Attached files
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
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[X]
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE YEAR ENDED MAY 31, 2013
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Commission file number 000-54093
WILESS CONTROLS INC.
(Exact Name of Small Business Issuer as specified in its charter)
NEVADA
(State or other Jurisdiction of Incorporation or Organization)
3450 St. Denis
Suite 202
Montreal, Quebec
Canada H2X 3L3
(Address of principal executive offices)
(514) 904-2333
(Issuer’s telephone number, including area code)
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Securities registered pursuant to Section 12(b) of the Act:
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Securities registered pursuant to section 12(g) of the Act:
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None
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Common Stock
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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 15(d) of the Act: YES [ ] NO [X]
Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (SS 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 if the Exchange Act.
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Large Accelerated Filer
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Accelerated Filer
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Non-accelerated Filer
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Smaller Reporting Company
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[X]
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(Do not check if smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES [ ] NO [X]
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked price of such common equity, as of November 30, 2012 - $491,002
As of August 28, 2013, 64,700,659 shares of the registrant’s common stock were outstanding.
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Business.
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3
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Risk Factors.
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6
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Unresolved Staff Comments.
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Properties.
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Legal Proceedings.
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6
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Mine Safety Disclosures.
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Market Price for the Registrant’s Common Equity, Related Stockholders Matters and
Issuer Purchases of Equity Securities.
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Selected Financial Data.
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7
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Management’s Discussion and Analysis of Financial Condition and Results of Operation.
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Quantitative and Qualitative Disclosures About Market Risk.
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12
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Financial Statements and Supplementary Data.
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Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
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26
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Disclosure Controls and Procedures.
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Other Information.
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Directors, Executive Officers and Corporate Governance.
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Executive Compensation.
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31
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
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Certain Relationships and Related Transactions, and Director Independence.
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Principal Accounting Fees and Services.
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Exhibits and Financial Statement Schedules.
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Our mission is to become a leading solution provider of wireless communication services designed to control and manage the access and use of virtually any asset from “anywhere-to-anywhere” in the world. This is the world of Machine-to-Machine, the “Internet of Things”. With the combination of its embedded device, global network and web service, the our platform moves the information from the source directly to the desktop, greatly reducing cost and implementation time, at the same time helping develop new service offerings and open up new markets.
Our solutions improve the management of remote assets. We provide technically sophisticated, user friendly web-based access to the operating information gathered from remote assets such as stationary equipment like motors, vending machines, heating and air conditioning systems, through the use of an open wireless platform. This information is tailored to meet client’s financial, operational and/or security needs. Our system solution includes rugged devices with wireless communication, a GPS chipset, sensors, and web-applications to monitor assets, warn managers of out of tolerance situations and provide timely and accurate information about asset utilization in order to feed key decision-making.
The solution combines wireless devices, embedded operating systems, a wireless gateway to the network carriers, web applications and a secure hosting environment to provide carrier grade service to customers.
History
We were incorporated under the laws of the State of Nevada on May 6, 2009. We were originally formed with the intent of creating a profitable service for placing Canadian citizens in accounting positions with Canadian corporations. From the date of our incorporation until August 5, 2010, we were in the business of placing Canadian citizens in accounting positions with Canadian accounting firms and corporations located in the Province of Quebec.
On August 5, 2010, we filed a Certificate of Amendment with the State of Nevada, changing our name from “Montreal Services Company” to “iMetrik M2M Solutions Inc.” to reflect our new business orientation of the Company to be a solution provider of wireless communication services designed to control and manage the access and use of virtually any asset from “anywhere-to-anywhere” in the world. On November 29, 2012, we changed our name to Wiless Controls Inc. Our shares of common stock are traded on the OTCBB operated by the Financial Industry Regulatory Authority under the symbol “WILS”.
We maintain our statutory registered agent’s office at 1000 East William Street, Suite 204, Carson City, Nevada 89701 and our business office is located at 3450 St-Denis Street W, Suite 202, Montreal, Quebec, Canada H2X 3L3.
Our management has no expertise in providing any such services. Michel St-Pierre, our sole officer and director, is responsible for all of our operations.
Overview
M2M refers to solutions that enable machines to communicate with a central server without requiring human intervention. M2M is not a new technology. In fact, it is based on a combination of several mature electronics, information and telecommunications technologies. M2M is mainly driven by the wide adoption of wireless network technologies, which served to open new markets namely for mobile assets, ease deployment and greatly reduce costs.
Over the past few years, standardized packet data wireless technologies, such as GSM/GPRS, WiFi, and adoption of Internet Protocol (IP) standards have enabled the creation of M2M solutions previously not economically viable nor technically possible. As observed in many industries, the adoption of standards has accelerated implementation of M2M solutions. Many different asset-intensive industries, and particularly large enterprises, are now aware of the potential benefits that M2M represents for their operations, for example, helping reduce costs and optimize the utilization of resources and assets. Additionally these solutions can assist in preventive maintenance services, or launching new product offerings, creating new sources of revenue.
Inefficient management of assets, especially in asset-intensive industries such as utilities, transportation, discrete and process manufacturing, leads to overspending, lost production time, and dissatisfied customers. As a result these can erode corporate profitability. To improve asset utilization companies are adopting enterprise asset management solutions to enhance overall profitability; asset utilization and asset performance; reduce equipment downtime; and increase inventory turns.
Geographical market
We promote our services in North America. We intend to expand our operations to other geographical areas as we generate additional adequate revenues.
Market
Numerous market sectors fall comfortably under the M2M umbrella due to the need to respond to a wide array of requirements, depending on the nature of the machine and its location. We want to market and distribute M2M solutions for stationary asset markets worldwide using the Wiless Controls technologies developed over the last two years, as well as developing new applications. This includes industrial, commercial and personal market segments such as building management, lighting systems, vending machines, point of sale terminals, information technology equipment, power supply systems, security, remote healthcare monitoring and mobile internet devices.
Website
We created and are maintaining a website which allows us to market our services on the Internet.
Competition
Because we are small and in a start-up phase, we face stiff competition from other employment agencies that have far more capital than we do. Our competitive position within the industry is negligible in light of the fact that we have just started our operations. Older, well established competitors with records of success will attract qualified clients away from us. There are numerous competitors within our field. These competitors are moderately sized and ones we hope to emulate in the future. Those competitors have established reputations and have built extensive client relationships within the industry. Since we have just started operations, we cannot compete with them on the basis of reputation. We compete with them on the basis of price and services and we hope to be able to provide a higher quality personal service to our initial customers. We do this by spending and devoting more time to clients. We believe this higher quality personal service distinguishes us.
Regulations
Our services are subject to federal, state, provincial and local laws and regulations concerning business activities generally. In Quebec we will be subject to the Civil Code of Quebec. There are no Canadian regulations pertaining to our business with which we need to comply other than registering provincially as a foreign corporation. We are not obligated to register as a foreign corporation until we initiate operations. We have registered as a foreign corporation in the Province of Quebec.
Employees and employment agreements
At present, we have two consulting agreements in place. During the fiscal year ended May 31, 2011, we signed a Consulting Agreement with Jean-Paul Langlais pursuant to which, Mr. Langlais was providing sales, marketing, corporate development and management consulting services relating to the corporate activities of our Company. The “Engagement Period” is for one year. The agreement is renewable for a one year period. During the fiscal year ended May 31, 2011, we signed a Consulting Agreement with Michel St-Pierre pursuant to which, Mr. St-Pierre was providing the services to serve in the capacity of President and Chief Executive Officer of our company. The “Engagement Period” is for one year. The agreements have been renewed in August 2013 for a one year period.
We presently do not have pension, health, annuity, insurance, stock options, profit sharing or similar benefit plans; however, we may adopt plans in the future. There are presently no personal benefits available to our officers and directors. Mr. St-Pierre handles our administrative duties.
Our Current Operations
During the past few months, we have hired independent contractors that have worked on developing M2M systems to serve major clients that are counting on us to open new markets for them in wireless M2M, the “Internet of Things”.
They have evaluated, implemented and are presently testing a functional prototype solution that enables the integration of 3rd party USB device into cellular gateway to connect through Wiless-M2M platform.
On July 7, 2011, we nominated Jonathan Barratt Chief Technical Officer (CTO) of the company, and as such he will oversee all technical developments for Wiless Controls, as well as keep a close relationship with the clients to guarantee the development and delivery of all product lines. We also nominated, Medhat Mahmoud as VP Technology and Strategy.
On July 26, 2011, we completed the development of our game changing Cellular Gateway. We are ready to introduce the market to its technology platform, one which opens up new possibilities in the Machine to Machine world by offering a plug and play system for deploying an entirely wireless M2M solution in a single step.
On July 26, 2011, we and Monnit Corporation announced a partnership that will enable us to offer the Machine-To-Machine (M2M) market a plug-and-play, end-to-end, cellular enabled wireless sensing solution.
Using Monnit’s wireless sensors and iMonnit web application, and our Cellular Gateway with global connectivity, users will benefit from a system that eliminates development time and reduces installation to an absolute minimum. The system will comprise Monnit’s battery operated low-cost wireless sensors collecting information, transmitted wirelessly through the Wiless Controls Cellular Gateway via the iMetrik global GSM network and iMonnit web application. Once installed, a user can access the sensor data, and monitor any asset from anywhere at any time through a computer or smart phone with Internet access.
On October 11, 2011, we announced that after months of development, and following a successful demonstration of the system at Metropolitan’s head offices in Chicago, Metropolitan has chosen Wiless Controls to monitor all sump pumps it sells in the US.
On February 28, 2012, after a year of development and months of testing, our Cellular Gateway has passed all tests for functionality and reliability of hardware and connectivity, and is now ready to be commercialized. We have been working with Monnit Corporation to create what would be the first truly end-to-end “plug and play” wireless M2M system. By combining Monnit’s sensors with our Cellular Gateway and Global Network, integrators and users will no longer have to source the many components and services necessary to monitor and control their assets or systems.
On May 22, 2012, we announced that we had commenced commercial shipments of our Cellular Gateway in North America to two major distributors in the United States.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
None.
We do not own any real estate. We do not plan on investing in real estate in the near future. The Company believes that its current office facilities will be sufficient for the foreseeable future.
We are not presently a party to any litigation.
None.
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MARKET PRICE FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
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Market Information
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Fiscal Year – 2013
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High Bid
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Low Bid
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Fourth Quarter: 3/1/13 to 5/31/13
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0.10
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0.01
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Third Quarter: 12/1/12 to 2/28/13
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0.11
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0.01
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Second Quarter: 9/1/12 to 11/30/12
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0.15
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0.02
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First Quarter: 6/1/12 to 8/30/12
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0.45
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0.10
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Fiscal Year – 2012
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High Bid
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Low Bid
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Fourth Quarter: 3/1/12 to 5/31/12
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0.38
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0.26
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Third Quarter: 12/1/11 to 2/28/12
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0.26
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0.20
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Second Quarter: 9/1/11 to 11/30/11
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0.45
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0.20
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First Quarter: 6/1/11 to 8/30/11
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0.43
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0.50
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Our shares of common stock are traded on the OTCBB operated by the Financial Industry Regulatory Authority (FINRA) under the symbol “WILS”. The shares trading of our common stock began on July 6, 2010.
Holders
As of August 27, 2013, we had forty nine stockholders of record.
Dividends
We have never declared or paid cash dividends. There are currently no restrictions which limit our ability to pay dividends in the future.
Securities authorized for issuance under equity compensation plans
We have no equity compensation plans at the present time.
Section 15(g) of the Securities Exchange Act of 1934
Our company’s shares are covered by Section 15(g) of the Securities Exchange Act of 1934, as amended that imposes additional sales practice requirements on broker/dealers who sell such securities to persons other than established customers and accredited investors (generally institutions with assets in excess of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouses). For transactions covered by the Rule, the broker/dealer must make a special suitability determination for the purchase and have received the purchaser’s written agreement to the transaction prior to the sale. Consequently, the Rule may affect the ability of broker/dealers to sell our securities and also may affect your ability to sell your shares in the secondary market.
Section 15(g) also imposes additional sales practice requirements on broker/dealers who sell penny securities. These rules require a one page summary of certain essential items. The items include the risk of investing in penny stocks in both public offerings and secondary marketing; terms important to in understanding of the function of the penny stock market, such as “bid” and “offer” quotes, a dealers “spread” and broker/dealer compensation; the broker/dealer compensation, the broker/dealers duties to its customers, including the disclosures required by any other penny stock disclosure rules; the customers rights and remedies in causes of fraud in penny stock transactions; and, the FINRA’s toll free telephone number and the central number of the North American Administrators Association, for information on the disciplinary history of broker/dealers and their associated persons.
The application of the penny stock rules may affect your ability to resell your shares.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
Operations
The following discussion of the financial condition and results of our operations should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K for the year ended May 31, 2013 (this “Report”). This report contains certain forward-looking statements and our future operating results could differ materially from those discussed herein. Certain statements including, without limitation, statements containing the words “believes”, “anticipates,” “expects” and the like, constitute “forward-looking statements”. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments.
Since inception, we have incorporated the company, retained an attorney to prepare a registration statement, retained an auditor to audit our financial statements, and prepared a registration statement. We have created and are maintaining a website which allows us to market our services on the Internet. We have started our operations.
On August 5, 2010, we changed our name from “Montreal Services Company” to “iMetrik M2M Solutions Inc.”
On August 5, 2010, under a certificate of action without a meeting of shareholders, our shareholder who controls 86.78% of the voting power approved an amendment to our articles of incorporation whereby we increased our authorized shares of common stock from 100,000,000 shares to 500,000,000 shares with a par value of $0.00001 per share.
Our Board of directors approved a stock dividend of 9 additional shares of common stock for each 1 share of common stock outstanding. The record date for the stock dividend was August 19, 2010.
Over the past few months, we have hired independent contractors that have worked on developing M2M systems to serve major clients that are counting on us to open new markets for them in wireless M2M, the “Internet of Things”.
They have evaluated, implemented and are presently testing a functional prototype solution that enables the integration of 3rd party USB device into cellular gateway to connect through Wiless Controls platform.
On July 7, 2011, we nominated Jonathan Barratt Chief Technical Officer (CTO) of the company, and as such he oversees all of our technical developments for Wiless Controls, as well as keep a close relationship with the clients to guarantee the development and delivery of all product lines. We also nominated, Medhat Mahmoud as VP Technology and Strategy.
On July 26, 2011, we completed the development of our game changing Cellular Gateway. We are ready to introduce the market to our technology platform, one which opens up new possibilities in the Machine to Machine world by offering a plug and play system for deploying an entirely wireless M2M solution in a single step.
On July 26, 2011, we and Monnit Corporation announced a partnership that will enable us to offer the Machine-To-Machine (M2M) market a plug-and-play, end-to-end, cellular enabled wireless sensing solution.
Using Monnit’s wireless sensors and iMonnit web application, and our Cellular Gateway with global connectivity, users will benefit from a system that eliminates development time and reduces installation to an absolute minimum.
On October 11, 2011, we announced that after months of development, and following a successful demonstration of the system at Metropolitan’s head offices in Chicago, Metropolitan chose Wiless Controls to monitor all sump pumps it sells in the US.
On February 28, 2012, after a year of development and months of testing, our Cellular Gateway passed all tests for functionality and reliability of hardware and connectivity, and is now ready to be commercialized. We have been working with Monnit Corporation to create what would be the first truly end-to-end “plug and play” wireless M2M system. By combining Monnit’s sensors with our Cellular Gateway and Global Network, integrators and users will no longer have to source the many components and services necessary to monitor and control their assets or systems.
On May 22, 2012, we announced we had commenced commercial shipments of our Cellular Gateway in North America to two major distributors in the United States.
On August 31, 2012, we announced the successful FCC certifications of our Cellular Gateway. These certifications guarantee consumers that the product conforms to essential requirements of performance and safety, following the industry standards. The FCC certification is applicable on products sold in the United States. Manufacturers and suppliers of radio and telecoms equipment wishing to gain access to the US market must obtain the necessary grant (approval) from the Federal Communications Commission (FCC).
On November 29, 2012, we changed our name to Wiless Controls Inc.
Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have generated small revenues. We believe the technical aspects of our website are sufficiently developed for our operations. We must raise cash from sources other than operations. Our only other source for cash at this time is investments by others in our company. We must raise cash to continue our project implementation and continue our operations.
If we are unable to attract users of our services, or if we are unable to attract enough clients to utilize our services, we may quickly use up the proceeds from our first offering and will need to find alternative sources, like a second public offering, a private placement of securities, or loans from our officers or others in order for us to maintain our operations. At the present time, we have not made any arrangements to raise additional cash, other than through this offering.
Business Plan
We are striving to become a leading solution provider of wireless communication services designed to control and manage the access and use of virtually any asset from “anywhere-to-anywhere” in the world. This is the world of Machine-to-Machine, the “Internet of Things”. With the combination of its embedded device, global network and web service, the Wiless Controls M2M platform moves the information from the source directly to the desktop, greatly reducing cost and implementation time, at the same time helping develop new service offerings and open up new markets.
We intend to concentrate on recurring service revenues, as more and more product functionalities will be marketed, thus building a large base for pay-per-use fees, which will be based on the nature of the service rendered.
The initial sales strategy consisted in identifying existing sales organizations which were subject matter experts (SME) in the verticals they served, and allowing them to sell under their own brand name. The strong recognition by the market of the superiority of the Wiless Controls product over all competition leads us to undertake selling under our own brand in the verticals being currently addressed, as well as in future verticals. When stand-alone branding will not be feasible, co- branding will be preferred.
Our method of developing value is based upon technological vertical integration. We offer our clients a complete wireless service delivery chain to allow them to efficiently deploy M2M solutions worldwide. Wiless Controls enables an “M2M Solution in a box,” a one-stop-shop or an end-to-end wireless solution allowing their clients to quickly deploy and compete in the M2M wireless space.
We supply wireless devices and web applications but without the ownership of the radio frequencies. MVNOs, by definition, are companies that provide wireless devices, applications, and purchase wholesale airtime on an existing wireless network to provide their own branded services to end-users.
To the market segments initially addressed, Wiless Controls offering covers the entire value chain: Device, Network and Application. Due to its unique technology, the company is able to market various ranges of service. Large organizations, for instance, could decide to host the data themselves and manage the client interface, while using our device, network access and application enablers. At the other end of the spectrum, some clients might need to operate with a modified device, integrating the actual network access component of our device. Content
providers could market their own applications to our installed base of customers. Finally, we could also partner with mobile carriers to provide network access to a growing number of M2M service providers. In all cases, we will favor revenue models based on recurring usage service fees, based on the value of the service for the end user.
Results of Operations
For the Twelve Month Period ended May 31, 2013
Overview
We recorded a net loss of $720,016 for the year ended May 31, 2013 as compared to a net loss of $1,105,116 for the year ended May 31, 2012. The loss resulted mainly from selling, general and administrative expenses and debt conversion inducement expense.
For the year ended May 31, 2013, the Company spent $130,154 in professional fees, $192,000 in salary, $178,230 in research. For the year ended May 31, 2012, the Company spent $40,841 in professional fees, $192,000 in salary, $242,492 in research and development and $456,748 in Debt conversion inducement expense.
Sales
For the year ended May 31, 2013 we had no gross revenues as compared to gross revenues of $12,800 in 2012.
Total Cost and Expenses
For the year ended May 31, 2013, we incurred total costs and expenses of $720,016. This compared to $1,100,071 for last year, a decrease of 35% from the same period of 2012. The decrease was due primarily to diminution in Debt conversion inducement expense.
Selling, General and Administration
For the year ended May 31, 2013, we incurred selling, general and administration expenses of $381,639 and $365,554 for last year, an increase of 4% from last year. The increase was due primarily to an increase of $21,500 in professional fees.
Interest
We calculate interest in accordance with the respective note payable, note payable stockholders and Derivative liabilities. For the year ended May 31, 2013, we incurred $222,557 compared to $35,277 for last year. The increase of 265% was caused by interest expense on increased borrowings and interest expense recorded upon issuance of convertible debt in which the debt discount related to the conversion feature recorded as a derivative exceed the face value of the note.
Liquidity and Capital Resources
At May 31, 2013, we had $2,178 in cash, as opposed to $23,704 in cash at May 31, 2012. Total cash requirements for operations for the twelve month period ended May 31, 2013 was $476,861. As a result of its new business plan, management estimates that cash requirements through the end of the fiscal year ended May 31, 2014 will be between $500,000 to $2,000,000. As of the date of this Report, we do not have available resources sufficient to cover the expected cash requirements through the end of the first quarter of 2014 or the balance of the year. As a result, there is substantial doubt that we can continue as an ongoing business without obtaining additional financing. Management’s plans for maintaining our operations and continued existence include selling additional
equity securities and borrowing additional funds to pay operational expenses. There is no assurance we will be able to generate sufficient cash from operations, sell additional shares of Common Stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse effect on our financial position, results of operations and our ability to continue our existence. If our losses continue and we are unable to secure additional financing, we may ultimately be required to seek protection from creditors under applicable bankruptcy laws.
At May 31, 2013, we had total assets of $23,918. This was a decrease of $14,823, or 38%, as compared to total assets of $38,741at May 31, 2012. The decrease was primarily attributable to accounts receivable and cash.
At May 31, 2013, we had total current liabilities of $1,171,833. This was an increase of $640,443, or 121%, as compared to current liabilities of $531,390 at May 31, 2012. The net increase was attributable to an increase in note payable- stockholders, note payable, derivative liabilities and accrued expenses and sundry current liabilities.
On May 31, 2013 we received loans from Michel St-Pierre, a shareholder, in the amount of $95,178. These loans carried an interest of 10% and is payable on demand.
Our financial condition raises substantial doubt about our ability to continue as a going concern. Management’s plan for our continued existence includes selling additional stock through private placements and borrowing additional funds to pay overhead expenses while maintaining marketing efforts to raise our sales volume. Our future success is dependent upon our ability to achieve profitable operations, generate cash from operating activities and obtain additional financing. There is no assurance that we will be able to generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds. Our inability to obtain additional cash could have a material adverse effect on our financial position, results of operations and our ability to continue as a going concern.
This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this Memorandum. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.
We have only had operating losses which raise substantial doubts about our viability to continue our business and our auditors have issued an opinion expressing the uncertainty of our Company to continue as a going concern. If we are not able to continue operations, investors could lose their entire investment in our Company.
Limited Operating History
We have a history of operating losses, and may continue to incur operating losses. We experienced losses during the fiscal year ending May 31, 2013. With respect to the audited year ending May 31, 2013, we incurred losses of $720,016 (compared with losses of $1,105,116 for the same period last year). We had negative working capital for the year ending May 31, 2013 of $1,147,915, (compared with negative working capital of $492,649 for the same period last year), and a stockholders’ deficiency of $1,147,915as of May 31, 2013 (compared with a stockholders’ deficiency of $492,649 audited as of May 31, 2012). All of these developments raise substantial doubt about our ability to continue as a going concern. As a result of these losses and the losses incurred as of May 31, 2013, our auditors issued an opinion in their audit report for the year ended May 31, 2013 expressing uncertainty about the ability of our Company to continue as a going concern. This means that there is substantial doubt whether we can continue as an ongoing business without additional financing and/or generating profits from our operations. Presently, the monthly negative cash flow amounts to $25,000 and our available cash cannot sustain current operations for more than one month. In order to continue, we want to sell additional shares of common stock or borrow additional funds and generate sufficient cash from operations to support our company for the next twelve months.
We have no operations upon which to base an evaluation of our performance. We were previously in the business of providing consultation to business executives. We were never retained by anyone to provide such services. Accordingly, we have very limited business operating history. In May, 2012 we have sold our first functional prototype solution that enables the integration of 3rd party USB device into cellular gateway to connect through Wiless Controls-M2M platform. This prototype iteration was the final production design for production.
Contractual Obligations
The Company is not party to any contractual obligations.
Off Balance Sheet Arrangements
We have no off balance sheet arrangements other than as described above.
We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
|
Index
|
|
|
13
|
|
|
14
|
|
|
15
|
|
|
16
|
|
|
17
|
|
|
18
|
|
Paritz & Company, P.A.
|
15 Warren Street, Suite 25
Hackensack, New Jersey 07601
(201)342-7753
Fax: (201) 342-7598
E-Mail: paritz @paritz.com
|
|
Certified Public Accountants
|
Board of Directors
Wiless Controls, Inc.
(Formerly known as Imetrik M2M Solutions, Inc.).
We have audited the accompanying balance sheet of Wiless Controls, Inc. (Formerly known as Imetrik M2M Solutions, Inc.) as of May 31, 2013 and 2012, and the related statements of operations, stockholders’ deficiency and cash flows for the years then ended and for the period from inception (May 6, 2009) to May 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit 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 Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit 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 Wiless Controls, Inc. (formerly known as Imetrik M2M Solutions, Inc.) as of May 31, 2013 and 2012 and the results of its operations and its cash flows for the years then ended and for the period from inception (May 6, 2009) to May 31, 2013, 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 disclosed in note 3 to the accompanying financial statements the Company reported a net loss of $720,016 for the year ended May 31, 2013 and $1,105,116 for the year ended May 31, 2012. The Company had no revenue for the year ended May 31, 2013. The Company also has a negative working capital of $1,147,915 and a stockholders’ deficiency of $1,147,915 at May 31, 2013. These factors, among others, raise substantial doubt regarding the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Paritz & Company, P.A.
Paritz & Company, P.A.
Hackensack, New Jersey
August 26, 2013
WILESS CONTROLS INC
(A Development Stage Company)
(Formerly known as iMETRIK M2M SOLUTIONS INC)
May 31,
|
2013
|
2012
|
|||
|
|
||||
|
ASSETS
|
||||
|
|
||||
|
CURRENT ASSETS
|
||||
|
Cash
|
$
|
2,178
|
$
|
23,704
|
|
Inventories (note 4)
|
21,740
|
6,497
|
||
|
Account receivable
|
-
|
7,000
|
||
|
Prepaid expenses
|
-
|
1,540
|
||
|
|
||||
|
TOTAL CURRENT ASSETS AND TOTAL ASSETS
|
$
|
23,918
|
$
|
38,741
|
|
|
||||
|
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
|
||||
|
|
||||
|
CURRENT LIABILITIES:
|
||||
|
|
||||
|
Notes payable-stockholders (note 7)
|
711,761
|
333,426
|
||
|
Notes payable (note 6)
|
34,380
|
32,500
|
||
|
Derivative liabilities (note 8)
|
141,706
|
7,798
|
||
|
Accrued expenses and other current liabilities (note 5)
|
283,986
|
157,666
|
||
|
|
||||
|
TOTAL CURRENT LIABILITIES AND TOTAL LIABILITIES
|
$
|
1,171,833
|
$
|
531,390
|
|
|
||||
|
STOCKHOLDERS’ DEFICIENCY
|
||||
|
Common stock
500,000,000 shares authorized, par value $0.00001, 64,700,659
and 62,182,477 respectively issued and outstanding
|
$
|
647
|
$
|
622
|
|
Additional paid in capital
|
1,027,161
|
962,436
|
||
|
Accumulated Deficit
|
(81,158)
|
(81,158)
|
||
|
Deficit Accumulated during development stage
|
(2,094,565)
|
(1,374,549)
|
||
|
|
||||
|
TOTAL STOCKHOLDERS’ DEFICIENCY
|
$
|
(1,147,915)
|
$
|
(492,649)
|
|
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
|
$
|
23,918
|
$
|
38,741
|
“See notes to financial statements”
WILESS CONTROLS INC
(A Development Stage Company)
(Formerly known as iMETRIK M2M SOLUTIONS INC)
Period of inception (May 6, 2009) to May 31, 2013
Stockholders Deficiency
|
Stockholders
Equity (Deficiency)
|
Shares
|
Common stock
Authorized
100,000,000
Shares,
Par value
$0,00001
|
Additional
Paid in
Capital
|
Accumulated
Deficit
|
Deficit
Accumulated
During
Development
Stage
|
Offering
Costs
|
Total
|
||||||
|
|
|||||||||||||
|
Period of inception
(May 6, 2009)
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
|
|||||||||||||
|
Proceeds from the issuance
of common stock
|
5,000,000
|
50
|
-
|
-
|
-
|
-
|
50
|
||||||
|
|
|||||||||||||
|
Offering costs
|
(15,000)
|
-
|
-
|
(15,000)
|
|||||||||
|
|
|||||||||||||
|
Net Loss
|
-
|
-
|
-
|
(294)
|
-
|
-
|
(294)
|
||||||
|
|
|||||||||||||
|
May 31, 2009
|
5,000,000
|
50
|
(15,000)
|
(294)
|
-
|
-
|
(15,244)
|
||||||
|
|
|||||||||||||
|
Proceeds from the issuance
of common stock
|
761,500
|
8
|
76,142
|
-
|
-
|
-
|
76,150
|
||||||
|
|
|||||||||||||
|
Offering costs
|
(12,155)
|
-
|
-
|
(12,155)
|
|||||||||
|
|
|||||||||||||
|
Net Loss
|
-
|
-
|
-
|
(31,512)
|
-
|
-
|
(31,512)
|
||||||
|
|
|||||||||||||
|
May 31, 2010
|
5,761,500
|
58
|
48,987
|
(31,806)
|
-
|
-
|
17,239
|
||||||
|
|
|||||||||||||
|
Stock dividend
|
51,853,500
|
518
|
(518)
|
-
|
-
|
||||||||
|
|
|||||||||||||
|
Net Loss
|
-
|
-
|
-
|
(48,834)
|
(269,433)
|
-
|
(318,267)
|
||||||
|
|
|||||||||||||
|
May 31, 2011
|
57,615,000
|
576
|
48,987
|
(81,158)
|
(269,433)
|
-
|
(301,028)
|
||||||
|
|
|||||||||||||
|
Debt conversion into
common shares
|
4,567,477
|
46
|
913,449
|
913,495
|
|||||||||
|
Net Loss
|
-
|
-
|
-
|
-
|
(1,105,116)
|
-
|
(1,105116)
|
||||||
|
May 31, 2012
|
62,182,477
|
622
|
962,436
|
(81,158)
|
(1,374,549)
|
-
|
(492,649)
|
||||||
|
Debt conversion into
common shares
|
2,518,182
|
25
|
64,725
|
64,750
|
|||||||||
|
|
|||||||||||||
|
Net Loss
|
(720,016)
|
(720,016)
|
|||||||||||
|
|
|||||||||||||
|
May 31, 2013
|
64,700,659
|
$
|
647
|
$
|
1,027,161
|
$
|
(81,158)
|
$
|
(2,094,565)
|
$
|
-
|
$
|
(1,147,915)
|
“See notes to financial statements”
WILESS CONTROLS INC
(A Development Stage Company)
(Formerly known as iMETRIK M2M SOLUTIONS INC)
|
Year ended
May 31,
2013
|
Year ended
May 31,
2012
|
Beginning of
development stage
(September 1, 2010)
to May 31,
2013
|
||||
|
SALES
|
$
|
-
|
$
|
12,800
|
$
|
12,800
|
|
|
||||||
|
Cost of sales
|
-
|
17,845
|
17,845
|
|||
|
|
||||||
|
Gross deficit
|
-
|
5,045
|
5,045
|
|||
|
|
||||||
|
COSTS AND EXPENSES (INCOME):
|
-
|
|||||
|
Selling, general and administrative
|
381,639
|
365,554
|
984,151
|
|||
|
Research and Development
|
178,230
|
242,492
|
444,106
|
|||
|
Debt conversion inducement expense (income)
(note 6)
|
(8,000)
|
456,748
|
448,748
|
|||
|
Changes in fair value of derivative liability
|
(54,410)
|
-
|
(54,410)
|
|||
|
Stock dividend
|
-
|
-
|
518
|
|||
|
Interest related party
|
28,450
|
16,684
|
45,134
|
|||
|
Interest
|
194,107
|
18,593
|
221,273
|
|||
|
|
||||||
|
|
||||||
|
TOTAL COSTS AND EXPENSES
|
720,016
|
1,100,071
|
2,089,520
|
|||
|
|
||||||
|
NET LOSS
|
$
|
(720,016)
|
$
|
(1,105,116)
|
$
|
(2,094,565)
|
|
|
||||||
|
Net Loss Per Share
|
$
|
(0.01)
|
$
|
(0.02)
|
$
|
(0.03)
|
|
|
||||||
|
Average weighted Number of Shares
|
63,659,901
|
59,023,305
|
63,659,901
|
“See notes to financial statements”
WILESS CONTROLS INC
(A Development Stage Company)
(Formerly known as iMETRIK M2M SOLUTIONS INC)
|
Year ended
May 31,
2013
|
Year ended
May 31,
2012
|
Beginning of
development stage
(September 1, 2010)
to May 31,
2013
|
||||
|
|
||||||
|
Cash Flow from Operating activities:
|
||||||
|
Net loss
|
$
|
(720,016)
|
$
|
(1,105,116)
|
$
|
(2,094,565)
|
|
|
||||||
|
Adjustment to reconcile net loss to net cash used in
operating activities
|
||||||
|
Debt Conversion Inducement (Income) Expense
|
(8,000)
|
456,748
|
448,748
|
|||
|
Non-cash interest expense
|
125,198
|
7,798
|
132,996
|
|||
|
Gain on change in fair value of derivatives
|
(54,410)
|
-
|
(54,410)
|
|||
|
|
||||||
|
Changes in operating assets and liabilities:
|
||||||
|
Account receivable
|
7,000
|
(6,400)
|
600
|
|||
|
Inventories
|
(15,243)
|
(6,497)
|
(21,740)
|
|||
|
Increase in prepaid expenses
|
1,540
|
(1,540)
|
-
|
|||
|
Decrease in accounts receivable
|
||||||
|
Increase (decrease) in accrued expenses and other
current liabilities
|
187,070
|
202,936
|
447,799
|
|||
|
Net cash used in operating activities
|
$
|
(476,861)
|
$
|
(452,071)
|
$
|
(1,140,572)
|
|
|
||||||
|
Cash Flow from Financing activities:
|
||||||
|
|
||||||
|
Proceeds of notes payable stockholder
|
378,335
|
95,178
|
528,716
|
|||
|
Proceeds of notes payable
|
77,000
|
365,273
|
553,598
|
|||
|
|
||||||
|
Net cash provided by financing activities
|
$
|
455,335
|
$
|
460,451
|
$
|
1,082,314
|
|
Increase (decrease) in cash
|
(21,526)
|
8,380
|
(58,258)
|
|||
|
|
||||||
|
Cash- beginning of year
|
23,704
|
15,324
|
60,436
|
|||
|
|
||||||
|
Cash - end of year
|
$
|
2,178
|
$
|
23,704
|
$
|
2,178
|
|
Supplemental Disclosure of Cash Flow information
|
||||||
|
Conversion of current liabilities to common stock
|
$
|
60,750
|
$
|
130,814
|
||
|
Conversion of notes payable to common stock
|
$
|
75,120
|
$
|
-
|
||
|
Conversion of notes payable stockholders to common
stock
|
$
|
-
|
$
|
325,934
|
“See notes to financial statements”
WILESS CONTROLS INC
(A Development Stage Company)
(Formerly known as iMETRIK M2M SOLUTIONS INC)
NOTE 1 – NATURE OF BUSINESS
The Company was incorporated under the laws of the State of Nevada on May 6, 2009. The Company’s specific goal was to create a profitable service for placing Canadian citizens in accounting positions with Canadian corporations. On August 5, 2010, we changed our name to iMetrik M2M Solutions Inc. to reflect our new business purpose of bringing solutions to the Machine-to-Machine market (Machine-to-Machine (M2M) refers to technologies that allow both wireless and wired systems to communicate with other devices of the same ability). Initially the Company wants to cover applications for fixed assets. On November 29, 2012, we changed our name to Wiless Controls Inc.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH
The Company cash balances accounts at institution are insured by the Federal Deposit Insurance Corporation up to $250,000. The Company’s accounts at these institutions may, at times, exceed the federally insured limits. The Company has not experienced any losses in such accounts.
We consider all short-term highly liquid investments with an original maturity at the date of purchase of three months or less to be cash equivalents.
DEVELOPMENT STAGE COMPANY
The Company was an active business from 2009 through August 31, 2010 and was involved in placing Canadian citizens in accounting positions with Canadian corporations. Commencing September 2010, the Company was looking for new business and commenced the Machine-to-Machine market (Machine-to-Machine (M2M) business solutions. The Company currently has operations and no revenues and, in accordance with the relevant authoritive guidance is considered a Development Stage Enterprise. As a development stage enterprise, the Company discloses the deficit accumulated during the development stage and the cumulative statements of operations and cash flows from September 1st, 2010 to the current balance sheet date.
FAIR VALUE MEASUREMENTS
The Company adopted the provisions of ASC Topic 820, “Fair Value Measurements and Disclosures”, which defines fair value as used in numerous accounting pronouncements, establishes a framework for measuring fair value and expands disclosure of fair value measurements.
The estimated fair value of certain financial instruments, including cash and cash equivalents, prepaid expenses, notes payable, and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments.
ASC 820 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 describes three levels of inputs that may be used to measure fair value:
* level l - quoted prices in active markets for Identical assets or liabilities
* level 2 - quoted prices for similar assets and liabilities in active markets or inputs that are observable
* level 3 - inputs that are unobservable (for example cash flow modeling inputs based on assumptions)
The Company’s derivative liability, classified as a level 3 liability, is the only financial liability measured at fair value on a recurring basis.
DERIVATIVE LIABILITIES
Our derivative financial instruments consist of embedded derivatives related to the convertible debt, warrants and beneficial conversion features embedded within our convertible debt. The accounting treatment of derivative financial instruments requires that we record the derivatives and related warrants at their fair values as of the inception date of the debt agreements and at fair value as of each subsequent balance sheet date. Any change in fair value was recorded as non-operating, non-cash income or expense at each balance sheet date. If the fair value of the derivatives was higher at the subsequent balance sheet date, we recorded a non-operating, non-cash charge. If the fair value of the derivatives was lower at the subsequent balance sheet date, we recorded non-operating, non-cash income.
INVENTORIES
Inventories consisting of electronic parts and components are stated at the lower of cost or market. The cost of work in process and finished goods includes materials, direct labor, variable costs and overhead and full absorption of fixed manufacturing overhead.
INCOME TAXES
The Company uses the asset and liability method of accounting for income taxes in accordance with ASC Topic 740, “Income Taxes.” Under this method, income tax expense is recognized for the amount of: (i) taxes payable or refundable for the current year and (ii) deferred tax consequences of temporary differences resulting from matters that have been recognized in an entity’s financial statements or tax returns. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is provided to reduce the deferred tax assets reported if based on the weight of the available positive and negative evidence, it is more likely than not some portion or all of the deferred tax assets will not be realized.
ASC Topic 740.10.30 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC Topic 740.10.40 provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. We have no material uncertain tax positions for any of the reporting periods presented.
USE OF ESTIMATES
The preparation of the financial statements in conformity with Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates. These estimates and assumptions include derivative financial instruments issued in financing transactions, the collectability of accounts receivable and deferred taxes and related valuation allowances. We re-evaluate all of our accounting estimates at least quarterly based on these conditions and record adjustments when necessary.
REVENUE RECOGNITION
The Company’s business plan is to sell wireless devices. The wireless devices are manufactured for the Company by a third-party in United States. Revenue is recognized at the time of shipment and when title changes hands to the buyer.
LOSS PER COMMON SHARE
The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding.
Diluted net loss per common share is computed by dividing the net loss, adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities.
STOCK BASED COMPENSATION
The Company accounts for stock options and similar equity instruments issued in accordance with ASC 718. Accordingly, compensation costs attributable to stock options or similar equity instruments granted are measured at the fair value at the grant date, and expensed over the expected vesting period. Transactions in which goods or services are received in exchange for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. ASC 718 requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid.
RESEARCH AND DEVELOPMENT
Research and development costs are charged to expense as incurred.
NEW ACCOUNTING PRONOUNCEMENTS
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented.
NOTE 3 – GOING CONCERN
The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business. The Company reported net loss of $720,016 for the year ended May 31, 2013 and $1,105,116 for the year ended May 31, 2012. The Company had no revenue for the year ended May 31, 2013.The Company also has a negative working capital of $1,147,915 and a stockholders deficiency of $1,147,915 at May 31, 2013. These factors among others raise substantial doubt about the Company’s ability to continue as a going concern.
Management’s plans for the Company’s continued existence include selling additional stock and borrowing additional funds to pay overhead expenses.
The Company’s future success is dependent upon its ability to achieve profitable operations, generate cash from operating activities and obtain additional financing. There is no assurance that the Company will be able to generate sufficient cash from operations, sell additional shares of common stock or borrow additional funds.
The Company’s inability to obtain additional cash could have a material adverse effect on its financial position, results of operations and its ability to continue in existence. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
NOTE 4 – INVENTORIES
Inventories consist of the following at May 31:
|
2013
|
2012
|
|||
|
|
||||
|
Work-in-process
|
$
|
-
|
$
|
6,497
|
|
Finished goods
|
21,740
|
|||
|
$
|
21,740
|
$
|
6,497
|
NOTE 5 – ACCRUED EXPENSES AND SUNDRY CURRENT LIABILITIES
Accrued expenses consisted of the following at May 31:
|
2013
|
2012
|
|||
|
|
||||
|
Accrued interest
|
$
|
24,021
|
$
|
2,282
|
|
Accrued interest related party
|
52,205
|
23,755
|
||
|
Accrued compensation
|
24,000
|
24,000
|
||
|
Accrued operating expenses
|
183,760
|
107,629
|
||
|
$
|
283,986
|
$
|
157,666
|
NOTE 6 – NOTES PAYABLE
In 2013, the Company received loans from Asher Enterprises Inc. in the amount of $147,500. The amount owed to Asher Enterprises Inc. at May 31, 2013, is shown net of the remaining debt discount of $63,120 resulting in a balance of $34,380.The loans are convertible, over a one year period, into restricted common shares at a fixed price. The price of the shares is equal to 55% of the market price of the shares at the date of the execution of the conversion. This loan bears interest at 8% per annum and is payable on demand.
In 2012, the Company received loans from Asher Enterprises Inc. in the amount of $32,500. The amount owed to Asher Enterprises Inc. at May 31, 2013, is $0.
On December 10, 2012 Asher Enterprises Inc. converted loans of $12,000 into 1,818,182 shares of the Company. The fair value of the shares was equal to $0.0066 per share and the market price was $0.0012.
On December 10, 2012 the Company paid $37,000 for a loan from Asher Enterprises Inc. in the amount of $20,500. The difference between the amount paid and the outstanding balance resulted in an interest expense of $16,500.
On December 24, 2012 the Company paid $45,000 for a loan from Asher Enterprises Inc. in the amount of $27,500. The difference between the amount paid and the outstanding balance resulted in an interest expense of $17,500.
On January 29, 2013 the Company paid $34,638 for a loan from Asher Enterprises Inc. in the amount of $22,500. The difference between the amount paid and the outstanding balance of $12,138 resulted in an interest expense.
|
2013
|
||
|
Convertible debts
|
$
|
97,500
|
|
Debt discount
|
(63,120)
|
|
|
Net convertible debt
|
$
|
34,380
|
NOTE 7 – NOTES PAYABLE – STOCKHOLDERS’
In 2013, the Company received additional loans from Michel St-Pierre in the amount of $151,202. At May 31, 2013, the loans amounted to $366,463. These loans carry an interest of 10% and are payable on demand.
On September 1, 2012, the Company signed an agreement with a shareholder to convert an account payable into a note payable. The amount owed to the shareholder at May 31, 2013 is $63,578. This note bears interest at 10% per annum and is payable on demand.
In 2013, the Company received additional loans from Capex Investments Limited, a shareholder, in the amount of $118,615. In 2012, the Company received additional loans from Capex Investments Limited, a shareholder, in the amount of $287,774. In 2011, the Company received loans from Capex Investments Limited in the amount of $111,325.
On February 8, 2012, Capex Investments Limited converted loans of $280,934 plus $11,370 in accrued interest into 2,923,035 shares of the Company. The fair value of the shares was $0.10 per share and the market price was $0.20 per share resulting in a debt conversion inducement expense of $292,304. The amount owed to Capex Investments Limited at May 31, 2013 is $236,780. These loans carry an interest of 10% and are payable on demand.
In 2013, the Company received loans from DT Crystal in the amount of $44,940. In 2012, the Company received loans from DT Crystal in the amount of $45,000. On February 8, 2012, DT Crystal converted loans of $45,000 into 450,000 shares of the Company. The fair value of the shares was $0.10 per share and the market price was $0.20 per share resulting in a debt conversion inducement expense of $45,000. The amount owed to DT Crystal May 31, 2013 is $44,940. These loans carry an interest of 10% and are payable on demand.
|
2013
|
||
|
Michel St-Pierre
|
$
|
366,463
|
|
Shareholder
|
63,578
|
|
|
Capex Investments Limited
|
236,780
|
|
|
DT Crystal
|
44,940
|
|
|
Total
|
$
|
711,761
|
NOTE 8 – DERIVATIVE LIABILITIES
On May 4, 2012, the Company issued a drawdown convertible promissory note (“the drawdown note”) to an investor, in the principal amount of $32,500, at an interest rate of eight percent (8%) per annum. The drawdown note can be prepaid upon five days notice, is payable nine months following its issuance on February 4, 2013, and all or a portion of the principal and interest is convertible upon demand into fully paid and non-assessable shares of the Company’s common stock at 55% of the average of the lowest three trading prices of the Company’s common stock during the ten trading day period ending on the latest complete trading day period to the conversion date. The Company requested $32,500 and received proceeds in the amount of $32,500 from the drawdown note on May 4, 2012. The conversion option was recorded as a discount on notes payable of $32,500 was valued using the Black- Scholes Method using a risk free rate of 2.00%, volatility rate of 145.00%, and a forfeiture rate of 0%.and expensed over the nine months life of the of the drawdown note. Interest expense of $7,798 was recorded in 2012 related to this conversion option. Additional interest expense of $202 was accrued as of May 31, 2012 related to the eight percent (8%) per annum payable under the drawdown note.
From June 12 to August 31, 2012, the Company issued a drawdown convertible promissory notes (“the drawdown notes”) to an investor, in the aggregate amount of $50,000, at an interest rate of eight percent (8%) per annum. The drawdown notes can be prepaid upon five days notice, is payable nine months following its issuance, and all or a portion of the principal and interest is convertible upon demand into fully paid and non-assessable shares of the Company’s common stock at 55% of the average of the lowest three trading prices of the Company’s common stock during the ten trading day period ending on the latest complete trading day period to the conversion date. The
conversion options were recorded as a discount on notes payable of $50,000 were valued using the Black- Scholes Method using a risk free rate of 0.14%, volatility rate of 151.00%, and a forfeiture rate of 0%.and expensed over the nine months life of the of the drawdown notes. Interest expense of $29,662 was recorded in 2013 related to this conversion options. Additional interest expense of $1,677 was accrued as of February 28, 2013 related to the eight percent (8%) per annum payable under the drawdown note.
From January 20 to February 28, 2013, the Company issued a drawdown convertible promissory notes (“the drawdown notes”) to an investor, in the aggregate amount of $70,000, at an interest rate of eight percent (8%) per annum. The drawdown notes can be prepaid upon five days notice, is payable nine months following its issuance, and all or a portion of the principal and interest is convertible upon demand into fully paid and non-assessable shares of the Company’s common stock at 55% of the average of the lowest three trading prices of the Company’s common stock during the ten trading day period ending on the latest complete trading day period to the conversion date. The conversion options were recorded as a discount on notes payable of $70,000 were valued using the Black- Scholes Method using a risk free rate of 0.14%, volatility rate of 151.00%, and a forfeiture rate of 0%.and expensed over the nine months life of the of the drawdown notes. Interest expense of $17,349 was recorded in 2013 related to this conversion options. Additional interest expense of $1,809 was accrued as of May 31, 2013 related to the eight percent (8%) per annum payable under the drawdown note.
On May 4, 2013, the Company issued a drawdown convertible promissory note (“the drawdown note”) to an investor, in the principal amount of $27,500, at an interest rate of eight percent (8%) per annum. The drawdown note can be prepaid upon five days notice, is payable nine months following its issuance on February 4, 2014, and all or a portion of the principal and interest is convertible upon demand into fully paid and non-assessable shares of the Company’s common stock at 55% of the average of the lowest three trading prices of the Company’s common stock during the ten trading day period ending on the latest complete trading day period to the conversion date. The Company requested $27,500 and received proceeds in the amount of $27,500 from the drawdown note on May 4, 2012. The conversion option was recorded as a discount on notes payable of $27,500 was valued using the Black- Scholes Method using a risk free rate of 2.00%, volatility rate of 311.00%, and a forfeiture rate of 0%.and expensed over the nine months life of the of the drawdown note. Interest expense of $16,001 was recorded in 2013 related to this conversion option. Additional interest expense of $92 was accrued as of May 31, 2013 related to the eight percent (8%) per annum payable under the drawdown note.
NOTE 9 – CAPITAL STOCK
The company is authorized to issue 500,000,000 shares of common stock (par value $0.00001) of which 64,700,659 were issued and outstanding as of May 31, 2013.
On January 13, 2010 the Company sold 761,500 shares of common stock (par value $0.00001) for an aggregate consideration of $76,150 and incurred related expenses of $12,155.
On September 28, 2010 the Company paid a stock dividend of 9 additional shares of common stock for each 1 share of common stock outstanding. The record date, for the stock dividend, was August 18, 2010.
On February 8, 2012, we issued 2,923,035 restricted shares of the Company’s common stock, fully paid and non-assessable, in full satisfaction of the outstanding indebtedness owed to Capex in the amount of $292,304 owed at January 26, 2012. The shares were issued on the basis of one restricted common share for each $0.10 of debt.
On February 9, 2012, we issued 450,000 restricted shares of the Company’s common stock, fully paid and non-assessable, in full satisfaction of the outstanding indebtedness owed to DT Crystal Holdings Ltd in the amount of $45,000 owed at February 9, 2012. The shares were issued on the basis of one restricted common share for each $0.10 of debt.
On February 8, 2012, we issued 1,194,442 restricted shares of the Company’s common stock, fully paid and non-assessable, in full satisfaction of the outstanding indebtedness owed to Mr. Jean-Paul Langlais in the amount of $119,444 owed at January 31, 2012. The shares were issued on the basis of one restricted common share for each $0.10 of debt. The fair value of the shares was $0.10 per share and the market price was $0.20 per share resulting in a debt conversion inducement expense of $119,444.
On June 6, 2012, we issued 100,000 restricted shares of the Company’s common stock, fully paid and non-assessable, in full satisfaction of the outstanding indebtedness owed to Viper Enterprises in the amount of $25,000. The shares were issued on the basis of one restricted common share for each $0.25 of debt. The fair value of the shares was $0.25 per share and the market price was $0.21 per share resulting in a debt conversion inducement gain of $4,000.
On June 6, 2012, we issued 100,000 restricted shares of the Company’s common stock, fully paid and non-assessable, in full satisfaction of the outstanding indebtedness owed to Willow Cove Investment Group in the amount of $25,000. The shares were issued on the basis of one restricted common share for each $0.25 of debt. The fair value of the shares was $0.25 per share and the market price was $0.21 per share resulting in a debt conversion inducement gain of $4,000.
On November 19, 2012, we issued 500,000 restricted shares of the Company’s common stock, fully paid and non-assessable, in full satisfaction of the outstanding indebtedness owed to Emerging Growth LLC in the amount of $10,750. The shares were issued on the basis of one restricted common share for each $0.0215 of debt. The fair value of the shares was $0.0215 per share and the market price was $0.0215 per share resulting in no debt conversion inducement gain or loss.
On December 10, 2012 Asher Enterprises Inc. converted loans of $12,000 into 1,818,182 shares of the Company. The fair value of the shares was equal to $0.0066 per share and the market price was $0.0012.
NOTE 10 – INCOME TAXES
Components of deferred tax assets and liabilities at May 31, 2013 are as follows:
|
2013
|
2012
|
|||
|
|
||||
|
Deferred tax asset
|
$
|
582,221
|
$
|
582,221
|
|
Valuation allowance
|
(582,221)
|
(582,221)
|
||
|
Net deferred tax asset
|
$
|
0
|
$
|
0
|
Income taxes are provided for using the liability method of accounting in accordance with the Income Taxes Topic of the FASB ASC. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. A valuation allowance is established when necessary to reduce deferred tax assets to the amount expected to be realized and when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. The computation of limitations relating to the amount of such tax assets, and the determination of appropriate valuation allowances relating to the realizing of such assets, are inherently complex and require the exercise of judgment. As additional information becomes available, we continually assess the carrying value of our net deferred tax assets.
NOTE 11 – COMMITMENTS AND CONTINGENCIES
The Company does not have any commitments nor contingencies.
NOTE 12 – RELATED PARTY TRANSACTIONS
See Note 7 regarding Notes Payable to related parties.
NOTE 13 – SUBSEQUENT EVENTS
Management evaluated all activity of the Company through the issue date of the Financial Statements and noted there were no material subsequent events as of that date.
There have been no disagreements on accounting and financial disclosures from the inception of our company through the date of this Form 10-K. Our financial statements for the period from inception to May 31, 2013, included in this report have been audited by Paritz & Company, PA, as set forth in this annual report.
Limitations on the Effectiveness of Controls
Our management, including our CEO and CFO, does not expect that our Disclosure Controls and internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management or board override of the control.
The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
As of May 31, 2013, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses. The matter involving internal controls and procedures that our
management considered to be a material weakness under the standards of the Public Company Accounting Oversight Board was the lack of a functioning audit committee, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures. The aforementioned material weaknesses were identified by our management in connection with the review of our financial statements for the year ended May 31, 2013.
Management believes that the material weakness set forth above did not have an effect on our financial results. However, management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the SEC that permit us to provide only the management’s report in this annual report.
|
-
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
|
|
-
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
|
CEO and CFO Certifications
Appearing immediately following the Signatures section of this report there are Certifications of the CEO and the CFO. The Certifications are required in accordance with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certifications). This Item of this report, which you are currently reading is the information concerning the Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.
Changes in Internal Controls
There was no change in our internal control over financial reporting during the year ended May 31, 2013 that has affected, or is reasonably likely to affect, our internal control over financial reporting.
None.
The following table presents information with respect to our officers, directors and significant employees as of the date of this Report:
|
Name
|
Age
|
Position
|
|
Michel St-Pierre
|
51
|
president, principal executive officer, principal accounting officer
|
|
941 de Calais Street
|
principal financial officer, secretary, treasurer and sole member of
|
|
|
Mont St-Hilaire, Quebec,
|
the board of directors
|
|
|
Canada, J3H 4T7
|
||
|
|
||
|
Jonathan Barratt
|
34
|
Chief technical officer
|
|
610-49 Condo A-Space,
|
||
|
Asok Din Daeng, Din Dang,
Bangkok, 10400, Thailand
|
||
|
|
||
|
Medhat Mahmoud
|
47
|
Vice president of technology and strategy
|
|
6-581 Scarlett Rd.
|
||
|
Toronto, Ontario
|
Each director serves until our next annual meeting of the stockholders or unless they resign earlier. The Board of Directors elects officers and their terms of office are at the discretion of the Board of Directors.
Each of our directors serves until his or her successor is elected and qualified. Each of our officers is elected by the board of directors to a term of one (1) year and serves until his or her successor is duly elected and qualified, or until he or she is removed from office. At the present time, members of the board of directors are not compensated for their services to the board.
Biographical Information Regarding Officers and Directors
Michel St-Pierre, President, principal executive officer, principal accounting officer, principal financial officer, secretary, treasurer and sole member of the board of directors.
Mr. St-Pierre has served as president, principal executive officer, principal accounting officer, principal financial officer, secretary, treasurer and sole member of the board of directors since our inception on May 6, 2009. Mr. St-Pierre is a registered chartered accountant in Quebec, Canada. Before working for the Company, Mr. St-Pierre has served as an officer of the Ecolocap Solutions since July 2006. Mr. St-Pierre has served as Chief Financial Officer of a public shell company, Tiger Renewable Energy Limited (formerly known as Tiger Ethanol International Inc. and Arch Management) since January, 2007 and held positions as the Finance Director (comparable to Corporate Treasurer) at SPB Canada Inc. from 2004-2006, Symbior Technologies Inc. from 2003-2004.
Jonathan Barratt, Chief Technical Officer.
Jonathan Barratt was nominated Chief Technical Officer (CTO) on July 20, 2011, and as such will oversee all technical developments for iMetrik M2M. Jonathan graduated Magna Cum Laude from Harvard University, Cambridge, and brings with him over 20 years of experience in the IT industry. His past roles include such senior positions as director of VoIP Services at Openface Internet in Montreal, CTO of KnIFE ICT (Bangkok), software developers for Internet Security from March 2008 to March 2011, Co-Founder and General CTO of Voipin, Voice-Over IP service providers (also Montreal) from June 2005 to March 2008, and was Co-Founder and Director of Software Development of EasyStockSoftware (Los Angeles) from March 2002 to May 2005.
Medhat Mahmoud, VP Technology and Strategy.
Medhat Mahmoud was nominated VP Technology and Strategy on July 20, 2011. Medhat holds B.Sc. Engineering in Computer Science & Automatic Control from Alexandria University. Medhat was with Ericsson Canada (NASDAQ: ERIC), from 2000 to February 2010, he held positions that included international assignments to Africa and the Middle East as Director, Core Network Solutions Management, and to Saudi Arabia where he
headed the Core & IP Multimedia System Solutions Management department with responsibility for major accounts and a target in the tens of millions USD. From February 2010 to present, Medhat was founder and president of Adegu Ltd, consultants in M2M applications and Telecom strategy.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who beneficially own more than 10% of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than 10% shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file. Based on our review of the copies of such forms we received, we believe that during the fiscal year ended May 31, 2013 all reports were filed.
Conflicts of Interest
There are no conflicts of interest. Further, we have not established any policies to deal with possible future conflicts of interest.
Audit Committee Financial Expert
We do not have an audit committee financial expert. We do not have an audit committee financial expert because we believe the cost related to retaining a financial expert at this time is prohibitive. Further, because we are only beginning our commercial operations, at the present time, we believe the services of a financial expert are not warranted.
Involvement in Certain Legal Proceedings
During the past ten years, Mr. Michel St-Pierre, Mr. Jonathan Barratt and Mr. Medhat Mahmoud have not been the subject of the following events
|
1.
|
A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
|
|
2.
|
Convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
|
|
3.
|
The subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities;
|
|
|
i)
|
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
|
|
|
ii)
|
Engaging in any type of business practice; or
|
|
|
iii)
|
Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
|
|
4.
|
The subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph 3.i in the preceding paragraph or to be associated with persons engaged in any such activity;
|
|
5.
|
Was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
|
|
6.
|
Was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
|
7. Was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
|
|
i)
|
Any Federal or State securities or commodities law or regulation; or
|
|
|
ii)
|
Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or
|
|
|
iii)
|
Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
|
8.
|
Was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
|
Audit Committee and Charter
We have a separately-designated audit committee of the board. Audit committee functions are performed by our board of directors. None of our directors are deemed independent. All directors also hold positions as our officers. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee. A copy of the audit committee charter is filed as an exhibit to this report.
Code of Ethics
We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code. A copy of the code of ethics is filed as an exhibit to this report.
Disclosure Committee and Charter
We have a disclosure committee and disclosure committee charter. Our disclosure committee is comprised of all of our officers and directors. The purpose of the committee is to provide assistance to the Chief Executive Officer and the Chief Financial Officer in fulfilling their responsibilities regarding the identification and disclosure of material information about us and the accuracy, completeness and timeliness of our financial reports. A copy of the disclosure committee charter is filed as an exhibit to this report.
As of August 27, 2013, we had one director. Mr. St-Pierre is not independent.
Compensation of Officers
Option award compensation is the fair value for stock options vested during the period, a notional amount estimated at the date of the grant using the Black-Scholes option-pricing model. The actual value received by the executives may differ materially and adversely from that estimated. A summary of cash and other compensation paid in accordance with management consulting contracts for our Principal Executive Officer and other executives for the most recent two years is as follows:
Executive Compensation
|
Nonqualified
|
|||||||||
|
Non-Equity
|
Deferred
|
||||||||
|
Stock
|
Option
|
Incentive Plan
|
Compensation
|
All Other
|
|||||
|
Name and
|
Salary
|
Bonus
|
Awards
|
Awards
|
Compensation
|
Earnings
|
Compensation
|
Total
|
|
|
Principal Position
|
Year
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|
Michel St-Pierre
|
2013
|
96,000
|
0
|
0
|
0
|
0
|
0
|
0
|
96,000
|
|
President, CEO, CFO
|
2012
|
96,000
|
0
|
0
|
0
|
0
|
0
|
0
|
96,000
|
|
Jonathan Barratt
|
2013
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
|
Chief Technical Officer
|
2012
|
58,650
|
0
|
0
|
0
|
0
|
0
|
0
|
58,650
|
|
Medhat Mahmoud
|
2013
|
84,000
|
0
|
0
|
0
|
0
|
0
|
0
|
84,000
|
|
VP Technology and Strategy
|
2012
|
76,650
|
0
|
0
|
0
|
0
|
0
|
0
|
76,650
|
|
(1)
|
Mr. St-Pierre has been appointed president and CEO on May 20, 2009.
|
|
(2)
|
Mr. Barratt has been appointed CTO on July 20, 2011.
|
|
(3)
|
Mr. Mahmoud has been appointed VP Technology & Strategy on July 20, 2011.
|
Employment Contracts
During the fiscal year ended May 31, 2011, we signed a Consulting Agreement with Jean-Paul Langlais pursuant to which, Mr. Langlais was providing sales, marketing, corporate development and management consulting services relating to the corporate activities of our Company. The “Engagement Period” is for one year. During the fiscal year ended May 31, 2011, we signed a Consulting Agreement with Michel St-Pierre pursuant to which, Mr. St-Pierre was providing the services to serve in the capacity of President and Chief Executive Officer of our company. The “Engagement Period” is for one year.
Other Executive Officers
During 2013, no employment contracts were entered into with any officers.
Retirement, Resignation or Termination Plans
We sponsor no plan, whether written or verbal, that would provide compensation or benefits of any type to an executive upon retirement, or any plan that would provide payment for retirement, resignation, or termination as a result of a change in control of our company or as a result of a change in the responsibilities of an executive following a change in control of our company.
Directors’ Compensation
|
Non-Equity
|
Deferred
|
||||||
|
Fees Earned or
|
Stock
|
Option
|
Incentive Plan
|
Compensation
|
All Other
|
||
|
Paid in Cash
|
Awards
|
Awards
|
Compensation
|
Earnings
|
Compensation
|
Total
|
|
|
Name
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
(US$)
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|
|
|||||||
|
Michel St-Pierre
|
0
|
0
|
0
|
0
|
0
|
0
|
0
|
The persons who served as members of our board of directors, including executive officers did not receive any compensation for services as a director for 2013.
Indemnification
Pursuant to the articles of incorporation and bylaws of the corporation, we may indemnify an officer or director who is made a party to any proceeding, including a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in its best interest. In certain cases, we may advance expenses incurred in defending any such proceeding. To the extent that the officer or director is successful on the merits in any such proceeding as to which such person is to be indemnified, we must indemnify him against all expenses incurred, including attorneys fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Nevada.
Regarding indemnification for liabilities arising under the Securities Act of 1933 which may be permitted for directors or officers pursuant to the foregoing provisions, we are informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy, as expressed in the Act and is therefore unenforceable.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|
The following table sets forth certain information regarding the beneficial ownership of our common stock as of the date of this Report by (i) each of our directors, (ii) each of our officers named in the Summary Compensation Table, (iii) each person who is known by us to be the beneficial owner of more than five percent of our outstanding common stock, and (iv) all directors and executive officers as a group. Except as otherwise indicated below, each person named has sole voting and investment power with respect to the shares indicated.
The percentage of ownership set forth below reflects each holder’s ownership interest in the 64,700,659 shares of our common stock outstanding as of August 29, 2013.
Amount and Nature of Beneficial Ownership
|
Name and Address of Beneficial Owner (1)
|
Shares
|
Options/ Warrants
|
Total
|
Percent
|
|
|
||||
|
Michel St-Pierre (2)
|
34,000,000
|
0
|
34,000,000
|
54.68%
|
|
|
||||
|
All executive officers and directors as a group (1 person)
|
34,000,000
|
0
|
34,000,000
|
54.68%
|
|
(1)
|
The mailing address for the listed individual is c/o Wiless Controls, Inc., 3450 St. Denis, Suite 202, Montreal, Quebec, Canada H2X 3L3.
|
|
(2)
|
Owner of 5% or more of our common stock. Mr. St-Pierre is the President and Chief Executive Officer.
|
Transactions with Michel St-Pierre
During the twelve months ended May 31, 2013, the Company received loans from Michel St-Pierre, our president, in the amount of $151,202. These loans were received over a one year period. These loans carried an interest of 10% and are payable on demand. The total amount owed to Mr. St-Pierre at May 31, 2013 is $366,463.
(1) Audit Fees
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for our audit of annual financial statements and reviews of our interim financial statements included in our Form 10-Q and Form 10-K or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was:
|
2013
|
Paritz & Company, PA
|
$
|
5,800
|
|
2012
|
Paritz & Company, PA
|
$
|
3,850
|
(2) Audit-Related Fees
The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of our financial statements and are not reported in the preceding paragraph:
|
2013
|
Paritz & Company, PA
|
$
|
0
|
|
2012
|
Paritz & Company, PA
|
$
|
0
|
(3) Tax Fees
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:
|
2013
|
Paritz & Company, PA
|
$
|
0
|
|
2012
|
Paritz & Company, PA
|
$
|
0
|
(4) All Other Fees
The aggregate fees billed in each of the last two fiscal years for the products and services provided by the principal accountant, other than the services reported in paragraphs (1), (2), and (3) was:
|
2013
|
Paritz & Company, PA
|
$
|
0
|
|
2012
|
Paritz & Company, PA
|
$
|
0
|
(5) Our audit committees pre-approval policies and procedures described in paragraph (c) (7) (i) of Rule 2-01 of Regulation S-X were that the audit committee pre-approves all accounting related activities prior to the performance of any services by any accountant or auditor.
(6) The percentage of hours expended on the principal accountants engagement to audit our consolidated financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountants full time, permanent employees, to the best of our knowledge, was 0%.
Audit Committee Pre-Approval Policies
Our Audit Committee reviewed the audit and non-audit services rendered by Paritz & Company, P.A. during the periods set forth above and concluded that such services were compatible with maintaining the auditors’ independence. All audit and non-audit services performed by our independent accountants are pre-approved by our Audit Committee to assure that such services do not impair the auditors’ independence from us.
The following is a complete list of exhibits filed as part of this annual report:
|
Exhibit
|
Incorporated by reference
|
Filed
|
|||
|
Number
|
Document Description
|
Form
|
Date
|
Number
|
herewith
|
|
3.1
|
Articles of Incorporation, as amended.
|
S-1
|
6/19/09
|
3.1
|
|
|
|
|||||
|
3.2
|
Bylaws.
|
S-1
|
6/19/09
|
3.2
|
|
|
|
|||||
|
4.1
|
Stock Certificate
|
S-1
|
6/19/09
|
4.1
|
|
|
|
|||||
|
10.1
|
Consulting Agreement – Michel St-Pierre.
|
10-K
|
8/19/11
|
10.1
|
|
|
|
|||||
|
10.2
|
Consulting Agreement – Jean-Paul Langlais.
|
10-K
|
8/19/11
|
10.2
|
|
|
|
|||||
|
10.3
|
Manufacturing Agreement with SMT Hautes
Technologies.
|
10-Q
|
1/14/12
|
10.3
|
|
|
|
|||||
|
10.4
|
Partnership Agreement with Monnit Corp.
|
10-K
|
8/29/12
|
10.4
|
|
|
10.5
|
License Agreement with iMetrik Global Inc.
|
10-K
|
8/29/12
|
10.5
|
|
|
14.1
|
Code of Ethics
|
10-K
|
8/20/10
|
14.1
|
|
|
|
|||||
|
31.1
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||
|
|
|||||
|
32.1
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Chief Executive Officer and Chief Financial Officer.
|
X
|
|||
|
|
|||||
|
99.1
|
Audit Committee Charter
|
10-K
|
8/20/10
|
99.2
|
|
|
|
|||||
|
99.2
|
Disclosure Committee Charter
|
10-K
|
8/20/10
|
99.3
|
|
|
|
|||||
|
101.INS
|
XBRL Instance Document.
|
X
|
|||
|
|
|||||
|
101.SCH
|
XBRL Taxonomy Extension – Schema.
|
X
|
|||
|
|
|||||
|
101.CAL
|
XBRL Taxonomy Extension – Calculations.
|
X
|
|||
|
|
|||||
|
101.DEF
|
XBRL Taxonomy Extension – Definitions.
|
X
|
|||
|
|
|||||
|
101.LAB
|
XBRL Taxonomy Extension – Labels.
|
X
|
|||
|
|
|||||
|
101.PRE
|
XBRL Taxonomy Extension – Presentation.
|
X
|
|||
In accordance with Section 13 or 15(d) of the Securities and Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on this 29th day of August 2013.
|
WILESS CONTROLS INC.
|
||
|
BY:
|
MICHEL ST-PIERRE | |
|
Michel St-Pierre
|
||
|
President, Principal Accounting Officer, Principal Executive Officer and Principal Financial Officer
|
||
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dated indicated.
|
Signature
|
Title
|
Date
|
| MICHEL ST-PIERRE |
President, Principal Executive Officer, Principal Financial
|
August 29, 2013
|
|
Michel St-Pierre
|
Officer, Principal Accounting Officer, Secretary, Treasurer
and sole member of the Board of Directors
|
|
Exhibit
|
Incorporated by reference
|
Filed
|
|||
|
Number
|
Document Description
|
Form
|
Date
|
Number
|
herewith
|
|
3.1
|
Articles of Incorporation, as amended.
|
S-1
|
6/19/09
|
3.1
|
|
|
|
|||||
|
3.2
|
Bylaws.
|
S-1
|
6/19/09
|
3.2
|
|
|
|
|||||
|
4.1
|
Stock Certificate
|
S-1
|
6/19/09
|
4.1
|
|
|
|
|||||
|
10.1
|
Consulting Agreement – Michel St-Pierre.
|
10-K
|
8/19/11
|
10.1
|
|
|
|
|||||
|
10.2
|
Consulting Agreement – Jean-Paul Langlais.
|
10-K
|
8/19/11
|
10.2
|
|
|
|
|||||
|
10.3
|
Manufacturing Agreement with SMT Hautes
Technologies.
|
10-Q
|
1/14/12
|
10.3
|
|
|
|
|||||
|
10.4
|
Partnership Agreement with Monnit Corp.
|
10-K
|
8/29/12
|
10.4
|
|
|
|
|||||
|
10.5
|
License Agreement with iMetrik Global Inc.
|
10-K
|
8/29/12
|
10.5
|
|
|
|
|||||
|
14.1
|
Code of Ethics
|
10-K
|
8/20/10
|
14.1
|
|
|
|
|||||
|
31.1
|
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
X
|
|||
|
|
|||||
|
32.1
|
Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for the Chief Executive Officer and Chief Financial Officer.
|
X
|
|||
|
|
|||||
|
99.1
|
Audit Committee Charter
|
10-K
|
8/20/10
|
99.2
|
|
|
|
|||||
|
99.2
|
Disclosure Committee Charter
|
10-K
|
8/20/10
|
99.3
|
|
|
|
|||||
|
101.INS
|
XBRL Instance Document.
|
X
|
|||
|
|
|||||
|
101.SCH
|
XBRL Taxonomy Extension – Schema.
|
X
|
|||
|
|
|||||
|
101.CAL
|
XBRL Taxonomy Extension – Calculations.
|
X
|
|||
|
|
|||||
|
101.DEF
|
XBRL Taxonomy Extension – Definitions.
|
X
|
|||
|
|
|||||
|
101.LAB
|
XBRL Taxonomy Extension – Labels.
|
X
|
|||
|
|
|||||
|
101.PRE
|
XBRL Taxonomy Extension – Presentation.
|
X
|
|||
-36-