incurred
$250,000 of research and development expenses, $4,705 of interest expense
related to a note payable with a shareholder and $1,301,999 of interest expense
related to the convertible debenture (this includes approximately $1.2 million
of interest expense related to the inducement to convert the debt through the
lowering of the conversion price).
10
During the period November 1, 2005
(inception) to May 31, 2009, we incurred a total of $3,182,126 general and
administrative expenses along with $930,498 of research and development
expenses, $10,736 of interest expense with our shareholder and $1,345,665
interest expense on the convertible debenture.
Net
Loss
As a result of the aforementioned,
our net loss was $1,456,811 for the year ended May 31, 2009; $3,442,943 for the
year ended May 31, 2008 and $5,517,867 for period November 1, 2005 (inception)
to May 31, 2009.
Plan
of Operation
On March 1, 2007 we ceased all
activities associated with our former business of the production and
distribution of workforce training videos, see “Company History” and through our
wholly owned subsidiary Dematco Limited, focused all efforts on the further
development and marketing of our dematerialization process.
We will continue to devote our
resources to marketing and developing our dematerialization
process. At this time these efforts are focused on seeking to acquire
contracts for the use of our dematerialization process, and to further expand
its utilization within the financial industry. To date we have succeeded in
securing contracts for the dematerialization of Life Settlement Policies with a
face value of over $400,000,000. As a result of these contracts management
anticipates that upon the fulfillment of our responsibilities pursuant to the
terms of these agreements, the Company will generate over $8,000,000 in future
revenue. Management expects that revenues from the above referenced
contracts will be sufficient to satisfy our budgeted cash requirements through
May 31, 2010.
We currently have no employees. Mr.
Robert Stevens, our Chief Executive Officer, Chief Financial Officer and
Chairman of the Board of Directors, and Mr. Terence Ramsden, our principal
shareholder, each work on a part-time basis. During the twelve months ended May
31, 2009, Mr. Stevens, and Mr. Ramsden, received non-cash compensation
(representing the estimated value of services contributed to the Company) of
$365,000. During the twelve months ended May 31, 2009, these two individuals
were paid or accrued a total of $315,498 for earnings not waived.
Liquidity
and Capital Resources
Our working capital deficit was
$1,175,885 at May 31, 2009.
Our cash provided by operating
activities was $202,477 for the year ended May 31, 2009. This is primarily the
result of our net loss of $1,456,811 offset by increases in accounts payable and
accrued expenses of $115,047, unearned revenue in the amount of $671,129 and
amounts due to a related party of $70,000.
Our cash used by operating activities
was $176,992 for the year ended May 31, 2008. This is primarily the result of
our net loss of $3,442,943 offset by increases in accounts payable and accrued
expenses of $45,927 and amounts due to a related party of $110,000.
Our cash used by operating activities
was $14,214 for the period November 1, 2005 (inception) to May 31,
2009. This is primarily the result of our net loss of $5,517,867
offset by increases in accounts payable and accrued expenses of $197,051,
unearned revenue in the amount of $671,129 and amounts due to a related party of
$239,000.
11
During
the year ended May 31, 2009 we used $45,732 to purchase securities for
investment purposes. During the year ended May 31, 2008 we did not have or use
any cash for investing activities.
Our cash used by financing activities
was $158,810 for the year ended May 31, 2009. This is primarily the result of
repayment of borrowings from shareholders in the amount of
$178,411.
Our cash provided by financing
activities was $177,423 for the year ended May 31, 2008. This is the result of
borrowing from shareholders in the amount of $122,423 and net proceeds from the
sale of common stock in the amount of $55,000.
Our cash provided by financing
activities was $60,165 for the period of November 1, 2005 (inception) to May 31,
2009.
We currently have no material
commitments at this time to fund development of our dematerialization process or
to acquire any significant capital equipment
We are a company with a limited
operating history and a history of net losses.
We had a cash balance of $219 on May
31, 2009.
If revenues from the sale of our
dematerialization process do not provide sufficient funds to maintain
operations, then we believe the raising of funds through borrowings from our
principal shareholder or the sale of additional equity will be needed to satisfy
our budgeted cash requirements through May 31, 2010. Further, our ability to
pursue any business opportunity that requires us to make cash payments would
also depend on the amount of funds that we can secure from these various
sources.
If funding is insufficient at any
time in the future, we may not be able to take advantage of business
opportunities or respond to competitive pressures, any of which could have a
negative impact on the business, operating results and financial condition. In
addition, if additional shares were issued to obtain financing, current
shareholders may suffer a dilutive effect on their percentage of stock ownership
in the Company.
On February 28, 2006, we issued a
zero percent convertible debenture to Societe Bancaire Privee, S.A.,
(“Societe”), and received $500,000. The convertible debenture called for the
principal sum to be paid on or before March 31, 2009 without interest. At any
time prior to the maturity date and after March 31, 2006, Societe had the right
and option to convert the principal balance of Five Hundred Thousand Dollars
($500,000) into Eight Hundred Thirty Three Thousand (833,000) shares of our
common stock, par value $0.001 per share, restricted as to transfer (the
“Shares”) based upon a conversion rate of One Thousand Six Hundred Sixty Six
(1,666) shares for every One Thousand Dollars ($1,000) of the Principal
Amount.
In March 2008, the Company reduced
the conversion price of the convertible note payable to $0.02 and Societe
converted the $500,000 note payable in exchange for 25,000,000 shares of the
Company’s common stock. The Company has recorded an expense of $1,208,333 for
the value of the inducement.
12
ITEM
8.
|
FINANCIAL
STATEMENTS.
|
Index
to Consolidated Financial Statements
Pages
|
|
Independent
Registered Accounting Firm Report
|
14
|
Financial
Statements:
|
|
Consolidated
Balance Sheets as of May 31, 2009 and 2008
|
15
|
Consolidated
Statements of Operations for the Years Ended May 31, 2009
|
|
and
2008 and for the period November 1, 2005 (inception) to May 31,
2009
|
16
|
Consolidated
Statements of Stockholders' Deficit
|
|
for
the period November 1, 2005 (inception) to May 31, 2009
|
17
|
Consolidated
Statements of Cash Flows for the Years Ended May 31, 2009
|
|
and
2008 and for the period November 1, 2005 (inception) to May 31,
2009
|
18
|
Notes
to Consolidated Financial Statements
|
19-25
|
13
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders of
Dematco,
Inc.
I have
audited the accompanying consolidated balance sheet of Dematco, Inc. and
subsidiary (the “Company”) as of May 31, 2009 and the related consolidated
statements of operations, stockholders’ deficit, and cash flows for the year
then ended. These financial statements are the responsibility of the
Company’s management. My responsibility is to express an opinion on
these financial statements based on my audit.
I
conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. I believe
that my audit provides a reasonable basis for my opinion.
In my
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Dematco, Inc. and subsidiary
as of May 31, 2009 and the results of their operations and cash flows for the
year then ended in conformity with accounting principles generally accepted in
the United States.
The
accompanying financial statements referred to above have been prepared assuming
that the Company will continue as a going concern. As discussed in
Note 2 to the financial statements, the Company’s present financial condition
raises substantial doubt about its ability to continue as a going
concern. Management’s plans in regard to this matter are also
described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Michael T. Studer
CPA P.C.
Michael
T. Studer CPA P.C.
|
Freeport,
New York
October
12, 2009
14
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO
THE BOARD OF DIRECTORS AND STOCKHOLDERS OF DEMATCO, INC.:
We have
audited the accompanying consolidated balance sheet of Dematco, Inc. (formerly
Advanced Media Training, Inc.; the "Company") as of May 31, 2008, and the
related statements of operations, shareholders' deficit and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company determined that it was
not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control as a basis for designing audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control over financial reporting.
Accordingly we express no such opinion. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our
opinion, based on our audit, such consolidated financial statements present
fairly, in all material respects, the financial position of the Company as of
May 31, 2008, and the results of its operations and its cash flows for the year
then ended in conformity with accounting principles generally accepted in the
United States of America.
The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in the
notes to the financial statements, the Company has incurred losses since
inception of approximately $4,061,000, has negative working capital of
approximately $473,000, and has failed to generate any revenues. These matters
raise substantial doubt about the Company’s ability to continue as a going
concern. Management’s plans concerning these matters are also
described in the notes to the consolidated financial statements. The
consolidated financial statements do not include adjustments that might result
from the outcome of this uncertainty.
/s/
Farber Hass Hurley LLP
September
11, 2008
Camarillo,
California
15
DEMATCO,
INC. AND SUBSIDIARY
(A
Development Stage Company)
CONSOLIDATED
BALANCE SHEETS
May
31,
|
May
31,
|
|||||||
2009
|
2008
|
|||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
|
$ | 219 | $ | 2,284 | ||||
Total
Current Assets
|
219 | 2,284 | ||||||
Total
Assets
|
$ | 219 | $ | 2,284 | ||||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||||||
Current
Liabilities
|
||||||||
Accounts
payable and accrued expenses
|
$ | 196,876 | $ | 81,829 | ||||
Unearned
revenue
|
671,129 | — | ||||||
Due
to related parties
|
288,498 | 393,502 | ||||||
Note
payable
|
19,601 | — | ||||||
Total
Current Liabilities
|
1,176,104 | 475,331 | ||||||
Stockholders'
Deficit
|
||||||||
Common
Stock, authorized 200,000,000 shares, par value $0.001, issued and
outstanding; 193,103,524 and 178,103,524 shares,
respectively
|
193,103 | 178,103 | ||||||
Additional
Paid-in Capital
|
4,145,900 | 3,410,900 | ||||||
Deficit
accumulated during the development stage
|
(5,517,867 | ) | (4,061,056 | ) | ||||
Cumulative
translation adjustment
|
2,979 | (994 | ) | |||||
Total
Stockholders' Deficit
|
(1,175,885 | ) | (473,047 | ) | ||||
Total
Liabilities and Stockholders' Deficit
|
$ | 219 | $ | 2,284 |
The
accompanying notes are an integral part of these statements
16
DEMATCO,
INC. AND SUBSIDIARY
(A
Development Stage Company)
CONSOLIDATED
STATEMENTS OF OPERATIONS
FOR THE
YEARS ENDED MAY 31, 2009 AND 2008,
AND FOR
THE PERIOD NOVEMBER 1, 2005 (INCEPTION) TO MAY 31, 2009
YEAR ENDED MAY 31,
|
YEAR ENDED MAY 31,
|
NOVEMBER 1, 2005
(INCEPTION) TO
MAY 31
|
||||||||||
2009
|
2008
|
2009
|
||||||||||
OPERATING
EXPENSES:
|
||||||||||||
General
and administrative, including stock-based compensation of $385,000,
$1,410,000 and $1,795,000, respectively
|
$ | 974,864 | $ | 1,885,439 | $ | 3,182,126 | ||||||
Research
and development
|
430,498 | 250,000 | 930,498 | |||||||||
Interest
expense, related party
|
3,407 | 4,705 | 10,736 | |||||||||
Interest
expense
|
— | 1,301,999 | 1,345,665 | |||||||||
Loss
on investment
|
47,242 | — | 47,242 | |||||||||
TOTAL
EXPENSES
|
1,456,011 | 3,442,143 | 5,516,267 | |||||||||
NET
LOSS BEFORE INCOME TAXES
|
(1,456,011 | ) | (3,442,143 | ) | (5,516,267 | ) | ||||||
Income
tax
|
800 | 800 | 1,600 | |||||||||
NET
LOSS
|
$ | (1,456,811 | ) | $ | (3,442,943 | ) | $ | (5,517,867 | ) | |||
BASIC
AND DILUTED LOSS PER SHARE
|
$ | (0.01 | ) | $ | (0.03 | ) | ||||||
WEIGHTED
AVERAGE SHARES OUTSTANDING
|
188,177,497 | 129,442,458 |
The
accompanying notes are an integral part of these statements
17
DEMATCO,
INC. AND SUBSIDIARY
(A
Development Stage Company)
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' DEFICIT
For the
Period November 1, 2005 (Inception) to May 31, 2009
DEFICIT
|
||||||||||||||||||||||||
ACCUMULATED
|
||||||||||||||||||||||||
DURING
|
TOTAL
|
|||||||||||||||||||||||
COMMON STOCK
|
PAID-IN
|
CURRENCY
|
DEVELOPMENT
|
EQUITY
|
||||||||||||||||||||
SHARES
|
AMOUNT
|
CAPITAL
|
TRANSLATION
|
STAGE
|
(DEFICIT)
|
|||||||||||||||||||
Common
Shares issued to Founders for intangibles at $0.00573 per
share
|
101,000,000 | $ | 1,762,450 | $ | (1,762,450 | ) | $ | — | $ | — | $ | — | ||||||||||||
Currency
Translation
|
— | — | — | (17 | ) | — | (17 | ) | ||||||||||||||||
Net
Loss
|
— | — | — | — | (1,412 | ) | (1,412 | ) | ||||||||||||||||
Net
Comprehensive Loss
|
(1,429 | ) | ||||||||||||||||||||||
BALANCE,
DECEMBER 31, 2005
|
101,000,000 | $ | 1,762,450 | $ | (1,762,450 | ) | $ | (17 | ) | $ | (1,412 | ) | $ | (1,429 | ) | |||||||||
Recapitalization
|
15,753,524 | (1,645,697 | ) | 1,379,096 | — | — | (266,601 | ) | ||||||||||||||||
Shares
of subsidiary cancelled in exchange for debt payment
|
— | — | 80,000 | — | — | 80,000 | ||||||||||||||||||
Contribution
of services
|
— | — | 401,271 | — | — | 401,271 | ||||||||||||||||||
Currency
Translation
|
— | — | — | 3 | — | 3 | ||||||||||||||||||
Net
Loss
|
— | — | — | — | (616,701 | ) | (616,701 | ) | ||||||||||||||||
Net
Comprehensive Loss
|
(616,688 | ) | ||||||||||||||||||||||
BALANCE,
MAY 31, 2007
|
116,753,524 | $ | 116,753 | $ | 97,917 | $ | (14 | ) | $ | (618,113 | ) | $ | (403,457 | ) | ||||||||||
Common
stock issued for cash
|
1,100,000 | 1,100 | 53,900 | — | — | 55,000 | ||||||||||||||||||
Common
stock issued for services
|
35,250,000 | 35,250 | 1,374,750 | — | — | 1,410,000 | ||||||||||||||||||
Common
stock issued for debt
|
25,000,000 | 25,000 | 1,454,244 | — | — | 1,479,244 | ||||||||||||||||||
Related
party debt forgiveness
|
— | — | 30,089 | — | — | 30,089 | ||||||||||||||||||
Contribution
of services
|
— | — | 400,000 | — | — | 400,000 | ||||||||||||||||||
Currency
Translation
|
— | — | — | ( 980 | ) | — | (980 | ) | ||||||||||||||||
Net
Loss
|
— | — | — | — | (3,442,943 | ) | (3,442,943 | ) | ||||||||||||||||
Net
Comprehensive Loss
|
(3,443,923 | ) | ||||||||||||||||||||||
BALANCE,
MAY 31, 2008
|
178,103,524 | $ | 178,103 | $ | 3,410,900 | $ | (994 | ) | $ | (4,061,056 | ) | $ | (473,047 | ) | ||||||||||
Common
stock issued for services
|
15,000,000 | 15,000 | 370,000 | — | — | 385,000 | ||||||||||||||||||
Contribution
of services
|
— | — | 365,000 | — | — | 365,000 | ||||||||||||||||||
Currency
Translation
|
— | — | — | 3,973 | — | 3,973 | ||||||||||||||||||
Net
Loss
|
— | — | — | — | (1,456,811 | ) | (1,456,811 | ) | ||||||||||||||||
Net
Comprehensive Loss
|
(1,452,838 | ) | ||||||||||||||||||||||
BALANCE,
MAY 31, 2009
|
193,103,524 | $ | 193,103 | $ | 4,145,900 | $ | 2,979 | $ | (5,517,867 | ) | $ | (1,175,885 | ) |
The
accompanying notes are an integral part of these statements
18
DEMATCO,
INC. AND SUBSIDIARY
(A
Development Stage Company)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
November 1,
|
||||||||||||
2005
|
||||||||||||
Year
|
Year
|
(Inception)
|
||||||||||
Ended
|
Ended
|
to
|
||||||||||
May 31,
|
May 31,
|
May 31,
|
||||||||||
2009
|
2008
|
2009
|
||||||||||
Operating
Activities
|
||||||||||||
Net
Loss
|
$ | (1,456,811 | ) | $ | (3,442,943 | ) | $ | (5,517,867 | ) | |||
Adjustments
to Reconcile Net (Loss) Currency translation adjustment
|
3,973 | (980 | ) | 2,979 | ||||||||
Stock
issued for services
|
385,000 | 1,410,000 | 1,795,000 | |||||||||
Interest
expense
|
— | 1,208,333 | 1,208,333 | |||||||||
Contributed
services
|
365,000 | 400,000 | 1,166,271 | |||||||||
Amortization
of debt discount
|
— | 93,666 | 137,331 | |||||||||
Loss
on investment in securities
|
45,732 | — | 45,732 | |||||||||
Changes
in Operating Assets and Liabilities
|
||||||||||||
Accounts
payable and accrued expenses
|
115,047 | 45,927 | 197,051 | |||||||||
Due
to related party, under consulting agreement
|
70,000 | 110,000 | 239,000 | |||||||||
Unearned
revenue
|
671,129 | — | 671,129 | |||||||||
Due
to related entity
|
— | (5,700 | ) | 30,090 | ||||||||
Accrued
interest due to related party
|
3,407 | 4,705 | 10,737 | |||||||||
Net
Cash Provided (Used) by Operating Activities
|
202,477 | (176,992 | ) | (14,214 | ) | |||||||
Investing
Activities
|
||||||||||||
Purchase
of securities
|
(45,732 | ) | — | (45,732 | ) | |||||||
Net
Cash Used by Investing Activities
|
(45,732 | ) | — | (45,732 | ) | |||||||
Financing
Activities
|
||||||||||||
Net
repayments on line of credit
|
— | — | (19,094 | ) | ||||||||
Net
proceeds from (repayments of) loans from related parties
|
(178,411 | ) | 122,423 | (18,043 | ) | |||||||
Net
proceeds from (repayments of) note payable
|
19,601 | — | 19,601 | |||||||||
Net
proceeds from common stock
|
— | 55,000 | 55,000 | |||||||||
Cash
proceeds from Progressive
|
— | — | 22,701 | |||||||||
Net
Cash Provided (Used)by Financing Activities
|
(158,810 | ) | 177,423 | 60,165 | ||||||||
Net
Increase (Decrease) in Cash
|
(2,065 | ) | 431 | 219 | ||||||||
Cash,
Beginning of Period
|
2,284 | 1,853 | — | |||||||||
Cash,
End of Period
|
$ | 219 | $ | 2,284 | $ | 219 | ||||||
Supplemental
Information:
|
||||||||||||
Interest
Paid
|
$ | — | $ | — | $ | — | ||||||
Income
Taxes Paid
|
$ | — | $ | — | $ | — | ||||||
Schedule
of Non-Cash Activities:
|
||||||||||||
Related
party debt forgiveness
|
$ | — | $ | 30,090 | $ | 30,090 |
The
accompanying notes are an integral part of these statements
19
DEMATCO,
INC. AND SUBSIDIARY
(A
Development Stage Company)
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
MAY 31,
2009
NOTE
1. GENERAL ORGANIZATION AND BUSINESS
Dematco,
Inc. (formerly Advanced Media Training, Inc.; the "Company") is engaged in the
business of dematerializing or converting financial instruments from paper form
to electronic form so as to enable such instruments to be traded electronically
on exchanges or exchange platforms on a peer to peer basis.
PRINCIPLES
OF CONSOLIDATION
The
consolidated financial statements include the accounts of Dematco, Inc. and its
wholly-owned subsidiaries, Dematco, Ltd., which is a United Kingdom registered
private company based in London and Dematco Group Corp., which is a British
Virgin Islands corporation incorporated on November 5, 2008.
All
material inter-company accounts and transactions have been
eliminated.
NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRESENTATION
AND GOING CONCERN
The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern, which contemplates the realization
of assets and the liquidation of liabilities in the normal course of
business. The Company is in its development stage, has incurred
significant losses since inception and has a working capital
deficit. These factors raise substantial doubt about the Company's
ability to continue as a going concern. The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities that
might result from this uncertainty.
The
Company plans to improve its financial condition by fulfilling its
responsibilities under Dematerialization Services Agreements as described in
Note 4. However, there is no assurance that the Company will
accomplish this objective.
USE OF
ESTIMATES
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America
requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenue and expenses during the reporting period. Actual results could differ
from those estimates.
CASH AND
CASH EQUIVALENTS
Cash and
cash equivalents include all short-term liquid investments that are readily
convertible to known amounts of cash and have original maturities of three
months or less.
20
REVENUE
RECOGNITION
The
Company recognizes revenue under the Dematerialization Services Agreements
described in Note 4 in the period in which the Dematerialization Life Settlement
Policies are delivered to and accepted by the respective clients.
STOCK
BASED COMPENSATION
Stock-based
compensation is accounted for in accordance with SFAS No. 123(r). The
cost of stock-based awards are measured at grant date based on the estimated
fair value of the award and expensed at grant date or over any requisite service
period.
FOREIGN
CURRENCY TRANSLATION
The
financial statements of Dematco, Ltd. are measured using the Great Britain Pound
as the functional currency. Assets, liabilities and equity accounts
of Dematco, Ltd. are translated at exchange rates as of the balance sheet
date. Revenues and expenses are translated at average rates of
exchange in effect during the period. The resulting cumulative
translation adjustments have been recorded as a separate component of
stockholders' deficit. The consolidated financial statements are
presented in United States of America dollars.
INCOME
TAXES
The
provision for income taxes is the total of the current taxes payable and the net
of the change in the deferred income taxes. Provision is
made for the
deferred income taxes where differences exist between the
period in which
transactions affect current taxable income and
the period in which they enter into the determination of net income in the
financial statements.
NET LOSS
PER SHARE
Basic and
diluted net loss per share has been computed by dividing net loss by the
weighted average number of common shares outstanding during the applicable
fiscal periods. At May 31, 2009, the Company had no potentially dilutive shares
outstanding. Potentially dilutive shares are excluded from the diluted
computation in loss periods, as their effect would be
anti-dilutive.
FAIR
VALUE OF FINANCIAL INSTRUMENTS
The
Company’s financial instruments consist of cash and cash equivalents, accounts
payable and accrued expenses, and notes payable. Pursuant to SFAS No.
107, “Disclosures About Fair
Value of Financial Instruments,” the Company is required to estimate the
fair value of all financial instruments at the balance sheet
date. The Company considers the carrying values of its financial
instruments in the financial statements to approximate their fair values due to
the short term nature of the instruments.
RECENTLY
ISSUED ACCOUNTING STANDARDS
In
April 2009, the FASB issued FASB Staff Position (“FSP”) SFAS No. 157-4,
“Determining Fair Value When
the Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not
Orderly”. Based on the guidance, if an entity determines that
the level of activity for an asset or liability has significantly decreased and
that a transaction is not orderly, further analysis of transactions or quoted
prices is needed, and a significant adjustment to the transaction or quoted
prices may be necessary to estimate fair value in accordance with SFAS
No. 157, “Fair Value
Measurements”. This FSP is to be applied prospectively and is effective
for interim and annual periods ending after June 15, 2009 with early
adoption permitted for periods ending after March 15, 2009. The Company
adopted this FSP for its year ended May 31, 2009. There was no impact on the
Company’s financial statements.
21
In
April 2009, the FASB issued FSP SFAS 115-2 and SFAS 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments. The guidance applies to investments in
debt securities for which other-than-temporary impairments may be recorded. If
an entity’s management asserts that it does not have the intent to sell a debt
security and it is more likely than not that it will not have to sell the
security before recovery of its cost basis, then an entity may separate
other-than-temporary impairments into two components: 1) the amount related to
credit losses (recorded in earnings), and 2) all other amounts (recorded in
other comprehensive income). This FSP is to be applied prospectively and is
effective for interim and annual periods ending after June 15, 2009 with
early adoption permitted for periods ending after March 15, 2009. The
Company adopted this FSP for its year ended May 31, 2009. There was no impact on
the Company’s financial statements.
In
April 2009, the FASB issued FSP FAS 107-1 and Accounting Principles Board
(“APB”) 28-1, “Interim
Disclosures about Fair Value of Financial Instruments”. The FSP amends
SFAS No. 107 “Disclosures
about Fair Value of Financial Instruments” to require an entity to
provide disclosures about fair value of financial instruments in interim
financial information. This FSP is to be applied prospectively and is effective
for interim and annual periods ending after June 15, 2009 with early
adoption permitted for periods ending after March 15, 2009. There were no
required disclosures for the Company to include in its year ended May 31,
2009.
In
December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”, which
became effective for fiscal years beginning after December 15, 2008 via
prospective application to business combinations. This Statement requires that
the acquisition method of accounting be applied to a broader set of business
combinations, amends the definition of a business combination, provides a
definition of a business, requires an acquirer to recognize an acquired business
at its fair value at the acquisition date and requires the assets and
liabilities assumed in a business combination to be measured and recognized at
their fair values as of the acquisition date (with limited exceptions). The
Company will adopt this Statement on June 1, 2009. The effects on future
periods will depend on the nature and significance of business combinations
subject to this statement.
In
April 2009, the FASB issued FSP SFAS No. 141(R)-1, “Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from
Contingencies”. This FSP requires that assets acquired and liabilities
assumed in a business combination that arise from contingencies be recognized at
fair value if fair value can be reasonably estimated. If fair value cannot be
reasonably estimated, the asset or liability would generally be recognized in
accordance with SFAS No. 5, “Accounting for Contingencies”
and FASB Interpretation No. 14, “Reasonable Estimation of the Amount
of a Loss”. Further, the FASB removed the subsequent accounting guidance
for assets and liabilities arising from contingencies from SFAS No. 141(R).
The requirements of this FSP carry forward without significant revision the
guidance on contingencies of SFAS No. 141, “Business Combinations”, which
was superseded by SFAS No. 141(R) (see previous paragraph). The FSP
also eliminates the requirement to disclose an estimate of the range of possible
outcomes of recognized contingencies at the acquisition date. For unrecognized
contingencies, the FASB requires that entities include only the disclosures
required by SFAS No. 5. The Company will adopt this FSP on June 1,
2009. The effects on future periods will depend on the nature and
significance of business combinations subject to this statement.
22
Effective
June 1, 2009, the Company will adopt FASB Statement No. 160, “Noncontrolling Interests in
Consolidated Financial Statement- an Amendment of ARB No. 51” (“SFAS
160”). SFAS 160 changes the accounting and reporting for minority
interests, which will be recharacterized as noncontrolling interests and
classified as a component of equity. SFAS 160 requires retrospective
adoption of the presentation and disclosure requirements for existing minority
interests. All other requirements of SFAS 160 will be applied
prospectively. The adoption of SFAS 160 is not expected to have a
material impact on the Company’s financial statements.
In May
2009, the FASB issued SFAS No. 165, “Subsequent Events,” which
requires entities to disclose the date through which they have evaluated
subsequent events and whether the date corresponds with the release of their
financial statements. The statement established general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before financial statements are issued or are available to be
issued. SFAS No. 165 is effective for interim or annual financial
periods ending after June 15, 2009. The adoption of SFAS No. 165 is
not expected to have a material impact on the Company’s consolidated financial
statements.
In June
2009, the FASB issued SFAS No. 168,“The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting
Principles” (“SFAS 168”). SFAS 168 will become the single
source authoritative nongovernmental U.S. generally accepted accounting
principles (“GAAP”), superseding existing FASB, American Institute of Certified
Public Accounts, EITF, and related accounting literature. SFAS 168
reorganized the thousands of GAAP pronouncements into roughly 90 accounting
topics and displays them using a consistent structure. Also included
is relevant SEC guidance organized using the same topical structure in separate
sections. SFAS 168 will be effective for financial statements issued
for reporting periods that end after September 15, 2009. The Company
does not expect the adoption of the Codification to have an impact on its
financial position or results of operations.
NOTE
3. INVESTMENT IN SECURITIES
On August
11, 2008, the Company purchased 1,600,000 shares of Private Trading Systems,
PLC,(“PTS”), for ₤24,000, or $45,732. The Company’s Chief Executive Officer, and
its principal shareholder were also shareholders of PTS. Additionally, the
Company’s then Chief Financial Officer was an officer of PTS. On November 30,
2008, the investment in PTS was determined to have had an other-than-temporary
decline in value and was written down to $-0-.
NOTE
4. UNEARNED REVENUE
During
the year ended May 31, 2009, the Company entered into contracts for the
dematerialization of Life Settlement Policies and received a total of $688,459
in deposits from the respective clients. Of this amount, $17,330 has
been applied to the reimbursement of research and development
expenses. As of May 31, 2009, the Company has not brought the
dematerialization process to a commercial stage of operation.
The
Dematerialization Services Agreements provide for the Company to convert Life
Settlements Policies to be purchased by clients into electronic form
facilitating the trading of such securities and have terms of up to three
years. As compensation, the Company is to receive fees at a rate of
two percent of the face value of the securities to be dematerialized, 0.25% upon
commencement and 1.75% upon completion of the process to dematerialize the
securities.
On
September 24, 2008, the Company entered into a Fee Sharing Agreement with
Private Trading System PLC (“PTS”) whereby the Company agreed to introduce its
clients to PTC as the provider of an electronic platform for trading Senior Life
Settlement Policies (“SLSP’s”) in real time. The agreement has a term
of five years and provides for the Company to pay PTS 10% of the initial fee
from clients and 20% of the completion fee from clients and for PTS to pay the
Company 20% of the PTS fees and commissions received from such
clients. The Company’s chief executive officer and then chief
financial officer were also then directors of PTS.
23
NOTE 5.
DUE TO RELATED PARTIES
Due to
related parties consist of:
Year Ended May 31,
|
||||||||
2009
|
2008
|
|||||||
Amounts
due to former chief executive officer:
|
||||||||
Note
payable, 8% interest rate, due June 30, 2009
|
$ | 38,645 | $ | 58,645 | ||||
Accrued
interest on note payable
|
8,896 | 5,489 | ||||||
Payable
under consulting agreement which provided for monthly fees of $10,000
through December 31, 2008
|
239,000 | 169,000 | ||||||
Loan
payable to owner of approximately 30% of the Company’s issued and
outstanding common stock at May 31, 2009, 0% interest rate, due upon
demand
|
1,957 | 160,368 | ||||||
Total
|
$ | 288,498 | $ | 393,502 |
NOTE 6.
NOTE PAYABLE
The
$19,601 note payable at May 31, 2009 is due to Denvel Limited, bears interest at
0% and is due upon demand.
NOTE 7.
CONVERTIBLE NOTE PAYABLE
The
Company issued a zero percent convertible debenture to Societe Bancaire Privee,
S.A., (“Societe”), and received $500,000 on February 28, 2006. At that time,
Societe was related to Dematco through a business venture. The convertible
debenture called for the principal sum to be paid on or before March 31, 2009
without interest. At any time prior to the maturity date and after
March 31, 2006, Societe had the right and option to convert the principal
balance of $500,000 into 833,000 shares of the Company’s common stock, in whole
or part.
In March
2008, the Company reduced the conversion price of the convertible note payable
to $0.02 and Societe converted the $500,000 note payable into 25,000,000 shares
of the Company’s common stock. The Company recorded an expense of $1,208,333 for
the value of the inducement which has been included in interest expense in the
consolidated statement of operations for the year ended May 31,
2008.
NOTE
8. STOCKHOLDERS' EQUITY
INCENTIVE
STOCK PLAN
During
February 2008, the Company executed the The Dematco, Inc. 2008 Incentive Stock
Plan, (the “Plan”). The Plan is designed to retain directors,
executives and selected employees and consultants and reward them for making
major contributions to the success of the Company. These objectives
are accomplished by making long-term incentive awards under the Plan thereby
providing participants with a proprietary interest in the growth and performance
of the Company. The Plan shall be administered by the Company’s Board of
Directors. The persons who shall be eligible to receive grants shall be
directors, officers, employees or consultants to the Company. Subject to
adjustment as provided in the Plan, the total number of shares of stock which
may be purchased or granted directly by options, stock awards or restricted
stock purchase offers, or purchased indirectly through exercise of options
granted under the Plan shall not exceed fifty million (50,000,000). The
Company shall reserve and keep available at all times during the term of the
Plan such number of shares as shall be sufficient to satisfy the requirements of
the Plan. In March 2008, a total of 35,250,000 shares valued at $1,410,000 were
issued for services under the Plan. In September and November 2008, a total of
15,000,000 shares valued at $385,000 were issued for services under the
Plan.
24
COMMON
STOCK
During
January 2008, the Company received $55,000 and issued 1,100,000 shares of its
common stock at $0.05 per share to one private party.
During
March 2008, the Company issued a total of 35,250,000 shares of its common stock
under the Plan to three directors, the principal shareholder of the Company, the
former President of the Company, an attorney and a consultant for services
rendered.
During
March 2008, the Company issued a total of 25,000,000 shares of its common stock
at $0.02 per share for the conversion of debt (see Note 7.).
During
September 2008, the Company issued a total of 13,000,000 shares of its common
stock, (5,000,000 shares to the Company’s chief executive officer, 8,000,000
shares to a consultant) for services rendered.
During
November 2008, the Company issued 2,000,000 shares of its common stock to a
consultant for services rendered.
NOTE
9. PROVISION FOR INCOME TAXES
The
Company provides for income taxes under Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes, SFAS No. 109 requires the use of
an asset and liability approach in accounting for income taxes.
SFAS No.
109 requires the reduction of deferred tax assets by a valuation allowance if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized. The total
deferred tax asset is $649,220, as of May 31, 2009, which is calculated by
multiplying a 22% estimated tax rate by the cumulative NOL of
$2,951,000. The deferred tax asset has been completely offset by a
valuation allowance. The valuation allowance increased by
approximately $155,000 during the year ended May 31, 2009.
Below is
a chart showing the estimated federal net operating losses and the
year
in which
they will expire.
YEAR
|
AMOUNT
|
EXPIRATION
|
|||
2009
|
$ | 705,000 |
2029
|
||
2008
|
2,030,000 |
2028
|
|||
2007
|
216,000 |
2027
|
|||
Total
|
$ | 2,951,000 |
25
NOTE 10.
RELATED PARTY TRANSACTIONS
At May
31, 2009, accounts payable and accrued expenses include $23,402 of compensation
payable to the Company’s executive officer and $45,606 compensation payable to
the Company’s former chief financial officer.
For the
years ended May 31, 2009 and 2008, general and administrative expenses and
research and development expenses include compensation involving related parties
as follows:
Year Ended May 31,
|
||||||||
2009
|
2008
|
|||||||
General
and administrative:
|
||||||||
Chief
executive officer:
|
||||||||
Paid
and accrued
|
$ | 80,000 | $ | - | ||||
Contributed
services
|
170,000 | 150,000 | ||||||
Common
stock issued for services
|
125,000 | 300,000 | ||||||
Former
chief financial officer:
|
||||||||
Paid
and accrued
|
60,000 | - | ||||||
Contributed
services
|
- | - | ||||||
Common
stock issued for services
|
- | 120,000 | ||||||
Secretary
and director:
|
||||||||
Common
stock issued for services
|
- | 160,000 | ||||||
Owner
of approximately 30% of the Company’s issued and outstanding common stock
at May 31, 2009:
|
||||||||
Common
stock issued for services
|
- | 500,000 | ||||||
Total
general and administrative
|
435,000 | 1,230,000 | ||||||
Research
and development:
|
||||||||
Owner
of approximately 30% of the Company’s issued and outstanding common stock
at May 31, 2009:
|
||||||||
Paid
and accrued
|
235,498 | - | ||||||
Contributed
services
|
195,000 | 250,000 | ||||||
Common
stock issued for services
|
- | - | ||||||
Total
research and development
|
430,498 | 250,000 | ||||||
Total
|
$ | 865,498 | $ | 1,480,000 |
26
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
None.
ITEM
9A.
|
CONTROLS
AND PROCEDURES.
|
EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES.
Mr. Robert Stevens, our Chief
Executive Officer and principal accounting and financial officer has evaluated
the effectiveness of our disclosure controls and procedures (as such term is
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) as of the end of the period covered by
this annual report on Form 10-K (the "Evaluation Date"). Based on that
evaluation, Mr. Stevens has concluded that, as of the Evaluation Date, our
disclosure controls and procedures are still not effective in ensuring that (i)
information required to be disclosed by the company in the reports that we file
or submit under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms and
(ii) information required to be disclosed by the company in the reports that we
file or submit under the Exchange Act is accumulated and communicated to the
company's management, including our principal executive and financial officer,
or persons performing similar functions, as appropriate to allow timely
decisions regarding required disclosure.
Disclosure controls and procedures
are those controls and procedures that are
designed to ensure that information required to be disclosed in our reports
filed or submitted under the Exchange Act are recorded, processed, summarized
and reported within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management, including our Chief Executive Officer and Chief Financial Officer,
to allow timely decisions regarding required disclosure.
Notwithstanding
the assessment that our internal control over financial reporting was not
effective and that there were material weaknesses as identified in this report,
we believe that our financial statements contained in our Annual Report on Form
10-K for the year ended May 31, 2009 accurately present our financial condition,
results of operations and cash flows in all material respects.
Our Board of Directors has determined
that it is in the best interests of the company and its shareholders to address
the lack of formal internal controls and procedures and to implement changes to
our internal control over information and financial reporting. We are exploring
ways to improve our accounting procedures to ensure accuracy. We are also
working to improve our internal control through increased segregation of
critical duties among the members of our general and administrative staff and
improved oversight of the financial accounting and reporting process by our
principal accounting officer. With regard to the latter, we are also considering
the need to engage additional accounting personnel.
MANAGEMENT'S
ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for
establishing and maintaining adequate internal control over financial reporting,
as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act,
for the company.
27
Internal control over financial
reporting includes those policies and procedures that: (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of our assets; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only in
accordance with authorization of our management and directors; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect
on our financial statements.
Management recognizes that there are
inherent limitations on the effectiveness
of any system of internal control, and accordingly, even effective internal
control can provide only reasonable assurance with respect to financial
statement preparation and may not prevent or detect material misstatements. In
addition, effective internal control at a point in time may become ineffective
in future periods because of changes in conditions or due to deterioration in
the
degree of compliance with our established policies and procedures.
A material weakness is a significant
deficiency, or combination of significant
deficiencies, that results in there being a more than remote likelihood
that a material misstatement of the annual or interim financial statements
will not be prevented or detected.
Under the supervision and with the
participation of Mr. Robert Stevens, our Chief Executive Officer and principal
accounting and financial officer, management conducted an evaluation of the
effectiveness of our internal control over financial reporting, as of the
Evaluation Date, based on the framework set forth in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on its evaluation under this framework, management
concluded that our internal control over financial reporting was not effective
as of the Evaluation Date.
Management assessed the effectiveness
of the Company's internal control over financial reporting as of Evaluation Date
and identified the following material weaknesses:
INSUFFICIENT
RESOURCES: We have an inadequate number of personnel with requisite expertise in
the key functional areas of finance and accounting.
INSUFFICIENT
WRITTEN POLICIES & PROCEDURES: We have insufficient written policies and
procedures for accounting and financial reporting.
LACK OF
AUDIT COMMITTEE: We do not have a functioning audit committee resulting in
ineffective oversight in the establishment and monitoring of required internal
controls and procedures.
Management is committed to improving
its internal controls and will (1) continue to use third party specialists to
address shortfalls in staffing and to assist us with accounting and finance
responsibilities, (2) increase the frequency of independent reconciliations of
significant accounts which will mitigate the lack of segregation of duties until
there are sufficient personnel and (3) prepare and implement sufficient written
policies and checklists for financial reporting and closing processes and (4)
may consider appointing an audit committee comprised of both management and
outside board members in the future.
Management, including our Chief
Executive Officer and principal accounting and financial officer, has discussed
the material weakness noted above with our independent registered public
accounting firm.
28
CHANGES
IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal
control over financial reporting identified in connection with the evaluation
required by paragraph (d) of Rule 240.13a-15 or Rule 240.15d-15 of the
Securities Exchange Act of 1934, as amended, that occurred during the last
fiscal quarter of the year ended May 31, 2009
that have materially affected, or that are reasonably likely to materially
affect, our internal control over financial reporting. Because the company was
cash constrained, and could not hire staff to take segregated duties. The
company is now considering what if Any extra staff will resolve this and ensure
better internal control.
LIMITATIONS
ON THE EFFECTIVENESS OF CONTROLS AND PROCEDURES
Our management does not expect that
our controls and procedures will prevent all potential errors or fraud. A
control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met.
PART
III
ITEM
10.
|
DIRECTORS,
EXECUTIVE OFFICERS, AND CORPORATE
GOVERNANCE.
|
The following table sets forth the
current officers and directors of Advanced
Media Training:
ROBERT J. STEVENS - CHIEF EXECUTIVE
OFFICER, AND CHAIRMAN; Mr. Stevens was appointed President, Chief Executive
Officer, and Chairman in December 2006, and also serves as a director of our
wholly owned subsidiary Dematco, Ltd. Additionally, since May 2005, he has
served as a director of Private Trading Systems plc, and its operating
subsidiary Private Treaty Market Limited. Prior to joining PTML as a director,
he co-founded Betting Markets Ltd. in 2000.
LINDSAY M. SMITH - DIRECTOR; Mr.
Smith was appointed a Director of our company in December 2006. Additionally,
since May 2005, he has served as Chief Executive Officer of Private Trading
Systems plc ("PTS") and also serves on the board of directors of PTS. Mr. Smith
is a U.K. qualified Chartered Accountant. From July 2004 to March 2005, he
served as a director of Caplay plc, a U.K. publicly quoted company. Prior to
that, Mr. Smith had been a director of a number of venture capital start up and
recovery companies, having previously spent 11 years with a U.K. Merchant Bank
both in the U.K. and the United States.
In addition to the foregoing, Mr.
Joseph S. Lefrak served as Secretary and a director of DeMatco until his death
in August 2009.
29
ITEM 11.
EXECUTIVE COMPENSATION.
ANNUAL
COMPENSATION
|
LONG-TERM
COMPENSATION
|
|||||||||||||||||||||||||||||
Securities
|
||||||||||||||||||||||||||||||
Name
and
|
|
Other
Annual
|
Restricted
|
Underlying
|
LTIP
|
All
Other
|
||||||||||||||||||||||||
Principal Position
|
Year
|
Salary
|
Bonus
|
Compensation
|
Stock Awards
|
Option
|
Payouts
|
Comp.
|
||||||||||||||||||||||
Robert
Stevens, (1)
|
||||||||||||||||||||||||||||||
President
and CEO,
|
2007
|
-0- | -0- | $ | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
2008
|
-0- | -0- | -0- | 300,000 | -0- | -0- | -0- | |||||||||||||||||||||||
2009
|
-0- | -0- | 80,000 | 125,000 | -0- | -0- | -0- | |||||||||||||||||||||||
Lindsay
Smith, (2)
|
||||||||||||||||||||||||||||||
Director
|
2007
|
-0- | -0- | $ | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
2008
|
-0- | -0- | -0- | 120,000 | -0- | -0- | -0- | |||||||||||||||||||||||
2009
|
-0- | -0- | 60,000 | -0- | -0- | -0- | -0- | |||||||||||||||||||||||
Joseph
Lefrak, (3)
|
||||||||||||||||||||||||||||||
Secretary
& Director
|
2007
|
-0- | -0- | $ | -0- | -0- | -0- | -0- | -0- | |||||||||||||||||||||
2008
|
-0- | -0- | -0- | 160,000 | -0- | -0- | -0- | |||||||||||||||||||||||
2009
|
-0- | -0- | -0- | -0- | -0- | -0- | -0- |
During
the twelve months ended May 31, 2009, Mr. Stevens devoted time
to
developing the business of our company. A total of $ 375,000 has been recorded
as compensation expense for the twelve months ended May 31,
2009, including $170,000 representing the estimated value of services
contributed to the company.
(1)
|
During
March 2008, pursuant to Dematco, Inc.'s 2008 Incentive Stock
PlanMr. Stevens was
issued 7,500,000 shares of our common stock valued at
$300,000.
During September 2008, he also received 5,000,000 shares of common
stock valued at $125,000.
|
(2)
|
During
March 2008, pursuant to Dematco, Inc.'s
2008 Incentive Stock Plan
Mr. Smith was issued 3,000,000 shares of our common
stock valued at
$120,000.
|
(3)
|
During
March 2008, pursuant to Dematco, Inc.'s
2008 Incentive Stock Plan
Mr. Lefrak was issued 4,000,000 shares of our common stock
valued at
$160,000.
|
EMPLOYMENT
AND CONSULTING AGREEMENTS
We do not
have any employment or consulting agreements with any of our executive
officers.
OPTION/SAR
GRANTS
Except as
set forth above under EXECUTIVE COMPENSATION, we have not granted any options or
stock appreciation rights to any of our executive officers or
employees.
AGGREGATED
OPTION/SAR EXERCISES
None.
30
COMPENSATION
OF DIRECTORS
Other
than the as described above, our directors have not and do not receive any
compensation for serving on the board or for attending any
meetings. Directors who are also officers of the company receive no
additional consideration for their service as directors.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
The following table
sets forth information as of May 31, 2009, regarding beneficial ownership of
the Common Stock of the Company by (i) each person known
by the Company to be the beneficial owner of more than 5%
of the outstanding shares
of the Company's Common Stock, (ii)
each director of the Company, (iii)
the Chief Executive Officer and other executive officers of the
Company
and (iv) the Company's executive officers and directors as a group.
PERCENTAGE
|
||||||||||
TITLE OF CLASS
|
NAME AND ADDRESS
|
NUMBER OF SHARES
|
OWNERSHIP
|
|||||||
Common
stock
|
Terence
Ramsden
|
59,626,000 | 30.87 | % | ||||||
1
Mark Road
|
||||||||||
Hemel
Hempstead
|
||||||||||
Herts
HP 2 7BN, England
|
||||||||||
Common
stock
|
Robert
Stevens (1)
|
40,030,000 | 20.73 | % | ||||||
1
Mark Road
|
||||||||||
Hemel
Hempstead
|
||||||||||
Herts
HP 2 7BN, England
|
||||||||||
Common
stock
|
Lindsay
Smith (2)
|
3,000,000 | 1.55 | % | ||||||
1
Mark Road
|
||||||||||
Hemel
Hempstead
|
||||||||||
Herts
HP 2 7BN, England
|
||||||||||
All
officers and directors as a group (3 persons)
|
43,030,000 | 22..28 | % |
(1)
|
President,
CEO and Chairman
|
(2)
|
Director
|
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr.
Robert Stevens, our Chief Executive Officer and Chairman of the Board of
Directors, and Mr. Terence Ramsden, our principal shareholder, each work on a
part-time basis. During the twelve months ended May 31, 2009 and 2008, Mr.
Stevens, and Mr. Ramsden, contributed their services to the Company which has
been
valued at $365,000 and $400,000, respectively. Additionally, in March of 2008
pursuant to our 2008 Stock Incentive Plan, Mr. Stevens, received 7,500,000
shares of our common stock valued at $300,000, Mr. Lindsay Smith, a Director,
received 3,000,000 shares of our common stock valued at $120,000, Mr. Joseph
Lefrak, a Director, received 4,000,000 shares of our common stock valued at
$160,000 and Mr. Ramsden, received 12,500,000 shares of our common stock valued
at $500,000.
Mr. Lindsay Smith, our director, is
also the Chief Executive Officer of Private Trading Systems PLC (“PTS”). On
September 24, 2008, we entered into a Fee Sharing Agreement with PTS. Under the
agreement, PTS is to provide an electronic platform for real time trading of
Senior Life Settlement Policies for which we pay over to PTS a portion of our
fees received from customers based on the face value of the policies (10% of the
initial fee and 20% of the completion fee). Also, under the agreement, we
introduce clients for listing on PTS’s trading system for which PTS pays us 20%
of its fees received from customers which are also based on the face value of
the policies.
31
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
AUDIT
FEES
The
aggregate fees billed for professional services rendered by our principal
accountants for the audit of
our financial statements and for the
reviews
of the financial statements included in our annual report on Form 10-K
and
quarterly reports on Form 10-QSB, respectively, and for other services normally
provided in connection with statutory filings were approximately $40,000,
and $65,000, respectively, for the years ended May 31, 2009 and
2008.
TAX
FEES
The
aggregate fees billed by our auditors for tax compliance matters were
approximately $0
and $0, respectively, for the years ended May 31, 2009 and
2008.
ALL OTHER
FEES
We
did not incur any fees for other professional services rendered by
our
independent auditors for the years ended May 31, 2009 or
2008.
32
ITEM 15.
EXHIBITS
The
following documents are included
or incorporated by reference as exhibits
to this report:
31.1
Certification of CEO and Principal Financial and Accounting Officer
Pursuant to Securities Exchange Act Rules 13a-14 and
15d-14.
32.1
Certification Pursuant to 18
U.S.C. Section 1350.
33
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by
the undersigned, thereunto
duly authorized.
Date:
October 14, 2009
|
DEMATCO,
INC.
|
|
By:
|
/S/ ROBERT STEVENS
|
|
Robert
Stevens
|
||
President,
Chief Executive Officer and Chief
|
||
Financial
Officer
|
In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the
capacities and on the
date indicated.
/S/ ROBERT STEVENS
|
|
Robert
Stevens
|
|
President,
Chief Executive Officer, Chief
|
|
Financial
Officer and Director (Principal
|
|
Executive,
Financial and Accounting Officer)
|
|
Date:
October 14, 2009
|
/S/ LINDSAY SMITH
|
Lindsay
Smith
|
|
Director
|