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EX-31.1 - MAJIC WHEELS CORP | v203620_ex31-1.htm |
EX-32.1 - MAJIC WHEELS CORP | v203620_ex32-1.htm |
U.S.
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K/A
(Amendment No. 1)
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE
ACT OF 1934
For
the fiscal year ended December 31, 2009
Commission file number:
333-147629
MAJIC WHEELS
CORP.
(Exact
name of registrant as specified in its charter)
Delaware
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98-0533882
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(State
of incorporation)
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(I.R.S.
Employer Identification
No.)
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c/o Benny
Resheff
28
Rembrandt St.
Tel Aviv,
Israel
(Address
of principal executive offices)
52522
(zip
code)
972-(3)
5759001
(Registrant’s
telephone number, including area code)
Securities
registered pursuant to Section 12(b) of the Exchange Act:
None
Securities
registered pursuant to Section 12(g) of the Exchange Act:
Common
Stock, $0.0001 par value
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
past 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 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 in Part III of this Form 10-K
or any amendment to this Form 10-K. o
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
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer ¨
|
Accelerated
filer o
|
|
Non-accelerated
filer o
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Smaller
reporting company x
|
|
(Do
not check if a smaller reporting company)
|
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Act).
Yes No
x
State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently computed second fiscal
quarter. $1,000,000 based upon $0.01 per share which was the last price at which
the common equity purchased by non-affiliates was last sold.
The
number of shares of the issuer’s common stock issued and outstanding as of March
3, 2010, was 100,000,000 shares.
Documents
Incorporated By Reference: None
TABLE
OF CONTENTS
Page
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PART
I
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3
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Item
1
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Business
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3
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Item
1A
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Risk
Factors
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7
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Item
1B
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Unresolved
Staff Comments
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8
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Item
2
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Properties
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8
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Item
3
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Legal
Proceedings
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8
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PART
II
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8
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Item
4
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Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
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8
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Item
5
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Selected
Financial Data
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9
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Item
6
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Management’s
Discussion and Analysis of Financial Condition and Results of
Operation
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9
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Item
6A
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Quantitative
and Qualitative Disclosures About Market Risk.
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13
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Item
7
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Financial
Statements and Supplementary Data
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F-1
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Item
8
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Changes
in and Disagreements With Accountants on Accounting and Financial
Disclosure
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14
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Item
8A(T)
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Controls
and Procedures
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14
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Item
8B
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Other
Information
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15
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PART
III
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16
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Item
9
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Directors,
Executive Officers and Corporate Governance
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16
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Item
10
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Executive
Compensation
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18
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Item
11
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Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
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18
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Item
12
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Certain
Relationships and Related Transactions, and Director
Independence
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19
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Item
13
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Principal
Accountant Fees and Services
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20
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PART
IV
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20
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Item
14
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Exhibits
and Financial Statement Schedules
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20
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SIGNATURES
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21
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2
PART
I
Item
1. Business.
As used
in this Annual Report on Form 10-K (this “Report”), references to the “Company,”
the “Registrant,” “we,” “our,” “us” or “Majic Wheels” refer to Majic Wheels
Corp., unless the context otherwise indicates .
Forward-Looking
Statements
This
Report contains forward-looking statements. For this purpose, any statements
contained in this Report that are not statements of historical fact may be
deemed to be forward-looking statements. Forward-looking information includes
statements relating to future actions, prospective products, future performance
or results of current or anticipated products, sales and marketing efforts,
costs and expenses, interest rates, outcome of contingencies, financial
condition, results of operations, liquidity, business strategies, cost savings,
objectives of management, and other matters. You can identify forward-looking
statements by those that are not historical in nature, particularly those that
use terminology such as “may,” “will,” “should,” “expects,” “anticipates,”
“contemplates,” “estimates,” “believes,” “plans,” “projected,” “predicts,”
“potential,” or “continue” or the negative of these similar terms. The Private
Securities Litigation Reform Act of 1995 provides a “safe harbor” for
forward-looking information to encourage companies to provide prospective
information about themselves without fear of litigation so long as that
information is identified as forward-looking and is accompanied by meaningful
cautionary statements identifying important factors that could cause actual
results to differ materially from those projected in the
information.
These
forward-looking statements are not guarantees of future performance and involve
risks, uncertainties and assumptions that we cannot predict. In evaluating these
forward-looking statements, you should consider various factors, including the
following: (a) those risks and uncertainties related to general economic
conditions, (b) whether we are able to manage our planned growth efficiently and
operate profitable operations, (c) whether we are able to generate sufficient
revenues or obtain financing to sustain and grow our operations, (d) whether we
are able to successfully fulfill our primary requirements for cash, which are
explained below under “Liquidity and Capital Resources.” We assume no obligation
to update forward-looking statements, except as otherwise required under the
applicable federal securities laws.
Corporate
Background
We were
incorporated in Delaware on March 15, 2007, and we are a development stage
company. We intend to engage in the manufacturing and distribution of a
radio-controlled toy vehicle which uses a patented technology that allows the
vehicle to climb inclined and vertical surfaces. The use of the patented
technology in the Product will enable us to create a toy that seemingly
challenges gravity and provides entertainment and fun.
We do not
currently have a working prototype of our Product, but intend to create one by
the end of the second quarter of 2010. Subsequently, we plan to engage an
independent manufacturer to manufacture our Product at low cost. Our current
expectation is that the Product will be manufactured in China, which offers the
most cost-effective manufacturing option. We plan to generate revenue by
engaging marketing companies to introduce the Product to large wholesale toy
companies in China and the United States. We also plan to market our Product and
generate revenues through internet distributors of children’ s toys. We expect
that the Product's retail price to the consumer will be between $50 and
$60.
3
To date,
we have not generated any revenues and our operations have been limited to
organizational and capital formation matters. Since we were incorporated, we
have executed a Patent Licensing Agreement for the licensing of a patent
pertaining to the use of a substance with unique adhesive properties, executed a
Marketing Rights Agreement for worldwide marketing rights pertaining to our
product, issued common stock pursuant to subscription agreements, and commenced
capital formation activities.
On June
20, 2007, the Company issued 40,000,000 (post forward stock split) shares of
common stock valued at a price of $0.00002 per share for common stock
subscriptions receivable of $800. On September 28, 2007, the Company
received $800 as full payment for the stock subscriptions
receivable.
In
addition, in 2007, the Company commenced a capital formation activity to effect
a Registration Statement on Form S-1 with the SEC to raise capital of up to
$160,000 from a self-underwritten offering of 10,000,000 (post forward stock
split) shares of newly issued common stock in the public markets. The
Registration Statement on Form S-1 was filed with the SEC on November 27, 2007,
and declared effective on February 22, 2008. In March 2008, the
Company commenced the offering of its registered securities. In April
2008, the Company completed and closed the offering by selling a total of
10,000,000 (post forward stock split) registered shares of its common
stock, par value of $0.0001 per share, at an offering price of $0.0165 per
share, for total proceeds of $164,481.
On July
14, 2008, the Company declared a 5-for-1 forward stock split of its issued and
outstanding common stock to the holders of record on that date. Such
forward stock split was effective as of July 15, 2008. In Q1
2009, the Company initiated an additional forward stock split of 1-2.
The accompanying audited financial statements and related notes thereto
included in this Annual Report have been adjusted accordingly to
reflect this forward stock split.
We have
never declared bankruptcy, have never been in receivership, and have never been
involved in any legal action or proceedings. We have not made any significant
purchase or sale of assets, nor has the Company been involved in any mergers,
acquisitions or consolidations. We are not a blank check registrant as that term
is defined in Rule 419(a)(2) of Regulation C of the Securities Act of 1933,
because we have a specific business plan and purpose. Neither Majic Wheels
Corp., nor its officers, Directors, promoters or affiliates, has had preliminary
contact or discussions with, nor do we have any present plans, proposals,
arrangements or understandings with any representatives of the owners of any
business or company regarding the possibility of an acquisition or
merger.
The
Key Licensing and Marketing Agreements
Prior to
our inception, Michael Taft patented a substance with unique adhesive properties
in Israel (IL Patent Number: 148794 and PCT/IL06/00498). On September 28, 2007,
Michael Taft filed a new patent application in the United States with the Patent
and Trademark Office. We intend to integrate this Patented Technology into our
Product.
On
November 21, 2005, Mr. Taft entered into a distributor agreement with Idea Plus
Ltd. and Global Sourcing and Marketing LLC ("Distributor Agreement"). The
President of Idea Plus Ltd. is Mr. Benjamin Resheff, one of our Directors and
officers. The Distributor Agreement granted to Global Source and Marketing LLC
an exclusive, worldwide, perpetual license (with the right to sub-license). The
Distributor Agreement was cancelled in a waiver document, enabling Michael Taft
and us to sign the Patent Licensing Agreement on June 21, 2007.
4
On June
21, 2007, we entered into the Patent Licensing Agreement, which grants us an
exclusive, world-wide license in the Patent rights for developing,
manufacturing, marketing and selling the radio-controlled vehicle units for a
period of 5 years, with an option, at our discretion, to extend the term for an
additional five years. The agreement specifies that we will pay Michael Taft
4.5% of gross sales within 30 days of the end of each quarter. The agreement
also requires us to meet sales quotas of at least 500,000 units in the aggregate
for the first five years commencing as of June 21, 2007, and an additional sales
quota of 100,000 units per annum during the five year renewal term. If we fail
to meet any of these sales quotas, then Michael Taft may either terminate our
rights under the Patent Licensing Agreement or require us to pay the royalties
that would have been due had we met the relevant sales quota.
On June
20 2007, we entered into the Marketing Rights Agreement with Idea Plus Ltd. and
Global Sourcing and Marketing LLC, in order to acquire the sub-licensing and
marketing rights previously granted to them by Michael Taft, in exchange for
$60,000 payable to Global Sourcing and Marketing LLC by December 31, 2007. As of
December 31, 2007, we have paid $10,000 in connection with the Distribution
Rights Agreement. The remaining $50,000 was due on December 31, 2007, but,
pursuant to an addendum executed by the parties on December 26, 2007, the
remaining payment obligation was extended to June 30, 2008. The agreement
specifies that should we fail to pay Global Sourcing and Marketing LLC any
payment required under the agreement, Global Sourcing and Marketing LLC may
terminate the Marketing Rights Agreement and re-activate the Distributor
Agreement signed between Michael Taft and Idea Plus Ltd. and Global Sourcing and
Marketing LLC on November 21, 2005. The Marketing Rights Agreement also entitles
Global Sourcing and Marketing LLC to purchase 100,000 units of the
radio-controlled toy vehicle per year at cost plus fifteen percent (excluding
any value added taxes) for a period of five years from June 30,
2007.
In
addition, in 2007, Majic Wheels commenced a capital formation activity to effect
a Registration Statement on Form S-1 with the Securities and Exchange
Commission, and raise capital of up to $160,000 from a self-underwritten
offering of 10,000,000 (post forward stock split) shares of newly issued common
stock in the public markets. The Registration Statement on Form S-1
was filed with the SEC on November 27, 2007, and declared effective on February
22, 2008. On April 15, 2008, Majic Wheels completed the offering
of its registered common stock.
Our
principal offices are located at 28 Rembrandt St., Tel Aviv, Israel. Our
telephone number is 972-(3)5759001. Our registered office in Delaware is located
at c/o Delaware Intercorp, Inc., 113 Barksdale Professional Center, Newark, DE
19711, and our registered agent is Delaware Intercorp, Inc. Our fiscal year end
is December 31.
Business
Summary
Through
the use of the Patented Technology, we expect that our Product will be able to
climb inclined and vertical surfaces. More specifically, the Patented Technology
relates to the use of a substance with unique adhesive properties which can be
molded into various shapes, including tires for installation on radio-controlled
toy vehicles. Unlike current remote-controlled toy vehicles that can be
driven on flat or inclined surfaces, our Product adds vertical surfaces to the
dimensions in which to play and entertain. We expect that our Product will climb
and cling to the surface of vertical walls without falling.
According
to the International Council of Toy Industries, “Toys do more than entertain and
keep children occupied. Properly chosen, they should aid a child's physical,
mental, social and emotional development. Play is universally recognized as a
vital part of learning and growing and, because toys are such an important
ingredient of play, they are invaluable to a child's development into a mature,
confident adult.” See
http://www.toy-icti.org/info/toysandchilddevelopment.html.
5
According
to a recent survey commissioned by the International Council of Toy Industries,
the total value of world toy sales in 2006 was approximately US$67 billion and
was expected to grow to US$71billion in 2007. The strongest growth is expected
in Latin America, Asia and Eastern Europe. As of 2006, North America and Asia
have represented over 50% of the world market sales. See
http://www.toy-icti.org.
The
Company intends to develop a working prototype, which can then be used to
develop and manufacture the actual product. The intention is to raise these
additional funds in 2009 and complete the prototype development and manufacture
our Product in China, where, due to the low cost of manufacturing, a very large
proportion of the world’s toys are manufactured. We intend to engage a third
party manufacturer to manufacture our Product pursuant to strict guidelines that
we will set during the development of our working prototype.
We also
plan to consult with marketing companies to assist us with the development of
marketing and distribution channels for the Product. These efforts will take
many forms, including:
|
¨
|
direct contact with major toy
manufacturers,
|
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¨
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direct sales via the Company’s
website (www.majicwheels.com currently in
development),
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¨
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wholesale and retail contracts
with third party manufacturers and sales
outlets
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Third-Party
Manufacturers
We will
rely on third parties to develop a prototype and to work with us to manufacture
the Product. Currently, we have identified key manufacturing partners in China
that can be solicited for this purpose. If our manufacturing and distribution
agreements are not satisfactory, we may not be able to develop or commercialize
our Product as planned. In addition, we may not be able to contract with third
parties to manufacture our Product in an economical manner. Furthermore,
third-party manufacturers may not adequately perform their obligations, which
may impair our competitive position. If a manufacturer fails to perform, we
could experience significant time delays or we may be unable to commercialize or
continue to market our Product.
Intellectual
Property
On June
21, 2007, we signed a Patent Licensing Agreement with Michael Taft, the original
patent owner, licensing all rights, title and interest in, including a patent
(granted in Israel ), for a radio-controlled toy vehicle. On September 28, 2007,
a patent application was filed in the United States Patent and Trademark
Office.
Competition
There are
several companies in the radio-controlled toy vehicle field, including major toy
manufacturers internationally. We are not, however, aware of any other company
that has developed, manufactured, and/or marketed a device of a similar nature
that incorporates a substance with unique adhesive properties which can be
molded into various shapes, including tires for installation on radio-controlled
toy vehicles. Current models are limited to flat or inclined surfaces. When
these toys are challenged by vertical angles, they either stop completely or
flip over. We expect that our Product’s unique Patented Technology will enable
our Product to overcome the challenges of even vertical surfaces, allowing the
toy vehicle to climb walls without falling.
6
Patent,
Trademark, License & Franchise Restrictions And Contractual Obligations
& Concessions
As
described above, we have entered into an exclusive Patent Licensing Agreement
for the patented technology on which our proposed toy product is based. In
addition, as described above, we have entered into a Marketing Rights Agreement
whereby we acquired certain distribution rights that had originally been granted
to two other parties. On September 28, 2007, a patent application was filed in
the United States Patent and Trademark Office.
In
addition, we are developing our website and have registered www.majicwheels as
our domain name. We intend to protect our software developments with copyright
and trade secrecy laws.
Existing
or Probable Government Regulations
We will
be subject to the provisions of the Federal Consumer Product Safety Act and the
Federal Hazardous Substances Act, among other laws. These acts empower the CPSC
to protect the public against unreasonable risks of injury associated with
consumer products, including toys and other articles. The CPSC has the authority
to exclude from the market articles that are found to be hazardous and can
require a manufacturer to repair or repurchase such toys under certain
circumstances. Any such determination by the CPSC is subject to court review.
Violations of these acts may also result in civil and criminal penalties.
Similar laws exist in some states and cities in the U.S. and in many
jurisdictions throughout the world.
Employees
Other
than our current Directors and officers, we have no other full time or part-time
employees. If and when we develop the prototype for our radio-controlled toy
vehicle device and are able to begin manufacturing and marketing, we may need
additional employees for such operations. We do not foresee any significant
changes in the number of employees or consultants we will have over the next
twelve months.
Transfer
Agent
We have
engaged Nevada Agency and Trust as our stock transfer agent. Nevada Agency and
Trust is located at 50 West Liberty Street, Reno, Nevada 89501. Their
telephone number is (775) 322-0626 and their fax number is (775) 322-5623.
The transfer agent is responsible for all record-keeping and administrative
functions in connection with our issued and outstanding common
stock.
Research
and Development
The
Company is currently expending research and development costs to
continue to develop a fully operational working prototype of the
product.
Item
1A. Risk Factors
In
addition to the risk factors described in our Registration Statement on Form
SB-2, as filed with the Securities and Exchange Commission, and although smaller
reporting companies are not required to provide disclosure pursuant to this
Item, your attention is directed to the following risk factor that relates to
our business.
7
We
do not have sufficient cash to fund our operating expenses for the next twelve
months, and plan to seek funding through the sale of our common stock. Without
significant improvement in the capital markets, we may not be able to sell our
common stock and funding may not be available for continued
operations.
There is
not enough cash on hand to fund our administrative and other operating expenses
or our proposed research and development program for the next twelve months. In
addition, we will require substantial new capital following the development of a
strategic marketing plan for bringing our product to global markets in order to
actually market, arrange for the manufacturing of, and sell our product. Because
we do not expect to have any cash flow from operations within the next twelve
months, we will need to raise additional capital, which may be in the form of
loans from current stockholders and/or from public and private equity offerings.
Our ability to access capital will depend on our success in implementing our
business plan. It will also depend upon the status of the capital markets at the
time such capital is sought. Without significant improvement in the capital
markets, sufficient capital may not be available and the implementation of our
business plan could be delayed. If we are unable to raise additional funds in
the future, we may have to cease all substantive operations. In such event it
would not be likely that investors would obtain a profitable return on their
investment or a return of their investment at all
Item
1B. Unresolved Staff
Comments
None
Item
2. Properties
Our
Principal executive offices are located at c/o Benny Resheff, 28 Rembrandt St,
Tel Aviv, Israel. This location is the home of our Secretary, Treasurer, and
Director and we have been allowed to operate out of such location at no cost to
the Company. We believe that this space is adequate for our current and
immediately foreseeable operating needs. We do not have any policies regarding
investments in real estate, securities, or other forms of property.
Item
3. Legal Proceedings.
There are
no pending legal proceedings to which the Company is a party or in which any
Director, officer or affiliate of the Company, any owner of record or
beneficially of more than 5% of any class of voting securities of the Company,
or security holder is a party adverse to the Company or has a material interest
adverse to the Company. The Company’s property is not the subject of any pending
legal proceedings.
PART
II
Item 4.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities.
|
Market
Information
Our
common stock has been eligible to be traded on the Over-The-Counter Bulletin
Board since September 18, 2008, under the ticker symbol MJWL. There has
been no material active trading in the Company’s securities.
8
Holders
As of
March 3, 2010, there were 100,000,000 common shares issued and outstanding,
which were held by 47 stockholders of record.
Dividends
We have
never declared or paid any cash dividends on our common stock nor do we
anticipate paying any in the foreseeable future. Furthermore, we expect to
retain any future earnings to finance our operations and expansion. The payment
of cash dividends in the future will be at the discretion of our Board of
Directors and will depend upon our earnings levels, capital requirements, any
restrictive loan covenants and other factors the Board considers
relevant.
Equity
Compensation Plans
We do not
have any equity compensation plans.
Recent
Sales of Unregistered Securities; Use of Proceeds from Registered
Securities
We did
not sell any unregistered securities during the fiscal year ended December 31,
2009.
Purchases
of Equity Securities by the Small Business Issuer and Affiliated
Purchasers
We have
not repurchased any shares of our common stock during the fiscal year ended
December 31, 2009.
Item
5. Selected Financial Data.
A smaller
reporting company is not required to provide the information required by this
item.
Item
6. Management’s Discussion and Analysis of Financial Condition
and Results of Operations.
Certain
statements contained in this Annual Report, including statements regarding the
anticipated development and expansion of our business, our intent, belief or
current expectations, primarily with respect to the future operating performance
of Majic Wheels Corp. and the services we expect to offer and other statements
contained herein regarding matters that are not historical facts, are
“forward-looking” statements. Future filings with the Securities and Exchange
Commission, future press releases and future oral or written statements made by
us or with our approval, which are not statements of historical fact, may
contain forward-looking statements, because such statements include risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements.
All
forward-looking statements speak only as of the date on which they are made. We
undertake no obligation to update such statements to reflect events that occur
or circumstances that exist after the date on which they are made.
This
Management’s Discussion and Analysis or Plan of Operations (“MD&A”) section
of this Report discusses our results of operations, liquidity and financial
condition, and certain factors that may affect our future results. You should
read this MD&A in conjunction with our audited financial statements and
accompanying notes included in this Report. This plan of operation contains
forward-looking statements that involve risks, uncertainties, and assumptions.
The actual results may differ materially from those anticipated in these
forward-looking statements as a result of certain factors, including, but not
limited to, those presented under “Risk Factors” or elsewhere in this
Report.
9
Plan
of Operation
We are a
development stage company that has licensed the technology and patent for a
radio-controlled toy vehicle. The purpose of this product is to provide a toy
that can continue to move, even over hard surfaces, steep inclines, and vertical
surfaces, thus lengthening and enriching the experience for the child or young
adult.
Although
we have not yet engaged a manufacturer to develop a working prototype of the
radio-controlled toy vehicle, based on our preliminary discussions with certain
manufacturing vendors, we believe that it will take approximately three to four
months to construct a basic valid prototype of our product. Once the working
prototype has been successfully created and tested, we will be able to raise
additional funds to cover the next phase of our operation, which will involve
wide-scale manufacturing and marketing in international markets using a variety
of local and international resources. To accomplish this goal efficiently, the
Company plans to engage third-party manufacturing and marketing providers. Our
current plan is to manufacture our Product in China and begin marketing the toys
according to the plan developed with marketing experts. Our Product will also be
available via the Company’s website (www.majicwheels.com), which website is
currently under development.
If and
when we have a viable prototype, depending on the availability of funds, we
estimate that we would need approximately an additional four to six months to
bring our Product to market. Our objective is to manufacture the Product
ourselves through third party sub-contractors in China and market the Product as
an off-the-shelf device, and/or to license the manufacturing rights to the
Product and related technology to third party manufacturers who would then
assume responsibility for marketing and sales. The Company website will
also publicize and act as a marketing facility through which global sales can be
generated.
We are
not aware of any material trend, event, or capital commitment, which would
potentially adversely affect liquidity. In the event such a trend develops, we
believe that we will have sufficient funds available to satisfy working capital
needs through lines of credit and the funds expected from equity
sales.
Liquidity
and Capital Resources
As of
December 31, 2009, we had $719 in cash as compared to $2,522 in cash as
of December 31, 2008. We incurred a net loss of $51,495 for the fiscal year
ended December 31, 2009 as compared with a net loss of $125,887 for the period
December 31 2008. Our cumulative net loss since inception is
$195,981, which is comprised entirely of general and administrative and research
and development expenses .
The
Company does not believe that its cash resources will be sufficient to
fund its expenses over the next 12 months. There can be no assurance that
additional capital will be available to the Company. The Company currently has
no agreements, arrangements, or understandings with any person to obtain funds
through bank loans, lines of credit, or any other sources. Since the Company has
no such arrangements or plans currently in effect, its inability to raise funds
for the above purposes will have a severe negative impact on its ability to
remain a viable company.
10
Lack
of Insurance
The
Company currently has no insurance in force for its office facilities and
operations and it cannot be certain that it can cover the risks associated with
such lack of insurance or that it will be able to obtain and/or maintain
insurance to cover these risks at economically feasible premiums.
Going
Concern Consideration
Our
registered independent auditors have issued an opinion on our financial
statements which includes a statement describing our going concern status. This
means that there is substantial doubt that we can continue as an on-going
business for the next 12 months unless we obtain additional capital to pay our
bills and meet our other financial obligations. This is because we have not
generated any revenues and no revenues are anticipated until we begin marketing
the product. Accordingly, we must raise capital from sources other than the
actual sale of the product. We must raise capital to implement our project and
stay in business. Even if we raise the maximum amount of money in this offering,
we do not know how long the money will last, however, we do believe it will last
at least 12 months.
Recently
issued accounting pronouncements
In March
2008, the FASB issued FASB Statement No. 161, (FASB ASC 815) “Disclosures about
Derivative Instruments and Hedging Activities – an amendment of FASB Statement
133.” SFAS No. 161 (FASB ASC 815) enhances required disclosures
regarding derivatives and hedging activities, including enhanced disclosures
regarding how: (a) an entity uses derivative instruments; (b)
derivative instruments and related hedged items are accounted for under FASB No.
133, “Accounting for Derivative Instruments and Hedging Activities”; and (c)
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. Specifically, SFAS
No. 161 (FASB ASC 815) requires:
·
|
disclosure
of the objectives for using derivative instruments be disclosed in terms
of underlying risk and accounting
designation;
|
·
|
disclosure
of the fair values of derivative instruments and their gains and losses in
a tabular format;
|
·
|
disclosure
of information about credit-risk-related contingent
features;
|
·
|
and
cross-reference from the derivative footnote to other footnotes in which
derivative-related information is
disclosed.
|
SFAS No.
161 (FASB ASC 815) is effective for fiscal years and interim periods beginning
after November 15, 2008. Earlier application is
encouraged. The management of the Company does not expect the
adoption of this pronouncement to have a material impact on its financial
statements.
On May 9,
2008, the FASB issued FASB Statement No. 162, (FASB ASC 105) “The Hierarchy of
Generally Accepted Accounting Principles.” SFAS No. 162 (FASB ASC
105) is intended to improve financial reporting by identifying a consistent
framework, or hierarchy, for selecting accounting principles to be used in
preparing financial statements that are presented in conformity with U.S.
generally accepted accounting principles (“GAAP”) for nongovernmental
entities.
Prior to
the issuance of SFAS No. 162 (FASB ASC 105), GAAP hierarchy was defined in the
American Institute of Certified Public Accountants (“AICPA”) Statement on
Auditing Standards (“SAS”) No. 69, “The Meaning of Present Fairly in Conformity
with Generally Accept Accounting Principles.” SAS No. 69 has been
criticized because it is directed to the auditor rather than the
entity. SFAS No. 162 (FASB ASC 105) addresses these issues by
establishing that the GAAP hierarchy should be directed to entities because it
is the entity (not the auditor) that is responsible for selecting accounting
principles for financial statements that are presented in conformity with
GAAP.
The
sources of accounting principles that are generally accepted are categorized in
descending order as follows:
a.
|
FASB
Statements of Financial Accounting Standards and Interpretations, FASB
Statement 133 Implementation Issues, FASB Staff Positions, and American
Institute of Certified Public Accountants (AICPA) Accounting Research
Bulletins and Accounting Principles Board Opinions that are not superseded
by actions of the FASB.
|
b.
|
FASB
Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and
Accounting Guides and Statements of
Position.
|
c.
|
AICPA
Accounting Standards Executive Committee Practice Bulletins that have been
cleared by the FASB, consensus positions of the FASB Emerging Issues Task
Force (EITF), and the Topics discussed in Appendix D of EITF Abstracts
(EITF D-Topics).
|
d.
|
Implementation
guides (Q&As) published by the FASB staff, AICPA Accounting
Interpretations, AICPA Industry Audit and Accounting Guides and Statements
of Position not cleared by the FASB, and practices that are widely
recognized and prevalent either generally or in the
industry.
|
11
SFAS No.
162 (FASB ASC 105) is effective 60 days following the SEC’s approval of the
Public Company Accounting Oversight Board amendment to its
authoritative literature. It is only effective for nongovernmental
entities; therefore, the GAAP hierarchy will remain in SAS 69 for state and
local governmental entities and federal governmental entities. The
management of the Company does not expect the adoption of this pronouncement to
have a material impact on its financial statements.
On May
26, 2008, the FASB issued FASB Statement No. 163, (FASB ASC 944) “Accounting for
Financial Guarantee Insurance Contracts.” SFAS No. 163 (FASB ASC 944)
clarifies how FASB Statement No. 60, “Accounting and Reporting by Insurance
Enterprises” (“SFAS No. 60”), applies to financial guarantee insurance contracts
issued by insurance enterprises, including the recognition and measurement of
premium revenue and claim liabilities. It also requires expanded
disclosures about financial guarantee insurance contracts.
The
accounting and disclosure requirements of SFAS No. 163 (FASB ASC 944) are
intended to improve the comparability and quality of information provided to
users of financial statements by creating consistency. Diversity
exists in practice in accounting for financial guarantee insurance contracts by
insurance enterprises under SFAS No. 60, “Accounting and Reporting by Insurance
Enterprises.” That diversity results in inconsistencies in the
recognition and measurement of claim liabilities because of differing views
about when a loss has been incurred under FASB Statement No. 5, “Accounting for
Contingencies” (“SFAS No. 5”). SFAS No. 163 (FASB ASC 944) requires
that an insurance enterprise recognize a claim liability prior to an event of
default when there is evidence that credit deterioration has occurred in an
insured financial obligation. It also requires disclosure about (a)
the risk-management activities used by an insurance enterprise to evaluate
credit deterioration in its insured financial obligations and (b) the insurance
enterprise’s surveillance or watch list.
SFAS No.
163 (FASB ASC 944) is effective for financial statements issued for fiscal years
beginning after December 15, 2008, and all interim periods within those fiscal
years, except for disclosures about the insurance enterprise’s risk-management
activities. Disclosures about the insurance enterprise’s
risk-management activities are effective the first period beginning after
issuance of SFAS No. 163 (FASB ASC 944). Except for those
disclosures, earlier application is not permitted. The management of
the Company does not expect the adoption of this pronouncement to have material
impact on its financial statements.
On May
22, 2009, the FASB issued FASB Statement No. 164, (FASB ASC 958) “Not-for-Profit
Entities: Mergers and Acquisitions”. SFAS No. 164 (FASB ASC 958) is
intended to improve the relevance, representational faithfulness, and
comparability of the information that a not-for-profit entity provides in its
financial reports about a combination with one or more other not-for-profit
entities, businesses, or nonprofit activities. To accomplish that,
this Statement establishes principles and requirements for how a not-for-profit
entity:
a.
|
Determines
whether a combination is a merger or an
acquisition.
|
b.
|
Applies
the carryover method in accounting for a
merger.
|
c.
|
Applies
the acquisition method in accounting for an acquisition, including
determining which of the combining entities is the
acquirer.
|
d.
|
Determines
what information to disclose to enable users of financial statements to
evaluate the nature and financial effects of a merger or an
acquisition.
|
This
Statement also improves the information a not-for-profit entity provides about
goodwill and other intangible assets after an acquisition by amending FASB
Statement No. 142, Goodwill and Other Intangible Assets, to make it fully
applicable to not-for-profit entities.
SFAS No.
164 (FASB ASC 958) is effective for mergers occurring on or after December 15,
2009, and acquisitions for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2009. Early application is prohibited. The management
of the Company does not expect the adoption of this pronouncement to have
material impact on its financial statements.
On May
28, 2009, the FASB issued FASB Statement No. 165, (FASB ASC 855) “Subsequent
Events.” SFAS No. 165 (FASB ASC 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. Specifically, Statement 165 (FASB ASC 855)
provides:
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.
|
3.
|
The
disclosures that an entity should make about events or transactions that
occurred after the balance sheet
date.
|
In
accordance with this Statement, an entity should apply the requirements to
interim or annual financial periods ending after June 15, 2009. The
adoption of this pronouncement did not have a material impact on the financial
statements of the Company.
In June
2009, the FASB issued FASB Statement No. 166, (FASB ASC 860) “Accounting for
Transfers of Financial Assets- an amendment of FASB Statement No,
140.” SFAS No. 166 (FASB ASC 860) is a revision to SFAS No. 140
“Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities” and will require more information about transfers of financial
assets, including securitization transactions, and where companies have
continuing exposure to the risks related to transferred financial
assets. It eliminates the concept of a “qualifying special-purpose
entity,” changes the requirements for derecognizing financial assets, and
requires additional disclosures.
This
statement is effective for financial asset transfers occurring after the
beginning of an entity's first fiscal year that begins after November 15,
2009. The management of the Company does not expect the adoption of
this pronouncement to have material impact on its financial
statements.
In June
2009, the FASB issued FASB Statement No. 167, (FASB ASC 810) "Amendments to FASB
Interpretation No. 46(R).” SFAS No. 167 (FASB ASC 810) amends certain
requirements of FASB Interpretation No. 46(R), “Consolidation of Variable
Interest Entities” and changes how a company determines when an entity that is
insufficiently capitalized or is not controlled through voting (or similar
rights) should be consolidated. The determination of whether a
company is required to consolidate an entity is based on, among other things, an
entity’s purpose and design and a company’s ability to direct the activities of
the entity that most significantly impact the entity’s economic
performance.
This
statement is effective as of the beginning of each reporting entity’s first
annual reporting period that begins after November 15, 2009. The
management of the Company does not expect the adoption of this pronouncement to
have material impact on its financial statements.
In June
2009, the FASB issued FASB Statement No. 168, (FASB ASC 105) "The FASB
Accounting Standards Codification and the Hierarchy of Generally Accepted
Accounting Principles - a replacement of FASB Statement No.
162.” SFAS No. 168 (FASB ASC 105) establishes the FASB Accounting
Standards Codification (the "Codification") to become the single official source
of authoritative, nongovernmental U.S. generally accepted accounting principles
(“GAAP”). The Codification did not change GAAP but reorganizes the
literature.
SFAS No.
168 (FASB ASC 105) is effective for interim and annual periods ending after
September 15, 2009. The adoption of this pronouncement did not have a
material impact on the financial statements of the Company.
12
Off Balance
Sheet Arrangements
We do not
have any off-balance sheet arrangements that have or are reasonably likely to
have a current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures, or capital resources that are material to investors.
Item
6A. Quantitative and Qualitative
Disclosures About Market Risk.
A smaller
reporting company is not required to provide the information required by this
item.
13
Item
7. Financial Statements and Supplementary Data.
MAJIC
WHEELS CORP.
(A
DEVELOPMENT STAGE COMPANY)
INDEX
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009, AND 2008
Report
of Registered Independent Auditors
|
F-2
|
Financial
Statements-
|
|
Balance
Sheets as of December 31, 2009, and 2008
|
F-3
|
Statements
of Operations for the Years Ended December 31, 2009, and 2008, and
Cumulative from Inception
|
F-4
|
Statement
of Stockholders’ (Deficit) for the Period from Inception Through December
31, 2009
|
F-5
|
Statements
of Cash Flows for the Years Ended December 31, 2009, and 2008, and
Cumulative from Inception
|
F-6
|
Notes
to Financial Statements December 31, 2009, and 2008
|
F-7
|
F-1
REPORT
OF REGISTERED INDEPENDENT AUDITORS
To the
Board of Directors and Stockholders
of Majic
Wheels Corp.:
We have
audited the accompanying balance sheets of Majic Wheels Corp. (a Delaware
corporation in the development stage) as of December 31, 2009, and 2008, and the
related statements of operations, stockholders’ (deficit), and cash flows for
the each of the two years in the period ended December 31, 2009, and cumulative
from inception (March 15, 2007) through December 31, 2009. 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 standards of the Public Company
Accounting Oversight Board (United States of America). Those
standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. The Company is not required to have, nor were we
engaged to perform, an audit of its internal control over financial
reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. 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 Majic Wheels Corp. as of December
31, 2009, and 2008, and the results of its operations and its cash flows for
each of the two years in the period ended December 31, 2009, and cumulative from
inception (March 15, 2007) through December 31, 2009, in conformity with
accounting principles generally accepted in the United States of
America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is in the development stage, and has not
established any source of revenue to cover its operating costs. As
such, it has incurred an operating loss since inception. Further, as
of December 31, 2009, and 2008, the cash resources of the Company were
insufficient to meet its planned business objectives. These and other
factors raise substantial doubt about the Company’s ability to continue as a
going concern. Management’s plan regarding these matters is also
described in Note 2 to the financial statements. The accompanying
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
Respectfully
submitted,
/s/ Davis
Accounting Group P.C.
Cedar
City, Utah,
February
9, 2010.
F-2
MAJIC
WHEELS CORP.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEETS (NOTE 2)
AS
OF DECEMBER 31, 2009, AND 2008
2009
|
2008
|
|||||||
ASSETS
|
||||||||
Current
Assets:
|
||||||||
Cash
in bank
|
$ | 719 | $ | 2,522 | ||||
Total
current assets
|
719 | 2,522 | ||||||
Other
Assets:
|
||||||||
Patent
rights (net of accumulated amortization of $1,994 and $1,193 in 2009, and
2008, respectively)
|
5,054 | 2,573 | ||||||
Marketing
rights (net of accumulated amortization of $31,000 and $19,000 in 2009,
and 2008, respectively)
|
29,000 | 41,000 | ||||||
Total
other assets
|
34,054 | 43,573 | ||||||
Total
Assets
|
$ | 34,773 | $ | 46,095 | ||||
LIABILITIES
AND STOCKHOLDERS' (DEFICIT)
|
||||||||
Current
Liabilities:
|
||||||||
Accounts
payable - Trade
|
$ | 3,600 | $ | - | ||||
Accrued
liabilities
|
9,178 | 6,100 | ||||||
Due
to related party - Director and stockholder
|
97,695 | 64,200 | ||||||
Total
current liabilities
|
110,473 | 70,300 | ||||||
Total
liabilities
|
110,473 | 70,300 | ||||||
Commitments
and Contingencies
|
||||||||
Stockholders'
(Deficit):
|
||||||||
Common
stock, par value $.0001 per share, 150,000,000 shares authorized;
100,000,000 shares issued and outstanding in 2009, and 2008,
respectively
|
10,000 | 10,000 | ||||||
Additional
paid-in capital
|
110,281 | 110,281 | ||||||
(Deficit)
accumulated during the development stage
|
(195,981 | ) | (144,486 | ) | ||||
Total
stockholders' (deficit)
|
(75,700 | ) | (24,205 | ) | ||||
Total
Liabilities and Stockholders' (Deficit)
|
$ | 34,773 | $ | 46,095 |
The
accompanying notes to financial statements are
an
integral part of these balance sheets.
F-3
MAJIC
WHEELS CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF OPERATIONS (NOTE 2)
FOR
THE YEARS ENDED DECEMBER 31, 2009, AND 2008,
AND
CUMULATIVE
FROM INCEPTION (MARCH 15, 2007) THROUGH DECEMBER 31, 2009
Year Ended
December 31,
|
Cumulative
From
|
|||||||||||
2009
|
2008
|
Inception
|
||||||||||
Revenues
|
$ | - | $ | - | $ | - | ||||||
Expenses:
|
||||||||||||
General
and administrative-
|
||||||||||||
Professional
fees
|
28,187 | 45,299 | 77,414 | |||||||||
Research
and Development
|
- | 31,350 | 31,350 | |||||||||
Amortization
|
12,801 | 12,754 | 32,994 | |||||||||
Consulting
fees
|
625 | 21,000 | 23,625 | |||||||||
Filing
fees
|
5,394 | 2,520 | 10,507 | |||||||||
Web
design fees
|
2,000 | 4,200 | 6,200 | |||||||||
Investor
and public relations
|
2,000 | 2,853 | 4,853 | |||||||||
Office
supplies
|
- | 2,270 | 2,270 | |||||||||
Organization
costs
|
- | - | 2,270 | |||||||||
Bank
charges
|
488 | 1,583 | 2,440 | |||||||||
Other
|
- | 2,058 | 2,058 | |||||||||
Total
general and administrative expenses
|
51,495 | 125,887 | 195,981 | |||||||||
(Loss)
from Operations
|
(51,495 | ) | (125,887 | ) | (195,981 | ) | ||||||
Other
Income (Expense)
|
- | - | - | |||||||||
Provision
for income taxes
|
- | - | - | |||||||||
Net
(Loss)
|
$ | (51,495 | ) | $ | (125,887 | ) | $ | (195,981 | ) | |||
(Loss)
Per Common Share:
|
||||||||||||
(Loss)
per common share - Basic and Diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | ||||||
Weighted
Average Number of Common Shares Outstanding - Basic and
Diluted
|
100,000,000 | 47,530,738 |
The
accompanying notes to financial statements are
an
integral part of these statements.
F-4
MAJIC
WHEELS CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENT
OF STOCKHOLDERS' (DEFICIT) (NOTE 2)
FOR
THE PERIOD FROM INCEPTION (MARCH 15, 2007) THROUGH DECEMBER 31,
2009
Common stock
|
Discount on
Common
|
Additional
Paid-in
|
(Deficit)
Accumulated
During the
Development
|
|||||||||||||||||||||
Description
|
Shares
|
Amount
|
Stock
|
Capital
|
Stage
|
Totals
|
||||||||||||||||||
Balance
- March 15, 2007
|
- | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
Common
stock issued for cash
|
80,000,000 | 8,000 | (7,200 | ) | - | - | 800 | |||||||||||||||||
Net
(loss) for the period
|
- | - | - | - | (18,599 | ) | (18,599 | ) | ||||||||||||||||
Balance
- December 31, 2007
|
80,000,000 | 8,000 | (7,200 | ) | - | (18,599 | ) | (17,799 | ) | |||||||||||||||
Common
stock issued for cash
|
20,000,000 | 2,000 | 7,200 | 155,281 | - | 164,481 | ||||||||||||||||||
Less
- Deferred offering costs
|
- | - | (45,000 | ) | - | (45,000 | ) | |||||||||||||||||
Net
(loss) for the period
|
- | - | - | (125,887 | ) | (125,887 | ) | |||||||||||||||||
Balance
- December 31, 2008
|
100,000,000 | $ | 10,000 | $ | - | $ | 110,281 | $ | (144,486 | ) | $ | (24,205 | ) | |||||||||||
Net
(loss) for the period
|
- | - | - | (51,495 | ) | (51,495 | ) | |||||||||||||||||
Balance
- December 31, 2009
|
100,000,000 | $ | 10,000 | $ | - | $ | 110,281 | $ | (195,981 | ) | $ | (75,700 | ) |
The
accompanying notes to financial statements are
an
integral part of this statement.
F-5
MAJIC
WHEELS CORP.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF CASH FLOWS (NOTE 2)
FOR
THE YEARS ENDED DECEMBER 31, 2009, AND 2008,
AND
CUMULATIVE FROM INCEPTION (MARCH 15, 2007) THROUGH DECEMBER 31,
2009
Years
Ended
|
Cumulative
|
|||||||||||
December 31,
|
From
|
|||||||||||
2009
|
2008
|
Inception
|
||||||||||
Operating
Activities:
|
||||||||||||
Net
(loss)
|
$ | (51,495 | ) | $ | (125,887 | ) | $ | (195,981 | ) | |||
Adjustments
to reconcile net (loss) to net cash (used in) operating
activities:
|
||||||||||||
Amortization
|
12,801 | 12,754 | 32,994 | |||||||||
Changes
in net liabilities-
|
||||||||||||
Accounts
payable - Trade
|
3,600 | - | 3,600 | |||||||||
Accrued
liabilities
|
3,078 | (12,502 | ) | 9,178 | ||||||||
Net
Cash (Used in) Operating Activities
|
(32,016 | ) | (125,635 | ) | (150,209 | ) | ||||||
Investing
Activities:
|
||||||||||||
Patent
rights
|
(3,282 | ) | - | (7,048 | ) | |||||||
Marketing
rights
|
- | (50,000 | ) | (60,000 | ) | |||||||
Net
Cash (Used in) Investing Activities
|
(3,282 | ) | (50,000 | ) | (67,048 | ) | ||||||
Financing
Activities:
|
||||||||||||
Proceeds
from issuance of common stock
|
- | 164,481 | 165,281 | |||||||||
Due
to related party - Director and stockholder
|
33,495 | 23,000 | 97,695 | |||||||||
Deferred
offering costs
|
- | (10,000 | ) | (45,000 | ) | |||||||
Net
Cash Provided by Financing Activities
|
33,495 | 177,481 | 217,976 | |||||||||
Net
Increase (Decrease) in Cash
|
(1,803 | ) | 1,846 | 719 | ||||||||
Cash
- Beginning of Period
|
2,522 | 676 | - | |||||||||
Cash
- End of Period
|
$ | 719 | $ | 2,522 | $ | 719 | ||||||
Supplemental
Disclosure of Cash Flow Information:
|
||||||||||||
Cash
paid during the period for:
|
||||||||||||
Interest
|
$ | - | $ | - | $ | - | ||||||
Income
taxes
|
$ | - | $ | - | $ | - |
The
accompanying notes to financial statements are
an
integral part of these statements.
F-6
MAJIC
WHEELS CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009, AND 2008
(1) Summary
of Significant Accounting Policies
Basis of Presentation and
Organization
Majic
Wheels Corp. (“Majic Wheels” or the “Company”) is a Delaware corporation in the
development stage. The Company was incorporated under the laws of the
State of Delaware on March 15, 2007. The business plan of the Company
is to develop a radio-controlled toy vehicle utilizing a patent pertaining to
unique adhesive wheels. The patent’s intended use is to enable the
radio-controlled toy vehicle to climb inclined and vertical
surfaces. The accompanying financial statements of Majic Wheels Corp.
were prepared from the accounts of the Company under the accrual basis of
accounting.
In
addition, in 2007, Majic Wheels commenced a capital formation activity to affect
a Registration Statement on Form S-1 with the Securities and Exchange
Commission, and raise capital of up to $160,000 from a self-underwritten
offering of 10,000,000 (post forward stock split) shares of newly issued common
stock in the public markets. The Registration Statement on Form S-1
was filed with the SEC on November 27, 2007, and declared effective on February
22, 2008. On April 15, 2008, Majic Wheels completed an offering of
its registered common stock as explained in Note 5.
Cash and Cash
Equivalents
For
purposes of reporting within the statements of cash flows, the Company considers
all cash on hand, cash accounts not subject to withdrawal restrictions or
penalties, and all highly liquid debt instruments purchased with a maturity of
three months or less to be cash and cash equivalents.
Revenue
Recognition
The
Company is in the development stage and has yet to realize revenues from planned
operations. It plans to realize revenues from the manufacturing and
sale of a radio-controlled toy vehicle. Revenues will be recognized
for manufacturing and selling activities when the sale and distribution of its
product is complete, risk of loss and title to the product have transferred to
the customer, there is persuasive evidence of an agreement, acceptance has been
approved by the customer, and collection is reasonably assured.
Development
Costs
The
Company is in the development stage, and primarily involved in the development
of a prototype application of a patent. When it has been determined
that a prototype can be economically developed, the costs incurred to develop
this prototype will be capitalized accordingly. Development costs
capitalized will be amortized over the estimated useful life of the product
following attainment of commercial production or written-off to expense if the
product or project is abandoned.
F-7
MAJIC
WHEELS CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009, AND 2008
Patent Rights
The
Company obtained the licensing rights to a United States patent from Michael
Taft, inventor, on June 21, 2007. The Company incurred $3,766 in
costs associated with the Patent Licensing Agreement. The costs
incurred to acquire the patent rights are being amortized over the five-year
term of the Agreement. On October 19, 2009, the Company incurred
$3,282 in costs associated with the Patent Licensing Agreement. The
costs incurred to acquire the patent rights are being amortized over the 17-year
term of the Agreement.
Impairment
of Long-Lived Assets
The
Company evaluates the recoverability of long-lived assets and the related
estimated remaining lives at each balance sheet date. The Company
records an impairment or change in useful life whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable or the
useful life has changed. For the years ended December 31, 2009, and
2008, no events or circumstances occurred for which an evaluation of the
recoverability of long-lived assets was required.
Loss Per Common
Share
Basic
loss per share is computed by dividing the net loss attributable to the common
stockholders by the weighted average number of shares of common stock
outstanding during the period. Fully diluted loss per share is
computed similar to basic loss per share except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potential common shares had been issued and if the additional
common shares were dilutive. There were no dilutive financial
instruments issued or outstanding for the years ended December 31, 2009, and
2008.
Deferred
Offering Costs
The
Company defers as other assets the direct incremental costs of raising capital
until such time as the offering is completed. At the time of the
completion of the offering, the costs are charged against the capital
raised. Should the offering be terminated, deferred offering costs
are charged to operations during the period in which the offering is
terminated.
Income
Taxes
The
Company accounts for income taxes pursuant to SFAS No. 109, “Accounting for Income Taxes”
(“SFAS No. 109”). Under SFAS No. 109, deferred tax assets and
liabilities are determined based on temporary differences between the basis of
certain assets and liabilities for income tax and financial reporting
purposes. The deferred tax assets and liabilities are classified
according to the financial statement classification of the assets and
liabilities generating the differences.
The
Company maintains a valuation allowance with respect to deferred tax
assets. The Company establishes a valuation allowance based upon the
potential likelihood of realizing the deferred tax asset and taking into
consideration the Company’s financial position and results of operations for the
current period. Future realization of the deferred tax benefit
depends on the existence of sufficient taxable income within the carryforward
period under the Federal tax laws.
F-8
MAJIC
WHEELS CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009, AND 2008
Changes
in circumstances, such as the Company generating taxable income, could cause a
change in judgment about the realizability of the related deferred tax
asset. Any change in the valuation allowance will be included in
income in the year of the change in estimate.
Fair Value of Financial
Instruments
The
Company estimates the fair value of financial instruments using the available
market information and valuation methods. Considerable judgment is
required in estimating fair value. Accordingly, the estimates of fair
value may not be indicative of the amounts the Company could realize in a
current market exchange. As of December 31, 2009, and 2008, the
carrying value of the Company’s financial instruments approximated fair value,
due to the short-term maturity of these instruments.
Subsequent
Events
The
management of the Company performs a review and evaluation of subsequent events
following the end of each quarterly and annual financial period. For
the year ended December 31, 2009, the review and evaluation of subsequent events
for proper accrual and disclosure was completed through February 9, 2010, which
was the date the financial statements were available to be issued.
Estimates
The
financial statements are prepared on the basis of accounting principles
generally accepted in the United States of America. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities as of December 31, 2009, and 2008,
and expenses for the years ended December 31, 2009, and 2008, and
cumulative from inception. Actual results could differ from those
estimates made by management.
(2) Development
Stage Activities and Going Concern
The
Company is currently in the development stage, and its business plan addresses
the development of a radio-controlled toy vehicle utilizing certain patent
rights pertaining to a Climbing Device. The Company also plans to
develop a prototype of the patent application and then manufacture and market
the product.
During
the period from March 15, 2007, through December 31, 2009, the Company was
incorporated, completed the Patent Licensing Agreement of a patent pertaining to
a Climbing Device, completed a Marketing Rights Agreement for worldwide
marketing rights pertaining to its product, issued common stock for stock
subscription agreements, and commenced a capital formation activity to effect a
Registration Statement on Form S-1 with the SEC to raise capital of up to
$160,000 from a self-underwritten offering of 10,000,000 (post forward stock
split) shares of newly issued common stock in the public markets. The
Registration Statement on Form S-1 was filed with the SEC on November 27, 2007,
and declared effective on February 22, 2008. On April 15, 2008, Majic
Wheels completed an offering of its registered common stock as explained in Note
5. The Company also intends to conduct additional capital formation
activities through the issuance of its common stock and to commence
operations.
F-9
MAJIC
WHEELS CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009, AND 2008
While
management of the Company believes that it will be successful in its capital
formation and planned operating activities, there can be no assurance that the
Company will be able to raise additional equity capital, or be successful in the
development of a prototype associated with its patent licensing rights,
commercialization of the prototype, or sale of its planned product that will
generate sufficient revenues to sustain the operations of the
Company.
The
accompanying financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of America, which
contemplate continuation of the Company as a going concern. The
Company has incurred an operating loss since inception, had negative working
capital as of December 31, 2009, and 2008, and the cash resources of the Company
were insufficient to meet its planned business objectives. These and
other factors raise substantial doubt about the Company’s ability to continue as
a going concern. The accompanying financial statements do not include
any adjustments to reflect the possible future effects on the recoverability and
classification of assets or the amounts and classification of liabilities that
may result from the possible inability of the Company to continue as a going
concern.
(3) Patent
Licensing Agreement
On June
21, 2007, the Company entered into a patent licensing agreement (the “Patent
Licensing Agreement”) to acquire the patent rights pertaining to a Climbing
Device (all the rights covered by the registered patent and any future patents,
including applications, manufacturing processes, formulae, trade secrets and
know-how, and any other information relating to the registered and any future
patents, including any data, technology, inventions, discoveries, designs,
processes, formulations, models, technical reports, diagrams, software and
hardware, ideas, trade and business plans covered by the registered and any
future patents, and commercialization) from Michael Taft, an Israeli patent
owner (“the Inventor”) in exchange for the Company’s commitment to future
royalty payments to the Inventor of four and one half percent of all future
revenues received from the exploitation of the climbing device
patent. The Company incurred $3,766 in costs associated with
obtaining the Patent Licensing Agreement which has a term of five
years. On October 17, 2009, the company incurred $3,282 in costs
associated with obtaining the Patent Licensing Agreement. The Company
recorded amortization of the costs associated with the Patent Licensing
Agreement in the amounts of $1,994 and $1,193 for the years ended December 31,
2009, and 2008, respectfully.
(4) Marketing
Rights
On June
20, 2007, the Company entered into a marketing agreement (the “Marketing Rights
Agreement”) with Idea Plus Ltd. (“Idea Plus”) and Global Sourcing and Marketing,
LLC (“Global”). Idea Plus and Global had entered into an agreement
with the Inventor on November 21, 2005 (the “Previous Agreement”), which granted
the companies the exclusive, worldwide, perpetual license to the Climbing Device
patent (see Note 3) which could be used in a radio-controlled toy
vehicle. The Marketing Rights Agreement dated June 20, 2007, between
Majic Wheels, Idea Plus, and Global terminated the Previous Agreement with the
Inventor for consideration of $60,000 and the right to purchase from Majic
Wheels, for a period of five years, 100,000 units of produced radio-controlled
toy vehicles per year, for consideration of cost plus 15 percent (excluding any
value added taxes). The Company was to pay Idea Plus and Global
$7,500 within seven days of the contract’s execution date, $7,500 by September
30, 2007, and the remaining $50,000 by December 31, 2007. However, on
December 26, 2007, the parties extended the final payment’s due date to no later
than June 30, 2008. As of June 30, 2008, the obligation related to
the marketing agreement was paid in full by the Company. The Company
recorded amortization of costs associated with Marketing Rights Agreement in the
amounts of $31,000 and $19,000 for the years ended December 31, 2009, and 2008,
respectively.
F-10
MAJIC
WHEELS CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009, AND 2008
(5) Common
Stock
On June
20, 2007, the Company issued 80,000,000 (post forward stock split) shares of
common stock valued at a price of $0.00001 per share for common stock
subscriptions receivable of $800. On September 28, 2007, the Company
received $800 as full payment for the stock subscriptions
receivable.
In
addition, in 2007, the Company commenced a capital formation activity to affect
a Registration Statement on Form S-1 with the SEC to raise capital of up to
$160,000 from a self-underwritten offering of 20,000,000 (post forward stock
split) shares of newly issued common stock in the public markets. The
Registration Statement on Form S-1 was filed with the SEC on November 27, 2007,
and declared effective on February 22, 2008. In March 2008, the
Company commenced the offering of its registered securities. In April
2008, the Company completed and closed the offering by selling a total of
10,000,000 (post forward stock split) registered shares of its common
stock, par value of $0.0001 per share, at an offering price of $0.00825 per
share, for total proceeds of $164,481.
On July
14, 2008, the Company declared a 5-for-1 forward stock split of its issued and
outstanding common stock to the holders of record on that date. Such
forward stock split was effective as of July 15, 2008. The
accompanying financial statements and related notes thereto have been adjusted
accordingly to reflect this forward stock split.
On March
2, 2009, the Company declared a 2-for-1 forward stock split of its issued and
outstanding common stock to the holders of record on that date. Such
forward stock split was effective as of March 17, 2009. The
accompanying financial statements and related notes thereto have been adjusted
accordingly to reflect this forward stock split.
(6) Income
Taxes
The
provision (benefit) for income taxes for the years ended December 31, 2009, and
2008, respectively, were as follows (using a 23 percent
effective Federal and state income tax rate):
F-11
MAJIC
WHEELS CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009, AND 2008
2009
|
2008
|
|||||||
Current
Tax Provision:
|
||||||||
Federal-
|
||||||||
Taxable
income
|
$ | - | $ | - | ||||
Total
current tax provision
|
$ | - | $ | - | ||||
Deferred
Tax Provision:
|
||||||||
Federal-
|
||||||||
Loss
carryforwards
|
$ | 11,844 | $ | 28,954 | ||||
Change
in valuation allowance
|
(11,844 | ) | (28,954 | ) | ||||
Total
deferred tax provision
|
$ | - | $ | - |
The
Company had deferred income tax assets as of December 31, 2009, and 2008, as
follows:
2009
|
2008
|
|||||||
Loss
carryforwards
|
$ | 45,076 | $ | 33,232 | ||||
Less
- Valuation allowance
|
(45,076 | ) | (33,232 | ) | ||||
Total
net deferred tax assets
|
$ | - | $ | - |
As of
December 31, 2009, the Company had net operating loss carryforwards for income
tax reporting purposes of approximately $195,981 that may be offset against
future taxable income. The net operating loss carryforwards will
begin to expire in the year 2027. Current tax laws limit the amount
of loss available to be offset against future taxable income when a substantial
change in ownership occurs or a change in the nature of the
business. Therefore, the amount available to offset future taxable
income may be limited.
No tax
benefit has been reported in the financial statements for the realization of
loss carryforwards, as the Company believes there is high probability that the
carryforwards will not be utilized in the foreseeable
future. Accordingly, the potential tax benefits of the loss
carryforwards are offset by a valuation allowance of the same
amount.
(7) Related
Party Transactions
As of
December 31, 2009, and 2008, the Company owed to a Director and stockholder of
the Company $97,695 and $64,200, respectively, for various working capital loans
received by the Company from September 28, 2007, through December 31,
2009. The loans are unsecured, non-interest bearing, and have no
terms for repayment.
F-12
MAJIC
WHEELS CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009, AND 2008
(8) Commitments
and Contingencies
On June
21, 2007, the Company committed to paying royalties for a five-year period to
Michael Taft, Inventor, based on four and one half percent of all future
revenues received from the exploitation of certain patent rights pertaining to a
Climbing Device, as described in Note 3 above.
As
described in Note 4 above, on June 20, 2007, the Company entered into a
Marketing Rights Agreement with Idea Plus and Global. The Agreement
provides to Idea Plus and Global the right to purchase from Majic Wheels, for a
period of five years, 100,000 units per year of produced radio-controlled toy
vehicles for consideration of cost plus 15 percent (excluding any value added
taxes).
On March
3, 2008, the Company entered into a Transfer Agent Agreement with Island Capital
Management, LLC dba Island Stock Transfer (“Island Stock Transfer”) for transfer
agent services. Under the Agreement, the Company agreed to pay to
Island Stock Transfer initial fees amounting to $12,000 payable as
follows: $1,000 due at the time of execution of the Agreement; and,
$11,000 within 60 days. The Company is also responsible for a monthly
maintenance fee of $100. As of December 31, 2009, the Company had
paid fees totaling $12,000 for transfer agent services.
(9) Recent
Accounting Pronouncements
In March
2008, the FASB issued FASB Statement No. 161, (FASB ASC 815) “Disclosures about Derivative
Instruments and Hedging Activities – an amendment of FASB Statement
133.” SFAS No. 161 (FASB ASC 815) enhances required
disclosures regarding derivatives and hedging activities, including enhanced
disclosures regarding how: (a) an entity uses derivative instruments;
(b) derivative instruments and related hedged items are accounted for under FASB
No. 133, “Accounting for Derivative Instruments and Hedging Activities”; and (c)
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. Specifically, SFAS
No. 161 (FASB ASC 815) requires:
|
·
|
disclosure
of the objectives for using derivative instruments be disclosed in terms
of underlying risk and accounting
designation;
|
|
·
|
disclosure
of the fair values of derivative instruments and their gains and losses in
a tabular format;
|
|
·
|
disclosure
of information about credit-risk-related contingent
features;
|
|
·
|
and
cross-reference from the derivative footnote to other footnotes in which
derivative-related information is
disclosed.
|
SFAS No.
161 (FASB ASC 815) is effective for fiscal years and interim periods beginning
after November 15, 2008. Earlier application is
encouraged. The management of the Company does not expect the
adoption of this pronouncement to have a material impact on its financial
statements.
On May 9,
2008, the FASB issued FASB Statement No. 162, (FASB ASC 105) “The Hierarchy of Generally Accepted
Accounting Principles.” SFAS No. 162 (FASB ASC 105) is
intended to improve financial reporting by identifying a consistent framework,
or hierarchy, for selecting accounting principles to be used in preparing
financial statements that are presented in conformity with U.S. generally
accepted accounting principles (“GAAP”) for nongovernmental
entities.
F-13
MAJIC
WHEELS CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009, AND 2008
Prior to
the issuance of SFAS No. 162 (FASB ASC 105), GAAP hierarchy was defined in the
American Institute of Certified Public Accountants (“AICPA”) Statement on
Auditing Standards (“SAS”) No. 69, “The Meaning of Present Fairly in
Conformity with Generally Accept Accounting Principles.” SAS
No. 69 has been criticized because it is directed to the auditor rather than the
entity. SFAS No. 162 (FASB ASC 105) addresses these issues by
establishing that the GAAP hierarchy should be directed to entities because it
is the entity (not the auditor) that is responsible for selecting accounting
principles for financial statements that are presented in conformity with
GAAP.
The
sources of accounting principles that are generally accepted are categorized in
descending order as follows:
|
a.
|
FASB
Statements of Financial Accounting Standards and Interpretations, FASB
Statement 133 Implementation Issues, FASB Staff Positions, and American
Institute of Certified Public Accountants (AICPA) Accounting Research
Bulletins and Accounting Principles Board Opinions that are not superseded
by actions of the FASB.
|
|
b.
|
FASB
Technical Bulletins and, if cleared by the FASB, AICPA Industry Audit and
Accounting Guides and Statements of
Position.
|
|
c.
|
AICPA
Accounting Standards Executive Committee Practice Bulletins that have been
cleared by the FASB, consensus positions of the FASB Emerging Issues Task
Force (EITF), and the Topics discussed in Appendix D of EITF Abstracts
(EITF D-Topics).
|
|
d.
|
Implementation
guides (Q&As) published by the FASB staff, AICPA Accounting
Interpretations, AICPA Industry Audit and Accounting Guides and Statements
of Position not cleared by the FASB, and practices that are widely
recognized and prevalent either generally or in the
industry.
|
SFAS No.
162 (FASB ASC 105) is effective 60 days following the SEC’s approval of the
Public Company Accounting Oversight Board amendment to its
authoritative literature. It is only effective for nongovernmental
entities; therefore, the GAAP hierarchy will remain in SAS 69 for state and
local governmental entities and federal governmental entities. The
management of the Company does not expect the adoption of this pronouncement to
have a material impact on its financial statements.
On May
26, 2008, the FASB issued FASB Statement No. 163, (FASB ASC 944) “Accounting for Financial Guarantee
Insurance Contracts.” SFAS No. 163 (FASB ASC 944) clarifies
how FASB Statement No. 60, “Accounting and Reporting by
Insurance Enterprises” (“SFAS No. 60”), applies to financial guarantee
insurance contracts issued by insurance enterprises, including the recognition
and measurement of premium revenue and claim liabilities. It also
requires expanded disclosures about financial guarantee insurance
contracts.
F-14
MAJIC
WHEELS CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009, AND 2008
The
accounting and disclosure requirements of SFAS No. 163 (FASB ASC 944) are
intended to improve the comparability and quality of information provided to
users of financial statements by creating consistency. Diversity
exists in practice in accounting for financial guarantee insurance contracts by
insurance enterprises under SFAS No. 60, “Accounting and Reporting by
Insurance Enterprises.” That diversity results in
inconsistencies in the recognition and measurement of claim liabilities because
of differing views about when a loss has been incurred under FASB Statement No.
5, “Accounting for
Contingencies” (“SFAS No. 5”). SFAS No. 163 (FASB ASC 944)
requires that an insurance enterprise recognize a claim liability prior to an
event of default when there is evidence that credit deterioration has occurred
in an insured financial obligation. It also requires disclosure about
(a) the risk-management activities used by an insurance enterprise to evaluate
credit deterioration in its insured financial obligations and (b) the insurance
enterprise’s surveillance or watch list.
SFAS No.
163 (FASB ASC 944) is effective for financial statements issued for fiscal years
beginning after December 15, 2008, and all interim periods within those fiscal
years, except for disclosures about the insurance enterprise’s risk-management
activities. Disclosures about the insurance enterprise’s
risk-management activities are effective the first period beginning after
issuance of SFAS No. 163 (FASB ASC 944). Except for those
disclosures, earlier application is not permitted. The management of
the Company does not expect the adoption of this pronouncement to have material
impact on its financial statements.
On May
22, 2009, the FASB issued FASB Statement No. 164, (FASB ASC 958) “Not-for-Profit Entities: Mergers and
Acquisitions”. SFAS No. 164 (FASB ASC 958) is intended to
improve the relevance, representational faithfulness, and comparability of the
information that a not-for-profit entity provides in its financial reports about
a combination with one or more other not-for-profit entities, businesses, or
nonprofit activities. To accomplish that, this Statement establishes
principles and requirements for how a not-for-profit entity:
|
a.
|
Determines
whether a combination is a merger or an
acquisition.
|
|
b.
|
Applies
the carryover method in accounting for a
merger.
|
|
c.
|
Applies
the acquisition method in accounting for an acquisition, including
determining which of the combining entities is the
acquirer.
|
|
d.
|
Determines
what information to disclose to enable users of financial statements to
evaluate the nature and financial effects of a merger or an
acquisition.
|
This
Statement also improves the information a not-for-profit entity provides about
goodwill and other intangible assets after an acquisition by amending FASB
Statement No. 142, Goodwill
and Other Intangible Assets, to make it fully applicable to
not-for-profit entities.
SFAS No.
164 (FASB ASC 958) is effective for mergers occurring on or after December 15,
2009, and acquisitions for which the acquisition date is on or after the
beginning of the first annual reporting period beginning on or after December
15, 2009. Early application is prohibited. The management
of the Company does not expect the adoption of this pronouncement to have
material impact on its financial statements.
F-15
MAJIC
WHEELS CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009, AND 2008
On May
28, 2009, the FASB issued FASB Statement No. 165, (FASB ASC 855) “Subsequent
Events.” SFAS No. 165 (FASB ASC 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. Specifically, Statement 165 (FASB ASC 855)
provides:
|
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.
|
|
3.
|
The
disclosures that an entity should make about events or transactions that
occurred after the balance sheet
date.
|
In
accordance with this Statement, an entity should apply the requirements to
interim or annual financial periods ending after June 15, 2009. The
adoption of this pronouncement did not have a material impact on the financial
statements of the Company.
In June
2009, the FASB issued FASB Statement No. 166, (FASB ASC 860) “Accounting for Transfers of
Financial Assets- an amendment of FASB Statement No,
140.” SFAS No. 166 (FASB ASC 860) is a revision to SFAS
No. 140 “Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities” and will require more information about transfers of
financial assets, including securitization transactions, and where companies
have continuing exposure to the risks related to transferred financial
assets. It eliminates the concept of a “qualifying special-purpose
entity,” changes the requirements for derecognizing financial assets, and
requires additional disclosures.
This
statement is effective for financial asset transfers occurring after the
beginning of an entity's first fiscal year that begins after November 15,
2009. The management of the Company does not expect the adoption of
this pronouncement to have material impact on its financial
statements.
In June
2009, the FASB issued FASB Statement No. 167, (FASB ASC 810) "Amendments to FASB Interpretation
No. 46(R).” SFAS No. 167 (FASB ASC 810) amends certain
requirements of FASB Interpretation No. 46(R), “Consolidation of Variable
Interest Entities” and changes how a company determines when an entity that is
insufficiently capitalized or is not controlled through voting (or similar
rights) should be consolidated. The determination of whether a
company is required to consolidate an entity is based on, among other things, an
entity’s purpose and design and a company’s ability to direct the activities of
the entity that most significantly impact the entity’s economic
performance.
This
statement is effective as of the beginning of each reporting entity’s first
annual reporting period that begins after November 15, 2009. The
management of the Company does not expect the adoption of this pronouncement to
have material impact on its financial statements.
In June
2009, the FASB issued FASB Statement No. 168, (FASB ASC 105) "The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles - a
replacement of FASB Statement No. 162.” SFAS No. 168 (FASB ASC
105) establishes the FASB Accounting Standards Codification (the "Codification")
to become the single official source of authoritative, nongovernmental U.S.
generally accepted accounting principles (“GAAP”). The Codification
did not change GAAP but reorganizes the literature.
F-16
MAJIC
WHEELS CORP.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
DECEMBER
31, 2009, AND 2008
SFAS No.
168 (FASB ASC 105) is effective for interim and annual periods ending after
September 15, 2009. The adoption of this pronouncement did not have a
material impact on the financial statements of the Company.
F-17
Item
8. Changes in
and Disagreements With Accountants on Accounting and Financial
Disclosure.
None.
Item
8A(T). Controls and Procedures.
EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES
We are
required to maintain disclosure controls and procedures, as such term is defined
in Rule 13a-15(e) under the Securities Exchange Act of 1934, that are designed
to ensure that information required to be disclosed in our Exchange Act reports
is recorded, processed, summarized and reported within the time periods
specified in the SEC rules and forms, and that such information is accumulated
and communicated to our management, including our CEO and Internal Accounting
Officer , to allow timely decisions regarding required disclosure. As of
December 31 2009 we conducted an evaluation, under the supervision, and with the
participation of our CEO and INTERNAL ACCOUNTING OFFICER , of the effectiveness
of the design and operation of our disclosure controls and procedures. Based on
this evaluation, our CEO and INTERNAL ACCOUNTING OFFICER concluded that our
disclosure controls and procedures were effective.
Management
does not expect that our Disclosure Controls and internal controls will prevent
all errors and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty, and that
breakdowns can occur because of a simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by
collusion of two or more people, or by management or board override of the
control.
The
design of any system of controls also is based in part upon certain assumptions
about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future
conditions; over time, controls may become inadequate because of changes in
conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be
detected.
MANAGEMENT'S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. Internal control over financial reporting is
defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange
Act of 1934 as a process designed by, or under the supervision of, the company's
CEO and INTERNAL ACCOUNTING OFFICER and effected by the company's board of
directors, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with accounting
principles generally accepted in the United States of America and includes those
policies and procedures that:
*
|
Pertain
to the maintenance of records that in reasonable detail accurately and
fairly reflect the transactions and dispositions of the assets of the
company;
|
*
|
Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America and that
receipts and expenditures of the company are being made only in accordance
with authorizations of management and directors of the company;
and
|
*
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use or disposition of the company's assets that
could have a material effect on the financial
statements.
|
14
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate. All internal control systems, no matter
how well designed, have inherent limitations. Therefore, even those systems
determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation. Because of the inherent
limitations of internal control, there is a risk that material misstatements may
not be prevented or detected on a timely basis by internal control over
financial reporting. However, these inherent limitations are known features of
the financial reporting process. Therefore, it is possible to design into the
process safeguards to reduce, though not eliminate, this risk.
As of
December 31 2009 management assessed the effectiveness of our internal control
over financial reporting based on the criteria for effective internal control
over financial reporting established in Internal Control—Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”) and SEC guidance on conducting such assessments. Based on that
evaluation, they concluded that, during the period covered by this report, such
internal controls and procedures were effective .
Attestation
report of the registered public accounting firm
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
During
the year ended December 31, 2009, there was no change in our internal
control over financial reporting that has materially affected, or is reasonably
likely to materially affect our internal control over financial
reporting.
Item
8B. Other
Information.
None.
15
PART
III
Item
9. Directors, Executive
Officers and Corporate Governance.
Directors
and Executive Officers
The
following table sets forth certain information regarding the members of our
Board of Directors and our executive officers:
Name
|
Age
|
Positions and Offices Held
|
||
Asher
Zwebner(1)
|
46
|
Interim
Chief Executive Officer, Chief Financial Officer and
Director
|
||
Benjamin
Resheff
|
|
57
|
|
Secretary
and Director
|
(1) On
January 27, 2009, Lavi Krasney resigned from his positions as Chief Executive
Officers and as a director of the Company, effective as of such date. On January
27, 2007, the Board of Directors of the Company appointed Asher Zwebner as the
Interim Chief Executive Officer.
Our
Directors hold office until the next annual meeting of our shareholders, or
until their successors are duly elected and qualified. Set forth below is a
summary description of the principal occupation and business experience of each
of our Directors and executive officers for at least the last five
years.
Asher Zwebner has served as
our Interim Chief Executive Officer since January 2009, and our Chief Financial
Officer since the Company’s inception in March 15, 2007. As of January 1, 2007,
Mr. Zwebner has served as the Chief Financial Officer of SinoBiomed Inc., and
since October 18, 2007, as the Chief Financial Officer of PCMT Corporation, each
a publicly traded company. From November 2004 until October 2006, Mr. Zwebner
was also a Director of SinoBiomed Inc. Since May 2002, he has also served as the
Chief Financial Officer of ForexManage Ltd., a private hi-tech developer of
Internet-based foreign exchange and risk management solutions based in Israel.
From May 2001 until May 2002, Mr. Zwebner served as the Chief Financial Officer
of SMC Ventures.com, a strategic consulting firm specializing in mergers and
acquisitions and in corporate debt and equity financing activities. From January
2000 until May 2001, Mr. Zwebner acted as CFO for Britanica.com, an educational
software company that developed a proprietary e-learning platform technology. .
From March 1995 through December 1999, Mr. Zwebner was a senior manager at the
Israeli accounting office of Kost Forer and Gabbay, a member of Ernst &
Young International. Mr. Zwebner is a CPA in Israel and the United States, and
received a BS Degree in Accounting and Finance from Touro College in 1988.
Benjamin Resheff has served as
our Secretary and Director since June 15, 2007. Since 2001, Mr. Resheff has been
the President of Idea Plus Ltd., a company based in Ramat Gan, Israel. Idea Plus
Ltd. markets new products and patents, including those of ThermoSiv Ltd., a
thermal fabric manufacturer controlled by Idea Plus Ltd. From August 2000 to
August 2001, he was a Vice President of sales and marketing at Optimet Ltd. a
company based in Jerusalem, Israel . From 1996 until 2001, Mr. Resheff was the
Director of business development for Cognitens Ltd., an optical quality control
equipment manufacturer in Israel. Mr. Resheff graduated with a BSc. In
Electronics and Computer Science from the Technion, Israel Institute of
Technology in 1978 and completed his MBA at Manchester University in
2001.
16
There are
no familial relationships among any of our directors or officers. None of our
directors or officers is a director in any other U.S. reporting companies. None
of our directors or officers has been affiliated with any company that has filed
for bankruptcy within the last five years. The Company is not aware of any
proceedings to which any of the Company’s officers or directors, or any
associate of any such officer or director, is a party adverse to the Company or
any of the Company’s subsidiaries or has a material interest adverse to it or
any of its subsidiaries.
Each
director of the Company serves for a term of one year or until the successor is
elected at the Company's annual shareholders' meeting and is qualified, subject
to removal by the Company's shareholders. Each officer serves, at the pleasure
of the Board of Directors, for a term of one year and until the successor is
elected at the annual meeting of the Board of Directors and is
qualified.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires officers and directors of
the Company and persons who own more than ten percent of a registered class of
the Company's equity securities to file reports of ownership and changes in
their ownership with the Securities and Exchange Commission, and forward copies
of such filings to the Company. We believe, based solely on our review of the
copies of such forms, that during the fiscal year ended December 31, 2008, all
reporting persons complied with all applicable Section 16(a) filing
requirements.
Auditors
Davis
Accounting Group P.C., an independent registered public accounting firm, is our
auditor.
We do not
currently have a Code of Ethics applicable to our principal executive, financial
and accounting officers. We do not have a “financial expert” on the board or an
audit committee or nominating committee.
Potential
Conflicts of Interest
Since we
do not have an audit or compensation committee comprised of independent
directors, the functions that would have been performed by such committees are
performed by our directors. The Board of Directors has not established an audit
committee and does not have an audit committee financial expert, nor has the
Board established a nominating committee. The Board is of the opinion that such
committees are not necessary since the Company has only two directors, and to
date, such directors have been performing the functions of such committees.
Thus, there is a potential conflict of interest in that our directors and
officers have the authority to determine issues concerning management
compensation, nominations, and audit issues that may affect management
decisions. We are not aware of any other conflicts of interest with any of our
executive officers or directors.
Involvement
in Certain Legal Proceedings
There are
no legal proceedings that have occurred within the past five years concerning
our directors, or control persons which involved a criminal conviction, a
criminal proceeding, an administrative or civil proceeding limiting one's
participation in the securities or banking industries, or a finding of
securities or commodities law violations.
17
Item
10. Executive
Compensation.
Summary
Compensation
Since our
incorporation on March 15, 2007, we have not paid any compensation to our
Directors or officers in consideration for their services rendered to our
Company in their capacity as such. We have no employment agreements
with any of our Directors or executive officers. We have no pension,
health, annuity, bonus, insurance, stock options, profit sharing or similar
benefit plans.
Since our
incorporation on March 15, 2007, no stock options or stock appreciation rights
were granted to any of our Directors or executive officers. We have
no long-term equity incentive plans.
Outstanding
Equity Awards
None of
our Directors or executive officers holds unexercised options, stock that has
not vested, or equity incentive plan awards.
Compensation
of Directors
Since our
incorporation on March 15, 2007, no compensation has been paid to any of our
Directors in consideration for their services rendered in their capacity as
directors.
Item
11. Security Ownership of
Certain Beneficial Owners and Management and Related Stockholder
Matters.
The
following table lists, as of March 18, 2009, the number of shares of common
stock of our Company that are beneficially owned by (i) each person or entity
known to our Company to be the beneficial owner of more than 5% of the
outstanding common stock; (ii) each officer and director of our Company; and
(iii) all officers and directors as a group. Information relating to beneficial
ownership of common stock by our principal shareholders and management is based
upon information furnished by each person using “beneficial ownership” concepts
under the rules of the Securities and Exchange Commission. Under these rules, a
person is deemed to be a beneficial owner of a security if that person has or
shares voting power, which includes the power to vote or direct the voting of
the security, or investment power, which includes the power to vote or direct
the voting of the security. The person is also deemed to be a beneficial owner
of any security of which that person has a right to acquire beneficial ownership
within 60 days. Under the Securities and Exchange Commission rules, more than
one person may be deemed to be a beneficial owner of the same securities, and a
person may be deemed to be a beneficial owner of securities as to which he or
she may not have any pecuniary beneficial interest. Except as noted below, each
person has sole voting and investment power.
The
percentages below are calculated based on 50,000,000 shares of our common stock
issued and outstanding as of March 18, 2009. We do not have any outstanding
options, warrants or other securities exercisable for or convertible into shares
of our common stock. Unless otherwise indicated, the address of each person
listed is c/o 28 Rembrandt St. 28 Rembrandt St. Tel Aviv,
Israel.
18
Name and Address of
Beneficial Owner
|
Number of Shares of Common
Stock Beneficially
Owned or Right to
Direct Vote (1)
|
Percent of
Common
Stock Beneficially
Owned or Right
to Direct Vote
|
||||||
Asher
Zwebner
|
10,000,000
|
10
|
%
|
|||||
|
|
14.75
|
%
|
|||||
Benjamin
Resheff
|
18,000,000
|
18
|
%
|
|||||
Danny
Elbaz
|
18,000,000
|
18
|
%
|
|||||
|
|
5.5
|
%
|
(1)
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the "SEC") and generally includes voting or
investment power with respect to securities. In accordance with SEC rules,
shares of common stock issuable upon the exercise of options or warrants which
are currently exercisable or which become exercisable within 60 days following
the date of the information in this table are deemed to be beneficially owned
by, and outstanding with respect to, the holder of such option or warrant.
Except as indicated by footnote, and subject to community property laws where
applicable, to our knowledge, each person listed is believed to have sole voting
and investment power with respect to all shares of common stock owned by such
person.
Item
12. Certain Relationships
and Related Transactions, and Director Independence.
Other
than the transactions discussed below, we have not entered into any transaction
nor are there any proposed transactions in which our Director, executive
officer, stockholders, or any member of the immediate family of the foregoing
had or is to have a direct or indirect material interest.
Benjamin
Resheff, our Secretary and Director, is the President of Idea Plus Ltd. On June
20, 2007, the Company entered into a Marketing Rights Agreement with Idea Plus
Ltd. and Global Sourcing and Marketing, LLC, pursuant to which we acquired the
worldwide marketing rights to the Product in consideration of $60,000 to be paid
to Global Sourcing and Marketing, LLC. According to the terms of the agreement,
Global Sourcing and Marketing, LLC also has the right to purchase from Majic
Wheels, for a period of five years, 100,000 units of produced radio-controlled
toy vehicles per year at cost plus fifteen percent (excluding any value added
taxes). Idea Plus Ltd. did not receive any payment from Majic Wheels, and does
not have any right to purchase units of the Product from Majic Wheels. The
Marketing Rights Agreement specifies that should we fail to pay Global Sourcing
and Marketing, LLC any payment required under the agreement, Global Sourcing and
Marketing, LLC may terminate the Marketing Rights Agreement and re-activate the
Distributor Agreement signed between Michael Taft and Idea Plus Ltd. and Global
Sourcing and Marketing, LLC on November 21, 2005.
As of
December 31, 2009, the Company owed to the CEO, and Director and
stockholder of the Company $97,695 for various working capital loans received by
the Company from September 28, 2007, through December 31, 2009. The
loans are unsecured, non-interest bearing, and have no terms for
repayment.
19
Director
Independence
We are
not subject to listing requirements of any national securities exchange or
national securities association and, as a result, we are not at this time
required to have our board comprised of a majority of “independent directors.”
We do not believe that any of our directors currently meet the definition of
“independent” as promulgated by the rules and regulations of the American Stock
Exchange.
Item
13. Principal Accounting
Fees and Services.
Our
principal independent accountant is Davis Accounting Group P.C. Their
pre-approved fees billed to the Company are set forth below:
For Fiscal Year Ended
December 31, 2009
|
For Fiscal Year Ended
December 31, 2008
|
|||||||
Audit
Fees
|
$
|
14,000
|
$
|
14,000
|
||||
Tax
Fees ( Paid to Alan Weinberg CPA )
|
$
|
1,000
|
$
|
1,000
|
As of
December 31, 2009, the Company did not have a formal documented pre-approval
policy for the fees of the principal accountant. The Company does not have
an audit committee. The percentage of hours expended on the principal
accountant's engagement to audit our financial statements for the most recent
fiscal year that were attributed to work performed by persons other than the
principal accountant's full-time, permanent employees was 0%.
PART
IV
Item
14. Exhibits
and Financial Statement Schedules.
Exhibit | Description | |
Exhibit
|
||
3.1
|
Articles
of Incorporation of the Company (filed as Exhibit 3.1 to Registration
Statement on Form SB-2, filed with the Securities and Exchange Commission
on November 27, 2007)
|
|
3.2
|
Bylaws
of the Company (filed as Exhibit 3.2 to Registration Statement on Form
SB-2, filed with the Securities and Exchange Commission on November 27,
2007)
|
|
3.3
|
Form
of Common Stock Certificate of the Company (filed as Exhibit 3.3 to
Registration Statement on Form SB-2, filed with the Securities and
Exchange Commission on November 27, 2007)
|
|
10.1
|
Licensing
Agreement dated June 21, 2007, between the Company and the Licensor (filed
as Exhibit 10.1 to Registration Statement on Form SB-2, filed with the
Securities and Exchange Commission on November 27,
2007)
|
|
10.2
|
Marketing
Rights Agreement dated June 20, 2007 (filed as Exhibit 10.2 to
Registration Statement on Form SB-2, filed with the Securities and
Exchange Commission on November 27, 2007)
|
|
10.3
|
Amendment
to Marketing Rights Agreement dated December 26, 2007 (filed as Exhibit
10.3 to Registration Statement on Form SB-2/A, filed with the Securities
and Exchange Commission on January 2, 2008)
|
|
31.1
|
Certification
of Principal Executive and Financial Officer Pursuant to Exchange Act Rule
13A-14(A)/15D-14(A) as Adopted Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
32.1
|
|
Certification
of Principal Executive and Financial Officer pursuant to Section 302(a) of
the Sarbanes-Oxley Act of 2002(filed
herewith)
|
20
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MAJIC
WHEELS CORP.
|
||||
Date:
November 22, 2010
|
By:
|
/ s/ Asher Zwebner
|
||
Name: Asher Zwebner
Title: Interim Chief Executive Officer, Chief
Financial Officer and Director (Principal
Executive, Financial and Accounting Officer)
|
In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Date:
November 22, 2010
|
By:
|
/ s/ Asher Zwebner
|
|
Name: Asher Zwebner
Title: Interim Chief Executive Officer, Chief
Financial Officer and Director (Principal
Executive, Financial and Accounting Officer)
|
|||
Date:
November 22, 2010
|
By:
|
/ s/ Benjamin Resheff
|
|
Name:
Benjamin Resheff
Title:
Secretary and
Director
|
21