Attached files
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EX-31.2 - IMPERIALI INC | v167705_ex31-2.htm |
EX-31.1 - IMPERIALI INC | v167705_ex31-1.htm |
EX-32.1 - IMPERIALI INC | v167705_ex32-1.htm |
EX-32.2 - IMPERIALI INC | v167705_ex32-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q/A
Amendment
1
¨
|
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
|
For the
quarterly period ended February 28, 2009
¨
|
TRANSITION
REPORT UNDER SECTION 13 OR 15 (D) OF THE EXCHANGE
ACT
|
Imperiali,
Inc.
(Name of
Small Business Issuer as Specified in Its Charter)
Florida
|
65-0574887
|
|
(State
of Other Jurisdiction
of
Incorporation or Organization)
|
(I.R.S.
Employer Identification
No.)
|
222
Lakeview Avenue, Suite 160
West
Palm Beach, Florida 33401
(Address
of Principal Executive Offices)
(561)
805-9494
(Issuer’s
Telephone Number, including Area Code)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes x
No ¨
Indicate
by check mark whether the registrant 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.
Large accelerated filer
|
o
|
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 ¨ No x
Indicate
the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date:
Class –
Common Stock, 39,643,319 shares outstanding as of May 4, 2009.
IMPERIALI
INC.
QUARTERLY
REPORT ON FORM 10-Q/A
For the
quarterly period February 28, 2009
EXPLANATORY
NOTE
This
Amendment No. 1 on Form-10-Q/A to the Quarterly Report on Form-10-Q of
Imperiali, Inc. (the Company) for the quarterly period ended February 28, 2009
is being filed to correct the date referenced in Item 4 CONTROLS AND PROCEDURES
under the paragraph ‘Management’s Report on Internal Control over Financial
Reporting’. The date has been changed from August 31, 2008 to
February 28, 2009.
2
Imperiali,
Inc.
Form
10-Q/A
For
the Quarter Ended February 28, 2009
Table
of Contents
Page
|
||||
PART
I
|
FINANCIAL
INFORMATION
|
|||
Item 1.
|
Financial
Statements
|
|||
Balance
Sheets at February 28, 2009 (unaudited) and August 31,
2008
|
4
|
|||
Statements
of Operations for the three and six month periods ended February 28, 2009
and February 29, 2008(unaudited)
|
5
|
|||
Statements
of Cash Flows for the six-month periods ended February 28, 2009 and
February 29, 2008 (unaudited)
|
7
|
|||
Notes
to Financial Statements
|
8
|
|||
Item 2.
|
Management’s Discussion and Analysis of Financial
Condition and Results of Operations
|
11
|
||
Item 3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
17
|
||
Item 4.
|
Controls
and Procedures
|
17
|
||
PART
II
|
OTHER
INFORMATION
|
|||
Item 1
|
Legal Proceedings
|
18
|
||
Item 1A
|
Risk Factors
|
18
|
||
Item 2
|
Unregistered Sales of Equity Securities and Use of
Proceeds
|
18
|
||
Item 3
|
Defaults Upon Senior
Securities
|
18
|
||
Item 4
|
Submission of Matters to a Vote of Security
Holders
|
18
|
||
Item 5
|
Other Information
|
18
|
||
Item 6.
|
Exhibits
|
18
|
||
Exh.
31.1 Section 302 Certification of Chief Executive Officer
|
||||
Exh.
31.2 Section 302 Certification of Chief Financial Officer
|
||||
Exh.
32.1 Section 906 Certification of Chief Executive Officer
|
||||
Exh.
32.2 Section 906 Certification of Chief Financial Officer
|
||||
Signatures
|
23
|
3
PART
I.
ITEM
1 - FINANCIAL STATEMENTS
Imperiali,
Inc.
(a
Development Stage Company)
Balance
Sheets
As
of February 28, 2009 and August 31, 2008
(Unaudited)
February 28, 2009
|
August 31, 2008
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
|
$ | 8,827 | $ | 3,059 | ||||
Total
current assets
|
8,827 | 3,059 | ||||||
Fixed
assets (net of accumulated depreciation of $751 and $160 at February 28,
2009 and August 31, 2008 respectively)
|
6,004 | 840 | ||||||
Total
assets
|
$ | 14,831 | $ | 3,899 | ||||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable – related party
|
$ | 39,469 | $ | 43,000 | ||||
Accounts
payable
|
58,235 | 1,651 | ||||||
Note
payable and accrued interest – related party
|
288,975 | 269,262 | ||||||
Total
current liabilities
|
386,679 | 313,913 | ||||||
Stockholders'
deficit:
|
||||||||
Common
stock; $.001 par value; authorized - 500,000,000 shares; 39,643,319 and
36,961,319 shares issued and outstanding at February 28, 2009 and August
31, 2008, respectively
|
39,643 | 36,961 | ||||||
Additional
paid in capital
|
24,642,857 | 16,469,539 | ||||||
Accumulated
deficit prior to entering the development stage
|
(15,983,833 | ) | (15,983,833 | ) | ||||
Accumulated
deficit since entering the development stage
|
(9,070,515 | ) | (832,681 | ) | ||||
Total
stockholders' deficit
|
(371,848 | ) | (310,014 | ) | ||||
Total
liabilities and stockholders' deficit
|
$ | 14,831 | $ | 3,899 |
The
accompanying notes are an integral part of these financial
statements
4
IMPERIALI,
INC.
(a
Development Stage Company)
Statements
of Operations
For
the three and six months ended February 28, 2009 and February 29,
2008
and
the period from September 1, 2007 to February 28, 2009
(unaudited)
For the Three months ended
|
For the Six months ended
|
|||||||||||||||||||
February 28,
2009 |
February 29,
2008 |
February 28,
2009 |
February 29,
2008 |
Development
Stage (Sept. 1, 2007 to Feb. 28, 2009) |
||||||||||||||||
(Restated)
|
(Restated)
|
|||||||||||||||||||
Dividend
Income
|
$ | — | $ | 36 | $ | — | $ | 725 | $ | 735 | ||||||||||
Total
Income
|
— | 36 | — | 725 | 735 | |||||||||||||||
Expenses:
|
||||||||||||||||||||
Employees
and Related Party Consulting
|
8,067,756 | 9,000 | 8,107,756 | 172,158 | 8,146,663 | |||||||||||||||
General
and administrative
|
45,481 | 19,363 | 100,263 | 341,953 | 203,010 | |||||||||||||||
Total
Operating Expenses
|
8,113,237 | 28,363 | 8,208,019 | 514,111 | 8,349,673 | |||||||||||||||
Net
Income (loss) from Operations
|
(8,113,237 | ) | (28,327 | ) | (8,208,019 | ) | (513,386 | ) | (8,348,938 | ) | ||||||||||
Other
Income (Expenses):
|
||||||||||||||||||||
Other
Expense
|
(680,000 | ) | ||||||||||||||||||
Interest
expense
|
(16,321 | ) | — | (29,815 | ) | — | (41,577 | ) | ||||||||||||
Net
Loss for the period
|
$ | (8,129,558 | ) | $ | (28,327 | ) | $ | (8,237,834 | ) | $ | (513,386 | ) | $ | (9,070,515 | ) | |||||
Earnings
(loss) per common share – basic and diluted
|
$ | (0.216 | ) | $ | (0.001 | ) | $ | (0.221 | ) | $ | (0.014 | ) | ||||||||
Weighted
avg. common shares out. – basic and diluted
|
37,557,617 | 36,955,714 | 37,259,468 | 36,937,600 |
The
accompanying notes are an integral part of these financial
statements.
5
IMPERIALI,
INC.
(a
Development Stage Company)
Statement
of Changes in Stockholders' Equity (Deficit)
From
August 31, 2006 to February 28, 2009
(unaudited)
Shares
|
Amount
|
Additional Paid
in Capital |
Accumulated
Deficit Prior to Entering the Development Stage |
Deficit
Accumulated Since Entering the Development Stage |
Total
|
|||||||||||||||||||
Balance
August 31, 2006
|
20,358,486 | $ | 20,358 | $ | 11,760,605 | $ | (11,171,422 | ) | $ | - | $ | 609,541 | ||||||||||||
Issuance
of common stock
|
16,561,000 | 16,561 | 4,358,828 | - | - | 4,375,389 | ||||||||||||||||||
Net
loss for the year
|
- | - | - | (4,812,411 | ) | - | (4,812,411 | ) | ||||||||||||||||
Balance
August 31, 2007
|
36,919,486 | $ | 36,919 | $ | 16,119,433 | $ | (15,983,833 | ) | $ | - | $ | 172,519 | ||||||||||||
Capital
contribted by shareholder
|
- | - | 336,000 | - | - | 336,000 | ||||||||||||||||||
Shares
sold for cash
|
41,833 | 42 | 14,106 | - | - | 14,148 | ||||||||||||||||||
Net
loss for the year
|
- | (832,681 | ) | (832,681 | ) | |||||||||||||||||||
Balance
August 31, 2008
|
36,961,319 | $ | 36,961 | $ | 16,469,539 | $ | (15,983,833 | ) | $ | (832,681 | ) | $ | (310,014 | ) | ||||||||||
Capital
contribted by shareholder
|
- | - | 130,000 | - | - | 130,000 | ||||||||||||||||||
Stock
based compensation
|
2,682,000 | 2,682 | 8,043,318 | 8,046,000 | ||||||||||||||||||||
Net
loss for the year
|
- | (8,237,834 | ) | (8,237,834 | ) | |||||||||||||||||||
Balance
February 28, 2009
|
39,643,319 | $ | 39,643 | $ | 24,642,857 | $ | (15,983,833 | ) | $ | (9,070,515 | ) | $ | (371,848 | ) |
The
accompaning notes are an integral part of these financial
statements.
6
IMPERIALI, INC.
(a
Development Stage Company)
Statements of Cash Flows
For
the three months ended February 28, 2009 and February 29, 2008
and
the period from September 1, 2007 to February 28, 2009
(unaudited)
For the Six
Months Ended February 28, 2009 |
For the Six
Months Ended February 29,
2008 |
Development
Stage (Sept. 1, 2007 to Feb. 28, 2009) |
||||||||||
(Restated)
|
||||||||||||
Cash flow from operating activities:
|
||||||||||||
Net
loss
|
$ | (8,237,834 | ) | $ | (513,386 | ) | $ | (9,070,515 | ) | |||
Adjustments
to reconcile net loss to net cash used
in operating activities:
|
||||||||||||
Stock
based compensation
|
8,046,000 | — | 8,046,000 | |||||||||
Write-off
of Kaiser Himmel loan
|
— | — | 680,000 | |||||||||
Depreciation
expense
|
591 | 80 | 751 | |||||||||
Change
in operating assets and liabilities:
|
||||||||||||
Other
assets
|
— | — | 9,765 | |||||||||
Notes
Receivable
|
— | — | (680,000 | ) | ||||||||
Change
in accounts payable and accrued expenses
|
69,180 | (208,135 | ) | 98,979 | ||||||||
Net cash (used in) operating activities
|
(122,063 | ) | (721,441 | ) | (915,020 | ) | ||||||
Cash flows from investing activities:
|
||||||||||||
Capital
expenditures
|
(5,755 | ) | (1,000 | ) | (6,755 | ) | ||||||
Net
cash (used in) investing activities
|
(5,755 | ) | (1,000 | ) | (6,755 | ) | ||||||
Cash
flows from financing activities:
|
||||||||||||
Net
proceeds from related party note
|
3,586 | 300,000 | 261,086 | |||||||||
Net
capital contribution from shareholder
|
130,000 | 234,891 | 466,000 | |||||||||
Proceeds
from sale of common stock
|
— | 14,147 | 14,148 | |||||||||
Net cash provided by financing activities
|
133,586 | 549,038 | 741,234 | |||||||||
Net increase
(decrease) in cash
|
5,768 | (173,403 | ) | (180,541 | ) | |||||||
Cash at beginning of period
|
3,059 | 189,368 | 189,368 | |||||||||
Cash at end of period
|
$ | 8,827 | $ | 15,965 | $ | 8,827 | ||||||
Supplemental
Cash Flow Information:
|
||||||||||||
Income
taxes paid in cash
|
— | — | — | |||||||||
Interest
paid in cash
|
$ | 3,259 | — | $ | 3,259 |
The
accompanying notes are an integral part of these financial
statements.
7
Imperiali
Inc.
(a
Development Stage Company)
Notes
To Financial Statements
(unaudited)
Note
1 - Basis of presentation
The
accompanying unaudited financial statements have been prepared in accordance
with the accounting principles generally accepted in the United States of
America and the rules of the Securities and Exchange Commission, and should be
read in conjunction with Imperiali’s annual financial statements and
notes thereto filed with the SEC on form 10-K/A for the year ended August 31,
2008. The interim financial information presented in this report is
done so following the instructions to Form 10-Q. Accordingly, they do
not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for financial
statements. In the opinion of management, all adjustments, consisting of normal
recurring accruals considered necessary for a fair presentation, have been
included. Operating results for the three months ended February 28, 2009 are not
necessarily indicative of the results that may be expected for the year ending
August 31, 2009.
Note
2 – Going Concern
Imperiali’s
financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and settlements of liabilities and
commitments in the normal course of business for the foreseeable
future. The company has insufficient working capital to meet
operating needs for the next twelve months as of February 28, 2009, which raises
doubt about Imperiali’s ability to continue as a going concern.
Note
3 – Organizational Information
Nature
of Business
Imperiali,
Inc. is a team of global expansion and business development company experts that
are strategically positioned around the globe to identify emerging companies
that wish to align with strategic partners to grow their businesses, and raise
capital for business development and telecommunications
infrastructure. The Company is currently in the development
stage.
Note
4 – Note Payable
As of
February 28, 2009 the company has a note payable due of $251,086, plus $37,889
in accrued interest, to Daniel Imperato a member of the Board of Directors and
the interim CEO. As of August 31, 2008, the balance of the note was
$257,500, plus $11,762 in accrued interest.
Note 5 - Guaranteed
Commitments
The
Company leases approximately 2,000 square feet of space at 529 Flagler Drive and
the mailing address is 222 Lakeview Avenue, Suite 160, West Palm Beach, Florida
USA 33401. The office space is used for sales, administrative offices, and
customer support.
8
Note
6 - Related Party Transactions
Included
in current liabilities is $39,469 of accrual expenses owed to Mr. Imperato
for travel and miscellaneous expenses incurred on behalf of the
company. The Company also received capital contributions of $130,000
from shareholders during the quarter ended February 28, 2009.
The
company also owes Mr. Imperato $288,975 related to a note payable and accrued
interest, which is described in Note 4.
Note
7 - Entry into a Material Definitive Agreement
On
February 10, 2009, the company entered into an agreement with three
entities controlled by Mr. Imperato that had been providing management,
marketing and consulting services to the company for an extended period of
time. Pursuant to the terms of the agreement, the Company issued
2,682,000 shares of common stock for these services. The
consideration for this transaction consisted solely of Company common stock
valued at $3.00 per share, thereby totaling $8,046,000, which has been recorded
as stock-based compensation on the Statement of Operations. The capitalization
of the Company now consists of 39,643,319 shares of common stock
outstanding. The $3.00 per share value was the last price at which
the Company sold its common stock, and was used as the market value of the stock
for this transaction.
Note
8 - Unregistered Sales of Equity Securities
Pursuant
to the share transaction described above in Note 7, on February 10, 2009,
the Company issued 2,682,000 shares of its common stock to entities controlled
by Mr. Imperato. These persons were the only offerees in connection with
this transaction. The registrant relied upon section 4(2) and Regulation D of
the Securities Act of 1933, as amended.
Note
9 – Restatement
The
Company has restated its previously issued February 29, 2008 financial
statements for matters related to the following: revenue, operating
expense and depreciation expense. The following is a summary of the
restatements for February 29, 2008:
9
STATEMENT OF
OPERATIONS
Previously
reported |
Restated
|
|||||||||||
Six months
ended 2/29/2008 |
Adjustment
|
Six months
ended 2/29/2008 |
||||||||||
Revenue
|
||||||||||||
Consulting
Income
|
$ | 286,000 | $ | (286,000 | ) | $ | — | |||||
I/C
Income
|
22,000 | (22,000 | ) | — | ||||||||
Interest
and dividends
|
725 | — | 725 | |||||||||
Total
Revenue
|
$ | 308,725 | $ | (308,000 | ) | $ | 725 | |||||
Expenses
|
||||||||||||
Employee
and related party consulting costs
|
243,564 | (71,406 | ) | 172,158 | ||||||||
General
and administrative
|
343,576 | (1,703 | ) | 341,873 | ||||||||
Depreciation
Expense
|
— | 80 | 80 | |||||||||
Total
Expenses
|
587,140 | (73,029 | ) | 514,111 | ||||||||
Operating
Income
|
(278,415 | ) | (234,971 | ) | (513,386 | ) | ||||||
Other
(income)expense
|
— | — | — | |||||||||
Net
Income (loss)
|
$ | (278,415 | ) | $ | (234,971 | ) | $ | (513,386 | ) | |||
Earnings
(loss) per share (basic and diluted)
|
$ | (0.006 | ) | $ | (0.02 | ) | $ | (0.014 | ) | |||
Weighted
average common shares (basic and diluted)
|
48,200,986 | (11,263,386 | ) | 36,937,600 |
The
result of these restatements is an increase in the net loss of
$234,971.
This
Amendment to our Quarter Report on Form 10-Q for the quarter ended February 29,
2008 is filed to amend certain errors in the following sections: shares
outstanding, cash, depreciation expense, interest expense, accounts payable and
Shareholders Equity.
Except as
required to reflect the change noted above, this Form 10-Q does not attempt to
modify or update any other disclosures set forth in our Quarter Report on Form
10-Q. Additionally, this Form 10-Q does not purport to provide a general update
or discussion of any other developments of the Company subsequent to the
original filing. The filing of this Form 10-Q shall not be deemed an admission
that the original filing, when made, included any untrue statement of material
fact or omitted to state a material fact necessary to make a statement not
misleading.
1 -
Consulting income was overstated by $308,000, which should have been reported as
capital contributed from shareholder.
2 –
Consulting expenses and G&A expenses were overstated by
$73,109.
3 –
Depreciation expense was understated by $ 80.
10
ITEM
2 MANAGEMENT’S DISCUSSION and ANALYSIS or PLAN of OPERATIONS
The
following discussion should be read in conjunction with our unaudited financial
statements and notes thereto.
Forward-Looking
Statements
This
quarterly report contains forward-looking statements and information relating to
us that are based on the beliefs of our management as well as assumptions made
by, and information currently available to, our management. When used in this
report, the words “anticipate”, “believe”, “estimate”, “expect”, “intend”,
“plan” and similar expressions, as they relate to us or our management, are
intended to identify forward-looking statements. These statements reflect
management’s current view of us concerning future events and are subject to
certain risks, uncertainties and assumptions, including among many others: a
general economic downturn; a downturn in the securities markets; federal or
state laws or regulations having an adverse effect on proposed transactions that
we desire to effect; Securities and Exchange Commission regulations which affect
trading in the securities of “penny stocks,”; and other risks and uncertainties.
Should any of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described in this report as anticipated, estimated or expected. All
forward-looking statements attributable to us are expressly qualified in their
entirety by the forgoing cautionary statement.
Overview
On
November 6, 2008, Imperiali, Inc. filed a Form N-54C with the SEC withdrawing
the Company’s election to be regulated as a business development company
pursuant to the Investment Company Act of 1940.
The
Company is now pursuing a business model whereby it would consolidate its
subsidiaries and provide global business development consulting services (the
“New Business Model”).
Specifically, the Company will identify client companies and assist them with
their global expansion, and provide them with business advice and management
expertise related thereto. Under the New Business Model, the Company will at all
times be managed and conduct its activities in such a way as to not act as an
“investment company” subject to regulation under the 1940 Act. Thus, it will not
hold itself out as being engaged primarily in the business of investing,
reinvesting or trading in securities. In addition, the Company will conduct its
business in such a manner as to ensure that it will at no time own or propose to
acquire investment securities having a value exceeding 40 percent of the
Company's total assets at any one time. The Company has recently implemented a
share exchange whereby shareholders of each of the Company’s subsidiaries may
exchange the subsidiary shares for Company shares on a 1:1 basis.
Plan
of Operation
Imperiali,
Inc. (the “Company”) was
incorporated in Florida on September 27, 1994 under the name Automated Energy
Security Inc.
11
From
September 1994 through March 1999, our Company provided energy management
services and intelligent security for residential dwellings, commercial
buildings and government facilities. In 1994, the Company purchased all of the
patented technology, software and patents pending on the Wide Area Energy
Savings System known as “TESS” (Total Energy Security System) from Associated
Data Consultants, Inc. In 1998, after Bell Atlantic (one of our strategic
partners) withdrew from the development of TESS and engaged in litigation with
Associated Data, the Company abandoned our business operations related to
TESS.
In March
1999, we changed our name to New Millennium Development Group, Inc. and our
business operations to media and telecommunications, focusing on connectivity
solutions, storage, fiber optic cable systems, security and the international
long distance market. Our plan was to spearhead a subsea fiber optic cable
system connecting 70 countries around the globe. In furtherance of the plan the
Company entered into Memoranda of Understanding with 30 countries, completed
landing party site and ocean surveys, arranged long-term financing and selected
vendors and subcontractors for fiber optic cable and equipment. During the
process, however, the price of cable systems skyrocketed, forcing us to
reconsider our business plans and projections. The Company retained the services
of an independent consultant who concluded that not only would increasing cable
prices decrease long-term gains, the rapid development of the internet and
Intellectual Property systems would render obsolete the market for fiber optic
cable. Accordingly, in mid 2001 we shifted our focus away from fiber optic cable
systems and concentrated on Voice over Internet Protocol (VOIP) and related
services including high-speed wireless standard ISP and broadband services;
international calling cards; video conferencing and related IP
products.
Failed
corporate history, management infighting, the tragedy of September 11, 2001 and
the general economic downturn especially related to technology, led us to cease
business operations in mid-2002 until mid-2005. However, during this time, Mr.
Imperato, the Company’s Chairman, at the time, and majority shareholder, worked
to maintain management relationships with previous businesses, associates and
professionals for the eventual resurrection of business operations.
In
November 2005, we changed our name to Imperiali, Inc. and commenced operations
as a business development company an investment company and elected to be
regulated as a business development by the Securities and Exchange Commission
under the Investment Company Act 1940. As a business development company, we
were primarily engaged in the business of furnishing capital and making
available managerial assistance to companies that do not have ready access to
capital through conventional financial channels. As a business development
company we were required to comply with numerous regulatory
requirements.
On
November 19, 2007, our Company entered into an initial subscription agreement
with Kaiser Himmel Corporation (“Kaiser”) whereby Kaiser agreed
to purchase 10,000,000 shares of our Company’s common stock in exchange for
Kaiser transferring to the Company 1.6 million shares of Sprint Nextel common
stock, which Kaiser indicated was held in the name of Kaiser at Bank of America.
The shares were purportedly restricted until October 2008.
Pursuant
to the initial subscription agreement, (i) Kaiser agreed to provide
non-cancellable instructions, along with all necessary and supporting documents
related thereto, to Bank of America to directly transfer the 1.6 million shares
Sprint Nextel stock to our Company’s stock account upon the expiration of the
restrictions in October 2008. Such shares were valued at $23,800,120; and (ii)
our Company agreed to loan Kaiser an aggregate of $380,000 at the current prime
interest rate plus 1%, with such loan due and payable in October 2008. $150,000
was to be transferred to Kaiser upon execution of the subscription agreement,
with the balance to be transferred to Kaiser within 30 days. Further, the
Company agreed to deliver 10,000,000 shares of Company common stock to
Kaiser.
12
On
November 22, 2007, our Company entered into a second subscription agreement with
Kaiser whereby Kaiser agreed to purchase an additional 70,000,000 shares of our
Company’s common stock in exchange for Kaiser transferring to our Company 11.8
million shares of Sprint Nextel common stock, which Kaiser indicated was held in
the name of Kaiser at Bank of America. These shares were also purportedly
restricted until October 2008.
Pursuant
to the second subscription agreement, which was scheduled to close on February
28, 2008, (i) Kaiser agreed to provide non-cancellable instructions, along with
all necessary and supporting documents related thereto, to Bank of America to
directly transfer the 11.8 million shares Sprint Nextel stock to our Company’s
stock account upon the expiration of the restrictions in October 2008. Such
shares were valued at $175,525,880; and (ii) our Company agreed to loan Kaiser
an aggregate of $3,000,000 at the current prime interest rate plus 1%, and to
deliver 70,000,000 shares of Company common stock to Kaiser.
Upon
closing of both of these transactions Kaiser acquired 80,000,000 shares of our
Company and controlled 62.5% of the Company. Eric Skys, who owned and controlled
Kaiser, appointed himself as our Company’s chief executive officer.
Over the
next several months, management infighting began to occur and the Company’s
assets began to disappear. On or about May 15, 2008, Eric Skys was arrested by
the Federal Bureau of Investigation (FBI). In late July 2008, a New York grand
jury indicted Mr. Skys on charges that he tried to defraud several banks out of
millions of dollars in an elaborate stock sale scheme. Mr. Skys was indicted on
three counts of wire fraud and one count each of securities fraud and bank
fraud. According to the U.S. attorney’s office for the Southern District of New
York, Mr. Skys, if convicted may face up to 110 years in prison and the greater
of a $6 million fine or twice the gross gain or loss from his
offense.
Authorities
said Mr. Skys contacted several banks in 2007 claiming he had 13.4 million
shares of Sprint Nextel stock valued at $243,076,000 and he was seeking large
sums of money in exchange for ownership interest in the Sprint Nextel stock. Mr.
Skys said Kaiser received the shares as compensation for computer technology
services, according to the court documents. Authorities also said that Mr. Skys
was trying to induce the banks to give him cash or a loan in exchange for
ownership interest in the shares. Authorities also said that as part of the
scheme, Mr. Skys sent the banks fabricated documents and altered e-mails that
showed Kaiser possessed the shares of Sprint Nextel stock. According to court
documents, an FBI investigator interviewed representatives from Sprint Nextel,
who said they never entered into a multi-million stock agreement with
Kaiser.
In
connection with Mr. Sky’s arrest, the FBI seized all of our Company’s data
center equipment in Kaiser’s possession. To date, certain Company funds provided
to Kaiser have not been accounted for, and no Company equipment has been
returned to the Company by the FBI. The Company loaned approximately $680,000 to
Kaiser.
On May
29, 2008, at meeting of the Company’s Board of Directors, the board approved an
agreement between the Company, Kaiser and Imperiali Organization, a company
owned and controlled by Daniel J. Imperato, whereby in exchange for Imperiali
Organization assuming the debt owed to the Company by Kaiser, Kaiser will
transfer all of its assets, including accounts receivable, causes of action,
software, hardware, and work in process for all software projects, prototypes,
websites, trademarks, vehicles and source code, to Imperiali
Organization.
13
On
September 1, 2008, Mr. Daniel J. Imperato, our Company’s majority shareholder,
removed the Company’s then current board of directors and named himself as
Interim Non-Executive Chairman Emeritus of our Company, treasurer and as a
member of our board of directors; he also named Mr. Richard E. Biggs as an
additional member of our board of directors. He then cancelled all 80,000,000
shares of Company stock issued to Kaiser as a result of Kaiser’s inability to
deliver the 13.4 million shares of Sprint Nextel stock to our
Company.
As of
September 1, 2007, Imperiali did not meet the criteria of a business development
company and entered the development stage.
On
November 6, 2008, Imperiali, Inc. filed a Form N-54C with the SEC, formally
withdrawing the Company’s election to be regulated as a business development
company pursuant to the Investment Company Act of 1940.
The
Company is now pursuing a business model whereby it would consolidate its
subsidiaries and provide global business development consulting services (the
“New Business Model”).
Specifically, the Company will identify client companies and assist them with
their global expansion, and provide them with business advice and management
expertise related thereto. Under the New Business Model, the Company will at all
times be managed and conduct its activities in such a way as to not act as an
“investment company” subject to regulation under the 1940 Act. Thus, it will not
hold itself out as being engaged primarily in the business of investing,
reinvesting or trading in securities. Subsequent to year-end, the
Company has implemented a share exchange whereby shareholders of each of the
Company’s subsidiaries may exchange the subsidiary shares for Company shares on
a 1:1 basis.
Results
of Operations
The
following table summarizes selected unaudited financial information for the
three and six months ended February 28, 2009 compared to the restated three and
six months ended February 29, 2008.
For the Three months ended
|
For the Six months ended
|
|||||||||||||||
February 28,
2009
|
February 29,
2008 (restated)
|
February 28,
2009
|
February 29,
2008 (restated)
|
|||||||||||||
Dividend
Income
|
$ | — | $ | 36 | $ | — | $ | 725 | ||||||||
Total
Income
|
— | 36 | — | 725 | ||||||||||||
Expenses:
|
||||||||||||||||
Employees
and Related Party Consulting
|
8,067,756 | 9,000 | 8,107,756 | 172,158 | ||||||||||||
General
and administrative
|
45,481 | 19,363 | 100,263 | 341,953 | ||||||||||||
Total
Operating Expenses
|
8,113,237 | 28,363 | 8,208,019 | 514,111 | ||||||||||||
Net
Income (loss) from Operations
|
(8,113,237 | ) | (28,327 | ) | (8,208,019 | ) | (513,386 | ) | ||||||||
Other
Income (Expenses):
|
||||||||||||||||
Interest
expense
|
(16,321 | ) | — | (29,815 | ) | — | ||||||||||
Net
Loss for the period
|
$ | (8,129,558 | ) | $ | (28,327 | ) | $ | (8,237,834 | ) | $ | (513,386 | ) | ||||
Loss
per common share – basic and diluted
|
$ | (0.216 | ) | $ | (0.001 | ) | $ | (0.221 | ) | $ | (0.014 | ) | ||||
Weighted
avg. common shares outstanding – basic and diluted
|
37,557,617 | 36,955,714 | 37,259,468 | 36,937,600 |
14
During
the quarter ended February 28, 2009, the Company incurred a net loss of
$8,129,558. General and administrative expenses related primarily to rent,
salaries, telephone, other office costs and costs associated with being a
reporting company was $45,481. Professional fees totaled $21,989,
used for legal fees, accounting fees and consulting. The Company
recorded an expense for stock based compensation in the amount approximately $8
million (2,682,000 shares at $3.00 per share).
General
and administrative expenses increased $26,118 to $45,481, when comparing the
second quarter of 2009 to 2008, primarily due to higher computer and internet
expenses, higher filing expenses and increase in Insurance costs.
For the
six months ended February 28, 2009 as compared to six months ended February 29,
2008, the Company incurred a net loss of $8,237,834 as compared to a loss of
$513,386 (restated) for the prior year. The difference mainly is due to lower
operating expenses in fiscal year 2009 and the recorded expense for stock based
compensation in the amount approximately $8 million (2,682,000 shares at $3.00
per share).
Compared
to the previous year, the six months ended February 28, 2009 experienced a
threefold decrease in the cost of internet access and web- hosting expenses as
it began to reestablish itself in the global business development consulting
market. Through the use of more competitive providers, the
elimination of in-house salaries, and an influx of capital, the company was able
to expand its technological capabilities as it reorganizes and positions itself
for its reintroduction. The costs of insurance, regulatory filings and
professional fees remain a constant fixed cost.
Interest
expense of $16,321 in the quarter ending February 28, 2009 covers accrued
interest payable on the related party loan. Year to date interest
expense is $29,815.
Liquidity
and Capital Resources
The
Company had cash on hand of $8,827 at February 28, 2009 and had no other assets
to meet ongoing expenses or debts that may accumulate. As of such date, we have
accumulated a deficit of $25,054,348. As of February 28, 2009 we had current
liabilities totaling $386,679.
Operating
Activities
The
decrease of $122,063 in cash resulting from operating activities was primarily
attributable to net cash used in operations of $191,243 offset by net increase
in operating liabilities of $69,180.
Investing
Activities
The
Company has fixed assets, net of accumulated depreciation of $6,004 and has no
commitment for any additional capital expenditure and foresee none. However, we
will incur routine fees and expenses incident to our reporting duties as a
reporting company, and we will incur expenses in finding and investigating
possible acquisitions and other fees and expenses in the event we make an
acquisition or attempt but are unable to complete an acquisition. Our cash
requirements for the next twelve months are relatively modest, principally
operational accounting expenses and other expenses relating to making filings
required under the Securities Exchange Act of 1934 (the “Exchange Act”), which
should not exceed $1.7 million in the fiscal year ending August 31, 2009. Any
travel, lodging or other expenses which may arise related to finding,
investigating and attempting to complete a combination with one or more
potential acquisitions could also amount to thousands of
dollars.
15
Financing
Activities
The
Company generated $133,586 from financing activities through the first six
months, made up of capital contributions from shareholders.
We will
only be able to pay our future debts and meet operating expenses by raising
additional funds, acquiring a profitable company or otherwise generating
positive cash flow. As a practical matter, we are unlikely to generate positive
cash flow by any means other than acquiring a company with such cash flow. We
believe that management members or shareholders will loan funds to us as needed
for operations prior to completion of an acquisition. Management and the
shareholders are not obligated to provide funds to us, however, and it is not
certain they will always want or be financially able to do so. Our shareholders
and management members who advance money to us to cover operating expenses will
expect to be reimbursed, either by us or by the company acquired, prior to or at
the time of completing a combination. We have no intention of borrowing money to
reimburse or pay salaries to any of our officers, directors or shareholders or
their affiliates.
Should
existing management or shareholders refuse to advance needed funds, however, we
would be forced to turn to outside parties to either loan money to us or buy our
securities. There is no assurance whatsoever that the Company will be able to
raise necessary funds from outside sources. Such a lack of funds could result in
severe consequences to us, including among others:
•
|
failure
to make timely filings with the SEC as required by the Exchange Act, which
also probably would result in suspension of trading or quotation in our
stock and could result in fines and penalties to us under the Exchange
Act;
|
•
|
curtailing
or eliminating our ability to locate and perform suitable investigations
of potential acquisitions; or
|
•
|
Inability
to complete a desirable acquisition due to lack of funds to pay legal and
accounting fees and acquisition-related
expenses.
|
We hope
to require potential candidate companies to deposit funds with us that we can
use to defray professional fees and travel, lodging and other due diligence
expenses incurred by our management related to finding and investigating a
candidate company and negotiating and consummating a business combination. There
is no assurance that any potential candidate will agree to make such a
deposit.
Critical
Accounting Policies
Financial
Reporting Release No. 60 of the SEC encourages all companies to include a
discussion of critical accounting policies or methods used in the preparation of
the financial statements. There are no current business operations or revenue
generating activities that give rise to significant assumptions or
estimates.
Our most
critical accounting policies relate to the accounting and disclosure of related
party transactions. Our financial statements filed as part of this report
include a summary of the significant accounting policies and methods used in the
preparation of our financial statements.
16
ITEM 3
- Quantitative and Qualitative Disclosures about Market Risk
Not
applicable.
ITEM 4 - Controls and
Procedures
Management’s
Report on Internal Control over Financial Reporting.
We
carried out an evaluation, under the supervision and with the participation of
our management, including our principal executive officer and principal
financial officer, of the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e).
Based upon that evaluation, our principal executive officer and principal
financial officer concluded that, as of February 28, 2009, our disclosure
controls and procedures were not effective to ensure that information required
to be disclosed in reports filed under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the required time periods
and is accumulated and communicated to our management, including our principal
executive officer and principal financial officer, as appropriate to allow
timely decisions regarding required disclosure.
Changes
in internal control over financial reporting
There
were no changes in internal controls over financial reporting that occurred
during the quarter ended February 28, 2009, that have materially affected, or
are reasonably likely to materially affect, our internal control over financial
reporting.
17
PART II OTHER INFORMATION
ITEM
1 - LEGAL PROCEEDINGS
We are
currently not involved in any litigation that we believe could have a material
adverse effect on our financial condition or results of operations. There is no
action, suit, proceeding, inquiry or investigation before or by any court,
public board, government agency, self-regulatory organization or body pending
or, to the knowledge of the executive officers of our company or any of our
subsidiaries, threatened against or affecting our company, our common stock, any
of our subsidiaries or of our companies or our subsidiaries' officers or
directors in their capacities as such, in which an adverse decision could have a
material adverse effect.
ITEM 1A
- RISK FACTORS
Not
applicable.
ITEM
2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
SECURITIES
Pursuant
to the share transaction described in Note 7, on February 10, 2009, the
Company issued 2,682,000 shares of its common stock to entities controlled by
Mr. Imperato. These persons were the only offerees in connection with this
transaction. The registrant relied upon section 4(2) and Regulation D of the
Securities Act of 1933, as amended.
ITEM
3 - DEFAULTS UPON SENIOR SECURITIES
There
were no defaults upon senior securities during the period ended February 28,
2009.
ITEM 4 - SUBMISSION OF MATTERS
TO A VOTE OF SECURITY
HOLDERS
There
were no matters submitted to the vote of securities holders during the period
ended February 28, 2009.
ITEM
5 - OTHER INFORMATION
None.
ITEM 6. EXHIBITS and REPORTS on FORM
8-K.
|
(a)
|
EXHIBITS. The
following exhibits are filed as part of this
report.
|
31.1
|
Certification
pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act
of 1934 executed by the Principal Executive Officer of the
Company
|
|
31.2
|
Certification
pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act
of 1934 executed by the Principal Financial Officer of the
Company
|
|
32.1
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, executed by the
Principal Executive Officer of the Company
|
|
32.2
|
Certification
pursuant to 18 U.S.C. Section 1350 as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, executed by the
Principal Financial Officer of the
Company
|
18
SIGNATURES
In accordance with the requirements of
the Securities Exchange Act of 1934, the registrant caused this Report on Form
10-Q to be signed on its behalf by the undersigned, thereunto duly
authorized.
DATE: May 14, 2009 | ||
Imperiali
Inc.,
|
||
Registrant
|
||
By
|
/s/ Daniel
Imperato
|
|
Daniel
Imperato,
|
||
Interim
Non-Executive Chairman Emeritus
|
||
Director
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By
|
/s/ Daniel
Imperato
|
|
Daniel
Imperato,
|
||
Interim
Non-Executive Chairman Emeritus,
|
||
Director
|
19