SECURITIES AND EXCHANGE COMMISSION

 

WASHINGTON, D.C. 20549

__________________________________

FORM 10-K

__________________________________

þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended October 31, 2009

 

OR

 

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

 

For the transition period from              to              

VAULT AMERICA, INC.

(Exact Name of Registrant as specified in its Charter)

______________________________________

Issuer's telephone number, including area code:  (403) 938-4156

_______________________________

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 par value

(Title of Class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    _¨Yes    _þ No

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    _¨Yes    _þ No

 

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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

_þYes    _¨No 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  _¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨	Accelerated filer  ¨
Non-accelerated filer  ¨	Smaller Reporting Company  þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the  Act).

 _¨Yes    _þ No

As of February 11, 2010 there were 1,144,324 outstanding shares of the issuer's common stock, par value $0.001 per share ("Common Stock"), which is the only class of common stock of the issuer.  As of February 11, 2010 the aggregate market value of the shares of Common Stock held by non-affiliates of the issuer, computed based on the closing bid price of the Common Stock as quoted on the OTC Bulletin Board, was approximately $22,897.

Documents Incorporated by Reference:   None.  

Transitional Small Business Disclosure Format:       _¨Yes    _þ No

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TABLE OF CONTENTS

 

 

			Page
PART I
Item 1.	Business		1
Item 2.	Properties		4
Item 3.	Legal Proceedings		4
Item 4.	Submission of Matters to a Vote of Security Holders		4
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases Of Equity Securities		5
Item 6.	Selected Financial Data		6
Item 7	Management's Discussion and Analysis of Financial Condition and Results of Operations		6
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		13
Item 8.	Financial Statements and Supplementary Data		F-1
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure		13
Item 9A.	Controls and Procedures		13
Item 9B.	Other Information		13
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		14
Item 11.	Executive Compensation		16
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		17
Item 13.	Certain Relationships and Related Transactions		17
Item 14.	Principal Accountant Fees And Services		18
PART IV
Item 15	Exhibits and Financial Statement Schedules		18
Signatures			20

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PART I

     ITEM 1.        BUSINESS

 

Unless the context otherwise requires, “Vault”, "MoneyFlow", "Company", "we", "us" and "our" refer to Vault America, Inc., and its subsidiaries combined.

Overview

Vault America, Inc. (“Vault”), formerly MoneyFlow Systems International Inc., ("MoneyFlow") was incorporated on April 25, 2001 under the laws of the State of Nevada.  Security Bancorp Inc. ("Security Bancorp"), our wholly owned subsidiary, was organized on August 3, 1992 in Alberta, Canada and was inactive until January 5, 1999 when it changed its name to Security Bancorp Inc. and began operations under the name CA$H STATION^(R).  In July, 2001, Security Bancorp and MoneyFlow approved a share exchange agreement whereby MoneyFlow issued 14,000,000 shares of its common stock in exchange for 100% of the issued and outstanding shares of Security Bancorp.  In connection with this agreement, Security Bancorp became a wholly owned subsidiary of MoneyFlow.  On April 1, 2002, MoneyFlow formed a wholly owned Canadian subsidiary, Intercash POS Systems Ltd., ("Intercash") through which MoneyFlow conducted its Point-of-Sale business.  Point-of-Sale terminals allow customers to use their debit and credit cards to make purchases and obtain cash on the premises of businesses.  On August 31, 2004, MoneyFlow sold the majority of its Point-of-Sale business to BP Financial Corp. for approximately $258,000 in cash pursuant to a purchase and sale agreement, and Intercash is no longer an operating subsidiary of MoneyFlow.  The Point-of-Sale terminals that were not part of the sale are being managed by Security Bancorp, and the Company does not plan to sell any new terminals.

Since May, 1999, Security Bancorp was involved in successfully supplying, installing, maintaining and managing ATM machines which it places on the premises of property owners and businesses for the purpose and convenience of dispensing cash and other services.  Security Bancorp is a member of the Automated Teller Machine Industry Association (ATMIA) which serves the industry in Canada and the United States.  Security Bancorp has placed ATMs in convenience stores, grocery stores, service stations, hotels, motels, hospitals, night clubs, casinos, restaurants, truck stores, airports and many other locations.  Security Bancorp's ATMs accept VISA, Mastercard, Interac, Maestro, Cirrus, Circuit and American Express (Canada).  Security Bancorp has a website located at http://www.cashstation.net.  Security Bancorp operates its ATMs under the trademark "CA$H STATION^(R)."

In October 2004, MoneyFlow acquired Interglobe Investigation Services Inc. ("Interglobe"), organized on August 3, 1992 in British Columbia, pursuant to a share exchange agreement whereby MoneyFlow issued 500,000 shares of its common stock in exchange for 100% of the issued and outstanding shares of Interglobe, and Interglobe became a subsidiary of MoneyFlow.  Interglobe provides security consulting services and related products and services to companies and individuals, and also supplies and installs custom remote access digital surveillance systems.  Subsequent to the acquisition, during the second quarter of the 2005 fiscal year, MoneyFlow elected to divest itself of the physical surveillance part of the business.  MoneyFlow continued to operate its digital surveillance business under the name Interglobe Security until the sale of the on-hand inventory.

During the first quarter of the current fiscal year, the Company completed an agreement pursuant to which it divested itself of all its ATM operations.  Subsequent to the sale, management elected to consolidate all its operations and focus on growing the company’s business and shareholder value through a leveraged investment approach with the intention of concentrating its efforts in the real estate sector.  More particularly, management pursued opportunities in the southwestern United States with the emphasis being Arizona, Nevada and California.

The Real Estate Industry

Significant downtrends in the sector, combined with volatile market conditions in general did not provide economic opportunities which were deemed sufficiently stable with acceptable levels of risk and a reasonable expectation of an acceptable return on investment.  Although the targeted geographic regions continue to see foreclosure rates above the national average, recent economic reports suggest that market conditions are stabilizing, which we anticipate will provide enhanced investment opportunities.  According to the National Association of Realtors, home prices rose in more than a third of U.S. metropolitan areas in the fourth quarter of 2009.

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Our business model is built around the strategic acquisition of existing real estate properties with a view to upgrading where advantageous or necessary and reselling at a premium over aggregate investment cost.  If circumstances permit we would consider employing a revenue generating model which included revenue properties.  If we are able to take advantage of the significant price pressure of the available inventory of real estate properties in our preferred areas we will examine multi-unit properties which will offer the lowest-cost entry points for revenue generating, or cash-flow inventory.

A new FHA rule change could help real estate markets subject to unusually high foreclosure rates, like Las Vegas, Phoenix, and Los Angeles, making it easier for investors to “flip” houses to buyers who use FHA-insured loans.  Effective Feb. 1, the federal government will waive for one year an FHA anti-flipping rule that prohibits insuring a mortgage on a home owned by the seller for less than 90 days.

The new rule lets investors buy today and re-sell as quickly as possible. The move is to allow REO homes purchased by investors to resell as quickly as possible, helping stabilize real estate prices and revitalize neighborhoods after the U.S. housing market collapse.

This new rule will open up a new pool of homes to buyers. Waiving the 90-day flip rule is being viewed by many real estate investors as an advantage to their ability to buy, rehab and resell foreclosed homes on a more efficient time line.

Due to continued negative pricing pressure in the preferred geographic regions, we are being diligent in our review of each and every potential investment opportunity.  We feel that there is no time pressure to act with haste, as conditions are not yet moving against us.  Although we feel that the market is moving toward the bottom, we do not anticipate a rapid price recovery.  Instead, we intend to carefully select the individual properties which best suit our need for asset value preservation, potential for revenue generation, and price appreciation.

Employees

We currently have three employees.

 

     ITEM 1A.     Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and this Item is not applicable to the Company or we are not required to provide the information required under this item.

 

     ITEM 1B.     Unresolved Staff Comments

None.

 

     ITEM 2.     PROPERTIES

Vault’s principal offices are located at 720 Cimarron Close, Okotoks, Alberta T1S 1A6, telephone number (403) 938-4156.  These offices consist of sufficient multi-use space as is required to maintain the corporate records and conduct business, and is provided at a nominal fee by one of the officers of the company

The Company's management believes that all facilities occupied by the Company are adequate for present requirements, and that the Company's current equipment is in good condition and is suitable for the operations involved.

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     ITEM 3.        LEGAL PROCEEDINGS

 

The Company currently has a pending lawsuit against a former employee for the misappropriation or destruction of information that was proprietary to the Company and its business, as well as the breach of his employment contract.  The Company is seeking damages in the amount of $1,250,000.

The Company has successfully defeated a counterclaim which had been advanced by the former employee and Vault America no longer has any liability with respect to such action, however, the action is still pending against the Company’s subsidiary.  The Company is vigorously working on defeating this counterclaim.

Management, based on consultation with its legal counsel, believes that there will not be any liability to the Company from this counterclaim.

 

 

     ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

 

No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended October 31, 2009.

 

PART II

 

 

     ITEM 5.        MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

 

Vault had 1,144,324 shares of common stock outstanding as of February 11, 2010.  

 

Number of Shareholders

The number of beneficial shareholders of record of the Common Stock of the Company as of the close of business on February 11, 2010 was approximately 64.  

 

Dividend Policy

To date, the Company has no cash dividends on its Common Stock, and does not expect to pay cash dividends in the near term.  The Company intends to retain future earnings, if any, to provide funds for operation and growth of its business.

 

Market Information

Our common stock is currently traded on the National Association of Securities Dealers Automated Quotation System Over the Counter Bulletin Board ("OTCBB") under the symbol "VAMA.OB."  There is limited trading activity in our securities, and there can be no assurance a regular trading market for our common stock will be sustained. We began trading on the OTCBB on October 11, 2002. The following table sets forth, for the periods indicated, the bid price range of our common stock, giving retroactive effect to our fifty to one reverse stock split, which occurred in February 2008.  Prior to the reverse stock split, our common stock was traded under the symbols "MFLW.OB."

Fiscal Period	Average Low	Average High
Fourth Quarter 2009	$0.02	$.050
Third Quarter 2009	$0.05	$0.05
Second Quarter 2009	$0.05	$0.08
First Quarter 2009	$0.05	$0.18
Fourth Quarter 2008	$0.45	$1.05
Third Quarter 2008	$0.30	$0.65
Second Quarter 2008	$0.35	$0.65
First Quarter 2008	$0.45	$1.25

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Such market quotations reflect the high bid and low prices as reflected by the OTCBB or by prices, without retail mark-up, markdown or commissions and may not necessarily represent actual transactions.

 

Disclosure of Equity Compensation Plans

The Company maintains the 2004 Benefit Plan (the "Benefit Plan"), pursuant to which it may grant equity awards to eligible persons.  The Benefit Plan allows the Board of Directors to issue shares of Vault common stock or grant options to purchase shares of Vault common stock to employees, consultants and advisors of the Company or its subsidiaries.  As of February 11, 2010, no options had been granted or shares issued under the Benefit Plan.  Pursuant to the Company's previous plan, the 2002 Stock Option Plan, 537,500 shares of common stock were issued to the Company's directors and employees of Security Bancorp on December 10, 2004.  Subsequent to that date, the 2002 Stock Option Plan was discontinued and the Company maintains only the Benefit Plan as of the date of this filing.  The table below lists information on our equity compensation plans as of October 31, 2009.  

Plan Category		Number of securities to be issued upon exercise of outstanding options, warrants and rights (#)		Weighted-average exercise price of outstanding options, warrants and rights ($)		Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by shareholders		N/A		N/A		1,800,000
Equity compensation plans not approved by shareholders		N/A		N/A		N/A
Total		N/A		N/A		1,800,000

 

 

Recent Sales of Unregistered Securities

No unregistered sales of securities were made by the company during its most recent fiscal year.  During the fiscal year ended October 31, 2008, and more particularly, in February 2008 and March 2008 the Company issued certain officers and directors 3,000,000 restricted common shares and 600 restricted Preferred A shares.  

 

     Item 6.        Selected Financial Data

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and this Item is not applicable to the Company.

     Item 7.

Management's Discussion And Analysis Of Financial Condition And Results Of Operations

Results of Operations

Vault America, Inc. (herein referred to as the Company) was organized on April 25, 2001, under the laws of the State of Nevada.  The Company operates as a holding company for future acquisitions of subsidiaries.  On March 10, 2008, the Company changed its name from Moneyflow Systems International, Inc.

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Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.  In consultation with our Board of Directors, we have identified several accounting principles that we believe are key to an understanding of our financial statements.  These important accounting policies require management's most difficult, subjective judgments.

 

Principles of Consolidation

For the

year ended October 31, 2009, the consolidated financial statements include the accounts of Vault America, Inc. and its wholly-owned subsidiary, Security Bancorp, Inc.

For the year ended October 31, 2008, the consolidated financial statements include the accounts of Vault America, Inc. and its wholly-owned subsidiaries, Security Bancorp, Inc., and Interglobe, Ltd.

All material inter-company accounts and transactions have been eliminated.

 

Revenue Recognition Policy

For the year ended October 31, 2008, the Company recognized revenue when persuasive evidence of an arrangement existed, title transfer occurred, the price was fixed or readily determinable, and collectability was probable. Sales were recorded net of sales discounts.  The Company recognized revenue in accordance with ASC 605 (formerly Staff Accounting Bulletin No. 101).  Revenue from transaction and service fees were earned daily and were electronically transferred to the Company from the processors.

 

Stock Issued for Non-Cash Transactions

It is the Company’s policy to value stock issued for non-cash transactions, such as services, at the fair market value of the goods or services received or the consideration granted, whichever is more readily determinable, at the date the transaction is negotiated.  

Preferred “A” stock that is issued for non-cash transactions, such as services, at the fair market value of the goods or services received or the consideration granted, whichever is more readily determinable, at the date the transaction is negotiated and by applying the conversion feature of one share of preferred “A” stock into 100 shares of common stock.

No new stock was issued during the year ended October 31, 2009.

During the year ended October 31, 2008, the following Preferred Stock transactions occurred:

There were 3,000,000 shares of common stock, with an aggregate value of $450,000 issued to three officers and board members of the Company as compensation.

There were 600 shares of Preferred “A” Stock, with an aggregate value of $9,000 issued to employees of the Company as compensation.

There were 3,000,000 stock options, with a value of $410,100 issued to employees and directors of the Company as compensation.

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Accounts Receivable

Accounts receivable are reported at the customers' outstanding balances less any allowance for doubtful accounts. Interest is not accrued on overdue accounts receivable.  

 

Allowance for Doubtful Accounts

The allowance for doubtful accounts on accounts receivable is charged against income in amounts sufficient to maintain the allowance for uncollectible accounts at a level management believes is adequate to cover any probable losses. Management determines the adequacy of the allowance based on historical write-off percentages and information collected from individual customers.  Accounts receivable are charged off against the allowance when collectibility is determined to be potentially impaired (bankruptcy, lack of contact, age of account balance, etc.).

 

Property and Equipment

Property and equipment are stated at cost.  Major renewals and improvements are charged to the asset accounts while replacements, maintenance, and repairs, which do not improve or extend the lives of the respective assets, are expensed.  At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts.  Gains or losses from retirements or sales are credited or charged to income.

The Company depreciates property and equipment as follows:

Financial statement reporting – straight line method as follows:

Furniture and fixtures

10 years

Computer equipment

5 years

Telephone equipment

5 years

Automobile

5 year

 

Income Taxes

Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements.  Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in ASC 740 (formerly FASB Statement No. 109, Accounting for Income Taxes).  As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

 

Foreign Currency Translation

The financial statements of our Canadian subsidiaries are measured using the Canadian dollar as the functional currency. Assets, liabilities and equity accounts of the companies are translated at exchange rates as of the balance sheet date.  Revenues and expenses are translated at the average rate in effect during the year.  The resulting cumulative translation adjustment has been recorded as a separate component of stockholders' equity.  The financial statements are presented in United States of America dollars.

 

Stock Split and Restatement of Common Stock

On March 10, 2008, the Company affected a 50:1 reverse stock split of the Company’s common stock.  The stock split has been retroactively recorded in the financial statements as if it occurred at the date of inception.

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SELECTED FINANCIAL INFORMATION

				Year Ended
				10/31/2009		10/31/2008
Statement of Operations Data:
	Total revenue		$                    -		$	-
	(Loss) from continuing operations		$	( 12,527)	$	( 887,925)
	Income (Loss) from discontinued operations			628,041		( 1,798)
	Net income (loss)		$	615,514	$	( 889,723)
	Net (loss) per share from continuing operations – Basic		$	( 0.01)	$	( 0.47)
Diluted			$	N/A	$	N/A
Net (loss) per share from discontinued operations – Basic				0.36	$	( 0.00)
Diluted			$	0.35	$	N/A
Balance Sheet Data:
	Total assets			842,553	$	200,953
	Total liabilities			22,611	$	28,313
	Stockholders' equity		$	819,942	$	172,640

 

 

Results of Operations

 

Year ended October 31, 2009 compared to year ended October 31, 2008.

Revenues.  There were no revenues from continuing operations for the years ended October 31, 2009 or 2008.

Cost of Sales and Gross Profit.  There were no costs of sales for the years ended October 31, 2009 or 2008.

 

Selling, General and Administration Expenses.  We had $12,527 of selling, general and administrative expenses for the year ended October 31, 2009, which were mainly professional fees.  We had selling, general and administrative expenses of $18,825 for the year ended October 31, 2008, which were mainly marketing and office expenses.  

 

(Loss) From Continuing Operations.  We had a net loss from continuing operations of $12,527 for the year ended October 31, 2009, compared to a net loss from continuing operations of $887,925 for the year ended October 31, 2008.  This change is primarily due to $869,100 of compensation paid with common stock, preferred stock and stock options during the year ended October 31, 2008.

 

Income (Loss) From Discontinued Operations.  We had net income from discontinued operations of $628,041 for the year ended October 31, 2009 compared to a net loss from discontinued operations of $1,798 for the year ended October 31, 2008.  This is primarily due to the sale of most of the assets of SBI during the year ended October 31, 2009.

 

Corporation Income Taxes. Corporation income tax for the years ended October 31, 2009 and 2008 was $-0-.  No income tax expense was due for the years ended October 31, 2009 and 2008 due to the operating losses and net operating loss carryforwards.

 

Foreign Currencies.  The key foreign currencies in which we effect transactions are the Canadian dollar and the United States dollar.  For the year ended October 31, 2009, the average exchange rate was 1.17006 United States dollars to Canadian dollars.  This is a 14% increase from the year ended October 31, 2008 in which the average exchange rate was 1.02557 United States dollars to Canadian dollars.

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Capital and Sources of Liquidity.  We currently have no material commitments for capital expenditures and have no material fixed expenses per year.

Working capital is summarized and compared as follows:

 

 

On November 5, 2008, the Company completed the sale of the ATM assets of its wholly owned subsidiary, Security Bancorp, Inc. for a total purchase price of $1,100,000 Canadian dollars.  To date, the Company received approximately $1,050,000 Canadian dollars of that amount, which represents the purchase price less an industry-standard hold-back amount.  The Company is in the process of researching and identifying new internal business prospects, as well as potential external business opportunities designed to grow the Company and add Shareholder value.

Our net cash used by operations was $159,380 for the year ended October 31, 2009.  We had a net loss from continuing operations of $12,527, and a net income from discontinued operations of $628,041.  These included non-cash items such as depreciation in the amount of $2,494, a recovery of bad debt in the amount of $2,222, a loss on disposal of fixed assets of $125 and a gain on sale of assets included in discontinued operations of $777,735.  We also had cash provided by a decrease in accounts and other receivables of $4,297, and a decrease in prepaid expenses and deposits of $4,881.  This was offset by an increase in accounts payable and accrued expenses of $5,590, an increase in G.S.T and P.S.T. receivable of 1,032 and a decrease in G.S.T. and P.S.T. payable of $112.

Our net cash provided by operations was $50,041 for the year ended October 31, 2008.  For the year ended October 31, 2008, we had a net loss from continuing operations of $887,925 and a net loss from discontinued operations of $1,798.  These included non-cash items such as depreciation in the amount of $17,346, an impairment of inventory in the amount of $61,135, a provision for doubtful accounts of $3,653, a gain on the disposal of fixed assets of $485, and compensation paid with common stock, preferred stock, and stock options of $869,100.  Net cash was provided by a decrease in inventories of $20,571 and prepaid expenses and deposits of $1,714.  These were offset by an increase in accounts and other receivables of $160, and a decrease in accounts payable and accrued expenses of $32,685 and G.S.T. and P.S.T. payable of $425.

Our net cash provided by investing activities was $885,789 for the year ended October 31, 2009, which represent proceeds from the sale of Security Bancorp Inc.’s assets.

Our net cash used by investing activities was $4,483 for the year ended October 31, 2008, which was for the purchase of property and equipment.

Our net cash used by financing activities was $40,000 and $1,169 for the years ended October 31, 2009 and 2008, respectively.  This was due to the purchase of our common stock to place in treasury for the year ended October 31, 2009 and the repayment of a capital lease of $1,169 for the year ended October 31, 2008.  

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND RISK FACTORS

The Company's Form 10-K, any Form 10-Q or any Form 8-K of the Company or any other written or oral statements made by or on behalf of the Company may contain forward-looking statements which reflect the Company's current views with respect to future events and financial performance. The words "believe," "expect," "anticipate," "intends," "estimate," "forecast," "project," and similar expressions identify forward-looking statements. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new products, services, developments or industry rankings; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing.  Such "forward-looking statements" are subject to risks and uncertainties set forth from time to time in the Company's SEC reports and are generally set forth below and particularly discussed in the Company's Form 10-K for the year ended October 31, 2008.

Readers are cautioned not to place undue reliance on such forward-looking statements as they speak only of the Company's views as of the date the statement was made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Risk Factors

You should consider the following discussion of risks as well as other information regarding our operations.  The risks and uncertainties described below are not the only ones.  Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations.  

·

Our ongoing reporting obligations as a public company have resulted and may continue to result in ongoing operating losses.

·

If we have to comply with any new government regulations, or if old government regulations are reenacted, we may not be able to comply with them or we may have to spend large amounts of resources to meet these new regulations, which we may not have the resources to do, and which may result in a loss of revenue and reduced profitability.

·

Our need for additional financing is uncertain, as is our ability to acquire further financing if required. It is probable that we will require additional capital, either debt or equity, or both. As a result, it is possible that we may elect to raise additional equity capital by selling shares of our Common Stock or other securities in the future to raise the funds necessary to allow us to implement our business plan. If we do so, our current shareholders will suffer significant dilution.

·

As holders of our Common Stock, you will only be entitled to receive those dividends that are declared by our Board of Directors out of retained earnings. We do not expect to have retained earnings available for declaration of dividends in the foreseeable future. There is no assurance that such retained earnings will ever materialize to permit payment of dividends to you. Our Board of Directors will determine future dividend policy based upon our results of operations, financial condition, capital requirements, reserve needs and other circumstances.

·

We depend on key management personnel and the loss of any of them would seriously disrupt our operations.  

·

Our operations are not diversified and we will not have the benefit of reducing our financial risks by relying on other revenues.

·

There is a limited market for our common stock, and there is no assurance that a market will develop in the future or, if developed, that it will continue.

·

Our common stock is subject to penny stock regulation.

·

Our auditors have expressed substantial doubt about our ability to continue as a going concern.

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        Item 7a.

    Quantitative And Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and this Item is not applicable to the Company or we are not required to provide the information required under this item.

        Item 8.         Financial Statements And Supplementary Data

 

The information required by this Item is submitted as a separate section of this Form 10-K.  See Item 15.

                        Item 9.         Changes In And Disagreements With Accountants On Accounting And Financial Disclosure

 

None.

        Item 9a.

    Controls And Procedures

 

(a)

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the design and operation of our disclosure controls and procedures, as such term is defined under Rules 13a-14(c) and 15d-14(c) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), within 90 days of the filing date of this report.  Based on that evaluation, our principal executive officer and our principal financial officer concluded that the design and operation of our disclosure controls and procedures were effective to ensure that information required to be included in our Securities and Exchange Commission reports is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms.

 

(b)

In addition, there have been no changes in our internal control over financial reporting identified in connection with the elevation that occurred during the last fiscal quarter that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.

        Item 9b.

    Other Information

 

Vault previously reported on its Form 8-K filed on November 12, 2008, that the Company completed the sale of the ATM assets of its wholly owned subsidiary, Security Bancorp, Inc. for a total purchase price of $1,200,000.  

 

 

PART III

        Item 10.

    Directors, Executive Officers and Corporate Governance

The names of our directors and executive officers, their ages, and certain other information about them are set forth below:  

Name	Age	Position	Term Began
Harold F. Schultz	75	Chairman of the Board, President, CEO, CFO	April, 2001
Darwyn Ross	46	Director	July, 2004

Harold F. Schultz, Chairman of the Board, President, CEO and CFO.  Mr. Schultz is a founding shareholder of Vault as well as serving as its President and Chief Executive Officer since Vault (then MoneyFlow) was formed in 2001.  Mr. Schultz is also President, CEO and a Director of Security Bancorp Inc., Vault’s wholly owned subsidiary.  Mr. Schultz has been President of Security Bancorp Inc. since 1999.  Mr. Schultz has over 40 years experience in the areas of construction, real estate and the oil and gas industry.  Prior to joining Security Bancorp Inc., Mr. Schultz was Chairman of Enviro FX, Inc., a publicly traded Canadian company, from 1996 until 1998.  Mr. Schultz has been President of Advance Contracting Services Ltd., a private holding company, since 1972.  Mr. Schultz is a member of the 400 Club, a founder of the Lakeview Community Association and many other community organizations.

10

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Darwyn Ross, Director.  Mr. Ross became a director of Vault in July of 2004.  Mr. Ross has been practicing law since 1986.  He began his legal career at Paterson Ross in 1986, and moved to Sisson Warren Sinclair in 2002.  Since 2004, Mr. Ross has practiced from his own firm.  From 2000 to 2002, Mr. Ross served as a director of Delta Capital Technologies Corp., a publicly traded corporation.

Conflicts of Interest Policy

Vault has adopted a policy that any transactions with directors, officers or entities of which they are also officers or directors or in which they have a financial interest, will only be on terms consistent with industry standards.  These transactions must also be approved by a majority of the disinterested directors of Vault’s Board of Directors.  

 

Board Committees, Meetings and Compensation

The Company's business affairs are managed by the Board.  During the fiscal year ending October 31, 2008, the Board of Directors held two meetings at which time no director then in office attended fewer than 100% of the aggregate number of meetings of the Board of Directors.  None of the Directors currently receive any cash compensation for their service on the Board, although they may receive, at the Company's discretion, restricted stock as compensation for their service on the Board.  The Company does not currently have any standing committees.  As of the date of this filing, the entire Board fulfills the functions of the Audit Committee.  The Board has determined that none of the directors are "audit committee financial experts" as such term is defined in Item 401(e) of Regulation S-B.  Due to the small size of the Company, the Board believes an audit committee financial expert is not necessary, but the Board may seek an audit committee financial expert for the Board in the future if the Company's needs change.  The Company does not have a nominating committee, and the Board believes such a committee is not necessary due to the small size of the Board and the absence to date of any director candidates recommended by shareholders.  Currently, the entire Board participates in the consideration of director nominees.  The Board of Directors does not have a formal policy with regard to the consideration of any director candidates recommended by stockholders, the minimum qualification of director candidates or the process for identifying and evaluating director nominees.  To date, the Company has not received any director candidates recommended by its stockholders and consequently the Board of Directors has believed that it could appropriately address any such recommendations received without a formal policy.  Although the Company does not have a formal policy regarding attendance by members of the Board of Directors at annual meetings of stockholders, directors are encouraged to attend annual meetings.

 

Stockholder Communications with the Board of Directors  

Stockholders may communicate with the full Board, or any individual directors, by sending such written communication to the following address:

Corporate Secretary

Vault America, Inc.

PO Box 359 Stn. Main

Okotoks, Alberta  T1S1A6

Any written communications received by the Corporate Secretary will be forwarded to the appropriate directors.

 

 

Code of Ethics

The Company has not yet established a code of ethics comprising written standards that are reasonably designed to deter wrongdoing and to promote the behavior described in Item 406 of Regulation S-B promulgated by the Securities and Exchange Commission.  The Board does not believe such a code is necessary at this stage in the Company's development.

11

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Indemnification of Officers and Directors.

We have the authority under the Nevada General Corporation Law to indemnify our directors and officers to the extent provided for in such statute. Set forth below is a discussion of Nevada law regarding indemnification which we believe discloses the material aspects of such law on this subject. The Nevada law provides, in part, that a corporation may indemnify a director or officer or other person who was, is or is threatened to be made a named defendant or respondent in a proceeding because such person is or was a director, officer, employee or agent of the corporation, if it is determined that such person:

·

conducted himself in good faith;

·

reasonably believed, in the case of conduct in his official capacity as a director or officer of the corporation, that his conduct was in the corporation's best interest and, in all other cases, that his conduct was at least not opposed to the corporation's best interests; and

·

in the case of any criminal proceeding, had no reasonable cause to believe that his conduct was unlawful.

A corporation may indemnify a person under the Nevada law against judgments, penalties, including excise and similar taxes, fines, settlement, unreasonable expenses actually incurred by the person in connection with the proceeding. If the person is found liable to the corporation or is found liable on the basis that personal benefit was improperly received by the person, the indemnification is limited to reasonable expenses actually incurred by the person in connection with the proceeding, and shall not be made in respect of any proceeding in which the person shall have been found liable for willful or intentional misconduct in the performance of his duty to the corporation. The corporation may also pay or reimburse expenses incurred by a person in connection with his appearance as witness or other participation in a proceeding at a time when he is not a named defendant or respondent in the proceeding. 

Our Articles of Incorporation provides that none of our directors shall be personally liable to us or our stockholders for monetary damages for an act or omission in such directors' capacity as a director; provided, however, that the liability of such director is not limited to the extent that such director is found liable for (a) a breach of the directors' duty of loyalty to us or our stockholders, (b) an act or omission not in good faith that constitutes a breach of duty of the director to us or an act or omission that involves intentional misconduct or a knowing violation of the law, (c) a transaction from which the director received an improper benefit, whether or not the benefit resulted from an action taken within the scope of the director's office, or (d) an act or omission for which the liability of the director is expressly provided under Nevada law. Limitations on liability provided for in our Articles of Incorporation do not restrict the availability of non-monetary remedies and do not affect a director's responsibility under any other law, such as the federal securities laws or state or federal environmental laws.

We believe that these provisions will assist us in attracting and retaining qualified individuals to serve as executive officers and directors. The inclusion of these provisions in our Articles of Incorporation may have the effect of reducing a likelihood of derivative litigation against our directors and may discourage or deter stockholders or management from bringing a lawsuit against directors for breach of their duty of case, even though such an action, if successful, might otherwise have benefitted us or our stockholders.

Our Bylaws provide that we will indemnify our directors to the fullest extent provided by Nevada General Corporation Law and we may, if and to the extent authorized by our board of directors, so indemnify our officers and other persons whom we have the power to indemnify against liability, reasonable expense or other matters.

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 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 is asserted by such director, officer, or controlling person in connection with the securities being registered, we will (unless in the opinion of our counsel the matter has been settled by controlling precedent) submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. 

 

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires the Company's directors, executive officers and persons who own more than 10% of the Company's stock (collectively, "Reporting Persons") to file with the SEC initial reports of ownership and changes in ownership of the Company's common stock.  Reporting Persons are required by SEC regulations to furnish the Company with copies of all Section 16(a) reports they file.  To the Company's knowledge, based solely on its review of the copies of such reports received or written representations from certain Reporting Persons that no other reports were required, the Company believes that during its fiscal year ended October 31, 2009, all Reporting Persons timely complied with all applicable filing requirements.

12

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        Item 11.

    Executive Compensation

SUMMARY COMPENSATION TABLE

Members of the Board of Directors do not receive any cash compensation for their service as Directors but the Company may determine to pay Directors a per meeting fee in the future if these Directors are not separately compensated by Vault for other services and the Company may award restricted stock to Directors from time to time.  All expenses for meeting attendance or out of pocket expenses connected directly with their Board representation will be reimbursed by Vault.

Director liability insurance may be provided to all members of the Board of Directors.  Vault has not yet obtained such insurance and does not have any specifics for available cost and coverage.  Vault does not have a specific time frame to obtain the insurance.  No differentiation is made in the compensation of "outside directors" and those officers of Vault serving in that capacity

        Item 12.

    Security Ownership Of Certain Beneficial Owners And Management And Related Stockholder Matters

There were 1,144,324 common shares outstanding as of February 11, 2010.  The following tabulates holdings of shares of Vault by each person who, subject to the above, as of February 11, 2010, holds of record or is known by Management to own beneficially more than 5.0% of the common shares and, in addition, by all directors and officers of Vault individually and as a group.  

 

 

 

13

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(1)

Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as amended, beneficial ownership of a security consists of sole or shared voting power (including the power to vote or direct the voting) and/or sole or shared investment power (including the power to dispose or direct the disposition) with respect to a security whether through a contract, arrangement, understanding, relationship or otherwise. Unless otherwise indicated, each person indicated above has sole power to vote, or dispose or direct the disposition of all shares beneficially owned, subject to applicable community property laws.

(2)

Denotes officer or director of Vault.

(3)

Certain shares beneficially owned by Mr. Schultz are held of record by Advance Contracting Services Ltd., an entity owned and controlled by Mr. Schultz, President of Vault.

 

        Item 13.

    Certain Relationships And Related Transactions, And Director Independence

Since inception, Vault, through its wholly owned subsidiary, Security Bancorp Inc., has had an arrangement with Advance Contracting Services Ltd., whose sole shareholder, officer and director is Harold F. Schultz, President of Vault.  As part of this arrangement, Security Bancorp pays a monthly management fee to Advance in the amount of CDN$5,000 (approximately US$4,650) for Mr. Schultz's services to Security Bancorp.  No written agreement has been entered into and this arrangement is terminable at will.   

        Item 14.

    Principal Accountant Fees And Services

The following table presents fees for professional services rendered by Weaver & Martin, LLC, for the audit of the Company's annual consolidated financial statements for fiscal 2008 and 2009.

		2009			2008
Audit Fees	$	11,000		$	30,000
Audit related fees	$	0		$	0
Tax fees	$	0		$	0
All other fees	$	0		$	0
Total fees	$	11,000		$	30,000

The Board pre-approves all auditing and permitted non-audit services to be performed for the Company by its independent auditor, including the fees and terms of those services.

 

 

PART IV

        Item 15.

    Exhibits, Financial Statement Schedules

The Following Documents are filed as Part of this Report

1. Financial Statements:

            Report of Independent Registered Public Accounting Firm

            Consolidated Balance Sheets

            Consolidated Statements of Operations

            Consolidated Statements of Stockholders' Equity

            Consolidated Statements of Cash Flows

            Notes to Consolidated Financial Statements

 

 

 

 

14

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2. Exhibits

            The following exhibits are filed with, or incorporated by reference into this report.

 

Exhibit No.	Description
2.11	Acquisition Agreement dated as of July 15, 2001 between MoneyFlow Systems International Inc. and Security Bancorp Inc.
3.11	Articles of Incorporation
3.21	Bylaws
3.35	Certificate of Amendment, dated July 15, 2004
4.34	2002 Stock Option Plan, dated July 31, 2002
4.48 10.12	2004 Benefit Plan, dated July 24, 2004 Connection Services Agreement dated December 20, 2001 with TCS Canada, Ltd.
10.22	Agreement for Credit Card Processing Services dated November 15, 2001 with TCS Canada, Ltd.
10.52	Letter Agreement dated July 26, 2001 with Hypercom Canada, Ltd., as amended and assumed by Letter Agreement dated February 7, 2003 with Rycom, Inc.
10.93	Letter Agreement dated January 17, 2003 with 1st SB Partners Ltd.
10.104	Director's Loan dated February 24, 2003
10.116	Agreement for the Purchase and Sale of Assets dated August 31, 2004 between Intercash POS Systems Inc. and BP Financial Corp.
10.127	Share Exchange Agreement dated October 28, 2004 among MoneyFlow Systems International Inc., Interglobe Investigation Services Inc. and the shareholders of Interglobe Investigation Services Inc.
21.19	Subsidiaries of the Company.
24.17	Power of Attorney (see signature page of the Annual Report on Form 10-K).
319	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer and Principal Financial Officer
329	Section 1350 Certification
99.19	Consent of Independent Registered Public Accounting Firm

_______________

1.  Incorporated by reference from the Company's Form SB-2, filed with the SEC on December 11, 2001.

2.  Incorporated by reference from the Company's Form SB-2/A, filed with the SEC on June 11, 2002.

3.  Incorporated by reference from the Company's Form 10-KSB, filed with the SEC on February 14, 2003.

4.  Incorporated by reference from the Company's Form 10-QSB, filed with the SEC on September 15, 2003.

5.  Incorporated by reference from the Company's Form 10-QSB, filed with the SEC on September 14, 2004.  

6.   Incorporated by reference from the Company's Form 8-K, filed with the SEC on October 26, 2004.  

7.  Incorporated by reference from the Company's Form 8-K, filed with the SEC on November 1, 2004.  

8.   Incorporated by reference from the Company's Form S-8, filed with the SEC on November 23, 2004.  

9.   Filed herewith.   

 

 

 

15

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SIGNATURES

 

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

VAULT AMERICA, INC.,

a Nevada corporation

Date:  February 11, 2010

By:      /s/ Harold F. Schultz________________________

Harold F. Schultz

Chairman of the Board, President, Chief Financial

Officer and Chief Executive Officer

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:

 

 

 

 

 

16

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

Vault America, Inc. and Subsidiaries

Formerly known as Moneyflow Systems International, Inc.

We have audited the accompanying consolidated balance sheets of Vault America, Inc. and Subsidiaries as of October 31, 2009 and 2008 and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended.  Vault America, Inc.’s management is responsible for these financial statements.  Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion. Our audits of the financial statements include examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Vault America, Inc. and Subsidiaries as of October 31, 2009 and 2008, and the results of its consolidated operations, stockholders’ equity, and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Weaver & Martin, LLC

Kansas City, Missouri

February 11, 2010

F - 1

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VAULT AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

OCTOBER 31, 2009 AND 2008

 

 

	October 31, 2009		October 31, 2008
ASSETS   CURRENT ASSETS
Cash and cash equivalents	$         839,451		$          81,254
Accounts receivable, net of allowance for     doubtful accounts of $208 and $5,377	-		2,075
Inventories	-		98,135
Rent security deposit	-		2,588
G.S.T. and P.S.T. receivable	1,032		-
Prepaid expenses and other current assets	328		2,621
TOTAL CURRENT ASSETS	840,811		186,673
PROPERTY AND EQUIPMENT, net of       accumulated depreciation of $8,247 and     $80,997	1,742		14,280
TOTAL ASSETS	$         842,553		$       200,953

(Continued)

F - 2

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VAULT AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET (CONTINUED)

OCTOBER 31, 2009 AND 2008

 

 

		October 31, 2009	October 31, 2008
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses		$      22,611	$      28,201
G.S.T. and P.S.T. payable		-	112
TOTAL CURRENT LIABILITIES		22,611	28,313
STOCKHOLDERS’ EQUITY
Preferred “A” stock, par value $.001 per share;   Authorized, 70,000 shares;   Issued and outstanding, 790 shares at October 31, 2009       and 2008		10	10
Preferred “B” stock, par value $.001 per share;   Authorized, 1,000 shares;   Issued and outstanding, 1,000 shares at October 31,       2009 and 2008		1	1
Common stock, par value $.001 per share;   Authorized, 50,000,000 shares;   Issued and outstanding, 1,144,324 shares at October 31,      2009 and 3,144,324 shares at October 31, 2008		10,276	10,276
Paid in capital in excess of par value of stock		3,530,489	3,530,489
Accumulated deficit		( 2,794,911)	( 3,410,425)
Accumulated other comprehensive income   (primarily cumulative translation adjustment)		123,077	51,289
		868,942	181,640
Less treasury stock of 2,012,000 shares at October 31, 2009, and 12,000 shares at October 31, 2008, at cost		( 49,000)	( 9,000)
TOTAL STOCKHOLDERS’ EQUITY		819,942	172,640
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$         842,553	$       200,953

See accompanying notes.

F - 3

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VAULT AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED OCTOBER 31, 2009 AND 2008

        

                

  

			2009		2008
TOTAL REVENUES			-		-
COST AND EXPENSES
Compensation paid with common stock, preferred stock and   and stock options			-		869,100
Selling, general and administrative expenses			12,527		18,825
TOTAL COST AND EXPENSES			12,527		887,925
(LOSS) FROM CONTINUING OPERATIONS BEFORE    CORPORATION INCOME TAXES			( 12,527)		( 887,925)
CORPORATION INCOME TAXES			-		-
NET (LOSS) FROM CONTINUING OPERATIONS			( 12,527)		( 887,925)
NET INCOME (LOSS) FROM DISCONTINUED   OPERATIONS			628,041		( 1,798)
NET INCOME (LOSS)			$   615,514		$ ( 889,723)
NET INCOME (LOSS) FROM CONTINUING  OPERATIONS PER COMMON SHARE
BASIC			$      ( 0.01)		$      ( 0.47)
DILUTED			$         N/A		$         N/A
NET INCOME (LOSS) FROM DISCONTINUED     OPERATIONS PER COMMON SHARE
BASIC			$         0.36		$     ( 0.00)
DILUTED			$         0.35		$        N/A
WEIGHTED AVERAGE NUMBER OF COMMON     SHARES OUTSTANDING
BASIC			1,736,105		1,903,228
DILUTED			1,815,105		N/A

See accompanying notes.

F - 4

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VAULT AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS)

FOR THE YEARS ENDED OCTOBER 31, 2009 AND 2008

 

See accompanying notes.

F - 5

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VAULT AMERICAN, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED OCTOBER 31, 2009 AND 2008

F - 6

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VAULT AMERICAN, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED OCTOBER 31, 2009 AND 2008

 

 

F - 7

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VAULT AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED OCTOBER 31, 2009 AND 2008

  

 

(Continued)

F - 8

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VAULT AMERICA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FOR THE YEARS ENDED OCTOBER 31, 2009 AND 2008

 

 

See accompanying notes

F - 9

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VAULT AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2009

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Nature of Business and History of Company – Vault America, Inc. (hereinafter referred to as the Company) was organized on April 25, 2001, under the laws of the State of Nevada.  The Company operates as a holding company for acquisitions of subsidiaries.  On March 10, 2008, the Company changed its name to Vault America, Inc.

Foreign Currency Translation - The financial statements of the subsidiaries are measured using the Canadian dollar as the functional currency.  Assets, liabilities and equity accounts of the subsidiaries are translated at exchange rates as of the balance sheet date.  Revenues and expenses are translated at average rates of exchange in effect during the year.  The resulting cumulative translation adjustments have been recorded as a separate component of stockholders' equity.  The financial statements are presented in United States of America dollars.

Principles of Consolidation – For the year ended October 31, 2009, the Company was consolidated with its wholly-owned subsidiary, Security Bancorp Inc. (“SBI”).

For the year ended October 31, 2008, the consolidated financial statements include the Company’s wholly-owned subsidiaries SBI and Interglobe Ltd. (“ITL”), which were both incorporated in Alberta, Canada.  Assets, liabilities and equity accounts of SBI and ITL were translated at exchange rates as of the balance sheet date.  Revenues and expenses were translated at average rates of exchange in effect during the year.  The resulting cumulative translation adjustments were recorded as a separate component of stockholders' equity.  The financial statements are presented in United States of America dollars.  ITL ceased operations on December 31, 2008, and SBI ceased operations on November 5, 2008.

Revenue Recognition Policy – During prior periods, the Company recognized revenue when persuasive evidence of an arrangement existed, title transfer had occurred, the price was fixed or readily determinable, and collectability was probable.  Sales were recorded net of sales discounts.  The Company recognized revenue in accordance with ASC 605 (formerly Staff Accounting Bulletin No. 104) "Revenue Recognition in Financial Statements".  Revenue from transaction and service fees were earned daily and were electronically transferred to SBI from the processors.

Cash and Cash Equivalents - For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents.

 

Accounts Receivable - Accounts receivable are reported at the customers' outstanding balances less any allowance for doubtful accounts.  Interest is not accrued on overdue accounts receivable.  

 

Allowance for Doubtful Accounts - The allowance for doubtful accounts on accounts receivable is charged to income in amounts sufficient to maintain the allowance for doubtful accounts at a level management believes is adequate to cover any probable losses.  Management determines the adequacy of the allowance based on historical write-off percentages and information collected from individual customers.  Accounts receivable are charged off against the allowance when collectability is determined to be permanently impaired (bankruptcy, lack of contact, age of account balance, etc.).  

 

 

F - 10

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VAULT AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2009

 

 

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Inventories - Inventories are valued at the lower of cost or market. Cost is determined as follows:

Automated Teller Machines - actual cost for the machine purchased.

Automated Teller Machines – placements - actual cost for the machine purchased less accumulated depreciation.  Depreciation is computed on the straight line basis over 10 years.

Property and Equipment - Property and equipment are stated at cost.  Major renewals and improvements are charged to the asset accounts while replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed.  At the time property and equipment are retired or otherwise disposed of, the asset and related accumulated depreciation accounts are relieved of the applicable amounts.  Gains or losses from retirements or sales are credited or charged to income.

The Companies depreciate the property and equipment as follows:

Financial statement reporting – straight-line method as follows:

Furniture and fixtures

10 years

Computer equipment  

5 years

Telephone equipment

5 years

            Automobile                                                                                            5 years

Depreciation expense was $2,494 and $17,346 for the years ended October 31, 2009 and 2008, respectively.

Long-Lived Assets – The Company recognizes impairment losses on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets’ carrying amount. In such circumstances, those assets are written down to estimated fair value. Long-lived assets consist primarily of fixed assets.  

 

Common Stock Issued for Non-Cash Transactions - It is the Company’s policy to value stock      issued for non-cash transactions, such as services, at the fair market value of the goods or services received or the consideration granted, whichever is more readily determinable, at the date the transaction is negotiated.

 

Treasury Stock – The Company intends to hold repurchased shares in Treasury for general corporate purposes, including issuances under the employee stock option plan. The Company accounts for the Treasury stock using the cost method.

Income Taxes - Provisions for income taxes are based on taxes payable or refundable for the current year and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements.  Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in ASC 740 (formerly FASB Statement No. 109) "Accounting for Income Taxes".  As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

 

 

 

 

F - 11

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VAULT AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2009

 

 

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Accounting Estimates - Management uses estimates and assumptions in preparing financial statements in accordance with accounting principles generally accepted in the United States. Those estimates and assumptions affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities, and the reported revenues and expenses.  Actual results could vary from the estimates that were used.

Net Income (Loss) Per Share - The Company adopted ASC 260 (formerly Statement of Financial Accounting Standards No. 128) that requires the reporting of both basic and diluted earnings (loss) per share.  Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period.  Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.  In accordance with ASC 260, any anti-dilutive effects on net earnings (loss) per share are excluded.

Stock Split and Restatement of Common Stock - On March 10, 2008, the Company affected a 50:1 reverse stock split of the Company’s common stock.  The stock split has been retroactively recorded in the financial statements as if it occurred at the date of inception.

Corporation Income Taxes – No corporation income tax expense was due for the years ended October 31, 2009 and 2008 due to the availability of net operating loss carry forward from current and prior years.

Concentration of Credit Risk

Financial Instruments

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and trade accounts receivable.  The Companies place their temporary cash investments in reputable financial institutions.

Concentrations of credit risk with respect to accounts receivable are limited due to the number of customers comprising the customer base and their dispersion across different geographic areas.  Management routinely assesses the financial strength of its customers and normally does not require collateral to support its receivables.  

Reclassifications – Certain 2008 amounts have been reclassified to conform to 2009 presentations.

Recent Accounting Pronouncements

In September 2006, the Company adopted ASC 250 (formerly SAB 108). ASC 250 was issued to provide consistency to how companies quantify financial statement misstatements. ASC 250 establishes an approach that requires companies to quantify misstatements in financial statements based on effects of the misstatement on both the consolidated balance sheet and statement of operations and the related financial statement disclosures. Additionally, companies must evaluate the cumulative effect of errors existing in prior years that previously had been considered immaterial. We adopted ASC 250 in connection with the preparation of our annual financial statements for the years ended October 31, 2009 and 2008 and found no adjustments necessary.

 

 

 

 

F - 12

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VAULT AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2009

1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

In September 2006, the Company adopted ASC 820 (formerly SFAS No. 157) Fair Value Measurements.  ASC 820 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820 does not require any new fair value measurements, rather, its application will be made pursuant to other accounting pronouncements that require or permit fair value measurements. ASC 820 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those years. The provisions of ASC 820 are to be applied prospectively upon adoption, except for limited specified exceptions. We are evaluating the requirements of ASC 820 and do not expect the adoption to have a material impact on our consolidated balance sheet or statement of operations. 

In June 2006, the Company adopted ASC 740 (formerly FASB Interpretation No. 48) Accounting for Uncertainty in Income Taxes. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in a company’s financial statements in accordance with ASC 260 (formerly FASB Statement No. 109, Accounting for Income Taxes. It prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. ASC 740 is effective for fiscal years beginning after December 15, 2006 and will be adopted by us on November 1, 2007. We do not expect the adoption of ASC 740 to have a material impact on our consolidated balance sheet or statement of operations.

 

 

2.

INVENTORIES

Inventories are comprised of the following:	2009	2008
Automated Teller Machines	$                  -	$           78,073
Parts and supplies	-	20,062
Total	$                  -	$           98,135

3.

PROPERTY AND EQUIPMENT

Property and equipment consists of the following:	2009	2008
Furniture and fixtures	$           1,252	$           24,372
Computer equipment	8,737	31,732
Telephone equipment (Capital lease)	-	8,742
Automobile	-	18,054
Total property and equipment	9,989	82,900
Less accumulated depreciation	( 8,247)	( 68,620)
Property and equipment, net	$            1,742	$           14,280

F - 13

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VAULT AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2009

4.

INCOME TAXES

Pretax Income (Loss)	2009	2008
United States of America	$      131,682	$   ( 1 036,542)
Canadian	483,832	18,348
Total	$      615,514	$   ( 1 018,194)

Provision (Benefit)

The provision (benefit) for/or refund of income taxes for the years ended October 31, 2009 and 2008 consist of the following:

Current	2009	2008
United States of America	$                   -	$                   -
Canadian	-	-
Deferred
United States of America	-	-
Canadian	-	-
Total provision (benefit)	$                  -	$                  -

      

 

 

Deferred Tax Components

Significant components of the Company’s deferred tax assets are as follows at October 31, 2009:

	US Companies in US Dollars	Canadian Companies In US Dollars	Total In US Dollars
Net operating loss carryforwards	$     478,000	$     167,000	$       645,000
Property and equipment related	-	-	-
	478,000	167,000	645,000
Less valuation allowance	( 478,000)	( 167,000)	( 645,000)
Net deferred tax assets	$               -	$                 -	$                  -

Summary of valuation allowance:

	2009	2008
Balance, beginning of year	$   1,562,000	$       810,000
Increase (Decrease) for the year	( 917,000)	752,000
Balance, end of year	$      645,000	$    1,562,000

In assessing the realizability of deferred assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.

 

 

 

F - 14

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VAULT AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2009

4.

INCOME TAXES (CONTINUED)

Net Operating Loss Carryforwards

United States Corporation Income Taxes

Year of Loss	Amount	Expiration Date
October 31, 2001	$            40,000	October 31, 2021
October 31, 2002	549,000	October 31, 2022
October 31, 2004	29,000	October 31, 2024
October 31, 2005	587,000	October 31, 2025
October 31, 2006	-	October 31, 2026
October 31, 2007	2,000	October 31, 2027
October 31, 2008	19,000	October 31, 2028
October 31, 2009	-	October 31, 2029
	$       1,226,000

Canadian Corporation Income Taxes

Year of Loss	Amount in Canadian Dollars	Amount In US Dollars	Expiration Date
October 31, 2003	165,000	154,000	October 31, 2010
October 31, 2004	236,000	220,000	October 31, 2011
October 31, 2005	190,000	177,000	October 31, 2012
October 31, 2006	1,000	1,000	October 31, 2013
October 31, 2007	3,000	3,000	October 31, 2014
October 31, 2008	-	-	October 31, 2015
October 31, 2009	-	-	October 31, 2016
Net deferred tax assets	$      595,000	$      555,000

 

5.

COMMITMENTS AND CONTINGENCIES

Lease

The Company had a signed lease extension which expired on November 30, 2008, and was not renewed subsequent to that date.

Rent expense including rental costs and taxes was $3,202 and $32,520 for the years ended October 31, 2009 and 2008, respectively.

F - 15

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VAULT AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2009

6.

EMPLOYEE STOCK OPTIONS

On July 24, 2004, the Company adopted the 2004 Benefit Plan of Moneyflow Systems International Inc. (the “Plan”). Under the Plan, the Company may issue stock, or grant options to acquire the Company’s common stock, par value $0.001, from time to time to employees of the Company or its subsidiaries. In addition, at the discretion of the Board or Directors, benefits may from time to time be granted under this Plan to other individuals, including consultants or advisors, who contribute to the success of the Company or its subsidiaries, but are not employees of the Company or its subsidiaries, provided that bona fide services shall be rendered by consultants and advisors and such services must not be in connection with the offer or sale of securities in a capital raising-transaction.

The Plan is administered by the Company’s Board of Directors and the Company has reserved a total of 2,500,000 shares of common stock under the Plan. Options granted under this Plan will have terms, vesting and expiration dates as determined by the Plan’s Administrator at the time of grant.

There was no option activity for the year ended October 31, 2009.

On March 31, 2008, the Company issued 3,000,000 options to the employees and directors of the Company.  The expense associated with these options was $410,100.

 

7.

STOCK SPLIT

On March 7, 2008 and March 8, 2008, the Company issued 30,000 shares of Preferred A Stock to the employees and directors of the Company.  The Company then approved a 50 to 1 reverse split for the Preferred A Stock.  A summary of the Preferred A Stock is as follows:

 

    Before

     After

    50 to 1

    50 to 1

      Split      

      Split     

  

Balance at January 31, 2008   

      9,500     

 190

Shares issued to employees and directors

   30,000

      600

Balance, at March 8, 2008

   39,500

      790

 

 

On March 10, 2008, the Company approved a 50 to 1 reverse split on the Common Stock as follows:

 

 

 Before

     After

 50 to 1

    50 to 1

     Split     

      Split     

 

Outstanding at January 31, 2008 and 2007

7,216,203

Outstanding at March 10, 2008 and 2007

    144,324

 

 

 

 

 

F - 16

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VAULT AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2009

 

8.

COMMON STOCK

During the year ended October 31, 2009, the Company had the following transactions in relation to shares of common stock:

On February 18, 2009, the Company acquired 2,000,000 shares of its common shares from two of the Company’s officers and directors, for an aggregated consideration of $40,000.  The shares have been returned to treasury and will be available for issuance at a later date.

During the year ended October 31, 2008, the Company had the following transactions in relation to shares of common stock:

3,000,000 shares of common stock were issued to three officers and board members of the company as compensation, with an aggregate value of $450,000.

9.

PREFERRED STOCK

Preferred “A” stock carries the following preferences:

(a) Liquidation Preference. In the event of any liquidation, dissolution or winding up of the Company, the holders of Preferred A Series I shares will be entitled to receive, prior and in preference to any distribution of any assets or surplus funds to the holders of Common Stock, liquidation   amounts

equal to the sum of (i) the Original issue Price ($.25 per share), plus (ii) all declared but unpaid dividends (the “Senior Preferential Amount”). After payment of the Senior Preferential Amount, liquidation  proceeds will be shared prorate by the holders of the Common Stock and the Preferred A Series I shares on an as converted basis.

(b) Voluntary Conversion. The holders of the Preferred A Series I shares will have, at the option of the holder, the right to convert one share of Preferred A Series I shares stock, at any time, into one hundred shares of Common Stock.

(c)  Automatic Conversion. The Preferred A Series I shares will be converted automatically into Common Stock, at the applicable Conversion ratio, (i) upon the closing of an underwritten public offering of shares of the Common Stock of the Company in an offering of not less than $20,000,000 (prior to underwriting commissions and expenses), (ii) upon the closing of a Sale of the Company that is not deemed a dissolution under the liquidation preference provisions above, or (iii) in the event that the holders of a majority of the Preferred A Series I shares consent to convert into Common Stock.

(d) Anti-dilution Protection.  The Conversion Price will be subject to proportional adjustment for stock splits, stock dividends, recapitalizations and the like. The Preferred A Series I shares also will be subject to adjustment to prevent dilution in the event that the Company issues additional equity securities (or warrants or rights to purchase Common Stock or securities convertible into Common Stock) at purchase price less that the applicable Conversion Price. Such adjustment will be on a   standard,

broad based weighted average basis. The Conversion Price will not be adjusted for issuances of equity securities upon the exercise or conversion of presently outstanding securities, or on the future issuance of stock options to employees, as approved by the Company’s Board of Directors and certain other strategic issuances.

 

 

 

 

 

F - 17

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VAULT AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2009

9.

PREFERRED STOCK (CONTINUED)

(e) Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the Common Shares are exchanged for or changed into other shares or securities, cash and/or any other property, then in any such case the Preferred A Series I Shares shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of shares, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Shares is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on Common Shares payable in Common Shares, or effect a subdivision or combination or consolidation of the outstanding Common Shares (by reclassification or otherwise than by payment of a dividend in Common Shares) into a greater or lesser number of

Common Shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of Series A Preferred Shares shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of Common Shares outstanding immediately after such event and the denominator of which is the number of Common Shares that were outstanding immediately prior to such event.

(f) Dividends.  No cash dividends may be declared on the Common Stock unless or until a like dividend in an amount equal to or greater than the dividend has been declared on the Preferred A Series I shares  (dividends shall be compared on a Common Stock equivalent basis).

(g) Reacquired Shares. Any Preferred A Series I Shares purchased or otherwise acquired by the Corporation  in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation, and upon the taking of any action required by applicable law,  become authorized but unissued preferred shares and may be reissued as part of a new series of preferred shares to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.

(h) Amendment. The Articles of Incorporation of the Corporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Preferred A Series I Shares so as to affect them adversely without the affirmative vote of the holders of two-thirds or more of the outstanding Series A Preferred Shares voting together as a single class.

(i) Board Rights. So long as the Preferred A Series I shares Investors collectively hold at least 10,000 shares of Preferred A Series I shares, a representative of such group, selected by the Preferred A Series I shares Investors, shall be entitle to be elected to the Company’s Board of Directors.

Preferred “B” stock carries the following preferences:

(a)

Voting Rights. The holders of Preferred B Series I shares shall not be entitled to vote on any matters on which shareholders of common shares of the corporation shall be entitled to vote, with the express exception of the right of the holders of Preferred B Series I shares to have a representative of the holders elected to the Board of Directors as set out in paragraph (d) of this section.

 

 

 

 

F - 18

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VAULT AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2009

9.

PREFERRED STOCK (CONTINUED)

(b) Reacquired Shares. Any Preferred Series I Shares purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation, and upon the taking of any action required by applicable law, become authorized but unissued preferred shares and may be reissued as part of a new series of preferred shares to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein.

(c) Amendment. The Articles of Incorporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Preferred B Series I Shares so as to affect them adversely without the affirmative vote of the holders of two-thirds or more of the outstanding Series B Preferred Shares voting together as a single class.

(d) Board Rights. So long as the holders of Preferred B Series I shares collectively hold at least 1,000 shares of Preferred B Series I shares, a representative of such group, selected by the Preferred B Series I shares shall be entitled to be elected to the Company’s Board of Directors.

During the year ended October 31, 2008, the Company had the following transactions in relation to shares of Preferred “A” stock:

On March 7, 2008 and March 8, 2008, the Company issued 30,000 shares of Preferred A Stock to the employees and directors of the Company.  The Company then approved a 50 to 1 reverse split for the Preferred A Stock (See Note 7).

On March 31, 2008, the Company issued 3,000,000 shares of restricted common stock, with an aggregate value of $450,000, to three board members/directors of the Company for compensation for services performed.

There was no issuance of Preferred “B” stock during the years ended October 31, 2009 and 2008.

10.

PENDING LITIGATION

The Company currently has a lawsuit against a former employee for the misappropriation or destruction of information that was proprietary to the Company and its business, as well as the breach of his employment contract.  The Company is seeking damages in the amount of $1,250,000.

At any given time, the Company is involved with various types of litigation which arise in the normal course of conducting business.  Although there is a possibility that the Company may be held liable or receive damages, an estimated range of potential loss or damages to be received cannot be determined at this time but it is not believed to have a material impact on the financial condition of the Company.

 

 

 

F - 19

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VAULT AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2009

11.

DISCONTINUED OPERATIONS

Interglobe, Ltd.

On October 31, 2008, the Company ceased all operations for Interglobe, Ltd.  As a result, the results of operations are included in discontinued operations in the Company’s consolidated statements of operations.  In addition, there were no longer any assets or liabilities for Interglobe, Ltd. as of October 31, 2008.   

The following Interglobe, Ltd. amounts have been segregated from continuing operations and reported as discontinued operations as of October 31, 2009 and 2008:

	2009	2008
Revenues	$                  -	$            6,164
Costs and expenses	-	( 80,415)
Net (loss) from discontinued operations   before income taxes	-	( 74,251)
Income taxes	-	-
Net (loss) from discontinued operations	$                  -	$       ( 74,251)

Security Bancorp, Inc.

On November 5, 2008, the Company announced that it had successfully completed the sale of the ATM assets of its wholly owned subsidiary, Security Bancorp, Inc.  The terms of the agreement will result in a total cash payment of $1,080,000 Canadian dollars, with a value in U.S. Dollars of $864,948 at the date of the sale.

The purchase price in Canadian dollars is allocated as follows:

ATM contracts

$

992,551

SBI-owned ATM’s on location

53,449

ATM’s in house inventory

15,000

ATM parts inventory

15,000

Furniture and office equipment

4,000

$

1,080,000

The following Security Bancorp, Inc. amounts have been segregated from continuing operations and reported as discontinued operations as of October 31, 2009 and 2008:

 

 

 

 

 

 

F - 20

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VAULT AMERICA, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

OCTOBER 31, 2009

11.

DISCONTINUED OPERATIONS (CONTINUED)

	2009	2008
Revenues	$          3,736	$         577,645
Costs and expenses	( 175,146)	( 505,192)
Net (loss) from discontinued operations   before gain on sale of assets and income   taxes	( 171,410)	72,453
Gain on sale of assets	799,451	-
Income taxes	-	-
Net income from discontinued operations	$      628,041	$           72,453

Summary

The following is a summary of the amounts segregated from continuing operations and reported as discontinued operations as of October 31, 2009 and 2008:

	2009	2008
Revenues	$          3,736	$         583,809
Costs and expenses	( 175,146)	( 585,607)
Net (loss) from discontinued operations   before gain on sale of assets and income   taxes	( 171,410)	( 1,798)
Gain on sale of assets	799,451	-
Income taxes	-	-
Net income from discontinued operations	$      628,041	$           ( 1,798)

12.

SUBSEQUENT EVENT

Management has evaluated subsequent events through December, 2009, the date which the financial statements were available for issue.  There were no subsequent events related to these financial statements.

 

 

F - 21

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