Attached files
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EX-3.2 - EXHIBIT 3.2 - Hartford Great Health Corp. | photo_ex3x2.htm |
EX-3.1 - EXHIBIT 3.1 - Hartford Great Health Corp. | photo_ex3x1.htm |
EX-5.1 - EXHIBIT 5.1 - Hartford Great Health Corp. | photoamigo_ex5x1.htm |
EX-23.1 - EXHIBIT 23.1 - Hartford Great Health Corp. | photoamigo_ex23x1.htm |
As
filed with the Securities and Exchange Commission on February 2,
2010
Registration
No. __________
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
PHOTOAMIGO, INC.
(Name
of small business issuer in its charter)
Nevada
|
8999
|
20-5422795
|
||
(State
or jurisdiction of
incorporation
or organization)
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer
I.D.
Number)
|
924
Olive Street
Santa
Barbara, California 93101
(805)
965-0699
Address
and telephone number of principal executive offices)
924
Olive Street
Santa
Barbara, California 93101
(805)
965-0699
(Address
of principal place of business or intended principal place of
business)
Robert
Heckes, Chief Executive Officer
924
Olive Street
Santa
Barbara, California 93101
(805)
965-0699
(Name,
address and telephone number of agent for service)
Copies
to:
Gary
A. Agron, Esquire
5445 DTC
Parkway, Suite 520
Greenwood
Village, CO 80111
(303) 770-7254
(303)
770-7257 (Fax)
Approximate date of
commencement of proposed sale to the public: As soon as practicable after
the effective date of this registration statement.
If
any securities being registered on this form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act, check the
following box: ý
If
this form is filed to register additional securities for an offering pursuant to
Rule 462(b) 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. o
If this form
is a post-effective amendment filed pursuant to Rule 462(c) 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.
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. o
Indicate by
check mark whether Registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See
definitions of “large accelerated filer,” “accelerated filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o | Accelerated filer o | ||
Non-accelerated filer o | Smaller reporting company x | ||
(Do no check if a smaller reporting company) |
____________________
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, $.001 par value
|
1,162,000 | $.50 | $581,000 | $41.43 | ||||||||||||
Totals
|
1,162,000 | $.50 | $581,000 | $41.43 | ||||||||||||
This
registration statement registers the resale of 1,162,000 shares of common stock
held by security holders of the Registrant. In addition to the number
of shares set forth above, the amount to be registered includes any shares of
common stock issued as a result of stock splits, stock dividends and similar
transactions in accordance with Rule 416.
The
Proposed Maximum Offering Price Per Share and the Proposed Maximum Aggregate
Offering Price in the table above are estimated solely for the purpose of
calculating the registration fee pursuant to Rule 457(c) promulgated under
the Securities Act of 1933.
The
Registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until it 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 Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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. This prospectus is not an offer to sell
these securities, and we are not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
Subject to completion | Dated __________, 2010 |
1,162,000
shares of common stock
PHOTOAMIGO,
INC.
This
prospectus covers the resale by our 32 selling stockholders of 1,162,000 shares
of our common stock. The selling stockholders’ names and share
amounts are set forth under “Selling Stockholders and Plan of Distribution” in
this prospectus. The shares will be offered by our selling
stockholders initially at $.50 per share and then at prevailing market prices or
privately negotiated prices. We intend to apply to list our common
shares for quotation on the Electronic Bulletin Board but cannot assure that our
application will be accepted by the Bulletin Board. The
offering will terminate on the earlier of the date all of the shares are sold or
one year from the date hereof. We will not receive any proceeds from
the sale of shares offered by the selling stockholders.
There
is no public market for our common stock and it is not quoted or listed on any
exchange.
Investing in our common stock
involves substantial risks. See “Risk Factors” beginning on
page 3.
The
Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities or passed upon the adequacy or accuracy
of this prospectus. Any representation to the contrary is a criminal
offense.
The date
of this prospectus is __________, 2010.
TABLE
OF CONTENTS
About this Prospectus | i | |||
Summary | 1 | |||
Summary Financial Data | 2 | |||
Risk Factors | 3 | |||
Forward-Looking Statements | 8 | |||
Use of Proceeds | 8 | |||
Selected Financial Data | 9 | |||
Management’s Discussion and Analysis of Financial Conditions and Results of Operations | 10 | |||
Business | 14 | |||
Management | 17 | |||
Security Ownership of Executive Officers, Directors and Beneficial Owners of Greater than 5% of Our Common Stock | 18 | |||
Selling Stockholders and Plan of Distribution | 19 | |||
Related Party and Other Material Transactions | 21 | |||
Shares Eligible for Future Sale | 22 | |||
Experts | 22 | |||
Legal Matters | 23 | |||
Where You Can Find More Information | 23 | |||
Financial Statements | 23 | |||
F-1 |
ABOUT
THIS PROSPECTUS
You
should rely only on the information contained in this prospectus as we have not
authorized any other person to provide you with different
information. If anyone provides you with different or inconsistent
information, you should not rely on it. We are not making an offer to
sell these securities in any jurisdiction where such an offer or sale is not
permitted.
i
SUMMARY
This
summary highlights material information regarding our company and the offering
contained in this prospectus. However, you should read the entire
prospectus carefully, including the financial information and related notes,
before making an investment decision.
Business
Since March 2006, we have provided
social networking and photo sharing services to users from our Photoamigo.com
website.
We
commenced operations as a proprietorship in March 2006 and were incorporated in
April 2008 as a Nevada corporation. Our corporate office is located
at 924 Olive Street, Santa Barbara, California 93101, and our telephone number
is (805) 965-0699. Our website address is www.photoamigo.com.
Information on our website is not a part of this prospectus.
The
Offering
Securities
offered by our selling stockholders:
|
1,162,000
shares of common stock
|
|
Common
stock outstanding prior
to
and after the offering:
|
3,012,000
shares of common stock
|
|
Use
of proceeds:
|
We
will not receive any proceeds from the sale of the common
stock.
|
Description
of Selling Stockholders
Through
this prospectus, we are registering for resale 250,000 shares of common stock
which we issued to our President in exchange for assets contributed, 250,000
shares of common stock sold to one investor in April 2008 for $.012 per share
and in consideration of services rendered, 500,000 shares of our common stock
which we sold to a group of three accredited investors in April 2008 for $.094
per share, 138,000 shares of common stock which we sold to a group of twenty
three accredited investors in April 2008 for $.0833 per share, and 24,000 shares
of common stock which we sold to a group of four investors in January 2010 for
$.0166 per share.
The names
and share amounts of the selling stockholders are set forth under “Selling
Stockholders and Plan of Distribution” in this prospectus. None of
the selling stockholders, other than Robert Heckes, are officers, directors or
10% or greater stockholders of our company nor are any affiliated or associated
with any broker-dealers.
1
SUMMARY
FINANCIAL DATA
The
following summary financial data should be read in conjunction with
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and our financial statements and related notes for the period from
inception (April 2, 2008) to October 31, 2009. This financial
information for the three months ended October 31, 2009 and 2008, is derived
from our audited financial statements contained elsewhere herein.
Statement
of Operations Data
Three Months Ended
October 31,
2009
|
Three Months Ended
October 31,
2008
|
Period From
Inception
(April 2,
2008)
to
October 31,
2009
|
Year Ended
July 31,
2009
|
|||||||||||||
Revenue | $ | -- | -- | -- | -- | |||||||||||
Loss from operations | $ | (3,755 | ) | (13,620 | ) | (126,755 | ) | (36,374 | ) | |||||||
Net loss | $ | (3,748 | ) | (13,553 | ) | (126,537 | ) | (36,247 | ) | |||||||
Net loss per share of common stock | $ | (0.00 | (0.00 | ) | (0.01 | ) | ||||||||||
Balance
Sheet Data
As of October 31, 2009 | As of July 31, 2009 | |||||||
Working capital | $ | 14,563 | 18,311 | |||||
Total assets | $ | 18,522 | 20,370 | |||||
Total liabilities | $ | 3,959 | 2,059 | |||||
Working capital (deficit) | $ | -- | -- | |||||
Stockholders’ equity | $ | 14,563 | 18,311 |
2
RISK
FACTORS
The
shares of common stock offered by this prospectus involve a high degree of risk
and represent a highly speculative investment. You should not
purchase these shares if you cannot afford the loss of your entire
investment. In addition to the other information contained in this
prospectus, you should carefully consider the following risk factors in
evaluating our company, our business prospects and an investment in our shares
of common stock.
Our
auditors believe there is substantial doubt that we can continue as a going
concern.
In their audit report dated November
17, 2009, our auditors indicated that there was substantial doubt that we could
continue as a going concern. If we are unable to generate cash from
earnings or from the sale of equity securities, we could be required to reduce
our operations.
If
we are unable to attract users to our website, we will be unable to attain
profitability, increase revenue, expand the range of our services or enter new
markets.
We have not generated significant
revenues. We derive revenues primarily by charging an annual fee for
premium photo sharing services. To derive any revenues, we must
attract users to our websites. We currently offer free photo sharing
services in order to attract members to our websites. We cannot
guarantee that members that have used our free membership will upgrade to a paid
membership. Furthermore, to be able to maintain or increase our
revenues, we will have to retain existing users and attract new
ones.
If we are not
successful in increasing our number of paid members or having members actively
participate in our programs, our business and financial results will
suffer.
The success of our photo sharing and
social networking services depends upon our ability to increase our base of paid
photo sharing members and social networking users, thus increasing our traffic
numbers and revenue. Our ability to increase our base of members and
users is dependent upon attracting users to our website. We may not
be able to increase the level of new member registrations. Failure to
increase our base of paid members and users would reduce our membership revenue
and potential advertising revenue and our ability to implement our
strategies.
Significant
photo sharing competition could reduce our revenues.
There are several established websites
offering photo sharing including, but not limited to, Flickr.com, Fotolog.com
and Shutterfly.com. Most users choose only one photo sharing site,
and we cannot guarantee that our website will be able to compete with these
established sites. If we are unable to attract paid members, our
revenue would be reduced.
Our
inability to obtain capital, use internally generated cash, or use shares of our
capital stock or debt to finance future expansion efforts could impair the
growth and expansion of our business.
Reliance on internally generated cash
or debt to finance our operations or complete business expansion efforts could
substantially limit our operational and financial flexibility. The
extent to which we will be able or willing to use shares of capital stock to
consummate expansions will depend on the value of our capital stock from time to
time and the willingness of potential investors, sellers or business partners to
accept it as full or partial payment. Using shares of capital stock
for this purpose also may result in significant dilution to our then existing
shareholders. To the extent that we are unable to use capital stock
to make future expansions, our ability to grow through expansions may be limited
by the extent to which we are able to raise capital for this purpose through
debt or equity financings. No assurance can be given that we will be
able to obtain the necessary capital to finance a successful expansion program
or our other cash needs. If we are unable to obtain additional
capital on acceptable terms, we may be required to reduce the scope of any
operations. In addition to requiring funding for expansions, we may
need additional funds to implement our internal growth and operating strategies
or to finance other aspects of our operations. Our failure to (i)
obtain additional capital on acceptable terms, (ii) use internally generated
cash or debt to complete expansions because it significantly limits our
operational or financial flexibility, or (iii) use shares of capital
stock to make future expansions may hinder our ability to actively pursue any
expansion program we may decide to implement.
3
Our
members may infringe intellectual property rights by uploading
content. Infringements could result in costly and time-consuming
litigation and could limit our ability to operate as planned.
As part of a photo sharing community,
members have the ability to upload their own digital content. Due to
the volume of uploaded content, it is impossible to determine if our members own
the intellectual property associated with that content. In addition
to intellectual property issues, we cannot control our members from uploading
sensitive or offensive material.
Changes
to fees and the terms of use associated with the use of third-party payment
services that our users use to make payments on our website could decrease use
of our website and, therefore, our revenue.
We are not a credit card merchant and
are unable to accept direct payments from our users. Instead, we
depend on our users using third-party payment services such as PayPalTM. In
doing so, we are subject to the fees and terms of use of such third-party
payment services. From time to time, such third-party payment
services may increase the fees that they charge for payment transactions or
change the terms of use such that use of the payment service on our websites is
less favorable than before. These increased fees and changes in the
terms of use may make it harder and more costly for people to use our websites
thereby reducing our revenues and decreasing our profitability.
We
do not currently maintain redundant capabilities and a catastrophic event could
be costly and result in significant disruption of our services.
Our computer equipment and the
telecommunications infrastructure of our third-party network provider are
vulnerable to damage from fires, earthquakes, floods, power loss,
telecommunications failures, terrorism and similar events. Our
servers are also vulnerable to computer viruses, worms, physical and electronic
break-ins, sabotage and similar disruptions from unauthorized tampering of our
computer systems. We do not currently maintain redundant capabilities
and a catastrophic event could result in a significant and extended disruption
of our services. Currently, we do not have a disaster recovery plan
to address these and other vulnerabilities. As a result, it would be
difficult to operate our business in the event of a disaster. Any
prolonged disruption of our services due to these, or other events, would
severely impact or shut down our business.
Our
business depends on continued and unimpeded access to the Internet and Internet
service providers may be able to block, degrade or charge us or our users
additional fees for our offerings.
Our users rely on access to the
Internet to use our websites. Internet service providers may take
measures that could degrade, disrupt or increase the cost of our websites by
restricting or prohibiting the use of their lines for our websites, by
filtering, blocking, delaying or degrading the packets containing the data
associated with our websites, or by charging increased fees to us or our users
for use of their lines for our websites. Some of these providers may
contractually restrict their customers’ access to our offerings through their
terms of service with their customers. These activities are
technically feasible and may be permitted by applicable law. In
addition, Internet service providers could attempt to charge us each time our
users use our websites. Interference with our websites or higher
charges for access to our websites, whether paid by us or by our users, could
cause us to lose existing users, impair our ability to attract new users, and
harm our revenues and growth.
4
Our
Chief Executive Officer does not devote his full time to our operations, which
could limit our operations and growth.
Robert Heckes, our Chief Executive
Officer, Treasurer and a director of our company, devotes only 20% of his time
to our operations, thereby potentially limiting our operations and
growth.
Our
results of operations and key business metrics may fluctuate, which makes our
results difficult to predict and could cause our results to fall short of
expectations.
Our
results of operations and key business metrics may fluctuate as a result of a
variety of factors, many of which are outside of our control. As a
development company in a rapidly evolving industry, it may be difficult for us
and others to accurately predict future performance. If our results
of operations or key business metrics fall below the expectations of investors,
the trading price of our common stock, if any, could
decline. Fluctuations in our results of operations and key
business metrics may be due to a number of factors, including:
·
|
the
number of members accessing our services and the extent of their
engagement with our services;
|
·
|
variations
in our advertising revenues and our ability to attract members to our
social networking services; and
|
·
|
the
timing and success of new service introductions by us or our
competitors.
|
We
believe that our results of operations and key business metrics may vary
significantly in the future and that period-to-period comparisons of our results
of operations and key business metrics may not be meaningful. You should not
rely on the results of one period as an indication of our future performance. In
addition, if our results of operations and key business metrics do not meet or
exceed the expectations of securities analysts or investors, the price of our
common stock could decline substantially.
If
we are unable to develop new or enhanced features or fail to predict or respond
to emerging trends, our revenue and any profitability will suffer.
Our
future success will depend in part on our ability to modify or enhance our
website features to meet users demands, add features and address technological
advancements. If we are unable to predict preferences or industry changes, or if
we are unable to modify our website features in a timely manner, we may lose
members. New features may be dependent upon our obtaining needed technology or
services from third parties, which we may not be able to obtain in a timely
manner, upon terms acceptable to us, or at all. We spend significant resources
developing and enhancing our features. However, new or enhanced features may
have technological problems or may not be accepted by users. If we are unable to
successfully develop, acquire or implement new features or enhance our existing
features in a timely and cost-effective manner, our revenue and any
profitability will suffer.
5
Assertions
by a third party that we infringe its intellectual property could result in
costly and time-consuming litigation, expensive licenses or the inability to
operate as planned.
The
software and technology industries are characterized by the existence of a large
number of patents, copyrights, trademarks and trade secrets and by frequent
litigation based on allegations of infringement or other violations of
intellectual property rights. As we face increasing competition, the possibility
of intellectual property rights claims against us may grow. Our technologies may
not be able to withstand third-party claims or rights restricting their use.
Companies, organizations or individuals, including our competitors, may hold or
obtain patents or other proprietary rights that would prevent, limit or
interfere with our ability to provide our services or develop new services and
features, which could make it more difficult for us to operate our
business.
If
we are determined to have infringed upon a third party’s intellectual property
rights, we may be required to pay substantial damages, stop using technology
found to be in violation of a third party’s rights or seek to obtain a license
from the holder of the infringed intellectual property right, which license may
not be available on reasonable terms, or at all, and may significantly increase
our operating expenses or may require us to restrict our business activities in
one or more respects. We may also be required to develop alternative
non-infringing technology, that could require significant effort and expense or
may not be feasible. In the event of a successful claim of infringement against
us and our failure or inability to obtain a license to the infringed technology,
our business and results of operations could be harmed.
If we fail to implement and
maintain proper and effective internal controls and disclosure controls and
procedures, our ability to produce accurate and timely financial statements and
public reports could be impaired, which could adversely affect our operating
results, our ability to operate our business and investors’ views of
us.
We
must ensure that we have adequate internal financial and accounting controls and
procedures in place so that we can produce accurate financial statements on a
timely basis. We will be required to spend considerable effort establishing and
maintaining our internal controls, which will be costly and time-consuming and
will need to be re-evaluated frequently. We are in the process of documenting,
reviewing and, if appropriate, improving our internal controls and procedures in
anticipation of being a reporting company and eventually being subject to
Section 404 of the Sarbanes-Oxley Act of 2002, which will require annual
management assessments of the effectiveness of our internal control over
financial reporting. Both we and our independent auditors will
be testing our internal controls in anticipation of being subject to these
Section 404 requirements and, as part of that documentation and testing, may
identify areas for further attention and improvement. We are in the process of
developing disclosure controls and procedures designed to ensure that
information required to be disclosed by us in our public reports and filings is
recorded, processed, summarized and reported within the time periods specified
by applicable SEC rules and forms.
Implementing
any appropriate changes to our internal controls and disclosure controls and
procedures may entail substantial costs to modify our existing financial and
accounting systems and internal policies, take a significant period of time to
complete, and distract our officers, directors and employees from the operation
of our business. These changes may not, however, be effective in establishing or
maintaining the adequacy of our internal controls or disclosure controls, and
any failure to maintain that adequacy, or a consequent inability to produce
accurate financial statements or public reports on a timely basis, could
materially adversely affect our business. Further, investors’ perceptions that
our internal controls or disclosure controls are inadequate or that we are
unable to produce accurate financial statements may seriously affect the price
of our common stock.
6
We
may be required to seek additional funding, and such funding may not be
available on acceptable terms or at all.
We may need
to obtain additional funding due to a number of factors beyond our expectations
or control, including a shortfall in revenue, increased expenses, increased
investment in capital equipment or the acquisition of businesses, services or
technologies. If we do need to obtain funding, it may not be available on
acceptable terms or at all. If we are unable to obtain sufficient funding, our
business would
be harmed. Even
if we were able to find outside funding sources, we might be required to issue
securities in a transaction that could be highly dilutive to our investors or we
may be required to issue securities with greater rights than the securities we
have outstanding today. We may also be required to take other actions that could
lessen the value of our common stock, including borrowing money on terms that
are not favorable to us. If we are unable to generate or raise capital that is
sufficient to fund our operations, we may be required to curtail operations,
reduce our services, defer or cancel expansion or acquisition plans or cease
operations in certain jurisdictions or completely.
Because
our common stock may be classified as “penny stock,” trading may be limited, and
the share price could decline.
Because our
common stock may fall under the
definition of “penny stock,” trading in the common stock, if any, may be limited
because broker-dealers would be required to provide their customers with
disclosure documents prior to allowing them to participate in transactions
involving the common stock. These disclosure requirements are
burdensome to broker-dealers and may discourage them from allowing their
customers to participate in transactions involving the common
stock.
“Penny
stocks” are equity securities with a market price below $5.00 per share other
than a security that is registered on a national exchange, included for
quotation on the NASDAQ system or whose issuer has net tangible assets of more
than $2,000,000 and has been in continuous operation for greater than three
years. Issuers who have been in operation for less than three years
must have net tangible assets of at least $5,000,000.
Rules promulgated
by the Securities and Exchange Commission under Section 15(g) of the
Exchange Act require broker-dealers engaging in transactions in penny stocks, to
first provide to their customers a series of disclosures and documents
including:
·
|
A
standardized risk disclosure document identifying the risks inherent in
investment in penny stocks;
|
·
|
All
compensation received by the broker-dealer in connection with the
transaction;
|
·
|
Current
quotation prices and other relevant market data;
and
|
·
|
Monthly
account statements reflecting the fair market value of the
securities.
|
These rules also require that a
broker-dealer obtain financial and other information from a customer, determine
that transactions in penny stocks are suitable for such customer and deliver a
written statement to such customer setting forth the basis for this
determination.
7
Our
director and executive officer will continue to exert significant control over
our future direction, which could reduce the sale value of our
company.
The sole
Member of our Board of Directors and our executive officer own 70% of our
outstanding common stock. Accordingly, this stockholders, will be
able to control all matters requiring approval of our stockholders, including
the election of directors and approval of significant corporate
transactions. This concentration of ownership, which could result in
a continued concentration of representation on our Board of Directors, may
delay, prevent or deter a change in control and could deprive our stockholders
of an opportunity to receive a premium for their common stock as part of a sale
of our assets.
Investors
should not anticipate receiving cash dividends on our common stock.
We have never
declared or paid any cash dividends or distributions on our common stock and
intend to retain future earnings, if any, to support our operations and to
finance expansion. Therefore, we do not anticipate paying any cash
dividends on the common stock in the foreseeable future.
There
is a reduced probability of a change of control or acquisition of us due to the
possible issuance of additional preferred stock. This reduced
probability could deprive our investors of the opportunity to otherwise sell our
stock in an acquisition of us by others.
Our Articles
of Incorporation authorize our Board of Directors to issue up to 5,000,000
shares of preferred stock, of which no shares have been issued. Our
preferred stock is issuable in one or more series and our Board of Directors has
the power to fix the rights, preferences, privileges and restrictions thereof,
including dividend rights, dividend rates, conversion rights, voting rights,
terms of redemption, liquidation preferences and the number of shares
constituting any series or designation of such series, without further vote or
action by stockholders. As a result of the existence of this “blank
check” preferred stock, potential acquirers of our company may find it more
difficult to, or be discouraged from, attempting to effect an acquisition
transaction with, or a change of control of, our company, thereby possibly
depriving holders of our securities of certain opportunities to sell or
otherwise dispose of such securities at above-market prices pursuant to such
transactions.
FORWARD-LOOKING
STATEMENTS
This
prospectus includes forward-looking statements. We have based these
forward-looking statements on our current expectations about future
events. These forward-looking statements are subject to risks,
uncertainties and assumptions about us which are discussed in the “Risk Factors”
section above and throughout this prospectus. In light of these
risks, uncertainties and assumptions, any forward-looking events discussed in
this prospectus might not occur.
USE
OF PROCEEDS
We will not
receive any proceeds from the sale of shares of our common stock being offered
by the selling stockholders.
8
SELECTED
FINANCIAL DATA
Statement
of Operations Data
Three Months Ended
October 31,
2009
|
Three Months Ended
October 31,
2008
|
Period From
Inception
(April 2,
2008)
to
October 31,
2009
|
Year Ended
July 31,
2009
|
|||||||||||||
Revenue | $ | -- | -- | -- | -- | |||||||||||
Loss from operations | $ | (3,755 | ) | (13,620 | ) | (126,755 | ) | (36,374 | ) | |||||||
Net loss | $ | (3,748 | ) | (13,553 | ) | (126,537 | ) | (36,247 | ) | |||||||
Net loss per share of common stock | $ | (0.00 | (0.00 | ) | (0.01 | ) | ||||||||||
Balance
Sheet Data
As of October 31, 2009 | As of July 31, 2009 | |||||||
Working capital | $ | 14,563 | 18,311 | |||||
Total assets | $ | 18,522 | 20,370 | |||||
Total liabilities | $ | 3,959 | 2,059 | |||||
Working capital (deficit) | $ | -- | -- | |||||
Stockholders’ equity | $ | 14,563 | 18,311 |
9
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
This
discussion updates our business plan for the balance of 2009. It also
analyzes our financial condition at October 31, 2009 and compares it to our
financial condition at July 31, 2009. This discussion summarizes the
results of our operations for the three month period ended October 31, 2009 and
compares it to the three month period ended October 31,
2008. Finally, this discussion summarizes the results of our
operations for the year ended July 31, 2009. As the year ended July
31, 2009 was our first full year of operation, a comparison of those twelve
months results to the results for the period from inception (April 2, 2008) to
July 31. 2008 would not be meaningful. This discussion and analysis
should be read in conjunction with our audited financial statements for the year
ended July 31, 2009, including footnotes, and with the unaudited financial
statements for the period ended October 31, 2009, including footnotes, both of
which are included in this document.
Overview
of the Business
We were
incorporated in the State of Nevada on April 2, 2008. Since
inception, we have engaged in activities to formulate and implement our business
plan.
For the
period from March 2006 until our incorporation, our predecessor company provided
social networking and photo sharing services to users from the PhotoAmigo.com
website.
Ability to continue as a “going
concern”. The independent registered public accounting firm’s
report on our financial statements as of July 31, 2009, includes a “going
concern” explanatory paragraph that describes substantial doubt about the
Company’s ability to continue as a going concern. Management’s plans
in regard to the factors prompting the explanatory paragraph are discussed in
the financial statements, including footnotes thereto.
Development Stage
Company. We
are considered to be in the development stage as defined in the accounting
standards. We have devoted substantially all of our efforts to business planning
and development. Additionally, we have allocated a substantial
portion of our time and investment to bringing our product to the market, and to
raising capital. We have not yet generated significant revenue from
operations.
Plan
of Operation
Since
March 2006, we and our predecessor have provided social networking and photo
sharing from our website PhotoAmigo.com. We also maintain the domain
names PhotoAmigo.net, fotoamigo.com and fotoamigo.net. These domain
names all redirect incoming traffic to our main website,
PhotoAmigo.com.
We
believe that we can generate significant revenue from the services provided by
our website. We need to continue development of the features on the
website and attract additional subscribers. PhotoAmigo believes that
its brand, product offering and future enhancements will continue to attract
users and will make it a premier destination for photo sharing. While
there are established photo sharing sites on the Internet, we believe that the
continued growth of sharing photos and photo blogging will create an opportunity
for additional sites.
10
Our
strategy is to engage users by offering free photo sharing and social networking
services. We believe that by offering a full suite of services for
free, we can eventually get users to upgrade their membership for more photo
sharing storage space.
Liquidity
and Capital Resources
As of
October 31, 2009, we had working capital of $14,563 comprised of current assets
of $18,522 and current liabilities of $3,959. This represents a decrease
in working capital of $3,748 from the July 31, 2009 balance of $18,311.
During the three months ended October 31, 2009, our working capital
decreased as we continued to fund our plan of operations.
We have
not yet reported any revenue from operations. To fund our operations,
we issued 2,850,000 shares of common stock on April 2, 2008 for cash proceeds of
$50,000. On April 28, 2008, we issued an additional 138,000 shares of
common stock for cash proceeds of $11,500.
In
addition, our Chief Executive Officer has periodically advanced funds to us to
meet our working capital needs. As of October 31, 2009, we owe our Chief
Executive Officer $234 for advances which are non-interest bearing and due on
demand.
From
inception to October 31,
2009, cash used from operating activities was $42,678. We have
recently reduced our operating activities so that we can conserve
cash.
Our lack
of capital resources may require us to obtain additional funding to achieve our
photo sharing website development goals. In the past we have relied on
issuances of common stock to fund our operations.
We may
seek additional financing in the form of debt or equity. There is no
assurance that we will be able to obtain any needed financing on favorable
terms, or at all, or that we will find qualified purchasers for the sale of our
stock. Any sales of our securities would dilute the ownership of our
existing investors.
We
currently have no written or firm agreement regarding future funding
requirements, and we may curtail our efforts or cease activities
entirely.
Future Capital
Expenditures. As of and
subsequent to October 31, 2009, we have no plans or commitments to acquire
capital assets.
Off-Balance Sheet
Arrangements. As of and subsequent to October 31, 2009, we
have no off-balance sheet arrangements.
Contractual
Commitments. As of October 31, 2009, we have no material
contractual commitments.
Results
of Operations- Three Months Ended October 31, 2009 Compared to Three Months
Ended October 31, 2008
We
reported a net loss of $3,748 for the three months ended October 31, 2009,
compared to a net loss of $13,553 for the three months ended October 31,
2008. We recently reduced our activities to conserve our capital
resources.
11
As our
efforts to convert subscriptions of our free service to a paid service level
have not yielded the desired results, we reduced our development and marketing
efforts and are currently reformulating our business plans.
Results
of Operations- Year Ended July 31, 2009
We
reported a net loss of $36,247 or ($0.01 per share) for the year ended July 31,
2009. We did not report any revenues from sales or services during
the year.
Operating
expenses totaled $36,374, and were comprised primarily of website development
expenses, employee compensation, and professional fees. These
expenses were focused on improving the operations and features of our website
and on the activities required to comply with our obligations as a public
reporting company.
CRITICAL
ACCOUNTING POLICIES
Use
of Estimates
Preparation
of the 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
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Significant estimates have been used by management
in conjunction with the measurement of the valuation allowance relating to
deferred tax assets and future cash flows associated with long-lived assets.
Actual results could differ from those estimates.
Revenue
Recognition
We
recently commenced operations, and have not yet generated any significant
revenues from operations. Revenues are expected to be derived
principally from subscriptions to our website. Revenue will be
recognized only when the price is fixed or determinable, persuasive evidence of
an arrangement exists, the service is performed and collectability of the amount
is reasonably assured. Certain insignificant amounts collected during
the development, testing, and implementation phases are recorded as a recovery
of development expense.
Deferred
revenue will be recorded when amounts are received from customers for future
subscriptions. Amounts received are recorded as income each month
based on the pro-rata portion of the prepaid subscription that has been
fulfilled.
Cash
and Cash Equivalents
For
financial statement presentation purposes, we consider short-term, highly liquid
investments with original maturities of three months or less to be cash and cash
equivalents.
Contingencies
We are
not currently a party to any pending or threatened legal
proceedings. Based on information currently available, management is
not aware of any matters that would have a material adverse effect on our
financial condition, results of operations or cash flows.
12
Fair
Value of Financial Instruments
Fair
value estimates discussed herein are based upon certain market assumptions and
pertinent information available to management. The respective
carrying value of certain on-balance-sheet financial instruments approximated
their fair values. These financial instruments include cash, due from
shareholders, and accounts payable. Fair values are assumed to
approximate carrying values for these financial instruments because they are
short term in nature, or are receivable or payable on demand.
Income
Taxes
Deferred
income taxes are reported for timing differences between items of income or
expense reported in the financial statements and those reported for income tax
purposes using the asset/liability method of accounting for income
taxes. Deferred income taxes and tax benefits are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases, and for tax loss and credit
carry-forwards. 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.
PhotoAmigo provides for deferred taxes for the estimated future tax effects
attributable to temporary differences and carry-forwards when realization is
more likely than not.
Per
Share Amounts
We
provide for the calculation of "Basic" and "Diluted" earnings per
share. Basic earnings per share includes no dilution and is computed
by dividing net income (or loss) by the weighted-average number of shares
outstanding during the period. Diluted earnings per share reflect the potential
dilution of securities that could share in the earnings of the Company, assuming
the issuance of an equivalent number of common shares pursuant to options,
warrants, or convertible debt arrangements. Diluted earnings per
share is not shown for periods in which the Company incurs a loss because it
would be anti-dilutive. Similarly, potential common stock equivalents
are not included in the calculation if the effect would be
anti-dilutive.
Impairment
of Long Lived Assets
PhotoAmigo
periodically reviews the carrying amount of long lived assets to determine
whether current events or changes in circumstances warrant adjustments to such
carrying amounts. If an impairment adjustment is deemed necessary,
such loss is measured by the amount that the carrying value of such assets
exceeds their fair value. Considerable management judgment is
necessary to estimate the fair value of assets; accordingly, actual results
could vary significantly from such estimates. Assets to be disposed
of are carried at the lower of their financial statement carrying amount or fair
value less costs to sell.
Recent Accounting
Pronouncements. There were various accounting standards and
interpretations recently issued which have not yet been adopted,
including:
Fair Value Accounting - In
August 2009, the ASC guidance for fair value measurements and disclosure
was updated to further define fair value of liabilities. This update provides
clarification for circumstances in which: (i) a quoted price in an active
market for the identical liability is not available, (ii) the liability has a
restriction that prevents its transfer, and (iii) the identical liability
is traded as an asset in an active market in which no adjustments to the quoted
price of an asset are required. The updated guidance is effective for the
Company’s interim reporting period beginning November 1, 2009. The Company
is evaluating the potential impact of adopting this guidance on the Company’s
financial position, results of operations and cash flows.
There
were various other recently issued accounting standards and interpretations that
are not expected to a have a material impact on the Company's financial
position, operations or cash flows.
13
BUSINESS
Current
Operations
Since March
2006, we have provided social networking and photo sharing from our website
PhotoAmigo.com. Our website launched in March 2006 and has grown
organically to over 3,000 users. In addition, we have over 145,000
photo comments from our user base. We also maintain the domain names
PhotoAmigo.net, fotoamigo.com and fotoamigo.net. These domain names
all redirect incoming traffic to our main website,
PhotoAmigo.com. Photo sharing sites are a recent trend on the
Internet, and they allow users to upload and store their digital images and
videos. Users can then provide their friends with links to their
online portfolios. While the most basic functions are free, some
sites also require an annual purchase and offer premium upgrades for a small
fee.
Many photo
sharing sites have also morphed into social networking sites where users upload
their images and communicate with each other through photoblogs. The
three most popular sites are Fotolog, Flickr and Photobucket, which allow users
to comment on photos, share images, etc. Photo sharing sites have
become some of the most popular destinations on the
Internet. Fotolog, Flickr and Photobucket all rank in the top 50
global websites according to Alexa.com, which tracks Internet
traffic. It is believed that the popularity of photo sharing sites is
in part due to the number of digital cameras: The Consumer
Electronics Association estimates that 62% of all US households now own a
digital camera. Across the globe, digital cameras are found in
devices ranging from mobile phones to laptop computers. While there
are established photo sharing sites on the Internet, we believe that the
continued growth of sharing photos and photoblogging will create an opportunity
for additional sites. PhotoAmigo believes that its brand, product
offering and future enhancements will continue to attract users and will make it
a premier destination for photo sharing.
We offer
three different levels of membership: Basic, Pro and
Premium. Basic membership is free and allows users to upload ten
photos per day. Pro membership is $15.99 per year and allows for 50
photos a day to be uploaded. Premium membership is $19.99 per year
and allows for unlimited photo uploading. Subscription payments for
the PhotoAmigo products are handled through PayPal. To date, we have
been not been successful converting free memberships to paid
memberships.
Business
Strategy
Our business
strategy is to engage users by offering free photo sharing and social networking
services. We believe that by offering a full suite of services for
free, we can eventually get users to upgrade their membership for more photo
sharing storage space. Currently, we offer the following services to
our members:
·
|
Full
html in guestbooks and photo descriptions--by providing html based pages,
users are able to embed video, audio and links within their
pages. By allowing users to include this type of data, the
PhotoAmigo internal pages can provide rich media to the site’s
visitors;
|
·
|
High
resolution images—our image compression tools create a repository for
higher resolution images for enlargements and
printing;
|
·
|
Cell
phone uploads—users will be able to send images from their mobile phone
directly to their PhotoAmigo pages;
|
·
|
In-house
mail program allowing users to send and receive email originated within
the site;
|
·
|
Image
printing—we have integrated with Shutterfly to allow users to
print their photos directly from our
website.
|
14
Marketing
We will use a
variety of marketing strategies to build overall traffic to the site and intend
to emphasize our marketing efforts. We plan to gain new members by
offering the free subscription level but will use marketing efforts within the
site to upgrade our members to a paid program. To cultivate new
members, we plan to use the following marketing strategies:
·
|
Google
adwords (purchasing key words such as “free photo
sharing”)
|
·
|
International
Craigslist postings
|
·
|
Guerrilla
marketing: handing out postcards and installing street
posters
|
·
|
Harvesting
existing photo sharing sites (direct email
invites)
|
·
|
Press
releases to mass publications (magazines, newspapers, radio and
TV)
|
·
|
Friends,
family and word of mouth.
|
We also
believe that our success is dependent on viral marketing, which is implicit in
photo sharing since our domain name is presented each time a member shares a
photo.
Competition
Several
online sites allow for storage and printing of digital photos. Many
of these sites have grown to recognized brand names and receive millions of
uploaded photos each day. We believe that some users are interested
in using a smaller site in which their photos can be featured.
Flickr was
acquired by Yahoo! When it had approximately 300,000
members. According to a 2007 article in the weblog TechCrunch.com,
“Flickr now has over 1 billion photos and 37.7 million unique monthly
visitors. 2.5 million new photos are uploaded daily by 15 million
registered users.
Fotolog: A
February 2007 press release from the company cited 6.5 million member accounts
from more than 200 countries that have shared more than 200 million photos since
the site’s inception in October 2002. The press release went on to
call Fotolog “the world’s largest photo-blogging community and the third most
trafficked social media network on the Internet.” It added, “Fotolog
has grown 100 percent virally since its founding in 2002, with no marketing or
member incentives.”
Photobucket
was founded in 2003. $15 million was invested before Photobucket was
acquired by Fox Interactive Media’s MySpace for $250 million in May of 2007,
according to crunchbase.com. “Their main revenue streams are through
premium accounts and advertising.”
15
Online
Dating
In addition
to our current photo sharing operations, we have begun initial development of a
free dating website and application for the Internet. Other websites,
such as Plentyoffish.com and okcupid.com provide free dating websites and
generate revenue from online advertising. We intend to offer a free
dating application using existing members of social networks such as Facebook
and MySpace. We have completed limited development of our dating
network, and we have not committed significant resources or capital to this
project. Our current knowledge of the online dating space is limited,
and we may decide not to pursue this project. In addition, we may
find that our capital resources are not significant enough to complete the
project or to compete with existing dating websites.
Employees
At
January 1, 2010, we had 1 employee, including our Chief Executive
Officer.
Facilities
We
are provided rent-free office space by our Chief Executive Officer at 924 Olive
Street, Santa Barbara, California 93101.
16
MANAGEMENT
Directors,
Executive Officers, Promoters and Control Persons
Directors hold office until the next
annual meeting of the shareholders or until their successors have been elected
and qualified. Our officers are appointed by our Board of Directors
and hold office until their death, resignation or removal from
office. Our sole director and executive officer’s age, positions held
and date first appointed are as follows:
Name | Position Held With the Company | Age | Date First Electd or Appointed | ||||
Robert
Heckes
|
Chief
Executive Officer, Chief Financial
Officer and Director
|
44 | 2008 | ||||
Business
Experience
The following
is a brief account of the education and business experience of our sole director
and executive officer during at least the past five years.
Robert Heckes
founded our business as a sole proprietorship in March 2006 and has operated the
business since that date. He was appointed Chief Executive Officer,
Chief Financial Officer and sole director in April 2008. Since 2006,
he has been a licensed real estate agent with Sotheby’s International Realty and
devotes 20% of his time to our affairs.
Committees
of the Board
Our company
currently does not have nominating, compensation or audit committees or
committees performing similar functions nor does our company have a written
nominating, compensation or audit committee charter.
Executive
Compensation
We have not
paid any compensation to executive officers and directors since our inception as
a sole proprietorship in March 2006. We do not have key person life
insurance on our sole executive officer’s life. In April 2008 we
began paying our Chief Executive Officer $600 per month for his services, on a
part-time basis.
Director
Compensation
Our sole
director does not receive compensation for his services as a
director.
17
Liability
and Indemnification of Officers and Directors
Our Articles
of Incorporation provide that liability of directors to us for monetary damages
is eliminated to the full extent provided by Nevada law. Under Nevada
law, a director is not personally liable to us or our stockholders for monetary
damages for breach of fiduciary duty as a director except for liability
(i) for any breach of the director’s duty of loyalty to us or our
stockholders; (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law; (iii) for authorizing
the unlawful payment of a dividend or other distribution on our capital stock or
the unlawful purchases of our capital stock; (iv) a violation of Nevada law with
respect to conflicts of interest by directors; or (v) for any transaction
from which the director derived any improper personal benefit.
The effect of
this provision in our Articles of Incorporation is to eliminate our rights and
our stockholders’ rights (through stockholders’ derivative suits) to recover
monetary damages from a director for breach of the fiduciary duty of care as a
director (including any breach resulting from negligent or grossly negligent
behavior) except in the situations described in clauses (i) through
(v) above. This provision does not limit or eliminate our rights
or the rights of our security holders to seek non-monetary relief, such as an
injunction or rescission, in the event of a breach of a director’s duty of care
or any liability for violation of the federal securities laws.
Insofar as
indemnification for liabilities arising under 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 SEC
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
SECURITY OWNERSHIP OF EXECUTIVE
OFFICERS, DIRECTORS AND
BENEFICIAL
OWNERS OF GREATER THAN 5% OF OUR COMMON STOCK
As of the
date of this prospectus, there are 3,012,000 shares of common stock
outstanding. The following table sets forth certain information
regarding the beneficial ownership of the outstanding shares as of the date of
this prospectus by (i) each person who is known by us to own beneficially
more than 5% of our outstanding common stock; (ii) each of our executive
officers and directors; and (iii) all of our executive officers and
directors as a group. Except as otherwise indicated, each such person
has investment and voting power with respect to such shares, subject to
community property laws where applicable. The address of our
executive officers and directors is in care of us at 924 Olive Street, Santa
Barbara, California 93101.
Name of Shareholder | Title of Class (1) |
Amount
and Nature of
Beneficial
Ownership
|
Percent of Class | ||||
Robert
Heckes
924
Olive Street
Santa
Barbara, CA 93101
|
Common Stock | 2,100,000 | 69.7% | ||||
Gary
A. Agron
5445
DTC Pkwy., Suite 520
Greenwood
Village, CO 80111
|
Common Stock | 250,000 | 8.3% | ||||
Iliff
Street Capital, LLC
2340
S. Columbine
Denver,
CO 80210
|
Common Stock | 250,000 | 8.3% | ||||
All
directors and officers as
a
group (1)
|
2,100,000 | 69.7% | |||||
(1) Beneficial
ownership is determined in accordance with SEC rules and generally includes
voting or investment power with respect to securities. Shares of
common stock subject to options, warrants and convertible preferred stock
currently exercisable or convertible, or exercisable or convertible within sixty
(60) days, would be counted as outstanding for computing the percentage of the
person holding such options or warrants but not counted as outstanding for
computing the percentage of any other person.
18
SELLING
STOCKHOLDERS AND PLAN OF DISTRIBUTION
We have
outstanding 3,012,000 shares of common stock. We are registering by
this prospectus an aggregate of 1,162,000 shares of common stock comprised
250,000 shares of common stock which we issued to our President in exchange for
assets contributed, 250,000 shares of common stock sold to one investor in April
2008 for $.012 per share and in consideration of services rendered, 500,000
shares of our common stock which we sold to a group of three accredited
investors in April 2008 for $.094 per share, 138,000 shares of common stock
which we sold to a group of twenty three accredited investors in April 2008 for
$.0833 per share, and 24,000 shares of common stock which we sold to a group of
four investors in January 2010 at $.0166 per share.
The following
table sets forth the names of the selling stockholders, the number of shares of
our common stock held by each selling stockholder and certain other information.
The selling stockholders listed below are offering for sale all shares listed
following their names. None of the selling stockholders is required
to sell any of their shares at any time.
The shares
may be offered from time to time by the selling stockholders. Since
the selling stockholders may sell all or part of the shares of common stock
offered in this prospectus, we cannot estimate the number of shares of our
common stock that will be held by the selling stockholders upon termination of
this offering.
None of our selling
stockholders, other than Robert Heckes, are officers, directors or 10% or
greater stockholders,. None of our selling stockholders are
broker-dealers or affiliates of broker-dealers, and none of the selling
stockholders has or had any material relationship with us except as
stockholders.
Name
of Shareholder
|
Shares
of Common Stock Owned
|
Percentage
of Outstanding Common Stock Owned
|
Share
of Common Stock Offered For Sale
|
Percentage
of Outstanding Common Stock Owned After Sale
|
||||||||||||
Robert
Heckes
|
2,100,000 | 69.7 | % | 250,000 | 61.4 | % | ||||||||||
Gary
A. Agron
|
250,000 | 8.3 | % | 250,000 | 0 | |||||||||||
Iliff
Street Capital, LLC
Jennifer
Frenkel, Manager
|
250,000 | 8.3 | % | 250,000 | 0 | |||||||||||
Battersea
Capital, Inc.
Matt
Lepo, President
|
125,000 | 4.2 | % | 125,000 | 0 | |||||||||||
Underwood
Family Partners, Ltd.
Mike
Underwood, General Partner
|
125,000 | 4.2 | % | 125,000 | 0 | |||||||||||
Anthony
Szeluga
|
6,000 | * | 6,000 | 0 | ||||||||||||
Bradley
C. Underwood
|
6,000 | * | 6,000 | 0 | ||||||||||||
19
Catherine
Lepo
|
6,000 | * | 6,000 | 0 | ||||||||||||
Cheryl
Koch
|
6,000 | * | 6,000 | 0 | ||||||||||||
Christopher
D. Jennings
|
6,000 | * | 6,000 | 0 | ||||||||||||
Crotalus,
Inc.
Matt
Lepo, President
|
6,000 | * | 6,000 | 0 | ||||||||||||
Deanie
Underwood
|
6,000 | * | 6,000 | 0 | ||||||||||||
Jason
Koch
|
6,000 | * | 6,000 | 0 | ||||||||||||
Jason
Reimer
|
6,000 | * | 6,000 | 0 | ||||||||||||
Jennifer
Kritzik
|
6,000 | * | 6,000 | 0 | ||||||||||||
Jennifer
M. Underwood
|
6,000 | * | 6,000 | 0 | ||||||||||||
John
M. Dalfonsi
|
6,000 | * | 6,000 | 0 | ||||||||||||
John
Lepo
|
6,000 | * | 6,000 | 0 | ||||||||||||
John
Lepo, Jr.
|
6,000 | * | 6,000 | 0 | ||||||||||||
Keith
Koch
|
6,000 | * | 6,000 | 0 | ||||||||||||
L.
Michael Underwood
|
6,000 | * | 6,000 | 0 | ||||||||||||
Michael
L. Lepo
|
6,000 | * | 6,000 | 0 | ||||||||||||
Michael
Koch
|
6,000 | * | 6,000 | 0 | ||||||||||||
Mike
Gellman
|
6,000 | * | 6,000 | 0 | ||||||||||||
Pat
A. Szeluga
|
6,000 | * | 6,000 | 0 | ||||||||||||
Sherman
Avenue Trust
Matt
Lepo, Trustee
|
6,000 | * | 6,000 | 0 | ||||||||||||
Sistrurus,
LLC
Matt
Lepo, Manager
|
6,000 | * | 6,000 | 0 | ||||||||||||
Stephen
Koch
|
6,000 | * | 6,000 | 0 | ||||||||||||
Sue
Hayes
|
6,000 | * | 6,000 | 0 | ||||||||||||
Susan Reimer | 6,000 | * | 6,000 | 0 | ||||||||||||
Underwood
Family Partners, LTD
L.
Michael Underwood, General Partner
|
6,000 | * | 6,000 | 0 | ||||||||||||
Vaselisa
A. Barr
|
6,000 | * | 6,000 | 0 |
*less
than 1%
20
In the event
that we permit or cause this prospectus to lapse, the selling stockholders may
only sell shares of our common stock pursuant to Rule 144 under the
Securities Act of 1933. The selling stockholders will have the sole
and absolute discretion not to accept any purchase offer or make any sale of
these shares of our common stock if they deem the purchase price to be
unsatisfactory at any particular time.
The selling
stockholders may also sell these shares of our common stock directly to market
makers and/or broker-dealers acting as agents for their
customers. These broker-dealers may receive compensation in the form
of discounts, concessions or commissions from the selling stockholders and/or
the purchasers of these shares of our common stock for whom such broker-dealers
may act as agents. As to a particular broker-dealer, this
compensation might be in excess of customary commissions. Market
makers and block purchasers purchasing these shares of our common stock may do
so for their own account and at their own risk. It is possible that a
selling stockholder will attempt to sell shares of our common stock in block
transactions to market makers or other purchasers at a price per share which may
be below the prevailing market price of our common stock. There can
be no assurance that all or any of these shares of our common stock offered
hereby will be issued to, or sold by, the selling stockholders. Upon
effecting the sale of any of these shares of our common stock offered under this
prospectus, the selling stockholders and any brokers, dealers or agents, hereby,
may be deemed “underwriters” as that term is defined under the Securities Act of
1933 or the Securities Exchange Act of 1934, or the rules and regulations
thereunder.
Alternatively, the
selling stockholders may sell all or any part of the shares of our common stock
offered hereby through an underwriter. No selling stockholder has
entered into any agreement with a prospective underwriter, and there is no
assurance that any such agreement will be entered into. If a selling
stockholder enters into an agreement or agreements with an underwriter, then the
relevant details will be set forth in a supplement or revision to this
prospectus.
The selling
stockholders and any other persons participating in the sale or distribution of
these shares of our common stock will be subject to applicable provisions of the
Securities Exchange Act of 1934 and the rules and regulations thereunder
including, without limitation, Regulation M. These provisions
may restrict activities of, and limit the timing of purchases and sales of any
of these shares of our common stock by, the selling
stockholders. Furthermore, pursuant to Regulation M, a person
engaged in a distribution of securities is prohibited from bidding for,
purchasing or attempting to induce any person to bid for or purchase our
securities for a period beginning five business days prior to the date of this
prospectus until such person is no longer a selling
stockholder. These regulations may affect the marketability of these
shares of our common stock.
We will pay
substantially all of the expenses incident to the registration and offering of
our common stock, other than commissions or discounts of underwriters,
broker-dealers or agents.
RELATED
PARTY AND OTHER MATERIAL TRANSACTIONS
We are
provided rent-free office space by our Chief Executive Officer.
21
DESCRIPTION
OF CAPITAL STOCK
General
We are
authorized to issue 100,000,000 shares of common stock, $.001 par value per
share, and 10,000,000 shares of preferred stock, $.001 par value per
share.
Common
Stock
Currently,
there are 3,012,000 shares of common stock outstanding. The holders
of common stock are entitled to one vote per share on all matters submitted to a
vote of stockholders, including the election of directors. There is
no right to cumulate votes in the election of directors. The holders
of common stock are entitled to any dividends that may be declared by the Board
of Directors out of funds legally available therefore subject to the prior
rights of holders of preferred stock and any contractual restrictions we have
against the payment of dividends on common stock. In the event of our
liquidation or dissolution, holders of common stock are entitled to share
ratably in all assets remaining after payment of liabilities and the liquidation
preferences of any outstanding shares of preferred stock. Holders of
common stock have no preemptive rights and have no right to convert their common
stock into any other securities.
Preferred
Stock
We may issue
our preferred stock in one or more series with such designations, voting powers,
if any, preferences and relative, participating, optional or other special
rights, and such qualifications, limitations and restrictions, as are determined
by resolution of our Board of Directors. The issuance of preferred
stock may have the effect of delaying, deferring or preventing a change in
control of our company without further action by stockholders and could
adversely affect the rights and powers, including voting rights, of the holders
of common stock. In certain circumstances, the issuance of preferred
stock could depress the market price of the common stock. No shares of preferred
stock have been issued.
Dividends
We do not
intend to pay dividends on our capital stock in the foreseeable
future.
Transfer
Agent
Corporate
Stock Transfer, Inc, Denver, Colorado, is our transfer agent and warrant
agent.
SHARES
ELIGIBLE FOR FUTURE SALE
We have
3,012,000 shares of common stock outstanding, of which 1,162,000 shares of
common stock are being registered hereby. The remaining 1,850,000
shares are restricted shares but are eligible for sale at any time under Rule
144 promulgated under the Securities Act of 1933, as amended.
In general,
under Rule 144 as modified on February 15, 2008, a person who owns shares
that were purchased from us, or any affiliate, at least six months previously
and who is not an officer, director or 10% or greater stockholder of our company
(a “non-affiliate”), is entitled to sell all or any portion of such shares under
Rule 144 so long as we have filed all required SEC reports and continue to do so
while the shares are offered for sale. After one year from purchase,
the shares may be sold by a non-affiliate regardless of whether we have filed
all required SEC reports. Our affiliates may also sell their shares
after they have been held six months or longer under Rule 144 in an amount not
to exceed:
22
·
|
1%
of the then outstanding shares of our common stock;
or
|
·
|
The
average weekly trading volume of our common stock during the four calendar
weeks preceding the date on which notice of the sale is filed with the
SEC.
|
Future sales of restricted common stock
under Rule 144 or otherwise or of the shares which we are registering under
this prospectus could negatively impact the market price of our common
stock. We are unable to estimate the number of shares that may be
sold in the future by our existing stockholders or the effect, if any, that
sales of shares by such stockholders will have on the market price of our common
stock prevailing from time to time. Sales of substantial amounts of
our common stock by existing stockholders could adversely affect prevailing
market prices.
EXPERTS
Our audited financial statements
included in this prospectus for the period ended July 31, 2009, have been
included in reliance on the report of Ronald R. Chadwick, P.C., an independent
registered public accounting firm, given on the authority of this firm as
experts in accounting and auditing.
LEGAL MATTERS
The
validity of the common stock offered hereby will be passed upon for us by the
Law Office of Gary A. Agron, Greenwood Village, Colorado. Mr. Agron
owns 250,000 shares of our common stock.
WHERE
YOU CAN FIND MORE INFORMATION
We
have filed with the Securities and Exchange Commission a registration statement
on Form S-1 under
the Securities Act of 1933 with respect to the common stock offered by this
prospectus. This prospectus does not contain all of the information
set forth in the registration statement and the exhibits to the registration
statement. For further information with respect to our company and
our common stock offered hereby, reference is made to the registration statement
and the exhibits filed as part of the registration statement. We are
also required to file periodic reports with the Securities and Exchange
Commission, including quarterly reports, annual reports which include our
audited financial statements and proxy statements, and we provide our annual
reports, including audited financial statements and proxy statements, to our
stockholders. The registration statement, including exhibits thereto,
and all of our periodic reports may be inspected without charge at the
Securities and Exchange Commission’s principal office in Washington, DC, and
copies of all or any part thereof may be obtained from the Public Reference
Section of the Securities and Exchange Commission, 100 F Street, NE, Washington,
DC 20549. You may obtain additional information regarding the
operation of the Public Reference Section by calling the Securities and Exchange
Commission at 1-800-SEC-0330. The Securities and Exchange Commission
also maintains a website which provides online access to reports, proxy and
information statements and other information regarding registrants that file
electronically with the Securities and Exchange Commission at the address:
http://www.sec.gov.
23
PHOTOAMIGO,
INC.
1,162,000
SHARES OF COMMON STOCK
Until ______________, 2010, 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.
PHOTOAMIGO,
INC.
INDEX
TO FINANCIAL STATEMENTS
Page
|
||||
Three Months Ended October 31, 2009 and
2008
|
||||
Balance
Sheet (unaudited) as of October 31, 2009
|
F-2 | |||
Statements
of Operations (unaudited) for the three months ended October 31, 2009 and
2008, and Inception to October 31, 2009
|
F-3 |
|
||
Statements
of Cash Flows (unaudited) for the three months ended October 31, 2009 and
2008, and Inception to October 31, 2009
|
F-4 | |||
Statement
of Changes in Stockholders’ Equity (unaudited) for the period from
inception to October 31, 2009
|
F-5 | |||
Notes
to Financial Statements (unaudited)
|
F-6 | |||
Year Ended July 31, 2009 and
2008
|
||||
Report
of Independent Registered Public Accounting Firm
|
F-11 | |||
Balance
Sheets at July 31, 2009 and 2008
|
F-12 | |||
Statements
of Operations for the year ended July 31, 2009 and for the period
from Inception (April 2, 2008) to July 31, 2008 and for the period from
Inception (April 2, 2008) to July 31, 2009
|
F-13 | |||
Statements
of Cash Flows for the year ended July 31, 2009 and for the period
from Inception (April 2, 2008) to July 31, 2008 and for the period from
Inception (April 2, 2008) to July 31, 2009
|
F-14 | |||
Statements
of Changes in Stockholders’ Equity for the period from Inception (April 2,
2008) to July 31, 2009
|
F-15 | |||
Notes
to Financial Statements
|
F-16 |
F-1
PHOTOAMIGO, INC.
|
||||||||
(A Development Stage
Company)
|
||||||||
BALANCE SHEETS
|
||||||||
October
31, 2009
|
July
31, 2009
|
|||||||
(unaudited)
|
||||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 18,522 | $ | 20,370 | ||||
Total
current assets
|
$ | 18,522 | $ | 20,370 | ||||
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 125 | $ | 125 | ||||
Accrued
compensation
|
3,600 | 1,800 | ||||||
Advances
from officer
|
234 | 134 | ||||||
Total
current liabilities
|
3,959 | 2,059 | ||||||
Commitments
and contingencies (Notes 2, 4 and 5)
|
||||||||
Stockholders'
equity:
|
||||||||
Preferred
stock - $0.001 par value, 5,000,000 shares
authorized:
|
||||||||
No
shares issued or outstanding
|
- | - | ||||||
Common
stock - $0.001 par value, 100,000,000 shares authorized:
|
||||||||
2,988,000
shares issued and outstanding
|
2,988 | 2,988 | ||||||
Additional
paid-in capital
|
138,112 | 138,112 | ||||||
(Deficit)
accumulated during the development stage
|
(126,537 | ) | (122,789 | ) | ||||
Total
stockholders' equity
|
14,563 | 18,311 | ||||||
Total
liabilities and stockholders' equity
|
$ | 18,522 | $ | 20,370 | ||||
The
accompanying notes are an integral part of these financial
statements.
|
F-2
PHOTOAMIGO, INC.
|
||||||||||||
(A Development Stage
Company)
|
||||||||||||
STATEMENTS OF OPERATIONS
|
||||||||||||
for
the three months ended October 31, 2009 and 2008,
|
||||||||||||
and
for the period from Inception (April 2, 2008) to October 31,
2009
|
||||||||||||
(unaudited)
|
||||||||||||
Three
Months
|
Three
Months
|
From
Inception
|
||||||||||
ended
|
ended
|
(April
2, 2008) to
|
||||||||||
October
31, 2009
|
October
31, 2008
|
October
31, 2009
|
||||||||||
Revenues
|
$ | - | $ | - | $ | - | ||||||
Expenses:
|
||||||||||||
Website
development
|
1,655 | 5,894 | 18,347 | |||||||||
Employee
compensation
|
1,800 | 2,400 | 11,400 | |||||||||
Sales
and marketing
|
- | 212 | 2,834 | |||||||||
Legal
and accounting fees
|
200 | 4,400 | 10,119 | |||||||||
Investor
relations
|
- | 541 | 21,165 | |||||||||
Other
general and administrative
|
100 | 173 | 3,490 | |||||||||
Impairment
|
- | - | 59,400 | |||||||||
Total
expenses
|
3,755 | 13,620 | 126,755 | |||||||||
Operating
(loss)
|
(3,755 | ) | (13,620 | ) | (126,755 | ) | ||||||
Other
income:
|
||||||||||||
Interest
income
|
7 | 67 | 218 | |||||||||
Net
(loss)
|
$ | (3,748 | ) | $ | (13,553 | ) | $ | (126,537 | ) | |||
Net
(loss) per common share:
|
||||||||||||
Basic
and Diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | ||||||
Weighted
average shares outstanding:
|
||||||||||||
Basic
and Diluted
|
2,988,000 | 2,988,000 | ||||||||||
The
accompanying notes are an integral part of these financial
statements.
|
F-3
PHOTOAMIGO, INC.
|
||||||||||||
(A Development Stage
Company)
|
||||||||||||
STATEMENTS OF CASH FLOWS
|
||||||||||||
for
the three months ended October 31, 2009 and 2008,
|
||||||||||||
and
for the period from Inception (April 2, 2008) to October 31,
2009
|
||||||||||||
(unaudited)
|
||||||||||||
Three
Months
|
Three
Months
|
From
Inception
|
||||||||||
ended
|
ended
|
(April
2, 2008) to
|
||||||||||
October
31, 2009
|
October
31, 2008
|
October
31, 2009
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
(loss)
|
$ | (3,748 | ) | $ | (13,553 | ) | $ | (126,537 | ) | |||
Adjustments
to reconcile net (loss) to net cash
|
||||||||||||
used
by operating activities:
|
||||||||||||
Impairment
|
- | - | 59,400 | |||||||||
Stock
issued for services
|
- | - | 20,500 | |||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Increase/(decrease)
in accounts payable
|
- | - | 125 | |||||||||
Increase
in accrued compensation
|
1,800 | - | 3,600 | |||||||||
Increase/(decrease)
in advances from officer
|
100 | (213 | ) | 234 | ||||||||
Increase/(decrease)
in other current liabilities
|
- | (91 | ) | - | ||||||||
Total
adjustments
|
1,900 | (304 | ) | 83,859 | ||||||||
Net
cash (used in) operating activities
|
(1,848 | ) | (13,857 | ) | (42,678 | ) | ||||||
Cash
flows from investing activities:
|
||||||||||||
Purchase
of website assets
|
- | - | (300 | ) | ||||||||
Net
cash (used in) investing activities
|
- | - | (300 | ) | ||||||||
Cash
flows from financing activities:
|
||||||||||||
Cash
proceeds from sale of stock
|
- | - | 61,500 | |||||||||
Net
cash provided by financing activities
|
- | - | 61,500 | |||||||||
Net
increase (decrease) in cash and equivalents
|
(1,848 | ) | (13,857 | ) | 18,522 | |||||||
Cash
and equivalents at beginning of period
|
20,370 | 55,260 | - | |||||||||
Cash
and equivalents at end of period
|
$ | 18,522 | $ | 41,403 | $ | 18,522 | ||||||
Supplemental
Cash Flow Information
|
||||||||||||
Interest
paid
|
$ | - | $ | - | $ | - | ||||||
Income
taxes paid
|
$ | - | $ | - | $ | - | ||||||
Non-cash
investing and financing activities:
|
||||||||||||
Shares
issued in exchange for website domain names,
|
||||||||||||
membership
base and software
|
$ | - | $ | - | $ | 59,100 | ||||||
The
accompanying notes are an integral part of these financial
statements.
|
F-4
PHOTOAMIGO,
INC.
|
||||||||||||||||||||
(A
Development Stage Company)
|
||||||||||||||||||||
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
|
||||||||||||||||||||
for
the period from Inception (April 2, 2008) to October 31,
2009
|
||||||||||||||||||||
(unaudited)
|
||||||||||||||||||||
Additional
|
Total
|
|||||||||||||||||||
Common Stock
|
Paid
- in
|
Accumulated
|
Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
(Deficit)
|
Equity
|
||||||||||||||||
Balance
at Inception, April 2, 2008
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
Shares
issued in exchange for assets,
April
2, 2008
|
2,100,000 | 2,100 | 57,000 | - | 59,100 | |||||||||||||||
Shares
issued for cash at
$0.094 per share, April 2, 2008
|
500,000 | 500 | 46,500 | - | 47,000 | |||||||||||||||
Shares
issued for cash and services at
$0.094 per share, April 2, 2008
|
250,000 | 250 | 23,250 | - | 23,500 | |||||||||||||||
Shares
issued for cash at
|
||||||||||||||||||||
$0.0833
per share, April 28, 2008
|
138,000 | 138 | 11,362 | - | 11,500 | |||||||||||||||
Net
(loss)
|
- | - | - | (86,542 | ) | (86,542 | ) | |||||||||||||
Balance,
July 31, 2008
|
2,988,000 | 2,988 | 138,112 | (86,542 | ) | 54,558 | ||||||||||||||
Net
(loss)
|
- | - | - | (36,247 | ) | (36,247 | ) | |||||||||||||
Balance,
July 31, 2009
|
2,988,000 | 2,988 | 138,112 | (122,789 | ) | 18,311 | ||||||||||||||
Net
(loss)
|
- | - | - | (3,748 | ) | (3,748 | ) | |||||||||||||
Balance,
October 31, 2009
|
2,988,000 | $ | 2,988 | $ | 138,112 | $ | (126,537 | ) | $ | 14,563 | ||||||||||
The
accompanying notes are an integral part of these financial
statements.
|
F-5
PHOTOAMIGO,
INC.
(A
Development Stage Company)
Notes
to Financial Statements
October
31, 2009 and 2008
NOTE
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This
summary of significant accounting policies is presented to assist in
understanding the Company’s financial statements. The financial
statements and notes are the responsibility of the Company’s
management. These accounting policies conform to accounting
principles generally accepted in the United States of America (“US GAAP”) and
have been consistently applied in the preparation of the financial
statements.
Organization
PhotoAmigo,
Inc. (the Company or PhotoAmigo) was organized under the laws of the State of
Nevada on April 2, 2008. The Company has been in the development
stage since its formation and has not yet realized any significant revenues from
its planned operations. It plans to develop photographic sharing and
networking through its website PhotoAmigo.com. The Company has chosen
July 31 as its fiscal year-end.
Development
Stage Company
Based on
the Company’s business plan, it is a development stage company since planned
principal operations have not yet commenced. Accordingly, the
financial statements are presented in conformity with US GAAP that applies to
development stage enterprises. In addition to all the requirements
applicable to an established enterprise, as a development stage enterprise, the
Company discloses the deficit accumulated during the development stage and the
cumulative statements of operations and cash flows from its inception date to
the current balance sheet date.
Use
of Estimates
The
preparation of financial statements in conformity with US GAAP requires the
Company's management to make estimates and assumptions that affect the amounts
of assets and liabilities, the identification and disclosure of impaired assets
and contingent liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Revenue
Recognition
PhotoAmigo
recently commenced operations, is in its development stage, and has not yet
generated any significant revenues from operations. Revenues are
expected to be derived principally from subscriptions to our
website.
PhotoAmigo
will recognize revenue in accordance with SEC Staff Accounting Bulletin No. 104,
“Revenue Recognition”, (“SAB 104”). In all cases, revenue is
recognized only when the price is fixed or determinable, persuasive evidence of
an arrangement exists, the service is performed and collectability of the amount
is reasonably assured. Certain insignificant amounts collected during
the development, testing, and implementation phases are recorded as a recovery
of development expense.
F-6
Deferred
revenue will be recorded when amounts are received from customers for future
subscriptions. Amounts received are recorded as income each month
based on the pro-rata portion of the prepaid subscription that has been
fulfilled.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit
risk consist primarily of temporary cash investments. On October 31, 2009, the
Company did not have a concentration of credit risk since it had no temporary
cash investments in bank accounts in excess of the FDIC insured
amounts.
Stock-based
Compensation
PhotoAmigo
accounts for stock-based compensation in accordance with SFAS 123(R), “Share
Based Payment,” requiring the Company to record compensation costs determined in
accordance with the fair value based method prescribed in SFAS
123(R). PhotoAmigo has no stock option plan and has not made any
option grants since inception, and, accordingly, has not recognized any
stock-based compensation expense.
Per
Share Amounts
ASC 260,
"Earnings Per Share," provides for the calculation of "Basic" and "Diluted"
earnings per share. Basic earnings per share includes no dilution and
is computed by dividing net income (or loss) by the weighted-average number of
shares outstanding during the period. Diluted earnings per share reflect the
potential dilution of securities that could share in the earnings of the
Company, assuming the issuance of an equivalent number of common shares pursuant
to options, warrants, or convertible debt arrangements. Diluted
earnings per share is not shown for periods in which the Company incurs a loss
because it would be anti-dilutive. Similarly, potential common stock
equivalents are not included in the calculation if the effect would be
anti-dilutive.
Recent
Pronouncements
The
Company evaluates the pronouncements of various authoritative accounting
organizations, primarily the Financial Accounting Standards Board (“FASB”), the
Securities and Exchange Commission (“SEC”), and the Emerging Issues Task Force
(“EITF”), to determine the impact of new pronouncements on US GAAP and the
impact on the Company.
Recently Adopted Accounting
Standards. The Company has adopted the following new
accounting standards during its current fiscal year:
Accounting Standards Codification
- In June, 2009, FASB established the FASB Accounting Standards
Codification (“ASC”) as the single source of authoritative GAAP. The
ASC is a new structure which took existing accounting pronouncements and
organized them by accounting topic. Relevant authoritative literature issued by
the Securities and Exchange Commission (“SEC”) and select SEC staff
interpretations and administrative literature was also included in the ASC. All
other accounting guidance not included in the ASC is non-authoritative. The ASC
IS effective for interim and annual reporting periods ending after September 15,
2009. The adoption of the ASC did not have an impact on the Company’s financial
position, results of operations or cash flows.
F-7
Accounting for the Useful Life of
Intangible Assets - In April 2008, the ASC guidance for Goodwill and
Other Intangibles was updated to amend the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset. The intent of this update is to improve the
consistency between the useful life of a recognized intangible asset and the
period of expected cash flows used to measure the fair value of the asset under
guidance for business combinations. The updated guidance was effective for the
Company’s fiscal year beginning August 1, 2009 and will be applied
prospectively to intangible assets acquired after the effective date. The
adoption had no impact on the Company’s financial position, results of
operations or cash flows.
Derivative Instruments - In
March 2008, the ASC guidance for derivatives and hedging was updated for
enhanced disclosures about how and why an entity uses derivative instruments,
how derivative instruments and the related hedged items are accounted for, and
how derivative instruments and the related hedged items affect an entity’s
financial position, financial performance and cash flows. The Company adopted
the updated guidance on August 1, 2009. The adoption had no impact on the
Company’s financial position, results of operations or cash flows.
Business Combinations - In
December 2007, the ASC guidance for business combinations was updated to
provide new guidance for recognizing and measuring identifiable assets and
goodwill acquired, liabilities assumed, and any non-controlling interest in the
acquiree. The updated guidance also provides disclosure requirements to enable
users of the financial statements to evaluate the nature and financial effects
of the business combination. The Company adopted the updated guidance on August
1, 2009 and it will be applied to any future acquisitions.
Non-controlling Interests –
In December 2007, the ASC guidance for Non-controlling Interests was
updated to establish accounting and reporting standards pertaining to:
(i) ownership interests in subsidiaries held by parties other than the
parent (“non-controlling interest”), (ii) the amount of net income
attributable to the parent and to the non-controlling interest,
(iii) changes in a parent’s ownership interest, and (iv) the valuation
of any retained non-controlling equity investment when a subsidiary is
deconsolidated.. If a subsidiary is deconsolidated, any retained
non-controlling equity investment in the former subsidiary is measured at fair
value and a gain or loss is recognized in net income based on such fair
value. For presentation and disclosure purposes, the guidance
requires non-controlling interests (formerly referred to as minority interest)
to be classified as a separate component of equity. The Company adopted the
updated guidance on October 1, 2009. The adoption had no impact
on the Company’s financial position, results of operations or cash
flows.
F-8
Recent Accounting
Pronouncements. There were various accounting standards and
interpretations recently issued which have not yet been adopted,
including:
Fair Value Accounting - In
August 2009, the ASC guidance for fair value measurements and disclosure
was updated to further define fair value of liabilities. This update provides
clarification for circumstances in which: (i) a quoted price in an active
market for the identical liability is not available, (ii) the liability has a
restriction that prevents its transfer, and (iii) the identical liability
is traded as an asset in an active market in which no adjustments to the quoted
price of an asset are required. The updated guidance is effective for the
Company’s interim reporting period beginning November 1, 2009. The Company
is evaluating the potential impact of adopting this guidance on the Company’s
financial position, results of operations and cash flows.
There
were various other recently issued accounting standards and interpretations that
are not expected to a have a material impact on the Company's financial
position, operations or cash flows.
NOTE
2. GOING CONCERN
The
accompanying financial statements were prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of obligations in
the normal course of business. However, PhotoAmigo’s operations are
in the development stage and it has incurred losses since inception, resulting
in an accumulated deficit of $126,537 as of October 31, 2009. These
conditions raise substantial doubt about the ability of PhotoAmigo to continue
as a going concern.
In view
of these matters, continuation as a going concern is dependent upon several
factors, including the availability of debt or equity funding upon terms and
conditions acceptable to PhotoAmigo, and ultimately achieving profitable
operations. Management believes that PhotoAmigo’s business plan
provides it with an opportunity to continue as a going
concern. However, management cannot provide assurance that PhotoAmigo
will meet its objectives and be able to continue in operation.
The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
PhotoAmigo to continue as a going concern.
NOTE
3. STOCKHOLDERS' EQUITY
Preferred
Stock The Company has authorized 5,000,000 shares
of preferred stock with a par value of $0.001. These shares may be
issued in series with such rights and preferences as may be determined by the
Board of Directors. Since inception, the Company has not issued any
preferred shares.
Common Stock
The Company has authorized 100,000,000 shares of $0.001
par value common stock.
Issued and
Outstanding The total issued and outstanding
common stock at October 31, 2009 is 2,988,000 common shares, as
follows:
|
i.
|
On
April 2, 2008, PhotoAmigo issued 2,100,000 common shares to a founder in
exchange for assets, including the website and four domain names. The
transaction was recorded at $59,100 representing the founder’s basis in
the exchanged assets.
|
|
ii.
|
On
April 2, 2008, PhotoAmigo issued 500,000 common shares to founders for
cash proceeds of $47,000, or $0.094 per
share.
|
|
iii.
|
On
April 2, 2008, PhotoAmigo issued 250,000 common shares to a founder for
$3,000 cash and for services valued at $20,500, or $0.094 per
share.
|
|
iv.
|
On
April 28, 2008, PhotoAmigo completed a private placement of 138,000 common
shares for cash proceeds of $11,500, or $0.0833 per
share.
|
F-9
NOTE
4. INCOME TAXES
The
Company records deferred taxes to reflect the recognition of deferred tax assets
and liabilities for temporary differences between the tax bases of assets and
liabilities and the amounts at which they are carried in the financial
statements, the effect of net operating losses, based upon the enacted tax rates
in effect for the year in which the differences are expected to
reverse. A valuation allowance is established when necessary to
reduce deferred tax assets to the amount expected to be realized.
PhotoAmigo’s
deferred tax assets, valuation allowance, and change in valuation allowance are
as follows:
Period Ending
|
Estimated
NOL carry-forward
|
NOL
expires
|
Estimated
tax benefit from NOL
|
Valuation
allowance
|
Change
in valuation allowance
|
Net
tax asset
|
July
31, 2008
|
$86,500
|
2028
|
$
17,300
|
$
(17,300)
|
$
(17,300)
|
$ -
|
July
31, 2009
|
$36,200
|
2029
|
$
7,200
|
$
(7,200)
|
$
(7,200)
|
$ -
|
October
31, 2009
|
$3,750
|
2030
|
$
750
|
$
(750)
|
$
(750)
|
$ -
|
Income
taxes at the statutory rate are reconciled to reported income tax expense
(benefit) as follows:
2009
|
2008
|
|||||||
Income
tax benefit at statutory rate
|
(20%) | (20%) | ||||||
Deferred
income tax valuation allowance
|
20% | 20% | ||||||
Reported
tax rate
|
0% | 0% |
At this
time, the Company is unable to determine if it will be able to benefit from its
deferred tax asset. There are limitations on the utilization of net
operating loss carryforwards, including a requirement that losses be offset
against future taxable income, if any. In addition, there are
limitations imposed by certain transactions which are deemed to be ownership
changes. Accordingly, a valuation allowance has been established for
the entire deferred tax asset.
NOTE
5. RELATED PARTY TRANSACTIONS
From time
to time, PhotoAmigo receives funds from its sole executive officer to cover
temporary working capital requirements. During the three months ended
October 31, 2009, PhotoAmigo received cash advances aggregating
$100. As of October 31, 2009 the outstanding balance of advances from
officer was $234.
PhotoAmigo
accrues consulting fees of $600 per month to its sole executive officer as
compensation for his services. As of October 31, 2009, amounts accrued and
unpaid were $3,600.
Office
space is provided to PhotoAmigo at no additional cost by the sole executive
officer. No provision for these costs has been included in these
financial statements as the amounts are not material.
NOTE
6. SUBSEQUENT EVENTS
The
Company evaluated all events subsequent to the balance sheet date of July 31,
2009 through December 10, 2009, the date that these financial statements were
available for issuance, and has determined that there are no subsequent events
that require disclosure.
F-10
RONALD R.
CHADWICK, P.C.
Certified
Public Accountant
2851
South Parker Road, Suite 720
Aurora,
Colorado 80014
Telephone
(303)306-1967
Fax
(303)306-1944
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of
Directors
PhotoAmigo,
Inc.
Santa
Barbara, California
I have
audited the accompanying balance sheets of PhotoAmigo, Inc. (a development stage
company) as of July 31, 2009 and 2008, and the related statements of operations,
stockholders’ equity and cash flows for the year ended July 31, 2009, the period
from April 2, 2008 (inception) through July 31, 2008, and for the period from
April 2, 2008 (inception) through July 31, 2009. These financial statements are
the responsibility of the Company's management. My responsibility is to express
an opinion on these financial statements based on my audit.
I
conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the 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. I believe that my audit provides a
reasonable basis for my opinion.
In my
opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of PhotoAmigo, Inc.
as of July 31, 2009 and 2008, and the results of its operations and its cash
flows for the year ended July 31, 2009, the period from April 2, 2008
(inception) through July 31, 2008, and for the period from April 2, 2008
(inception) through July 31, 2009 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 discussed in Note 2 to the financial
statements the Company has suffered losses from operations that raise
substantial doubt about its 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 that might result from the outcome of
this uncertainty.
Aurora,
Colorado
November
17,
2009
/s/ Ronald R. Chadwick,
P.C.
RONALD R. CHADWICK,
P.C.
F-11
PHOTOAMIGO, INC.
|
||||||||
(A Development Stage
Company)
|
||||||||
BALANCE SHEETS
|
||||||||
July
31, 2009
|
July
31, 2008
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 20,370 | $ | 55,260 | ||||
Total
current assets
|
$ | 20,370 | $ | 55,260 | ||||
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 125 | $ | 230 | ||||
Accrued
compensation
|
1,800 | - | ||||||
Advances
from officer
|
134 | 347 | ||||||
Other
current liabilities
|
- | 125 | ||||||
Total
current liabilities
|
2,059 | 702 | ||||||
Commitments
and contingencies (Notes 2, 4 and 5)
|
||||||||
Stockholders'
equity:
|
||||||||
Preferred
stock - $0.001 par value, 5,000,000 shares
authorized:
|
||||||||
No
shares issued or outstanding
|
- | - | ||||||
Common
stock - $0.001 par value, 100,000,000 shares authorized:
|
||||||||
2,988,000
shares issued and outstanding
|
2,988 | 2,988 | ||||||
Additional
paid-in capital
|
138,112 | 138,112 | ||||||
(Deficit)
accumulated during the development stage
|
(122,789 | ) | (86,542 | ) | ||||
Total
stockholders' equity
|
18,311 | 54,558 | ||||||
Total
liabilities and stockholders' equity
|
$ | 20,370 | $ | 55,260 | ||||
The
accompanying notes are an integral part of these financial
statements.
|
F-12
PHOTOAMIGO, INC.
|
||||||||||||
(A Development Stage
Company)
|
||||||||||||
STATEMENTS OF OPERATIONS
|
||||||||||||
for
the year ended July 31, 2009,
|
||||||||||||
and
for the period from Inception (April 2, 2008) to July 31,
2008,
|
||||||||||||
and
for the period from Inception (April 2, 2008) to July 31,
2009
|
||||||||||||
Year
|
From
Inception
|
From
Inception
|
||||||||||
ended
|
(April
2, 2008) to
|
(April
2, 2008) to
|
||||||||||
July
31, 2009
|
July
31, 2008
|
July
31, 2009
|
||||||||||
Revenues
|
$ | - | $ | - | $ | - | ||||||
Expenses:
|
||||||||||||
Website
development
|
14,523 | 2,169 | 16,692 | |||||||||
Employee
compensation
|
7,200 | 2,400 | 9,600 | |||||||||
Sales
and marketing
|
2,331 | 503 | 2,834 | |||||||||
Legal
and accounting fees
|
9,253 | 666 | 9,919 | |||||||||
Investor
relations
|
541 | 20,624 | 21,165 | |||||||||
Other
general and administrative
|
2,526 | 864 | 3,390 | |||||||||
Impairment
|
- | 59,400 | 59,400 | |||||||||
Total
expenses
|
36,374 | 86,626 | 123,000 | |||||||||
Operating
(loss)
|
(36,374 | ) | (86,626 | ) | (123,000 | ) | ||||||
Other
income:
|
||||||||||||
Interest
income
|
127 | 84 | 211 | |||||||||
Net
(loss)
|
$ | (36,247 | ) | $ | (86,542 | ) | $ | (122,789 | ) | |||
Net
(loss) per common share:
|
||||||||||||
Basic
and Diluted
|
$ | (0.01 | ) | $ | (0.03 | ) | ||||||
Weighted
average shares outstanding:
|
||||||||||||
Basic
and Diluted
|
2,988,000 | 2,958,100 | ||||||||||
The
accompanying notes are an integral part of these financial
statements.
|
F-13
PHOTOAMIGO, INC.
|
||||||||||||
(A Development Stage Company)
|
||||||||||||
STATEMENTS OF CASH FLOW
|
||||||||||||
for
the year ended July 31, 2009,
|
||||||||||||
and
for the period from Inception (April 2, 2008) to July 31,
2008,
|
||||||||||||
and
for the period from Inception (April 2, 2008) to July 31,
2009
|
||||||||||||
Year
|
From
Inception
|
From
Inception
|
||||||||||
ended
|
(April
2, 2008) to
|
(April
2, 2008) to
|
||||||||||
July
31, 2009
|
July
31, 2008
|
July
31, 2009
|
||||||||||
Cash
flows from operating activities:
|
||||||||||||
Net
(loss)
|
$ | (36,247 | ) | $ | (86,542 | ) | $ | (122,789 | ) | |||
Adjustments
to reconcile net (loss) to net cash
|
||||||||||||
used
by operating activities:
|
||||||||||||
Impairment
|
59,400 | 59,400 | ||||||||||
Stock
issued for services
|
- | 20,500 | 20,500 | |||||||||
Changes
in operating assets and liabilities:
|
||||||||||||
Increase/(decrease)
in accounts payable
|
(105 | ) | 230 | 125 | ||||||||
Increase
in accrued compensation
|
1,800 | - | 1,800 | |||||||||
Increase/(decrease)
in advances from officer
|
(213 | ) | 347 | 134 | ||||||||
Increase/(decrease)
in other current liabilities
|
(125 | ) | 125 | - | ||||||||
Total
adjustments
|
1,357 | 80,602 | 81,959 | |||||||||
Net
cash (used in) operating activities
|
(34,890 | ) | (5,940 | ) | (40,830 | ) | ||||||
Cash
flows from investing activities:
|
||||||||||||
Purchase
of website assets
|
- | (300 | ) | (300 | ) | |||||||
Net
cash (used in) investing activities
|
- | (300 | ) | (300 | ) | |||||||
Cash
flows from financing activities:
|
||||||||||||
Cash
proceeds from sale of stock
|
- | 61,500 | 61,500 | |||||||||
Net
cash provided by financing activities
|
- | 61,500 | 61,500 | |||||||||
Net
increase (decrease) in cash and equivalents
|
(34,890 | ) | 55,260 | 20,370 | ||||||||
Cash
and equivalents at beginning of period
|
55,260 | - | - | |||||||||
Cash
and equivalents at end of period
|
$ | 20,370 | $ | 55,260 | $ | 20,370 | ||||||
Supplemental
Cash Flow Information
|
||||||||||||
Interest
paid
|
$ | - | $ | - | $ | - | ||||||
Income
taxes paid
|
$ | - | $ | - | $ | - | ||||||
Non-cash
investing and financing activities:
|
||||||||||||
Shares
issued in exchange for website domain names,
|
||||||||||||
membership
base and software
|
$ | - | $ | 59,100 | $ | 59,100 | ||||||
The
accompanying notes are an integral part of these financial
statements.
|
F-14
PHOTOAMIGO,
INC.
|
||||||||||||||||||||
(A
Development Stage Company)
|
||||||||||||||||||||
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
|
||||||||||||||||||||
for
the period from Inception (April 2, 2008) to July 31, 2009
|
||||||||||||||||||||
Additional
|
Total
|
|||||||||||||||||||
Common Stock
|
Paid
- in
|
Accumulated
|
Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
(Deficit)
|
Equity
|
||||||||||||||||
Balance
at Inception, April 2, 2008
|
- | $ | - | $ | - | $ | - | $ | - | |||||||||||
Shares
issued in exchange for assets,
April
2, 2008
|
2,100,000 | 2,100 | 57,000 | - | 59,100 | |||||||||||||||
Shares
issued for cash at
|
||||||||||||||||||||
$0.094
per share, April 2, 2008
|
500,000 | 500 | 46,500 | - | 47,000 | |||||||||||||||
Shares
issued for cash and services at
|
||||||||||||||||||||
$0.094
per share, April 2, 2008
|
250,000 | 250 | 23,250 | - | 23,500 | |||||||||||||||
Shares
issued for cash at
|
||||||||||||||||||||
$0.0833
per share, April 28, 2008
|
138,000 | 138 | 11,362 | - | 11,500 | |||||||||||||||
Net
(loss)
|
- | - | - | (86,542 | ) | (86,542 | ) | |||||||||||||
Balance,
July 31, 2008
|
2,988,000 | 2,988 | 138,112 | - | 54,558 | |||||||||||||||
Net
(loss)
|
- | - | - | (36,247 | ) | (36,247 | ) | |||||||||||||
Balance,
July 31, 2009
|
2,988,000 | $ | 2,988 | $ | 138,112 | $ | (122,789 | ) | $ | 18,311 | ||||||||||
The
accompanying notes are an integral part of these financial
statements.
|
F-15
PHOTOAMIGO,
INC.
(A
Development Stage Company)
Notes
to Financial Statements
July
31, 2009 and 2008
NOTE
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This
summary of significant accounting policies is presented to assist in
understanding the Company’s financial statements. The financial
statements and notes are the responsibility of the Company’s
management. These accounting policies conform to accounting
principles generally accepted in the United States of America (“US GAAP”) and
have been consistently applied in the preparation of the financial
statements.
Organization
PhotoAmigo,
Inc. (the Company or PhotoAmigo) was organized under the laws of the State of
Nevada on April 2, 2008. The Company has been in the development
stage since its formation and has not yet realized any significant revenues from
its planned operations. It plans to develop photographic sharing and
networking through its website PhotoAmigo.com. The Company has chosen
July 31 as its fiscal year-end.
Development
Stage Company
Based on
the Company’s business plan, it is a development stage company since planned
principal operations have not yet commenced. Accordingly, the
financial statements are presented in conformity with US GAAP that applies to
development stage enterprises. In addition to all the requirements
applicable to an established enterprise, as a development stage enterprise, the
Company discloses the deficit accumulated during the development stage and the
cumulative statements of operations and cash flows from its inception date to
the current balance sheet date.
Use
of Estimates
The
preparation of financial statements in conformity with US GAAP requires the
Company's management to make estimates and assumptions that affect the amounts
of assets and liabilities, the identification and disclosure of impaired assets
and contingent liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Revenue
Recognition
PhotoAmigo
recently commenced operations, is in its development stage, and has not yet
generated any significant revenues from operations. Revenues are
expected to be derived principally from subscriptions to our
website.
PhotoAmigo
will recognize revenue in accordance with SEC Staff Accounting Bulletin No. 104,
“Revenue Recognition”, (“SAB 104”). In all cases, revenue is
recognized only when the price is fixed or determinable, persuasive evidence of
an arrangement exists, the service is performed and collectability of the amount
is reasonably assured. Certain insignificant amounts collected during
the development, testing, and implementation phases are recorded as a recovery
of development expense.
F-16
Deferred
revenue will be recorded when amounts are received from customers for future
subscriptions. Amounts received are recorded as income each month
based on the pro-rata portion of the prepaid subscription that has been
fulfilled.
Cash
and Cash Equivalents
For
purposes of balance sheet classification and the statements of cash flows, the
Company considers cash in banks, deposits in transit, and all highly liquid
investments purchased with an original maturity of three months or less to be
cash equivalents.
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentrations of credit
risk consist primarily of temporary cash investments. On July 31, 2009, the
Company did not have a concentration of credit risk since it had no temporary
cash investments in bank accounts in excess of the FDIC insured
amounts.
Capital
Expenditures
Expenditures
for capital assets are recorded at historical cost. Additions,
improvements and major renewals are capitalized, while maintenance, repairs and
minor renewals are expensed as incurred. When assets are retired or disposed of,
the assets and related accumulated depreciation and amortization are removed
from our general ledger, and the resulting gain or loss is reflected in the
statement of operations. Depreciation of capital assets is provided over their
estimated useful lives on a straight line basis
Internal
Use Software and Website Development Costs
Software
development costs, including the costs to develop our website, are recorded
based on the guidance contained in Statement of Position No. 98-1, “Accounting
for Costs of Computer Software Developed or Obtained for Internal Use”, and the
additional guidance provided by EITF Issue No. 00-2, “Accounting for Website
Development Costs”. We evaluate all costs incurred to determine
whether they should be either expensed or capitalized.
Impairment
of Long Lived Assets
PhotoAmigo
periodically reviews the carrying amount of long lived assets to determine
whether current events or changes in circumstances warrant adjustments to such
carrying amounts. If an impairment adjustment is deemed necessary,
such loss is measured by the amount that the carrying value of such assets
exceeds their fair value. Considerable management judgment is
necessary to estimate the fair value of assets; accordingly, actual results
could vary significantly from such estimates. Assets to be disposed
of are carried at the lower of their financial statement carrying amount or fair
value less costs to sell.
Income
Taxes
Deferred
income taxes are reported for timing differences between items of income or
expense reported in the financial statements and those reported for income tax
purposes in accordance with Statement of Financial Accounting Standards (“SFAS”)
No. 109, “Accounting for Income Taxes”, which requires the use of the
asset/liability method of accounting for income taxes. Deferred
income taxes and tax benefits are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases, and for tax loss
and credit carry-forwards. 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. PhotoAmigo provides for deferred taxes for the estimated
future tax effects attributable to temporary differences and carry-forwards when
realization is more likely than not.
F-17
Stock-based
Compensation
PhotoAmigo
accounts for stock-based compensation in accordance with SFAS 123(R), “Share
Based Payment,” requiring the Company to record compensation costs determined in
accordance with the fair value based method prescribed in SFAS
123(R). PhotoAmigo has no stock option plan and has not made any
option grants since inception, and, accordingly, has not recognized any
stock-based compensation expense.
Per
Share Amounts
SFAS 128,
"Earnings Per Share," provides for the calculation of "Basic" and "Diluted"
earnings per share. Basic earnings per share includes no dilution and
is computed by dividing net income (or loss) by the weighted-average number of
shares outstanding during the period. Diluted earnings per share reflect the
potential dilution of securities that could share in the earnings of the
Company, assuming the issuance of an equivalent number of common shares pursuant
to options, warrants, or convertible debt arrangements. Diluted
earnings per share is not shown for periods in which the Company incurs a loss
because it would be anti-dilutive. Similarly, potential common stock
equivalents are not included in the calculation if the effect would be
anti-dilutive.
Fair
Value of Financial Instruments
Fair
value estimates discussed herein are based upon certain market assumptions and
pertinent information available to management as of July 31,
2009. The respective carrying value of certain on-balance-sheet
financial instruments approximated their fair values. These financial
instruments include cash, due from shareholders, and accounts
payable. Fair values are assumed to approximate carrying values for
these financial instruments because they are short term in nature, or are
receivable or payable on demand.
Segment
Information
The
Company follows SFAS 131, “Disclosure about Segments of an Enterprise and
Related Information”. Certain information is disclosed, per SFAS 131,
based on the way management organizes financial information for making operating
decisions and assessing performance. The Company currently operates
in one business segment and will evaluate additional segment disclosure
requirements as it expands operations.
Reclassifications
Certain
amounts previously presented for prior periods have been reclassified to conform
with the current presentation. The reclassifications had no effect on
net loss, total assets, or total shareholders’ equity.
Recent
Pronouncements
The
Company evaluates the pronouncements of various authoritative accounting
organizations, primarily the Financial Accounting Standards Board (“FASB”), the
Securities and Exchange Commission (“SEC”), and the Emerging Issues Task Force
(“EITF”), to determine the impact of new pronouncements on US GAAP and the
impact on the Company.
F-18
In
December 2007 the FASB issued SFAS No. 141 (revised 2007), “Business
Combinations,” (“SFAS 141R”). This statement replaces
FAS No. 141, which was effective July 1, 2001. The
statement provides guidance for how the acquirer recognizes and measures the
identifiable assets acquired, liabilities assumed and any non-controlling
interest in the acquiree. SFAS 141R provides for how the acquirer
recognizes and measures the goodwill acquired in the business combination or a
gain from a bargain purchase. The statement provides for disclosures
to enable users to be able to evaluate the nature and financial effects of the
business combination. The provisions of SFAS 141R are effective
for the first annual reporting period beginning on or after December 15, 2008,
and must be applied prospectively to business combinations completed after that
date. Early adoption is prohibited. Management is
currently evaluating the impact of adopting this statement.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests
in Consolidated Financial Statements,” (“SFAS 160”), which becomes
effective for annual periods beginning after December 15, 2008. This
standard establishes accounting and reporting standards for ownership interests
in subsidiaries held by parties other than the parent, the amount of
consolidated net income attributable to the parent and to the noncontrolling
interest, changes in a parent’s ownership interest and the valuation of retained
non-controlling equity investments when a subsidiary is
deconsolidated. The Statement also establishes reporting requirements
that provide sufficient disclosures that clearly identify and distinguish
between the interests of the parent and the interests of the non-controlling
owners. Management is currently evaluating the impact of adopting
this statement.
In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities – an Amendment of FASB Statement No. 133,” (“SFAS 161”),
which becomes effective for periods beginning after November 15,
2008. This standard changes the disclosure requirements for
derivative instruments and hedging activities. Entities are required
to provide enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under SFAS 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity's financial
position, financial performance, and cash flows. Management is
currently evaluating the impact of adopting this statement.
In May
2009, the FASB issued SFAS No. 165, Subsequent Events (“SFAS 165”),
which provides general standards of accounting for and disclosure of events that
occur after the balance sheet date but before financial statements are issued or
are available to be issued. This topic was previously addressed only
in auditing literature. SFAS 165 is similar to the existing auditing
guidance with some exceptions that are not intended to result in significant
changes to practice. Entities are now required to disclose the date through
which subsequent events have been evaluated, with such date being the date the
financial statements were issued or available to be
issued. SFAS 165 was adopted for the annual reporting periods
ended July 31, 2009, and provided
the expanded disclosure contained in the Subsequent Events
footnote. The adoption had no other impact on the Company’s financial
position, results of operations or cash flows.
In June
2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles – a
replacement of FASB Statement No. 162” (“SFAS 168”). SFAS 168 will become
the source of authoritative US GAAP to be applied by nongovernmental entities.
Rules and interpretive releases of the SEC under authority of federal securities
laws are also sources of authoritative GAAP for public companies. The
codification will supersede all non-SEC accounting and reporting standards. All
other non-grandfathered non-SEC accounting literature not included in the
codification will become non-authoritative. The codification is
effective for interim and annual periods ending on or after September 15,
2009. Management is currently evaluating the impact of adopting this
statement.
F-19
There
were various other recently issued accounting standards and interpretations that
are not expected to a have a material impact on the Company's financial
position, operations or cash flows.
NOTE
2. GOING CONCERN
The
accompanying financial statements were prepared on a going concern basis, which
contemplates the realization of assets and the satisfaction of obligations in
the normal course of business. However, PhotoAmigo’s operations are
in the development stage and it has incurred losses since inception, resulting
in an accumulated deficit of $122,789 as of July 31, 2009. These
conditions raise substantial doubt about the ability of PhotoAmigo to continue
as a going concern.
In view
of these matters, continuation as a going concern is dependent upon several
factors, including the availability of debt or equity funding upon terms and
conditions acceptable to PhotoAmigo, and ultimately achieving profitable
operations. Management believes that PhotoAmigo’s business plan
provides it with an opportunity to continue as a going
concern. However, management cannot provide assurance that PhotoAmigo
will meet its objectives and be able to continue in operation.
The
financial statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible inability of
PhotoAmigo to continue as a going concern.
NOTE
3. WEBSITE ASSETS AND IMPAIRMENT THEREOF
At
inception, we capitalized costs of $59,100 representing our founder’s basis in
the website software, domain names, and membership base. During the
period from inception (April 2, 2008) to July 31, 2008, the Company capitalized
additional costs of $300 related to the website assets. Effective
July 31, 2008, the carrying value of the website assets was evaluated and a
determination was made that the entire cost basis was
impaired. Accordingly, the Company recorded an impairment expense of
$59,400 for the period ended July 31, 2008.
NOTE
4. STOCKHOLDERS' EQUITY
Preferred
Stock The Company has authorized 5,000,000 shares
of preferred stock with a par value of $0.001. These shares may be
issued in series with such rights and preferences as may be determined by the
Board of Directors. Since inception, the Company has not issued any
preferred shares.
Common Stock
The Company has authorized 100,000,000 shares of $0.001
par value common stock.
Issued and
Outstanding The total issued and outstanding
common stock at July 31, 2009 is 2,988,000
common shares, as follows:
|
i.
|
On
April 2, 2008, PhotoAmigo issued 2,100,000 common shares to a founder in
exchange for assets, including the website and four domain names. The
transaction was recorded at $59,100 representing the founder’s basis in
the exchanged assets.
|
|
ii.
|
On
April 2, 2008, PhotoAmigo issued 500,000 common shares to founders for
cash proceeds of $47,000, or $0.094 per
share.
|
F-20
|
iii.
|
On
April 2, 2008, PhotoAmigo issued 250,000 common shares to a founder for
$3,000 cash and for services valued at $20,500, or $0.094 per
share.
|
|
iv.
|
On
April 28, 2008, PhotoAmigo completed a private placement of 138,000 common
shares for cash proceeds of $11,500, or $0.0833 per
share.
|
|
v. On
January 10, 2010, PhotoAmigo completed a private placement of 24,000
common shares for cash proceeds of $400 or $0.0167 per
share.
|
NOTE
5. INCOME TAXES
The
Company records deferred taxes in accordance with Statement of Financial
Accounting Standards 109 “Accounting for Income Taxes” (SFAS
109). The statement requires recognition of deferred tax assets and
liabilities for temporary differences between the tax bases of assets and
liabilities and the amounts at which they are carried in the financial
statements, the effect of net operating losses, based upon the enacted tax rates
in effect for the year in which the differences are expected to
reverse. A valuation allowance is established when necessary to
reduce deferred tax assets to the amount expected to be realized.
PhotoAmigo’s
deferred tax assets, valuation allowance, and change in valuation allowance are
as follows:
Period Ending
|
Estimated
NOL carry-forward
|
NOL
expires
|
Estimated
tax benefit from NOL
|
Valuation
allowance
|
Change
in valuation allowance
|
Net
tax asset
|
July
31, 2008
|
$86,500
|
2028
|
$
17,300
|
$
(17,300)
|
$
(17,300)
|
$ -
|
July
31, 2009
|
$36,200
|
2029
|
$
7,200
|
$
7,200)
|
$
(7,200)
|
$ -
|
Income
taxes at the statutory rate are reconciled to reported income tax expense
(benefit) as follows:
2009
|
2008
|
|||||||
Income
tax benefit at statutory rate
|
(20%) | (20%) | ||||||
Deferred
income tax valuation allowance
|
20% | 20% | ||||||
Reported
tax rate
|
0% | 0% |
At this
time, the Company is unable to determine if it will be able to benefit from its
deferred tax asset. There are limitations on the utilization of net
operating loss carryforwards, including a requirement that losses be offset
against future taxable income, if any. In addition, there are
limitations imposed by certain transactions which are deemed to be ownership
changes. Accordingly, a valuation allowance has been established for
the entire deferred tax asset.
NOTE
6. RELATED PARTY TRANSACTIONS
From time
to time, PhotoAmigo receives funds from its sole executive officer to cover
temporary working capital requirements. During the year ended July
31, 2009, PhotoAmigo received cash advances aggregating $571 and repaid cash
advances of $358. As of July 31, 2009 the outstanding balance of
advances from officer was $134.
PhotoAmigo
accrues consulting fees of $600 per month to its sole executive officer as
compensation for his services. As of July 31, 2009, amounts accrued and unpaid
were $1,800.
Office
space is provided to PhotoAmigo at no additional cost by the sole executive
officer. No provision for these costs has been included in these
financial statements as the amounts are not material.
NOTE
7. SUBSEQUENT EVENTS
The
Company evaluated all events subsequent to the balance sheet date of July 31,
2009 through the date that these financial statements were available for
issuance and has determined that there are no subsequent events that require
disclosure.
F-21
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF
ISSUANCE AND DISTRIBUTION (1)
SEC
Registration Fees
|
$
|
41.43
|
||
Blue
Sky Filing Fees
|
$
|
1,000.00
|
||
Blue
Sky Legal Fees
|
$
|
1,000.00
|
||
Printing
Expenses
|
$
|
2,000.00
|
||
Legal
Fees
|
$
|
5,000.00
|
||
Accounting
Fees
|
$
|
3,000.00
|
||
Transfer
Agent Fees
|
$
|
1,000.00
|
||
Miscellaneous
Expenses
|
$
|
1,000.00
|
||
Total
|
$
|
14,041.43
|
(2)
|
(1)
|
All
expenses, except the SEC registration fee, are
estimated.
|
(2)
|
All
expenses of the offering (excluding brokerage commissions) will be borne
by the
Registrant and not the selling
stockholders.
|
ITEM
14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Articles
of Incorporation provide that liability of directors to us for monetary damages
is eliminated to the full extent provided by Nevada law. Under Nevada
law, a director is not personally liable to us or our stockholders for monetary
damages for breach of fiduciary duty as a director except for liability
(i) for any breach of the director’s duty of loyalty to us or our
stockholders; (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law; (iii) for authorizing
the unlawful payment of a dividend or other distribution on our capital stock or
the unlawful purchases of our capital stock; (iv) a violation of Nevada law with
respect to conflicts of interest by directors; or (v) for any transaction
from which the director derived any improper personal benefit.
The effect of
this provision in our Articles of Incorporation is to eliminate our rights and
our stockholders’ rights (through stockholders’ derivative suits) to recover
monetary damages from a director for breach of the fiduciary duty of care as a
director (including any breach resulting from negligent or grossly negligent
behavior) except in the situations described in clauses (i) through
(v) above. This provision does not limit or eliminate our rights
or the rights of our security holders to seek non-monetary relief, such as an
injunction or rescission, in the event of a breach of a director’s duty of care
or any liability for violation of the federal securities laws.
Insofar as
indemnification for liabilities arising under 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 SEC
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
II-1
ITEM
15. RECENT SALES OF UNREGISTERED SECURITIES
In
the last three years, we have issued the following unregistered
securities:
(i) In
April 2008 we issued 2,100,000 shares to Robert Heckes in exchange for
contribution of assets.
(ii) In
April 2008 we issued 250,000 shares to Iliff Street Capital, LLC (Jennifer
Frenkel, manager) for $.012 per share and in exchange for services
rendered.
(iii) In
April 2008 we issued 250,000 shares to Gary A. Agron for $.094 per
share.
(iv) In
April 2008 we issued 125,000 shares each to Underwood Family Partners, Ltd. (L.
Michael Underwood, general partner) and Battersea Capital, Inc. (Matt Lepo,
President) for $.094 per share.
(v) In
April 2008, we issued the following shares of common stock at $.083 per share to
the following entities and individuals:
Name
|
Number
of Shares Issued
|
|||
Anthony
Szeluga
|
6,000 | |||
Bradley
C. Underwood
|
6,000 | |||
Catherine
Lepo
|
6,000 | |||
Cheryl
Koch
|
6,000 | |||
Christopher
D. Jennings
|
6,000 | |||
Crotalus,
Inc.
|
6,000 | |||
Deanie
Underwood
|
6,000 | |||
Jason
Koch
|
6,000 | |||
Jennifer
M. Underwood
|
6,000 | |||
John
M. Dalfonsi
|
6,000 | |||
John
Lepo
|
6,000 | |||
John
Lepo, Jr.
|
6,000 | |||
Keith
Koch
|
6,000 |
II-2
L.
Michael Underwood
|
6,000 | |||
Michael
L. Lepo
|
6,000 | |||
Michael
Koch
|
6,000 | |||
Pat
A. Szeluga
|
6,000 | |||
Sherman
Avenue Trust
|
6,000 | |||
Sistrurus,
LLC
|
6,000 | |||
Stephen
Koch
|
6,000 | |||
Sue
Hayes
|
6,000 | |||
Underwood
Family Partners, LTD
|
6,000 | |||
Vaselisa
A. Barr
|
6,000 |
(vi) In
January 2010, we issued the following shares of common stock at $.0166 per share
to the following individuals:
Name
|
Number
of Shares Issued
|
|||
Jason
Reimer
|
6,000 | |||
Jennifer
Kritzik
|
6,000 | |||
Mike
Gellman
|
6,000 | |||
Susan
Reimer
|
6,000 | |||
The securities issuances described in
items (i) and (ii) above were made in reliance upon the exemption provided in
Section 4(2) of the Securities Act and/or Regulation D
thereunder. These issuances were to a limited number of investors,
all of whom executed subscription agreements acknowledging they were familiar
with our business operations and were taking the shares for investment and not
for distribution. All such securities were marked with the customary restrictive
legend prohibiting transfer except under certain circumstances. All
of the investors were accredited investors as defined in Rule 501 under
Regulation D and had a prior relationship with us or our investors and who
executed subscription agreements affirming their accredited status and further
affirming that they were familiar with our operations, were taking the shares
for investment and not for distribution, and recognized that a restrictive
legend would be placed on the certificates.
II-3
ITEM
16. EXHIBIT INDEX
Number
|
Exhibit
|
3.1
|
Articles
of Incorporation, as amended, of
Registrant
|
3.2
|
Bylaws
of Registrant
|
5.1
|
Opinion
of Gary A. Agron
|
10.1
|
Reserved
|
10.2
|
Reserved
|
10.3
|
Reserved
|
23.1
|
Consent
of Ronald R. Chadwick, P.C., independent registered public
accounting firm
|
23.2
|
Consent
of Gary A. Agron (see 5.1 above)
|
ITEM
17. UNDERTAKINGS
The
undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
i. To
include any prospectus required by section 10(a)(3) of the Securities Act of
1933;
ii. 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 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
Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than 12% change in the maximum aggregate offering price set
forth in the “Calculation of registration Fee” table in the effective
registration statements; and
iii. 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.
(2) That,
for the purpose of determining any liability under the Securities Act, 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.
(3) 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.
(4) Insofar
as indemnification for liabilities arising under the Securities Act of 1933 (the
“Act”) may be permitted to directors, officers and controlling persons of the
small business issuer pursuant to the foregoing provisions, or otherwise, the
small business issuer 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 small
business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director or controlling person
in connection with the securities being registered, the small business issuer
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.
(5) That,
for the purpose of determining liability under the securities Act of 1933 to any
purchaser:
(i) If
the registrant is relying on Rule 430B:
II-4
(A) Each
prospectus filed by the registrant 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
(B) 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)9i), (vii), or (x) for the purpose of
providing the information required by section 10(a) of the Securities Act of
1933 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 statement or made in any such
document immediately prior to such effective date; or
(ii) If
the registrant is subject to Rule 430C, 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 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.
(6) That,
for the purpose of determining liability of the registrant under the Securities
Act of 1933 to any purchaser in the initial distribution of the
securities:
The
undersigned registrant undertakes that in a primary offering of securities of
the undersigned 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 or sell such securities to such
purchaser:
(i) Any
preliminary prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule 424;
(ii) 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;
(iii) 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
(iv)
Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
II-5
SIGNATURES
Pursuant
to the requirements of the Securities Act, as amended, the Registrant has caused
this Registration Statement on Form S-1 to be signed on its behalf by the
undersigned, thereunto duly authorized in Santa Barbara, California on February
2, 2010.
PHOTOAMIGO,
INC.
|
|||
|
By:
|
/s/ Robert Heckes | |
Robert Heckes | |||
Chief Executive Officer and Sole Director | |||
II-6
EXHIBIT
INDEX
Number
|
Exhibit
|
3.1
|
Articles
of Incorporation, as amended, of
Registrant
|
3.2
|
Bylaws
of Registrant
|
5.1
|
Opinion
of Gary A. Agron
|
10.1
|
Reserved
|
10.2
|
Reserved
|
10.3
|
Reserved
|
23.1
|
Consent
of Ronald R. Chadwick, P.C., independent registered public
accounting firm
|
23.2
|
Consent
of Gary A. Agron (see 5.1 above)
|
II-7