Attached files
| file | filename |
|---|---|
| EX-32 - CERTIFICATION - SuperDirectories Inc. | ex32.htm |
| EX-31.1 - CERTIFICATION - SuperDirectories Inc. | ex311.htm |
| EX-31.2 - CERTIFICATION - SuperDirectories Inc. | ex312.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
Annual
Report Pursuant to Section 13 or 15(d)
of the
Securities Exchange Act of 1934
For
the Fiscal Year Ended 09/30/09 Commission File Number 0-51533
SuperDirectories,
Inc.
(Name of
small business issuer specified in its charter)
|
Delaware
|
14-1817301
|
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
|
Incorporation
or organization)
|
Identification
Number)
|
5337
Route 374, Merrill, New York 12955
(Address
of principal executive offices) (Zip Code)
Issuer's
telephone number, including area code (518) 425-0320
Securities
registered pursuant to Section 12(b) of the Act: None
Securities
registered pursuant to Section 12(g) of the Act:
Common
Stock, $.01 par value
Indicate
by a check mark whether the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes No X
Indicate
by a check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes No X
Indicate
by a 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 a check mark whether the registrant has submitted and posted on its corporate
Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-K (232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes __ No __
Indicate
by a check mark if there is disclosure of delinquent filers in response to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K, or any amendment to
this Form 10-K. [X]
Indicate
by a check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. Large accelerated filer __ Accelerated filer __
Non-accelerated filer __ Smaller reporting company X
Indicate
by a check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act) Yes No X
State the
issuer’s revenues for its most recent fiscal year $0
The
aggregate market value of the voting stock held by non-affiliates of the
registrant as of December 15, 2009: Common Stock, $.01 par value --
$________*
*The
market value cannot be determined because there is no established trading market
for the stock.
As of
December 23, 2009, there were 158,821,157 shares of common stock,
par value $.01 per share, issued and outstanding.
Exhibit
index is located on page 32.
Table
of Contents
|
Part
I
|
1 | |
| Item 1 - Business | 1 | |
| Item 1A - Risk Factors | 6 | |
| Item 2 - Properties | 9 | |
| Item 3 - Legal Proceedings | 9 | |
| Item 4 - Submission of Matters to a Vote of Security Holders | 9 | |
|
Part
II
|
|
10 |
| Item 5 - Market for Common Equity and Related Stockholder Matters | 10 | |
| Item 6 - Selected Financial Data | 11 | |
| Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations | 11 | |
| Item 7A - Quantitative and Qualitative Disclosures About Market Risk | 15 | |
| Item 8 - Financial Statements | 16 | |
| Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 27 | |
| Item 9A(T) - Controls and Procedures | 27 | |
| Item 9B - Other Information |
28
|
|
|
Part
III
|
|
28 |
| Item 10 - Directors, Executive Officers, and Corporate Governance | 28 | |
| Item 11 - Executive Compensation | 29 | |
| Item 12 - Security Ownership of Certain Beneficial Owners and Management | 30 | |
| Item 13 - Certain Relationships and Related Transactions | 30 | |
| Item 14 - Principal Accountant Fees and Services | 31 | |
| Item 15 – Exhibits and Financial Statement Schedules | 32 |
CAUTIONARY
STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Certain
statements in this Annual Report on Form 10-K (this “Form 10-K”, that are not
historical facts are identified as “forward-looking
statements.” Forward-looking statements include projections,
assumptions or information concerning possible or assumed future actions, events
or results of operations of our company. These statements involve
estimates and assumptions based on the judgment of our management. A
number of risks and uncertainties may cause actual results to differ materially
from those suggested by the forward-looking statements. Discussions
containing forward-looking statements may be found in the material set forth
under “Description of Business, Part I, Item 1 on Page 1,” “Risk Factors, Part
I, Item 1A on Page 6,” “Management’s Discussion and Analysis of Financial
Conditions and Results of Operations, Part II, Item 7 on page 11” and in other
sections of this annual report.
We use
words such as “believe,” “intend,” “expect,” “anticipate,” “plan,” “may,” “will”
and similar expressions or negatives thereof to identify certain, but not
necessarily all, forward-looking statements. All forward-looking
statements in this annual report are made as of the date hereof, based on
information available to us as of the date hereof, and we do not undertake any
obligation to update publicly any forward-looking statements to reflect
subsequent events or circumstances. Such forward looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of SuperDirectories, Inc. to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. References
in this Form 10-K, unless another date is stated, are to September 30,
2009
INTRODUCTORY
NOTE
As used
in this Annual Report, the terms “we,” “us,” “our”, “SD” and “SuperDirectories”
means SuperDirectories, Inc., (unless the context indicates a
different
meaning).
PART
I
Item
1 - Business
General
SuperDirectories,
Inc. (the "Company" or "we"), a Delaware corporation, was formed in October
1999. Our corporate offices are located at 5337 Route 374, Merrill, New York
12955, and our telephone number is (518) 425-0320. Our website is
located at www.superdirectories.com.
We are a development stage company whose activities to date have included
organization of the company, design and development of the Superdirectories
website linking to the Company’s searchable directory of selected materials,
which is its database, all a part of the same searchable directory; continued
improvement and expansion of the same leading to its readiness for
commercialization. We have not been involved in any bankruptcy, receivership or
similar proceeding or in any material reclassification, merger, consolidation,
or purchase or sale of a significant amount of assets other than in the ordinary
course of business.
Although
we are not a “search engine” (see “Our Business” below) and not comparable to
the leading search engines (Yahoo and Google) reference to them is relevant as
they are both search engines (which we are not) and directories (which we are as
well). We think information about companies in similar or related industries is
relevant to an understanding of our business. Thus, we also included data
concerning Amazon and EBay. We refer to them as we will attempt to engage in
their Affiliate and Associate programs.
From
inception to September 30, 2009 we have raised $3,387,016 from private sales of
58,715,926 shares of restricted common stock issued at various prices per share.
All such sales have been exempt from registration under various exemptions
including, Section 4(2), Regulation D, and Regulation S.
Our
Business
SuperDirectories
is not a "search engine". Our principal product is a searchable
directory of selected topics presented on the internet, at www.superdirectories.com.
It is not possible to search the internet from within the SuperDirectories
searchable directory - database. The search capability offered to
SuperDirectories' users is limited to searching our own database. The principal
advantage available to SuperDirectories' users is elimination of large amounts
of extraneous material in every response. Our database produces results which
are comprised of specific materials presented alphabetically and geographically
compared to voluminous and often random results from keyword-driven internet
search engine experience. As an additional user convenience, SuperDirectories'
website provides links to major search engines to assist users to make searches
via other firms' search engines. These links, permitting internet search, are
not a significant element in the SD presentation. We use a program called "Open
Tracker", an internet website traffic analyzer. It provides statistics about
visitors including the most popular pages. We do not own it. It is available for
a fee based upon the amount of statistics required and the traffic volume. Our
fee is approximately $50.00 per month.
1
Contents
of our directory/database represent the company's selection of material suitable
for inclusion in its directory from the much larger selection of material to be
found on the internet. We use the terms “human edited” and “full text”
searchable to describe our directory/database and its self-search features.
Human editing, the selection of content, is done by independent contractors
(“editors”) engaged by us for that purpose. Each of our editors has been trained
to create new categories, revise existing categories in our directory, and add
new websites to the categories. The "Human Editing Process" bears an average
cost of $0.92 per category including a minimum of one website link. This is
determined by dividing the total monthly cost of the editors’ compensation by
the number of categories and links in our database. Checking for bad links is
automated and carries no specific costs. The potential limitations on the
information available are directly proportioned to the number of editors
collecting such information. An editor now bookmarks an average of 320 links per
day into our database. It is our goal to grow this to average to more than 500
per day with additional training and thereby reduce our overall unit
costs. We now have 26 editors, 22 working on adding new information
and 4 on revising and updating information. We have 2,168,302 categories and
1,804,737 links in our database.
Human
editing is the process of selection for and entry into our database of selected
URL’s representing desired content. The selection process has enabled and will
enable us to accumulate an orderly database, linking subject to location. The
database is constructed and programmed to allow “full text” rather than
“keyword” search of its directory. Full text search limits the search response
to only those which match the inquiring text and its sense completely. As an
example only, a search for “Fishing Charters in Massachusetts” (if it were
offered) would yield only sites which represent fishing charters available in
Massachusetts, not a general Fishing Charters listing and no other information
about Massachusetts. The editors are given assignments in specific topic areas.
They search for and select sites to be included based upon their specific
assignments within the framework of their training and experience. The final
word on selection rests with our President. We have established a
priority list for the subjects to research based upon their internet search
popularity. We have a system called “Replication” that is a part of our
Microsoft SQL program. It copies over every two hours from our database machines
to all our internet server machines the newly created categories and links.
Because it is an integral part of SQL, there is no incremental cost. We also
have a program that checks for “dead links” every day.
Our
market is the entire universe of internet directory searchers. SD seeks to add
materially to the depth and breadth of its database, ultimately presenting the
market with a directory of defined term listings, each item of which matches
precisely to the textual sense of the phrase entered by the searcher. We keep
up-to-date with the latest technologies available in our trade and have the
latest routers and servers. We recognize that failure to keep current will
seriously and adversely affect our ability to compete. We are unaware of any
disadvantage we have suffered.
The
search feature of our directory allows users to query our database in many
different ways such as category, name, location, chain or company affiliation
plus limits by other selected modifiers such as “Pets Allowed” in hotel
listings because the “Full Text Structure” of our directories is designed to
accommodate such searches.
SuperDirectories’
editors add content to the SuperDirectories website in a manner which
accommodates content and context search queries rather than simply keyword
searches. “Full Text” searching is the capability of SuperDirectories’ system
which provides a narrower search, more directly matched to the context and
content of the database’s human edited offerings. “Full Text” search limits the
search response to only those items that match the inquiring text and its sense
completely. Our goal is to offer a more limited and precise source of directory
service. Our directory is organized to provide relevance for both category-based
and keyword searches. Searches may also be conducted by location or subject by
making use of “options on queries” type tools. These are represented by common
database software functions. When searching a database, one might add refinement
to a search by selecting from among a list of options to be added to or omitted
from a search “query”. Our navigation interface allows a user to follow a search
path into categories and sub-categories visually on the screen. The database
shows all regions, countries, states, counties and major cities of the world
with best links to them, and a multitude of subjects in organized and classified
listings. Our directory includes a collection of 2,168,302 active searchable
categories, and links to more than 1,804,737 selected websites. As we add
searchable categories and links to relevant websites increasing those totals
approximately every two hours, we expect to grow in marketability. We have a
program that checks the connectivity of all the URLs in our database every six
hours. Any URLs that do not open within 10
seconds are listed and rechecked daily for 30 days and then automatically
deleted if not active. Our editors routinely revise the directory content. Our
database is now growing at a rate of 2,100 categories per day, which is not
inconsistent with the frequency of additions.
To the
extent service businesses are dominant in our database, that focus is not a
planned limitation. It is our intention to eventually add manufacturing,
research, biotechnology and other sciences, for example, as our capital
allows.
SuperDirectories'
human edited content and full text search capability is maintained on servers in
Watertown, NY, Gatineau, QC and Montreal, QC (with additional servers to be
acquired as needed) and accessed via www.superdirectories.com.
Our routers are selected and configured to lead each user to the fastest
available internet connection. A fourth server, located in Watertown, NY is
internally known as “our database machine”. It is not available to internet
users, but is remotely accessible to our consultants by their individual
security passwords. The database machine does replicate every two hours to the 3
other machines all the new categories and websites that were added to the
database machine since their last replication. The two hours setting is an
option and could be changed for any other time setting. A fifth
server, located in Gatineau, QC is used as a test machine by our tech
consultants for testing new programs and applications.
"SuperDirectories"
is a United States registered Service Mark (No. 2,425,941), and
superdirectories.com, superdirectories.biz, superdirectories.info,
superdirectories.us and lukesmart.com are domain names owned by the Company. The
servers contain the directory structure and content and are fully searchable
“Full Text Databases”. Over the years, we have developed and refined many
software programs of our own to assist our consultants in their research,
download through the internet, remotely create and organize categories with
websites links into our database. We do not publish the source of our programs.
Although there are no patents or trademarks, we consider these to be trade
secrets, not to be published or shared with other entities. By not having
patents, we risk loss of exclusivity. However, most of our “trade secrets”
pertain solely to our database. To the best of our knowledge, there is no other
such database style on the internet. As a result, we feel the risk is not
substantial. See Risk Factor-Patents, Licenses and Trademarks.
2
We have
been working for nine years to develop our searchable database and expect to
commence commercial marketing in less than one additional year. Our management
has consciously chosen to develop at a pace that we can support financially.
There have been no other business activities. Our principal has selected a pace
which is based upon his opinion of our ability to finance the development and
growth safely. We recognize results are fully dependent upon and could be
limited by our financial position and ability to raise funds as we progress to
operational status. Nevertheless, we feel comfortable in assuming that cost of
construction and maintenance will be met, based upon our currently available
cash and demonstrated success to date in raising capital (see Description of
Business, General, Page 1 and Risk Factors-Vulnerability to Developments in
Technology, page 9). It is our belief our directory will never become
essentially complete in as much as topics of current interest and the
technologies of listing and searching those topics is under perpetual change and
will require continual revision and improvement. Our President intends to place
the database into competition
when he believes it is large enough to attract users and generate revenues,
presently estimated to be within four months based upon our present rate of
growth in listings.
Distribution
Methods
SuperDirectories
is free; there are no fees to the internet users. Our revenues will be derived
from future fees to be charged to the listed websites including a listing fee
and pay-per-click charges each time a site is accessed by a user. Publicity
banners and Associate and Affiliate Agreements will also be expected to generate
revenues. Final pricing and marketing models have not been determined. We have
“Online Tutorials” to educate internet users on how to get the most pertinent
results from their queries. Our consultants/editors use proprietary and licensed
software products that help them find, categorize, index and rate high-quality
websites.
The
Company has not yet produced revenue or offered its product on a commercial
basis. We do not presently charge a listing fee or receive pay-per-click
charges. We expect to commence such activity as disclosed under Marketing
Activities on page 4, below.
Competitive
Situation
Our
product is a database of material, organized and structured as a directory that
offers an alternative feature of defined term searches. Unlike the entry of
keywords into a search box, our system will produce a limited number of “hits”,
but they will all be directly and fully responsive to the inquiry. In contrast,
the keyword system used by others searching the entire internet, provides an
infinite number of responses (Google and Yahoo, for example), not necessarily
all directly responsive to the phrase entered by the searcher. The keyword
system conducts an online research rather than matching the “full text” of the
inquiry as done by our system. Every item on our website has been reviewed by a
human being on whom we rely rather than relying solely on a collation of
computer drive data from other sources. We focus on including only authoritative
and up-to-date context in our directory subject to the time and cost constraints
of this method.
Our
President works closely with our editors to insure that only authoritative and
up-to-date context is in our directory. This is a part of their training and is
controlled by a special editing program we created. It is considered to be a
trade secret not to be disclosed or shared with others.
This use
of “human-editing” creates content which allows users to conduct “full text”
searches resulting in a narrower search result than would be possible using
other internet search methods. Most directories and search engines conduct
research online by seeking matches through keyword searches rather than through
the meaning of whole phrases or ”full text”. In contrast, the results of
research behind our database has been edited and categorized as part of the
process of listing in our database, allowing users to obtain results using “Full
Text” searches. This higher level of specificity in our “Full Text” search
capability may cause the updating of our information to be slower than the
inclusion of new information in competing directories and search engines that
use keyword systems. Other products and services planned to be
offered include ‘Associate and Affiliate’ programs, ‘Referral’ programs for
airline ticket bookings, cruise
bookings, fishing charter bookings , golf packages bookings , hotel room
bookings, and ski packages bookings . Such services are common
between internet E-commerce sites. Typically, a program runs between the two
concerned websites, and a fee is paid monthly for all referrals leading to a
sale at a rate ranging from 8% to 15% of the sale price. No agreements or final
pricing decisions have been reached with anyone concerning this type of
business.
The
directory and search engine industry is competitive and rapidly
changing. We have kept up with changes in technology, i.e., new
servers and other equipment and training of our editors. However, we
remain vulnerable to more rapid developments. Concentration on
development of our database (due to financial considerations) results in lag
time with our competitors and increased costs to catch up. Because
the Company’s database is directly dependent upon funding and we have generated
no revenues to date, our searchable results will continue to be limited by our
financial situation. In the Internet content retrieval market, we will compete
on the basis of the quality of our content and the ease of use of our online
services. We have no current market position. When we commence our
business operations, we will compete with Google, MSN and Yahoo!, all of whom
have greater capital and/or technical resources, large distribution networks or
user bases, longer operating histories and greater brand recognition than we
have. Nevertheless, we believe our database offers very good and
complete information on more than 4,005 of the most popular searched subjects on
the internet. We have a 98% mark of active working links. An active working link
is a URL that leads the user to a very good website page. A 98%
active link result is a high mark in our business.
3
As
disclosed above and elsewhere in this document, the Company has not generated
any revenues to date. Thus, continued operations are totally
dependent on funding through raising capital. It follows that
searchable results will continue to be limited and dependent upon our financial
situation.
Status
of Any Publicly Announced New Product or Service
There
have been no public announcements regarding new products or
services.
Marketing
Activities
Marketing
activities have not yet commenced. We expect to commence our marketing during
the fiscal year ending September 30, 2010. When we start, our
marketing strategy will be primarily targeted at the following
groups:
|
·
|
the
advertising trade, including advertising agency media planners who plan
and buy online advertising for their
client,
|
|
·
|
business
partners, including ISPs, media companies, portals, search engines and
other web sites, that partner with us to enhance the search experience of
their users, and
|
|
·
|
online
businesses that seek to have their listings included in our search results
in order to gain the benefits of search
marketing.
|
Among
other things, it is planned that any of our listed sites that have not been
covered by a “Pay-per-Click agreement” with us when we begin to market our
service will receive a bi-weekly report showing the hits they have received from
us. There are two kinds of listed websites – (1) those that we selected and
listed in our quest to populate our database, i.e., make them available and
increase our number, (such listings will remain free) and (2) those that will
submit or have submitted their website for listing subject to payment of the
listing fee of $125.00. All sites will have the option to join our
“Pay-per-Click” program at a fixed price of $0.25 per click. Those that do join
will be found at the top of any routine query done on our database. As a result,
our “pay per click” customers will get more clicks since our users will find
them more easily. We do not intend to remove any listed websites
because they are not a part of our “Pay-per-Click” agreement or have not paid a
listing fee.
The
search feature of our directory does not use “quotation marks” to set off search
terms like all conventional spiral directories on the internet. Since all our
categories and website URLs are named in a “Full Text” methodology, the users
may query our database in a very different way than possible with search engines
and conventional spiral directories. We are a searchable directory, not a search
engine. A thorough understanding of the different ways to search our database
requires a review of the online listings and tutorial pages included at http://www.superdirectories.com/notices.asp?Notice_ID=31.
The
priority order in which websites will appear in our search results will be
controlled by the popularity of each website and not by the amount they have
agreed to pay for key words. Our Pay-per-Click fees will be a fixed rate. The
website owners contracting for a publicity banner might be expected to
experience greater popularity and in turn to show at the top of the search
result listing.
It is our
opinion that all websites listed on SuperDirectories are advertisers. However,
as explained above, those who do not pay will also be automatically found, but
at a lower order in the search result listing.
In
addition, when we commence our commercial activity, our search results will be
annotated in a manner most usually adopted in the industry such as “Sponsored
Results” of “Color Coding” or other appropriate mechanism to identify and setoff
“paid results”.
Source
and Availability of Raw Materials
We are
not a user of raw materials and do not anticipate any future use.
Customers
We are a
development stage company and currently have no customers. When we commence
marketing, we may be dependent on one or a few customers and there is no
guarantee we will be able to obtain any customers from the database. However,
our target list of potential customers to be solicited is estimated to be more
than 1,000,000 website owners to be found on the database. As of this date, we
do not have agreements or indications of interest from any of these website
owners.
Although there is no guarantee that any will choose to participate, we feel that
our target list of 1,000,000 is realistic based upon our current level of
1,804,337 websites listed. However, our ability to provide services
remains dependent upon our financial situation.
4
We do not
presently have any Associate or Affiliate Agreements in place, nor do we have a
standard form for such agreements. The anticipated terms, which are in general
use in the industry, are described in Item 7 – Management’s Discussion and
Analysis of Financial Condition and Results of Operations – Overview, page 11.
Basically, an Associate or Affiliate would offer a product or service through a
listing on SuperDirectories and pay a negotiated fee expected to be between 8%
and 15% of the price of the item payable monthly after a sale.
Employees
As of the
date hereof, we have one employee, Luke Lalonde, who is also sole director and
President and who puts in 100% of his available time. He works on Company
programs, finances and regulatory matters 10-12 hours a day, seven days a week.
We have never had a work stoppage, and our employee is not represented by a
labor union. There are no labor contracts. We consider our relations with our
employee to be good. We presently use 26 independent editors on a contract base.
All such editor-contractors are organized as business entities such as
corporations. There are no written contracts with any of them. They agree to
perform a specific task and are compensated in accordance with quality of
performance. There are no standard sets of terms. None of them are shareholders,
directors, officers or employees of the Company or of Mr. Lalonde or any of his
associates or affiliates. They invoice us on a “job done” basis at an
approximate cost of $1,000 per editor per month. We intend to hire several
additional administrative employees once commercial operations
begin.
Environment
and Government Approval
We do not
have any environmental compliance costs, and there is no existing or anticipated
impact by reason of government regulation or approval.
Patents,
Trademarks and Royalty Agreements
We hold
the registered Service Mark – SUPERDIRECTORIES- carrying registration number
2,425,941 in the United States Patent and Trademark Office. We hold no other
patents, licenses, franchises, concessions or royalty agreements. The service
mark expires on January 31, 2011 unless renewed. Most of our programs have been
developed "in-house"; there are now 168 such programs running on our website.
These programs are vital to our success in that they provide the basis and
background for creation and implementation of our business. See Risk
Factor-Patents, Licenses and Trademarks.
Research
and Development
During
the fiscal years ended September 30, 2007, 2008, and 2009 we spent approximately
$174,862, $234,466 and $285,185 respectively, on product
development. None of these costs have been or will be passed on to
customers or borne directly by them.
Web
Site
Our web
site, www.superdirectories.com,
will provide access, without charge, to our annual report on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments
to those reports as soon as reasonably practicable after such material is
electronically filed with the Securities and Exchange Commission.
In 2000,
Mr. Lalonde transferred his legal title, right and interest to the company “in
the internet website concept and design he has created or will create that will
be known as superdirectories.com …” by Subscription Agreement dated April 29,
2000. The agreement provided he would invest in the company by subscribing to
the number of shares of common stock set forth (100,000,000) and in exchange of
delivery of the stock to transfer the considerations upon the following
terms:
1.
Investor (Mr. Lalonde) shall first transfer the Subscription
Payment;
2.
Investor agrees he is an Accredited Investor;
3.
Investor is purchasing the stock for his own account and not for
resale;
4.
Investor understands the stock has not been registered and cannot be resold
without registration under the 1933 Act or pursuant to an exemption there from;
and
5.
Investor has received all documents and other information
requested.
5
The
transaction was treated as a charge of $1,000,000 to Additional Paid in
Capital.
In 2000,
the basic structure was developed, and the database had 6,000 categories and not
yet configured for the “Full Text Search”. The company has since evolved to
SuperDirectories, Inc. with a service mark, domain names, as well as organized
and trained web-consulting group and a database of over 2,168,302 categories
with “Full Text Service Editing”. Because the Company is directly
dependent upon funding and has not generated revenues to date, the development
of our searchable results will continue to be limited by our financial
situation.
We
are a development stage company, and our lack of operating history makes
evaluating our business and future prospects difficult.
We were
incorporated in Delaware in October 1999, and we have not generated any revenues
to date. The directory, database and the website are the Company’s significant
assets other than financial resources such as cash and access to new capital. We
have been engaged predominately in start-up activities related to the
development of our SuperDirectories database and website. The likelihood of our
success must be considered in light of the problems, expenses, difficulties,
complications and delays frequently encountered by a small developing company
starting and growing a business enterprise in the highly competitive environment
in which we intend to operate. To address these risks, we must, among other
things, respond to competitive developments; continue to attract, retain and
motivate qualified persons; research and develop new technologies; and
commercialize services incorporating such technologies. There can be no
assurance
that we will be successful in addressing these risks or any other risks. There
can be no assurance that we will be able to successfully implement our business
plan, generate sufficient revenues to meet our expenses, operate profitably or
be commercially successful.
We
have a history of operating losses and we anticipate significant increases in
our operating expenses over the next few years, which could limit our ability to
become profitable.
We
anticipate incurring additional losses during the next stages of development and
expansion. In addition, we anticipate that our operating expenses will increase
for the foreseeable future as we expand our business operations. As a result of
these increased expenses, we will need to generate significantly higher
revenues, or otherwise seek out additional funds, to maintain our business
operations. There can be no assurance that we will be successful in obtaining
revenues or additional funds in amounts necessary to fund our operations or
implement our business strategies.
Our
data base is directly dependent upon our funding.
Since we
have not generated revenues to date, the development and maintenance of our
database is directly dependent upon funding through loans or sales of equity or
debt securities. Accordingly, our searchable results will continue to
be limited and dependent upon our financial position.
Our
business plan emphasizes commercializing our directory and search solutions, but
we have not developed these capabilities to date.
Our
business plan is based on our ability to develop a substantial Internet user
base and, in turn, develop commercial applications including paid placement and
paid inclusion listings and additional related services such as research and
booking tools and comparison shopping tools. By developing a substantial
Internet user base, we would be able to offer advertisers the opportunity to
reach Internet users on a broad scale and find their target audiences more
effectively. That is our plan, however, and we have no prior experience in
developing these types of services. Moreover, we may not be able to develop a
substantial Internet user base or develop paid placement inclusion listing
services or other related services that are attractive to advertisers. If we are
unable to develop these capabilities, we will not be able to generate any
revenue and our business, financial condition and prospects would be materially
harmed.
We
may be unable to obtain additional operating funds through loans or future sales
of equity or debt securities, which could have a material adverse effect on our
ability to implement our business plan, and which could result in dilution to
our stockholders.
Our
capital requirements to implement our business strategy will be significant. We
will need additional funds from loans and/or the sale of equity or debt
securities. We anticipate requiring additional funds in order to fully implement
our business plan to expand significantly our operations. No assurance can be
given that such funds will be available or, if available, will be on
commercially reasonable terms satisfactory to us. Our inability to obtain
financing would have a material adverse effect on our ability to implement our
business strategy and, as a result, could require us to diminish or suspend our
business operations.
6
Furthermore,
our future capital needs could require us to sell equity or debt securities. The
sale of additional equity or convertible debt securities could result in
dilution to our stockholders. If additional funds are raised through the
issuance of debt securities, these securities could have rights that are senior
to holders of our common stock and could contain covenants that restrict our
operations.
There
is currently no public market for our securities and there can be no guaranty
that there will be a market in the future, thereby significantly restricting the
transferability of our securities.
Although
our stock has been approved for quotation on the OTCBB and Pink Sheets and we
have retained a market maker there can be no assurances that a market will ever
develop or be maintained. In addition, the stock market has generally
experienced, and continues to experience, price and volume fluctuations which
have affected the market price of many small capital companies and which have
often been unrelated to the operating performance of these companies. These
broad market fluctuations, as well as general economic and political conditions,
may adversely affect the market price of our common stock in any market that may
develop.
All of
our presently outstanding securities are "restricted securities" as the meaning
of this term is defined in Rule 144 promulgated by the Securities and Exchange
Commission (“SEC”) under the Securities Act, because they were issued in private
transactions or in other exempt transactions rather than a public offering. This
means these securities cannot be resold unless registered or subject to an
exemption from registration. In addition, resale and transfer of our shares may
be restricted under the blue sky regulations of some states unless exemptions
apply. If we register these securities, we expect them to fall under "Penny
Stock" regulations promulgated by the SEC – see Item 5, “Market for Common
Equity and Related Stockholder Matters" in Part II of this annual
report.
We could face liability for
information contained on, and communications made through, our
website.
We may be
subject to claims for defamation, negligence, copyright or trademark
infringement, personal injury or other legal theories relating to the
information we publish on our website. These types of claims have been brought,
sometimes successfully, against online services as well as other print
publications in the past. Based on links we provide to other websites, we could
also be subject to claims based upon online content we do not control that is
accessible from our website. These claims could result in substantial costs,
damage to our reputation and business, and a diversion of our management's
attention and resources, regardless of whether we are successful in defending
against such claims. We do not have commercial general liability insurance to
protect us against these types of claims.
Our
small size and limited operating history may significantly limit our ability to
compete successfully against larger, more established competitors such as
Google, Yahoo, Microsoft, and others, which could have a material adverse effect
on our business, results of operations and financial condition.
The
online directory industry is characterized by large, well organized and well
funded competitors such as Yahoo!, Google, and MSN who are active in the
directory business in addition to their known prominence in the search
field. As a development stage enterprise with no revenues, we do not
compare ourselves to these very large entities, and because of our small size,
we may have difficulty in competing with larger, more established competitors.
The Internet directory and search market is rapidly evolving and intensely
competitive, and we expect competition to intensify in the future. Barriers to
entry are low; current and new competitors can easily launch new websites at a
relatively low cost. Other major companies have the financial and technical
ability to compete aggressively in this market. Many of our competitors have
longer operating histories, larger customer bases, greater brand recognition in
other business and Internet markets, and significantly greater financial,
marketing, technical and other resources than we have. Competitive pressures
created by any one of these companies, or by our competitors collectively, could
have a material adverse effect on our business, results of operations and
financial condition, and we can give no assurance that we will be able to
compete successfully against current and future competitors.
We may be unable to respond to the
rapid technological change in our industry, which could significantly limit our
ability to compete in our industry.
Our
industry is characterized by rapidly changing technologies, frequent new product
and service introductions and evolving industry standards. The growth of the
Internet and intensity of competition in the Internet search industry make these
market characteristics more pronounced. Our future success will depend on our
ability to adapt to rapidly changing technologies by continually improving the
performance features and reliability of our products and
services. The existing information on our directory is revised and
updated once a month. We may experience difficulties that could delay
or prevent the successful development, introduction or marketing of new products
and services. In addition, any enhancements must meet the requirements of our
current and prospective users and must achieve significant market acceptance. We
could also incur substantial costs if we need to modify our service or
infrastructure to adapt to these changes. The failure to offer the most current
technologies could significantly limit our ability to compete and could have a
material adverse effect upon our business.
7
We
have only one employee and executive officer and director, which could adversely
affect our operations.
We have
only one employee, Luke Lalonde, who is also our president, and only executive
officer and director, and is totally responsible for our current
operations.
We
depend on the efforts of certain key personnel, the loss of whose services could
adversely affect our business.
We depend
significantly upon the services of Luke Lalonde, our president and majority
stockholder. The loss of his services could adversely affect our business and
implementation of our business plan and growth strategy. This in turn could
materially harm our financial condition and future results. We do not currently
have an employment agreement with Mr. Lalonde and his services may become
unavailable to us at any time. We do not carry key person life insurance on the
life of Mr. Lalonde.
Our
sole executive officer and director owns a large percentage of our voting stock
and could exert significant influence over matters requiring stockholder
approval.
Based on
his share ownership, our president and sole director, Luke Lalonde, and his
affiliates, will own, or will have the right to acquire within 60 days of such
date, approximately 56.4% of our outstanding common stock. Accordingly, as a
practical matter, Mr. Lalonde may be able to exert significant influence over
matters requiring approval by our stockholders, including the election of
directors and the approval of mergers or other business combinations. This
concentration of voting stock could have the effect of delaying, preventing or
causing a change in control. The interests of Mr. Lalonde may also conflict with
the interests of other holders of our common stock. As of the date of
this report Mr. Lalonde owns 89,622,375 shares.
We
incur significant costs as a result of being a fully reporting
company.
Compliance
with the reporting obligations under the Exchange Act involves substantial
costs, including the cost of an independent registered public accounting firm to
review quarterly financial reports and audit Financial Statements included in
our annual reports, the cost of directors and officers liability insurance and
indemnification, the costs to implement internal control procedures for
financial reporting and public disclosure, the cost of preparing quarterly,
annual and periodic reports and filing them with the SEC and the cost of
printing and mailing information related to stockholders' meetings. We believe
that these costs are offset by the benefit of greater access to capital and an
improved trading market and liquidity for our stockholders. However, the costs
related to being public are largely fixed, while the benefits are dependent upon
a number of factors, the success of which cannot be guaranteed.
Time and Cost
Restraints.
Our
“Human Editing Process” bears a cost of $0.92 per category. This is relatively
expensive because of the use of consultants. We are limited by the number of
consultants collecting or adding new data and continuously adding and updating.
We must control these costs to remain competitive. At the same time, we are
faced with need to remain current and not allowing time lags in our building-up
of data. Lack of sufficient controls in these areas could conceivably cost us
customers, resulting in decreased revenues. Mr. Lalonde is in constant
consideration of these factors and supervision of the person involved. We are
unable at this time to place a specific amount on potential losses.
We
may be liable for issuing some of our common stock without registration or an
exemption there from.
During
the period October 1, 2002 through August 31, 2005 we issued 16,301,161 shares
for approximately
$941,000 to non-United States persons. We relied on the exemption from
regulation provided by Regulation S. If it is ever determined that we did not
properly rely on the exemption or otherwise erred in such reliance, we could be
or become liable for a claim by investors or regulators that such shares were
issued in violation of Section 5 of the Securities Act of 1933, i.e., issuing
shares without registration or not pursuant to an applicable exemption. No such
claim has been made by any regulator or shareholder.
During
the course of the preparation of the original filing of our registration
statement, a concern was orally expressed that the documentation supporting the
Regulation S exemption was potentially insufficient. Although there
was no written legal opinion or finding to that effect, we determined to offer
to repurchase the shares, and an offer was made to all non-United States
persons. A written recission offer was sent by first class mail
on October 15, 2005 and a written offer was hand delivered at a shareholder
meeting in Montreal on October 16, 2005. There have been no further
contacts in this regard. However, there could be a second potential
claim based on the fact that the recission offer was not properly made and did
not qualify for a Regulation S exemption. The recission offer itself
could create a violation of Section 5 of the Securities Act, and, if Regulation
S were not available or properly implemented, it could give rise to a second
potential violation claim of issuing stock without registration or a proper
exemption. This would create the same prospects of liability
discussed above. No shareholder has accepted the offer.
8
We may be
or become liable for a violation of section 5 relative to the registration
of shares issued to a consultant, Mr. Frank G. Wright, pursuant to an option
agreement if it is ever determined that we did not properly use Form
S-8. Mr. Wright received his option grant as a part of his
compensation for services rendered. One of the items provided for in
the agreement was that Mr. Wright would assist in getting our stock quoted on
the OTC Bulletin Board. If Mr. Wright were to perform this service,
the Company could not use Form S-8 to register the option shares issued to Mr.
Wright. Mr. Wright's agreement also provided he would not
be required to perform any activity that would render Form S-8 unavailable. The
test relied upon by the Company was whether or not SD authorized or requested
that Mr. Wright perform an activity and whether Mr. Wright performed such
activity at our request which would render our issue of securities in reliance
on S-8 a violation of Section 5. If a claim is made and it is
ultimately determined that Form S-8 was not available to the issuer, we may face
the same types of actions and claims against us discussed in paragraph 2 above.
We cannot estimate the amount or nature of our liability, if any. Mr.
Wright has sold all of his shares back to the Company.
Oral
Contracts
We do not
have written contract with our independent editors. As a result, they may cease
working with us at any time with little or no notice, taking what they have
learned with them and using it to compete with us. This could cause delay in
completion of our website program and additional expense in locating, hiring and
training replacements. Such delays could possibly cost us customers and loss of
future revenues.
Patents,
Licenses and Trademarks
As noted
in “Our Business”, Part I, Item 1, we have no patents, licenses or trademark
(except for a United States registered Service Mark) protecting our programs and
other aspects of our business. They, therefore, could be adopted and used by
other entities, weakening our ability to compete with other providers. Such a
result could cost us customers and create additional expense in providing our
services as well as possible loss of future revenues. The sources of our
programs are considered to be trade secrets and are essential to creation and
implementation of our business; but they are not covered by patents or
trademarks. We cannot estimate the impact on our financial position or future
business, if any, if these are improperly disclosed.
Vulnerability
to Developments in Technology
We have
focused solely on the development of our database since our inception. The pace
of our development makes us vulnerable to more rapid development in technology,
resulting in lag time with competitors and increased costs to catch up. It also
could lead to delayed or lost revenues.
Item
2 - Properties
Our
principal corporate offices are currently located at 5337 Route 374, Merrill,
New York and consist of approximately 150 square feet of office and
administrative space that we lease from and share with Aqua Nature of USA, Inc.
pursuant to an informal month-to-month lease arrangement. Such rent has now been
set at a fixed amount of $4,000 per month. Luke Lalonde, our president and
majority stockholder is the majority stockholder of Aqua Nature of USA, Inc.
Aqua Nature of USA, Inc.’s sole business is owning and managing properties
controlled by Mr. Lalonde. For the fiscal years ended September 30, 2007, 2008
and 2009 we paid Aqua Nature of USA, Inc. $36,000, $39,000 and $48,000,
respectively, in rent and services related to the property.
We are
currently seeking to lease a new facility in or near Plattsburgh, New York,
which will serve as our principal corporate offices. We anticipate relocating to
such a new facility during the next eight months.
Item
3 - Legal Proceedings
We are
not currently a party to any pending legal proceeding, nor is any of our
property the subject of a pending legal proceeding. We are not aware of any
proceeding that a governmental authority is contemplating against
us.
.
Item
4 - Submission of Matters to a Vote of Security Holders
No matters were presented to a vote of
securities holders during the fourth quarter of the fiscal year covered by this
report.
9
Part
II
Item
5 - Market for Common Equity and Related Stockholder Matters
|
Market
Information
|
As of
September 30, 2009, there were outstanding 158,821,157 shares of our common
stock all of which are restricted and may be transferred only pursuant to a
registration under the Securities Act, Rule 144 or some other exemption from
registration. No shares are presently proposed to be publicly
offered.
We are an
Exchange Act reporting company. However, currently, there is no established
public trading market for our common stock. We cannot assure you that a public
trading market for our common stock will ever develop or be maintained. We have
not applied for a listing on any public trading exchange; however, we have
qualified for quotation on the OTC Bulletin Board. We have retained a
broker/dealer to serve as market maker. Although we have accomplished
these, no active market has developed.
The
Securities and Exchange Commission has promulgated rules affecting so-called
"Penny Stocks," which are defined in Rule 15g-9 promulgated under the Exchange
Act as equity securities whose market price is less than $5.00. We anticipate
that our stock will fall under this definition. Transactions in Penny Stocks are
restricted and regulated in several ways:
|
·
|
Brokers
must approve a client's account for transactions in Penny Stocks by
obtaining information about the client's financial situation and making a
determination that Penny Stocks are suitable for the client, or that
clients have sufficient experience to evaluate the investment in a Penny
Stock themselves;
|
|
·
|
Brokers
must receive a written agreement to the transaction, setting forth the
identity and quantity of the penny stock to be
purchased;
|
|
·
|
Brokers
must deliver to the client prior to a transaction in Penny Stocks a
written disclosure statement highlighting the basis for the suitability
decision, as well as that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure about the
risks of investing in penny stock in both public offering and in secondary
trading, and about commissions payable to both the broker-dealer and the
registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny
stock transactions; and
|
|
·
|
Brokers
must furnish the client with monthly account statements with recent price
information about the client's Penny Stocks and setting forth information
about the limited market in Penny
Stocks.
|
These
regulations could make it more difficult for investors to transact in our common
stock, and therefore, a market in our securities may be less developed than that
of otherwise similar issuers who are not subject to Penny Stock
regulations.
Holders
On
September 30, 2009, there were approximately 1,158 holders of record of our
common stock.
Dividends
Dividends,
if any, will be contingent upon our revenues and earnings, if any, capital
requirements and financial conditions. The payment of dividends, if any, will be
within the discretion of our board of directors. We have never declared or paid
any dividends on our common stock and we do not intend to pay dividends on our
common stock in the foreseeable future. We anticipate that we will retain any
earnings to finance the growth and development of our business and for general
corporate purposes.
10
Securities
Authorized for Issuance Under Equity Compensation Plans
As of
September 30, 2009 and the date of this Annual Report, there are no existing
compensation plans. An earlier option plan has been fully
exercised.
Shares
were issued pursuant to the Stock Option Agreement dated November 24, 2004
between us and Frank G. Wright. The options were granted to Mr.
Wright as partial compensation for consulting services that he provided to us
related to the registration of our common stock under the Exchange Act and such
other related business consulting services as we may reasonably
request. Pursuant to the stock option agreement, we granted to Mr.
Wright options to purchase up to 7,605,000 shares of our common
stock. One-third of the options became immediately exercisable;
another one-third of the options became exercisable upon the filing of our
original registration statement with the Securities and Exchange Commission; and
the remaining one-third of the options became exercisable upon the effectiveness
of the registration statement. The exercise price for the options was
$0.01 per share. The options were registered on a Form S-8 filed with
the SEC, and there are no unexercised options remaining. Mr. Wright
has resold all of his shares to the Company.
Item
6 – Selected Financial Data
Not
applicable.
Item
7- Management's Discussion and Analysis of Financial Condition and Results of
Operations
This
report contains what may be deemed to be forward looking statements. These
forward looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from historical results or
anticipated results, including those set forth in the following Plan of
Operation and elsewhere in this report. See also Cautionary Statement, Part 1 on
page 1.
The
following discussion and analysis should be read in conjunction with our
financial statements and notes thereto included elsewhere in this
report.
Results
of Operations
We are a
start-up company and do not yet generate revenue. We continue to rely
on funds raised through the sale of our common stock. Our current
cash balance is approximately $300,000 and we will need to raise additional
funds of approximately $453,000 in order to continue for at least the twelve
month period presented in our Plan of Operation following.
We had a
net loss for the year ended September 30, 2009 of $528,406 as compared to a net
loss for the year ended September 30, 2008 of $509,637. The net
losses accumulated since inception amount to approximately $6.7
million. The increased loss for the year ended September 30, 2009, is
primarily attributable to increased product development costs which were
partially offset by increased interest income.
Liquidity
and Capital Resources
Since
inception, we have relied on proceeds from the sale of securities to fund our
activities. During the fiscal year ended September 30, 2009, we used
cash of approximately $530,227 for operating activities and approximately
$44,637 for investing activities, while financing activities provided
approximately $216,400 in cash. During the fiscal year ended
September 30, 2008 we used cash of approximately$475,512 for operating
activities and approximately $2,326 for investing activities, while financing
activities provided $534,207.
Based on
our projected expenditures for the next twelve months, as presented in our Plan
of Operation below, we estimate that cash of approximately $453,000 will be
needed in addition to approximately $300,000 that we currently have on
hand. Actual expenditures will depend both on the level of
expenditures and the availability of funds.
11
Selected
Quarterly Financial Data (Unaudited)
The
following is a summary of the quarterly results of operations for the year ended
September 30, 2009:
|
1st Quarter
|
2nd Quarter
|
3rd Quarter
|
4th Quarter
|
|
|
Operating
Expenses
|
$(106,438)
|
$(134,610)
|
$(119,773)
|
$(183,670)
|
|
Other
income
|
6,071
|
4,143
|
3,037
|
2,834
|
|
Net
(Loss)
|
(100,367)
|
(130,467)
|
(116,736)
|
(180,836)
|
Plan
of Operation
The
following discussion of our plan of operation for the next 12 months should be
read in conjunction with our financial statements, any notes related thereto,
and the other financial data included elsewhere in this annual
report.
Overview
SuperDirectories,
Inc., a Delaware corporation, was formed in October 1999 under the name
LukeSmart, Inc. In July 2001, we changed our name to SuperDirectories,
Inc.
SB
303 (a) Plan of
operation.
|
1.
|
SuperDirectories'
plan of operation for the next twelve months is completely dependent upon
the issuer’s success in raising additional capital.
|
|
|
i.
|
At
the present time we have approximately $300,000 cash available
and believe we can satisfy our capital requirements for the 12
months ending November 30, 2010 as set forth in our plan from existing
cash and additional sales of unregistered securities;
|
|
|
ii.
|
As
in previous periods, we will engage consultants to perform “human” editing
services, expanding the quality and size of our searchable directory. As
expansion occurs, and as increased user activity places greater demand on
the system, more hardware (servers and routers) will be added to manage
the increased volume of data stored in the database and presented by the
online directory;
|
|
|
iii.
|
Except
for one or more servers and routers as may be occasioned by large demand
for our directory, we do not expect to purchase any significant equipment
or make any other capital expenditure.
|
|
We have
been successful in financing our operational and developmental activities by
selling shares of our common stock and advances to the Company by our President.
While we have no assurance that we will be able to continue that success, our
current available cash balance is approximately $300,000 and we are confident we
will be able to raise sufficient capital to continue development until business
operations are commenced. This is based upon our past performance and
the many requests from investors for new subscriptions. We have no plans for
other business activities if we are unable to raise funds. Based upon cash
currently available we feel we will need to raise additional capital of
approximately $453,000 in order to continue for at least the twelve month period
presented in the schedule of expected expenditures. Our activities to date have
been limited to building our database and those activities will continue
throughout our Plan of Operation and as long as we continue our operations. The
information available through our directory comes from ever changing and growing
sources. Therefore, our task of adding to our database will never
end.
We
believe within four months, we will have a sufficient database to make our
website marketable. We currently have 28 directory editors, who work
on a contract basis only, research subjects for our directory, create new
categories and add websites to our directory. Our average cost per
directory consultant is approximately $1,000 per month. We are currently
conducting a training program for our editors to help us to reach the desired
efficiency of each editor being able to add approximately 500 new links per day
into our database.
We
currently have five servers in operation – two in Watertown, New York at
facilities operated by Westelcom, two in Gatineau, QC, and one installed at
facilities operated by MCI in Montreal, Quebec. We plan to install a sixth
server at our Westelcom facility in Plattsburgh, New York during May
2010.
In May
2010 we intend to start building an administrative staff that will be needed to
manage our business as we prepare to move from a developmental to operational
mode. In this regard we plan to add approximately six administrative personnel
and expect to begin to incur related payroll costs of approximately $15,000 per
month.
12
By May
2010 we anticipate that we will have sufficiently developed our database to the
point where we can offer a product that will be receptive to potential
customers. At that time, although we will continue to add to our database, we
intend to start adding marketing personnel to develop and implement a plan to
bring our product into the marketplace. We plan to add two marketing personnel
per month beginning in May 2010 until we reach a total of ten at an approximate
monthly payroll cost of $2,750 per such employee.
According
to our Plan of Operation, our marketing team will be fully assembled by August
2010. At that point, much of the effort of our marketing team will be
directed to developing a national marketing effort and formulating a plan and
cost projection to carry it out. The national marketing effort will
not commence until after November 2010. Therefore, the costs of this
national marketing plan are not included in our Plan of Operation for the next
twelve months as we have not yet developed the exact time frames, costs, fees
and other details. The feasibility of this national marketing plan will be
dependent on our ability to raise additional capital and we have no
assurance that this can be accomplished. However, it is not vital to
our operations and we will implement it only when we do have sufficient
funds. We have no plan for any other business.
Following
is a summary of our expected expenditures for the next twelve months ending
November 30, 2010:
|
December
|
March
|
June
|
September
|
12
Months
|
||||||
|
Through
|
Through
|
Through
|
Through
|
Ending
|
||||||
|
February
|
May
|
August
|
November
|
Nov 2010
|
||||||
|
Directory
Consultants
|
$
|
84,000
|
$
|
84,000
|
$
|
84,000
|
$
|
84,000
|
$
|
336,000
|
|
Professional
services
|
6,000
|
6,000
|
6,000
|
6,000
|
24,000
|
|||||
|
Adm.
Personnel
|
15,000
|
45,000
|
45,000
|
105,000
|
||||||
|
Marketing
personnel
|
5,500
|
49,500
|
82,500
|
137,500
|
||||||
|
Product
development
|
15,000
|
15,000
|
15,000
|
15,000
|
60,000
|
|||||
|
Rental
expense
|
12,000
|
12,000
|
12,000
|
12,000
|
48,000
|
|||||
|
Travel
expense
|
4,000
|
4,000
|
4,000
|
4,000
|
16,000
|
|||||
|
Automobile
expense
|
2,000
|
2,000
|
2,000
|
2,000
|
8,000
|
|||||
|
Telephone
expense
|
1,000
|
1,200
|
1,200
|
1,200
|
4,600
|
|||||
|
Office
supplies
|
900
|
900
|
900
|
900
|
3,600
|
|||||
|
Bank
fees
|
75
|
75
|
75
|
75
|
300
|
|||||
|
Install
new server
|
10,000
|
10,000
|
||||||||
|
$
|
124,975
|
$
|
155,675
|
$
|
219,675
|
$
|
252,675
|
$
|
753,000
|
Funding
for the above plan of operation will continue to be available from cash
currently on hand of approximately $300,000 and sales of securities of
$453,000. If we are able to successfully develop and market our
directory, we hope to generate revenue from several different sources. We can
not be certain that the planned revenue sources will be marketable and therefore
generate cash flow until we are actually in operation.
We have
described above our plan for the deployment of our existing capital. During the
past, our CEO has received and continues to receive numerous telephone and email
inquiries from our shareholders and investors referred by our shareholders,
seeking to acquire common stock in private transactions. We believe
that we can satisfy our capital requirements for the next twelve months, as
presented in the above schedule, with our currently available cash of
approximately $300,000 and proceeds from additional sales of
securities.
Pay Per Click A major
portion of revenue is expected to come from Pay Per Click fees which we will
commence before May 31, 2010. We are presently generating 245,000 clicks per
month and we have no agreements in place at this time to convert clicks to
dollars. Our rate structure will be a flat $0.25 per click compared to an
average of $0.92 for Google and Yahoo, the most measurable in our industry who
generate more than 2,000,000 clicks per day. We expect to increase
our monthly click rate as rapidly as our financing will permit us to conduct our
marketing activities.
Banners
will be sold on an annual basis, starting as soon as possible after May 2010
when we will attempt to convert all present (trial basis) free-banner sites to
paid sites. The program has not commenced, no transactions have been recorded
and no sums raised or fees received.
We intend
to introduce a fixed “price per click” (as opposed to the highest bid strategy
employed by all known competitors) which we expect to yield a following
dedicated to true content matching rather than a ranking based on price. This
plan will be modified to offer discounts to sites producing the highest click
ratings. We believe this strategy is not yet in wide use and will require a
series of modifications to test and prove the concept. In the opinion of
management, the bidding concept for key words is not the proper,
customer-centric way to determine the priority order of websites to be shown in
search results. We believe that showing the most frequently accessed sites at
the top of the results list produces a more ethical result for
users/searchers.
13
Paid
inclusion on listing will provide relevant search traffic with the submission of
only a URL, title and description. Each click to a paid inclusion listing will
be billed on a simple pre-set “cost per click”. Paid inclusion listing will be
boosted into the sponsored search section of the search results page when space
is available. In addition, we will pursue alternative revenue generating
opportunities such as providing research and booking search tools for certain on
line service providers such as hotels, airlines, car rental and vacation
packages as well as comparison shopping tools for users to find, research,
compare and purchase products online. We publish our data in a proprietary set
of categories in specific taxonomy, which has over 2,168,302 searchable
categories and 1,804,674 links. Our categories are titled to permit a response
to our “Full Text Search” program. We expect to develop technology for
incorporating maximum “cost per click” and click through rate in the placement
of listings in search results, updated throughout the day.
Listing fees will be
offered at $125 per page listed compared to more than $500 for the big players
like Google and Yahoo. A "Submit" form will be installed on our site. We have
not yet begun to offer these services.
Associates and
Affiliates programs are those such as EBay and Amazon who pay between 8%
and 15% of the sale referred. We plan to start our campaign for these listings
before May 31, 2010, but have not yet done so. As we previously
disclosed, "Associates" and "Affiliates" are virtually synonymous. They are
commercial understandings between parties where, for example, "Machinery Dealer"
shows many of his products for sale on his website. The dealer then arranges to
list the website in our database under one or more fee structures. If a user of
our directory checks on this site, examines and subsequently buys a machine from
the dealer's inventory or offerings, this sale would generate a commission in
our favor because the buyer located the product via the use of our listed
website.
Referrals. Referrals
are bookings which will generate revenues for hotel and other facility
operators, resulting in an automatic credit or payment via the creation of an
online sale, usually around 2%. Revenues will be generated from electronic
linking with hotel chains, tour operators and other large internet sellers of
services such as cruise lines, resorts and golf and other sports and recreation
packages.
We have
an extensive listing of such sites and will start working with them for
agreements as soon as possible. None have been entered into as of the date
hereof. Nor have we included referral business in our 12 month plan
of operation. While we plan eventually to engage in such business, we
have not yet determined the time frame, fees, costs and other
details. Reference to this phase of our business has been deleted
from our website until we start operation.
Bookings revenues
will generate from electronic linking with Hotel chains, Tour operators and
other large internet sellers of services such as Cruise lines, Resorts, Golf and
other sports and recreation packagers. We have an extensive listing of such
sites and plan to start working with them for agreements before October 31,
2009.
A national advertising
program is planned to be undertaken following the next 12 months
presented in the schedule of expected expenditures above. Final costs
and budgets have not been negotiated or agreed upon; however, management
estimates that advertising might cost several millions in the first year and
will be a dominant future cost. Taken in addition to those costs described above
and below for development, personnel, office and associated equipment costs, we
will require additional capital before we can undertake a national advertising
program. We continue to research non-equity alternatives but our most
promising avenue seems always to be equity. We will implement this
national advertising program only when we have sufficient funds since our
continuing operations are not dependent on such program.
Independent
directory consultants are trained to research subjects for our directory. We
have had good success with these and presently use twenty-eight on a contractor
basis only. These people create new categories and add websites to
our directory.
We have
upgraded our server network by adding router machines
to our existing servers. More servers in different locations will be added as
the user-traffic volume and origin-locus will require.
Our
database software is basically a modified Microsoft SQL. We have also written
38,000 pages of script to run our database and search performance.
Off-balance
Sheet Arrangements
We have
no off-balance sheet arrangements.
14
Critical
Accounting Policies
In June
2009 the Financial Accounting Standards Board (“FASB”) issued Accounting
Standards Codification (“ASC”) 105, “Generally Accepted Accounting Principles”
(formerly Statement of Financial Accounting Standards (“FASB”) No, 168, “The
FASB Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles”). ASC 105 establishes the FASB ASC as the
single source of authoritative nongovernmental U.S. GAAP. The
standard is effective for interim and annual periods ending after September 15,
2009. We adopted
the provisions of the standard on September 30, 2009, which did not have a
material impact on our financial statements.
There
were various other accounting standards and interpretations issued in 2009, none
of which are expected to have a material impact on the Company’s financial
position, operations or cash flows.
The
preparation of financial statements requires us to make assumptions, estimates
and judgments that affect the reported amounts of assets, liabilities, revenues
and expenses and disclosures of contingent assets and liabilities as of the date
of the financial statements. On an ongoing basis, we evaluate our
estimates, including those related to reserves; impairment of website
development cost, value of our stock issued to consultants for services and
deferred taxes. We base our estimates on assumptions that we believe
to be reasonable under the circumstances, the results of which form the basis
for making judgments about the carrying value of assets and liabilities that are
not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions; however, we
believe that our estimates, including those for the above-described items are
reasonable.
We
believe the following critical accounting policies affect our more significant
judgments and estimates used in the preparation of our financial
statements.
Long-Lived
Assets
The
Company’s long-lived assets are primarily property and equipment and in
accordance with ASC No. 360, Property, Plant & Equipment
(“ASC 360”), they are tested for impairment based on undiscounted cash
flows when triggering events occur, and if impaired, written-down to fair value
based on either discounted cash flows or appraised values. ASC 360 also provides
a single accounting model for long-lived assets to be disposed of by sale and
establishes additional criteria that would have to be met to classify an asset
as held for sale. The carrying amount of an asset or asset group is
not recoverable if it exceeds the sum of the undiscounted cash flows expected to
result from the use and eventual disposition of the asset or asset
group. Estimates of future cash flows used to test the recoverability
of a long-lived asset or asset group must incorporate the entity’s own
assumptions about its use of the asset or asset group and must factor in all
available evidence.
ASC 360
requires that long-lived assets be tested for recoverability whenever events or
changes in circumstances indicate that their carrying amount may not be
recoverable. Such events include significant under-performance
relative to the historical or projected future operating results; significant
changes in the manner of use of the assets; significant negative industry or
economic trends and significant changes in market capitalization.
Income
taxes
Deferred
income taxes are determined using the asset and liability method in accordance
with ASC No. 740, Income
Taxes (“ASC 740”). Income taxes are provided for the tax effects
of
transactions
reported in the financial statements and consist of taxes currently due plus
deferred taxes relating primarily to differences between the financial and tax
basis of the balance sheet elements. The deferred tax assets represent the
future return consequences of differences, which will be deductible when the
assets or liabilities are recovered or settled. Conversely, a deferred tax
liability is required when the basis differences will yield a future taxable
amount when the asset or liability is settled. A valuation allowance
is recorded to reduce deferred tax assets to amounts expected to be more likely
than not to be realized.
Development
Stage Activities
The
Company was incorporated in the state of Delaware on November 15, 1999.
Activities to date have been directed at developing a searchable directory of
selected contents from the Internet and raising capital through the issuance of
the Company’s capital stock.
Item
7A - Quantitative and Qualitative Disclosures about Market Risk
Interest
Rate Risk – Interest rate risk refers to fluctuations in the value of a security
resulting from changes in the general level of interest rates. We do
not have significant short-term investments. Accordingly, we believe
that we do not have a material interest rate exposure.
Foreign
Currency Risk – Our functional currency is the United States dollar and we do
not currently transact business in foreign currencies. Accordingly,
we believe that we do not have a material foreign currency
exposure.
Commodity
Price Risk – Based on the nature of our business, we have no direct exposure to
commodity price risk.
15
Item
8 - Financial Statements
The
information following presents audited balance sheets of the Company as of
September 30, 2008 and 2009 and audited statements of operations, stockholders’
equity, and cash flows for each of the 2 years then ended and for the period
from November 15, 1999 (inception) to September 30, 2009.
Index to
Financial Statements
Contents
| Report of Independent Registered Public Accounting Firm | 17 |
| Managements Report on Internal Control over Financial Reporting | 18 |
| Financial Statements | |
| Balance Sheets | 19 |
| Statements of Operations | 20 |
| Statements of Stockholders’ Equity | 21 |
| Statements of Cash Flows | 22 |
| Notes to Financial Statements | 23 |
16
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders
of
SuperDirectories, Inc.
We have
audited the accompanying balance sheets of SuperDirectories, Inc. (a development
stage company) as of September 30, 2009 and 2008, and the related statements of
operations, stockholders’ equity and cash flows for the years then ended, and
for the period from November 15, 1999 (inception), to September 30, 2009. These
financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audits included consideration
of internal control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the company’s internal control
over financial reporting. Accordingly, we express no such
opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of SuperDirectories, Inc. as of
September 30, 2009 and 2008, and the results of its operations and its cash
flows for the years then ended, and from November 15, 1999 (inception), to
September 30, 2009, in conformity with accounting principles generally accepted
in the United States of America.
GOFF
BACKA ALFERA & COMPANY, LLC.
Pittsburgh,
Pennsylvania
December
23, 2009
17
MANAGEMENT’S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
We, the
Chief Executive Officer and Chief Financial Officer of SuperDirectories, Inc.
are responsible for establishing and maintaining adequate internal control over
financial reporting of the Company, as such term is defined in Rules 13a-15(f)
and 15d-15(f) under the Securities Exchange Act of 1934. The
Company’s internal control over financial reporting is designed to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles in the United States.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation
of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
We
evaluated the effectiveness of the Company’s internal control over financial
reporting as of September 30, 2009, using the criteria for effective internal
control established in Internal Control Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
Based on
our evaluation, we concluded that we did not maintain effective internal control
over financial reporting as of September 30, 2009, based on the specified
criteria. We identified control deficiencies regarding: (1) lack of
segregation of duties; (2) lack of timely completion of financial control and
reporting processes; and (3) need for stronger internal control
environment. We believe that these material weaknesses are due to the
fact that we only have one employee. During the current fiscal year
ending on September 30, 2010, we intend to increase the number of administrative
employees; however, the number of such employees will still be limited and may
prevent adequate controls in the future, such as segregation of duties, due to
cost/benefit of such remediation.
The
control deficiencies that we identified could result in a misstatement of
account balances that would result in a reasonable possibility that a material
misstatement to our financial statements may not be prevented or detected on a
timely basis. Accordingly, we have determined that these combined
control deficiencies constitute a material weakness.
In light
of this material weakness, we performed additional analysis and procedures in
order to conclude that our financial statements for the year ended September 30,
2009, included in this Annual Report on Form 10-K were fairly stated in
accordance with accounting principles generally accepted in the United
States. Accordingly, we believe that despite our material weaknesses,
our financial statements for the years ended September 30, 2009 and 2008, are
fairly stated, in all material respects, in accordance with United States
generally accepted accounting principles.
The
Company’s financial statements included in this annual report have been audited
by Goff Backa Alfera & Company, LLC, an independent registered public
accounting firm. This annual report does not include an attestation
report of the Company’s registered public accounting firm regarding internal
control over financial reporting. Management’s report was not subject
to attestation by the Company’s registered public accounting firm pursuant to
temporary rules of the Securities and Exchange Commission that permit the
Company to provide only management’s report in this annual report.
/s/ Luke
Lalonde President
and Date:
December 23, 2009
Luke
Lalonde Chief
Executive Officer
/s/ Gary R.
Benware Principal Financial
Officer Date:
December 23, 2009
Gary R.
Benware
18
SuperDirectories, Inc. (A Development Stage Company)Balance sheets
|
September
30,
|
September
30,
|
||
|
2009
|
2008
|
||
|
ASSETS
|
|||
|
CURRENT
ASSETS
|
|||
|
Cash
and cash equivalents
|
$ 391,798
|
$ 750,242
|
|
|
Prepaid
expenses
|
-
|
5,000
|
|
|
TOTAL
CURRENT ASSETS
|
391,798
|
755,242
|
|
|
PROPERTY
AND EQUIPMENT
|
|||
|
Office
equipment
|
124,222
|
79,586
|
|
|
Less
accumulated depreciation
|
(84,387)
|
(65,495)
|
|
|
TOTAL
PROPERTY AND EQUIPMENT
|
39,835
|
14,091
|
|
|
TRADE NAME,
NET
|
1,595
|
1,812
|
|
|
TOTAL
ASSETS
|
$ 433,228
|
$ 771,145
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||
|
CURRENT
LIABILITIES
|
|||
|
Accrued
expenses
|
$ 24,000
|
$ 39,233
|
|
|
Accounts
payable
|
5,578
|
16,275
|
|
|
Advance
from officer
|
186,709
|
-
|
|
|
TOTAL
CURRENT LIABILITIES
|
216,287
|
55,508
|
|
|
TOTAL
LIABILITIES
|
216,287
|
55,508
|
|
|
STOCKHOLDERS'
EQUITY
|
|||
|
STOCKHOLDERS'
EQUITY
|
|||
|
Capital
stock, par value $.01 per share, 200,000,000 shares
|
|||
|
authorized. 158,821,157
and 158,791,446 shares issued and
|
1,588,211
|
1,587,914
|
|
|
outstanding
2009 and 2008 respectively
|
|||
|
Additional
paid in capital
|
5,351,702
|
5,322,289
|
|
|
Accumulated
loss during the developmental stage
|
(6,722,972)
|
(6,194,566)
|
|
|
TOTAL
STOCKHOLDERS' EQUITY
|
216,941
|
715,637
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ 433,228
|
$ 771,145
|
The accompanying notes are an integral part of these financial statements.
19
SuperDirectories, Inc. (A Development Stage Company)Statements of Operations
|
|
|||||
|
Years
Ended
|
Year Ended |
November
15, 1999
|
|||
|
September
30,
|
September 30, | (Inception) | |||
|
2008
|
2009
|
to Sept. 30, 2009 | |||
|
REVENUES
|
|||||
|
Operating
income
|
$ -
|
$ -
|
$ -
|
||
|
TOTAL
OPERATING INCOME
|
-
|
-
|
-
|
||
|
EXPENSES
|
|||||
|
Consultants
|
45,728
|
-
|
4,002,889
|
||
|
Legal
and accounting
|
166,356
|
170,687
|
957,279
|
||
|
Impairment
loss
|
-
|
-
|
243,903
|
||
|
Product
development costs
|
234,466
|
285,185
|
884,113
|
||
|
Rental
expense
|
39,000
|
48,000
|
392,477
|
||
|
Travel
expense
|
17,919
|
10,247
|
83,674
|
||
|
Automobile
expense
|
9,292
|
4,649
|
48,840
|
||
|
Depreciation
|
15,908
|
18,892
|
84,387
|
||
|
Start-Up
Costs
|
-
|
-
|
17,500
|
||
|
Other
taxes
|
1,680
|
1,190
|
21,142
|
||
|
Telephone
|
2,561
|
2,669
|
21,781
|
||
|
Office
supplies
|
1,662
|
2,615
|
25,620
|
||
|
Amortization
|
217
|
217
|
1,663
|
||
|
Miscellaneous
|
-
|
-
|
888
|
||
|
Bank
fees
|
210
|
140
|
1,115
|
||
|
Penalties
|
-
|
-
|
561
|
||
|
Advertising
|
-
|
-
|
158
|
||
|
Repair
and maintenance
|
-
|
-
|
107
|
||
|
Insurance
|
-
|
-
|
3,423
|
||
|
Training
|
-
|
-
|
599
|
||
|
Web
consulting
|
-
|
-
|
5,231
|
||
|
TOTAL
EXPENSES
|
534,999
|
544,491
|
6,797,350
|
||
|
OTHER
INCOME
|
|||||
|
Other
income
|
-
|
-
|
125
|
||
|
Interest
income
|
25,362
|
16,085
|
74,253
|
||
|
TOTAL
OTHER INCOME
|
25,362
|
16,085
|
74,378
|
||
|
INCOME
(LOSS) BEFORE INCOME TAXES
|
(509,637)
|
(528,406)
|
(6,722,972)
|
||
|
(PROVISION)
BENEFIT FOR INCOME TAXES
|
-
|
-
|
-
|
||
|
NET
LOSS
|
$ (509,637)
|
$ (528,406)
|
$ (6,722,972)
|
||
|
EARNINGS(LOSS)
PER COMMON SHARE - BASIC
|
$ (0.0032)
|
$ (0.0033)
|
|||
|
EARNINGS(LOSS)
PER COMMON SHARE - DILUTED
|
$ (0.0032)
|
$ (0.0033)
|
|||
|
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING - BASIC
|
160,648,386
|
158,815,215
|
|||
|
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING - DILUTED
|
160,648,386
|
158,815,215
|
The accompanying notes are an integral part of these financial statements.
20
SuperDirectories, Inc. (A Development Stage Company)Statements of Stockholders’ Equity
|
Shares
|
Amount
|
Additional
Paid-In Capital
|
Common
Stock Options
|
Common
Stock Subscriptions
|
Deficit
Accumlated During the Development Stage
|
Total
Stockholders' Equity
|
||||||||
|
COMMON
STOCK
|
||||||||||||||
|
Balance
at September 30, 1999
|
-
|
$ -
|
$ -
|
$ -
|
$ -
|
$ -
|
$ -
|
|||||||
|
Issuance
of common stock
|
140,500,000
|
1,405,000
|
(1,000,000)
|
-
|
-
|
-
|
405,000
|
|||||||
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(128,347)
|
(128,347)
|
|||||||
|
Balance
at September 30, 2000
|
140,500,000
|
1,405,000
|
(1,000,000)
|
-
|
-
|
(128,347)
|
276,653
|
|||||||
|
Issuance
of common stock
|
46,500
|
465
|
46,035
|
-
|
-
|
-
|
46,500
|
|||||||
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(109,493)
|
(109,493)
|
|||||||
|
Balance
at September 30, 2001
|
140,546,500
|
1,405,465
|
(953,965)
|
-
|
-
|
(237,840)
|
213,660
|
|||||||
|
Issuance
of common stock
|
3,228,299
|
32,283
|
132,932
|
-
|
-
|
-
|
165,215
|
|||||||
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(121,664)
|
(121,664)
|
|||||||
|
Balance
at September 30, 2002
|
143,774,799
|
1,437,748
|
(821,033)
|
-
|
-
|
(359,504)
|
257,211
|
|||||||
|
Issuance
of common stock
|
507,408
|
5,074
|
20,296
|
-
|
-
|
-
|
25,370
|
|||||||
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(51,503)
|
(51,503)
|
|||||||
|
Balance
at September 30, 2003
|
144,282,207
|
1,442,822
|
(800,737)
|
-
|
-
|
(411,007)
|
231,078
|
|||||||
|
Issuance
of common stock
|
7,934,119
|
79,341
|
271,361
|
-
|
-
|
-
|
350,702
|
|||||||
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(109,209)
|
(109,209)
|
|||||||
|
Balance
at September 30, 2004
|
152,216,326
|
1,522,163
|
(529,376)
|
-
|
-
|
(520,216)
|
472,571
|
|||||||
|
Issuance
of common stock
|
4,656,036
|
46,561
|
504,104
|
-
|
-
|
-
|
550,665
|
|||||||
|
Stock
Based Compensation Expensed
|
||||||||||||||
|
(Options
valued at $.492 per share)
|
-
|
-
|
-
|
1,247,220
|
-
|
-
|
1,247,220
|
|||||||
|
(Options
valued at $.49 per share)
|
-
|
-
|
-
|
1,242,150
|
-
|
-
|
1,242,150
|
|||||||
|
Exercise
of stock options
|
2,484,300
|
24,843
|
1,217,307
|
(1,242,150)
|
-
|
-
|
-
|
|||||||
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(2,783,739)
|
(2,783,739)
|
|||||||
|
Balance
at September 30, 2005
|
159,356,662
|
1,593,567
|
1,192,035
|
1,247,220
|
-
|
(3,303,955)
|
728,867
|
|||||||
|
Issuance
of common stock
|
595,674
|
5,956
|
589,718
|
-
|
-
|
-
|
595,674
|
|||||||
|
Stock
Based Compensation Expensed
|
||||||||||||||
|
(Options
valued at $.492 per share)
|
-
|
-
|
-
|
1,247,220
|
-
|
-
|
1,247,220
|
|||||||
|
Exercise
of stock options
|
4,968,600
|
49,686
|
2,444,754
|
(2,494,440)
|
-
|
-
|
-
|
|||||||
|
Stock
Subscriptions Received
|
-
|
-
|
-
|
4,040
|
-
|
4,040
|
||||||||
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(1,868,183)
|
(1,868,183)
|
|||||||
|
Balance
at September 30, 2006
|
164,920,936
|
1,649,209
|
4,226,507
|
-
|
4,040
|
(5,172,138)
|
707,618
|
|||||||
|
Issuance
of common stock
|
500,280
|
5,003
|
495,277
|
-
|
-
|
-
|
500,280
|
|||||||
|
Stock
Subscriptions
|
-
|
(4,040)
|
-
|
(4,040)
|
||||||||||
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(512,791)
|
(512,791)
|
|||||||
|
Balance
at September 30, 2007
|
165,421,216
|
1,654,212
|
4,721,784
|
-
|
-
|
(5,684,929)
|
691,067
|
|||||||
|
Issuance
of common stock
|
717,899
|
7,179
|
710,720
|
-
|
-
|
-
|
717,899
|
|||||||
|
Retired
common Stock
|
(7,347,669)
|
(73,477)
|
(110,215)
|
(183,692)
|
||||||||||
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(509,637)
|
(509,637)
|
|||||||
|
Balance
at September 30, 2008
|
158,791,446
|
1,587,914
|
5,322,289
|
-
|
-
|
(6,194,566)
|
715,637
|
|||||||
|
Issuance
of common stock
|
29,711
|
297
|
29,413
|
-
|
-
|
-
|
29,710
|
|||||||
|
Retired
common Stock
|
-
|
-
|
-
|
-
|
||||||||||
|
Net
loss
|
-
|
-
|
-
|
-
|
-
|
(528,406)
|
(528,406)
|
|||||||
|
Balance
at September 30, 2009
|
158,821,157
|
$
1,588,211
|
$
5,351,702
|
$ -
|
$ -
|
$ (6,722,972)
|
$ 216,941
|
|||||||
The accompanying notes are an integral part of these financial statements.
21
SuperDirectories, Inc. (A Development Stage Company)Statements of Cash Flows
|
Years
Ended
|
Years Ended | November 15, 1999 | |||
|
September
30,
|
September 30, | (Inception) to | |||
|
2008
|
2009
|
November 15, 1999 | |||
|
\
|
|||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|||||
|
Net
loss
|
$ (509,637)
|
$ (528,406)
|
$ (6,722,972)
|
||
|
Adjustments
to reconcile net loss to net cash used
|
|||||
|
by
operating activities:
|
|||||
|
Noncash
Stock Compensation Expense
|
-
|
-
|
3,736,570
|
||
|
Depreciation
|
15,908
|
18,892
|
84,387
|
||
|
Amortization
|
217
|
217
|
1,663
|
||
|
Impairment
loss
|
-
|
-
|
243,903
|
||
|
(Increase)
decrease in assets:
|
|||||
|
Prepaid
expenses
|
20
|
5,000
|
-
|
||
|
Increase
(decrease) in liabilities:
|
|||||
|
Accounts
payable
|
1,247
|
(10,697)
|
5,577
|
||
|
Accrued
expenses
|
16,733
|
(15,233)
|
|
24,000
|
|
|
NET
CASH USED BY OPERATING ACTIVITIES
|
(475,512)
|
(530,227)
|
(2,626,872)
|
||
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|||||
|
Purchase
of fixed assets
|
(2,326)
|
(44,637)
|
(368,126)
|
||
|
Trade
name
|
-
|
-
|
(3,257)
|
||
|
NET
CASH USED IN INVESTING ACTIVITIES
|
(2,326)
|
(44,637)
|
(371,383)
|
||
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|||||
|
Issuance
of common stock
|
717,899
|
29,711
|
3,387,036
|
||
|
Retirement
of common stock
|
(183,692)
|
-
|
(183,692)
|
||
|
Advances
from officer
|
-
|
186,709
|
186,709
|
||
|
NET
CASH PROVIDED BY FINANCING
|
|||||
|
ACTIVITIES
|
534,207
|
216,420
|
3,390,053
|
||
|
NET
INCREASE (DECREASE) IN CASH
|
|||||
|
AND
CASH EQUIVALENTS
|
56,369
|
(358,444)
|
391,798
|
||
|
CASH
AND CASH EQUIVALENTS AT BEGINNING
|
|||||
|
OF
YEAR
|
693,873
|
750,242
|
-
|
||
|
CASH
AND CASH EQUIVALENTS AT END OF
|
|||||
|
YEAR
|
$ 750,242
|
$ 391,798
|
$ 391,798
|
||
|
SUPPLEMENTAL
DISCLOSURES:
|
|||||
|
Interest
paid
|
$ -
|
$ -
|
$ -
|
||
|
Income
taxes paid
|
$ -
|
$ -
|
$ -
|
||
|
Stock
options exercised
|
$ -
|
$ -
|
$ 3,736,570
|
The accompanying notes are an integral part of these financial statements.
22
SuperDirectories,
Inc.
Notes
to Financial Statements
Note
1 – Summary of significant accounting policies:
A summary
of the significant accounting policies consistently applied in the preparation
of the accompanying financial statements follows.
General
SuperDirectories,
Inc. is a corporation organized under the State of Delaware General Corporation
Law. The Corporation was created on November 15, 1999 under the name LukeSmart,
Inc. and was renamed SuperDirectories, Inc. on July 9, 2002. SuperDirectories,
Inc. is a corporation that is currently developing a searchable directory of
selected contents from the Internet.
Effective
November 21, 2005, the Company became a registered reporting company pursuant to
the provision of Sections 12 and 13 of the Securities Exchange Act of
1934. Its first report was its quarterly report on Form 10-QSB for
the quarter ending December 31, 2005.
Accounting
Method Applied
The
accrual method is used for both financial reporting and income tax
purposes.
Cash
and Cash Equivalents
For the
purpose of the balance sheet and statements of cash flows, the organization
considers all unrestricted highly liquid investments with an initial maturity of
three months or less to be cash equivalents.
Property
and Equipment
Property
and equipment are stated at cost when purchased. Depreciation of property and
equipment is computed using the straight-line method based on the estimated
useful lives of the assets. The useful life of office equipment is
from 3 to 5 years. Upon retirement or disposal of an asset, the cost and
accumulated depreciation are eliminated from the accounts and the resulting gain
or loss is included in the determination of net income (loss). Depreciation
expense was $18,892 and $15,908 the years ended September 30, 2009 and 2008
respectively.
Long-Lived
Assets
The
Company’s long-lived assets are primarily property and equipment and in
accordance with ASC No. 360, Property, Plant & Equipment
(“ASC 360”), they are tested for impairment based on undiscounted cash
flows when triggering events occur, and if impaired, written-down to fair value
based on either discounted cash flows or appraised values. ASC 360 also provides
a single accounting model for long-lived assets to be disposed of by sale and
establishes additional criteria that would have to be met to classify an asset
as held for sale. The carrying amount of an asset or asset group is
not recoverable if it exceeds the sum of the undiscounted cash flows expected to
result from the use and eventual disposition of the asset or asset
group. Estimates of future cash flows used to test the recoverability
of a long-lived asset or asset group must incorporate the entity’s own
assumptions about its use of the asset or asset group and must factor in all
available evidence.
ASC 360
requires that long-lived assets be tested for recoverability whenever events or
changes in circumstances indicate that their carrying amount may not be
recoverable. Such events include significant under-performance
relative to the historical or projected future operating results; significant
changes in the manner of use of the assets; significant negative industry or
economic trends and significant changes in market capitalization.
The
Company capitalized certain website development costs totaling $243,903 during
the years ended September 30, 2006. These capitalized website
development costs were included in property and equipment.
As
discussed above, Management regularly reviews the carrying value of intangible
assets including capitalized website development costs and at September 30,
2006, was uncertain as to the timing of the commencement of
operations. Accordingly, Management determined that the fair value of
the website development costs could not be established and an impairment loss of
$243,903 was recognized during the fiscal year ended September 30, 2006 to write
off the carrying value of the Website Development Costs.
23
Trade
name is carried at cost less accumulated amortization. Intangible assets are
generally amortized on a straight-line basis over the economic lives of the
respective assets, generally two to fifteen years. Long-lived assets and certain
identifiable intangible assets to be held and used are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
such assets may not be recoverable. Determination of recoverability is based on
an estimate of undiscounted future cash flows resulting from the use of the
asset and its eventual disposition. Measurement of any impairment
loss for long-lived assets and certain identifiable intangible assets that
management expects to hold and use is based on the amount the carrying value
exceeds the fair
value of the asset. The Company recorded amortization expense of $217 and $217
for 2009 and 2008, respectively.
Income
taxes
Deferred
income taxes are determined using the asset and liability method in accordance
with ASC No. 740, Income
Taxes (“ASC 740”). Income taxes are provided for the tax effects of
transactions reported in the financial statements and consist of taxes currently
due plus deferred taxes relating primarily to differences between the financial
and tax basis of the balance sheet elements. The deferred tax assets represent
the future return consequences of differences, which will be deductible when the
assets or liabilities are recovered or settled. Conversely, a deferred tax
liability is required when the basis differences will yield a future taxable
amount when the asset or liability is settled. A valuation allowance
is recorded to reduce deferred tax assets to amounts expected to be more likely
than not to be realized.
Product
Development Costs
Product
development costs consist primarily of subcontractor payments and related
expenses incurred for enhancements to and maintenance of the Company’s network,
classification and organization of listings, research and development costs,
amortization of capitalized Website development costs, and other operating
costs.
Earnings
(Loss) per Share of Common Stock
In
accordance with ASC No. 260, Earnings per Share, the
reported earnings (loss) per share are computed by dividing net income (loss) by
weighted average common shares outstanding for the period. Basic earnings per
share are computed using an unadjusted weighted average number of shares of
common stock. Diluted earnings per share are compiled using the weighted average
number of shares of common stock, plus an adjustment for the dilutive effect of
unexercised in-the-money stock options. A reconciliation between
basic and diluted weighted average common shares outstanding for the two years
ended September 30 follows:
|
2008
|
2009
|
|
|
Basic
weighted average shares outstanding
|
160,648,386
|
158,791,446
|
|
Stock
Option Shares
|
0
|
0
|
|
Diluted
weighted-average shares outstanding
|
160,648,386
|
158,791,446
|
Stock
Options
In
accordance with the provisions of ASC No. 718, Compensation, Stock
Compensation (“ASC 718”), the Company measures the cost of employee or
non-employee services received in exchange for an award of equity instruments
based on the grant-date fair value of the award. That cost will be
recognized over the period during which the employee or non-employee is required
to provide service in exchange for the award.
Use
of Estimates
The
preparation of the financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Development
Stage Activities
The
Company was incorporated in the state of Delaware on November 15, 1999.
Activities to date have been directed at developing a searchable directory of
selected contents from the Internet and raising capital through the issuance of
the Company’s capital stock.
Recent
Accounting Pronouncements
In June
2009 the Financial Accounting Standards Board (“FASB”) issued Accounting
Standards Codification (“ASC”) 105, “Generally Accepted Accounting Principles”
(formerly Statement of Financial Accounting Standards (“FASB”) No, 168, “The
FASB Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles”). ASC 105 establishes the FASB ASC as the
single source of authoritative nongovernmental U.S. GAAP. The
standard is effective for interim and annual periods ending after September 15,
2009. We adopted the provisions of the standard on September 30, 2009, which did
not have a material impact on our financial statements.
24
There
were various other accounting standards and interpretations issued in 2009, none
of which are expected to have a material impact on the Company’s financial
position, operations or cash flows.
Consideration
of Subsequent Events
These
financial statements were approved and authorized for issue by the Board of
Directors on December 23, 2009.
Note
2 – Concentration of credit risk:
The
Company maintains cash balances at a bank in New York. At September 30, 2009,
the Company’s cash balances exceeded the $250,000 insured by the Federal Deposit
Insurance Corporation (FDIC) by $33,204.
Note
3 – Stockholders’ Equity:
During
the three years ended September 30, 2005, the Company issued shares of stock
without registration or qualification under federal and state securities laws.
Although it is Management’s opinion that these sales were exempt from any such
registration, additional steps have been taken to fortify our basis of
exemption. A Form D has been filed with SEC with respect to the 25
United States purchasers. The non-United States purchasers were offered a right
to rescind, their remedy under Section 12. None of them have asked
for a rescission, and all have agreed to accept replacement certificates bearing
an expanded and more restrictive legend. They have also agreed to
sell shares only pursuant to Regulation S and not to engage in hedging. They
have also provided additional personal information in support of their status as
non-United States investors. None of the purchasers were, or are,
directors, officers or beneficial owners. Based upon the foregoing Management
believes that there will be no impact on financial status as no expenses will be
involved other than those already paid for mailing and printing, approximately
$15,000. Accordingly, the Company is of the opinion that no liability exists and
no provision for liability has been made in the financial statement. The common
stock was issued at various dates to non-employees at prices determined by the
Company’s president.
The
following table summarizes the Company’s activity in its common stock since
inception:
| Description | # of shares issued | Share Price | Cash proceeds |
|
Issuance
of common stock at $0.00 per share (1)
|
100,000,000
|
0.00
|
$ 0
|
|
Issuance
of common stock at $0.01 per share
|
40,500,000
|
0.01
|
405,000
|
|
Balance
at September 30, 2000
|
140,500,000
|
$405,000
|
|
|
Issuance
of common stock at $1.00 per share
|
46,500
|
1.00
|
46,500
|
|
Balance
at September 30, 2001
|
140,546,500
|
$451,500
|
|
|
Issuance
of common stock at $0.05 per share
|
3,224,299
|
0.05
|
161,215
|
|
Issuance
of common stock at $1.00 per share
|
4,000
|
1.00
|
4,000
|
|
Balance
at September 30, 2002
|
143,774,799
|
$616,715
|
|
|
Issuance
of common stock at $0.05 per share
|
507,408
|
0.05
|
25,370
|
|
Balance
at September 30, 2003
|
144,282,207
|
$642,085
|
|
|
Issuance
of common stock at $0.01 per share
|
330,000
|
0.01
|
3,300
|
|
Issuance
of common stock at $0.02 per share
|
3,650,266
|
0.02
|
73,005
|
|
Issuance
of common stock at $0.04 per share
|
1,197,401
|
0.04
|
47,896
|
|
Issuance
of common stock at $0.05 per share
|
1,937,806
|
0.05
|
96,890
|
|
Issuance
of common stock at $0.06 per share
|
272,600
|
0.06
|
16,356
|
|
Issuance
of common stock at $0.10 per share
|
356,356
|
0.10
|
35,636
|
|
Issuance
of common stock at $0.363 per share
|
136,690
|
0.363
|
49,619
|
|
Issuance
of common stock at $0.50 per share
|
50,000
|
0.50
|
25,000
|
|
Issuance
of common stock at $1.00 per share
|
3,000
|
1.00
|
3,000
|
|
Balance
at September 30, 2004
|
152,216,326
|
$992,787
|
|
|
Issuance
of common stock at $0.01 per share
|
516,234
|
0.01
|
5,163
|
|
Issuance
of common stock at $0.05 per share
|
928,480
|
0.05
|
46,424
|
|
Issuance
of common stock at $0.10 per share
|
2,222,602
|
0.10
|
222,260
|
|
Issuance
of common stock at $0.15 per share
|
620,120
|
0.15
|
93,018
|
|
Issuance
of common stock at $0.25 per share
|
22,000
|
0.25
|
5,500
|
|
Issuance
of common stock at $0.50 per share
|
336,600
|
0.50
|
168,300
|
|
Issuance
of common stock at $1.00 per share
|
10,000
|
1.00
|
10,000
|
|
Issuance
of common stock per stock option (2)
|
2,484,300
|
N/A
|
N/A
|
|
Balance
at September 30, 2005
|
159,356,662
|
$1,543,452
|
|
|
Issuance
of common stock at $1.00 per share
|
595,674
|
1.00
|
595,674
|
|
Issuance
of common stock per stock option (2)
|
4,968,600
|
N/A
|
N/A
|
|
Balance
at September 30, 2006
|
164,920,936
|
$2,139,126
|
|
|
Issuance
of common stock at $1.00 per share
|
500,280
|
1.00
|
500,280
|
|
Balance
at September 30, 2007
|
165,421,616
|
$2,639,406
|
|
|
Issuance
of common stock at $1.00 per share
|
717,899
|
1.00
|
717,899
|
|
Retirement
of common stock
|
(7,347,669)
|
0.025
|
(183,692)
|
|
Balance
at September 30, 2008
|
158,791,446
|
$3,173,613
|
|
|
Issuance
of common stock at $1.00 per share
|
29,711
|
1.00
|
29,711
|
|
Balance
at September 30, 2009
|
158,821,157
|
$3,203,324
|
|
(1)
|
On
April 29, 2000, the Company issued 100,000,000 shares of common stock to
the Company’s president in connection with his transfer to the Company of
his legal right, title and interest in the internet website concept and
design known as superdirectories.com. Because the
Company’s president did not have any historical cost basis in the website
concept, the Company did not record an asset but rather a charge to
additional paid in capital.
|
|
(2)
|
Represents
exercise by Frank G. Wright of vested stock options granted for services
rendered related to the registration of the Company’s common stock under
the Exchange Act and other business consulting
services.
|
Note
4 – Stock Options:
In
November 2004, the Company granted stock options to a consultant of the
Company. Pursuant to the terms of the agreement the consultant had
the right to purchase 7,605,000 shares of stock at an exercise price of $0.01
per share. The options were exercisable as follows: one-third were
immediately exercisable; one-third were exercisable upon the Corporation’s
filing with the SEC a registration statement on Form-10SB; and the remaining
one-third were exercisable upon the effectiveness of the Form-10SB.
On March
30, 2005, the consultant exercised his options to purchase 2,535,000 shares of
the Company’s stock having a fair value of $.50 per share. In accordance with
the option agreement, the consultant paid for the shares by returning 50,700 of
those shares to the Company, which resulted in 2,484,300 shares being issued. In
addition, the options exercisable upon the filing of the registration statement
for 2,535,000 shares were vested, however not exercised at September 30,
2005. Consulting expense of $2,489,370 was recognized in the year
ended September 30, 2005 as a result of the options that became exercisable upon
entering into the consulting agreement and those that became exercisable upon
the filing of the registration statement.
The
remaining 2,535,000 shares were vested during the quarter ended March 31, 2006,
and consulting expense of $1,247,220 was recognized in that
quarter. These shares, along with those vested at September 30, 2005
were also exercised during the quarter ended March 31, 2006. As with
the earlier option exercise and in accordance with the option agreement, for
each of the options for 2,535,000 shares the consultant paid for the shares by
returning 50,700 shares to the Company, which resulted in a total of 4,968,600
shares being issued. The fair value of all options was determined using the
Black-Scholes option-pricing model with the following weighted average
assumptions:
25
|
Expected
Dividend
|
0.00%
|
|
Risk
Free Interest Rate
|
3.61%
|
|
Expected
Volatility
|
60%
|
|
Expected
life (in years)
|
5
Years
|
The
Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options that have no vesting restrictions and are fully
transferable.
Effective
May 28, 2008, Mr. Wright and certain other shareholders who had been given
shares by Mr. Wright sold 7,347,669 shares back to the Company at a price of
$0.025 per share, a gross consideration of $183,692. There were no
brokers or dealers involved, no commissions or fees were paid and there have
been no public announcements or offers to purchase additional
shares. All 7,347,669 shares repurchased were immediately
cancelled. The excess paid for the shares over their par value was
recorded as a charge to Additional Paid-In Capital.
Note
5 – Common stock subscriptions:
Prior to
September 30, 2006, the Company received $4,040 for subscriptions to its common
stock, which were fulfilled during the fiscal year ended September 30,
2007.
Note
6 – Related party transactions:
Shareholders
received complimentary advertising on the SuperDirectories, Inc.
website. There was no recognized income from these activities.
SuperDirectories, Inc. receives services and rents its administrative offices
from Aqua Nature of USA, Inc., a company of which
the majority stockholder is the majority stockholder of SuperDirectories,
Inc. Services and rentals from Aqua Nature of USA, Inc. of $48,000
and $39,000 for the years ended September 30, 2009 and 2008 are included in the
Statement of Operations.
Beginning
in the year ended September 30, 2009, the Company received services totaling
$29,650 from 9200-2914 Quebec, Inc. a company owned by the daughter of the
president and majority stockholder of Superdirectories, Inc.
During
the year ended September 30, 2009, the Company’s president and majority
stockholder advanced $186,709 to the Company to fund current
operations. These advances do not bear interest and are payable upon
demand.
Note
7 – Income taxes:
The net
deferred tax benefits in the accompanying balance sheets include the following
components:
|
2009
|
2008
|
|
|
Deferred
tax assets
|
$2,815,993
|
$2,597,913
|
|
Less:
valuation allowance
|
(2,815,993)
|
(2,597,913)
|
|
Net
deferred tax liability
|
$ 0
|
$ 0
|
Deferred
taxes as of September 30, 2009 and 2008, relate primarily to unused net
operating loss carryforwards of approximately $6.7 million and $6.2 million and
differences between book and tax basis on fixed assets of approximately $18,000
and $7000 respectively at tax rates of 34% for Federal taxes and 8% for state
taxes. Due to the uncertainty regarding the level of future earnings,
the Company has recorded a valuation allowance to reflect the estimated amount
of deferred tax assets that may not be realized, principally due to the
expiration of net operating loss carryforwards. There was no provision for
income tax expense for 2009 and 2008.
26
Item
9 - Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
In 2005,
we changed accountants. This has been fully disclosed in our Forms
10-SB and 8-K, as amended, previously filed.
None of
our accountants, during the fiscal years ended September 30, 2009 and 2008 have
advised us that internal controls did not exist or that they were unwilling to
rely on management’s representations or that the scope of the audit should be
expanded or that information had come to their attention that would materially
impact the fairness or reliability of any opinion. The prior
accountants were authorized to respond fully to the inquiries of a
successor.
Item
9A (T) - Controls and Procedures
Evaluation
of Disclosure Controls and Procedures
Under the
supervision and with the participation of our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities
Exchange Act of 1934 as amended (Exchange Act), as of September 30,
2009. Based on this evaluation, our principal executive officer and
principal financial officer have concluded that our disclosure controls and
procedures were effective to ensure that information required to be disclosed by
us in the reports we file or submit under the Exchange Act is recorded,
processed, summarized, and reported within the time periods specified in the
Securities and Exchange Commission’s rules and forms and that our disclosure and
controls are designed to ensure that information required to be disclosed by us
in the reports that we file or submit under the Exchange Act is accumulated and
communicated to our management, including our principal executive and principal
financial officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosures.
Management’s
Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as such term is defined in Rules 13a-15(f) and
15d-15(f) of the Securities Exchange Act of 1934, as amended. Our internal
control over financial reporting is a process designed under the supervision of
our Chief Executive Officer and Chief Financial Officer to provide reasonable
assurance regarding the reliability of financial reporting and the preparation
of our financial statements for external purposes in accordance with accounting
principles generally accepted in the United States of America.
Management,
under the supervision and with the participation of our Chief Executive Officer
and Chief Financial Officer, evaluated the effectiveness of our internal control
over financial reporting using the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission in Internal Control – Integrated
Framework. Based
upon their evaluation, they concluded that we did not maintain effective
internal control over financial reporting as of September 30, 2009, based on the
specified criteria They
identified control deficiencies regarding: (1) lack of segregation of duties;
(2) lack of timely completion of financial control and reporting processes; and
(3) need for stronger internal control environment. We believe that
these material weaknesses are due to the fact that we only have one
employee. During the current fiscal year ending on September 30,
2010, we intend to increase the number of administrative employees; however, the
number of such employees will still be limited and may prevent adequate controls
in the future, such as segregation of duties, due to cost/benefit of such
remediation.
The
control deficiencies that we identified could result in a misstatement of
account balances that would result in a reasonable possibility that a material
misstatement to our financial statements may not be prevented or detected on a
timely basis. Accordingly, we have determined that these combined
control deficiencies constitute a material weakness.
27
In light
of this material weakness, we performed additional analysis and procedures in
order to conclude that our financial statements for the year ended September 30,
2009, included in this Annual Report on Form 10-K were fairly stated in
accordance with accounting principles generally accepted in the United
States. Accordingly, we believe that despite our material weaknesses,
our financial statements for the years ended September 30, 2009 and 2008, are
fairly stated, in all material respects, in accordance with United States
generally accepted accounting principles
Attestation
Report of Registered Public Accounting Firm
This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial
reporting. Management’s report was not subject to attestation by our
registered public accounting firm pursuant to temporary rules of the Securities
and Exchange Commission that permit the Company to provide only management’s
report in this Annual Report.
Changes
in Internal Controls
There
were no significant changes in our internal controls over financial reporting
that occurred during the quarter and year ended September 30, 2009 that have
materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.
Item
9B –Other Information
No report
was filed on Form 8-K, and none was required.
PART
III
Item
10 - Directors, Executive Officers, and Corporate Governance
Executive Officers, Key Employees and
Directors
The
following table sets forth the name, age and positions of Luke Lalonde, our sole
executive officer and director and Gary Benware who acts as Chief Financial
Officer. Mr. Lalonde is serving as a director until the next annual meeting of
stockholders and until his successor is elected and qualified or until his
earlier resignation or removal. Mr. Lalonde is serving as our sole executive
officer for a term which continues until the meeting of the board of directors
which follows the next annual meeting of stockholders and until his successor
shall have been chosen and qualified. He devotes 100% of his working time to our
business (60 to 80 hours per week).
|
Name
|
Age
|
Position(s)
|
||
|
Luke
Lalonde
|
71
|
President,
Treasurer and Sole Director
|
||
|
Gary
Benware
|
60
|
Chief
Financial Officer
|
||
Mr.
Lalonde has served as our President and sole director since 1999. From 1993
until 1999, Mr. Lalonde was semi-retired. From 1980 until 1993, Mr. Lalonde was
the founder, President and Chief Executive Officer of AquaNature, Inc., a
natural spring water bottling company, located in Quebec, Canada. Mr. Lalonde
also owned and operated AquiCulture, Inc., a rainbow trout farm, from 1972 until
1986. Both AquaNature, Inc. and AquiCulture, Inc. were sold to
Danon, Inc. in 1993. Mr. Lalonde is also majority shareholder of Aqua Nature of
USA. Aqua Nature of USA is limited to owning land and residence used by Mr.
Lalonde for family purposes and our office. Mr. Lalonde’s
activities with Aqua Nature of USA are limited to reviewing accounts payable and
financial items and making payment decisions.
Mr.
Benware, an independent accountant, has been a member of the accounting firm of
Dragon Benware during the past five years. He performs the function of Chief
Financial Officer for us. He is not a director, officer or employee of
SuperDirectories or related to any director or officer or nominee.
Family
Relationships
There
are no family relationships among our directors, executive officers, or persons
nominated or chosen by us to become directors or executive
officers.
28
Involvement
in Certain Legal Proceedings
During
the past five years, none of our directors, persons nominated to become a
director, executive officers, promoters or control persons have been involved
in:
|
·
|
Any
bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that
time;
|
|
·
|
Any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violation and other minor
offenses);
|
|
·
|
Being
subject to any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking activities;
or
|
|
·
|
Being
found by a court of competent jurisdiction (in a civil action), the
Securities and Exchange Commission or the Commodity Futures Trading
Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended or
vacated.
|
Audit
Committee and Audit Committee Financial Expert
We do not
currently have an audit committee financial expert, nor do we have an audit
committee. Our board of directors, which currently consists solely of Mr.
Lalonde, handles the functions that would otherwise be handled by an audit
committee. We do not currently have the capital resources to pay director fees
to a qualified independent expert who would be willing to serve on our board and
who would be willing to act as an audit committee financial expert. As our
business expands and as we appoint others to our board of directors we expect
that we will seek a qualified independent expert to become a member of our board
of directors. Before retaining any such expert our board of directors
would
make a determination as to whether such person is independent, and otherwise
meets the requirements of an audit committee financial expert.
Corporate
Governance
The
information required by Item 405 of Regulation S-K is presented in Item 13
Certain Relationships and Related Transactions. During the
period covered by this report, Mr. Lalonde sold 377,625 shares and gifted
10,000,000 shares. Reports on Form 4 were timely filed for all
transactions except one in February which was late.
Code
of Ethics
The
Company has adopted a Policy Statement on Business Ethics and Conflicts of
Interest, which was approved by the Board of Directors, applicable to all
employees. A copy of our Code of Ethics is available upon request by
contacting Management of our Company.
Item
11 - Executive Compensation
The following table sets forth
compensation paid to persons who may be considered executive officers of the
Company during the three fiscal years ended September 30, 2008. Mr.
Lalonde received no compensation of any nature.
|
Name
and Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
Option
Award
|
Non-Equity
Incentive Plan Compensation
|
Non-Qualified
Deferred Compensation Earnings
|
All
Other
|
Total
|
|
Luke
Lalonde President and Chief Executive Officer
|
2008
2007
2006
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
|
Gary
Benware(1)
Chief
Financial
Officer
|
2009
2008
2007
|
$18,650
$24,395
$22,450
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
$18,650
$24,395
$22,450
|
29
|
(1)
|
Mr.
Benware has been a member of the accounting firm of Dragon Benware for the
past five years. As is customary with many startup companies, we retained
his firm to provide internal accounting services. The sums noted above
were paid to his firm, and Mr. Benware received no compensation directly
from us. Neither he nor his firm own any of our
shares.
|
Option
Grants
Option
Grants in Last Fiscal Year
We have
not granted options to Mr. Lalonde or Mr. Benware at any time.
Director
Compensation
Mr.
Lalonde, our sole director, does not receive any compensation for acting as
such.
Item
12 Security Ownership of Certain Beneficial Owners and
Management
The
following table sets forth, as of September 30, 2009 certain information
concerning the ownership of our common stock by:
|
·
|
any
person who is known to us to own beneficially 5% or more of our
outstanding common stock;
|
|
·
|
any
director, president and executive officers;
and
|
|
·
|
director
and executive officers as a group.
|
Unless
otherwise indicated, the person named below has sole voting and investment power
with respect to all shares shown as beneficially owned by him, except to the
extent authority is shared by his spouse under applicable community property
laws.
Beneficial
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes all shares over which the subject
individual has or shares voting or investment power. Shares of common stock
subject to options that are currently exercisable within 60 days of the date of
this report are treated as outstanding for the purpose of computing the
percentage ownership of the subject individual. These shares, however, are not
considered outstanding when computing the percentage ownership of any other
person.
As of
September 30, 2009, there were approximately 158,821,157 shares of our common
stock outstanding. There is no plan or arrangement with respect to a change in
control. We currently do not have any equity compensation
plans.
|
Amount and Nature
of
|
||||
|
Name of Beneficial
Owner
|
Beneficially
Ownership
|
Percent of
Class
|
||
|
Luke
Lalonde (1)
|
89,622,375
|
56.4%
|
||
|
Gary
Benware (2)
|
None
|
0%
|
||
|
(1)
Mr. Lalonde's business address is in care of SuperDirectories, Inc., 5337
Route 374, Merrill, New York 12955.
(2)
See Directors, Executive Officers, and Corporate Governance, Part
III, Item 10 on page 28.
|
||||
Item
13 Certain Relationships and Related Transactions
We are
parties to an informal arrangement with Aqua Nature of USA, Inc. pursuant to
which we lease from them our principal corporate offices located at 5337 Route
374, Merrill, New York and we also receive certain telephone, internet,
administrative, bookkeeping and related services. Luke Lalonde, our president
and majority stockholder is the majority stockholder of Aqua Nature of USA,
Inc. We paid Aqua Nature of USA, Inc. $39,000 and $48,000 for the
fiscal years ended September 30, 2008 and 2009 respectively. See
Description of Property, Part I, Item 2 on page 9.
30
Beginning
in the year ended September 30, 2009 the Company received services totaling
$29,650 from 9200-2914 Quebec, Inc., a company owned by the daughter of the
President and majority stockholder of Superdirectories, Inc.
During
the year ended September 30, 2009 the Company’s President and majority
shareholder advanced $186,709 to the Company to fund its current
operations. These advances to the Company are noninterest bearing and
payable upon demand.
In 2000,
Mr. Lalonde transferred his legal right, title and interest in the
SuperDirectories Internet website to the Company in exchange for 100,000,000
shares of our common stock. During the period covered by this report,
Mr. Lalonde sold 377,625 shares and gifted 10,000,000 shares. Reports
on Form 4 were timely filed for all transactions except one in February 2009
which was late.
Mr. Frank
G. Wright was a consultant and a minority shareholder of the Company, holding
3.61% of our issued and outstanding common stock. He has sold his
shares back to the Company. Mr. Wright was engaged as a consultant
pursuant to a November 2004 written agreement previously included as an exhibit
to our Form-10-SB, General Form for Registration on
Securities. Compensation was $90,000 plus options to purchase
7,605,000 shares of common stock. The services provided, for which
Mr. Wright received compensation, were the introduction of and negotiation with
a number of CPA’s and
Securities lawyers engaged in the public company practice; liaison among us and
those professionals engaged by us, supervision and coordination of the work of
the professionals engaged in preparation and filing for the Company pursuant to
SEC’s regulations, and examination of the SEC commentary with respect to the
overall effort.
Mr.
Wright received a total of 7,452,900 shares on exercise of his option on April
11, 2005 and March 25, 2006. The value for these shares was set at
$0.50 per share ($3,726,450) as agreed to by the Company and Mr.
Wright. The exercise price was $0.01 per share. Mr. Wright
paid for these shares with 152,100 shares from his total grant of 7,605,000 in a
cashless transaction. In February 2006 Mr. Wright made a gift of
1,485,000 shares to 22 members of his family and 2 acquaintances. He
received no consideration for these shares and there were no fees or commissions
paid. No broker/dealers were involved, and the transferees were
advised there was no market for the shares.
Commencing
on August 1, 2006, we entered into an oral agreement with Mr. Wright to continue
his consulting services. His services included interviewing and
recommending a person to be Chief Financial Officer, assisting in finalizing our
Form 10-SB and future periodic filings. He also served as liaison
among Mr. Lalonde, counsel and auditors and reviewed the work of the
professionals and the Company with respect to our obligations as a reporting
company. He was compensated $8,000 per month on a month to month
basis. He did not assist in raising capital or engage in any effort
to promote or retain a public market for our securities. He was not
authorized to engage in any other activities on our behalf. He was
retained as a consultant only and was not a director, officer, or
employee. We did not enter into a written agreement, and there were
no additional terms in the oral agreement. Mr. Wright’s oral
agreement was not extended and his services terminated as of December 31,
2007.
Mr.
Wright, together with members of his family who received shares of stock in the
Company as gifts from Mr. Wright, offered to sell back a total of 7,347,669
shares, or an aggregate of 4.6% of the outstanding shares of the
Company. On May 1, 2008, the Company acquired for cash consideration
in a negotiated transaction all such shares for $0.025 per share, or an
aggregate consideration of $183,691.72, of which Mr. Wright and his wife
received $155,067. The stock is not listed on any securities exchange
or other trading market. The book value per share at March 31, 2008
was $0.006 per share.
Item
14 - Principal Accountant Fees and Services
The
following table sets forth fees billed to the Company by our auditors during the
fiscal years ended September 30, 2009 and 2008
|
SEPTEMBER
30, 2009
|
SEPTEMBER
30, 2008
|
|
|
1. Audit
Fees
|
$ 34,500.00
|
$ 33,600.00
|
|
|
||
|
2. Audit
Related Fees
|
0.00
|
0.00
|
|
3. Tax
Fees
|
0.00
|
0.00
|
|
4. All
Other Fees
|
0.00 |
1,130.00
|
|
Total
Fees
|
$ 34,500.00
|
$ 34,730.00
|
Audit
fees consist of fees billed for professional services rendered for the audit of
the Company's consolidated financial statements and review of the interim
consolidated financial statements included in quarterly reports and services
that are normally provided by Goff Back Alfera & Company, LLC in connection
with statutory and regulatory filings or engagements. The 2009 audit
fees will be paid in 2010.
31
Audit-related
fees consist of fees billed for assurance and related services that are
reasonably related to the performance of the audit or review of the Company's
consolidated financial statements, which are not reported under "Audit
Fees."
Tax fees
consist of fees billed for professional services for tax compliance, tax advice
and tax planning.
All other
fees consist of fees for products and services other than the services reported
above. There were no management consulting services provided in fiscal 2009 or
2008.
Item
15 – Exhibits
|
3.1
|
Articles
of Incorporation
|
*
|
|
3.2
|
By-laws
|
*
|
|
10
|
Consulting
Agreement dated November 24, 2004
|
|
|
Between
the Company and Frank G. Wright
|
*
|
|
|
14
|
Code
of Ethics
|
***
|
|
16.1
|
Letter
from Sprouse & Anderson to SEC
|
*
|
|
16.2
|
Letter
from Dragon Benware to SEC
|
*
|
|
31.1
|
Certification
of Chief Executive Officer
|
|
|
31.2
|
Certification
of Principal Financial Officer
|
|
|
32
|
Section
1350 Certificates
|
|
|
99
|
Share
Subscription Agreement for non-United States Purchases
|
**
|
|
91.1
|
Website
Letter from President
|
*
|
|
91.2
|
Index
to Full Listings on http Superdirectories.com
|
*
|
* Previously
submitted with Form 10-SB as amended.
**
Previously submitted with Form 10-QSB for period ending June 30,
2006.
***Previously
submitted with Form 10-KSB for the year ending September 30, 2006
SIGNATURES
In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SuperDirectories,
Inc.
32
By /s/ Luke
Lalonde
Luke
Lalonde
President and Chief
Executive Officer
Date:
December 23, 2010
33
In
accordance with the Exchange Act, this report has been signed by the following
persons on behalf of the Registrants in the capacities and on the dates
indicated:
|
By:
/s/ Luke
Lalonde
|
By: /s/ Gary
Benware
|
|
Luke
Lalonde
|
Gary
Benware
|
|
Director
and President
|
Principal
Financial Officer
|
|
Date:
December 23, 2009
|
Date: December
23, 2009
|