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EX-31 - EX-31.1 SECTION 302 CEO CERTIFICATION - American Smooth Wave Ventures, Inc.amsmooth10q093009ex311.htm
EX-32 - EX-32.1 SECTION 302 CEO/CFO CERTIFICATION - American Smooth Wave Ventures, Inc.amsmooth10q093009ex321.htm
EX-31 - EX-31.2 SECTION 302 CFO CERTIFICATION - American Smooth Wave Ventures, Inc.amsmooth10q093009ex312.htm

U.S. SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


(Mark One)


 X .

Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of 1934

 

 

 

For the quarterly period ended September 30, 2009

 

 

     .

Transition Report under Section 13 or 15(d) of the Exchange Act

 

 

 

For the Transition Period from ________to __________


Commission File Number: 333-152849


AMERICAN SMOOTH WAVE VENTURES, INC.

(Exact Name of Registrant as Specified in its Charter)


IOWA

26-3036101

(State of other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification Number)


8650 Grand Avenue

 

Yucca Valley, CA

92264

(Address of principal executive offices)

(Zip Code)


Registrant's Phone: (760) 363-6189


Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or 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 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 Exchange Act). Yes  X .No     .


As of September 30, 2009, the issuer had 2,200,000 shares of common stock issued and outstanding.





 

TABLE OF CONTENTS

Page


PART I – FINANCIAL INFORMATION

 

Item 1.

Financial Statements

3

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

12

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

13

Item 4.

Controls and Procedures

13


PART II – OTHER INFORMATION

 

Item 1.

Legal Proceedings

14

Item 1A.

Risk Factors

14

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

15

Item 3.

Defaults Upon Senior Securities

15

Item 4.

Submission of Matters to a Vote of Security Holders

15

Item 5.

Other Information

15

Item 6.

Exhibits

15



2



ITEM 1 FINANCIAL STATEMENTS


Financial Statements for 9 month period ended September 30, 2009 have been prepared by the Management Group of American Smooth Wave Ventures, Inc.


AMERICAN SMOOTH WAVE VENTURES, INC.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEET

SEPTEMBER 30, 2009

 

 

 

 

ASSETS

 

 

 

 

 

 

Current Assets

$

 

 

Cash and Cash Equivalents

 

-

 

Prepaid Expenses

 

-

Total Current Assets

 

-

 

 

 

 

 

 

 

 

Total Assets

$

-

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Stockholders' Equity (Note B)

 

 

 

Common stock, 0.001 par value;

 

 

 

   75,000,000 shares authorized;

 

 

 

   2,200,000 shares issued and outstanding

$

2,200

 

Additional Paid in Capital

 

2,850

 

Retained Earnings (Accumulated Deficit)

 

(5,050)

Total Stockholders' Equity

 

-

 

 

 

 

Total Liabilities and Stockholders' Equity

$

-




3




(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF OPERATIONS

FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30,  2009

 

 

 

 

Income

 

 

 

Revenues

$

-

Total Income

 

-

 

 

 

 

Total Cost of Sales

 

-

 

 

 

 

Gross Profit (Loss)

 

-

 

 

 

 

General and Administrative Expenses

 

 

 

Licenses and Permits

 

-

 

Organization Costs

 

-

 

Professional Fees

 

 

 

    Consulting

 

-

 

    Legal

 

-

 

    Accounting

 

-

Total General and Administrative Expenses

 

-

 

 

 

 

Net Income (Loss)

$

(0)

 

 

 

 

Per Share Information:

 

 

 

 

 

 

Net Income (Loss) per share - 2,200,000 shares issued

$

(0.00)

 

 

 

 

Basic weighted average number

 

 

 

common stock shares outstanding

 

2,200,000

 

 

 

 

Diluted weighted average number

 

 

 

common stock shares outstanding

 

2,200,000




4




AMERICAN SMOOTH WAVE VENTURES, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CASH FLOWS

FOR THE PERIOD ENDED SEPTEMBER 30, 3009

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net income (Loss)

$

(0)

 

 

 

 

 

 

Adjustments to reconcile net income to net cash provided

 

 

 

by operating activities

 

 

 

 

Depreciation

 

-

 

 

(Increase) decrease in:

 

 

 

 

Accounts Receivable

 

-

 

 

Prepaid Expenses

 

-

 

 

Increase (decrease) in:

 

 

 

 

Accounts Payable

 

-

 

 

    Net Cash Provided (Used) By Operating Activities

 

(0)

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

 

Fixed Asset Additions

 

-

 

 

    Net Cash (Used) By Investing Activities

 

-

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

 

Sale of Common Stock

 

(0)

 

 

    Net Cash (Used) By Financing Activities

 

(0)

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH

 

-

 

 

 

 

 

 

CASH AT BEGINNING OF PERIOD

 

-

 

 

 

 

 

 

CASH AT END OF PERIOD

$

-




5



AMERICAN SMOOTH WAVE VENTURES, INC. (A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

FOR THE INCEPTION PERIOD OF JULY 11, 2008

TO SEPTEMBER 30, 2009


NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


A summary of significant accounting policies of American Smooth Wave Ventures, Inc. (A Development Stage Company) (the Company) is presented to assist in understanding the Company’s financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial statements. These financial statements and notes are representations of the Company’s management who are responsible for their integrity and objectivity. The Company has not realized revenues from its planned principal business purpose and is considered to be in its development state in accordance with SFAS 7, “Accounting and Reporting by Development State Enterprises.”


Organization, Nature of Business and Trade Name


American Smooth Wave Ventures, Inc. was incorporated in the state of Iowa on July 11, 2008 under the same name. The Company is a development stage company and has as a principal business objective of becoming on online candy and sweets catering service. Appropriate food and Bakery items will be purchased online for shipping.


We intend to develop procedures to make the information given to a prospective purchaser as accurate as possible to lead to the highest percentage of successful American Smooth Wave purchases. We intend to focus only on items that can be shipped without diminution in quality of the product.

 

Basis of Presentation


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 at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Company’s system of internal accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) all valid transactions are recorded and (3) transactions are recorded in the period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the company for the respective periods being presented.


Stockholders’ Equity: Common stock


The authorized common stock of the Company consists of 75,000,000 shares with par value of $0.001. On July 11, 2008, the Company authorized the issuance of 200,000 shares of its $.001 par value common stock at $0.001 per share in consideration of $200 in services rendered. Also on July 11, 2008, the Company authorized the issuance of 2,000,000 shares of its $.001 par value common stock at .002425 per share in consideration of $4,850 in cash from Orion Investments. As of september 30, 2009 the shares were issued and outstanding.



6



AMERICAN SMOOTH WAVE VENTURES, INC. (A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

FOR THE INCEPTION PERIOD OF JULY 11, 2008

TO SEPTEMBER 30, 2009


NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


Net loss per common share


Net loss per share is calculated in accordance with SFAS No. 128, “ Earnings Per Share. ” The weighted-average number of common shares outstanding during each period is used to compute basic loss per share. Diluted loss per share is computed using the weighted averaged number of shares and dilutive potential common shares outstanding. Dilutive potential common shares are additional common shares assumed to be exercised.


Basic net loss per common share is based on the weighted average number of shares of common stock outstanding during 2009 and since inception. As of September 30, 2009 and since inception, the Company had 2,200,000 common shares outstanding. As of September 30, 2009 and since inception, the Company had no dilutive potential common shares.


Basic Loss Per Share


The computations of basic loss per share of common stock are based on the weighted average number of shares outstanding at the date of the financial statements. There are no common stock equivalents outstanding.


 

 

Loss

 

Shares

 

Per Share

 

 

(Numerator)

 

(Denominator)

 

Amount

From Inception on July 11, 2008 to Period Ended SEPTEMBER 30, 2009

$

(5,050)

 

2,200,000

$

(0.0025)


Provision for Income Taxes


Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely that not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.


Net deferred tax assets consist of the following components from Inception on July 11, 2008 to SEPTEMBER 30, 2009:


 

 

2008

Deferred tax assets NOL Carryover

$

5,050

Valuations Allowance

 

0

Net Deferred Tax Asset

$

0




7



AMERICAN SMOOTH WAVE VENTURES, INC. (A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

FOR THE INCEPTION PERIOD OF JULY 11, 2008

TO SEPTEMBER 30, 2009


NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


Provision for Income Taxes (continued)


The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate of 34% to pretax income from continuing operations for the periods ended September 30, 2009 due to the following:


 

 

2009

Book Loss

$

5,050

Common Stock Issued For Services

 

0

Valuation Allowance

 

0

 

$

0


At September 30, 2009, the Company had an operating loss carry forward of $5,050 that can be used as an offset against future taxable income. No tax benefit has been reported in the September 30, 2009 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.


Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry-forwards for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in the future.


Use of Estimates


The preparation of financial statements in 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 revenues and expenses during the reporting period. A change in managements’ estimates or assumptions could have a material impact on American Smooth Wave Ventures, Inc.’s financial condition and results of operations during the period in which such changes occurred.


Actual results could differ from those estimates. American Smooth Wave Ventures, Inc.’s financial statements reflect all adjustments that management believes are necessary for the fair presentation of their financial condition and results of operations for the periods presented.


Fair Value of Financial Instruments


As at September 30, 2009, the fair value of cash and accounts and advances payable, including amounts due to and from related parties, approximate carrying values because of the short-term maturity of these instruments.



8



AMERICAN SMOOTH WAVE VENTURES, INC. (A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

FOR THE INCEPTION PERIOD OF JULY 11, 2008

TO SEPTEMBER 30, 2009


NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


Recently Issued Accounting Pronouncements


In December 2007, the FASB issued SFAS 160, “Noncontrolling interests in Consolidated Financial Statements – an amendment of ARB No. 51”. This Statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. This Statement is effective for fiscal years beginning on or after December 15, 2008. Early adoption is not permitted. Management is currently evaluating the effects of this statement, but it is not expected to have any impact on the Company’s financial statements.


In February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities. SFAS 159 creates a fair value option allowing an entity to irrevocably elect fair value as the initial and subsequent measurement attribute for certain financial assets and financial liabilities, with changes in fair value recognized in earnings as they occur. SFAS 159 also requires an entity to report those financial assets and financial liabilities measured at fair value in a manner that separates those reported fair values from the carrying amounts of assets and liabilities measured using another measurement attribute on the face of the statement of financial position. Lastly, SFAS 159 requires an entity to provide information that would allow users to understand the effect on earnings of changes in the fair value on those instruments selected for the fair value election. SFAS 159 is effective for fiscal years beginning after November 15, 2007 with early adoption permitted. The Company is continuing to evaluate SFAS 159 and to assess the impact on its results of operations and financial condition if an election is made to adopt the standard.

 

In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” which defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. Where applicable, SFAS No. 157 simplifies and codifies related guidance within GAAP and does not require any new fair value measurements. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier adoption is encouraged. The Company does not expect the adoption of SFAS No. 157 to have a significant effect on its financial position or results of operation.

 

Pursuant to FASB Statement No. 141, Business Combinations (SFAS 141, and its predecessor, APB Opinion No. 16 (APB 16)), goodwill may be recognized in connection with the acquisition of oil and gas exploration and production properties that constitute a business. Rule 4-10(c)(6)(i) of Regulation S-X, applicable to the full cost accounting method, specifies that "sales of oil and gas properties, whether or not being amortized currently, shall be accounted for as adjustments of capitalized costs, with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas attributable to a cost center." It goes on to indicate that "a significant alteration would not ordinarily be expected to occur for sales involving less than 25% of the reserve quantities of a given cost center."



9



AMERICAN SMOOTH WAVE VENTURES, INC. (A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

FOR THE INCEPTION PERIOD OF JULY 11, 2008

TO SEPTEMBER 30, 2009


NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


Recently Issued Accounting Pronouncements (continued)


None of the above new pronouncements has current application to the Company, but may be applicable to the Company’s future financial reporting.


Long-lived Assets-Technology


The Company’s technology is recorded at its cost. The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.


Concentration of Risk


Cash – The Company at times may maintain a cash balance in excess of insured limits. At September 30, 2009, the Company has no cash in excess of insured limits.


Revenue Recognition


The Company recognizes revenues when payments are billed to the customer and according to the terms of the contract.


Property and Equipment


Property and equipment are carried at cost. Expenditures for maintenance and repairs are charged against operations. Renewals and betterments that materially extend the life of the assets are capitalized. When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is reflected in income for the period.


Depreciation is computed for financial statement purposes on a straight-line basis over estimated useful lives of the related assets. The estimated useful lives of depreciable assets are:


 

Estimated Useful Lives

Office Equipment

5-10 years

Copier

5-7 years

Vehicles

5-10 years


For federal income tax purposes, depreciation is computed under the modified accelerated cost recovery system. For audit purposes, depreciation is computed under the straight-line method.



10



AMERICAN SMOOTH WAVE VENTURES, INC. (A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

FOR THE INCEPTION PERIOD OF JULY 11, 2008

TO SEPTEMBER 30, 2009


NOTE A – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)


Accounts Receivable


Accounts receivable are carried at the expected net realizable value. The allowance for doubtful accounts is based on management's assessment of the collectibility of specific customer accounts and the aging of the accounts receivables. If there were a deterioration of a major customer's creditworthiness, or actual defaults were higher than historical experience, our estimates of the recoverability of the amounts due to us could be overstated, which could have a negative impact on operations.


Cash and Cash Equivalents


For purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with maturity of three months or less to be cash equivalents.

 

NOTE B – GOING CONCERN


The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other current assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.


Marketing will be focused on attracting retail customers of candy, sweets, foods and bakery items to our website which will be designed to allow the potential customers to order the desired items on the website for delivery to the specified location. When and if these activities provide sufficient revenues it would allow it to continue as a going concern. In the interim the Company is working toward raising operating capital through the private placement of its common stock or debt instruments.

 

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the preceding paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern.



11



ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


FORWARD-LOOKING STATEMENTS


This Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included or incorporated by reference in this Form 10-Q which address activities, events or developments which the Company expects or anticipates will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof); finding suitable merger or acquisition candidates; expansion and growth of the Company's business and operations; and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. However, whether actual results or developments will conform with the Company's expectations and predictions is subject to a number of risks and uncertainties, including general economic, market and business conditions; the business opportunities (or lack thereof) that may be presented to and pursued by the Company; changes in laws or regulation; and other factors, most of which are beyond the control of the Company.


These forward-looking statements can be identified by the use of predictive, future-tense or forward-looking terminology, such as "believes," "anticipates," "expects," "estimates," "plans," "may," "will," or similar terms. These statements appear in a number of places in this Filing and include statements regarding the intent, belief or current expectations of the Company, and its directors or its officers with respect to, among other things: (i) trends affecting the Company's financial condition or results of operations for its limited history; (ii) the Company's business and growth strategies; and, (iii) the Company's financing plans. Investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve significant risks and uncertainties, and that actual results may differ materially from those projected in the forward-looking statements as a result of various factors. Such factors that could adversely affect actual results and performance include, but are not limited to, the Company's limited operating history, potential fluctuations in quarterly operating results and expenses, government regulation, technological change and competition.


Consequently, all of the forward-looking statements made in this Form 10-Q are qualified by these cautionary statements and there can be no assurance that the actual results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequence to or effects on the Company or its business or operations. The Company assumes no obligations to update any such forward-looking statements.


GENERAL DESCRIPTION OF BUSINESS


The Company is an online candy, sweet, food and bakery service. Appropriate food and Bakery items will be purchased online for shipping.


Initially we intend to focus on sales of small niche specialty candy produced by small local shops from which we will do bulk wholesale purchases. We feel that this will distinguish us from several current online sellers who sell mostly commercially widely available candies. We will act as a reseller of these products and not as a producer initially. As the business grows we intend to begin producing some of our own product in house such as small rock or hard candies.


MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS


The Company has a limited operating history upon which an evaluation of the Company, its current business and its prospects can be based. The Company's prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development. Such risks include inadequate funding the company's inability to anticipate and adapt to a developing market, the failure of the company's infrastructure, changes in laws that adversely affect the company's business, the ability of the Company to manage its operations, including the amount and timing of capital expenditures and other costs relating to the expansion of the company's operations, the introduction and development of different or more extensive communities by direct and indirect competitors of the Company, including those with greater financial, technical and marketing resources, the inability of the Company to attract, retain and motivate qualified personnel and general economic conditions.


The Company expects that its operating expenses will increase significantly, especially as it implements its business plan. To the extent that increases in its operating expenses precede or are not followed by commensurate increases in revenues, or that the Company is unable to adjust operating expense levels accordingly, the Company's business, results of operations and financial condition would be materially and adversely affected. There can be no assurances that the Company can achieve or sustain profitability or that the Company's operating losses will not increase in the future.



12



RESULTS OF OPERATIONS


The Company has achieved no significant revenue or profits to date, and the Company anticipates that it will continue to incur net losses for the foreseeable future. The Company incurred a net loss of approximately ($0.00) for the nine months ended September 30, 2009.


LIQUIDITY AND CAPITAL RESOURCES


Since its inception the Company has had limited operating capital, and has relied heavily on debt and equity financing.


The financial statements as of and for the period ended on July 15, 2008 expressed their substantial doubt as to the Company's ability to continue as a going concern. Without additional capital, it is unlikely that the Company can continue as a going concern. The Company plans to raise operating capital via debt and equity offerings. However, there are no assurances that such offerings will be successful or sufficient to fund the operations of the Company. In the event the offerings are insufficient, the Company has not formulated a plan to continue as a going concern. Moreover, if such offerings are successful, they may result in substantial dilution to the existing shareholders.


CRITICAL ACCOUNTING POLICIES


In Financial Reporting release No. 60, "CAUTIONARY ADVICE REGARDING DISCLOSURE ABOUT CRITICAL ACCOUNTING POLICIES" ("FRR 60"), the Securities and Exchange Commission suggested that companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the SEC defined the most critical accounting policies as the ones that are most important to the portrayal of a company's financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, our most critical accounting policies include: non-cash compensation valuation that affects the total expenses reported in the current period and the valuation of shares and underlying mineral rights acquired with shares. The methods, estimates and judgments we use in applying these most critical accounting policies have a significant impact on the results we report in our financial statements.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


The Company is not exposed to market risk related to interest rates or foreign currencies.


CONTROLS AND PROCEDURES


ITEM 4. CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the “1934 Act”), as of September 30, 2009, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer), who concluded, that because of the material weakness in our internal control over financial reporting (“ICFR”) described below, our disclosure controls and procedures were not effective as of September 30, 2009.


Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’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 our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.


Internal Control Over Financial Reporting


Our management is also responsible for establishing ICFR as defined in Rules 13a-15(f) and 15(d)-15(f) under the 1934 Act. Our ICFR are intended to be designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Our ICFR are expected to include those policies and procedures that management believes are necessary that:


(i)

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;



13



(ii)

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and our directors; and


(iii)

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.


Management recognizes that there are inherent limitations in the effectiveness of any system of internal control, and accordingly, even effective internal control can provide only reasonable assurance with respect of financial statement preparation and may not prevent or detect 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.


As of September 30, 2009, management assessed the effectiveness of our ICFR based on the criteria for effective ICFR established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and SEC guidance on conducting such assessments by smaller reporting companies and non-accelerated filers.


Based on that assessment, management concluded that, during the period covered by this report, such internal controls and procedures were not effective as of September 30, 2009 and that material weaknesses in ICFR existed as more fully described below.


As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements and Related Independence Rule and Conforming Amendments,” established by the Public Company Accounting Oversight Board ("PCAOB"), a material weakness is a deficiency or combination of deficiencies that results more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses as of September 30, 2009:


(1)

Lack of an independent audit committee. Although we have an audit committee it is not comprised solely of independent directors. We may establish an audit committee comprised solely of independent directors when we have sufficient capital resources and working capital to attract qualified independent directors and to maintain such a committee.


(2)

Inadequate staffing and supervision within our bookkeeping operations. The relatively small number of people who are responsible for bookkeeping functions prevents us from segregating duties within our internal control system. The inadequate segregation of duties is a weakness because it could lead to the ultimate identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews which may result in a failure to detect errors in spreadsheets, calculations, or assumptions used to compile the financial statements and related disclosures as filed with the Securities and Exchange Commission.


(3)

Insufficient number of independent directors. At the present time, our Board of Directors does not consist of a majority of independent directors, a factor that is counter to corporate governance practices as set forth by the rules of various stock exchanges.


Our management determined that these deficiencies constituted material weaknesses. Due to a lack of financial and personnel resources, we are not able to, and do not intend to, immediately take any action to remediate these material weaknesses. We will not be able to do so until we acquire sufficient financing and staff to do so. We will implement further controls as circumstances, cash flow, and working capital permit. Notwithstanding the assessment that our ICFR was not effective and that there were material weaknesses as identified in this report, we believe that our consolidated financial statements contained in our Quarterly Report on form 10-Q for the quarter year ended September 30, 2009, fairly present our financial position, results of operations and cash flows for the years covered thereby in all material respects.


There were no changes in our internal control over financial reporting during the quarter ended September 30, 2009, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


The Company is not a party to any legal proceedings.


ITEM 1A. RISK FACTORS


There are no material changes in the risk factors set forth in the Company’s S-1 dated May 13, 2009.



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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


There were no sales of unregistered equity securities during the covered time period.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES


None.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS


None.


ITEM 5. OTHER INFORMATION


None.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K


The following documents are included or incorporated by reference as exhibits to this report:


Exhibit Number


Description

31.1

Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1

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

32.1

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


(b)

REPORTS ON FORM 8-K


None.



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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: Nov. 2, 2009


 

American Smooth Wave Ventures, Inc.

 

Registrant

 

 

 

 

 

By: /s/ Irwin J. Kirz       

 

 Irwin J. Kirz

 Chairman of the Board
Chief Executive Officer






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