Attached files
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2009
Commission File No.333-130707
EWORLD INTERACTIVE, INC.
_______________________________________________
(Exact name of registrant as specified in its charter)
Florida 333-130707 65-0855736
_____________ ___________ __________________
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
Incorporation)
1147 Kang Ding Road, Room 208, Block D, Shanghai, China 200042
_______________________________________
(Address of principal executive offices)(Zip Code)
(021) 6888 0708
_______________________________
(Registrant's telephone number, including area code)
(Former name, address and fiscal year, if changed since last report)
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
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 twelve months (or for such shorter periods 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 [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of the 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 shell company (as defined in
Rule 12b-2 of the Exchange Act):
Yes [X] No [ ]
Revenues for year ended December 31, 2009: $-0-
The aggregate market value of the voting and non-voting common equity held by
non-affiliates as of December 31, 2009, computed by reference to the bid/ask
price of $.001 at December 31, 2009 is $1,496,362.
Number of shares of our common stock outstanding as of December 31, 2009 is:
33,252,480
State the number of shares outstanding of each of the issuer's classes of
common equity, as of December 31, 2009: 33,252,480 shares of common stock.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Salty's Warehouse, Inc. (The Company) was incorporated in Florida on July 16,
1998 and was engaged in selling name brand consumer products over the Internet.
The Company focused on selling consumer electronics.
On December 11, 2006, owners of an aggregate of 22,450,000 shares of common
stock, of Salty's Warehouse, Inc. sold in a private transaction all of the
shares held by them to a group of approximately 54 purchasers. As a result of
this transaction, a change of control in the Company occurred resulting,
subsequently, in a change in the name of the Company to Eworld Interactive,
Inc. (Eworld).
eWorld Interactive formerly operated: eWorld China ( WWW.EWORLDCHINA.CN
including WWW.17DIAN.CN ) and Mojo Mediaworks.
Eworld was the developer of eworldchina.cn, an online community focused on
entertainment content provided by both professional content producers and
amateur content produced by users of the website. The online platform allowed
users to create and define their own personal space in the community, then
interact with and within the community on multiple levels.
Effective May 11, 2007 Eworld Interactive, Inc. (Eworld) acquired 100% of the
issued and outstanding equity of Mojo Media Works, Limited (Mojo), a British
Virgin Islands company. The principal business of Mojo and its subsidiary
companies was to establish a new business in the production and distribution of
television programs in the Peoples Republic of China (PRC).
Although, Eworld Interactive was able to launch an online game as intended and
Mojo Media Works was able to produce a television show in the PRC as intended,
revenues did not develop rapidly enough to sustain operations and the Company
was unable to obtain sufficient additional financing to maintain operations.
The Company has disposed of Shanghai Eworld China Information Technologies Co.,
Ltd ("Eworld China") and Mojo Media Works Limited and its subsidiaries in
August 2008. The Company has ceased all business in online game and media
production business and became a shell company with no functional operations.
In March of 2009, the Company entered into a stock purchase agreement with Blue
Atelier, under which Inc. Blue Atelier acquired 25,000,000 newly authorized and
issued common stock of Eworld Interactive Inc. ("EWRL") after EWRL executed a
forty to one reverse split of the presently issued and outstanding EWRL common
stock in exchange for $250,000 and Blue Atelier provided the Company a non-
interest bearing loan up to $250,000 for costs and fees required to maintain
the full reporting status of EWRL and quotation of its common stock on the
OTCBB with advances made under this loan to go towards the cost of the newly
issued stock.. The Company completed the forty to one reverse split in
September 2009 and entered into a series of agreements with various holders of
Convertible Notes to convert $2,226,185 of notes payable plus accumulated
interest of $501,283 to E World Common Stock in the aggregate to 6,872,830
shares of common stock. Following this, Blue Atelier acquired 25,000,000 of
newly authorized and issued common stock for $250,000 in accordance with the
stock purchase agreement.
2
The Company is now seeking to acquire a new operating entity that may have a
different business scope.
Eworld Interactive, Inc. has never declared bankruptcy, has never been in
receivership.
The common stock of Eworld Interactive, Inc. is quoted on the OTC Bulletin
Board under the symbol EWRL.OB.
The Company has a December 31st fiscal year end.
EMPLOYEES
At December 31, 2009 the Company had two employees, Mr. Guy Peckham, the
Company President and Chief Executive Officer and Gerry Shirren as Chief
Operations Officer and Chief Financial Officer. Mr. Peckham resigned as
President and Chief Executive Officer on April 08, 2010.
ITEM 2. DESCRIPTION OF PROPERTY
Eworld Interactive, Inc. has no properties and at this time has no agreements
to acquire any properties although it may do so in the future.
The Company's temporary offices are at 1147 Kang Ding Road, Room 208, Block D,
Shanghai, China 200042; comprised of facilities for administrative offices. The
facilities are provided as needed cost free by our President. We believe that
the foregoing facilities are sufficient for our current operational needs.
ITEM 3. LEGAL PROCEEDINGS
No legal proceedings were initiated or served upon the Company in the fiscal
year ending December 31, 2009. We are not currently involved in any material
legal proceedings. We are not aware of any material legal proceedings pending
against us.
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 fiscal year 2009.
The company executed a 40/1 reverse split following the approval of a majority
of the shareholders with the holders of over 56% of the shares eligible to vote
supporting the Board's decision for the reverse split.
3
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
On December 31, 2009, there were approximately 72 shareholders of record and an
undetermined number of holders in street name and the Company's common stock is
traded on the Over the Counter Bulletin Board, trading symbol "EWRL".
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Eworld Interactive, Inc. common stock is quoted on the Over-The-Counter
Bulletin Board under the symbol "EWRL.OB". The first available quotations on
the Over-The-Counter Bulletin Board appear at the end of January 2007. The
quotations provided are for the over the counter market which reflect
interdealer prices without retail mark-up, mark-down or commissions, and may
not represent actual transactions. The prices included below have been obtained
from sources believed to be reliable:
Period Ending Open High Low Close
------------- ----- ----- ----- -----
December 31, 2009 0.045 0.045 0.045 0.045
September 30, 2009 0.02 0.02 0.02 0.02
June 30, 2009 0.004 0.004 0.004 0.004
$0.002 $0.002 $0.002 $0.002
March 31, 2009
December 31, 2008 0.001 0.001 0.001 0.001
September 30, 2008 0.01 0.01 0.01 0.01
June 30, 2008 0.05 0.05 0.05 0.05
March 31, 2008 0.13 0.13 0.13 0.13
December 31, 2007 0.40 0.42 0.25 0.33
September 28, 2007 0.42 0.46 0.31 0.41
June 29, 2007 0.96 0.98 0.38 0.49
March 30, 2007 0.66 0.71 0.66 0.66
January 31, 2007 1.15 1.17 1.01 1.10
4
Holders
Total shares outstanding as of December 31, 2009 were 33,252,480; and were held
by approximately 72 shareholders of record and an undetermined number of
holders in street name.
Dividend Policy
Eworld Interactive, Inc. has never paid a cash dividend on its common stock and
does not anticipate paying any cash dividends on its common stock in the next
12 month period.
We intend to follow a policy of retaining earnings, if any, to finance the
growth of the business and do not anticipate paying any cash dividends in the
foreseeable future. The declaration and payment of future dividends on the
Common Stock will be the sole discretion of the Board of Directors and will
depend on our profitability and financial condition, capital requirements,
statutory and contractual restrictions, future prospects and other factors
deemed relevant.
Outstanding Options/Warrants
At December 31, 2009, we have no warrants
Warrants Granted and Expired
Grant Date Number of Warrants Exercise Price Expiry Date
---------- ------------------ -------------- -----------------
February 2, 2007 970,000 $0.80 December 31, 2008
February 14, 2007 1,000,000 $0.80 February 14, 2009
April 30, 2007 866,670 $0.80 December 31, 2008
2,836,670
Less: expired warrants (2,836,670
0
Eworld Interactive, Inc.
Equity Compensation Plan Information
The following table provides information as of March 31, 2009 regarding
compensation plans under which our equity securities are authorized for
issuance:
Number of securities
Number of securities available for future
to be issued Weighted-average issuance under equity
upon exercise of exercise price of compensation plans
outstanding options, outstanding options, (excluding securities
Plan Category warrants and rights warrants and rights shown in first column)
------------- ------------------- ------------------- ----------------------
Equity compensation plans
approved by shareholders 0 $ 0.00 0
Equity compensation plans 0 $ 0.00 1,910,000
not approved by shareholders
Total 0 $ 0.00 1,910,000
5
1.. Effective March 18, 2008, our Board of Directors approved the adoption of
a Stock Option Plan allowing for the direct award of stock or granting of stock
options to directors, officers, employees and consultants to acquire up to a
total of 6,000,000 shares of common stock. The exercise price of the option
shall not be less than 100 percent of the Fair Market Value of a Share on the
date of grant and shall be determined by the Board of Directors of the Company
at its sole discretion.
2. On March 18, 2008, we authorized the issuance of 4,090,000 shares to the
Company officers and third party consultants for their services provided for
the year ended December 31, 2007. We used the market value of our stock on the
date the shares were authorized to determine the amount of shares to be issued
for the charges. The shares were later issued in June 2008.
Recent Sales of Unregistered Securities
During the 12 month period ended December 31, 2009, the company sold
1. 25,000,000 shares of E World common stock for cash and
2. Issued 6,872,830 shares of E World common stock for the conversion of
Convertible Notes and interest outstanding.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Forward-Looking Statements
This statement may include projections of future results and "forward looking
statements" as that term is defined in Section 27A of the Securities Act of
1933 as amended (the "Securities Act"), and Section 21E of the Securities
Exchange Act of 1934 as amended (the "Exchange Act"). All statements that are
included in this Annual Report, other than statements of historical fact, are
forward looking statements. Although management believes that the expectations
reflected in these forward looking statements are reasonable, it can give no
assurance that such expectations will prove to have been correct.
Critical Accounting Policies
IMPAIRMENT OF LONG-LIVED ASSETS AND INTANGIBLE ASSETS
Long-lived assets and intangible assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. The Company assesses the recoverability of the
long-lived assets and intangible assets (other than goodwill) by comparing the
carrying amount to the estimated future undiscounted cash flow associated with
the related assets. The Company recognizes impairment of long-lived assets and
intangible assets in the event that the net book value of such assets exceeds
the estimated future undiscounted cash flow attributed to such assets. The
Company uses estimates and judgments in its impairment tests and if different
estimates or judgments had been utilized, the timing or the amount of the
impairment charges could be different.
6
REVENUE RECOGNITION
Online game services
The Company formerly earned revenue from sales of its prepaid game cards and
prepaid online points for its online game products sold to distributors who in
turn ultimately sell them to end customers. All prepaid fees received from
distributors are initially recognized as advances from customers. Prepaid fees
are recognized as deferred revenue upon the customer's online registration and
activation of their cards or online points. Players can access our games free
of charges but may use game points for in-game premium features. The
distribution of points to end users is typically made by sales of prepaid game
cards and prepaid online points. Fees of prepaid game cards and prepaid online
points are deferred when received. Revenue is recognized over the life of the
premium features or as the premium features are consumed. Unused prepaid cards
were returned to respective distributors upon the disposal of Eworld China in
August 2008. The Company no longer has any online game revenue subsequent to
the disposal.
Media Production Consulting Services
The Company recognizes revenue in accordance with Securities and Exchange
Commission Staff Accounting Bulletin No. 104 ("SAB 104"), "Revenue Recognition
in Financial Statements." The Company accounts for revenue as a principal using
the guidance in EITF 99-19, "Reporting Revenue Gross as a Principal vs. Net as
an Agent.
Revenue represents the invoiced values of service, net of business taxes. The
media production revenue was mainly derived from the consulting services on the
media production for the "American Next Top Model" in China. Accordingly, the
related revenue was recognized when all four of the following criteria were
met: (i) pervasive evidence that an arrangement exists; (ii) delivery of the
service has occurred; (iii) the price of the services is both fixed and
determinable; and (iv) collection of the resulting receivable is reasonably
assured. The Company no longer has any media production revenue subsequent to
the disposal of Mojo Media Limited and its subsidiary in August 2008.
EWORLD INTERACTIVE, INC.
Plan of Operations
eWorld Interactive formerly operated: eWorld China (WWW.EWORLDCHINA.CN
including WWW.17DIAN.CN) and Mojo Mediaworks.
Although, Eworld Interactive was able to launch an online game as intended and
Mojo Media Works was able to produce a television show in the PRC as intended,
revenues did not develop rapidly enough to sustain operations and the Company
was unable to obtain sufficient additional financing to maintain operations.
The Company has disposed of Shanghai Eworld China Information Technologies Co.,
Ltd ("Eworld China") and Mojo Media Works Limited and its subsidiaries in
August 2008. The Company has ceased all business in online game and media
production business and became a shell company with no functional operations.
In March of 2009, the Company entered into a stock purchase agreement with Blue
Atelier, Inc. under which Blue Atelier acquired 25,000,000 newly authorized and
issued common stock of Eworld Interactive Inc. ("EWRL") after EWRL executed a
forty to one reverse split of the presently issued and outstanding EWRL common
stock in exchange for $250,000. Blue Atelier provided the Company a non-
interest bearing loan up to $250,000 for costs and fees required to maintain
the full reporting status of EWRL and quotation of its common stock on the
OTCBB with advances made under this loan to go towards the cost of the newly
issued stock. The Company completed the forty to one reverse split in September
2009 and entered into a series of agreements with various holders of
Convertible Notes to convert $2,226,185 of notes payable plus accumulated
interest to E World Common Stock in the aggregate of $501,283 to 6,872,830
shares of common stock. Following this, Blue Atelier acquired 25,000,000 of
newly authorized and issued common stock for $250,000 in accordance with the
stock purchase agreement.
7
EWRL Company expects to seek to acquire a new operating entity that may have a
different business scope.
It may be that any acquisition of a business venture that the Company makes
would be by conducting a reorganization involving the issuance of the Company '
s restricted securities. Such a reorganization may involve a merger (or
combination pursuant to state corporate statutes, where one of the entities
dissolves or is absorbed by the other), or it may occur as a consolidation,
where a new entity is formed and the Company and such other entity combine
assets in the new entity.
There are currently no contracts or agreements between any operating companies
that are searching for shell companies with which to merge.
Eworld Interactive, Inc.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Comparison of Results of Operations for the Year Ending December 31, 2009 and
December 31, 2008
The Company reported a net loss $2,570,629 for the year ending December 31,
2008 versus a net profit of $2,652,618 after Extraordinary Items for the year
ending December 31, 2009.
For the year ending December 31, 2008; primary contributors to the net loss of
$2,570,629 included professional fees of $592,723; general and administrative
expenses of $740,224; salaries and benefits of $473,847; office expenses of
$315,364; expenses related to the impairment of intangible assets and license
fees of $1,108,903; and, loan fees totaling $53,820. Interest expense for 2008
was $419,099
For the year ending December 31, 2009; primary contributors to the net profit
of $2,652,618 included professional fees of $134,185; general and
administrative expenses of $-73,934; provision for bad debts of $101,337; and
loan fees totaling $92,253. Interest expense for 2009 was $134,780 and
extraordinary items resulted in gains of $3,041,239 resulting from the
conversion of loans notes and accumulated interest.
Comparatively for the periods, net loss was significantly reduced in the year
ended 2009 as compared to 2008 by recorded gains from extra ordinary items of
$3,041,239 and the reduction in operating costs from discontinued operations.
Note: Prior period comparisons of results are impacted by developing operations
and termination of operations during the periods covered and the migration of
the Company to shell company status.
8
Results for the year ending December 31, 2009:
Selected Financial Information
Year Ended
December 31,
2008 2009
----------------- ------------
Statement of Operations Data:
Sales $ 1,731,310 $ 0
Operating Loss (3,320,794) (253,841)
Net loss (2,570,629) 2,652,618
Net (loss)/Profit per share $ (0.04) $ 0.24
Balance Sheet Data:
Total assets $ 3,798 $ 77
Total liabilities 2,636,730 119,495
----------------- ------------
Stockholders' equity (deficit) $ (2,632,932) $ (119,419)
----------------- ------------
Results of Operations
Year Ended
December 31,
2008 2009
----------- ----------
Sales $ 1,731,310 $ 0
Cost of Sales (1,767,223) 0
Operating expenses 3,284,881 253,841
Net (loss)/profit (2,570,629) 2,652,619
Liquidity and Capital Resources
During the fiscal year ending December 31, 2009 net cash used in operating
activities totaled $-322,449. Cash used in investing activities totaled $0.
Cash provided by financing activities totaled $318,185 and included $250,000
from the sales of common stock for cash.
During the fiscal year ending December 31, 2008 net cash used in operating
activities totaled $1,701,559. Cash used in investing activities totaled $6,535
for the purchase of fixed assets. Cash provided by financing activities totaled
$1,456,185 and included $1,056,185 from convertible notes issued and $400,000
from the sales of assets.
Reduction in cash for the period was $3798.
Convertible Notes
In July 2007, we sold $500,000 in convertible notes at an interest rate of 12%
per annum with a maturity period on 25 January 2008 (later extended to July 25,
2009). The notes are convertible at a 20% discount to the ten day average
trading price at the time the request for conversion. The convertible notes had
a beneficial conversion of $145,800. This was accreted as additional interest
in the year ended December 31, 2007.
In November 2007, we sold $450,000 in convertible notes at an interest rate of
12% per annum with a maturity period on 25 January 2008 (later extended to July
25, 2009). The notes are convertible at a 20% discount to the ten day average
trading price at the time the request for conversion. Also, the convertible
notes had a beneficial conversion of $199,043. This was accreted as additional
interest of the loans.
9
We extended the above convertible notes that were originally due on January 25,
2008 to July 25, 2008, and subsequently to July 25, 2009 with the terms and
conditions as laid out in the original agreement. On March 18, 2008 we
authorized 1,985,874 shares to be issued to the convertible note holders and
440,000 shares to be issued to the short term note lender as compensation for
the maturity date extensions.
On March 3, 2008, we sold $50,000 in a convertible note at an interest rate of
12% per annum that matures on March 3, 2009. The note is convertible at a 20%
discount to the ten-day average trading price of our stock at the time the
request for conversion is received. The convertible note had a beneficial
conversion of $4,348. This was accreted as additional interest expense.
During the second quarter of 2008, we sold $372,254 of convertible notes in
aggregate at an interest rate of 12% per annum with maturity dates from April 5
to July 15, 2009. These notes are convertible at a 20% discount to the ten-day
average trading price of our stock at the time the request for conversion is
received. These convertible notes had a beneficial conversion of $101,509. This
was accreted as additional interest expense.
On July 15, 2008, we sold $100,000 in a convertible note at an interest rate of
12% per annum that matures on July 15, 2009. The note is convertible at a 20%
discount to the ten-day average trading price of our stock at the time the
request for conversion is received. The convertible note had a beneficial
conversion of $68,269. This was accreted as additional interest expense.
In April 2009, the Company entered into a series of agreements with the various
holders of all convertible notes outstanding amount to $2,226,185 to convert
the full amount of $2,226,185 of notes payable plus accumulated interest of
$501,283 to E World Common Stock in the aggregate to 6,872,830 shares of common
stock.
Material Impact of Known Events on Liquidity
Other than the general economic, financial and credit problems being
experienced throughout the world markets and economies resulting in a general
reduction of available credit and investment funds; we have not identified any
known trends or any known demands, commitments, events or uncertainties that
will result in or are reasonably likely to result in a material increase or
decrease in our liquidity. We have historically financed our operations through
the sale of our common equity and continue to experience the same difficulties
in the current financial environment as we had in the past. Our limited
operational history and lack of current revenues are more of an impact on
financing efforts to sustain and expand our operations than the global economic
condition.
Cash Flow Requirements for Operations
As of December 31, 2009 we had available cash of $77. Based on our historical
cash needs for operations averaging approximately $100,000 per year, we were
unable to sustain current operations and were forced to cease operations as a
result of our inability satisfying our cash requirements with loans and equity
sales. We currently have legal and accounting expenses with no revenue
generating operations.
10
Going Concern
Our continuation as a going concern is dependent upon obtaining the additional
working capital necessary to sustain our current status. As shown in the
accompanying financial statements, the Company has incurred an accumulated
deficit of $4,332,436 to the year ended December 31, 2009. The future of the
Company is dependent upon its ability to obtain additional financing.
Management plans to seek additional financing through debt or the sale of its
common stock through private placements. There is no assurance that the will
raise sufficient funds to continue. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts of and classification of liabilities that might be
necessary in the event the Company cannot continue in existence.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements or financing activities with special
purpose entities.
11
ITEM 8. FINANCIAL STATEMENTS
Our financial statements, together with the report of auditors, are as follows:
EWORLD INTERACTIVE, INC.
FINANCIAL STATEMENTS
FOR THE FISCAL YEARS ENDED DECEMBER 31, 2008 AND DECEMBER 31, 2009
Eworld Interactive, Inc.
Financial Statements Table of Contents
Page
INDEPENDENT AUDITORS REPORT F-1
BALANCE SHEETS F-2
STATEMENTS OF OPERATIONS F-3
STATEMENT OF STOCKHOLDER'S EQUITY F-4
STATEMENT OF CASH FLOWS F-5
FOOTNOTES TO THE FINANCIAL STATEMENTS F-6
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders
Eworld Interactive, Inc.
We have audited the accompanying consolidated balance sheets of Eworld
Interactive, Inc. (the "Company" or "Eworld") and its subsidiary as of December
31, 2009 and 2008, and the related consolidated statements of operations,
stockholders' equity and comprehensive income, and cash flows for each of the
years in the two-year period ended December 31, 2009. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Eworld Interactive,
Inc and subsidiaries as of December 31, 2009 and 2008, and the results of their
operations and their cash flows for each of the years in the two-year period
ended December 31, 2009, in conformity with U.S. generally accepted accounting
principles.
The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern, as discussed in the Note 3 to the
consolidated financial statements, the Company has now became dormant with no
revenue after the disposal of Eworld China and Mojo Media Group in 2008, and
the ability to continue as a going concern is dependent upon acquiring new
company with profitable operations. The Company has also adopted additional
measures to improve the Group immediate liquidity to sustain the Group as a
going concern. The details are disclosed in Note 13 to the consolidated
financial statements
The consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Shanghai Perfect C.P.A Partnership
Certified Public Accountants
PRC, China
10 April, 2009
F-1
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2009 AND 2008
2009 2008
---------- ------------
ASSETS
Current assets:
Cash $ 77 $ 3,798
---------- ------------
Total current assets $ 77 $ 3,798
========== ============
LIABILITIES AND STOCKHOLDER'S EQUITY / (DEFICIT)
Current liabilities:
Accounts and other payables 97,905 395,545
Due to shareholders 21,590 15,000
Convertible notes - 2,226,185
---------- ------------
Total current liabilities 119,495 2,636,730
---------- ------------
Stockholders' equity / (deficit):
Preferred stock, no par value; 5,000,000 shares authorized
and no shares issued or outstanding - -
---------- ------------
Common stock, no par value, 150,000,000 shares authorized
and 33,252,480 and 59,214,516 shares issued and outstanding
at December 31, 2009 and December 31, 2008, respectively 4,214,130 3,895,402
Unissued shares no par value; 1,000,000 shares - 382,500
Comprehensive income (1,113) 74,220
Accumulated deficit (4,332,436) (6,985,054)
---------- ------------
(119,419) (2,632,932)
---------- ------------
$ 77 $ 3,798
========== ============
The accompanying notes are an integral part of these financial statements
F-2
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2009 AND 2008
2009 2008
----------- ------------
Sales $ - $ 1,731,310
Cost of sales - (1,767,223)
----------- ------------
Gross (loss)/profit - (35,913)
Bad debts 101.337 -
Professional fees 134,185 592,723
Salaries and benefits - 473,847
Depreciation and amortization - 53,820
General and administrative expenses (73,934) 740,224
Loan fees 92,253 315,364
Impairment of license fee and intangible assets - 1,108,903
----------- ------------
Total operating expense 253,841 3,284,881
----------- ------------
Operating loss (253,841) (3,320,794)
Other (expense)/income
Interest expense (134,780) (419,099)
Extraordinary Items 3,041,239 -
Gain on sale of Eworld China - 289,310
Gain on sale of Mojo Group - 879,954
----------- ------------
Total other income (expense) (2,906,459) 750,165
----------- ------------
NET PROFIT / (LOSS) 2,652,618 (2,570,629)
=========== ============
Net profit / (loss) per share $ 0.24 $ (0.04)
=========== ============
Net profit / (loss) per share fully diluted $ 0.24 $ (0.02)
=========== ============
Weighted average shares outstanding 11,136,959 58,305,425
=========== ============
Weighted average shares outstanding fully diluted 11,136,959 150,000,000
=========== ============
The accompanying notes are an integral part of these financial statements
F-3
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2009 AND 2008
Common Common Unissued
Stock Stock Stock Comprehensive Accumulated
Shares Amount Shares Amount Income Deficit Total
---------- ----------- --------- ---------- ----------- ------------ -------------
Balance at January 1, 2008 51,789,551 $ 2,974,962 1,000,000 $ 382,500 $ 30,971 $ (4,414,425) $ (1,025,992)
Convertible notes and short - - 3,335,775 315,364 - 315,364
term
borrowings
Common stock issuance to - - 4,090,000 531,700 - 531,700
officers
and consultants
Beneficial conversion of - 174,126 - - - - 174,126
convertible notes
Issuance of previous 7,424,965 847,064 (7,425,775) (847,064) - - -
unissued stocks
Cancellation of 4,030,000 - (100,750) - - - - (100,750)
treasury
shares returned by Mojo
Group
Exchange difference - - - - 43,249 43,249
Net loss, year ended Dec 31, (2,570,629) (2,570,629)
2008
---------- ----------- --------- ---------- ----------- ------------ -------------
Balance at Dec 31, 2008 59,214,516 $ 3,895,402 1,000,000 $ 382,500 $ 74,220 $ (6,985,054) $ (2,632,932)
========== =========== ========= ========== =========== ============ =============
Balance at January 1, 2009 59,214,516 $ 3,895,402 1,000,000 $ 382,500 $ 74,220 $ (6,985,054) $ (2,632,932)
Stock cancelled (4,030,000) - - - - - -
40/1 Reverse share split (53,804,866) - - - - - -
Common stock issuance for - - - - - - -
acquisition
of Mojo Mediaworks, no
par value
Cancellation of Un-Issued - - - (382,500) - - (382,500)
Stock
Issuance of Convertible - - - - - - -
Notes
Common stocks issued for 25,000,000 250,000 - - - - 250,000
cash
Conversion of convertible 6,872,830 68,728 - - - - 68,728
notes
Comprehensive Income &
Exchange difference - - - - (75,333) - (75,333)
Net Profit/(loss), year - - - - - 2,652,618 2,652,618
ended Dec 31, 2009
---------- ----------- --------- ---------- ----------- ------------ -------------
Balance at Dec 31, 2009 33,252,480 $ 4,214,130 1,000,000 $ - $ (1,113) $ (4,332,436) $ (119,419)
========== =========== ========= ========== =========== ============ =============
The accompanying notes are an integral part of these financial statements
F-4
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2009 AND 2008
2009 2008
----------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Profit (loss) $ 2,652,618 $ (2,570,629)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on sale of Mojo Group - (879,954)
Gain on sale of Eworld China - (289,310)
Impairment of intangible assets and license fee - 1,108,903
Depreciation and amortization - 105,680
Other - Comprehensive income and Unissued stock (457,833) -
Loan fees settled with Company stock - 315,364
Liabilities settled with Company stock - 531,700
Accretion of interest and beneficial conversion (2,226,185) 174,126
Changes in operating assets and liabilities:
Prepaid assets - 53,934
Prepaid assets with related party - 50,323
Accounts and other payables (297,640) 126,707
Due to shareholders 6,590 (375,333)
Deferred revenue - -
----------------- -------------
CASH USED IN OPERATING ACTIVITIES (322,449) (1,688,489)
----------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets - (6,535)
----------------- -------------
CASH USED IN INVESTING ACTIVITIES - (6,535)
----------------- -------------
CASH FLOWS FROM FINANCINGS ACTIVITIES:
Sale of assets in Eworld China - 400,000
Issuance of common stock for cash 250,000 -
Stock issued for conversion of notes 68,728
-Convertible notes issued - 1,056,185
Loan fees - -
----------------- -------------
CASH PROVIDED BY FINANCING ACTIVITIES 318,728 1,456,185
----------------- -------------
Effects of exchange rate changes - 43,249
INCREASE (DECREASE) IN CASH (3,721) (195,590)
Cash, beginning of period 3,798 199,388
----------------- -------------
Cash, end of period $ 77 $ 3,798
================= =============
Supplemental disclosure of cash flow information:
Cash paid for interest $ - $ -
================= =============
Cash paid for income taxes $ - $ -
================= =============
Non-cash financing activities:
Conversion of convertible notes $ 2,226,185 $ -
================= =============
Warrants issued with convertible notes $ - $ -
================= =============
Unissued stock for loan fee $ - $ -
================= =============
Liabilities settled with Company stock $ 501,283 $ 531,700
================= =============
Loan fees settled with Company stock $ - $ 315,364
================= =============
The accompanying notes are an integral part of these financial statements
F-5
EWORLD INTERACTIVE, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS
The Company was incorporated in Florida on July 16, 1998 under the name of
Salty's Warehouse, Inc. and was engaged in selling name brand consumer products
over the Internet. The Company focused on selling consumer electronics and
audio-video equipment such as speakers, amplifiers, and tuners, although the
Company also sold assorted other goods such as watches, sunglasses and sports
games.
On December 11, 2006, owners of an aggregate of 22,450,000 shares of common
stock, of Salty's Warehouse, Inc. sold in a private transaction all of the
shares held by them to a group of approximately 54 purchasers. As a result of
this transaction, a change of control in the Company occurred resulting,
subsequently, in a change in the name of the Company to Eworld Interactive,
Inc.
As a result of this transaction, Mr. Guy Peckham acquired 14,077,229 common
shares representing 62.7% of the total issued and outstanding common shares and
changed the name of the Company to Eworld Interactive, Inc. (Eworld). Eworld
mainly engaged in selling of online game services and media production business
in Mainland China.
As disclosed in Note 13 to the consolidated financial statements, the Company
disposed Shanghai Eworld China Information Technologies Co., Ltd ("Eworld
China") and Mojo Media Works Limited and its subsidiary in August 2008. The
Company has since ceased all business in online game and media production
business and became a dormant shelf company. The Company is currently seeking
to acquire new operating entity that may have a different business scope.
In March of 2009, the Company entered into a stock purchase agreement with Blue
Atelier, Inc. Blue Atelier will acquire 25,000,000 newly authorized and issued
common stock of Eworld Interactive Inc. ("EWRL") after EWRL executes a forty to
one reverse split of the presently issued and outstanding EWRL common stock in
exchange for $250,000 and Blue Atelier provided the Company a non-interest
bearing loan up to $250,000 for costs and fees required to maintain the full
reporting status of EWRL and quotation of its common stock on the OTCBB with
advances made under this loan to go towards the cost of the newly issued
stock..
The Company completed the forty to one reverse split in September 2009 and
entered into a series of agreements with various holders of Convertible Notes
to convert $2,226,185 of notes payable plus accumulated interest of $501,283 to
E World Common Stock in the aggregate to 6,872,830 shares of common stock.
Following this, Blue Atelier acquired 25,000,000 of newly authorized and issued
common stock for $250,000 in accordance with the stock purchase agreement.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a)Basis of Presentation
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in the United States
of America ("US GAAP"). Significant accounting policies followed by the
Company in the preparation of the accompanying consolidated financial
statements are summarized below.
b)Basis of consolidation
The consolidated financial statements include the financial statements of the
Company, its subsidiaries and Variable interest entities for which the
Company is the primary beneficiary. All transactions and balances among the
Company, its subsidiaries and VIEs' have been eliminated upon consolidation.
The Group applied FIN 46, "Consideration of Variable Interest Entities, an
Interpretation of ARB No. 51" ("FIN 46") for all the years presented. FIN 46
requires certain variable interest entities to be consolidated by the primary
beneficiary of the entity if the equity investors in the entity do not have
the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties.
F-6
c)Cash and Cash Equivalents
The Company considers all highly liquid instruments with maturity of three
months or less at the time of issuance to be cash equivalents.
d)Use of Estimates
The preparation of the financial statements in conformity with U.S. generally
accepted accounting principles ("GAAP") requires management to make
estimates, judgments and assumptions that affect the amounts reported in the
consolidated financial statements and footnotes thereto. Actual results could
differ from those estimates. Significant estimates inherent in the
preparation of the consolidated financial statements include accounting for
asset impairments, reserves established for doubtful accounts, equity-based
compensation, depreciation and amortization, business combinations, income
taxes, litigation matters and contingencies.
e)Significant Risks and Uncertainties
The Company's management believes that changes in any of the following areas
could have a material adverse effect on the Company's future financial
position, results of operations or cash flows: the Company's limited
operating history; The Company's ability to acquire new company with
profitable operations; advances and trends in new technologies and industry
standards; competition from other competitors; regulatory or other PRC
related factors; risks associated with the Company's ability to attract and
retain employees necessary to support its growth; and risks associated with
the Company's growth strategies.
f)Allowance of doubtful accounts
The Company establishes an allowance for doubtful accounts based on
management's assessment of the collectability of trade receivable. A
considerable amount of judgment is required in assessing the amount of the
allowance and the Company considers the historical level of credit losses and
applies percentages to aged receivable categories. The Company makes
judgments about the creditworthiness of each customer based on ongoing credit
evaluations, and monitors current economic trends that might impact the level
of credit losses in the future. If the financial condition of the customers
were to deteriorate, resulting in their inability to make payments, a larger
allowance may be required. Based on the above assessment, during the
reporting years, provision is made against trade receivables to the extent
which they are considered to be doubtful. Bad debts are written off when
identified.
g)Property, equipment and software
The company has no fixed assets.
h)Deferred revenue and prepaid production costs
No deferred revenues or expenses were incurred as at December 31, 2008 or for
December 31, 2009.
i)License fees
Upfront licensing fees paid to licensors are recognized as intangible assets
if the game software has reached technological feasibility when such payments
are made. Technological feasibility is established upon completion of a
working model. License fees are amortized on a straight-line basis over the
license period. The company now holds no licenses.
j)Impairment of long-lived assets and intangible assets
Long-lived assets and intangible assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. The Company assesses the recoverability of the
long-lived assets and intangible assets (other than goodwill) by comparing
the carrying amount to the estimated future undiscounted cash flow associated
with the related assets. The Company recognizes impairment of long-lived
assets and intangible assets in the event that the net book value of such
assets exceeds the estimated future undiscounted cash flow attributed to such
assets. The Company uses estimates and judgments in its impairment tests and
if different estimates or judgments had been utilized, the timing or the
amount of the impairment charges could be different.
The company now holds no long lived assets or intangible assets.
k)Revenue Recognition
Online game services
The Company earns revenue from sales of its prepaid game cards and prepaid
online points for its online game products sold to distributors who in turn
ultimately sell them to end customers. All prepaid fees received from
distributors are initially recognized as advances from customers. Prepaid
fees are recognized as deferred revenue upon the customer's online
registration and activation of their cards or online points. Players can
access our games free of charges but may use game points for in-game premium
features. The distribution of points to end users is typically made by sales
of prepaid game cards and prepaid online points. Fees of prepaid game cards
and prepaid online points are deferred when received. Revenue is recognized
over the life of the premium features or as the premium features are
consumed.
Unused prepaid cards were returned to respective distributors upon the
disposal of Eworld China in August 2008. The details of the disposal are set
in Note 13 to the consolidated financial statements. The Company no longer
has any online game revenue subsequent to the disposal.
Media Production Consulting Services
The Company recognizes revenue in accordance with Securities and Exchange
Commission Staff Accounting Bulletin No. 104 ("SAB 104"), "Revenue
Recognition in Financial Statements." The Company accounts for revenue as a
principal using the guidance in EITF 99-19, "Reporting Revenue Gross as a
Principal vs. Net as an Agent. Revenue represents the invoiced values of
service, net of business taxes. The media production revenue was mainly
derived from the consulting services on the media production for the
"American Next Top Model" in China. Accordingly, the related revenue was
recognized when all four of the following criteria were met: (i) pervasive
evidence that an arrangement exists; (ii) delivery of the service has
occurred; (iii) the price of the services is both fixed and determinable; and
(iv) collection of the resulting receivable is reasonably assured.
F-7
k)Revenue Recognition (continued)
Media Production Consulting Services (continued)
The Company no longer has any media production revenue subsequent to the
disposal of Mojo Media Limited and its subsidiary in August 2008. The details
of the disposal are set in Note 13 to the consolidated financial statements.
l)Sales and marketing costs
Sales and marketing costs consist primarily of costs of advertising and
promotional expenses, payroll and other overhead expenses incurred by the
Company's sales and marketing personnel. Advertising expenses in the amount
of $0 for the year ended December 31, 2009 (2008: $226,079) were expensed as
incurred.
m)Leases
Leases for which substantially all of the risks and rewards of ownership of
assets remain with the leasing company are accounted for as operating leases.
The company holds no leases.
n)Taxation
The Company accounts for income taxes under the provisions of SFAS No. 109,
"Accounting for Income Taxes". Under SFAS No. 109, income taxes are accounted
for under the asset and liability method. Deferred taxes are determined based
upon differences between the financial reporting and tax bases of assets and
liabilities at currently enacted statutory tax rates for the years in which
the differences are expected to reverse. The effect on deferred taxes of a
change in tax rates is recognized in income in the period of change.
A valuation allowance is provided on deferred tax assets to the extent that
it is more likely than not that such deferred tax assets will not be
realized. The total income tax provision includes current tax expenses under
applicable tax regulations and the change in the balance of deferred tax
assets and liabilities.
We adopted FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes - an interpretation of FASB Statement No. 109 ("FIN 48") as of January
1, 2007. FIN 48 clarifies the accounting for uncertainty in income taxes
recognized in companies' financial statements in accordance with FASB
Statement No. 109, Accounting for Income Taxes. As a result, we apply a more-
likely-than-not recognition threshold for all tax uncertainties. FIN 48 only
allows the recognition of those tax benefits that have a greater than fifty
percent likelihood of being sustained upon examination by the taxing
authorities. As a result of implementing FIN 48, we have reviewed our tax
positions and determined there were no outstanding, or retroactive tax
positions with less than a 50% likelihood of being sustained upon examination
by the taxing authorities, therefore the implementation of this standard has
not had a material affect on the Company.
We file income tax returns in the United States, however our subsidiaries and
VIE's operate under foreign jurisdictions.
We classify tax-related penalties and net interest as income tax expense. As
of December 31, 2009 and 2008, no income tax expense has been incurred.
o)Basic and Diluted Net Earnings (Loss) Per Share
The Company computes net income (loss) per share in accordance with SFAS No.
128, "Earnings per Share" SFAS No. 128 requires presentation of both basic
and diluted earnings per share (EPS) on the face of the income statement.
Basic EPS is computed by dividing net income (loss) available to common
shareholders (numerator) by the weighted average number of shares outstanding
(denominator) during the period. Diluted EPS gives effect to all dilutive
potential common shares outstanding during the period using the treasury
stock method and convertible preferred stock using the if-converted method.
In computing Diluted EPS, the average stock price for the period is used in
determining the number of shares assumed to be purchased from the exercise of
stock options or warrants. Diluted EPS excludes all dilutive potential shares
if their effect is anti dilutive. Diluted loss per share is equal to basic
loss per share as the Company does not have any dilutive instruments. At
December 31, 2009, there are no warrants and convertible notes outstanding.
p) Foreign Currency Translation
The functional and reporting currency of the Company is the United States
dollar ("US dollar"). Monetary assets and liabilities denominated in
currencies other than the US dollar are translated into the US dollar at the
rates of exchange ruling at the balance sheet date. Transactions in
currencies other than the US dollar during the year converted into US dollar
at the applicable rates of exchange prevailing at the first day of the month
transactions occurred. The financial records of the Company's PRC subsidiary
are maintained in its local currency, the Renminbi ("RMB"), which is its
functional currency. Assets and liabilities are translated at the exchange
rates at the balance sheet date, equity accounts are translated at historical
exchange rates and revenues, expenses, and gains and losses are translated
using the average rate for the year. Translation adjustments are reported as
cumulative translation adjustments and are shown as a separate component of
comprehensive income (loss) in the statement of stockholders' equity.
q)Comprehensive Income
The Company utilizes SFAS No. 130, "Reporting Comprehensive Income". This
statement establishes standards for the reporting and display of
comprehensive loss and its components in the financial statements. As at
December 31, 2009 and 2008, the Company's only item that represents
comprehensive income is the foreign currency translation adjustments.
r)Fair value of Financial Instruments
The carrying value of the Company's financial instruments, including cash and
cash equivalents, trade, bills and other receivables, amount due from/to
related parties and trade and other payables approximate their fair values
due to the immediate or short-term maturity of these instruments.
It is the management's opinion that the Company is not exposed to significant
interest, price or credit risks arising from these financial instruments.
The Group did not have any hedging transactions during the reporting periods.
As the functional currency of the subsidiaries operating in Mainland China is
RMB, the exchange difference on translation to US dollar for reporting
purpose is taken to other comprehensive income.
F-8
s)Business combination
The Company accounts for its business combinations using the purchase method
of accounting in accordance with SFAS 141. This method requires that the
acquisition cost to be allocated to the assets, including separate
identifiable intangible assets, and liabilities the Company acquired based on
their estimated fair values. The Company makes estimates and judgments in
determining the fair value of the acquired assets and liabilities based on
independent appraisal reports as well as its experience with similar assets
and liabilities in similar industries. If different judgment or assumptions
were used, the amounts assigned to the individual acquired assets or
liabilities could be materially affected.
t)Concentration of Credit Risk
Financial instruments that potentially expose the Company to significant
concentrations of credit risk consist principally of cash and cash
equivalents. The Company places its cash and cash equivalents with financial
institutions with high-credit ratings and quality. Substantially 65% of our
revenue came from one customer in 2008. The company had no revenue in 2009.
u)Recent Accounting Pronouncements
In June 2009, the FASB issued SFAS No. 167, "Amendments to FASB
Interpretation No. 46(R)," ("SFAS 167"). The amendments include: (1) the
elimination of the exemption for qualifying special purpose entities, (2) a
new approach for determining who should consolidate a variable-interest
entity, and (3) changes to when it is necessary to reassess who should
consolidate a variable-interest entity. SFAS 167 is effective for the first
annual reporting period beginning after November 15, 2009 and for interim
periods within that first annual reporting period. The Company will adopt
SFAS 167 in fiscal 2010. The Company does not expect that the adoption of
SFAS 167 will have a material impact on the financial statements.
In June 2009, the FASB issued SFAS No. 166, "Accounting for Transfers of
Financial Assets, an amendment to SFAS No. 140," ("SFAS 166"). SFAS 166
eliminates the concept of a "qualifying special-purpose entity," changes the
requirements for derecognizing financial assets, and requires additional
disclosures in order to enhance information reported to users of financial
statements by providing greater transparency about transfers of financial
assets, including securitization transactions, and an entity's continuing
involvement in and exposure to the risks related to transferred financial
assets. SFAS 166 is effective for fiscal years beginning after November 15,
2009. The Company will adopt SFAS 166 in fiscal 2010. The Company does not
expect that the adoption of SFAS 166 will have a material impact on the
financial statements.
In June 2009, the FASB issued SFAS No. 165, "Subsequent Events," ("SFAS No.
165"). SFAS 165 establishes general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or are available to be issued. SFAS 165
applies to both interim financial statements and annual financial statements.
SFAS 165 is effective for interim or annual financial periods ending after
September 15, 2009. SFAS 165 does not have a material impact on our financial
statements.
In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities, ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses
whether instruments granted in share-based payment transactions are
participating securities prior to vesting, and therefore need to be included
in the computation of earnings per share under the two-class method as
described in FASB Statement of Financial Accounting Standards No. 128,
"Earnings per Share." FSP EITF 03-6-1 is effective for financial statements
issued for fiscal years beginning on or after December 15, 2008 and earlier
adoption is prohibited. The Company does believe that FSP EITF 03-6-1 would
have material effect on its consolidated financial position.
F-9
u)Recent Accounting Pronouncements (continued)
In May 2008, the FASB issued SFAS No. 162 "The Hierarchy of Generally
Accepted Accounting Principles". SFAS 162 identifies, within the accounting
literature established by the FASB, the sources and hierarchy of the
accounting principles to be used in the preparation of financial statements
of nongovernmental entities that are presented in conformity with GAAP. SFAS
162 is effective 60 days following the Securities and Exchange Commission's
approval of the Public Company Accounting Oversight Board amendments to AU
Section 411 "The Meaning of Present Fairly in Conformity with Generally
Accepted Accounting Principles".
In May 2008, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 163, "Accounting for Financial Guarantee Insurance Contracts-and
Interpretation of FASB Statement No. 60". SFAS No. 163 clarifies how
Statement 60 applies to financial guarantee insurance contracts, including
the recognition and measurement of premium revenue and claims liabilities.
This statement also requires expanded disclosures about financial guarantee
insurance contracts. SFAS No. 163 is effective for fiscal years beginning on
or after December 15, 2008, and interim periods within those years. SFAS No.
163 has no effect on the Company's financial position, statements of
operations, or cash flows at this time.
In March 2008, the FASB issued SFAS No. 161 "Disclosures About Derivative
Instruments and Hedging Activities - an amendment to FASB Statement No.133".
The new standard requires enhanced disclosures to help investors better
understand the effect of an entity's derivative instruments and related
hedging activities on its financial position, financial performance, and cash
flows. Statement 161 is effective for financial statements issued for fiscal
years and interim periods beginning after November 15, 2008, with early
application encouraged. We do not believe that the implementation of SFAS 161
will have a material impact on our results of operations and financial
condition.
NOTE 3 - GOING CONCERN
The accompanying consolidated financial statements have been prepared assuming
that we will continue as a going concern. As the Company has now became dormant
with no revenue after the disposal of Eworld China and Mojo Media Group in
2008. Our ability to continue as a going concern is dependent upon acquiring
new company with profitable operations. We also adopted additional measures to
improve the Group immediate liquidity to sustain the Group as a going concern.
As disclosed in Note 16 to the consolidated financial statements, on 30 March
2009, the Company issued and allotted 25,000,000 newly authorized and issued
shares to Blue Atelier Inc., for US$250,000. Blue Atelier Inc. has also
provided US$250,000 of non interest bearing loan to the Company prior to the
closing of the purchase agreement for meeting the cost and fee required to
maintain the full reporting status of the Group and daily operating costs. The
Company completed the forty to one reverse split in September 2009 and entered
into a series of agreements with various holders of Convertible Notes to
convert $2,226,185 of notes payable plus accumulated interest of $501,283 to E
World Common Stock in the aggregate to 6,872,830 shares of common stock.
Following this, Blue Atelier acquired 25,000,000 of newly authorized and issued
common stock for $250,000 in accordance with the stock purchase agreement.
We also intend to use other borrowings and security sales to mitigate the
affects of our cash position, however, no assurance can be given that debt or
equity financing, if and when required, will be available. The consolidated
financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets and classification of
liabilities that might be necessary should we be unable to continue in
existence.
NOTE 4 - LICENSE FEES
The company holds no licenses and incurred no license fees.
NOTE 5 - PROPERTY AND EQUIPMENT
The company has no Property and Equipment at December 31, 2008 or December 31,
2009.
Depreciation expense for the year ended December 31, 2009 and 2008 was Nil and
$53,820 respectively.
All fixed assets were either sold or written off as both Eworld China and Mojo
Group were disposed in August 2008. The detail of the disposal is described in
Note 13 to the consolidated financial statements.
NOTE 6 - IMPAIRMENT OF LONG-LIVED ASSETS AND INTANGIBLE ASSETS
The company has written-off the balance of the unamortized license fees on our
online game Battlezone, and terminated the game with our gaming provider, Sidus
in July 2008 and held no Intangible Assets at December 31, 2009. The
unamortized gaming development cost was also written-off as impaired subsequent
to the termination of the online game with Sidus. The total amount of
impairment for the year ended December 31, 2008 was $1,120,505.
F-10
NOTE 7 - ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
December 31, 2009 December 31, 2008
----------------- -----------------
Accounts payable $ - $ 2,255
Professional fees payable 97,905 136,734
Accrued interests - 276,556
Other accrued expenses - 1,500
----------------- -----------------
$ 119,495 $ 415,545
================= =================
NOTE 8 - SHORT-TERM BORROWINGS
In March of 2009, the Company entered into a stock purchase agreement with Blue
Atelier, Inc. Blue Atelier will acquire 25,000,000 newly authorized and issued
common stock of Eworld Interactive Inc. ("EWRL") after EWRL executes a forty to
one reverse split of the presently issued and outstanding EWRL common stock in
exchange for $250,000 and Blue Atelier provided the Company a non-interest
bearing loan up to $250,000 for costs and fees required to maintain the full
reporting status of EWRL and quotation of its common stock on the OTCBB with
advances made under this loan to go towards the cost of the newly issued stock.
Following this, Blue Atelier acquired 25,000,000 of newly authorized and issued
common stock for $250,000 in accordance with the stock purchase agreement.
On September 26, 2006, Eworld China entered into an agreement with Mr. Laurence
Lee, the shareholder of Eworld China, to borrow a total amount of $220,000
("borrowed amount") which is unsecured and non-interest bearing and is
repayable on demand. The borrowed amount was in fact provided by Crown Ocean
International Ltd. ("Crown Ocean" ) to Mr. Laurence Lee through a separate
agreement. The terms of the agreement only allows Mr. Laurence Lee to lend the
borrowed amount to Eworld China which is non-interest bearing and is repayable
within 15 working days after the payments were received from Eworld China. In
addition, Mr. Laurence Lee pledged his equity interest in Eworld China as a
security in which his liability to Crown Ocean shall not exceed the net value
of his equity interest in Eworld China. As at December 31, 2007, Mr. Laurence
Lee holds 80% of the equity interest in Eworld China. The related short-term
borrowings were repaid during 2008 and there was not further borrowings noted.
NOTE 9 - INCOME TAX
United States
We file a consolidated tax return in the United States for the income that
would be subject to their tax.
Cayman Islands and British Virgin Islands
Under the current tax laws of the Cayman Islands and British Virgin Islands,
the Company and its subsidiaries are not subject to tax on their income or
capital gains.
Hong Kong
The Company's subsidiary operations are not subject to the taxation in Hong
Kong.
PRC Income Tax
The Company's subsidiaries and VIE subsidiaries in the PRC are subject to
Enterprise Income Tax ("EIT") on the taxable income as reported in their
respective statutory financial statements adjusted in accordance with the
Income Tax Law of the People's Republic of China concerning Foreign Investment
Enterprise and Foreign Enterprises and the Enterprise Income Tax Law
(collectively the "PRC Income Tax Laws"), respectively. Pursuant to the PRC
Income Tax Laws, the Group's subsidiaries and VIE subsidiaries in the PRC are
generally subject to EIT at a statutory rate of 25%. No PRC income tax has been
provided as the Company's subsidiary in the PRC recorded and no cumulative net
operating profits for the year ended December 31, 2009 (2008: $108,913). After
the Company disposed Eworld China and Mojo Media Group in August 2008, the
related accumulated losses in these disposed companies are no longer allow to
utilize in offsetting against future taxable income.
We have tax loss carry forward for United States tax purposes of approximately
$ (2008: $4,164,357). The loss carry-forwards expire in the years 2021-2022.
There are no significant book-tax return differences in reporting of items for
the years ended December 31, 2008 and 2009. There are no State income taxes for
the years ended December 31, 2008 and 2009.
F-11
PRC Income Tax (continued)
The components of the net deferred tax asset at December 31, 2009 and 2008 and
the effective tax rate and the estimated amount of the valuation allowance are
scheduled below (excluding the accumulative losses for Eworld China and Mojo
Media Group which no longer able to be utilized for offsetting future taxable
income after disposal):
December 31, 2009 December 31, 2008
----------------- -----------------
$ - $ 4,596,791
Cumulative Combined Net
Operating Losses
Effective Tax Rate - 28.00%
Deferred Tax Asset $ - $ 1,287,101
Valuation Allowance $ - $ (1,287,101)
----------------- -----------------
Net Deferred Tax Asset - -
NOTE 10 - CONVERTIBLE NOTES
We sold $1,000,000 in convertible notes with a detachable warrant in the
quarter ending March 31, 2007 for net proceeds of $915,000 after loan fees of
$85,000. The terms of the notes are to provide 6% interest accruing beginning
90 days from the effective date, payable thereafter and have a one-year
maturity. The notes are convertible at $0.60 per share and include a warrant
for the purchase of an additional share at $0.80 for a period ending 2 years
after the notes are issued. We are under the obligation to register the
underlying equity with penalty if not declared effective. We did not register
our shares in accordance with the agreements and have recorded a loan fee equal
to the penalty required by the agreements. The loan fee is $382,500 and was
calculated based on our stock's trading price less an estimate of a discount
for the thinly traded market as compared to the quantity of shares issued. The
penalty shares were not issued at December 31, 2008.
When we sold the convertible notes we determined the fair market value of the
warrants and of the convertible notes and allocated the proceeds based on the
percentage of fair value of the warrants and convertible notes. The amount
allocated to the warrants was $194,527 and to the notes was $805,473. The
warrants fair value was determined by the Black-Scholes pricing model with the
following assumptions - Stock Price at grant date $0.65; Strike price $0.80;
Term 2 years; Volatility 75%; Dividend Yield 0%; Interest Yield 4.94% . The
convertible notes market value was determined based on the maturity, conversion
feature and interest rate. There was a beneficial conversion relating to the
convertible notes based on the value of our stock when the notes were issued.
The beneficial conversion was $277,860. The beneficial conversion was expensed
as additional interest in the year ending December 31, 2007. The difference
between the issue price of the notes and the maturity value of the notes is
accreted as additional interest expense over the term of the notes. On June 11,
2007 the notes were converted into 1,666,667 shares of common stock.
Accordingly the accretion of the additional interest of $194,527 was recognized
in the year ended December 31, 2007.
In July 2007, we sold $500,000 in convertible notes at an interest rate of 12%
per annum with a maturity period on 25 January 2008 (later extended to July 25,
2009). The notes are convertible at a 20% discount to the ten day average
trading price at the time the request for conversion. The convertible notes had
a beneficial conversion of $145,800. This was accreted as additional interest
in the year ended December 31, 2007.
In November 2007, we sold $450,000 in convertible notes at an interest rate of
12% per annum with a maturity period on 25 January 2008 (later extended to July
25, 2009). The notes are convertible at a 20% discount to the ten day average
trading price at the time the request for conversion. Also, the convertible
notes had a beneficial conversion of $199,043. This was accreted as additional
interest of the loans.
We extended the above convertible notes that were originally due on January 25,
2008 to July 25, 2008, and subsequently to July 25, 2009 with the terms and
conditions as laid out in the original agreement. On March 18, 2008 we
authorized 1,985,874 shares to be issued to the convertible note holders and
440,000 shares to be issued to the short term note lender as compensation for
the maturity date extensions.
On March 3, 2008, we sold $50,000 in a convertible note at an interest rate of
12% per annum that matures on March 3, 2009. The note is convertible at a 20%
discount to the ten-day average trading price of our stock at the time the
request for conversion is received. The convertible note had a beneficial
conversion of $4,348. This was accreted as additional interest expense.
During the second quarter of 2008, we sold $372,254 of convertible notes in
aggregate at an interest rate of 12% per annum with maturity dates from April 5
to July 15, 2009. These notes are convertible at a 20% discount to the ten-day
average trading price of our stock at the time the request for conversion is
received. These convertible notes had a beneficial conversion of $101,509. This
was accreted as additional interest expense.
On July 15, 2008, we sold $100,000 in a convertible note at an interest rate of
12% per annum that matures on July 15, 2009. The note is convertible at a 20%
discount to the ten-day average trading price of our stock at the time the
request for conversion is received. The convertible note had a beneficial
conversion of $68,269. This was accreted as additional interest expense.
If all of the convertible notes were converted we would need to change the
authorized amount of our shares because the conversion would exceed 150,000,000
shares. Based on the closing price of our stock on December 31, 2008
171,531,750 shares would be issued for the convertible notes.
The Company entered into a series of agreements with various holders of
Convertible Notes to convert $2,226,185 of notes payable plus accumulated
interest of $501,283 to E World Common Stock in the aggregate to 6,872,830
shares of common stock.
F-12
NOTE 11 - RELATED PARTY TRANSACTIONS
The Company records transactions of commercial substance with related parties
at fair value as determined with management. The following is a list of related
party transactions and balances as at December 31, 2009 and 2008:
2009 2008
------- -------
Closing balances as at December 31,
Prepaid assets with related parties $ - $ -
Due to shareholders 15,000 15,000
Short term borrowings - -
------- -------
Transaction for the year:
Consulting fees $ - $60,100
Rental expenses for occupancy by management - 16,941
------- -------
NOTE 12 - ACQUISITION AND DISPOSAL OF SUBSIDIARIES
Mojo Group
On May 11, 2007, we acquired Mojo, a company that is engaged in the production
and distribution of television programs in the Peoples Republic of China (PRC).
With the addition of Mojo, we have created a branded media for distribution and
sales through traditional broadcast platforms as well as Internet, Mobile, IPTV
and SMS. Mojo intends to develop media for our web portal and with active game
and other media draws intends to develop advertising sales from the portal
site. Our product portfolio now includes a broad spectrum of TV production,
online gaming, virtual community and wireless advertising which allows us to
offer a more comprehensive and better integrated set of interactive
entertainment content for our users.
We acquired all of the outstanding shares of MOJO by issuing 7 million shares
of our stock. In conjunction with this transaction, Mr. Peckham returned 7
million shares of his stock to the company to be used in the acquisition. The
net result of the acquisition was the same number of outstanding shares before
and after the transaction. We believe the people and infrastructure acquired
will have a benefit to the company We recorded an intangible asset on the
transaction of $490,551 as this related to the value of the existing license
that we had acquired from Open TV
The acquisition has been accounted for under the purchase accounting method.
Our consolidated financial statements for the year ended December 31, 2007
include the financial results of Mojo subsequent to the acquisition date of May
11, 2007.
The aggregate Mojo purchase price was allocated to the assets acquired and
liabilities assumed based on their estimated fair values at the date of the
acquisition.
On July 31, 2008, we entered into a Term Sheet agreement with Blue Atelier,
Inc., a Nevada company, to purchase all the assets and liabilities ("Equity
Interest") of our subsidiary group, Mojo Media Works, Limited and its
subsidiaries/Variable Interest Entity (together referred to as the "Mojo
Group") for a total consideration of $411,967 and 4,030,000 common shares of
EWRL currently held by the Mojo management. The cash consideration of $411,967
shall be paid by Blue Atelier, Inc. on an "earn out" basis, which means the
payment will be paid out from the profits generated by the Mojo Group in the
future before any pay out of shareholder dividends and management bonuses. The
4,030,000 common shares of EWRL which is directly or indirectly held by Mojo
management have been surrendered to us.
We have assessed the receivable of $411,967 in December 2008 and considered it
to be uncollectible and fully written-off as bad debts. The resulting gain in
relation to sale of Mojo Group was $879,954.
Eworld China
On May 1, 2007 Eworld China became a variable interest entity and we have
combined the operations of this entity with our operations after that date.
On August 11, 2008, we entered into a Letter of Intent ("LOI") with Big Leap
International Limited ("Big Leap"), a subsidiary of CY Foundation Group Limited
listed in the Hong Kong Stock Exchange, to enter an arrangement of contract of
service with Laurence Li and a selected number of his team members in EW
Shanghai; and to acquire the operating platform, 4 servers and a list of assets
of Eworld China for a total consideration of $400,000. The resulting gain in
relation to sale of Eworld China was $300,912.
F-13
NOTE 13 - COMMON STOCK AND WARRANTS
On March 18, 2008, we extended the convertible notes that were originally due
on January 25, 2008 to July 25, 2008, and subsequently to July 25, 2009 with
the terms and conditions as laid out in the original agreement. We authorized
1,985,874 shares to be issued to the convertible note holders and 440,000
shares to be issued to the short-term note lender as compensation for the
maturity date extensions. We recorded $315,364 as a loan fee for the extension.
The fee was determined based on the market value of our stock on the date of
the extension.
On March 18, 2008 our Board of Directors approved the adoption of a Stock
Option Plan allowing for the direct award of stock or granting of stock options
to directors, officers, employees and consultants to acquire up to a total of
6,000,000 shares of common stock. The exercise price of the option shall not be
less than 100 percent of the Fair Market Value of a Share on the date of grant
and shall be determined by the Board of Directors of the Company at its sole
discretion.
On March 18, 2008, we authorized the issuance of 4,090,000 shares to be issued
to our officers and third party consultants for payment of liabilities for
services provided. We recorded $531,700 as compensation and professional fee
expense. We used the market value of our stock on the date the shares were
authorized to determine the amount of shares to be issued for the charges. The
shares were later issued in June 2008.
In 2009, Company entered into a series of agreements with various holders of
Convertible Notes to convert $2,226,185 of notes payable plus accumulated
interest of $501,283 to E World Common Stock in the aggregate to 6,872,830
shares of common stock.
In October 2009, the Company issued 25,000,000 of newly authorized and issued
common stock for $250,000 in accordance with the stock purchase agreement to
Blue Atelier, Inc.
At December 31, 2009, we have no warrants outstanding.
Grant Date Number of Warrants Exercise Price Expiry Date
February 2, 2007 970,000 $0.8 December 31, 2008
February 14, 2007 1,000,000 $0.8 February 14, 2008
April 30, 2007 866,670 $0.8 December 31, 2008
---------
2,836,670
Less: expired warrants (2,836,670)
---------
-
NOTE 14 - OPERATING LEASE COMMITMENTS:
The Company has operating lease agreements at December 31, 2009.
NOTE 15 - CAPITAL COMMITMENTS:
The Company had no capital commitments as of December 31, 2009.
NOTE 16 - SUBSEQUENT EVENTS
1. Blue Atelier acquired 25,000,000 newly authorized and issued common stock
of Eworld Interactive Inc. ("EWRL") after EWRL executed a forty to one reverse
split of the presently issued and outstanding EWRL common stock in exchange for
$250,000.
2. The Company is a shell company with no functional operations, the Company
is seeking to acquire a new operating entity with a different business scope.
Any acquisition of a business venture involving reorganization and issuance of
the Company's restricted securities. There are currently no contracts or
agreements between any companies that are searching for shell companies with
which to merge although a number of opportunities are being considered.
F-14
ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no disagreements between the Company and its independent
accountants on any matter of accounting principles or practices or financial
statement disclosure. As reported on our Current report on Form 8-K filed on
April 3, 2009, effective as of March 30, 2009 Weaver & Martin, LLC was
dismissed as the independent registered public accounting firm of Eworld
Interactive, Inc. On that date, the Board of Directors approved the engagement
of Shanghai Perfect C.P.A. Partnership as its independent registered public
accounting firm.
ITEM 9A. CONTROLS AND PROCEDURES
We carried out an evaluation of the effectiveness of the design and operation
of our disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) as of December 31, 2009. This evaluation was carried
out under the supervision and with the participation of our Principal Executive
Officer, Guy Peckham and Chief Financial Officer, Gerry Shirren. Based upon
that evaluation, our Principal Executive Officer and Principal Financial
Officer concluded that, as of December 31, 2009, our disclosure controls and
procedures were effective.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in our reports
filed or submitted under the Exchange Act are recorded, processed, summarized
and reported, within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed under the Exchange Act is accumulated and communicated to
management, including our Principal Executive Officer and Principal Financial
Officer, to allow timely decisions regarding required disclosure.
A control system, no matter how well conceived or operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met.
Management's Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal
control over financial reporting for our company. Our control system is
designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in
accordance with U.S. generally accepted accounting principles.
Our internal control over financial reporting includes those policies and
procedures that pertain to the maintenance of records that, in reasonable
detail, accurately and fairly reflect the transactions and disposition of our
assets; provide reasonable assurance that the transactions are recorded as
necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles; that receipts and expenditures are
being made only with proper authorizations of management and directors; and
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of company assets that could have
a material effect on the financial statements.
All internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement
preparation and presentation. Because of the inherent limitations of internal
control, there is a risk that material misstatements may not be prevented or
detected on a timely basis by internal control over financial reporting.
However, these inherent limitations are known features of the financial
reporting process. Therefore, it is possible to design into the process
safeguards to reduce, though not eliminate, this risk.
12
Because of inherent limitations, internal control over financial reporting may
not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.
Management, including our President acting as principal executive officer and
our principal financial officer, assessed the effectiveness of our internal
control over financial reporting as of December 31, 2009. In making this
assessment, management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control
Over Financial Reporting - Guidance for Smaller Public Companies published in
June of 2006 and the PCAOB preliminary staff views published October 17, 2007.
Based on our assessment and those criteria, management concluded that during
the period covered by this report, our internal control and procedures over
financial reporting was effective as of December 31, 2009.
Attestation Report of the Registered Public Accounting Firm
This annual report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management's report in this annual
report.
ITEM 9B. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting (as such
term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during
the most recent fiscal quarter that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS: COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
ACT
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The directors and officers are as follows:
Name Age Position Tenure
Guy Peckham 46 President, CEO, Secretary December 2006 to
and Director April 08, 2010
Gerry Shirren 51 CFO and Director October 2009 to present
President April 12, 2010 to Present
Harold Rothstein 48 Director October 2009 to present.
13
MR. GUY PECKHAM has prior operational and financial experience from his
development of the Canadian based Goodlife Brands. Goodlife Brands reached
CAD$128,000,000 in annual sales employed over 550 employees across Canada
before it was sold in 2001. His responsibilities at Goodlife included the day
to day management of the organization, developing and implementing strategies,
preparing and reporting budgets and monthly/ quarterly results to the board of
directors, recruitment of the executive and senior management team, the
purchase and disposal of major assets as well as negotiating purchase
agreements with suppliers and sales programs with major customers.
After the sale of GoodLife Brands, Mr. Peckham was an executive director with
the Calneva Financial Group an integrated financial advisory firm specialized
in linking China based companies with foreign capital markets. Since joining
Calneva he has split his time between Canada and China preparing candidate
companies for public and private financing events. Mr. Peckham has worked with
Shanghai-based online gaming company T2 and Shanghai-based digital signage
network provider i-level Media Group.
Mr. Peckham resigned from the Board of Directors on April 08th, 2010.
MR. SHIRREN, age 51, has held senior positions in media and entertainment
companies for over 20 years, including production and distribution companies
based in Europe and the US specializing in family programming. He has been
extensively involved in international co-production, financing including many
multi-territory co-productions between Europe and Asia. From 1997 to 2005, Mr.
Shirren was Joint-Managing Director of TerraGlyph Productions and TerraGlyph
Rights Limited, an animation production and distribution studio based in
Dublin, Ireland and from 2005 to May 2008, as Joint Managing Director of
Digital Animation Media Limited, an animation production and animation software
tools company servicing the animation industry. Most recently, since October
2007 until May 2009, he was Consultant CFO working with Valcom Inc, (OTCBB:
VLCO) and during this time, the company successfully reorganized in Chapter 11
bankruptcy, emerged from bankruptcy in September 2008 and acquired the TV
network subsidiary, My Fam.ily TV (formerly Faith TV). Mr. Shirren is a Fellow
of the Association of Chartered Certified Accountants (FCCA) having qualified
as a Certified Account (ACCA) in 1988.
MR. ROTHSTEIN, age 48, has many years of experience in the hospitality industry
starting with the restaurants; Don Roth's Blackhawk and Anne Morton's Arnies in
Chicago. Mr. Rothstein's career took him to Dallas with the Roma Corporation.
He later opened JP Eating Place in Chicago with Jorge Perez and also JP's in
the Tuscany Hotel in Chicago. His next project in June of 1991 was Hi Tops, the
famous sports bar in Chicago and subsequently with Hi Tops opening in 2000
Phoenix Arizona and 2001 Pittsburgh, Pennsylvania. In July 2007, Mr. Rothstein
partnered in the purchase of the Greek Isles Hotel and Casino in Las Vegas.
Other business ventures include Tequila Roadhouse, Chicago, Zella, Chicago, The
Black Duck, Chicago, The W Hotel Lakeshore, Chicago, Satly's , Seattle, Mie
Shannon's Steakhouse, St. Louis, Marriot at the Quorum, Addison, Yesterdays,
Ft. Lauderdale and Caf{e'} Pacific in Dallas. Mr. Rothstein is also a
consultant to the Office of Commissioner of Major League baseball, Bud Selig
and on the Advisory Board of the Mayor's office in Pittsburgh, PA.
14
The directors shall be elected at an annual meeting of the stockholders and
except as otherwise provided within the Bylaws of Eworld Interactive, Inc., as
pertaining to vacancies, shall hold office until his successor is elected and
qualified.
The directors of Eworld Interactive, Inc. are aware of no petitions or
receivership actions having been filed or court appointed as to the business
activities, officers, directors, or key personnel of Eworld Interactive, Inc.
There are no familial relationships among the officers and directors, nor are
there any arrangements or understanding between any of our directors or
officers or any other person pursuant to which any officer or director was or
is to be selected as an officer or director.
No non-compete or non-disclosure agreements exist between the management of
Eworld Interactive, Inc. and any prior or current employer.
There are no employees under contract with Eworld Interactive, Inc.
Eworld Interactive, Inc. has not, nor proposes to do so in the future, make
loans to any of its officers, directors, key personnel, 10% stockholders,
relatives thereof, or controllable entities.
Board of Director Meetings and Committees
The Board of Directors held no formal meetings during the year ended December
31, 2009. The board has conducted board activities through unanimous consent
board resolutions in lieu of meetings. The directors received no compensation
for their role as directors for the year ended December 31, 2009.
The board has not defined any committees and performs all functions that would
be delegated.
CODE OF ETHICS
The board of directors of Eworld Interactive, Inc. has not adopted a written
Code of Ethics. The board of directors believes our current business conduct
and ethics promote honest and ethical conduct, handling of conflicts which may
arise, timely and complete reporting and disclosure compliance with the
Securities and Exchange Commission, compliance with all applicable governing
laws, and accountability for our conduct.
The Company is currently managed by a sole officer and director. The company
intends to adopt a written code of ethics as soon as the executive management
and Board of Directors is expanded.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the company's
directors and officers, and persons who own more than ten-percent (10%) of the
company's common stock, to file with the Securities and Exchange Commission
reports of ownership on Form 3 and reports of change in ownership on Forms 4
and 5. Such officers, directors and ten-percent stockholders are also required
to furnish the company with copies of all Section 16(a) reports they file.
Based solely on its review of the copies of such forms received by the company
and on written representations from certain reporting persons, the company
believes that all Section 16(a) reports applicable to its officers, directors
and ten-percent stockholders with respect to the fiscal year ended December 31,
2008 were filed except for Form 4 information relating to a disclosed
transaction with Mr. Peckham which occurred in March of 2008.
15
CERTAIN LEGAL PROCEEDINGS
No director, nominee for director, or executive officer has appeared as a party
in any legal proceeding material to an evaluation of his ability or integrity
during the past five years.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Non-Equity Nonqualified
Incentive Deferred
Stock Option Plan Compensation All Other
Name and Salary Bonus Awards Awards Compensation Earnings Compensation Total
Principal Year ($) ($) ($) ($) ($) ($) ($) ($)
Position
GUY
PECKHAM 2009 45,000 0 0 0 0 0 0 45,000
President 2008 60,000 0 0 0 0 0 0 60,000
and CEO
(Resigned
April
2010)
GERRY SHIRREN 2009 15,0000 0 0 0 0 15,000
Notes:
We had no pension plans or plans or agreements which provide compensation on
the event of termination of employment or change in control of us and have
therefore eliminated a column specified by Item 402 (c)(2) titled "Change in
Pension Value and Nonqualified Deferred Compensation Earnings (h)" in the above
Summary Compensation Table No family relationships exist among any directors,
executive officers, or persons nominated or chosen to become directors or
executive officers. As of December 31, 2009, Eworld Interactive, Inc. has no
group life, health, hospitalization or medical plans available for its
employees. Further, Eworld Interactive, Inc. had no pension plans or plans or
agreements which provide compensation on the event of termination of employment
or change in control of us.
OPTION GRANTS AND EXERCISES
Effective March 18, 2008, our Board of Directors approved the adoption of a
Stock Option Plan allowing for the direct award of stock or granting of stock
options to directors, officers, employees and consultants to acquire up to a
total of 6,000,000 shares of common stock. The exercise price of the option
shall not be less than 100 percent of the Fair Market Value of a Share on the
date of grant and shall be determined by the Board of Directors of the Company
at its sole discretion.
On March 18, 2008, we authorized the issuance of 4,090,000 shares to the
Company's officers.
16
EMPLOYMENT AGREEMENTS
As of the year ended December 31, 2008, Eworld Interactive, Inc. has not
entered into formal employment agreements with any of our executive officers or
directors. Until a formal employment agreement is put in place, Mr. Peckham is
accepting compensation at a rate of $60,000 per year, based on the Company's
ability to pay.
COMPENSATION OF DIRECTORS
Eworld Interactive paid no compensation to any directors as director's fees,
nor any fees for attendance or similar remuneration or reimbursement for any
out-of-pocket business expenses incurred, for the year ended December 31, 2009.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth, as of December 31, 2009; the beneficial
ownership of Eworld Interactive, Inc. common stock by each person known to the
company to beneficially own more than five percent (5%) of the company's common
stock, including options, outstanding as of such date and by the officers and
directors of the company as a group. Except as otherwise indicated, all shares
are owned directly:
Common Stock
Amount and Nature Percentage
Name and Address of Beneficial Owner of Beneficial Ownership Acquirable of Class
------------------------------------ ----------------------- ---------- ----------
Guy Peckham 96,286 0 0.002%
President and Director
Officers and Directors as a Group 0 0.002%
Total Shares Issued and Outstanding 33,380,083
Owners of 5% or More
Blue Atelier 25,000,000 0 74.89%
There were no options or warrants outstanding at December 31, 2009.
Total shares outstanding as of December 31, 2009 were 33,252,480 held by
approximately 72 shareholders of record and an undetermined number of holders
in street name.
All ownership is beneficial and of record except as specifically indicated
otherwise. Beneficial owners listed above have sole voting and investment power
with respect to the shares shown unless otherwise indicated.
17
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Director Independence/Audit Committee
The board of directors of Eworld Interactive, Inc. has determined that for the
purpose of and pursuant to the instructions of item 401(e) of regulation S-B
titled Audit Committee Financial Expert, Inc. Eworld Interactive, Inc. does not
have a designated Audit Committee and relies on the board of directors to
perform those functions. Guy Peckham or Gerry Shirren are not independent as
defined by item 401(e)(ii) of regulation S-B.
Related Transactions
On July 31, 2008, we entered into a Term Sheet agreement with Blue Atelier,
Inc., a Nevada company, to purchase all the assets and liabilities ("Equity
Interest") of our subsidiary group, Mojo Media Works, Limited and its
subsidiaries/Variable Interest Entity (together referred to as the "Mojo
Group") for a total consideration of $411,967 and 4,030,000 common shares of
EWRL currently held by the Mojo management. The cash consideration of $411,967
shall be paid by Blue Atelier, Inc. on an "earn out" basis, which means the
payment will be paid out from the profits generated by the Mojo Group in the
future before any pay out of shareholder dividends and management bonuses. The
4,030,000 common shares of EWRL which is directly or indirectly held by Mojo
management has been surrendered to us.
We have assessed the receivable of $101,337 in December 2009 and considered it
to be uncollectible and fully written-off as bad debts.
On March 30, 2009, the Company entered into a stock purchase agreement with
Blue Atelier, Inc., to pledge 10,000,000 pre-reverse split common stocks of
EWRL as collateral and to reduce outstanding debt with the creditor to a
balance not exceeding $100,000 in order to secure the following financing and
security sales:
1. Blue Atelier will acquire 25,000,000 newly authorized and issued common
stock of Eworld Interactive Inc. ("EWRL") after EWRL executes a forty to
one reverse split of the presently issued and outstanding EWRL common
stock in exchange for $250,000.
2. The Company completed the forty to one reverse split in September 2009 and
entered into a series of agreements with various holders of Convertible
Notes to convert $2,226,185 of notes payable plus accumulated interest of
$501,283 to E World Common Stock in the aggregate to 6,872,830 shares of
common stock. Following this, Blue Atelier acquired 25,000,000 of newly
authorized and issued common stock for $250,000 in accordance with the
stock purchase agreement.
3. After the Company became a shell company with no functional operations,
the Company is seeking to acquire a new operating entity with a different
business scope. Any acquisition of a business venture involving
reorganization and issuance of the Company's restricted securities. There
are currently no contracts or agreements between any companies that are
searching for shell companies with which to merge.
The Company records transactions of commercial substance with related parties
at fair value as determined with management. The following is a list of related
party transactions and balances as at December 31, 2008 and 2009:
18
2008 2009
Closing balances as at December 31,
Prepaid assets with related parties $ - $ 0
Due to shareholders 15,000 21,590
Short term borrowings -
Transaction for the year:
Consulting fees $60,100 $60,000
Rental expenses for occupancy by management 16,941 0
PART IV
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
Eworld Interactive, Inc. includes by reference the following exhibits:
3.1 Articles of Incorporation, exhibit 3.1 filed with the registrant's
Registration Statement on Form SB-2, as amended; filed
with the Securities and Exchange Commission on December 27, 2005.
3.2 Amendment to Articles of Incorporation, exhibit 3.2 filed with the
registrant's Registration Statement on Form SB-2, as amended; filed
with the Securities and Exchange Commission on December 27, 2005.
3.3 Amendment to Articles of Incorporation, exhibit 3.3 filed with the
registrant's Registration Statement on Form SB-2, as amended; filed
with the Securities and Exchange Commission on December 27, 2005.
3.4 Bylaws, filed as exhibit 3.4 with the registrant's Registration
Statement on Form SB-2, as amended; filed with the Securities and
Exchange Commission on December 27, 2005.
3.5 Amendment to Articles of Incorporation, filed as exhibit 3.5 with the
registrant's Registration Statement
3.6 on Form 8-A; filed with the Securities and Exchange Commission on
December 14, 2006.
Amendment to Articles of Incorporation , filed as Exhibit Bylaws,
filed as exhibit 3.1 filed on Form 8-K, filed with the Securities and
Exchange commission on August 24, 2009.
10.1 Stock Purchase Agreement - Between Eworld Interactive, Inc., and Blue
Atelier, Inc., March 30, 2009 filed as exhibit 10.1 with the
registrant's Current Report on Form 8-K; filed with the Securities and
Exchange Commission on April 3, 2009.
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Eworld Interactive, Inc. includes herewith the following exhibits:
31.1 Certification of Principal Executive Officer and Principal Financial
Officer (Rule 13a-14(a)/15d-14(a))
32.1 Certification of Principal Executive Officer and Principal Financial
Officer (18 U.S.C. 1350)
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(1) AUDIT FEES
The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the audit of the
registrant's annual financial statements and review of financial statements
included in the registrant's Form 10-K or services that are normally provided
by the accountant in connection with statutory and regulatory filings or
engagements for the fiscal years ending December 31, 2008 and 2009 were: $4,500
and $11,850, respectively.
(2) AUDIT-RELATED FEES
The aggregate fees billed in each of the last two fiscal years for assurance
and related services by the principal accountant that are reasonably related to
the performance of the audit or review of the registrant's financial statements
and are not reported under item (1) for the fiscal years ending December 31,
2008 and 2009 were: $ 0 and $ 0, respectively.
(3) TAX FEES
No aggregate fees were billed for professional services rendered by the
principal accountant for tax compliance, tax advice, and tax planning for the
fiscal years ending December 31, 2008 and 2009.
(4) ALL OTHER FEES
No aggregate fees were billed for professional services provided by the
principal accountant, other than the services reported in items (1) through (3)
for the fiscal years ending December 31, 2008 and 2009.
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(5) AUDIT COMMITTEE
The registrant's Audit Committee, or officers performing such functions of the
Audit Committee, have approved the principal accountant's performance of
services for the audit of the registrant's annual financial statements and
review of financial statements included in the registrant's Form 10-K or
services that are normally provided by the accountant in connection with
statutory and regulatory filings or engagements for the fiscal year ending
December 31, 2009. Audit-related fees, tax fees, and all other fees, if any,
were approved by the Audit Committee or officers performing such functions of
the Audit Committee.
(6) WORK PERFORMANCE BY OTHERS
The percentage of hours expended on the principal accountant's engagement to
audit the registrant's financial statements for the most recent fiscal year
that were attributed to work performed by persons other than the principal
accountant's full-time, permanent employees was less than 50 percent.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EWORLD INTERACTIVE, INC.
Date: April 13, 2010 By: /s/ Gerry Shirren
-----------------
Gerry Shirren
President, Secretary
Pursuant to the requirements of the Securities and 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:
Signature Title(s) Date
--------- -------- ----
/s/ Gerry Shirren President, Secretary and Director April 13, 2010
----------------- (Secretary)
Gerry Shirren
/s/ Gerry Shirren Principal Financial and
----------------- Accounting Officer April 13, 2010
Gerry Shirren (Principal Financial and
Accounting Officer)
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