Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended May 31, 2012
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______, 2012 , to ______, 2012 .
Commission file number: 333-167743
AMWEST IMAGING INCORPORATED
(Exact name of registrant as specified in its charter)
Nevada 27-2336038
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
815 John St. Suite 150, Evansville, IN 47713
(Address of Principal Executive Offices) (Zip Code)
(812) 250-4210
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, par value $0.001 per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes [ ] No [X]
Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. Yes [ ] No [X]
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
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 (Section
232.405) during the preceding 12 months. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K 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. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer [ ] Accelerated filer [ ]
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): Yes [ ] No [X]
The aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant was approximately $13,000 as of the last
business day of the registrant's most recently completed second fiscal quarter,
based upon the closing sale price on the OTC:BB reported for such date. Shares
of common stock held by each officer and director and by each person who owns
10% or more of the outstanding common stock have been excluded in that such
persons may be deemed to be affiliates. This determination of affiliate status
is not necessarily a conclusive determination for other purposes.
As of July 23, 2012, the Registrant had 532,560,000 outstanding shares of its
common stock, $0.001 par value.
Documents incorporated by reference: none
AMWEST IMAGING INCORPORATED
FORM 10-Q--INDEX
Part I - Financial Information
Item 1. Financial Statements 3
Balance Sheets 3
Statements of Operations 4
Statement of Changes in Stockholders' Equity 5
Statements of Cash Flows 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation 15
Item 3. Quantitative and Qualitative Disclosures About Market Risk 18
Item 4T. Controls and Procedures 19
Part II - Other Information
Item 1. Legal Proceedings 20
Item 1A. Risk Factors 20
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Mine Safety Disclosures 20
Item 5. Other Information 20
Item 6. Exhibits 21
Signatures 21
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AMWEST IMAGING INCORPORATED
BALANCE SHEETS
--------------------------------------------------------------------------------
May 31, February 29,
2012 2012
------------ ------------
(unaudited) (audited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 14,422 $ 34,728
Accounts receivable, net 1,198 173
Prepaid expenses and other current assets 365,315 365,000
Loan costs 3,115 2,120
------------ ------------
TOTAL CURRENT ASSETS 384,050 402,021
------------ ------------
Software, net of amortization 475,000 512,500
OTHER ASSETS:
Long-term portion of prepaid expenses 244,165 335,041
------------ ------------
TOTAL OTHER ASSETS 244,165 335,041
------------ ------------
TOTAL ASSETS $ 1,103,215 $ 1,249,562
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 101,500 $ 100,000
Accrued expenses 2,677 317
Current portion of notes payable 112,365 86,467
Derivative Liability 111,451 61,034
------------ ------------
TOTAL CURRENT LIABILITIES 327,993 247,818
------------ ------------
STOCKHOLDERS' EQUITY
Preferred stock; $0.001 par value; 5,000,000 shares
authorized; 0 shares issued and outstanding -- --
Common stock, $0.001 par value; 595,000,000 shares
authorized; 532,560,000 shares issued and 338,000,000
shares outstanding 532,560 532,560
Capital in excess of par value 778,989 804,461
Accumulated deficit (536,327) (335,277)
------------ ------------
775,222 1,001,744
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,103,215 $ 1,249,562
============ ============
The accompanying notes are an integral part of these financial statements.
3
AMWEST IMAGING INCORPORATED
STATEMENTS OF OPERATIONS
--------------------------------------------------------------------------------
For the Three Months Ended
-----------------------------------
May 31, May 31,
2012 2011
------------ ------------
REVENUE:
Sales $ 1,358 $ --
------------ ------------
1,358 --
------------ ------------
COST OF GOODS SOLD 90,876 --
------------ ------------
GROSS MARGIN (89,518) --
OPERATING EXPENSES:
Selling, general and administrative expenses 100,128 15,000
------------ ------------
TOTAL OPERATING EXPENSES 100,128 15,000
------------ ------------
LOSS FROM OPERATIONS (189,646) (15,000)
------------ ------------
OTHER EXPENSE (INCOME)
Unrealized (gain) loss on derivative (17,555) --
Interest expense 28,959 --
------------ ------------
TOTAL OTHER EXPENSE (INCOME) 11,404 --
------------ ------------
NET LOSS $ (201,050) $ (15,000)
============ ============
NET LOSS PER COMMON SHARE, BASIC AND DILUTED $ (0.00) $ (0.00)
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING,
BASIC AND DILUTED 426,586,301 338,000,000
============ ============
The accompanying notes are an integral part of these financial statements.
4
AMWEST IMAGING INCORPORATED
STATEMENTS OF STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------
Common Stock Capital in Total
--------------------- Excess of Accumulated Treasury Stockholders'
Shares Amount Par Value Deficit Stock Equity
------ ------ --------- ------- ----- ------
Balance, February 28, 2011 338,000,000 $ 338,000 $(289,000.00) $(29,230.00) $ -- $ 19,770
Shares issued for the acquisition
of Instant Website Technology Inc. 157,560,000 157,560 429,940 -- -- 587,500
Stock based compensation 27,000,000 27,000 110,000 -- -- 137,000
Shares issued for Bion License 10,000,000 10,000 620,000 -- -- 630,000
Value of beneficial derivative
conversion in note payable -- -- (66,479) -- -- (66,479)
Net loss -- -- -- (306,047) -- (306,047)
----------- --------- ------------ ----------- ---- ----------
Balance, February 28, 2012 532,560,000 532,560 804,461 (335,277) -- 1,001,744
Value of beneficial derivative
conversion in note payable -- -- (25,472) -- -- (25,472)
Net loss -- -- -- (201,050) -- (201,050)
----------- --------- ------------ ----------- ---- ----------
Balance, May 31, 2012 532,560,000 $ 532,560 $ 778,989 $ (536,327) $ -- $ 775,222
=========== ========= ============ =========== ==== ==========
Note: Retroactively restated for 26:1 forward stock split effective November 7,
2011
The accompanying notes are an integral part of these financial statements.
5
AMWEST IMAGING INCORPORATED
STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
For the Three Months Ended May 31,
-------------------------------
2012 2011
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (201,050) $ (15,000)
Adjustments to reconcile net loss to net cash and
cash equivalents provided (used) by operating activities:
Amortization 37,500
Non-cash amortization for Bion License 90,876
Unrealized gain or loss on derivative (17,555)
Amortization of discount on convertible note payable 25,898
(Increase) decrease in:
Accounts receivable (1,025)
Loan costs 1,505
Prepaid expenses and other assets (315) (4,500)
Increase (decrease) in:
Accounts payable and accrued expenses 3,860
---------- ----------
NET CASH USED BY OPERATING ACTIVITIES (60,306) (19,500)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
NET CASH USED BY INVESTING ACTIVITIES -- --
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of common stock
Proceeds from issuance of notes payable 40,000 --
Proceeds from shareholder loans --
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 40,000 --
---------- ----------
Net increase in cash and cash equivalents (20,306) (19,500)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 34,728 20,067
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 14,422 $ 567
========== ==========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $ -- $ --
========== ==========
NON-CASH FINANCING AND INVESTING ACTIVITIES:
Issuance of note payable with a beneficial conversion
feature $ 67,972 $ 0
========== ==========
Issuance of note payable with a discount equivalent
to the relative fair value of the accompanying warrant $ 42,500 $ 0
========== ==========
The accompanying notes are an integral part of these financial statements.
6
Amwest Imaging Incorporated
Notes to Financial Statements
As of May 31, 2012 and for the
Three Months Ended May 31, 2012 and 2011
--------------------------------------------------------------------------------
1. BACKGROUND INFORMATION
Amwest Imaging Inc. ("AMWI", or the "Company") is a technology company whose
primary business is providing relationship-building tools and processes that
help any business cultivate profitable relationships with customers, all through
web based solutions. Our Company is always working on new internet based
technology. Our current portfolio consists of My Restaurant
Web,(www.myrestaurantweb.com), Lok Drop (www.LokDrop.com), Zip Clik
(www.ZipClik.com)
The Company derives its revenue by charging basic monthly fees for the use of
these website tools and services, which all three of these technologies are
currently creating revenue for the Company. The Company's goal is to provide
high end turnkey solutions to both businesses and private users of the internet.
My Restaurant Web
This web based solution specifically addresses the needs of restaurants that
desire a website with a strong emphasis of marketing and attracting new
customers. The primary component of this web based solution, an on-demand fold
out turn-key website for immediate use. The websites designed are highly
advanced, niche creations that exceed the needs of small businesses in the
target markets. Following the website creation, design, and listing online, the
client can utilize additional online tools to develop a marketing plan for its
customer base implementing SMS technology ("texting") and email marketing which
is a must-have in today's social networking environment.
We expect to expand the technology in the coming months to service several other
industries.
Lok Drop
Lok Drop Online Storage provides a secure digital safe deposit box enabling
entities to access, store, share and backup digital information in a secure,
private and encrypted location. It can be used to access and share critical data
from anywhere in the world.
Zip Clik
Zip Clik provides Encryption Software for Skype & Other Voice Over Internet
Protocol (VOIP) Software. Zip Clik software works by providing our own
encryption at the time you start your VOIP conversation on any service. The
encrypted version is then sent to the individual you are talking to, and then
our software decrypts it back into voice as they receive it. This entire process
is done instantly without any delay. More importantly is the fact that Skype
works with the courts to decrypt any conversation they deem necessary which
means the encryption does not protect your privacy and conversations.
FORMATION HISTORY
Amwest Imaging Incorporated (the "Company"), was incorporated in the State of
Nevada on April 7, 2010.
The Company's original principal business objective was to provide document
digitization services to businesses. On September 6, 2011, registrant completed
the transactions of the Share Exchange Agreement of September 6, 2011, between
Amwest Imaging Incorporated, a Nevada corporation, and the shareholders of
Instant Website Technology Inc. ("IWTI"). Accordingly, registrant acquired all
of the issued and outstanding shares of Instant Website Technology Inc., in
exchange for the issuance in the aggregate of 157,560,000 shares of common stock
of the registrant. As a result of the Share Exchange Agreement, Instant Website
Technology Inc., Inc. became a wholly-owned subsidiary of registrant.
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Amwest acquired from Instant Website Technology Inc. the rights to all
technology related to www.myrestaurantweb.com, including but not limited to the
Uniform Resource Locator ("URL") and the website development tools; however no
employees were retained post merger, the accounting system was not transitioned,
there were no bank accounts provided, and there were minimal recurring customers
as the majority of the historical revenue came from a one-time sale of the
technology and custom software development. It was determined that the assets
acquired from Instant Website Technology Inc. did not constitute a business as
there were several significant missing elements in the transferred assets that
would be necessary to operate a business, including the ability to collect
payments from the internet site.
2. GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. For the three months ended May 31,
2012, the Company incurred a net loss of approximately $201,050 and
approximately $306,047 for the year ended February 29, 2012. As of May 31, 2012,
the Company has an accumulated deficit of $536,327, positive working capital of
$56,057; however there are limited assets to fund short term operating cash flow
or service debt obligations. The Company used $60,306 and $105,339 of cash from
operations during the three months ended May 31, 2012 and the year ended
February 29, 2012, respectively, which was funded by proceeds from the sale of
stock and proceeds from the issuance of convertible derivative notes. There is
no assurance that such financing will be available in the future. In view of
these matters, there is substantial doubt that the Company will continue as a
going concern. The Company is currently pursuing sources of short and long-term
working capital.
The Company's ability to continue as a going concern is highly dependent on our
ability to obtain additional sources of cash flow sufficient to fund our working
capital requirements. However, there can be no assurance that the Company will
be successful in its efforts to secure such cash flow. Any failure by us to
timely procure additional financing or investment adequate to fund our ongoing
operations, including planned product development initiatives and
commercialization efforts, will have material adverse consequences on our
financial condition, results of operations and cash flows.
The financial statements of the Company do not include any adjustments relating
to the recoverability and classification of recorded assets, or the amounts and
classifications of liabilities that might be necessary should the Company be
unable to continue as a going concern.
3. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed are:
USE OF ESTIMATES - The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
CASH AND CASH EQUIVALENTS - All cash, other than held in escrow, is maintained
with a major financial institution in the United States. Deposits with this bank
may exceed the amount of insurance provided on such deposits. Temporary cash
investments with an original maturity of three months or less are considered to
be cash equivalents.
FINANCIAL INSTRUMENTS - The Company's balance sheet includes certain financial
instruments. The carrying amounts of current assets and current liabilities
approximate their fair value because of the relatively short period of time
between the origination of these instruments and their expected realization.
Financial Accounting Standards Board (FASB) Accounting Standards Codification
(ASC) 820 "Fair Value Measurements and Disclosures" (ASC 820) defines fair value
as the exchange price that would be received for an asset or paid to transfer a
liability (an exit price) in the principal or most advantageous market for the
asset or liability in an orderly transaction between market participants on the
measurement date.. ASC 820 also establishes a fair value hierarchy that
distinguishes between (1) market participant assumptions developed based on
8
market data obtained from independent sources (observable inputs) and (2) an
entity's own assumptions about market participant assumptions developed based on
the best information available in the circumstances (unobservable inputs). The
fair value hierarchy consists of three broad levels, which gives the highest
priority to unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3).
The three levels of the fair value hierarchy are described below:
* Level 1 - Unadjusted quoted prices in active markets that are
accessible at the measurement date for identical, unrestricted assets
or liabilities.
* Level 2 - Inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or
indirectly, including quoted prices for similar assets or liabilities
in active markets; quoted prices for identical or similar assets or
liabilities in markets that are not active; inputs other than quoted
prices that are observable for the asset or liability (e.g., interest
rates); and inputs that are derived principally from or corroborated
by observable market data by correlation or other means.
* Level 3 - Inputs that are both significant to the fair value
measurement and unobservable.
Fair value estimates discussed herein are based upon certain market assumptions
and pertinent information available to management as of February 29, 2012. The
respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values due to the short-term nature of these
instruments.
The Company applied ASC 820 for all non-financial assets and liabilities
measured at fair value on a non-recurring basis. The adoption of ASC 820 for
non-financial assets and liabilities did not have a significant impact on the
Company's financial statements.
As of May 31, 2012 and February 29, 2012 the fair values of the Company's
financial instruments approximate their historical carrying amount.
ACCOUNTS RECEIVABLE - The Company currently supplies their web solutions on a
monthly basis, billing on the month of services and collection on customer
accounts through credit cards or direct payments. The Company does not issue
credit on services provided, therefore has minimal accounts receivable. No
allowance for doubtful accounts is considered necessary to be established for
amounts that may not be recoverable, since there has been limited credit sales.
LONG-LIVED ASSETS - Long-lived assets are reviewed for impairment whenever
events or changes in circumstances indicate that the book value of the asset may
not be recoverable. The Company periodically evaluates whether events and
circumstances have occurred that indicate possible impairment. When impairment
indicators exist, the Company uses market quotes, if available or an estimate of
the future undiscounted net cash flows of the related asset or asset group over
the remaining life in measuring whether or not the asset values are recoverable.
There have been no significant impairments of long-lived assets during the three
months ended May 31, 2012.
SOFTWARE DEVELOPMENT COSTS AND CAPITALIZATION - The Company accounts for
software development costs in accordance with several accounting pronouncements,
including FASB ASC 730, Research and Development, FASB ASC 350-40, Internal-Use
Software, FASB 985-20, Costs of Computer Software to be Sold, Leased, or
Marketed and FASB ASC 350-50, Website Development Costs. The Company has
capitalized the cost of the technology license purchased from an unrelated third
party. At the time of purchase the technology was available to be marketed. As
such additional costs to customize, modify and betterment to the existing
product was charged to expense as it was incurred Capitalized software costs are
stated at cost. The estimated useful life of costs capitalized is evaluated for
each specific project and is currently being amortized over five years.
Amortization is computed on a straight line basis. The carrying amount of all
long-lived assets is evaluated periodically to determine if adjustment to the
amortization period or the unamortized balance is warranted. Based upon its most
recent analysis, the Company believes that no impairment of the proprietary
software existed at May 31, 2012.
9
Expenditures for software development costs incurred and expensed for the three
months ended May 31, 2012 and May 31, 2011 was approximately $6,300 and none
respectively.
Once technological feasibility of new products or features and functions of
current products, which extend its useful life is established, the cost incurred
until release to production are capitalized and amortized over a five year
useful life. There were no amounts capitalized during the three months ended May
31, 2012 or the three months ended May 31, 2011. Amortization expenses related
to capitalized software and charged to operations for the three months ended May
31, 2012 and three months ended May 31, 2011 were approximately $37,500 and none
respectively.
SHARE-BASED PAYMENTS - Share-based payments to employees, including grants of
employee stock or stock options are recognized as compensation expense in the
financial statements based on their fair values, in accordance with FASB ASC
Topic 718. That expense is recognized over the period during which an employee
is required to provide services in exchange for the award, known as the
requisite service period (usually the vesting period). The Company had no common
stock options or common stock equivalents granted or outstanding for all periods
presented. The company may issue shares as compensation in the future periods
for employee services.
The Company may issue restricted stock to consultants for various services. Cost
for these transactions will be measured at the fair value of the consideration
received or the fair value of the equity instruments issued, whichever is more
reliably measurable. The value of the common stock is to be measured at the
earlier of (i) the date at which a firm commitment for performance by the
counterparty to earn the equity instruments is reached or (ii) the date at which
the counterparty's performance is complete. The company has issue shares as
compensation in the future period for services associated with the registration
of the common shares.
REVENUE RECOGNITION - The Company recognizes revenue on arrangements in
accordance with FASB ASC No. 605, Revenue Recognition. In all cases, revenue is
recognized only when the price is fixed or determinable, persuasive evidence of
an arrangement exists, the service is performed and collectability is reasonably
assured.
Consideration for future services are made by customers in advance of those
services being provided. All accounts are currently on a month to month service,
therefore revenue is recognized ratably over the period that the services are
subscribed, the current month. The Company does not offer annual or other term
agreements; therefore there is no unearned portion or deferral of revenue.
Services are billed in advance of the period those services are provided.
The Company has not issued guarantees or other warrantees on the advertising
subscription success or results. The Company has not experienced any refund
requests or committed to any adjustments for terminated subscriptions. The
Company does not believe that there is any required liability.
ADVERTISING - The costs of advertising are expensed as incurred. Advertising
expense was approximately $7,400 and none for the three months ended May 31,
2012 and May 31, 2011, respectively. Advertising expenses, when incurred are to
be included in the Company's operating expenses.
INCOME TAXES - Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes currently due plus
deferred taxes resulting from temporary differences. Such temporary differences
result from differences in the carrying value of assets and liabilities for tax
and financial reporting purposes. The deferred tax assets and liabilities
represent the future tax consequences of those differences, which will either be
taxable or deductible when the assets and liabilities are recovered or settled.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized.
10
As of May 31, 2012, the Company had no unrecognized tax benefits or related
interest and penalties. We will include future interest and penalties associated
with any unrecognized benefits within provision for income taxes on the
Statements of Operations, if applicable. We do not anticipate any unrecognized
benefits in the next 12 months that would result in a material change to our
financial position.
LOSS PER SHARE - Basic and diluted loss per share are computed based on the
weighted-average common shares and common share equivalents outstanding during
the period. Common share equivalents consist of stock options, warrants and
convertible notes payable. There were none common share equivalents excluded
from the computation of diluted earnings per share for the three months ended
May 31, 2012 and May 31 2011, respectively, because their effect is
anti-dilutive.
RECENT ACCOUNTING PRONOUNCEMENTS
Except for rules and interpretive releases of the SEC under authority of federal
securities laws and a limited number of grandfathered standards, the FASB
Accounting Standards Codification(TM) ("ASC") is the sole source of
authoritative GAAP literature recognized by the FASB and applicable to the
Company. Management has reviewed the aforementioned rules and releases and
believes any effect will not have a material impact on the Company's present or
future consolidated financial statements.
4. SOFTWARE DEVELOPMENT COSTS AND CAPITALIZATION
The Company has capitalized the cost of acquiring their technology for internal
and external use. The purchase price was valued at the agreed upon price with
the unrelated party. Newly developed software was also capitalized based on our
accounting policy. Acquired and Developed software costs consist of the
following, as of May 31, 2012:
May 31, February 29,
2012 2012
-------- --------
Acquired Software $587,500 $587,500
-------- --------
Less accumulated amortization 112,500 75,000
-------- --------
$475,000 $512,500
======== ========
2013 $112,500
2014 150,000
2015 150,000
2016 62,500
2017 --
thereafter --
--------
$475,000
========
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5. NOTES PAYABLE
May 31, February 28,
2012 2011
-------- --------
Asher note payable $ 42,500 $ 42,500
Asher note payable (2) 42,500
Advanced Capital Management note payable 45,000 45,000
Shareholder note payable 25,000 25,000
Shareholder advance 10,000 10,000
-------- --------
Total debt 155,000 112,500
-------- --------
Debt discount 42,635 36,033
-------- --------
Total note payable $112,365 $ 86,467
======== ========
The Asher note payable was issued in January of 2012 and is a convertible
promissory note for $42,500. The note pays interest at 8% per annum, and
principal and accrued interest is due on the maturity date of October 19, 2012.
The conversion option price associated with the note has a 45 percent discount
to the market price of the stock. The market price is based on the average of
the two lowest trading prices during a fifteen day period prior to conversion.
The note is convertible at any time after 180 days.
The Asher note payable (2) was issued in March of 2012 and is a convertible
promissory note for $42,500. The note pays interest at 8% per annum, and
principal and accrued interest is due on the maturity date of December 20, 2012.
The conversion option price associated with the note has a 45 percent discount
to the market price of the stock. The market price is based on the average of
the two lowest trading prices during a fifteen day period prior to conversion.
The note is convertible at any time after 180 days.
The Advanced Capital management note payable was issued in December of 2011 for
$45,000. The note pays no interest unless in default, and principal is due on
the maturity date of December 6, 2012.
The Shareholder note payable was issued in December of 2012 for $25,000. The
note pays interest at 1% per annum, and principal and accrued interest is due on
the maturity date of December 15 19, 2012.
Share holder advances are considered payable on demand and is non-interest
bearing. The Company owed $10,000 to a shareholder as of February 29, 2012. No
interest has been accrued or imputed on these debts, as management believes that
interest expense would be immaterial.
6. DERIVATIVE LIABILITY
In January March of 2012 the Company issued convertible promissory notes for
$42,500 and $42,500, respectively. The notes pays interest at 8% per annum, and
principal and accrued interest is due on the maturity date of October 19, 2012
and December 20, 2012, respectively. The conversion option price associated with
the notes has a 45 percent discount to the market price of the stock. The market
price is based on the average of the two lowest trading prices during a fifteen
day period prior to conversion. The notes are convertible at any time after 180
days. As a result of the variable feature associated with the conversion option,
pursuant to ASC Topic 815, the Company bifurcated the conversion option, and
utilized the Black Scholes model to determine the fair value of the conversion
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option. At the issuance date, the Company recorded a debt discount and
derivative liability of approximately $42,500 and $108,979, respectively for the
note issued in January. At the issuance date, the Company recorded a debt
discount and derivative liability of approximately $42,500 and $67,972,
respectively for the note issued in March. The debt discount will be amortized
over the life of the notes.
The Company recognized approximately $26,000 of interest expense related to
amortization of the debt discount during the three months ended, May 31, 2012.
As of May 31, 2012 the unamortized discount related to the notes was $42,635.
The derivative liability will be adjusted to fair value each reporting period
with unrealized gain (loss) reflected in other income and expense. The
unrealized gain associated with the derivative liability was approximately
$17,555 for the three months ended May 31, 2012.
Liabilities measured at fair value on a recurring basis by level within the fair
value hierarchy as of May 31, 2012 and February 29, 2012 related to the above
derivative liability are as follows:
Fair Value Fair Value
Measurements at Measurements at
May 31, 2012 (1) February 29, 2012 (1)
------------------- -------------------
Using Using
Level 2 Total Level 2 Total
------- ----- ------- -----
Liabilities:
Derivative liabilities $(111,451) $(111,451) $ (61,034) $ (61,034)
--------- --------- --------- ---------
Total liabilities $(111,451) $(111,451) $ (61,034) $ (61,034)
========= ========= ========= =========
----------
(1) The Company did not have any assets or liabilities measured at fair value
using Level 1 or Level 3 of the fair value hierarchy as of May 31, 2012 or
February 29, 2012.
The Company's derivative liabilities are classified within Level 2 of the fair
value hierarchy. The Company utilizes the Black-Scholes Option Pricing Model to
value the derivative liabilities utilizing observable inputs such as the
Company's common stock price, the exercise price of the warrants, and expected
volatility, which is based on historical volatility. The Black-Scholes model
employs the market approach in determining fair value.
7. INCOME TAXES
There is no current or deferred income tax expense or benefit for the years
ended May 31, 2012 and May 31, 2011.
As of May 31, 2012 and February 29, 2012, the Company had federal and state net
operating loss carry-forwards totaling approximately $168,189 and $92,539,
respectively, which begin expiring in 2032. The Company has established a
valuation allowance to fully reserve all deferred tax assets at May 31, 2012 and
February 29, 2012 because it is more likely than not that the Company will not
be able to utilize these assets. The change in the valuation allowance for the
three months ended May 31, 2012 was an increase of $75,650.
As of May 31, 2012, the Company has not performed an IRC Section 382 study to
determine the amount, if any, of its net operating losses that may be limited as
a result of the ownership change percentages during 2011. However, the Company
will complete the study prior to the utilization of any of its recorded net
operating losses.
8. RELATED PARTY TRANSACTIONS
In support of the Company's efforts and cash requirements, it is relying on
advances from related parties until such time that the Company can support its
operations or attains adequate financing through sales of its equity or
traditional debt financing. Amounts represent advances or amounts paid in
satisfaction of certain liabilities as they come due. The advances are
considered temporary in nature and have not been formalized by a promissory
13
note. Shareholder advances are considered payable on demand and is non-interest
bearing. The Company owed $10,000 to a shareholder as of May 31, 2012. No
interest has been accrued or imputed on these debts, as management believes that
interest expense would be immaterial.
The majority shareholder has pledged his support to fund continuing operations;
however there is no written commitment to this effect. The Company is dependent
upon the continued support of this member.
The Company does not have employment contracts with its key employees, including
the majority shareholder who is the Chief Executive Chief Accounting and Chief
Technical Officer.
The amounts and terms of the above transactions may not necessarily be
indicative of the amounts and terms that would have been incurred had comparable
transactions been entered into with independent third parties.
9. COMMITMENTS AND CONTINGENCIES
Our offices are located at 815 John Street, Suite 150, Evansville, Indiana. We
have a Lease Agreement which expires on December 2014 for approximately 5,000
square feet at a monthly rental of $2,300. We are responsible, with others, for
common area maintenance. We believe that the space is adequate for our current
operations and additional space is available, if required, at approximately the
same cost and expense.
Some of the officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities that become available. They may face a conflict in selecting
between the Company and other business interests. The Company has not formulated
a policy for the resolution of such conflicts.
From time to time the Company may become a party to litigation matters involving
claims against the Company. Management believes that there are no current
matters that would have a material effect on the Company's financial position or
results of operations.
The Company is not currently a party to any pending legal proceedings. In the
ordinary course of business the Company may become a party to various legal
proceedings generally involving contractual matters, infringement actions,
product liability claims and other matters.
10. SUBSEQUENT EVENTS
On July 19, 2012, the board authorized and a majority of shareholders approved
the amendment of the company's certificate of incorporation to increase the
number of authorized shares of common shares by 600 million from the prior level
of 600 million for a total of 1.2 billion authorized shares. There was no change
in the stated par value of the shares as a result of this transaction.
14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS "ANTICIPATED,"
"BELIEVE," "EXPECT," "PLAN," "INTEND," "SEEK," "ESTIMATE," "PROJECT," "WILL,"
"COULD," "MAY," AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING
STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTURE
OPERATIONS, FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH FLOW. SUCH
STATEMENTS REFLECT THE COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND
FINANCIAL PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT
LIMITATION, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN FOREIGN,
POLITICAL, SOCIAL, AND ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND
COMPLIANCE WITH GOVERNMENTAL REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET
PENETRATION AND ADDITIONAL CUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH
ARE BEYOND THE COMPANY'S CONTROL. SHOULD ONE OR MORE OF THESE RISKS OR
UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS PROVE TO BE INCORRECT,
ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM THOSE ANTICIPATED,
BELIEVED, ESTIMATED, OR OTHERWISE INDICATED. CONSEQUENTLY, ALL OF THE
FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE QUALIFIED BY THESE CAUTIONARY
STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS OR DEVELOPMENTS.
The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our financial statements and
related notes appearing elsewhere herein. This discussion and analysis contains
forward-looking statements including information about possible or assumed
results of our financial conditions, operations, plans, objectives and
performance that involve risk, uncertainties and assumptions. The actual results
may differ materially from those anticipated in such forward-looking statements.
For example, when we indicate that we expect to increase our product sales and
potentially establish additional license relationships, these are
forward-looking statements. The words "expect", "anticipate", "estimate" or
similar expressions are also used to indicate forward-looking statements. The
following discussions should be read in conjunction with our financial
statements and the notes thereto presented in "Item 1 - Financial Statements"
and our audited financial statements and the related Management's Discussion and
Analysis of Financial Condition and Results of Operations included in our report
on Form 10-K for the year ended February 29, 2012.
The Company cautions readers that in addition to important factors described
elsewhere, the following important facts, among others, sometimes have affected,
and in the future could affect, the Company's actual results, and could cause
the Company's actual results during 2013 and beyond, to differ materially from
those expressed in any forward-looking statements made by, or on behalf of, the
Company.
This Management's Discussion and Analysis or Plan of Operation presents a review
of the operating results and financial condition of the Company for the three
month periods ended May 31, 2012 and 2011. This discussion and analysis is
intended to assist in understanding the financial condition and results of
operation of the Company and its subsidiary. This section should be read in
conjunction with the consolidated financial statements and the related notes.
RESULTS OF OPERATIONS
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MAY 31, 2012
AND 2011
GENERAL
The Company's net sales increased to $1,358 for the three months ended May 31,
2012, an increase of $1,358 or 100%, from no revenue for the three months ended
May 31, 2011. Operations began in the forth quarter of last year and Management
15
believes the revenue will continue to grow and is devoting its efforts to
increase sales through sales representatives, paid sales leads and advertising.
Gross profit for the operations decreased (89,518) to $(89,518) for the three
months ended May 31, 2012 from none for the three months ended May 31, 2011.
Operations began in the fourth quarter of last year.
Selling, general and administrative expenses increased to $100,128 for the three
months ended May 31, 2012 from $15,000 for the three months ended May 31, 2011,
an increase of $85,128 or 568%. Management believes selling, general and
administrative expenses will continue to increase while Management is building
the business and will stabilize in the first quarter of next year.
The Company incurred net loss of 201,050 for the three months ended May 31, 2012
compared to $15,000 net loss for the three months ended May 31, 2011.
LIQUIDITY AND CAPITAL RESOURCES
The Company finances its operations primarily through sales of its online
products and services, sales of its common stock, the issuance of convertible
promissory notes, unsecured promissory notes and license agreements.
Our historical revenues have not been sufficient to sustain our operations. We
have not achieved profitability since inception and we expect to continue to
incur net losses and negative cash flow from operations until we can produce
sufficient revenues to cover our costs, which are not expected for several
years. Our profitability will require the successful commercialization of our
online products and services and any future software or services we develop. No
assurances can be given when this will occur.
During the three months ended May 31, 2012 a loan was obtained from Asher and
was in March of 2012 and is a convertible promissory note for $42,500. The note
pays interest at 8% per annum, and principal and accrued interest is due on the
maturity date of December 20, 2012. The conversion option price associated with
the note has a 45 percent discount to the market price of the stock. The market
price is based on the average of the two lowest trading prices during a fifteen
day period prior to conversion. The note is convertible at any time after 180
days.
Any future financing may result in substantial dilution to existing
shareholders, and future debt financing, if available, may include restrictive
covenants or may require us to grant a lender a security interest in any of our
assets not already subject to an existing security interest. To the extent that
we attempt to raise additional funds through third party collaborations and/or
licensing arrangements, we may be required to relinquish some rights to our
technologies or products currently in various stages of development, or grant
licenses or other rights on terms that are not favorable to us. Any failure by
us to timely procure additional financing or investment adequate to fund our
ongoing operations, including planned product development initiatives and
commercialization efforts, will have material adverse consequences on our
financial condition, results of operations and cash flows.
We will be dependent upon our existing cash of $14,422 at May 31, 2012, product
sales and additional debt and equity issuances to finance our operations through
the next 12 months. We must raise additional capital in the amount of
approximately $500,000 net of expenses, during the next twelve months in order
to fund our working capital requirements in accordance with our existing plans
through 2013. If we are unable to raise these funds, we may be required to delay
our development plans, and curtail our expenditures.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. For the three months ended May 31,
2012, the Company incurred a net loss of $201,050. As of May 31, 2012, the
Company has an accumulated deficit of $536,327. The Company used $60,306 and
$19,500 of cash from operations during the three months ended May 31, 2012 and
2011, respectively, which was funded primarily by proceeds from issuance of debt
and stock. There is no assurance that such financing will be available in the
future. In view of these matters, there is substantial doubt that the Company
will continue as a going concern.
The Company's ability to continue as a going concern is highly dependent on our
ability to obtain additional sources of cash flow sufficient to fund our working
capital requirements. However, there can be no assurance that the Company will
16
be successful in its efforts to secure such cash flow. Any failure by us to
timely procure additional financing or investment adequate to fund our ongoing
operations, including planned product development initiatives and
commercialization efforts, will have material adverse consequences on our
financial condition, results of operations and cash flows.
The financial statements of the Company do not include any adjustments relating
to the recoverability and classification of recorded assets, or the amounts and
classifications of liabilities that might be necessary should the Company be
unable to continue as a going concern.
STATEMENTS OF CASH FLOWS
Cash and cash equivalents as of May 31, 2012 was approximately $14,422 compared
to approximately $567as of May 31, 2011. Cash is primarily used to fund our
working capital requirements.
Net cash used in operating activities was approximately $60,306 for the three
months ended May 31, 2012 compared to approximately $19,500 for the same period
in 2011.
Net cash provided by financing activities was approximately $40,000 for the
three months ended May 31, 2012 compared to none during the same period in 2011.
During the three months ended May 31, 2012, we received net proceeds of $40,000
from the issuance of debt.
SEASONALITY
The diversity of operations in the software segment protects it from seasonal
trends.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of the accompanying financial statements and related disclosures
in conformity with U.S. GAAP requires us to make judgments, assumptions and
estimates that affect the amounts reported in the accompanying financial
statements and the accompanying notes. The preparation of these financial
statements requires management to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenue and expenses, and related
disclosure of contingent assets and liabilities. When making these estimates and
assumptions, we consider our historical experience, our knowledge of economic
and market factors and various other factors that we believe to be reasonable
under the circumstances. Actual results could differ from these estimates.
Management has discussed the selection of critical accounting policies and
estimates with our Board of Directors, and the Board of Directors has reviewed
our disclosure relating to critical accounting policies and estimates in this
quarterly report on Form 10-Q. The following critical accounting policies are
significantly affected by judgments, assumptions and estimates used in the
preparation of the financial statements:
THE SIGNIFICANT ACCOUNTING POLICIES FOLLOWED ARE:
SOFTWARE DEVELOPMENT COSTS AND CAPITAL TECHNOLOGY
The Company accounts for software development costs in accordance with several
accounting pronouncements, including FASB ASC 730, Research and Development,
FASB ASC 350-40, Internal-Use Software, FASB 985-20, Costs of Computer Software
to be Sold, Leased, or Marketed and FASB ASC 350-50, Website Development Costs.
The Company has capitalized the cost of the technology license purchased from an
unrelated third party. At the time of purchase the technology was available to
be marketed. As such additional costs to customize, modify and betterment to the
existing product was charged to expense as it was incurred Capitalized software
costs are stated at cost. The estimated useful life of costs capitalized is
evaluated for each specific project and is currently being amortized over five
years. Amortization is computed on a straight line basis. The carrying amount of
all long-lived assets is evaluated periodically to determine if adjustment to
the amortization period or the unamortized balance is warranted. Based upon its
most recent analysis, the Company believes that no impairment of the proprietary
software existed at May 31, 2012 or May 31, 2011.
17
Expenditures for software development costs incurred and expensed for the years
ended May 31, 2012 and May 31, 2011 was approximately $6,300 and none
respectively.
REVENUE RECOGNITION
The Company recognizes revenue on arrangements in accordance with FASB ASC No.
605, Revenue Recognition. In all cases, revenue is recognized only when the
price is fixed or determinable, persuasive evidence of an arrangement exists,
the service is performed and collectability is reasonably assured.
Consideration for future services are made by customers in advance of those
services being provided. All accounts are currently on a month to month service,
therefore revenue is recognized ratably over the period that the services are
subscribed, the current month. The Company does not offer annual or other term
agreements; therefore there is no unearned portion or deferral of revenue.
Services are billed in advance of the period those services are provided.
The Company has not issued guarantees or other warrantees on the advertising
subscription success or results. The Company has not experienced any refund
requests or committed to any adjustments for terminated subscriptions. The
Company does not believe that there is any required liability.
IMPAIRMENT OF LONG-LIVED AND INTANGIBLE ASSETS
Long-lived and intangible assets are reviewed for impairment whenever events or
changes in circumstances indicate that the book value of the asset may not be
recoverable. The Company periodically evaluates whether events and circumstances
have occurred that indicate possible impairment. When impairment indicators
exist, the Company uses market quotes, if available or an estimate of the future
undiscounted net cash flows of the related asset or asset group over the
remaining life in measuring whether or not the asset values are recoverable.
There have been no significant impairments of long-lived and intangible assets
during the two-year period ended February 29, 2012.
TAXES
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
resulting from temporary differences. Such temporary differences result from
differences in the carrying value of assets and liabilities for tax and
financial reporting purposes. The deferred tax assets and liabilities represent
the future tax consequences of those differences, which will either be taxable
or deductible when the assets and liabilities are recovered or settled.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized.
As of May 31, 2012, the Company had no unrecognized tax benefits or related
interest and penalties. We will include future interest and penalties associated
with any unrecognized benefits within provision for income taxes on the
Statements of Operations, if applicable. We do not anticipate any unrecognized
benefits in the next 12 months that would result in a material change to our
financial position.
NEW ACCOUNTING PRONOUNCEMENTS
For a description of recent accounting standards, including the expected dates
of adoption and estimated effects, if any, on our financial statements, see
"Note 3: Recent Accounting Pronouncements" in Part I, Item 1 of this Form 10-Q.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
18
ITEM 4(T). CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including
our President and our Chief Accounting Officer, carried out an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act.
Management conducted its evaluation based on the framework in INTERNAL CONTROL
OVER FINANCIAL REPORTING GUIDANCE FOR SMALLER PUBLIC COMPANIES issued by the
Committee on Sponsoring Organizations of the Treadway Commission (COSO). Based
upon such evaluation, the President and Chief Accounting Officer have concluded
that, as of the end of such period, the Company's disclosure controls and
procedures were not effective as required under Rules 13a-15(e) and 15d-15(e)
under the Exchange Act. This conclusion by the Company's President and Chief
Accounting Officer does not relate to reporting periods after May 31, 2012.
Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in our reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in our
reports filed or submitted under the Exchange Act is accumulated and
communicated to management, including our President and Chief Accounting
Officer, or persons performing similar functions, as appropriate, to allow
timely decisions regarding required disclosure.
LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS
Our disclosure controls and procedures are designed to provide reasonable, not
absolute, assurance that the objectives of our disclosure control system are
met. Because of inherent limitations in all control systems, no evaluation of
controls can provide absolute assurance that all control issues, if any, within
a company have been detected. Based on their evaluation as of the end of the
period covered by this report, management concluded that our disclosure controls
and procedures were sufficiently effective to provide reasonable assurance that
the objectives of our disclosure control system were met.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of
the Exchange Act) of the Company. Internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States of America.
The Company's internal control over financial reporting includes those policies
and procedures that (i) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company; (ii) provide reasonable assurance
that transactions are recorded as necessary to permit preparation of financial
statements in accordance with accounting principles generally accepted in the
United States of America, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and directors of
the Company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use or disposition of the
Company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies and procedures may deteriorate.
19
A material weakness is a deficiency, or combination of deficiencies, in internal
control over financial reporting such that there is a reasonable possibility
that a material misstatement of the Company's annual or interim financial
statements will not be prevented or detected on a timely basis.
The Chief Accounting Officer has determined that material weaknesses exist
during the three months ended May 31, 2012, due to the lack of an independent
Audit Committee, Financial Disclosure Controls, as well as a lack of segregation
of duties, i.e. all of the accounting tasks are performed by a single
individual. Currently, the Company's President reviews all transactions. Until
the Company raises additional capital, it cannot remediate these weaknesses.
We determined that our disclosure controls and procedures were ineffective at
May 31, 2012 and that we had material weaknesses in the design of our internal
control over financial reporting as of such date. We believe that we have
started the process of remediating the material weakness in our financial
reporting through the contracting with consultants to provide such services.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
No change in the Company's internal control over financial reporting occurred
during the year ended February 29, 2012, that materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.
PART II
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
During the three months ended May 31, 2012, there was no modification of any
instruments defining the rights of holders of the Company's common stock and no
limitation or qualification of the rights evidenced by the Company's common
stock as a result of the issuance of any other class of securities or the
modification thereof.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER MATTERS
None.
20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBIT INDEX
Sequentially
SEC Exhibit Reference Numbered
--------------------- --------
Certification of the Chief Financial Officer 31.1
Certification of the Chief Executive Officer 31.2
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbaenes-Oxley Act of 2002
of the Chief Financial Officer 32.1
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
Pursuant to Section 906 of the Sarbaenes-Oxley Act of 2002
of the Chief Executive Officer 32.2
Interactive data files pursuant to Rule 405 of Regulation S-T. 101
(b) Reports on Form 8-K None
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AMWEST IMAGING INCORPORATED
Date: July 23, 2012 By: /s/ Jason Gerteisen
----------------------------------
Jason Gerteisen, President
(Principle Executive Officer)
Date: July 23, 2012 By: /s/ Jason Gerteisen
----------------------------------
Jason Gerteisen Chief Financial
Officer (Principle Accounting
Officer)
2
