Attached files
| file | filename |
|---|---|
| 8-K/A - CURRENT REPORT AMENDMENT NO. 1 - TaxMasters, Inc. | taxmasters_8ka-080409.htm |
| EX-99.3 - UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET - TaxMasters, Inc. | taxmasters_8ka-ex9903.htm |
| EX-99.2 - UNAUDITED CONDENSED BALANCE SHEET - TaxMasters, Inc. | taxmasters_8ka-ex9902.htm |
EXHIBIT 99.1
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors
TaxMaster,
Inc.
Houston,
Texas
We have
audited the accompanying balance sheets of TaxMaster, Inc. formerly known as
TMIRS Enterprises, LP, (the “Company”) as of December 31, 2008 and 2007 and the
related statements of operations, partners’ deficit and cash flows for the years
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 audits.
We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight
Board (United States). Those standards require that we plan and perform the
audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. The Company is 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 over financial reporting 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
audits provide a reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the
financial position of the Company as of December 31, 2008 and 2007 and the
results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally
accepted in the United States of America.
/s/ MALONE
& BAILEY, PC
MALONE
& BAILEY, PC
www.malone-bailey.com
Houston,
Texas
October
20, 2009
|
TaxMasters,
Inc., formerly known as TMIRS Enterprises, LP
|
||||||||||||
|
BALANCE
SHEETS
|
||||||||||||
|
AS
OF DECEMBER 31, 2008 and 2007
|
||||||||||||
|
2008
|
2007
|
|||||||||||
|
ASSETS
|
||||||||||||
|
CURRENT
ASSETS:
|
||||||||||||
|
Cash
and cash equivalents
|
$ | 3,683,467 | $ | 1,650,513 | ||||||||
|
Short-term
Investments
|
306,414 | - | ||||||||||
|
Accounts
receivable trade, net
|
5,722,585 | 2,535,132 | ||||||||||
|
Total
current assets
|
9,712,466 | 4,185,645 | ||||||||||
|
PROPERTY
AND EQUIPMENT, net
|
192,074 | 162,897 | ||||||||||
|
INVESTMENTS
|
413,168 | - | ||||||||||
|
OTHER
ASSETS
|
17,000 | 17,000 | ||||||||||
|
TOTAL
ASSETS
|
$ | 10,334,708 | $ | 4,365,542 | ||||||||
|
LIABILITIES
AND PARTNERS' DEFICIT
|
||||||||||||
|
CURRENT
LIABILITIES
|
||||||||||||
|
Accounts
payable and accrued expenses
|
$ | 1,884,884 | $ | 1,051,562 | ||||||||
|
Deferred
revenue
|
8,942,759 | # | 4,005,710 | |||||||||
|
Capital
Lease Obligation
|
71,706 | 58,483 | ||||||||||
|
Total
current liabilities
|
10,899,349 | 5,115,755 | ||||||||||
|
LONG
TERM DEBT
|
||||||||||||
|
Capital
lease obligations, net of current portions
|
139,193 | 113,527 | ||||||||||
|
Deferred
revenue, net of current portions
|
7,954,266 | 1,569,034 | ||||||||||
|
PARTNERS'
DEFICIT
|
(8,658,100 | ) | (2,432,774 | ) | ||||||||
|
TOTAL
LIABILITIES AND PARTNERS' DEFICIT
|
$ | 10,334,708 | $ | 4,365,542 | ||||||||
See notes
to financial statements.
1
|
TaxMasters,
Inc., formerly known as TMIRS Enterprises, LP
|
||||||||
|
STATEMENTS
OF OPERATIONS
|
||||||||
|
FOR
THE YEARS ENDED DECEMBER 31, 2008 and 2007
|
||||||||
|
2008
|
2007
|
|||||||
|
REVENUES,
net
|
15,183,253 | 6,542,957 | ||||||
|
OPERATING
COSTS AND EXPENSES:
|
||||||||
|
Selling,
general and administrative expenses
|
11,544,393 | 4,712,314 | ||||||
|
Compensation
|
8,266,226 | 2,914,659 | ||||||
|
Depreciation
|
106,637 | 34,588 | ||||||
|
Total
operating costs and expenses
|
19,917,256 | 7,661,561 | ||||||
|
LOSS
FROM OPERATIONS
|
(4,734,003 | ) | (1,118,604 | ) | ||||
|
OTHER INCOME
(EXPENSE):
|
||||||||
|
Interest
income
|
28,826 | - | ||||||
|
Interest
expense
|
(38,757 | ) | (12,409 | ) | ||||
|
Other
|
24 | - | ||||||
|
Total
other income (expense)
|
(9,907 | ) | (12,409 | ) | ||||
|
NET
LOSS
|
$ | (4,743,910 | ) | $ | (1,131,013 | ) | ||
See notes
to financial statements.
2
|
TaxMasters,
Inc., formerly known as TMIRS Enterprises, LP
|
||||
|
STATEMENT
OF PARTNERS' DEFICIT
|
||||
|
FOR
THE YEARS ENDED DECEMBER 31, 2008 and 2007
|
||||
|
Total
|
||||
|
Partners'
|
||||
|
Deficit
|
||||
|
Balance,
January 1, 2007
|
$ | (822,476 | ) | |
|
Distribution
|
(479,285 | ) | ||
|
Net
Loss
|
(1,131,013 | ) | ||
|
|
||||
|
Balance,
December 31, 2007
|
$ | (2,432,774 | ) | |
|
Distribution
|
(1,481,416 | ) | ||
|
Net
Loss
|
(4,743,910 | ) | ||
|
|
||||
|
Balance,
December 31, 2008
|
$ | (8,658,100 | ) | |
See notes to financial statements.
3
|
TaxMasters,
Inc., formerly known as TMIRS Enterprises, LP
|
||||||||
|
STATEMENTS
OF CASH FLOWS
|
||||||||
|
FOR
THE YEARS ENDED DECEMBER 31, 2008 and 2007
|
||||||||
|
2008
|
2007
|
|||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
|
Net
Loss
|
$ | (4,743,910 | ) | $ | (1,131,013 | ) | ||
|
Adjustments
to reconcile net loss to net cash provided by
|
||||||||
|
operating
activities:
|
||||||||
|
Depreciation
|
106,637 | 34,588 | ||||||
|
Changes
in operating assets and liabilities:
|
||||||||
|
Accounts
receivable
|
(3,187,453 | ) | (1,878,555 | ) | ||||
|
Deposits
|
- | (17,000 | ) | |||||
|
Accounts
payable and accrued liabilities
|
833,322 | 752,216 | ||||||
|
Deferred
revenue
|
11,322,281 | 4,105,757 | ||||||
|
Net
cash provided by operating activities
|
4,330,877 | 1,865,993 | ||||||
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
|
Purchase
of investments
|
(719,582 | ) | - | |||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
|
Repayment
of capital lease obligations
|
(96,925 | ) | (30,610 | ) | ||||
|
Distributions
to partners
|
(1,481,416 | ) | (479,285 | ) | ||||
|
Net
cash used in financing activities
|
(1,578,341 | ) | (509,895 | ) | ||||
|
NET
CHANGE IN CASH AND CASH EQUIVALENTS
|
2,032,954 | 1,356,098 | ||||||
|
CASH
AND CASH EQUIVALENTS—Beginning of year
|
1,650,513 | 294,415 | ||||||
|
CASH
AND CASH EQUIVALENTS—End of year
|
$ | 3,683,467 | $ | 1,650,513 | ||||
|
Supplemental
schedule for cash flow information
|
||||||||
|
Cash
paid for interest
|
$ | 38,757 | $ | 12,409 | ||||
|
NON
CASH INVESTING AND FINANCING ACTIVITIES
|
||||||||
|
Purchase
of property and equipment by financing
|
$ | 135,814 | $ | 132,106 | ||||
See notes
to financial statements.
4
TaxMasters,
Inc.
NOTES
TO FINANCIAL STATEMENTS
For the
Years Ended December 31, 2008 and 2007
Note
1 - Nature of Operations and Summary of Significant Accounting
Policies
Nature of
Operations
TaxMasters,
Inc. (the “Company”) was formed 2001 as a sole proprietorship in Texas until
January 2004. On January 9, 2004, the Company was organized as a Texas limited
partnership, TMIRS Enterprises Ltd., which did business as
TaxMasters. TM GP Services, LLC, a Texas limited liability company
wholly-owned by TMIRS, was also formed as a general partner of TMIRS. April 6,
2009 TMIRS Enterprises entered into a 351 Contribution Agreement with Tax
Masters, pursuant to which TMIRS assigned to TaxMasters, Inc., a new formed
Nevada corporation all of the assets of TMIRS Enterprises’ tax solutions
business in exchange 100,000 shares of common stock of TaxMaxters,
Inc. The Company primarily engages in resolution of complicated
Internal Revenue Service tax problems for customers located in the USA and other
parts of the world with USA operations. The Company also assists
customers with state and local tax problem resolution. The Company
headquarters is located in Houston, Texas.
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect certain reported amounts and
disclosures. Actual results may differ from those
estimates.
Financial
Instruments
The
carrying values of cash and cash equivalents, accounts receivable, accounts
payable, and accrued expenses approximate their
fair values due to their short term
maturities.
Fair Value
Measurements
Effective
January 1, 2008, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 157, Fair Value Measurements. In February 2008, the Financial
Accounting Standards Board (the "FASB") issued Staff Position ("FSP") No. 157-1
to exclude SFAS No. 13, Accounting for Leases and its related interpretive
accounting pronouncements that address leasing transactions, from the scope of
SFAS No. 157. In February 2008, the FASB also issued FSP No. 157-2,
Effective Date of FASB Statement 157, which provides a one year deferral of the
effective date of SFAS No. 157 for non-financial assets and non-financial
liabilities, except those that are recognized or disclosed in the financial
statements at fair value at least annually. Therefore, the Company has adopted
the provision of SFAS No. 157 with respect to its financial assets and
liabilities only.
5
TaxMasters,
Inc.
NOTES
TO FINANCIAL STATEMENTS
For the
Years Ended December 31, 2008 and 2007
Note
1 - Nature of Operations and Summary of Significant Accounting Policies
(continued)
Fair Value
Measurements (continued)
SFAS No.
157 defines fair value, establishes a framework for measuring fair value under
generally accepted accounting principles and enhances disclosures about fair
value measurements. Fair value is defined under SFAS No. 157 as the exchange
price that would be received for an asset or paid to transfer a liability (an
exit price) in the principal or the most advantageous market for an asset or
liability in an orderly transaction between participants on the measurement
date. Valuation techniques used to measure fair value under SFAS No.
157 must maximize the use of observable inputs and minimize the
use of unobservable inputs. The standard describes a fair
value hierarchy based on the levels of inputs, of which the first two
are
considered
observable and the last unobservable, that may be used to measure fair value
which are the following:
- Level 1
- Quoted prices in active markets for identical assets or
liabilities.
- Level 2
- Inputs other than Level 1 that are observable, either directly or indirectly,
such as quoted prices for similar assets or liabilities; quoted prices in
markets that are not active; or other inputs that are observable or corroborated
by observable market data or substantially the full term of the assets or
liabilities.
- Level 3
- Unobservable inputs that are supported by little or no market activity and
that are significant to the value of the assets or liabilities
Effective
January 1, 2008, the Company could have adopted SFAS No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities. SFAS No. 159 allows an
entity the irrevocable option to elect fair value for the initial and subsequent
measurement for specified financial assets and liabilities on a contract-by
contract basis. The Company did not elect to adopt the fair value option under
this pronouncement.
Cash and Cash
Equivalents
The
Company considers all bank deposits and highly liquid investments with original
maturities of three months or less to be cash and cash
equivalents. Cash in financial institutions exceeded the Federal
Deposit Insurance Corporation (FDIC) coverage. Management does not
consider such deposits over the FDIC insured limits to be a significant
risk.
Short-Term and Long Term
Investments
Short-term
investments consist of investments with original maturities greater than three
months and less than one year. Short-term and long-term investments
as of December 31, 2008, comprised of bank CD’s with interest rates of 2.95%,
were $306,414 and $413,168, respectively. There were no investments
as of December 31, 2007.
6
TaxMasters,
Inc.
NOTES
TO FINANCIAL STATEMENTS
For the
Years Ended December 31, 2008 and 2007
Note
1 - Nature of Operations and Summary of Significant Accounting Policies
(continued)
Trade
Receivables
Trade
accounts receivable are stated at the amount the Company expects to
collect. The Company maintains allowances for doubtful accounts for
estimated losses resulting from the inability of its customers to make required
payments. Management considers the following factors when determining
the collectability of specific customer accounts: customer
credit-worthiness, past transaction history with the customer, current economic
and industry trends, and changes in customer payment terms. If the
financial condition of the Company’s customers wereto deteriorate, adversely
affecting their ability to make payments, additional allowances would be
required. The Company provides for estimated uncollectible amounts
through a charge to earnings and an increase to a valuation
allowance. Balances that remain outstanding after the Company has
used reasonable collection efforts are written off through a charge to the
valuation allowance and a credit to accounts receivable.
The
Company’s trade receivables are generally unsecured. The Company has
no concentration of revenue with any one or any few customers that the loss of
any one or a few customers could impact its operations materially unless such a
loss of customers were a general loss of customers.
Property and
Equipment
Property
and equipment are stated at cost, less accumulated
depreciation. Major renewals and improvements that extend the useful
lives of property and equipment are capitalized. Expenditures for
maintenance and repairs are charged to expense as incurred. Upon sale
or retirement, the cost of the property and equipment and the related
accumulated depreciation are removed, and any resulting gains or losses are
credited or charged to operations.
Depreciation
is computed using straight-line methods with various estimated useful lives:
computer equipment at 2 years, software that has no specific life or license
duration at 5 years, software with an annual license or annually renewable
license is expensed as purchased, office furniture and fixtures and office
equipment at 7 years, and capital leased equipment at 7
years. Leasehold improvements are depreciated over the shorter of the
term of the lease or their estimated useful lives.
7
TaxMasters,
Inc.
NOTES
TO FINANCIAL STATEMENTS
For the
Years Ended December 31, 2008 and 2007
Note
1 - Nature of Operations and Summary of Significant Accounting Policies
(continued)
Long-Lived
Assets
Long-lived
assets are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of the assets might not be recoverable and at
a minimum on an annual basis. The Company does not perform a periodic
assessment of assets for impairment in the absence of such information or
indicators. Conditions that would necessitate an impairment include a
significant decline in the observable market value of an asset, a significant
change in the extent of manner in which an asset is used, or a significant
adverse change that would indicate that the carrying amount of an asset or group
of assets is not recoverable. For long-lived assets to be held and
used, the Company recognizes an impairment loss only if an impairment
is indicated by its carrying value not being recoverable through
undiscounted cash flows. The impairment loss is the difference
between the carrying amount and the fair value of the asset estimated using
discounted cash flows. Long-lived assets held for sale are reported
at the lower of cost or fair value less costs to sell.
Income
Taxes
The
Company and its stockholders have elected to be taxed under the provision of a
limited partnership of the Internal Revenue Code. This
election effectively eliminates federal and state income tax expense at the
corporate level as the Company's stockholders are taxed directly on their
respective shares of the Company's profits.
Revenue
Recognition
The
Company’s revenue is generated from the sale of our proprietary tax resolution
products and services and is comprised principally of flat fees charged for
services. The Company recognizes revenue in accordance with
Securities and Exchange Commission Staff Accounting Bulletin No. 104 “Revenue Recognition” (“SAB
104”). Revenue is recognized when the price is fixed or determinable, persuasive
evidence of an arrangement exists, the service is performed and collectability
of the resulting receivable is reasonably assured. We use the proportionate
completion method for revenue recognition. With this method, we determine
our revenue by gathering the completion points of six major services rendered by
the company. These services are Consultations, Tax Returns, Automated
Collection Service, Revenue Officer Case, Collection Due Process, and Settlement
Analysis. Revenue is recognized when it is earned, typically when our
services have been rendered.
8
TaxMasters,
Inc.
NOTES
TO FINANCIAL STATEMENTS
For the
Years Ended December 31, 2008 and 2007
Note
1 - Nature of Operations and Summary of Significant Accounting Policies
(continued)
Flat fees
charged for services are recognized as revenue in the same period the services
are rendered. Fees received prior to services being rendered are
initially deferred and not until the services are completed are they recognized
as revenue. Deferred revenue as of December 31, 2008 and 2007 was
$16,897,025 and $5,574,744, respectively. Deferred revenue expected
to be realized in one year or more from the balance sheet date is classified as
long-term.
In
addition to the flat fee, certain services require our tax consultants to
interact with the IRS, such as a settlement negotiation or an audit, for which
we charge our clients additional consulting fees. We provide our
services on a “pay-as-you-go” basis and an installment plan. These
consulting fees are recognized when the services are rendered.
Advertising
Expenses
The
Company expenses the costs of advertising as incurred. Advertising
expenses totaled $3,773,618 and $1,692,656 for 2008 and 2007,
respectively.
Note
2 - Fair Value
In
accordance with SFAS No. 157, the following table represents the Company's fair
value hierarchy for its financial assets and liabilities measured at
fair value on a recurring basis as of December 31, 2008:
|
Level
1
|
Level
2
|
Level
3
|
Total
|
|||||||||||||
|
Assets
|
||||||||||||||||
|
Investments-
short-term
|
$ | 306,414 | - | - | $ | 306,414 | ||||||||||
|
Investments-
long-term
|
413,168 | 413,168 | ||||||||||||||
|
Total
Assets
|
$ | 719,582 | - | - | $ | 719,582 | ||||||||||
|
Liabilities
– N/A
|
- | - | - | - | ||||||||||||
Some of
the Company's financial instruments are not measured at fair value on a
recurring basis but are recorded at amounts that approximate fair value due to
their liquid or short-term nature, such as cash and cash equivalents,
receivables and payables.
9
TaxMasters,
Inc.
NOTES
TO FINANCIAL STATEMENTS
For the
Years Ended December 31, 2008 and 2007
Note
3 - Property and Equipment (continued)
Property
and equipment consist of the following as of December 31, 2008 and
2007:
|
2008
|
2007
|
|||||||
|
Capital
leased computer equipment
|
$ | 347,212 | $ | 211,398 | ||||
| 347,212 | 211,398 | |||||||
|
Less
accumulated depreciation
|
(155,138 | ) | (48,501 | ) | ||||
| $ | 192,074 | $ | 162,897 | |||||
Depreciation
expense, including that on assets under capitalized leases, for the years ended
December 31, 2008 and 2007 was $106,637 and $34,588, respectively.
Note
4 – Capital Lease Obligations
The
Company acquired equipment under long-term leases with two to four year terms,
generally bearing interest rates from 13% to 26%. For financial
reporting purposes, the present value of the minimum lease payments has been
capitalized.
|
December
31
|
|||||||||
|
Year
|
2008
|
2007
|
|||||||
|
2005
|
Capital
lease to a company in monthly installments of $201 including interest,
secured by computer equipment, maturing in September 2009
|
$ | 455 | $ | 2,033 | ||||
|
2006
|
Capital
leases to a company in monthly installments of $2,427 including interest,
secured by computer equipment, with maturity dates ranging from January
2009 to June 2010.
|
21,065 | 44,994 | ||||||
|
2007
|
Capital
leases to a company in monthly installments of $4,560 including
interest, secured by computer equipment, with maturity dates ranging from
January to August 2010.
|
83,382 | 125,983 | ||||||
|
2008
|
Capital
lease to a company in monthly installments of $4,947 including
interest, secured by computer equipment, with maturity dates ranging from
January 2011 to March 2012.
|
105,997 | 0 | ||||||
|
Total Lease
Obligation
|
210,899 | 172,010 | |||||||
|
Less: current
portion
|
71,706 | 58,483 | |||||||
|
Capital
lease obligation, net of current portion
|
$ | 139,193 | $ | 113,527 | |||||
10
TaxMasters,
Inc.
NOTES
TO FINANCIAL STATEMENTS
For the
Years Ended December 31, 2008 and 2007
Note
4 – Capital Lease Obligations
Future
payments under these capital lease arrangements, which includes $148,265 in
finance charges and $1,398,890 of new capital leases entered into in 2009, are
as follows:
|
Year
ending December 31,
|
||||
|
2009
|
$ | 292,001 | ||
|
2010
|
393,086 | |||
|
2011
|
336,976 | |||
|
2012
|
294,985 | |||
|
2013
|
278,530 | |||
|
Thereafter
|
162,476 | |||
|
Total
future payments
|
$ | 1,758,054 | ||
|
Less:
amount representing interest
|
148,265 | |||
|
Less:
2009 capital leases
|
1,398,890 | |||
|
Present
value of net minimum lease payments
|
$ | 210,899 | ||
Note
5 – Partners’ Equity (Deficit)
In 2008
and 2007, the Company made distributions to its sole partner of $1,481,416 and
$479,285, respectively.
Note
6 – Related Party Transactions
The
Company incurs certain business development and entertainment expenses related
to brand image development, employee retention, necessary entertainment, and
certain expenses related to its community relations activities that are paid to
companies owned by one or more of the corporate executives. It is
believed that these costs are reasonable and approximate the costs of similar
activities with unrelated parties.
The
Company is affiliated, through common ownership, with another company that
provides the Company with advertising. The affiliated company charged
$332,825 and $0 in 2008 and 2007, respectively, for advertising costs
incurred. In addition, the outstanding balances due to the affiliated
company as of December 31, 2008 and 2007 were $240,000 and $0,
respectively.
In
addition, the Company has marketing services provided by a related entity that
is owned by the Company’s management. Marketing expenses were
$264,309 and $138,392 in 2008 and 2007, respectively. There were no
outstanding balances due to this related entity as of December 31, 2008 and
2007.
11
TaxMasters,
Inc.
NOTES
TO FINANCIAL STATEMENTS
For the
Years Ended December 31, 2008 and 2007
Note
7 – Commitments and Contingencies
Leases
The
Company has two separate office space lease agreements. The Company
leases its main office space in Houston, Texas under a lease agreement that
commenced in December 2006 and expires February 2014. In addition,
there were two expansion leases entered into for this property in January and
March 2008 which both expire in May 2014. The aggregate monthly lease
payments are $25,162. In July 2009, The Company entered into an
additional lease agreement for office space in Houston, Texas through December
31, 2014. Monthly lease payment under this agreement are $0 for the
first six months, $67,431 for the months seven through twenty-six, $74,422 for
months twenty-seven through forty-six, and $85,413 thereafter.
The
future minimum lease payments at December 31, 2008 are as follows:
|
Year
Ended:
|
||||
|
2009
|
$ | 301,944 | ||
|
2010
|
1,111,118 | |||
|
2011
|
1,148,081 | |||
|
2012
|
1,204,008 | |||
| 2013 | 1,297,935 | |||
| Thereafter | 1,158,296 | |||
|
|
$ | 6,221,382 | ||
Total
rent expense for 2008 and 2007 was $415,981 and $196,157,
respectively.
Legal
Proceedings
From time
to time, the Company is involved in various legal proceedings in the ordinary
course of business. Management believes that no pending legal
proceedings will have a material adverse effect on the financial condition,
results of operations or cash flows of the Company.
12
TaxMasters,
Inc.
NOTES
TO FINANCIAL STATEMENTS
For the
Years Ended December 31, 2008 and 2007
Note
8 – Subsequent Events
In August
2009, the sole shareholder of the Company sold 100% of his interest to Crown
Partners, Inc. in exchange for 301,000,000 common shares. In
addition, the sole shareholder of the Company received 1,000 preferred shares
which gave him the authority to designate a majority of the Company’s board of
directors for a five-year period. In addition, the sole shareholder
has the right to earn up to an additional 299,000,000 common shares during the
next five years based on a formula calculated on the net profits of the
Company. Crown Partners, Inc.’s current board of directors and officers
resigned effective with the closing and concurrently appointed the Company’s
sole shareholder as a director. This transaction will be accounted for as
a reverse merger whereby the Company is considered the accounting acquirer and
the historical and future financial statements will be those of the Company
since Crown Partners, Inc. will discontinue their primary business activity of
daily trading in the stock market.
In July
2009, the Company entered into a Section 351 Contribution Agreement with Crown
Partners, Inc., pursuant to which the Company assigned to TaxMasters, Inc., a
newly formed Nevada corporation, all of the assets of the Company in exchange
for 100,000 shares of common stock of TaxMasters, Inc.
13
.