Attached files
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
CityplaceCityWashington,
StateD.C. PostalCode20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2009
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number: 000-50530
SALAMON GROUP, INC.
(Exact name of registrant as specified in its charter)
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StateplaceNevada |
93-1324674 |
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification no.) |
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4080 Paradise Road #15-901, CityplaceCityLas Vegas, StateNevada, country-regionUSA |
89169 |
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(Address of principal executive offices) |
(Zip Code) |
(702)
241-0145
(Registrant's telephone number,
including area code)
(Former
name, former address and former fiscal year, if changed since last report)
Indicate by
check mark whether the registrant (1) 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 is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a
smaller reporting company. See the definitions of “large accelerated
filer”, “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of
the Exchange Act.
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Larger accelerated filer [ ] |
Accelerated filer [ ] |
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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 [ ] No [X]
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date.
As of November 12, 2009,
the Issuer had 21,017,127 shares of common stock outstanding with a par value
per share of $0.001.
TABLE OF CONTENTS
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PART I. |
FINANCIAL INFORMATION |
3 |
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ITEM 1. FINANCIAL STATEMENTS |
3 |
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION |
11 |
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
15 |
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ITEM 4T. CONTROLS AND PROCEDURES |
15 |
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PART II. |
OTHER INFORMATION |
15 |
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ITEM 1. LEGAL PROCEEDINGS |
15 |
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
15 |
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ITEM 3. DEFAULTS UPON SENIOR SECURITIES |
15 |
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ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS |
15 |
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ITEM 5. OTHER INFORMATION |
15 |
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ITEM 6. EXHIBITS |
16 |
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SIGNATURES |
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17 |
SALAMON GROUP, INC.
(A Development Stage Company)
BALANCE SHEETS
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September 30, |
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2009 |
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December |
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(unaudited) |
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31, 2008 |
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ASSETS |
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Current assets: |
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Cash |
$ |
61 |
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$ |
2 |
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Prepaid expense |
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688 |
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688 |
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Total assets |
$ |
749 |
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$ |
690 |
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LIABILITIES AND STOCKHOLDERS’ DEFICIT |
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Current liabilities: |
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Accounts payable |
$ |
53,914 |
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$ |
50,538 |
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Due to related parties |
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27,148 |
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6,427 |
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Related party note payable |
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9,750 |
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- |
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Total current liabilities |
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90,812 |
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56,965 |
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Contingencies |
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Stockholders’ deficit: |
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Preferred stock, no par value; 10,000,000 shares authorized, no shares issued and outstanding |
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- |
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- |
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Common stock, $0.001 par value; 500,000,000 shares authorized, 20,334,305 and 17,603,880 shares issued and outstanding, respectively |
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20,334 |
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17,604 |
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Additional paid-in capital |
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905,759 |
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779,272 |
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Deficit accumulated during the development stage |
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(1,016,156 |
) |
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(853,151 |
) |
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Total stockholders’ deficit |
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(90,063 |
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(56,275 |
) |
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$ |
749 |
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$ |
690 |
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See accompanying notes
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SALAMON GROUP, INC. (A Development Stage Company) STATEMENTS OF OPERATIONS (unaudited) |
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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For The Period From April 27, 2001 (Inception) To September 30, |
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2009 |
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2008 |
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2009 |
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2008 |
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2009 |
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EXPENSES: |
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General and administrative |
$ |
42,855 |
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$ |
34,593 |
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$ |
163,005 |
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$ |
106,857 |
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$ |
665,323 |
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Interest expense |
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- |
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- |
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- |
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- |
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35,833 |
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Research and development |
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- |
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- |
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- |
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- |
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315,000 |
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Net loss |
$ |
(42,855 |
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$ |
(34,593 |
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$ |
(163,005 |
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$ |
(106,857 |
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$ |
(1,016,156 |
) |
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Loss per share - basic and diluted |
$ |
- |
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$ |
- |
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$ |
(0.01 |
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$ |
(0.01 |
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Weighted average shares outstanding - basic and diluted |
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19,869,714 |
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16,663,463 |
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18,711,414 |
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16,380,582 |
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See accompanying notes |
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SALAMON GROUP, INC. |
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(A Development Stage Company) |
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STATEMENTS OF CASH FLOWS |
(unaudited)
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For The Nine Months |
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For The Nine Months |
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For the Period From April 27, 2001 |
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Ended |
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Ended |
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(Inception) to |
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September 30, |
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September 30, |
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September 30, |
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2009 |
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2008 |
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2009 |
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Cash flows from operating activities: |
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Net loss |
$ |
(163,005 |
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$ |
(106,857 |
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$ |
(1,016,156 |
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Adjustments to reconcile net loss to net |
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cash used in operating activities: |
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Amortization of intangible asset |
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- |
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- |
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55,000 |
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Estimated fair value of common stock issued for patents |
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- |
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- |
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315,000 |
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Beneficial conversion of amounts due to related party |
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- |
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- |
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35,833 |
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Depreciation of property and equipment |
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- |
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- |
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4,515 |
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Estimated fair value of common stock issued |
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for services |
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82,000 |
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7,000 |
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145,791 |
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Changes in operating assets and liabilities: |
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Prepaid expense |
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- |
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609 |
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(688) |
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Accounts payable |
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3,376 |
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33,795 |
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63,973 |
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Net cash used in operating activities |
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(77,629 |
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(65,453 |
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(396,732 |
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Cash flows from investing activities: |
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Purchase of property and equipment |
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- |
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- |
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(4,515 |
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Purchase of license |
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- |
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- |
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(50,000 |
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Net cash used in investing activities |
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- |
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- |
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(54,515 |
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Cash flows from financing activities: |
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Advances from related parties |
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53,988 |
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65,399 |
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324,608 |
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Proceeds from related party note payable |
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23,700 |
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- |
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23,700 |
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Issuance of common stock for cash |
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- |
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- |
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103,000 |
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Net cash provided by financing activities |
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77,688 |
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65,399 |
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451,308 |
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Net change in cash |
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59 |
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(54) |
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61 |
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Cash, beginning of period |
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2 |
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74 |
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- |
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Cash, end of period |
$ |
61 |
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$ |
20 |
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$ |
61 |
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Non cash: |
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Estimated fair value of common stock issued upon conversion of amounts due to related parties |
$ |
33,267 |
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$ |
79,038 |
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$ |
297,460 |
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Estimated fair value of common stock issued upon conversion of related party note payable |
$ |
13,950 |
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$ |
- |
$ | - |
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Estimated fair value of common stock issued for license |
$ |
- |
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$ |
- |
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$ |
5,000 |
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Estimated fair value of common stock issued in conversion of accounts payable |
$ |
- |
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$ |
- |
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$ |
10,059 |
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See accompanying notes
SALAMON GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
Salamon Group, Inc. (the "Company") was incorporated in the state of StateplaceNevada on April 27, 2001 (“Inception”).
The Company is a development stage company whose principal business plan is to seek earnings by exploiting technology in the
field of ‘alternative energy sources’, which technology includes four patents pending related to electrical power generation.
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These financial statements have been prepared in accordance with accounting principles generally accepted in the placecountry-regionUnited States of America (“GAAP”) applicable to a going concern. At September 30, 2009, the Company had no revenues to date, had accumulated losses of $1,016,156 and a working capital deficit of $90,063 and expects to incur further losses in the development of its business, all of which cast substantial doubt about the Company’s ability to continue as a going concern. Management plans to continue to provide for the Company's capital needs during the year ending December 31, 2009 by issuing debt and equity securities and by the continued support of its related parties (see Note 3). The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence. There is no assurance that funding will be available to continue the Company’s business operations. On July 5, 2001, the Company entered into a licensing agreement with Space Globe Technologies Ltd. (" Space Globe "), a Canadian corporation. The agreement allows the Company to use certain technology with respect to a power cell technology used for internal and external electrical applications. The sole shareholder and sole director of Space Globe is John Salamon who is the President and a Director of the Company. |
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In January 2005, Space Globe and the Company in mutual agreement replaced the license agreement with an agreement that was amended December 31, 2007, which transferred 100% ownership of, and rights to, Space Globe’s technology related to electrical power generation to the Company for no further consideration. John Salamon, the Company’s Chief Executive Officer and majority shareholder, also assigned to Salamon Group a 99% interest in the rights to the patent pending. |
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In June 2007,
Space Globe transferred to Salamon Group 100% ownership of rights to Space
Globe’s technology related to wireless electrical power generation,
including a 99% interest in three patent applications, for a total
4,500,000 shares of the Company’s common stock (see Note 4). |
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2. |
Summary of Significant Accounting Policies |
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(a) |
Development stage enterprise |
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The Company is a development stage company under the provisions of accounting standards. The Company is devoting substantially all of its present efforts to establishing a new business, and its planned principal operations have not yet commenced. All losses accumulated since Inception have been considered as part of the Company's development stage activities. |
SALAMON GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(b) Basic and diluted net loss per share
The Company presents both basic and diluted loss per share (“ EPS ”) on the face of the statement of operations. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, convertible preferred stock, and convertible debt, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all potentially dilutive common shares if their effect is antidilutive. At September 30, 2009 and 2008, there were no potentially dilutive instruments outstanding.
(c) Revenue recognition
Revenues from the sale of products will be recorded when the product is shipped, title and risk of loss have transferred to the purchaser, payment terms are fixed or determinable and payment is reasonably assured. Revenues from service contracts will be recognized when performance of the service is complete or over the term of the contract.
(d) Foreign currency transactions/balances
Transactions in currencies other than the U.S. dollar are translated at the rate in effect on the transaction date. Any balance sheet items denominated in foreign currencies are translated into U.S. dollars using the rate in effect on the balance sheet date. There have been no significant transactions in currencies other than the U.S. dollar since Inception.
(e) Income Taxes
The Company determines its income taxes under the asset and liability method, which require the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
(f) Use of Estimates
The preparation of financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the amounts reported in these financial statements and the accompanying notes. Actual results could differ from those estimates.
(g) Financial Instruments
The fair values of cash, accounts payable, and amounts due to related parties approximate their carrying values due to the immediate or short-term maturity of these financial instruments.
(h) Issuance of Stock for Non-cash Consideration
All issuances of the Company’s common stock for non-cash consideration have been assigned a dollar amount equaling either the market value of the shares issued or the value of consideration received whichever is more readily determinable. The majority of the non-cash consideration received pertains to services rendered by consultants and others and has been valued at the market value of the shares issued.
SALAMON GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.
(i) New Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board (“FASB”) issued a pronouncement which establishes the FASB Accounting Standards Codification TM as the source of authoritative accounting guidance under GAAP. The rules and interpretive releases of the SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. This pronouncement is effective for periods ending after September 15, 2009. The Company has concluded that the application of this pronouncement did not have a material impact on its consolidated financial position and results of operations as of and for the period ended September 30, 2009.
In December 2007, the Company adopted the accounting standard related to business combinations principles and requirements on how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, liabilities assumed, and any non controlling interest in the acquiree as well as the recognition and measurement of goodwill acquired in a business combination. It also requires certain disclosures to enable users of the financial statements to evaluate the nature and financial effects of the business combination. Acquisition costs associated with the business combination will generally be expensed as incurred. The adoption of this Standard did not have a significant impact on the Company’s financial statements.
3. Related Party Transactions
(a) Amounts owing to Space Globe are unsecured, non interest bearing and are due on demand. The sole shareholder and sole director of Space Globe is John Salamon who is the President and a Director of the Company. At September 30, 2009 and December 31, 2008, a total of $27,148 and $6,427, respectively, was due to Space Globe.
(b)During the nine months ended September 30, 2009, the Company received proceeds of $23,700 for issuing a note payable to a former board director. On July 30, 2009, the Company issued 348,750 shares of common stock at a price of $0.04 per share (estimated fair value) to settle $13,950 of the note payable. The balance of the note (which is non-interest bearing and due on demand) as of September 30, 2009 was $9,750.
(c) During the nine months ended September 30, 2009, the Company shared office space and travel arrangements with Space Globe. During each of the nine months ended September 30, 2009 and 2008, the Company incurred an aggregate of approximately $9,000 of allocated rent and travel expense.
(d) On July 30, 2009, the Company issued 150,000 shares of common stock to Space Globe at a price of $0.04 per share (the estimated fair value) to settle indebtedness of $6,000 owed to Space Globe for advances.
(e) On August 30, 2009, the Company issued 531,675 share of common stock to Space Glove at a price of $0.04 per share (the estimated fair value) to settle indebtedness of $21,267 owed to Space Globe for advances.
(f) On January 15, 2009, the Company issued 200,000 shares of common stock to Space Globe at a price of $0.03 per share (the estimated fair value) to settle indebtedness of $6,000 owed to Space Globe for loan advances.
(g) On December 31, 2008, a former director of the Company surrendered 1,000,000 shares of his common stock for no consideration. Accordingly, the Company has not reflected such shares as issued or outstanding at December 31, 2008 as such shares have been cancelled by the Company.
(h) On November 15, 2008, the Company issued 869,050 shares of common stock to Space Globe at a price of $0.02 per share (the estimated fair value) to settle indebtedness of $17,821 owed to Space Globe for loan advances.
(i) On August 19, 2008, the Company issued 476,129 shares of common stock to Space Globe at a price of $0.07 per share (the estimated fair value) to settle indebtedness of $33,329 owed to Space Globe for loan advances.
(j) On August 19, 2008, the Company issued 203,543 shares of common stock to a director at a price of $0.07 per share (the estimated fair value) to settle indebtedness of $14,249 owed for working capital advances.
SALAMON GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(k) On April 16, 2008, the Company issued 331,158 shares of common stock to Space Globe at a price of $0.095 per share (the estimated fair value) to settle indebtedness of $31,460 owed to Space Globe for loan advances.
(l) During the year ended December 31, 2007, Mr. Salamon, through his company, Space Globe, contributed patent applications to the Company in exchange for 4,500,000 shares of common stock (see Notes 1 and 4).
(m) During the year ended December 31, 2007, Space Globe converted advances made to the Company into 2,310,000 shares of common stock (see Note 4).
(n) On July 5, 2001, the Company purchased a license related to certain power cell technology for cash of $50,000 and five million common shares of the Company valued at $5,000 from Space Globe. In addition, the Company agreed to pay Space Globe a royalty equal to 3% of the gross sales derived from the technology. To date, no sales have been made and accordingly no royalties have been earned in connection with this agreement.
4. Stockholders’ Deficit
(a) As of September 30, 2009, there are no preferred shares issued and outstanding.
(b) As of September 30, 2009, the Company has not granted any stock options or warrants.
(c) On August 30, 2009, the Company issued 531,675 shares of common stock to Space Globe at a price of $0.04 per share (the estimated fair value) to settle indebtedness of $21,267 due under a note payable (see Note 3).
(d) On July 30, 2009, the Company issued 348,750 shares of common stock to a related party at a price of $0.04 per share (the estimated fair value) to settle indebtedness of $13,950 due under a note payable (see Note 3).
(e) On July 30, 2009, the Company issued 150,000 shares of common stock to Space Globe at a price of $0.04 per share (the estimated fair value) to settle indebtedness of $6,000 (see Note 3).
(f) In April 2009, the Company issued 700,000 forfeitable shares of common stock to a consulting firm. In accordance with the applicable consulting agreement, the shares are to be earned ratably over the term of the agreement from April 15, 2009 through July 15, 2009. During the period ended September 30, 2009, the Company recorded $49,000 of expense and recorded 700,000 common shares as issued and outstanding.
(g) On January 15, 2009, the Company issued 200,000 shares of common stock to Space Globe at a price of $0.03 per share (the estimated fair value) to settle indebtedness of $6,000 (see Note 3).
(h) On October 27, 2008, the Company issued 201,180 shares of the Company’s common stock as payment for services rendered. The Company had accrued $10,059 for such services. However, based on the estimated fair value of the Company’s common stock on the date of conversion, the Company has recorded an additional $2,012 of expense upon issuance.
(i) In September 2008, the Company issued 1,200,000 forfeitable shares of common stock to a consultant. In accordance with the applicable consulting agreement, the shares are to be earned ratably over the one-year term of the agreement through August, 2009. During the nine months ended September 30, 2009, the Company recorded $33,000 of expense and recorded 800,000 common shares as issued and outstanding. During the year ended December 31, 2008, the Company recorded $15,000 of expense and recorded 400,000 common shares as issued and outstanding.
(j) In November 2007, the Company issued 518,340 shares of common stock to Space Globe for the conversion of advances in the amount of $77,751 or $0.15 per share, the estimated fair value (see Note 3).
(k) Mr. Salamon and his company Space Globe, contributed three patent applications to the Company in June 2007 (see Note 4). In exchange for the patents, the Company issued 4,500,000 shares of common stock to Space Globe. The shares were valued at $0.07 per share, the estimated fair value of the stock on the measurement date. The total value of the shares of $315,000 was recorded as research and development expense in the accompanying statements of operations as there was no asset value on the books of Space Globe at the time of the contribution.
SALAMON GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(l) In June 2007, the Company issued 1,791,660 shares of common stock to Space Globe for the conversion of advances in the amount of $89,583, or $0.05 per share (see Note 3). Since the estimated fair value of the stock at the time of conversion was $0.07 per share, the Company recorded interest expense of $35,833 related to the beneficial conversion equal to the difference between the value of the shares issued and the advances converted in the accompanying statements of operations.
(m) In June, 2007, the Company, pursuant to an agreement, issued shares to a third party for services provided. According to the terms of the agreement, the Company issued 350,000 shares of its common stock, which were valued at their estimated fair value of $0.07 per share (based on the fair value of the services provided) for total of $25,000. As of December 31, 2007, all services related to the agreement have been provided and the value of the shares was recorded in general and administrative expense in the accompanying statements of operations.
(n) During the year ended December 31, 2003, 183,640 shares were issued for cash of $22,460 at an average price of $0.12 per share and 245,360 shares were issued for services and other expenses with a fair value of $10,676 at an average price of $0.04 per share
(o) During the year ended December 31, 2002, 481,046 shares were issued for cash of $44,008 at an average price of $0.09 per share and 500,000 shares were issued for services with a fair value of $10,400 at an average price of $0.02 per share.
(p) During the period ended December 31, 2001, 1,850,324 shares were issued for cash of $36,532 at an average price of $0.02 per share and 702,450 shares were issued for services with a fair value of $703 at an average price of $0.001 per share.
(q) On July 5, 2001, 5,000,000 shares with a stated par value of $0.001 per share were issued as part of the consideration to acquire a license (see Note 5).
5. Contingencies
(a) Litigation
From time to time, the Company may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company. The Company is currently not aware of any such legal proceedings or claims that the Company believes will have, individually or in the aggregate, a material adverse affect on its business, financial condition or operating results.
(b) Indemnities and Guarantees
During the normal course of business, the Company has made certain indemnities and guarantees under which it may be required to make payments in relation to certain transactions. The Company indemnifies its directors, officers, employees and agents to the maximum extent permitted under the laws of the State of placeStateNevada. These indemnities include certain agreements with the Company's officers under which the Company may be required to indemnify such person for liabilities arising out of their employment relationship. The duration of these indemnities and guarantees varies and, in certain cases, is indefinite. The majority of these indemnities and guarantees do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated to make significant payments for these obligations and no liabilities have been recorded for these indemnities and guarantees in the accompanying balance sheets.
(c) On June 20, 2008, the Company entered into a license agreement with 482229 B.C. Ltd. (“482229”), a private company based in Kelowna, British Columbia, whereby the Company granted 482229 the exclusive rights to manufacture, market, distribute and sell in Canada all electrical power generation products derived from its 2001 patent pending. The license is for an initial term of seven years. 482229 has agreed to pay the Company a one time licensing fee of CDN$15,000 on or before June 20, 2009 and additional fees equal to 3% of 482229’s gross revenues derived from the sale of products, payable quarterly. In order to maintain the license, 482229 must meet or exceed the following minimum sale requirements. On June 16, 2009, the Company entered into an addendum to the license agreement with 482229 to extend the due date of the one time licensing fee of CDN $15,000 to on or before December 31, 2009. In addition, the sales requirements were modified and are now the following:
SALAMON GROUP, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
During Year Ended Minimum Total Sales of Products
December 31, 2008 CDN$0.00
December 31, 2009 CDN$0.00
December 31, 2010 CDN$20,000
December 31, 2011 CDN$30,000
December 31, 2012 CDN$40,000
December 31, 2013 CDN$50,000
December 31, 2014 CDN$60,000
December 31, 2015 CDN$70,000
6. Subsequent Events
In October 2009, the Company issued 682,822 shares of common stock to Space Globe at a price of $0.03 per share (the estimated fair value) to settle indebtedness of $20,485.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION.
The following discussion of the financial condition, changes in financial condition and results of operations of Salamon Group, Inc. (hereinafter referred to as the “ Company ,” “ Salamon Group ,” “ we ,” “ our ” or “ us ”) for the three and nine months ended September 30, 2009 and should be read in conjunction with Salamon Group’s unaudited financial statements and related notes for the three and nine months ended September 30, 2009.
Cautionary Statements Regarding 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 (the “ Exchange Act ”), as amended. All statements, other than statements of historical facts, included in this Form 10-Q which address activities, events or developments which we expect or anticipate will or may occur in the future, including such things as future capital expenditures (including the amount and nature thereof), business strategy, expansion and growth of our business and operations, and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made by Salamon Group in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate in the circumstances. However, whether actual results or developments will conform with our expectations and predictions are subject to a number of risks and uncertainties, general economic market and business conditions; the business opportunities (or lack thereof) that may be presented to and pursued by us; changes in laws or regulation; and other factors, most of which are beyond our control. 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 us will be realized or, even if substantially realized, that they will have the expected consequence to or effects on us or our business or operations. We assume no obligations to update any such forward-looking statements.
Overview
We were organized under the laws of the State of placeStateNevada on April 27, 2001. We are a developmental stage company organized by John E. Salamon. Our aim is to develop, license and/or acquire certain electrical generator technologies, which we believe to be proprietary. Our offices are presently located at 4080 Paradise Road #15-901, placeCityLas Vegas, StateNevada, country-regionUSA 89169, and our telephone number is (702) 241-0145.
Since our inception, we have been involved in organizational and fund raising activities and the licensing, subsequent acquisition and further development of a certain electrical generator technology from Space Globe Technologies Ltd., a private StateBritish Columbia, placecountry-regionCanada corporation (“ Space Globe ”), founded and organized also by John Salamon. Space Globe was founded for the purpose of developing technologies and concepts in the field of “Alternative Energy Sources.” Alternative Energy Sources are those which are not supplied by the burning of fossil fuels or the splitting of atoms. Some of the alternative energy sources include solar energy, wind power, geothermal, tides and hydro power. Space Globe was incorporated in the PlaceTypeProvince of PlaceNameBritish Columbia, placecountry-regionCanada in 1998 by John Salamon. It was initially established as a management/consulting company in which to develop ideas and concepts for power generation. Space Globe’s primary assets consist of office equipment and investments in us. Effective June 29, 2007, in connection with our acquisition of ownership and rights to certain patents and wireless EPG technology from Space Globe, we no longer considered ourself a “shell” company and our current operations are focused on developing and licensing such technologies. From 1999 to 2001 Space Globe and Mr. Salamon developed the concept and design of an Electrical Power Generator (“ EPG ”) for home and office use and for emergency power backup situations. Mr. Salamon filed a patent application in placecountry-regionCanada on September 4, 2001 for protection of the design of the EPG and on March 10, 2008, as requested by the Canadian Patent Office, we filed additional information regarding this patent pending. Mr. Salamon filed a second patent application in placecountry-regionCanada on May 12, 2006 and two more patent applications later in 2006 for the protection of designs related to wireless EPGs.
We were formed by Mr. Salamon for the purpose of pursuing his business plan of developing technologies and concepts in the field of “Alternative Energy Sources” in a newly established placeStateNevada corporation. All transactions described below between us and Space Globe were incidental to the transfer of assets to us in connection with the reorganization of these two entities under Mr. Salamon’s common control.
On July 5, 2001, we entered into a Technology License Agreement with Space Globe whereby we agreed to pay $50,000 cash and issued 5,000,000 shares of common stock to Space Globe as license fees for the technology related to the EPG. The cost of the license was determined to be at an estimated cost of research and development time and materials expended by Space Globe for the development of the EPG. The 5,000,000 shares issued in connection with such Technology License Agreement were issued pursuant to Section 4(2) of the Act at an estimated fair value of $5,000 and the cash was subsequently paid from proceeds of our private placements.
On January 10, 2005, we replaced the license agreement with Space Globe with an agreement under which Space Globe transferred 100% ownership of and rights to the EPG technology, protected by the 2001 patent application, to us for no additional compensation.
John Salamon, through Space Globe, also assigned all rights to the patent pending to us. On September 30, 2007, we amended the agreement with Space Globe such that John Salamon retains a 1% interest in the patent application.
In addition to the foregoing issuances, from April 2001 through December 31, 2008, we received services gross proceeds of $507,317 (including $103,000 in cash, conversion of $270,193 of amounts due to a related party, and services valued at $134,124) from the issuance of a total of 9,487,213 shares of common stock in offerings conducted pursuant to Section 4(2) of the Act and Regulation S. These offerings were made in the Provinces of British Columbia and StateAlberta, placecountry-regionCanada.
On June 29, 2007, we entered into an assignment agreement with Space Globe whereby Space Globe transferred to us its ownership of and rights to the wireless EPG technology, including Space Globe’s 99% interest in the three 2006 patent applications, in consideration for the issuance of 4,500,000 shares of common stock to Space Globe (or 1,500,000 shares for each of the three patents applications) at a value of $0.07 per share, the estimated fair value of the shares on the date of the transaction. John Salamon, who filed the three patent applications, retains a 1% interest in the patents pending. The value of the technology was determined to be at an estimated cost of research and development time and materials expended by Space Globe for the development of the wireless EPG. The 4,500,000 shares issued in connection with the assignment agreement were issued pursuant to Section 4(2) of the Act.
On June 20, 2008, we entered into a license agreement with 482229 B.C. Ltd. (“482229”), a private company based in CityKelowna, StateBritish Columbia, whereby we granted 482229 the exclusive rights to manufacture, market, distribute and sell in placecountry-regionCanada all electrical power generation products derived from our 2001 patent pending. The license is for an initial term of seven years. 482229 has agreed to pay us a one time licensing fee of CDN $15,000 on or before June 20, 2009 and additional fees equal to 3% of 482229’s gross revenues derived from the sale of products, payable quarterly. In order to maintain the license, 482229 must meet or exceed certain sale requirements. On June 16, 2009, we entered into an addendum to the license agreement with 482229 to extend the due date of the one time licensing fee of CDN $15,000 to on or before December 31, 2009. In addition, the sales requirements were modified and are now the following:
|
|
|
|
During Year Ended |
Minimum Total Sales of Products |
|
December 31, 2008 |
CDN$0.00 |
|
December 31, 2009 |
CDN$0.00 |
|
December 31, 2010 |
CDN$20,000 |
|
December 31, 2011 |
CDN$30,000 |
|
December 31, 2012 |
CDN$40,000 |
|
December 31, 2013 |
CDN$50,000 |
|
December 31, 2014 |
CDN$60,000 |
|
December 31, 2015 |
CDN$70,000 |
In August of 2008, our Board of Directors resolved to expand our current business plan into other areas which would allow us to generate revenues. One particular area that our Board resolved would provide added value to our company would be real estate, more specifically real estate in the form of an operating casino in CityCityLas Vegas, CityNevada. Currently, our President is actively identifying potential casinos that are for sale in the CityLas Vegas area. If we are able to locate and purchase a suitable casino, we intend to move our corporate headquarters into the casino. The purchase of the casino will allow us to start generating revenues so that we can further our business plan to develop, license and/or acquire technologies and concepts in the field of “Alternative Energy Sources.” Once we locate a suitable casino, we intend to enter into a letter of intent to purchase the casino. We intend to finance the purchase of a suitable casino through a combination of equity and/or debt financing, and by undertaking a non-brokered private placement under Rule 506 of Regulation D, to raise the funds required to purchase the casino. There is no assurance that we will succeed in identifying and purchasing a casino or that funding will be available to us for this purpose. There is also no assurance that any casino we might purchase will generate revenues sufficient for us to carry out our business plan related to alternative energy sources.
As of the date hereof, we have no other employees or customers.
Plan of Operation
Since our inception, we have been involved in organizational activities, have completed offerings of shares of common stock, have concluded the licensing and subsequent acquisition of an EPG from Space Globe, and have completed a working model of the power generator. For the period from inception (April 27, 2001) through September 30, 2009, we had no revenue from operations and our deficit accumulated during the development stage amounted to $1,016,156. We propose to compete in the alternative energy source technology market.
As reported in the Report of Independent Registered Public Accounting Firm on our December 31, 2008 financial statements, we have suffered recurring losses from operations, we have a working capital deficit and a deficit accumulated during the development stage. These items raise substantial doubt about our ability to continue as a going concern.
We plan to generate revenues through the sale of manufacturing and marketing licenses on a world-wide basis. We also plan on generating revenues by possibly purchasing an operating casino in CityCityLas Vegas, CityNevada. Our President is currently identifying potential casinos that are available for sale in CityLas Vegas. If he is successful in locating a casino, we intend to finance the purchase of the casino through a combination of debt and equity financing. We would also move our corporate headquarters into the casino.
Future research and development will be focused on smaller, portable EPGs adding a solar power component as well as an electric wireless product. Mr. Salamon has a conceptual design and prototypes and will proceed with plans when funding allows.
We are not planning to purchase a plant or equipment at this time but rather to enter into licensing agreements to manufacture and market our products.
If we are unable to generate sufficient revenue from operations to implement our plans, we intend to explore all available alternatives for debt and/or equity financing, including but not limited to private and public securities offerings. Accordingly, we expect that it will be necessary for us to raise additional funds in the event that we are unable to generate any revenue from operations and if only a minimal level of revenue is generated in accordance with our expectations.
Mr. Salamon, at least initially, will be responsible for developing our business. However, at such time, if ever, as sufficient operating capital becomes available, he expects to employ additional staffing. In addition, we expect to continuously engage in market research in order to monitor new market trends and other critical information deemed relevant to our business.
Results of Operations for the three and nine months ended September 30, 2009, compared to the same periods in 2008
The following discussion should be read in conjunction with the financial statements included in this report and is qualified in its entirety by the foregoing.
Liquidity and Capital Resources
As of September 30, 2009 we had cash of $61, total current assets of $749, total current liabilities of $90,812 and a working capital deficit of $90,063. From our inception on April 27, 2001 to September 30, 2009 we accumulated a deficit during the development stage of $1,016,156. We are dependent on funds raised through equity or debt financing and investing activities to fund our operations. We anticipate that we will incur substantial losses over the next year and our ability to generate any revenues in the next 12 months continues to be uncertain.
We used net cash of $77,269 in operating activities during the nine months ended September 30, 2009, compared to $65,453 during the same period in 2008 and $396,732 from our inception on April 27, 2001 to September 30, 2009. The increase in operating expenses for the period ended September 30, 2009 resulted primarily from an increase in professional fees.
We had no investing activities for the nine months ended September 30, 2009 and 2008 and $54,515 from our inception on April 27, 2001 to September 30, 2009. The cash used in investing activities since our inception was for website development costs.
We received net cash of $77,688 from financing activities for the nine months ended September 30, 2009, compared to $65,399 during the same period in 2008 and $451,308 from our inception on April 27, 2001 to September 30, 2009. The cash received from financing activities during the period ended September 30, 2009 resulted from the proceeds of advances and note payable from related parties. During the period ended September 30, 2009 our cash position increased by $59.
Results of Operations
Revenues
From our inception on April 27, 2001 to September 30, 2009 we have not yet generated any revenues. We do not expect to earn significant revenues in the near future.
Expenses
We incurred total operating expenses of $42,855 and $163,005 for the three and nine months ended September 30, 2009, respectively, compared to $34,593 and $106,857 for the same periods in 2008, respectively, and $1,016,156 from our inception on April 27, 2001 to September 30, 2009. The increase in operating expenses for the periods ended September 30, 2009 resulted from an increase in our general and administrative costs, primarily due to an increase in professional fees and equity-based compensation.
Net Loss
From our inception on April 27, 2001 to September 30, 2009 we have deficit accumulated during the development stage of $1,016,156. For the three and nine months ended September 30, 2009 we incurred net losses of $42,855 and $163,005, respectively, compared to net losses of $34,593 and $106,857 for the same periods in 2008, respectively.
Research and Development
482229 is now responsible for all further development, testing and commercialization of all EPG products derived from our 2001 patent pending. Until we can secure other qualified licensees regarding the EPG products derived from our other patents pending, all further development, testing and commercialization of those EPG products will be completed by us, subject to obtaining the necessary financing. Upon securing such other qualified licensees, any further research, development and commercialization of those EPG products and all related costs will be the responsibility of the licensee.
We, under the direction of Mr. Salamon, are continually researching and studying “Alternative Energy Sources” and plan to develop other power generation devices as capital funding becomes available. Alternative Energy Sources are those which are not supplied by the burning of fossil fuels or the splitting of atoms. Some of the alternative energy sources include solar energy, wind power, geothermal, tides and hydro power.
We have developed a smaller, portable EPG utilizing similar designs and adding a solar power component. We have also developed prototypes of EPG products that generate power wirelessly.
For the nine months ended September 30, 2009, we have not incurred any research and development expenses.
Off-Balance Sheet Arrangements
As of September 30, 2009 we had no off balance sheet transactions that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Material Commitments for Capital Expenditures
We had no contingencies or long-term commitments at September 30, 2009.
Critical Accounting Policies
There were no changes to the critical accounting policies as discussed in our 2008 Form 10-K filed on April 15, 2009.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES.
Not applicable.
ITEM 4T. CONTROLS AND PROCEDURES
Disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported, within the time period 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 the reports filed under the Exchange Act is accumulated and communicated to management, including the Chief Executive Officer covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2009 (the “Evaluation Date”). Based upon the evaluation of our disclosure controls and procedures as of the Evaluation Date, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective because of the identification of material weaknesses in our internal control over financial reporting which are identified in our Management’s Report on Internal Control Over Financial Reporting included with our Annual Report on Form 10-K for the fiscal year ended December 31, 2008, which we view as an integral part of our disclosure controls and procedures.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting during the most recently completed quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Limitations on the Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our Disclosure Controls and internal controls will prevent all errors and all 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. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.
The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We know of no legal proceedings to which we are a party or to which any of our property is the subject which are pending, threatened or contemplated or any unsatisfied judgments against us.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of our shareholders, through the solicitation of proxies or otherwise, during the period ended September 30, 2009.
ITEM 5. OTHER INFORMATION
None.
The following exhibits are filed with the Form 10-Q:
|
32.1 |
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (8) |
(1)
Incorporated by reference to the exhibits of the Registration Statement on Form
10-SB filed with the Securities and Exchange Commission on December 12,
2003.
(2) Incorporated by reference to the exhibits of the Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission on January 15, 2005.
(3) Incorporated by reference to the exhibits of the Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission on August 20, 2007.
(4) Incorporated by reference to the exhibits of the Quarterly Report on Form 10-QSB filed with the Securities and Exchange Commission on November 6, 2007.
(5) Incorporated by reference to the exhibits of the Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on April 14, 2008.
(6) Incorporated by reference to the exhibits of the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 14, 2008.
(7) Incorporated by reference to the exhibits of the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 14, 2008
(8)
Filed herewith.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized officer.
Date: November 16, 2009
SALAMON GROUP, INC.
By:
/s/ John E.
Salamon
John
E.
Salamon
President
(Principal Executive Officer
and
Principal Financial Officer)