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EX-32 - EXHIBIT 32 - ISA INTERNATIONALE INCexhibit32.htm
EX-31 - EXHIBIT 31 - ISA INTERNATIONALE INCexhibit31.htm
EX-99 - EXHIBIT 99 - ISA INTERNATIONALE INCrealitycorp_isatdraftagreeme.htm

n@2                             UNITED STATES

                     SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C. 20549


                                 FORM 10-K

                               


             ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

                     SECURITIES EXCHANGE ACT OF 1934

              For the Fiscal year ended September 30, 2012


                    Commission File Number: 001-16423


ISA INTERNATIONALE INC.

   (Exact name of Smaller Reporting Company as specified in its charter)


          Delaware                                 41-1925647

(State of Incorporation)             (I.R.S. Employer Identification No.)


     2564 Rice Street, St. Paul, MN                          55113

 (Address of principal executive offices)                  (Zip Code)


                Issuer's telephone number (651) 484-9850

----------------------------------------------------------------------------

Securities registered pursuant to Section 12(b) of the Act: None.


Securities registered pursuant to Section 12(g) of the Exchange Act:

Common Stock, $.0001 par value          OTC Bulletin Board

    (Title of each class)       (Name of each exchange on which registered)


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 Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No []


Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, 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-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 (as defined in Rule 12b-2 of the Exchange Act:


     Large accelerated filer []    Non-accelerated filer     []

     Accelerated filer       []    Smaller reporting company [X]


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes [] No [X]





1

The aggregate market value of the issuer's common stock held by non-affiliates of the registrant was approximately $113,615 as of March 31, 2012 based upon the average bid price of $.05 per share as reported on the OTC Bulletin Board Exchange. As of January 14, 2013, the registrant had 49,224,912 shares of common stock issued and 47,974,912 shares outstanding.





2


                             TABLE OF CONTENTS


                                                                       Page

                                  PART I

 

Item 1.  Business                                                         4

Item 1A. Risk Factors (Not applicable)                                    8

Item 1B. Unresolved Staff Comments (Not applicable)                       8

Item 2.  Properties

                                                      8

Item 3.  Legal Proceedings                                                8

Item 4.  Mine Safety Disclosures          

              8



                                   PART II


Item 5.  Market for Common Equity, Related Stockholder Matters, Issuer

         Purchases of Equity Securities                                   9

Item 6.  Selected Financial Data (Not applicable)                        11

Item 7.  Management's Discussion and Analysis of Financial

         Condition and Results of Operations                             11

Item 7A  Quantitative and Qualitative Disclosures About Market

         Risk (Not applicable)   

             14

Item 8.  Financial Statements and Supplementary Data                     14

           Index to Audited Financial Statements                         14

           Report of Independent Registered Public Accounting Firm       15

           Consolidated Financial Statements                          16-20

           Notes to Consolidated Financial Statements                 21-30


Item 9.  Changes in and Disagreements with Accountants on Accounting

           and Financial Disclosure                                      31   

Item 9A. Controls and Procedures                                         32

Item 9B. Other Information                                               32


                                   PART III


Item 10. Directors, Executive Officers, and Corporate Go                 33

Item 11. Executive Compensation                                          34

Item 12. Security Ownership of Certain Beneficial Owners and

         Management and Related Stockholder Matters                      35

Item 13. Certain Relationships and Related Transactions, and

         Director Independence                                           35

Item 14. Principal Accountant Fees and Services                          36


                                   PART IV


Item 15. Exhibits                                                     36-37

         Index to Exhibits, Form 10-K                                    38

         Signatures                                                      38














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                                  PART I


Forward Looking Statements

Forward-looking statements are not guarantees of future performance. They involve risks, uncertainties and assumptions. The Companys future results and shareholder values may differ materially from those expressed in these forward-looking statements. Readers are cautioned not to put undue reliance on any forward-looking statements.

The matters discussed in this section and in certain other sections of this Form 10-K contain forward-looking statements within the meaning of Section 21D of the Securities Exchange Act of 1934, as amended (Exchange Act), and Section 27A of the Securities Act of 1933, as amended (Securities Act), that involve risks and uncertainties. All statements other than statements of historical information provided herein may be deemed to be forward-looking statements. Without limiting the foregoing, the words may, will, could, should, intends, thinks, believes, anticipates, estimates, plans, expects, or the negative of such terms and similar expressions are intended to identify assumptions and uncertainties which could cause actual results to differ materially from those expressed in them. Any forward-looking statements are qualified in their entirety by reference to the factors discussed throughout this Report.

The following cautionary statements identify important factors that could cause ISA Internationale, Inc. (The Company, we or Companys) actual results to differ materially from those projected in the forward-looking statements made in this Report. Among the key factors that have a direct bearing on The Companys results of operations include:


General economic and business conditions; the existence or absence of adverse publicity; changes in, or failure to comply with, government regulations; changes in marketing and technology; changes in political, social and economic conditions;


Success of operating initiatives; changes in business strategy or development plans; management of growth;


Availability, terms and deployment of capital;

 

 


Availability of desirable portfolio investment opportunities that meet The Companys investment criteria;


Legal, administrative and accounting expenses;

 

 


Dependence on senior management; business abilities and judgment of personnel; availability of qualified personnel; labor and employee benefit costs;

 


Development risks; risks relating to the availability of financing, and

 


Other factors, including risk factors, referenced in this Report.

 

Because the risk factors referred to above could cause actual results or outcomes to differ materially from those expressed in any forward-looking statements made by the Company, you should not place undue reliance on any such forward-looking statements. Other factors may be described from time to time in Companys other filings with the Securities and Exchange Commission (SEC), news releases and other communications. Further, any forward-looking statement speaks only as of the date on which it is made and the Company undertakes no obligation to update any forward-looking statement or statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for The Company to predict which will arise. In addition, The Company cannot assess the impact of each factor on the Companys business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.



Item 1. BUSINESS


As used herein, the terms "ISAI" or "ISAT" (the trading symbol of the Company), and the "Company" refer to ISA Internationale Inc., a Delaware corporation, unless the context indicates otherwise.


Forward Looking Statements


The information herein contains certain forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including, without limitation, the ability of the Company to continue its present business strategy which will require it to obtain significant additional working capital, changes in costs of doing business, identifying and establishing a means of generating revenues at appropriate margins to achieve profitability, changes in governmental regulations and labor and employee benefits and costs, and general economic and market conditions.  Such risks and uncertainties may cause the Company's actual results, levels of activity, performance or achievements to be materially different from those future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.


Although the Company believes that the assumptions and expectations reflected in these forward-looking statements are reasonable, any of the assumptions and expectations could prove inaccurate or not be achieved, and accordingly, there can be no assurance that the forward-looking statements included in this Form 10-K will prove to be accurate. In view of the significant uncertainties inherent in these forward looking statements, their inclusion herein should not be regarded as any representation by the Company or any other person that the objectives, plans, and projected business results of the Company will be achieved. Generally, such forward-looking statements can be identified by terminology such as "may," "anticipate," "expect," "will," "believes," "intends," "estimates," "plans," or other comparable terminology.


Overview


ISA Internationale Inc. was until June 29, 2012, a financial services company primarily engaged in the business of collecting distressed debt receivables for our own portfolios and also as a third party agency for our clients. Collection activities were conducted by our subsidiary ISA Acceptance Corporation (ISAC), a licensed and bonded collection agency in Minnesota and eight other states. The Company also did use third party agencies and attorneys to collect our portfolios.


On June 29, 2012, the Companys Board of Directors approved the discontinuance of the operations of a wholly owned subsidiary that was in the debt collection business and sold the subsidiary, ISA Acceptance Corporation, to a related party for a note receivable of $22,782 and future potential proceeds on the sale or disposition of a portion of the proceeds of 3,000,000 common stock shares of ISA Internationale, Inc., owned by the subsidiary that were received by the purchaser as consideration of total transaction of the Stock Purchase Agreement. See note 5 for complete explanation of the Stock Purchase Agreement transaction.


The Company and its Board of Directors has decided to become a Business Development Corporation and has accordingly filed Form N54-A with the Securities and Exchange Commission on June 29, 2012. The Company started operating as a Business Development Corporation (BDC) on October 1, 2012 and commenced accounting methodologies and reporting standards required for BDCs on that date. See note 7 of the financial statements for an explanation of the Companys future plans and direction following a revised and new business plan of operations.


1 The Company has commenced the development of new management consulting services to assist American client companies in complying with the reporting requirements to the government and in communicating with shareholders, customers and the public and the accessing of needed growth capital.  The Company will be receiving shares from its various new client for financial consulting work completed in the succeeding quarters going forward from October 1, 2012.


2 In June 2012, the Company entered into its first agreement with NewsBeat Social, Inc, an Oregon corporation, a Company organized to provide social news content via the internet, such as Facebook, Inc. A commitment to purchase 2,000,000 shares of common stock of NewsBeat, Inc. was consummated on June 29, 2012. On September 28, 2012, the Company did make the requested investment and accordingly will be receiving the purchased shares. A copy of that agreement was attached to the Form 10Q filing as an exhibit at June 30, 2012.


Corporate History, Organization and Recapitalization


ISAI was incorporated in Delaware in 1989 under a former name, and was inactive operationally for some time prior to its May 1998 recapitalization through an acquisition of Shoptropolis, which was a wholly owned subsidiary of ISAI. ISAI acquired its home shopping network business through such purchases, after which the former shareholders of this subsidiary acquired 89% of the outstanding common stock of ISAI through a stock exchange. ISAI issued 11,772,600 shares of its common stock in exchange for all of the outstanding common stock of ShoptropolisTV.com, Inc. This transaction was effected as a reverse merger for financial statement and operational purposes, and accordingly, ISAI regards its inception as being the incorporation of ShoptropolisTV.com, Inc. on October 7, 1997.




4


ISAI's strategy from December 2000 to 2005 was the restructuring of its financial affairs and forming an operating company. On August 18, 2004, ISAI created a subsidiary corporation that later changed its name to ISA Financial Services, Inc. (ISAF). ISAF is a holding parent company to ISA Acceptance Corporation (ISAC) formed on July 20, 2005 to serve as our operating company subsidiary.  


In May 2005, the Company consummated its first purchase of performing, sub-performing and non-performing consumer receivables. These portfolios generally consist of one or more of the following types of consumer receivables:


  -  charged-off receivables -- accounts that have been written-off by the

     originators and may have been previously serviced by collection

     agencies;


  -  sub-performing receivables -- accounts where the debtor is currently

     making partial or irregular monthly payments, but the accounts may have

     been written-off by the originators; and are currently being serviced by

     collection agencies;                            


  -  performing receivables - accounts where the debtor is making regular  

payments or pays upon normal and customary procedures to collection

agencies.


The Company outsourced some of its collections to one or more carefully selected collection agencies and attorneys and actively monitored collection and servicing strategies accordingly. Due to various problems and characteristics of the distressed debt portfolios purchased by the Company, no conclusive statistics of collection by the Company can be realistically discerned to facilitate the development of reliable collection assumptions as to the amount of income that can ultimately result from these debt portfolios. Hence the Company did not utilize the "interest method" in accounting for its investment in finance receivables under FASB ASC 310. Accordingly, the Company recognized income from the collection of its portfolios using the "cost recovery" method. Profit is recognized only after it has collected the full purchase price less impairment write-downs and sales of portfolios, for the portfolios purchased during the period from May 18, 2005 to June 30, 2012.


Industry Overview and Trends


The purchasing, servicing and collection of charged-off, sub-performing and

performing consumer receivables is a rapidly expanding industry driven by:


  -  levels of consumer debt;


  -  charge-off and delinquency rates of the underlying receivables;


  -  utilization of third-party agency collection service providers; and


  -  increasing use of computer technology to improve productivity in the

     collection process.




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As a result of the difficulty experienced by the originating lending institutions in collecting these past due receivables and the desire to focus on their core businesses and to generate accelerated cash revenue from these receivables, originating institutions are increasingly electing to sell these portfolios through a network of brokers in the debt collection industry. ISAI used these brokers to purchase debt receivable portfolios.


As a result of the change in the business plan and direction of the Company, the Company will not be engaged in the debt collection business in the future. The information contained herein is presented as the history of the Companys debt collection activities and reasons for not continuing its presence in the debt collection business.


Although ISAT believes there continues to be opportunity to expand its debt business as the debt collection industry matures and grows, we see hindering challenges ahead as a result of changing global economic factors. Precisely, the cost of recent debt purchases and the projected cost of debt receivable portfolios has increased dramatically. The increased oversight and enforcement of debt collectors to adhere to new debt collection laws and rulings, albeit a good practice for the debt collection business, has caused there to be increased lawsuits and litigation matters that dramatically increase the overall costs of the operation of the debt collection business.


Accordingly, ISAT has changed its directed business operations to that of a Business Development Company assisting new corporations and related business ventures therein providing management consulting services to assist American client companies in complying with the reporting requirements to the government and in communicating with shareholders, customers and the public and the accessing of needed growth capital.




6


Strategy


The Company's current new business strategy is to acquire relationships with the business community to develop into client companies that can lead to consulting contracts and the providing of services to assist American client companies in complying with the reporting requirements to the government and in communicating with shareholders, customers and the public and the accessing of needed growth capital.


Most Business Development Companies (BDC) that comply with the 1940 Investment Act are similar in their business and investment operations due to the standard compliance requirements. However, there are significant differences in individual BDC philosophies and investment strategies. We have not as of yet developed our own strategy that can foretell the type of filings and client investments that we will endure to develop.

We will become an internally managed, non-diversified, closed-end management Investment Company that has elected to be regulated as a business development company under the Investment Company Act of 1940, as amended (the 1940 Act). We generally have to invest at least 70% of our total assets in qualifying assets, including securities of American companies, cash, cash equivalents, U.S.A. government securities and high-quality debt investments.

We plan to elect to be treated for tax purposes as a regulated investment company, or a RIC, under Subchapter M of the Code. However, there is no guarantee that we will be successful in obtaining or maintaining our RIC status. As a new BDC operation, we have not yet generated a taxable profit. As of this 10K filing, we have not yet made the election to be treated for tax purposes as a regulated investment company, or a RIC, under Subchapter M of the Code.


Competition in the industry


The Business Development Corporation model of activity includes income generation and capital appreciation or any combination of the two. Income generation is sought from facilitating short term secured loans to our portfolio companies and other non-portfolio companies, through affiliated and non-affiliated lending sources. Operating capital loans may be used by our investment portfolio companies for invoices, orders and inventory and may follow the factoring strategy operated for our BDC by affiliated and non-affiliated experienced factors, with existing software and management systems in place. Our BDC investors may participate in the cash return yield generated by these activities.

Long term secured loans to refinance and acquire additional plant, equipment and/or other earnings and assets could provide cash flow income to our investors. This lending income may pass through interest and fees paid for secured loans for such purposes. Leasing revenues and fees paid from borrowers as renters rather than own assets, including sale lease backs, may also provide cash income paid to our investors.

Capital appreciation is sought from our equity participation and profit realization from a sale of some or all of our equity in a portfolio companys investment. We may invest cash and/or fees earned and received for providing managerial support consulting services to a client. The percentage amount of our BDC ownership may be passive at less than 10% without our Board of Director and control positions in the portfolio company. This may allow us more unrestricted sale of our investment at our sole discretion to attempt to maximize the return of this investment. Or we may own a larger percentage of the portfolio company including options to increase the size of our ownership and control stake.

The main strategy for value creation of portfolio companies is current SEC registration for transparency with financial reporting and liquidity with subsequent SEC registration for public stock trading. A price to earnings multiple arbitrage between public stock and private stock may increase our portfolio company holding value. This concept is based on the investment market value accretion for going from private to public status. Factors such as financial and operating transparency, quality of liquidity, management and asset, and earnings acquisition are improved when a company is publically traded versus privately owned and operated.

Also, under the BDC Act, we can help fix business net income and other financial problems for existing thinly traded public stock company already reporting to the SEC. Additional earnings and the factors such as improved financial and operating transparency, quality of liquidity, management and asset and further earnings acquisition can increase the value of a thinly traded portfolio company and our investment.

Our shareholders can participate in our portfolio income and capital appreciation with our fund that allows them to share in our potential share value increase from our investment. We believe the shares of a company we invest in should trade at a higher price when that price is based on earnings increases and/or an increased price earning multiple, of a successful public SEC reporting company, than on a non-reporting privately held company... Any increase share value of our portfolio investments should increase the Net Asset Value, (NAV) of our BDC and subsequent market price of our BDC traded shares listed under the Nasdaq OTCBB symbol: ISAT.

However, the success of these strategies and models by us cannot be guaranteed.


Personnel


Mr. Bernard L. Brodkorb is the ISAT President, Chief Operating Officer, Chief Financial Officer, and Chairman of the Board. He also serves as a consultant to the Company and is a Certified Public Accountant. Also on the date of this report, the Company has one additional administrative part time employee and one part time accountant retained as an independent consultant. Additional contractors and staff persons are used on a part-time basis.



Item 1A.  RISK FACTORS


A smaller reporting company is not required to provide the information required by this item.


Item 1B.  UNRESOLVED STAFF COMMENTS


A smaller reporting company is not required to provide the information required by this item.




7

Item 2.   PROPERTIES


The principal executive office of the Company is located at 2564 Rice St., St. Paul, MN 55113. The President of ISAT, rents office space to the Company for a monthly charge of $1,250 from October 1, 2011 through June 30, 2012 and $500 from July 1, 2012 forward to date.


Item 3.  LEGAL PROCEEDINGS


During the year ended September 30, 2012, the Company was not sued in or a plaintiff in any new legal matters except in the ordinary course of its operational business to collect purchased debt receivables. As of September 30, 2012, there were two lawsuits currently pending regarding proposed violations of collection procedures. The Companys sold subsidiary, ISA Acceptance Corporation is a named defendant but the Parent Company, ISAT Company, its former Parent company, does not believe the exposure in these two proceedings will have a material and adverse effect on the financial stability of the Company.



Item 4.  MINE SAFETY DISCLOSURES


Not applicable.






8


                              PART II


Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.


Market Information for Common Stock


The Company's Common Stock traded publicly on the NASDAQ Over-The-Counter Electronic Bulletin Board (OTCBB) under the symbol "ISAI" from May 11, 1998 to January 21, 2004. From January 22, 2004 to present it has traded under the symbol "ISAT". Information provided regarding periods prior to January 2001 is not an indication an active market existed for the Company's common stock during such periods. Further, there can be no assurance the current market for the Company's common stock will be sustained or grow in the future.


The following Table sets forth the high and low bid closing prices for the Company's Common Stock as reported by the OTC Bulletin Board during this period of time. These bid quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.


FISCAL

YEAR    QUARTER                               HIGH BID LOW BID


2010    October 1 to December 31, 2009         $0.10    $0.05

2010    January 1 to March 31, 2010            $0.07    $0.05

2010    April 1 to June 30, 2010               $0.07    $0.05

2010    July 1 to September 30, 2010           $0.25    $0.05

2011    October 1 to December 31, 2010         $0.25    $0.05

2011    January 1 to March 31, 2011            $0.05    $0.05

2011    April 1 to June 30, 2011               $0.20    $0.05

2011    July 1 to September 30, 2011           $0.09    $0.08

2012    October 1 to December 31, 2011         $0.08    $0.07

2012    January 1 to March 31, 2012            $0.07    $0.05

2012    April 1 to June 30, 2012               $0.07    $0.05

2012    July 1 to September 30, 2012           $0.05    $0.03


Holders


As of January 14, 2013, there were 49,224,912 shares of common stock issued and 47,974,912 shares of common stock outstanding held by approximately 4 beneficial owners and approximately 338 registered holders of record of the Company's common stock.


Dividends


The Company has not declared or paid any cash dividends on its common stock since its inception and does not anticipate declaring or paying any such dividends on its common stock in the foreseeable future. To date, the Company has incurred losses and presently expects to retain its future earnings to finance development and expansion of its business. The declaration of dividends is within the discretion of the Board of Directors of the Company. There are no current restrictions limiting the Company's ability to pay dividends if the Company becomes profitable.


The Company has not purchased any equity securities for the year ended September 30, 2012. It currently holds 1,250,000 shares as treasury stock.


There are no securities authorized for issuance under equity compensation plans or options to purchase securities in effect.


The Company declared dividends on its preferred stock for the fiscal year ended September 30, 2011 in the amount of $94,066. There were no dividends declared on its preferred stock during the fiscal year September 30, 2012. Since September 30, 2007 ISAT has declared dividends on its preferred stock totaling $357,831.





9

Recent Sales History of Unregistered Securities


The following information includes a history of all securities sold by the

Company from October 2008 to present and use of proceeds:


B.1  On August 31, 2009, ISA Acceptance Corporation issued 22,400 shares of Series A 12% Preferred Stock, par value $25.00 to the Newman Foundation in exchange for loans and accrued interest due to the creditor from the subsidiary.


B.2  On September 30, 2009, the Company issued 306,000 shares of Series A 12% Cumulative Convertible Preferred Stock, par value $0.0001 to Doubletree Capital Partners, Inc. for an equivalent value of loans, consulting fees and related expenses paid. Prior to September 30, 2009, ISAT issued 610,000 shares of Cumulative Convertible Preferred Stock to DCP for loans, fees and related expenses.


B.3 The Board, effective as of September 30, 2009, repriced the 12% Cumulative Convertible Preferred Stock outstanding to an effective conversion rate of 10 common shares for each preferred share or a common conversion price of $.10 per share.


B.4  On December 31, 2009, the Company authorized the issuance of 175,000 shares of Series A 12% Cumulative Convertible Preferred Stock, par value $0.0001 to Doubletree Capital Partners, Inc. for an equivalent value of loans, consulting fees and related expenses paid totaling $175,000.


B.5  On March 31, 2010, the Company authorized the issuance of 160,000 shares of Series A 12% Cumulative Convertible Preferred Stock, par value $0.0001 to Doubletree Capital Partners, Inc. for an equivalent value of loans, consulting fees and related expenses paid totaling $160,000.


B.6  On June 30, 2010, the Company authorized the issuance of 163,000 shares of Series A 12% Cumulative Convertible Preferred Stock, par value $0.0001 to Doubletree Capital Partners, Inc. for an equivalent value of loans, consulting fees and related expenses paid totaling $163,000.


B.7  On September 30, 2010, the Company authorized the issuance of 75,000 shares of Series A 12% Cumulative Convertible Preferred Stock, par value $0.0001 to Doubletree Capital Partners, Inc. for an equivalent value of loans, consulting fees and related expenses paid totaling $75,000. The 573,000 shares were formally issued as of September 30, 2011.


B.8  On December 31, 2010, the Company issued 168,000 shares of Series A 12% Cumulative Convertible Preferred Stock, par value $0.0001 to Doubletree Capital Partners, Inc. for an equivalent value of loans, consulting fees and related expenses paid totaling $168,000.


B.9  On March 31, 2011, the Company issued 124,000 shares of Series A 12% Cumulative Convertible Preferred Stock, par value $0.0001 to Doubletree Capital Partners, Inc. for an equivalent value of loans, consulting fees and related expenses paid totaling $124,000.


B.10 On June 30, 2012, the holder of the Companys 1,781,000 preferred stock converted the preferred stock shares into 17,810,000 common shares at the conversion price of 10 common shares for each preferred share outstanding or an equivalent common price of $.10 per share.


B.11 On June 30, 2012, the Company issued 7,065,300 common stock shares, par value $0.0001 to ISA Acceptance Corporation in full payment of inter-company loans and cash advances totaling $512,233 payable to the subsidiary by the Parent company as of June 28, 2012.


As a result of the above issuances of common stock shares, the total outstanding common shares of the parent Company as of September 30, 2012 total 48,874,912 common shares, $.0001 par value. There are no outstanding preferred shares at September 30, 2012.




10


As of April, 1, 2011, the Company decided to suspend the payment of the cumulative 12% Class A Preferred Stock dividends until further notice to Doubletree Capital Partners, Inc., for loans, advances, consulting fees and related expenses. As a result, Doubletree Capital Partners has contributed capital to the Company during the six months from April 1, 2011 to September 30, 2011 in the amount of $114,208. Doubletree received no additional common stock shares or preferred stock shares as consideration for the contributed capital of $114,208.


During the fiscal year ended September 30, 2012, Doubletree Capital Partners contributed capital to the Company during the six months from October 1, 2011 to March 31, 2012 in the amount of $98,758. Doubletree received no additional common stock shares or preferred stock shares as consideration for the contributed capital of $98,758.

                       



11

Item 6.   Selected Financial Data


A smaller reporting company is not required to provide the information required by this item.




12


Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Certain statements contained in this Annual Report, including statements regarding our anticipated business development our intentions and current expectations with respect to future operations and other statements contained herein regarding matters that are not historical facts are to be considered "forward-looking" statements. Because such statements include risks and uncertainties, actual results may differ materially from those expressed in this report or in future oral or written statements made by the Company or with our approval. All forward-looking statements speak only as of the date on which they are made.


This section of this report discusses our results of operations, liquidity and financial condition, and factors that could impact our future results. The reader of this report should read them in conjunction with our audited financial statements and accompanying notes included in this report. Our plan of operation contains forward-looking statements involving risks, uncertainties and assumptions. Actual results may vary significantly from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those presented under Item 1A Risk Factors or elsewhere in this report.


Results of Operations for the Twelve Months ended September 30, 2012


Sales and Gross Profit


The Company is in the process of changing its business plan of operation. The Company has not generated and sales and gross profit from any of its new operations as a Business Development Company. All current and prior year sales and gross profits have been reflected as discontinued operations within this 10K report.



13

 


Operating Collection Costs


The Company is in the process of changing its business plan of operation. The Company has not incurred any new operating collection costs as a Business Development Company. All current and prior year operating collection costs have been reflected as discontinued operations within this 10K report.




14


General and Administrative Expenses


General and administrative expenses were $149,623 for the twelve months ended September 30, 2012, a decrease of $110,926 from the prior year of $260,549. All general and administrative expenses previously a part of the discontinued operations involving collection activities have been removed from this analysis. These expenses for the fiscal year were principally for office occupancy, telephone charges and office expenses ($56,748), management consulting fees ($35,000), legal ($4,480), and accounting ($53,395).


The President's and management company (DCP) consulting fees for the year ended September 30, 2012 were a non-cash expense of $35,000 and the President did not draw any cash salary expense. Another management consultant received $15,000 in fees in fiscal year ended September 30, 2011





15

Other Income and Expenses


Interest expense for the year ended September 30, 2012 was $16,233 compared to $18,360 for the year ended September 30, 2011, a decrease of $2,127. For the year ended September 30, 2012, $2,864 was expensed for interest on Bank line of credit loans and other notes payable, $13,369 was accrued for interest on loans payable to related parties, and $1,646 was accrued for interest on defaulted convertible debentures.


For the year ended September 30, 2011, $3,000 in interest expense was accrued for defaulted convertible debentures, and $6,755 from related-party convertible notes and $8,605 was expensed for interest on Bank line of credit loans and other notes payable.


The Company discontinued recording interest expense due on previously non-converted and defaulted convertible debt obligations of the Company in the fourth quarter ended September 30, 2009, but continued recording interest expense on one defaulted debenture. The Company was not successful in converting this debt to equity shareholdings for two remaining debenture holders. The liability for these Debenture notes has been removed from our books as of September 30, 2012 and assumed by the indemnification agreement with Doubletree Liquidation Corporation. The Company does not have the cash liquidity to redeem these notes and the statute of limitation on these debts has been exceeded.


Effective, April 1, 2011, all 12% Preferred stock dividends payable in accordance with all previously issued Preferred shares (1,781,000) has been suspended by the Company and accordingly, $109,862 in 12% dividends expense for the six months ended September 30, 2011 was paid by the Company and is not included in our reported Net Loss for the year ended September 30, 2011. Dividend expenses declared and paid through March 31, 2011 in the amount of $94,066 is included in our net loss attributable to common shareholders. The table below summarizes our interest and dividend expense for the last two years. All interest that did involve discontinued operations have been removed from the presentation below.


                                             Fiscal years ended September 30,

                                                    2012           2011

Interest expense                                  $16,233        $18,360

Preferred Stock Dividend expense                  $     -        $94,066


Summary Comments on Income and Expenses


A net operating loss of $167,251 was recorded for the fiscal year ended September 30, 2012. The net operating loss for the fiscal year ended September 30, 2011 was $644,597.


The Company does not anticipate higher operating expenses in total in future periods for our Business Development Company operations. We are formulating a revised business plan of operations principally directed to the involvements and relationships developed within our projected operations. At the present time, no additional expenses are being incurred for office, telephone, consulting and legal and professional expenses relating to additional business development operations.




16


Liquidity and Capital Resources


For the fiscal year ended September 30, 2012, the Company raised $83,949 from demand notes payable from a related investor compared to $283,123 from demand notes payable from a related investor for the fiscal year ended September 30, 2011. The demand loans bear interest at the rate of 12% per annum and are collateralized by all the assets of the Company. These secured demand notes accrued interest in the amount of $2,603 during the fiscal year ended September 30, 2012. During the fiscal year ended September 30, 2011, other related party demand  notes, the interest accrued, and stock dividends in the amount of $94,064 were redeemed by the Company by issuing 292,000 shares in 12% Cumulative and Convertible Series A Preferred Stock, par value $.0001, valued at $1.00 per share to the financing company.


The Company also received from the related party investors, capital contributions in the amount of $98,758 from the period from October 1, 2011 to March 31, 2012. There were no subsequent capital contributions from the period from April 1, 2012 to September 30, 2012. Further, there were no additional preferred shares issued by the Company during the year ended September 30, 2012.


As of September 30, 2012, the Company had current assets of $5,232 consisting of $5,232 in cash only. At the same time, the Company had $350,803 in current liabilities consisting of $165,633 in accounts payable, $97,480 in notes payable, related party, current portion, $3,741 in other notes payable current portion, and $83,949 in convertible notes payable related party. The Company had a working capital deficit of $345,571 as of September 30, 2012 compared to $331,634 as of September 30, 2011.


The Company's current capital resources are not sufficient to support its development and operations. New capital and loans will be necessary to support the ongoing operation of the Company's general and administrative expenses and interest expenses currently being incurred. The Company cannot continue its existence without full and complete reorganization effort of all of its financial affairs and obligations.  The Company is evaluating possible new sources of development operation financing in order to adequately continue its projected business development company operations, as may be needed. There can be no guarantee as to the Companys ability to seek or obtain acceptable sources of the needed cost of capital and/or equity financing to fulfill its goal of its new business plan of operations.




17

The Company is seeking additional sources of debt or equity financing other than additional convertible notes payable issued by a related party. Until new financing needs are solidified, the Company cannot provide assurances as to its future viability or its ability to prevent the possibility of filing a bankruptcy petition, either voluntary or involuntary, by any creditor of the Company. As a result of the Company's history of operating losses and its need for significant additional capital, the reports of the Company's independent auditors' on the Company's financial statements for the twelve months ended September 30, 2012 and 2011 include explanatory notes concerning the Company's ability to continue as a going concern.


Income Tax Benefit


The Company has an income tax benefit from net operating losses, if any, which is available to offset any future operating profits. None of this benefit was recorded in the accompanying financial statements as of September 30, 2012. Federal tax laws impose significant restrictions on the utilization of net operating loss carry-forwards in the event of a change in ownership of the Company which constitutes an "ownership change", as defined by the Internal Revenue Code, Section 382. The Company's net operating loss carry-forward will be subject to the above limitations.


Accounts Payable and Expenditures



The Companys accounts payable decreased by $27,468 for the year ended September 30, 2012 as compared to the prior fiscal year.


Long-Term Notes Payable related to the auto loan decreased by $3,833 for the fiscal year ended September 30, 2012.  The current portion of these notes increased by $279 and the Company's bank credit lines payable were paid in full in the principal amount of $18,360. Notes payable-related party whose proceeds were previously used to purchase finance debt portfolios in 2010 and 2011, increased by $10,469 due to the addition of interest charges related thereto.




18


Going Concern Consideration


The Company and its financial partner are no longer attempting to reach agreements to convert the remaining $200,000 in defaulted debenture notes and $192,801 in related accrued interest as of September 30, 2010 to common shares. These debentures and related accrued interest were classified as current liabilities and are offset by a corresponding receivable under the indemnification agreement between Doubletree Liquidation Corporation (DLC) and the company whereby DLC agreed to assume these and other certain liabilities of ISAI. The company's position is it is no longer directly liable for these notes except as a guarantor having sold the debt instruments to DLC through the indemnification agreement.


During the year ended September 30, 2012, the indemnification was fully expired and the Company recorded a related income from debt extinguishment as an extraordinary item. These specific amounts relate to a previously extended promissory note of $50,000 included in the aforementioned $200,000 in defaulted convertible notes and related interest of $77,116 included in the $192,801 of defaulted interest payments also referred to in the prior paragraph.


One remaining officer, Bernard L. Brodkorb, is currently managing the Company. Our registered independent auditors have issued an opinion on our financial statements which includes a statement describing our going concern status.


OFF-BALANCE SHEET ARRANGEMENTS


We have no outstanding off-balance sheet guarantees or arrangements.


CRITICAL ACCOUNTING POLICIES


The preparation of the consolidated financial statements is 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, such as the fair value of investments and the useful lives of fixed assets, at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.



Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


A smaller reporting company is not required to provide the information required by this item.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


The following consolidated financial statements of ISA Internationale Inc. and its wholly owned subsidiaries, the notes thereto and Independent Auditors' Report thereon required by this item are included herein indicated by the following index:





19

Index to Audited Financial Statements                               Page


Report of Independent Registered Public Accounting Firm---------------15


Consolidated Balance Sheets as of September 30, 2012 and 2011---------16


Consolidated Statements of Operations for the twelve months ended

  September 30, 2012 and 2011-----------------------------------------17


Consolidated Statement of Shareholders' Equity for the twelve months

  ended September 30, 2012 and 2011 ----------------------------------18


Consolidated Statements of Cash Flows for the twelve months ended

  September 30, 2012 and 2011 ----------------------------------------19


Notes to Consolidated Financial Statements-------------------------20-30

































20


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors andShareholders of ISA Internationale, Inc.

St. Paul, Minnesota

We have audited the accompanying balance sheet of ISA Internationale, Inc. as of September 30, 2012, and the related statement of operations, stockholders equity, and cash flows for the fiscal year ended September 30, 2012. The financial statements of ISA Internationale, Inc. as of September 30, 2011, were audited by other auditors whose report dated February 16, 2012, expressed an unqualified opinion on those statements. ISA Internationale, Inc.s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of ISA Internationale, Inc. as of September 30, 2012, and the results of its operations and its cash flows for the fiscal year ended September 30, 2012 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has negative working capital at September 30, 2012, has incurred recurring losses and recurring negative cash flows from operating activities, and has an accumulated deficit which raises substantial doubt about its ability to continue as a going concern.  Managements plans concerning these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The 2011 financial statements were audited by other auditors whose report dated February 16, 2012, included an emphasis-of-matter paragraph describing conditions that raised substantial doubt about that Companys ability to continue as a going concern.



/s/ Boulay, Heutmaker, Zibell & Co. P.L.L.P.

Boulay, Heutmaker, Zibell & Co. P.L.L.P.

Minneapolis, Minnesota

January 14, 2013


ISA INTERNATIONALE INC. and SUBSIDIARIES

                               CONSOLIDATED BALANCE SHEETS

                                                                          

                                                                                                              Sept 30, 2012      Sept 30, 2011

ASSETS                                              --------------------------------

Current assets:

  Cash                                              $      5,232               1,841

  Restricted cash                                              -              13,491

  Trade receivables                                            -                 580

                                                     ------------         -----------

Total current assets                                       5,232              15,912


Investment NewsBeat Social, Inc.

           32,000                   -


Fixed assets, at cost less accumulated depreciation

  of $17,763 and $44,597, respectively                    11,247              24,460

 

Other assets:

  Finance contract receivables, net of collections             -              75,879

  Note Receivable Related party                         22,782                   -

                                                       ----------         ----------

 Total assets                                         $   71,261          $  116,251

                                                      ==========         ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

  Accounts payable trade, wages and taxes            $ 135,634          $  163,103

  Credit lines payable                                         -              18,360

  Payable to related party NewsBeat Social, Inc.        30,000                   -

  Notes payable other                                      3,741               3,462

  Notes payable - Related Party                           97,480              87,011

  Convertible notes payable - related party               83,949                   -

  Convertible debentures payable defaulted                   -              50,000

  Accrued interest payable-debentures defaulted              -              25,611

                                                      ----------         ----------

Total current liabilities                                350,803             347,546


Long-Term Liabilities

  Notes payable other-long term portion                    5,293               9,127

                                                       ---------           ----------

Total Liabilities                                        356,097             356,674

                                                        --------           ----------

Stockholders' Equity (Deficit):

 Preferred 12% cumulative convertible stock,

  par value $.0001; 30,000,000 shares authorized,

  No shares issued and outstanding at September 30 2012

  and 1,781,000 shares issued and outstanding at September

  30, 2011                                                     -                 178                            

 Preferred stock of ISA Acceptance Corporation

  par value $25 per share, 12% dividend rate paid

  quarterly, when declared by the Company;

  50,000 shares authorized, No shares issued and

  outstanding at September 30, 2012 and 22,400 issued

  and outstanding at September 30, 2011                        -             560,000

 Common stock, par value $.0001; 300,000,000 shares

  authorized; 48,874,912 shares issued and 48,874,912

  outstanding at September 30, 2012; 23,999,612

  shares issued and 23,999,612 outstanding at

  September 30, 2011                                       4,888               2,400

 Additional paid-in capital                           10,325,770          10,795,328

 Treasury stock   1,250,000 shares                      (537,500)           (537,500)

 Accumulated deficit                                 (10,077,994)        (11,060,829)

                                                     -----------         -----------

 Total stockholders' deficit                             (284,836)           (240,423)

                                                     -----------         -----------

 Total liabilities and stockholders' deficit          $    71,261         $   116,251

                                                     ===========         ===========


The accompanying notes are an integral part of these consolidated financial statements.




21

ISA INTERNATIONALE INC. and SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

                                

        

                                                        (Audited)                (Audited)

                                                   Twelve Months Ended     Twelve Months Ended

                                                    September 30, 2012      September 30, 2011

                                                    -------------------     -------------------

Operating revenues                                       $        -              $          -

 

Operating expenses:

 General and administrative                                 108,623                   204,949

 General and administrative-related party                    41,000                    55,600

                                                          ----------               -----------

     Operating expenses                                     149,623                   260,549

                                                         ----------               -----------

     Operating loss                                        (149,623)                 (260,549)


Other income (expense):

 Interest expense                                           ( 2,864)                  (11,605)

 Interest expense-related party                             (13,369)                  ( 6,755)

 Indemnification expiration charge                                -                   (75,611)            

 Interest income                                                279                         -

                                                         ----------                -----------

Net loss                                                   (165,577)                 (354,520)

                     

Discontinued operations

  Loss from discontinued operations                         (78,790)                 (290,077)

                                                         ----------                ----------     

Loss before extraordinary items                            (244,367)                 (644,597)

  Gain on liability extinguishment                           77,116                         -

                                                         ----------                ----------

Loss before income taxes                                   (167,251)                 (644,597)


Income tax expense                                                -                         -

                                                         ----------                ----------

Net loss                                                   (167,251)                 (644,597)      

     

 Dividends to preferred shareholders                              -                   (94,066)

                                                         ----------                ----------

Net loss attributable to common shareholders             $ (167,251)              $  (738,663)

                                                         ==========                ==========

Basic loss per share                                      

 Continuing operations                                   $   (0.0029)             $    (0.0148)

 Discontinued operations                                 $   (0.0026)             $    (0.0121)

                                                         ===========               ===========


Basic and diluted loss per share                         $   (0.0056)              $   (0.0269)


Weighted Average common shares outstanding:

Basic and diluted                                         30,060,852                23,999,612

                                                         ===========              ===========

Dividends per share of common stock                             none                     none

Dividends per share of preferred stock                          none                   0.0053










The accompanying notes are an integral part of these consolidated financial statements.








22


                                      ISA INTERNATIONALE INC. and SUBSIDIARIES

                                          CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

                                                  SEPTEMBER 30, 2012 AND 2011


                                 Convertible Stock Convertible Stock                    Treasury   Additional                

                                 Preferred   Par   Preferred   Par   Common Stock  Par    Stock      Paid-in        Accum

                                 Shares      Value Shares      Value    Shares     Value  Value      Capital       Deficit    Total

                                 Parent Co  $.0001 Subsidiary Co $25.



Balance September 30, 2010      1,489,000    149   560,000   22,400   23,999,612   2,400  (537,500) 10,386,149 (10,322,165)   89,034

             


Indemnification agreement  

 interest on debenture holders                                                                           3,000                 3,000

Preferred Stock Dividend to a

 related party                                                       -                                             (94,066)  (94,066)

Contributed Capital from

 related party                                                                                         114,208               114,208

Issuance of Preferred convertible

 stock, Par value $.0001

 for secured debt related party   292,000     29                                                       291,971               292,000


Net loss                                                                                                          (644,598) (644,598)

                              ------------------------------------------------------------------------------------------------------


Balance September 30, 2011      1,781,000    178   560,000   22,400  23,999,612    2,400  (537,500) 10,795,328 (11,060,829) (240,423)


Preferred stock conversion

  related party 17,810,000

  shares                       (1,781,000)  (178)                    17,810,000    1,781                (1,603)                    -

ISAC preferred stock converted                                                                         

  into ISAC note payable                          (560,000) (22,400)                                                        (560,000)

Capital contribution by related

  party DCP                                                                                             98,759                98,759

Remove ISAC Paid in Capital

  in sale                                                                                           (1,227,000)           (1,227,000)  

Remove ISAC accumulated deficit

  in sale                                                                                                        1,150,086 1,150,086

Issue common shares to ISAC

  for debt payment                                                    7,065,300      707               511,527               512,234

Capital contribution from ISAC sale

  to entity under common control                                                                       148,759               148,759

 

Net loss                                                                                                          (167,251) (167,251)

                              ------------------------------------------------------------------------------------------------------

Balance September 30, 2012               -      -        -        -  48,874,912    4,888  (537,500) 10,325,770 (10,077,994) (284,836)

                              ======================================================================================================







The accompanying notes are an integral part of these consolidated financial statements.


 



23

   ISA INTERNATIONALE INC. and SUBSIDIARIES

                              CONSOLIDATED STATEMENTS OF CASH FLOWS


                   

                                             Twelve Months Ended   Twelve Months Ended

                                              September 30, 2012    September 30, 2011

                                               ------------------    -----------------

Cash flows from operations:  

Net loss                                            $ (167,251)       $   (644,598)

Gain from extraordinary item                           (77,116)                  -

Loss from discontinued operations                       78,790                   -

Adjustments to reconcile net loss from operations  

  to cash flow used in operating activities:

  Depreciation                                            5,369              30,704

  Indemnification settlement charge                           -              75,611

   Reduction of debt receivable purchase price

   on gross collections received                          8,044              70,208

Changes in operating assets and liabilities:

  Restricted cash                                        13,491              17,572

  Trade account receivables                                 300                 (46)

  Prepaid expenses                                            -               9,500     

  Decrease in portfolio value for impairment charge           -             135,000

  Accounts payable and accrued expenses                  (8,985)             (5,219)

                                                     ----------          ----------

  Cash used in operations                              (155,402)           (311,268)

                                                     ----------          ----------

Cash flow from investing activities:

  Purchase of investment stock in Newsbeat Inc.          (2,000)                  -

  Debt receivables purchased                                  -             (12,699)

  Purchase of fixed assets                                    -              (5,004)

                                                     ----------            --------

Cash used in investing activities                        (2,000)            (17,703)

                                                    -----------          ----------

Cash flows from financing activities      

 Payments on bank lines, net of proceeds                (18,360)                (87)

 Payments to principal on auto loan note                 (3,555)             (3,379)                  

 Interest accrued on notes payable-related party              -               9,025   

 Payments on convertible debt-related party                   -                (338)      

 Interest on indemnification agreement                        -               3,000    

 Issue preferred stock for cash loans, expenses

   and interest on notes payable related party              -             197,934

 Proceeds from contributed capital-related party         98,798             114,208

 Proceeds from convertible notes related party         48,949                   -

                                                     ----------          ----------

Cash provided by financing activities                   160,793             320,363

                                                     ----------          ----------

Net increase (decrease) in cash                           3,391              (8,608)


Cash, beginning of period                                 1,841              10,449

                                                     ----------          ----------

Cash, end of period                                   $   5,232          $    1,841

                                                     ==========          ==========

Interest paid                                         $  16,233         $    20,224


Non-cash investing and financing transactions:

    Accrued Preferred stock dividend expense          $       -          $   94,064

                                                     ----------          ----------

    Liability incurred for investment purchase        $  30,000          $        -

                                                     ----------          ----------







The accompanying notes are an integral part of these consolidated financial statements.

                       

                   





24


ISA INTERNATIONALE INC. and SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

TWELVE MONTHS ENDED SEPTEMBER 30, 2012 and 2011



The accompanying audited consolidated financial statements of ISA Internationale, Inc. have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. As used in this report in Form 10-K, the Company represents ISA Internationale, Inc. and Subsidiary.


1.) NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES


1.a) NATURE OF BUSINESS

ISA Internationale, Inc ("ISAI") was a financial services company specializing in debt collections for third party clients and our own portfolios of distressed debt receivables. The Company and its Board of Directors decided to become a Business Development Corporation on June 29, 2012 and has accordingly filed Form N54-A with the Securities and Exchange Commission. See note 7 for an explanation of the Companys future plans and direction following a revised and new business plan of operations.


These consolidated financial statements include the parent Company, ISA Internationale, Inc. and its wholly owned subsidiary, ISA Financial Services, Inc. (formerly ISA Acquisition Corporation).




25

1.b) PRESENTATION


On June 28, 2012, the Company filed Form N-54A with the United States Securities Exchange Commission to become a Business Development Company (BDC). As a result, it will soon become a closed-end company (mutual fund) organized and operated for the purpose of making investments in securities described in Section 55 (a)(1) through (3) of the Investment Company Act of 1940; and that it will make available significant managerial assistance to American companies with respect to issuers of such securities to the extent required by the act. The Company will commence significant investment activities in fiscal 2013 and as such will begin reporting and accounting methodologies consistent with BDC requirements at the beginning of fiscal 2013.


1.c) USE OF ESTIMATES


The preparation of the consolidated financial statements is 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, such as the fair value of investments and the useful lives of fixed assets, at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.


1.d) STOCK BASED COMPENSATION AT FAIR VALUE


Significant estimates of the fair value of the Company's common stock were computed under FASB ASC 718-30, Compensation - Stock-Based Compensation. The valuations were based upon the Company's estimates of the goods or services or transactional related value of consideration received by the Company. Since no established market exists for the Company's common shares, the Company used alternative valuations of estimates for consummated agreements and approved actions for preferred stock issuances by the Company through September 30, 2011 to the related party financial company.


There was no stock-based compensation of shares of the Company's common stock issued for services or other expenses for the fiscal years ended September 30, 2012 and 2011.




26


1.e) CASH


The Company considers all highly liquid debt instruments and other short term investments with an initial maturity of three months or less to be cash or cash equivalents. Restricted cash is the amount held in trust owed to our third party clients for collections on their accounts net of our fees.  


1.f) LOSS PER SHARE


Basic loss per share excludes dilution and is computed by dividing the net loss by the weighted average number of common shares outstanding during the period. Diluted loss per share includes assumed conversion shares consisting of dilutive stock options and warrants determined by the treasury stock method and dilutive convertible securities. In fiscal years ended September 30, 2012 and 2011, all potentially issuable shares have been excluded from the calculation of loss per share, as their effect is anti-dilutive.  


1.g) INCOME TAXES


The Company has adopted the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial statement carrying amount and tax basis of assets and liabilities. The Company provides for deferred taxes at the enacted tax rate as of the balance sheet date.


1.h) FINANCIAL INSTRUMENTS


The Company has categorized it financial assets and liabilities based upon the Fair Value Measurement and Disclosures (ASC 820). This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures.

      



27

This standard does not require any new fair value measurement, but discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost).


Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability.  The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.


In addition to defining fair value, the disclosure requirements around fair value establishes a fair value hierarchy for valuation inputs which is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are described as:


     

Level 1:

Quoted Market prices in Active Markets

Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

     

Level 2:

Significant Observable Inputs

Inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.



     

Level 3:

Significant Unobservable Inputs

Inputs are generally unobservable and typically reflect management's estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.


The carrying value of the Company's financial assets and liabilities which consist of cash, accounts payable and accrued liabilities, and notes payable are valued using level 1 inputs.  The Company believes that the recorded values approximate their fair value due to the short maturity of such instruments. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments.






28


1.i) FAIR VALUE OF FINANCIAL INSTRUMENTS


Fair value measurements of our financial instrument assets are presented in the following table:


     

     Fair Value Measurements as of September 30, 2012:


                        

Level 1   Level 2    Level 3      Total


Assets

  Investment NewsBeat Social, Inc.      $-           $-    $32,000   $ 32,000

Total Assets                               -            -    $32,000    $32,000



    Fair Value Measurements as of September 30, 2011:


                        

Level 1   Level 2    Level 3      Total


Assets

  Finance Receivables

         $-           $-

 $75,879    $75,879

Total Assets                                -           -     75,879     75,879


The following table is a reconciliation of changes in the net fair value of financed receivables which are classified as level 3 in the hierarchy.


                                                       2012       2011

                                                     -------    -------

Balance as of October 1                              $75,879   $268,389

Purchases of Portfolios/Investments                   32,000     12,699

Sales of Portfolios                                  (66,392)         0

Gross Collections applied to inventory                (9,487)   (70,209)  

Impairment write-downs of receivables                      -   (135,000)         

                                                     -------- ----------

Balance as of September 30,                          $32,000    $75,879



The fair value of the Companys investment at September 30, 2012 approximates cost due to the short time period from the time of purchase and the operating activity of the investment company. At September 30, 2011, the Company recorded purchased receivables at actual cost, which represents a significant discount from the contractual receivable balances due called face value or principal due.  The Company computed estimated fair value of these receivables using proprietary pricing models that the Company utilized in making portfolio purchase decisions.


1.j) NEW ACCOUNTING PRONOUNCEMENTS


The Companys management has evaluated all recently issued accounting pronouncements through the filing date of these financial statements and has determined that these pronouncements will have no material impact on the financial statements of ISA Internationale, Inc.                                    


1.k) FIXED ASSETS


Fixed assets are stated at cost less accumulated depreciation. Depreciation is provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives, principally on a straight-line basis. Estimated service lives of property and equipment is 5 years.




29

(2.) LIQUIDITY AND GOING CONCERN MATTERS


The Company had become operational for the past three years in the debt collection business and did incur losses since its inception. As a result, the Company has an accumulated deficit of $10,077,994 at September 30, 2012. The net loss for the twelve month period ended September 30, 2012 was $167,251. Additionally, working capital represented a deficit of $345,571. These factors raised substantial doubt about the Company's ability to continue as a going concern.


The Company's ability to continue as a going concern depends upon successfully restructuring its debt, obtaining sufficient financing to maintain adequate liquidity and provide for capital expansion until such time as operations produce positive cash flow. The Company had been in reorganization but decided in June 2012, to cease its debt collection operations and change is business plan of operations to be that of a BDC.


The accompanying consolidated financial statements have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and liabilities in the ordinary course of business. The consolidated financial statements do not include any adjustments that might result if the Company was forced to discontinue its operations.


The Company's current plans are not to continue its debt collection operation, but instead develop an acceptable business plan of operations for the activities of a BDC more specifically operating as an internally managed, closed-end management investment company that has elected to be regulated as a business development Company under the Investment Company Act of 1940. We generally have to invest at least 70% of our total assets in qualifying assets, including securities of American companies, cash, cash equivalents, U.S.A. government securities and high-quality debt investments.


We plan to elect to be treated for tax purposes as a regulated investment company, or a RIC, under Subchapter M of the Code. However, there is no guarantee that we will be successful in obtaining or maintaining our RIC status. As a new BDC operation, we have not yet generated a taxable profit. As a new BDC investment company, we need to further develop the sources of funds either by loans or equity investments to sustain the activities intended for new ventures.


The consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.


(3.) INCOME TAXES


The Company has incurred significant net operating losses. The Company has not reflected any benefit of such net operating loss carry-forwards in the accompanying financial statements. The income tax expense benefit differed from the amount computed by applying the U.S. federal income tax rate of 34% to income before income taxes as a result of the following:

 

Tax Year ended September 30,                     2012        2011

                                            ---------      ---------

 Computed "expected" tax benefit                34.0%        34.0%

 State income tax, net of federal benefit        3.8%         3.8%

 Change in valuation allowance                 (37.8%)      (37.8%)

                                           ---------        -------

                                                  -%            -%

The tax effect of temporary differences that give rise to significant portions of the deferred tax assets for the period ended September 30, 2012 and September 30, 2014 is presented below:


Tax Year ended September 30,                     2012         2011

                                            ----------     ---------

Deferred tax assets:

  Net operating loss carry forward           $ 2,810,000     3,211,314

                                              ----------     ---------

Total gross deferred tax assets                2,810,000     3,211,314

  Valuation allowance                         (2,810,000)   (3,211,314)

                                             -----------    ----------

Net deferred tax assets                    $         --     $     --

                                             ===========    ==========


During the year ended September 30, 2012, a portion of the Companys available consolidated net operating loss was transferred to ISAC in connection with the sale of the operating subsidiary ISA Acceptance Corporation to DLC, a related party. Accordingly, the deferred tax benefits of the Company were reduced by the transferred portion of the accumulated deficit (net operating loss of $1,150,086) which reduced the presented deferred tax benefit by $401,314 at September 30, 2012.




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In assessing the realization of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based on the level of historical taxable income and projections of future taxable income over the periods in which the deferred tax assets are deductible, management does not believe that it is more likely than not the Company will realize the benefits of these deductible differences. Accordingly, the Company has provided a valuation allowance against the gross deferred tax assets as of September 30, 2012 and 2011.


For the year ended September 30, 2012, the Company reported a net operating tax loss carry-forward of approximately $7,466,658, after being reduced by the pass-off of that portion of the accumulated net operating loss carry-forward related to the subsidiary that was disposed of at June 30, 2012. The federal net operating loss carry-forward begins to expire in the year 2017.


Federal tax laws impose significant restrictions on the utilization of net operating loss carry-forward in the event of a change in ownership of the Company that constitutes an "ownership change" as defined by the Internal Revenue Code, Section 382. The Company's net operating loss carry-forward will be subject to the above limitations.


(4.) STOCK ISSUANCE


(4.a) PREFERRED STOCK


Preferred stock may be issued from time to time in one or more series. Each series is distinctly designated. All shares of any series of the preferred stock shall be alike in all rights to preference in liquidations, voting rights, dividends and other powers, qualifications, or restrictions.


As of September 30, 2012, all of the Companys previously issued 1,781,000 of preferred shares have been converted into 17,810,000 shares of common stock as authorized by the Companys Board of Directors.


Previous to September 30, 2011, the Companys subsidiary, ISA Acceptance Corporation which was sold as of June 30, 2012, had issued to a related party 22,400 shares of $25 par value 12% dividend non-convertible preferred shares, payable when declared. On June 28, 2012, the Company and its subsidiary converted the Preferred Stock of 22,400 shares into a 6% Note Payable on the books of the subsidiary in the amount of $560,000. This note was included in the Stock Purchase Agreement that was completed on June 29, 2012 and is included in the assumption of liabilities by the purchaser. This note and an additional $149,680 in various liabilities were assumed by the purchaser related party - as a part of the Stock Purchase Agreement. See note 5 - discontinued operations for a complete explanation of the Stock Purchase Agreement and a complete itemization of the assets sold and liabilities assumed within the transaction.  


During the fiscal year ended September 30, 2011, 292,000 preferred shares of the Companys Parent Co., ISA Internationale Co., par value $.0001, were issued to DCP valued at $1.00 per share as of March 31, 2011. No further issuances of preferred stock have been issued by the Company through September 30, 2012 and the DCP loan account had a balance due of $0 at the end of September 30, 2011.


In year ended September 30, 2011 the company declared a dividend of $94,066 which was subsequently settled for issuance of $94,066 convertible preferred shares.


(4.b) COMMON STOCK


As of September 30, 2012, an additional 7,065,300 of common shares were issued as a part of the Stock Purchase Agreement to previously owned wholly owned subsidiary, ISA Acceptance Corporation, consummated with the purchaser related party as consideration for the payment of intercompany loans and advances totaling $512,234 due to the subsidiary by the Parent Company at June 28, 2012.


There was an additional 17,810,000 of common shares issued to a related party management Company due for the conversion of previously issued Preferred Stock shares of 1,781,000 prior to September 30, 2011. See reference to note 4.a above for a further explanation of the issuance.


As a result of these new issues of common shares, there are 48,874,912 in common stock shares outstanding at September 30, 2012.


During the year ended September 30, 2012, there were no dividends due the holder of the converted preferred shares and all common shares as none have been declared during 2012.




31

As of September 30, 2012, 300,000,000 shares of common stock were authorized. There were 48,874,912 shares of common stock, par value $.0001 outstanding. As of September 30, 2011, there were 23,999,612 shares of common stock issued and outstanding.


In the fourth quarter of 2007, the company re-acquired 1,250,000 previously issued common stock shares from the U.S. Bankruptcy Court in accordance with a settlement agreement with the court. The re-acquired shares were valued at $.43 cents per share based upon then current average market prices prevailing during the fourth quarter of 2007. It is the intention of the Company in the near future or before September 30, 2013, to cancel these restricted shares and remove them from being issued and outstanding common shares.


(5.) CONVERTIBLE DEBT


(5.a) CONVERTIBLE DEBENTURES


The Company issued convertible debentures in a private placement between November 1999 and May 2000 in exchange for $1,591,640. These debentures were convertible at the option of the holder into common stock at $1.50 per share and had an interest rate payable quarterly beginning June 30, 2000 at 12% per annum.  The debentures had a term of three years and matured between November 2002 and May 2003. The Company defaulted on the payment of all of the principal and interest and converted all of the unpaid interest and principal into common shares of the Company except $200,000 of principal debenture loan advances.


In 2009, the Company removed from its books $150,000 of defaulted debentures and related interest of $167,946. After the Indemnification Agreement expired (see note 6) on the $150,000 of defaulted debentures, legal consul for the Company stated the liability could be removed from the books due to state statute of limitations laws.




32


During 2003, the Company extended one previously defaulted $50,000 convertible debenture to a future due date of March 31, 2006 with interest payable at that date. The interest rate on the remaining balance of $50,000 was lowered to 6% per annum.  Currently the debenture is in default and is convertible into 25,270 common shares at the rate of $3.00 per share at the option of the holder.  Through September 30, 2011, the liability had been offset by a contra-liability (indemnification receivable).  The indemnification agreement given by a related third party company in connection with this liability has expired as of September 30, 2011.  As of September 30, 2011, the balances of the debenture and the accrued interest are $50,000 and $25,611, respectively. As of September 30, 2012, thee balances of all of the convertible debentures, their related interest charges, the one extended promissory note in the amount of $50,000 and its related interest in the amount of $27,116 have been removed from the books of the Company. Reference should be made to note 6 for further details.


(5.b) CONVERTIBLE or SECURED NOTES PAYABLE - RELATED PARTY


The principal parties of Doubletree Capital Partners, Inc. (DCP) have lending arrangements with ISAT, as promulgated by and between DCP and the past board of directors and officers of the company who had subsequently resigned their positions throughout the years 2000 and 2001.  The financial company is owned by two individuals, one of which is ISAT's current President, CEO and Chairman of the Board of Directors. The two principals advance funds as deemed necessary from other entities they control and the balance is listed as a Loan Payable to Related Parties. If surplus funds are available the Loan is reduced.


During the fiscal year ended September 30, 2012, DCP provided the financing necessary to maintain operations by advancing loans and advances of $144,984 to the Company. These monies included cash advances, net of repayments of $147,707. None of these advances were repaid except a consulting fee was added to the amount in the amount of $35,000 and a note payable at September 30, 2012 to DCP was in the amount of $83,949. The remaining amount of advances net of repayments in the amount of $98,758 have been recorded as contributed capital as of September 30, 2012.


During the fiscal year ended September 30, 2011, DCP provided the financing necessary to maintain operations by loaning an additional $283,123 to the Company. These advances included cash advances of $120,100 and reimbursed expenses totaling $163,023. All of these advances were repaid with the issuance of preferred stock shares and $114,208 which is recorded as contributed capital as of September 30, 2011.


In prior years, all advances were either repaid in full or resolved through the issuance of Convertible Series A 12% Preferred Stock to the related party. During the year ended at September 30, 2011, 292,000 Series A Preferred stock shares were issued for partial payment of advances totaling $197,934 and dividends declared in the amount of $94,066. As of April 1, 2011, the Company has suspended the issuance of future dividends on the 1,781,000 convertible 12% Series A Preferred Stock shares that are outstanding.


(5.c) OTHER RELATED PARTY TRANSACTIONS - CONVERTIBLE


Indemnification Agreement - Related Party


The Company had reported a $50,000 convertible debenture and the related interest due thereon in the amount of $27,116 as of March 31, 2012. The Company has removed the liability of $77,116 at June 30, 2012 due to the expiration of the Statute of Limitations under Minnesota Law for the payment of the debt as well as the expiration of an Indemnification Agreement between the Company and the Companys Management Party. As a result, the Company recorded an extraordinary item of income at June 30, 2012 in the amount of $77,116. This gain of $77,116 has been recorded as an extraordinary item of income due to the extinguishment of the debt on the books of the Company at June 30, 2012.




33

(6.) DISCONTINUED OPERATIONS

                                               

During the recent quarters of operations beginning with the fiscal year ended September 30, 2009, the Company had experienced a history of losses from operations. Due to the Company's financial condition and inability to continue ongoing operations with current cash flows, along with debt obligations, the Company's Board of Directors and management determined that it would be in the best interest of the Company's stockholders to sell all of the operating assets and liabilities associated with the Companys wholly-owned subsidiary that was in the debt collection business on June 28, 2012.

    

On June 28, 2012, the Board of Directors approved the sale of all the assets and liabilities of a wholly owned subsidiary operating completely within the debt collection business to related parties that had been directing and operating all of the efforts of the Company to establish itself within that industry.  The related parties have a Company that has been in the debt liquidation business and through an agreement the parties have decided to sell the assets and related inherent liabilities to that entity 100% owned by the related parties under a Stock Purchase Agreement dated June 29, 2012. Accordingly, on June 29, 2012 the Company completed the sale of substantially all of the subsidiary assets and liabilities of the subsidiary ISA Acceptance Corporation to Doubletree Liquidation Corporation, a Minnesota corporation formed in 2005 by the related parties, for consideration valued at $22,782, which consisted of the following:                                                                      



The transaction as herein described:


(i)  7,065,300 of the seller Companys, ISA Internationale, Inc. common stock shares which were to be delivered to the Purchaser at Closing.      


(ii) An unsecured promissory note in the aggregate principal amount of          

$22,782, as amended on September 30, 2012, (amended from $14,500 that was determined to be due at June 30, 2012) due the seller within 3 years. The promissory note bears interest at the rate of 6%, with principal and interest due on upon the disposition of the liquidation of the various assets sold on June 29, 2012. Additional proceeds are due as follows in a separate provision in the purchase agreement as of June 30, 2012. The Purchaser DLC also has the obligation to pay to the seller ISAF, additional certain specific excess proceeds received by DLC on the sale of the first 3,000,000 shares of ISA Internationale, Inc. in excess of $.25 per share of stock sold and further after all of the trade debts that are owed by ISAC as of June 29, 2012 are paid in full. This provision is not a part of the promissory note obligation on the payment of the $22,782 plus interest due thereon until paid in full, but is a part of the Purchase Agreement signed by ISAF to Doubletree Liquidation Corporation






The following tables summarize the consideration received and the net           liabilities divested:


Consideration Received


Promissory Note in the amount of $22,781 with interest at the rate of 6% per annum until paid in full.


Proceeds received by DLC, the seller, on shares sold by them exceeding a sale price of $.25 per share on the first 3,000,000 common shares sold by the purchaser, as explained above. No value to this provision has been calculated as of June 30, 2012 because the Company cant predict what proceeds, if any, would accrue to the Company on the sale of common shares tendered to ISAC in full payment for the intercompany loans paid in full with the issuance of 7,065,300 common stock shares to ISAC or if the holder of the shares will even be able to sell any of the shares of common stock received..                                                                  


Total fair value of consideration received ...................       $ 22,782

                                                                   ===========


Assets Divested


Cash .........................................................      $   2,760

Accounts receivable ..........................................            280

Property and Equipment, net ..................................          2,037

Debt Collection Receivables (unrecovered original cost).......         66,392

ISAT common stock(7,065,300 shares) valued at $ .0725

  per share                                                           512,234                         

                                                                   -----------

Total assets divested ........................................$       583,703        

                                                                   ===========


Liabilities Divested


Accounts payable ....................................         $ 23,875           

Loans Payable related party    ....................          125,805

Loan Payable - related party ...................               560,000

                                                              

Total liabilities divested ..........................          709,680

                                                           -----------

Fair value of the consideration received                                        

 plus the net liabilities divested ....................      $ 148,759

                                                           ===========


Included in Discontinued Operations for the year ended September 30, 2012 was revenue of $50,476. For the year ended September 30, 2012, net loss included in discontinued operations was $ 78,790.                                           


No gain or loss was recorded in relation to the 2012 Asset Sale as the          transaction was between entities under common control. Accordingly, the excess of the fair value of the consideration received over the net assets disposed of was treated as a capital contribution in the statement of shareholders equity at September 30, 2012.                                          


Note 7 - BUSINESS DEVELOPMENT CORPORATION


As of June 30, 2012, the Company filed Form N-54A with the United States Securities Exchange Commission to become a Business Development Company. As a result, it will soon become a closed-end company (mutual fund) organized and operated for the purpose of making investments in securities described in Section 55 (a)(1) through (3) of the Investment Company Act of 1940; and that it will make available significant managerial assistance to American companies with respect to issuers of such securities to the extent required by the act.


1)

The Company has commenced the development of new management consulting services to assist American client companies in complying with the reporting requirements to the government and in communicating with shareholders, customers and the public and the accessing of needed growth capital. The Company will be receiving shares from its various new client for financial consulting work completed in the succeeding quarters going forward from July 1, 2012.


2)

In June, 2012, the Company entered into its first agreement with NewsBeat Social, Inc, an Oregon corporation, a Company organized to provide social news content via the internet, such as Facebook, Inc. A commitment to purchase 2,000,000 shares of NewsBeat, Inc. was consummated on June 29, 2012. A copy of that agreement is attached to this Form 10Q filing as an exhibit. The total purchase price was approximately $32,000 and is not considered significant. The Company plan is to purchase more investments during 2013 and as such will report as a BDC commencing October 1, 2013.


(8.) FIXED ASSETS


Fixed assets and accumulated depreciation consists of the following at:


                                           September 30,     September 30,

                                               2012              2011

                                            -----------       -----------

Automobile, at cost                           $ 18,505        $  18,505

  Less accumulated depreciation                (10,178)          (6,477)

Computer equipment, at cost                     10,505           50,552

  Less accumulated depreciation                 (7,585)         (38,120)

                                               --------        ---------

Net fixed assets                              $ 11,247        $  24,460

                                               -------        ----------


Depreciation expense                          $  5,369        $  30,706





34


ISA Financial Services, Inc. signed a secured note on January 14, 2010 in the amount of $18,125 at 5.11% interest to purchase an automobile which is used as collateral for the loan. The note is personally guaranteed by an officer of the Corporation and the automobile is pledged as collateral to the loan. ISAF is current on the payments of this loan with a principal balance due of $ 9,035 at September 30, 2012.


For the year ended September 30, 2011, the Company has recorded a reduction in carrying value of $8,225 as additional depreciation expense due to a Company estimate of remaining salvage value of equipment currently on hand at that date.


(9.) CREDIT LINES PAYABLE


During the year ended September 30, 2011, the Company received $8,446 in loan proceeds and interest charges and paid back $8,533 in loan payments for its available bank credit lines of $10,000. The interest rate is 12.0% per annum and the lines are payable on demand and unsecured. The lines are personally guaranteed by the Company's President. The Company owed $0 and $18,360 in bank credit lines payable at the end of September 30, 2012 and 2011, respectively.


(10.) COMMITMENTS


There are no contractual agreements outstanding as of September 30, 2012. The Company rents its office facilities from the Companys President at the rate of $500 per month on a month to month basis.


(11.) OTHER NOTES PAYABLE


Bernard L. Brodkorb, President of ISAT, has a Loan Agreement with ISAF issued on January 25, 2010 in the amount of $25,008 used to finance a portfolio purchase. This 24 month note pays 11% interest, and requires monthly payments of $1,156. As of September 30, 2012, no payments have been made on this note, and it is considered to be in default. Interest amounting to $8,646 has been accrued for a total loan balance of $33,654 At September 30, 2012.

                              

A related party investor, C. J. Newman, Vice President of Doubletree Capital Partners, Inc., has two loan agreements with ISAF issued on June 25, 2010 and August 3, 2010. Both loans are for $25,000 for a total of $50,000. The notes each have a 24 month term and pay 11% interest. No payments have been made on these notes and interest has been accrued. The current balance is $63,826.


The following table presents the all Notes Payable broken out between the current portion and the long-term portions due as of September 30, 2012. There are three notes that total $99,600 in principal and interest with $90,473 being the current portion and $9,127 the long term portion due.



35

                                        Current    Long-term    Total


Note 1 Other Note Payable              $ 3,741     $ 5,293    $ 9,034

Note 2 Note Payable Related Party       33,654           -     33,654

Note 3 Note Payable Related Party       63,826           -     63,826

                                       -------     --------   --------

                                     $ 101,221     $ 5,293    106,514


(12.) LEGAL PROCEEDINGS


During the year ended September 30, 2012, the Company was not sued in or a plaintiff in any new legal matters except in the ordinary course of its operational business to collect purchased debt receivables. As of September 30, 2012, there were two lawsuits currently pending regarding proposed violations of collection procedures. The Companys sold subsidiary, ISA Acceptance Corporation is a named defendant but ISAT Company, its former Parent company, does not believe the exposure in these two proceedings will have a material and adverse effect on the financial stability of the Company.


(13.) SUBSEQUENT EVENTS


In October 2013, the Company issued 50,000 shares of common unregistered shares to an independent contractor that will be used to assist the Company in finding viable investment candidates for the Companys new BDC business model.


Subsequent to September 30, 2012, the Company negotiated a second investment transaction in line with its intended Business Development Company activities that commenced on October 1, 2012. On December 21, 2012 the Company signed and executed a second investment transaction agreement, as intended within its developing Business Development Company activities, with Re@lityCorp (RE@LITY), a Delaware corporation located in Newport, DE. RE@LITY focuses on eClinical valuation services using its proprietary platform, ClinTest; and ISAT will focus on mentoring, coaching and enhancing the investment opportunity for the healthcare and technology on behalf of RE@LITY Corp. ISAT will either directly or through its assigns, or investors facilitated by ISAT, acquire equity interests in RE@LITY for a minimum of $1,000 in cash, payable at closing and, ISAT will then distribute a pre-agreed portion of its equity interests to its shareholders as a dividend. A copy of the agreement is attached to this 10-K filing as of the date of this report.


The independent contractor referred to in paragraph one in this footnote (13.) has also been issued 300,000 shares of common unregistered shares for his assistance in the efforts to obtain the second investment transaction herein with RE@LITYCorp.

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE


Section 4.1 Changes in Registrants Certifying Accountant.


On November 16, 2012, ISA Internationale, Inc. (the Company) decided to change its independent registered public accountants, and accordingly dismissed Seale and Beers, CPAs. Seale and Beers reports on the Companys financial statements during the past year did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.


The decision to change independent registered public accountants was proposed by management to the Audit Committee and the Audit Committee subsequently recommended to the Board of Directors. By direction of the Board of Directors, the Audit Committee analyzed and approved the change.


There were no disagreements with Seale and Beers, CPAs on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which if not resolved to Seale and Beers satisfaction would have caused it to make reference to the subject matter of the disagreement in connection with its report.


The Company has provided Seale and Beers, CPAs with the contents of this current report on Form 8-K and has requested that Seale and Beers, CPAs furnish a letter addressed to the Securities and Exchange Commission stating whether it agrees with the statements made by the Company in this report, and if not, stating the respects in which it does not agree. A copy of the letter from Seale and Beers, CPAs to the Securities and Exchange Commission is filed as Exhibit 16.1 hereto.


On November 16, 2012, the audit committee approved the engagement of Boulay, Heutmaker, Zibell and Co. P.L.L.P. (Boulay) as the Companys independent registered public accounting firm for the year ending September 30, 2012 subject to Boulays completion of its client acceptance process.


During the years ended September 30, 2011 and September 30, 2012 and through November 16, 2012, neither the Company nor anyone on its behalf has consulted Boulay with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Companys financial statements, and neither a written report nor oral advice was provided to the Company that Boulay concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).











36


Item 9A. CONTROLS AND PROCEDURES


(a) Evaluation of Disclosure Controls and Procedures


ISA International Inc., under the direction, supervision, and participation of our Chief Executive Officer and Chief Financial Officer and effected by management and other personnel, has conducted an evaluation as of the end of the period covered by this report, of the effectiveness of the design and operation of disclosure controls and procedures (as defined in Rules 240.13a-15(e) and 240.15d-15(e) of the Securities Exchange Act of 1934). Based on the foregoing, we concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this annual report.


(b) Management's Report on Internal Control Over Financial Reporting


The management of ISA Internationale Inc. is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the direction, supervision, and participation of, our Chief Executive Officer and Chief Financial Officer and effected by management and other personnel, our management and certifying officers conducted an evaluation as of the end of the period covered by this report, of the effectiveness of internal control over financial reporting based on the framework in Internal-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO-Framework).  A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Companys annual or interim financial statements will not be prevented or detected on a timely basis.  In connection with managements assessment of our internal control over financial reporting as required under Section 404 of the Sarbanes-Oxley Act of 2002, we identified the following material weakness in internal control over financial reporting as of September 30, 2012:


The Company has not established adequate financial reporting monitoring activities to mitigate the risk of management override.  Specifically, there is a lack of segregation of duties as there is only one officer/employee overseeing the finance department.  Although the controls are not effective, this material weakness did not result in any material misstatements in our consolidated financial statements.

 



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This annual report does not include an attestation report of the Company's registered public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation by the Company's registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management's report in this annual report.


Changes in Internal Control over Financial Reporting


There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our most recently completed fiscal quarter, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


Item 9B.  OTHER INFORMATION


None




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                                   PART III


Item 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE


Directors and Executive Officers of the Company


Set forth below are the names of the directors and executive officers of the Company as of September 30, 2012, their ages, the year first elected as an executive officer and/or director of the Company, and employment history for the past five years.


Also set forth below are the changes to names of the directors and executive officers of the Company as of January 1, 2004 through September 30, 2012, their ages, the year first elected as an executive officer and/or director of the Company, and employment for the past five years.


Name              Positions with the Company          Age    Since


Bernard L. Brodkorb, President, Chief Executive Officer,

           Chief Financial Officer and Director

           Chairman of the Board of Directors [1]      71    January 2001


[1] (Note: Also served as Treasurer, Chief Financial Officer and Director from October 1997 to July 2000)


Donald G. Kampmann      Outside Director               57    January 2000

(Mr. Kampmann resigned as a director of the Company effective, January 19, 2012)


Steven E. Boynton       Outside Director               52    November 2011


Directors:


BERNARD L. BRODKORB (October 1997 to July 2000 and January 2001 to present) was the Treasurer, Chief Financial Officer and a director of the Company from it's inception in October 1997 to July 2000 when he resigned his positions. He was reelected to the board of directors in January 2001 and elected by the board of directors as President, Chief Executive Officer, and Chief Financial Officer in February 2001. Mr. Brodkorb is an independent practicing licensed Certified Public Accountant (CPA) within the State of Minnesota for many years, and has extensive experience in financial and accounting matters relating to both private and public companies, including auditing, financial consulting and advising on corporate taxation. He is a member of the Minnesota Society of Certified Public Accountants and the American Institute of Certified Public Accountants.


STEVEN E. BOYNTON  (November 2011 to present is an outside director of the Company from November 2011 to present. Mr. Boynton is a practicing attorney in the State of Minnesota. He has extensive executive experience in the collection, legal and financial services industries.




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Section 16(A) Beneficial Ownership Reporting Compliance


Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), requires the Company's directors, executive officers, and any persons holding more than 10% of the outstanding common stock of the Company to file reports with the Securities and Exchange Commission concerning their initial ownership of common stock and any subsequent changes in that ownership.  


In 2009 and 2008, Bernard Brodkorb, Charles Newman, James Dixon, Donald Kampmann, Doubletree Capital Partners, Inc., and Doubletree Liquidation Corporation filed Annual Statements of Changes in Beneficial Ownership on Form 5. In the fiscal year ended September 30, 2012, additional forms are required to be filed reporting changes that have occurred. These reports will be filed before this 10K report is filed.


CODE OF ETHICS


We have adopted a code of ethics that applies to our principal executive officers, principal financial officer, principal accounting officer or controller, and Directors or persons performing similar functions.






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Item 11.  EXECUTIVE AND DIRECTOR COMPENSATION


For the twelve months ended September 30, 2012 and 2011, non cash compensation was paid to executive officers or directors through the related party financial company Doubletree Capital Partners, Inc.


The following table sets forth information on the remuneration of our chief executive officer during any part of our last two fiscal years, including non cash compensation. No cash compensation was paid.


                          SUMMARY EXECUTIVE AND DIRECTOR COMPENSATION

-------------------------------------------------------------------------------------------------

                       ANNUAL COMPENSATION                                LONG TERM COMPENSATION

                                                           AWARDS               PAYOUTS

           FISCAL                      OTHER      RESTRICTED    SECURITIES

NAME AND    YEAR                       ANNUAL       STOCK       UNDERLYING    LTIP    ALL OTHER

PRINCIPAL   END                      COMPENSA       AWARD        OPTIONS     PAYOUTS   COMPENSA

POSITION   09-30    SALARY ($) BONUS ($)TION ($)    ($)          SARS ($)     ($)      TION($)

Bernard L.  2012       $ 0       -0-   35,000       -0-             -0-        -0-      -0-

Brodkorb (1)

Bernard L.  2011       $ 0       -0-   25,000       -0-             -0-        -0-      -0-

Brodkorb (1)

President, CEO


Directors   2011        -0-     -0-         -0-      -0-             -0-        -0-      -0-

Directors   2010        -0-     -0-         -0-      -0-             -0-        -0-      -0-



(1) Compensation for Bernard L. Brodkorb and the management company (DCP) was recorded on the books of the Company as compensation for consulting ($35,000) and $25,000 and salary ($0) for the fiscal years ended September 30, 2012 and September 30 2011, respectively.. There was no cash compensation paid on consulting fees accrued for Brodkorb and the management company (DCP) for the either fiscal year ended September 30, 2012 and 2011. Compensation for their services is allocated to the management company and is further converted to the issuance of preferred stock shares by the Company during the year ended September 30, 2011.


Director Compensation


Directors received no new shares or other compensation for their services as directors for the three year period from October 1, 2008 through September 30, 2012.


No additional Director compensation has been authorized for services for the period from October 1, 2009 through September 30, 2012, and through the date of this 10-K report filing.


Stock Options Granted for Compensation


As of September 30, 2012, all stock options had expired and are no longer outstanding. None of the stock options granted has ever been exercised.





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Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


The following table sets forth as of September 30, 2012 certain information regarding the beneficial ownership of shares of common stock of the Company by (1) each person or entity who is known by the Company to own more than 5% of the Company's common stock, (2) each director of the Company, and (3) all directors and executive officers of the Company as a group. It does not include stock options or preferred stock ownership noted in the footnotes.


12-A. Security Ownership of Certain Beneficial Owners


Title      Name and Address           Amount and nature of      Percent of

of class   of Beneficial Owner        beneficial ownership        Class

-------------------------------------------------------------------------

Common   Doubletree Capital Partners, Inc.    44,947,924           91.97%

         2560 Rice St                            (1)(2)

         St. Paul, MN 55113


Common   Bernard L. Brodkorb                  46,130,711           94.39%

         2560 Rice St.                           (2)

         St. Paul, MN. 55113


(1) Includes 21,428 common shares acquired in November, 2000. Includes 100% interest in 1,232,143 shares held by Doubletree Liquidation Corporation (DLC), an affiliated company to be used for the resolution of any contingent, non-contingent or real liabilities to creditors of a former subsidiary that may arise in the future. DCP also owns 17,810,000 common shares issued in exchange for  1,781,000 of Convertible Preferred Stock which at a conversion value of $0.10 would equal 17,810,000 shares of common stock issued on June 28, 2012.  DLC is the owner of ISA Acceptance Corporation that is the owner of 7,065,300 of common shares issued to ISAC at June 28, 2012. DLC owns 100% of the entity ISA Acceptance Corporation and these shares are included in the beneficial ownership interests presented above.


(2) Includes a 100% beneficial interest in DCP, a 50% beneficial interest in DLC and its beneficial ownership, interests referred above, 8,929 common shares owned since 1998, 383,857 common shares issued in 2004, 790,000 shares issued in 2006, 50% interest in 9,700 shares issued in 2007 to DCP.  


12-B. Security Ownership of Management


Title         Name of                 Amount and nature of       Percent of

of class   Beneficial Owner           beneficial ownership          Class

-------------------------------------------------------------------------

Common   Bernard L. Brodkorb,                46,130,711  (1,2)     94.39%

                                             ----------            -------

Directors and executive officers as a group  46,130,711            94.39%


 

12-C. Changes in control


There have not been any arrangements known to the registrant which may at a subsequent date result in a change in control of the registrant.




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Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AMD DIRECTOR INDEPENDENCE


Recent transactions:


During the fiscal year ended September 30, 2011 the Company issued 292,000 shares of Cumulative Convertible Series A Preferred Stock to DCP at $1.00 per share par value in settlement of current loan liabilities and accrued interest valued at $292,000.


During the fiscal year ended September 30, 2012, the Company issued 7,065,300 common shares, par value $.0001 to ISA Acceptance Corporation, a former wholly owned subsidiary, as payment in full for the unpaid loans and advances by ISAC to the parent company during the period from August 31, 2004 through June 29, 2012.


During the fiscal year ended September 30, 2012 the Company issued 17,810,000 common shares, par value $.0001, in exchange for their 1,781,000 shares of Cumulative Convertible Series A Preferred Stock that had been issued to them since October 1, 2007 through June 29, 2012.


The total issued and outstanding common shares are 48,874,912 as of September 30, 2012.




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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES


Audit Fees.


The aggregate fees billed for each of the last two fiscal years for professional services for the audit of the Registrant's annual financial statements, and review of financial statements included in the Company's Form 10-K and 10-Qs: $24,165 in 2012 and $24,750 in 2011.


Audit-Related Fees.


The aggregate fees billed in each of the last two fiscal years for assurance and related services that are reasonably related to the performance of the audit or review of the Registrant's financial statements and are not under Audit Fees above: $0 in 2012 and 2011.


Tax Fees.


The aggregate fees billed in each of the last two fiscal years for professional services rendered for tax compliance and tax planning: $0 in 2012 and 2011.


All Other Fees.


The aggregate fees billed in each of the last two fiscal years for products and services other than the services reported above: $0 in 2012 and 2011.


Audit Committee's pre-approval policies and procedures.


The Registrant's committee consists of two Directors. The audit committee has adopted a written charter. The Registrant's Board of Directors has determined the Company does have a financial expert serving on its audit committee.


The Registrant does not have any pre-approval policies and procedures. The audit committee makes recommendations concerning the engagements of independent public accountants, review with the independent public accountants, the scope and results of the audit engagement, approves all professional services provided by the independent accountants, reviews the independence of the independent public accountants, considers the range of audit and non-audit fees, and reviews the adequacy of the Registrant's internal accounting controls.


Work performed by other than the principal accountant's engagement of full time permanent employees.


The percentage of time expended by other than full time permanent employees of the principal accountant did not exceed 50%.


Item 15. EXHIBITS


(a)  LISTING OF EXHIBITS


The exhibits required to be a part of this report are listed in the Index to

Exhibits.


Section 4.1 Changes in Registrants Certifying Accountant.


On November 16, 2012, ISA Internationale, Inc. (the Company) decided to change its independent registered public accountants, and accordingly dismissed Seale and Beers, CPAs. Seale and Beers reports on the Companys financial statements during the past year did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles.


The decision to change independent registered public accountants was proposed by management to the Audit Committee and the Audit Committee subsequently recommended to the Board of Directors. By direction of the Board of Directors, the Audit Committee analyzed and approved the change.


There were no disagreements with Seale and Beers, CPAs on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which if not resolved to Seale and Beers satisfaction would have caused it to make reference to the subject matter of the disagreement in connection with its report.


The Company has provided Seale and Beers, CPAs with the contents of this current report on Form 8-K and has requested that Seale and Beers, CPAs furnish a letter addressed to the Securities and Exchange Commission stating whether it agrees with the statements made by the Company in this report, and if not, stating the respects in which it does not agree. A copy of the letter from Seale and Beers, CPAs to the Securities and Exchange Commission is filed as Exhibit 16.1 hereto.


On November 16, 2012, the audit committee approved the engagement of Boulay, Heutmaker, Zibell and Co. P.L.L.P. (Boulay) as the Companys independent registered public accounting firm for the year ending September 30, 2012 subject to Boulays completion of its client acceptance process.


During the years ended September 30, 2011 and September 30, 2012 and through November 16, 2012, neither the Company nor anyone on its behalf has consulted Boulay with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Companys financial statements, and neither a written report nor oral advice was provided to the Company that Boulay concluded was an important factor considered by the Company in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions to Item 304 of Regulation S-K) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).










44


ISA INTERNATIONALE INC.

FORM 10-K INDEX TO EXHIBITS


The following exhibits numbered 3.1 to 10.1 below are included in our Form 10-SB Registration Statement (File No. 0-027373) and are incorporated by reference. Exhibits 31.1 and 32.1 are filed herewith.


Exhibit No.  Description


3.1      Articles of Incorporation of the Company (incorporated by reference to Exhibit 2(i) to the Company's registration statement on Form 10-SB (File No. 0-27373)).


3.2      By-laws of the Company (incorporated by reference to Exhibit 2(ii) to the Company's registration statement on Form 10-SB (File No. 0-27373)).


4.1      Form of Common Stock Certificate (incorporated by reference to Exhibit 3 to the Company's Registration Statement on Form 10-SB (File No. 0-27373)).


10.1     Agreement and Plan of Business Combination dated April 11, 1998 between ISA Internationale Inc. (formerly known as 1-800 Consumer International Inc.), a Delaware corporation and Internationale Shopping Alliance, Inc., a Minnesota corporation (now a wholly owned subsidiary of ISA Internationale Inc. (incorporated by reference to Exhibit 6(i) to the Company's registration statement on Form 10-SB (File No. 0-27373)).


10.2   Indemnification Agreement between ISA Internationale Inc. and Doubletree Liquidation Corporation., a Minnesota corporation.


10.3      Agreement between ISA Internationale, Inc. and Newsbeat Social, Inc. dated June 30, 2012.

 

10.4       Agreement between ISA Internationale, Inc. and RE@LITYCorp dated December 21, 2012.


16.1      Letter from Seale & Beers CPAs stating no disagreement with the Company as to reason for change in auditors for FYE 9/30/12.


31.1      Rule 13a-14(a) Certification of Chief Executive Officer relating to the Registrant's Annual report on Form 10-K for the year ended September 30, 2012.


32.1       Certification of Chief Executive Officer of Registrant pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, relating to the Registrant's Annual report on Form 10-K for the year ended September 30, 2012.


                               SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated, thereunto duly authorized.



ISA INTERNATIONALE INC.


/s/Bernard L. Brodkorb

By Bernard L. Brodkorb  

                                 

President, Chief Executive Officer, and Director


January 14, 2013

End of Report







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