Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended September 30, 2010
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _____________ to _____________
Commission file number 000-52317
NETFONE, INC.
(Name of small business issuer in its charter)
Nevada 98-0438201
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4801 Woodway Drive, Suite 300 East
Houston, TX 77056
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (713) 968-7569
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Nil Nil
Securities registered pursuant to Section 12(g) of the Act:
Common Shares, par value $0.001
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. [ ] Yes [X] No
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 [X] No
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss. 232.405
of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). [ ] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.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. [X]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] 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). [X] Yes [ ] No
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 completed second fiscal
quarter.
$30,835 based on a price of $0.0064 per share multiplied by 4,818,000 shares of
our common stock held by non-affiliates. Shares of our common stock did not
trade during the year ended September 30, 2010. As a result, the aggregate
market value has been determined by the purchase price per share paid by Charles
El-Moussa for acquiring 7,840,000 shares of our common stock for an aggregate
purchase price of $50,000 pursuant to a share transfer agreement entered into on
September 12, 2008.
APPLICABLE ONLY TO CORPORATE REGISTRANTS
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date. 12,658,000 shares of common
stock issued and outstanding as of January 10, 2011.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and the Part
of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is
incorporated: (1) Any annual report to security holders; (2) Any proxy or
information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or
(c) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes (e.g., annual report to security holders
for fiscal year ended December 24, 1980).
TABLE OF CONTENTS
PART I
ITEM 1. BUSINESS......................................................... 1
ITEM 1A. RISK FACTORS..................................................... 3
ITEM 1B. UNRESOLVED STAFF COMMENTS........................................ 6
ITEM 2. PROPERTIES....................................................... 6
ITEM 3. LEGAL PROCEEDINGS................................................ 6
ITEM 4. (REMOVED AND RESERVED)........................................... 6
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES................ 6
ITEM 6. SELECTED FINANCIAL DATA.......................................... 7
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS............................................ 7
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....... 10
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...................... 11
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE............................................. 21
ITEM 9A(T). CONTROLS AND PROCEDURES.......................................... 21
ITEM 9B. OTHER INFORMATION................................................ 22
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE........... 22
ITEM 11. EXECUTIVE COMPENSATION........................................... 24
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS...................................... 26
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE..................................................... 26
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES........................... 27
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.......................... 28
SIGNATURES................................................................... 29
ii
PART I
ITEM 1. BUSINESS
This annual report contains forward-looking statements. These statements relate
to future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "may", "will",
"should", "expects", "plans", "anticipates", "believes", "estimates",
"predicts", "potential" or "continue" or the negative of these terms or other
comparable terminology. These statements are only predictions and may involve
known and unknown risks, uncertainties and other factors, including the risks in
the section entitled "Risk Factors", that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Except as required by applicable law,
including the securities laws of the United States, we do not intend to update
any of the forward-looking statements to conform these statements to actual
results.
Our financial statements are stated in United States dollars and are prepared in
accordance with generally accepted accounting principles in the United States of
America.
In this annual report, unless otherwise specified, all dollar amounts are
expressed in United States dollars.
As used in this annual report, the terms "we", "us", "our", and "NetFone" means
Netfone, Inc. and our wholly owned subsidiary, Netfone Services, Inc., unless
otherwise indicated.
DESCRIPTION OF THE BUSINESS
BUSINESS DEVELOPMENT
We were incorporated in the State of Nevada on June 8, 2004. From inception of
our business on June 8, 2004 to March 7, 2007, we were engaged in the
development of communication technology and services for internet protocol (IP),
telephony and video applications. This business plan has been abandoned due to
declining margins and increased competition in the field.
OUR CURRENT BUSINESS
During our year ended September 30, 2007, management determined that the Voice
over IP market was becoming increasingly competitive with diminishing margins.
In addition, we could not acquire additional financing in order for our
subsidiary to market its products, pay support staff or maintain equipment, nor
did we have the resources to acquire insurance especially related to liability
arising from 911 emergency calls for our company directly or for our directors.
In light of this determination, we sold all of the assets of our wholly owned
subsidiary, NetFone Services Inc., with the exception of the software assets
purchased on January 4, 2007, which were retained by our company.
We are currently seeking other business opportunities.
SHARE PURCHASE AGREEMENT WITH ORANGE CAPITAL CORP. AND ITP OIL & GAS
INTERNATIONAL S.A.
On December 23, 2010, we entered into a into a Share Exchange Agreement (the
"SHARE EXCHANGE AGREEMENT") with Orange Capital Corp., a corporation existing
under the laws of British Columbia ("ORANGE") and ITP Oil & Gas International
S.A., a corporation existing under the laws of Luxembourg ("ITP-LUX"). Upon the
satisfaction or waiver of the conditions set forth in the Share Exchange
Agreement, we agreed to acquire all of the issued and outstanding shares of ITP
Impianti e Tecnologie di Processo S.p.A., a corporation existing under the laws
of Italy ("ITP") in exchange for our issuing and delivering to ITP-Lux such
number of shares which results in current holders of our company having 6% of
the outstanding shares of our company and ITP Lux having 94% (the "SHARE
EXCHANGE"). Upon consummation of the Share Exchange, our board of directors will
1
all be appointed by ITP-Lux. The closing of the Share Exchange is anticipated to
occur on or about March 31, 2011 or an earlier date agreed to by all parties to
the Share Exchange Agreement.
The issuance of an expected 34,000,000 shares of our common stock to ITP-Lux so
that they will own 94% of our common stock upon closing will result in
substantial dilution to current shareholders of our company.
Pursuant to the terms of the Share Exchange Agreement, concurrently with or
prior to the consummation of the Share Exchange, among other matters, we are
required and have agreed to:
* Effectuate a reverse stock split of our issued and outstanding common
stock, par value $0.001 per share (the "COMMON STOCK"), at a ratio of
1 for 2.4, to become effective prior to the closing of the Share
Exchange. The number of authorized shares of Common Stock has been
agreed to be increased from 100,000,000 shares of Common Stock to
1,000,000,000 shares. As a result of the reverse stock split, every
2.4 shares of our Common Stock issued and outstanding immediately
prior to the effective time for the stock split would be combined and
reclassified into one share of Common Stock. We would not issue
fractional shares of Common Stock. Fractional shares resulting from
the reverse stock split will be rounded up to the next whole share;
* Cancel 3,166,670 (on a post reverse stock split basis) restricted
Common Shares issued by our company to Charles El-Moussa, our current
president. Mr. El-Moussa has agreed to the cancellation as a condition
of the ITP transaction;
* In consideration of Orange indemnifying ITP-Lux as to certain
representations, issue to Orange certain unregistered warrants to
purchase shares of our Common Stock expiring on the fourth anniversary
of the consummation of the Share Exchange (the "WARRANTS"). The number
of shares of Common Stock issuable under the Warrants shall represent
the aggregate of:
* One and a half percent (1.5%) of our total share capital at the
closing of the Share Exchange at an exercise price which equals
seventy five million U.S. dollars ($75,000,000) divided by our
total share capital at the closing of the Share Exchange;
currently estimated to represent 541,613 warrants (on an after
stock split basis) with an exercise price of $2.08; and
* One and a half percent (1.5%) of our total share capital at the
closing of the Share Exchange at an exercise price which equals
one hundred million U.S. dollars ($100,000,000) divided by our
total share capital at the closing of the Share Exchange;
currently estimated to represent the 541,613 warrants (on an
after stock split basis) with an exercise price of $2.77.
* Change our corporate name from "Netfone Inc." to such name as ITP-Lux
may designate;
* Change our corporate purpose in our Articles of Incorporation to
conform with the business purpose of ITP; and
* Change our corporate domicile into, and continue our corporate
existence pursuant to, the laws of the State of Delaware.
As of the closing of the Share Exchange, the shares of our Common Stock to be
issued under the Share Exchange Agreement to ITP-Lux, the Warrants issuable to
Orange and the shares of Common Stock issuable under the Warrants, will not have
been registered under the Securities Act of 1933, as amended, or any state
securities laws and unless so registered at a later time, may not be sold except
in a transaction registered under, or exempt from, the registration provisions
of the Securities Act of 1933, as amended, and applicable state securities laws.
No registration rights have been granted regarding these shares, the Warrants or
the shares underlying the Warrants.
We have agreed that until such time as the Share Exchange Agreement is
consummated or terminated, which shall not be later than March 31, 2011, we,
Orange and ITP-Lux will not, directly or indirectly solicit, initiate, entertain
or accept any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any person or entity relating to any transaction
involving the sale of the business or assets (other than in the ordinary course
2
of business), or any of the capital stock of ITP or our company, as applicable,
or any merger, consolidation, business combination, or similar transaction other
than as contemplated by the Share Exchange Agreement.
EMPLOYEES
At present, we have no employees, other than our sole director and officer, who
devotes his time as required to our business operations. Our sole director and
officer is not presently compensated for his services and does not have an
employment agreement with us. We presently do not have pension, health, annuity,
insurance, stock options, profit sharing or similar benefit plans; however, may
adopt such plans in the future. There are presently no personal benefits
available to sole director and officer.
RESEARCH AND DEVELOPMENT
We did not incur expenditures in research and development over the last two
fiscal years, other than expenses that were generally incurred in the
development of our business.
ITEM 1A. RISK FACTORS
RISKS ASSOCIATED WITH OUR COMPANY
BUSINESS OPPORTUNITIES THAT WE BELIEVE ARE IN THE BEST INTERESTS OF OUR COMPANY
MAY BE SCARCE OR WE MAY BE UNABLE TO OBTAIN THE ONES THAT WE WANT. IF WE ARE
UNABLE TO OBTAIN A BUSINESS OPPORTUNITY THAT WE BELIEVE IS IN THE BEST INTERESTS
OF OUR COMPANY, WE MAY NEVER RECOMMENCE OPERATIONS AND WILL GO OUT OF BUSINESS.
IF WE GO OUT OF BUSINESS, INVESTORS WILL LOSE THEIR ENTIRE INVESTMENT IN OUR
COMPANY.
We are, and will continue to be, an insignificant participant in the number of
companies seeking a suitable business opportunity or business combination. A
large number of established and well-financed entities, including venture
capital firms, are actively seeking suitable business opportunities or business
combinations which may also be desirable target candidates for us. Virtually all
such entities have significantly greater financial resources, technical
expertise and managerial capabilities than we do. We are, consequently, at a
competitive disadvantage in identifying possible business opportunities and
successfully completing a business combination. We will also compete with
numerous other small public companies seeking suitable business opportunities or
business combinations. If we are unable to obtain a business opportunity that we
believe is in the best interests of our company, we may never recommence
operations and will go out of business. If we go out of business, investors will
lose their entire investment in our company.
THE WORLDWIDE ECONOMIC UNCERTAINTY MAY REDUCE OUR ABILITY TO OBTAIN THE
FINANCING NECESSARY TO CONTINUE OUR BUSINESS AND MAY REDUCE THE NUMBER OF VIABLE
BUSINESSES THAT WE MAY WISH TO ACQUIRE. IF WE CANNOT RAISE THE FUNDS THAT WE
NEED OR FIND A SUITABLE BUSINESS TO ACQUIRE, WE WILL GO OUT OF BUSINESS AND
INVESTORS WILL LOSE THEIR ENTIRE INVESTMENT IN OUR COMPANY.
Since 2008, there has been an uncertainty in general worldwide economic
conditions due to many factors, including the effects of the subprime lending
and general credit market crises, slower economic activity, decreased consumer
confidence, reduced corporate profits and capital spending, adverse business
conditions, increased unemployment and liquidity concerns. In addition, these
economic effects, including the resulting recession in various countries and
slowing of the global economy, will likely result in fewer business
opportunities as companies face increased financial hardship. Tightening credit
and liquidity issues will also result in increased difficulties for our company
to raise capital for our continued operations. We may not be able to raise money
through the sale of our equity securities or through borrowing funds on terms we
find acceptable. If we cannot raise the funds that we need or find a suitable
product or business to acquire, we will go out of business. If we go out of
business, investors will lose their entire investment in our company.
WE HAVE HAD NEGATIVE CASH FLOWS FROM OPERATIONS AND IF WE ARE NOT ABLE TO OBTAIN
FURTHER FINANCING, OUR BUSINESS OPERATIONS MAY FAIL.
We had cash in the amount of $0 and a working capital deficit of $186,503 as of
September 30, 2010. We anticipate that we will require additional financing
while we are seeking a suitable business opportunity or business combination.
3
Further, we anticipate that we will not have sufficient capital to fund our
ongoing operations for the next 12 months. We may be required to raise
additional financing for a particular business combination or business
opportunity. We would likely satisfy our cash needs through equity financing.
There can be no assurance that, if required, any such financing will be
available upon terms and conditions acceptable to us, if at all. Our inability
to obtain additional financing in a sufficient amount when needed, and upon
terms and conditions acceptable to us, could have a material adverse effect upon
our company. We will require further funds to finance the development of any
business opportunity that we acquire. There can be no assurance that such funds
will be available or available on terms satisfactory to us. If additional funds
are raised by issuing equity securities, further dilution to existing or future
shareholders is likely to result. If adequate funds are not available on
acceptable terms when needed, we may be required to delay, scale back or
eliminate the development of any business opportunity that we acquire.
Inadequate funding could also impair our ability to compete in the marketplace,
which may result in the dissolution of our company.
A DECLINE IN THE PRICE OF OUR COMMON SHARES COULD AFFECT OUR ABILITY TO RAISE
FURTHER WORKING CAPITAL AND ADVERSELY IMPACT OUR OPERATIONS. IF WE CANNOT RAISE
THE FUNDS THAT WE REQUIRE, WE WILL GO OUT OF BUSINESS AND INVESTORS WILL LOSE
THEIR ENTIRE INVESTMENT IN OUR COMPANY.
A prolonged decline in the price of our common shares could result in a
reduction in the liquidity of our common shares and a reduction in our ability
to raise capital. Because our operations have been primarily financed through
the sale of equity securities, a decline in the price of our common shares could
be especially detrimental to our liquidity and our continued operations. Any
reduction in our ability to raise equity capital in the future would force us to
reallocate funds from other planned uses and would have a significant negative
effect on our business plans and operations, including our ability to develop
new products and continue our current operations. If our stock price declines,
we may not be able to raise additional capital or generate funds from operations
sufficient to meet our obligations.
WE HAVE A LIMITED OPERATING HISTORY AND IF WE ARE NOT SUCCESSFUL IN CONTINUING
TO GROW OUR BUSINESS, THEN WE MAY HAVE TO SCALE BACK OR EVEN CEASE OUR ONGOING
BUSINESS OPERATIONS.
We have a limited operating history on which to base an evaluation of our
business and prospects. Our prospects must be considered in light of the risks,
uncertainties, expenses and difficulties frequently encountered by companies
seeking to acquire or establish a new business opportunity. Some of these risks
and uncertainties relate to our ability to identify, secure and complete an
acquisition of a suitable business opportunity.
We cannot be sure that we will be successful in addressing these risks and
uncertainties and our failure to do so could have a materially adverse effect on
our financial condition. In addition, our operating results are dependent to a
large degree upon factors outside of our control. There are no assurances that
we will be successful in addressing these risks, and failure to do so may
adversely affect our business.
It is unlikely that we will generate any or significant revenues while we seek a
suitable business opportunity. Our short and long-term prospects depend upon our
ability to select and secure a suitable business opportunity. In order for us to
make a profit, we will need to successfully acquire a new business opportunity
in order to generate revenues in an amount sufficient to cover any and all
future costs and expenses in connection with any such business opportunity. Even
if we become profitable, we may not sustain or increase our profits on a
quarterly or annual basis in the future.
We will, in all likelihood, sustain operating expenses without corresponding
revenues, at least until we complete a business combination or acquire a
business opportunity. This may result in our company incurring a net operating
loss which will increase continuously until we complete a business combination
or acquire a business opportunity that can generate revenues that result in a
net profit to us. There is no assurance that we will identify a suitable
business opportunity or complete a business combination.
4
WE HAVE NO AGREEMENT FOR BUSINESS COMBINATION OR OTHER TRANSACTION AND WE HAVE
NO STANDARDS FOR BUSINESS COMBINATIONS. WE MAY NEVER ENTER INTO A BUSINESS
COMBINATION OR MAY ENTER INTO AN UNSUCCESSFUL BUSINESS COMBINATION, EITHER OF
WHICH WOULD LIKELY CAUSE US TO GO OUT OF BUSINESS AND OUR INVESTORS TO LOSE ALL
OF THEIR INVESTMENT IN OUR COMPANY.
We have no arrangement, agreement, or understanding with respect to acquiring a
business opportunity or engaging in a business combination with any private
entity. There can be no assurance that we will successfully identify and
evaluate suitable business opportunities or conclude a business combination.
There is no assurance that we will be able to negotiate the acquisition of a
business opportunity or a business combination on terms favorable to us. We have
not established a specific length of operating history or a specified level of
earnings, assets, net worth or other criteria which we will require a target
business opportunity to have achieved, and without which we would not consider a
business combination in any form with such business opportunity. Accordingly, we
may enter into a business combination with a business opportunity having no
significant operating history, losses, limited or no potential for earnings,
limited assets, negative net worth or other negative characteristics. We many
never enter into a business combination or we may enter into an unsuccessful on,
either of which would likely cause us to go out of business and our investors to
lose all of their investment in our company.
RISKS ASSOCIATED WITH OUR COMMON SHARES
TRADING ON THE OTC BULLETIN BOARD MAY BE VOLATILE AND SPORADIC, WHICH COULD
DEPRESS THE MARKET PRICE OF OUR COMMON SHARES AND MAKE IT DIFFICULT FOR OUR
SHAREHOLDERS TO RESELL THEIR SHARES.
Our common shares are quoted on the OTC Bulletin Board service of the Financial
Industry Regulatory Authority (FINRA). Trading in stock quoted on the OTC
Bulletin Board is often thin and characterized by wide fluctuations in trading
prices due to many factors that may have little to do with our operations or
business prospects. This volatility could depress the market price of our common
shares for reasons unrelated to operating performance. Moreover, the OTC
Bulletin Board is not a stock exchange, and trading of securities on the OTC
Bulletin Board is often more sporadic than the trading of securities listed on a
stock exchange like NASDAQ. Accordingly, our shareholders may have difficulty
reselling any of their shares.
OUR STOCK IS A PENNY STOCK. TRADING OF OUR STOCK MAY BE RESTRICTED BY THE SEC'S
PENNY STOCK REGULATIONS AND FINRA'S SALES PRACTICE REQUIREMENTS, WHICH MAY LIMIT
A STOCKHOLDER'S ABILITY TO BUY AND SELL OUR STOCK.
Our stock is a penny stock. The Securities and Exchange Commission has adopted
Rule 15g-9 which generally defines "penny stock" to be any equity security that
has a market price (as defined) less than $5.00 per share or an exercise price
of less than $5.00 per share, subject to certain exceptions. Our securities are
covered by the penny stock rules; which impose additional sales practice
requirements on broker-dealers who sell to persons other than established
customers and "accredited investors". The term "accredited investor" refers
generally to institutions with assets in excess of $5,000,000 or individuals
with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 jointly with their spouse. The penny stock rules require a
broker-dealer, prior to a transaction in a penny stock not otherwise exempt from
the rules, to deliver a standardized risk disclosure document in a form prepared
by the SEC which provides information about penny stocks and the nature and
level of risks in the penny stock market. The broker-dealer also must provide
the customer with current bid and offer quotations for the penny stock, the
compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customer's account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customer's confirmation. In addition, the penny stock
rules require that prior to a transaction in a penny stock not otherwise exempt
from these rules; the broker-dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in, and limit the marketability of, our common shares.
5
FINRA'S SALES PRACTICE REQUIREMENTS MAY ALSO LIMIT A STOCKHOLDER'S ABILITY TO
BUY AND SELL OUR STOCK.
In addition to the "penny stock" rules promulgated by the Securities and
Exchange Commission (see above for a discussion of penny stock rules), FINRA
rules require that in recommending an investment to a customer, a broker-dealer
must have reasonable grounds for believing that the investment is suitable for
that customer. Prior to recommending speculative low priced securities to their
non-institutional customers, broker-dealers must make reasonable efforts to
obtain information about the customer's financial status, tax status, investment
objectives and other information. Under interpretations of these rules, FINRA
believes that there is a high probability that speculative low priced securities
will not be suitable for at least some customers. FINRA requirements make it
more difficult for broker-dealers to recommend that their customers buy our
common shares, which may limit your ability to buy and sell our stock and have
an adverse effect on the market for our shares.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not Applicable
ITEM 2. PROPERTIES
Our principal executive offices are currently located at 5100 Westheimer, Suite
200, Houston, TX, 77056. We currently do not have a formal rental agreement as
we have updated our business model and have reduced our operations.
Our registered agent for service is the Corporation Trust Company of Nevada
located at 6100 Neill Road, Suite 500, Reno, Nevada 89511.
ITEM 3. LEGAL PROCEEDINGS
We know of no material, active or pending legal proceedings against our company,
nor are we involved as a plaintiff in any material proceeding or pending
litigation. There are no proceedings in which any of our directors, officers or
affiliates, or any registered or beneficial shareholder, is an adverse party or
has a material interest adverse to our interest.
ITEM 4. (REMOVED AND RESERVED)
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
MARKET INFORMATION
Our shares of common stock are quoted on the OTC Bulletin Board of the Financial
Industry Regulatory Authority under the symbol "NFON.OB". There were no trades
of our shares of common stock made through the facilities of the OTC Bulletin
Board from January 1, 2009 to September 30, 2010. On November 17, 2010, the
closing price of our common stock as reported by the OTC Bulletin Board was
$0.17 per share.
The following table shows the quarterly range of high and low bid information
for our common stock over the fiscal quarter ended December 31, 2008 as reported
on the OTC Bulletin Board. We obtained the following high and low bid
information from the OTC Bulletin Board. These over-the-counter market
quotations reflect inter-dealer prices without retail mark-up, mark-down or
commission, and may not represent actual transactions. Investors should not rely
on historical prices of our common stock as an indication of its future price
performance.
Quarter Ended High Low
------------- ---- ---
December 31, 2008 $0.25 $0
6
TRANSFER AGENT
Our common shares are issued in registered form. Nevada Agency and Transfer
Company, 50 West Liberty Street, Suite 880 Reno, Nevada 89501 Telephone (775)
322-0626, Fax (775) 322-5623 e-mail: info@natco.org is the registrar and
transfer agent for our common shares.
HOLDERS OF COMMON STOCK
As of January 10, 2011, there were 17 holders of record of our common stock. As
of such date, 12,658,000 shares were issued and outstanding.
DIVIDENDS
We have not declared any dividends since incorporation and does not anticipate
that we will do so in the foreseeable future. Although there are no restrictions
that limit the ability to pay dividends on our common shares, our intention is
to retain future earnings for use in our operations and the expansion of our
business.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We have not adopted any equity compensation plans.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
We did not purchase any of our shares of common stock or other securities for
the year ended September 30, 2010.
RECENT SALES OF UNREGISTERED SECURITIES
Since the beginning of our year ended September 30, 2010, we have not sold any
equity securities that were not registered under the Securities Act of 1933 that
were not previously reported in a quarterly report on Form 10-Q or in a current
report on Form 8-K.
ITEM 6. SELECTED FINANCIAL DATA
Not Applicable
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with our audited
consolidated financial statements and the related notes for the years ended
September 30, 2010 and 2009 which appear elsewhere in this annual report. The
following discussion contains forward-looking statements that reflect our plans,
estimates and beliefs. Our actual results could differ materially from those
discussed in the forward looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, those discussed
below and elsewhere in this annual report, particularly in the section entitled
"Risk Factors" beginning on page 3 of this annual report.
OVERVIEW
OUR CURRENT BUSINESS
During our year ended September 30, 2007, management determined that the Voice
over IP market was becoming increasingly competitive with diminishing margins.
In addition, we could not acquire additional financing in order for our
subsidiary to market its products, pay support staff or maintain equipment, nor
did we have the resources to acquire insurance especially related to liability
arising from 911emergency calls for our company directly or for our directors.
In light of this determination, we sold all of the assets of our wholly owned
subsidiary, NetFone Services Inc., with the exception of the software assets
purchased on January 4, 2007, which were retained by our company.
We are currently seeking other business opportunities.
7
SHARE PURCHASE AGREEMENT WITH ORANGE CAPITAL CORP. AND ITP OIL & GAS
INTERNATIONAL S.A.
On December 23, 2010, we entered into a into a Share Exchange Agreement (the
"SHARE EXCHANGE AGREEMENT") with Orange Capital Corp., a corporation existing
under the laws of British Columbia ("ORANGE") and ITP Oil & Gas International
S.A., a corporation existing under the laws of Luxembourg ("ITP-LUX"). Upon the
satisfaction or waiver of the conditions set forth in the Share Exchange
Agreement, we agreed to acquire all of the issued and outstanding shares of ITP
Impianti e Tecnologie di Processo S.p.A., a corporation existing under the laws
of Italy ("ITP") in exchange for our issuing and delivering to ITP-Lux such
number of shares which results in current holders of our company having 6% of
the outstanding shares of our company and ITP Lux having 94% (the "SHARE
EXCHANGE"). Upon consummation of the Share Exchange, our board of directors will
all be appointed by ITP-Lux. The closing of the Share Exchange is anticipated to
occur on or about March 31, 2011 or an earlier date agreed to by all parties to
the Share Exchange Agreement.
The issuance of an expected 34,000,000 shares of our common stock to ITP-Lux so
that they will own 94% of our common stock upon closing will result in
substantial dilution to current shareholders of our company.
Pursuant to the terms of the Share Exchange Agreement, concurrently with or
prior to the consummation of the Share Exchange, among other matters, we are
required and have agreed to:
* Effectuate a reverse stock split of our issued and outstanding common
stock, par value $0.001 per share (the "COMMON STOCK"), at a ratio of
1 for 2.4, to become effective prior to the closing of the Share
Exchange. The number of authorized shares of Common Stock has been
agreed to be increased from 100,000,000 shares of Common Stock to
1,000,000,000 shares. As a result of the reverse stock split, every
2.4 shares of our Common Stock issued and outstanding immediately
prior to the effective time for the stock split would be combined and
reclassified into one share of Common Stock. We would not issue
fractional shares of Common Stock. Fractional shares resulting from
the reverse stock split will be rounded up to the next whole share;
* Cancel 3,166,670 (on a post reverse stock split basis) restricted
Common Shares issued by our company to Charles El-Moussa, our current
president. Mr. El-Moussa has agreed to the cancellation as a condition
of the ITP transaction;
* In consideration of Orange indemnifying ITP-Lux as to certain
representations, issue to Orange certain unregistered warrants to
purchase shares of our Common Stock expiring on the fourth anniversary
of the consummation of the Share Exchange (the "WARRANTS"). The number
of shares of Common Stock issuable under the Warrants shall represent
the aggregate of:
* One and a half percent (1.5%) of our total share capital at the
closing of the Share Exchange at an exercise price which equals
seventy five million U.S. dollars ($75,000,000) divided by our
total share capital at the closing of the Share Exchange;
currently estimated to represent 541,613 warrants (on an after
stock split basis) with an exercise price of $2.08; and
* One and a half percent (1.5%) of our total share capital at the
closing of the Share Exchange at an exercise price which equals
one hundred million U.S. dollars ($100,000,000) divided by our
total share capital at the closing of the Share Exchange;
currently estimated to represent the 541,613 warrants (on an
after stock split basis) with an exercise price of $2.77.
* Change our corporate name from "Netfone Inc." to such name as ITP-Lux
may designate;
* Change our corporate purpose in our Articles of Incorporation to
conform with the business purpose of ITP; and
* Change our corporate domicile into, and continue our corporate
existence pursuant to, the laws of the State of Delaware.
As of the closing of the Share Exchange, the shares of our Common Stock to be
issued under the Share Exchange Agreement to ITP-Lux, the Warrants issuable to
Orange and the shares of Common Stock issuable under the Warrants, will not have
8
been registered under the Securities Act of 1933, as amended, or any state
securities laws and unless so registered at a later time, may not be sold except
in a transaction registered under, or exempt from, the registration provisions
of the Securities Act of 1933, as amended, and applicable state securities laws.
No registration rights have been granted regarding these shares, the Warrants or
the shares underlying the Warrants.
We have agreed that until such time as the Share Exchange Agreement is
consummated or terminated, which shall not be later than March 31, 2011, we,
Orange and ITP-Lux will not, directly or indirectly solicit, initiate, entertain
or accept any inquiries or proposals from, discuss or negotiate with, provide
any non-public information to, or consider the merits of any unsolicited
inquiries or proposals from, any person or entity relating to any transaction
involving the sale of the business or assets (other than in the ordinary course
of business), or any of the capital stock of ITP or our company, as applicable,
or any merger, consolidation, business combination, or similar transaction other
than as contemplated by the Share Exchange Agreement.
RESULTS OF OPERATIONS
From the date of our incorporation on June 8, 2004 to September 30, 2010, we
have been a start up company that has not generated substantial revenues.
For the year ended September 30, 2010, we posted losses of $29,131 compared to
$19,033 for the year ended September 30, 2009. The principal components of the
losses for the year ended September 30, 2010 were professional fees and filing
fees.
Operating expenses for the year ended September 30, 2010 were $29,131 compared
to $19,033 for the year ended September 30, 2009.
Our operating expenses are classified primarily into the following three
categories:
* legal fees incurred by our company during the year ended September 30,
2009 was $4,055 and during the year ended September 30, 2010 was
$11,024; the reason for the increase was activity related to the
acquisition of ITP.
* accounting fees incurred by our company during the year ended
September 30, 2009 was $8,582 and during the year ended September 30,
2010 was $11,050;
* during the year ended September 30, 2009, expenses from continuing
operations incurred were $2,904 for office and general expenses,
$3,407 for filing fees, and during the year ended September 30, 2010
expenses from continuing operations totalled $7,057.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Our principal capital resources have been through the issuance of common stock
and shareholder loans, advances from related parties.
At September 30, 2010, we had working capital deficit of $186,503.
At September 30, 2010, our total assets were $0.
At September 30, 2010, our total liabilities were $186,503.
At September 30, 2010, we had cash on hand of $0.
CASH REQUIREMENTS
Presently, we currently are not generating revenues. Management projects that we
will require additional funding to maintain our current operations and to enable
us to address our current and ongoing expenses. The issuance of additional
equity securities by us will result in a dilution in the equity interests of our
9
current stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.
We have incurred operating losses since inception. As we had cash on hand of $0
as at September 30, 2010, management projects that we may require an additional
$30,000 to fund our ongoing operating expenditures and working capital
requirements for the twelve month period ending December 31, 2011, broken down
as follows:
Operating expenditures
General and Administrative $ 7,500
Professional fees 22,500
-------
Total $30,000
=======
GOING CONCERN
Due to our being a development stage company and not having generated
substantial revenues, in their report on our financial statements for the year
ended September 30, 2010, our independent auditors included an explanatory
paragraph regarding concerns about our ability to continue as a going concern.
Our financial statements contain additional note disclosures describing the
circumstances that lead to this disclosure.
We have historically incurred losses, and through September 30, 2010 have
incurred losses of $477,703 from our inception. Because of these historical
losses, we will require additional working capital to develop our business
operations. We intend to raise additional working capital through equity
financing, bank financing and/or advances from related parties or shareholder
loans.
The continuation of our business is dependent upon obtaining further financing
and achieving a break even or profitable level of operations. The issuance of
additional equity securities by us could result in a significant dilution in the
equity interests of our current or future stockholders. Obtaining commercial
loans, assuming those loans would be available, will increase our liabilities
and future cash commitments.
There are no assurances that we will be able to either (1) achieve a level of
revenues adequate to generate sufficient cash flow from operations; or (2)
obtain additional financing through either equity financing and/or bank
financing necessary to support our working capital requirements. To the extent
that funds generated from operations and any equity financing and/or bank
financing are insufficient, we will have to raise additional working capital. No
assurance can be given that additional financing will be available, or if
available, will be on terms acceptable to us. If adequate working capital is not
available we may not increase our operations.
These conditions raise substantial doubt about our ability to continue as a
going concern. The financial statements do not include any adjustments relating
to the recoverability and classification of asset carrying amounts or the amount
and classification of liabilities that might be necessary should we be unable to
continue as a going concern.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
10
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
NETFONE, INC.
(A Development Stage Company)
Financial Statements
September 30, 2010
11
[LETTERHEAD OF DALE MATHESON CARR-HILTON LABONTE LLP]
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and Board of Directors of Netfone, Inc.
We have audited the accompanying balance sheets of Netfone, Inc. (a development
stage company) as of September 30, 2010 and 2009, and the statements of
operations, stockholders' deficit and cash flows for the years then ended and
the period from June 8, 2004 (Inception) to September 30, 2010. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform an audit to obtain reasonable assurance 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 also 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, these financial statements present fairly, in all material
respects, the financial position of the Company as of September 30, 2010 and
2009, and the results of its operations and its cash flows for the years then
ended and the period from June 8, 2004 (Inception) to September 30, 2010 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 1 to the
financial statements, the Company is in the development stage and has incurred
losses since inception and has limited working capital available raising
substantial doubt about the Company's ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on
raising capital to fund its business and ultimately to attain profitable
operations. Management's plans in regard to these matters are described in Note
1. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
"DMCL"
DALE MATHESON CARR-HILTON LABONTE LLP
CHARTERED ACCOUNTANTS
Vancouver, Canada
January 6, 2011
12
NETFONE, INC.
(A Development Stage Company)
BALANCE SHEETS
September 30, September 30,
2010 2009
---------- ----------
ASSETS
Total Assets $ -- $ --
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT
Accounts payable and accrued liabilities $ 13,876 $ 6,957
Due to related parties (Note 5) 172,627 150,415
---------- ----------
186,503 157,372
---------- ----------
STOCKHOLDERS' DEFICIT
Common stock (Note 3)
Authorized:
100,000,000 common shares; par value of $0.001
20,000,000 preferred shares; par value of $0.001
Issued and outstanding:
12,658,000 common shares (September 30, 2009: 12,658,000) 12,658 12,658
Additional paid-in capital 278,542 278,542
Deficit accumulated during the development stage (477,703) (448,572)
---------- ----------
(186,503) (157,372)
---------- ----------
Total Liabilities and Stockholders' Deficit $ -- $ --
========== ==========
Subsequent Event (Note 6)
The accompanying notes are an integral part of these financial statements.
13
NETFONE, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
June 8, 2004
Years Ended (Inception) to
September 30, September 30, September 30,
2010 2009 2010
------------ ------------ ------------
REVENUE $ -- $ -- $ 12,000
------------ ------------ ------------
EXPENSES
Accounting and audit fees 11,050 8,582 103,001
Depreciation -- -- 52
Bank fees and interest -- 85 586
Consulting fees -- -- 14,623
Equipment write-off -- -- 1,358
Filing fees 4,163 3,407 15,786
Foreign exchange gain -- -- (748)
Legal fees 11,024 4,055 60,931
Office and general expenses 2,894 2,904 6,707
------------ ------------ ------------
29,131 19,033 202,296
------------ ------------ ------------
NET LOSS FROM CONTINUED OPERATIONS 29,131 19,033 190,296
------------ ------------ ------------
DISCONTINUED OPERATIONS
Loss from operations -- -- 333,472
Gain on sale of subsidiary -- -- (46,065)
------------ ------------ ------------
-- -- 287,407
------------ ------------ ------------
NET LOSS $ 29,131 $ 19,033 $ 477,703
============ ============ ============
NET LOSS PER SHARE - BASIC AND DILUTED $ (0.00) $ (0.00)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING - BASIC AND DILUTED 12,658,000 12,658,000
============ ============
The accompanying notes are an integral part of these financial statements.
14
NETFONE, INC.
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' DEFICIT
Deficit
Accumulated Accumulated
Common Stock Additional Other During the
--------------------- Paid-in Comprehensive Development
Number Par Value Capital Income (Loss) Stage Total
------ --------- ------- ------------- ----- -----
Balance, June 8, 2004
(Date of Inception) -- $ -- $ -- $ -- $ -- $ --
Issued for cash:
Common stock at $0.001 8,000,000 8,000 -- -- -- 8,000
Common stock at $0.05 4,000,000 4,000 196,000 -- -- 200,000
Net loss -- -- -- -- (34,665) (34,665)
Foreign currency translation -- -- -- (555) -- (555)
---------- ------- -------- ------- --------- ---------
Balance, September 30, 2004 12,000,000 12,000 196,000 (555) (34,665) 172,780
Net loss -- -- -- -- (196,062) (196,062)
Foreign currency translation -- -- -- 1,514 -- 1,514
---------- ------- -------- ------- --------- ---------
Balance, September 30, 2005 12,000,000 12,000 196,000 959 (230,727) (21,768)
Issued for cash:
Common stock at $0.10 474,000 474 46,926 -- -- 47,400
Common stock at $0.20 104,000 104 20,696 -- -- 20,800
Net loss -- -- -- -- (164,782) (164,782)
Foreign currency translation -- -- -- (3,551) -- (3,551)
---------- ------- -------- ------- --------- ---------
Balance, September 30, 2006 12,578,000 12,578 263,622 (2,592) (395,509) (121,901)
Foreign currency translation -- -- -- 2,592 -- 2,592
Exercise of warrants 80,000 80 14,920 -- -- 15,000
Net loss -- -- -- -- (24,052) (24,052)
---------- ------- -------- ------- --------- ---------
Balance, September 30, 2007 12,658,000 12,658 278,542 -- (419,561) (128,361)
Net loss -- -- -- -- (9,978) (9,978)
---------- ------- -------- ------- --------- ---------
Balance, September 30, 2008 12,658,000 12,658 278,542 -- (429,539) (138,339)
Net loss -- -- -- -- (19,033) (19,033)
---------- ------- -------- ------- --------- ---------
Balance, September 30, 2009 12,658,000 12,658 278,542 -- (448,572) (157,372)
Net loss -- -- -- -- (29,131) (29,131)
---------- ------- -------- ------- --------- ---------
Balance, September 30, 2010 12,658,000 $12,658 $278,542 $ -- $(477,703) $(186,503)
========== ======= ======== ======= ========= =========
The accompanying notes are an integral part of these financial statements.
15
NETFONE, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
June 8, 2004
Years Ended (Inception) to
September 30, September 30, September 30,
2010 2009 2010
---------- ---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss from continuing operations $ (29,131) $ (19,033) $ (190,296)
Add item not affecting cash
Equipment write-off -- -- 1,358
Depreciation -- -- 52
Receivable write-off -- -- 307
Changes in operating assets and liabilities
Accounts receivable -- -- (307)
Accounts payable and accrued liabilities (6,919) (1,002) 13,876
---------- ---------- ----------
Net cash used in continuing operations (22,212) (20,035) (175,010)
Net cash used in discontinued operations -- -- (312,407)
---------- ---------- ----------
Net cash used in operating activities (22,212) (20,035) (487,417)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Advances from related parties 22,212 19,872 172,626
Proceeds from sale of subsidiary -- -- 25,000
Proceeds from issuance of common stock -- -- 291,200
---------- ---------- ----------
Net cash provided by financing activities 22,212 19,872 488,826
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Equipment additions -- -- (1,410)
---------- ---------- ----------
Net cash used in investing activities -- -- (1,410)
---------- ---------- ----------
NET DECREASE IN CASH -- (163) --
CASH, BEGINNING -- 163 --
---------- ---------- ----------
CASH, ENDING $ -- $ -- $ --
========== ========== ==========
SUPPLEMENTARY DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ -- $ -- $ --
========== ========== ==========
Cash paid for income taxes $ -- $ -- $ --
========== ========== ==========
The accompanying notes are an integral part of these financial statements.
16
NETFONE, INC.
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2010
NOTE 1 - NATURE AND CONTINUANCE OF OPERATIONS
The Company was incorporated in the State of Nevada, United States of America on
June 8, 2004. The Company is in the development stage. From inception of the
business on June 8, 2004 until March 9, 2007, the Company was engaged in the
development of communication technology and services for internet protocol,
telephony and video applications. On March 9, 2007, the Company disposed of its
subsidiary Netfone Services Inc. The Company is currently in the process of
seeking new business opportunities (Note 6).
These financial statements have been prepared on a going concern basis. The
Company has incurred losses since inception resulting in an accumulated deficit
of $477,703 at September 30, 2010 and further losses are anticipated in the
development of its business raising substantial doubt about the Company's
ability to continue as a going concern. Its ability to continue as a going
concern is dependent upon the ability of the Company to generate profitable
operations in the future and/or to obtain the necessary financing to meet its
obligations and repay its liabilities arising from normal business operations.
Management will continue to seek equity financing and advances from related
parties to fund the Company. These financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts of and classification of liabilities that might be
necessary in the event the Company cannot continue.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements are presented in United States dollars and
are prepared in accordance with accounting principles generally accepted in the
United States ("US GAAP").
Development Stage Company
The Company is considered to be in the development stage.
Use of estimates and assumptions
The preparation of financial statements in conformity with US GAAP requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. The Company regularly evaluates estimates
and assumptions. The Company bases its estimates and assumptions on current
facts, historical experience and various other factors that it believes to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities and the
accrual of costs and expenses that are not readily apparent from other sources.
The actual results experienced by the Company may differ materially and
adversely from the Company's estimates. To the extent there are material
differences between the estimates and the actual results, future results of
operations will be affected. The most significant estimates with regard to these
financial statements relate to deferred income tax amounts, rates and timing of
the reversal of income tax differences.
Loss Per Share
Basic loss per share is computed by dividing net loss available to common
shareholders by the weighted average number of outstanding common shares during
the period. Diluted loss per share gives effect to all dilutive potential common
shares outstanding during the period. Dilutive loss per share excludes all
potential common shares if their effect is anti-dilutive. Because the Company
does not have any potentially dilutive securities, diluted loss per share is
equal to basic loss per share.
17
Financial Instruments
The fair value of the Company's financial instruments, consisting of accounts
payable and due to related parties, are estimated to be equal to their carrying
value. It is management's opinion that the Company is not exposed to significant
interest, currency or credit risks arising from these financial instruments.
Income Taxes
Deferred income taxes are provided for tax effects of temporary differences
between the tax basis of asset and liabilities and their reported amounts in the
financial statements. The Company uses the liability method to account for
income taxes, which requires deferred taxes to be recorded at the statutory rate
expected to being in effect when the taxes are paid. Valuation allowances are
provided for a deferred tax asset when it is not more likely than not that such
asset will be realized.
Management evaluates tax positions taken or expected to be taken in a tax
return. The evaluation of a tax position includes a determination of whether a
tax position should be recognized in the financial statements, and such a
position should only be recognized if the Company determines that it is more
likely than not that the tax position will be sustained upon examination by the
tax authorities, based upon the technical merits of the position. For those tax
positions that should be recognized, the measurement of a tax position is
determined as being the largest amount of benefit that is greater than fifty
percent likely of being realized upon ultimate settlement.
Stock-based Compensation
The Company accounts for stock based compensation arrangements using a fair
value method and records such expense on a straight-line basis over the vesting
period.
To date the Company has not adopted a stock option plan and has not granted any
stock options.
Recent Accounting Pronouncements
Recent accounting pronouncements with future effective dates are either not
applicable or are not expected to be significant to the financial statements of
the Company.
NOTE 3 - CAPITAL STOCK
The total number of common shares authorized that may be issued by the Company
is 100,000,000 with a par value of one tenth of one cent ($0.001) per share.
The total number of preferred shares authorized that may be issued by the
Company is 20,000,000 with a par value of one tenth of one cent ($0.001) per
share.
At September 30, 2010 and 2009, there were no options or share purchase warrants
outstanding.
18
NOTE 4 - INCOME TAXES
As of September 30, 2010, the Company has estimated tax loss carry forwards for
tax purposes of approximately $481,033, which expire by 2030. These amounts may
be applied against future federal taxable income. Utilization of these carry
forwards is dependent on the Company generating sufficient future taxable
income. Future tax benefits which may arise as a result of these losses have not
been recognized in these financial statements, as their realization has not been
determined to be more likely than not to occur.
The Company reviews its valuation allowance requirements annually based on
projected future operations. When circumstances change and this causes a change
in management's judgment about the recoverability of future tax assets, the
impact of the change on the valuation allowance would generally be reflected in
current income.
The actual income tax provisions differ from the expected amounts calculated by
applying the statutory income tax rate to the Company's loss before income
taxes. The components of these differences are as follows:
September 30,
2010 2009
-------- --------
Net loss $(29,131) $(19,033)
Statutory tax rate 35% 35%
-------- --------
Expected recovery of income taxes at statutory rate (10,196) (6,662)
Change in valuation allowance 10,196 6,662
-------- --------
Income tax recovery $ -- $ --
======== ========
The components of the Company's tax effect deferred tax assets are as follows:
September 30,
2010 2009
-------- --------
Non-capital tax loss carry forwards $ 168,362 $ 158,166
Valuation allowances (168,362) (158,166)
--------- ---------
Net deferred tax asset $ -- $ --
========= =========
Inherent uncertainties arise over tax positions taken with respect to related
party transactions and stock based transactions. Management has considered the
likelihood and significance of possible penalties associated with its tax filing
positions and has determined, based on their assessment, that such penalties, if
any, would not be expected to be material.
NOTE 5 - RELATED PARTY TRANSACTIONS
At September 30, 2010, included in due to related parties is $42,084 (2009:
$19,872) owed to the President of the Company, $29,990 (2009: $29,990) owed to a
shareholder of the Company and $100,553 (2009: $100,553) owed to a former
director and officer of the Company. These amounts are unsecured, non-interest
bearing and have no set terms of repayment.
Related party transactions are measured at the exchange amount which is the
amount agreed upon by the related parties.
19
NOTE 6 - SUBSEQUENT EVENT
On December 23, 2010, the Company entered into a share exchange agreement (the
"Agreement") whereby it will, no later than March 31, 2011, acquire 100% of the
issued and outstanding share capital of ITP Impianti e Technologie di Processo
S.p.A. ("ITP"), a corporation existing under the laws of Italy and engaged in
the exploration and development of oil and gas properties. As consideration, the
Company will issue such number of shares of the Company that will result in the
current shareholders of the Company holding 6% of the issued and outstanding
common shares of the Company and the current shareholders of ITP holding 94% of
the issued and outstanding common shares of the Company. Pursuant to the terms
of the agreement, the Company will complete a reverse stock split of its issued
and outstanding common shares at a ratio of 1 new share for 2.4 old shares. The
number of authorized shares of Common Stock will increase from 100,000,000
common shares to 1,000,000,000 common shares. The Company will cancel 3,166,670
common shares (on a post reverse stock split basis) currently issued and
outstanding and held by the president of the Company. Based on the number of
common shares outstanding as of January 6, 2010, the Company will issue
approximately 34,000,000 common shares as consideration.
In connection with the Agreement, the Company will also issue unregistered
common share purchase warrants (the "Warrants") to a company as compensation for
indemnifying ITP as to certain representations made relating to the Company. The
Warrants will expire on the fourth anniversary of the consummation of the
Agreement. The number of common shares issuable under the Warrants will be:
a) 1.5% of the outstanding common shares at the closing of the Agreement
at an exercise price equal to $75,000,000 divided by the number of
shares outstanding at the closing of the Agreement, currently
estimated to be 541,613 common shares (on a post reverse stock split
basis) at an exercise price of $2.08; and
b) 1.5% of the outstanding common shares at the closing of the Agreement
at an exercise price equal to $100,000,000 divided by the number of
shares outstanding at the closing of the Agreement, currently
estimated to be 541,613 common shares (on a post reverse stock split
basis) at an exercise price of $2.77.
The closing of this transaction is subject to certain conditions; including, the
Company obtaining all necessary regulatory approvals and consents, and the
Company changing its corporate domicile into, and continue its corporate
existence pursuant to, the laws of the State of Delaware.
20
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A(T). CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
We maintain "disclosure controls and procedures", as that term is defined in
Rule 13a-15(e), promulgated by the Securities and Exchange Commission pursuant
to the Securities Exchange Act of 1934, as amended. Disclosure controls and
procedures mean controls and procedures designed to ensure that information
required to be disclosed in our company's reports filed under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commission's rules and
forms, and that such information is accumulated and communicated to our
management, including our principal executive and principal accounting officer
to allow timely decisions regarding required disclosure.
As required by paragraph (b) of Rules 13a-15 under the Securities Exchange Act
of 1934, our principal executive and principal financial officer evaluated our
company's disclosure controls and procedures as of the end of the period covered
by this annual report on Form 10-K. Based on this evaluation, our principal
executive and principal financial officer concluded that as of the end of the
period covered by this annual report on Form 10-K, our disclosure controls and
procedures were effective.
INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management, including our principal executive and principal financial
officer, is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rule 13a-15(f) of the Securities
Exchange Act of 1934) for our company.
Our management, with the participation of our principal executive and principal
financial officer, evaluated the effectiveness of our internal control over
financial reporting as of September 30, 2010. Our management's evaluation of our
internal control over financial reporting was based on the framework in Internal
Control--Integrated Framework, issued by the Committee of Sponsoring
Organizations of the Treadway Commission. Based on this evaluation, our
management concluded that our internal control over financial reporting was
effective as of September 30, 2010 and that there were no material weaknesses in
our internal control over financial reporting.
A material weakness is a deficiency or a combination of control deficiencies in
internal control over financial reporting such that there is a reasonable
possibility that a material misstatement of our annual or interim financial
statements will not be prevented or detected on a timely basis.
This annual report does not include an attestation report of our company's
independent registered public accounting firm regarding internal control over
financial reporting. Management's report was not subject to attestation by our
company's independent registered public accounting firm pursuant to temporary
rules of the SEC that permit our company to provide only management's report in
this annual report.
LIMITATIONS ON EFFECTIVENESS OF CONTROLS
Our principal executive and principal financial officer does not expect that our
disclosure controls or our internal control over financial reporting 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 our 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. Additional controls
can be circumvented by the individual acts of some persons, by collusion of two
21
or more people, or by management override of the controls. 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.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There were no changes in our internal control over financial reporting during
the fourth quarter of our fiscal year ended September 30, 2010 that have
materially affected, or are reasonably likely to materially affect our internal
control over financial reporting.
ITEM 9B. OTHER INFORMATION
None
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
DIRECTORS AND EXECUTIVE OFFICERS
Our directors are to be elected at our annual meeting of stockholders and each
director elected is to hold office until his successor is elected and qualified.
Our board of directors may remove our officers at any time.
Our directors and executive officers, their ages, positions held and duration
each person has held that position, are as follows:
Position Held with Date First Elected
Name the Company Age or Appointed
---- ----------- --- ------------
Charles El-Moussa President, Treasurer, 39 September 12, 2008
Secretary and Director
BUSINESS EXPERIENCE
The following is a brief account of the education and business experience of
each director and executive officer during at least the past five years,
indicating each person's principal occupation during the period, and the name
and principal business of the organization by which he was employed.
Mr. El-Moussa (age 38) is currently general counsel and chief operation officer
of Remax, Texas where he directs and oversees all legal and corporate franchise
operations including franchise sales, broker services, corporate development and
sponsorship, advertising, marketing, charities promotions and information
technology. Mr. El-Moussa also held the position of Corporate Fuel Marketing
Manager of Universal Weather & Aviation, in Houston, Texas where he managed the
marketing of a $200 million global fuel card program, managed direct
relationships with fortune 500 clients, fixed base operators and fuel suppliers
worldwide, coordinated the design and implementation of the fuel department's
automated web page, spearheaded the development of the department's in-house
automation project and analyzed fuel sales profitability and productivity.
Mr. El-Moussa obtained his B.B.A at the University of St. Thomas in Houston and
his J.D. at the South Texas College of Law in Houston.
We believe Mr. El-Moussa is qualified to serve on our board of directors because
of his knowledge of our company's history and current operations, which he
gained from serving as our officer and director since September 12, 2008, in
addition to his education and business experiences described above.
22
FAMILY RELATIONSHIPS
There are no family relationships between any director or executive officer.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
During the past ten years, none of our executive officers or directors have had
any of the following events occur:
* a bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time
of the bankruptcy or within two years prior to that time;
* conviction in a criminal proceeding or being subject to a pending
criminal proceeding, excluding traffic violations and other minor
offenses;
* being subject to any order, judgment or decree, not substantially
reversed, suspended or vacated, of any court of competent
jurisdiction, permanently enjoining, barring, suspending or otherwise
limiting his or her involvement in any type of business, securities or
banking business;
* being found by a court of competent jurisdiction, in a civil action,
the SEC or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has
not been reversed, suspended or vacated;
* Being the subject of, or a party to, any federal or state judicial or
administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated, relating to an alleged violation of:
(i) any federal or state securities or commodities law or regulation;
or (ii) any law or regulation respecting financial institutions or
insurance companies including, but not limited to, a temporary or
permanent injunction, order of disgorgement or restitution, civil
money penalty or temporary or permanent cease-and-desist order, or
removal or prohibition order; or (iii) any law or regulation
prohibiting mail or wire fraud or fraud in connection with any
business entity; or
* being the subject of, or a party to, any sanction or order, not
subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Securities
Exchange Act of 1934), any registered entity (as defined in Section
1(a)(29) of the Commodity Exchange Act), or any equivalent exchange,
association, entity or organization that has disciplinary authority
over its members or persons associated with a member.
CODE OF ETHICS
We have not adopted a code of ethics because our board of directors believes
that our small size does not merit the expense of preparing, adopting and
administering a code of ethics. Our board of directors intends to adopt a code
of ethics when circumstances warrant.
COMMITTEES OF THE BOARD
Our board of directors held no formal meetings during the year ended September
30, 2010. All proceedings of our board of directors were conducted by
resolutions consented to in writing by all the directors and filed with the
minutes of the proceedings of the directors. Such resolutions consented to in
writing by the directors entitled to vote on that resolution at a meeting of the
directors are, according to the corporate laws of the State of Nevada and our
By-laws, as valid and effective as if they had been passed at a meeting of our
directors duly called and held.
We currently do not have nominating or compensation committees or committees
performing similar functions nor do we have a written nominating or compensation
committee charter. Our board of directors does not believe that it is necessary
to have such committees because it believes that the functions of such
committees can be adequately performed by our board of directors.
23
We do not have any defined policy or procedure requirements for shareholders to
submit recommendations or nominations for directors. We do not currently have
any specific or minimum criteria for the election of nominees to our board of
directors and we do not have any specific process or procedure for evaluating
such nominees. Our board of directors assesses all candidates, whether submitted
by management or shareholders, and makes recommendations for election or
appointment.
A shareholder who wishes to communicate with our board of directors may do so by
directing a written request to the address appearing on the first page of this
annual report.
AUDIT COMMITTEE AND AUDIT COMMITTEE FINANCIAL EXPERT
We do not have a standing audit committee at the present time. Our board of
directors has determined that we do not have a board member that qualifies as an
"audit committee financial expert" as defined in Item 407(d)(5)(ii) of
Regulation S-K.
We believe that our board of directors is capable of analyzing and evaluating
our financial statements and understanding internal controls and procedures for
financial reporting. The board of directors of our company does not believe that
it is necessary to have an audit committee because we believe that the functions
of an audit committee can be adequately performed by the board of directors. In
addition, we believe that retaining an independent director who would qualify as
an "audit committee financial expert" would be overly costly and burdensome and
is not warranted in our circumstances given the early stages of our development
and the fact that we have not generated any revenues from operations to date.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our
executive officers and directors and persons who own more than 10% of a
registered class of our equity securities to file with the Securities and
Exchange Commission initial statements of beneficial ownership, reports of
changes in ownership and annual reports concerning their ownership of our common
stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive
officers, directors and greater than 10% shareholders are required by the
Securities and Exchange Commission regulations to furnish us with copies of all
Section 16(a) reports they file.
To the best of our knowledge, all executive officers, directors and greater than
10% shareholders filed the required reports in a timely manner.
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION
The particulars of compensation paid to the following persons:
(a) our principal executive officer;
(b) each of our two most highly compensated executive officers who were
serving as executive officers at the end of the year ended September
30, 2010; and
(c) up to two additional individuals for whom disclosure would have been
provided under (b) but for the fact that the individual was not
serving as our executive officer at the end of the most recently
completed financial year,
who we will collectively refer to as the named executive officers, of our two
most recently completed fiscal years ended September 30, 2010, are set out in
the following summary compensation table.
24
Non-Equity Nonqualified
Name and Incentive Deferred
Principal Stock Option Plan Compensation All Other
Position Year Salary($) Bonus($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Totals($)
-------- ---- --------- -------- --------- --------- --------------- ----------- --------------- ---------
Charles El-Moussa 2010 Nil Nil Nil Nil Nil Nil Nil Nil
President, 2009 Nil Nil Nil Nil Nil Nil Nil Nil
Treasurer,
Secretary and
Director
EMPLOYMENT AGREEMENTS
We have not entered into any employment agreement or consulting agreement with
our directors and executive officers.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
During the year ended September 30, 2010, we did not grant any stock options to
any of our executive officers. There were no stock options outstanding as at
September 30, 2010. To date, we have not granted stock options or stock
appreciation rights to any of our employees, consultants, directors or executive
officers.
Option Awards Stock Awards
----------------------------------------------------------------- -------------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Equity Number of Value of
Incentive Number Unearned Unearned
Plan Awards; of Market Shares, Shares,
Number of Number of Number of Shares Value of Units or Units or
Securities Securities Securities or Units Shares or Other Other
Underlying Underlying Underlying of Stock Units of Rights Rights
Unexercised Unexercised Unexercised Option Option That Stock That That That
Options Options Unearned Exercise Expiration Have Not Have Not Have Not Have Not
Name Exercisable(#) Unexercisable(#) Options(#) Price($) Date Vested(#) Vested($) Vested(#) Vested(#)
---- -------------- ---------------- ---------- ----- ---- --------- --------- --------- ---------
Charles Nil Nil Nil Nil Nil Nil Nil Nil Nil
El-Moussa
President,
Treasurer,
Secretary
and Director
COMPENSATION OF DIRECTORS
We have no formal plan for compensating our directors for their service in their
capacity as directors, although such directors are expected in the future to
receive stock options to purchase common shares as awarded by our board of
directors or (as to future stock options) a compensation committee which may be
established. Directors are entitled to reimbursement for reasonable travel and
other out-of-pocket expenses incurred in connection with attendance at meetings
of our board of directors. Our board of directors may award special remuneration
to any director undertaking any special services on our behalf other than
services ordinarily required of a director. No director received and/or accrued
any compensation for their services as a director, including committee
participation and/or special assignments.
25
There are no management agreements with our directors or executive officers.
We have no plans or arrangements in respect of remuneration received or that may
be received by our executive officers to compensate such officers in the event
of termination of employment (as a result of resignation, retirement, change of
control) or a change of responsibilities following a change of control.
There are no arrangements or plans in which we provide pension, retirement or
similar benefits for directors or executive officers. We have no material bonus
or profit sharing plans pursuant to which cash or non-cash compensation is or
may be paid to our directors or executive officers, except that stock options
may be granted at the discretion of the Board of Directors or a committee
thereof.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
BENEFICIAL OWNERSHIP
The following table sets forth certain information with respect to the
beneficial ownership of our common shares by each shareholder known to us to be
the beneficial owner of 5% of our common shares, and by each of our officers and
directors. Each person has sole voting and investment power with respect to the
common shares, except as otherwise indicated. Beneficial ownership consists of a
direct interest in the common shares, except as otherwise indicated.
Name and Address Amount and Nature Percentage
Title of Class of Beneficial Owner of Beneficial Ownership of Class(1)
-------------- ------------------- ----------------------- -----------
Common Stock Charles El-Moussa 7,840,000 Direct 61.9%
5100 Westheimer, Ste 200
Houston, TX 77056
----------
1. Percentage of ownership is based on 12,658,000 shares of common stock
issued and outstanding as of January 10, 2011. Except as otherwise
indicated, we believe that the beneficial owners of the common stock listed
above, based on information furnished by such owners, have sole investment
and voting power with respect to such shares, subject to community property
laws where applicable. Beneficial ownership is determined in accordance
with the rules of the SEC and generally includes voting or investment power
with respect to securities. Shares of common stock subject to options or
warrants currently exercisable, or exercisable within 60 days, are deemed
outstanding for purposes of computing the percentage ownership of the
person holding such option or warrants, but are not deemed outstanding for
purposes of computing the percentage ownership of any other person
CHANGES IN CONTROL
Immediately after the closing of the Share Exchange Agreement, ITP-Lux is
expected to become our company's largest and controlling shareholder, with 94%
ownership of the total number of shares of Common Stock issued and outstanding
and issuable by our company (excluding only the shares of Common Stock issuable
under the warrants).
Please refer to Item 1. Business for full details of the Share Exchange
Agreement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
TRANSACTIONS WITH RELATED PERSONS
There has been no transaction, since October 1, 2008, or currently proposed
transaction, in which we were or are to be a participant and the amount involved
exceeds the lesser of $120,000 or one percent of the average of our total assets
26
at year end for the last two completed fiscal years, and in which any of the
following persons had or will have a direct or indirect material interest:
(i) Any director or executive officer of our company;
ii) Any person who beneficially owns, directly or indirectly, shares
carrying more than 5% of the voting ( rights attached to our
outstanding shares of common stock; and
iii) Any member of the immediate family (including spouse, parents,
children, siblings and in- laws) of any ( of the foregoing persons.
DIRECTOR INDEPENDENCE
Our board of directors consists of Charles El-Moussa. Our securities are quoted
on the OTC Bulletin Board which does not have any director independence
requirements. According to the definition of "independent director" used in
NASDAQ rule 5605(a)(2), Mr. El-Moussa is not an independent director as he is
our President, Secretary and Treasurer.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Our independent registered public accounting firm, Dale Matheson Carr-Hilton
Labonte, provided audit and other services during the years ended September 30,
2010 and 2009 as follows:
2010 2009
-------- --------
Audit Fees $ 6,250 $ 8,000
Audit Related Fees $ 4,950 $ 4,500
Tax Fees $ 1,350 $ 2,250
All Other Fees $ Nil $ Nil
-------- --------
Total Fees $ 12,550 $ 14,750
======== ========
AUDIT FEES. This category includes the fees for the audit of our consolidated
financial statements and the quarterly reviews of interim financial statements.
This category also includes advice on audit and accounting matters that arose
during or as a result of the audit or the review of interim financial statements
and services in connection with SEC filings.
TAX Fees. This category includes the fees for professional services rendered for
tax compliance, tax advice and tax planning.
The board of directors pre-approves all services provided by our independent
auditors. All of the above services and fees were reviewed and approved by the
board of directors before the respective services were rendered.
The board of directors has considered the nature and amount of fees billed by
Dale Matheson Carr-Hilton Labonte and believes that the provision of services
for activities unrelated to the audit is compatible with maintaining Dale
Matheson Carr-Hilton Labonte's independence.
27
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
SUCCESSION
2.1 Share Exchange Agreement, dated December 23, 2010 by and among Netfone,
Inc., Orange Capital Corp. and ITP Oil & Gas International S.A.
(incorporated by reference to our current report on Form 8-K filed on
December 30, 2010)
(3) ARTICLES OF INCORPORATION AND BYLAWS
3.1 Articles of Incorporation (incorporated by reference to our
Registration Statement on Form SB-2 filed December 1, 2004)
3.2 By-laws (incorporated by reference to our Registration Statement on
Form SB-2 filed December 1, 2004)
(10) MATERIAL CONTRACTS
10.1 Share Exchange Agreement, dated December 23, 2010 by and among Netfone,
Inc., Orange Capital Corp. and ITP Oil & Gas International S.A.
(incorporated by reference to our current report on Form 8-K filed on
December 30, 2010)
(21) SUBSIDIARIES
21.1 Netfone Services Inc., a federal Canadian Company
(31) SECTION 302 CERTIFICATIONS
31.1* Section 302 Certification of Charles El-Moussa
(32) SECTION 906 CERTIFICATIONS
32.1* Section 906 Certification of Charles El-Moussa
----------
* Filed herewith
28
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized
NETFONE, INC.
By: /s/ Charles El-Moussa
---------------------------------------------------------
Charles El-Moussa
President, Secretary, Treasurer and Director
(Principal Executive Officer, Principal Financial Officer
and Principal Accounting Officer)
Date: January 10, 2011
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated
By: /s/ Charles El-Moussa
---------------------------------------------------------
Charles El-Moussa
President, Secretary, Treasurer and Director
(Principal Executive Officer, Principal Financial Officer
and Principal Accounting Officer)
Date: January 10, 2011
2
