Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended October 31, 2010
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to __________
DIGITAL VALLEYS CORP.
(Exact name of registrant as specified in charter)
Nevada 333-152798 98-05737383
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1100 DEXTER AVENUE NORTH
SUITE 100
SEATTLE WA 98109
(Address of principal executive offices)
206-273-7892
(Registrant's Telephone Number, including Area Code)
Check whether the issuer (1) filed all reports required to be filed by section
13 or 15(d) of the Exchange Act 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 requirement for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of December 13, 2010, 2,300,000 shares of the issuer's common stock, $0.001
par value, were outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
INDEX
PART I - FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis or Plan of Operation 11
Item 3. Quantitative and Qualitative Disclosures about Market Risk 13
Item 4. Controls and Procedures 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits 14
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DIGITAL VALLEYS CORP
(A Development Stage Company)
BALANCE SHEETS
October 31, April 30,
2010 2010
-------- --------
(unaudited)
ASSETS
Cash $ 26 $ 2,840
Prepaid expenses -- 250
-------- --------
Total Current Assets 26 3,090
-------- --------
Total Assets $ 26 $ 3,090
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES
Accounts payable and accrued liabilities $ 11,109 $ 11,501
Due to related party 11,171 2,671
-------- --------
Total Current Liabilities 22,280 14,172
-------- --------
Total Liabilities 22,280 14,172
-------- --------
Stockholders' Equity (Deficit)
Common stock authorized -
100,000,000 common shares with a par value of $0.001
Common shares issued and outstanding -
41,400,000 common shares 41,400 41,400
Additional paid in capital 13,600 13,600
Deficit accumulated during the development stage (77,254) (66,082)
-------- --------
Total Stockholders' Equity (Deficit) (22,254) (11,082)
-------- --------
Total Liabilities and Stockholders' Equity (Deficit) $ 26 $ 3,090
======== ========
The accompanying notes are an integral part of these financial statements.
3
DIGITAL VALLEYS CORP.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(unaudited)
From Date of
Three months Three months Six months Six months Incorporation
ended ended ended ended (May 21, 2007) to
October 31, October 31, October 31, October 31, October 31,
2010 2009 2010 2009 2010
----------- ----------- ----------- ----------- -----------
REVENUE $ -- $ -- $ -- $ -- $ --
----------- ----------- ----------- ----------- -----------
OPERATING EXPENSES
Accounting and legal 1,000 -- 7,383 2,750 53,365
General & Administrative 1,307 1,545 2,289 3,189 19,266
Bank Fees -- -- -- -- 123
Consulting Fees 750 -- 1,500 -- 4,500
----------- ----------- ----------- ----------- -----------
Loss before income taxes (3,057) (1,545) (11,172) (5,939) (77,254)
Provision for income taxes -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net loss $ (3,057) $ (1,545) $ (11,172) $ (5,939) $ (77,254)
=========== =========== =========== =========== ===========
Basic and diluted loss per
Common share (1) -- -- -- --
=========== =========== =========== ===========
Weighted average number of common
shares outstanding (Note 5) 41,400,000 41,400,000 41,400,000 41,400,000
=========== =========== =========== ===========
----------
(1) less than $0.01
The accompanying notes are an integral part of these financial statements.
4
DIGITAL VALLEYS CORP.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
(unaudited)
Deficit
Accumulated
Common Stock Additional during
-------------------- Paid in Development
Shares Amount Capital Stage Total
------ ------ ------- ----- -----
Balance, May 21, 2007 (date of inception) -- $ -- $ -- $ -- $ --
Shares issued to founder on May 21, 2007
@ $0.0115 per share (par value $0.001
per share) 28,800,000 28,800 (8,800) -- 20,000
Private placement on January 31, 2008
@ $0.05 per share (par value $0.001
per share) 12,600,000 12,600 22,400 -- 35,000
Net (loss) for the period from inception
on July 31, 2007 to March 31, 2008 -- -- -- (7,367) (7,367)
----------- --------- --------- --------- ---------
Balance, April 30, 2008 41,400,000 41,400 13,600 (7,367) 47,633
Net (loss) for the year-ended April 30, 2009 -- -- -- (45,240) (45,240)
----------- --------- --------- --------- ---------
Balance, April 30, 2009 41,400,000 41,400 13,600 (52,607) 2,393
Net (loss) for the year ended April 30, 2009 -- -- -- (13,475) (13,475)
----------- --------- --------- --------- ---------
Balance, April 30, 2010 41,400,000 41,400 13,600 (66,082) (11,082)
Net (loss) for the six months ended
October 31, 2010 -- -- -- (11,172) (11,172)
----------- --------- --------- --------- ---------
Balance, October 31, 2010 41,400,000 $ 41,400 $ 13,600 $ (77,254) $ (22,254)
=========== ========= ========= ========= =========
The accompanying notes are an integral part of these financial statements.
5
DIGITAL VALLEYS CORP.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(unaudited)
From Date of
Six Months Six Months Incorporation
ended ended (May 21, 2007) to
October 31, October 31, October 31,
2010 2009 2010
-------- -------- --------
CASH FLOWS USED IN OPERATING ACTIVITIES
Net loss for the period $(11,172) $ (5,939) $(77,254)
Adjustments to reconcile net (loss) to net
cash (used in) operating activities:
(Increase) Decrease in prepaid expenses 250 201 --
Increase (Decrease) in accrued liabilities (392) (21,175) 11,109
Increase (Decrease) in due to stockholder 8,500 -- 11,171
-------- -------- --------
Net cash used in operating activities (2,814) (26,913) (54,974)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in operating activities -- -- --
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock -- -- 55,000
-------- -------- --------
Cash from financing activities -- -- 55,000
-------- -------- --------
Change in cash during the period (2,814) (26,913) 26
Cash, beginning of the period 2,840 32,403 --
-------- -------- --------
Cash, end of the period $ 26 $ 5,490 $ 26
======== ======== ========
Supplemental disclosure with respect to cash flows:
Cash paid for income taxes $ -- $ -- $ --
Cash paid for interest $ -- $ -- $ --
Non cash activities:
Stock issued for services $ -- $ -- $ --
Stock issued for accounts payable $ -- $ -- $ --
Stock issued for notes payable and interest $ -- $ -- $ --
Stock issued for convertible debentures and interest $ -- $ -- $ --
Convertible debentures issued for services $ -- $ -- $ --
Warrants issued $ -- $ -- $ --
Note payable issued for finance charges $ -- $ -- $ --
Forgiveness of note payable and accrued interest $ -- $ -- $ --
Stock issued for penalty on default of convertible debenture $ -- $ -- $ --
The accompanying notes are an integral part of these financial statements.
6
Digital Valleys Corp.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2010
NOTE 1 - NATURE OF OPERATIONS
Digital Valleys Corp. ("the Company"), incorporated in the state of Nevada on
May 21, 2007, is a company with business activities in online customer support /
help desk system.
The company has limited operations and is considered to be in the development
stage.
NOTE 2 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
company will continue as a going concern. As discussed in the notes to the
financial statements, the Company has no established source of revenue. This
raises substantial doubt about the Company's ability to continue as a going
concern. Without realization of additional capital, it would be unlikely for the
Company to continue as a going concern. The financial statements do not include
any adjustments that might result from this uncertainty.
The Company's activities to date have been supported by equity financing. It has
sustained losses in all previous reporting periods with an inception to date
loss of $77,254 as of October 31, 2010. Management continues to seek funding
from its shareholders and other qualified investors to pursue its business plan.
In the alternative, the Company may be amenable to a sale, merger or other
acquisition in the event such transaction is deemed by management to be in the
best interests of the shareholders.
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING BASIS
These financial statements are prepared on the accrual basis of accounting in
conformity with accounting principles generally accepted in the United States of
America.
FINANCIAL INSTRUMENT
The Company's financial instrument consists of amount due to stockholder. The
amount due to stockholder is non interest-bearing. It is management's opinion
that the Company is not exposed to significant interest, currency or credit
risks arising from its other financial instruments and that their fair values
approximate their carrying values except where separately disclosed.
PROPERTY
The Company does not own any property. Our office space is leased to us on a
month to month basis for approximately $200 per month.
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Digital Valleys Corp.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2010
NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles of the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the year.
The more significant areas requiring the use of estimates include asset
impairment, stock-based compensation, and future income tax amounts. Management
bases its estimates on historical experience and on other assumptions considered
to be reasonable under the circumstances. However, actual results may differ
from the estimates.
ADVERTISING
The Company expenses advertising costs as incurred. The Company has had no
advertising activity since inception.
LOSS PER SHARE
Basic loss per share is calculated using the weighted average number of common
shares outstanding and the treasury stock method is used to calculate diluted
earnings per share. For the years presented, this calculation proved to be
anti-dilutive.
DIVIDENDS
The Company has not adopted any policy regarding payment of dividends. No
dividends have been paid during the period shown.
INCOME TAXES
The Company provides for income taxes using an asset and liability approach in
accounting for income taxes.
Deferred tax assets are reduced by a valuation allowance if, based on the weight
of available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized. No provision for income taxes is
included in the statement due to its immaterial amount, net of the allowance
account, based on the likelihood of the Company to utilize the loss
carry-forward.
NET INCOME PER COMMON SHARE
Net income (loss) per common share is computed based on the weighted average
number of common shares outstanding and common stock equivalents, if not
anti-dilutive. The Company has not issued any potentially dilutive common
shares.
8
Digital Valleys Corp.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2010
NOTE 4 - DUE TO STOCKHOLDER
The amount owing to stockholder is unsecured, non-interest bearing and has no
specific terms of repayment.
NOTE 5 - CAPITAL STOCK
Common Shares - Authorized
The company has 100,000,000 common shares authorized at a par value of $0.001
per share.
Common Shares - Issued and Outstanding
During the year ended April 30, 2008, the company issued 2,300,000 common shares
for total proceeds of $55,000.
On July 12, 2010, the Company approved an 18-1 forward stock split. Shares
outstanding have been restated to reflect the split as if the shares have been
outstanding since inception.
As at October 31, 2010, the Company had 41,400,000 common shares issued and
outstanding.
As at October 31, 2010, the Company has no warrants or options outstanding.
NOTE 6 - INCOME TAXES
The Company provides for income taxes using an asset and liability. Deferred tax
assets and liabilities are recorded based on the differences between the
financial statement and tax bases of assets and liabilities and the tax rates in
effect currently.
Deferred tax assets are reduced by a valuation allowance if, based on the weight
of available evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized. In the Company's opinion, it is
uncertain whether they will generate sufficient taxable income in the future to
fully utilize the net deferred tax asset. Accordingly, a valuation allowance
equal to the deferred tax asset has been recorded. The total deferred tax asset
is $16,995, which is calculated by multiplying a 22% estimated tax rate by the
cumulative NOL of $77,254.
The company has non-capital losses of $77,254.
NOTE 7 - RELATED PARTY TRANSACTIONS
As at October 31, 2010, there is a balance owing to a stockholder of the Company
in the amount of $11,171.
The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities that become available. They may face a conflict in selecting
between the Company and other business interests. The Company has not formulated
a policy for the resolution of such conflicts.
9
Digital Valleys Corp.
(A Development Stage Company)
Notes to Financial Statements
October 31, 2010
NOTE 8 - CONCENTRATIONS OF RISKS
Cash Balances
The Company maintains its cash in institutions insured by the Federal Deposit
Insurance Corporation (FDIC). This government corporation insured balances up to
$100,000 through October 13, 2008. As of October 14, 2008 all non-interest
bearing transaction deposit accounts at an FDIC-insured institution, including
all personal and business checking deposit accounts that do not earn interest,
are fully insured for the entire amount in the deposit account. This unlimited
insurance coverage is temporary and will remain in effect for participating
institutions until December 31, 2010.
All other deposit accounts at FDIC-insured institutions are insured up to at
least $250,000 per depositor until December 31, 2010. On January 1, 2010, FDIC
deposit insurance for all deposit accounts, except for certain retirement
accounts, will return to at least $100,000 per depositor. Insurance coverage for
certain retirement accounts, which include all IRA deposit accounts, will remain
at $250,000 per depositor.
NOTE 9 - RECENT ACCOUNTING PRONOUNCEMENTS
Digital Valleys does not expect the adoption of any recently issued accounting
pronouncements to have a significant impact on the Company's results of
operations, financial position or cash flow.
NOTE 10 - SUBSEQUENT EVENTS
The Company has analyzed its operations subsequent to October 31, 2010 through
December 13, 2010, the date these financial statements were issued, and has
determined that it does not have any material subsequent events to disclose.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
This report on Form 10-Q contains forward-looking statements that involve risks
and uncertainties. You should not place undue reliance on these forward-looking
statements. Our actual results could differ materially from those anticipated in
the forward-looking statements for many reasons, including the risks described
in this report, our Registration Statement on Form 10-K and other filings we
make from time to time with the Securities and Exchange Commission. Although we
believe the expectations reflected in the forward-looking statements are
reasonable, they relate only to events as of the date on which the statements
are made. We do not intend to update any of the forward-looking statements after
the date of this report to conform these statements to actual results or to
changes in our expectations, except as required by law.
This discussion and analysis should be read in conjunction with the unaudited
interim financial statements and notes thereto included in this Report and the
audited financials in our Registration Statement on Form 10-K filed with the
Securities and Exchange Commission.
OVERVIEW
We are a development stage company with limited operations and no revenues from
our business activities. Our auditors have issued a going concern opinion. This
means that our registered independent auditors believe there is substantial
doubt that we can continue as an on-going business for the next twelve months.
We do not anticipate that we will generate significant revenues until we have
developed our online help desk customer support system to assist service
companies in improving their customer relationship management. Accordingly, we
must raise cash from sources other than our operations in order to implement our
sales and marketing plan.
In our management's opinion this is a good time to develop an online help desk
customer support system to assist service companies in improving their customer
relationship management. However, if we are unable to procure the necessary
funding to complete our website development and market our online help desk
customer support system, or if we are unable to generate revenues in the future
for any reason, or if we are unable to make a reasonable profit in the future,
we may have to suspend or cease operations unless we are able to raise
additional capital. At the present time, we have not made any arrangements to
raise additional cash.
PLAN OF OPERATION
Our specific goal is to develop an online help desk customer support system to
assist service companies in improving their customer relationship management. We
expect our system to be used by organizations interested in improving their
customer relationship management by automating their customer support and by
establishing a centralized help desk. We plan for our software product to be
capable of providing a generic solution across a broad range of industries.
The company has completed its corporate website and has begun development of its
software product. We expect to have this accomplished by end of the next
quarter.
RESULTS OF OPERATIONS
NET INCOME (LOSS)
Our net loss for the three months ended October 31, 2010 was $3,057 compared to
$1,545 for the three months ended October 31, 2009. Our net loss for the six
months ended October 31, 2010 was $11,172 compared to $5,939 for the six months
ended October 31, 2009. During the period from May 21, 2007 (date of inception),
through October 31, 2010, we incurred a net loss of $77,254. This loss consisted
primarily of legal and accounting fees, consulting fees, website hosting costs,
and administrative expenses. Since inception, we have sold 41,400,000 shares of
common stock.
11
EXPENSES
Our expenses for the three months ended October 31, 2010 were $3,057 compared to
$1,545 for the three months ended October 31, 2009. These expenses were
comprised primarily of general and administrative, and legal and accounting
expenses, as well as banking fees.
Our expenses for the six months ended October 31, 2010 were $11,172 compared to
$5,939 for the six months ended October 31, 2009. These expenses were comprised
primarily of general and administrative, and legal and accounting expenses, as
well as banking fees.
During the period from May 21, 2007 (date of inception), through October 31,
2010, we incurred expenses of $77,254.
LIQUIDITY AND CAPITAL RESOURCES
Our balance sheet as of October 31, 2010, reflects assets of $26. Cash and cash
equivalents from inception to date have not been insufficient to provide the
working capital necessary to operate to date.
We anticipate generating losses and, therefore, may be unable to continue
operations in the future. If we require additional capital, we would have to
issue debt or equity or enter into a strategic arrangement with a third party.
There can be no assurance that additional capital will be available to us. We
currently have no agreements, arrangements, or understandings with any person to
obtain funds through bank loans, lines of credit, or any other sources.
GOING CONCERN CONSIDERATION
Our registered independent auditors included an explanatory paragraph in their
report on our financial statements as of and for the period ended April 30,
2010, regarding concerns about our ability to continue as a going concern. Our
interim financial statements as of and for the period ended October 31, 2010,
contain additional note disclosures describing the circumstances that lead to
this disclosure by our registered independent auditors.
Due to this doubt about our ability to continue as a going concern, management
is open to new business opportunities which may prove more profitable to our
shareholders. Historically, we have been able to raise a limited amount of
capital through private placements of our equity stock, but we are uncertain
about our continued ability to raise funds privately. Further, we believe that
our company may have difficulties raising capital until we locate a prospective
business opportunity through which we can pursue our plan of operation. If we
are unable to secure adequate capital to continue our acquisition efforts, our
business may fail and our stockholders may lose some or all of their investment.
Should our original business plan fail, we anticipate that the selection of a
business opportunity in which to participate will be complex and without
certainty of success. Management believes that there are numerous firms in
various industries seeking the perceived benefits of being a publicly registered
corporation. Business opportunities may be available in many different
industries and at various stages of development, all of which will make the task
of comparative investigation and analysis of such business opportunities
extremely difficult and complex. We can provide no assurance that we will be
able to locate compatible business opportunities.
PURCHASE OR SALE OF EQUIPMENT
We do not expect to purchase or sell any plant or significant equipment.
REVENUES
We had no revenues for the period from May 21, 2007 (date of inception) through
October 31, 2010.
12
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
ITEM 3. QUANITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
None.
ITEM 4. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES:
Our management evaluated, with the participation of our Chief Executive Officer
and Chief Financial Officer, the effectiveness of the design and operation of
our disclosure controls and procedures as of the end of the period covered by
this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief
Executive Officer and our Chief Financial Officer have concluded that our
disclosure controls and procedures are effective to ensure that information we
are required to disclose in reports that we file or submit under the Securities
Exchange Act of 1934 (i) is recorded, processed, summarized and reported within
the time periods specified in Securities and Exchange Commission rules and
forms, and (ii) is accumulated and communicated to our management, including our
Chief Executive Officer and our Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure. Our disclosure controls
and procedures are designed to provide reasonable assurance that such
information is accumulated and communicated to our management. Our disclosure
controls and procedures include components of our internal control over
financial reporting. Management's assessment of the effectiveness of our
internal control over financial reporting is expressed at the level of
reasonable assurance that the control system, no matter how well designed and
operated, can provide only reasonable, but not absolute, assurance that the
control system's objectives will be met.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING:
There were no changes in our internal control over financial reporting that
occurred during our last fiscal quarter that have materially affected, or are
reasonably likely to materially affect, our internal control over financial
reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We may be involved from time to time in ordinary litigation, negotiation and
settlement matters that will not have a material effect on our operations or
finances. We are not aware of any pending or threatened litigation against us or
our officers and directors in their capacity as such that could have a material
impact on our operations or finances.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS
Exhibit
Number Description
------ -----------
3.1 Articles of Incorporation (included as Exhibit 3.1 to the Form S-1
filed August 6, 2008, and incorporated herein by reference).
3.2 By-laws (included as Exhibit 3.2 to the Form S-1 filed August 6, 2008,
and incorporated herein by reference).
31 Certification of the Chief Executive and Chief Financial Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 Certification of Officers pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
14
SIGNATURE
In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
DIGITAL VALLEYS CORP.
Date: December 13, 2010 By: /s/ Felipe A. Pati
------------------------------------------
Name: Felipe A. Pati
Title: President, Treasurer, Secretary, and
Director (Principal Executive and
Principal Financial and Accounting
Officer)
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated:
Date: December 13, 2010 By: /s/ Felipe A. Pati
------------------------------------------
Name: Felipe A. Pati
Title: President, Treasurer, Secretary, and
Director (Principal Executive and
Financial Officer)
15
