Attached files
file | filename |
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EX-31.1 - EX-31.1 - ContinuityX Solutions, Inc. | v237669_ex31-1.htm |
EX-32.2 - EX-32.2 - ContinuityX Solutions, Inc. | v237669_ex32-2.htm |
EX-31.2 - EX-31.2 - ContinuityX Solutions, Inc. | v237669_ex31-2.htm |
EX-32.1 - EX-32.1 - ContinuityX Solutions, Inc. | v237669_ex32-1.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended March 31, 2011
¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from ____________ to ____________
Commission file number: 333-168587
EDUTOONS, INC.
(Exact name of registrant as specified in its charter)
Delaware
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27-2701563
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(State or other jurisdiction of
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(I.R.S. Employer
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incorporation or organization)
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Identification No.)
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101 East 52nd Street, 10th Floor, New York, NY 10022
(Address of principal executive offices, including zip code)
Tel: (212) 319-1754
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes ¨ No ¨
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 definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. ¨
Large accelerated filer
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¨
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Accelerated filer
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¨
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Non-accelerated filer
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¨
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Smaller reporting company
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x
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes x No¨
As of October 19, 2011, there were issued and outstanding 3,250,000 shares of Common Stock, $.001 par value.
FORM 10-Q
INDEX
Page
Number
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|||
PART I. FINANCIAL INFORMATION
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3
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Item 1.
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Unaudited Financial Statements for the three and nine months ended March 31, 2011 and the period from April 28, 2010(Inception) to March 31, 2011
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3
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Balance Sheets
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3
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Statements of Operations
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4
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Statements of Changes in Stockholders’ Equity
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5
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Statements of Cash Flows
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6
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Notes to Unaudited Financial Statements
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7
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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11
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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14
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Item 4.
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Controls and Procedures
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14
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PART II. OTHER INFORMATION
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14
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Item 1.
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Legal Proceedings
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14
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Item 1A.
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Risk Factors
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14
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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14
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Item 3.
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Defaults Upon Senior Securities
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14
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Item 4.
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(Removed and Reserved)
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14
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Item 5.
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Other Information
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14
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Item 6.
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Exhibits
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15
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SIGNATURES
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15
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2
ITEM 1. FINANTIAL STATEMENTS
EDUTOONS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
June 30, 2010
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||||||||
March 31, 2011
(Unaudited)
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(Derived
from audited
financial
statements)
|
|||||||
ASSETS
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||||||||
Current assets:
|
||||||||
Cash (Note2)
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$ | 1,398 | $ | 27,500 | ||||
Total current assets
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1,398 | 27,500 | ||||||
Deferred registration costs (Note 2)
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22,614 | 10,000 | ||||||
TOTAL ASSETS
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$ | 24,012 | $ | 37,500 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY
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||||||||
Current liabilities:
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||||||||
Due to stockholder (Note 2)
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$ | - | $ | 10,000 | ||||
Accrued liabilities
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4,254 | 3,950 | ||||||
Total current liabilities
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4,254 | 13,950 | ||||||
Stockholders’ equity:
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||||||||
Common stock, $0.001 par value per share, 10,000,000 shares authorized, and 3,250,000 shares issued and outstanding at March 31, 2011 and 2,750,000 shares issued and outstanding at June 30, 2010
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3,250 | 2,750 | ||||||
Additional paid-in capital
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49,250 | 24,750 | ||||||
Deficit accumulated during development stage
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(32,742 | ) | (3,950 | ) | ||||
Total stockholders’ equity
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19,758 | 23,550 | ||||||
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
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$ | 24,012 | $ | 37,500 |
The accompanying notes are an integral part of these financial statements.
3
EDUTOONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPRATIONS
(UNAUDITED)
For the Period From
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||||||||||||
April 28, 2010
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||||||||||||
For the Three Months
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For the Nine Months
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(Inception) to
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||||||||||
Ended
March 31, 2011
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Ended
March 31, 2011
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March 31, 2011
(Cumulative )
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||||||||||
Revenue
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$ | - | $ | - | $ | - | ||||||
Operating expenses:
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||||||||||||
General and administrative expenses
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954 | 28,657 | 32,607 | |||||||||
Net (loss) before income taxes
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(954 | ) | (28,657 | ) | (32,607 | ) | ||||||
Provision for income tax (Note 2)
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- | (135 | ) | (135 | ) | |||||||
Net (loss)
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$ | (954 | ) | $ | (28,792 | ) | $ | (32,742 | ) | |||
(Loss) per common share, basic and diluted (Note 2)
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$ | (0.00 | ) | $ | (0.01 | ) | $ | (0.01 | ) | |||
Weighted average shares outstanding, basic and diluted
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3,250,000 | 2,945,255 | 2,908,284 |
The accompanying notes are an integral part of these financial statements.
4
EDUTOONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CHANGES IN STOCKHOLDER’S EQUITY
(UNAUDITED)
For the period from April 28, 2010 (Inception) to March
31, 2011
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Additional
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Deficit
Accumulated
During
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Common
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Paid-in
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Development
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Stock
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Capital
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Stage
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Total
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Initial capitalization
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$ | 2,750 | $ | 24,750 | $ | - | $ | 27,500 | ||||||||
Net (loss)
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- | - | (3,950 | ) | (3,950 | ) | ||||||||||
Balance, June 30, 2010
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2,750 | 24,750 | (3,950 | ) | 23,550 | |||||||||||
Stock based compensation (Notes 2 and 6)
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500 | 24,500 | - | 25,000 | ||||||||||||
Net (loss)
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- | - | (28,792 | ) | (28,792 | ) | ||||||||||
Balance, March 31, 2011
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$ | 3,250 | $ | 49,250 | $ | (32,742 | ) | $ | 19,758 |
The accompanying notes are an integral part of these financial statements.
5
EDUTOONS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the
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For the
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For the Period From
April 28, 2010
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||||||||||
Three Months
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Nine Months
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(Inception) to
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||||||||||
Ended
March 31, 2011
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Ended
March 31, 2011
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March 31, 2011
(Cumulative )
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||||||||||
Cash flows from operating activities:
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||||||||||||
Net (loss)
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$ | (954 | ) | $ | (28,792 | ) | $ | (32,742 | ) | |||
Stock based compensation
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- | 25,000 | 25,000 | |||||||||
Change in operating assets and liabilities:
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||||||||||||
Deferred registration costs
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(969 | ) | (12,614 | ) | (22,614 | ) | ||||||
Repayment of stockholder advance
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- | (10,000 | ) | - | ||||||||
Accrued liabilities
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(920 | ) | 304 | 4,254 | ||||||||
Net cash (used in) operating activities
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(2,843 | ) | (26,102 | ) | (26,102 | ) | ||||||
Cash flows from financing activities:
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||||||||||||
Proceeds from issuance of common stock
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- | - | 27,500 | |||||||||
Net cash provided by financing activities
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- | - | 27,500 | |||||||||
Net change in cash
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(2,843 | ) | (26,102 | ) | 1,398 | |||||||
Cash, beginning of period
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4,241 | 27,500 | - | |||||||||
Cash, end of period
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$ | 1,398 | $ | 1,398 | $ | 1,398 |
The accompanying notes are an integral part of these financial statements.
6
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1. GENERAL
Organization and Business Nature
EDUtoons, Inc. (the “Company”) was incorporated in the State of Delaware on April 28, 2010 to produce one-minute, three-minute and five-minute educational cartoons primarily to be sold to television networks and independent television stations, and digital platforms throughout the United States and Canada, and thereafter offered at a lower cost to schools. The Company aims to provide reinforcement in children’s programming that will serve as both an educational tool and counter-balance to the violence and age-inappropriate nature of cartoons and programming currently directed at children. The Company’s one-minute television programming consists of 26-segment series, each devoted to one letter of the alphabet; the three-minute segments would be offered in 13 and 26 series in subjects such as the presidents of the United States, the countries of the world, the states of the United States and the like; and the five-minute segments would be focused primarily on nature, various animal habitats around the world, the stars and sea life.
The Company is in the development stage and has not generated any revenues from operations and has no assurance of any future revenues. The Company will require substantial additional funding to cover its operations. There is no assurance that the Company will be able to obtain sufficient additional funds when needed, or that such funds, if available, will be obtainable on terms satisfactory to the Company.
NOTE 2. ACCOUNTING POLICIES
Basis of Accounting and Presentation
The unaudited interim financial statements of the Company as of March 31, 2011 and for the three and nine months ended March 31, 2011 and the period from April 28, 2010 (inception) to March 31, 2011, have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules and regulations of the Securities and Exchange Commission (the “SEC”) which apply to interim financial statements. In the opinion of management, such information contains all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the periods presented. The results of operations for the three and nine months ended March 31, 2011 are not necessarily indicative of the results to be expected for future quarters or for the year ending June 30, 2011.
Certain information and disclosures normally included in the notes to financial statements have been condensed or omitted as permitted by the rules and regulations of the SEC, although the Company believes the disclosure is adequate to make the information presented not misleading. The accompanying unaudited financial statements should be read in conjunction with the audited financial statements of the Company for the period from April 28, 2010 (inception) to June 30, 2010.
Cash and Cash Equivalents
The Company considers all liquid investments with an original maturity of three months or less that are readily convertible into cash to be cash equivalents. The Company places its cash with high credit quality financial institutions. Accounts at these institutions are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At March 31, 2011 and June 30, 2010, the Company did not have cash balances which were in excess of the FDIC insurance limit. The Company performs ongoing evaluations of these institutions to limit its concentration of risk exposure. Management believes this risk is not significant due to the financial strength of the financial institutions utilized by the Company.
Due to Stockholder
Amount due to stockholder, representing an advance from a stockholder, is non-interest bearing and is due on demand. In August 2010, the advance was paid in full.
Deferred Registration Costs
Deferred registration costs are incremental costs incurred by the Company in connection with a proposed common stock offering to be charged against the gross proceeds of the offering. Deferred registration costs do not include any allocation of salaries, overhead or similar costs. Deferred registration costs were $22,614 and $10,000 as of March 31, 2011 and June 30, 2010, respectively.
7
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimated.
Income Taxes
The Company accounts for income taxes in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 740, Income Taxes, which requires the recognition of deferred income taxes for differences between the basis of assets and liabilities for financial statement and income tax purposes. Deferred tax assets and liabilities represent the future tax consequence for those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred taxes are also recognized for operating losses that are available to offset future taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. At March 31, 2011 and June 30, 2010, the Company has established full valuation allowances against deferred tax assets, recognized for operating losses, due to the uncertainty in realizing their benefits. At March 31, 2011, the Company had $32,607 of unused operating losses expiring in 2031.
The Company adopted the provisions of FASB ASC 740-10-25. The provisions prescribe a recognition threshold and measurement attribute for the recognition and measurement of tax positions taken or expected to be taken in income tax returns and require that uncertain tax positions are evaluated in a two-step process.
The Company is in the process of preparing and filing its federal income tax return for the year ended June 30, 2010 and its State of Delaware Annual Report and Franchise Taxes for the year of 2010. As of March 31, 2011 and June 30, 2010, accrual of taxes, interest, and penalty of $385 and $0 are included in accrued liabilities in the accompanying balance sheets, respectively. For the nine months ended March 31, 2011 and for the period from April 28, 2010 (inception) to March 31, 2011, the Company recorded its federal income tax, penalty, and interest of $135 as income tax expense and its State of Delaware franchise tax, filing fee, penalties, and interest of $250 as general and administrative expenses.
No income taxes or interest were paid as of March 31, 2011.
Fair Value of Financial Instruments
FASB ASC 820, Fair Value Measurements and Disclosures, defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. The Company did not identify any financial assets and liabilities that are required to be presented on the balance sheets at fair value.
Financial instruments include cash, due to stockholder and accrued liabilities. As of March 31, 2011 and June 30, 2010, the carrying values of these financial instruments approximated their fair values due to the short term nature of these financial instruments.
Earnings per Share
Net income (loss) per share is calculated in accordance with FASB ASC 260, Earnings per Share. Basic net income (loss) per share is based upon the weighted average number of common shares outstanding. Diluted net income (loss) per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Basic and diluted earnings per share are the same for the three months and nine months ended March 31, 2011 and for the period from April 28, 2010 (inception) to March 31, 2011 because the Company had no common stock equivalents.
Stock Based Compensation
The Company records stock based compensation in accordance with FASB ASC 718, Compensation – Stock Based Compensation, which requires the Company measure stock based compensation based on the grant date estimated fair values for all stock based awards made to employees and directors, including stock options and recognize the compensation expense on the straight-line basis over the period during which an employee or director is required to provide service in exchange for the award.
8
NOTE 3. RECENTLY ISSUED ACCOUNTING STANDARDS
In January 2010, the FASB issued Accounting Standards Update No. 2010-6, Improving Disclosures about Fair Value Measurements (“ASU No. 2010-06”). ASU No. 2010-06 amends FASB ASC Topic 820, to require additional information to be disclosed principally regarding Level 3 measurements and transfers to and from Level 1 and 2. In addition, enhanced disclosure is required concerning inputs and valuation techniques used to determine Level 2 and Level 3 measurements. This guidance is generally effective for interim and annual reporting periods beginning after December 15, 2009; however, requirements to disclose separately purchases, sales, issuances, and settlements in the Level 3 reconciliation are effective for fiscal years beginning after December 15, 2010 (and for interim periods within such years). The update did not have a material impact on the Company’s results of operations or financial position.
In February 2010, the FASB issued Accounting Standards Update No. 2010-09, Amendments to Certain Recognition and Disclosure Requirements (“ASU No. 2010-09”). ASU No. 2010-09 amends FASB ASC Topic 855-10, Subsequent Events, to remove the requirement for an SEC filer to disclose the date through which subsequent events have been evaluated in both issued and revised financial statements. This change alleviates potential conflicts between ASC 855-10 and the SEC’s requirements. The update did not have a material impact on the Company’s results of operations or financial position.
In March 2010, the FASB issued Accounting Standards Update No. 2010-11, which is included in the Codification under ASC 815, Derivatives and Hedging (“ASC 815”). This update clarifies the type of embedded credit derivative that is exempt from embedded derivative bifurcation requirements. Only an embedded credit derivative that is related to the subordination of one financial instrument to another qualifies for the exemption. This guidance is effective for interim and annual reporting periods beginning January 1, 2010. The adoption of this standard did not have a material impact on the Company’s results of operations or financial position.
In April 2010, the FASB issued ASU No. 2010-13, Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades (“ASU 2010-13”). ASU 2010-13 addresses the classification of a share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. FASB ASC Topic 718 was amended to clarify that a share-based payment award with an exercise price denominated in the currency of a market in which a substantial portion of the entity’s equity securities trade shall not be considered to contain a market, performance or service condition.
Therefore, such an award is not to be classified as a liability if it otherwise qualifies for equity classification. The amendments in ASU 2010-13 are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010, with early application permitted. The Company does not believe that the adoption of this standard will have a material impact on the Company’s results of operations or financial position.
In December 2010, the FASB issued ASU No. 2010-28, When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (“ASU 2010-28”). ASU 2010-28 modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. This eliminates an entity’s ability to assert that a reporting unit is not required to perform Step 2 because the carrying amount of the reporting unit is zero or negative despite the existence of qualitative factors that indicate the goodwill is more likely than not impaired. ASU 2010-28 is effective for fiscal and interim periods beginning after December 15, 2010. The Company does not believe that the adoption of this standard will have a material impact on the Company’s results of operations or financial position.
In December 2010, the FASB issued ASU No. 2010-29, Disclosure of Supplementary Pro Forma Information for Business Combinations (“ASU 2010-29”). ASU 2010-29 specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. ASU 2010-29 is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The Company does not believe that the adoption of this standard will have a material impact on the Company’s results of operations or financial position.
9
NOTE 4. SHARE CAPITAL
Number of
shares
|
Amount
|
|||||||
Authorized:
|
||||||||
Common stock at $0.001 par value per share
|
10,000,000 | $ | 10,000 | |||||
At December 31, 2010 and June 30, 2010
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10,000,000 | $ | 10,000 | |||||
Issued and outstanding:
|
||||||||
Shares issued at $0.001 par value per share
|
2,750,000 | $ | 2,750 | |||||
At June 30, 2010
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2,750,000 | $ | 2,750 | |||||
Issued and outstanding:
|
||||||||
Shares issued at $0.001 par value per share
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3,250,000 | $ | 3,250 | |||||
At March 31, 2011
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3,250,000 | $ | 3,250 |
NOTE 5. GOING CONCERN/RISKS AND UNCERTAINTIES
The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is a startup company subject to the substantial business risks and uncertainties inherent to such an entity, including the potential risk of business failure. This raises substantial doubt about the Company’s ability to continue as a going concern. The reasons for the substantial doubt along with management’s plans are as follows.
The Company has not generated any revenues since inception. While the Company is attempting to commence operations and generate revenues, the Company’s cash position may not be sufficient to support the Company’s daily operations. Management intends to raise additional funds through the issuance of equity or debt securities. Management believes that the actions presently being taken to implement its business plan and to generate revenues provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy to generate revenues and in its ability to raise additional funds, there can be no assurances to that effect. The Company’s continuation as a going concern and its ability to emerge from the development stage with any planned principal business activity is dependent upon the continued financial support from its stockholders and its ability to obtain the necessary equity or debt financing and attain profitable operations.
The accompanying financial statements do not include any adjustments that would be necessary should the Company be unable to continue as a going concern.
NOTE 6. STOCK BASED COMPENSATION
On December 15, 2010, the Company issued an aggregate of 500,000 share of common stock to the Company’s officers in consideration for services rendered by them to the Company during the month of December 2010. Such shares were valued at $25,000 at $0.05 per share. The total stock-based compensation cost recognized in the statements of operation for the nine months ended March 31, 2011 and for the period from April 28, 2010 (inception) to March 31, 2011 was $25,000.
10
ITEM 2.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
The following discussion should be read in conjunction with our unaudited financial statements and the related notes that appear elsewhere in this Form 10-Q. 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 those discussed below and elsewhere in this Form 10-Q.
Our financial statements are stated in United States dollars and are prepared in accordance with United States generally accepted accounting principles.
Application of Critical Accounting Estimates
The preparation of financial statements in conformity with United States generally accepted accounting principles 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.
General Organization and Business
EDUtoons, Inc. (the “Company,” “we,” “us,” or “our”) was incorporated in the State of Delaware on April 28, 2010 to produce one-minute, three-minute and five-minute educational cartoons primarily to be sold to television networks and independent television stations, and digital platforms throughout the United States and Canada, and thereafter offered at a lower cost to schools. We aim to provide reinforcement in children’s programming that will serve as both an educational tool and counter-balance to the violence and age-inappropriate nature of cartoons and programming currently directed at children. Our one-minute television programming consists of 26-segment series, each devoted to one letter of the alphabet; the three-minute segments would be offered in 13 and 26 series in subjects such as the presidents of the United States, the countries of the world, the states of the United States and the like; and the five-minute segments would be focused primarily on nature, various animal habitats around the world, the stars and sea life.
We have not generated any revenues and as of the date hereof, we have only taken the initial steps necessary before we can implement our business plan, such as the raising of initial capital through the sale of 2,750,000 shares of our common stock which occurred in May to June of 2010. In addition, in October of 2010, we obtained the domain rights to our website, ww.edutoons4kids.com. During the first quarter of 2010, our management also developed a business plan.
We have registered 3,000,000 shares of common stock with the Securities and Exchange Commission (the “SEC”) and the registration statement was declared effective on May 05, 2011. The shares are currently being offered for sale. To date, we have not sold any of the shares registered. Assuming that all 3,000,000 shares are sold for aggregate net proceeds of approximately $129,990, our management intends to undertake the following activities during the twelve months following the closing of the offering:
First Quarter Following the closing of the Offering:
During the first three month period following the offering, we intend to conduct initial research and development activities related to the production of one set of one-minute, three-minute and five-minute cartoons. Such activities will consist mostly of research related to the categories and content of the cartoons in order to determine what categories will be most acceptable to our targeted market. We also intend to begin the actual development and production of the initial set of cartoon segments (i.e. one set of one-minute, three-minute and five-minute cartoons) and intend to use the initial set of cartoon segments for marketing activities to be conducted during the next three-month period. We do not anticipate generating revenues during this period and further anticipate that approximately $18,000 will be spent on the development and production of the initial set of cartoon segments and that approximately $6,000 will be spent on research related to the categories and content of the cartoons.
11
Second Quarter Following the Closing of the Offering:
During this time, we intend to begin the marketing of the initial set of cartoons that we develop during the first quarter following the closing of the offering. As part of our initial marketing strategy, we intend to advertise our product on the internet, send announcements to our management team’s contacts in the industry and make calls directly to the four major television and cable networks and their affiliates. It is currently intended that our Chief Executive Officer and President Ms. Eileen Russell, will also market the cartoons to schools, particularly, those educational institutions located in the City of New York. Also as a part of our marketing strategy, we will make a clip of the cartoon segments available at no charge by posting the same on our website, which website will be minimally developed during the second quarter following the closing of the offering for the purpose of making such clips available therein. Prior to downloading such clips, any potential customer will be required to provide us with their names and contact information. As an additional marketing strategy, it is anticipated that all such customers will be provided with newsletters informing them of any additional cartoon strips developed by the Company. We do not anticipate generating revenues during this period and further anticipate that approximately $60,000 will be spent on our marketing activities during this period, of which approximately $40,000 is expected to account for costs related to advertising our product and approximately $19,000 will be spent on the printing of our newsletters. It is also anticipated that approximately $1,000 will be used to update and develop our website in such a manner that will permit us to make the clips of the cartoon segments we develop available on such website.
Third Quarter Following the Closing of the Offering:
We currently intend to devote the third quarter following the closing of the offering on further developing and completing our website. At the present time, it is anticipated that a website designer will be engaged during this period that will assist us in designing and completing our website. It is anticipated that approximately $8,000 will be spent for the development of our website.
It is also anticipated, although no assurance can be given, that during this period, we will begin to receive orders for the cartoons that we intend to produce. During this time, only the initial set of one-minute, three-minute and five-minute cartoons will be available for sale and/or distribution. However, we do not anticipate receiving a significant amount of revenue during this period.
Fourth Quarter Following the Closing of the Offering:
Based on our current business plan, we anticipate that the fourth quarter following the closing of the offering will be devoted to the development of additional cartoons at an anticipated cost of roughly $3,000. It is intended that the cartoons that we develop will have themes and categories that are based on the feedback we get from potential customers as a result of our marketing efforts.
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Results of Operations
We are a development stage company with no established source of revenue. From the period from inception (April 28, 2010) to March 31, 2011, we have incurred cumulative general & administrative expenses in the amount of $32,607 which primarily consists of the audit fee and stock based compensation. We have not generated any revenues and as of the date hereof, we have only taken the initial steps necessary before we can fully implement our business plan, such as the raising of initial capital through the sale of 2,750,000 shares of our common stock and obtaining the domain rights to our website. Our auditors have expressed substantial doubt about our ability to continue as a going concern. Without realization of additional capital, it would be unlikely for us to continue as a going concern. Since inception, our activities have been supported by equity financing, and as of March 31, 2011, we have sustained losses in the amount of $32,742.
Liquidity and Capital Resources
Since inception, we have raised $27,500 through the sale or our common stock and have incurred expenses of $32,742. In addition, since inception, we obtained an advance from a stockholder in the amount of $10,000, which was repaid in August of 2010. We anticipate that our future cash needs will be approximately $95,000 for the twelve month period following the closing of the offering currently being undertaken by the Company. We anticipate obtaining net proceeds of approximately $29,900 to $129,990 through the sale of our common stock. Such amounts will be used to fund our anticipated expenses for the next twelve to eighteen months, including those expenses relating to the execution of our business plan, as discussed above. However, no assurance can be given that any proceeds will be received, in which event, we may revise our business plan or may engage in additional financing activities, including the possible sale of debt instruments to be issued by us. No assurance can be given that we will be successful in obtaining the necessary financing, or that we will be able to negotiate acceptable terms in a timely fashion. In addition, our access to capital is affected by prevailing conditions in the financial and equity capital markets, as well as our own financial condition. At this time, we have not entered into any agreements with any third-party relating to the provision of credit facilities to us. In addition, none of our current officers, directors or shareholders has committed, whether orally or in writing, to provide us with additional financing when needed. Moreover, even if we are able to execute our business plan as intended, no assurance can be given that we will be able to sell any of the cartoons that we create or that we will be able to generate sufficient revenues to become profitable.
Off Balance Sheet Arrangements
None.
Recent Developments
During the previous twelve months, we focused on the preparation and filling of our registration statement on Form S-1 and the offering in order to raise the necessary funds to develop and market our product.
Plan of Operation
Our plan of operation for the twelve (12) months following the closing of the offering is to primarily develop our three (3) cartoon segments (1, 3 and 5 minutes) that focus on educational story lines and animation, which will be distributed initially through the Internet.
Over the next twelve (12) months, we anticipate spending approximately $95,000 for business operations. This budget assumes that all of the shares offered pursuant to the registration statement will be sold, permitting the Company to execute its current business plan as intended, and includes all anticipated costs associated with the production of cartoon segments, professional fees (which include the filing of the registration statement) and future compliance with reporting obligations and marketing expenses. Any amounts remaining from the sale of the shares offered, if any, after expenses for the production of cartoons, marketing efforts and other expenses will be retained for any unknown expenses that the Company may incur.
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During this first year of operation, Ms. Eileen Russell will contribute to the long-term growth and success of the business by donating her time without charge to the business and will spend at least 25 to 30 hours per week on company business.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Management, under the supervision and with the participation of our Principal Executive Officer (“PEO”) and Principal Financial Officer (“PFO”), Ms. Eileen Russell, has evaluated the effectiveness of our disclosure controls and procedures (“Disclosure Controls”) as defined in Rules 13a-15 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this Quarter Report (the “Evaluation Date”). Based on such evaluation, our PEO/PFO has concluded that as of the Evaluation Date, our Disclosure Controls were not effective to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified by the SEC and that material information relating to our company is made known to management, including the PEO/PFO, particularly during the period when our periodic reports are being prepared, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934) during the quarter ended March 31, 2011 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
ITEM 1A. RISK FACTORS
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. (Removed and Reserved).
ITEM 5. OTHER INFORMATION
None.
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ITEM 6. EXHIBITS
The following exhibits are filed herewith:
Exhibit No.
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Description
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3.1*
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Certificate of Incorporation of EDUtoons, Inc.
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3.2*
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Bylaws of EDUtoons, Inc.
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4.1*
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Specimen Stock Certificate
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31.1
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Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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31.2
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Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
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32.1
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Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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32.2
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Certifications pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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*
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Previously filed as exhibits to the registration statement on Form S-1 filed by the Company on August 6, 2010.
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In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
EDUtoons, Inc.
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||
Date: October 20, 2011
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By:
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/s/ Eileen Russell
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Eileen Russell
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||
Chief Executive Officer and President
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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.
Date: October 20, 2011
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By:
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/s/ Eileen Russell
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Eileen Russell
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||
Chief Executive Officer, President and Director
(Principal Executive Officer, Principal Financial Officer
and Principal Accountant Officer)
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