Attached files
file | filename |
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EX-31.1 - Lumonall Inc. | lunlexhibit31_1dec31-2009.htm |
EX-32.2 - Lumonall Inc. | lunlexhibit32_2dec31-2009.htm |
EX-32.1 - Lumonall Inc. | lunlexhibit32_1dec31-2009.htm |
EX-31.2 - Lumonall Inc. | lunlexhibit31_2dec31-2009.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-Q
(Mark
One)
[X]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
|
For
the Quarterly Period Ended December 31, 2009
|
|
[ ]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
|
For
the transition period from ______________ to
________________
|
Commission
file number 0-28315
LUMONALL,
INC.
(Exact
Name of Small Business Issuer as Specified in Its Charter)
Nevada
|
84-1517404
|
(State
or Other Jurisdiction of Incorporation)
|
(I.R.S.
Employer Identification No.)
|
3565
King Road, Suite 102
King
City, Ontario, L7B 1M3, Canada
(Address
of Principal Executive Offices)
(905)
833-2451
(Issuer’s
Telephone Number, Including Area Code)
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes [X]
No [ ]
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files).
Yes
[ ] No [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
|
[ ]
|
Accelerated
file
|
[ ]
|
Non-accelerated
filer
|
[ ]
(Do not check if a smaller reporting company)
|
Smaller
reporting company
|
[X ]
|
Indicate
by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes
[ ] No [X]
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date:
The
number of shares of common stock outstanding as of February 16, 2010:
136,659,671
Lumonall,
Inc.
INDEX
PART
I
|
Financial
Information
|
|
Item
1.
|
Condensed
Financial Statements (unaudited)
|
|
Condensed
Balance Sheets
|
3
|
|
Condensed
Statements of Operations
|
4
|
|
Condensed
Statements of Change in Stockholders’ Deficiency
|
5
|
|
Condensed
Statements of Cash Flows
|
6
|
|
Notes
to Condensed Financial Statements
|
7
|
|
Item
2.
|
Management's
Discussion and Analysis
|
13
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
16
|
Item
4.
|
Controls
and Procedures
|
16
|
PART
II.
|
Other
Information
|
|
Item
1.
|
Legal
Proceedings
|
17
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
17
|
Item
3.
|
Defaults
Upon Senior Securities
|
17
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
17
|
Item
5.
|
Other
Information
|
17
|
Item
6.
|
Exhibits
and Reports on Form
8-K
|
17
|
Signatures
|
18
|
|
|
2
PART I.
Financial Information
Item
1. Condensed Financial Statements
LUMONALL,
INC.
CONDENSED
BALANCE SHEETS
(Stated
in US dollars)
December
31, 2009
(UNAUDITED)
|
March
31, 2009
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
|
$ | - | $ | 201 | ||||
Accounts
receivable, net
|
- | 4,868 | ||||||
Prepaid
expenses
|
- | 938 | ||||||
Inventory
|
- | 123,441 | ||||||
Deposit
on acquisition (Note 3)
|
47,575 | - | ||||||
Total
assets
|
$ | 47,575 | $ | 129,448 | ||||
LIABILITIES
Current
liabilities
|
||||||||
Bank
overdraft
|
$
|
1,821
|
$
|
-
|
||||
Accounts
payable and accrued liabilities
|
484,554
|
377,863
|
||||||
Due
to related parties (Note 4)
|
1,060,534
|
809,179
|
||||||
Deposits
(Note 5)
|
121,367
|
121,367
|
||||||
Total
current liabilities
|
$
|
1,668,276
|
$
|
1,308,409
|
||||
STOCKHOLDERS’
DEFICIENCY
Preferred
stock, $0.001 par value; 5,000,000 shares
authorized, no shares issued and outstanding
|
-
|
-
|
||||||
Common
stock, $0.001 par value; 200,000,000 shares authorized,
136,659,671 shares issued and outstanding (March 31, 2009:
126,659,671)
|
136,660
|
126,660
|
||||||
Common
stock units subscribed (Note 6 )
|
4,000
|
300,000
|
||||||
Additional
paid-in capital
|
3,242,419
|
2,952,419
|
||||||
Accumulated
deficit
|
(5,003,780)
|
(4,558,040
|
)
|
|||||
Total
stockholders’ deficiency
|
(1,620,701)
|
(1,178,961
|
)
|
|||||
Total
liabilities and stockholders’ deficiency
|
$
|
47,575
|
$
|
129,448
|
||||
The
accompanying notes are an integral part of these financial
statements
3
LUMONALL,
INC.
CONDENSED
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three
months ended
December
31
|
Nine
months ended
December
31
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Revenues
|
$
|
-
|
$
|
36,240
|
$
|
12,508
|
$
|
202,594
|
||||||||
Cost
of sales
|
-
|
22,884
|
7,149
|
136,198
|
||||||||||||
Gross
profit
|
-
|
13,356
|
5,359
|
66,396
|
||||||||||||
Operating
expenses:
|
||||||||||||||||
Management
fees
|
54,552
|
86,507
|
161,327
|
278,455
|
||||||||||||
Office
and general
|
29,961
|
11,117
|
94,813
|
147,410
|
||||||||||||
Professional
and consulting
|
8,100
|
49,376
|
27,618
|
242,248
|
||||||||||||
Total
operating expenses
|
92,613
|
147,000
|
283,758
|
668,113
|
||||||||||||
Net
loss before other expenses and income taxes
|
(92,613)
|
(133,644
|
)
|
(283,758)
|
(601,717
|
)
|
||||||||||
Other
expenses (income)
|
||||||||||||||||
Foreign
exchange loss (gain)
|
15,950
|
(99,383)
|
141,999
|
(119,631)
|
||||||||||||
Interest
(income)
|
(1,627)
|
-
|
(1,627)
|
-
|
||||||||||||
Interest
expense
|
9,630
|
8,923
|
26,969
|
30,482
|
||||||||||||
Total
other expenses (income)
|
23,953
|
(90,460)
|
167,341
|
(89,149)
|
||||||||||||
Net
income (loss) before income taxes
|
(116,566)
|
(43,184
|
)
|
(445,740)
|
(512,568
|
)
|
||||||||||
Provision
for income taxes
|
-
|
-
|
-
|
-
|
||||||||||||
Net
loss
|
$
|
(116,566)
|
$
|
(43,184
|
)
|
$
|
(445,740)
|
$
|
(512,568
|
)
|
||||||
Weighted
average number of common shares outstanding – Basic and
diluted
|
136,659,671
|
125,894,364
|
136,104,115
|
124,598,637
|
||||||||||||
Loss
per share of common stock - Basic and diluted
|
(0.001)
|
(0.000
|
)
|
(0.003)
|
(0.004
|
)
|
The
accompanying notes are an integral part of these financial
statements
4
LUMONALL,
INC.
CONDENSED
STATEMENT OF CHANGES
IN
STOCKHOLDERS’ DEFICIENCY
MARCH 31,
2009 TO DECEMBER 31, 2009
(UNAUDITED)
Common
Stock
|
||||||||||||||||||||||||
Shares
|
Par
Value Amount
|
Common
Stock Subscribed
|
Additional
Paid – In Capital
|
Accumulated
(Deficit)
|
Total
|
|||||||||||||||||||
Balance,
March 31, 2009
|
126,659,671
|
$
|
126,660
|
$
|
300,000
|
$
|
2,952,419
|
$
|
(4,558,040
|
)
|
$
|
(1,178,961
|
)
|
|||||||||||
Issuance
of common stock pursuant to private placement
|
10,000,000
|
10,000
|
(300,000
|
)
|
290,000
|
-
|
-
|
|||||||||||||||||
Net
loss for period ended June 30, 2009
|
-
|
-
|
-
|
-
|
(170,090
|
)
|
(170,090
|
)
|
||||||||||||||||
Balance,
June 30, 2009
|
136,659,671
|
$
|
136,660
|
$
|
-
|
$
|
3,242,419
|
$
|
(4,728,130
|
)
|
$
|
(1,349,051
|
)
|
|||||||||||
Net
loss for period ended September 30, 2009
|
-
|
-
|
-
|
-
|
(159,084
|
)
|
(159,084)
|
|||||||||||||||||
Balance,
September 30, 2009
|
136,659,671
|
$
|
136,660
|
$
|
-
|
$
|
3,242,419
|
$
|
(4,887,214)
|
(1,508,135)
|
||||||||||||||
Common
stock subscriptions received
|
- | - |
4,000
|
- | - |
4,000
|
||||||||||||||||||
Net
loss for period ended
December
31, 2009
|
-
|
-
|
-
|
-
|
(116,566
|
)
|
(116,566)
|
|||||||||||||||||
Balance,
December 31, 2009
|
136,659,671
|
$
|
136,660
|
$
|
4,000
|
$
|
3,242,419
|
$
|
(5,003,780)
|
(1,620,701)
|
The
accompanying notes are an integral part of these financial
statements
5
LUMONALL,
INC.
CONDENSED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine
months ended
December
31,
|
||||||||
2009
|
2008
|
|||||||
Net
cash used in operations
|
||||||||
Net
loss
|
$
|
(445,740)
|
$
|
(512,568)
|
||||
Adjustments
to reconcile net loss
to
net cash used in operating activities:
|
||||||||
Bad
debt allowance
|
5,153
|
-
|
||||||
Common
stock issued for consulting services
|
-
|
34,375
|
||||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(285)
|
(4,056)
|
||||||
Accounts
payable and accrued liabilities
|
210,467
|
(38,788)
|
||||||
Inventory
|
19,665
|
-
|
||||||
Prepaid
expenses
|
938
|
(31,937)
|
||||||
Deposits
|
-
|
(95,630)
|
||||||
Net
cash used in operating activities
|
(209,802)
|
(648,604)
|
||||||
Cash flows provided by
investing activities:
|
||||||||
Deposit
on acquisition (Note 3)
|
(47,575)
|
-
|
||||||
Net
cash used in investing activities:
|
(47,575)
|
-
|
||||||
Cash flows provided by
financing activities:
|
||||||||
Increase
in bank overdraft
|
1,821
|
-
|
||||||
Proceeds
from common stock subscriptions
|
4,000
|
-
|
||||||
Proceeds
from the issuance of common stock
|
-
|
205,000
|
||||||
Proceeds
from related parties (Note 4)
|
251,355
|
434,936
|
||||||
Net
cash provided by financing activities:
|
257,176
|
639,936
|
||||||
Increase
(decrease) in cash
|
(201)
|
(8,668)
|
||||||
Cash, beginning
of period
|
201
|
9,335
|
||||||
Cash, end of
period
|
$
|
-
|
$
|
667
|
||||
Non cash
financing activities:
During
the nine month period ended December 31, 2009, the Company:
|
·
|
Issued 10,000,000 common shares
valued at $300,000 pursuant to common stock units subscribed during the
fiscal period ended March 31,
2009.
|
|
·
|
Lumonall International acquired
$80,000 of photo luminescent inventory, amounts were paid directly to
unpaid suppliers (Note 7).
|
During
the nine month period ended December 31, 2008, the Company:
|
·
|
Issued 1,243,746 common shares
valued at $34,375 for consulting services
provided.
|
|
·
|
Issued 9,100,000 common shares
valued at $132,490 pursuant to a settlement with a related
party.
|
|
·
|
Issued 500,000 common share units
subscribed, valued at $15,000 for previous consulting services
provided.
|
|
·
|
Issued 3,500,000 common share
units subscribed, valued at $105,000 for previous related party services
provided.
|
The
accompanying notes are an integral part of these financial
statements
6
Note 1 – Description of
Business and Basis of Presentation
Description
of Business
We were
originally incorporated in the State of Colorado on May 1, 1996 as Grand Canyon
Ventures Two, Incorporated. The Company changed its name to Azonic Engineering
Corporation on September 23, 1998. On November 12, 1999 is was re-domiciled to
the State of Nevada by merging into its wholly owned subsidiary Azonic
Corporation, a Nevada corporation. On July 21, 2005 the Azonic Corporation
changed its name to Midland International Corporation (referred to herein as
“Midland,” the “Company,” Registrant” and “Issuer”).
In
February 2007, the Company adopted a new business plan to become a global
supplier of innovative photo luminescent (PLM) products, with a concentration on
Exit Signs and Safety Way Guidance Systems (SWGS). In order to
accurately reflect the nature of the Company’s business, the Company changed its
name from Midland International Corporation to Lumonall,
Inc. effective August 16, 2007.
In light
of general economic conditions and the Company’s current financial performance
and financial position the Company has taken steps to restructure the manner in
which the Company operates. In August 2009, the Company entered into
an Outsourcing and Royalty Agreement with a newly formed entity called Lumonall
International Corporation (“Lumonall International”). Pursuant to the
terms of the Agreement, Lumonall International received exclusive rights to
distribute Lumonall and Prolink branded photo luminescent signs and safety way
guidance products in North America. The rights apply to all of North
America except for the Canadian government and all its agencies, all provinces
and territories of Canada and all their agencies and agents of the Canadian
government, or of any province, in their capacity as owners or managers of
buildings.
Our
present business strategy and direction is to become a diversified safety
systems and clean room products entity.
Going
Concern Basis of Presentation
The
financial statements have been prepared on a going concern basis, which
contemplates the realization of assets and the liquidation of liabilities in the
ordinary course of business. As shown in the accompanying financial
statements, the Company has a working capital deficit of $1,620,701 and an
accumulated deficit of $5,003,780 at December 31, 2009. As a result,
substantial doubt exists about the Company’s ability to continue to fund future
operations using its existing resources.
During
the nine month period ended December 31, 2009, the Company’s operations were
substantially funded by related parties. In order to ensure the
success of the business, the Company will have to raise additional financing to
satisfy existing liabilities and to provide the necessary funding for future
operations.
To
alleviate the difficult financial position of the Company, management entered
into an Outsourcing and Royalty Agreement, (further details of which can be
found elsewhere in this report) pursuant to which the Company transferred all
operational costs associated with the distribution of its products in exchange
for a royalty. Such steps are expected to lessen the burden on the
Company allowing management to focus on alternative public safety opportunities.
In November 2009, the Company entered into a letter of intent to acquire
Cleanwear Products Ltd. and JM Harris Holdings Inc. which if consummated will
provide the Company ongoing revenues.
The
Company has in the past relied upon loans from related parties, specifically
Newlook Industries Corp. (“Newlook”), to further provide capital contributions.
As at December 31, 2009 the Company was indebted to Newlook in the amount of
$751,550 (Note 4).
Newlook
is an investment and merchant banking enterprise and its investments have
suffered due to adverse events and the global financial crisis. Newlook may not
be able to provide additional capital over the next year to the Company in order
to satisfy existing liabilities and make further capital contributions. Failure
to obtain such capital could adversely impact the Company’s
operations.
Recent
Developments
Proposed
Acquisition of CleanWear Products Ltd. (“Cleanwear”), JM Harris Holdings Inc.
(“JM Harris Holdings”) and the Copyright Name CleanWear.
On
November 3, 2009, the Company entered into a Letter of Intent with Mr. Jonathan
M. Harris with respect to the proposed acquisition of CleanWear Products Ltd, JM
Harris Holdings Inc. and the copyright name CleanWear. Mr. Harris is
the sole shareholder of CleanWear and Holdings. CleanWear is a manufacturer of
reusable and limited use garments and gloves for industrial, clean room and
static operations (collectively commonly known as clean room operations) and
Holdings is a separate legal entity which owns the land and building where the
operations reside. Pursuant to the terms of the Letter of Intent,
Lumonall agreed to acquire all of the issued and outstanding shares
of CleanWear and Holdings, and the Name. The purchase price, subject to terms
and conditions, will be paid by the issuance of restricted common shares of the
Company and the remainder of the
7
purchase
price will be paid by the issuance of a Lumonall secured promissory note. The
closing date of the acquisition shall be subject to the Company’s due diligence
of CleanWear and Holdings and the issuance of audited financial statements. The
Company anticipates closing the acquisition by March 31, 2010.
Concurrently
with the acquisition, management is hopeful to restructure several components of
the Company, potentially including changes in the board of directors, certain of
its officers and the Company’s name. Management also intends to negotiate the
settlement of many related party liabilities thereby improving the Company’s
financial position to ready it for other appropriate and prudent
acquisitions.
Private
Placement
The
directors of the Company approved an equity private placement of up $100,000
consisting of 50,000,000 shares of common stock at $0.002 per share at a meeting
held of November 3, 2009.
Review of
Operations
In light
of general economic conditions and the Company’s current financial performance
and financial position the Company continues to perform a complete analysis of
the business including reviewing and reconsidering channels to market; sharing
of gross margin with distributors and various other business processes.
Management plans to continue to take steps to restructure the manner in which
the Company operates.
Management
intends to seek other business opportunities in the safety systems or like
sectors to diversify its operations. The Company believes that
attractive opportunities will become available as the current global financial
crisis subsides in the markets the Company operates. As of the date of this
report management has identified a viable initial acquisition for the Company
from which to rebuild and intends to complete such acquisition by March 31,
2010. Management is also hopeful that other acquisitions in suitable industries
will be sourced.
Industry
Overview
Photoluminescent
Products, Safety and Energy Conservation
Recent
increases in “green” initiatives, tied with improved awareness regarding energy
use and saving the environment, as well as the tragic events of 9/11, have all
contributed to creating this market. Building safety alone provides significant
business opportunity for our Exit Signs and Safety Way Guidance Systems, but the
potential in energy saving measures in new building developments, as well as
retrofitting current, out-of-date premises to lower their energy usage, is
enormous. The latter initiative is also highly political in nature, with all
levels of government, in both Canada and the United States striving to improve
the “green” element(s) of their political platforms.
Since
9/11, there has been an increase in safety measures and initiatives in
buildings. New York City created Bylaw 26 in the wake of the tragedy, requiring,
amongst other things, any building over six storeys high to install Safety Way
Guidance Systems in their stairwells and escape routes.
In March,
2009 the International Code Council (IBC 2009) published the 2009 International
Building Code, a foundation document used by most jurisdictions in the United
States as a starting point for their own building codes. IBC 2009 mandates
the use of non-electrically powered emergency egress systems in most new and
existing buildings with occupied floors 75’ above fire emergency vehicle access.
As IBC
2009 addresses existing as well as new construction, the market for PLM
materials is expected to expand.
In
Canada, similar changes to code are expected in 2010.
Competition
The
primary competition for Lumonall International comes from American Permalight,
Jalite USA, Brady, Jessup, and Lunaplast, all of which offer PLM Exit Signs and
Safety Way Guidance Systems in Canada and/or the United States. With the
exception of Brady and Jessup, all of these competitors deal exclusively in PLM
products like us.
Government
Regulations
Exit
Signs must be approved by the Underwriters Laboratory in both Canada and the
United States. MEA (Materials and Equipment Acceptance) approvals are
required at the State level. We are also an Energy Star Partner in Canada and
the United States. Our PLM formulation meets most current building code
standards.
8
Employees
As of the
date of this report, we have 3 employees which are our current
officers.
Risk
Factors
While
there are relatively few competitors to date, the safety way guidance systems
market is a highly competitive industry, based on maintaining standards and
keeping ahead of government regulations and initiatives. Our failure or Lumonall
International’s failure to compete effectively could adversely affect our market
share and results in operations.
There is
also a significant learning curve and a certain level of acceptance of PLM Exit
Signs, not only at all levels of government, but there is also a shift in
thinking for our customers to accept them in place of traditional,
electrically-powered signs. The status quo is difficult to change and the
adoption for our product may be slow.
Similarly,
despite increased awareness regarding safety measures in buildings, the
acceptance and subsequent seriousness of installing Safety Way Guidance Systems
to guide people to safety in the event of a blackout, fire or other emergency
situation is not a foregone conclusion.
Due to
the relative early stages of this industry, the authorities that create the
guidelines are not always consistent in their standards. The Underwriters
Laboratory seems to have some inconsistencies in its approval processes, the
costs involved in getting approvals, the time required in testing and, more
specifically, what they do, and do not accept with regard to PLM Exit Sign
standards, possibly making it an uneven playing field in regards to the
competitive landscape.
In
addition, potential roadblocks could be created by differing interpretations of
building and fire codes in a state or local code.
Note 2 – Summary of
Significant Accounting Policies
The
accompanying condensed unaudited financial statements of Lumonall, Inc. (the
“Company”) have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of
the information and footnotes required by U.S. generally accepted accounting
principles for complete financial statements. In the opinion of management of
the Company, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the nine month period ended December 31, 2009 are not necessarily
indicative of the results that may be expected for the year ending March 31,
2010. For further information, refer to the financial statements and footnotes
thereto included in the Company’s annual report on Form 10-K for the year ended
March 31, 2009.
The
financial statements have, in management’s opinion, been properly prepared
within reasonable limits of materiality and within the framework of the
significant accounting policies summarized below:
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Revenue
Recognition
The
Company recognizes revenue upon transfer of title at the time of shipment (F.O.B
shipping point), when all significant contractual obligations have been
satisfied, the price is fixed or determinable, and collectability is reasonably
assured.
Inventory
Photo
luminescent inventory is recorded at lower of cost or market.
Research
and Development
The
Company did not engage in any material research and development activities
during the past two years.
Shipping
and Handling Costs
Costs
incurred by the Company related to shipping and handling are included in office
and general expenses.
9
Accounts
Receivable and Allowance for Doubtful Accounts
Accounts
receivable are recorded at the invoiced amount and do not bear interest. The
collectability of outstanding client invoices is continually assessed. The
Company maintains an allowance for estimated losses resulting from the inability
of clients to make required payments. In estimating the allowance, the Company
considers factors such as historical collections, a client’s current
creditworthiness, age of the receivable balance both individually and in the
aggregate and general economic conditions that may affect a client’s ability to
pay.
Fair
Value of Financial Instruments
The
carrying value of accounts receivable, accounts payable and accrued liabilities
approximates fair value because of the short maturity of these instruments. The
carrying value of notes payable and due to related parties also approximates
fair value. Unless otherwise noted, it is management’s opinion that the Company
is not exposed to significant interest, currency or credit risk arising from
these financial instruments.
Income
Taxes
The
Company provides for income taxes in accordance with FASB ASC 740 (prior
authoritative literature, FAS 109, “Accounting for Income Taxes”). Under the
asset and liability method deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amount of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled.
Additionally, a valuation allowance is established when necessary to reduce
deferred income tax assets to the amounts expected to be realized. Under SFAS
109, the effect on deferred tax assets and liabilities of a change in tax rates
is recognized in income in the period that includes the enactment
date.
Earnings
and Loss per Common Share
The
Company reports loss per share in accordance with FASB ASC 260-10 (prior
authoritative literature, SFAS No. 128, “Earnings Per
Share”). Basic loss per share is computed using the weighted
average number of shares outstanding during the year. Diluted
earnings per share includes the potentially dilutive effect of outstanding
common stock options and warrants, which are convertible to common shares.
Diluted loss per share is not presented as results would be
“anti-dilutive”.
Valuation
of Warrants
The
Company estimates that value of common share purchase warrants issued using the
Black-Scholes pricing model.
Subsequent
Events
Subsequent
events were evaluated through February 22, 2010, the date the financial
statements were issued.
Recent
Pronouncements
In
December 2007, the Financial Accounting Standards Board issued FASB ASC 805
(prior authoritative literature SFAS No. 141(R), "Business
Combinations”. FASB ASC 805 establishes principles and requirements
for how the acquirer recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, on any noncontrolling
interest in the acquiree, recognizes and measures the goodwill acquired in the
business combination or a gain from a bargain purchase, and determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. FASB
ASC 805 is effective for fiscal years, and interim periods within those fiscal
years, beginning on or after December 15, 2008. As such, the Company
is required to adopt these provisions at the beginning of the fiscal year ended
March 31, 2010. Adoption of FASB ASC 805 did not have a material
effect on its consolidated financial statements.
In April
2009, the FASB issued FASB ASC 320-10-65 (prior authoritative literature, FSP
No. FAS 115-2 and FAS 124-2, “Recognition and Presentation of
Other-Than-Temporary Impairments”). FASB ASC 320-10-65 amends the
other-than-temporary impairment guidance for debt securities to make the
guidance more operational and to improve the presentation and disclosure of
other-than-temporary impairments on debt and equity securities in the financial
statements. This guidance does not amend existing recognition and measurement
guidance related to other-than-temporary impairments of equity securities. The
provisions of FASB ASC 320-10-65 were effective for interim and annual reporting
periods ending after June 15, 2009, as such, the Company was required to
adopt the standards second quarter of fiscal 2010. Adoption of FASB ASC
320-10-65 did not have a material effect on the consolidated financial
statements.
In April
2009, the FASB issued FASB ASC 320-12-65 (prior authoritative literature, FSP
No. FAS 107-1 and APB No. 28-1, “Interim Disclosures about Fair Value of
Financial Instruments”) which amends SFAS No. 107, Disclosures about Fair
Value of Financial Instruments, to require disclosures about fair value of
financial instruments for interim reporting periods of publicly
10
traded
companies, as well as in annual financial statements. This FSP also amends APB
Opinion No. 28, Interim Financial Reporting, to require those disclosures
in summarized financial information at interim reporting periods. FASB ASC
320-12-65 was effective for interim reporting periods ending after June 15,
2009. Adoption of FASB ASC 320-12-65 did not have a material effect on the
financial statement disclosures.
In May
2009, the FASB issued FASB ASC 855-10 (prior authoritative literature, FSB
No. FAS 165, “Subsequent Events”). FASB ASC 855-10 established general
standards of accounting for and disclosure of events that occur after the
balance sheet date but before financial statements are issued. FASB ASC 855-10
is effective for interim or annual financial periods ending after June 15, 2009:
as such, the Company was required to adopt the standards during the second
quarter of fiscal 2010. FASB ASC 855-10 did not have a material effect on the
financial position, cash flows, or results of operations.
In June
2009, the FASB issued FASB ASC 105-10 (prior authoritative literature, FSB No.
FAS 168, “The FASB Accounting Standards Codification and the Hierarchy of
Generally Accepted Accounting Principles—a replacement of FASB Statement No.
162”), to formally establish the FASB Accounting Standards Codification as the
single source of authoritative, nongovernmental U.S. GAAP, in addition to
guidance issued by the SEC. On the effective date, the Codification will
supersede existing non-SEC accounting and reporting standards. All other
nongrandfathered non-SEC accounting literature not included in the Codification
becomes nonauthoritative. Therefore, from the effective date of the
Codification, there will no longer be levels of authoritative GAAP, rather there
will only be authoritative and nonauthoritative GAAP. All content within the
Codification carries the same level of authority. The Statement makes the
Codification effective for interim and annual periods ending after September 15,
2009. Adoption of FASB ASC 105-10 did not have a material effect on
its consolidated financial statements.
Note 3 – Deposit on
Acquisition
On
November 3, 2009, the Company provided a $47,575 (CAD$50,000) deposit against
the purchase price of the proposed Cleanwear acquisition to JM Harris Holdings
(see Recent Developments). An officer of the Company provided a loan in a like
amount to fund the deposit, such loan is reflected in amounts due to related
parties (Note 4) and the Company and Cleanwear agreed the deposit would be
secured and rank in priority behind a mortgagor of JM Harris Holdings and ahead
of all other creditors. The parties also agreed that the loan provided by the
officer will have the same rights and privileges as between the Company and
Cleanwear.
Note 4 – Related Party
Transactions
At
December 31, 2009, amounts due to related parties amounted to $
1,060,534. Related parties of the Company include entities under
common management and Officers and Directors of the Company.
Newlook
Industries Corp., a related party (due to common officers with the Company)
agreed to fund the development of the Company’s business at an interest rate of
Prime + 3% per annum and general security over all the Company’s assets in event
of default. During the nine month period ended December 31, 2009, amounts
owed to Newlook increased $186,047, a result of $41,077 of cash advances,
$26,969 of accrued interest and $118,001 relating to a foreign exchange loss.
Amounts received from Newlook are recorded in Canadian Dollars and for the nine
month period ended December 31, 2009, the Canadian dollar appreciated
significantly in value to the U.S. Dollar which led to the foreign exchange
loss.
The
Company was obligated to pay CAD$6,000 per month through September 2009 for
financial and administrative services to Wireless Age Communications Inc.
(“Wireless Age”).
On
November 3, 2009, an officer of the Company provided a CAD$50,000 loan to the
Company and received a security position in JM Harris Holdings which ranks
behind a mortgagor and ahead of all other creditors (Note 3).
At
December 31, 2009 and March 31, 2009, the amounts due to related parties
were:
December
31, 2009
|
March
31, 2009
|
|||||||
Newlook
Industries Corp.
|
$
|
751,550
|
$
|
565,503
|
||||
Wireless
Age Communications, Inc.
|
84,090
|
35,830
|
||||||
Directors
and/or Officers of the Company
|
177,319
|
207,846
|
||||||
Director
and Officer of the Company deposit loan
|
47,575
|
-
|
||||||
$
|
1,060,534
|
$
|
809,179
|
11
Note 5 –
Deposits
The
Company has entered into strategic partnerships for the distribution of PLM
products across the North American market place. Deposits have been
made by certain distribution partners for future purchase of PLM products.
Deposits held by the Company totaled $121,367 at December 31, 2009 and March 31,
2009 and such funds were utilized for general working capital purposes in prior
periods.
Note 6 – Common Stock Units
Subscribed.
In fiscal
2009, 10,000,000 common stock units were subscribed for, valued at
$300,000. Each common stock unit consisted of one common share and
one purchase warrant exercisable at $0.05 for a duration of six
months.
During
the three month period ended December 31, 2009, the board of directors of the
Company approved a private placement of up to 50,000,000 common shares at $0.002
per share. As at December 31, 2009 the Company had received $4,000 in stock
subscriptions under this private placement.
Note 7 – Outsourcing,
Royalty Agreement and Sale of Tradename
In August
2009, the Company entered into an Outsourcing and Royalty Agreement with a newly
formed entity called Lumonall International Corporation. Pursuant to the terms
of the Agreement, Lumonall International received exclusive rights to distribute
Lumonall and Prolink branded photo luminescent signs and safety way guidance
products in North America. The rights apply to all of North America except for
the Canadian government and all its agencies, all provinces and territories of
Canada and all their agencies and agents of the Canadian government, or of any
province, in their capacity as owners or managers of buildings.
In
exchange Lumonall International agreed to pay the Company a royalty over a 10
year period. The royalty will be calculated as 10% of gross margin defined as
gross sales, less payments discounts, direct cost of goods sold, applicable
taxes and sales commissions.
Lumonall
International acquired $97,521 of photo luminescent inventory, $17,521 paid in
cash to the Company and $80,000 to unpaid suppliers.
The
tradename Lumonall was sold to
Lumonall International in exchange for a $200,000 promissory
note. The Note is secured by a general security agreement pledging a
first charge security interest in the Tradename, bears interest at Canadian
Prime rate, payable at maturity and matures on the earlier of; 1) 5 years from
the date of closing, or 2) when Lumonall International transfers, sells or
assigns the Tradename to others. Lumonall International is a newly
formed Company and collection of the promissory note is uncertain. As
a result the Company will recognize a gain only when amounts from the note are
collected.
The
Company is obligated to change its name as soon as practical following
closing.
Note 8 – Segment Data,
Geographic Information and Significant Customers
Lumonall
products prior to the entering into the Royalty and Outsourcing Agreement
described in Note 7, were sold through distribution agreements covering most
regions of North America. Distributors included Willis Group of Companies in
Canada, Designer Building Solutions, Butler-Johnson Corporation and Hallmark
Building Supplies in the United States. The Company was not organized by market
and is managed and operated as one business. A single management team reports to
the chief operating decision maker who comprehensively manages the entire
business. The Company at this time does not operate any material separate lines
of business or separate business entities. Accordingly, the Company does not
accumulate discrete financial information, other than product revenue and
material costs, with respect to separate product lines and does not have
separately reportable segments as defined by FASB ASC 280-10 “Segment
Report”.
For the
nine months ended December 31, 2009 and 2008, Willis Group of Companies and
Hallmark Building Supplies accounted for approximately 100% and 83% of sales,
respectively. During the three month period ended December 31, 2009 the Company
did not earn royalties under the Royalty and Outsourcing Agreement.
Note 9 – Subsequent
Events:
On
January 31, 2010, the Company and Cleanwear agreed to extend the closing date of
the Cleanwear acquisition to March 31, 2010. All other terms and conditions
remained the same.
As of
February 22, 2010 the Company has received $55,000 in subscriptions under the
board approved private placement of up to 50,000,000 common shares at $0.002 per
share.
12
Item
2. Managements Discussion and Analysis or Plan of
Operation
The
following discussion should be read in conjunction with our financial statements
and notes thereto included herein. In connection with, and because we
desire to take advantage of, the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, we caution readers regarding certain
forward looking statements in the following discussion and elsewhere in this
report and in any other statement made by, or on our behalf, whether or not in
future filings with the Securities and Exchange
Commission. Forward-looking statements are statements not based on
historical information and which relate to future operations, strategies,
financial results or other developments. Forward-looking statements
are necessarily based upon estimates and assumptions that are inherently subject
to significant business, economic and competitive uncertainties and
contingencies, many of which are beyond our control and many of which, with
respect to future business decisions, are subject to change. These
uncertainties and contingencies can affect actual results and could cause actual
results to differ materially from those expressed in any forward-looking
statements made by, or on our behalf. We disclaim any obligation to
update forward-looking statements.
Overview
In light
of general economic conditions and the Company’s current financial performance
and financial position the Company has taken steps to restructure the manner in
which the Company operates. In August 2009, the Company entered into
an Outsourcing and Royalty Agreement with a newly formed entity called Lumonall
International Corporation. Pursuant to the terms of the Agreement,
Lumonall International received exclusive rights to distribute Lumonall and
Prolink branded photo luminescent signs and safety way guidance products in
North America. The rights apply to all of North America except for
the Canadian government and all its agencies, all provinces and territories of
Canada and all their agencies and agents of the Canadian government, or of any
province, in their capacity as owners or managers of buildings. In November
2009, the Company also identified an acquisition in the safety products industry
with existing revenues and operating assets (including land and a building)
which it intends to close prior to year end March 31, 2010.
Our
present business strategy and direction is to become a diversified safety
systems and clean room products entity.
RESULTS
OF OPERATION
Comparison
of Results of Operations for the Three Months Ended December 31, 2009 and
2008
We did
not generate any revenues from the sale of PLM product in the three-month period
ended December 31, 2009, compared to revenues of $36,240 during the same three
month period for 2008. Gross profit on sales during the three month
period was $nil in comparison to $13,356 in the prior year. The reduction in
sales is a result of the Company performing a complete analysis of the
business including reviewing and reconsidering our channels to market including
entering into an Outsourcing and Royalty Agreement in August 2009. During the
three month period ended December 31, 2009, the Company did not earn any royalty
revenue from Lumonall International.
We
incurred management fees of $54,552 in the three-month period ended December 31,
2009, compared to $86,507 during the same period ended December 31, 2008.
Management fees during the three month period ended December 31, 2009 were
accrued and/or paid to John Simmonds, CEO, Carrie Weiler, Corporate Secretary,
Gary Hokkanen, CFO, and Wireless Age Communications, Inc. (a related party due
to certain common officers, directors and ownership), for the services of
managerial level accounting and finance personnel. Year over year
management fees decreased $31,955 primarily as a result in a change in
management. Management fees during the three-month period ended
December 31, 2008 were for the services of Mike Hetherman, CEO; Carrie Weiler,
our Corporate Secretary; Gary Hokkanen, our CFO; and a related party due to
certain common officers, directors and ownership for the service of managerial
level accounting and finance personnel.
We
incurred office and general expenses of $29,961 during the three-month
period ended December 31, 2009, compared to $11,117 in the same period ended
December 31, 2008, an increase of $41,495. Office and general
expenses include travel, communications and other similar costs associated with
operating the business in its current state of evolution.
We also
incurred professional and consulting fees of $8,100 in the three-month period
ended December 31, 2009, compared to $49,376 in the same period ended December
31, 2008 a decrease of $41,276. Higher costs during fiscal 2009 are a
result of the Company’s initial development of the Company’s business and
strategy.
We
incurred interest expense of $9,630 during the period ended December 31, 2009,
compared to $8,923 during the three month period ended December 31, 2008 arising
from related party liabilities.
During
the current period, the Company accrued interest income of $1,627 under a
$200,000 promissory note (which the Company records at a carrying value of $nil)
pursuant to which the Company sold the tradename “Lumonall” (Note
7).
13
We
recorded a foreign currency loss of $15,950 during the three month period ended
December 31, 2009 in comparison to $99,383 during the comparative period ended
December 31, 2008. A substantial portion of the Company’s liabilities
and expenses are transacted in Canadian Dollars. During the three
month period ended December 31, 2009, the Canadian Dollar appreciated in value
against the U.S. Dollar.
Management
expects the operating losses to continue until breakeven operations are achieved
through royalties paid or until the proposed Cleanwear acquisition generates
sufficient profits to offset corporate costs. Additional financing will be
required in order to offset pre-breakeven operating losses.
Comparison
of Results of Operations for the Nine Months Ended December 31, 2009 and
2008
We
generated $12,508 in revenues from the sale of PLM product in the nine-month
period ended December 31, 2009, compared to revenues of $202,594 during the same
nine month period for 2008. Gross profit on sales during the nine
month period was $5,359 in comparison to $66,396 in the prior
year. Year over year revenues for the nine months ended December 31,
2009 declined $190,086. The reduction in sales is a result of
the Company performing a complete analysis of the business including
reviewing and reconsidering our channels to market including entering into an
Outsourcing and Royalty Agreement in August 2009. Year to date December 31,
2009, the Company has not earned any royalty revenue from Lumonall
International.
We
incurred management fees of $161,327 during the nine month period ended December
31, 2009, compared to $278,455 during the same period ended December 31, 2008.
Management fees during the nine month period ended December 31, 2009 accrued
and/or paid consisted John Simmonds, CEO, Carrie Weiler, Corporate Secretary,
Gary Hokkanen, CFO, and Wireless Age Communications, Inc. (a related party due
to certain common officers, directors and ownership), for the services of
managerial level accounting and finance personnel. Year over year
management fees decreased $117,128 primarily as a result in a change in
management. Management fees during the nine month period ended
December 31, 2008 were for the services of Mike Hetherman, CEO; Carrie Weiler,
our Corporate Secretary; Gary Hokkanen, our CFO; and a related party due to
certain common officers, directors and ownership for the service of managerial
level accounting and finance personnel.
We
incurred office and general expenses of $94,813 in the nine month period
ended December 31, 2009, compared to $147,410 during the same period ended
December 31, 2008, a decrease of $29,946. During the nine month
period ended December 31, 2008 the new PLM business plan was initiated and
required significantly more resources during the Company’s current state of
evolution. In addition, during the nine month period ended December 31, 2009 the
Company has focused on strict cost control measures to address limited financial
resources. Office and general expenses include travel, communications
and other similar costs associated with operating the business in its current
state of evolution. We expect operating costs to increase as we
pursue new business.
We also
incurred professional and consulting fees of $27,618 in the nine month period
ended December 31, 2009, compared to $242,248 during the same period ended
December 31, 2008 a decrease of $214,630. Higher costs during fiscal
2009 are a result of the Company’s initial development of the Company’s business
and strategy.
We
incurred interest expense of $26,969 during the period ended December 31, 2009,
compared to $30,482 during the nine month period ended December 31, 2008 arising
from related party liabilities.
We
recorded a foreign currency loss of $141,999 during the nine month period ended
December 31, 2009 in comparison to a gain of $119,631 for the comparative period
ended December 31, 2008. A substantial portion of the Company’s
liabilities and expenses are transacted in Canadian Dollars. For the
nine month period ended December 31, 2009, the Canadian Dollar appreciated
significantly in value to the U.S. Dollar which led to the foreign exchange
loss.
The
Company recorded interest income of $1,627 during the current period under a
$200,000 promissory note (which the Company records at a carrying value of $nil)
pursuant to which the Company sold the tradename “Lumonall” (Note
7).
As a
result, we incurred a net loss of $445,740 during the nine month period ended
December 31, 2009, compared to a net loss of $512,568 during the same period
ended December 31, 2008.
Management
expects the operating losses to continue until breakeven operations are achieved
through royalties paid or until the proposed Cleanwear acquisition generates
sufficient profits to offset corporate costs. Additional financing will be
required in order to offset pre-breakeven operating losses.
LIQUIDITY
AND CAPITAL RESOURCES
Our total
assets decreased from $129,448 at March 31, 2009 to $47,575 at December 31,
2009, substantially as a result of the sale and transfer of $123,441 in
inventory. As at December 31, 2009, the Company assets consisted of a $47,575
(CAD$50,000) deposit made on the proposed Cleanwear acquisition.
14
Our total
liabilities increased from $1,308,409 at March 31, 2009 to $1,668,276 at
December 31, 2009, an increase of $359,867. Accounts payable
increased to $484,554 from $377,863, an increase of $106,691, amounts of which
are primarily due to costs incurred for professional and consulting
services. Due to related parties balance increased from $809,171 at
March 31, 2009 to $1,060,554 at December 31, 2009. Due to related party amounts
do not have specific repayment terms and it is expected that these amounts will
be repaid as the financial position of the Company improves. Distributor
deposits for the future purchase of photo luminescent products remained
unchanged at $121,367.
The
stockholders’ deficiency increased from ($1,178,961) at March 31, 2009 to
($1,620,701) at December 31, 2009. The increase is primarily
attributable to our loss of $445,740 during the nine months ended December 31,
2009.
At
December 31, 2009, we had a working capital deficit of $1,620,701. We
had cash balances of $Nil at December 31, 2009 and we are largely reliant upon
our ability to arrange equity private placements or alternatively advances from
related parties to pay
expenses
as incurred. In addition to normal accounts payable of $484,554 we
also owe related parties $1,060,534 without specific repayment terms and
$121,367 in distributor deposits. Our only source for capital could be loans or
private placements of common stock.
The board
of directors has authorized management to complete a $100,000 private placement
consisting of up to 50,000,000 common shares at $0.002 per share. As of December
31, 2009, the Company had received $4,000 in such subscriptions and as of
February 22, 2010 has received $55,000. Management is hopeful that it will be
successful in completely the full private placement prior to March 31,
2010.
Management
also believes that if the proposed Cleanwear acquisition is completed the
Company’s financial position will improve substantially and the Company will
begin to record new revenues from the sale of clean room products. It is also
anticipated that the acquisition will provide the impetus to restructure the
Company’s balance sheet and negotiate repayment of related party liabilities on
a mutually beneficial basis.
During
the nine months ended December 31, 2009 we; 1) used $209,802 used in cash in
operating activities arising primarily from operating losses, 2) used $47,575 in
investing activities, and 3) generated $257,176 in cash from financing
activities. Financing activities included $251,355 funded from related
parties.
For the
nine month period ended December 31, 2009, the Company’s operations were
substantially funded by related parties. In order to ensure the
success of the business, the Company will have to raise additional financing to
satisfy existing liabilities and to provide the necessary funding for future
operations.
The
Company relies heavily upon loans from related parties, specifically Newlook, to
further provide capital contributions. As at December 31, 2009 the Company was
indebted to Newlook in the amount of $751,550. During the nine month period
ended December 31, 2009, amounts owed to Newlook increased $186,047, a result of
$41,077 of cash advances, $26,969 of accrued interest and $118,001 relating to a
foreign exchange loss. Amounts received from Newlook are recorded in
Canadian Dollars and during the nine month period ended December 31, 2009, the
Canadian dollar appreciated significantly in value to the U.S. Dollar which led
to the foreign exchange loss.
Newlook
is an investment and merchant banking enterprise focused on the development of
its technology investments. Newlook’s investments have suffered due to
unforeseen events and the global financial crisis. Newlook may not be able to
provide additional capital over the next year to the Company in order to satisfy
existing liabilities and make further capital contributions. Failure to obtain
such capital could adversely impact the Company’s operations.
It will
require additional financing to cover legal, accounting, transfer, consulting,
management fees and the miscellaneous costs of being a reporting company in the
next fiscal year. We do not intend to pursue or fund any research or development
activities during the coming year. We do not intend to add any additional
part-time or full-time employees until our activities can support it. Our
business plan calls for us to not make any large capital expenditures in the
coming year.
Going
concern qualification: We have incurred significant losses from operations
for the three months ended December 31, 2009, and such losses are expected to
continue. In addition, we have a working capital deficit of
$1,620,701 and an accumulated deficit of $5,003,780. The foregoing
raises substantial doubt about the Company's ability to continue as a going
concern. Management's plans include seeking additional capital and/or
debt financing. Management also believes that the Cleanwear acquisition if
consummated will improve the Company’s results from operations and financial
position. There is no guarantee that the Cleanwear acquisitions will close
or that additional capital and/or debt financing will be available when and to
the extent required, or that if available, it will be on terms acceptable to
us. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
OFF-BALANCE
SHEET ARRANGEMENTS
The
Company does not have any off balance sheet arrangements.
15
Item 3. Quantitative and
Qualitative Disclosures About Market Risk
We are a
smaller reporting company as defined by Rule 12b-2 of the Securities Exchange
Act of 1934 and are not required to provide the information under this
item.
Item 4. Controls and
Procedures
Disclosure
controls and procedures
Our
management evaluated, with the participation of our Chief Executive Officer and
Chief Financial Officer, the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this Form 10-Q. Based on
this evaluation, our Chief Executive Officer and Chief Financial Officer have
concluded that our disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended (the Exchange Act)), as of the end of such period, are effective to
ensure that information required to be disclosed by us in reports that we file
or submit under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms.
There
have been no significant changes in our internal controls over financial
reporting during the third quarter ended December 31, 2009 that have materially
affected, or are reasonably likely to materially affect, our internal controls
over financial reporting.
Management
Report on Internal Control over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f)
promulgated under the Exchange Act. Those rules define internal control over
financial reporting as a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles and includes those policies and procedures
that:
• Pertain
to the maintenance of records that in reasonable detail accurately and fairly
reflect the transactions and dispositions of the assets of the
company;
• Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and the receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the Company; and
• Provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisitions, use or disposition of the company's assets that could have a
material effect on the financial statements.
Because
of its inherent limitations, internal controls over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Management
assessed the effectiveness of our internal control over financial reporting as
of December 31, 2009. In making this assessment, our management used the
criteria established in Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission
(COSO).
16
PART II. Other
Information
Item 1. Legal
Proceedings
None
Item 2. Unregistered Sales
of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior
Securities
None
Item 4. Submission of
Matters to a Vote of Security Holders
None
Item 5. Other
Information
None
Item 6. Exhibits and Reports
on Form 8-K
|
a)
|
Exhibits
|
Exhibit
31.1
|
Rule
13a-14(a) Certification of Chief Executive Officer. *
|
Exhibit
31.2
|
Rule
13a-14(a) Certification of Chief Financial Officer. *
|
Exhibit
32.1
|
Certification
of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*
|
Exhibit
32.2
|
Certification
of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*
|
* Filed
herein.
|
b)
|
Reports
Filed on Form 8-K
|
On
November 9, 2009 the Company filed Form 8-K describing its entry into a Letter
of Intent with Mr. Jonathon M. Harris.
The
Company filed Form 8-K on October 6, 2009 and Form 8-K/A on October 14, 2009 to
discuss the resignation of its current auditors in connection with their merger,
the Company engaged the new firm resulting from the merger.
17
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Lumonall
Inc.
|
|||
Date:
February 22, 2010
|
By:
|
/s/
John Simmonds
|
|
Name:
John Simmonds
|
|||
Title:
Chief Executive Officer and Chairman
|
|||
By:
|
/s/
Gary N Hokkanen
|
||
Name:
Gary N. Hokkanen
|
|||
Title:
Chief Financial Officer
|
|||