Attached files
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EX-32.1 - SECTION 1350 CERTIFICATION OF CHIEF EXECUTIVE OFFICER - Apextalk Holdings Inc | f10k2009ex32i_apextalk.htm |
EX-31.2 - RULE 13A-14(A)/ 15D-14(A) CERTIFICATION OF CHIEF FINANCIAL OFFICER - Apextalk Holdings Inc | f10k2009ex31ii_apextalk.htm |
EX-32.2 - SECTION 1350 CERTIFICATION OF CHIEF FINANCIAL OFFICER - Apextalk Holdings Inc | f10k2009ex32ii_apextalk.htm |
EX-31.1 - RULE 13A-14(A)/ 15D-14(A) CERTIFICATION OF CHIEF EXECUTIVE OFFICER - Apextalk Holdings Inc | f10k2009ex31i_apextalk.htm |
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K
(Mark
One)
x
|
ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For
the fiscal year ended December 31, 2009
o
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from ___________ to __________
Commission
File No. 333-153838
APEXTALK
HOLDINGS, INC.
(Name
of small business issuer in its charter)
DELAWARE
|
26-1402471
|
|
(State
or other jurisdiction of
incorporation
or organization)
|
(IRS
Employer Identification No.)
|
637
Howard Street
San
Francisco, CA
|
94105
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(888)
228 2829
(Registrant’s
telephone number, including area code)
Securities
registered under Section 12(b) of the Exchange Act:
|
|
Title
of each class registered:
|
Name
of each exchange on which registered:
|
None
|
None
|
Securities
registered under Section 12(g) of the Exchange Act:
|
|
Common
Stock, par value $.001
(Title
of class)
|
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes o No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes o No x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files). Yes o No o
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
be contained, to the best of registrant’s knowledge, in definitive proxy or
information statements incorporated by reference Part III of this Form 10-K or
any amendment to this Form 10-K. x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
|
o
|
Accelerated
filer
|
o
|
Non-accelerated
filer
(Do
not check if a smaller reporting company)
|
o
|
Smaller
reporting company
|
x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act). Yes o No x
There is
no established public trading market for our common stock.
As of
April 8, 2010, the registrant had 1,293,040 shares of its common stock
outstanding.
Documents
Incorporated by Reference: None.
TABLE
OF CONTENTS
|
PART
I
|
||
ITEM
1.
|
Description of
Business
|
1
|
|
ITEM
1A.
|
Risk Factors
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5
|
|
ITEM
2.
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Description of
Property
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6
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|
ITEM
3.
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Legal Proceedings
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6
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ITEM
4.
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(Removed
and Reserved)
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6
|
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PART
II
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|||
ITEM
5.
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Market for Common Equity and Related Stockholder
Matters
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6
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ITEM
6.
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Selected Financial
Data
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6
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ITEM
7.
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Management’s Discussion and Analysis of Financial
Condition and Results of Operation
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7
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ITEM
7A.
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Quantitative and Qualitative Disclosures About
Market Risk
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11
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|
ITEM
8.
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Financial Statements and Supplementary
Data
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F
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|
ITEM
9.
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Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
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12
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ITEM
9A(T)
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Controls and
Procedures
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12
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PART
III
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|||
ITEM
10.
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Directors, Executive Officers, Control Persons and
Corporate Governance; Compliance with Section 16(a) of the Exchange
Act
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13
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ITEM
11.
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Executive
Compensation
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15
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ITEM
12.
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Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder
Matters
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16
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|
ITEM
13.
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Certain Relationships and Related Transactions,
and Director Independence
|
17
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|
ITEM
14.
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Principal Accounting Fees and
Services
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17
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PART
IV
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|||
ITEM
15.
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Exhibits, Financial Statement
Schedules
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18
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SIGNATURES
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19
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PART
I
ITEM
1. DESCRIPTION OF BUSINESS
General
Apextalk
Holdings, Inc. (the “Company or “we”) was incorporated in the State of Delaware
on November 7, 2007. On November 16, 2007 we entered into a share
exchange agreement with Apextalk, Inc., a California based corporation, whereby
Apextalk, Inc. became our wholly owned subsidiary. All of our
operations are conducted through Apextalk, Inc. On November 18, 2007,
we issued 89,619 common shares (post reverse split) to TLMS International, Inc.
and 44,810 common shares (post reverse split) to Spencer Luo for in exchange for
an aggregate $111,038 investment in us.
We have
integrated VoIP and wireless technology to develop various market driven
applications. With our “Soft-switch”, we have developed a few unique
applications with proprietary programming. These applications have
been soft launched on the US market by introducing our services slowly into the
market. We have approached the friends and business associates of our officers
and directors to test our services. During our “soft launch,” we
found great appreciation and acceptance of our products and services. Based upon
the positive feedbacks we have received, we believe we can expand our services
with additional funding and a systematic marketing and promotional plan in
place.
Objectives
We aim to
become one of the major value-added telecom service providers by partnering with
different local value-added service providers around the globe. With our
integrated soft-switch platform, our local partners will have the ability to
penetrate into their local market.
We have integrated VoIP and wireless technology to develop various market driven applications. With our “Soft-switch”, we have developed a few unique applications with proprietary programming.
Other
than the US market, our strategy is to open up the burgeoning market place in
the People’s Republic of China (“PRC”). We will attempt to establish strategic
alliances in China and Hong Kong to explore business opportunities within those
regions. We will also seek opportunities to acquire existing business
engaged in the telecom industry and or other business in the
PRC.
Products and Services
Our products and services are designed for small and medium size businesses although many individuals have also chosen to use our products and services. We generate revenue from the sale of minutes to our customers. The following summarizes the current services provided by us, as well as our planned services:
●
|
Speed
Dial: The user can set all the numbers that he/she most frequently calls
for up to 99 extensions.
|
●
|
Global
Forwarding: The customer is assigned a dedicated personal local DID and or
800 number, customer logs online, access to our web site. Customer can
route their personal number to any phone number wherever customer is out
of the office and or is traveling overseas. Customers can re-route to any
phone number at anytime using a landline phone or via the Internet. This
way, customers will not miss any calls originated from their home base
while they are traveling. Customers will pickup phone calls anywhere from
their friends, relatives and business associates while they are
traveling.
|
●
|
Virtual
office: Customers with small to medium offices can use this service to
route calls to anywhere when they are out of the
office.
|
●
|
Promotional
Minute - Interactive Voice Prompt Promotional System: This is our unique
application. Business buys bulk minutes from us, and then issue
phone cards and or VIP card and give to their loyal customers for
free. Each phone card carries Apextalk’s personal and dedicated
phone number. Their customer calls each one’s personal number, then “Press
the number “2” to get access to long distance connection for free or up to
a preset limit of usage set by the business.
Once
customers get use to their personalized number, they do not need to look
for the business’ phone number. Instead, they just need to dial their own
personal phone number and then “Press the number 1,” which will route the
call to the business’ main switch. By using our system, business operators
can easily get repeat customers, since the business’ number is already
built into the customers’ memory. Businesses can update their voice
prompts to promote their current marketing and sales pitches when their
customers press “number 1”.
|
1
●
|
Media
Tracker: Media Tracker is a dynamic tool, designed to help business to
determine the most effective means of marketing products and
services. By providing a different phone number for each
advertising media, such as TV commercials, radio spots, newspapers and
even flyers. Media Tracker gives customers live call-counting on each
phone number. This information can be used to monitor the
effectiveness of each media in order to streamline business’ adverting
budget more effectively.
|
Among our
products and services, “Speed Dial” and “Global Forwarding” are well accepted in
the market and currently generate revenues. We plan to build and improve market
depth of these two services in the near future. “Wholesale Call Minutes” is
currently generating revenues and we do not have any further development plan
for this service. “Media Tracker,” “promotion Minute,” and “Vertical Office” are
finished with their developed stage and were launched on December 1, 2008.
To date, we are planning to utilize approximately $8,000 to launch our
“Media Tracker,” “Promotional Minute,” and “Virtual Office” services to the
general public.
Currently,
our primary source of business is international call termination services.
International call termination has a higher profit margin than that of domestic
call termination. We believe that our users will find our system easier to use
to make international calls than other systems since their most frequent call
numbers are stored in our system for speed dialing. Other
international long distance calling requires users to key in many digits in
order to make low cost international calls.
Providing
convenience to make international calls is the key element of our business plan,
including our Promotional Call Minute program. Therefore, international call
termination services are important for our future business
development.
Termination
to international is conducted through Apex Telecom, a significant shareholder of
the Company, which is using Quest, Level 3 and other telecom
providers. However, we are planning to use some other international
call termination services to other providers and possible other carriers for
other countries.
By
connecting with different providers that are strong on connecting to their
particular country or market, the sound quality will be more reliable and
enhance our customers’ satisfaction. For the year ended December 31,
2009, the majority of our revenue is coming from retail including international
and domestic connections. Speed Dial and Global Forwarding generated
$12,825. However, the “Promotional Minute” concept is more likely to
use domestic connection instead of international call termination services, as
the sponsors are located in the domestic market.
Market
Opportunity
As
international trade dramatically increases and even small companies are
attempting to create their global presence. The need for a user-friendly, low
costs global communication program will continue to be in substantial
demand.
United States
Market
U.S.
corporations are expanding their global presence. By using our services, they
will be able to increase their methods of communication with substantial
discounts, and most importantly, the ease of use and convenience to make
calls.
Our
Virtual Office system offers small and medium size companies who are using our
Virtual Office system in similar functions that the expensive PBX or Key systems
can offer without buying and installing the system. In addition, customers using
our Virtual Office system can use other features included in the system such as
Speed Dial and Global Forwarding without additional payments.
China / Hong Kong
Market
China and
Hong Kong are major target markets to develop our presence. Since most of our
officers and directors immigrated to U.S. from Hong Kong or mainland China in
the 1980s, they have friends and business acquaintances in Hong Kong and China
who are in the telecom business. We have conducted preliminary discussions with
some companies and individuals in the telecom business about our business model
and the possibility of establishing joint ventures. To develop our plan for
establishing a joint venture, we are looking for one or several local
value-added telecom operators in each city of China and Hong Kong to implement
our applications to their local market places. Our goal is to collect loyalty
fees from each joint venture. Due to our strong connection with the local
telecom operators in China and Hong Kong, we are planning to develop a joint
venture program with local VoIP operators to sell our products and services; we
shall develop a strong market presence over there.
2
We have
not signed any agreement with any overseas telecom operators to date. The local
partners and or joint venture parties will be value-added telecom providers in
that particular country. This overseas partnership is part of our
international business model. It expands our coverage to other countries to
offer our products and services. At the same time, we can support our US
customers when they travel overseas to a country where we have local partners,
and the local partners will be able to support them when they have communication
problems.
We would
like to offer our unique “Promotional Minute” applications to those partners
which we believe it will increase their sales. When they are planning to sell
our products and services, we will negotiate and collect loyalty fee when they
offer these products and services. We will setup an Apextalk
soft-switch at their local data center. The partners and or joint venture
parties will provide their own local DID numbers to their
customers. We intend to provide them the marketing concept and all
the sales material.
With the
Chinese government entering the World Trade Organization, we believe the
government will gradually reduce their control over the telecom industry over
time, which will substantially benefit our plan of accessing local market places
and establishing joint ventures with local value-added telecom operators. To
facilitate the implementation of this plan, we are re-packaging our services
into more convenient, more user-friendly applications to meet the needs of the
domestic markets of China and Hong Kong, Many other countries are taking a
similar path by losing their control over the telecom market, which will open us
to more development and expansion opportunities.
Other
Markets
We plan
to expand and implement our products and services to Philippines, Japan, Korea
and Africa with local VoIP operators.
Regulation
In
September 2001, the Chinese government entered the World Trade Organization
(“WTO”). Based on the WTO requirement, China will become a member of the
Basic Telecom Agreement which provides that China has to implement the
pro-competitive regulatory principles embodied in the WTO agreement. China has
to use a standard as other members are using, such as cost-base pricing,
interconnected rights and independent regulatory authority. The Chinese
government also agreed to technology-neutral scheduling, which means foreign
suppliers can use any technology they choose to provide telecommunications
services. Before entering the WTO, China did not allow foreign investment in
telecommunication services. Now, China will allow 49 percent foreign
ownership for value-added telecommunication services.
According
to the agreement, we believe that China will phase out all geographic
restrictions for paging and value-added services in 2003, mobile/cellular in
2006 and domestic wireline services in 2007. Although written in the
WTO agreement, the Chinese government appears to be reluctant to open this
market as agreed and will most likely gradually reduce their control over
time.
Competition
The
customers in the telecom business segment where we are competing are mostly
driven by price, quality and effectiveness of products and services are
considered less important than price. Our Virtual Office system offers small and
medium size companies similar functions than the expensive PBX or Key systems
can offer without buying and installing the system. In addition, customers using
our Virtual Office system can use other features included in the system such as
Speed Dial and Global Forwarding without paying additional fees.
Our
business model offers unique, convenient, easy to use and cost effective telecom
tools that meet the needs of our customers. Speed Dial, Global Forwarding,
Instant Call Log-Continuous Record Keeping, Promotional Minutes and Virtual
office are some of the unique features that our system offers to
customers.
Sales and
Marketing
We plan
to recruit sales teams in Hong Kong, China and US to introduce the Interactive
Voice Prompt Promotional System and our products and services on all of the
above mentioned markets. Initial target customers are hotels,
casinos, department stores. Then, we plan to market this program to smaller
local telecom stores to maximize the market penetration.
We plan
to setup a referral program that will give our existing customers a chance to
get free minutes and other incentive to refer their friends, relatives and
business associates to sign up our services.
Technology
Proprietary
& OEM Technologies
Apextalk
switch is a stand-alone PC-based PBX developed based on asterisk and Digium
network cards. Digium cards provide digital telephony interfaces supporting both
E1 and T1 environments that support PRI ISDN protocol families. Through the
Digium cards, the Apextalk switch is connected to the PSTN network through PRI
provided by different carrier.
3
Currently,
Apex Telecom, a minor shareholder who owns approximately 0.58% of our common
stock, provides phone service over broadband.
We order
Direct Inward Dialing (DID) numbers through Apex Telecom, which technically are
virtual telephone numbers acquired through Level 3, a major telecommunication
service provider. The DID numbers will be assigned to each individual
customer as their access number when they sign up for our services.
In
traditional telephone services, a telephone number is always tied to an end
device. For example, a telephone number always ties to a landline telephone or
cellular phone. In addition, a telephone numbers always ties to the end device
within a certain geographical area with an area code and country code. With the
latest technology, we are able to provide Virtual Telephone Numbers to overcome
the above limitation. For example, a New York company can order a San Francisco
telephone number while they do not have a physical presence in San Francisco.
Anyone can call this San Francisco number to reach the New York company without
paying long distance services.
DID is
not a regular telephone number provided by land line carriers. DID numbers need
to be connected to a soft-switch before it can connect to the other landline
telephone and/or wireless telephone.
Customers
are calling their own access numbers, and the calls will be inbound to the
Apextalk switch from the legacy PSTN network. The Apextalk switch will be
dialing the pre-programming numbers and terminated to the PSTN termination
partner.
We will
increase the network connectivity with other carriers when our customer base
increases. We do not currently have a contract with Level
3. We do not consider ourselves to be dependent upon our contract
with Apex Telecom because other services providers are readily
available.
The cost
break down will be:
·
|
Bandwidth
Fee $50 per month
|
·
|
Access
PRI is $350 per line per month
|
We are
currently paying fees of $0.60 per month per DID number, which is negotiable
with the carriers. The PRI or T1 costs $350 per month. We do not anticipate
these fees increasing over the next 12 months.
Our
“Soft-switch” is built around a flexible component-based architecture that
utilizes Linus, and Asterick PBX program; it consists of a set of discrete but
inter-operable modules that manage the complexity associated with secure content
delivery to multiple cellular networks and protocols that integrate with
multiple back-end applications/services.
The
applications and services are agnostic of the underlying network infrastructure
and will operate over GSM, CDMA, 3G networks concurrently and at
high-performance levels.
By combining the current VoIP technology and our proprietary rendering Engine, we developed the proprietary Voice Prompt & Content Management Gateway. The Rendering Engine optimizes the content presentation across devices and networks. It enables our “Soft-switch” to integrate new content with minimal programming effort.
Voice
Prompt, Content management and Systems Integration tools: The content
management and systems integration middleware engine provides a scalable and
reliable method for communicating between the web server and multiple back-end
systems and sources of information. The Voice Prompt will support our
Promotional Minute Program.
Rendering
Engine: The Rendering Engine allows our service to be compatible with
a multiple wireless devices. The advanced coding we have developed allows our
services to be accessible by most wireless networks around the world and also
allows us to add new technology as they are introduced to the market
place.
Next Generation Soft-switch Development
Next generation development –Cheuk Wong and Edward Seo are looking for capable programmers to further develop the Soft-switch with a more robust hardware and software to support custom-tailored features for specific customers and larger capacity of customer base.
Network Development
As
network speed,
reliability and performance has been improved over the years, the performance of
our network is improving, and when we open up other markets we will secure more
network connectivity with various backbone network providers.
We plan
to establish a Network Operation Centre (NOC) that allows interconnection and
network monitoring between different operators around the globe. As the Company
continues to grow, additional inbound PRI is required to provide adequate
capacity and redundancy. The existing price for each PRI, provided by APEX
Telecom, is $350 per month. Prices from other carriers average
$500.
4
At the
same time, the increase in customer base will require additional termination
partners to provide better quality product as well as redundancy. This will
result in additional deposit requirement; $10,000 is the average deposit
requirement for Tier-1 carrier.
When the
company begins to establish services in other country, we will be required to
establish a co-location in each country. The average cost to establish a
co-location averages a $10,000 non-recurring charge and $2,500 for monthly
recurring charge.
Web
Base Development
Customer
supports through web applications are important. These services will consist of
information caching, financial transaction processing and billing and smart
agent technologies.
●
|
Web
based Customer Service: Apextalk’s web site allows end users to manage
their personal calling functions and features
|
●
|
End-user
management modules
|
Intellectual Property
“Promotional
Minute” technology, is currently protected by U.S. Patents. U.S. Patents
pending number 12/371,454.
Material
Contracts
·
|
On
December 30, 2009, we entered into a stock purchase agreement with
Champion Investors (China) Ltd., a New York company, pursuant to which, we
agreed to sell and Champion Investors agreed to purchase a total of
1,666,668 shares of our newly issued common stock at a purchase price of
$2.40 per share equal to Four Million Dollars ($4,000,000) in the
aggregate in reliance upon Section 4(2) of the Securities
Act.
|
·
|
On
December 14, 2009, we entered into a stock purchase agreement (the
“Agreement”) with our then existing shareholders (the “Apextalk
Shareholders”), Apextalk, Inc., a California corporation and the wholly
owned subsidiary of Apextalk Holdings, Global Apex Holdings, Inc., a
Delaware corporation whose shareholders are identical to the Apextalk
Shareholders (“Global Apex Holdings”), Global Apex, Inc., a California
corporation and a wholly owned subsidiary of Global Apex Holdings (“Global
Apex”) and five individual purchasers set forth in the Agreement (the
“Purchasers”).
Pursuant
to the Agreement, the Apextalk Shareholders agreed to transfer to the
Purchasers an aggregate of 413,736 shares of our common stock (the
“Purchased Shares”), representing 90% of our issued and outstanding common
stock, at an aggregated purchase price of Three Hundred Thousand Dollars
($300,000) (the “Purchase Price”) in reliance upon the exemption from
securities registration provided by Section 4(2) of the Securities Act of
1933, as amended. Upon the final closing of the Stock Purchase, the
Purchasers shall aggregately hold 90% of our issued and outstanding common
stock. In addition, subject to the terms and condition of the Agreement,
we agreed to transfer 70% of our equity interest in Apextalk, Inc. to
Global Apex. We shall retain the remaining 30% equity interest in
Apextalk, Inc. As additional consideration, we agreed to grant Global Apex
Holdings the right to receive a cash payment in the amount of $30,000 for
each $1,000,000 invested into us of up to $4,000,000 in the aggregate from
outside investors. As of April 8, 2010, the transfer has not completed due
to the complications arising from operations and from net assets
transfer.
|
·
|
Since
July 1, 2008, Apex Telecom, a local telephone services provider in
California, provides access network to Apextalk. Apex Telecom provides
co-location space to Apextalk at a fixed monthly fee of $150 per month. In
additional, Apex Telecom is also providing us with access network which
includes $50 for 8 lines per month for internet access and PSTN
access.
|
Employees
As of April 8, 2010, we have three (3) full time employees.
ITEM
1A. RISK
FACTORS
Not applicable because we are a smaller reporting company.
5
ITEM 2. DESCRIPTION OF PROPERTY
Our business office is located at 637 Howard Street, San Francisco, CA 94105. Our telephone number is (415) 462-0901. As we are expanding our operation, we currently lease more space to meet our need and we are paying $2,000 per month for our principal office. Currently, the space at Apex Telecom for our servers is still sufficient and we are paying $200 per month for it; however, if we expand our business, we will have to lease a larger space.
ITEM 3. LEGAL PROCEEDINGS
To our knowledge, we are not presently parties to any litigation, nor to our knowledge and belief is any litigation threatened.
ITEM
4. (REMOVED AND
RESERVED)
None
PART
II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
No Public Market for Common Stock
Our
common stock has been listed on the Over-the-Counter Bulletin Board system under
the symbol “APXG” since November 12, 2009. We effectuated a
one-for-twenty reverse stock split on our issued and outstanding common stock on
November 12, 2009. Currently, there is no public trading market for our
common stock.
Holders
As of April 15, 2010, we had 52 shareholders of our common stock.
Stock Option
Grants
To date,
we have not granted any stock options.
Registration
Rights
We have
not granted registration rights to the selling shareholders or to any other
persons.
Penny Stock Considerations
Broker-dealer practices in connection with transactions in “penny stocks” are regulated by certain penny stock rules adopted by the Securities and Exchange Commission. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules.
Dividends
Since inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock, when issued pursuant to this offering. Although we intend to retain our earnings, if any, to finance the exploration and growth of our business, our Board of Directors will have the discretion to declare and pay dividends in the future. Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.
ITEM 6. SELECTED FINNACIAL
DATA
Not
applicable because we are a smaller reporting company.
6
ITEM
7. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The
following discussion contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934 relating to future events or our future
performance. Actual results may materially differ from those
projected in the forward-looking statements as a result of certain risks and
uncertainties set forth in this prospectus. Although management
believes that the assumptions made and expectations reflected in the
forward-looking statements are reasonable, there is no assurance that the
underlying assumptions will, in fact, prove to be correct or that actual results
will not be different from expectations expressed in this report.
Corporate History and Structure
We were incorporated in the State of Delaware as Apextalk, Inc. on November 7, 2007. On November 12, 2007, we changed our name to Apextalk Holdings, Inc. On November 16, 2007, we entered into a share exchange agreement (“Share Exchange Agreement”) with ApexTalk, Inc., a California corporation, pursuant to which, the ApexTalk, Inc. shareholders transferred to us all of the issued and outstanding capital stock of ApexTalk, Inc. in exchange for 180,000 of our newly issued common shares. As a result, Apextalk, Inc. became our wholly owned subsidiary.
On
November 18, 2007, we issued 89,619 common shares to TLMS International, Inc.
and 44,810 shares to Spencer Luo in exchange for an aggregate $111,038 in the
Company.
On
December 14, 2009, we entered into a Stock Purchase Agreement (the “Stock
Purchase Agreement”) with our then existing shareholders (the “Apextalk
Shareholders”), Apextalk, Inc., Global Apex Holdings, Inc., a Delaware
corporation whose shareholders are identical to the Apextalk Shareholders
(“Global Apex Holdings”), Global Apex, Inc., a California corporation and a
wholly owned subsidiary of Global Apex Holdings (“Global Apex”) and five
individual purchasers set forth in the Agreement (the
“Purchasers”). Pursuant to the Agreement, the Apextalk Shareholders
transferred to the Purchasers an aggregate of 413,736 shares of our common
shares, representing 90% of our then issued and outstanding common shares at the
purchase price of $300,000. In addition, in connection with the closing of the
Stock Purchase Agreement, we reached an understanding to assign and transfer our
Apextalk Inc’s technologies and in-turn owns 30% of Global Apex,
Inc. As additional consideration to the closing, we agreed to grant
Global Apex Holdings, Inc. the right to receive a cash payment in the amount of
$30,000 for each $1,000,000 investment from outside investors invested into the
Company, up to $4,000,000 in the aggregate. With the additional
capital, the Company is planning to expand its current operations beyond its
current segment by acquiring other profitable businesses as the Company deems
necessary from time to time, to continue to enhance and maximize the
shareholders’ value. As of April 8, 2010, the transfer has not completed due to
the complications arise from operations and of net assets
transfer.
The
following chart depicts our current corporate structure:
Business
Overview
We have
integrated VoIP and wireless technology to develop various market driven
applications. With its “Soft-switch”, ApexTalk has developed a few unique
applications with proprietary programming. To date, these applications have only
been soft launched into the market by approaching our friends and business
associates to test our services as opposed to heavily promoting our services to
the public market.
7
ApexTalk
has developed the following products and services:
Speed
Dial – 99 extensions with personal access number
|
Global
Forwarding – 800 number or local phone number capable for forwarding to
any phone numbers around the globe, travelers’ ideal communication
tools
|
Virtual
Office – small to medium size office phone system with personalize
greeting and multiple extension capability
|
Promotional
Minute – interactive voice prompt system for business using this system to
generate and keep repeated customers
|
Media
tracker – identify which media generates most of the
sales
|
Business
Plan
The
following outlines our business plan for the next 12 months:
1.
|
We
are a growing and value added telecom service provider, and we intend to
partner with different local value-added service providers around the
globe. In addition to the US market, our strategy is to open up
the burgeoning market place in the People’s Republic of China
(“PRC”). We will continue to reach out to potential candidates
in the PRC, Hong Kong, and the Philippines to develop global business
opportunities. We may also engage in opportunities to acquire
viable businesses in the telecom and financial consultation service
industries in the PRC to support our emerging global
presence.
|
2.
|
We
will continue to attract subscribers to sign up with our services through
various marketing channels such as a referral program, online advertising,
out-door sales teams going after telecom retail outlets, and also start
developing the alliance and the joint venture program with overseas
value-added telecom operators. We expect the total cost of the
marketing to substantially increase from
2009.
|
3.
|
On
November 17, 2009, we entered the Stock Purchase Agreement, in which 5
individuals from the PRC agreed to purchase 90% of our current outstanding
shares from all of our shareholders for $300,000. In connection
with the closing of the Stock Purchase Agreement on December 14, 2009, our
original executive officers and directors resigned and new officers and
directors were appointed.
As
a result of the closing of the Stock Purchase Agreement, we not only
formed a management team with both operational and financing expertise but
also acquired additional funding for our development of hardware and
software application business and financial consultation services both in
the China and in the U.S.
With
this new management and additional funding, we intend to launch new
product lines and services related to the telecom industry for Chinese and
US markets. One of the new product lines could be hardware
development for VoIP calling, other services related to telecom
consultation services or financial consultation services.
We
entered an agreement with a Chinese company - Guangdong Yi An Investment
Consulting Co., Ltd. (Yi An) on December 16, 2009, regarding an
acquisition of 51% of Yi An’s issued and outstanding common stocks. The
agreement was contingent on receiving approval from the Chinese
government. The transaction was approved by the Chinese relevant
authorities in March, 2010. Currently, we are in the process of finalizing
the transaction.
|
8
Results of Operation for the
Years Ended December 31, 2009 and 2008
The
following table presents certain consolidated statement of operations
information for the year ended December 31, 2009 and 2008. The
discussion following the table is based on these results.
For the year ended |
For
the year ended
|
||||||
December 31, 2009 |
December
31, 2008
|
||||||
Revenue
|
$
|
19,841
|
$
|
56,806
|
|||
Cost
of services
|
35,879
|
58,016
|
|||||
Gross
profit
|
(16,038
|
)
|
(1,210
|
)
|
|||
Operating
Expenses:
|
|||||||
Payroll
expenses
|
56,640
|
17,820
|
|||||
Rent
and utilities
|
5,340
|
5,340
|
|||||
General
and administrative
|
42,277
|
48,455
|
|||||
Legal
and professional fees
|
83,026
|
66,686
|
|||||
Total
Operating Expenses
|
187,283
|
138,301
|
|||||
Loss
from Operations before Income Taxes
|
(203,321
|
)
|
(139,511
|
)
|
|||
Provision
for Income Tax
|
(7,950
|
)
|
(7,546
|
)
|
|||
Net
Loss
|
$
|
(211,271
|
)
|
$
|
(147,057
|
)
|
|
Loss
per Share – Basic and Diluted
|
$
|
(0.47
|
)
|
$
|
(0.34
|
)
|
|
Weighted
average number of common shares outstanding
during
the period - Basic and Diluted
|
450,344
|
434,114
|
Revenue: Our revenue was generated
by existing customers and signing up of new customers through our referral
program and from our services rendered to business associates, friends and
relatives of our officer and directors. For the year ended December
31, 2009, we generated $19,841 in revenue, representing a decrease of $36,965
compared to the revenue of $56,806 during the same period ended on December 31,
2008. The decrease of our revenue was due to in part with the
softness of economy and in part the sales outreach by the directors and officers
have reached saturated point in their respective local regions, therefore new
shareholders and investors are recruited to bring new life sign to the
Company.
Cost of Service:
Our cost of services include expenses related to the purchase of
wholesale minutes and communication usage fees. Our cost of services
were $35,879 for the year ended December 31, 2009, compared to $58,016 for the
same period ended December 31, 2008, representing a decrease of $22,137 or
38.16%. The decrease was primarily due to in the respective decrease in sales
revenue and certain cost cutting measures instituted by the
management.
General and
Administrative Expenses: General and administrative expenses include
depreciation, licenses, payroll taxes, advertising, consulting fees, travel and
entertainment expenses. Our general and administrative
expenses were $42,277 for the year ended December 31, 2009, compared to
$48,455 in the same period ended December 31, 2008, representing an decrease of
$6,178 which caused by travel and related expenditures. The legal and
professional fees were $83,026 for the current period and $66,686 for the period
ended a year earlier. The increase was primarily attributable to the
ongoing activities related to sales of shares and transactions to five new
shareholders.
Liquidity
and Capital Resources
As of
December 31, 2009, we had $21,710 in cash, compared to $49,430 as of December
31, 2008. This decrease in cash was primarily due to
net cash used in operating activities of $118,465, and net cash proceeds of
$60,664 from the issuance of common stock between the first quarter and the
third quarter of 2009, and the $30,716 in shareholders loan from proceeds of the
sale of 90% of their common stock to the five new
shareholders.
Because
of the two million dollars new investment received in early 2010, the Company
believe that we have sufficient funding to satisfy our cash requirements for the
next twelve months.
In the
next 12 months, we believe we will require substantial capital injection
and financing to fully implement our business model in the telecommunication
section, as well as develop new line of business such as financial
consultation services. We expect the capital injection and financing
to be in the form of a private placement of equity or debt and should be from $3
million to $5 million. We intend to seek advice from investment
professionals and the 5 investors from the PRC on how to raise additional
capital and obtain financing.
Going
Concern
As
reflected in the accompanying financial statements, the Company had a net loss
of $211,271, a working capital deficiency of $108,025, used $118,465 in cash
flows from operations during 2009, and had an accumulated deficit of $415,955 at
December 31, 2009. This normally would raises substantial doubt about
its ability to continue as a going concern. The ability of the
Company to continue as a going concern is dependent on the Company’s ability to
raise additional capital and implement its business
plan. Nevertheless, with the confirmation of the additional capital
received in early 2010, the Company believes the financial statements do not
need to include any adjustments that might be necessary if the Company is unable
to continue as a going concern.
9
Off-Balance
Sheet Arrangements
We have
never entered into any off-balance sheet financing arrangements and have never
established any special purpose entities. We have not guaranteed any
debt or commitments of other entities or entered into any options on
non-financial assets.
Critical
Accounting Policies
The
discussion and analysis of our financial condition and results of operations are
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these consolidated financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and related disclosure of contingent assets and
liabilities. On an on-going basis, we evaluate our estimates based on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.
A summary
of significant accounting policies is included in Note 2 to the consolidated
financial statements included in this annual report. Management
believes that the application of these policies on a consistent basis enables us
to provide useful and reliable financial information about our Company's
operating results and financial condition.
Recent
Accounting Pronouncements
In May
2009, the FASB issued FASB Accounting Standards Codification No. 855, Subsequent
Events. FASB Accounting Standards Codification No. 855
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. FASB Accounting Standards Codification
No. 855 sets forth (1) the period after the balance sheet date during which
management of a reporting entity should evaluate events or transactions that may
occur for potential recognition or disclosure in the financial statements, (2)
the circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements and (3) the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. FASB Accounting Standards
Codification No. 855 is effective for interim or annual financial periods ending
after September 15, 2009. The adoption of this FASB Accounting Standards
Codification No. 855 did not have a material effect on the Company’s financial
statements.
In June
2009, the FASB issued FASB Accounting Standards Codification No. 860, Transfers and
Servicing. FASB Accounting Standards Codification No. 860
improves the relevance, representational faithfulness, and comparability of the
information that a reporting entity provides in its financial statements about a
transfer of financial assets; the effects of a transfer on its financial
position, financial performance, and cash flows; and a transferor’s continuing
involvement, if any, in transferred financial assets. FASB Accounting
Standards Codification No. 860 is effective as of the beginning of each
reporting entity’s first annual reporting period that begins after November 15,
2009, for interim periods within that first annual reporting period and for
interim and annual reporting periods thereafter. The Company is
evaluating the impact the adoption that FASB Accounting Standards Codification
No. 860 will have on its financial statements.
In June
2009, the FASB issued FASB Accounting Standards Codification No. 810, Consolidation. FASB
Accounting Standards Codification No. 810 improves financial reporting by
enterprises involved with variable interest entities. FASB Accounting Standards
Codification No. 810 is effective as of the beginning of each reporting entity’s
first annual reporting period that begins after November 15, 2009, for interim
periods within that first annual reporting period, and for interim and annual
reporting periods thereafter. The Company is evaluating the impact
the adoption of FASB Accounting Standards Codification No. 810 will have on its
financial statements.
10
In June
2009, the FASB issued FASB Accounting Standards Codification No. 105, Generally Accepted Accounting
Principles. The FASB Accounting Standards Codification
(“Codification”) will be the single source of authoritative nongovernmental U.S.
generally accepted accounting principles. Rules and interpretive
releases of the SEC under authority of federal securities laws are also sources
of authoritative GAAP for SEC registrants. FASB Accounting Standards
Codification No. 105 is effective for interim and annual periods ending after
September 15, 2009. All existing accounting standards are superseded
as described in FASB Accounting Standards Codification No. 105. All
other accounting literature not included in the Codification is
nonauthoritative. The Codification is effective for us in the third
quarter of 2009. The adoption of this guidance only affected how
specific references to GAAP literature have been disclosed in the notes to the
Company's financial statements; it did not result in any impact on the Company's
results of operations, financial condition, or cash flows.
In
February 2010, the FASB issued update No. 2010-09 -- Subsequent Events (Topic 855):
Amendments to Certain Recognition and Disclosure Requirements. The
amendments remove the requirement for an SEC filer to disclose a date in both
issued and revised financial statements. The amendment is effective
for interim or annual periods ending after June 15, 2010.
ITEM
7A. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not
applicable because we are a smaller reporting company.
11
ITEM 8. FINANCIAL STATEMENTS
Our
financial statements, together with the report of our independent auditors, are
as follows:
APEXTALK
HOLDINGS, INC. AND SUBSIDIARY
CONTENTS
|
||
PAGE
|
F1
|
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
PAGE
|
F2
|
CONSOLIDATED
BALANCE SHEETS AS OF DECEMBER 31, 2009 AND 2008
|
PAGE
|
F3
|
CONSOLIDATED
STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2009 AND
2008
|
PAGE
|
F4
|
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) FOR THE YEARS ENDED
DECEMBER 31, 2009 AND 2008
|
PAGE
|
F5
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2009 AND
2008
|
PAGES
|
F6
- F12
|
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
F
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors of:
Apextalk
Holdings, Inc.
We have
audited the accompanying consolidated balance sheets of Apextalk Holdings, Inc.
and Subsidiary as of December 31, 2009 and 2008, and the related statements of
operations, changes in stockholders’ equity (deficiency) and cash flows for the
years then ended. These financial statements are the responsibility
of the Company’s management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the 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 financial statements referred to above present fairly in all
material respects, the financial position of Apextalk Holdings, Inc. and
Subsidiary as of December 31, 2009 and 2008 and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 8 to the financial
statements, the Company has a net loss of $211,271, and used cash from
operations of $118,465 during the year ended December 31, 2009, and had an
accumulated deficit of $415,955 at December 31, 2009. These factors raise
substantial doubt about the Company's ability to continue as a going concern.
Management's plans concerning these matters are also described in Note 8. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
WEBB
& COMPANY, P.A.
Certified
Public Accountants
Boynton
Beach, Florida
April 7,
2010
F-1
APEXTALK
HOLDINGS, INC. AND SUBSIDIARY
|
||||||||
CONSOLIDATED
BALANCE SHEETS
|
||||||||
AS
OF DECEMBER 31, 2009 AND 2008
|
||||||||
December
31, 2009
|
December
31, 2008
|
|||||||
ASSETS
|
||||||||
Current
Assets
|
|
|||||||
Cash
and cash equivalents
|
$ | 21,710 | $ | 49,430 | ||||
Accounts
receivable, net
|
3,085 | 9,201 | ||||||
Other
receivables, net
|
1,871 | 1,871 | ||||||
Inventory,
net
|
- | 1,840 | ||||||
Deposit
|
- | 11,000 | ||||||
Total
Currents Assets
|
26,666 | 73,342 | ||||||
Property
and Equipment, net
|
41,943 | 54,252 | ||||||
Patent
|
8,969 | 8,969 | ||||||
Total
Assets
|
$ | 77,578 | $ | 136,563 | ||||
LIABILITIES AND STOCKHOLDERS'
DEFICIT
|
||||||||
Current
Liabilities
|
||||||||
Accounts
payable
|
$ | 30,165 | $ | 40,266 | ||||
Accrued
expenses
|
61,093 | 40,747 | ||||||
Unearned
revenue
|
11,717 | 11,036 | ||||||
Shareholders'
loan
|
31,716 | 1,000 | ||||||
Total
Current Liabilities
|
134,691 | 93,049 | ||||||
Total
Liabilities
|
134,691 | 93,049 | ||||||
Stockholders'
Equity
|
||||||||
Common
stock, authorized 1,000,000,000 shares,
par
value $0.001, 459,706 shares and 434,429 shares
issued
and outstanding on December 31, 2009 and 2008,
respectively
|
459 | 434 | ||||||
Additional
paid-in-capital
|
358,383 | 247,764 | ||||||
Accumulated
deficit
|
(415,955 | ) | (204,684 | ) | ||||
Total
Stockholders' Equity (Deficiency)
|
(57,113 | ) | 43,514 | |||||
Total
Liabilities and Stockholders' Equity (Deficiency)
|
$ | 77,578 | $ | 136,563 | ||||
See
accompanying notes to consolidated financial statements
F-2
APEXTALK
HOLDINGS, INC. AND SUBSIDIARY
|
||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008
|
||||||||
|
||||||||
2009
|
2008
|
|||||||
|
|
|||||||
Revenue
|
$ | 19,841 | $ | 56,806 | ||||
Cost
of Services
|
35,879 | 58,016 | ||||||
Gross
profit
|
(16,038 | ) | (1,210 | ) | ||||
Operating
Expenses
|
||||||||
Payroll
expenses
|
56,640 | 17,820 | ||||||
Rent
and utilities
|
5,340 | 5,340 | ||||||
General
and administrative
|
42,277 | 48,455 | ||||||
Legal
and professional fees
|
83,026 | 66,686 | ||||||
Total
Operating Expenses
|
(187,283 | ) | (138,301 | ) | ||||
Loss
from Operations before Income Taxes
|
(203,321 | ) | (139,511 | ) | ||||
Provision
for Income Taxes
|
(7,950 | ) | (7,546 | ) | ||||
Net
Loss
|
$ | (211,271 | ) | $ | (147,057 | ) | ||
Loss
per Share - Basis and Diluted
|
$ | (0.47 | ) | $ | (0.34 | ) | ||
Weighted
average number of common shares outstanding
|
||||||||
during
the period - Basis and Diluted
|
450,344 | 434,115 | ||||||
See
accompanying notes to consolidated financial statements
F-3
APEXTALK
HOLDINGS, INC. AND SUBSIDIARY
|
||||||||||||||||||||||||
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY / (DEFICIENCY)
|
||||||||||||||||||||||||
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008
|
||||||||||||||||||||||||
Common
Stock
|
Paid
in
|
Subscriptions
|
Accumulated
|
Total
Equity
|
||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Receivable
|
Deficit
|
(Deficiency)
|
|||||||||||||||||||
Balance,
December 31, 2007
|
432,241 | $ | 432 | $ | 233,106 | $ | (85,538 | ) | $ | (57,627 | ) | $ | 90,373 | |||||||||||
Amount
received against the subscription receivable
|
- | - | - | 85,538 | - | 85,538 | ||||||||||||||||||
Common
stock issued for cash
|
2,188 | 2 | 3,498 | - | - | 3,500 | ||||||||||||||||||
In
kind contribution for services
|
- | - | 11,160 | - | - | 11,160 | ||||||||||||||||||
Net
Loss
|
- | - | - | - | (147,057 | ) | (147,057 | ) | ||||||||||||||||
Balance,
December 31, 2008
|
434,429 | 434 | 247,764 | - | (204,684 | ) | 43,514 | |||||||||||||||||
Common
stock issued for cash
|
25,277 | 25 | 60,639 | - | - | 60,664 | ||||||||||||||||||
In
kind contribution for services
|
- | - | 49,980 | - | - | 49,980 | ||||||||||||||||||
Net
Loss
|
- | - | - | - | (211,271 | ) | (211,271 | ) | ||||||||||||||||
Balance,
December 31, 2009
|
459,706 | $ | 459 | $ | 358,383 | $ | - | $ | (415,955 | ) | $ | (57,113 | ) | |||||||||||
See
accompanying notes to consolidated financial statements
F-4
APEXTALK
HOLDINGS, INC. AND SUBSIDIARY
|
||||||||
CONSOLIADTED
STATEMENTS OF CASH FLOWS
|
||||||||
FOR
THE YEARS ENDED DECEMBER 31, 2009 AND 2008
|
||||||||
|
|
|||||||
|
|
|||||||
2009
|
2008
|
|||||||
Cash
Flows from Operating Activities
|
||||||||
Net
loss
|
$ | (211,271 | ) | $ | (147,057 | ) | ||
Adjustment
to reconcile net loss to net cash provided by used in operating
activities:
|
||||||||
Depreciation
and amortization
|
12,944 | 7,872 | ||||||
Provision
for doubtful accounts
|
339 | 2,084 | ||||||
In
kind contribution of services
|
49,980 | 11,160 | ||||||
Change
in operating assets and liabilities:
|
||||||||
(Increase)
decrease in accounts receivable
|
5,777 | (10,223 | ) | |||||
(Increase)
decrease in accounts receivable, other
|
- | (1,871 | ) | |||||
(Increase)
decrease in inventories
|
1,840 | - | ||||||
Increase
(decrease) in unearned revenue
|
681 | 737 | ||||||
(Increase)
decrease in deposit
|
11,000 | (11,000 | ) | |||||
(Increase)
decrease in patents
|
- | (8,969 | ) | |||||
Increase
(decrease) in accounts payable
|
(10,101 | ) | 21,117 | |||||
Increase
(decrease) in accrued expenses
|
20,346 | 17,102 | ||||||
Net
Cash Used in Operating Activities
|
(118,465 | ) | (119,048 | ) | ||||
Cash
Flows from Investing Activities
|
||||||||
Equipment:
Software
|
(635 | ) | (57,765 | ) | ||||
Net
Cash Used In Investing Activities
|
(635 | ) | (57,765 | ) | ||||
Cash
Flows from Financing Activities:
|
||||||||
Proceeds
from issuance of common stock
|
60,664 | 89,038 | ||||||
Repayment
of stockholder loan
|
- | (1,840 | ) | |||||
Proceeds
from stockholder loan
|
30,716 | - | ||||||
Net
Cash Provided by Financing Activities
|
91,380 | 87,198 | ||||||
Net
Increase/ (Decrease) in Cash
|
(27,720 | ) | (89,615 | ) | ||||
Cash,
Beginning of Period
|
49,430 | 139,045 | ||||||
Cash,
Ending of Period
|
$ | 21,710 | $ | 49,430 | ||||
Interest
Paid
|
$ | - | $ | - | ||||
Income
Taxes paid
|
$ | 6,475 | $ | 2,671 | ||||
See
accompanying notes to consolidated financial statements
F-5
APEXTALK
HOLDINGS, INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
NOTE
1.
SUMMARY OF ORGANIZATION
Apextalk,
Inc. was incorporated on November 7, 2007 under the laws of the state of
Delaware. On November 12, 2007, Apextalk, Inc. changed its name to Apextalk
Holdings, Inc. The company, located in San Francisco, California, is a holding
company whose subsidiary provides various telecom services.
Apextalk
Inc. was incorporated on June 8, 2004 under the laws of the state of California.
The company has integrated VoIP and wireless technology to develop various
market driven applications.
Apextalk
Holdings, Inc. completed the acquisition of Apextalk Inc. on November 16, 2007
where Apextalk Holdings, Inc. purchased all of the outstanding shares of
Apextalk Inc. The transaction was accounted for as a combination of entities
under common control and accordingly, recorded the merger at historical cost.
Accordingly, all shares and per share amounts have been retroactively
restated.
Apextalk
Holdings, Inc. and its wholly owned subsidiary Apextalk Inc. are hereafter
referred to as (the “Company”).
NOTE 2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES
Basis of
Presentation
The
accompanying consolidated financial statements a have been prepared by in
accordance with accounting principles general accepted in the United States of
America and the rules and regulations of the Securities and Exchange
Commission (“SEC”). Amounts presented in the accompanying financial
statements are expressed in U.S. dollars.
Cash
and Cash Equivalents
The
Company considers cash on hand and amounts on deposit with financial
institutions, which have original maturities of three months or less to be cash
and cash equivalents.
Earnings
(Loss) per Share
Basic and
diluted net loss per common share is computed based upon the weighted average
common shares outstanding Financial Accounting Standards Board (FASB) Accounting
Standards Codification No. 260, Earnings Per
Share. As of December 31, 2009 and 2008, there were no diluted
shares outstanding.
Income
Taxes
|
The
Company accounts for income taxes under FASB Accounting Standards Codification
No. 740, Income Taxes. Under FASB Accounting Standards Codification
No. 740, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statements
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be recovered or settled. Under
FASB Accounting Standards Codification No. 740, the effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
Use
of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those
estimates.
F-6
APEXTALK
HOLDINGS, INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
Business
Segments
The
Company operates in one segment and therefore segment information is not
presented.
Revenue
and Cost Recognition
The
Company recognizes revenue on arrangements in accordance with FASB Accounting
Standards Codification No. 605, Revenue Recognition. Revenue
is recognized when amounts are earned and when the amount and timing of the
revenue can be reasonably estimated. Expenses are recognized when they occurred
and matched against revenue, as a component of costs of services in the
statement of operations in accordance with FASB Accounting Standards
Codification No. 605, Revenue
Recognition. Revenues from internet communication services are recognized
in the period such services are used by the end user.
Allowance
for Doubtful Accounts
The
Company maintains an allowance for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. The
Company evaluates the trends in customers’ payment patterns, including review of
specific delinquent accounts, changes in business conditions and external
communications available about customers to estimate the level of allowance that
is needed to address potential losses that the Company may incur due to the
customer’s inability to pay. Accounts are considered delinquent or
past due, if they have not been paid within the terms provided on the invoice.
Delinquent account balances are written off after management has determined that
the likelihood of collection is not probable. As of December 31, 2009 and 2008,
the Company has recorded an allowance for doubtful accounts in the amounts of
$2,423 and $2,084, respectively.
Inventory
Inventories
are valued at the lower of cost or market. Cost is determined using
the first-in, first-out (FIFO) method. As of December 31, 2009 and
2008, purchased finished goods inventory was $-0- and $1,840,
respectively. Provision for potentially obsolete or slow moving
inventory is made based on management’s analysis of inventory levels and future
sales forecasts.
Consolidation
The books
and records of the parent company Apextalk Holdings, Inc. have been consolidated
with the records of the wholly owned subsidiaries – Apextalk Inc. as of December
31, 2009 and 2008. All of the material inter-company transactions have been
eliminated.
Reclassification
Certain
amounts from the prior year financial statements have been reclassified to
conform to the current year presentation. These reclassifications had
no effect on the Company's consolidated net loss or stockholders'
deficit.
Property
and Equipment
|
Property
and equipment are stated at cost and are depreciated using 150% the
double-declining balance method over their estimated useful lives, which differ
by asset category:
•
Furniture & fixtures: 7 years
•
Equipment: 5-7 years
•
Software: 5 years
•
Leasehold improvements: 15 years
F-7
APEXTALK
HOLDINGS, INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
The
residual value of property and equipment is estimated to be equal to 10% of the
original cost. Upon disposal, the assets and related accumulated
depreciation are removed from the Company’s accounts, and the resulting gains or
losses are reflected in the statements of operations.
Intangible
Assets
Intangible
assets are stated at cost and are amortized using straight-line method over
their estimated useful lives. Patent fees paid is not amortized until
approved.
Impairment
of Long-lived Assets
The
Company evaluates the recoverability of its long-lived assets, including
goodwill, on an annual basis or more frequently if indicators of potential
impairment arise. Following the criteria of FASB Accounting Standards
Codification No. 350, Intangibles-Goodwill &
Other, the Company evaluates the recoverability of its amortizable
purchased intangible assets based on an estimate of the undiscounted cash flows
resulting from the use of the related asset group and its eventual disposition.
The asset group represents the lowest level for which cash flows are largely
independent of cash flows of other assets and liabilities. Measurement of an
impairment loss for long-lived assets that the Company expects to hold and use
is based on the difference between the fair value and carrying value of the
asset. Long-lived assets to be disposed of are reported at the lower of carrying
amount or fair value less costs to sell.
NOTE 3.
|
RECENT
ACCOUNTING PRONOUNCEMENTS
|
In May
2009, the FASB issued FASB Accounting Standards Codification No. 855, Subsequent
Events. FASB Accounting Standards Codification No. 855
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. FASB Accounting Standards Codification
No. 855 sets forth (1) the period after the balance sheet date during which
management of a reporting entity should evaluate events or transactions that may
occur for potential recognition or disclosure in the financial statements, (2)
the circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements and (3) the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. FASB Accounting Standards
Codification No. 855 is effective for interim or annual financial periods ending
after September 15, 2009. The adoption of this FASB Accounting Standards
Codification No. 855 did not have a material effect on the Company’s financial
statements.
In June
2009, the FASB issued FASB Accounting Standards Codification No. 860, Transfers and
Servicing. FASB Accounting Standards Codification No. 860
improves the relevance, representational faithfulness, and comparability of the
information that a reporting entity provides in its financial statements about a
transfer of financial assets; the effects of a transfer on its financial
position, financial performance, and cash flows; and a transferor’s continuing
involvement, if any, in transferred financial assets. FASB Accounting
Standards Codification No. 860 is effective as of the beginning of each
reporting entity’s first annual reporting period that begins after November 15,
2009, for interim periods within that first annual reporting period and for
interim and annual reporting periods thereafter. The Company is
evaluating the impact the adoption that FASB Accounting Standards Codification
No. 860 will have on its financial statements.
In June
2009, the FASB issued FASB Accounting Standards Codification No. 810, Consolidation. FASB
Accounting Standards Codification No. 810 improves financial reporting by
enterprises involved with variable interest entities. FASB Accounting Standards
Codification No. 810 is effective as of the beginning of each reporting entity’s
first annual reporting period that begins after November 15, 2009, for interim
periods within that first annual reporting period, and for interim and annual
reporting periods thereafter. The Company is evaluating the impact
the adoption of FASB Accounting Standards Codification No. 810 will have on its
financial statements.
F-8
APEXTALK
HOLDINGS, INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
In June
2009, the FASB issued FASB Accounting Standards Codification No. 105, Generally Accepted Accounting
Principles. The FASB Accounting Standards Codification
(“Codification”) will be the single source of authoritative nongovernmental U.S.
generally accepted accounting principles. Rules and interpretive
releases of the SEC under authority of federal securities laws are also sources
of authoritative GAAP for SEC registrants. FASB Accounting Standards
Codification No. 105 is effective for interim and annual periods ending after
September 15, 2009. All existing accounting standards are superseded
as described in FASB Accounting Standards Codification No. 105. All
other accounting literature not included in the Codification is
nonauthoritative. The Codification is effective for us in the third
quarter of 2009. The adoption of this guidance only affected how
specific references to GAAP literature have been disclosed in the notes to the
Company's financial statements; it did not result in any impact on the Company's
results of operations, financial condition, or cash flows.
In
February 2010, the FASB issued update No. 2010-09 -- Subsequent Events (Topic 855):
Amendments to Certain Recognition and Disclosure Requirements. The
amendments remove the requirement for an SEC filer to disclose a
date in
both issued and revised financial statements. The amendment is
effective for interim or annual periods ending
after June 15, 2010.
NOTE
4. INCOME
TAXES
The
Company accounts for income taxes under FASB Accounting Standards Codification
No. 740, Income
Taxes. Under FASB Accounting Standards Codification No. 740,
clarification is given on the accounting for uncertainty in income taxes
recognized in an enterprise’s financial statements, FASB Accounting
Standards Codification No. 740, Income Taxes, describes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return and also provides guidance on de-recognition, classification,
interest and penalties, accounting in interim periods, disclosure and
transition.
The
Company adopted FASB Accounting Standards Codification No. 740, Income Taxes. The
adoption of this codification did not result in significant change to the
liability for unrecognized tax benefits. As of December 31, 2009 and
2008, the Company had a net operating loss carryforward of $405,502 and
$193,008, respectively, available to offset future taxable income through 2029.
The valuation allowance at December 31, 2009 and 2008 was $162,201 and $76,884,
respectively. The increase in the valuation allowance for the year
ended December 31, 2009 and 2008 was $85,317 and $54,134,
respectively
Income
tax expenses (with adoption of this codification) for the years ended December
31, 2009 and 2008 is summarized as below:
2009
|
Current
|
Deferred
|
Total
|
|||||||||
Federal
|
$ | - | $ | - | $ | - | ||||||
State
|
7,950 | - | 7,950 | |||||||||
$ | 7,950 | $ | - | $ | 7,950 | |||||||
2008
|
||||||||||||
Federal
|
$ | - | $ | - | $ | - | ||||||
State
|
7,546 | - | 7,546 | |||||||||
$ | 7,546 | $ | - | $ | 7,546 | |||||||
Deferred
Income Tax:
2009
|
2008
|
|||||||
Expected
income tax recovery (expense) at the statutory rate of 34%
|
$ | (75,745 | ) | $ | (51,034 | ) | ||
Tax
effect of expenses that are not deductible for income tax purposes (net of
other amounts deductible for tax purposes)
|
19,909 | 4,446 | ||||||
Change
in valuation allowance
|
63,785 | 54,134 | ||||||
Provision
for income taxes
|
$ | 7,950 | $ | 7,546 | ||||
The
components of deferred income taxes are as follows:
|
||||||||
2009 | 2008 | |||||||
Deferred
income tax asset:
|
||||||||
Net
operating loss carry forwards
|
$ | 141,133 | $ | 76,884 | ||||
Valuation
allowance
|
(141,133 | ) | (76,884 | ) | ||||
Deferred
income taxes
|
$ | - | $ | - |
F-9
APEXTALK
HOLDINGS, INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
NOTE
5. PROPERTY
AND EQUIPMENT
At
December 31, 2009 and 2008 property and equipment is as follows:
2009
|
2008
|
|||||||
Computer
and Office Equipment
|
$ | 68,400 | $ | 67,765 | ||||
Less
accumulated depreciation and amortization
|
(26,457 | ) | (13,513 | ) | ||||
$ | 41,943 | $ | 54,252 | |||||
Depreciation
and amortization expense for the years ended December 31, 2009 and 2008 was
$12,944 and $7,872,
respectively.
NOTE
6. STOCKHOLDERS’
EQUITY
Common and Preferred
Stocks
The
Company collected stock subscriptions receivables of $85,538 during January and
February of 2008.
The
Company sold 2,188 shares of stock to two investors for $3,500 in cash during
January and February of 2008.On March 31, 2009, the Company issued 8,340 shares
through a private offering for sale to persons who qualify as accredited
investors for total gross proceeds of $20,016 cash.
On April
19, 2009, the Company issued 4,167 shares of common stock for $10,000 in
cash.
During
June of 2009, the Company sold 6,520 shares of stock for $15,648 in
cash.
On June
23, 2009, the Company issued 6,250 shares to an investor for $15,000 in
cash.
Reverse Stock
Split
On
November 12, 2009, the Company effectuated a one-for-twenty reverse common stock
split. As
no change was made to the par value of the common shares, a total of $8,734 was
reclassified from common stock to additional paid-in capital as a retrospective
adjustment for all periods presented. As a result of the reverse stock
split, unless otherwise indicated all basic and diluted loss per share, average
share, and common stock issued and outstanding information has been adjusted to
reflect the aforementioned reverse stock split.
In Kind
Contribution
As of
December 31, 2009 and 2008, key management personnel contributed administrative
and managerial services to the Company with a fair market value of $49,980 and
$11,160, respectively.(See Note 7).
NOTE
7. RELATED
PARTY TRANSACTIONS
The
current office space is sub-leased from one of the shareholders on a
month-to-month basis. The rent expense for 2009 and 2008 was $2,940
and $2,940, respectively.
The
Company entered into an agreement with Apex Telecom, shareholder of the Company,
for leasing the facility and related equipment for use in the
operation. The monthly rate of this lease is $200 per
month. Either party could terminate the lease by 30-day notification
to the other party. The leasing expense for 2009 and 2008 was $2,400 and $2,400,
respectively. In addition, as of December 31, 2009 and 2008, the Company had
Apex Telecom that accounted for 95% and 23% the total cost of sales,
respectively (see Note 9).
F-10
APEXTALK
HOLDINGS, INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
During
the years ended December 31, 2009 and 2008, the Company accrued compensation for
key management personnel for the administrative and managerial services rendered
to the Company. The total compensation accrued for 2009 and 2008 was
$6,660 and $6,600, respectively.
During
the years ended December 31, 2009 and 2008, the Company had related party sales
of $1,648 and $1,563, respectively.
As of
December 31, 2009 and 2008, $49,980 and $11,160 was recorded as an in-kind
contribution of services, respectively. (See Note 6).
NOTE 8. GOING
CONCERN
As
reflected in the accompanying financial statements, the Company had a net loss
of $211,271, used cash in operations of $118,465 during
the year ended December 31, 2009, and had an accumulated deficit of $415,955 at
December 31, 2009. This raises substantial doubt about its ability to
continue as a going concern. The ability of the Company to continue
as a going concern is dependent on the Company’s ability to raise additional
capital and implement its business plan. The financial statements do
not include any adjustments that might be necessary if the Company is unable to
continue as a going concern.
Management
believes that actions presently being taken to raise additional capital,
implement its business plan, and work closely with their potential merger
company provide the opportunity for the Company to continue as a going concern.
As of April 8, the Company received $2,000,000 cash from a new investor pursuant
to the stock purchase agreement that the Company entered into on December 30,
2009 (See Note 11). As such, the Company believes the financial statements do
not need to include any adjustments that might be necessary if the Company is
unable to continue as a going concern.
NOTE 9. CONCENTRATIONS
At
December 31, 2009, 13% of revenue earned was due from Customer A, 13% was due
from Customer B and 10%
was due
from Customer C.
At
December 31, 2008, 78% of revenue earned was due from Customer A.
In
addition, as of December 31, 2009, the Company had vendor A that accounted for
95% the total cost of sales. As of December 31, 2008, the Company had vendor A
and vendor B that accounted for 71% and 23% the total cost of sales,
respectively.
NOTE 10.
STOCK PURCHASE AGREEMENT DATED NOVEMBER 17, 2009
On
December 14, 2009, the Company assisted its then existing shareholders (the
“Apextalk Shareholders”) to close a portion of a stock
purchase agreement (the “Agreement”) with Apextalk, Inc.(“Apextalk”),
Global Apex Holdings, Inc., a Delaware corporation whose shareholders were
identical to the Apextalk Shareholders (“Global Apex Holdings”), Global Apex,
Inc., a California corporation and a wholly owned subsidiary of Global Apex
Holdings (“Global Apex”) and five individual purchasers set forth in the
Agreement (the “Purchasers”).
Pursuant
to the Agreement, the Apextalk Shareholders agreed to transfer to the Purchasers
an aggregate of 413,736 shares of Apextalk Holdings common stock (the “Purchased
Shares”), representing 90% of the Company’s issued and outstanding common stock,
at an aggregated purchase price of $300,000 (the “Purchase Price”). After the
final closing of the Stock Purchase, the Purchasers aggregately hold
90% of the Company’s issued and outstanding common stock.
In
addition, subject to the terms and condition of the Agreement, the Company will
transfer 70% of its equity interest in Apextalk to Global Apex and the Company
will retain the remaining 30% equity interest in Apextalk. As of April 8, 2010,
the transfer has not completed due to the complications arise from operations
and of net assets transfer. The Company is planning to complete this transfer by
the end of June 2010.
F-11
APEXTALK
HOLDINGS, INC. AND SUBSIDIARY
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009 AND 2008
As
additional consideration, the Company agreed to grant Global Apex Holdings the
right to receive a cash payment in the amount of $30,000 for each $1,000,000
invested into the Company of up to $4,000,000 in the aggregate from outside
investors.
Among the
$300,000 purchase price proceeds, approximately $50,000 will be available in the
form of a short-term loan to the Company to support its operations and
expansion. As of December 31, 2009, $30,716 from this proceeds was loan to the
Company.
NOTE 11. SUBSEQUENT
EVENTS
On
December 16, 2009, the Company entered an acquisition agreement (“Acquisition
Agreement”) with Guangdong Yi An Investment Consulting Co., Ltd. (“Yi An”), a
non-public China company, pending on approval from Chinese government
agency. Pursuant to the Acquisition Agreement, the Company will
acquire 51% of Yi An’s common stocks at an aggregate acquisition price of about
$4,000,000 (“Acquisition Price”). The agreement was approved by the Chinese
government agency on mid March, 2010. Currently, we are in the process of
arranging the payment for the transaction. As of April 8, 2010, the agreement
between Yi An and the Company was not closed.
On
December 30, 2009, the Company entered into a stock purchase agreement (the
“Stock Purchase Agreement”) with Champion Investors (China) Ltd. (the
“Purchaser”), a New York company. Pursuant to the Stock Purchase Agreement, the
Company agreed to sell and the Purchaser agreed to purchase a total of 1,666,668
shares of the Company’s newly issued common stock (the “Common Shares”) at a
purchase price of $2.40 per share equal to Four Million Dollars ($4,000,000) in
the aggregate (the “Purchase Price”) .
On
January 20, 2010, the Company effectuated an initial closing of the Stock
Purchase Agreement whereby the Company issued to the Purchaser 416,667 shares in
exchange for $1,000,000 of the Purchase Price.
On
February 22, 2010, the Company effectuated the second closing of the Stock
Purchase Agreement upon receipt of an additional $1,000,000 of the Purchase
Price, in connection with which the Company issued to the Purchaser 416,667
shares of the Company’s common stock.
On March
30, 2010, the Company effectuated an amendment agreement with the Purchaser to
extend the payment period for the remaining $2,000,000 to 120 days after the
execution of this Stock Purchase Agreement.
F-12
Our
accountant is Webb & Company, P.A., CPAs, independent certified public
accountants. We do not presently intend to change accountants. At no time have
there been any disagreements with such accountants regarding any matter of
accounting principles or practices, financial statement disclosure, or auditing
scope or procedure.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
Pursuant
to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”),
the Company carried out an evaluation, with the participation of the Company’s
management, including the Company’s Chief Executive Officer (“CEO”) and Chief
Financial Officer (“CFO”) (the Company’s principal financial and accounting
officer), of the effectiveness of the Company’s disclosure controls and
procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the
end of the period covered by this report. Based upon that evaluation, the
Company’s CEO and CFO concluded that the Company’s disclosure controls and
procedures are effective to ensure that information required to be disclosed by
the Company in the reports that the Company files or submits under the Exchange
Act, is recorded, processed, summarized and reported, within the time periods
specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to the Company’s management, including the Company’s CEO and
CFO, as appropriate, to allow timely decisions regarding required
disclosure.
Management's Annual Report on Internal Control Over Financial Reporting.
The
management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting for the
Company. Our internal control system was designed to, in general,
provide reasonable assurance to the Company’s management and board regarding the
preparation and fair presentation of published financial statements, but because
of its 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.
Our
management assessed the effectiveness of the Company’s internal control over
financial reporting as of December 31, 2009. The framework used by
management in making that assessment was the criteria set forth in the document
entitled “ Internal Control – Integrated Framework” issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based on that assessment,
our management has determined that as of December 31, 2009, the Company’s
internal control over financial reporting were not fully effective for the
purposes for which it is intended due to the following reasons:
a)
|
The
material weakness was identified as the Company does not have a system to
verify and or reconcile the cash receipt payments. This material weakness
is the result of the Company's limited of human resource. This material
weakness may affect management's ability to determine if errors or
inappropriate actions have taken place. Management is required to apply
its judgment in evaluating the cost-benefit relationship of possible
changes in our controls and
procedures.
|
b)
|
The
material weakness was identified as the Company does not have a system to
ensure all reportable agreements are timely disclosed and filed. This
material weakness is the result of the Company's limited number of human
resource. This material weakness may give the impression to the
investors that the management does not file the reportable information
timely. Management is required to apply its judgment in evaluating the
cost-benefit relationship of possible changes in our disclosure controls
and procedures.
|
To cope
with these weaknesses, the management has hired professional personnel to
improve and be in charge of the company billing system. In addition, improved
policy has been implemented to ensure all reportable agreements are timely
disclosed and filed.
This
annual report does not include an attestation report of the Company’s registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the Company's registered
public accounting firm pursuant to temporary rules of the Securities and
Exchange Commission that permit the Company to provide only management's report
in this annual report.
Changes
in Internal Control over Financial Reporting
No change in our system of internal control over financial reporting occurred during the period covered by this report, fourth quarter of the fiscal year ended December 31, 2009 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
12
PART
III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS,
PROMOTERS AND CONTROL PERSONS: COMPLIANCE WITH SECTION 16(A) OF THE
EXCHANGE ACT
Our
directors and executive officers, their ages and titles, as of April 15, 2010,
are as follows.
NAME
|
AGE
|
POSITION
|
Hui
Liu
|
32
|
CEO,
Director
|
George
Ma
|
58
|
Chairman
|
Shan
Liu
|
45
|
CFO
|
Chuanda
Zeng
|
37
|
Secretary,
Director
|
On
December 14, 2009, in connection with the Stock Purchase Agreement, George Ma,
Tony Lee, Spencer Luo, Micky Siu, Chuck Hong Wong, Patrick Chu, Edward Seo and
William Ng resigned from the board of directors of Apextalk Holdings (the
“Board”), and Tony Lee, Spencer Luo, Cheuk Hong Wong, Edward Seo and Micky Siu
resigned from all officer positions that they held at Apextalk
Holding.
On
December 14, 2009, the Board appointed Hui Liu and Shan Liu as our Chief
Executive Officer and Chief Financial Officer of Apextalk Holdings,
respectively. In addition, Chuanda Zeng and Hui Liu were appointed as members of
the Board.
On December 16, 2009, with the unanimous written consent of our Board, George Ma was appointed as the Chairman of the Board. Mr. Ma does not have any family relationship with any other director or executive officer of the Company.
The following summarizes the occupation and business experience during the past five years for our officers and directors.
Hui Liu, Director and Chief Executive Officer
Mr. Liu
is a member of our Board and Chief Executive Officer. Currently, Mr. Liu also
serves as the Vice President and General Manager of ZhongDan Investment and
Guarantee Company which he joined in 2003. Hui Liu has 10 years of experience in
telecommunication and financial industry. Prior to joining ZhongDan Investment
and Guarantee Company, Mr. Liu held various leading positions in Beijing
Shenzhou Online Telecommunication Co. Ltd. Mr. Liu graduated from
Beijing Union University in 1999.
Shan
Liu, Chief Financial Officer
Mr. Liu
is our Chief Financial Officer. Currently, he also serves as the Senior Vice
President of Guangdong Wealth Guarantee Co., Ltd, the Senior Vice President in
Investment Banking department of ZhongDan Investment & Guarantee Co., and
the assistant to President of Guangdong SME Financing Promotion Association. Dr.
Liu has 20 years of experience in financial and telecommunication industry. He
worked for almost 10 years in the Hong Kong and Macao
Office of People’s Government since 1989, during which period he was involved in
the listings of four Chinese companies on the Hong Kong Stock
Exchange. Mr. Liu received his Master Degree in economics from Sun
Yat-Sen University in China.
Chuanda
Zeng, Director
Mr. Zeng
is our director. Mr. Zeng also serves as a director of Guangdong Small and
Medium-sized Enterprise Financial Promotion Association and the administrative
assistant of general manager of Dong Guan Yue Rong Guarantee Company. Mr. Zeng
has 14 years of experience in telecommunication, real estate and retail
business. Before he joined us, Mr. Zeng was the General Manager of Guangzhou
Zhongjue Venture Capital Co. Ltd. Mr. Zeng graduated from Huanan Science &
Engineering University in 1995.
13
George Ma, Chairman
George Ma
is currently the Chairman of the Board and is also one of the co-founders of the
Company. Mr. Ma is an experienced executive who has many years of
experience in creative marketing. His previous careers include film and
television productions and working at an advertising agency with mass media
experience in Hong Kong. After migrating to California in 1984, he founded
Infinitel Communications, a cellular phone retail chain, VoIP and communication
products and services provider based in California. He graduated from Hong Kong
Technical College in 1972.
The board
of directors has adopted the following definition of “independent director:” an
independent director is a person other than an officer or employee of the
company or its subsidiaries or any other individual having a relationship which,
in the opinion of the Company’s board of directors, would interfere with the
exercise of independent judgment in carrying out the responsibilities of a
director.
Term of Office
Our directors are appointed for a one-year term to hold office until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until removed by the board.
Audit
Committee
We have
not yet appointed an audit committee. At the present time, we believe that the
members of board of directors are collectively capable of analyzing and
evaluating our financial statements and understanding internal controls and
procedures for financial reporting.
Audit Committee Financial
Expert
Our board
of directors currently acts as our audit committee. We currently do not have a
member who qualifies as an “audit committee financial expert” as defined in
Regulation S-K and are in search of one director who is “independent” as the
term is used in Item 7(d) (3) (iv) of Schedule 14A under the Securities Exchange
Act. Our board of directors is in the process of searching for additional
suitable candidates for this position.
Certain Legal
Proceedings
To the
best of our knowledge, none of our directors or executive officers have been
convicted in a criminal proceeding, excluding traffic violations or similar
misdemeanors, or has been a party to any judicial or administrative proceeding
during the past five years that resulted in a judgment, decree or final order
enjoining the person from future violations of, or prohibiting activities
subject to, federal or state securities laws, or a finding of any violation of
federal or state securities laws, except for matters that were dismissed without
sanction or settlement. Except as set forth in our discussion below in certain
Relationships and Related Transactions,” none of our directors, director
nominees or executive officers has been involved in any transactions with us or
any of our directors, executive officers, affiliates or associates which are
required to be disclosed pursuant to the rules and regulations of the
SEC.
Compliance With Section
16(A) Of The Exchange Act
Section
16(a) of the Exchange Act requires the Company’s officers and directors, and
persons who beneficially own more than 10% of a registered class of the
Company’s equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission and are required to
furnish copies to the Company. To the best of the Company’s knowledge, any
reports required to be filed were timely filed in fiscal year ended December 31,
2009.
Code of
Ethics
We
currently do not have a code of ethics that applies to our officers, employees
and directors, including our Chief Executive Officer and senior
executives.
14
ITEM 11.
EXECUTIVE
COMPENSATION
Compensation of Executive Officers
The
following summary compensation table sets forth all compensation awarded to,
earned by, or paid to the named executive officers paid by us during the fiscal
years ended December 31, 2009 and 2008 in all capacities for the
accounts of our current and former executives, including the Chief Executive
Officer (CEO) and Chief Financial Officer (CFO):
SUMMARY
COMPENSATION TABLE
Name
and principal position
|
Year
|
Salary
($)(1)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive Plan Compensation
($)
|
Nonqualified
Deferred
Compensation Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|||||||||||||||
Hui
Liu,
Current
CEO,
Director
Shan
Liu
Current
CFO
Tony
Lee,
Former
President, CEO, Director
|
2009
2009
2009
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
0
0
0
|
|||||||||||||||
2008
|
4,650
|
0
|
0
|
0
|
0
|
0
|
0
|
4,650
|
||||||||||||||||
Spencer
Luo,
Former
CFO,
Director
|
2009
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|||||||||||||||
2008
|
3,900
|
0
|
0
|
0
|
0
|
0
|
0
|
3,900
|
||||||||||||||||
(1) All
salaries referenced above have been accrued but remain unpaid.
We do not
have any plans to pay our officers and directors any compensation at this
time.
Option Grants Table. There
were no individual grants of stock options to purchase our common stock made to
the executive officer named in the Summary Compensation Table through April 25,
2010.
Aggregated Option Exercises and
Fiscal Year-End Option Value Table. There were no stock
options exercised during the period ending April 15, 2010 by the executive
officer named in the Summary Compensation Table.
Long-Term Incentive Plan (“LTIP”)
Awards Table. There were no awards made to a named executive officer
during the period ended April 15, 2010 under any LTIP.
15
Compensation of
Directors
Directors
are permitted to receive fixed fees for their services as directors. The
Board of Directors has the authority to fix the compensation of directors. No
amounts have been paid to date to the directors in such capacity. We
anticipate paying the directors the accrued salary listed above when the Company
becomes profitable.
Employment
Agreements
We do not
have any employment agreements in place with any of our officers or
directors,
ITEM 12.SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information as of April 15, 2010 with respect
to the beneficial ownership of our common stock, the sole outstanding class of
our voting securities, by (i) any person or group owning more than 5% of each
class of voting securities, (ii) each director, (iii) each executive officer
named in the Summary Compensation Table in the section entitled “Executive
Compensation” above and (iv) all executive officers and directors as a
group.
Title
of Class
|
Name
and Address
of
Beneficial Owner
|
Amount
and
Nature
of
Beneficial
Owner
|
Percent
of
Class
(1)
|
Common
Stock
|
Champion
Investors (China) LTD
Address:
9
Division Street, Suite 201
New
York, NY 10004
|
833,334
|
64.45%
|
Common
Stock
|
LeShan
Xie
Address:
43
Gong Ye Da Dao Bei, Room B7803, Hei Zhu District,
Guangzhou,
GD, China
|
103,437
|
8.00%
|
Common
Stock
|
WeiBin
Zhong
Address:
11
Yuan Cun Er Lu, No. 8 Block, Room 505, Tian He District,
Guangzhou,
GD, China
|
93,093
|
7.20%
|
Common
Stock
|
Hui
Liu
Address:
12
Zhu Ge Zhuang, No.1 Building, 7th Floor, Room 1, Hai
Ding
District, Beijing, China
|
82,750
|
6.40%
|
Common
Stock
|
Chuanda
Zeng
Address:
1
Xiang Yang Xin Jie, No. 3, Hong Xing District, Yang Jiang
City,
GD, China
|
72,406
|
5.60%
|
Common
Stock
|
Yu
Chen
Address:
439
Che Po Lu, Room 807, Tian He District, Guangzhou, GD,
China
|
62,061
|
4.80%
|
Common
Stock
|
George
Ma
Address:
310
La Prenda Avenue
Millbrae,
CA 94030
|
3,742
|
0.29%
|
Common
Stock
|
All
executive officers and directors as a group
|
158,898
|
12.29%
|
(1) Based
on 1,293,040 shares outstanding as of April 15, 2010.
16
The
current office space is sub-leased from one of the shareholders on a month to
month basis. The rent expense for 2009 and 2008 is $2,940 and $2,940,
respectively.
The
Company entered into an agreement with Apex Telecom, shareholder of the Company,
for leasing the facility and related equipment for use in the
operation. The monthly rate of this lease is $200 per
month. Either party could terminate the lease by 30 day notification
to the other party. The lease expense for 2009 and 2008 is $2,400 and $2,400
respectively.
During
the years ended December 31, 2009 and 2008, the Company accrued compensation for
key management personnel for the administrative and managerial services rendered
to the Company. The total compensation accrued for 2009 and 2008 was
$6,660 and $6,600, respectively.
During
the years ended December 31, 2009 and 2008, the Company had related party sales
of $1,648 and $1,563, respectively.
As of
December 31, 2009 and 2008, the Company had related party purchase that
accounted for 95% and 23% the total cost of sales, respectively
As of
December 31, 2009 and 2008, $49,980 and $11,160 was recorded as an in-kind
contribution of services, respectively.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND
SERVICES
Audit
Fees
For the
Company’s fiscal years ended December 31, 2009 and 2008, we were billed
approximately $26,013 and $30,234 for professional services rendered for
the audit and review of our financial statements.
Audit Related
Fees
There
were no fees for audit related services for the years ended December 31, 2009
and 2008.
Tax Fees
For the
Company’s fiscal years ended December 31, 2009 and 2008, we were not billed for
professional services rendered for tax compliance, tax advice, and tax
planning.
All Other
Fees
The
Company did not incur any other fees related to services rendered by our
principal accountant for the fiscal years ended December 31, 2009 and
2008.
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Effective
May 6, 2003, the Securities and Exchange Commission adopted rules that require
that before our auditor is engaged by us to render any auditing or permitted
non-audit related service, the engagement be:
- approved
by our audit committee; or
- entered
into pursuant to pre-approval policies and procedures established by the audit
committee, provided the policies and procedures are detailed as to the
particular service, the audit committee is
informed of each service, and such policies and procedures do not include
delegation of the audit committee's responsibilities to management.
We do not
have an audit committee. Our entire board of directors pre-approves
all services provided by our independent auditors.
The
pre-approval process has just been implemented in response to the new rules.
Therefore, our board of directors does not have records of what
percentage of the above fees were pre-approved. However, all of the
above services and fees were reviewed and approved by the entire board of
directors either before or after the respective services were
rendered.
17
PART IV
a)
Documents filed as part of this Annual Report
1.
Consolidated Financial Statements
2.
Financial Statement Schedules
3.
Exhibits
EXHIBIT
NUMBER
|
DESCRIPTION
|
31.1
|
Rule
13a-14(a)/ 15d-14(a) Certification of Chief Executive
Officer
|
31.2
|
Rule
13a-14(a)/ 15d-14(a) Certification of Chief Financial
Officer
|
32.1
|
Section
1350 Certification of Chief Executive Officer
|
32.2
|
Section
1350 Certification of Chief Financial
Officer
|
18
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, there unto duly authorized on April 15, 2010.
APEXTALK HOLDINGS, INC.
|
|
By:
|
/s/Hui
Liu
|
Hui
Liu
|
|
Chief
Executive Officer
|
By:
|
/s/Shan
Liu
|
Shan
Liu
|
|
Chief
Financial Officer
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Name
|
Title
|
Date
|
||
/s/
Hui Liu
|
Chief
Executive Officer,
|
|||
Hui
Liu
|
and
Director
|
April
15, 2010
|
||
/s/
George Ma
|
||||
George
Ma
|
Chairman
|
April
15, 2010
|
||
/s/
Shan Liu
|
||||
Shan
Liu
|
Chief
Financial Officer
|
April
15, 2010
|
||
/s/
Chuanda Zeng
|
||||
Chuanda
Zeng
|
Director
|
April
15, 2010
|
||
and
Secretary
|
19