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EX-23.1 - CONSENT - SONGWAVE INDUSTRIES INC | songware_2301.htm |
EX-5.1 - OPINION - SONGWAVE INDUSTRIES INC | songwave_ex0501.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C., 20549
FORM
S-1/A
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
Songwave
Industries
(Exact name of Registrants specified in its charter)
Nevada
|
20-5282912
|
|||
(State
or other jurisdiction of incorporation or organization)
|
(Primary
Standard Industrial Classification Code Number)
|
(I.R.S.
Employer Identification Number)
|
16761
Dale Vista Lane
|
||
Huntington
Beach, CA 92647
|
||
(Address
of principal executive offices)
|
Registrant’s
telephone number, including area code: (714)
847-2460
|
Copies of all correspondence
to:
Horwitz,
Cron & Jasper, PLC
Attn:
Lawrence Horwitz, Esq.
Four
Venture, Suite 390
Irvine,
CA 92618
Tel:
(949) 450-4942
Fax:
(949)453-8774
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the
following box: [_]
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act Registration Statement number of the earlier effective
Registration Statement for the same offering. [_]
If this
Form is post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
state3ment number of the earlier effective Registration Statement for the same
offering. [_]
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act Registration
Statement number of the earlier effective Registration Statement for the same
offering. [_]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company’ in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer [_]
|
Accelerated
filer [_]
|
|
Non-accelerated
filer [_]
|
Smaller
reporting company [X]
|
CALCULATION
OF REGISTRATION FEE
Title
of Each Class of Securities to be Registered
|
Amount
to be Registered
|
Proposed
Maximum Offering Price Per Share
|
Proposed
Maximum Aggregate Offering Price
|
Amount
of Registration Fee
|
Common
Stock
|
65,000
|
$0.501
|
$32,500
|
$1.812
|
THE
REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A
FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.
2 The
amount of the registration fee was estimated for the purpose of calculating the
registration fee in accordance with Rule 457(a) under the Securities Act of
1933.
ii
SUBJECT TO COMPLETION, DATED JANUARY __, 2010
PROSPECTUS
SONGWAVE
INDUSTRIES
65,000
SHARES
OF COMMON STOCK
INITIAL
PUBLIC OFFERING
The
selling shareholders named in this selling shareholder’s prospectus (the
“Prospectus”) are offering up to 65,000 shares of common stock offered through
this Prospectus. We will not receive any proceeds from this offering
and have not made any arrangements for the sale of these
securities. We have, however, set an offering price for these
securities of $0.50 per share. We will use our best efforts to
maintain the effectiveness of the resale Registration Statement (the
“Registration Statement”) from the effective date through and until all
securities registered under the Registration Statement have been sold or are
otherwise able to be sold pursuant to Rule 144 promulgated under the Securities
Act of 1933.
Offering
Price
|
Underwriting
Discounts and Commissions
|
Proceeds
to Selling Shareholders
|
|
Per
Share
|
$0.50
|
None
|
$0.50
|
Total
|
$32,500
|
None
|
$32,500
|
Our
common stock is presently not traded on any market or securities
exchange. The sales price to the public is fixed at $0.00 per share
until such time as the shares of our common stock are traded on the
Over-The-Counter Bulletin Board. Although we intend to apply for
quotation of our common stock on the Over-The-Counter Bulletin Board, public
trading of our common stock may never materialize. If our common
stock becomes traded on the Over-The-Counter Bulletin Board, then the sale price
to the public will vary according to prevailing market prices or privately
negotiated prices by the selling shareholders.
The
purchase of the securities offered through this Prospectus involves a high
degree of risk. See section of this Prospectus entitled "Risk
Factors."
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of this Prospectus. Any representation to the contrary is a criminal
offense.
The
information in this Prospectus is not complete and may be changed. We
may not sell these securities until the Registration Statement filed with the
Securities and Exchange Commission is effective. The Prospectus is
not an offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not
permitted.
The Date
of This Prospectus Is: January __,
2010
iii
TABLE OF
CONTENTS
Page
|
|
Part
I: Prospectus
|
|
Summary
|
1
|
The
Offering
|
1
|
Summary
Financial Information
|
1
|
Risk
Factors
|
2
|
Forward-Looking
Statements
|
8
|
Use
of Proceeds
|
9
|
Determination
Of Offering Price
|
9
|
Dilution
|
9
|
Selling
Shareholders
|
9
|
Plan
Of Distribution
|
11
|
Description
Of Securities
|
12
|
Interests
Of Named Experts And Counsel
|
13
|
Description
Of Business
|
13
|
Legal
Proceedings
|
14
|
Market
For Common Equity And Related Stockholder Matters
|
15
|
Financial
Statements
|
17
|
Plan
Of Operations
|
18
|
Changes
In And Disagreements With Accountants
|
18
|
Directors,
Executive Officers, Promoters And Control Persons
|
18
|
Executive
Compensation
|
20
|
Security
Ownership Of Certain Beneficial Owners And Management
|
22
|
Disclosure
Of Commission Position Of Indemnification For Securities Act
Liabilities
|
23
|
Certain
Relationships And Related Transactions
|
23
|
Available
Information
|
23
|
Dealer
Prospectus Delivery Obligation
|
23
|
Part
II Information Not Required In the Prospectus
|
24
|
|
|
Item
13. Other Expenses of Issuance and
Distribution.
|
24
|
Item
14. Indemnification of Directors and Officers.
|
24
|
Item
15. Recent Sales of Unregistered Securities.
|
25
|
Item
16. Exhibits and Financial Statement Schedules.
|
25
|
Item
17. Undertakings.
|
25
|
Signatures
|
27
|
iv
SUMMARY
Songwave
Industries
Songwave
Industries, a Nevada corporation (“Parent” or “Songwave,”) through its wholly
owned subsidiary Tropical Beauty, Inc., California corporation (“Subsidiary” or
“Tropical Beauty”) (Songwave Industries and Tropical Beauty, Inc. shall be
collectively referred to herein as the “Company”), plans to develop, market, and
brand skin care and body care products. Particularly, the core
products of the Company are going to be natural, organic, botanical based
products which offer a healthy alternative to conventional
cosmetics. The Company, and its Subsidiary, have a limited operating
history, thus there is little information upon which to base an evaluation of
our business and prospects. We lack any meaningful financial history against
which a potential investor can judge our performance or that, if known, would be
of assistance in evaluating our business prospects or the merits of investing in
the Company. We will compete on the basis of a complete package of
natural botanical based products that we will offer to our customers, as well as
instituting a reputation for fair pricing and quality. We will also
compete with other owners and operators for buyers of the products we will
manufacture.
Since we
are in the early stage of our business plan, we have earned no revenues from our
operations. As of September 30, 2009, we had $1,108 cash on hand and
$46,705 in total liabilities. Since our inception
through September 30, 2009, we have incurred a net loss of
$34,551. We attribute our net loss to not having sufficient revenues
to offset our expenses and the professional fees related to the creation and
operation of our business.
Our
fiscal year ended is December 31.
Songwave
was incorporated on July 25, 2006 under the laws of the State of
Nevada. Our principal offices are located at 16761 Dale Vista Lane,
Huntington Beach, CA 92647. Our resident agent is Laughlin Associates, Inc. who
is located at 2533 N. Carson Street, Carson City, NV 89706. Our phone
number is (714) 847-2460.
Unless
otherwise noted, references to “we,” “our” or “us” means the
Company.
THE
OFFERING
Securities
Being Offered:
|
Up
to 65,000 shares of our common stock.
|
||
Offering
Price and Alternative Plan of Distribution:
|
The
offering price of the common stock is $0.50 per share. We
intend to apply to the Over-The-Counter Bulletin Board to allow the
trading of our common stock upon our becoming a reporting entity under the
Securities Exchange Act of 1934. If our common stock becomes so
traded and a market for the stock develops, the actual price of stock will
be determined by prevailing market prices at the time of sale or by
private transactions negotiated by the selling
shareholders. The offering price would thus be determined by
market factors and the independent decisions of the selling
shareholders.
|
||
Minimum
Number of Shares To Be Sold in This Offering:
|
None
|
||
Securities
Issued and to be Issued:
|
1,070,100
shares of our common stock are issued and outstanding as of the date of
the Prospectus. All of the common stock to be sold under this
Prospectus will be sold by existing shareholders. There will be
no increase in our issued and outstanding shares as a result of this
offering.
|
||
Use
of Proceeds:
|
We
will not receive any proceeds from the sale of the common stock by the
selling shareholders.
|
1
SUMMARY FINANCIAL
INFORMATION
Balance
Sheet Data
|
From
December
31, 2008 until
September 30,
2009
|
|||
Cash
|
$ | 1,108 | ||
Liabilities
|
$ | 46,705 | ||
Total
Stockholder’s Equity (Deficit)
|
$ | (45,531 | ) | |
Statement
of Operations
|
||||
Revenue
|
$ | 0 | ||
Net
Loss for Reporting Period
|
$ | (5,609 | ) |
RISK
FACTORS
You
should consider each of the following risk factors and any other information set
forth herein and in our reports filed with the SEC, including our financial
statements and related notes, in evaluating our business and prospects. The
risks and uncertainties described below are not the only ones that impact on our
operations and business. Additional risks and uncertainties not presently known
to us, or that we currently consider immaterial, may also impair our business or
operations. If any of the following risks actually occur, our business and
financial results or prospects could be harmed. In that case, the value of the
common stock could decline.
Risks Related To Our
Financial Condition and Business Model
IF
WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.
As
of September 30, 2009, we had cash in the amount of $1,108. Our
cash on hand will not sufficiently allow us to acquire inventory and proceed
with our business plan. We currently have begun operations and we have no
income. We will require additional financing to sustain our business operations
if we are not successful in earning significant revenues once our business plan
is enacted. We are in the process of securing an adequate
manufacturing facility site properly equipped for manufacturing our products and
properly training new employees.
2
Tropical Beauty intends to utilize the following materials: Molds for soap; oils such as Olive Oil, Castor Oil, Coconut Oil, Virgin Coconut Oil, Monoi de Tahiti Oil, Olive Squalane, Palm Oil, Palm Kernel Oil, Sunflower Oil, Rice Bran Oil, Rosehip Seed Oil, Cranberry Seed Oil, Blueberry Seed Oil, Carrot Seed Oil; Emulsifying Wax NF; Emulsifying Conditioner; Preservatives; Beeswax; Packaging; Cocoa Butter; Shea Butter; Mango Butter; Absolutes such as Cocoa Absolute; Essential Oils such as Lavender, Tea Tree, Lemon and many others; Fragrance oils; FD&C colorants; Oxides; Ultramarines used for colorant; seeds used for exfoliating properties in body scrubs and soaps; and sugar, which also includes organic ingredients as well.
All
ingredients listed above are to be used for lip balms, lotions, creams, soaps,
facial products, body scrubs, bath bombs, bubble bath, bubble bath, lotions, and
facial care products. All these products are for hygiene, skincare,
and novelty use.
We
currently do not have any arrangements for financing and we may not be able to
obtain financing when required. Obtaining additional financing would be subject
to a number of factors, including a response to advertising and our ability to
penetrate the bath and beauty marketplace.
BECAUSE
WE WILL NEED ADDITIONAL FINANCING TO FUND OUR CONTINUING GROWTH, OUR ACCOUNTANTS
BELIEVE THERE IS SUBSTANTIAL DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING
CONCERN.
We have
incurred a net loss of $34,551 for the period from our inception
to September 30, 2009, and have no sales. Our future is
dependent upon our ability to obtain financing and upon future profitable
operations from the sale of our products. Our auditors have issued a going
concern opinion and have raised substantial doubt about our continuance as a
going concern. When an auditor issues a going concern opinion, the auditor has
substantial doubt that the company will continue to operate indefinitely and not
go out of business and liquidate its assets. This is a significant
risk to investors who purchase shares of our common stock because there is an
increased risk that we may not be able to generate and/or raise enough resources
to remain operational for an indefinite period of time. Potential investors
should also be aware of the difficulties normally encountered by new business
ventures and the high rate of failure of such enterprises. The auditor’s
going concern opinion may inhibit our ability to raise financing because we may
not remain operational for an indefinite period of time resulting in potential
investors failing to receive any return on their investment.
BECAUSE
WE HAVE ONLY RECENTLY COMMENCED BUSINESS OPERATIONS, WE FACE A HIGH RISK OF
BUSINESS FAILURE.
We have
just begun the initial stages of our business plan. As a result, we
have no way to evaluate the likelihood that we will be able to operate the
business successfully. We were incorporated on July 25, 2006 and to
date have been involved primarily in organizational activities. We have not
earned any revenues as of the date of this Prospectus, and thus face a high risk
of business failure.
OPERATING
DEFICITS
The
expenses of the operations will exceed our revenues for the foreseeable future.
This will require that these deficits be financed through our operations and our
previous and perhaps future capital raises. In the event we are unable to
achieve operating revenues to achieve our objectives and we are unable to obtain
additional outside capital, we may be forced to curtail or terminate
operations.
3
BECAUSE
THE EXECUTIVE OFFICERS OF TROPICAL BEAUTY HAVE LIMITED TRAINING SPECIFIC TO THE
TECHNICALITIES OF THE PRODUCTION AND SALE OF BATH AND BEAUTY PRODUCTS WE FACE A
HIGH RISK OF BUSINESS FAILURE.
Ms.
Analyn Sahachaisere, the president, chief executive officer and director of
Tropical Beauty, has limited training in the production and sales of bath and
body products. As a result, our management may lack certain skills
that are advantageous in managing such a company. In addition, Ms. Analyn
Sahachaisere’s decisions and choices may not take into account standard business
practices bath and beauty companies commonly use. Consequently, our operations,
earnings, and ultimate financial success could suffer irreparable harm due to
management’s limited experience in the Bath and Beauty Industry.
BECAUSE
OF THE UNIQUE DIFFICULTIES AND UNCERTAINTIES INHERENT IN THE BATH AND BEAUTY
BUSINESS, WE FACE A HIGH RISK OF BUSINESS FAILURE.
Potential
investors should be aware of the difficulties normally encountered by new bath
and beauty manufacturing companies and the high rate of failure of such
enterprises. The likelihood of success must be considered in light of
the problems, expenses, difficulties, complications and delays encountered in
connection with the design, manufacture and sale of the products that we plan to
offer. These potential problems include, but are not limited to, unanticipated
problems relating to manufacturing and sales, and additional costs and expenses
that may exceed current estimates.
BECAUSE
WE ANTICIPATE OUR OPERATING EXPENSES WILL INCREASE PRIOR TO OUR EARNING
SIGNIFICANT REVENUES, WE MAY NEVER ACHIEVE PROFITABILITY.
Prior to
completion of our development stage, we anticipate that we will incur increased
operating expenses while realizing minimal revenues. We expect to
incur continuing and significant losses into the foreseeable
future. As a result of continuing losses, we may exhaust all of our
resources and be unable to complete the successful development of our
business. Our accumulated deficit will continue to increase as we
continue to incur losses. We may not be able to earn profits or
continue operations if we are unable to generate significant revenues from the
sale of our products. There is no history upon which to base any
assumption as to the likelihood that we will be successful, and we may not be
able to generate any operating revenues or ever achieve profitable
operations. If we are unsuccessful in addressing these risks, our
business will most likely fail.
MR.
ROY SAHACHAISERE AND HORWITZ, CRON & JASPER, PLC COLLECTIVELY OWN 94% OF OUR
OUTSTANDING COMMON STOCK, INVESTORS MAY FIND THAT CORPORATE DECISIONS INFLUENCED
BY MR. ROY SAHACHAISERE AND HORWITZ, CRON & JASPER, PLC MAY BE INCONSISTENT
WITH THE BEST INTERESTS OF OTHER STOCKHOLDERS.
Mr. Roy
Sahachaisere, who is married to the President, Treasurer, Chief Executive
Officer and sole Director, Ms. Analyn Sahachaisere, and Horwitz, Cron &
Jasper, PLC, collectively own 94% of the outstanding shares of our common
stock. Accordingly, both parties will have a significant influence in
determining the outcome of all corporate transactions or other matters,
including mergers, consolidations and the sale of all or substantially all of
our assets, and also the power to prevent or cause a change in control. While we
have no current plans with regard to any merger, consolidation or sale of
substantially all of its assets, the interests of Mr. Roy Sahachaisere and
Horwitz, Cron & Jasper, PLC may still differ from the interests of the other
stockholders.
4
BECAUSE
MR. ROY SAHACHAISERE AND HORWITZ, CRON & JASPER, OWN 94% OF OUR OUTSTANDING
COMMON STOCK, THE MARKET PRICE OF OUR SHARES WOULD MOST LIKELY DECLINE IF THEY
WERE TO SELL A SUBSTANTIAL NUMBER OF SHARES ALL AT ONCE OR IN LARGE
BLOCKS.
Mr. Roy
Sahachaisere owns 502,600 shares of our common stock. Horwitz, Cron
& Jasper, PLC owns 500,000 shares of our common stock. Both of
their holdings collectively equates to 94% of our outstanding common
stock. There is presently no public market for our common stock and
we plan to apply for quotation of our common stock on the Over-The-Counter
Bulletin Board upon the effectiveness of the registration statement of which
this Prospectus forms a part. If our shares are publicly traded on
the Over-The-Counter Bulletin Board, Mr. Roy Sahachaisere and Horwitz, Cron
& Jasper, PLC will eventually be eligible to sell their shares publicly
subject to the volume limitations in Rule 144. The offer or sale of a
large number of shares at any price may cause the market price to
fall. Sales of substantial amounts of common stock or the perception
that such transactions could occur, may materially and adversely affect
prevailing markets prices for our common stock.
MR.
ROY SAHACHAISERE, OUR PREVIOUS PRESIDENT, TREASURER, CHIEF EXECUTIVE OFFICER AND
DIRECTOR, WHO HAS RESIGNED FROM ALL SUCH POSITIONS AS OF AUGUST 20, 2009, HAS
RECEIVED A WELLS NOTICE FROM THE SECURITIES AND EXCHANGE COMMISSION, IN RELATION
TO ANOTHER COMPANY, INVESTSOURCE, INC.
Mr. Roy
Sahachaisere, our previous President, Treasurer, Chief Executive Officer and
Director, has received a Wells Notice from the Securities and Exchange
Commission (the “SEC”) dated August 5, 2009 in relation to InvestSource,
Inc. The Wells Notice states that the SEC intends to bring a civil
injunctive action against InvestSource, Inc. and Mr. Sahachaisere, alleging that
they violated Sections 17(a) and 17(b) of the Securities Act of 1933 and Section
10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder. The Wells Notice states that the SEC is giving Mr.
Sahachaisere an opportunity to make Wells Submissions to the SEC. At
this time, the SEC has not authorized an enforcement action against
InvestSource, Inc. or Mr. Sahachaisere. Mr. Sahachaisere resigned as
President, Treasurer, Chief Executive Officer and Director on August 20,
2009.
IF
WE ARE UNABLE TO SUCCESSFULLY COMPETE WITHIN THE BATH AND BEAUTY BUSINESS, WE
WILL NOT BE ABLE TO ACHIEVE PROFITABLE OPERATIONS.
We
compete against numerous competitors and others in the business, many of which
are larger and have greater financial resources and better access to capital
markets than us. We also compete with other owners and operators for buyers of
the products we will manufacture.
There can
be no assurance that any competitors will not develop and offer products similar
or even superior to, the products which we will offer. Such competitiveness is
likely to bring both strong price and quality competition to the sale of our
products. This will mean, among others things, increased costs in the form of
marketing and customer services, along with a reduction in pricing in sales.
Generally, this will have a significant negative effect on our
business.
There can
be no assurance that we will have the financial resources, technical expertise
or marketing and support capabilities to compete successfully.
5
BECAUSE
OF FACTORS BEYOND OUR CONTROL WHICH COULD AFFECT THE MARKETABILITY OF THE
PRODUCTS PRODUCED, WE MAY HAVE DIFFICULTY SELLING THE PRODUCTS WE
MANUFACTURE.
Even if
we design and produce the products intended, a ready market may not exist for
the sale of the products. Numerous factors beyond our control may affect the
marketability of any products manufactured. These factors include
market fluctuations, the proximity and capacity of bath and beauty product
markets and government regulations. These factors could inhibit our
ability to sell products that we manufacture and have in inventory.
BECAUSE
NEW LEGISLATION, INCLUDING THE SARBANES-OXLEY ACT OF 2002, INCREASES THE COST OF
COMPLIANCE WITH FEDERAL SECURITIES REGULATIONS AS WELL AS THE RISKS OF LIABILITY
TO OFFICERS AND DIRECTORS, WE MAY FIND IT MORE DIFFICULT FOR US TO RETAIN OR
ATTRACT OFFICERS AND DIRECTORS.
The Sarbanes-Oxley Act of 2002 was enacted in response to public concerns
regarding corporate accountability in connection with recent accounting
scandals. The stated goals of the Sarbanes-Oxley Act are to
increase corporate responsibility, to provide for enhanced penalties for
accounting and auditing improprieties at publicly traded companies, and to
protect investors by improving the accuracy and reliability of corporate
disclosures pursuant to the securities laws. The Sarbanes-Oxley Act generally
applies to all companies that file or are required to file periodic reports with
the SEC, under the Securities Exchange Act of 1934. Upon becoming a
public company, we will be required to comply with the Sarbanes-Oxley Act and it
is costly to remain in compliance with the federal securities
regulations. Additionally, we may be unable to attract and retain
qualified officers, directors and members of board committees required to
provide for our effective management as a result of Sarbanes-Oxley Act of 2002.
The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of
rules and regulations by the SEC that increase responsibilities and liabilities
of directors and executive officers. The perceived increased personal risk
associated with these recent changes may make it more costly or deter qualified
individuals from accepting these roles. Significant costs incurred as
a result of becoming a public company could divert the use of finances from our
operations resulting in our inability to achieve profitability.
CHANGING
ECONOMIC AND MARKET CONDITIONS
The
success of our activities may be affected by general economic conditions, such
as interest rates, availability of credit, inflation rates, economic
uncertainty, changes in laws, and national and international political
circumstances.
General
economic and market conditions, such as interest rates, availability of credit,
inflation rates, economic uncertainty, changes in laws, and national and
international political circumstances may affect the success of the
Company.
The
market for specific products or services offered by the Company may adversely
change, thereby reducing the value of our shares of common stock. The
general economic prospects of the United States or any general fluctuations in
the capital markets may also affect the value of the shares of common
stock.
OUR
FINANCIAL CONDITION AND RESULTS OF OPERATIONS WILL DEPEND ON OUR ABILITY TO
MANAGE OUR FUTURE GROWTH EFFECTIVELY.
We are
subject to the business risks and uncertainties associated with any new business
enterprise. Our ability to achieve our business objectives will depend on our
ability to grow. In the future, will need to hire, train, supervise and manage
new employees. Failure to manage our future growth effectively could have a
material adverse effect on our business, financial condition and results of
operations.
6
WE
MAY EXPERIENCE FLUCTUATIONS IN OUR OPERATING RESULTS.
We may
experience fluctuations in our operating results due to a number of factors,
including the level of our expenses, the degree to which we encounter
competition in our markets and general economic conditions. As a result of these
factors, results for any period should not be relied upon as being indicative of
performance in future periods.
Risks Related to this
Offering
IF
A MARKET FOR OUR COMMON STOCK DOES NOT DEVELOP, SHAREHOLDERS MAY BE UNABLE TO
SELL THEIR SHARES
A market
for our common stock may never develop. We currently plan to apply
for quotation of our common stock on the Over-The-Counter Bulletin Board upon
the effectiveness of the Registration Statement of which this Prospectus forms a
part. However, our shares may never be traded on the Over-The-Counter
Bulletin Board, or, if traded, a public market may not
materialize. If our common stock is not traded on the
Over-The-Counter Bulletin Board or if a public market for our common stock does
not develop, investors may not be able to re-sell the shares of our common stock
that they have purchased and may lose all of their investment.
IF
THE SELLING SHAREHOLDERS SELL A LARGE NUMBER OF SHARES ALL AT ONCE OR IN BLOCKS,
THE MARKET PRICE OF OUR SHARES WOULD MOST LIKELY DECLINE.
The
selling shareholders are offering 65,000 shares of our common stock through this
prospectus. Our Common stock is presently not traded on any market or securities
exchange, but should a market develop, shares sold at a price below the current
market price at which the Common stock is trading will cause that market price
to decline. Moreover, the offer or sale of a large number of shares at any price
may cause the market price to fall. The outstanding shares of common
stock covered by this prospectus represent approximately 6% of the common shares
outstanding as of the date of this Prospectus.
BECAUSE
WE WILL BE SUBJECT TO THE “PENNY STOCK” RULES ONCE OUR SHARES ARE QUOTED ON THE
OVER-THE-COUNTER BULLETIN BOARD, THE LEVEL OF TRADING ACTIVITY IN OUR STOCK MAY
BE REDUCED.
Broker-dealer
practices in connection with transactions in "penny stocks" are regulated by
penny stock rules adopted by the Securities and Exchange Commission. Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on some national securities exchanges or quoted on
NASDAQ). The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document that provides information about penny stocks and the
nature and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction,
and, if the broker-dealer is the sole market maker, the broker-dealer must
disclose this fact and the broker-dealer's presumed control over the market, and
monthly account statements showing the market value of each penny stock held in
the customer's account. In addition, broker-dealers who sell these securities to
persons other than established customers and "accredited investors" must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
Consequently, these requirements may have the effect of reducing the level of
trading activity, if any, in the secondary market for a security subject to the
penny stock rules, and investors in our common stock may find it difficult to
sell their shares.
7
IF
OUR SHARES ARE QUOTED ON THE OVER-THE-COUNTER BULLETIN BOARD, WE WILL BE
REQUIRED TO REMAIN CURRENT IN OUR FILINGS WITH THE SEC AND OUR SECURITIES WILL
NOT BE ELIGIBLE FOR QUOTATION IF WE ARE NOT CURRENT IN OUR FILINGS WITH THE
SEC.
In the
event that our shares are quoted on the Over-The-Counter Bulletin Board, we will be required to
remain current in our filings with the SEC in order for shares of our Common
stock to be eligible for quotation on the Over-The-Counter Bulletin
Board. In the event that we become delinquent in our required filings
with the SEC, quotation of our common stock will be terminated following a 30 or
60 day grace period if we do not make our required filing during that
time. If our shares are not eligible for quotation on the
Over-The-Counter Bulletin Board, investors in our common stock may find it
difficult to sell their shares.
STATE
SECURITIES LAWS MAY LIMIT SECONDARY TRADING, WHICH MAY RESTRICT THE STATES IN
WHICH YOU CAN SELL THE SHARES OFFERED BY THIS PROSPECTUS.
If you
purchase shares of our common stock sold by the selling stockholders in this
offering, you may not be able to resell the shares in any state unless and until
the shares of our common stock are qualified for secondary trading under the
applicable securities laws of such state or there is confirmation that an
exemption, such as listing in certain recognized securities manuals, is
available for secondary trading in such state. There can be no assurance that we
will be successful in registering or qualifying our common stock for secondary
trading, or identifying an available exemption for secondary trading in our
common stock in every state. If we fail to register or qualify, or to obtain or
verify an exemption for the secondary trading of, our common stock in any
particular state, the shares of common stock could not be offered or sold to, or
purchased by, a resident of that state. In the event that a significant number
of states refuse to permit secondary trading in our common stock, the market for
the common stock will be limited which could drive down the market price of our
common stock and reduce the liquidity of the shares of our common stock and a
stockholder’s ability to resell shares of our common stock at all or at current
market prices, which could increase a stockholder’s risk of losing some or all
of his investment.
STATE
SECURITIES - BLUE SKY LAWS
Transfer
of our common stock may also be restricted under the securities regulations or
laws promulgated by various states and foreign jurisdictions, commonly referred
to as “Blue Sky” laws. Absent compliance with such individual state laws, our
common stock may not be traded in such jurisdictions. Because the securities
registered hereunder have not been registered for resale under the Blue Sky laws
of any state, the holders of such shares and persons who desire to purchase them
in any trading market that might develop in the future, should be aware that
there may be significant state Blue-Sky law restrictions upon the ability of
investors to sell the securities and of purchasers to purchase the securities.
Accordingly, investors may not be able to liquidate their investments and should
be prepared to hold the shares of our common stock for an indefinite period of
time.
FORWARD-LOOKING
STATEMENTS
8
Although
we believe that the assumptions underlying the forward-looking statements
contained in this prospectus are reasonable, any of the assumptions could be
inaccurate, and, therefore, there can be no assurance that the forward-looking
statements included in this prospectus will prove to be accurate. When
considering forward-looking statements, you should keep in mind the risk factors
and other cautionary statements in this prospectus and any prospectus
supplement. We will not update these statements unless the securities laws
require us to do so. Accordingly, you should not rely on forward-looking
statements because they are subject to known and unknown risks, uncertainties,
and other factors that may cause our actual results to differ materially from
those contemplated by the forward-looking statements.
USE OF
PROCEEDS
We will
not receive any proceeds from the sale of the common stock offered through this
Prospectus by the selling shareholders.
DETERMINATION OF OFFERING
PRICE
All
shares being offered will be sold by existing shareholders without our
involvement, consequently the actual price of the stock will be determined by
prevailing market prices at the time of sale or by private transactions
negotiated by the selling shareholders. The offering price will thus be
determined by market factors and the independent decisions of the selling
shareholders.
DILUTION
The
common stock to be sold by the selling shareholders is common stock that is
currently issued and outstanding. Accordingly, there will be no
dilution to our existing shareholders.
SELLING
SHAREHOLDERS
The
selling shareholders named in this Prospectus are offering 65,000 shares of
common stock offered through this Prospectus.
The
following table provides information regarding the beneficial ownership of our
common stock held by each of the selling shareholders as of September 30,
2009 including:
|
1.
|
The
number of shares owned by each prior to this
offering;
|
|
2.
|
The
total number of shares that are to be offered by
each;
|
|
3.
|
The
total number of shares that will be owned by each upon completion of the
offering;
|
|
4.
|
The
percentage owned by each upon completion of the offering;
and
|
|
5.
|
The
identity of the beneficial holder of any entity that owns the
shares.
|
9
The named
party beneficially owns and has sole voting and investment power over all shares
or rights to the shares, unless otherwise shown in the table. The
numbers in this table assume that none of the selling shareholders sells shares
of common stock not being offered in this Prospectus or purchases additional
shares of common stock, and assumes that all shares offered are
sold. The percentages are based on 1,070,100 shares of common
stock outstanding on September 30, 2009.
Name
of Selling Shareholder
|
Shares
Owned Prior to this Offering
|
Total
Number of Shares to be Offered for Selling Shareholder
Account
|
Total
Shares to be Owned Upon Completion of this Offering, assuming the
Shareholder sells all of their Shares
|
Percent
Owned Upon Completion of this Offering, assuming that the Shareholder
sells all of their Shares.
|
||||||||
Allan
Suare
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Ben
Feingold
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Charles
Feingold
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Christopher
J. Nichols
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Christopher
Scott
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Dave
Tax
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Digital
Wallstreet, Inc.
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Fabian
Suarez
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Fern
Petit
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Francis
Horwitz
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Hodassah
Feingold
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Invest
Source, Inc.
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Javanshir
Khazali
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Keith
Michel
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Keren
Feingold
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Leilani
Wilson
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Matt
Jennings
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Michelle
Kramer
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Neeraj
S. Iyer
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Oleksandr
Farennikov
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Paul
W. Salay
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Robert
Jennings
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Shawn
P. Crawford
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Tal
Feingold
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Tom
Rubin
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
Wallstreet
Direct, Inc.
|
2,500 | 2,500 |
Zero
|
Zero
|
||||||||
TOTAL:
|
65,000 | 65,000 |
10
Other
than as set forth below, none of the selling shareholders: (1) has had a
material relationship with us other than as a shareholder at anytime within the
past three years; or (2) has ever been one of our officers or
directors:
|
1.
|
Mr.
Roy Sahachisere, the husband of our President, Treasurer and Sole Director
Ms. Analyn Sahachisere, is the sole Shareholder, Officer, and Director of
InvestSource, Inc.
|
|
2.
|
Oledksandr
Farennikov is the present Secretary of the
Company.
|
PLAN OF
DISTRIBUTION
The
selling shareholders may sell some or all of their common stock in one or more
transactions, including block transactions:
1.
|
On
such public markets or exchanges as the common stock may from time to time
be trading;
|
|
2.
|
In
privately negotiated transactions;
|
|
3.
|
Through
the writing of options on the common stock;
|
|
4.
|
In
short sales; or
|
|
5.
|
In
any combination of these methods of
distribution.
|
The sales
price to the public is fixed at $0.50 per share until such time as the shares of
our common stock become traded on the Over-The-Counter Bulletin Board or another
exchange. Although we intend to apply for quotation of our common
stock on the Over-The-Counter Bulletin Board, public trading of our common stock
may never materialize. If our common stock becomes traded on the
Over-The-Counter Bulletin Board, or another exchange, then the sales price to
the public will vary according to the selling decisions of each selling
shareholder and the market for our stock at the time of resale. In
these circumstances, the sales price to the public may be:
1.
|
The
market price of our common stock prevailing at the time of
sale;
|
|
2.
|
A
price related to such prevailing market price of our common stock;
or
|
|
3.
|
Such
other price as the selling shareholders determine from time to
time.
|
The
shares may also be sold in compliance with the Securities and Exchange
Commission's Rule 144.
The
selling shareholders may also sell their shares directly to market makers acting
as agents in unsolicited brokerage transactions. Any broker or dealer
participating in such transactions as an agent may receive a commission from the
selling shareholders or from such purchaser if they act as agent for the
purchaser. If applicable, the selling shareholders may distribute shares to one
or more of their partners who are unaffiliated with us. Such partners
may, in turn, distribute such shares as described above.
We are
bearing all costs relating to the registration of the common
stock. The selling shareholders, however, will pay any commissions or
other fees payable to brokers or dealers in connection with any sale of the
common stock.
The
selling shareholders must comply with the requirements of the Securities Act of
1933 and the Securities Exchange Act in the offer and sale of the common
stock. In particular, during such times as the selling shareholders
may be deemed to be engaged in a distribution of the common stock, and therefore
be considered to be an underwriter, they must comply with applicable law and may
among other things:
1.
|
Not
engage in any stabilization activities in connection with our common
stock;
|
|
2.
|
Furnish
each broker or dealer through which common stock may be offered, such
copies of this Prospectus, as amended from time to time, as may
be required by such broker or dealer; and
|
|
3.
|
Not
bid for or purchase any of our securities or attempt to induce any
person to purchase any of our securities other than as permitted
under the Securities
Exchange Act.
|
11
DESCRIPTION OF
SECURITIES
Common
Stock
We have
75,000,000 common shares authorized, with a par value of $0.001 per share, of
which 1,070,100 shares were outstanding as of September 30,
2009.
Voting
Rights
Holders
of common stock have the right to cast one vote for each share of stock in his
or her own name on the books of the Company, whether represented in person or by
proxy, on all matters submitted to a vote of holders of common stock, including
the election of directors. There is no right to cumulative voting in
the election of directors. Except where a greater requirement is
provided by statute or by the Articles of Incorporation, or by the Bylaws, the
presence, in person or by proxy duly authorized, of the holder or holders of a
majority of the outstanding shares of the our common voting stock shall
constitute a quorum for the transaction of business. The vote by the holders of
a majority of such outstanding shares is also required to effect certain
fundamental corporate changes such as liquidation, merger or amendment of the
Company's Articles of Incorporation.
Dividends
There are
no restrictions in our articles of incorporation or bylaws that prevent us from
declaring dividends. We have not declared any dividends and we do not
plan to declare any dividends in the foreseeable future.
Pre-emptive
Rights
Holders
of common stock are not entitled to pre-emptive or subscription or conversion
rights, and there are no redemption or sinking fund provisions applicable to the
common stock. All outstanding shares of common stock are, and the shares of
common stock offered hereby will be when issued, fully paid and
non-assessable.
Share Purchase
Warrants
We have
not issued and do not have outstanding any warrants to purchase shares of our
common stock.
Stock
Options
We have
not issued and do not have outstanding any options to purchase shares of our
common stock.
Convertible
Securities
We have
not issued and do not have outstanding any securities convertible into shares of
our common stock or any rights convertible or exchangeable into shares of our
common stock.
Transfer
Agent
Our
transfer agent is Globex Transfer, LLC and they are located at 780 Deltona
Blvd., Suite 202, Deltona, Florida 32725. Their phone number is
(386)206-1133.
12
INTERESTS OF NAMED EXPERTS
AND COUNSEL
No expert
or counsel named in this prospectus as having prepared or certified any part of
this prospectus or having given an opinion upon the validity of the securities
being registered or upon other legal matters in connection with the registration
or offering of the common stock was employed on a contingency basis, or had, or
is to receive, in connection with the offering, a substantial interest, direct
or indirect, in the registrant or any of its parents or subsidiaries. Nor was
any such person connected with the registrant or any of its parents or
subsidiaries as a promoter, managing or principal underwriter, voting trustee,
director, officer, or employee.
The law
firm of Horwitz, Cron & Jasper, P.L.C, our legal counsel, has provided an
opinion on the validity of our common stock. Originally, Lawrence
Horwitz, Esq. invested $5,000 in exchange for 500,000 shares of common stock of
the Company which was used by the Company as additional start up
capital. However, Mr. Horwitz transferred his shares into the name of
Horwitz, Cron & Jasper, P.L.C.
Mendoza
Berger & Company, LLP, Certified Public Accountants, has audited our
financial statements included in this Prospectus and Registration Statement to
the extent and for the periods set forth in their audit
report. Mendoza Berger & Company, LLP has presented their report
with respect to our audited financial statements. The report of
Mendoza Berger & Company, LLP is included in reliance upon their authority
as experts in accounting and auditing.
DESCRIPTION OF
BUSINESS
In
General
Songwave
Industries, a Nevada corporation (“Parent” or “Songwave,”) through its wholly
owned subsidiary Tropical Beauty, Inc., California corporation (“Subsidiary” or
“Tropical Beauty”) (Songwave Industries and Tropical Beauty, Inc. shall be
collectively referred to herein as the “Company”), develops, markets, and brands
skin care and body care products. Particularly, the core products of
the Company are natural botanical based products which offer a highly
differentiated, healthy alternative to conventional cosmetics. The
Company and its Subsidiary have a limited operating history, thus there is
little information upon which to base an evaluation of our business and
prospects. We lack any meaningful financial history against which a potential
investor can judge our performance or that, if known, would be of assistance in
evaluating our business prospects or the merits of investing in the
Company. We compete on the basis of a complete package of natural,
organic, botanical based products that we will offer to our customers, as well
as having a reputation for fair pricing and quality. We will also
compete with other owners and operators for buyers of the products we will
manufacture.
Our plan
of operations is to relocate to more suitable premises and acquire a sufficient
inventory of required materials to allow us to produce and sell our line of bath
and beauty products.
Songwave
originally was developing a business model to market and distribute music over
the internet. However, at this time, the Company is not pursuing such business
model. However, Tropical Beauty is planning to expand their operations to
include commercial interior design and decorating services.
13
Competition
We
compete against numerous competitors and others in the business, many of which
are larger and have greater financial resources and better access to capital
markets than us. We will also compete with other owners and operators for buyers
of the products we manufacture.
There can
be no assurance that any competitors will not develop and offer products similar
or even superior to, the products which we offer. Such competitiveness is likely
to bring both strong price and quality competition to the sale of our products.
This will mean, among other things, increased costs in the form of marketing and
customer services, along with a reduction in pricing in sales. Generally, this
will have a significant negative effect on our business.
There can
be no assurance that we will have the financial resources, technical expertise
or marketing and support capabilities to compete successfully.
Employees
We have
no employees as of the date of this prospectus other than our President,
Treasurer and sole Director Ms. Analyn Sahachaisere and our Secretary Oleksandr
Farennikov. We conduct our business largely through agreements with
consultants and other independent third parties.
Subsidiaries
We
currently have one wholly owned subsidiary, Tropical Beauty, Inc. (“Tropical
Beauty” or “Subsidiary”) which was formed on August 19, 2004. On
January 1, 2008 we purchased all of the issued and outstanding stock of Tropical
Beauty pursuant to a stock purchase agreement.
Patents and
Trademarks
We do not
own, either legally or beneficially, any patent or trademark.
Licenses and
Royalties
We do not
have any license or royalty agreements in place.
LEGAL
PROCEEDINGS
We are
not currently a party to any legal proceedings. We are not aware of any pending
legal proceeding to which any of our officers, directors, or any beneficial
holders of 5% or more of our voting securities are adverse to us or have a
material interest adverse to us.
However,
our previous President, Treasurer, Chief Executive Officer and Director, Mr. Roy
Sahachaisere, the husband of our CEO, Ms. Analyn Sahachaisere, has
received a Wells Notice from the Securities and Exchange Commission (the “SEC”)
dated August 5, 2009 in relation to InvestSource, Inc. The Wells
Notice states that the SEC intends to bring a civil injunctive action against
InvestSource, Inc. and Mr. Sahachaisere, alleging that they violated Sections
17(a) and 17(b) of the Securities Act of 1933 and Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Wells
Notice states that the SEC is giving Mr. Sahachaisere an opportunity to make
Wells Submissions to the SEC. Mr. Sahachaisere resigned as President,
Treasurer, Chief Executive Officer and Director on August 20, 2009.
14
MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
No Public Market for Common
Stock
There is
presently no public market for our common stock. We intend to file an
application for trading of our common stock on the Over-The-Counter Bulletin
Board upon the effectiveness of the Registration Statement of which this
Prospectus forms a part. We can provide no assurance that our shares
will be traded on the Over-The-Counter Bulletin Board, or if traded, that a
public market will materialize.
The
Securities Exchange Commission has adopted rules that regulate broker-dealer
practices in connection with transactions in penny stocks. Penny stocks are
generally equity securities with a price of less than $5.00, other than
securities registered on certain national securities exchanges or quoted on the
NASDAQ system, provided that current price and volume information with respect
to transactions in such securities is provided by the exchange or
system. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock, to deliver a standardized risk disclosure document
prepared by the Commission, that: (a) contains a description of the nature and
level of risk in the market for penny stocks in both public offerings and
secondary trading; (b) contains a description of the broker's or dealer's duties
to the customer and of the rights and remedies available to the customer with
respect to a violation to such duties or other requirements of Securities' laws;
(c) contains a brief, clear, narrative description of a dealer market, including
bid and ask prices for penny stocks and the significance of the spread between
the bid and ask price; (d) contains a toll-free telephone number for
inquiries on disciplinary actions; (e) defines significant terms in the
disclosure document or in the conduct of trading in penny stocks; and; (f)
contains such other information and is in such form, including language, type,
size and format, as the Commission shall require by rule or
regulation.
The
broker-dealer also must provide, prior to effecting any transaction in a penny
stock, the customer with; (a) bid and offer quotations for the penny stock; (b)
the compensation of the broker-dealer and its salesperson in the transaction;
(c) the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market for
such stock; and (d) a monthly account statements showing the market value of
each penny stock held in the customer's account.
In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitability
statement.
These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for our stock if it becomes subject to these penny stock
rules. Therefore, because our common stock is subject to the penny stock rules,
stockholders may have difficulty selling those securities.
Holders of Our Common
Stock
Currently,
we have 29 holders of record of our common stock.
15
Rule 144
Shares
None of
our common stock is currently available for resale to the public under Rule 144
of the Securities Act of 1933. In general, under Rule 144 as
currently in effect, a person who has beneficially owned shares of a company's
common stock for at least 180 days is entitled to sell his or her shares.
However, Rule 144 is not available to shareholders for at least one year
subsequent to an issuer that previously met the definition of Rule 144(i)(1)(i)
having publicly filed, on Form 8K, the information required by Form
10.
As of the
date of this prospectus, all of the selling shareholder have held their shares
for more than 180 days, however it has not been at least one year since the
company filed the Form 10 Information on Form 8K as contemplated by Rule
144(i)(2) and (3). Sales under Rule 144 are also subject to manner of sale
provisions and notice requirements and to the availability of current public
information about the Company.
Registration
Rights
We have
not granted registration rights to the selling shareholders or to any other
persons.
We are
paying the expenses of the offering because we seek to: (a) become a reporting
company with the Commission under the Securities Exchange Act of 1934; and (b)
enable our common stock to be traded on the Over-The-Counter Bulletin
Board. We are filing this S-1 Registration Statement with the
Commission to cause us to become a reporting company with the Commission under
the 1934 Act. We must be a reporting company under the 1934 Act in order that
our common stock is eligible for trading on the Over-The-Counter Bulletin
Board. We believe that the registration of the resale of shares on
behalf of existing shareholders may facilitate the development of a public
market in our common stock if our common stock is approved for trading on a
recognized market for the trading of securities in the United
States.
We
consider that the development of a public market for our common stock will make
an investment in our common stock more attractive to future
investors. In the near future, in order for us to continue with the
development of our bath and beauty line of products, we will need to raise
additional capital. We believe that obtaining reporting company
status under the 1934 Act and trading on the Over-The-Counter Bulletin Board
should increase our ability to raise these additional funds from
investors.
16
FINANCIAL
STATEMENTS
Index to
Financial Statements:
PAGE
#
|
|||
1.
|
Audited
financial statements for the years ended December 31, 2008 and 2007 and
for the period from inception (July 25, 2006) through December 31,
2008.
|
||
Report
of Independent Certified Public Accounting Firm;
|
F-1
|
||
Balance
Sheets;
|
F-2
|
||
Statements
of Operations;
|
F-3
|
||
Statements
of Stockholders’ Equity; and
|
F-4
|
||
Statements
of Cash Flows;
|
F-5
|
||
Notes
to Financial Statements
|
F-6
|
||
2.
|
Unaudited
Interim financial statements for the three and six months ended June 30,
2009 and 2008 and for the period from inception (July 25, 2006) through
June 30, 2009.
|
|
|
Balance
Sheets
|
F-16
|
||
Statements
of Operations
|
F-17
|
||
Statements
of Stockholders’ Equity
|
F-18
|
||
Statements
of Cash Flows
|
F-19
|
||
Notes
to Financial Statements
|
F-20
|
||
3. | Unaudited Interim financial statements for the nine months ended September 30, 2009 and 2008 and for the period from inception (July 25, 2006) through September 30, 2009. | F-28 |
17
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
FINANCIAL
STATEMENTS
FOR
THE YEARS ENDED
DECEMBER
31, 2008 (CONSOLIDATED) AND 2007
AND
FOR THE PERIOD
FROM
INCEPTION (JULY 25, 2006)
THROUGH
DECEMBER 31 2008
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders
Songwave
Industries, Inc.
Huntington
Beach, CA
We have
audited the accompanying consolidated balance sheets of Songwave Industries,
Inc. and subsidiary (a development stage company) as of December 31, 2008 and
the related consolidated statements of operations, changes in stockholders’
(deficit) equity, and cash flows for the year then ended and for the period from
inception (July 25, 2006) through December 31, 2008. We have also audited
the balance sheet of Songwave Industries, Inc. as of December 31, 2007, and the
related statements of operations, changes in stockholders’ (deficit) equity, and
cash flows for the year then ended. These financial statements are
the responsibility of the Company’s management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the consolidated 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 includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our
opinion, the 2008 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Songwave Industries, Inc. and subsidiary as of December 31, 2008, and the
results of its consolidated operations and its cash flows for the year then
ended and for the period from inception (July 25, 2006) through December 31,
2008, in conformity with accounting principles generally accepted in the United
States of America. Also, in our opinion, the 2007 financial
statements present fairly, in all material respects, the financial position of
Songwave Industries, Inc. as of December 31, 2007, and the results of its
operations and its cash flows for the year then ended, in conformity with
accounting principles generally accepted in the United States of
America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As more fully described in Note 2,
the Company has incurred recurring operating losses since its inception and the
Company will require additional funding through debt or equity to continue its
operations. These conditions raise substantial doubt as to the
Company’s ability to continue as a going concern. Management’s plans
in regard to these matters are also described in Note 2. The
financial statements do not include any adjustments to reflect the outcome of
this uncertainty.
Mendoza
Berger & Company LLP
Irvine,
California
April 9,
2009
F-1
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
BALANCE
SHEETS
DECEMBER
31, 2008 AND 2007
ASSETS
Consolidated
|
||||||||
2008
|
2007
|
|||||||
Current
assets
|
||||||||
Cash
|
$ | 9,757 | $ | 9,881 | ||||
Total
current assets
|
9,757 | 9,881 | ||||||
Property
and equipment,
net of accumulated depreciation
|
263 | - | ||||||
Total
assets
|
$ | 10,020 | $ | 9,881 |
LIABILITIES
AND STOCKHOLDERS’ (DEFICIT) EQUITY
Current
liabilities
|
||||||||
Notes
payable – related parties
|
$ | 32,370 | $ | - | ||||
Accrued
interest related to notes payable – related parties
|
4,304 | - | ||||||
Total
current liabilities
|
36,674 | - | ||||||
Total liabilities
|
36,674 | - | ||||||
Stockholders’
(deficit) equity
|
||||||||
Common
stock, par value $.001 per share 75,000,000 shares authorized; 1,070,100
and 1,070,000 shares issued and outstanding at December 31,
2008 and 2007, respectively
|
1,070 | 1,070 | ||||||
Additional
paid-in capital
|
- | 10,930 | ||||||
Deficit
accumulated during the development stage
|
(27,724 | ) | (2,119 | ) | ||||
Total
stockholders’ (deficit) equity
|
(26,654 | ) | 9,881 | |||||
Total
liabilities and stockholders’ (deficit) equity
|
$ | 10,020 | $ | 9,881 |
See
accompanying notes to the financial statements.
F-2
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
STATEMENTS
OF OPERATIONS
Consolidated | Consolidated | |||||||||||
For
the Year Ended December 31, 2008
|
For
the Year Ended
December
31, 2007
|
For
the Period from Inception
(July
25, 2006) through
December
31, 2008
|
||||||||||
Net
revenue
|
$ | 12,000 | $ | - | $ | 12,000 | ||||||
Operating
expenses
|
||||||||||||
General
and administrative
|
25,555 | 1,059 | 27,674 | |||||||||
Total
operating expenses
|
25,555 | 1,059 | 27,674 | |||||||||
Net
loss before income taxes
|
(13,555 | ) | (1,059 | ) | (15,674 | ) | ||||||
Provision
for income taxes
|
- | - | - | |||||||||
Net
loss
|
$ | (13,555 | ) | $ | (1,059 | ) | $ | (15,674 | ) | |||
Net
loss per common share – basic and diluted
|
$ | (0.013 | ) | $ | (0.001 | ) | ||||||
Weighted
average of common shares
– basic and diluted
|
$ | 1,070,100 | $ | 1,070,000 |
See
accompanying notes to the financial statements.
F-3
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
STATEMENTS
OF CHANGES IN STOCKHOLDERS’ (DEFICIT) EQUITY
FOR
THE PERIODS FROM INCEPTION (JULY 25, 2006)
THROUGH
DECEMBER 31, 2007 AND 2008
Common
Stock
|
||||||||||||||||||||
Number
of Shares
|
Amount
|
Additional
Paid-In
Capital
|
Deficit
Accumulated During Development Stage
|
Total
Stockholders’ Equity (Deficit)
|
||||||||||||||||
Balance
at inception (July 25, 2006)
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
Issuance
of common stock November 1, 2006 for
cash
|
1,000,000 | 1,000 | 4,000 | - | 5,000 | |||||||||||||||
Issuance
of common stock December 2, 2006 for
cash
|
67,500 | 68 | 6,682 | - | 6,750 | |||||||||||||||
Issuance
via gift of common stock December
28, 2006 to related party
|
2,500 | 2 | 248 | - | 250 | |||||||||||||||
Net
loss
|
- | - | - | (1,060 | ) | (1,060 | ) | |||||||||||||
Balance,
December 31, 2006
|
1,070,000 | 1,070 | 10,930 | (1,060 | ) | 10,940 | ||||||||||||||
Net
loss
|
- | - | - | (1,059 | ) | (1,059 | ) | |||||||||||||
Balance,
December 31, 2007
|
1,070,000 | 1,070 | 10,930 | (2,119 | ) | 9,881 | ||||||||||||||
Exchange
of common stock January 1, 2008 Songwave
Industries, Inc. for common stock of
Tropical Beauty, Inc.
|
100 | - | (10,930 | ) | (12,050 | ) | (22,980 | ) | ||||||||||||
Net
loss
|
- | - | - | (13,555 | ) | (13,555 | ) | |||||||||||||
Balance,
December 31, 2008 - consolidated
|
1,070,100 | $ | 1,070 | $ | - | $ | (27,724 | ) | $ | (26,654 | ) |
See
accompanying notes to financial statements.
F-4
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
STATEMENTS
OF CASH FLOWS
Consolidated
|
Consolidated
|
|||||||||||
For
the Year
Ended
December
31, 2008
|
For
the Year Ended
December
31, 2007
|
For
the Period from Inception
(July
25, 2006) through
December
31, 2008
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
loss
|
$ | (13,555 | ) | $ | (1,059 | ) | $ | (15,674 | ) | |||
Adjustments
to reconcile net income to net cash
provided by (used in) operating activities:
|
||||||||||||
Depreciation
|
692 | - | 692 | |||||||||
Gift
of common stock
|
- | - | 250 | |||||||||
Changes
in assets and liabilities:
|
||||||||||||
Accrued
interest related to notes payable – related parties
|
2,079 | - | 2,079 | |||||||||
Net
cash used in operating activities
|
(10,784 | ) | (1,059 | ) | (12,653 | ) | ||||||
Cash
flows from investing activities:
|
||||||||||||
Cash
from acquisition of Tropical Beauty, Inc.
|
160 | - | 160 | |||||||||
Net
cash provided by investing activities
|
160 | - | 160 | |||||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds
from issuance of common stock
|
- | - | 11,750 | |||||||||
Proceeds
from related party notes payable
|
10,500 | - | 10,500 | |||||||||
Net
cash provided by financing activities
|
10,500 | - | 22,250 | |||||||||
Net
increase (decrease) in cash
|
(124 | ) | (1,059 | ) | 9,757 | |||||||
Cash,
beginning of period
|
9,881 | 10,940 | - | |||||||||
Cash,
end of period
|
$ | 9,757 | $ | 9,881 | $ | 9,757 | ||||||
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION:
|
||||||||||||
Interest
paid
|
$ | 2,079 | $ | - | $ | 2,079 | ||||||
Income
taxes paid
|
$ | - | $ | - | $ | - | ||||||
Cash
from acquisition of Tropical Beauty, Inc.
|
$ | 160 | $ | - | $ | 160 | ||||||
SUPPLEMENTAL
DISCLOSURE OF NON-CASH FINANCING AND INVESTING
ACTIVITIES:
|
||||||||||||
Property
and equipment from acquisition of Tropical Beauty, Inc.
|
$ | (955 | ) | $ | - | $ | (955 | ) | ||||
Note
payable – related parties from acquisition of Tropical Beauty,
Inc.
|
$ | 21,870 | $ | - | $ | 21,870 | ||||||
Accrued
expenses from acquisition of Tropical Beauty, Inc.
|
$ | 2,225 | $ | - | $ | 2,225 |
See
accompanying notes to financial statements.
F-5
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
1.
|
NATURE OF OPERATIONS
AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
|
Nature of
Operations
Songwave
Industries, Inc. (the Company) is currently a development stage company under
the provisions of Statement of Financial Accounting Standards (SFAS) No. 7 and
was incorporated under the laws of the State of Nevada on July 25,
2006. The Company originally was developing a business model to
market and distribute music over the internet. However, at this time,
the Company has incurred only organizational costs to date and is not pursuing
such business model.
The
Company entered into a purchase agreement dated January 1, 2008 with Tropical
Beauty, Inc., a California Corporation. The Company acquired all of
the outstanding shares (1,000) of Tropical Beauty, Inc., from its shareholder in
exchange for 100 shares of Songwave Industries, Inc. stock. The
owners of Tropical Beauty, Inc. are majority owners of the
Company. Tropical Beauty, Inc. became a wholly owned subsidiary of
Songwave Industries, Inc. The assets and liabilities were recorded at
cost basis. From January 1, 2008, the financial statements were
presented on a consolidated basis.
Basis of
Accounting
The
consolidated financial statements of the Company have been prepared on the
accrual basis of accounting and are in conformity with accounting principles
generally accepted in the United States of America and prevailing industry
practice.
Principles of
Consolidation
The
consolidated financial statements include the financial statements of the
Company and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in
consolidation.
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reported periods. Actual results could materially differ
from those estimates.
F-6
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
1.
|
NATURE
OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
Property and
Equipment
Property
and equipment is stated at cost. Expenditures for major improvements
are capitalized, while replacements, maintenance and repairs, which do not
significantly improve or extend the useful life of the asset, are expensed when
incurred.
Depreciation
of property and equipment is computed using the straight-line method over the
estimated useful lives of the assets, which range from three to five
years.
Provision for Income
Taxes
The
Company accounts for income taxes under SFAS 109, “Accounting for Income
Taxes”. Under the asset and liability method of SFAS 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under
SFAS 109, the effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period the enactment occurs. A
valuation allowance is provided for certain deferred tax assets if it is more
likely than not that the Company will not realize tax assets through future
operations.
Reclassifications
Certain
reclassifications have been made in the prior period financial statements to
conform to the current presentation.
Basic and Diluted Income
(Loss) Per Share
In
accordance with SFAS No. 128, “Earnings Per Share”, basic
income (loss) per common share is computed by dividing net income (loss)
available to common stockholders by the weighted average number of common shares
outstanding. Diluted income (loss) per common share is computed
similar to basic income per common share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. As of December 31, 2008 and 2007, the
Company did not have any equity or debt instruments outstanding that could be
converted into common stock.
Recent Accounting
Pronouncements
In
December 2007, the FASB issued SFAS No. 141(R), Business Combinations (SFAS
No. 141(R)), which replaces SFAS No. 141, Business Combinations,
requires an acquirer to recognize the assets acquired, the liabilities assumed,
and any non-controlling interest in the acquiree at the acquisition date,
measured at their fair values as of that date, with limited exceptions. This
Statement also requires the acquirer in a business combination achieved in
stages to recognize the identifiable assets and liabilities, as well as the
non-controlling interest in the acquiree, at the full amounts of their fair
values.
F-7
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
1.
|
NATURE
OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
SFAS
No. 141(R) makes various other amendments to authoritative literature
intended to provide additional guidance or to confirm the guidance in that
literature to that provided in this Statement. This Statement applies
prospectively to business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. We do not expect this will have a significant impact on
our financial statements.
In
December 2007, FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements (SFAS No. 160), which amends
Accounting Research Bulletin No. 51, Consolidated Financial
Statements, to improve the relevance, comparability, and transparency of
the financial information that a reporting entity provides in its consolidated
financial statements.
SFAS
No. 160 establishes accounting and reporting standards that require the
ownership interests in subsidiaries not held by the parent to be clearly
identified, labeled and presented in the consolidated statement of financial
position within equity, but separate from the parent’s equity. This statement
also requires the amount of consolidated net income attributable to the parent
and to the non-controlling interest to be clearly identified and presented on
the face of the consolidated statement of income. Changes in a parent’s
ownership interest while the parent retains its controlling financial interest
must be accounted for consistently, and when a subsidiary is deconsolidated, any
retained non-controlling equity investment in the former subsidiary must be
initially measured at fair value. The gain or loss on the deconsolidation of the
subsidiary is measured using the fair value of any non-controlling equity
investment. The Statement also requires entities to provide sufficient
disclosures that clearly identify and distinguish between the interests of the
parent and the interests of the non-controlling owners. This Statement applies
prospectively to all entities that prepare consolidated financial statements and
applies prospectively for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008. We do not expect this will
have a significant impact on our financial statements.
2.
|
GOING
CONCERN
|
As shown
in the accompanying consolidated financial statements, the Company has not
generated any significant revenue and has incurred a net operating loss of
$27,724 from inception (July 25, 2006) through December 31, 2008. The Company is
subject to those risks associated with development stage
companies. The Company has sustained losses since inception, and
additional debt and equity financing will be required to fund its plans on
expanding its manufacturing, product lines and to support
operations. However, there is no assurance that the Company will be
able to obtain such additional equity or financing. Furthermore,
there is no assurance that rapid technological changes, changing customer needs
and evolving industry standards will enable the Company to introduce new
products on a timely basis so that profitable operations can be attained. These
facts raise substantial doubt as to the Company’s ability to continue as a going
concern. The accompanying financial statements do not include any adjustments to
reflect the outcome of this uncertainty.
F-8
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
3.
|
BUSINESS
ACQUISITIONS
|
Tropical Beauty,
Inc.
On
January 1, 2008, the Company completed the acquisition of all of the outstanding
equity shares of Tropical Beauty, Inc. (“Tropical Beauty”) pursuant to a Stock
Purchase Agreement between the companies. As a result of this transaction,
Tropical Beauty became a wholly owned subsidiary of the Company. The Company
acquired all of the outstanding shares ($.001 par value; 1,000 shares issued and
outstanding) of Tropical Beauty, from its shareholder in exchange for 100 shares
of the Company. The owners of Tropical Beauty are majority owners of the
Company.
Tropical
Beauty is currently in a development stage, under the provision of statement of
financial accounting standards (SFAS) No. 7 and a business to produce and market
their own name brand of natural skin care products along the west coast beaches
of California. Tropical Beauty, Inc. is expanding their operations to include
commercial interior design and decorating services. Currently the Company is
looking at vertical business enterprises to promote the progress of both
operations.
Tropical
Beauty results of operations are included in the Company's statement of
operations from the acquisition date. The transaction was accounted for using
the purchase method of accounting in accordance with SFAS No. 141, Business Combinations.
Tropical
Beauty, Inc. (Continued)
The
following table summarizes the estimated fair values of the assets acquired and
liabilities assumed at the date of acquisition.
Amount
|
||||
Cash
|
$ | 160 | ||
Property
and equipment
|
955 | |||
Total
assets acquired
|
1,115 | |||
Note
payable – related parties
|
(21,870 | ) | ||
Accrued
interest
|
(2,225 | ) | ||
Total
liabilities assumed
|
(24,095 | ) | ||
Net
liabilities assumed
|
$ | (22,980 | ) |
F-9
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
4.
|
PROPERTY AND
EQUIPMENT
|
Property and equipment consist of the
following at December 31:
2008
|
2007
|
|||||||
Office
furniture and equipment
|
$ | 527 | $ | -- | ||||
Computers
|
428 | -- | ||||||
955 | -- | |||||||
Accumulated
depreciation and amortization
|
(692 | ) | ||||||
$ | 263 | $ | -- |
Depreciation
and amortization expense was $692 and $0 for the years ended December 31,2008 and 2007,
respectively.
5.
|
NOTES PAYABLE –
RELATED PARTIES
|
Notes
payable – related parties consists of the following promissory notes at
December 31, 2008:
Unsecured
note dated September 25, 2008, with Company owned by majority shareholder
with interest at 12.0%, due in 30 days upon demand
|
$ | 5,000 | ||
Unsecured
note dated November 25, 2008, with Company owned by majority shareholder
with interest at 15.0%, due in 30 days upon demand
|
5,000 | |||
Unsecured
note dated September 3, 2008, with interest at 10.0%, due in 30 days upon
demand
|
500 | |||
Unsecured
notes with majority shareholder, with interest at 8.0% and 12.0% due upon
demand
|
21,870 | |||
Total
|
$ | 32,370 |
6.
|
COMMON
STOCK
|
On
November 1, 2006, the Company issued 1,000,000 shares of its common stock to its
officer for cash of $5,000 which was considered a reasonable estimate of fair
value.
On
December 2, 2006, the Company issued 67,500 shares of its common stock to
unrelated investors for cash of $6,750 pursuant to the Company’s Registration
Statement on Form D. On December 28, 2006, the Company issued 2,500 shares of
its common stock as a gift to a related entity through common ownership valued
at $250.
F-10
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
6.
|
COMMON
STOCK, (Continued)
|
On
January 1, 2008, the Company issued 100 shares of its common stock to acquire
100% of the outstanding stock ($0.001 par value; 1,000 shares issued and
outstanding) of Tropical Beauty, Inc., from its shareholders. The
assets and liabilities were recorded at cost basis. The owners of
Tropical Beauty, Inc. are majority owners of Songwave Industries.
7.
|
PROVISION FOR INCOME
TAXES
|
Income
taxes are provided for using the liability method of accounting in accordance
with SFAS No. 109 “Accounting for Income Taxes,” and clarified by FASB
Interpretation (“FIN”) 48, “Accounting for Uncertainty in Income Taxes, an
interpretation of FASB statement No. 109.” A deferred tax asset or liability is
recorded for all temporary differences between financial and tax reporting.
Temporary differences are the differences between the reported amounts of assets
and liabilities and their tax basis. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effect of changes in
tax laws and rates on the date of enactment.
During
the year ended December 31, 2007, the Company adopted Financial Accounting
Standards Board (FASB), interpretation No. 48, Accounting for Uncertainty in
Income Taxes” (FIN 48), which supplements SFAS No. 109, “Accounting for Income
Taxes,” by defining the confidence level that a tax position must meet in order
to be recognized in the financial statements. The Interpretation requires that
the tax effects of a position be recognized only if it is “more-likely-than-not”
to be sustained based solely on its technical merits as of the reporting date.
The more-likely-than-not threshold represents a positive assertion by management
that a company is entitled to the economic benefits of a tax position. If a tax
position is not considered more-likely-than-not to be sustained based solely on
its technical merits, no benefits of the tax position are to be recognized.
Moreover, the more-likely-than-not threshold must continue to be met in each
reporting period to support continued recognition of a benefit. With the
adoption of FIN 48, companies are required to adjust their financial statements
to reflect only those tax positions that are more-likely-than-not to be
sustained. Any necessary adjustment would be recorded directly to retained
earnings and reported as a change in accounting principle.
The
components of the Company’s deferred tax asset as of December 31, 2008 and 2007
are as follows:
2008
|
2007
|
|||||||
Net
operating loss carry forward
|
$ | 3,700 | $ | 318 | ||||
Valuation
allowance
|
(3,700 | ) | (318 | ) | ||||
Net
deferred tax asset
|
$ | - | $ | - |
F-11
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
7.
|
PROVISION
FOR INCOME TAXES (Continued)
|
A
reconciliation of income taxes computed at the statutory rate to the income tax
amount recorded is as follows:
2008
|
2007
|
|||||||
Tax
at statutory rate (25% and 15% for 2008 and 2007,
respectively)
|
$ | 3,400 | $ | 159 | ||||
Increases
in valuation allowance
|
(3,400 | ) | (159 | ) | ||||
Net
deferred tax asset
|
$ | - | $ | - |
There is
no deferred tax or deferred tax asset as of December 31, 2008 and
2007.
Upon
adoption of FIN 48 as of January 1, 2007, the Company had no gross unrecognized
tax benefits that, if recognized, would favorably affect the effective income
tax rate in future periods. At December 31, 2008 the amount of gross
unrecognized tax benefits before valuation allowances and the amount that would
favorably affect the effective income tax rate in future periods after valuation
allowances were $0. These amounts consider the guidance in FIN 48-1, “Definition
of Settlement in FASB Interpretation No. 48”. The Company has not accrued any
additional interest or penalties as a result of the adoption of FIN
48.
The
Company had available approximately $15,700 and $2,100 in unused federal
operating loss carry-forwards at December 31, 2008 and 2007, respectively, that
may be applied against future taxable income. These net operation loss
carry-forwards expire through 2028.
No tax
benefit has been reported in connection with the net operation loss carry
forwards in the financial statements as the Company believes it is more likely
than not that the net operation loss carry forwards will expire unused.
Accordingly, the potential tax benefits of the net operating loss carry forwards
are offset by a valuation allowance of the same
amount. The Company recognized no state income tax
liability on tax asset since it is located in Nevada, a state that has no state
income taxes. Also, the net operating losses of Tropical Beauty, Inc.
are limited due to the change of ownership.
8.
|
FAIR VALUE
ACCOUNTING
|
In
September 2006, the Financial Accounting Standards Board (“FASB”) issued FASB
Statement No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. The provisions of FAS 157 were adopted January 1,
2008. In February 2008, the FASB staff issued Staff Position No.
157-2 “Effective Date of FASB Statement No. 157” (“FSP FAS
157-2”).
FSP FAS
157-2 delayed the effective date of FAS 157 for nonfinancial assets and
nonfinancial liabilities, except for items that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at least
annually). The provisions of FSP FAS-157-2 are effective for the
Company’s fiscal year beginning January 1, 2009.
F-12
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
8.
|
FAIR
VALUE ACCOUNTING,
(Continued)
|
FAS 157
establishes a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1 measurements) and the lowest priority to
unobservable inputs (Level 3 measurements). The three levels of the
fair value hierarchy under FAS 157 are described below:
Level
1
|
Unadjusted
quoted prices in active markets that are accessible at the measurement
date for identical, unrestricted assets or
liabilities;
|
|
Level
2
|
Quoted
prices in markets that are not active, or inputs that are observable,
either directly or indirectly for substantially the full term of the asset
or liability;
|
|
Level
3
|
Prices
or valuation techniques that require inputs that are both significant to
the fair value measurement and unobservable (supported by little or no
market activity).
|
The
following table sets forth the Company’s financial assets and liabilities
measured at fair value by level within the fair value hierarchy. As
required by FAS 157, assets and liabilities are classified in their entirety
based on the lowest level of output that is significant to the fair value
measurement.
Fair
value at December 31, 2008
|
||||||||||||||||
Total
|
Level
1
|
Level
2
|
Level
3
|
|||||||||||||
Assets:
|
||||||||||||||||
Cash
|
$ | 9,757 | $ | 9,757 | $ | - | $ | - | ||||||||
Liabilities:
|
||||||||||||||||
Notes
payable – related
parties
|
$ | 32,370 | $ | - | $ | - | $ | 32,370 | ||||||||
Accrued
interest related
to notes payable
– related parties
|
4,304 | - | - | 4,304 | ||||||||||||
$ | 36,674 | $ | - | $ | - | $ | 36,674 |
The
Company’ cash is classified within Level 1 of the fair value hierarchy since
they are valued using quoted market prices. The cash that are valued
based on quoted market prices.
The
Company’s notes payable – related parties and related accrued interest are
classified within Level 3 of the fair value hierarchy since they have valuation
techniques that require inputs that are both significant to the fair value
measurement and are unobservable.
F-13
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2008 AND 2007
8.
|
FAIR
VALUE ACCOUNTING,
(Continued)
|
In
February 2007, the FASB issued FASB Statement No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities” (“FAS 159”) permits entities to
choose to measure many financial instruments and certain other items at fair
value, with the objective of improving financial reporting by mitigating
volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. The provisions of FAS 159 were adopted January 1,
2008. The Company did not elect the Fair Value Option for any of its
financial assets or liabilities, and therefore, the adoption of FAS 159 had no
impact on the Company’s consolidated financial position, results of operations
or cash flows.
F-14
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
FINANCIAL
STATEMENTS
FOR
THE THREE AND SIX MONTHS ENDED
JUNE
30, 2009 AND 2008
AND
FOR THE PERIOD
FROM
INCEPTION (JULY 25, 2006)
THROUGH
JUNE 30, 2009
F-15
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
CONSOLIDATED
BALANCE SHEETS
JUNE
30, 2009 AND DECEMBER 31, 2008
ASSETS
June
30, 2009
(Unaudited)
|
December
31, 2008
|
|||||||
Current
assets
|
||||||||
Cash
|
$ | 1,040 | $ | 9,757 | ||||
Total
current assets
|
1,040 | 9,757 | ||||||
Property
and equipment,
|
||||||||
Net of accumulated
depreciation
|
131 | 263 | ||||||
Total
assets
|
$ | 1,171 | $ | 10,020 |
LIABILITIES
AND STOCKHOLDERS’ DEFICIT
Current
liabilities
|
||||||||
Accounts
payable
|
$ | 25 | $ | - | ||||
Notes
payable – related parties
|
35,070 | 32,370 | ||||||
Accrued
interest related to notes payable – related
parties
|
5,998 | 4,304 | ||||||
Total
current liabilities
|
41,093 | 36,674 | ||||||
Total liabilities
|
41,093 | 36,674 | ||||||
Stockholders’
(deficit) equity
|
||||||||
Common
stock, par value $.001 per share 75,000,000
shares authorized; 1,070,100 shares
issued and outstanding at June
30, 2009 and December 31, 2008
|
1,070 | 1,070 | ||||||
Additional
paid-in capital
|
- | - | ||||||
Deficit
accumulated during the development stage
|
(40,992 | ) | (27,724 | ) | ||||
Total
stockholders’ deficit
|
(39,922 | ) | (26,654 | ) | ||||
Total
liabilities and stockholders’ deficit
|
$ | 1,171 | $ | 10,020 |
See
accompanying notes to financial statements.
F-16
SONGWAVE
INDUSTRIES, INC.
(A Development Stage Company)CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
For
the Three Months Ended
|
For
the Six Months Ended
|
|||||||||||||||||||
June
30, 2009
|
June
30, 2008
|
June
30, 2009
|
June
30, 2008
|
For
the Period
from
Inception
(July
25, 2006) through
June
30, 2009
|
||||||||||||||||
Net
revenue
|
$ | - | $ | - | $ | - | $ | - | $ | 12,000 | ||||||||||
Operating
expenses
|
||||||||||||||||||||
General
and administrative
|
2,262 | 7,106 | 12,468 | 7,820 | 40,142 | |||||||||||||||
Total
operating expenses
|
2,262 | 7,106 | 12,468 | 7,820 | 40,142 | |||||||||||||||
Net
loss before income taxes
|
(2,262 | ) | (7,106 | ) | (12,468 | ) | (7,820 | ) | (28,142 | ) | ||||||||||
Provision
for income taxes
|
800 | - | 800 | - | 800 | |||||||||||||||
Net
loss
|
$ | (3,062 | ) | $ | (7,106 | ) | $ | (13,268 | ) | $ | (7,820 | ) | $ | (28,942 | ) | |||||
Net
loss per common share – basic and diluted
|
$ | (0.003 | ) | $ | (0.007 | ) | $ | (0.012 | ) | $ | (0.007 | ) | ||||||||
Weighted
average of common shares – basic and
diluted
|
1,070,100 | 1,070,100 | 1,070,100 | 1,070,100 |
See
accompanying notes to financial statements.
F-17
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
STATEMENTS
OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR
THE PERIODS FROM INCEPTION (JULY 25, 2006)
THROUGH
JUNE 30, 2009
Common
Stock
|
||||||||||||||||||||
(0.001
par value)
|
||||||||||||||||||||
Number
of Shares
|
Amount
|
Additional
Paid-In
Capital
|
Deficit
Accumulated During Development Stage
|
Total
Stockholders’ Equity (Deficit)
|
||||||||||||||||
Balance
at inception (July 25, 2006)
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
Issuance
of common stock November 1, 2006 for
cash
|
1,000,000 | 1,000 | 4,000 | - | 5,000 | |||||||||||||||
Issuance
of common stock December 2, 2006 for
cash
|
67,500 | 68 | 6,682 | - | 6,750 | |||||||||||||||
Issuance
via gift of common stock December
28, 2006 to related party
|
2,500 | 2 | 248 | - | 250 | |||||||||||||||
Net
loss
|
- | - | - | (1,060 | ) | (1,060 | ) | |||||||||||||
Balance,
December 31, 2006
|
1,070,000 | 1,070 | 10,930 | (1,060 | ) | 10,940 | ||||||||||||||
Net
loss
|
- | - | - | (1,059 | ) | (1,059 | ) | |||||||||||||
Balance,
December 31, 2007 (Audited)
|
1,070,000 | 1,070 | 10,930 | (2,119 | ) | 9,881 | ||||||||||||||
Exchange
of common stock January 1, 2008 Songwave
Industries, Inc. for common stock of
Tropical Beauty, Inc.
|
100 | - | (10,930 | ) | (12,050 | ) | (22,980 | ) | ||||||||||||
Net
loss
|
- | - | - | (13,555 | ) | (13,555 | ) | |||||||||||||
Bal,
Dec. 31, 2008 – (Audited) (Consolidated)
|
1,070,100 | 1,070 | - | (27,724 | ) | (26,654 | ) | |||||||||||||
Net
loss
|
- | - | - | (13,268 | ) | (13,268 | ) | |||||||||||||
Bal.,
June 30, 2009 – (Unaudited) (Consolidated)
|
1,070,100 | $ | 1,070 | $ | - | $ | (40,992 | ) | $ | (39,922 | ) |
See
accompanying notes to financial statements.
F-18
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
For
the Six Months Ended
|
||||||||||||
June
30, 2009
|
June
30, 2008
|
For
the Period
from
Inception
(July
25, 2006) through
June
30, 2009
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
loss
|
$ | (13,268 | ) | $ | (7,820 | ) | $ | (28,942 | ) | |||
Adjustments
to reconcile net income to net cash
provided by (used in) operating activities:
|
||||||||||||
Depreciation
|
132 | 346 | 824 | |||||||||
Gift
of common stock
|
- | - | 250 | |||||||||
Changes
in assets and liabilities:
|
||||||||||||
Accounts
payable
|
25 | - | 25 | |||||||||
Accrued
interest related to notes payable - related
parties
|
1,694 | 914 | 3,773 | |||||||||
Net
cash used in operating activities
|
(11,417 | ) | (6,560 | ) | (24,070 | ) | ||||||
Cash
flows from investing activities:
|
||||||||||||
Cash
from acquisition of Tropical Beauty,Inc.
|
- | 160 | 160 | |||||||||
Net
cash provided by investing activities
|
- | 160 | 160 | |||||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds
from issuance of common stock
|
- | - | 11,750 | |||||||||
Proceeds
from related party notes payable
|
2,700 | - | 13,200 | |||||||||
Net
cash provided by financing activities
|
2,700 | - | 24,950 | |||||||||
Net
increase (decrease) in cash
|
(8,717 | ) | (6,400 | ) | 1,040 | |||||||
Cash,
beginning of period
|
9,757 | 9,881 | - | |||||||||
Cash,
end of period
|
$ | 1,040 | 3,481 | $ | 1,040 | |||||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW
INFORMATION:
|
||||||||||||
Interest
paid
|
$ | 1,694 | $ | 914 | $ | 3,773 | ||||||
Income
taxes paid
|
$ | - | - | $ | - | |||||||
Cash
from acquisition of Tropical Beauty, Inc.
|
$ | - | $ | 160 | $ | 160 | ||||||
SUPPLEMENTAL
DISCLOSURE OF NON-CASH
FINANCING AND INVESTING
ACTIVITIES:
|
||||||||||||
Property
and equipment from acquisition of Tropical Beauty, Inc.
|
$ | - | $ | (955 | ) | $ | (955 | ) | ||||
Note
payable – related parties from acquisition of Tropical Beauty,
Inc.
|
$ | - | $ | 21,870 | $ | 21,870 | ||||||
Accrued
expenses from acquisition of Tropical Beauty, Inc.
|
$ | - | $ | 2,225 | $ | 2,225 |
See
accompanying notes to financial statements.
F-19
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
JUNE
30, 2009
1.
|
NATURE OF OPERATIONS
AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
|
Nature of
Operations
Songwave
Industries, Inc. (the Company) is currently a development stage company under
the provisions of Statement of Financial Accounting Standards (SFAS) No. 7 and
was incorporated under the laws of the State of Nevada on July 25,
2006. The Company originally was developing a business
model to market and distribute music over the internet. However, at this time,
the Company has incurred only orgazational costs to date and is not pursuing
such business model.
The
Company entered into a purchase agreement dated January 1, 2008 with Tropical
Beauty, Inc., a California Corporation. The Company acquired all of
the outstanding shares (1,000) of Tropical Beauty, Inc., from its shareholder in
exchange for 100 shares of Songwave Industries, Inc. stock. The
owners of Tropical Beauty, Inc. are majority owners of the
Company. Tropical Beauty, Inc. became a wholly owned subsidiary of
Songwave Industries, Inc. The assets and liabilities were recorded at
cost basis. From January 1, 2008, the financial statements were
presented on a consolidated basis.
Basis of
Presentation
The
consolidated financial statements of the Company have been prepared on the
accrual basis of accounting and are in conformity with accounting principles
generally accepted in the United States of America and prevailing industry
practice.
The
unaudited financial statements included herein have been prepared in accordance
with accounting principles generally accepted in the United States for interim
financial information and with the instructions to Item 10 of Regulation S-X.
They do not include all information and notes required by generally
accepted accounting principles for complete financial statements. However,
except as disclosed herein, there has been no material changes in the
information disclosed in the notes to the financial statements included in the
Company’s audit report for the years ended December 31, 2008 and 2007. In the
opinion of management, all adjustments (including normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three and six months ended June 30, 2009, are not necessarily
indicative of the results that may be expected for any other interim period or
the entire year. For further information, these unaudited financial statements
and the related notes should be read in conjunction with the Company’s audited
financial statements for the years ended December 31, 2008 and 2007, included
herein.
Principles of
Consolidation
The
consolidated financial statements include the financial statements of the
Company and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated in
consolidation.
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reported periods. Actual results could materially differ
from those estimates.
F-20
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
JUNE
30, 2009
1.
|
NATURE
OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
(Continued)
|
Property and
Equipment
Property
and equipment is stated at cost. Expenditures for major improvements
are capitalized, while replacements, maintenance and repairs, which do not
significantly improve or extend the useful life of the asset, are expensed when
incurred.
Depreciation
of property and equipment is computed using the straight-line method over the
estimated useful lives of the assets, which range from three to five
years.
Provision for Income
Taxes
The
Company accounts for income taxes under SFAS 109, “Accounting for Income
Taxes”. Under the asset and liability method of SFAS 109,
deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under
SFAS 109, the effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period the enactment occurs. A
valuation allowance is provided for certain deferred tax assets if it is more
likely than not that the Company will not realize tax assets through future
operations.
Basic and Diluted Income
(Loss) Per Share
In
accordance with SFAS No. 128, “Earnings Per Share”, basic
income (loss) per common share is computed by dividing net income (loss)
available to common stockholders by the weighted average number of common shares
outstanding. Diluted income (loss) per common share is computed
similar to basic income per common share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. As of June 30, 2009, the Company did not
have any equity or debt instruments outstanding that could be converted into
common stock.
Recent Accounting
Pronouncements
In May
2008, the FASB issued SFAS No. 162 (“FAS 162”), The Hierarchy of Generally Accepted
Accounting Principles. FAS 162 identifies the sources of
accounting principles and the framework for selecting the principles used in the
preparation of financial statements that are presented in accordance with
accounting principles generally accepted in the United States of
America. FAS 162 was effective on November 13, 2008. The adoption of FAS 162
did not have a material impact on the Company’s consolidated financial
statements. FAS 162 was superseded by FAS 168.
F-21
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
JUNE
30, 2009
1.
|
NATURE
OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES,
(Continued)
|
In June
2009, the FASB issued SFAS No. 168 (“FAS 168”), The FASB Accounting Standards
Codification. FAS 168 is effective for financial statements
issued for annual and interim periods beginning after September 15,
2009. On the effective date of FAS 168, the Codification will
supersede all then-existing non-SEC accounting and reporting
standards. Rules and interpretive releases of the SEC under authority
of federal securities laws will continue to be sources of authoritative GAAP for
SEC registrants. The adoption of FAS 168 is not expected to have a
material effect on the Company’s financial statements.
2.
|
GOING
CONCERN
|
As shown
in the accompanying consolidated financial statements, the Company has not
generated a substantial amount of revenue and has incurred a net operating loss
of $40,992 from inception (July 25, 2006) through June 30, 2009 and has a
working capital deficit of ($40,053). The Company is subject to those risks
associated with development stage companies. The Company has
sustained losses since inception, and additional debt and equity financing will
be required to fund its plans on expanding its manufacturing, product lines and
to support operations. However, there is no assurance that the
Company will be able to obtain such additional equity or
financing. Furthermore, there is no assurance that rapid
technological changes, changing customer needs and evolving industry standards
will enable the Company to introduce new products on a timely basis so that
profitable operations can be attained. These facts raise substantial doubt as to
the Company’s ability to continue as a going concern. The accompanying financial
statements do not include any adjustments to reflect the outcome of this
uncertainty.
3.
|
PROPERTY AND
EQUIPMENT
|
Property and equipment consist of the
following at:
June
30, 2009
(Unaudited)
|
December
31, 2008
|
|||||||
Office
furniture and equipment
|
$ | 527 | $ | 527 | ||||
Computers
|
428 | 428 | ||||||
955 | 955 | |||||||
Accumulated
depreciation and amortization
|
(824 | ) | (692 | ) | ||||
$ | 131 | $ | 263 |
Depreciation
and amortization expense was $132 and $346 for the six months ended
June 30, 2009 and June 30, 2008, respectively.
F-22
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
JUNE
30, 2009
4.
|
NOTES PAYABLE –
RELATED PARTIES
|
Notes
payable – related parties consists of the following promissory notes at June 30,
2009:
Unsecured
note dated May 6, 2009, with majority shareholder with interest at 15.0%,
due in 30 days upon demand
|
$ | 1,700 | ||
Unsecured
note dated November 25, 2008, with Company owned by majority shareholder
with interest at 15.0%, due in 30 days upon demand
|
5,000 | |||
Unsecured
note dated September 25, 2008, with Company owned by majority shareholder
with interest at 12.0%, due in 30 days upon demand
|
5,000 | |||
Unsecured
note dated September 3, 2008, with interest at 10.0%, due in 30 days upon
demand
|
500 | |||
Unsecured
note dated February 19, 2008, with Company owned by majority shareholder
with interest at 17.0%, due in 30 days upon demand
|
1,000 | |||
Unsecured
notes with majority shareholder, with interest at 8.0% and 12.0% due upon
demand
|
21,870 | |||
Total
|
$ | 35,070 |
5.
|
COMMON
STOCK
|
On
November 1, 2006, the Company issued 1,000,000 shares of its common stock to its
officer for cash of $5,000 which was considered a reasonable estimate of fair
value.
On
December 2, 2006, the Company issued 67,500 shares of its common stock to
unrelated investors for cash of $6,750 pursuant to the Company’s Registration
Statement on Form D. On December 28, 2006, the Company issued 2,500 shares of
its common stock as a gift to a related entity through common ownership valued
at $250.
On
January 1, 2008, the Company issued 100 shares of its common stock to acquire
100% of the outstanding stock ($0.001 par value; 1,000 shares issued and
outstanding) of Tropical Beauty, Inc., from its shareholders. The
assets and liabilities were recorded at cost basis. The owners of
Tropical Beauty, Inc. are majority owners of Songwave
Industries. Therefore, the transaction was recorded with no goodwill
and equity was charged with $22,980.
F-23
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
JUNE
30, 2009
6.
|
PROVISION FOR INCOME
TAXES
|
Income
taxes are provided for using the liability method of accounting in accordance
with SFAS No. 109 “Accounting for Income Taxes,” and clarified by FASB
Interpretation (“FIN”) 48, “Accounting for Uncertainty in Income Taxes, an
interpretation of FASB statement No. 109.” A deferred tax asset or liability is
recorded for all temporary differences between financial and tax reporting.
Temporary differences are the differences between the reported amounts of assets
and liabilities and their tax basis. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
Deferred tax assets and liabilities are adjusted for the effect of changes in
tax laws and rates on the date of enactment.
During
the year ended December 31, 2007, the Company adopted Financial Accounting
Standards Board (FASB), interpretation No. 48, Accounting for Uncertainty in
Income Taxes” (FIN 48), which supplements SFAS No. 109, “Accounting for Income
Taxes,” by defining the confidence level that a tax position must meet in order
to be recognized in the financial statements. The Interpretation requires that
the tax effects of a position be recognized only if it is “more-likely-than-not”
to be sustained based solely on its technical merits as of the reporting date.
The more-likely-than-not threshold represents a positive assertion by management
that a company is entitled to the economic benefits of a tax position. If a tax
position is not considered more-likely-than-not to be sustained based solely on
its technical merits, no benefits of the tax position are to be
recognized.
Moreover,
the more-likely-than-not threshold must continue to be met in each reporting
period to support continued recognition of a benefit. With the adoption of FIN
48, companies are required to adjust their financial statements to reflect only
those tax positions that are more-likely-than-not to be sustained. Any necessary
adjustment would be recorded directly to retained earnings and reported as a
change in accounting principle.
The
components of the Company’s deferred tax asset as of December 31, 2008 and
June 30, 2009 are as follows:
June
30, 2009
(Unaudited)
|
December
31, 2008
|
|||||||
Net
operating loss carry forward
|
$ | 7,000 | $ | 3,700 | ||||
Valuation
allowance
|
(7,000 | ) | (3,700 | ) | ||||
Net
deferred tax asset
|
$ | - | $ | - |
F-24
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
JUNE
30, 2009
6.
|
PROVISION
FOR INCOME TAXES
(Continued)
|
A
reconciliation of income taxes computed at the statutory rate to the income tax
amount recorded is as follows:
For
the
Six
Months
Ended
June
30, 2009
|
||||
Tax
at statutory rate (25% for the six months ended June
30, 2009)
|
$ | 3,300 | ||
Increases
in valuation allowance
|
(3,300 | ) | ||
Net
deferred tax asset
|
$ | - |
There is
no deferred tax or deferred tax asset as of June 30, 2009 and December 31,
2008.
Upon
adoption of FIN 48 as of January 1, 2007, the Company had no gross unrecognized
tax benefits that, if recognized, would favorably affect the effective income
tax rate in future periods. At June 30, 2009 and December 31, 2008 the amounts
of gross unrecognized tax benefits before valuation allowances and the amount
that would favorably affect the effective income tax rate in future periods
after valuation allowances were $0. These amounts consider the
guidance in FIN 48-1, “Definition of Settlement in FASB Interpretation No. 48”.
The Company has not accrued any additional interest or penalties as a result of
the adoption of FIN 48.
The
Company had available approximately $29,000 and $15,700 in unused federal
operating loss carry-forwards at June 30, 2009 and December 31, 2008,
respectively, that may be applied against future taxable income. These net
operation loss carry-forwards expire through 2029.
No tax
benefit has been reported in connection with the net operation loss carry
forwards in the financial statements as the Company believes it is more likely
than not that the net operation loss carry forwards will expire unused.
Accordingly, the potential tax benefits of the net operating loss carry forwards
are offset by a valuation allowance of the same amount. The Company
recognized no state income tax liability on tax asset since it is located in
Nevada, a state that has no state income taxes. Also, the net
operating losses of Tropical Beauty, Inc. are limited due to the change of
ownership.
7.
|
FAIR
VALUE ACCOUNTING
|
In
September 2006, the Financial Accounting Standards Board (“FASB”) issued FASB
Statement No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles, and expands disclosures about fair
value measurements. The provisions of FAS 157 were adopted January 1,
2008. In February 2008, the FASB staff issued Staff Position No.
157-2 “Effective Date of FASB Statement No. 157” (“FSP FAS
157-2”).
F-25
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
JUNE
30, 2009
7.
|
FAIR
VALUE ACCOUNTING
(Continued)
|
FSP FAS
157-2 delayed the effective date of FAS 157 for nonfinancial assets and
nonfinancial liabilities, except for items that are recognized or disclosed at
fair value in the financial statements on a recurring basis (at least
annually). The provisions of FSP FAS-157-2 are effective for the
Company’s fiscal year beginning January 1, 2009.
FAS 157
establishes a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1 measurements) and the lowest priority to
unobservable inputs (Level 3 measurements).
The three
levels of the fair value hierarchy under FAS 157 are described
below:
Level
1
|
Unadjusted
quoted prices in active markets that are accessible at the measurement
date for identical, unrestricted assets or
liabilities;
|
|
Level
2
|
Quoted
prices in markets that are not active, or inputs that are observable,
either directly or indirectly for substantially the full term of the asset
or liability;
|
|
Level
3
|
Prices
or valuation techniques that require inputs that are both significant to
the fair value measurement and unobservable (supported by little or no
market activity).
|
The
following table sets forth the Company’s financial assets and liabilities
measured at fair value by level within the fair value hierarchy. As
required by FAS 157, assets and liabilities are classified in their entirety
based on the lowest level of output that is significant to the fair value
measurement.
Fair
Value at June 30, 2009
|
||||||||||||||||
Total
|
Level
1
|
Level
2
|
Level
3
|
|||||||||||||
Assets:
|
||||||||||||||||
Cash
|
$ | 1,040 | $ | 1,040 | $ | - | $ | - | ||||||||
Liabilities:
|
||||||||||||||||
Notes
payable – related
parties
|
$ | 35,070 | $ | - | $ | - | $ | 35,070 | ||||||||
Accrued
interest related
to notes payable
– related parties
|
5,998 | - | - | 5,998 | ||||||||||||
$ | 41,068 | $ | - | $ | - | $ | 41,068 |
F-26
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO UNAUDITED FINANCIAL STATEMENTS
JUNE
30, 2009
7.
|
FAIR
VALUE ACCOUNTING
(Continued)
|
The
Company’ cash is classified within Level 1 of the fair value hierarchy since
they are valued using quoted market prices. The cash that are valued
based on quoted market prices.
The
Company’s notes payable – related parties and related accrued interest are
classified within Level 3 of the fair value hierarchy since they have valuation
techniques that require inputs that are both significant to the fair value
measurement and are unobservable.
Fair
Value Measurements at
Reporting
Date Using Significant
Unobservable
Inputs (Level 3)
|
||||||||||||
Note
Payable –
Related
Party
|
Accrued
Interest to
Notes
Payable –
Related
Party
|
Total
|
||||||||||
Beginning
balance
|
$ | 32,370 | $ | 4,304 | $ | 36,674 | ||||||
Included
in earnings (or
changes in net assets)
|
- | 1,694 | 1,694 | |||||||||
Issuances
|
2,700 | - | 2,700 | |||||||||
Ending
balance
|
$ | 35,070 | $ | 5,998 | $ | 41,068 |
In
February 2007, the FASB issued FASB Statement No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities” (“FAS 159”) permits entities to
choose to measure many financial instruments and certain other items at fair
value, with the objective of improving financial reporting by mitigating
volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. The provisions of FAS 159 were adopted January 1,
2008. The Company did not elect the Fair Value Option for any of its
financial assets or liabilities, and therefore, the adoption of FAS 159 had no
impact on the Company’s consolidated financial position, results of operations
or cash flows.
F-27
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
CONSOLIDATED
FINANCIAL STATEMENTS
FOR
THE PERIODS ENDED
SEPTEMBER
30, 2009 AND 2008
AND
FOR THE PERIOD
FROM
INCEPTION (JULY 25, 2006)
THROUGH SEPTEMBER 30,
2009
F-28
TABLE
OF CONTENTS
Balance Sheets | F-30 |
Statements of Operations | F-31 |
Statements of Changes in Stockholders’ Deficit | F-32 |
Statements of Cash Flows | F-33 |
Notes to the Financial Statements | F-34 |
F-29
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
CONSOLIDATED
BALANCE SHEETS
SEPTEMBER
30, 2009 AND DECEMBER 31, 2008
ASSETS
(Unaudited)
|
||||||||
September
30, 2009
|
December
31, 2008
|
|||||||
Current
assets
|
||||||||
Cash
|
$ | 1,108 | $ | 9,757 | ||||
Total
current assets
|
1,108 | 9,757 | ||||||
Property
and equipment,
|
||||||||
Net
of accumulated depreciation
|
66 | 263 | ||||||
Total
assets
|
$ | 1,174 | $ | 10,020 |
LIABILITIES AND STOCKHOLDERS’
DEFICIT
Current
liabilities
|
||||||||
Accounts
payable
|
$ | 150 | $ | - | ||||
Notes
payable – related parties
|
39,570 | 32,370 | ||||||
Accrued
interest related to notes payable – related
parties
|
6,985 | 4,304 | ||||||
Total
current liabilities
|
46,705 | 36,674 | ||||||
Total
liabilities
|
46,705 | 36,674 | ||||||
Stockholders’ (deficit) equity | ||||||||
Common
stock, par value $.001 per share 75,000,000
shares authorized; 1,070,100 shares
issued and outstanding at September
30, 2009 and December 31, 2008
|
1,070 | 1,070 | ||||||
Additional
paid-in capital
|
- | - | ||||||
Deficit
accumulated during development stage
|
(46,601 | ) | (27,724 | ) | ||||
Total
stockholders’ deficit
|
(45,531 | ) | (26,654 | ) | ||||
Total
liabilities and stockholders’ deficit
|
$ | 1,174 | $ | 10,020 |
See
accompanying notes to the financial statements
F-30
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited)
For
the Three Months Ended
|
For
the Nine Months Ended
|
|||||||||||||||||||
September
30,
2009
|
September
30,
2008
|
September
30,
2009
|
September
30,
2008
|
For
the Period
from
Inception
(July
25, 2006) through
September
30, 2009
|
||||||||||||||||
Net
revenue
|
$ | - | $ | - | $ | - | $ | - | $ | 12,000 | ||||||||||
Operating
expenses
|
||||||||||||||||||||
General
and administrative
|
5,609 | 7,806 | 18,077 | 15,626 | 45,751 | |||||||||||||||
Total
operating expenses
|
5,609 | 7,806 | 18,077 | 15,626 | 45,751 | |||||||||||||||
Net
loss before income taxes
|
(5,609 | ) | (7,806 | ) | (18,077 | ) | (15,626 | ) | (33,751 | ) | ||||||||||
Provision
for income taxes
|
- | 800 | 800 | 800 | 800 | |||||||||||||||
Net
loss
|
$ | (5,609 | ) | $ | (8,606 | ) | $ | (18,877 | ) | $ | (16,426 | ) | $ | (34,551 | ) | |||||
Net
loss per common share – basic and diluted
|
$ | (0.01 | ) | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||||||
Weighted
average of common shares – basic and
diluted
|
1,070,100 | 1,070,100 | 1,070,100 | 1,070,100 |
See
accompanying notes to the financial statements
F-31
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
STATEMENTS
OF CHANGES IN STOCKHOLDERS’ DEFICIT
FOR
THE PERIODS FROM INCEPTION (JULY 25, 2006)
THROUGH
SEPTEMBER 30, 2009
Common
Stock
|
||||||||||||||||||||||||||||
(0.001
par value)
|
||||||||||||||||||||||||||||
Number
of
Shares
|
Amount
|
Additional
Paid-In
Capital
|
Tropical
Beauty
Stock
Exchange
|
Deficit
Accumulated
During
Development
Stage
|
Total
Deficit
Accumulated
During
Development
Stage
|
Total
Stockholder’s
Equity
(Deficit)
|
||||||||||||||||||||||
Balance
at inception (July 25, 2006)
|
- | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||||
Issuance
of common stock November 1, 2006 for
cash
|
1,000,000 | 1,000 | 4,000 | - | - | - | 5,000 | |||||||||||||||||||||
Issuance
of common stock December 2, 2006 for
cash
|
67,500 | 68 | 6,682 | - | - | - | 6,750 | |||||||||||||||||||||
Issuance
via gift of common stock December
28, 2006 to related party
|
2,500 | 2 | 248 | - | - | - | 250 | |||||||||||||||||||||
Net
loss
|
- | - | - | - | (1,060 | ) | (1,060 | ) | (1,060 | ) | ||||||||||||||||||
Balance,
December 31, 2006
|
1,070,000 | 1,070 | 10,930 | - | (1,060 | ) | (1,060 | ) | 10,940 | |||||||||||||||||||
Net
loss
|
- | - | - | - | (1,059 | ) | (1,059 | ) | (1,059 | ) | ||||||||||||||||||
Balance,
December 31, 2007
|
1,070,000 | 1,070 | 10,930 | - | (2,119 | ) | (2,119 | ) | 9,881 | |||||||||||||||||||
Exchange
of common stock January 1, 2008 Songwave
Industries, Inc. for common stock of
Tropical Beauty, Inc.
|
100 | - | (10,930 | ) | (12,050 | ) | - | (12,050 | ) | (22,980 | ) | |||||||||||||||||
Net
loss
|
- | - | - | - | (13,555 | ) | (13,555 | ) | (13,555 | ) | ||||||||||||||||||
Balance,
December 31, 2008 - consolidated
|
1,070,100 | 1,070 | - | (12,050 | ) | (15,674 | ) | (27,724 | ) | (26,654 | ) | |||||||||||||||||
Net
loss
|
- | - | - | - | (18,877 | ) | (18,877 | ) | (18,877 | ) | ||||||||||||||||||
Balance,
September 30, 2009 - consolidated (unaudited)
|
1,070,100 | $ | 1,070 | $ | - | $ | (12,050 | ) | $ | (34,551 | ) | $ | (46,601 | ) | $ | (45,531 | ) |
See
accompanying notes to the financial statements
F-32
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
For
the Nine Months Ended
|
||||||||||||
September
30, 2009
|
September
30, 2008
|
For
the Period
from
Inception
(July
25, 2006) through
September
30, 2009
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
loss
|
$ | (18,877 | ) | $ | (16,426 | ) | $ | (34,551 | ) | |||
Adjustments
to reconcile net income to net cash
provided by (used in) operating activities:
|
||||||||||||
Depreciation
|
197 | 519 | 890 | |||||||||
Gift
of common stock
|
- | - | 250 | |||||||||
Changes
in assets and liabilities:
|
||||||||||||
Accounts
payable
|
150 | - | 150 | |||||||||
Accrued
interest related to notes payable – related
parties
|
2,681 | 1,560 | 4,759 | |||||||||
Net
cash used in operating activities
|
(15,849 | ) | (14,347 | ) | (28,502 | ) | ||||||
Cash flows from investing activities: | ||||||||||||
Cash
from acquisition of Tropical Beauty, Inc.
|
- | 160 | 160 | |||||||||
Net
cash provided by investing activities
|
- | 160 | 160 | |||||||||
Cash
flows from financing activities:
|
||||||||||||
Proceeds
from issuance of common stock
|
- | - | 11,750 | |||||||||
Proceeds
from related party notes payable
|
7,200 | 5,500 | 17,700 | |||||||||
Net
cash provided by financing activities
|
7,200 | 5,500 | 29,450 | |||||||||
Net
increase (decrease) in cash
|
(8,649 | ) | (8,687 | ) | 1,108 | |||||||
Cash,
beginning of period
|
9,757 | 9,881 | - | |||||||||
Cash,
end of period
|
$ | 1,108 | 1,194 | 1,108 | ||||||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW
INFORMATION:
|
||||||||||||
Interest
paid
|
$ | 2,680 | 1,560 | 4,759 | ||||||||
Income
taxes paid
|
$ | 800 | 800 | 1,600 | ||||||||
Cash
from acquisition of Tropical Beauty, Inc.
|
$ | - | 160 | 160 | ||||||||
SUPPLEMENTAL
DISCLOSURE OF NON-CASH
FINANCING AND INVESTING
ACTIVITIES:
|
||||||||||||
Property
and equipment from acquisition of Tropical Beauty, Inc.
|
$ | - | (955 | ) | (955 | ) | ||||||
Note
payable – related parties from acquisition of Tropical Beauty,
Inc.
|
$ | - | 21,870 | 21,870 | ||||||||
Accrued
expenses from acquisition of Tropical Beauty, Inc.
|
$ | - | 2,225 | 2,225 |
See
accompanying notes to the financial statements
F-33
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2009
(Unaudited)
1.
|
NATURE OF OPERATIONS
AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
|
Nature of
Operations
Songwave
Industries, Inc. (the Company) is currently a development stage company, as
defined by Accounting Standards Codification subtopic 915-10 Development State
Entities No. 7 and was incorporated under the laws of the State of Nevada on
July 25, 2006. The Company is developing a business model to market
and distribute music over the internet. The decline in traditional recorded
music retailing methods has opened up opportunities for on-line retailing on the
world-wide web.
The
Company entered into a purchase agreement dated January 1, 2008 with Tropical
Beauty, Inc., a California Corporation. The Company acquired all of
the outstanding shares (1,000) of Tropical Beauty, Inc., from its shareholder in
exchange for 100 shares of Songwave Industries, Inc. stock. The
owners of Tropical Beauty, Inc. are majority owners of the
Company. Tropical Beauty, Inc. became a wholly owned subsidiary of
Songwave Industries, Inc. The assets and liabilities were recorded at
cost basis. Beginning January 1, 2008, the financial statements are
presented on a consolidated basis.
Basis of
Accounting
The
consolidated financial statements of the Company have been prepared on the
accrual basis of accounting and are in conformity with accounting principles
generally accepted in the United States of America.
Principles of
Consolidation
The
consolidated financial statements include the financial statements of the
Company and its wholly owned subsidiary. All significant intercompany
balances and transactions have been eliminated in consolidation.
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reported periods. Actual results could materially differ
from those estimates.
F-34
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2009
(Unaudited)
1.
|
NATURE
OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
Property and
Equipment
Property
and equipment is stated at cost. Expenditures for major improvements
are capitalized, while replacements, maintenance and repairs, which do not
significantly improve or extend the useful life of the asset, are expensed when
incurred.
Depreciation
of property and equipment is computed using the straight-line method over the
estimated useful lives of the assets, which range from three to five
years.
Income
Taxes
The
Company accounts for income taxes under Accounting Standards Codification
subtopic 740-10, Income Taxes (“ASC 740-10”). Under the asset and
liability method of ASC 740-10, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statements carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. Under ASC 740-10, the effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the period the
enactment occurs. A valuation allowance is provided for certain
deferred tax assets if it is more likely than not that the Company will not
realize tax assets through future operations.
Basic and Diluted Income
(Loss) Per Share
In
accordance with Accounting Standards Codification subtopic 260-10, Earnings Per
Share, basic income (loss) per common share is computed by dividing net income
(loss) available to common stockholders by the weighted average number of common
shares outstanding. Diluted income (loss) per common share is
computed similar to basic income per common share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. As of September 30, 2009, the Company
did not have any equity or debt instruments outstanding that could be converted
into common stock.
F-35
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2009
(Unaudited)
1.
|
NATURE OF OPERATIONS
AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
Recent Accounting
Pronouncements
|
With
the exception of those stated below, there have been no recent accounting
pronouncements or changes in accounting pronouncements during the nine
months ended September 30, 2009, as compared to the recent accounting
pronouncements described in the Annual Report that are of material
significance, or have potential material significance, to the
Company.
|
Effective
July 1, 2009, the Company adopted the Financial Accounting Standards Board
(“FASB”) Accounting Standards Codification (“ASC”) 105-10, Generally Accepted Accounting
Principles – Overall (“ASC 105-10”). ASC 105-10 establishes the FASB Accounting Standards
Codification (the “Codification”) as the source of authoritative
accounting principles recognized by the FASB to be applied by nongovernmental
entities in the preparation of financial statements in conformity with U.S.
GAAP. Rules and interpretive releases of the SEC under authority of federal
securities laws are also sources of authoritative U.S. GAAP for SEC registrants.
All guidance contained in the Codification carries an equal level of authority.
The Codification superseded all existing non-SEC accounting and reporting
standards. All other non-grandfathered, non-SEC accounting literature not
included in the Codification is non-authoritative. The FASB will not issue new
standards in the form of Statements, FASB Staff Positions or Emerging Issues
Task Force Abstracts. Instead, it will issue Accounting Standards Updates
(“ASUs”). The FASB will not consider ASUs as authoritative in their own right.
ASUs will serve only to update the Codification, provide background information
about the guidance and provide the bases for conclusions on the change(s) in the
Codification. References made to FASB guidance throughout this document have
been updated for the Codification.
FASB ASC
855, Subsequent Events (“ASC 855” and formerly referred to as FAS-165), modified
the subsequent event guidance. The three modifications to the subsequent events
guidance are: 1) To name the two types of subsequent events either as recognized
or non-recognized subsequent events, 2) To modify the definition of subsequent
events to refer to events or transactions that occur after the balance sheet
date, but before the financial statement are issued or available to be issued
and 3) To require entities to disclose the date through which an entity has
evaluated subsequent events and the basis for that date, i.e. whether that date
represents the date the financial statements were issued or were available to be
issued. This guidance is effective for interim or annual financial periods
ending after June 15, 2009, and should be applied prospectively.
F-36
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2009
(Unaudited)
1.
|
NATURE
OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
Recent Accounting
Pronouncements
FASB ASC
105, Generally Accepted Accounting Principles (“ASC 105” and formerly referred
to as FAS 168) establishes the FASB Accounting Standards Codification as the
source of authoritative accounting principles recognized by the FASB to be
applied by nongovernmental entities in the preparation of financial statements
in conformity with GAAP. Rules and interpretive releases of the Securities and
Exchange Commission (SEC) under authority of federal securities laws are also
sources of authoritative GAAP for SEC registrants. ASC 105 is effective for
financial statements issued for interim and annual periods ending after
September 15, 2009.
2.
|
GOING
CONCERN
|
As shown
in the accompanying consolidated financial statements, the Company has not
generated a substantial amount of revenue and has incurred a net operating loss
of $46,601 from inception (July 25, 2006) through September 30, 2009 and has a
working capital deficit of $45,597. The Company is subject to those risks
associated with development stage companies. The Company has
sustained losses since inception, and additional debt and equity financing will
be required to fund its plans on expanding its manufacturing, product lines and
to support operations. However, there is no assurance that the
Company will be able to obtain such additional equity or
financing. Furthermore, there is no assurance that rapid
technological changes, changing customer needs and evolving industry standards
will enable the Company to introduce new products on a timely basis so that
profitable operations can be attained. These facts raise substantial doubt as to
the Company’s ability to continue as a going concern. The accompanying financial
statements do not include any adjustments to reflect the outcome of this
uncertainty.
F-37
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2009
(Unaudited)
Property and equipment consist of the
following at:
September
30, 2009
|
December
31, 2008
|
||||||||
Office
furniture and equipment
|
$ | 527 | $ | 527 | |||||
Computers
|
428 | 428 | |||||||
955 | 955 | ||||||||
Accumulated
depreciation and amortization
|
(889 | ) | (692 | ) | |||||
$ | 66 | $ | 263 |
|
Depreciation
and amortization expense was $197 and $519 for the nine months ended
September 30, 2009 and September 30, 2008,
respectively.
|
4.
|
NOTES PAYABLE –
RELATED PARTIES
|
Notes
payable – related parties consists of the following promissory notes at
September 30, 2009:
Unsecured
note dated September 1, 2009, with a company owned by the majority
shareholder with interest at 15%, due in 30 days after receipt of a
demand
|
$ | 3,500 | |||
Unsecured
note dated August 4, 2009, with majority shareholder with interest at 15%,
due in 30 days after receipt of a demand
|
1,000 | ||||
Unsecured
note dated May 6, 2009, with majority shareholder with interest at 15%,
due in 30 days after receipt of a demand
|
1,700 | ||||
Unsecured
note dated February 19, 2009, with company owned by majority shareholder
with interest at 17%, due in 30 days after receipt of a
demand
|
1,000 | ||||
Unsecured
note dated November 25, 2008, with company owned by majority shareholder
with interest at 15%, due in 30 days after receipt of a
demand
|
5,000 | ||||
Unsecured
note dated September 25, 2008, with company owned by majority shareholder
with interest at 12%, due in 30 days after receipt of a
demand
|
5,000 |
F-38
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2009
(Unaudited)
4.
|
NOTES
PAYABLE – RELATED PARTIES
(Continued)
|
Unsecured
note dated September 3, 2008, with interest at 10%, due in 30 days after
receipt of a demand
|
500 | ||||
Unsecured
notes with majority shareholder, with interest at 8% and 12.0% due after
receipt of a demand
|
21,870 | ||||
Total
|
$ | 39,570 |
5.
|
COMMON
STOCK
|
On
November 1, 2006, the Company issued 1,000,000 shares of its common stock to its
prior Chief Executive Officer and lawyer for cash of $5,000 which was considered
a reasonable estimate of fair value.
On
December 2, 2006, the Company issued 67,500 shares of its common stock to
unrelated investors for cash of $6,750 pursuant to the Company’s Registration
Statement -on Form D. On December 28, 2006, the Company issued 2,500 shares of
its common stock to a related entity through common ownership valued at
$250.
On
January 1, 2008, the Company issued 100 shares of its common stock to acquire
100% of the outstanding stock ($0.001 par value; 1,000 shares issued and
outstanding) of Tropical Beauty, Inc., from its shareholders. The
assets and liabilities were recorded at cost. The owners of Tropical
Beauty, Inc. are majority owners of Songwave Industries; therefore, the
transaction was recorded with no goodwill and equity (additional paid-in capital
of $10,930 and accumulated deficit of $12,050) was charged with
$22,980.
6.
|
PROVISION FOR INCOME
TAXES
|
Income
taxes are recorded in accordance with Accounting Standards Codification subtopic
740-10, Income Taxes (“ASC 740-10”). ASC 740-10 requires the
recognition of deferred tax assets and liabilities to reflect the future tax
consequences of events that have been recognized in the financial statements or
tax returns. Measurement of the deferred items is based on enacted
tax laws. In the event the future consequences of differences between
financial reporting bases and tax bases of the Company’s assets and liabilities
result in a deferred tax assets, ASC 740-10 requires an evaluation of the
probability of being able to realize the future benefits indicated by such
assets. A valuation allowance related to a deferred tax asset is
recorded when it is more likely than not that some portion or the entire
deferred tax asset will not be realized.
F-39
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2009
(Unaudited)
6.
|
PROVISION
FOR INCOME TAXES (Continued)
|
The
Company is subject to the income tax laws in the United States of
America. As of December 31, 2008, the Company had net operating loss
carry forward for income tax reporting purposes of approximately $15,700 that
may be offset against future taxable income through 2028. Current tax
laws such as IRC §382 limit the amount of loss available to be offset against
future taxable income when a substantial change in ownership
occurs. Therefore, the amount available to offset future taxable
income may be limited. No tax benefit has been reported in the
consolidated financial statements because the Company believes there is no
assurance the carry forwards will be used. Potential tax benefits of
the loss carry forwards are offset by valuation allowance of the same
amount.
7.
|
FAIR VALUE
ACCOUNTING
|
The
Company adopted the provisions of Accounting Standards Codification subtopic
825-10, Financial Instruments (“ACS 825-10”). ACS 825-10 defines fair
value, establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value
measurements. The provisions of ACS 825-10 were adopted January 1,
2008.
The
effective date of ACS 825-10 for nonfinancial assets and nonfinancial
liabilities, except for items that are recognized or disclosed at fair value in
the financial statements on a recurring basis (at least annually) are effective
for the Company’s fiscal year beginning January 1, 2009.
ACS
825-10 establishes a fair value hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value. The hierarchy gives
the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (Level 1 measurements) and the lowest priority to
unobservable inputs (Level 3 measurements).
The three
levels of the fair value hierarchy under ACS 825-10 are described
below:
Level
1
|
Unadjusted
quoted prices in active markets that are accessible at the measurement
date for identical, unrestricted assets or
liabilities;
|
Level
2
|
Quoted
prices in markets that are not active, or inputs that are observable,
either directly or indirectly for substantially the full term of the asset
or liability;
|
Level
3
|
Prices
or valuation techniques that require inputs that are both significant to
the fair value measurement and unobservable (supported by little or no
market activity).
|
F-40
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2009
(Unaudited)
7.
|
FAIR
VALUE ACCOUNTING (Continued)
|
The
following table sets forth the Company’s financial assets and liabilities
measured at fair value by level within the fair value hierarchy. As
required by ACS 825-10, assets and liabilities are classified in their entirety
based on the lowest level of output that is significant to the fair value
measurement.
Fair
Value at September 30, 2009
|
|||||||||||||||||
Total
|
Level
1
|
Level
2
|
Level
3
|
||||||||||||||
Assets:
|
|||||||||||||||||
Cash
|
$ | 1,108 | $ | 1,108 | $ | - | $ | - | |||||||||
Liabilities:
|
|||||||||||||||||
Notes
payable – related
parties
|
$ | 39,570 | $ | - | $ | - | $ | 39,570 | |||||||||
Accrued
interest related
to notes payable
– related parties
|
6,985 | - | - | 6,985 | |||||||||||||
$ | 46,555 | $ | - | $ | - | $ | 46,555 |
|
The
Company’ cash is classified within Level 1 of the fair value hierarchy
since they are valued using quoted market prices. The cash that
are valued based on quoted market
prices.
|
The
Company’s notes payable – related parties and related accrued interest are
classified within Level 3 of the fair value hierarchy since they have valuation
techniques that require inputs that are both significant to the fair value
measurement and are unobservable.
F-41
SONGWAVE
INDUSTRIES, INC.
(A
Development Stage Company)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER
30, 2009
(Unaudited)
7.
|
FAIR
VALUE ACCOUNTING
(Continued)
|
Fair
Value Measurements at
Reporting
Date Using Significant
Unobservable
Inputs (Level 3)
|
|||||||||||||
Note
Payable – Related Party
|
Accrued
Interest
to
Notes
Payable –
Related
Party
|
Total
|
|||||||||||
Beginning
balance
|
$ | 32,370 | $ | 4,304 | $ | 36,674 | |||||||
Included
in earnings (or
changes in net assets)
|
- | 2,681 | 2,681 | ||||||||||
Issuances
|
7,200 | - | 7,200 | ||||||||||
Ending
balance
|
$ | 39,570 | $ | 6,985 | $ | 46,555 |
In
February 2007, the Company adopted the provisions of Accounting Standards
Codification subtopic 825-10, Financial Instruments - Overall (“ASC 825-10”)
permits entities to choose to measure many financial instruments and certain
other items at fair value, with the objective of improving financial reporting
by mitigating volatility in reported earnings caused by measuring related assets
and liabilities differently without having to apply complex hedge accounting
provisions. The provisions of ASC 825-10 were adopted January 1,
2008. The Company did not elect the Fair Value Option for any of its
financial assets or liabilities, and therefore, the adoption of ASC 825-10 had
no impact on the Company’s consolidated financial position, results of
operations or cash flows.
F-42
PLAN OF
OPERATIONS
We were
incorporated on July 25, 2006 under the laws of the state of
Nevada. We hold a 100% interest in Tropical Beauty, Inc. which has
its principal place of business in Huntington Beach, California. Ms.
Analyn Sahachaisere is our President, Treasurer, Chief Executive Officer and
Sole Director.
Our plan
of operations is to relocate to a bigger, more suitable premises and acquire
sufficient inventory of required materials to allow us to produce and sell our
line of natural, organic, botanical based bath and beauty products.
We do not
have plans to purchase any significant equipment or change the number of our
employees during the next twelve months.
Off Balance Sheet
Arrangements
As of
September 30, 2009, there were no off balance sheet
arrangements.
Results of Operations for
Fiscal Year Ending December 31, 2008 and Quarter Ending September 30, 2009
Our
revenues from December 31, 2008 through the quarter ended September 30, 2009 were minimal. We do not
anticipate earning revenues until such time as we enter into the final
development stages of our bath and beauty products.
We
incurred operating expenses in the amount of $18,077
from December 31, 2008 until September 30,
2009. These operating expenses consisted of general and administrative
expenses. We anticipate our operating expenses will increase as we
undertake our plan of operations. We anticipate our ongoing operating
expenses will also increase once we become a reporting company under the
Securities Exchange Act of 1934.
Liquidity and Capital
Resources
As
of September 30, 2009, we had cash of $1,108 . We have not attained profitable
operations and are dependent upon obtaining financing to pursue activities
beyond those planned for the current fiscal year. For these reasons,
our auditors stated in their report that they have substantial doubt we will be
able to continue as a going concern.
CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS
We have
had no changes in or disagreements with our accountants.
DIRECTORS, EXECUTIVE
OFFICERS, PROMOTERS AND CONTROL PERSONS
Our
executive officers and directors and their respective ages as of September 30, 2009 are as follows:
Name
|
Age
|
Position(s)
and Office(s) Held
|
Analyn
Sahachaisere
|
32
|
President,
Treasurer, Chief Executive Officer, Sole Director
|
Oleksandr
Farennikov
|
32
|
Secretary
|
18
Set forth
below is a brief description of the background and business experience of each
of our current executive officers and directors:
Analyn
Sahachaisere
Ms.
Analyn D. Sahachaisere, earned a Bachelor of Arts degree, majoring in
Communications Studies, from the University California at Davis. Ms.
Schachaisere has 8 years experience working in the banking and financing
industry with corporations such as Home Savings, Washington Mutual and Commerce
West Bank. Ms. Schachaisere has assisted in the funding and originating
process of residential, business and personal lending.
Oleksandr
Farennikov
Mr.
Oleksandr Farennikov graduated with a Bachelor of Arts degree in International
Business from Donetsk State University of Management with a high emphasis on
Information Technologies Management in 1999. Mr. Farennikov moved to the
US in 2003 and worked in the international business markets. In 2004, Mr.
Farennikov was the founding and participating managing director for his
international award winning web development company, Logistetica, which
currently has offices in the US as well as Belarus. In 2007,
Mr. Farennikov worked with Fima Development Inc. in creating their IT
infrastructure.
Directors
Our
bylaws authorize no less than 1 director and currently have 1 Director, Ms.
Analyn Sahachaisere.
Term of
Office
Our
Directors are appointed for a one-year term to hold office until the next annual
general meeting of our shareholders or until removed from office in accordance
with our bylaws. Our officers are appointed by our board of directors
and hold office until removed by the board.
Significant
Employees
Ms.
Analyn Sahachaisere and Oleksandr Farennikov are the only employees of the
Company. We conduct our business through agreements with consultants
and arms-length third parties. Current arrangements in place include the
following:
|
1.
|
Verbal
agreements with our accountants to perform requested financial accounting
services.
|
|
2.
|
Written
agreements with auditors to perform audit functions at their respective
normal and customary rates.
|
|
3.
|
Written
agreements with consultants and arms-length third parties to perform
certain tasks at their respective normal and customary
rates.
|
19
EXECUTIVE
COMPENSATION
Compensation Discussion and
Analysis
The
Company presently not does have employment agreements with either of its named
executive officers and it has not established a system of executive compensation
or any fixed policies regarding compensation of executive
officers. Due to financial constraints typical of those faced by an
early development stage business, the company has not paid any cash and/or stock
compensation to its named executive officer.
Our
current named executive officers are motivated by a strong entrepreneurial
interest in developing our operations and potential revenue base to the best of
their ability. As our business and operations expand and mature, we
may develop a formal system of compensation designed to attract, retain and
motivate talented executives.
Summary Compensation
Table
The table
below summarizes all compensation awarded to, earned by, or paid to each named
executive officer for our last completed fiscal year for all services rendered
to us.
September 30, 2008 Summary
Compensation Table
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Stock
Awards ($)
|
Option
Awards ($)
|
Non-Equity
Incentive Plan Compensation ($)
|
Nonqualified
Deferred Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
Analyn
Sahachaisere,
President,
CEO & Treasurer
|
2008
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
Oleksandr
Farennikov,
Secretary
|
2008
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
20
Outstanding Equity Awards At
Fiscal Year-end Table
The table
below summarizes all unexercised options, stock that has not vested, and equity
incentive plan awards for each named executive officer outstanding as of the end
of our last completed fiscal year.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
|||||||||||
OPTION AWARDS | STOCK AWARDS | ||||||||||
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or
Shares
of
Stock
That
Have
Not
Vested
(#)
|
Market
Value
of
Shares
or
Shares
of
Stock
That
Have
Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Shares
or
Other
Rights
That
Have
Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of
Unearned
Shares,
Shares
or
Other
Rights
That
Have
Not
Vested
(#)
|
||
Analyn
Sahachaisere
|
0
|
0
|
0
|
$0
|
N/A
|
0
|
0
|
0
|
0
|
||
Oleksandr
Farennikov
|
0
|
0
|
0
|
$0
|
N/A
|
0
|
0
|
0
|
0
|
21
Compensation of Directors
Table
The table
below summarizes all compensation paid to our directors for our last completed
fiscal year.
DIRECTOR
COMPENSATION
|
|||||||
Name
|
Fees
Earned orPaid
in
Cash
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Non-Qualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
Analyn
Sahachaisere
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
Narrative Disclosure to the
Director Compensation Table
Our
director does not currently receive any compensation from the Company for her
services as a member of the Board of Directors of the Company.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of September 30, 2009, the beneficial
ownership of our common stock by each executive officer, director, and by each
person known by us to beneficially own more than 5% of the our common stock and
by the executive officers and directors as a group. Except as otherwise
indicated, all shares are owned directly and the percentage shown is based on
1,070,100 shares of common stock issued and outstanding on September 30,
2009.
Name
and Address of Owner
|
Title
of Class
|
Number
of Shares Owned
|
Percentage
of Class
|
Roy
Sahachaisere
|
Common
Stock
|
502,600
|
47%
|
Horwitz,
Cron & Jasper, PLC
|
Common
Stock
|
500,000
|
47%
|
As used
in this table, "beneficial ownership" means the sole or shared power to vote, or
to direct the voting of, a security, or the sole or shared investment power with
respect to a security (i.e., the power to dispose of, or to direct the
disposition of, a security). In addition, for purposes of this table, a person
is deemed, as of any date, to have "beneficial ownership" of any security that
such person has the right to acquire within 60 days after such
date.
The
persons named above have full voting and investment power with respect to the
shares indicated. Under the rules of the Securities and Exchange
Commission, a person (or group of persons) is deemed to be a "beneficial owner"
of a security if he or she, directly or indirectly, has or shares the power to
vote or to direct the voting of such security, or the power to dispose of or to
direct the disposition of such security. Accordingly, more than one
person may be deemed to be a beneficial owner of the same security. A person is
also deemed to be a beneficial owner of any security, which that person has the
right to acquire within 60 days, such as options or warrants to purchase our
common stock.
22
DISCLOSURE OF COMMISSION
POSITION OF INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
In
accordance with the provisions in our bylaws, we will indemnify an officer,
director, or former officer or director, to the full extent permitted by
law.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 (the
"Act") may be permitted to our directors, officers and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by us of expenses incurred or paid by a
director, officer or controlling person of us in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
None of
the following parties has, since our date of incorporation, had any material
interest, direct or indirect, in any transaction with us or in any presently
proposed transaction that has or will materially affect us:
|
·
|
Any
of our directors or officers;
|
|
·
|
Any
person proposed as a nominee for election as a
director;
|
|
·
|
Any
person who beneficially owns, directly or indirectly, shares carrying more
than 10% of the voting rights attached to our outstanding shares of common
stock;
|
|
·
|
Any
of our promoters;
|
|
·
|
Any
relative or spouse of any of the foregoing persons who has the same house
address as such person.
|
Ms.
Analyn Sahachaisere, out President, Treasurer and sole Director is married to
Mr. Roy Sahachaisere. Mr. Roy Sahachaisere, who previously served as
our President, Treasurer and sole Director, is the sole shareholder of
InvestSource, Inc. He also serves as the President, Treasurer,
Secretary and sole Director of InvestSource, Inc.
AVAILABLE
INFORMATION
We have
filed a Registration Statement on form S-1 under the Securities Act of 1933 with
the Securities and Exchange Commission with respect to the shares of our common
stock offered through this Prospectus. This Prospectus is filed as a
part of that Registration Statement, but does not contain all of the information
contained in the Registration Statement and exhibits. Statements made
in the Registration Statement are summaries of the material terms of the
referenced contracts, agreements or documents of the Company. We
refer you to our Registration Statement and each exhibit attached to it for a
more detailed description of matters involving the Company. You may
inspect the Registration Statement, exhibits and schedules filed with the
Securities and Exchange Commission at the Commission's principal office in
Washington, D.C. Copies of all or any part of the Registration
Statement may be obtained from the Public Reference Section of the Securities
and Exchange Commission, 450 Fifth Street, N.W., Washington, D.C.
20549. Please Call the Commission at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. The
Securities and Exchange Commission also maintains a web site at
http://www.sec.gov that contains reports, proxy statements and information
regarding registrants that files electronically with the
Commission. Our Registration Statement and the referenced exhibits
can also be found on this site.
If we are
not required to provide an annual report to our security holders, we intend to
still voluntarily do so when otherwise due, and will attach audited financial
statements with such report.
DEALER PROSPECTUS DELIVERY
OBLIGATION
Until
________________, all dealers that effect transactions in these securities
whether or not participating in this offering may be required to deliver a
Prospectus. This is in addition to the dealers’ obligation to deliver a
Prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
23
Part
II
Information
Not Required In the Prospectus
Item
13. Other
Expenses of Issuance and Distribution.
The
estimated costs of this offering are as follows:
Securities
and Exchange Commission Registration Fee
|
$ | 1.81 | ||
Federal
Taxes
|
$ | 0.00 | ||
State
Taxes and Fees
|
$ | 0.00 | ||
Listing
Fees
|
$ | 0.00 | ||
Printing
and Engraving Fees
|
$ | 0.00 | ||
Transfer
Agent Fees
|
$ | 0.00 | ||
Accounting
Fees and Expenses
|
$ | 2,000.00 | ||
Legal
Fees and Expenses
|
$ | 5,000.00 | ||
Total
|
$ | 7,001.81 |
All
amounts are estimates, other than the Commission's registration
fee.
We are
paying all expenses of the selling shareholders offering listed
above. No portion of these expenses will be borne by the selling
shareholders. The selling shareholders, however, will pay any other
expenses incurred in selling their common stock, including any brokerage
commissions or costs of sale.
Item
14. Indemnification
of Directors and Officers.
Our
officers and directors are indemnified as provided by the Nevada Statutes and
our Bylaws.
Under the
governing Nevada statutes, director immunity from liability to a company or its
shareholders for monetary liabilities applies automatically unless it is
specifically limited by a company's articles of incorporation. Our
articles of incorporation do not contain any limiting language regarding
director immunity from liability. Excepted from this immunity
are:
|
1.
|
A
willful failure to deal fairly with the company or its shareholders in
connection with a matter in which the director has a material conflict of
interest;
|
|
2.
|
A
violation of criminal law (unless the director had reasonable cause to
believe that his or her conduct was lawful or no reasonable cause to
believe that his or her conduct was
unlawful);
|
|
3.
|
A
transaction from which the director derived an improper personal profit;
and
|
|
4.
|
Willful
misconduct.
|
24
Our
bylaws provide that we will indemnify our directors and officers to the fullest
extent not prohibited by Nevada law; provided, however, that we may modify the
extent of such indemnification by individual contracts with our directors and
officers; and, provided, further, that we shall not be required to indemnify any
director or officer in connection with any proceeding (or part thereof)
initiated by such person unless:
|
1.
|
such
indemnification is expressly required to be made by
law;
|
|
2.
|
the
proceeding was authorized by our Board of
Directors;
|
|
3.
|
such
indemnification is provided by us, in our sole discretion, pursuant to the
powers vested in us under Nevada law;
or;
|
|
4.
|
such
indemnification is required to be made pursuant to the
bylaws.
|
Our
bylaws provide that we will advance to any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was a director or officer, of the company, or
is or was serving at the request of the company as a director or executive
officer of another company, partnership, joint venture, trust or other
enterprise, prior to the final disposition of the proceeding, promptly following
request therefore, all expenses incurred by any director or officer in
connection with such proceeding upon receipt of an undertaking by or on behalf
of such person to repay said amounts if it should be determined ultimately that
such person is not entitled to be indemnified under our bylaws or
otherwise.
Item
15. Recent
Sales of Unregistered Securities.
We
initiated a private offering, within the meaning of Regulation D of the
Securities Act, of up to 2,000,000 shares of common stock of the Company at
$0.50 per share. The shares of common stock of the Company were
offered to accredited investors within the requirements of Regulation D of the
Securities Act of 1933 under Rule 501(a) of Regulation D and
exempted. As of September 30, 2009, we have raised $6,750 from
27 accredited investors. The proceeds of this offering were used for
general working capital purposes.
Item
16. Exhibits
and Financial Statement Schedules.
Exhibit
Number
|
Description
|
3.1
|
Articles
of Incorporation*
|
3.2
|
By-Laws*
|
5.1
|
Opinion
of Horwitz, Cron & Jasper, P.L.C. with consent to
use
|
23.1
|
Consent
of Mendoza Berger & Company,
LLP
|
___________
* Previously filed
Item
17. Undertakings.
|
1.
|
To
file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement: (a) to
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933; (b) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in
the effective Registration Statement; and (c) to include any material
information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration
Statement.
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2.
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That,
for the purpose of determining any liability under the Securities Act of
1933, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
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3.
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To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
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4.
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That,
for the purpose of determining liability under the Securities Act to any
purchaser,
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a)
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If
the Company is relying on Rule
430B:
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i)
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Each
prospectus filed by the Company pursuant to Rule 424(b)(3) shall be
deemed to be part of
the registration statement as of
the date the filed prospectus was deemed
part of and included in the Registration Statement;
and
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ii)
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Each prospectus required to
be filed pursuant to Rule 424(b)(2),
(b)(5), or (b)(7) as part of a
registration statement in reliance on Rule 430B relating to an
offering made pursuant to
Rule 415(a)(1)(i), (vii), or (x) for
the purpose of providing the information required by
section 10(a) of the Securities Act shall be deemed
to be part of and included in the Registration
Statement as of the earlier of the date such form
of prospectus is first used
after effectiveness or the date of the first
contract of sale of securities in
the offering described in
the prospectus. As provided in
Rule 430B, for
liability purposes of
the issuer and
any person that is
at that date an underwriter,
such date shall be deemed to
be a new effective date of the
registration statement relating to the securities in the
Registration Statement to which that prospectus relates,
and the offering of such securities at that time shall be
deemed to be the initial bona fide offering
thereof; provided, however, that no statement made
in a registration statement or prospectus that is part of
the registration statement or made in a
document incorporated or deemed incorporated by reference into
the registration statement or prospectus that is part of
the registration statement will, as to a purchaser
with a time of contract of sale prior to
such effective date, supersede or
modify any statement that was made in
the registration statement or
prospectus that was part of the registration
the statement or made in any
such document immediately prior to such effective
date; or
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b)
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If
the Company is subject to Rule
430C:
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Each prospectus filed pursuant
to Rule 424(b) as part of a Registration Statement relating to an
offering, other than Registration Statements relying on Rule 430B or other
than prospectuses filed in reliance on Rule
430A, shall be deemed to be part of and included in
the registration statement as of the date it is first used
after effectiveness; provided, however, that no statement made in a
registration statement or prospectus that
is part of the Registration Statement or made in a document
incorporated or deemed incorporated by reference into
the registration statement or prospectus that is part of
the Registration Statement will, as to a purchaser with a time of
contract of sale prior to such first use, supersede or modify any
statement that was made in the Registration Statement or prospectus
that was part of the registration statement or made in any
such document immediately prior to such date of first
use.
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5.
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That,
for the purpose of determining liability of the registrant under the
Securities Act of 1933 to any purchaser in the initial distribution of
securities: The undersigned registrant undertakes that in a
primary offering of securities of the registrant pursuant to this
Registration Statement, regardless of the underwriting method used to sell
the securities to the purchaser, if the securities are offered or sold to
such purchaser by means of any of the following communications, the
undersigned registrant will be a seller to the purchaser and will be
considered to offer and sell such securities to the purchaser: (a) any
preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424; (b)
any free writing prospectus relating to the offering prepared by or on
behalf of the undersigned registrant or used or referred to by the
undersigned registrant; (c) the portion of any other free writing
prospectus relating to the offering containing material information about
the undersigned registrant or its securities provided by or on behalf of
the undersigned registrant; and (d) Any other communication that is an
offer in the offering made by the undersigned registrant to the
purchaser.
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6.
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Insofar
as Indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provision, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
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SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-1 and authorizes this Registration Statement
to be signed on its behalf by the undersigned, in California, on January
19, 2010.
SONGWAVE INDUSTRIES | |||
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By:
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/s/ Analyn Sahachaisere | |
Name: Analyn Sahachaisere | |||
Title: President, CEO and Director | |||
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