Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(D) of the Securities Exchange
Act of 1934
For the Fiscal Year Ended June 30, 2012
[ ] Transition Report Under Section 13 or 15(D) of the Securities Exchange
Act of 1934
SYNC2 NETWORKS CORP.
(Exact name of small business issuer in its charter)
Nevada 333-152551 26-1754034
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
5836 South Pecos Road, Suite 112
Las Vegas, NV 89120
(Address of principal executive offices)
1-778-707-3625
(Issuer's telephone number)
(Former name, former address and former fiscal year,
if changed since last report)
Securities registered under Section 12(b) of the Exchange Act:
None.
Securities registered under Section 12(g) of the Exchange Act:
Common Stock $0.001 par value.
Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. [ ]
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing 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 (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). YES [ ] NO [X]
Check if there is no disclosure of delinquent filers in response to Item 405 or
Regulation S-B contained in this form, and no disclosure will 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-KSB or any
amendment to this Form 10-K [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes [ ] No [X]
State issuer's revenues for its most recent fiscal year: $NIL
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. As of November 28, 2012 the issuer
had 103,046,175 shares of common stock issued and outstanding.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
CAUTIONARY STATEMENTS REGARDING FORWARD LOOKING INFORMATION
Except for statements of historical fact, certain information contained herein
constitutes `forward looking statements' within the meaning of Section 27A of
the securities Act and Section 21E of the Securities Exchange Act. Forward
looking statements address our current plans, intentions, beliefs and
expectations and are statements of our expected future economic performance.
Statements containing terms like `believes', `does not believe', `plans',
`expects', `intends', `estimates', `anticipates', and other phrases of similar
meaning or the negative or other variations of these words or other comparable
words or phrases are considered to imply uncertainty and are forward looking
statements.
Such forward looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results or achievements of the
Company to be materially different from any future results or achievements of
the Company expressed or implied by such forward looking statements. Such
factors include, but are not limited to changes in economic conditions,
government regulations, contract requirements and abilities, behavior of
existing and new competitor companies and other risks and uncertainties
discussed in this annual report on Form 10-K.
We cannot guarantee our future results, level of activity, performance or
achievements. Neither we nor any other person assumes responsibility for the
accuracy and completeness of these forward looking statements. We are under no
duty to update any of the forward looking statements after the date of this
report.
RISK FACTORS
Investment in our common stock involves a high degree of risk. Prospective
investors should carefully consider the following risk factors in addition to
other information in this annual report before purchasing our common stock.
Because we have a net loss from operations of $333,640 for the year ended June
30, 2012 and have accumulated losses of $2,874,604 from inception, we face a
risk of insolvency.
We have never earned substantial operating revenue. We have been dependent on
equity and debt financing to help pay operating costs and to help cover
operating losses.
Because we have a limited sales history our future is uncertain.
2
PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL INFORMATION
We were incorporated on January 16, 2008 under the laws of the state of Nevada
as Plethora Resources Inc. to commence operations in the business of consulting
to oil & gas exploration companies interested in obtaining exploration and
production licenses at auction for oil and gas properties in Russia. We were
unable to fund our intended business and, on May 28, 2009 but effective February
1, 2009, we acquired a wholly owned subsidiary, Sync2 International Ltd, for the
assumption of the debts of Sync2 Agency Ltd, a wholly owned subsidiary of Sync2
International Ltd. Sync2 Agency Ltd is an internet marketing and website
development company. On May 14, 2009 we changed our name to Sync2 Networks Corp.
(the `Company'). On December 15, 2009, the Company shut down the operations of
Sync2 Agency Ltd. after incurring substantial operating losses, and subsequently
wrote-off the investment in Sync2 Agency Ltd.
We have a total of 150,000,000 authorized common shares with a par value of
$0.001 per share. Of these, 103,046,175 common shares were issued and
outstanding as of June 30, 2012.
We completed a form S-1 Registration Statement under the Securities Act of 1933
with the U.S. Securities and Exchange Commission registering 34,850,000 shares
of our common stock on behalf of our selling shareholders.
BUSINESS DEVELOPMENT
We have sustained losses for the year ended June 30, 2010 of $333,640
Effective February 1, 2009 the Company acquired Sync2 International Ltd, a Malta
Corporation ("INTL"). The Company owns all of the shares of INTL. INTL owns all
of the shares of Sync2 Agency Ltd ("Agency"), a Canadian company located in
Vancouver and specializing in the area of internet marketing and website
development, among other things. Under the terms of the acquisition of INTL the
Company acquired 100% of the issued and outstanding shares of INTL for the
assumption of Cdn$767,333 in debts of Agency.
The Company has never declared bankruptcy, been in receivership, or been
involved in any kind of legal proceeding.
At this time the Company, its directors, officers and affiliates have not
entered negotiations or discussions with representatives or owners of any other
businesses or companies regarding the possibility of an acquisition or merger.
3
BUSINESS OF ISSUER
The Company engages in the business of acquiring and developing internet
marketing and web site development entities and/or their individual software
programs to assist third-party clients in marketing their products and in
maximizing the use of the internet to achieve those third-party clients'
ultimate business objectives.
Prior to the Company's purchase of assets for the assumption of debts of
Cdn$767,333 it had limited operations in this area and has since abandoned its
original business endeavors.
More recently the Sync2 Group has expanded its on-line business consulting
activities, by entering into a strategic alliance with prominent systems and
infrastructure providers such as "IBM" (attaining IBM Business Partner Status),
"Apple" (a part of the I-phone Developer Program), and more complex tri-partite
business arrangements with Telus Communications Company and Cisco Systems
developing specialized industry-specific software applications.
This new orientation compliments its existing on-line asset management, on-going
maintenance and support endeavors, and on-line systems analysis business,
permitting Sync2 to broaden its business activities throughout Canada and the
rest of the world, in turn creating the potential for the development of a more
unique array of products and services in an industry with growth potential.
PATENTS AND TRADE MARKS
To date there are no aspects of our business plan that require a patent or
trademark or product licence. We have not entered into any vendor agreements or
contracts that give or could give rise to any obligations or concessions for
patents or trademarks.
RESEARCH AND DEVELOPMENT
During the last three fiscal years no time was spent on specialized research and
development activities and has no plans are contemplated in the future .
EMPLOYEES AND EMPLOYMENT AGREEMENTS
As of June 30, 2012, we have no employees but have a liability for unpaid wages
and severance pay allowance of approximately $50,000 which is reflected in the
June 30, 2012 Financial Statements. Our officers and directors will handle our
administrative duties.
REPORTS TO SECURITY HOLDERS
Sync2 will voluntarily make available an annual report including annual
financial statements on Form 10K to security holders.We will file the necessary
reports with the SEC pursuant to the Exchange Act, including but not limited to,
reguired reports of material changes in the Company's business of Form
8-K.annual reports of Form 10-K and quarterly reports on FORM 10-Q.
The SEC maintains an Internet site that contains reports, proxy and information
statements and other electronic information regarding SYNC2 and filed at
hhtp://www.sec.gov.
4
ITEM 2. DESCRIPTION OF PROPERTY
Sync2 Network's principal place of business and corporate offices is located at
5836 South Pecos Road, Suite 112, Las Vegas, NV 89120 and our phone number is
778-707-3625.
We do not have any investments or interests in any real estate. We do not invest
in real estate mortgages, nor do we invest in securities of, or interests in,
persons primarily engaged in real estate activities or any other securities.
ITEM 3. LEGAL PROCEEDINGS
We are not currently involved in any legal proceedings nor do we have any
knowledge of any threatened litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
No change since previous filing.
The Company has filed with the SEC an S-1 registration statement July 25, 2008
and quarterly reports (form 10Q) for September and December 2008 and for March,
2009. This is the Company's first annual report (form 10K).
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND SMALL
BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES
SECURITIES
Our common stock is currently quoted on the OTC Bulletin Board under the symbol
"SYNW".
As of October 28, 2012 we have 103,465.275 shares of $0.001 par value common
stock issued and outstanding held by approximately 29 shareholders of record.
The stock transfer agent for our securities is:
Island Stock Transfer Company
100 Second Avenue South, Suite 705S, St. Petersburg, Florida 33701
Tel: (727) 289-0010
DIVIDENDS
On May 14, 2009 the Company forward split its issued shares of common stock on
the basis of 17 new shares for 1 old share by the issuance of 80,800,000 shares
pro rata to its existing shareholders as a stock dividend. At the same time the
Company changed its name from Plethora Resources Inc. to Sync2 Networks Corp and
increased its authorized share capital to 150,000,000 common shares.
5
There are no restrictions in our articles of incorporation or bylaws that
prevent us from declaring dividends. The Nevada Statutes, however, do prohibit
us from declaring cash dividends where, after giving effect to the distribution
of the dividend:
1. we would not be able to pay our debts as they become due in the usual
course of business; or
2. our total assets would be less than the sum of our total liabilities
plus the amount that would be needed to satisfy the rights of
shareholders who have preferential rights superior to those receiving
the distribution.
RECENT SALES OF UNREGISTERED SECURITIES
There were 17,196,175 share issuances during the year ended June 30, 2010 as
shares for debt for cash consideration of $17,196 and settlement of a debt of
$670,651.
On April 15, 2008 the Company issued 51,000,000 shares of common stock for cash
of $3,000 and on April 24, 2008 the Company issued 22,100,000 shares of common
stock for cash of $6,800 and additionally, on May 28, 2008 the Company issued
12,750,000 shares of common stock for cash of $15,000. No discounts or
commissions were paid in connection with these offerings. These offerings were
undertaken pursuant to the limited offering exemption from registration under
the Securities Act of 1933 as provided under Regulation D and Regulation S as
promulgated by the U.S. Securities and Exchange Commission. The offering was
made to "accredited investors." As a result, offers were made only to persons
that the Company believed, and had reasonable grounds to believe, either (a)
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of the proposed investment, or (b)
can bear the economic risks of the proposed investment (that is, at the time of
investment, could afford a complete loss) and (c) were non US residents.
ITEM 7. PLAN OF OPERATION
RESULTS OF OPERATIONS
We have generated $520,572 in revenues since inception ($nil for the period from
inception January 16, 2008 to June 30, 2008) and have incurred $2,136,106 in
expenses since inception through June 30, 2012.
The following table provides selected financial data about our company for the
year ended June 30, 2012.
Balance Sheet Data: June 30, 2012 June 30, 2010
------------------- ------------- -------------
Cash $ 0 $ 0
Total assets $ 0 $ 0
Total liabilities $ 1,120,982 $ 1,073,877
Shareholders' equity (deficit) $(2,119,662) $(1,750,022)
6
PLAN OF OPERATION
Statements contained herein which are not historical facts are forward-looking
statements as that term is defined by the Private Securities Litigation Reform
Act of 1995. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, forward-looking statements are
subject to risks and uncertainties that could cause actual results to differ
from those projected. The Company cautions investors that any forward-looking
statements made by the Company are not guarantees of future performance and
actual results may differ materially from those in the forward-looking
statements. Such risks and uncertainties include, without limitation:
established competitors who have substantially greater financial resources and
operating histories, regulatory delays or denials, ability to compete as a
start-up company in a highly competitive market, and access to sources of
capital.
The following discussion and analysis should be read in conjunction with our
financial statements and notes thereto included elsewhere in this Form 10-K.
With the exception of the historical information contained herein, the
discussion in this Form 10-K contains certain forward-looking statements that
involve risks and uncertainties, such as statements of our plans, objectives,
expectations and intentions. The cautionary statements made in this Form 10-K
should be read as being applicable to all related forward-looking statements
wherever they appear in this Form 10-K.
The Company's actual results could differ materially from those discussed here.
Over the course of the next twelve months Sync2 intends to continue with its
plan of business development and operations to assist companies, organizations
and individuals (collectively the "clients") in establishing, building,
maintaining and marketing the clients' online businesses.
If the Company is unable to meet its needs for cash it will be unable to
continue, develop, or expand its operations.
While the officers and directors have generally indicated a willingness to
provide services and financial contributions if necessary, there are presently
no agreements, arrangements, commitments, or specific understandings, either
verbally or in writing, between the officers and directors and Sync2.
If we are unable to pay for our expenses because we do not have enough money, we
may be forced to cease active operations until we are able to secure additional
financing. If we cannot or do not secure additional financing we may be forced
to cease active business operations.
LIMITED OPERATING HISTORY; NEED FOR ADDITIONAL CAPITAL
There is no historical financial information about us upon which to base an
evaluation of our performance. We cannot guarantee we will be successful in our
business operations. Our business is subject to risks inherent in the
establishment of a new business enterprise, including limited capital resources
and possible cost overruns due to price and cost increases in services,
supplies, and equipment.
7
We have no assurance that future financing will be available to us on acceptable
terms. If financing is not available on satisfactory terms, we may be unable to
continue, develop or expand our operations. Equity financing could result in
additional dilution to existing shareholders.
LIQUIDITY AND CAPITAL RESOURCES
We cannot guarantee that we will have enough funds to forward our business plan.
If that is the case, we will attempt to raise additional money by way of loans
from officers of the Company, loans from third-parties, and/or sale(s) of
additional securities. Additional equity financing would result in additional
dilution to our existing shareholders.
At the present time, we have not made any arrangements to raise additional cash.
If we need additional cash and cannot raise it, we will either have to suspend
operations until we do raise the cash, or cease operations entirely. Other than
as described in this paragraph, we have no other financing plans.
Since inception of the Company on January 16, 2008 to June 30, 2010 the Company
has issued shares for cash as follows:
* On April 15, 2010 the Company issued 17,196,175 shares of common stock
for cash of $17,916 and the forgiveness of debt of $670,651
* On April 15, 2008 the Company issued 51,000,000 shares of common stock
for cash of $3,000 and
* On April 24, 2008 the Company issued 22,100,000 shares of common stock
for cash of $6,800 and
* On May 28, 2008 the Company issued 12,750,000 shares of common stock
for cash of $15,000.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
Our financial statements have been prepared on a going concern basis. We have
accumulated a deficit from operations of $ 2,119,662 as of June 30, 2012. Our
ability to continue as a going concern is dependent upon our ability to generate
profitable operations in the future and/or to obtain the necessary financing to
meet our obligations and repay our liabilities arising from normal business
operations when they come due. The outcome of these matters cannot be predicted
with any certainty at this time. We have historically satisfied our working
capital needs primarily by sales of securities and by loans from investors.
8
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The company had no independent accountant review the financials for this period,
in accordance with Rule 3-11 of Regulation S-X
Sync2 Networks Corp
June 30, 2012
BALANCE SHEET
STATEMENTS OF OPERATIONS
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
STATEMENTS OF CASH FLOWS
NOTES TO THE FINANCIAL STATEMENTS
9
Sync2 Networks Corp
(formerly Plethora Resources, Inc.)
Balance Sheet
June 30, 2012
(Unaudited)
2012 2010
------------ ------------
CURRENT ASSETS
Cash $ -- $ --
Accounts receivable -- 36,202
Work in process -- --
------------ ------------
TOTAL CURRENT ASSETS -- 36,202
------------ ------------
FIXED ASSETS
GOODWILL
------------ ------------
TOTAL ASSETS $ -- $ 36,202
============ ============
CURRENT LIABILITES
Accounts payable $ 516,245 $ 294,806
Due to related parties 604,737 779,071
------------ ------------
TOTAL CURRENT LIABILITIES 112,098 1,073,877
------------ ------------
TOTAL LIABILITIES 112,098 1,073,877
------------ ------------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock
Authorized: 150,000,000: par value $0.001 per share
103,046,175 as of June 30, 2012 and
85,850,000 as of June 30, 2009
Issued: 103,046 103,046
Additional paid-in capital (deficiency) 609,301 609,301
Deficit accumulated during exploration stage (1,833,329) (1,786,224)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (1,120,982) (1,073,877)
------------ ------------
TOTAL LIABILTIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ -- $ 36,202
============ ============
The accompanying notes are an integral part of these financial statements
10
Sync2 Networks Corp
(formerly Plethora Resources, Inc.)
(A Development Stage Company)
Statements of Operations for the Year Ended June 30, 2010 and
Period Ended June 30, 2009 and for the period from January 16, 2008
(date of inception) to June 30, 2012
(Unaudited)
Cumulative
Results of
Operations From
the Date of
Inception to
Year ended June 30,
2010 2012
------------ ------------
REVENUES $ 354,191 $ 556,774
------------ ------------
Salaries and benefits 523,494 693,176
Rent 142,851 199,621
Marketing 31,831 46,451
Foreign exchange 11,478 17,386
Amortization 161,184 217,482
Transfer agent fees 24,358 26,166
Professional fees 52,180 67,360
Management fees 133,822 189,997
Administrative Fees 182,083 182,083
Financial consulting 33,572 49,450
Travel/Meals and Lodging 5,806 10,448
General and Administration 86,923 139,048
------------ ------------
TOTAL OPERATING COSTS 1,389,582 1,838,668
------------ ------------
Loss from operations before taxes (1,035,391) (1,281,894)
Net loss from the write-off of assets and
liabilities of the subsidiary (468,128) (468,128)
------------ ------------
NET LOSS FOR THE YEAR (1,503,519) (1,750,022)
============ ============
Basic and diluted earnings (loss) per share $ (0.00)
Weighted average number of common shares outstanding 103,046,175
The accompanying notes are an integral part of these financial statements
11
Sync2 Networks Corp
(formerly Plethora Resources, Inc.)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
From Inception January 16, 2008 to June 30, 2012
(Unaudited)
Deficit
Common Stock Accumulated
-------------------------- Additional During the
Number of Paid-in Development Subscription
shares Amount Capital Stage (Receivable) Total
------ ------ ------- ----- ------------ -----
Balance at inception
January 16, 2008 -- $ -- $ -- $ -- $ -- $ --
Common stock issued for cash:
- April 15, 2008 51,000,000 51,000 (48,000) -- -- 3,000
- April 24, 2008 22,100,000 22,100 (15,600) -- -- 6,500
- May 28, 2008 12,750,000 12,750 2,250 -- -- 15,000
----------- ---------- ---------- ----------- ---- -----------
Net loss for the period ended
June 30, 2008 -- -- -- (1,283) -- (1,283)
----------- ---------- ---------- ----------- ---- -----------
Balance June 30, 2008 85,850,000 85,850 (61,350) (1,283) -- 23,217
Net loss for the year ended
June 30, 2009 -- -- -- (245,220) -- (245,220)
----------- ---------- ---------- ----------- ---- -----------
Balance June 30, 2009 85,850,000 85,850 (61,350) (246,503) -- (222,003)
----------- ---------- ---------- ----------- ---- -----------
Common stock issued
April 1, 2010 17,196,175 17,196 670,651 -- -- --
Net loss for the year
ended June 30, 2010 -- -- -- (1,503,519) -- (1,503,519)
----------- ---------- ---------- ----------- ---- -----------
Balance June 30, 2010 103,046,175 $ 103,046 $ 609,301 $(1,750,022) $ -- $(1,750,022)
=========== ========== ========== =========== ==== ===========
The accompanying notes are an integral part of these financial statements
12
Sync2 Networks Corp
(formerly Plethora Resources, Inc.)
(A Development Stage Company)
Statements of Cash Flows
For the Year Ended June 30, 2010 and for the Year Ended June 30, 2009
and for the period from January 16, 2008 (date of inception) to
June 30, 2012
(Unaudited)
Cumulative
Results of
Operations
From the Date
Year Ended of Inception to
June 30, June 30,
2010 2012
------------ ------------
OPERATING ACTIVITIES
Net loss
Adjustments to reconcile net loss to net cash
used in operating activities: $ (1,503,519) $ (1,750,022)
Non cash expense - Amortization
- Foreign exchange
Increase in deferred revenue (7,684)
Increase in accounts receivable 14,912 (36,202)
Increase in work in process 17,650
Increase (decrease) in accounts payable 135,178 294,806
Increase in due to related parties 15,716 779,071
------------ ------------
NET CASH USED IN OPERATING ACTIVITIES (1,327,747) (712,347)
------------ ------------
INVESTING ACTIVITIES
Fixed assets 129,492 --
Goodwill 492,706 --
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES 622,198 --
------------ ------------
FINANCING ACTIVITIES
Common stick issued for debt settlement 670,651 609,301
Proceeds from sale of common stock 17,196 103,046
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 687,847 712,347
------------ ------------
EFFECT OF FOREIGN EXCHANGE ON CASH -- (4,104)
NET INCREASE (DECREASE) IN CASH (17,702) --
CASH, BEGINNING OF PERIOD 17,702 --
------------ ------------
CASH, END OF PERIOD $ -- $ --
============ ============
SUPPLEMENTAL CASH FLOW INFORMATION AND
NONCASH FINANCING ACTIVITIES:
Interest paid $ -- $ --
Income taxes paid $ -- $ --
Common stock issued for services $ -- $ --
The accompanying notes are an integral part of these financial statements
13
Sync2 Networks Corp
(formerly Plethora Resources, Inc.)
(A Development Stage Company)
Notes to the Financial Statements
June 30, 2010
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION AND NATURE OF BUSINESS AND ORGANIZATION
Sync2 Networks Corp (the "Company") was formed on January 16, 2008 in the State
of Nevada under the name Plethora Resources, Inc. as a development stage
company. The Company was originally organized to engage in the business of
consulting to oil & gas exploration companies interested in obtaining
exploration and production licenses at auction for oil and gas properties in
Russia.
On June 25, 2009 the Company purchased the assets and business of Sync2
International Ltd. in exchange for the assumption of all outstanding debts of
Sync2 Agency Ltd. ("Agency". Agency is a wholly owned subsidiary of Sync2
International Ltd., a web development and web property management company.
Effective May 14, 2009 the Company changed its name to Sync2 Networks Corp. On
December 15, 2009, the Company shut down the operations of Sync2 Agency Ltd
after incurring substantial losses.
The Company's business plan is to be an interactive marketing firm that designs,
builds, implements and optimizes strategic interactive web networks and internet
marketing programs that acquire, convert and retain customers for clients.
The Company is considered to be in the development stage as defined in Statement
of Financial Accounting Standards (SFAS) No. 7, "ACCOUNTING AND REPORTING BY
DEVELOPMENT STAGE ENTERPRISES". The Company has devoted substantially all of its
efforts to business planning and development, as well as allocating a
substantial portion of its time and investment in bringing product(s)/services
to the market, and the raising of capital.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
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NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
START-UP COSTS
In accordance with the American Institute of Certified Public Accountants
Statement of Position 98-5, "REPORTING ON THE COSTS OF START-UP ACTIVITIES", the
Company expenses all costs incurred in connection with the start-up and
organization of the Company.
INCOME TAXES
The Company follows the liability method of accounting for income taxes. Under
this method, deferred tax assets and liabilities are recognized for deductible
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.
EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Historical net loss per common share is computed using the weighted average
number of common shares outstanding. Diluted earnings (loss) per share reflect
the potential dilution of securities that could share in the earnings of the
Company. Because the Company does not have any potential dilutive securities,
the accompanying presentation reflects the basic loss per share calculated as
follows:
2012 2010
------------- -------------
Numerator: Net loss $ (333,640) $ (1,503,519)
------------- -------------
Denominator: Weighted average number
of shares issued 103,046,175 103,046,175
Earnings (loss) per share $ (0.00) $ (0.00)
------------- -------------
RECENT ACCOUNTING PRONOUNCEMENTS
In March, 2008, the FASB issued SFAS No. 161, "DISCLOSURES ABOUT DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES", as an amendment of FASB Statement No. 133.
SFAS 161 requires entities utilizing derivative instruments to provide
qualitative disclosures about their objectives and strategies for using such
instruments, as well as details of credit-risk-related contingent features
contained within derivatives. SFAS 161 also requires entities to disclose
additional information about the amounts and location of derivatives located
within the financial statements, how the provisions of SFAS No. 133 have been
applied and the impact that hedges have on an entity's financial position,
financial performance and cash flows. SFAS No. 161 is effective for fiscal years
and interim periods beginning after November 15, 2008. Early application is
encouraged. The Company does not have or utilize any derivative instruments
and/or hedging activities and therefore SFAS 161 is not expected to have an
impact on the Company's financial statements.
15
RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
In May 2008, the FASB issued Statement of Financial Accounting Standard ("SFAS")
No. 162, "THE HIERARCHY OF GENERALLY ACCEPTED ACCOUNTING PRINCIPLES". SFAS 162
identifies the sources of accounting principles and the framework for selecting
the principles used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles (GAAP) in the United States. SFAS 162 is
effective 60 days following the SEC's approval of the Public Company Accounting
Oversight Board amendments to AU Section 411, `The Meaning of Present Fairly in
Conformity With Generally Accepted Accounting Principles'. The Company is
currently evaluating the impact of SFAS 162 on its financial statements but does
not expect it to have a material effect.
In May 2008, the FASB issued Statement of Financial Accounting Standard ("SFAS")
No. 163, "ACCOUNTING FOR FINANCIAL GUARANTEE INSURANCE CONTRACTS - AN
INTERPRETATION OF FASB STATEMENT NO. 60" ("SFAS 163"). SFAS 163 interprets
Statement 60 and amends existing accounting pronouncements to clarify their
application to the financial guarantee insurance contracts included within the
scope of that Statement. SFAS 163 is effective for financial statements issued
for fiscal years beginning after December 15, 2008, and all interim periods
within those fiscal years. As such, the Company is required to adopt these
provisions at the beginning of the fiscal year ended June 30, 2010. The Company
is currently evaluating the impact of SFAS 162 on its financial statements but
does not expect it to have a material effect.
In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, DETERMINING
WHETHER INSTRUMENTS GRANTED IN SHARE-BASED PAYMENT TRANSACTIONS ARE
PARTICIPATING SECURITIES, ("FSP EITF 03-6-1"). FSP EITF 03-6-1 addresses whether
instruments granted in share-based payment transactions are participating
securities prior to vesting, and therefore need to be included in the
computation of earnings per share under the two-class method as described in
FASB Statement of Financial Accounting Standards No. 128, "Earnings per Share."
FSP EITF 03-6-1 is effective for financial statements issued for fiscal years
beginning on or after December 15, 2008 and earlier adoption is prohibited. We
are not required to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF
03-6-1 would have a material effect on our consolidated financial position and
results of operations if adopted.
In September 2008, the FASB issued exposure drafts that eliminate qualifying
special purpose entities from the guidance of SFAS No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities,"
and FASB Interpretation 46 (revised December 2003), "Consolidation of Variable
Interest Entities - an interpretation of ARB No. 51," as well as other
modifications. While the proposed revised pronouncements have not been finalized
and the proposals are subject to further public comment, the Company anticipates
the changes will not have a significant impact on the Company's financial
statements. The changes would be effective March 1, 2010, on a prospective
basis.
In October 2008, the FASB issued FSP No. FAS 157-3, "Determining the Fair Value
of a Financial Asset When the Market for That Asset is Not Active," ("FSP FAS
157-3"), which clarifies application of SFAS 157 in a market that is not active.
FSP FAS 157-3 was effective upon issuance, including prior periods for which
financial statements have not been issued. The adoption of FSP FAS 157-3 had no
impact on the Company's results of operations, financial condition or cash
flows.
In December 2008 the FASB issued FSP FAS 140-4 and FIN 46(R)-8, "Disclosures by
Public Entities (Enterprises) about Transfers of Financial Assets and Interests
in Variable Interest Entities." This disclosure-only FSP improves the
transparency of transfers of financial assets and an enterprise's involvement
16
RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED)
with variable interest entities, including qualifying special-purpose entities.
This FSP is effective for the first reporting period (interim or annual) ending
after December 15, 2008, with earlier application encouraged. The Company
adopted this FSP effective January 1, 2009. The adoption of the FSP had no
impact on the Company's results of operations, financial condition or cash
flows.
In December 2008 the FASB issued FSP No. FAS 132(R)-1, "Employers' Disclosures
about Postretirement Benefit Plan Assets" ("FSP FAS 132(R)-1"). FSP FAS 132(R)-1
requires additional fair value disclosures about employers' pension and
postretirement benefit plan assets consistent with guidance contained in SFAS
157. Specifically, employers will be required to disclose information about how
investment allocation decisions are made, the fair value of each major category
of plan assets, and information about the inputs and valuation techniques used
to develop the fair value measurements of plan assets. This FSP is effective for
fiscal years ending after December 15, 2009. The Company does not expect the
adoption of FSP FAS 132(R)-1 will have a material impact on its financial
condition or results of operation.
In April 2009, the FASB issued FSP No. FAS 157-4, "Determining Fair Value When
the Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly" ("FSP FAS 157-4").
FSP FAS 157-4 provides guidance on estimating fair value when market activity
has decreased and on identifying transactions that are not orderly.
Additionally, entities are required to disclose in interim and annual periods
the inputs and valuation techniques used to measure fair value. This FSP is
effective for interim and annual periods ending after June 15, 2009. The Company
does not expect the adoption of FSP FAS 157-4 will have a material impact on its
financial condition or results of operation.
The implementation of these new standards is not expected to have a material
effect on the Company's financial statements.
NOTE 3 - PROVISION FOR INCOME TAXES
Deferred income taxes will be determined using the liability method for the
temporary differences between the financial reporting basis and income tax basis
of the Company's assets and liabilities. Deferred income taxes will be measured
based on the tax rates expected to be in effect when the temporary differences
are included in the Company's tax return. Deferred tax assets and liabilities
are recognized based on anticipated future tax consequences attributable to
differences between financial statement carrying amounts of assets and
liabilities and their respective tax bases. For the year ended June 30, 2012 the
provision for income taxes was $0.00.
NOTE 4 - GOING CONCERN
As shown in the accompanying financial statements, the Company incurred
substantial net losses for the year ended June 30, 2012 and has no revenue
stream to support itself. This raises doubt about the Company's ability to
continue as a going concern.
The Company's future success is dependent upon its ability to raise additional
capital to fund its business plan and ultimately to attain profitable
operations. There is no guarantee that the Company will be able to raise enough
17
capital or generate sufficient revenues to sustain its operations. Management
believes they can raise the appropriate funds needed to support their business
plan.
The financial statements do not include any adjustments relating to the
recoverability or classification of recorded assets and liabilities that might
result should the Company be unable to continue as a going concern.
NOTE 5 - FIXED ASSETS
2010/2012 Accumulated
Cost Amortization Net
---- ------------ ---
Computer equipment $ -- $ -- $ --
Leasehold improvements -- -- --
----- ----- -----
$ -- $ -- $ --
INTANGIBLE ASSET - GOODWILL
Effective February 1, 2009 the Company acquired the equipment and business of
eDevlin Architects at a cost of $643,585. Identifiable assets were valued at
their book value of $142,088 resulting in an excess cost over book value of
$501,497 recorded as goodwill with amortization of $41,791 claimed to June 30,
2009. The goodwill is being amortized over five years and is tested for
impairment annually. The Company recorded amortization of $41,791 during the
year ended June 30, 2009 (for the five months commencing February 1, 2009).
Effective June 30, 2010, the Company had written off this investment.
NOTE 6 - STOCKHOLDERS' EQUITY
COMMON STOCK
On April 15, 2010 the Company issued 17,969,175 shares of common stock for cash
of $17,916 and the forgiveness of debt of $670,651 On April 15, 2008 the Company
issued 51,000,000 shares of common stock for cash of $3,000; and On April 24,
2008 the Company issued 22,100,000 shares of common stock for cash of $6,800;
and On May 28, 2008 the Company issued 12,750,000 shares of common stock for
cash of $15,000.
Effective May 14, 2009 the Company forward split its issued shares of common
stock on the basis of seventeen new shares for one old share (17:1). All share
issuances referred to in these financial statements are post forward split.
NOTE 7 - DUE TO RELATED PARTIES
The Company owes $604,737 to a company with a shareholder who is also a
shareholder of the Company. The loan is unsecured, does not bear interest and
has no fixed terms of repayment.
18
ITEM 9. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
The company had no independent accountant review the financials for this period,
in accordance with Rule 3-11 of Regulation S-X
ITEM 9A. CONTROLS AND PROCEDURES
Our management, on behalf of the Company, has considered certain internal
control procedures as required by the Sarbanes-Oxley ("SOX") Section 404 A which
accomplishes the following:
Internal controls are mechanisms to ensure objectives are achieved and are under
the supervision of the Company's Chief Executive Officer, and Chief Financial
Officer, being John Moore. Good controls encourage efficiency, compliance with
laws and regulations, sound information, and seek to eliminate fraud and abuse.
These control procedures provide reasonable assurance regarding the reliability
of financial reporting and the preparation of the Company's financial statements
for external purposes in accordance with U.S. generally accepted accounting
principles.
Internal control is "everything that helps one achieve one's goals - or better
still, to deal with the risks that stop one from achieving one's goals."
Internal controls are mechanisms that are there to help the Company manage risks
to success.
Internal controls is about getting things done (performance) but also about
ensuring that they are done properly (integrity) and that this can be
demonstrated and reviewed (transparency and accountability).
In other words, control activities are the policies and procedures that help
ensure the Company's management directives are carried out. They help ensure
that necessary actions are taken to address risks to achievement of the
Company's objectives. Control activities occur throughout the Company, at all
levels and in all functions. They include a range of activities as diverse as
approvals, authorizations, verifications, reconciliations, reviews of operating
performance, security of assets and segregation of duties.
As of June 30, 2012, the management of the Company assessed the effectiveness of
the Company's internal control over financial reporting based on the criteria
for effective internal control over financial reporting established in Internal
Control--Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting
such assessments. Management concluded, during the year ended June 30, 2012,
internal controls and procedures were not effective to detect the inappropriate
application of US GAAP rules. Management realized there are deficiencies in the
design or operation of the Company's internal control that adversely affected
the Company's internal controls which management considers to be material
weaknesses.
In the light of management's review of internal control procedures as they
relate to COSO and the SEC the following were identified:
* The Company's Audit Committee does not function as an Audit Committee
should since there is a lack of independent directors on the
Committee,
19
* The Company has limited segregation of duties which is not consistent
with good internal control procedures.
* The Company does not have a written internal control procedurals
manual which outlines the duties and reporting requirements of the
Directors and any staff to be hired in the future. This lack of a
written internal control procedurals manual does not meet the
requirements of the SEC or good internal control.
* There are no effective controls instituted over financial disclosure
and the reporting processes.
Management feels the weaknesses identified above, being the latter three, have
not had any effect on the financial results of the Company. Management will have
to address the lack of independent members on the Audit Committee and identify
an "expert" for the Committee to advise other members as to correct accounting
and reporting procedures.
The Company and its management will endeavor to correct the above noted
weaknesses in internal control once it has adequate funds to do so. By
appointing independent members to the Audit Committee and using the services of
an expert on the Committee will greatly improve the overall performance of the
Audit Committee. With the addition of other Board Members and staff the
segregation of duties issue will be address and will no longer be a concern to
management. By having a written policy manual outlining the duties of each of
the officers and staff of the Company will facilitate better internal control
procedures.
Management will continue to monitor and evaluate the effectiveness of the
Company's internal controls and procedures and its internal controls over
financial reporting on an ongoing basis and are committed to taking further
action and implementing additional enhancements or improvements, as necessary
and as funds allow.
ITEM 9A(T). CONTROLS AND PROCEDURES
There were no changes in the Company's internal controls or in other factors
that could affect its disclosure controls and procedures subsequent to the
Evaluation Date, nor any deficiencies or material weaknesses in such disclosure
controls and procedures requiring corrective actions.
ITEM 9B. OTHER INFORMATION
There are no matters required to be reported upon under this Item.
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS AND
CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Directors are elected by the stockholders to a term of one year and serve until
their successor is elected and qualified. Officers are elected by the Board of
Directors to a term of one year and serve until their successor is duly elected
and qualified, or until they are removed from office. The Board of Directors has
no nominating, auditing or compensation committees.
20
The name, address, age and position of our officers and director is set forth
below:
Name and Address Age Position(s)
---------------- --- -----------
John Moore* 55 CEO,CFO, Director
Helen Siwak** 43 (former) CFO, CEO, Director
----------
* John Moore has held the offices/positions since September 23,2009 and is
expected to hold said offices/positions until the next annual meeting of
our stockholders.
** Helen Siwak held her offices/positions since May 18 2009 and resigned
September 23, 2009.
BACKGROUND INFORMATION ABOUT OUR OFFICERS AND DIRECTORS
John Moore has over 30 of experience in finance, business management financial
analysis, strategic planning and a strong understanding of computer applications
and managing public companies. He has had extensive experience as a CEO, CFO,
Controller of both private and public companies both in USA and Canada. He was
instrumental in raising $18 million of equity and debt financing. John Moore was
the founder and president of Flameret Inc which now is an OTC listed company. He
was the CFO/Director of Image Power another OTC listed company. He has been the
CFO/Director of Real American Show Down/USA Karaoke Championship. John has also
been in numerous start-up companies that required financing one of interest was
Rim-Bra Brake System that needed funding to build a manufacturing plant in Port
Alberni He has owned his own consulting company since 1983 to provide a broad
range of services.
Helen Siwak has over twenty years management experience, with a principal
emphasis on the entertainment industry. Ms. Siwak was the founder and President
of Realia Music Ltd., an early innovator in the area of the digital production
and delivery of music for use in film and television synchronization licensing,
and was principally responsible for the development of Realia's delivery
software. Prior to her work with Realia, Ms. Siwak worked for a number of years
in film, television and music where she was involved in virtually all areas of
production and management. Ms. Siwak's corporate work includes having worked
with a leading Canadian law firm in the areas of corporate finance and licensing
law. Ms. Siwak presently resides in Athens, Greece.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
To our knowledge, during the past five years, no present or former director or
executive officer of our company: (1) filed a petition under the federal
bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or
similar officer appointed by a court for the business or present of such a
person, or any partnership in which he was a general partner at or within two
years before the time of such filing, or any corporation or business association
of which he was an executive officer within two years before the time of such
filing; (2) was convicted in a criminal proceeding or named subject of a pending
criminal proceeding (excluding traffic violations and other minor offenses); (3)
was the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining him from or otherwise limiting the following activities:
21
(i) acting as a futures commission merchant, introducing broker, commodity
trading advisor, commodity pool operator, floor broker, leverage transaction
merchant, associated person of any of the foregoing, or as an investment
advisor, underwriter, broker or dealer in securities, or as an affiliated
person, director of any investment company, or engaging in or continuing any
conduct or practice in connection with such activity; (ii) engaging in any type
of business practice; (iii) engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of federal or state securities laws or federal commodity laws; (4) was
the subject of any order, judgment or decree, not subsequently reversed,
suspended or vacated, of any federal or state authority barring, suspending or
otherwise limiting for more than 60 days the right of such person to engage in
any activity described above under this Item, or to be associated with persons
engaged in any such activity; (5) was found by a court of competent jurisdiction
in a civil action or by the Securities and Exchange Commission to have violated
any federal or state securities law and the judgment in subsequently reversed,
suspended or vacate; (6) was found by a court of competent jurisdiction in a
civil action or by the Commodity Futures Trading Commission to have violated any
federal commodities law, and the judgment in such civil action or finding by the
Commodity Futures Trading Commission has not been subsequently reversed,
suspended or vacated.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Because we do not have a class of equity securities registered pursuant to
Section 12 of the Exchange Act, our executive officers, directors and persons
who beneficially own more than 10% of our common stock are not required to file
initial reports of ownership and reports of changes in ownership with the SEC
under Section 16(a) of the Exchange Act.
CODE OF ETHICS
We have not adopted a corporate code of ethics.
22
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Change in
Pension
Value and
Non-Equity Nonqualified
Incentive Deferred All
Name and Plan Compen- Other
Principal Stock Option Compen- sation Compen-
Position Year Salary Bonus Awards Awards sation Earnings sation
------------ ---- ------ ----- ------ ------ ------ -------- ------
Helen Siwak** 2009 0 0 0 0 0 0 0
2010 0 0 0 0 0 0 0
John Moore 2009 0 0 0 0 0 0 0
2010 0 0 0 0 0 0 0
----------
** Helen Siwak held her offices/positions since May 18 2009 and resigned
September 23, 2009.
Option Awards Stock Awards
--------------------------------------------------------------- -------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Equity Number of Value of
Incentive Number Unearned Unearned
Plan Awards; of Market Shares, Shares,
Number of Number of Number of Shares Value of Units or Units or
Securities Securities Securities or Units Shares or Other Other
Underlying Underlying Underlying of Stock Units of Rights Rights
Unexercised Unexercised Unexercised Option Option That Stock That That That
Options (#) Options (#) Unearned Exercise Expiration Have Not Have Not Have Not Have Not
Name Exercisable Unexercisable Options (#) Price Date Vested(#) Vested Vested Vested
---- ----------- ------------- ----------- ----- ---- --------- ------ ------ ------
Helen
Siwak** 0 0 0 0 0 0 0 0 0
John
Moore 0 0 0 0 0 0 0 0 0
----------
** Helen Siwak held her offices/positions since May 18 2009 and resigned
September 23, 2009.
23
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth, as of the date of this report, the total number
of shares owned beneficially by each of our directors, officers and key
employees, individually and as a group, and the present owners of 5% or more of
our total outstanding shares. The stockholders listed below have direct
ownership of their shares and possess sole voting and dispositive power with
respect to the shares.
Title of Name and address of Amount of Percent of
Class beneficial owner beneficial ownership class
----- ---------------- -------------------- -----
Common Artur Etezov* 51,000,000 49.97%
Common All directors and executive
officers as a group 51,000,000 49.97%
----------
* Mr. Artur Etezov resigned his positions as officer and director of the
Company on May 18, 2009.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None of the following parties has, since our date of incorporation, had any
material interest, direct or indirect, in any transaction with us or in any
presently proposed transaction that has or will materially affect us:
1. Any of our directors or officers;
2. Any person proposed as a nominee for election as a director; Any
person who beneficially owns, directly or indirectly, shares carrying
more than 10% of the voting
3. rights attached to our outstanding shares of common stock;
4. Any member of the immediate family of any of the foregoing persons.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The company had no independent accountant review the financials for this period,
in accordance with Rule 3-11 of Regulation S-X, therefore no fees or services
were provided.
24
PART IV
ITEM 15. EXHIBITS
The following exhibits are included with this filing:
3(i) Articles of Incorporation*
3(ii) Bylaws*
31.1 Rule 13a-14(a)/15d-14(a) Certification
31.2 Rule 13a-14(a)/15d-14(a) Certification
32.1 Section 1350 Certification
32.2 Section 1350 Certification
----------
* Included in our SB-2 filing under Commission File Number 333-136134
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
December 6, 2012
By: /s/ John Moore
--------------------------------------
John Moore, Chief Executive Officer
and acting Chief Financial Officer
2
